[Federal Register Volume 64, Number 250 (Thursday, December 30, 1999)]
[Proposed Rules]
[Pages 73476-73479]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33803]


-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 531

[NHTSA-99-6676]


Passenger Automobile Average Fuel Economy Standards; Proposed 
Decision to Grant Exemption

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

ACTION: Proposed decision.

-----------------------------------------------------------------------

SUMMARY: This proposed decision responds to a petition filed by 
DeTomaso Automobiles, Ltd. (DeTomaso) requesting that it be exempted 
from the generally applicable average fuel economy standard of 27.5 
miles per gallon (mpg) for model years 2000 and 2001, and that, for 
DeTomaso, lower alternative standards be established. In this document, 
NHTSA proposes that the requested exemption be granted to DeTomaso and 
that alternative standards of 22.0 mpg be established for MY's 2000 and 
2001.

DATES: Comments on this proposed decision must be received on or before 
January 31, 2000.

ADDRESSES: Comments on this proposal must refer to the docket number 
and notice number in the heading of this notice and be submitted, 
preferably in ten copies, to: Docket Section, Room 5109, National 
Highway Traffic Safety Administration, 400 Seventh Street, SW., 
Washington, DC 20590. Docket hours are 9:30 a.m. to 4 p.m., Monday 
through Friday.

FOR FURTHER INFORMATION CONTACT: Mr. Sanjay Patel, Office of Planning 
and Consumer Programs, NHTSA, 400 Seventh Street, S.W., Washington, DC 
20590. Mr. Patel's telephone number is: (202) 366-0307.

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.

Background Information on DeTomaso

    DeTomaso Automobiles, Ltd. is a Delaware Corporation under common 
ownership with DeT. Auto Srl., an Italian corporation that produces 
DeTomaso automobiles in Italy and distributes them worldwide. These 
DeTomaso automobiles are produced under a license granted by DeTomaso 
Modena SpA., an Italian corporation owned by Alejandro DeTomaso. DeT 
Auto Srl. and DeTomaso Automobiles Ltd. produce fewer than 10,000 cars 
worldwide each year and are not owned by, or under common control with, 
any other auto company.
    The DeTomaso marque has always provided high performance through 
technology and weight reduction. DeTomaso vehicles were last exported 
to the United States in the late 1970's. The number of vehicles 
imported annually at that time was quite small. DeTomaso traditionally 
produces fewer than 2000 vehicles each year.
    For the 2000 and 2001 model years, DeTomaso's product-line for the 
U.S. market consists of the DeTomaso Mangusta, a two-seat convertible 
sports car powered by a 4.6 liter Ford V-8. This model will be the only 
vehicle imported by DeTomaso and the company projects that it will 
import 300 vehicles for MY 2000 and 500 vehicles for MY 2001. These 
projected sales volumes are consistent with its status as a low volume 
importer.

The DeTomaso Petition

    NHTSA's regulations on low volume exemptions from CAFE standards 
state that petitions for exemption are submitted ``not later than 24 
months before the beginning of the affected model year, unless good 
cause for later submission is shown.'' (49 CFR 525.6(b).)
    NHTSA received a joint petition from DeTomaso Automobiles Ltd. 
(DeTomaso) on June 20, 1998, seeking exemption from the passenger 
automobile fuel economy standards for MYs 2000-2001. This joint 
petition was filed less than 24 months before the beginning of MYs 2000 
and 2001 and was therefore untimely under 49 C.F.R. 526.6(b). DeTomaso 
indicates that its decision to enter the U.S. market for MY

[[Page 73477]]

2000 was not made until early 1999 after it reached an agreement with 
Ford that allowed DeTomaso to use a U.S. built and certified powerplant 
and drivetrain in the Mangusta.
    Under the circumstances, NHTSA concludes that DeTomaso took 
reasonable measures to submit a petition in as timely a manner as 
possible. The agency notes that DeTomaso's ability to enter the U.S. 
market apparently hinged on obtaining a U.S. powerplant for the 
Mangusta. This, according to DeTomaso, was not possible or feasible 
until it reached an agreement with Ford to provide the required engine. 
Therefore, the agency has determined that good cause exists for the 
late submission of the petition.

