[Federal Register Volume 65, Number 124 (Tuesday, June 27, 2000)]
[Notices]
[Pages 39614-39615]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-16180]


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ENVIRONMENTAL PROTECTION AGENCY

[FRL-6725-7]


Regulatory Reinvention (XL) Pilot Projects; Project XL Proposed 
Final Project Agreement: Progressive Insurance Company

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of availability of the Project XL Proposed Final Project 
Agreement: Progressive Insurance Project--Pay-as-you-Drive Auto 
Insurance.

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SUMMARY: EPA is requesting comments on a proposed Project XL Final 
Project Agreement (FPA) for the Progressive Auto Insurance Company 
(hereafter ``Progressive''). The FPA is a voluntary agreement developed 
collaboratively by Progressive and the EPA.

DATES: Comments are due on or before July 11, 2000.

[[Page 39615]]


ADDRESSES: All comments on the proposed FPA should be sent to: Janet 
Murray, EPA Headquarters, Ariel Rios Building, 1200 Pennsylvania 
Avenue, mail code 1802, Washington DC 20460. Comments may also be faxed 
to Ms. Murray at (202) 260-3125. Comments may also be received via 
electronic mail sent to: [email protected].

FOR FURTHER INFORMATION CONTACT: To obtain a copy of the proposed FPA 
or a Fact Sheet, contact: Janet Murray, EPA Headquarters, Ariel Rios 
Building, 1200 Pennsylvania Avenue, mail code 1802, Washington DC 
20460. The FPA and related documents are also available via the 
Internet at http://www.epa.gov/ProjectXL. Questions to EPA regarding 
the documents can be directed to Janet Murray at (202) 260-7570. To be 
included on the Progressive Project XL mailing list for information 
about future meetings, or XL Progress Reports, contact Janet Murray at 
(202) 260-7570. Information on other aspects of Project XL, 
descriptions of other XL projects and proposals, and application 
information is available via the Internet at http://www.epa.gov/ProjectXL.

SUPPLEMENTARY INFORMATION: Project XL, first announced in the Federal 
Register on May 23,1995 (60 FR 27282), gives regulated entities the 
flexibility to develop alternative strategies that will replace or 
modify specific regulatory or procedural requirements on the condition 
that they produce greater environmental benefits. EPA has set a goal of 
implementing fifty XL projects in full partnership with the states.
    The Progressive Insurance Company has piloted a new type of 
voluntary auto insurance program in the state of Texas. Most auto 
insurance rates are based on a number of factors, including: age, sex, 
marital status, and where the driver lives, while more specific 
information about customer driving patterns such as mileage driven, 
time of day and location of driving, are generally not taken into 
account because of the difficulty involved in monitoring and tracking 
the information. In response to this, Progressive has worked 
cooperatively with a technology firm to install in their customers' 
vehicles a global positioning system device which, in addition to 
providing personal security, and roadside and directional assistance, 
also monitors a number of other factors, including: time of day, amount 
of driving, and estimated geographic location of driving. The company 
can then use these additional factors in its ``Autograph'' Program in 
determining auto insurance rates which are more specific to 
individuals' driving habits.
    It has been estimated that roughly 80% of an individual's 
transportation costs are fixed once one purchases a car; that is, 80% 
of costs remain the same on a monthly basis regardless of how much or 
how little one drives. With the Progressive system, some of the fixed 
costs now become variable costs which will be influenced by the 
customer's monthly driving activity.
    By offering this product, Progressive is providing its customers a 
financial incentive to drive less and choose alternate forms of 
transportation, such as public transit or walking, and in so doing 
reduce the negative environmental impact resulting from higher levels 
of automobile usage. In this XL Project, EPA will initiate a study to 
determine the environmental impact of this insurance product.
    While the company has not yet directly measured environmental 
impacts, if consumers respond to the increased per mile cost of driving 
resulting from converting automotive insurance from a fixed to variable 
cost the same way they do to the increased per mile cost of driving 
resulting from fuel price increases, a significant reduction in driving 
would be expected. Initial cost figures appear to show that drivers are 
paying close attention to their driving patterns and the information 
supplied to them by the company, in order to minimize their insurance 
costs.
    The focus of this XL Project is an analytical study, which will 
determine the extent to which the Progressive Program has an effect on 
the environment. EPA, in partnership with USDOT and the Insurance 
Institute for Highway Safety, is developing a study methodology to 
determine if indeed the anecdotal evidence is accurate, and drivers are 
driving less as a result of their participation in the program. EPA's 
interest in the program derives from the possibility that insurance 
pricing plans like Autograph might alter driving habits, as well as 
distinguish existing differences in habits, as drivers learn how their 
driving habits affect their costs. Recognizing that factors such as 
total driving and driving during congested traffic periods, can also 
affect air quality, EPA is interested in whether people who sign up for 
a voluntary program like Autograph will reduce their total driving or 
their driving during congested periods.
    Reducing vehicle miles traveled (VMT) is essential to promoting 
many of EPA's environmental objectives. U.S. travel is responsible for 
a substantial portion of U.S. ozone precursor emissions (31% of 
volatile organic compounds and 36% of nitrogen oxides) 61% of 
nationwide carbon monoxide emissions, and 31% of carbon dioxide 
emissions. Reducing VMT is a fundamental strategy in addressing the 
full range of environmental harms related to travel.
    The company has already piloted the technology and the insurance 
product. Progressive's commitment to this XL Project involves making 
available to EPA, aggregated data on participants' driving mileage and 
times of day that participants are driving. This will allow the Agency 
to analyze Progressive's data and make determinations regarding 
increases or decreases in driving mileage in response to the use of 
this product.
    The public comment period on this project will be 14 days.

    Dated: June 21, 2000.
Elizabeth Shaw,
Deputy Associate Administrator for Reinvention Programs.
[FR Doc. 00-16180 Filed 6-26-00; 8:45 am]
BILLING CODE 6560-50-P