[Federal Register Volume 67, Number 241 (Monday, December 16, 2002)]
[Proposed Rules]
[Pages 77015-77029]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-31522]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration (NHTSA)

49 CFR Part 533

[Docket No. 2002-11419; Notice 2]
RIN 2127-AI70


Light Truck Average Fuel Economy Standards Model Years 2005-07

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

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document proposes the establishment of corporate average 
fuel economy standards for light trucks, pursuant to 49 U.S.C. chapter 
329, manufactured in model years (MY) 2005 through 2007. The agency is 
proposing to set the standard for light trucks at 21.0 mpg for MY 2005, 
21.6 mpg for MY 2006 and 22.2 mpg for MY 2007.

DATES: Comments must be received on or before February 14, 2003.

ADDRESSES: You should mention the docket number of this document in 
your comments and submit your comments in writing to: Docket 
Management, Room PL-401, 400 Seventh Street, SW., Washington, DC 20590. 
Comments may also be submitted to the docket electronically by logging 
onto the Dockets Management System Web site at http://dms.dot.gov. 
Click on ``Help & Information'' or ``Help/Info'' to obtain instructions 
for filing the document electronically.
    You may call Docket Management at 202-366-9324. You may visit the 
Docket from 10 a.m. to 5 p.m., Monday through Friday.

FOR FURTHER INFORMATION CONTACT: For technical issues, call Ken Katz, 
Lead Engineer, Fuel Economy Division, Office of Planning and Consumer 
Standards, at (202) 366-0846, facsimile (202) 493-2290, electronic mail 
[email protected].

Table of Contents

I. Background
II. Agency Proposal
III. Manufacturer Projections for Model Years 2005-2007
    A. General Motors
    B. Ford
    C. DaimlerChrysler
    D. Other Manufacturers
IV. Maximum Feasible Average Fuel Economy Considerations
V. Technological Feasibility
    A. General Motors
    B. Ford
    C. DaimlerChrysler
VI. Economic Practicability

[[Page 77016]]

    A. Costs to the Manufacturers
    B. Benefits to Society from this Proposal
    C. Comparison of Estimated Industry Costs to Estimated Societal 
Benefits
    VII. The Effect Of Other Government Regulations On Fuel Economy
    A. Federal Motor Vehicle Safety Standards
    i. FMVSS 138, tire pressure monitoring systems
    ii. FMVSS 139, tire upgrade
    iii. FMVSS 201, occupant protection in interior impact
    iv. FMVSS 202, head restraints
    v. FMVSS 208, occupant crash protection
    vi. FMVSS 225, child restraint anchorage systems
    vii. FMVSS 301, fuel system integrity
    B. Federal Motor Vehicle Emissions Standards
    i. Tier 2 Requirements
    ii. Onboard Refueling Vapor Recovery
    iii. Supplemental Federal Test Procedure
     iv. California Air Resources Board LEV II and Section 177 
States
    VIII. The Need of The Nation To Conserve Energy
IX. Rulemaking Analyses and Notices
    X. Comments

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 (EPCA). The Act established an automotive fuel economy 
regulatory program by adding Title V, ``Improving Automotive 
Efficiency,'' to the Motor Vehicle Information and Cost Saving Act. 
Title V has been amended from time to time and codified without 
substantive change as Chapter 329 of title 49, United States Code. 
Chapter 329 provides for the issuance of average fuel economy standards 
for passenger automobiles and automobiles that are not passenger 
automobiles (light trucks).
    Section 32902(a) of chapter 329 states that the Secretary of 
Transportation shall prescribe by regulation corporate average fuel 
economy (CAFE) standards for light trucks for each model year. That 
section also states that ``[e]ach standard shall be the maximum 
feasible average fuel economy level that the Secretary decides the 
manufacturers can achieve in that model year.'' The Secretary has 
delegated the authority to implement the automotive fuel economy 
program to the NHTSA Administrator. 49 CFR 1.50(f).
    The first light truck fuel economy standards were established for 
MY 1979 and applied to light trucks with Gross Vehicle Weight Ratings 
(GVWR) up to 6000 pounds. Beginning with MY 1980, NHTSA raised this 
GVWR ceiling to 8500 pounds. For MYs 1979-1981, NHTSA established 
separate standards for two-wheel drive (2WD) and four-wheel drive (4WD) 
light trucks, without a ``combined'' standard blending the two 
together. Beginning with MY 1982, NHTSA established a combined 
standard, plus optional 2WD and 4WD standards. After MY 1991, NHTSA 
dropped the optional 2WD and 4WD standards. During MYs 1980-1995, NHTSA 
also required U.S. light truck manufacturers' ``captive imports'' to be 
separated from their other truck models in determining compliance with 
CAFE standards. The following table lists the ``combined'' standards 
established since MY 1982:

------------------------------------------------------------------------
                                                          CAFE standard
                       Model year                             (mpg)
------------------------------------------------------------------------
MY 1982................................................             17.5
MY 1983................................................             19.0
MY 1984................................................             20.0
MY 1985................................................             19.5
MY 1986................................................             20.0
MY 1987................................................             20.5
MY 1988................................................             20.5
MY 1989................................................             20.5
MY 1990................................................             20.0
MY 1991................................................             20.2
MY 1992................................................             20.2
MY 1993................................................             20.4
MY 1994................................................             20.5
MY 1995................................................             20.6
MY 1996-2004...........................................             20.7
------------------------------------------------------------------------

    In 1994, the agency published an Advance Notice of Proposed 
Rulemaking (ANPRM) in the Federal Register outlining NHTSA's intention 
to set standards for some, or all, of the model years from 1998 to 
2006. 59 FR 16324 (April 6, 1994).
    On November 15, 1995, the Department of Transportation and Related 
Agencies Appropriations Act for FY 1996 was enacted. Pub. L. 104-50. 
Section 330 of that Act provided:

    None of the funds in this Act shall be available to prepare, 
propose, or promulgate any regulations * * * prescribing corporate 
average fuel economy standards for automobiles * * * in any model 
year that differs from standards promulgated for such automobiles 
prior to enactment of this section.

    We then issued a notice of proposed rulemaking (NPRM) limited to MY 
1998, proposing to set the light truck CAFE standard for that year at 
20.7 mpg, the same standard as had been set for MY 1997. 61 FR 145 
(January 3, 1996). This 20.7 mpg-standard was adopted by a final rule 
issued on March 29, 1996. 61 FR 14680 (April 3, 1996).
    On September 30, 1996, the Department of Transportation and Related 
Agencies Appropriations Act for FY 1997 was enacted. Public. Law. 104-
205. Section 323 of that Act included the same language on CAFE 
standards as that of Section 330 of the FY 1996 Appropriations Act. The 
agency followed the same process as the prior year and established a MY 
1999 light truck CAFE standard of 20.7 mpg, the same standard that had 
been set for MYs 1997 and 1998.
    Because the same limitation on the setting for CAFE standards was 
included in the Appropriations Acts for each of FYs 1998-2001, the 
agency followed that same procedure during those fiscal years and did 
not issue any NPRMs in the series of rulemakings we conducted to 
establish the light truck fuel economy standards for MYs 2000-2003. The 
agency concluded in those rulemakings, as it had when setting the MY 
1999 standard, that the restrictions contained in the Appropriations 
acts prevented the issuance of any standards other than the standard 
set for the prior model year. The agency also determined that issuing 
an NPRM was unnecessary and contrary to the public interest because 
there was no other course of action available to it.
    The Department of Transportation and Related Agencies 
Appropriations Act for FY 2001 was enacted on October 23, 2000. Public 
Law 106-346. This law provided appropriations for the Department of 
Transportation for FY 2001, and is the law under which we issued the 
light truck CAFE standard for MY 2003. While Section 320 of that Act 
contained a restriction on CAFE rulemaking identical to that contained 
in prior appropriation acts, the conference committee report for that 
act directed that NHTSA fund a study by National Academy of Sciences 
(NAS) to evaluate the effectiveness and impacts of CAFE standards (H.R. 
Conf. Rep. No. 106-940, at 117-118).
    The NAS submitted its report to the Department of Transportation on 
July 30, 2001. The final report was released in January 2002. The 
report concludes that technologies exist that could significantly 
increase passenger car and light truck fuel economy within 15 years. 
However, their development cycles--as well as future economic, 
regulatory, safety and consumer preferences--will influence the extent 
to which these technologies appear in the U.S. market.
    All but two members of the NAS committee noted: ``the downweighting 
and downsizing that occurred in the late 1970s and early 1980s, some of 
which was due to CAFE standards, probably resulted in an additional 
1300 to 2600 traffic fatalities in 1993.'' (NAS, pp. 3 and 111.) 
Specifically, ``to the extent that the size and weight of the fleet 
have been constrained by CAFE requirements * * * those requirements 
have caused more injuries and fatalities on the road than would 
otherwise have occurred.'' (NAS, p. 29).

