[Federal Register Volume 64, Number 96 (Wednesday, May 19, 1999)]
[Rules and Regulations]
[Pages 27201-27203]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-12607]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 531

[Docket No. NHTSA-98-4853]
RIN 2127-AG95


Passenger Automobile Average Fuel Economy Standards

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

ACTION: Final rule.

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SUMMARY: This rule amends the passenger automobile fuel economy 
regulation by providing a procedure by which a vehicle manufacturer may 
notify NHTSA of the model year in which it elects to consider 
production of components and automobile assembly in Mexico as domestic 
value added. This domestic value added is used to determine if a 
passenger automobile should be assigned to the manufacturer's import or 
domestic fleet for computation of the fleet average fuel economy. The 
amendment implements a provision of the North American Free Trade 
Agreement Implementation Act of 1993.

EFFECTIVE DATE: This amendment is effective July 19, 1999.

ADDRESS: Petitions for reconsideration should refer to the docket 
number set forth above and be submitted to Docket Management Section, 
Pl-403, 400 7th Street, SW, Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT: Ms. Henrietta L. Spinner, Office of 
Planning and Consumer Programs, NHTSA, 400 7th Street, SW, Washington, 
DC 20590. Telephone: (202) 366-4802.

SUPPLEMENTARY INFORMATION:

Background

    The Corporate Average Fuel Economy (CAFE) law, codified as Chapter 
329 of title 49, United States Code, provides that the Administrator of 
the Environmental Protection Agency (EPA) calculates the CAFE of each 
automobile manufacturer (49 U.S.C. 32904(a)). Section 32904(b) provides 
that passenger automobiles manufactured by a manufacturer are to be 
divided into two fleets, according to whether or not they are 
manufactured domestically. Each manufacturer's domestic and non-
domestic fleet is required to comply separately with the passenger 
automobile CAFE standard. An automobile is considered to be 
manufactured domestically if at least 75 percent of the cost to the 
manufacturer is attributable to value added in the United States and 
Canada.
    The North American Free Trade Agreement Implementation Act of 1993, 
Pub. L. 103-182, amended Section 32904(b) to provide that the value 
added to a passenger automobile in Mexico is considered to be domestic 
value. As amended, paragraph 32904(b)(3)(A) provides that

    [A] passenger car is deemed to be manufactured domestically in a 
model year, as provided in subparagraph (B) of this paragraph, if at 
least 75 percent of the cost to the manufacturer is attributable to 
value added in the United States, Canada, or Mexico, unless the 
assembly of the vehicle is completed in Canada or Mexico and the 
automobile is imported into the United States more than 30 days 
after the end of the model year.

    The effect of the amendment is that value added in Mexico is 
considered on the same terms as value added in Canada or the United 
States. However, the transition to treating Mexican value as domestic 
value was not to be immediate. Subparagraph (B) of paragraph 
32904(b)(3) sets forth specific conditions to govern the transition, 
and specifies different dates for manufacturers, according to whether 
or when they began to assemble passenger automobiles in Mexico.
    Under subparagraph 32904(b)(3)(B)(i), a manufacturer that began to 
assemble automobiles in Mexico before model year 1992 can elect to have 
its Mexican production considered domestic beginning with a model year 
that begins after the date of its election in the period from January 
1, 1997, through January 1, 2004.
    A manufacturer that began assembling automobiles in Mexico after 
model year 1991 is required to count the value added in Mexico as 
domestic value beginning with the model year that begins after January 
1, 1994, or the model year in which the manufacturer begins to assemble 
automobiles in Mexico, whichever is later (subparagraph (B)(ii)).
    A manufacturer that does not assemble automobiles in Mexico may 
elect under subparagraph (B)(iii) to have the value of Mexican 
components treated as domestic value for purposes of automobiles 
manufactured in a model year beginning after the date of its election 
in the period from January 1, 1997, through January 1, 2004.
    A manufacturer that does not assemble automobiles in either the 
United States, Canada, or Mexico is required to count the value of any 
Mexican components as domestic value, beginning with the model year 
that begins after January 1, 1994 (subparagraph (B)(iv)).
    A manufacturer covered by either subparagraph (B)(i) or (B)(iii) 
that does not make an election within the specified period must 
consider any value added in Mexico as domestic value beginning with the 
model year that begins after January 1, 2004 (subparagraph (B)(v)).
    Subparagraph 32904(b)(3)(C) provides that the Secretary of 
Transportation ``shall prescribe reasonable procedures'' for those 
manufacturers that can elect the model year for which the value added 
in Mexico is to be treated as domestic value. Insofar as the 
calculation of CAFE levels is the

