[Federal Register Volume 64, Number 47 (Thursday, March 11, 1999)]
[Rules and Regulations]
[Pages 12090-12092]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-6052]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 531

[Docket No. NHTSA-97-3205, Notice 02]


Passenger Automobile Average Fuel Economy Standards

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

ACTION: Final decision.

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SUMMARY: This final decision responds to a joint petition filed by 
Vector Aeromotive Corporation (Vector) and Lamborghini S.p.A. 
(Lamborghini) requesting that each company be exempted from the 
generally applicable average fuel economy standard of 27.5 miles per 
gallon (mpg) for model years (MYs) 1998 and 1999 and that lower 
alternative standards be established. In this document, NHTSA denies 
Lamborghini's request for MYs 1998 and 1999 and grants Vector's request 
only for MY 1998. The agency establishes an alternative standard of 
12.1 mpg for MY 1998 for Vector.

DATES: Effective Date: This final decision is effective April 12, 1999. 
This denial applies only to Lamborghini for MYs 1998 and 1999.
    Petitions for reconsideration: Petitions for reconsideration must 
be received no later than April 12, 1999.

ADDRESSES: Petitions for reconsideration of this rule should refer to 
the docket and notice number set forth above and be submitted to: 
Administrator, National Highway Traffic Safety Administration, 400 
Seventh Street, SW, Washington, D.C. 20590.

FOR FURTHER INFORMATION CONTACT: The following persons at the National 
Highway Traffic Safety Administration, 400 Seventh Street, SW, 
Washington, D.C. 20590.
    For non-legal issues: Ms. Henrietta L. Spinner, Office of Planning 
and Consumer Programs, Safety Performance Standards, NPS-32, NHTSA, 400 
Seventh Street, SW., Washington, D.C. 20590. Telephone: (202) 366-4802, 
facsimile (202) 366-2739.
    For legal issues: Otto Matheke, Office of the Chief Counsel, NCC-
20, telephone (202) 366-5253, facsimile (202) 366-3820.

SUPPLEMENTARY INFORMATION:

Statutory Background

    Pursuant to section 32902(d) of Chapter 329 ``Automobile Fuel 
Economy'' (49 U.S.C. 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 at 
that 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 exempt 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 Vector and Lamborghini should be 
exempted from the generally applicable MYs 1998 and 1999 passenger 
automobile average fuel economy standard of 27.5 mpg, and that 
alternative standards of 12.4 mpg for MYs 1998 and 1999 be established 
for Vector and Lamborghini (63 FR 5774; February 4, 1998). The agency 
did not receive any comments in response to the proposal.

NHTSA Final Determination

    On August 27, 1997, Lamborghini and Vector filed a joint petition 
seeking an exemption from the generally applicable fuel economy 
standards for passenger cars for MYs 1998 and 1999 and requested that 
an alternative fuel economy standard for the two companies be 
established. At the time this petition was filed, V-Power Corporation 
controlled Lamborghini and Vector. V-Power was, and remains, the 
largest shareholder of Vector, owning 57 percent of the stock; with the 
remaining 43 percent of Vector being publicly held. V-Power also had a 
controlling interest in Lamborghini owning 50 percent of Lamborghini's 
stock. As V-Power controlled both companies, any alternative Corporate 
Average Fuel Economy (CAFE) standard would apply to Lamborghini and 
Vector together (see 49 U.S.C. 32901(a) (4)), and a single

[[Page 12091]]

