[Federal Register Volume 67, Number 65 (Thursday, April 4, 2002)]
[Rules and Regulations]
[Pages 16052-16060]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-8122]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 533

[Docket No. NHTSA-2001-11048]
RIN 2127-AI68


Light Truck Average Fuel Economy Standard, Model Year 2004

ACTION: Final rule.

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SUMMARY: This final rule establishes the average fuel economy standard 
for light trucks manufactured in the 2004 model year. Chapter 329 of 
Title 49 of the United States Code requires the issuance of this 
standard. The standard for all light trucks manufactured by a 
manufacturer is set at 20.7 mpg for the 2004 model year.

DATES: The amendment is effective May 6, 2002. Petitions for 
reconsideration must be submitted within 30 days of publication.

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

[[Page 16053]]


FOR FURTHER INFORMATION CONTACT: For non-legal issues, call Ken Katz, 
Office of Planning and Consumer Programs, at (202) 366-0846, facsimile 
(202) 493-2290, electronic mail [email protected]. For legal issues, 
call Otto Matheke, Office of the Chief Counsel, at 202-366-5263.

SUPPLEMENTARY INFORMATION:   

Table of Contents

I. Background
II. Summary of Decision
III. Comments in Response to the NPRM
IV. Technological Feasibility
V. Effect of Other Federal Standards on Fuel Economy
    A. Safety Standards
    1. FMVSS 138
    2. FMVSS 201
    3. FMVSS 225
    4. FMVSS 139
    B. Emissions Standards
    1. Tier II Requirements
    2. Onboard Vapor Recovery
    3. Supplemental Federal Test Procedure
    4. California Air Resources Board LEV II
    5. Section 177 States
VI. The Need of the Nation to Conserve Energy
VII. Economic Practicability
VIII. Determining the Maximum Feasible Average Fuel Economy Level
    A. Interpretation of ``Feasible''
    B. Industry-wide Considerations
    C. Petroleum Consumption
    D. The 2004 model year Standard
IX. Rulemaking Analyses and Notices
    A. Economic Impacts
    B. Environmental Impacts
    C. Energy Impacts
    D. Impacts on Small Entities
    E. Federalism
    F. The Unfunded Mandates Reform Act
    G. Paperwork Reduction Act
    H. Regulation Identifier Number (RIN)
    I. Plain Language
    J. Executive Order 13045
    K. National Technology Transfer and Advancement Act
    L. Department of Energy Review

I. Background

    In December 1975, during the aftermath of the energy crisis created 
by the oil embargo of 1973-74, Congress enacted the Energy Policy and 
Conservation Act. Congress included a provision in that Act 
establishing an automotive fuel economy regulatory program. That 
provision added a new title, title V, ``Improving Automotive 
Efficiency,'' to the Motor Vehicle Information and Cost Saving Act (the 
Act). Title V provides for the establishment of average fuel economy 
standards for cars and light trucks. Title V has been codified without 
substantive change as Chapter 329 of Title 49 of the United States 
Code.
    Section 32902(a) of Chapter 329 requires the Secretary of 
Transportation to issue light truck fuel economy standards for each 
model year. Standards are required to be set at least 18 months prior 
to the beginning of the model year. The Act provides that the fuel 
economy standards are to be set at the maximum feasible average fuel 
economy level. In determining maximum feasible average fuel economy 
level, the Secretary is required under section 32902(f) of the Act to 
consider four factors: technological feasibility; economic 
practicability; the effect of other Federal motor vehicle standards on 
fuel economy; and the need of the nation to conserve energy. (The 
Secretary of Transportation delegated responsibility for the automotive 
fuel economy program to the Administrator of NHTSA (41 FR 25015, June 
22, 1976)).
    From 1995 until very recently, the standards-setting process for 
light truck CAFE standards was affected by restrictions imposed in the 
Department of Transportation's annual Appropriations Acts. These Acts 
provided that none of the funds were available to prepare, propose, or 
promulgate any regulations prescribing CAFE standards in any model year 
that differed from standards previously promulgated. This meant that 
the agency was unable to spend any funds for the collection and 
analysis of data relating to CAFE levels. During this time period, the 
agency established the required light truck CAFE standards at the level 
of 20.7 mpg, the level of the last light truck CAFE standard it had 
previously promulgated under the usual statutory criteria. Because we 
had no other course of action, we determined that issuing notices of 
proposed rulemaking (NPRMs) during this time period was unnecessary and 
contrary to the public interest.
    On July 10, 2001, U.S. Secretary of Transportation Mineta sent a 
letter to Congress requesting that the Department be allowed to begin 
the rulemaking process for future CAFE standards immediately. The 
restrictions ended with the enactment of the Department of 
Transportation and Related Agencies Appropriations Act for FY 2002. 
However, this did not take place until December 18, 2001, a time so 
close to the April 1, 2002 date by which the MY 2004 light truck CAFE 
standard must be issued as to preclude the agency from preparing the 
customary detailed factual and analytical foundation for a CAFE 
rulemaking.
    On January 24, 2002, we published in the Federal Register (67 FR 
3470) an NPRM to establish the MY 2004 light truck fuel economy 
standard at 20.7 mpg, the level of the MY 1996-2003 standards. This 
proposed standard reflected the absence of any current information or 
analysis regarding the impact of any change in CAFE standards and the 
capabilities of manufacturers. We nonetheless invited comments on the 
maximum feasible level of average fuel economy, including comments as 
to whether motor vehicle manufacturers could, with the limited leadtime 
available and product plans essentially established, achieve a level 
higher than 20.7 mpg in MY 2004.
    We note that on February 7, 2002, we published in the Federal 
Register (67 FR 5767) a request for comments relating to a variety of 
issues concerning fuel economy improvements for MY 2005-2010. The 
purpose of this request is to acquire detailed information to assist 
the agency in developing a proposal for model years beyond 2004. In 
that document, we also requested comments concerning the recent 
National Academy of Sciences (NAS) study on the effectiveness and 
impact of CAFE standards. Through the request for comments and other 
means we anticipate preparing the customary detailed factual and 
analytical foundation for establishing fuel economy standards in future 
years.
    In response to the January 24, 2002 NPRM concerning the MY 2004 
light truck CAFE standard, the agency received comments from General 
Motors (GM), Ford, DaimlerChrysler (DC), the National Automobile 
Dealers Association (NADA), a number of public interest groups, 
including Public Citizen, and one religious organization.

