[Federal Register Volume 63, Number 230 (Tuesday, December 1, 1998)]
[Rules and Regulations]
[Pages 66064-66069]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-31779]



[[Page 66064]]

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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 538

[Docket No. NHTSA-98-3429]
RIN 2127-AF37


Minimum Driving Range for Dual Fueled Electric Passenger 
Automobiles

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

ACTION: Final rule.

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SUMMARY: This rule establishes a minimum driving range of 7.5 miles for 
dual fueled electric passenger automobiles, otherwise known as hybrid 
electric vehicles (HEVs), when operating on the EPA urban cycle and a 
minimum driving range of 10.2 miles on the EPA highway cycle. The 
purpose of establishing the range is to meet statutory requirements 
intended to encourage the production of HEVs. An HEV which meets the 
range would qualify to have its fuel economy calculated according to a 
special procedure that would facilitate the efforts of its manufacturer 
to comply with the corporate average fuel economy standards.

DATES: This final rule is effective February 1, 1999. Petitions for 
reconsideration must be submitted by January 16, 1999.

ADDRESSES: Petitions for reconsideration should be submitted to the 
Administrator, National Highway Traffic Safety Administration, 400 
Seventh Street, SW., Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT: Mr. P.L. Moore, Motor Vehicle 
Requirements Division, Office of Market Incentives, National Highway 
Traffic Safety Administration, 400 Seventh Street SW, Washington, DC 
20590, (202) 366-5222.

SUPPLEMENTARY INFORMATION:

I. Background

A. Alternative Motor Fuels Act of 1988

    Section 6 of the Alternative Motor Fuels Act of 1988 amended the 
fuel economy provisions of the Motor Vehicle Information and Cost 
Savings Act (Cost Savings Act) by adding a new section 513, 
``Manufacturing Incentives for Automobiles.'' Section 513 contained 
incentives for the manufacture of vehicles designed to operate on 
alcohol or natural gas, including dual fuel vehicles, i.e., vehicles 
capable of operating on one of those alternative fuels and either 
gasoline or diesel fuel.
    Section 513 provided that dual fuel vehicles meeting specified 
criteria qualify for special treatment in the calculation of their fuel 
economy for purposes of the corporate average fuel economy (CAFE) 
standards. The fuel economy of a qualifying vehicle is calculated in a 
manner that results in a relatively high fuel economy value, thus 
encouraging its production as a way of facilitating a manufacturer's 
compliance with the CAFE standards. One of the qualifying criteria for 
passenger automobiles was to meet a minimum driving range, which was to 
be established by NHTSA.
    NHTSA was required to establish two minimum driving ranges, one for 
``dual energy'' (alcohol/gasoline or diesel fuel) passenger automobiles 
when operating on alcohol, and the other for ``natural gas dual 
energy'' (natural gas/gasoline or diesel fuel) passenger automobiles 
when operating on natural gas. In establishing the driving ranges, 
NHTSA was to consider the purposes of the Alternative Motor Fuels Act, 
consumer acceptability, economic practicability, technology, 
environmental impact, safety, driveability, performance, and any other 
factors deemed relevant.
    The Alternative Motor Fuels Act and its legislative history made it 
clear that the driving ranges were to be low enough to encourage the 
production of dual fuel passenger automobiles, yet not so low that 
motorists would be discouraged by a low driving range from actually 
fueling their vehicles with the alternative fuels.

B. Energy Policy Act of 1992

    The Energy Policy Act of 1992 amended section 513 of the Cost 
Savings Act to expand the scope of the alternative fuels it promotes. 
The amended section provided incentives for the production of vehicles 
using, in addition to alcohol and natural gas, liquified petroleum gas, 
hydrogen, coal derived liquid fuels, fuels (other than alcohol) derived 
from biological materials, electricity (including electricity from 
solar energy), and any fuel NHTSA determines, by rule, is substantially 
not petroleum and would yield substantial energy security benefits and 
substantial environmental benefits.
    Section 513 continued to provide incentives for the production of 
dual fuel vehicles, i.e., vehicles that operate on one of a now 
expanded list of alternative fuels, including electricity, and on 
gasoline or diesel fuel. NHTSA notes that some statutory terminology 
was changed by the 1992 amendments. Among other things, the terms 
``dual energy'' and ``natural gas dual energy'' were dropped, and the 
terms ``alternative fueled automobile,'' ``dedicated automobile,'' and 
``dual fueled automobile'' were added.
    Section 513 also continued to require dual fueled passenger 
automobiles to meet specified criteria, including meeting a minimum 
driving range, in order to qualify for the special treatment in the 
calculation of their fuel economy for purposes of the CAFE standards.
    The 1992 amendments necessitate amending Part 538. The agency must 
establish a minimum driving range for the expanded scope of dual fueled 
vehicles. Minimum driving range standards for all dual energy passenger 
automobiles except electric vehicles were established by a final rule 
issued on March 21, 1996. (61 FR 14507)
    On July 5, 1994, the Cost Savings Act was revised and codified 
``without substantive change.'' The provisions formerly found in 
section 513 of the Cost Savings Act are now at 49 U.S.C. 32901, 32905, 
and 32906. In setting the minimum driving range for dual energy 
electric passenger automobiles, NHTSA is required by 49 U.S.C. 
32901(c)(3) to consider the purposes set forth in section 3 of the 
Alternative Motor Fuels Act of 1988 as amended by the 1992 Energy 
Policy Act:

