[Federal Register Volume 68, Number 248 (Monday, December 29, 2003)]
[Proposed Rules]
[Pages 74908-74931]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-31890]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 533

[Docket No. 2003-16128]
RIN 2127-AJ17


Reforming the Automobile Fuel Economy Standards Program

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

ACTION: Advance notice of proposed rulemaking.

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SUMMARY: This document seeks comment on various issues relating to the 
corporate average fuel economy (CAFE) program. In particular, this 
document seeks comments relating to possible enhancements to the 
program that will assist in furthering fuel conservation while 
protecting motor vehicle safety and the economic vitality of the auto 
industry. The agency is particularly interested in improvements to the 
structure of the CAFE program authorized under current statutory 
authority. The focus of this document is to solicit comment on the 
structure of the CAFE program, not the stringency level for a future 
CAFE standard.

DATES: Comments must be received on or before April 27, 2004.

ADDRESSES: You may submit comments [identified by DOT DMS Docket Number 
2003-16128] by any of the following methods:
    [sbull] Web Site: http://dms.dot.gov. Follow the instructions for 
submitting comments on the DOT electronic docket site.
    [sbull] Fax: 1-202-493-2251.
    [sbull] Mail: Docket Management Facility; U.S. Department of 
Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, 
Washington, DC 20590-001.
    [sbull] Hand Delivery: Room PL-401 on the plaza level of the Nassif 
Building, 400 Seventh Street, SW., Washington, DC, between 9 am and 5 
pm, Monday through Friday, except Federal Holidays.
    [sbull] Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting 
comments.
    Instructions: All submissions must include the agency name and 
docket number or Regulatory Identification Number (RIN) for this 
rulemaking. For detailed instructions on submitting comments and 
additional information on the rulemaking process, see the

[[Page 74909]]

Public Participation heading of the Supplementary Information section 
of this document. Note that all comments received will be posted 
without change to http://dms.dot.gov including any personal information 
provided. Please see the Privacy Act heading under Regulatory Analyses 
and Notices.
    Docket: For access to the docket to read background documents or 
comments received, go to http://dms.dot.gov at any time or to Room PL-
401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., 
Washington, DC, between 9 am and 5 pm, Monday through Friday, except 
Federal Holidays.

FOR FURTHER INFORMATION CONTACT: For non-legal 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]. For legal issues, call Otto Matheke, Office of the 
Chief Counsel, at (202) 366-5263, electronic mail 
[email protected].

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Background
II. Why CAFE Reform?
III. Comments To Date on CAFE Reform
    A. Attribute-Based Standards
    B. Increasing GVWR Limit on Vehicles Subject to CAFE Standards
    C. Vehicle Classification
    D. Credit Availability
    E. Two-Fleet Rule
    F. Separate Standards for Cars and Light Trucks
    G. Uniform Percentage Increase
IV. The EPCA and CAFE Reform
V. The Structure of Light Truck Standards
    A. Two or More Classes of Light Trucks
    B. Functional Attribute-Based System
    1. Weight-Based Standard
    2. Size-Based Standards
    3. Mixed Attribute-Based Standards
    C. Fixed Attribute System
VI. Definitional Changes to the Current Vehicle Classification 
System
    A. Vehicle Classification Using A Single Attribute
    B. The Flat Floor Provision
    C. Open Cargo Bed
    D. Off-Highway Operation
VII. Expanding the Application of the CAFE Program
VIII. Conclusion
IX. Public Participation
X. Regulatory Analyses and Notices