II. Summary of Decision

    Based on our analysis, we are establishing an average fuel economy 
standard of 20.7 mpg for MY 2004 light trucks. As we indicated in the 
NPRM, we were precluded from collecting and analyzing information 
regarding potential changes in fuel economy standards from 1995 to mid-
December 2001. This factor, along with the statutory requirement to 
issue the 2004 model year standard not less than 18 months before the 
model year begins, limited the information we were able to gather and 
the analysis we were able to perform in setting the MY 2004 standard. 
Additionally, we note that the relatively short leadtime for the 2004 
model year precludes significant changes beyond those that 
manufacturers have already planned.
    In evaluating manufacturers' fuel economy capabilities for the 2004 
model year, we have been largely restricted to publicly available 
information, the information contained in the manufacturer comments 
submitted in

[[Page 16054]]

response to the NPRM, and the information contained in comments 
submitted by other interested parties. As the agency was foreclosed 
until mid-December 2001 from collecting the detailed information 
regarding manufacturer capabilities and product capabilities that are 
required to perform an in-depth analysis of manufacturer capabilities, 
future product plans, and the measures that can be implemented to 
improve fuel economy that are normally examined in the process of 
establishing fuel economy standards, much of our analysis is based on 
the comments submitted by vehicle manufacturers. Nonetheless, we have 
analyzed the information available to us and applied the four factors 
we are required by statute to consider in determining the maximum 
feasible fuel economy level for the 2004 model year.

III. Comments in Response to the NPRM

    NHTSA received approximately 130 public comments in response to the 
NPRM. Private citizens submitted the overwhelming majority of these 
comments. As indicated above, Ford, GM, and DC submitted comments. 
While these manufacturers produce the majority of light trucks sold in 
the United States, a number of other light truck producers, including 
Nissan and Toyota, did not submit comments. Similarly, smaller light 
truck manufacturers, who would also be affected by the 2004 model year 
standard, did not provide comments. Comments were also received from 
the National Automobile Dealers Association (NADA), Public Citizen, 
Frontiers of Freedom (FOF), The Small Business Survival Committee 
(SBSC) and The Environmental Ministries of Southern California (EMSC).
    Most of the commenters supported establishing the 2004 light truck 
standard at a higher level than the 20.7 mpg level proposed in the 
NPRM. Individuals submitted the majority of the comments supporting a 
higher standard. Many of these individual commenters also supported 
higher CAFE standards for passenger cars as well, advocated a single 
standard for cars and trucks to close what was commonly referred to as 
the ``SUV Loophole,'' and cited the existence of hybrid vehicles and 
other technological developments as evidence that manufacturers can 
achieve higher light truck CAFE levels. Some of these commenters 
suggested specific CAFE levels for MY 2004, while others suggested 
future levels and the timeframe for achieving these levels. Individuals 
advocating an increase in the standard cited a number of reasons in 
support of an increase, including environmental, energy and national 
security concerns. Approximately 15 of the commenters specifically 
mentioned the events of September 11th and reliance on imported 
petroleum as support for increasing CAFE levels. Private individuals 
who did not support an increase in the light truck fuel economy 
standard indicated their belief that increases in light truck fuel 
economy would result in decreased safety, reduced utility of light 
vehicles, a reduced number of available light trucks, and prevent 
vehicle manufacturers from providing sufficiently powerful vehicles to 
serve as tow vehicles and work trucks.
    Among the trade associations, public interest, and religious groups 
submitting comments, three--NADA, FOF, and SBSC--agreed with the 
proposed 2004 standard or advocated a lower standard. The FOF and SBSC 
cited safety concerns and the economic effects of raising the standard 
beyond 20.7 mpg as support for not increasing the standard. In 
addition, FOF stated that Americans living in rural areas have a 
particular need for sufficiently large and powerful trucks for work, 
farming and recreation. NADA argued that increasing the standard would 
also cause economic hardship and would conflict with consumer demand 
for larger and more powerful vehicles.
    Public Citizen and EMSC disagreed with the agency's proposal. EMSC 
argued that small increases in fuel economy are technologically 
feasible and desirable. In particular, EMSC argued that hybrid 
technology used in cars could be applied to light trucks.
    Public Citizen argued that the auto industry has the capacity to 
sell a fleet with an average fuel economy well above the current 
standard, even within the time constraints imposed by the rulemaking 
process. In support of this argument, Public Citizen stated that, in 
July 2000, Ford announced that it planned to improve the average fuel 
economy of its SUV fleet by 25 percent by 2005. Public Citizen also 
stated that General Motors and DC echoed that pledge. Assuming that the 
industry was continuing to adhere to those pledges, Public Citizen 
stated that manufacturers could comply with a 2004 standard above 20.7 
mpg and advocated that the agency set it at 21.5 mpg or, in the 
alternative, at 20.9 mpg.
    Public Citizen stated that certain technological improvements could 
be made that would improve fuel efficiency. Citing suggestions made by 
the Union of Concerned Scientists (UCS) in its report ``Drilling in 
Detroit--Tapping Automaker Ingenuity to Build Safe and Efficient 
Automobiles,'' Public Citizen argued that drivetrain improvements, 
reductions in parasitic losses, decreased rolling resistance and other 
new technologies could be applied to improve efficiency. Even in the 
short term, according to Public Citizen, small gains could be made if 
optional equipment was removed from vehicles that are using 
increasingly efficient engines and transmissions. In addition, although 
acknowledging that NHTSA had been constrained by Congress in the past, 
Public Citizen contended that the agency proposal represented an 
abdication of the agency's statutory duty to set fuel economy standards 
at the maximum feasible level.
    The comments submitted by DC, Ford and GM all supported the 
agency's proposal. DC stated it agreed that NHTSA did not, in the case 
of the 2004 light truck standard, have sufficient time to collect and 
analyze any new data. The company also indicated that the design and 
configuration of its product line for the 2004 model year could not be 
modified to add any technologies to improve fuel efficiency. In 
addition, DC strongly supported extension of the dual-fuel vehicle 
credit program and noted that the continuation of this program would 
have an impact on the company's ability to meet the 2004 model year 
standard. Finally, citing the National Academy of Sciences CAFE report, 
DC stated that any modifications to the existing standard of 20.7 mpg 
would have to be based on a realistic assessment of the lead time 
needed by vehicle manufacturers to institute design changes to improve 
fuel economy. Given what was described as an inability to accommodate 
any change in the 2004 light truck fuel economy standard, DC stated 
that any changes to the light truck CAFE standard would have a severe 
financial impact and could cause the company to reduce product 
offerings, close plants, and lay-off workers.
    Ford also supported the agency's proposal, arguing that 20.7 mpg is 
the maximum feasible light truck CAFE standard for the 2004 model year. 
Ford concurred in NHTSA's assertion that events did not leave the 
agency in a position to collect and analyze any new data. Moreover, 
Ford stated that its 2004 product plans are now fixed and that it would 
be impossible to add any fuel economy related technology to its 2004 
vehicles. The company also stated that any increase in CAFE standards 
for the 2004 model year would degrade Ford's financial health and cause 
them to reduce product offerings.