    (1) To encourage the development and widespread use of methanol, 
ethanol, natural gas, other gaseous fuels, and electricity as 
transportation fuels by consumers; and
    (2) To promote the production of alternatively fueled motor 
vehicles.

Section 32901(c)(3) also requires that the agency consider consumer 
acceptability, economic practicability, technology, environmental 
impact, safety, drivability, performance, and other relevant factors in 
setting a minimum driving range.

C. Regulatory Background

    To aid the agency in relating the data on driving range for dual 
fueled electric vehicles to the unique characteristics of dual fueled 
passenger automobiles, NHTSA published a Request for Comments in the 
Federal Register (59 FR 48589) on September 22, 1994. In that document, 
the agency posed a number of questions on the use of dual fueled 
electric passenger automobiles relating to the determination of a 
driving range that would serve the purposes of the Alternative Motor 
Fuels Act and the Energy Policy Act.
    NHTSA published a notice of proposed rulemaking (NPRM) on January 
3, 1997 (62 FR 375). Based on

[[Page 66065]]

NHTSA's review of comments in response to the Request for Comments, a 
review of current literature, studies of current industry capabilities, 
an assessment of the available technology, and existing statutory 
requirements, the agency proposed to set the minimum driving range for 
HEVs, even though operating solely on electricity, at 17.7 miles--the 
range required to complete one EPA urban/highway cycle under the 
current Federal Test Procedure (FTP).
    The NPRM stated the agency's view that setting a minimum driving 
range at 17.7 miles would ensure that HEVs will have sufficient driving 
range to meet the needs of consumers while also encouraging HEV 
development. NHTSA tentatively concluded that a 17.7 mile minimum range 
would not be so stringent as to foreclose the development of vehicles 
relying on new technologies or entry into the market without unduly 
large expenditures of capital resources. The proposed range was 
considered to be sufficient to meet the needs of many vehicle users. 
The agency also noted that setting the minimum driving range at 17.7 
miles would allow the use of EPA test procedures, where one complete 
highway and urban cycle consists of 17.7 miles.
    The NPRM also indicated that the proposed minimum driving range 
contemplated operation of the vehicle solely on electric power when 
some hybrid designs under consideration are full-time hybrids. In these 
vehicles, electric and internal combustion engines are designed to 
complement each other and may not have sufficient power alone to 
adequately propel the vehicle. NHTSA also observed that other designs 
in which the vehicle may be operated on electric power alone may not 
have sufficient range to meet the proposed 17.7 mile minimum range. The 
agency tentatively concluded that calculation of the fuel economy of a 
dual fueled automobile under Section 513 of the Cost Savings Act (now 
49 U.S.C. 32905) requires that the vehicle be operated solely on the 
alternative fuel and, as set forth in 49 U.S.C. 32904(c), have its 
energy consumption measured through use of the EPA combined urban and 
highway cycle. In the NPRM, NHTSA indicated its tentative view that 
this statutory requirement compelled a minimum driving range specifying 
electric-only operation for a distance equivalent to one EPA cycle.