[[Page 77017]]

    The NAS found that to minimize financial impacts on manufacturers, 
their suppliers, their employees and consumers, sufficient lead-time 
(consistent with normal product life cycles) should be given when 
considering increases in CAFE standards. The report stated that there 
are advanced technologies that could be employed, without negatively 
affecting the automobile industry, if sufficient lead-time were 
provided to the manufacturers. In the NAS' view, the selection of 
future fuel economy standards will require uncertain and difficult 
trade-offs among environmental benefits, vehicle safety, cost, energy 
independence, and consumer preferences. It also suggests that changing 
the CAFE regulatory program to one based on vehicle attributes, such as 
weight, and allowing ``credit trading'' could eliminate the current 
CAFE program's encouragement of downweighting or the production and 
sale of more small cars, and also would reduce costs. (NAS, pp. 5, 113) 
Recognizing the many trade-offs that must be considered in setting fuel 
economy standards, the committee took no position on what the 
appropriate CAFE standards should be for future years. In February 
2002, Secretary Mineta asked Congress ``to provide the Department of 
Transportation with the necessary authority to reform the CAFE program, 
guided by the NAS report's suggestions.''
    In a letter dated July 10, 2001, Secretary of Transportation Mineta 
asked the House and Senate Appropriations Committees to lift the 
restriction on the agency spending funds for the purposes of improving 
CAFE standards. The Department of Transportation and Related Agencies 
Appropriations Act for FY 2002 (Pub. L. 107-87) was enacted on December 
18, 2001, and does not contain a provision restricting the Secretary's 
authority to prescribe fuel economy standards.
    To prepare any fuel economy standard, the agency must collect 
information relating to prospective CAFE levels, analyze and weigh the 
information in light of the statutory criteria for determining the 
``maximum feasible'' average fuel economy level, and incorporate this 
information and analysis into a rulemaking action to set the standard, 
with opportunity for notice and comment. As NHTSA was unable to spend 
any funds by virtue of Section 320 of the FY 2001 Appropriations Act 
and the predecessor restrictions in earlier Appropriations Acts, it was 
not able to prepare the factual or analytical foundation necessary for 
rulemaking to establish new CAFE levels from September 1995 to December 
2001.
    When issuing our January 2002 proposal to establish the MY 2004 
standard at 20.7 mpg (67 FR 3470), we noted that the availability of 
funds did not translate into an immediate ability to conduct the level 
of analysis needed to set fuel economy standards. Although a number of 
commenters reacted to this proposal by advocating a higher MY 2004 
standard, the agency determined, on the basis of the limited 
information available and the proximity to the model year, to set the 
MY 2004 Standard at 20.7 mpg (67 FR 16052, April 4, 2002).
    On February 7, 2002, we issued a Request for Comments (67 FR 5767) 
seeking data on which we could base our analysis of appropriate CAFE 
standards for light trucks for upcoming model years. We also sought 
comments on possible reforms to the CAFE program, as it applies to both 
passenger cars and light trucks, to protect passenger safety, advance 
fuel-efficient technologies, and obtain the benefits of market-based 
approaches.

II. Agency Proposal

    This notice proposes to establish an average fuel economy standard 
for light trucks for each of MYs 2005-07. The agency is proposing to 
set the corporate average fuel economy standard for light trucks at 
21.0 mpg for MY 2005, 21.6 mpg for MY 2006 and 22.2 mpg for MY 2007.
    After receiving comments and reviewing any additionally provided 
data, we may decide to set the standards at different levels than those 
proposed. Factual uncertainties that could result in lower standards 
include the possibility that planned technological actions may not 
achieve anticipated fuel economy benefits or may prove to be 
infeasible. Similarly, factual uncertainties that could result in 
higher standards include the possibility that manufacturers may be able 
to improve fuel economy in their fleets by further technological 
advances beyond those currently planned.
    We believe that the advent of advanced vehicle technologies, such 
as hybrid propulsion systems and advanced diesel engines, will allow 
for the development of advanced fuel economy should they permeate the 
motor vehicle market. Fuel cell technology has the capacity over the 
long term to reframe the basic transportation system. While we are 
limited today in setting fuel economy standards for the relative short 
term and within the constraints of the current CAFE statute, we will 
continue to support and encourage the development of advanced vehicle 
technologies capable of substantial fuel economy improvements and a 
market structure to support them through efforts like FreedomCAR, 
continued targeted research dollars and consumer tax incentives. 
Consistent with the recommendations of the NAS report, we intend to 
study programmatic CAFE alternatives and to implement those reforms 
consistent with our statutory authority to allow for greater 
improvements in fuel economy safely in the years beyond those addressed 
in this proposal.
    The proposal is a significant step toward accomplishing the target 
in the conference energy bill to save at least 5 billion gallons of 
gasoline from MYs 2006 through MY 2012. The proposed increases for MYs 
2006-2007 alone will generate more than 3 billion gallons of gasoline 
savings compared to what would be used by those vehicles if they only 
achieved the current fuel economy standard of 20.7 mpg. Even if the 
standard remained at 22.2 mpg for MYs 2008 through 2012, approximately 
8 billion gallons of gasoline would be saved during MYs 2006 through 
2012.

III. Manufacturer Projections for Model Years 2005-2007

    In evaluating manufacturers' fuel economy capabilities for MY 2005-
07, we have analyzed manufacturers' current projections and underlying 
product plans and considered what, if any, additional actions the 
manufacturers could take to improve their fuel economy. We note that 
although manufacturers may receive credit towards their CAFE compliance 
by placing alternative fuel vehicles into the market, the statute 
prohibits us from taking such benefits into consideration in 
determining the maximum feasible fuel economy standard.

A. General Motors

    General Motors' (GM) current share of the light truck market is 
25.5%. In its May 2002 submission, General Motors projected that its 
light truck fleet would achieve a CAFE level of between 18.7 and 20.0 
mpg for 2005 MY, between 18.8 and 20.1 mpg for MY 2006 and between 19.1 
and 20.8 mpg for MY 2007. Its projections include sales of GMC, 
Chevrolet, Pontiac, Buick, Cadillac and Saturn vehicles.

B. Ford

    Ford Motor Company controls approximately 27.5% of the light truck 
market in the United States. In its May 2002 submission, Ford provided 
data from which the agency projects its light

[[Page 77018]]

truck fleet would achieve a CAFE level of 20.9 mpg for MY 2005, 21.6 
for MY 2006 mpg and 22.0 mpg for MY 2007. Its data include sales of 
Ford branded vehicles, as well as Lincoln, Mercury, Mazda, Land Rover 
and Volvo branded vehicles. Ford indicated that its estimates of fuel 
economy improvements are typically 40 to 60 percent higher than the 
corresponding improvements of actual production vehicles, thus it is 
possible that Ford's current product plan for MY 2005-2007 could result 
in a CAFE level for its light truck fleet of up to 0.5 mpg less per 
model year.

C. DaimlerChrysler

    DaimlerChrysler controls approximately 24.6 percent of the light 
truck market. In its May 2002 submission, DaimlerChrysler provided data 
from which the agency projects that its light truck fleet would achieve 
a CAFE level of 21.3 mpg for MY 2005, 21.6 mpg for MY 2006 and 22.2 mpg 
for MY 2007. Its data includes sales of Chrysler, Jeep, Dodge, Mercedes 
and Mitsubishi brand vehicles. DaimlerChrysler indicated that its fuel 
economy estimates include risks that their CAFE projections won't be 
met due to technology issues, product offerings, consumer acceptance, 
future safety regulations and the economic climate. These risks could 
cause the CAFE level for DaimlerChrysler light truck fleet to be 
approximately 0.4 to 0.7 mpg less per model year.
    In response to the agency's Request for Comments, DaimlerChrysler, 
Ford and General Motors clarified their public commitments relating to 
fuel economy improvements in their vehicles. Ford clarified its July 
27, 2000, announcement that it planned to increase the fuel economy of 
its sport utility vehicle fleet by 25 percent by the 2005 calendar 
year. Ford stated that its plan calls for a significant fuel economy 
improvement in its existing fleet combined with the introduction of new 
SUVs with higher fuel economy capabilities. Ford also clarified that 
its commitment uses MY 2000 as the base year and that the increase will 
become effective with the introduction of the MY 2006 vehicles during 
the latter half of 2005.
    General Motors stated that its public announcement did not refer to 
its average fuel economy levels, but rather to its leadership in light 
truck fuel economy and its intent to remain the leader over the next 
five years. GM also made clear that its leadership relates to the 
manufacture and sale of more fuel-efficient light trucks as measured 
through model-to-model comparisons of comparable vehicles.
    DaimlerChrysler stated that it is committed to improving the fuel 
efficiency of all of its vehicles and that its fleet will match or 
exceed those of other full-line manufacturers.

D. Other Manufacturers

    Honda, Toyota and Nissan each provided responses to all or many of 
the questions posed in the Request for Comments. All three of these 
manufacturers provided information regarding a variety of technologies 
for improving fuel efficiency that they plan on incorporating into 
their light trucks by the 2005 model year. For the technologies 
discussed, they provided the estimated fuel economy benefit, when the 
technology would be available for use, its potential applications, 
where it is currently being employed on their light trucks, and the 
estimated costs associated with employing the technology. None, 
however, provided detailed projections regarding their MY 2005-2010 
product plans or information regarding vehicle specifications or 
estimated fuel economy values for those model years.
    A number of foreign-based manufacturers participating in the U.S. 
market did not submit any response to our Request for Comments. Of 
these companies, which include BMW, Isuzu, Volkswagen, Hyundai, Kia, 
Suzuki, and others, only Isuzu sold more than 100,000 light trucks in 
the 2001 model year. The projected MY 2001 CAFE values and production 
for all light truck manufacturers other than GM, Ford and 
DaimlerChrysler are shown in following table:

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                                                                                     MY 2001      MY 2001 market
                            Manufacturer                               MY 2001     production,        share,
                                                                      CAFE, mpg       units         percentage
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Toyota.............................................................        22.1         647,416            8.9
Nissan.............................................................        20.7         377,338            5.2
Honda..............................................................        24.9         252,430            3.5
Isuzu..............................................................        21.1         131,400            1.82
Kia................................................................        22.9          58,000            0.80
BMW................................................................        19.2          52,957            0.73
Hyundai............................................................        25.2          47,000            0.652
Suzuki.............................................................        22.0          45,958            0.63
Volkswagen.........................................................        20.5          10,183            0.14
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IV. Maximum Feasible Average Fuel Economy Considerations