[[Page 16055]]

    GM also stated that it could not achieve a light truck CAFE higher 
than 20.7 mpg in the 2004 model year. In fact, GM said that it projects 
that the average fuel economy of its 2004 light truck fleet will be 
lower than 20.7 mpg, if CAFE credits resulting from its dual fuel 
vehicles are excluded. It did not, however, quantify the possible 
shortfall or explain the reasons for it. As is the case with the other 
manufacturers submitting comments, GM stated that its product lines and 
final designs for the 2004 model year are already fixed and not 
susceptible to change. GM also stated that it believed that sufficient 
time did not exist for NHTSA to gather data and perform analysis 
sufficient to show that a standard higher than 20.7 mpg is feasible. GM 
contrasted the limited information in the record for this rulemaking 
with the extensive information that NHTSA recently requested to aid it 
in addressing the light truck fuel economy standards for the 2005-2010 
model years. (67 FR 5767)

IV. Technological Feasibility

    One of the factors that Section 32902(f) directs NHTSA to consider 
in establishing fuel economy standards is the technological feasibility 
of the improvements in fuel efficiency that are required for 
manufacturers to meet that standard. As NHTSA has been foreclosed from 
collecting detailed information regarding manufacturer capabilities, it 
may only consider the potential for technological improvements in a 
general fashion. As a number of commenters have indicated, there are a 
number of technologies that offer promise for gains in fuel efficiency. 
These include hybrid-electric drive trains, integrated starter-
generators, variable valve timing, improved combustion management, 
aerodynamic improvements, reductions in friction losses, and advanced 
transmissions, including continuously variable transmissions (CVT's).
    In the absence of detailed information from vehicle manufacturers, 
including proprietary information that is not otherwise available, the 
agency is unable to determine which, if any, of these technologies are 
included in future product plans and either could or would be 
incorporated in 2004 model year trucks. NHTSA is aware, as Public 
Citizen pointed out in its comments, that Ford and other manufacturers 
pledged in 2000 to voluntarily improve SUV fuel efficiency by MY 2005. 
NHTSA does not know precisely which combination of measures these 
manufacturers contemplated using to meet this pledge or the degree to 
which increasing consumer demand for larger, heavier, and more powerful 
vehicles impacted on any assumptions that these pledges may have been 
based on. None of those manufacturers discussed the status of the 
pledges about SUV fuel economy in their comments. However, all of the 
manufacturers responding to the NPRM indicated that the maximum level 
of average fuel economy for all of their light trucks, not just their 
SUVs, for the 2004 model year would be 20.7 mpg.
    NHTSA does not possess the information required to analyze or 
question the assertions made by Ford, DC, and GM that the maximum 
average fuel economy their light truck fleets can achieve in the 2004 
model year is 20.7 mpg. As already noted, NHTSA lacks detailed 
information on the extent to which the manufacturers are using the 
various available fuel efficiency improving technologies in their 
current light truck models and the extent to which they plan to use 
them in the 2004 model year. Many commenters indicated a belief that 
manufacturers could achieve a higher level through the implementation 
of new technologies. However, NHTSA does not have the information 
necessary to determine if manufacturers can incorporate these 
technologies into their MY 2004 light trucks given the short leadtime.
    In fact, all the manufacturers stated that one constraint on their 
ability to improve fuel economy was the lack of leadtime for 
implementing improvements in fuel economy. The agency recognizes, as it 
has in the past, that the leadtime necessary to design tools and test 
components to implement a technological advance once the technology is 
deemed to be feasible is not less than 30 to 36 months (See 59 FR 
16313, April 6, 1994). This is further complicated by the long model 
lives of vehicles in the light truck segment. The lack of available 
leadtime before the beginning of the 2004 model year indicates that 
most, if not all, potential improvements in fuel efficiency that are 
not already designed into 2004 models could not now be used in these 
vehicles.
    Public Citizen also suggested that rather than use improvements in 
fuel efficiency to decrease fuel consumption, manufacturers have taken 
the opportunity to increase vehicle weight and content to boost sales 
and increase profits. If, as Public Citizen suggests, short-term gains 
in fuel economy could be gained by basing increases in the fuel economy 
standard on the removal of optional equipment, NHTSA has not had 
sufficient time or information to assess the feasibility, 
practicability or effectiveness of such an approach.