D. Hybrid Electric Vehicle Driving Range Requirements

    NHTSA received comments regarding driving range proposed in the 
NPRM from Toyota, Mercedes Benz, the American Automobile Manufacturers 
Association (AAMA) and Jeffrey J. Ronning. In addition, the agency 
received comments from the Department of Energy (DOE) in response to a 
draft NPRM which NHTSA had forwarded to DOE for review.
    Toyota expressed opposition to the proposed 17.7 mile electric-only 
minimum driving range. The company stated that such a range will limit 
the development of HEVs by forcing increased battery volume. This 
increased battery volume, in Toyota's view, would drive up costs and 
make HEVs less attractive to consumers. Toyota also indicated that the 
proposed range would force an emphasis on the employment of batteries 
and electricity in comparison to other configurations in which fuel 
powered engines and batteries are used together. Toyota further 
suggested that the minimum driving range should be set at zero in order 
to promote the maximum development of new technologies.
    The American Automobile Manufacturers Association (AAMA) also 
suggested that the minimum driving range for HEVs be set at zero 
because any other driving range would serve as a disincentive for the 
development of HEVs. The AAMA submission argued that the use of an 
electric-only mode of operation for measuring driving range would 
provide an advantage to vehicles capable of driving on electricity 
only. As some hybrid designs would not have this capability but may 
also be able to recharge their batteries from an external source, AAMA 
contends that a driving range greater than zero would unnecessarily 
restrict development of hybrids that would otherwise be eligible for 
CAFE incentives. AAMA further suggested that if NHTSA concludes that it 
must set a driving range greater than zero, that HEVs with an all 
electric range should be required to meet only 7.5 miles on the urban 
cycle and 10.2 miles on the highway cycle in two separate tests with 
charging allowed prior to each test. For vehicles that do not have the 
capability to complete this suggested test cycle on electric power, 
AAMA suggested that an alternative test procedure for measuring range 
be developed.
    Mercedes-Benz also opposed the proposed 17.7 mile minimum driving 
range. In its comments, Mercedes advocated that no minimum driving 
range be set in the final rule and that doing otherwise would limit the 
ability of manufacturers to introduce promising designs and 
configurations. Mercedes also agreed with the agency's view that 
section 32905 requires that alternative fueled vehicles be operated 
solely on an alternative fuel to calculate fuel economy and that 49 
U.S.C. Sec. 32904(c) requires the use of a combined urban and highway 
cycle that is 55% urban and 45% highway. The company argued, however, 
that the selection of the 17.7 mile EPA cycle ignores the provisions in 
Sec. 32904(c) allowing fuel economy calculations to be based on 
procedures giving comparable results to the EPA cycle. In Mercedes' 
view, a fuel economy test comparable to the existing EPA cycle which 
does not require a vehicle to travel 17.7 miles could be developed. 
Therefore, Mercedes contended that the agency's determination that a 
17.7 mile driving range must be used to measure fuel economy was 
incorrect. Mercedes also argued that the agency's preliminary finding 
that the 17.7 mile range was appropriate for meeting consumer needs and 
expectations is unsupported by any facts.
    Mr. Jeffrey J. Ronning, an engineer with experience in the 
development of automotive electric propulsion systems, supported the 
proposed 17.7 mile range. Mr. Ronning indicated that the proposed range 
would foster development of ``electric dominant hybrids'' as opposed to 
``combustion dominant hybrids.'' Mr. Ronning described ``electric 
dominant hybrids'' as vehicles with a battery range of about 70 miles, 
which use 1/6th of the petroleum of a conventional vehicle and operate 
with zero emissions in urban and local use. Such vehicles, Mr. Ronning 
argues, are superior in terms of energy independence, environmental 
benefits and technological feasibility.
    The Department of Energy (DOE) submitted comments generally 
applicable to driving range. DOE noted that it has not specified a 
minimum driving range in its HEV development programs. In DOE's view, 
electric and conventional power sources employed in HEVs are intended 
to complement each other and are often not sized to propel the vehicle 
alone. Batteries pose specific difficulties in that they are heavy and 
take up large amounts of space. Many HEV designs, according to DOE, use 
smaller batteries that are ill suited to the task of providing 
propulsion. DOE cautioned that setting a minimum driving range at too 
high a level will force the use of larger batteries and limit the 
development of alternative technologies.
    DOE suggested that, if the legislative scheme made such an option 
possible, NHTSA should establish a sliding scale that would set the 
minimum driving range in inverse proportion to the fuel economy of an 
HEV when compared to

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that of conventional vehicles. Under this scheme, an HEV with fuel 
economy three times greater than a conventional vehicle achieving 26.5 
mpg would only be required to have a range of 5 miles on electric power 
alone. HEVs with fuel economy equivalent to conventional vehicles would 
be required to have a range of 35 miles. In DOE's view, such a sliding 
scale would reward those designs that achieved the highest fuel economy 
while ensuring that maximum flexibility be provided to HEV developers.
    DOE also urged NHTSA to consider data showing that a range of 10 
miles would satisfy 77 percent of daily vehicle trips in setting a 
driving range. Thus, according to DOE, a modest driving range would 
satisfy consumer needs.
    DOE further suggested that NHTSA consider an alternative test 
procedure to the EPA cycle and suggested that the draft Society of 
Automotive Engineers (SAE) Hybrid Vehicle Test Procedure (SAE J1711) be 
used as a guide to developing such a test. The use of the electric-only 
mode of operation for specifying driving range and measuring fuel 
economy, in DOE's view, operates on the assumption that an HEV must 
``be charged from the grid'' or derive its electrical energy from a 
source other than its conventional petroleum fuel engine to qualify for 
the incentives contained in Chapter 329. DOE believes that HEVs may not 
have this capability and also may be designed so that the operator may 
not have control over the mode of operation. Therefore, DOE stated, a 
fuel economy test using a single mode of operation may be wholly 
inappropriate for HEVs.