I. Background

    Congress enacted the Energy Policy and Conservation Act (EPCA Pub. 
L. 94-163) during the aftermath of the energy crisis created by the oil 
embargo of 1973-74. 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).
    Congress established a statutory corporate average fuel economy 
standard applicable to passenger automobiles, and NHTSA has from time 
to time amended that statutory standard. The Secretary of 
Transportation has the authority to change the standard if it no longer 
represents the ``maximum feasible'' standard consistent with the 
criteria set forth in the statute.\1\ Pursuant to that authority, the 
Secretary amended the passenger car standard with regard to model years 
(MYs) 1986-1989 to address situations in which, despite manufacturers' 
good faith compliance plans, market conditions rendered the statutory 
standard impracticable and infeasible.\2\ Since 1990, the CAFE standard 
for passenger automobiles has been 27.5 miles per gallon (mpg).
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    \1\ In setting CAFE standards, the statute directs the Secretary 
to consider technological feasibility, economic practicability, the 
effect of other government regulations on fuel economy and the 
nation's need to conserve energy.
    \2\ To date, the agency has not considered whether a more 
stringent fuel economy standard than 27.5 mpg might better represent 
the ``maximum feasible'' level for the passenger car fleet. By 
statute, NHTSA was prohibited from considering any change between 
MYs 1996 and 2004.
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    Congress did not establish by statute a CAFE standard for light 
trucks. Instead, Congress directed the Secretary to consider 
appropriate CAFE standards applicable to a light truck fleet, or 
alternatively, to classes of light trucks, and to establish CAFE 
standards at least 18 months prior to the start of each model year. 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 6,000 pounds. Beginning with MY 1980, NHTSA raised this GVWR ceiling 
to 8,500 pounds.
    In 1977, NHTSA issued regulations indicating which vehicles should 
be subject to the CAFE program and establishing the distinction, imbued 
throughout the statute, between passenger and non-passenger automobiles 
(42 FR 38362). These regulations reflect the vehicle fleet prevalent at 
that time, and in particular, sought to distinguish between vehicles 
primarily designed for the transport of passengers and those designed 
for the transport of cargo. To some extent, that distinction was meant 
to reflect a difference between personal transportation and that 
designed for commercial, agricultural or recreational activity. The 
regulations accordingly attempt to define vehicles by the type of use 
to which they were generally put in the mid-1970s (in part in 
accordance with whether they were usually built on passenger car or 
truck platforms).
    In 1994, the agency departed from its past practice of considering 
light truck standards for one or two model years at a time and 
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 (Pub. L. 104-50) was enacted. 
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.

    This prohibition applied to both passenger automobiles and non-
passenger automobiles, and language continuing the prohibition was 
included in the Appropriations Acts for each of FYs 1997-2001.
    While the Department of Transportation and Related Agencies 
Appropriations Act for FY 2001 (Pub. L. 106-346) 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. Rept. 
No. 106-940, at p. 117-118).
    The NAS submitted its preliminary 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, while maintaining vehicle size, weight, utility, and 
performance. However, their development cycles--as well as future 
economic, regulatory, safety and consumer preferences--will influence 
the extent to which these technologies could lead to increased fuel 
economy in the U.S. market. Recognizing the many trade-offs that must 
be considered in setting fuel economy standards, the committee took no 
position on what the appropriate

[[Page 74910]]

CAFE standards should be for future years.
    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 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.
    All but two members of the NAS committee concluded: ``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, 
111.) Specifically, the Committee concluded, ``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). The NAS also suggested that changing the CAFE regulatory program 
to one based on vehicle attributes, such as weight, could eliminate the 
current CAFE program's encouragement of ``downweighting'' or the 
production and sale of more small cars. In addition, ``credit trading'' 
would also reduce costs. (NAS, pp. 5, 113)
    In a letter dated July 10, 2001, Secretary of Transportation Norman 
Y. Mineta asked the House and Senate Appropriations Committees to lift 
the restriction prohibiting agency expenditures for the purposes of 
considering CAFE standards. The Department of Transportation and 
Related Agencies Appropriations Act for FY 2002 (Pub. L. 107-87), which 
was enacted on December 18, 2001, contained no provision restricting 
the Secretary's authority to prescribe fuel economy standards. NHTSA 
began work towards the establishment of light truck CAFE standards, and 
has since set standards applicable to light trucks for MYs 2004 through 
2007 (68 FR 16868).
    The Department has also focused on improvements to the fuel economy 
program. 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.'' On February 
7, 2002, the agency issued a Request for Comments (67 FR 5767) seeking, 
in addition to data on which to base an analysis of appropriate CAFE 
standards for light trucks for upcoming model years, comments on 
possible reforms to the CAFE program. In particular, the agency sought 
input on possible reforms that could enhance fuel economy, protect 
occupant safety, advance fuel-efficient technologies, and obtain the 
benefits of market-based approaches. In the rulemaking establishing 
light truck CAFE standards for MYs 2005-2007, the agency restated its 
intention to pursue the potential for such reforms.
    The agency is also issuing, along with this notice, a request for 
comments seeking information on future product plans and other matters 
to assist in assessing the potential impacts of any changes to the CAFE 
program.