    The CAFE statute sets forth the parameters within which the agency 
is required to establish corporate average fuel economy standards. 
Section 32902(a) directs the Secretary of Transportation (who has 
delegated this authority to the NHTSA Administrator) to prescribe by 
regulation average fuel economy standards for light trucks at least 18 
months before the beginning of each model year, and provides that 
``each standard shall be the maximum feasible average fuel economy 
level that the Secretary decides the manufacturers can achieve in that 
model year.'' The agency is required to consider the factors in 49 
U.S.C. 32902(f) when determining the ``maximum feasible'' average fuel 
economy standards for any given model year. Although the EPCA does not 
include motor vehicle safety as an express statutory criterion, NHTSA 
may consider safety in accordance with the Administration's emphasis on 
safety in setting CAFE standards. Motor vehicle safety has long been 
recognized as an integral part of the agency's consideration of 
economic practicability, and this rulemaking includes consideration of 
the safety implications of the proposed new standards for light trucks.
    As discussed in many past fuel economy notices, it is clear from 
the legislative history that Congress intended NHTSA to take industry-
wide considerations into account in determining the maximum feasible 
average fuel economy levels, and not to limit its analysis to any 
particular company's ability to meet the standard. Consistent with the 
mandate that the agency consider economic practicability, the agency 
has determined maximum feasible CAFE

[[Page 77019]]

standards with regard to the projected capabilities of those 
manufacturers whose vehicles constitute a substantial share of the 
market.
    This does not necessarily mean that CAFE standards will be set at 
the level asserted by the ``least capable manufacturer'' with a 
substantial share of the market (Ford, GM and DaimlerChrysler). 
Instead, it means that we must consider the statutory factors with 
regard to these manufacturers, weighing their asserted capabilities, 
product plans and economic conditions against their projected 
capabilities, the need for the nation to conserve energy and the effect 
of other regulations (including motor vehicle safety and emissions 
regulations) and other public policy objectives.
    This approach is consistent with the Conference Report on the 
legislation enacting the CAFE statute:

    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 that 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. * * *

S. Rep. No. 94-516, 94th Congress, 1st Sess. 154-155 (1975).
    The agency has historically included consideration of numerous 
public policy concerns, whether considered as part of the enumerated 
factors or in addition to them. For example, the agency always has 
considered the impact of the average fuel economy standard on motor 
vehicle and passenger safety. As the United States Court of Appeals 
pointed out in upholding NHTSA's exercise of judgment in setting the 
1987-1989 passenger car standards, ``NHTSA has always examined the 
safety consequences of the CAFE standards in its overall consideration 
of relevant factors since its earliest rulemaking under the CAFE 
program.'' See, Competitive Enterprise Institute v. NHTSA (CEI I), 901 
F.2d 107, 121 at n.11 (DC Cir. 1990).
    The courts have routinely affirmed the agency's authority to 
balance all of these considerations in applying the statutory factors 
and have consistently upheld NHTSA's conclusions. See, e.g., Center for 
Auto Safety v. NHTSA, 793 F.2d 1322 (CAS II)(D.C. Cir. 1986) 
(administrator's consideration of market demand as component of 
economic practicability found to be reasonable); Public Citizen v. 
NHTSA, 848 F.2d 256 (D.C. Cir.1988)(Congress established broad 
guidelines in the fuel economy statutes; agency's decision to set lower 
standard a reasonable accommodation of conflicting policies); CEI I, 
901 F.2d 107 (D.C. Cir.1990)(agency setting of fuel economy standards 
and considerations of safety impacts upheld).
    We have tentatively concluded that this proposal is within the 
technological feasibility and economic practicability of the primary 
contributors to the light truck market, is capable of being met without 
substantial product restrictions, vehicle weight reduction or adverse 
effects on air quality, and will enhance the ability of the nation to 
conserve fuel consumption and reduce its dependence on foreign oil.
    We anticipate that hybrid vehicles and advanced diesel engines will 
begin to permeate the motor vehicle market and enhance the overall fuel 
efficiency of the vehicle fleet. We seek comments on the availability 
of advanced technology vehicles both during the 2005-2007 MY time frame 
and beyond, and on CAFE-related mechanisms, available under current 
statutory authority or through reformed CAFE standards that may require 
new statutory authority, through which the government can encourage and 
augment the incorporation of these vehicles into the fleet.

V. Technological Feasibility

    Using the data submitted in response to our Request for Comments, 
we believe that some manufacturers may be able to achieve CAFE 
performance better than they currently project. The agency's analysis 
of CAFE capability involves technological improvement and the potential 
to limit growth in horsepower/weight ratios.\1\ Although the agency's 
analysis includes the possibility that manufacturers may limit growth 
in horsepower/weight ratios, we believe that manufacturers will meet 
the proposed CAFE levels without any meaningful deviation from the 
planned performance and weight of their vehicles. Additionally, we do 
not expect any manufacturers to engage in any meaningful type of mix 
shifting to meet these standards, other than those already being 
planned. The agency's analysis assumes manufacturers will not reduce 
vehicle weight in order to comply with the proposed new standard. Under 
this approach, our CAFE standards will not adversely affect motor 
vehicle safety. However, we invite comments on this approach. 
Commenters are asked to provide data and analysis on the possibility or 
likelihood that manufacturers will comply with these new standards by 
reducing vehicle weight and, if so, the safety consequence of weight 
reduction.
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    \1\ This analysis is based on the information provided in 
response to our Request for Comments. A more detailed discussion of 
these issues is contained in the agency's Preliminary Economic 
Assessment (PEA), which has been placed in the docket for this 
notice. Some of the information included in the PEA, including the 
details of manufacturers' future product plans, has been determined 
by the Agency to be confidential business information the release of 
which could cause competitive harm. The public version of the PEA 
omits the confidential information.
---------------------------------------------------------------------------

    The Preliminary Economic Assessment (PEA) discusses in detail fuel 
efficiency enhancing technologies expected to be available during the 
MY 2005-2007 time period. Some of the technologies discussed in the PEA 
have been used for over a decade (e.g., overhead camshafts, engine 
friction reduction, and low friction lubricants). Some have only 
recently been incorporated into passenger cars, (e.g., 5-speed and 6-
speed automatic transmissions and variable valve timing). Some have 
been under development for a number of years but have not been produced 
in quantity for an extended period (e.g., cylinder deactivation, 
variable valve lift and timing, continuously variable transmission 
(CVT), integrated starter/generator, advanced diesels and hybrid drive-
trains).
    The agency has analyzed potential technological improvements to the 
product offerings for each manufacturer with a significant share of the 
light truck market. As indicated above, Ford, General Motors and 
DaimlerChrysler are the dominant manufacturers in the light truck 
segment. In comparison, Toyota, Honda or Nissan do not manufacture a 
substantial share of the light trucks sold in the U.S. We also note 
that unlike the domestic manufacturers, none of the foreign 
manufacturers of trucks provided detailed responses to our prior 
request for comments.
    Because Ford, General Motors and DaimlerChrysler each have a 
substantial share of the light truck market, we focused our analysis on 
their capabilities. Historically, the agency has premised its analysis 
of economic practicability on what level each manufacturer with a 
substantial share of the market could achieve without needing to engage 
in product restriction (with a potentially adverse effect on jobs and 
consumer choice) or weight

[[Page 77020]]

reductions (with a potentially adverse effect on safety). The limit of 
economic practicability has been considered to be that of the least 
capable manufacturer with a substantial share of the relevant market 
because the CAFE program seeks to find the maximum level of fuel 
economy achievable without impeding American jobs or motor vehicle 
safety.
    To define the maximum CAFE level that will not lead to adverse 
consequences, we reviewed in detail the confidential product plans 
provided by the major contributors to the market and assessed their 
technological capabilities. By doing so, we are able tentatively to 
determine the extent to which each can enhance their fuel economy 
performance using available technology.
    In examining the potential for improvements in light truck fuel 
economy, we considered potential technological improvements using a 
three-stage analysis in which different improvements in efficiency are 
applied to the light truck fleet at different times. Technologies that 
were reported by a particular manufacturer to be available for use in 
MY 2005 or earlier--but were not necessarily being applied by that 
manufacturer--are regarded in NHTSA's analysis as ``Stage 1'' 
technologies. Other technologies, including potential transmission and 
engine improvements, that some manufacturers indicated were part of 
planned production programs were designated as ``Stage 2'' 
improvements. Finally, improvements in efficiency garnered by replacing 
planned sales of vehicles equipped with 6.0L or larger engines to 
almost identical models equipped with 5.3L or larger engines was 
designated as ``Stage 3.'' To repeat, none of the efficiency 
improvements envisioned in our analysis involved significant changes in 
vehicle mass or size.
    Our analysis does not incorporate a rigid methodology to achieve 
the proposed levels of fuel economy. For instance, we estimate that 
replacing an overhead valve engine with a multi-valve overhead camshaft 
engine of the same displacement and replacing a 4-speed automatic 
transmission with a 5- or 6-speed automatic transmission offer about 
the same potential level of improvement. One of them may be more 
attractive to a particular manufacturer because of its cost, ease of 
manufacturing, or the model lines to which it would apply. Nor does 
this analysis include the many minor types of improvements in 
electronic controls and engine valving that could provide further fuel 
economy gains. These are omitted because it is difficult to 
definitively determine which of these technologies will be included in 
the models that manufacturers plan to produce in MY 2005-2007.