II. Analysis of Comments

    Hybrid electric vehicle technology is still in its infancy. 
Developers of these vehicles are pursuing a variety of configurations, 
including vehicles which use both conventional and alternative fuels 
simultaneously. A number of HEV designs include vehicles in which the 
alternative fuel used (electricity) is generated solely by the 
petroleum fueled engine incorporated into the vehicle. These hybrid 
designs are not intended to rely on the alternative fuel to propel the 
vehicle for an appreciable distance or under all anticipated driving 
conditions. Instead, the alternative fuel propulsion system is designed 
to either supplement the conventional fuel powerplant or to work in 
conjunction with that powerplant when demand for energy is relatively 
high.
    Two commenters, DOE and AAMA, indicated that the selection of an 
electric-only mode of operation for determining driving range is 
inconsistent with current developments in HEV technology. DOE noted 
that HEVs may not even provide operators with the option of selecting a 
particular power source. Instead, the vehicle itself will determine 
when to use its conventional or electric propulsion system. AAMA argued 
that a dual fueled automobile that uses electricity as one of its fuels 
should not be restricted by the requirement that it be capable of 
operating only on electricity in order to qualify for CAFE incentives.
    The comments of DOE and AAMA raise the issue of whether an HEV that 
uses electricity and petroleum fuel simultaneously can qualify for CAFE 
incentives under the Cost Savings Act and the subsequent EPACT 
amendments. Section 32901(a)(2) defines an alternative fuel vehicle as 
either a dedicated vehicle or a dual fueled vehicle. Dedicated vehicles 
are defined in Section 32901(a)(7) as automobiles that operate only on 
an alternative fuel. Dual fueled vehicles are defined in Section 
32901(a)(8) as follows:

    (8) ``dual fueled automobile'' means an automobile that--
    (A) is capable of operating on alternative fuel and on gasoline 
or diesel fuel;
    (B) provides equal or superior energy efficiency, as calculated 
for the applicable model year during fuel economy testing for the 
United States Government, when operating on alternative fuel as when 
operating on gasoline or diesel fuel;
    (C) for model years 1993-1995 for an automobile capable of 
operating on a mixture of an alternative fuel and gasoline or diesel 
fuel and if the Administrator of the Environmental Protection Agency 
decides to extend the application of this subclause, for an 
additional period ending not later than the end of the last model 
year to which section 32905(b) and (d) of this title applies, 
provides equal or superior energy efficiency, as calculated for the 
applicable model year during fuel economy testing for the 
Government, when operating on a mixture of alternative fuel and 
gasoline or diesel fuel containing exactly 50 percent gasoline or 
diesel fuel as when operating on gasoline or diesel fuel; and
    (D) for a passenger automobile, meets or exceeds the minimum 
driving range prescribed under subsection (c) of this section.

Examination of this Section compels the conclusion that Congress 
intended that, for the purposes of Chapter 329's incentive program, 
dual fueled vehicles are, with one limited exception, vehicles 
operating either on an alternative fuel or a petroleum fuel but not on 
a mixture of the two. Subsection (A) describes a vehicle that operates 
on a petroleum or alternative fuel but not a mixture of both. 
Subsection (B) limits dual fuel vehicles to those vehicles that offer 
equal or superior energy efficiency when operating on an alternative 
fuel, thereby indicating that the two modes of operation are exclusive. 
Subsection (C) indicates that vehicles operating on a mixture of 
alternative fuel and gasoline or diesel fuel may only be considered as 
dual fueled automobiles for the 1993-1995 model years (unless extended 
by the Administrator of the Environmental Protection Agency to the 2004 
model year) when such vehicles offer equal or superior energy 
efficiency when operating on a 50/50 mix of alternative fuel and diesel 
fuel or gasoline. Therefore, the statutory text of Section 32901(A)(8) 
indicates that Congress did not intend to make incentives available for 
dual fueled vehicles operating on a mix of fuels except under the 
limited circumstances enunciated in 32901(a)(8)(C). As the period set 
by Congress in which such vehicles could be considered as dual fueled 
vehicles has expired and the EPA has not extended this period by 
regulation, NHTSA concludes that under Chapter 329 a dual fueled 
vehicle is one that is capable of operating on either an alternative 
fuel or gasoline or diesel fuel but not a mixture of both 
simultaneously.
    HEVs that are not capable of operating on electric power alone 
cannot, under Chapter 329, be said to be dual fueled vehicles. 
Similarly, HEVs capable of operation in an electric-only mode but 
incapable of recharging their batteries from an external source are not 
dual fueled automobiles; a vehicle which is entirely dependent on a 
petroleum fuel for its motive power, regardless of whether electricity 
is used in the powertrain, is powered by petroleum. NHTSA concludes, 
therefore, that in order to qualify as a dual fueled vehicle under 
Chapter 329 an HEV must be capable of electric-only operation and must 
have the capability to recharge its batteries from an external source.
    Sections 32901(c) and 32905 of Chapter 329 require the Secretary of 
Transportation to establish a minimum driving range for dual fueled 
passenger automobiles when operating on an alternative fuel. NHTSA does 
not agree with those commenters who suggest that the minimum driving 
range for HEV's, when operating on electricity alone, be set at zero. 
If the agency were to establish a minimum driving range of zero miles 
for HEV's, as some commenters suggest, such a driving range would be 
inconsistent with the Congressional command that a minimum driving 
range be established. While the EPACT amendments expressly relieved 
electric powered dual