II. Why CAFE Reform?

    There are four prominent criticisms of the light truck CAFE 
program. They relate to energy security, traffic safety, economic 
practicability, and modernization of the definition and classification 
of light trucks.
    First, concern has been raised that the energy-saving potential of 
the CAFE program is hampered by the current regulatory structure. The 
difference between the fuel economy standards for passenger cars and 
light trucks (27.5 mpg and 20.7 mpg, respectively in 2004) encourages 
vehicle manufacturers to offer vehicles classified as light trucks for 
purposes of CAFE. In addition, the CAFE program currently applies to 
vehicles with a gross vehicle weight rating (GVWR) of less than 8,500 
lbs, encouraging manufacturers to offer products with a GVWR larger 
than this limit. Reconsideration of these classification rules may 
encourage the development of a relatively more fuel efficient fleet of 
vehicles.
    CAFE reform may also encourage more companies to pursue strategies 
to comply with established CAFE standards instead of paying fines for 
non-compliance. Some manufacturers regularly pay penalties rather than 
comply with the standards. To date, the U.S. Treasury has collected 
over $600 million in CAFE penalties, averaging more than $33 million in 
the past ten years. A different CAFE system might induce more vehicle 
manufacturers to innovate with fuel-saving technologies rather than pay 
fines for noncompliance.
    Second, concern has been raised that the current light truck CAFE 
standards could create safety risks by encouraging vehicle 
manufacturers to achieve greater fuel economy by downweighting their 
light truck offerings. As the NAS report and a more recent NHTSA study 
have found, downweighting of the light truck fleet, especially those 
trucks in the low and medium weight ranges, creates more safety risk 
for occupants of light trucks and all motorists combined. However, both 
studies also suggest that if downweighting is concentrated on the 
heaviest light trucks in the fleet there could be a small fleetwide 
safety benefit. An alternative CAFE system may allow more energy 
savings while protecting and enhancing the safety of the motoring 
public.
    As recommended by the NAS Report, NHTSA has updated its 1997 size 
and safety study and placed this updated report in the docket for 
technical comment. The NHTSA study considered the historical fatality 
statistics of model year 1991-1999 vehicles to find the average 
fatality increase per 100-pound reduction. This ``fatality increase per 
100-pound reduction'' does not mean the effect of literally removing 
100 pounds from a specific vehicle. It is the average increase in the 
fatality rates of 1991-99 models weighing W-100 pounds curb weight 
relative to other 1991-99 models weighing W pounds curb weight, given 
drivers of the same age/gender, and accounting for a variety of other 
factors.
    In cars weighing \3\ 2,950 pounds or more, overall fatality rates 
increased by an average of 1.98 percent per 100-pound weight reduction. 
If this percentage effect were applied to the baseline of all calendar 
year 1999 crash fatalities in the U.S. it would be equivalent to an 
increase of 216 fatalities per year. In cars weighing less than 2,950 
pounds, the average increase in the fatality rate per 100-pound weight 
reduction was 4.39 percent, equivalent to 597 fatalities per year.
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    \3\ The weights in the size and weight study are curb weights, 
whereas those in the context of CAFE standards are gross vehicle 
weights.
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    The findings were similar for light trucks. In light trucks 
weighing less than 3,870 pounds, the average increase in the fatality 
rate per 100-pound weight reduction was 2.90 percent, equivalent to 234 
fatalities per year. In light trucks weighing 3,870 pounds or more, the 
average increase in the fatality rate per 100-pound reduction was 0.48 
percent, equivalent to 71 fatalities per year.\4\
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    \4\ The increase is not statistically significant, since the 
study provides an interval estimate from -1.06 to +1.64 percent.
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    The study also found that trucks, starting with those weighing 
around 5,000 pounds (this number is an approximate arithmetic mean of 
the possible safety break points identified in