Methodology Used to Project Maximum Feasible Average Fuel Economy 
Level for DeTomaso

Baseline Fuel Economy

    To project the level of fuel economy which could be achieved by 
DeTomaso in the 2000 and 2001 model years, NHTSA considered whether 
there were technical or other improvements that would be feasible for 
these vehicles, and whether the company currently plans to incorporate 
such improvements in the vehicles. The agency reviewed the 
technological feasibility of any changes and their economic 
practicability.
    NHTSA interprets ``technological feasibility'' as meaning that 
technology which would be available to DeTomaso for use on its 2000 and 
2001 model year automobiles, and which would improve the fuel economy 
of those automobiles. The areas examined for technologically feasible 
improvements were weight reduction, aerodynamic improvements, engine 
improvements, drive line improvements, and reduced rolling resistance.
    The agency interprets ``economic practicability'' as meaning the 
financial capability of the manufacturer to improve its average fuel 
economy by incorporating technologically feasible changes to its 2000 
and 2001 model year automobiles. In assuming that capability, the 
agency has always considered market demand as an implicit part of the 
concept of economic practicability. Consumers need not purchase what 
they do not want.
    In accordance with the concerns of economic practicability, NHTSA 
has considered only those improvements which would be compatible with 
the basic design concepts of DeTomaso automobiles. Since NHTSA assumes 
that DeTomaso will continue to build high performance cars, design 
changes that would remove items traditionally offered on these cars 
were not considered. Such changes to the basic design would be 
economically impracticable since they might well significantly reduce 
the demand for these automobiles, thereby reducing sales and causing 
significant economic injury to the low volume manufacturer.

Technology for Fuel Economy Improvement

    The nature of DeTomaso vehicles generally do not result in high 
fuel economy values. Also, DeTomaso lags in having the latest 
developments in fuel efficiency technology because suppliers generally 
provide components and technology to small manufacturers only after 
supplying large manufacturers.
    DeTomaso states that the requested alternative fuel economy values 
represent the best possible CAFE that DeTomaso can achieve for the 2000 
and 2001 model years. For MYs 2000 and 2001, DeTomaso stated that the 
fuel economy value of 22.0 mpg represents the best possible CAFE that 
it can achieve. DeTomaso has produced small lightweight innovative 
sports vehicles for more than 40 years. Performance is achieved through 
obtaining maximum output per unit of engine displacement and the use of 
lightweight aerodynamic body designs. The vehicle's compact dimensions 
provide efficient performance coupled with a strong and relatively 
light-weight aerodynamic body construction.
    The current DeTomaso Mangusta engine, the Ford Cobra 4.6 litre V-8 
is a relatively new design. The engine uses four valves per cylinder to 
obtain both maximum output and efficiency and relies on a sophisticated 
engine management system and fuel injection to increase efficiency and 
reduce emissions. The engine provides a high power/torque package that 
is a very efficient balance of fuel economy versus engine power.
    Because of DeTomaso's financial constraints and its limited 
resources, the manufacturer must use an engine and transmission that is 
produced by Ford. Therefore, DeTomaso's ability to obtain further fuel 
economy improvements from engine and drivetrain modifications is quite 
limited. The Mangusta chassis/body configuration is small, aerodynamic 
and lightweight, so further fuel economy improvements through changes 
to the chassis and body also appear to be limited.

Model Mix

    DeTomaso is a small vehicle manufacturer that produces a modest 
range of high performance exotic sport vehicles. There is little 
opportunity to improve fuel economy by changing model mix since 
DeTomaso will make only one basic model in each model year.

Effect of Other Federal Motor Vehicle Standards

    The new, stringent California emission standards and the similarly 
stringent Federal Clean Air Act Amendments will apply to DeTomaso in 
MYs 2000 and 2001. DeTomaso will likely achieve lower fuel economy due 
to compliance with these standards. In addition, a portion of its 
limited engineering resources will have to be expended to comply with 
these more stringent emissions standards including, but not limited to, 
evaporative emission standards.
    Federal motor vehicle safety standards (FMVSS) and regulations also 
have an adverse effect on the fuel economy of DeTomaso vehicles. These 
standards include 49 CFR Part 581 (energy absorbing bumpers), FMVSS 202 
(head restraints), FMVSS 207(seating systems), FMVSS 208 (occupant 
crash protection), FMVSS 214 (side door strength), and FMVSS 216 (roof 
crush resistance). These standards tend to reduce achievable fuel 
economy values, since they result in increased vehicle weight.
    DeTomaso is a small company and engineering resources are limited. 
Priority must be given to meeting mandatory standards to remain in the 
marketplace.

The Need of the United States to Conserve Energy

    The agency recognizes there is a need to conserve energy, to 
promote energy security, and to improve balance of payments. However, 
as stated above, NHTSA has tentatively determined that it is not 
technologically feasible or economically practicable for DeTomaso to 
achieve an average fuel economy in MYs 2000 and 2001 above the levels 
set forth in this proposed decision. Granting an exemption to DeTomaso 
and setting an alternative standard at that level would result in only 
a negligible increase in fuel consumption and would not affect the need 
of the United States to conserve energy. In fact, there would not be 
any increase since DeTomaso cannot attain those generally applicable 
standards. Nevertheless, the agency estimates that the additional fuel 
consumed by operating the MYs 2000 and 2001 fleets of DeTomaso vehicles 
at the CAFE of 22.0 mpg (compared to an hypothetical 27.5 mpg fleet) is 
25,803 barrels of fuel. This value averages about 3.54 barrels/

[[Page 73478]]

day over the 20-year period that these vehicles will be an active part 
of the fleet. Obviously, this is insignificant compared to the fuel 
used daily by the entire motor vehicle fleet which amounts to 4.81 
million barrels per day for passenger cars in the United States in 
1994.