[[Page 66067]]

fueled passenger automobiles from the 200 mile minimum range 
requirement imposed on other dual fuel passenger automobiles, Congress 
did not eliminate the range requirement altogether. Setting a minimum 
driving range of zero miles would result in a range requirement having 
no practical effect. Furthermore, as discussed in the NPRM, an HEV must 
be capable of some meaningful operation in the electric-only mode to 
allow measurement of its fuel economy when operating on that 
alternative fuel.
    Mercedes argued against NHTSA's tentative conclusion that the 
proposed 17.7 mile range was compelled by sections 32904(c) and 32905. 
While agreeing that a combined urban/highway cycle must be used to 
determine the fuel economy of an HEV, Mercedes stated that section 
32904(c) does not require the use of the established EPA test cycle. 
Noting that section 32904(c) enables the Administrator of the EPA to 
use an alternative procedure or procedures ``that give comparable 
results,'' Mercedes suggests that manufacturers propose an alternative 
procedure that gives such comparable results so that HEVs need not have 
an electric-only range sufficient to complete one EPA driving cycle.
    The agency agrees with Mercedes' contention that section 32904(c) 
authorizes the use of a fuel economy test other than the established 
EPA test cycle if such an alternative test provides comparable results. 
If such an alternative test existed, it might well be used to measure 
the fuel economy of HEVs. However, despite the suggestions made by DOE 
and Mercedes, the agency has determined that there is no test that is 
as yet sufficiently developed to measure the fuel economy of HEV's and 
provide comparable results to the existing EPA test. The (SAE) Hybrid 
Vehicle Test Procedure (SAE J1711) has been under development for 
several years and remains in draft form. The SAE procedure, as it 
presently exists, relies on the current EPA urban and highway cycles 
and proposes an electric-only mode of operation as one test option. As 
Chapter 329 requires that HEVs must be dual fueled vehicles capable of 
operation in an electric-only mode to qualify for CAFE incentives, use 
of the SAE procedure would not eliminate the need for a passsenger 
automobile to travel a minimum distance--equivalent to one EPA urban 
cycle and one EPA highway cycle or both--to determine its electric-only 
fuel economy.
    Mercedes also suggests that in the event that HEVs are unable to 
complete the EPA driving cycle that manufacturers be afforded the 
opportunity to propose an alternative procedure that gives comparable 
results. NHTSA concludes that any test procedure for measuring HEV fuel 
economy must be uniform and applicable to all manufacturers. The SAE 
test, which is being developed but is not yet final, is an example of a 
uniform industry standard. Such a test might possess the uniformity 
required to serve as a standard for all vehicles in a certain class. 
The SAE test or any other industry developed test would not, however, 
necessarily be appropriate for measuring fuel economy for the purposes 
of the CAFE incentive program. Lastly, section 32904(c) directs that 
fuel economy testing be conducted by the EPA Administrator rather than 
the prospective beneficiaries of the incentive program.
    The lack of an acceptable test procedure for determining electric-
only fuel economy precludes consideration of the sliding scale minimum 
driving range suggested by DOE. Regardless of whether NHTSA has the 
authority to set the minimum driving range for HEVs along a range of 
values determined by the vehicle's measured fuel economy, the lowest 
minimum range suggested by DOE, 5 miles, would not be sufficient to 
allow fuel economy testing in the electric-only mode of operation.
    NHTSA has concluded that the lack of any available test procedure 
other than the existing EPA urban/highway test requires that the 
minimum driving range for HEV's be set at a distance that will allow 
use of this test. In its comments, AAMA suggested that if a range other 
than zero miles is set, an HEV with an electric-only range should be 
required to have a range equivalent to 7.5 miles while traveling on the 
EPA urban cycle and 10.2 miles while traveling on the EPA highway 
cycle, with charging allowed prior to each test. NHTSA concurs with 
this view. Setting the minimum driving range at 7.5 miles, or one EPA 
urban cycle, for urban driving and 10.2 miles, or one EPA highway 
cycle, for highway driving, while allowing the vehicle to recharge 
prior to attempting each test, will allow manufacturers maximum 
flexibility in developing HEV's while satisfying the considerations set 
forth in section 32901(c)(3).
    In the agency's view, setting a minimum driving range at 7.5 miles 
for urban use and 10.2 miles for highway use will provide incentives 
for manufacturers to develop HEVs while ensuring that these vehicles 
will meet the basic needs of consumers. According to the 1990 National 
Personal Transportation Survey (NPTS), a 6 to 10 mile range would be 
adequate for 77% of daily vehicle trips and 32% of daily vehicle miles 
traveled. Therefore, even with a range of 10.2 miles or 7.5 miles when 
operating on electricity alone, an HEV would be adequate for most of 
the daily vehicle trips taken by consumers.