V. Effect of Other Federal Standards on Fuel Economy

    In determining the maximum feasible fuel economy level, the agency 
must take into consideration the potential effects of other Federal 
standards. The following section discusses other government 
regulations, both in process and recently completed, that may have an 
impact on fuel economy capability.

A. Safety Standards

1. FMVSS 138
    On July 26, 2001, NHTSA published in the Federal Register (66 FR 
38982) a notice of proposed rulemaking containing a proposal to require 
tire pressure monitoring systems on passenger cars, multipurpose 
vehicles, trucks, and buses with a gross vehicle weight rating of 
10,000 pounds or less. This proposal was issued in response to a 
requirement contained in the Transportation Recall Enhancement, 
Accountability and Documentation Act of 2000 (TREAD). The TREAD Act 
further requires that the tire pressure monitoring system requirements 
take effect two years after the final rule is issued. Although NHTSA 
has not yet issued this final rule, it anticipates doing so in the near 
future. Therefore, the tire pressure monitoring system requirements 
will apply to 2004 model year light trucks. In its Preliminary 
Regulatory Evaluation for the tire pressure monitoring system 
rulemaking, the agency estimated weight increases per vehicle 
associated with tire pressure monitoring systems as being not more than 
one pound. As this weight increase is negligible, the tire pressure 
monitoring system requirements are not likely to have any CAFE impact.
    We note that correct tire pressure improves a vehicle's fuel 
economy. Thus, the addition of tire pressure monitoring systems will 
improve real world fuel economy by warning drivers about tires that are 
significantly underinflated. This will not result in a CAFE improvement 
for manufacturers, however, as a vehicle's fuel economy for CAFE 
purposes is determined by a detailed test procedure that includes 
specifications for tire pressure.
2. FMVSS 201
    On April 5, 2000, NHTSA published in the Federal Register (65 FR 
17482) an NPRM proposing to modify test procedures and to extend the 
upper interior impact requirements of FMVSS 201 to certain door frames 
and seat belt mounting structures to passenger car, trucks, 
multipurpose vehicles, and buses with a GVWR of 10,000 pounds or less. 
The agency proposal specified that

[[Page 16056]]

the new requirements would become effective 180 days after publication 
of a final rule. The proposed extension would require that certain 
vertical surfaces on doors of vehicles with doors that close together 
without an intervening pillar and vertical seat belt mounting 
structures meet the same impact requirements applicable to the pillars 
found on more conventional designs.
    The agency has not yet issued a final rule. Comments received in 
response to the NPRM suggested that the proposed effective date did not 
provide sufficient leadtime for manufacturers to respond to the new 
requirements. This request for additional leadtime is presently under 
consideration by the agency. Although no determination has yet been 
made regarding this issue, the extension of the impact requirements to 
door frames and seat belt mounting structures could become effective 
before or during the 2004 model year. The safety countermeasures 
required to meet the upper interior impact requirements of FMVSS 201 do 
not impose a significant weight penalty. The agency's estimate of the 
additional weight required to meet the requirements of Standard 201 
contained in the Final Economic Assessment prepared at the time of the 
issuance of the final rule establishing the upper interior requirements 
(60 FR 43031) estimated an increase in total vehicle weight of 2.29 to 
5.59 pounds for installation of countermeasures in the entire vehicle. 
As the proposed extension of these requirements to door frames and seat 
belt mounting structures applies only to these discrete components 
rather than the entire upper interior, the weight penalty associated 
with installing countermeasures on these structures would be less than 
one pound per vehicle. This added weight will have a minimal impact on 
vehicle fuel economy.
3. FMVSS 225
    On March 5, 1999, NHTSA published in the Federal Register (64 FR 
10786) a final rule establishing a new safety standard requiring the 
installation of dedicated child restraint anchorage systems in 
passenger cars, multipurpose vehicles, and trucks with a GVWR of 8,500 
pounds or less and buses with a GVWR of 10,000 pounds or less. On July 
31, 2000, NHTSA published a response to petitions for reconsideration 
of the March 5, 1999 final rule that extended the effective date of the 
new anchorage requirements to September 1, 2004. Because model years 
for CAFE purposes begin on October 1, these new requirements would 
apply to vehicles that must meet the 2004 model year light truck fuel 
economy standard. The FMVSS 225 requirements are intended to reduce 
deaths and injuries to children by providing a more effective and 
standardized means of attaching child restraints. The agency's Final 
Economic Analysis prepared at the time of the issuance of the March 5, 
1999 final rule estimated that compliance with the new child restraint 
anchorage requirements would result in a weight increase of one pound 
per vehicle. Accordingly, the agency determined that compliance would 
have a negligible impact on vehicle fuel economy.
4. FMVSS 139
    On March 5, 2002, NHTSA published in the Federal Register (67 FR 
10050) a notice of proposed rulemaking containing the agency's proposal 
for a new FMVSS establishing performance requirements for tires. The 
agency's proposal was issued pursuant to a mandate in the TREAD Act 
requiring that it issue new performance standards for tires on or 
before June 1, 2002. These tire performance requirements, which would 
appear in FMVSS 139 and would apply to new pneumatic tires for use on 
vehicles with a gross vehicle weight rating of 10,000 pounds or less. 
The agency's proposal sets forth two alternative phase-in schedules for 
these new requirements. Under one of these phase-ins, tires on MY 2004 
light trucks would have to meet the performance requirements of the 
standard. The proposed performance requirements for tires could have an 
impact on fuel economy if meeting the requirements altered the rolling 
resistance of these tires. However, there is no present indication that 
the proposed performance requirements will have any such impact. 
Accordingly, the agency believes that this proposal would have a 
minimal impact on the ability of manufacturers to comply with the 2004 
light truck fuel economy standard.