[[Page 74911]]

the study) and including those that were heavier, would have actually 
reduced fatalities by a small amount if their weights were reduced. 
Therefore, as cars and trucks increased in size, the severity of the 
safety impacts due to weight reduction lessens and eventually 
disappears. For vehicles above a certain weight, weight reduction may 
produce safety benefits.\5\
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    \5\ This new study explores the relationship between vehicle 
size, crash compatibility and vehicle weight for 1991 through 1999 
light vehicles. The study finds that weight reductions in passenger 
cars and most light trucks increase the risk of fatalities 
significantly more than previously thought. However, the results are 
not uniform over the entire weight range of trucks and cars. 
Reducing the weight of lighter cars and trucks results in more 
fatalities than down-weighting heavier cars and trucks.
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    The NHTSA study approach is retrospective, and not necessarily 
predictive of the future, since it examines a specific group of model 
year 1991-99 vehicles, often in relation to the other vehicles on the 
road, in calendar years 1995-2000. The study does not examine a 
reduction of 100 pounds in a specific vehicle, but rather the effect of 
a vehicle mix shift resulting in the average vehicle fleet being 100 
pounds lighter. For light trucks, a change in the sales mix to certain 
vehicles (e.g., minivans) could reduce weight, improve fuel economy and 
be safer for society overall. Even within vehicle classes we already 
see the potential for overall safety improvements (e.g., crossover SUVs 
are lighter, more fuel efficient, and appear to be safer for society 
overall than larger SUVs).
    It is important to note that the configuration of light vehicles, 
particularly the height of their center-of-gravity (CG), also has an 
impact on safety. In particular, vehicles with a higher CG are more 
likely to be involved in rollover crashes than vehicles with a lower 
CG. About one-third of all light vehicle occupant deaths involve 
rollover. More than half of all single vehicle crashes resulting in 
fatalities involve a rollover event. Fatalities in rollover crashes 
accounted for 82 percent of the total fatality increase in 2002. In 
2002, 10,666 people died in rollover crashes, up 5 percent from 10,157 
in 2001. The number of persons killed in SUVs that rolled over rose 14 
percent. Sixty-one percent of all SUV fatalities involved rollovers.
    The NAS found that ``technologies exist that, if applied to 
passenger cars and light trucks, would significantly reduce fuel 
consumption within 15 years (NSA, pp. 3). NAS also noted that 
technology changes require very long lead times to be introduced into 
product lines. Under the current regulatory structure, rapid increases 
in the light truck CAFE standard could have substantial safety and 
economic consequences. An analysis performed by the Energy Information 
Administration (EIA), based on their National Energy Modeling System 
(NEMS), indicates that if the light truck CAFE standard were increased 
by 0.6 mpg annually under the current system starting with MY 2008 (0.6 
mpg was the rate of increase for the last two MYs of the recently 
published MY 2005-2007 CAFE light truck rule), average light truck 
weight would be reduced by about 100 pounds annually over the MY 2010-
2015 period, about 200 pounds annually over the MY 2016-2020 period, 
and more than 350 pounds annually by MY 2025. Moreover, the study 
suggests that most of the weight reduction would occur in the small and 
medium end of the weight range. The EIA analysis and NHTSA's updated 
safety study together suggest that highway fatalities could increase 
significantly if such increases in CAFE standards for light trucks are 
implemented under the existing program.
    A third reason for considering CAFE reform relates to the adverse 
economic impacts that may result from such future increases in the 
stringency of CAFE standards. The EIA analysis predicts that a 
sustained gradual increase in the light truck standard (0.6 mpg per 
year from 2007 to 2025) would increase the cost of light trucks, reduce 
real Gross Domestic Product (GDP), and reduce employment. The 
incremental cost of light duty trucks is predicted to rise steadily for 
the entire forecast period through 2025, ultimately reaching a price 
increase of $720 (in constant 2001 dollars), although the rate of 
increase slows over time. The loss in real GDP grows over time. By 
2015, real GDP is predicted to be $15 billion smaller, which represents 
a loss of 0.1 percent when compared to the reference case. By 2025, the 
loss in GDP is predicted to be $19 billion (-0.10 percent). Viewed over 
the entire forecast period, the sum of the discounted changes (billions 
of dollars discounted at 7 percent from 2004 through 2025) in real GDP 
totals a loss of $84 billion, which represents a loss of approximately 
0.6 percent of the reference case value of real GDP over the 2004-2025 
period. Non-agricultural employment, under such a scenario, would 
decline in 2015 by 86,000 jobs compared to no increase in light truck 
CAFE standards. This adverse effect would attenuate in the long run as 
fuel savings from tighter CAFE standards induce some employment gains 
and the economy adjusts to a new steady-state equilibrium. By 2025, the 
net employment loss in the non-agricultural sector is 16,000 jobs.
    Although the NEMS model is useful as a long term forecasting tool, 
the model is a simplified representation of the macro-economy and its 
projections are subject to considerable uncertainty. NEMS is a 
generalized model that treats all manufacturers identically. Other 
approaches, such as the technology model used by NHTSA in its recent 
2005-2007 light truck rulemaking, rely heavily on detailed 
manufacturer-specific data. Models of this type have advantages for 
analyzing the effects of short-term modest increases in CAFE standards, 
while the NEMS approach is more useful for analyzing longer-term 
increases in CAFE standards. When longer-term analysis of significant 
increases in CAFE standards is required, current differences in 
manufacturer capabilities become much less relevant. In addition, NEMS' 
ability to estimate macroeconomic ``feedbacks'' from long run increases 
in CAFE standards is useful.
    Table 1 provides data on light truck manufacturers in the U.S. 
market, their sales volumes, and market shares by vehicle type.
BILLING CODE 4910-59-P