III. Final Rule

    The agency is modifying its earlier proposal to establish a minimum 
driving range of 17.7 miles for HEVs when operating on electricity 
alone. A review of the comments submitted in response to that proposal 
indicates that HEV technology has not yet reached a point where 
vehicles can attain driving ranges even remotely comparable to those 
attainable by other alternative fuel vehicles. The agency is, however, 
rejecting the arguments of those commenters seeking to have the minimum 
driving range set at zero miles.
    NHTSA notes that HEV's currently in development and in production 
outside the United States often use electric and internal combustion 
power either simultaneously or alone depending on specific needs at 
certain points while the vehicle is being driven. In these HEVs, the 
driver does not control when a particular power source is used nor is 
the vehicle intended to be operated on one power source alone for 
extended periods during normal operation.
    The incentives contained in Chapter 329 to encourage the 
development of dual fuel vehicles are not applicable to these HEVs. The 
language and structure of the incentive provisions in Chapter 329 make 
it clear that the incentive program was intended to foster the 
development of vehicles that may operate on petroleum or an alternative 
fuel depending on the mode selected by the operator. There is no 
indication in the legislative history of the Alternative Motor Fuels 
Act that Congress at any time considered applying the Act to a vehicle 
that operates on petroleum at all times rather than being able to 
operate on the alternate fuel alone.
    While HEVs, regardless of their configuration, appear to further 
many of the goals of the incentive program, the absence of provisions 
applicable to HEV's under the existing statutory scheme obliges NHTSA 
to restrict the availability of those incentives to vehicles that are 
capable of operating independently on electric power that is not 
generated by an on-board petroleum fueled engine. As the incentive 
program requires that the vehicle's fuel economy while operating on an 
alternative fuel must be measured by use of the EPA test procedure or 
its equivalent, any vehicle

[[Page 66068]]

qualifying for the incentive program must be capable of having its fuel 
economy measured while operating on an alternative fuel. NHTSA has 
concluded that at this time there is no fuel economy test available for 
measuring the fuel economy of HEV's while operating on electricity 
alone other than the existing EPA test cycle. Completion of this cycle 
normally requires that a vehicle travel two circuits totaling 17.7 
miles--7.5 miles in an urban portion and 10.2 miles in the highway 
portion.
    In the January 3, 1997, NPRM, the agency proposed that the minimum 
driving range for HEVs be set at 17.7 miles--the equivalent of one 
urban and one highway cycle. NHTSA has concluded, based on the comments 
submitted in response to the NPRM and the state of HEV development at 
this time, that this 17.7 mile range requirement is too stringent. 
Accordingly the agency has concluded that the driving range be set at 
the absolute minimum possible under existing test procedures by 
specifying a range that allows HEVs to be fully charged prior to 
completion of one EPA urban or highway cycle. Therefore, the minimum 
driving range established by this final rule is 7.5 miles while 
traveling on the EPA urban cycle and 10.2 miles while traveling on the 
EPA highway cycle, with charging allowed prior to each test.
    This final rule also establishes a petition process by which 
manufacturers may apply for exemption from the minimum range 
requirement. These provisions remain unchanged from those contained in 
the agency's earlier proposal.