B. Emissions Standards

1. Tier II Requirements
    On February 10, 2000, the Environmental Protection Agency (EPA) 
published in the Federal Register (65 FR 6698) a final rule 
establishing new federal emissions standards for vehicles classified by 
EPA as passenger cars, light trucks and larger passenger vehicles. 
These new emissions standards, known as Tier 2 standards, are designed 
to focus on reducing the emissions most responsible for the ozone and 
particulate matter (PM) impact from these vehicles. These emissions are 
nitrogen oxides (NO[X]) and non-methane organic gases (NMOG), 
consisting primarily of hydrocarbons (HC) and contributing to ambient 
volatile organic compounds (VOC). The program also applies the same set 
of federal standards to all passenger cars, light trucks, and medium-
duty passenger vehicles. Under the Tier 2 standards, light trucks 
include ``light light-duty trucks'' (or LLDTs), rated at less than 6000 
pounds gross vehicle weight and ``heavy light-duty trucks'' (or HLDTs), 
rated at more than 6000 pounds gross vehicle weight. For new passenger 
cars and light LDTs, the Tier 2 standards phase-in beginning in 2004, 
and are to be fully phased-in by 2007. During the phase-in period from 
2004-2007, all passenger cars and light LDTs not certified to the 
primary Tier 2 standards must meet an interim standard equivalent to 
the current National Low Emission Vehicle (NLEV) standards for light 
duty vehicles. In addition to establishing new emissions standards for 
vehicles, the Tier 2 standards also establish standards for the sulfur 
content of gasoline.
    When issuing the Tier 2 standards, EPA responded to comments 
regarding the impact of the Tier 2 standard and its impact on CAFE by 
indicating that it believed that the Tier 2 standards would not have an 
adverse effect on fuel economy. NHTSA notes that only one of the 
commenters responding to the agency's proposed 2004 light truck 
standard indicated that the Tier 2 standards would have any impact on 
the ability to meet fuel economy standards. DC, while addressing its 
strong support for continuation of the dual-fuel incentive program, 
stated that the Tier 2 standards presented special challenges for 
ethanol-fueled vehicles. The comments, did not, however, indicate the 
nature of these challenges and the degree to which the Tier 2 standards 
would impact on DC's ability to meet the proposed 2004 light truck 
standard.
2. Onboard Vapor Recovery
    On April 6, 1994, EPA published in the Federal Register a final 
rule (59 FR 16262) controlling vehicle refueling emissions through the 
use of onboard refueling vapor recovery (ORVR) vehicle-based systems. 
These requirements applied to light-duty vehicles beginning in the 1998 
model year, and were phased-in over three model years. The ORVR 
requirements also apply to light-duty trucks with a gross vehicle 
weight rating of 0-6000 lbs, beginning in model year 2001 and phasing-
in over three model years at the same rate as for light-duty vehicles. 
For light-duty trucks with a gross vehicle weight rating of 6001-8500 
lbs, the ORVR requirements first apply in the

[[Page 16057]]

2004 model year and phase-in over three model years at the same rate as 
light-duty vehicles.
    None of the commenters addressed the impact, if any, of the ORVR 
requirements on compliance with CAFE. The ORVR requirements impose a 
weight penalty on vehicles as they necessitate the installation of 
vapor recovery canisters and associated tubing and hardware. However, 
the operation of the ORVR system results in fuel vapors being made 
available to the engine for combustion while the vehicle is being 
operated. As these vapors provide an additional source of energy that 
would otherwise be lost to the atmosphere through evaporation, the ORVR 
requirements do not have a negative impact on fuel economy.
3. Supplemental Federal Test Procedure
    On October 26, 1996, EPA issued a final rule (61 FR 54852) revising 
the tailpipe emission portions of the Federal Test Procedure (FTP) for 
light-duty vehicles (LDVs) and light-duty trucks (LDTs). The revision 
created a Supplemental Federal Test Procedure (SFTP) designed to 
address shortcomings with the existing FTP in the representation of 
aggressive (high speed and/or high acceleration) driving behavior, 
rapid speed fluctuations, driving behavior following startup, and use 
of air conditioning. The SFTP also contains requirements designed to 
more accurately reflect real road forces on the test dynamometer. EPA 
chose to apply the SFTP requirements to trucks through a phase-in. 
Light-duty trucks with a gross vehicle weight rating (GVWR) up to 6000 
lbs were subject to a three-year phase-in ending in the 2002 model 
year. Heavy light-duty trucks, those with a GVWR greater than 6000 lbs 
but not greater than 8500 lbs, are subject to a phase-in in which 40 
percent of each manufacturer's production must meet the SFTP 
requirements in the 2002 model year, 80 percent in 2003, and 100 
percent in the 2004 model year.
    The 2004 model year represents the final phase-in year for light 
trucks subject to CAFE standards. Neither Ford, GM or DC indicated in 
their comments that the SFTP would have any impact on their ability to 
meet the proposed 2004 standard.
4. California Air Resources Board LEV II
    The State of California Low Emission Vehicle II regulations (LEV 
II) will apply to passenger cars and light trucks in the 2004 model 
year. The LEV II amendments restructure the light-duty truck category 
so that trucks with a gross vehicle weight rating of 8,500 pounds or 
lower are subject to the same low-emission vehicle standards as 
passenger cars. LEV II requirements also include more stringent 
emission standards for passenger car and light-duty truck LEVs and 
ultra low emission vehicles (ULEVs), and establish phase-in 
requirements that begin in 2004. During the initial year of the four-
year phase-in, the LEV II standards require that 25 percent of 
production comply.
    Comments submitted by DC indicated that company's concern that 
compliance with LEV II requirements may be difficult for dual-fuel 
vehicles. The company, did not, however, provide any details or data 
regarding these challenges.
5. Section 177 States
    The term ``Section 177 States'' refers to states that voluntarily 
adopt the more stringent California emissions standards. As of November 
2000, Massachusetts, New York and Maine had adopted the California Low 
Emission Vehicle (LEV) program. NHTSA has not received any data showing 
any impact on the 2004 light truck fuel economy capabilities as a 
result of states other than California adopting the California 
emissions standards.