[[Page 27202]]

responsibility of the EPA Administrator, the procedures issued by the 
Secretary must be in the form of directions to the EPA Administrator. 
EPA has amended its regulations at 40 CFR 600.511-80 to incorporate the 
provisions of the NAFTA Implementation Act (59 FR 33914; July 1, 1994). 
In anticipation of implementing regulations being issued by the 
Secretary of Transportation, subsection (b)(5) of 40 CFR 600.511-80 
provides that any model year elections by a manufacturer are to be made 
in accordance with the regulations issued by the Secretary.
    Insofar as 49 U.S.C. 32904(b)(3) does not limit a manufacturer's 
discretion to elect any model year in the period from January 1, 1997, 
through January 1, 2004, NHTSA concludes that the implementing 
procedures need only specify the method in which a manufacturer gives 
notice of its election and provide a minimum notice period before the 
beginning of the model year elected. Accordingly, this rule amends 
section 531.6 of title 49 CFR to provide that any manufacturer making a 
model-year election under subparagraphs (B)(i) and (B)(iii) of 49 
U.S.C. 32904(b)(3) shall notify the EPA and NHTSA Administrators of its 
election not later than 60 days before the beginning of the model year 
to which the election applies.

Final Rule

    This amendment is published as a final rule, without prior notice 
and opportunity to comment. The NAFTA Implementation Act required that 
the agency issue procedures to allow manufacturers to elect certain 
options by January 1, 1997. The regulations contained in this final 
rule are ministerial in nature and simply implement the express 
provisions of the NAFTA Implementation Act. Accordingly, the agency 
finds, for good cause, that notice and comment are unnecessary and 
issues the amendment as a final rule. 5 U.S.C. 53(b)(3)(B).

Impact Analyses

A. Executive Order 12866 and DOT Regulatory Policies and Procedures

    This rule was not reviewed under Executive Order 12866 (Regulatory 
Planning and Review). NHTSA has considered the economic implications of 
the rule and determined that it is not significant within the meaning 
of the DOT Regulatory Policies and Procedures. Today's amendment will 
not affect manufacturer or supplier costs.

B. Regulatory Flexibility Act

    Pursuant to the Regulatory Flexibility Act, the agency has 
considered the impact this rule would have on small entities. I certify 
that this action will not have a significant economic impact on a 
substantial number of small entities. Therefore, a regulatory 
flexibility analysis is not required for this action. Although certain 
small businesses, such as parts suppliers, and some vehicle 
manufacturers are affected by the regulation, the effect on them is 
negligible.

C. National Environmental Policy Act

    The agency has analyzed the environmental impacts of the rule in 
accordance with the National Environmental Policy Act, 42 U.S.C. 4321 
et seq., and has concluded that it will not have a significant effect 
on the quality of the human environment.

D. Executive Order 12612 (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 rule does not have sufficient Federalism implications to 
warrant the preparation of a Federalism Assessment.