IV. Regulatory Impacts

A. Executive Order 12866 and DOT Regulatory Policies and Procedures

    This notice has not been reviewed under Executive Order 12866. 
NHTSA has considered the impact of this rulemaking action and has 
determined that the action is not ``significant'' under the Department 
of Transportation's regulatory policies and procedures. In this final 
rule, the agency is setting the minimum driving range for all dual 
fueled electric passenger vehicles at one EPA urban cycle after 
recharging and one EPA highway cycle after recharging. None of these 
changes will result in an additional burden on manufacturers. They do 
not impose any mandatory requirements but implement statutory 
incentives to encourage the manufacture of alternative fuel vehicles. 
For these reasons, NHTSA believes that any impacts on manufacturers are 
so minimal as not to warrant preparation of a full regulatory 
evaluation.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980 (Public Law 96-354) requires 
each agency to evaluate the potential effects of a final rule on small 
businesses. Establishment of a minimum driving range for HEVs affects 
motor vehicle manufacturers, few of which are small entities. The Small 
Business Administration (SBA) has set size standards for determining if 
a business within a specific industrial classification is a small 
business. The Standard Industrial Classification code used by the SBA 
for Motor Vehicles and Passenger Car Bodies (3711) defines a small 
manufacturer as one having 1,000 employees or less.
    Very few single stage manufacturers of motor vehicles within the 
United States have 1,000 or fewer employees. Those that do are not 
likely to have sufficient resources to design, develop, produce and 
market an HEV. For this reason, NHTSA believes that this final rule 
would not have a significant impact on any small business. Moreover, 
production of passenger automobiles with the minimum ranges that are 
established by this regulation would be voluntarily undertaken in order 
to achieve beneficial CAFE treatment of those vehicles. Therefore, no 
significant costs are imposed on any manufacturers or other small 
entities.

C. National Environmental Policy Act.

    The agency has also analyzed this rule for the purpose of the 
National Environmental Policy Act, and determined that it would not 
have any significant impact on the quality of the human environment. 
The minimum driving range established for HEVs in this rule is set at 
the lowest level possible to accommodate the present state of HEV 
technology and the existing statutory framework. It is anticipated that 
this may encourage continued development of HEVs. HEVs are, however, 
not being produced or imported at this time and it is not possible to 
determine the degree to which the establishment of the minimum driving 
range in this final rule will have on future production of HEVs.

D. Paperwork Reduction Act

    The procedures in this final rule for passenger automobile 
manufacturers to petition for lower driving ranges are considered to be 
information collection requirements as that term is defined by the 
Office of Management and Budget (OMB) in 5 CFR part 1320. The 
information collection requirements for part 538 will be submitted to 
the OMB, pursuant to the Paperwork Reduction Act (44 U.S.C. 3501 et 
seq.).

E. Executive Order 12612 (Federalism) and Unfunded Mandates Act

    NHTSA has analyzed this final rule in accordance with the 
principles and criteria contained in E.O. 12612, and has determined 
that this rule would not have significant federalism implications to 
warrant the preparation of a Federalism Assessment.
    In issuing this final rule establishing a minimum driving range for 
HEVs, the agency notes, for the purposes of the Unfunded Mandates Act, 
that this rule facilitates the granting of incentives to manufacturers 
choosing to produce qualified HEVs. The rule does not impose any costs.

F. Civil Justice Reform

    This final rule does not have any retroactive effect. Under 49 
U.S.C. 30103, whenever a Federal motor vehicle safety standard is in 
effect, a State may not adopt or maintain a safety standard applicable 
to the same aspect of performance which is not identical to the Federal 
standard, except to the extent that the state requirement imposes a 
higher level of performance and applies only to vehicles procured for 
the State's use. 49 U.S.C. 30161 sets forth a procedure for judicial 
review of final rules establishing, amending or revoking Federal motor 
vehicle safety standards. That section does not require submission of a 
petition for reconsideration or other administrative proceedings before 
parties may file suit in court.

List of Subjects in 49 CFR Part 538

    Administrative practice and procedure, Fuel economy, Motor 
vehicles, Reporting and recordkeeping requirements.

    For the reasons set forth in the preamble, amend part 538 of title 
49 of the Code of Federal Regulations as follows:

PART 538--MANUFACTURING INCENTIVES FOR ALTERNATIVE FUEL VEHICLES

    1. The authority citation for part 538 continues to read:

    Authority: 49 U.S.C. 32901, 32905, and 32906; delegation of 
authority at 49 CFR 1.50.

    2. Amend Sec. 538.5 by adding paragraph (b) to read as follows:


Sec. 538.5  Minimum driving range.

* * * * *

[[Page 66069]]

    (b) The minimum driving range that a passenger automobile using 
electricity as an alternative fuel must have in order to be treated as 
a dual fueled automobile pursuant to 49 U.S.C. 32901(c) is 7.5 miles on 
its nominal storage capacity of electricity when operated on the EPA 
urban test cycle and 10.2 miles on its nominal storage capacity of 
electricity when operated on the EPA highway test cycle.
    3. Revise Sec. 538.6 to read as follows:


Sec. 538.6  Measurement of driving range.