VI. The Need of the Nation To Conserve Energy

    Since the petroleum ``shocks'' of the 1970s, the inflation-adjusted 
price of crude oil has generally declined. After the oil shocks of the 
1970s, several events have combined to keep oil prices low, including a 
diminution in the market power of OPEC due to an increase in petroleum 
production from non-OPEC nations. However, there also has been a 
growing dependence of the U.S. on imported petroleum since that time 
period.
    Based on information collected by the Energy Information 
Administration (EIA) in 2001, world crude oil reserves amount to about 
1,000 billion barrels, and world natural gas reserves amount to about 
5,180 trillion cubic feet. Of this total, the Middle East controls 
about 65 percent of the world's oil reserves and about 35 percent of 
the world's natural gas reserves (the former U.S.S.R. controls another 
38 percent of the world's natural gas reserves). North American 
reserves of oil amount to just 5-6 percent of world reserves, and North 
American reserves of natural gas amount to about 5 percent of world 
reserves.
    Today, the Persian Gulf region holds about two-thirds of the entire 
world's known oil reserves. The U.S. imports more than 53 percent of 
its petroleum--much of it coming from the Persian Gulf region. EIA's 
Annual Energy Outlook 2002 estimates that this oil importation will 
increase to 62 percent by the year 2020. EIA projects that Persian Gulf 
producers are expected to account for more than 45 percent of worldwide 
trade by 2002, for the first time since the 1980's. After 2002, the 
Persian Gulf share of worldwide petroleum exports is projected to 
increase gradually to almost 48 percent by 2020.

VII. Economic Practicability

    The agency's traditional interpretation of the requirement to 
consider ``economic practicability'' in deciding maximum feasible 
average fuel economy is that the agency must set standards that are 
within the financial capability of the industry, and not so stringent 
as to threaten substantial economic hardship for the industry (42 FR 
33537). Since GM, Ford and DC, whose production represents over 80 
percent of the light truck market, did not object to the setting of the 
model year 2004 light truck standard at 20.7 mpg, the agency concludes 
that a standard set at that level would be economically practicable.
    GM, Ford and DC indicated that they could not meet any standard 
higher than 20.7 mpg without suffering economic effects. Unfortunately, 
due to the unique circumstances of this rulemaking, NHTSA is not now in 
a position to determine the point at which those economic effects would 
amount to a substantial economic hardship. In the absence of the 
information needed to make such a determination, the agency concludes 
that establishing the standard above 20.7 mpg could create a risk of 
such substantial hardship.

VIII. Determining the Maximum Feasible Average Fuel Economy Level

    As discussed above, section 32902(f) requires that light truck fuel 
economy standards be set at the maximum feasible average fuel economy 
level. In making this determination, the agency must consider the four 
factors of section 32902(f): technological feasibility, economic 
practicability, the effect of other Federal motor vehicle standards on 
fuel economy, and the need of the nation to conserve energy.

A. Interpretation of ``Feasible''

    Based on definitions and judicial interpretations of similar 
language in other statutes, the agency has in the past interpreted 
``feasible'' to refer to whether something is capable of being done. 
The agency has thus concluded in the past that a standard set at the 
maximum feasible average fuel economy

[[Page 16058]]

level must: (1) be capable of being done and (2) be at the highest 
level that is capable of being done, taking account of what 
manufacturers are able to do in light of technological feasibility, 
economic practicability, how other Federal motor vehicle standards 
affect average fuel economy, and the need of the nation to conserve 
energy.

B. Industry-wide Considerations

    The statute does not expressly state whether the concept of 
feasibility is to be determined on a manufacturer-by-manufacturer basis 
or on an industry-wide basis. Legislative history may be used as an 
indication of congressional intent in resolving ambiguities in 
statutory language. The agency believes that the below-quoted language 
provides guidance on the meaning of ``maximum feasible average fuel 
economy level.'' The Conference Report to the 1975 Act (S. Rep. No. 94-
516, 94th Cong., 1st Sess. 154-55 (1975)) states:

    Such determination [of maximum feasible average fuel economy 
level] should take industry-wide considerations into account. For 
example, a determination of maximum feasible average fuel economy 
should not be keyed to the single manufacturer which might have the 
most difficulty achieving a given level of average fuel economy. 
Rather, the Secretary must weigh the benefits to the nation of a 
higher average fuel economy standard against the difficulties of 
individual manufacturers. Such difficulties, however, should be 
given appropriate weight in setting the standard in light of the 
small number of domestic manufacturers that currently exist and the 
possible implications for the national economy and for reduced 
competition association [sic] with a severe strain on any 
manufacturer * * *.

    It is clear from the Conference Report that Congress did not intend 
that standards simply be set at the level of the least capable 
manufacturer. Rather, NHTSA must take industry-wide considerations into 
account in determining the maximum feasible average fuel economy level.
    NHTSA has traditionally set light truck standards at a level that 
can be achieved by manufacturers whose vehicles constitute a 
substantial share of the market. The agency did set the MY 1982 light 
truck fuel economy standards at a level which it recognized might be 
above the maximum feasible fuel economy capability of Chrysler, based 
on the conclusion that the energy benefits associated with the higher 
standard would outweigh the harm to Chrysler. 45 FR 20871, 20876, March 
31, 1980. However, as the agency noted in deciding not to set the MYs 
1983-85 light truck standards above Ford's level of capability, 
Chrysler had only 10-15 percent of the light truck domestic sales, 
while Ford had about 35 percent. 45 FR 81593, 81599, December 11, 1980.