Maximum Feasible Average Fuel Economy for DeTomaso

    The agency has tentatively concluded that it would not be 
technologically feasible and economically practicable for DeTomaso to 
improve the fuel economy of its MY 2000 and 2001 fleet above an average 
of 22.0 mpg for MY 2000 and MY 2001. Federal automobile standards would 
not adversely affect achievable fuel economy beyond the amount already 
factored into DeTomaso' projections, and that the national effort to 
conserve energy would not be affected by granting the requested 
exemption and establishing an alternative standard.
    Consequently, the agency tentatively concludes that the maximum 
feasible average fuel economy for DeTomaso is 22.0 for MYs 2000 and 
2001.
    Chapter 329 permits NHTSA to establish an alternative average fuel 
economy standard applicable to exempted manufacturers in one of three 
ways:(1) A separate standard may be established for each exempted 
manufacturer; (2) classes, based on design, size, price or other 
factors, may be established for the automobiles of exempted 
manufacturers, with a separate fuel economy standard applicable to each 
class; or (3) a single standard may be established for all exempted 
manufacturers. The agency tentatively concludes that it would be 
appropriate to establish a separate standard for DeTomaso.
    While the agency has the option of establishing a single standard 
for all exempted manufacturers, we note that previous exemptions have 
been granted to manufacturers of high-performance cars, luxury cars and 
specialized vehicles for the transportation of persons with physical 
impairments. The agency's experience in establishing exemptions 
indicates that selection of a single standard would be inappropriate. 
Such a standard would have little impact on energy conservation while 
doing little to ease the burdens faced by small manufacturers who 
cannot meet the fuel economy standards applicable to larger 
manufacturers. Similarly, the agency is not proposing to establish 
alternative standards based on different classes of vehicles. Again, 
the agency's experience has been that vehicles manufactured by low 
volume manufacturers may differ widely in size, price, design or other 
factors. Based on the information available at this time, we do not 
believe it would be appropriate to establish class-based alternative 
standards.

Regulatory Impact Analyses

    NHTSA has analyzed this proposal and determined that neither 
Executive Order 12866 nor the Department of Transportation's regulatory 
policies and procedures apply. Under Executive Order 12866, the 
proposal would not establish a ``rule,'' which is defined in the 
Executive Order as ``an agency statement of general applicability and 
future effect.'' The proposed exemption is not generally applicable, 
since it would apply only to DeTomaso Automobiles Ltd., as discussed in 
this notice. Under DOT regulatory policies and procedures, the proposed 
exemption would not be a ``significant regulation.'' If the Executive 
Order and the Departmental policies and procedures were applicable, the 
agency would have determined that this proposed action is neither major 
nor significant. The principal impact of this proposal is that the 
exempted company would 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 proposal sets an 
alternative standard at the level determined to be the maximum feasible 
levels for DeTomaso for MYs 2000 and 2001, 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 DeTomaso fleet, that incremental usage of 
gasoline by DeTomaso's customers would not affect the United States's 
need to conserve gasoline. There would not be any impacts for the 
public at large.
    The agency has also considered the environmental implications of 
this proposed exemption in accordance with the Environmental Policy Act 
and determined that this proposed exemption if adopted, would 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 proposed exemptions 
and alternative standards. Further, since the exempted passenger 
automobiles cannot achieve better fuel economy than is proposed herein, 
granting these proposed exemptions would not affect the amount of fuel 
used.
    Interested persons are invited to submit comments on the proposed 
decision. It is requested but not required that 10 copies be submitted.
    All 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 business 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 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 
under 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 531

    Energy conservation, Gasoline, Imports, Motor vehicles.

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

[[Page 73479]]

PART 531--[AMENDED]

    1. The authority citation for part 531 would be revised to read as 
follows:

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

    2. In section 531.5, the introductory test of paragraph (b) is 
republished for the convenience of the reader and paragraph (b)(13) 
would be revised 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) DeTomaso Cars Ltd.

                      Average Fuel Economy Standard
------------------------------------------------------------------------
                                                              (Miles per
                         Model year                            gallon)
------------------------------------------------------------------------
2000.......................................................         22.0
2001.......................................................         22.0
------------------------------------------------------------------------

    Issued on: December 23, 1999.
Stephen R. Kratzke,
Acting Associate Administrator for Safety Performance Standards.
[FR Doc. 99-33803 Filed 12-29-99; 8:45 am]
BILLING CODE 4910-59-P