A. General Motors

    In its submission, General Motors described a variety of 
technologies that could be used to improve fuel economy. For each such 
technology, GM included its estimated fuel economy benefit, the basis 
for that estimate, whether the benefit was direct or interactive, a 
description of how the technology works and how it increases fuel 
economy, when the technology would be available for use, its potential 
applications, where it is currently employed in GM's light truck 
fleets, where the technology could potentially be used, risks in 
employing the technology, and potential impacts on noise, vibration and 
harshness (NVH), safety, emissions, cargo and towing capacity.
    The agency relied on these descriptions in determining which Stage 
1 technologies GM could employ in MYs 2005-2007 to enhance its fuel 
economy performance. Our analysis indicates that GM could employ five 
technologies by MY 2005 in certain parts of its light truck fleet with 
an additional three technologies employed in certain parts of its light 
truck fleet by MY 2006. The five technologies would carry over to MY 
2006-2007, while the additional three technologies would carry over to 
MY 2007. All of these technologies would, in NHTSA's view, continue to 
be used in future model years. We also used the numbers provided by GM 
for percentage increase in fuel economy in calculating the possible 
fuel economy increase attributable to each of these technologies.
    To determine which Stage 2 technologies GM could employ, on which 
vehicles and/or engines they could be employed, and when they could be 
employed, NHTSA relied on its own engineering judgment and the 
submissions from other manufacturers. In looking at these submissions, 
together with what GM provided, NHTSA has analyzed which Stage 2 
technologies could be applied to GM's light truck fleet for MYs 2005-
2007. Our analysis indicates that GM could employ two technologies by 
model year 2005, and an additional technology by model year 2006. One 
of the technologies introduced in MY 2005 would only carry over into MY 
2006, because the vehicles that could use this technology are being 
redesigned in MY 2007, and indications are that this specific 
technology application is included in the vehicle redesign. The other 
technologies would carry over in MY 2007 and would continue to be 
employed in future model years. To determine the possible fuel economy 
increase attributable to each of these technologies, NHTSA examined 
manufacturer-provided estimates for the percentage increases in fuel 
economy for each technology. If a manufacturer had already introduced a 
specific technology or was introducing it by MY 2005, we placed more 
credence on that value, especially if it was in the NAS range and if at 
least one other manufacturer estimated a similar value for the fuel 
economy potential of that technology.
    The Stage 3 analysis includes projections of the potential CAFE 
increase that could result from moving the sales of vehicles equipped 
with 6.0L or larger engines to almost identical models equipped with 
5.3L or larger engines. The agency reviewed GM's publicly available 
data and believes, based on that review, that the bulk of GM models 
equipped with the 6.0 L engines could be replaced with 5.3 L engines 
without notably degrading the cargo and towing capacity of these 
vehicles. If this were the only change made to GM's light truck fleet, 
it would increase GM's projected CAFE by 0.1 mpg for MYs 2005-2007.
    The potential improvements to the GM light truck CAFE are 
summarized in the following table. Due to rounding, the individual 
improvements may not equal the potential CAFE for GM.

                                       Potential GM CAFE Improvements, MPG
----------------------------------------------------------------------------------------------------------------
                                           Stage 1         Stage 2         Stage 3                    Potential
              Model year                improvements    improvements    improvements      Total      CAFE, mpg.
----------------------------------------------------------------------------------------------------------------
2005.................................            .439            .466           .1065        1.012         20.97
2006.................................            .936            .502           .0616        1.500         21.63
2007.................................            .921            .496           .0825        1.499         22.29
----------------------------------------------------------------------------------------------------------------


[[Page 77021]]

    Although General Motors also included a discussion of uncertainties 
and penalties that could adversely affect its fuel economy levels, we 
did not make further adjustments to account for these reservations. We 
believe that the increasing popularity of crossover vehicles may limit 
the future sales of full size Sport Utility Vehicles, and that the 
increasing use of traction control and limited slip differentials could 
replace 4WD in many applications at both lower cost and weight.

B. Ford Motor Company

    Ford's submission included information similar to that provided by 
General Motors. The agency engaged in the same type of analysis in 
assessing Ford's potential fuel economy capabilities as it did in 
assessing GM's potential capabilities.
    Our Stage 1 analysis showed that Ford could employ one technology 
on certain models by MY 2005, with an additional technology employed on 
certain models by MY 2007. The agency used the numbers provided by Ford 
for percentage increase in fuel economy in calculating the possible 
fuel economy increase attributable to each of these technologies. We 
did not carry over the benefits for the MY 2005 technology to further 
years because Ford is redesigning many of these vehicles in MY 2006-
2007 and appears to have included this technology in calculating its 
fuel economy estimates. Starting with MY 2007, Ford could use another 
technology on some vehicles.
    Our Stage 2 analysis showed that by MY 2007, Ford could offer two 
technologies two years earlier, one of which requires the use of an 
additional complimentary technology, with all carrying over into future 
model years.
    The Stage 3 analysis projects potential CAFE improvements resulting 
from moving the sales of vehicles equipped with 6.0L or larger engines 
to almost identical models equipped with slightly smaller engines. Ford 
does not project the production of any vehicles with a 6.0L engine or 
larger engine, thus there are no potential CAFE increases resulting 
from Stage 3.
    Based on these assessments, the agency has estimated modest 
adjustments to the projections based on Ford's data. We estimate that 
Ford can achieve an additional .08 mpg in CAFE performance through 
Stage 1 improvements in MY 2005 and an additional .02 mpg in Stage 1 
and .17 mpg in Stage 2 improvements in MY 2007. These CAFE adjustments 
result in CAFE capability of 21.0 mpg for MY 2005, 21.6 mpg for MY 2006 
and 22.2 mpg for MY 2007. Ford also described a number of risks and 
opportunities in its submission. Ford stated that its initial estimates 
of fuel economy improvements are typically higher than what actual 
production vehicles achieve. NHTSA didn't downwardly adjust Ford's 
estimates because the agency believes that its estimates of the 
effectiveness of fuel economy technologies--which are based on 
confidential data, the NAS study, publicly available information, and 
engineering judgment--are reasonable.

C. DaimlerChrysler

    DaimlerChrysler's plans include comparatively more fuel-efficient 
technologies in MYs 2005-2007, including the use of Stage 2 technology. 
Although Honda may be incorporating slightly more advanced technology 
than DaimlerChrysler, the level of detail Honda provided is 
insufficient to allow us to conclude that DaimlerChrysler could enhance 
its fuel economy performance through the use of technologies similar to 
those employed by Honda. Therefore, the agency has not adjusted 
DaimlerChrysler's numbers to incorporate additional Stage 1 or Stage 2 
technologies.
    The Stage 3 analysis includes projections of the potential CAFE 
increase that could result from moving the sales of vehicles equipped 
with 6.0L or larger engines to almost identical models equipped with 
5.3L or larger engines. The potential Stage 3 improvements to the 
DaimlerChrysler light truck CAFE result in a .02 mpg improvement in 
Stage 3 adjustment in MY 2006 and a .01 mpg Stage 3 adjustment in MY 
2007. Accordingly, we estimate DaimlerChrysler's light truck CAFE 
capability to be 21.3 mpg for MY 2005, 21.6 mpg for MY 2006 and 22.2 
mpg for MY 2007.
    DaimlerChrysler indicated that its fuel economy estimates include 
risks that their CAFE projections won't be met due to technology 
issues, product offerings, consumer acceptance, future safety 
regulations and the economic climate. NHTSA didn't downwardly adjust 
DaimlerChrysler's estimates because the agency believes that its 
estimates of the effectiveness of fuel economy technologies--which are 
based on confidential data, the NAS study, publicly available 
information, and engineering judgment--are reasonable.

VI. Economic Practicability

    The agency has historically reviewed whether a CAFE standard is 
economically practicable in terms of whether the standard is one 
``within the financial capability of the industry, but not so stringent 
as to threaten substantial economic hardship for the industry.'' See, 
e.g., Public Citizen v. National Highway Traffic Safety Administration, 
848 F.2d 256, 264 (D.C. Cir. 1988). In essence, the agency reviews what 
is technologically feasible for manufacturers to achieve without 
leading to adverse economic consequences, such as a significant loss of 
jobs or the unreasonable elimination of consumer choice. The CAFE 
statute does not compel that fuel savings be gained at the expense of 
American jobs or competition within the motor vehicle market.
    At the same time, the law does not preclude a CAFE standard that 
poses reasonable, even if considerable, challenges to any individual 
manufacturer. The Conference Report makes clear, and the case law 
affirms, that ``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.'' 
CEI-I, 793 F.2d 1322, 1352 (D.C. Cir. 1986). Instead, the agency is 
compelled ``to weigh the benefits to the nation of a higher fuel 
economy standard against the difficulties of individual automobile 
manufacturers.'' Id. The statute permits the imposition of reasonable, 
``technology forcing'' challenges on any individual manufacturer, but 
does not contemplate standards that will result in ``severe'' economic 
hardship by forcing reductions in employment or impeding competition.
    In the past, the agency has set CAFE standards above its estimate 
of the capabilities of a manufacturer with less than a substantial, but 
more than a de minimus, share of the market. See, e.g., Center for Auto 
Safety v. National Highway Traffic Safety Administration, 793 F.2d 
1322, 1326 (D.C. Cir. 1986) (noting that the agency set the MY 1982 
light truck standard at a level that might be above the capabilities of 
Chrysler, based on the conclusion that the energy benefits associated 
with the higher standard would outweigh the harm to Chrysler, and 
further noting that Chrysler had 10-15% market share while Ford had 35% 
market share). On another occasion the agency has reduced the CAFE 
standard to address unanticipated market conditions that rendered the 
established CAFE standard unreasonable and likely to lead to severe 
economic consequences. 49 FR 41250, 50 FR 40528, 53 FR 39275, Public 
Citizen v. National Highway Traffic Safety Administration, 848 F.2d 
256, 264 (D.C. Cir. 1988).