C. Petroleum Consumption

    The potential savings associated with a 2004 light truck standard 
above 20.7 mpg are highly uncertain. Assuming that a standard could be 
set at 21.2 mpg, 0.5 mpg above the capability asserted by GM, Ford and 
DC, these three companies, whose sales represent approximately 80 
percent of all the light trucks sold in the United States, could likely 
meet the level of the standard only by restricting the sales of their 
larger or more powerful light trucks. If this occurred, consumers might 
tend to keep their older, less-fuel-efficient light trucks in service 
longer. Also, consumers might purchase larger, heavier trucks that are 
not subject to CAFE standards. Therefore, the agency believes that any 
additional energy savings associated with alternative higher fuel 
economy standards above 20.7 mpg (the level the agency has determined 
to be the capability of GM, Ford and DC) for model year 2004 would be 
uncertain and speculative.

D. The 2004 Model Year Standard

    Based on its analysis described above and on manufacturers' 
projections contained in the comments submitted in response to the 
January 24, 2002 NPRM, the agency concludes that the major domestic 
manufacturers can achieve a light truck fuel economy level of 20.7 mpg.
    Ford, DC and GM dominate that domestic light truck market with 
approximately 80 percent of all sales. Other light truck manufacturers, 
such as Nissan, Toyota, Honda, BMW and others are expected in MY 2004 
to have CAFE levels both above and below Ford, DC and GM. However, 
since these companies have a small market share, NHTSA concludes that 
setting a standard based on their capabilities would be inconsistent 
with a determination of maximum feasibility that takes industry-wide 
considerations into account, as required by statute.
    Under the time constraints imposed on the agency and the limited 
amount of information available, NHTSA's analysis of manufacturer 
capabilities has been truncated. Given these constraints, NHTSA has 
concluded that it cannot determine which of the manufacturers with a 
substantial share of sales is the least capable manufacturer for model 
year 2004. NHTSA concludes that 20.7 mpg is the maximum feasible 
standard for the 2004 model year. For the reasons discussed below, this 
level balances the uncertain petroleum savings associated with a higher 
standard against the relatively certain difficulties of manufacturers 
facing a higher standard.
    A 20.7 mpg standard will not unduly restrict consumer choice or 
have adverse economic impacts on the large domestic manufacturers. The 
comments of GM, DC and Ford all supported setting the 2004 model year 
light truck CAFE standard at 20.7 mpg. NHTSA believes that the 20.7 mpg 
standard minimizes the risk of the potentially serious adverse economic 
consequences for the domestic automobile industry that could result 
from a higher standard precipitously set on the basis of limited 
information. The cost of avoiding this risk is, insofar as the 2004 
model year is concerned, foregoing any increased petroleum savings that 
might have been realized from more fuel-efficient light truck 
production in that model year. The agency concludes, in view of the 
statutory requirement to consider specified factors, that the 
relatively small and very uncertain energy savings associated with 
setting a standard above 20.7 mpg would not justify the potential harm 
to the industry and the economy as a whole.
    FOF and SBSC stated that NHTSA should consider the safety effects 
of any decision to increase fuel economy standards. Although the agency 
is not increasing the light truck fuel economy standard for 2004 above 
the standard for prior years, NHTSA has recognized that CAFE standards 
could adversely affect safety to the extent that they necessitate 
significant reductions in car size and/or weight. This issue was 
discussed at length in the agency's notice terminating rulemaking on 
the MY 1990 passenger car CAFE standard (see 58 FR 6939, February 3, 
1993). As recommended in the NAS report, NHTSA is currently updating 
its 1997 analysis on the relationship between vehicle size and safety. 
This study will be completed later this year.
    Given that this final rule maintains the light truck CAFE standard 
at 20.7 mpg, it will not have any impact on safety.

IX. Rulemaking Analyses and Notices

A. Economic Impacts

    The Office of Management and Budget reviewed this rule under 
Executive Order 12866, Regulatory Planning and Review. Although the 
light truck CAFE standard for MY 2004 does not differ from the fuel 
economy standards for the preceding model years, we are treating this 
rule as ``economically significant'' under Executive Order 12866 and 
``major'' under the Congressional Review Act, 5 U.S.C. 801 et seq., as

[[Page 16059]]

added by the Small Business Regulatory Enforcement Fairness Act of 
1996. This rule is also considered significant under the Department's 
regulatory policies and procedures. As noted above, the agency has been 
operating under a restriction on the use of appropriations for the last 
six fiscal years. The restriction has prevented the agency from 
gathering and analyzing data relating to fuel economy capabilities and 
the costs and benefits of improving the level of fuel economy. 
Particularly since that restriction was lifted only on December 18, 
2001, the agency has been unable to prepare a separate economic 
analysis for this rulemaking. The agency notes, however, that the 
standard it is setting for the 2004 model year will not make it 
necessary for the manufacturers with a substantial share of the market 
to change their product plans.

B. Environmental Impacts

    We have not conducted an evaluation of the impacts of this final 
rule under the National Environmental Policy Act. NHTSA is setting the 
2004 model year light truck CAFE standard at the same level as the 
standard applicable to the 1996 through 2003 model years. As this rule 
maintains the fuel economy standard at the same level as prior years, 
it does not impose change in any environmental impacts. Accordingly, no 
environmental assessment is required.

C. Energy Impacts

    NHTSA has not changed the level of the light truck CAFE standards 
in setting the standard for the 2004 model year. This final rule, which 
maintains the CAFE standard at its existing level, does not have ``a 
significant adverse effect on the supply, distribution, or use of 
energy,'' as defined by Executive Order 13211, Actions Concerning 
Regulations That Significantly Affect Energy Supply, Distribution, or 
Use. At this point, therefore, this action is not a ``significant 
energy action'' under Executive Order 13211 and no ``Statement of 
Energy Effects'' is required.