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[GRAPHIC] [TIFF OMITTED] TP29DE03.006

BILLING CODE 4910-59-C
    As stated by NAS, the current structure of the CAFE program favors 
manufacturers with a product mix dominated by small light trucks and 
disfavors manufacturers with a full line of light trucks or those with 
a product mix that is dominated by heavier trucks. The potentially 
adverse effects of tighter light truck CAFE standards on the economic 
vitality of the auto industry can be seen by ranking vehicle 
manufacturers by their current CAFE averages and their average fuel 
economy ratings within weight classes. The fuel economy data in Table 2 
suggest that reform toward a weight-class system will affect both 
domestic and foreign manufacturers. For example, within weight classes, 
GM vehicles generally rank high in overall fuel economy, while 
DaimlerChrysler vehicles do not rank high in several heavier weight 
classes. Similarly, Honda ranks high in the weight classes where it has 
substantial volume while Toyota products do not rank as high in fuel 
economy in several weight classes. These data are only for one model 
year but such trends are likely to continue in the near term. In the 
long run, all manufacturers will have sufficient lead time to make new 
product offerings under a reformed system.
    The vulnerability of full-line firms to tighter CAFE standards does 
not arise primarily from poor fuel economy ratings within weight 
classes. Their overall CAFE averages are low compared to manufacturers 
that produce more relatively light vehicles because their sales mixes 
comprise a much larger quantity of bigger and heavier vehicles. For 
example, within given weight classes, the average fuel economy average 
of GM vehicles weighing in excess of 3,400 lbs. curb weight is actually 
greater than Toyota's. Yet, Toyota's overall fuel economy average, 
across all weight classes over 3,400 lbs., is greater than GM's due to 
the fact that Toyota sells more vehicles in the lower weight classes 
than GM does and because GM's market share in the three heaviest 
classes is so large. An attribute-based (weight and/or size) system 
could neutralize disparate impacts on full-line manufacturers that 
could result from a sustained increase in CAFE standards. NHTSA seeks 
comment on these economic concerns, which ultimately relate to the 
economic practicability of more stringent light-

[[Page 74913]]

truck CAFE standards. We also seek comment on potential reforms that 
could reduce or eliminate these adverse economic effects.