[[Page 77022]]

    The agency has estimated not only the anticipated costs imposed on 
GM, Ford and DaimlerChrysler to comply with the proposed standards, but 
also the significance of the societal benefits anticipated to be 
achieved through direct and indirect fuel savings. We have tentatively 
concluded that these proposals need not result in significant 
reductions in employment or competition, and that--while challenging--
they are achievable within the framework described above, and that they 
will benefit society considerably. For the sake of this analysis, we 
have translated the societal benefits into dollar values and compared 
those values to our estimated costs to the manufacturers for this 
proposal.

A. Costs to the Manufacturers

    In order to estimate the costs of complying with the proposed 
standards, the agency developed cost estimates for the various 
technologies NHTSA expects manufacturers to employ to improve fuel 
efficiency. Our cost estimates were based on two principal 
considerations. We first assumed that manufacturers would apply 
technologies in keeping with our analysis of feasible Stage 1, Stage 2 
and Stage 3 technologies. Second, we also assumed that manufacturers 
would apply less costly technologies before those that are more costly 
(ranked on a cost per mpg investment basis).
    Within the range of values anticipated for each technology, we 
selected the ``expected'' cost impacts and fuel consumption impacts 
considered most plausible during the model years under consideration 
for the industry in general. Some manufacturers might achieve more 
benefit than others using similar technologies or on specific vehicles. 
However, this analysis assumes an equal impact from specific 
technologies for all manufacturers and vehicles. The technologies were 
ranked based on the cost per percentage point improvement in fuel 
economy and applied where available to each manufacturer's fleet in 
their order of rank. For example, we estimated that greater use of 
variable valve timing would yield a 1% improvement in fuel economy at a 
cost of $89 per vehicle. This measure would therefore be applied after 
engine friction reduction technologies, which we estimated would 
produce a 1.5% improvement in fuel economy at a cost of $35, yielding a 
cost per percentage point improvement of $23. The complete list of the 
technologies and the agency's estimates of cost and yield may be found 
in the PEA.
    Using the estimated costs and yields for the different 
technologies, the agency then examined the projections provided by 
different manufacturers for their light truck fleet fuel economy for 
the 2005-2007 model years. Although the details of the projections of 
individual manufacturers are confidential, present fuel economy 
performance indicates that some manufacturers would, if their fleets 
remain unchanged, be able to meet the proposed standards without 
significant expenditures. Other manufacturers will have to expend 
significantly more effort to meet the proposed standards.
    NHTSA estimates the average incremental cost per vehicle needed to 
meet the proposed standards to be $14 for MY 2005, $28 for MY 2006, and 
$47 for MY 2007. The total incremental cost (the cost necessary to 
bring the corporate average fuel economy for light trucks from 20.7 mpg 
to the proposed standards) is estimated to be $108 million for MY 2005, 
$221 million for MY 2006, and $373 million for MY 2007. More detailed 
specifics on the methodology employed are included in the PEA.
    While we have also conducted an analysis of the potential job 
losses arising should manufacturers choose to restrict products in lieu 
of incorporating technologies into their product plans, we believe 
product restrictions and associated employment reductions to be 
unnecessary to meet the proposed CAFE standards. We acknowledge that we 
have proposed some changes in engine assignments, but believe that 
these changes will neither change the basic utility of the trucks in 
terms of their cargo carrying and towing capacities nor require a 
substantial shift in product mix that will have economic significance.
    The fact that consumers are willing to pay higher prices for the 
larger engine suggests that they place some value on the additional 
horsepower. We seek comment on whether consumers are more likely to buy 
larger trucks, beyond the purview of the CAFE program, to obtain the 
perceived benefit, or whether they are more likely to purchase trucks 
of like size with slightly smaller engines.
    The agency has long recognized that one way to meet a CAFE standard 
is to restrict the availability of products that reduce, rather than 
enhance, a company's fleet wide corporate average fuel economy level. 
Conversely, the agency also acknowledges that restricting available 
product can adversely affect fuel economy. Consumers unable to obtain 
light trucks at or near the maximum weight vehicle within the CAFE 
limit (currently 8500 pounds GVWR) may choose to purchase vehicles 
above that weight. Such vehicles may be more readily available since 
they are outside the purview of the CAFE program. Of course, compliance 
through product restriction also poses the possibility of limiting 
consumer choice.
    The agency has tentatively concluded that it is unnecessary for any 
manufacturer to restrict the utility of their products to meet our 
proposed CAFE standards. Accordingly, we do not believe that any 
employment restriction should result from this proposal.

B. Benefits to Society From This Proposal

    The agency also performed an analysis of the economic and 
environmental benefits of this proposal by performing estimates of fuel 
savings over the lifetime of the model year (approximately 25 years). 
Impacts other than direct fuel savings were translated into dollar 
values and then factored into our cumulative estimates. Therefore, each 
impact is measured by the difference between a measure--such as total 
gallons of fuel consumed by light trucks produced during a single model 
year over its entire 25-year life span in the fleet--under the 
manufacturer plans compared to the fuel consumed with a stricter 
standard in effect. The agency's analysis estimated future impacts in 
both undiscounted terms and by their present value discounted using a 7 
annual percent discount rate.
    In estimating the direct benefits of decreased fuel consumption, 
forecasts of light truck sales for future years were obtained from the 
Energy Information Administration's (EIA) Annual Energy Outlook 2002 
(AEO 2002). Fuel economy performance for each future model year's light 
trucks under the current CAFE standard and with alternative standards 
in effect were estimated using the agency's projections for the 
application of fuel saving technologies. As shown in our PEA, NHTSA 
estimates that approximately 7,654,000 light trucks will be sold in the 
2005 model year. For the 2006 and 2007 model years, the estimates are 
7,795,000 and 7,922,000 vehicles respectively.
    The economic value of annual fuel savings resulting from higher 
light truck CAFE standards was then assessed by applying the Energy 
Information Administration's AEO 2002 forecast of future fuel prices to 
each year's estimated fuel savings. In turn, future fuel savings were 
estimated by dividing the total number of miles the surviving 
population of vehicles of that model

[[Page 77023]]

year are estimated to be driven by the average on-road fuel economy 
level associated with the base standard of 20.7 mpg. NHTSA then assumed 
that if the same trucks met a higher CAFE standard when sold, their 
total fuel consumption during each subsequent calendar year is 
calculated by dividing the increased number of miles they are driven as 
a result of the higher fuel economy resulting from that standard. The 
sum of these annual fuel savings over each calendar year that vehicles 
remain in service represents the cumulative fuel savings resulting from 
applying a stricter CAFE standard to light trucks produced during that 
model year.
    NHTSA's analysis of the benefits of external factors totaled $0.083 
per gallon of gasoline, including $0.048 for ``monopsony'' effect (the 
effect on the world market price of gasoline from reducing U.S. 
demand), and $0.035 for reducing the threat of supply disruptions. 
Incorporating these indirect benefits into the direct benefits of fuel 
saved as a result of higher CAFE standards produced an incremental 
benefit to consumers, when reduced to present value, of $29 per vehicle 
for MY 2005, $66 per vehicle for MY 2006 and $100 per vehicle for MY 
2007. The total present value of these direct and indirect benefits is 
estimated to be $219 million for MY 2005, $512 million for MY 2006 and 
$792 million for MY 2007.
    We have also analyzed the effect of the proposed standard on 
vehicle emissions. Estimates of the reduced economic value of damages 
to human health resulting from emissions of regulated air pollutants 
were obtained from a detailed recent analysis conducted by the 
Environmental Protection Agency. These estimates were applied to the 
estimated changes in emissions of each criteria pollutant to determine 
the resulting change in damage costs caused by that pollutant. Because 
reliable estimates of damage costs from contributions to potential 
climate change by emissions of carbon dioxide, other greenhouse gases 
and airborne toxic pollutants are not yet available, the PEA did not 
assign a monetary value to changes in these particular emissions. Our 
analysis indicated that the proposed MY 2005 standard would result in a 
net reduction of criteria pollutants with a present value of $179,200. 
For MY 2006, this net reduction would have a present value of $818,500 
and for MY 2007 the net reduction of criteria pollutants would have 
value of $1,644,400.

C. Comparison of Estimated Industry Costs v. Estimated Societal 
Benefits

    In sum, then, the total incremental costs by model year compared to 
the incremental societal benefits by model year are as follows:

------------------------------------------------------------------------
                                                   Total
                                   Total costs    societal       Net
                                     (million)    benefits     benefits
                                                 (million)    (million)
------------------------------------------------------------------------
MY 2005..........................         $108         $219         $111
MY 2006..........................          221          513          292
MY 2007..........................          373          794          421
------------------------------------------------------------------------