E. Paperwork Reduction Act

    This final rule includes new ``collections of information,'' as 
that term is defined by the Office of Management and Budget (OMB). The 
rule contains information collections that are subject to review by OMB 
under the Paperwork Reduction Act of 1995 (Pub. L. 104-13). The title, 
description, and respondent description of the information collections 
are shown below with an estimate of the annual burden. Included in the 
estimate is the time for reviewing regulations, searching existing data 
sources, gathering and maintaining the data, and completing and 
reviewing the collection of information.
    Title: 49 CFR part 531--Passenger Automobile Average Fuel Economy 
Standards.
    Need for Information: This information is needed to determine the 
domestic and non-domestic automobile fleets for CAFE computation 
purposes. The NAFTA Implementation Act's provision for the treatment of 
Mexican content permits certain manufacturers to elect the model year 
for which Mexican content in their automobiles will be treated as 
domestic content.
    Proposed Use of Information: The information would advise the EPA 
Administrator that a manufacturer has made an election as to the model 
year in which it will consider Mexican content to be domestic content, 
thereby enabling the EPA Administrator to identify the manufacturer's 
domestic and non-domestic automobile fleets.
    Frequency: The agency estimates that manufacturers will report this 
information once as they prepare to consider Mexican content as 
domestic content.
    Burden Estimate: The agency estimates that a manufacturer may 
encounter a total burden of five to seven hours to prepare a letter 
stating that it is electing to count the Mexican content in its 
passenger automobile fleet as domestic content. Seventeen manufacturers 
are eligible to make this election. Accordingly, the agency estimates 
the total burden hours to be 85 to 119.
    Respondents: There are 20 manufacturers, but only 17 are eligible 
to make an election. The other three manufacturers produce only light 
trucks, and light truck fleets are not divided into domestic and non-
domestic fleets for CAFE purposes.
    Form(s): Not applicable.
    Average burden hours per respondent: The agency estimates that a 
manufacturer may experience a total burden of five to seven hours to 
prepare a letter stating its intent to include Mexican content as 
domestic content in its passenger automobile fleet.
    Average burden cost per respondent: The agency estimates that a 
manufacturer may incur a cost of $200 to $300 to comply with this 
requirement. This cost includes the salary of its personnel to review 
this requirement, to examine its passenger automobile fleet content 
data, and to prepare and send the letter advising EPA and NHTSA 
Administrators of the manufacturer's election.
    Individuals and organizations may submit comments on the 
information collection requirements by June 18, 1999. The reporting and 
recordkeeping requirements associated with this final rule will be 
submitted to OMB for approval in accordance with the Paperwork 
Reduction Act (Pub. L. 104-13). The agency believes that the amendment 
made by this rule will result in a minimal increase in the paperwork 
burden for vehicle manufacturers and suppliers.

F. Civil Justice Reform

    This rule will not have any retroactive effect and does not preempt 
any State law. The rule does not require submission of a petition for 
reconsideration or other administrative proceedings before parties may 
file suit in court.

[[Page 27203]]

G. Notice and Comment

    NHTSA finds that prior notice and opportunity for comment are 
unnecessary under 5 U.S.C. 553(b)(3)(B) because this action requires 
only that manufacturers provide notice of elections they are making 
with regard to the inclusion of value added in Mexico. It does not 
affect a manufacturer's ability to make an election or the timing its 
election. In view of the negligible impacts of the rule, the agency 
finds there is good cause to issue the rule without prior notice and 
opportunity for comment.

List of Subjects in 49 CFR Part 531

    Energy conservation, Fuel economy, Gasoline, Imports, Labeling, 
Motor vehicles, Reporting and recordkeeping requirements.

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

PART 531--PASSENGER AUTOMOBILE AVERAGE FUEL ECONOMY STANDARDS

    1. The authority citation for Part 531 is revised to read as 
follows:

    Authority: 49 U.S.C. 32902, 49 U.S.C. 32904; Delegation of 
authority at 49 CFR 1.50.

    2. Section 531.6(b) is added to read as follows:


Sec. 531.6  Measurement and calculation procedures.

* * * * *
    (b) A manufacturer that is eligible to elect a model year in which 
to include value added in Mexico as domestic value, under subparagraphs 
(B)(i) and (B)(iii) of 49 U.S.C. 32904(b)(3), shall notify the 
Administrators of the Environmental Protection Agency and the National 
Highway Traffic Safety Administration of its election not later than 60 
days before it begins production of automobiles for the model year. If 
an eligible manufacturer does not elect a model year before January 1, 
2004, any value added in Mexico will be considered domestic value for 
automobiles manufactured in the next model year beginning after January 
1, 2004, and in subsequent model years.

    Issued on: May 10, 1999.
L. Robert Shelton,
Associate Administrator for Safety Performance Standards.
[FR Doc. 99-12607 Filed 5-18-99; 8:45 am]
BILLING CODE 4910-59-P