petition was submitted for a single alternative standard, applicable to 
the combined fleet of the two manufacturers.
    On July 24, 1998, Audi AG (Audi), a wholly owned subsidiary of 
Volkswagen AG, acquired full ownership of Lamborghini. Together, Audi 
and Volkswagen have an annual worldwide production of more than 10,000 
vehicles. Section 32902(d) of Chapter 329 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 two 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 of the terms manufacture and 
manufacturer for the purposes of determining eligibility for a low 
volume exemption under section 32902(d). In considering whether an 
entity is eligible for a low volume exemption, the agency indicated 
that it must count all of the cars manufactured by that entity 
worldwide, and not merely those imported in the United States. 
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.
    When Lamborghini and Vector filed their joint petition seeking an 
exemption in 1997, the annual worldwide production of both companies 
combined was fewer than 10,000 vehicles. However, Lamborghini was 
acquired by Audi, which is in turn owned and controlled by Volkswagen, 
during Lamborghini's 1998 model year. The combined worldwide production 
of Volkswagen, Audi, and Lamborghini during Lamborghini's 1998 model 
year was much greater than 10,000 vehicles. As section 32902(d)(1) 
prohibits establishing alternative fuel economy standards for 
manufacturers producing more than 10,000 vehicles during the model year 
for which the exemption is sought, Lamborghini, by virtue of its coming 
under the ownership of Audi and Volkswagen, is ineligible for an 
exemption for the 1998 model year. Similarly, as Lamborghini and its 
parents, Audi and Volkswagen, will manufacture more than 10,000 
vehicles annually in the 1999 model year, the agency is denying 
Lamborghini's request for an exemption for MY 1999 as well.
    The agency notes that Vector, which submitted a joint petition for 
exemption with Lamborghini, remains under the ownership of V-Power. 
Vector and its parent company produce fewer than 10,000 vehicles 
worldwide each year. The company is, therefore, still eligible for an 
exemption from the generally applicable fuel economy standards. Vector 
has requested that the agency consider the joint petition filed on 
behalf of itself and Lamborghini to be a single petition seeking an 
alternative standard for Vector alone. To assist the agency in 
considering its decision to set such an alternative standard, Vector 
provided NHTSA with information regarding its maximum feasible fuel 
economy for the 1998 model year. NHTSA has determined Vector's maximum 
feasible fuel economy for that year and establishes an alternative 
standard of 12.1 mpg for MY 1998, based on Vector's request. When 
Vector furnishes the agency with additional MY 1999 data and 
information to support its request for an alternative standard for that 
year, NHTSA will address its petition in a separate decision. In prior 
model years, Vector exclusively relied on the Lamborghini engine in its 
passenger cars. Volkswagen's acquisition of Lamborghini leaves Vector 
technically uncertain regarding the supplier of engines for its 1999 
models. Therefore, at this time, the agency cannot determine Vector's 
maximum feasible fuel economy for MY 1999.

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 
applies to Automobili Lamborghini S.p.A. and its parent companies and 
Vector Aeromotive Corporation, 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 companies seeking an exemption could be required 
to pay civil penalties if the average fuel economy of the Volkswagen/
Audi/Lamborghini's and Vector's fleets are less than the generally 
applicable standard. In that event, purchasers of those vehicles may 
have to bear the burden of those civil penalties in the form of higher 
prices. Since this rule sets an alternative standard at the level 
determined to be the maximum feasible level for Vector for MY 1998, 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 Vector's fleet, the 
incremental usage of gasoline by Vector's customers would not affect 
the nation's need to conserve gasoline. There would not be any impacts 
to 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 affected 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 denial of 
Lamborghini's request and the exemption of Vector's request for 
alternative standards. Further, since the passenger automobiles at 
issue will be required to meet applicable passenger car fuel economy 
standards, the decision does not affect the amount of fuel used.
    Since the Regulatory Flexibility Act may apply to both decisions 
denying an exemption to a manufacturer and 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. While the denial of the exemption imposes a burden on 
Lamborghini, the company and its parent companies are not small 
businesses. The prices of 1998 and 1999 Lamborghini automobiles are not 
likely to be affected by this decision as the Lamborghini vehicles are 
sold in very small numbers and will be included in the fleet of its 
parent company. The relatively low fuel economy of the small number of 
Lamborghini vehicles will be outweighed by the comparatively high fuel 
economy of the large numbers of Volkswagen and Audi vehicles.

[[Page 12092]]

Purchasers will therefore not be affected. This decision does not 
impose any burdens on Vector. It does relieve the company from being 
subject to an infeasible standard for MY 1998 and from having to pay 
civil penalties for noncompliance with that standard. Since the price 
of 1998 Vector automobiles were not affected by this decision, the 
purchasers are not affected.

List of Subjects in 49 CFR Part 531

    Energy conservation, Fuel economy, Imports, Motor vehicles.

    In consideration of the foregoing, 49 CFR Part 531 is amended as 
set forth below:

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. Section 531.5(b) is amended by republishing paragraph (b) 
introductory text and adding paragraph (b)(13) 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:
* * * * *
    (13) Vector Aeromotive Corporation.

------------------------------------------------------------------------
                                                           Average fuel
                                                              economy
                       Model year                            standard
                                                            (miles per
                                                              gallon)
------------------------------------------------------------------------
1998....................................................            12.1
------------------------------------------------------------------------

* * * * *
    Issued on: March 5, 1999.
L. Robert Shelton,
Associate Administrator for Safety Performance Standards.
[FR Doc. 99-6052 Filed 3-10-99; 8:45 am]
BILLING CODE 4910-59-P