    In light of these figures, we have tentatively concluded that the 
proposal serves the overall interests of the American people and is 
consistent with the balancing Congress has compelled us to do when 
establishing corporate average fuel economy levels. For all the reasons 
stated above, we believe the proposal is economically practicable and, 
independently, that it is a cost beneficial advancement for American 
society.
    In a well-functioning market with fully informed consumers and 
manufacturers, consumers would take into account the savings to 
themselves associated with more fuel-efficient vehicles. If the value 
of cumulative fuel savings exceeded the additional price and associated 
financing cost of purchasing a more fuel-efficient vehicle, consumers 
should be inclined to buy these vehicles and producers should be 
inclined to sell them. The NHTSA estimates find that the direct fuel-
savings to consumers account for the majority of the total social 
benefits, and exceed the estimated costs of adopting more fuel-
efficient technologies. Thus, the question arises as to what market 
conditions could explain this situation and whether fuel saving 
technologies will be adopted in the absence of increasing CAFE 
standards.
    One possibility is that consumers have not demanded greater fuel 
efficiency, despite the benefits to be gained, because of the 
difficulty and time involved in calculating the total savings 
associated with purchasing a more fuel-efficient vehicle. As a 
percentage of new vehicle purchase prices, the savings and costs of 
fuel economy increases are relatively small. Assuming the NHTSA 
calculations are correct and that light truck markets are reasonably 
competitive, consumers generally could be made better off if 
manufacturers were forced to offer more fuel efficiency. A more remote 
possibility is that the light truck market is not sufficiently 
competitive and manufacturers can survive without maximizing profits. 
In that case market forces would not be sufficient to ensure that 
manufacturers include in their vehicles fuel-saving technologies even 
though doing so would increase profits. A final possibility is that 
NHTSA's cost and/or benefit estimates are incomplete. For example, it 
could be that greater fuel efficiency comes with tradeoffs in power, 
safety, and design not accounted for in NHTSA's estimated costs, that 
the engineering costs of implementing new technologies are actually 
greater than those estimated, or that the actual fuel savings are less 
than those estimated. The agency invites comments on the ability of 
consumers to compare capital costs to expected fuel savings, the cost 
to them of doing so, as well as suggestions for facilitating these 
calculations. The agency also invites comments on the competitiveness 
of the light truck market and the technical tradeoffs between fuel 
efficiency and other characteristics of light trucks that consumers 
value.
    As part of the interagency review process, the Energy Information 
Agency (EIA) has provided NHTSA with a preliminary analysis of the 
energy and economic impacts of an increase in light truck fuel economy 
standards comparable to the proposed rule. Specifically, EIA analyzed 
standards of 21.2, 21.7, and 22.2 mpg for model years 2005-2007, 
respectively. Using its National Energy Modeling System (NEMS), EIA's 
analysis indicates that the actual average fuel economy of new light 
trucks would increase to 21.7 mpg in model year 2005--well beyond the 
21.2 mpg required during that year--but would fall slightly short of 
the 22.2 mpg standard by model year 2007. The EIA analysis also 
projects that NHTSA's proposed rule would cause a greater increase in 
the cost of light trucks than estimated by NHTSA and a slight reduction 
in the average weight of light

[[Page 77024]]

trucks. NHTSA estimated no weight reduction. EIA's estimates of fuel 
savings resulting from stricter CAFE standards for light trucks also 
appear to be larger than those calculated in NHTSA's analysis. Finally, 
EIA's projected effects on employment and real GDP are slightly 
negative through 2010, but become positive during 2011 to 2020.
    The differences in results of the two analyses of the proposed 
light truck standards stem primarily from differences in the underlying 
approaches of models. For example, the NEMS model effectively treats 
all manufacturers identically whereas NHTSA's approach relies heavily 
on detailed manufacturer-specific data. As a result of these 
differences, NHTSA's approach has advantages for analyzing the effects 
of near-term modest increases while the NEMS approach is more useful 
for analyzing longer-term industry-wide effects of larger increases in 
the standards. For shorter-term analysis of modest increases in 
required fuel economy levels, confidential information about the 
differences in the relative fuel economy capabilities of the individual 
manufacturers at the model-specific level is essential. This is because 
the technology application burdens and cost impacts imposed on 
individual manufacturers by the stricter standards will differ 
significantly. Where longer-term, industry-wide analysis of significant 
increases in fuel economy standards is required, current differences in 
manufacturer capabilities become much less relevant. In addition, NEMS' 
ability to estimate macroeconomic ``feedbacks'' from stricter CAFE 
standards is very useful.
    EIA's analysis has been included in the public docket for this 
rulemaking. NHTSA welcomes comment and wants to ensure that the CAFE 
program and future increases in CAFE standards do not adversely impact 
vehicle safety or employment. To this end, the agency is examining 
possible reforms to the CAFE system and may later propose specific 
reforms if they are superior to the current system in terms of 
improving fuel economy without negative safety and employment 
consequences.

VII. The Effect of Other Government Regulations on Fuel Economy

    The statute specifically directs us to consider the impact other 
government regulations have on fuel economy. This statutory factor 
constitutes an express recognition that fuel economy standards should 
not be set without due consideration given to other regulatory 
concerns, such as motor vehicle and passenger safety and motor vehicle 
emissions. The primary influence of many of these policies is the 
addition of weight to the vehicle, with the commensurate reduction in 
fuel economy.

A. Federal Motor Vehicle Safety Standards

    The agency has evaluated the impact of the Federal motor vehicle 
safety standards using MY 2001 vehicles as a baseline. We have issued 
or are about to issue a number of Federal motor vehicle safety 
standards that become effective between the MY 2001 baseline and MY 
2007. The fuel economy impact, if any, of these new requirements would 
take the form of increased vehicle weight resulting from the design 
changes needed to meet new standards.
    The average test weight (roughly equal to curb weight plus 300 
pounds) of the light truck fleet in MY 2001 was 4,501 pounds. The 
average test weight for General Motors, Ford, and DaimlerChrysler light 
trucks subject to the standard for MY 2001 was 4,627 pounds. Our review 
of new safety requirements that will apply to the MY 2005-2007 light 
truck fleet indicates that compliance with the following safety 
standards will have an impact on vehicle weight:
i. FMVSS 138, Tire Pressure Monitoring System
    As required by the Transportation Recall Enhancement, 
Accountability, and Documentation (TREAD) Act, NHTSA is requiring Tire 
Pressure Monitoring Systems be installed in all passenger cars, 
multipurpose passenger vehicles, trucks and buses that have a GVWR of 
10,000 pounds or less, effective in November 2003. We estimate the 
weight that would be added consists of electrical parts that would not 
weigh more than half a pound (0.23 kilograms or less) per vehicle.
ii. FMVSS 139, Tire Upgrade
    The TREAD Act mandated rulemaking to revise and update our safety 
performance requirements for tires. While the agency's Preliminary 
Economic Assessment of the proposed tire upgrade indicated there would 
be added cost for the improved tires but no increased weight, it is 
possible that some vehicles would need larger tires, which would add an 
undetermined minimal amount of weight to those vehicles.
iii. FMVSS 201, Occupant Protection in Interior Impact
    This standard specifies requirements to afford protection for 
occupants from impacts with interior parts of the vehicle. The new 
amendment relates to upper pillars, front and rear headers, the side 
roof rails and other upper interior parts. It applies to passenger cars 
and to multipurpose vehicles, trucks, and buses with a GVWR of 10,000 
pounds (4,536 kilograms) or less. Additional padding could be added or 
pillars could be redesigned to pass the upgraded standard. We estimate 
the average weight gain would be 7.5 pounds (3.4 kilograms) per 
vehicle.
iv. FMVSS 202, Head Restraints
    This proposed regulation would improve front seat head restraints 
in passenger cars, pickups, vans, and utility vehicles and require head 
restraints in the rear outboard positions. Because many pickup trucks 
and some vans do not have back seats, the average weight increase for 
this standard is lower than for automobiles. We estimate the average 
weight gain across light trucks, vans and SUVs would add 4.3 pounds 
(1.94 kilograms) per vehicle.
v. FMVSS 208, Occupant Crash Protection
    This rule amends our occupant crash protection standard to require 
that future air bags be designed to create less risk of serious air 
bag-induced injuries than current air bags, particularly for small 
women and young children; and provide improved frontal crash protection 
for all occupants, by means that include advanced air bag technology. 
Additional weight would come from sensors, switches, indicators, and 
associated electrical equipment. We estimate the average weight gain 
would be 3.4 pounds (1.54 kilograms).
vi. FMVSS 225, Child Restraint Anchorage Systems
    The Final Economic Assessment (February 1999) for FMVSS 213 and 225 
estimates the additional weight for improved anchorages would be less 
than 1 pound (0.45 kilogram).
vii. FMVSS 301, Fuel System Integrity
    This proposed rule would amend the testing standards for rear-end 
and side crashes and resulting fuel leaks. Although a few models 
(generally in the middle of their production lives) might require heavy 
additions such as a polymer guard for the bottom of the fuel tank, most 
would not. Many vehicles already pass the more stringent standards, and 
those affected are not likely to be pick-up trucks or vans. It is 
estimated that weight added will be only lightweight items such as a 
flexible filler neck. We estimate the average weight gain across this 
vehicle class

[[Page 77025]]

would be 0.24 pounds (0.11 kilograms) per vehicle.
    In summary, NHTSA estimates that weight additions required by FMVSS 
regulations that will be effective between the MY 2001 fleet and MY 
2007 fleet will average about 17 pounds per vehicle. As indicated 
elsewhere, the agency expects that manufacturers will not use weight 
reduction as one of the technologies available to improve fuel economy. 
As our analysis of feasible improvements in fuel economy assumes that 
manufacturer projections of future vehicle weights are valid and does 
not change these weights, weight increases due to new safety standard 
requirements, or whatever voluntary safety improvements the 
manufacturers are planning, will occur without the manufacturers being 
penalized by having to reduce weight to meet a fuel economy standard.