    The driving range of a passenger automobile model type not using 
electricity as an alternative fuel is determined by multiplying the 
combined EPA urban/highway fuel economy rating when operating on the 
alternative fuel, by the nominal usable fuel tank capacity (in 
gallons), of the fuel tank containing the alternative fuel. The 
combined EPA urban/highway fuel economy rating is the value determined 
by the procedures established by the Administrator of the EPA under 49 
U.S.C. 32904 and set forth in 40 CFR part 600. The driving range of a 
passenger automobile model type using electricity as an alternative 
fuel is determined by operating the vehicle in the electric-only mode 
of operation through the EPA urban cycle on its nominal storage 
capacity of electricity and the EPA highway cycle on its nominal 
storage capacity of electricity. Passenger automobile types using 
electricity as an alternative fuel that have completed the EPA urban 
cycle after recharging and the EPA highway cycle after recharging shall 
be deemed to have met the minimum range requirement.
    4. Add Sec. 538.7 to read as follows:


Sec. 538.7  Petitions for reduction of minimum driving range.

    (a) A manufacturer of a model type of passenger automobile capable 
of operating on both electricity and either gasoline or diesel fuel may 
petition for a reduced minimum driving range for that model type in 
accordance with paragraphs (b) and (c) of this section.
    (b) Each petition shall:
    (1) Be addressed to: Administrator, National Highway Traffic Safety 
Administration, 400 Seventh Street SW, Washington, DC 20590.
    (2) Be submitted not later than the beginning of the first model 
year in which the petitioner seeks to have the model type treated as an 
electric dual fueled automobile.
    (3) Be written in the English language.
    (4) State the full name, address, and title of the official 
responsible for preparing the petition, and the name and address of the 
petitioner.
    (5) Set forth in full data, views, and arguments of the petitioner, 
including the information and data specified in paragraph (c) of this 
section, and the calculations and analyses used to develop that 
information and data. No documents may be incorporated by reference in 
a petition unless the documents are submitted with the petition.
    (6) Specify and segregate any part of the information and data 
submitted under this section that the petitioner wishes to have 
withheld from public disclosure in accordance with part 512 of this 
chapter.
    (c) Each petitioner shall include the following information in its 
petition:
    (1) Identification of the model type or types for which a lower 
driving range is sought under this section.
    (2) For each model type identified in accordance with paragraph 
(c)(1) of this section:
    (i) The driving range sought for that model type.
    (ii) The number of years for which that driving range is sought.
    (iii) A description of the model type, including car line 
designation, engine displacement and type, electric storage capacity, 
transmission type, and average fuel economy when operating on:
    (A) Electricity; and
    (B) Gasoline or diesel fuel.
    (iv) An explanation of why the petitioner cannot modify the model 
type so as to meet the generally applicable minimum range, including 
the steps taken by the petitioner to improve the minimum range of the 
vehicle, as well as additional steps that are technologically feasible, 
but have not been taken. The costs to the petitioner of taking these 
additional steps shall be included.
    (3) A discussion of why granting the petition would be consistent 
with the following factors:
    (i) The purposes of 49 U.S.C. chapter 329, including encouraging 
the development and widespread use of electricity as a transportation 
fuel by consumers, and the production of passenger automobiles capable 
of being operated on both electricity and gasoline/diesel fuel;
    (ii) Consumer acceptability;
    (iii) Economic practicability;
    (iv) Technology;
    (v) Environmental impact;
    (vi) Safety;
    (vii) Driveability; and
    (viii) Performance.
    (d) If a petition is found not to contain the information required 
by this section, the petitioner is informed about the areas of 
insufficiency and advised that the petition will not receive further 
consideration until the required information is received.
    (e) The Administrator may request the petitioner to provide 
information in addition to that required by this section.
    (f) The Administrator publishes in the Federal Register a notice of 
receipt for each petition containing the information required by this 
section. Any interested person may submit written comments regarding 
the petition.
    (g) In reaching a determination on a petition submitted under this 
section, the Administrator takes into account:
    (1) The purposes of 49 U.S.C. chapter 329, including encouraging 
the development and widespread use of alternative fuels as 
transportation fuels by consumers, and the production of alternative 
fuel powered motor vehicles;
    (2) Consumer acceptability;
    (3) Economic practicability;
    (4) Technology;
    (5) Environmental impact;
    (6) Safety;
    (7) Driveability; and
    (8) Performance.
    (h) If the Administrator grants the petition, the petitioner is 
notified in writing, specifying the reduced minimum driving range, and 
specifying the model years for which the reduced driving range applies. 
The Administrator also publishes a notice of the grant of the petition 
in the Federal Register and the reasons for the grant.
    (i) If the Administrator denies the petition, the petitioner is 
notified in writing. The Administrator also publishes a notice of the 
denial of the petition in the Federal Register and the reasons for the 
denial.

    Issued on: November 24, 1998.
Ricardo Martinez,
Administrator.
[FR Doc. 98-31779 Filed 11-30-98; 8:45 am]
BILLING CODE 4910-59-P