D. Impacts on Small Entities

    Pursuant to the Regulatory Flexibility Act, the agency has 
considered the impact this rulemaking will have on small entities. I 
certify that this action would not have a significant economic impact 
on a substantial number of small entities. Therefore, a regulatory 
flexibility analysis is not required for this action. Few, if any, 
light truck manufacturers subject to the rule are classified as a 
``small business'' under the Regulatory Flexibility Act.
    The Regulatory Flexibility Act of 1980 (Public Law 96-354) requires 
each agency to evaluate the potential effects of a rule on small 
businesses. Establishment of a fuel economy standard for light trucks 
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 fewer.
    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 a light truck. For this reason, we certify that this final rule 
regarding the corporate average fuel economy of light trucks will not 
have a significant economic impact on a substantial number of small 
entities.

E. Federalism

    E.O. 13132 requires NHTSA to develop an accountable process to 
ensure ``meaningful and timely input by State and local officials in 
the development of regulatory policies that have federalism 
implications.'' E.O. 13132 defines the term ``Policies that have 
federalism implications'' to include regulations that have 
``substantial direct effects on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government.'' Under 
E.O. 13132, NHTSA may not issue a regulation that has federalism 
implication, that imposes substantial direct compliance costs, and that 
is not required by statute, unless the Federal government provides the 
funds necessary to pay the direct compliance costs incurred by State 
and local governments, or NHTSA consults with State and local officials 
early in the process of developing the proposed regulation.
    This final rule will not have substantial direct effects on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government as specified in E.O. 13132. Thus, the 
requirements of section 6 of the Executive Order do not apply to this 
rule.

F. The Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 (Public Law 104-4) 
requires agencies to prepare a written assessment of the costs, 
benefits and other effects of proposed or final rules that include a 
Federal mandate likely to result in the expenditure by State, local or 
tribal governments, in the aggregate, or by the private sector, of more 
than $100 million annually. For the same reasons discussed in the 
section above on economic impacts, the agency has been unable to 
prepare a separate assessment.

G. Paperwork Reduction Act

    There are no information collection requirements in this rule.

H. Regulation Identifier Number (RIN)

    The Department of Transportation assigns a regulation identifier 
number (RIN) to each regulatory action listed in the Unified Agenda of 
Federal Regulations. The Regulatory Information Service Center 
publishes the Unified Agenda in April and October of each year. You may 
use the RIN contained in the heading at the beginning of this document 
to find this action in the Unified Agenda.

I. Plain Language

    Executive Order 12866 requires each agency to write all rules in 
plain language. Application of the principles of plain language 
includes consideration of the following questions:

--Have we organized the material to suit the public's needs?
--Are the requirements in the rule clearly stated?
--Does the rule contain technical language or jargon that is not clear?
--Would a different format (grouping and order of sections, use of 
headings, paragraphing) make the rule easier to understand?
--Would more (but shorter) sections be better?
--Could we improve clarity by adding tables, lists, or diagrams?
--What else could we do to make the rule easier to understand?

    If you have any responses to these questions, please forward them 
to Otto Matheke, Office of Chief Counsel, National Highway Traffic 
Safety Administration, 400 Seventh Street, SW., Washington, DC 20590.

J. Executive Order 13045

    Executive Order 13045 (62 FR 19885, April 23, 1997) applies to any 
rule that: (1) Is determined to be economically significant as defined 
under E.O. 12866, and (2) concerns an environmental, health or safety 
risk that NHTSA has

[[Page 16060]]

reason to believe may have a disproportionate effect on children. If 
the regulatory action meets both criteria, we must evaluate the 
environmental health or safety effects of the planned rule on children, 
and explain why the planned regulation is preferable to other 
potentially effective and reasonably feasible alternatives considered 
by us.
    This rulemaking does not have a disproportionate effect on 
children. The primary effect of this rulemaking is to conserve energy 
resources by setting a fuel economy standard for light trucks.

K. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act (NTTAA) requires NHTSA to evaluate and use existing voluntary 
consensus standards in its regulatory activities unless doing so would 
be inconsistent with applicable law (e.g., the statutory provisions 
regarding NHTSA's vehicle safety authority) or otherwise impractical. 
In meeting that requirement, we are required to consult with voluntary, 
private sector, consensus standards bodies. Examples of organizations 
generally regarded as voluntary consensus standards bodies include the 
American Society for Testing and Materials (ASTM), the Society of 
Automotive Engineers (SAE), and the American National Standards 
Institute (ANSI). If NHTSA does not use available and potentially 
applicable voluntary consensus standards, we are required by the Act to 
provide Congress, through OMB, an explanation of the reasons for not 
using such standards.
    We are not aware of any available and potentially applicable 
voluntary consensus standards, i.e., ones regarding the maximum 
feasible level of corporate average fuel economy for MY 2004 light 
trucks. Therefore, this rule is not based on any voluntary consensus 
standards.

L. Department of Energy Review

    In accordance with 49 U.S.C. Sec. 32902(j), we submitted this rule 
to the Department of Energy for review. That Department did not make 
any comments that we have not responded to.

List of Subjects in 49 CFR Part 533

    Energy conservation, Motor vehicles.

PART 533--[AMENDED]

    In consideration of the foregoing, 49 CFR part 533 is amended as 
follows:
    1. The authority citation for part 533 continues to read as 
follows:

    Authority: 15 U.S.C. 2002; delegation of authority at 49 CFR 
1.50.

    2. Section 533.5 is amended by revising Table IV in paragraph (a) 
to read as follows:


Sec. 533.5  Requirements.

    (a) * * *

                                Table IV
------------------------------------------------------------------------
                          Model Year                            Standard
------------------------------------------------------------------------
1996.........................................................       20.7
1997.........................................................       20.7
1998.........................................................       20.7
1999.........................................................       20.7
2000.........................................................       20.7
2001.........................................................       20.7
2002.........................................................       20.7
2003.........................................................       20.7
2004.........................................................       20.7
------------------------------------------------------------------------

* * * * *

    Issued on: March 29, 2002.
Jeffrey W. Runge,
Administrator.
[FR Doc. 02-8122 Filed 4-1-02; 11:31 am]
BILLING CODE 4910-59-P