B. Federal Motor Vehicle Emissions Standards

    With input from the United States Environmental Protection Agency 
(EPA), NHTSA has evaluated the impact of a number of vehicle related 
emissions standards on fuel economy. In addition, NHTSA's Environmental 
Assessment examines how the proposed average fuel economy standard 
impacts air quality (the enhancement of which is at the core of the 
relevant EPA and state regulations) by affecting emissions of criteria 
pollutants. Many of these regulations are currently being incorporated 
into the vehicle fleet through a multi-year phase-in. NHTSA believes 
there to be no significant fuel economy impact between the baseline MY 
2001 and MY 2007 resulting from federal or state emissions regulations.
    The state of California has, in recent court filings, asserted that 
NHTSA has not treated the CAFE statute as preempting state efforts to 
engage in CAFE related regulation, stating that ``time and time again, 
NHTSA in setting CAFE standards has commented on the fuel economy 
effects of California's emissions regulations, and not once has it even 
suggested that these were preempted.'' See Appellants Opening Brief 
filed on behalf Michael P. Kenny in Central Valley Chrysler-Plymouth, 
Inc. et. al. v. Michael P. Kenny, No. 02-16395, at p. 33 (9th Circuit 
2002). As a result, the State suggests that it may, consistent with 
federal law, issue regulations that relate to fuel economy.
    The State misses the point. The agency reviews emissions 
requirements to ensure that we do not establish a standard that is 
infeasible in light of other public policy considerations, including 
federal and state efforts to regulate emissions. Thus, we consider 
potential fuel economy losses due to more stringent emissions 
requirements when we determine maximum feasible fuel economy levels.
    This does not mean that a state may issue a regulation that relates 
to fuel economy and which addresses the same public policy concern as 
the CAFE statute. Our statute contains a broad preemption provision 
making clear the need for a uniform, federal system: ``When an average 
fuel economy standard prescribed under this chapter is in effect, a 
State or a political subdivision of a State may not adopt or enforce a 
law or regulation related to fuel economy standards or average fuel 
economy standards for automobiles covered by an average fuel economy 
standard under this chapter.'' 49 U.S.C. 32919(a).
    The fact that NHTSA had not expressly addressed this particular 
aspect of California's requirements should not have been interpreted as 
tacit acceptance. Indeed, the United States has taken the express 
position in the Kenny case that it has a substantial interest in 
enforcing the federal fuel economy standards and in ensuring that 
states adhere to the Congressional directive prohibiting them from 
adopting or enforcing any law or regulation related to fuel economy or 
average fuel economy standards.
i. Tier 2 Requirements
    On February 10, 2000, EPA published a final rule (65 FR 6698) 
establishing new federal emissions standards for vehicles classified by 
EPA as passenger cars, light trucks and medium duty 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. 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 GVWR and ``heavy light-duty trucks'' (or HLDTs), 
rated at more than 6000 pounds GVWR. For new passenger cars and light 
LDTs, the Tier 2 standards phase-in beginning in MY 2004, and are to be 
fully phased-in by MY 2007. During the phase-in period of MYs 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 limits 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 the 
Supplemental Federal Test Procedure by indicating that it believed that 
the Tier 2 standards would not have an adverse effect on fuel economy.
    In setting the MY 2004 light truck CAFE standard, we noted that one 
of the commenters indicated that the Tier 2 standards would impact on 
its ability to meet fuel economy standards. DaimlerChrysler, 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 company did not, however, 
indicate the nature of these challenges and the degree to which the 
Tier 2 standards would impact on its ability to meet the CAFE light 
truck standard. Therefore, we have no basis to suggest the Tier 2 
standards will adversely affect fuel economy.
ii. Onboard Refueling 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 up to 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 2004 model year and 
phase-in over three model years at the same rate as light-duty 
vehicles.
    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 net negative impact on 
fuel economy.

[[Page 77026]]

iii. Supplemental Federal Test Procedure
    The Federal Test Procedure (FTP) contains the test conditions and 
procedures used by the EPA when conducting new vehicle emissions and 
fuel economy tests. 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. Although DaimlerChrysler has 
indicated that the changes to the FTP will have a disproportionately 
negative impact on light truck fuel economy, EPA has determined that 
the net effect on fuel economy for the recent test procedure changes is 
near zero. EPA considered the effects of four test changes: single-roll 
electric dynamometer with full-speed load simulation, elimination of 
the 10% air conditioning load factor, elimination of the 5500 maximum 
test weight for cars, and improved test equipment. While some changes 
decreased measured fuel economy, others raised it; with the net result 
of a near zero effect. This determination was based on the total fleet, 
which is a mix of front wheel drive and rear wheel drive cars and 
trucks.
    Considering trucks alone is not likely to change that 
determination. Trucks, as a sub-class, have a larger mix of rear wheel 
drive vehicles than the combined fleet. This would lead to a slightly 
increased effect of the single roll dynamometer and thereby slightly 
lower measured fuel economy. However, the truck sub-class also has 
higher road load horsepower than the combined fleet. This would lead to 
slightly higher effects due to the elimination of the 10% air 
conditioning load and thereby slightly higher measured fuel economy. 
The net effect of the combined test procedure changes on the truck sub-
class is still expected to be near zero.
iv. California Air Resources Board LEV II and Section 177 States
    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 DaimlerChrysler 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.
    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.

VII. The Need of the Nation To Conserve Energy

    The Energy Policy and Conservation Act (EPCA) arose in response to 
the energy crises created by the oil embargo of 1973-1974. The Act 
established an automotive fuel economy regulatory program by adding 
Title V, ``Improving Automotive Efficiency,'' to the Motor Vehicle 
Information and Cost Saving Act. The Department is specifically 
directed by the Act to balance the technological and economic 
challenges with the nation's need to conserve energy.
    While EPCA grew out of the energy crisis of the 1970s, the United 
States also faces considerable energy challenges today. As made clear 
in the National Energy Policy, efficient energy use and conservation 
are important elements of a comprehensive program to address the 
nation's current energy challenges:

    America's current energy challenges can be met with rapidly 
improving technology, dedicated leadership, and a comprehensive 
approach to our energy needs. Our challenge is clear--we must use 
technology to reduce demand for energy, repair and maintain our 
energy infrastructure, and increase energy supply. Today, the United 
States remains the world's undisputed technological leader: but 
recent events have demonstrated that we have yet to integrate 21st-
century technology into an energy plan that is focused on wise 
energy use, production, efficiency, and conservation.

    Conserving energy, especially reducing the nation's dependence on 
imported petroleum, benefits the nation's efforts to address the energy 
challenges in several ways. Reducing total petroleum use and reducing 
petroleum imports decrease our economy's vulnerability to oil price 
shocks and improves our national security.
    We believe that the Administration's support of continued 
development of advanced technology, such as fuel cell technology, and 
an infrastructure to support it, may help to achieve significant 
reductions in foreign oil dependence and stability in the world oil 
market. The continued infusion of hybrid propulsion and advanced diesel 
vehicles into the U.S. light truck fleet may also contribute to reduced 
dependence on petroleum. However, as noted above, these technologies 
are not likely to substantially infuse into the light truck market in 
the relative short term.
    We have tentatively concluded that the proposed light truck CAFE 
standards will be important contributors to the comprehensive program 
of addressing the nation's more immediate energy challenges. The 
transportation sector consumes the majority of the petroleum used in 
the United States. Within the transportation sector, passenger cars and 
light trucks, the vehicles covered by fuel economy standards account 
for almost 60% of petroleum consumption.
    Our analysis suggests that increasing the CAFE standards, as 
proposed, will contribute to energy conservation. In assessing the 
impact of the proposal, we accounted for the increased vehicle mileage 
that accompanies reduced costs to consumers associated with greater 
fuel efficiency and have tentatively concluded that the proposal will 
lead to

[[Page 77027]]

considerable fuel saving. While increasing fuel economy without 
increasing the cost of fuel will lead to some additional vehicle 
travel, the overall impact on fuel conservation remains positive. 
Increasing fuel economy by 10% will produce an estimated 8-9% reduction 
in fuel consumption.
    We acknowledge that, despite the CAFE program, the United States' 
dependence on foreign oil and petroleum consumption has increased in 
recent years. Nonetheless, data suggests that past fuel economy 
increases have had a major impact on U.S. petroleum use. The National 
Research Council determined that if the fuel efficiency of the vehicle 
fleet had not improved since the 1970s, the U.S. gasoline consumption 
and oil imports would be about 2.8 million barrels per day higher than 
they are today. Although a nearly complete turnover of the light duty 
vehicle fleet takes about 15 years, increases in the fuel economy of 
new vehicles eventually raise the fuel efficiency of all vehicles as 
older cars and trucks are scrapped.
    Nor do we believe that the proposed increases in the light truck 
CAFE standards applicable to the 2005-2007 MYs will unduly lead to so-
called ``energy waste.'' This theory, presented in comments responding 
to our Request for Comments, rests on the notion that efforts to reduce 
energy use can result in negative economic effects from losses in 
product values, profits and worker incomes. As discussed above, the 
agency has determined that the proposed CAFE standards can be achieved 
through the use of available technologies and without imposing product 
restrictions, job losses or adverse safety consequences. Within the 
bounds of technological feasibility and economic practicability, the 
proposal will in fact enhance ``energy efficiency'' without adverse 
ancillary effects.

VIII. Rulemaking Analyses and Notices

A. Executive Order 12866 and DOT Regulatory Policies and Procedures

    Executive Order 12866, ``Regulatory Planning and Review'' (58 FR 
51735, October 4, 1993), provides for making determinations whether a 
regulatory action is ``significant'' and therefore subject to OMB 
review and to the requirements of the Executive Order. The Order 
defines a ``significant regulatory action'' as one that is likely to 
result in a rule that may:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local or Tribal governments or communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    The rulemaking proposed in this Notice of Proposed Rulemaking will 
be economically significant if adopted. Accordingly, OMB reviewed it 
under Executive Order 12866. The rule, if adopted, would also be 
significant within the meaning of the Department of Transportation's 
Regulatory Policies and Procedures. The agency has estimated that 
compliance with the average fuel economy standards proposed would cost 
over $100 million.
    Because the proposed rule is major and economically significant, 
the agency has prepared a Preliminary Economic Assessment and placed it 
in the docket and on the agency's Web site.

B. National Environmental Policy Act

    Consistent with the requirements of the National Environmental 
Policy Act and the regulations of the Council on Environmental Quality, 
the agency has prepared a Draft Environmental Assessment of this 
proposed action, and has placed the analysis in the docket. Based on 
the Draft Environmental Assessment, the agency does not, at this time, 
anticipate that the proposed action will have a significant effect on 
the quality of the human environment. The agency seeks comments on the 
Draft Environmental Assessment.

C. Regulatory Flexibility Act

    Pursuant to the Regulatory Flexibility Act (5 U.S.C. 601 et seq., 
as amended by the Small Business Regulatory Enforcement fairness Act 
(SBREFA) of 1996), whenever an agency is required to publish a notice 
of rulemaking for any proposed or final rule, it must prepare and make 
available for public comment a regulatory flexibility analysis that 
describes the effect of the rule on small entities (i.e., small 
businesses, small organizations, and small governmental jurisdictions). 
The Small Business Administration's regulations at 13 CFR part 121 
define a small business, in part, as a business entity ``which operates 
primarily within the United States.'' (13 CFR 121.105(a)). No 
regulatory flexibility analysis is required if the head of an agency 
certifies the rule will not have a significant economic impact on a 
substantial number of small entities. SBREFA amended the Regulatory 
Flexibility Act to require Federal agencies to provide a statement of 
the factual basis for certifying that a rule will not have a 
significant economic impact on a substantial number of small entities.
    NHTSA has considered the effects of this final rule under the 
Regulatory Flexibility Act and certifies that this final rule will not 
have a significant economic impact on a substantial number of small 
entities. The rationale for this certification is that there are no 
single stage light truck manufacturers within the United States with 
1,000 or fewer employees.

D. Executive Order 13132 Federalism

    Executive Order 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.'' Executive Order 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 Executive Order 13132, NHTSA may not issue a 
regulation that has federalism implications, 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 Notice of Proposed Rulemaking would 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 
Executive Order 13132. The statute under which the CAFE program is 
administered clearly states that states may not adopt or enforce any 
law or regulation that relates to fuel economy standards. 49 U.S.C. 
32919(a). Thus, the requirements of section 6 of the Executive Order do 
not apply to this notice.

[[Page 77028]]

E. The Unfunded Mandates Reform Act

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires Federal 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 in any one year (adjusted for inflation with base 
year of 1995). Before promulgating a rule for which a written statement 
is needed, section 205 of the UMRA generally requires NHTSA to identify 
and consider a reasonable number of regulatory alternatives and adopt 
the least costly, most cost-effective, or least burdensome alternative 
that achieves the objectives of the rule. The provisions of section 205 
do not apply when they are inconsistent with applicable law. Moreover, 
section 205 allows NHTSA to adopt an alternative other than the least 
costly, most cost-effective, or least burdensome alternative if the 
agency publishes with the final rule an explanation why that 
alternative was not adopted.
    This final rule will not result in the expenditure by State, local, 
or tribal governments, in the aggregate, of more than $100 million 
annually, but it will result in the expenditure of that magnitude by 
vehicle manufacturers and/or their suppliers. In promulgating this 
proposal, NHTSA considered whether average fuel economy standards lower 
and higher than those proposed would be appropriate. NHTSA has 
tentatively concluded that the proposed standards are the maximum 
feasible standards for the light truck fleet for MYs 2005-2007 in light 
of the statutory considerations.

F. Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (PRA), a person is not 
required to respond to a collection of information by a Federal agency 
unless the collection displays a valid OMB control number. There are no 
new information collection requirements in this proposal.

G. 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.

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

I. 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 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 proposed rule does not have a disproportionate effect on 
children. The primary effect of this proposal is to conserve energy 
resources by setting fuel economy standards for light trucks.

J. 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 \2\ 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.
---------------------------------------------------------------------------

    \2\ Voluntary consensus standards are technical standards 
developed or adopted by voluntary consensus standards bodies. 
Technical standards are defined by the NTTAA as ``performance-based 
or design-specific technical specification and related management 
systems practices.'' They pertain to ``products and processes, such 
as size, strength, or technical performance of a product, process or 
material.''
---------------------------------------------------------------------------

    There are no voluntary consensus standards for U.S. fuel economy. 
Therefore, setting this future standard does not involve the use of any 
voluntary standards.

K. Executive Order 13211

    Executive Order 13211 (66 FR 28355, May 18, 2001) applies to any 
rule that: (1) Is determined to be economically significant as defined 
under E.O. 12866, and is likely to have a significant adverse effect on 
the supply, distribution, or use of energy; or (2) that is designated 
by the Administrator of the Office of Information and Regulatory 
Affairs as a significant energy action. If the regulatory action meets 
either criterion, we must evaluate the adverse energy effects of the 
planned rule and explain why the planned regulation is preferable to 
other potentially effective and reasonably feasible alternatives 
considered by us.
    The proposed rule seeks to establish light truck fuel economy 
standards that will reduce the consumption of petroleum and will not 
have any adverse energy effects. Accordingly, this rulemaking action is 
not designated as a significant energy action.

L. Department of Energy Review

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

IX. Comments

Submission of Comments

How Can I Influence NHTSA's Thinking on This Notice?
    In developing this notice, we tried to address the concerns of all 
our stakeholders. Your comments will help us determine what standards 
should be set for light truck fuel economy. We invite you to provide 
different views on questions we ask, new approaches and

[[Page 77029]]

technologies we did not ask about, new data, how this notice may affect 
you, or other relevant information. We welcome your views on all 
aspects of this notice, but request comments on specific issues 
throughout this notice. We grouped these specific requests near the end 
of the sections in which we discuss the relevant issues. Your comments 
will be most effective if you follow the suggestions below:
    [sbull] Explain your views and reasoning as clearly as possible.
    [sbull] Provide empirical evidence, wherever possible, to support 
your views.
    [sbull] If you estimate potential costs, explain how you arrived at 
the estimate.
    [sbull] Provide specific examples to illustrate your concerns.
    [sbull] Offer specific alternatives.
    [sbull] Refer your comments to specific sections of the notice, 
such as the units or page numbers of the preamble, or the regulatory 
sections.
    [sbull] Be sure to include the name, date, and docket number of the 
proceeding with your comments.
How Do I Prepare and Submit Comments?
    Your comments must be written and in English. To ensure that your 
comments are correctly filed in the Docket, please include the docket 
number of this document in your comments.
    Your comments must not be more than 15 pages long. (49 CFR 553.21). 
We established this limit to encourage you to write your primary 
comments in a concise fashion. However, you may attach necessary 
additional documents to your comments. There is no limit on the length 
of the attachments.
    Please submit two copies of your comments, including the 
attachments, to Docket Management at the address given above under 
ADDRESSES.
    Comments may also be submitted to the docket electronically by 
logging onto the Dockets Management System Web site at http://dms.dot.gov. Click on ``Help & Information'' or ``Help/Info'' to obtain 
instructions for filing the document electronically.
How Can I Be Sure That My Comments Were Received?
    If you wish Docket Management to notify you upon its receipt of 
your comments, enclose a self-addressed, stamped postcard in the 
envelope containing your comments. Upon receiving your comments, Docket 
Management will return the postcard by mail. Each electronic filer will 
receive electronic confirmation that his or her submission has been 
received.
How Do I Submit Confidential Business Information?
    If you wish to submit any information under a claim of 
confidentiality, you should submit three copies of your complete 
submission, including the information you claim to be confidential 
business information, to the Chief Counsel, NHTSA, at the address given 
above under FOR FURTHER INFORMATION CONTACT. In addition, you should 
submit two copies, from which you have deleted the claimed confidential 
business information, to Docket Management at the address given above 
under ADDRESSES. When you send a comment containing information claimed 
to be confidential business information, you should include a cover 
letter setting forth the information specified in our confidential 
business information regulation. (49 CFR part 512.)
Will the Agency Consider Late Comments?
    We will consider all comments that Docket Management receives 
before the close of business on the comment closing date indicated 
above under DATES. To the extent possible, we will also consider 
comments that Docket Management receives after that date. If Docket 
Management receives a comment too late for us to consider it in 
developing a proposed rule (assuming that one is issued), we will 
consider that comment as an informal suggestion for future rulemaking 
action.
How Can I Read the Comments Submitted By Other People?
    You may read the comments received by Docket Management at the 
address given above under ADDRESSES. The hours of the Docket are 
indicated above in the same location.
    You may also see the comments on the Internet. To read the comments 
on the Internet, take the following steps:
    (1) Go to the Docket Management System (DMS) Web page of the 
Department of Transportation (http://dms.dot.gov/).
    (2) On that page, click on ``search.''
    (3) On the next page (http://dms.dot.gov/search/), type in the 
four-digit docket number shown at the beginning of this document. 
Example: If the docket number were ``NHTSA-2002-1234,'' you would type 
``1234.'' After typing the docket number, click on ``search.''
    (4) On the next page, which contains docket summary information for 
the docket you selected, click on the desired comments. You may 
download the comments. However, since the comments are imaged 
documents, instead of word processing documents, the downloaded 
comments are not word searchable.
    Please note that even after the comment closing date, we will 
continue to file relevant information in the Docket as it becomes 
available. Further, some people may submit late comments. Accordingly, 
we recommend that you periodically check the Docket for new material.

List of Subjects in 49 CFR Part 533

    Energy conservation, Motor vehicles.

PART 533--[AMENDED]

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

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

    2. Section 533.5(a) would be amended by revising Table IV to read 
as follows:


Sec.  533.5  Requirements.

    (a) * * *

                                Table IV
------------------------------------------------------------------------
                          Model year                            Standard
------------------------------------------------------------------------
2001.........................................................       20.7
2002.........................................................       20.7
2003.........................................................       20.7
2004.........................................................       20.7
2005.........................................................       21.0
2006.........................................................       21.6
2007.........................................................       22.2
------------------------------------------------------------------------

* * * * *

    Issued: December 10, 2002.
Stephen R. Kratzke,
Associate Administrator for Rulemaking.
[FR Doc. 02-31522 Filed 12-13-02; 8:45 am]
BILLING CODE 4910-59-P