                                                                         Table 2
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                                                  <3,100    3,101 to   3,401 to   3,701 to   4,001 to   4,301 to   4,601 to  4,901   Overall
                 Manufacturer                      lb.     3,400 lb.  3,700 lb.  4,000 lb.  4,300 lb.  4,600 lb.  4,900 lb.         lb.           mpg
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GM............................................       29.8       25.7       23.1       24.7       21.2       20.3       19.6           18.0          19.9
Ford..........................................       28.8       24.8       23.0       20.0       21.1       19.6       19.1           17.5          20.3
DaimlerChrysler...............................        N/A       25.5       19.5       21.1       22.3       20.6       18.1           16.9          20.4
Toyota........................................       29.0       28.3       22.6       23.4       20.5       19.3       18.0           17.8          22.1
Honda.........................................       29.7       27.8        N/A        N/A       24.0       22.6        N/A            N/A          25.3
Nissan........................................        N/A       26.2       24.3       20.6       19.5       19.0        N/A            N/A          20.7
Isuzu.........................................        N/A       22.4       22.5       21.2       20.7       19.5        N/A            N/A          21.0
Hyundai.......................................        N/A        N/A       24.5        N/A        N/A        N/A        N/A            N/A          24.5
Suzuki........................................       23.3       22.4       21.4        N/A        N/A        N/A        N/A            N/A          21.8
Kia...........................................        N/A       23.3       23.0        N/A        N/A        N/A       19.8            N/A          21.4
BMW...........................................        N/A        N/A        N/A        N/A        N/A       20.3        N/A           17.5          20.2
VW............................................        N/A        N/A        N/A        N/A       20.6        N/A        N/A           20.0          20.6
    Total.....................................       29.0       25.7       22.7       22.1       21.6       20.1       19.1           17.7          20.6
--------------------------------------------------------------------------------------------------------------------------------------------------------

Light Truck Fuel Economy (mpg) by Weight Class (lbs.) for MY 2002

    A fourth reason for considering CAFE reform is to modernize the 
definitions and classifications of light trucks within the program. The 
markets for, and designs of, cars and light trucks have changed 
substantially since the inception of the CAFE program in the late 
1970's. The existing CAFE program creates a bright line distinction 
between passenger and non-passenger automobiles (light trucks) and that 
distinction--found in both the statute and subsequent rulemakings--
reflects the vehicle fleet prevalent in the 1970's.
    Since then, the American public has resoundingly responded to the 
development of new types of vehicles, such as minivans and sport 
utility vehicles (SUVs). As compared to traditional passenger cars, 
these multipurpose vehicles are better able to satisfy the demand for 
family transportation, cargo carrying capability and recreational use. 
The market for traditional pick-up trucks has also expanded, giving 
rise to a broader variety of sizes, performance abilities and uses.
    The market suggests that while some light trucks may be used 
primarily to transport passengers, their ``peak use or value'' 
capability (towing boats, hauling heavy loads, etc.) may be a critical 
factor in the purchase decision. In other words, a consumer may require 
substantial towing capability only periodically, but nevertheless may 
base his purchasing decision on a vehicle's ability to meet that peak 
need rather than his daily needs. The motor vehicle market has thus 
developed a demand for vehicles capable of cross-servicing traditional 
needs--that is, for vehicles capable of transporting people and cargo, 
for vehicles capable of servicing personal transportation needs as well 
as recreational and commercial ones, and for vehicles capable of 
substantial performance, even if such performance is only needed 
periodically.
    While minivans, SUVs and pick-up trucks dominated the market of the 
1990s, ``crossover'' vehicles are an emerging motor vehicle trend. Many 
of these vehicles reverse some of the adverse consequences of the past 
vehicle fleet. As previously mentioned, they tend to be smaller, 
lighter, potentially more fuel efficient and designed with lower 
centers of gravity than the more traditional light trucks of the 1990s.
    Any potential reforms to the CAFE system should be considered in 
light of their ability not only to enhance fuel economy but also to 
ensure the economic well-being and safety of the American public. In 
considering CAFE reforms, our aim is to develop a CAFE program 
consistent with, and not in any way adverse to, our economic and safety 
objectives.

III. Comments to Date on CAFE Reform

    In February 2002, NHTSA issued a request for comments (RFC) seeking 
information, views and data regarding future fuel economy standards and 
potential changes to the CAFE program. Published in the Federal 
Register on February 7, 2002 (26 FR 5767; Docket No. 2002-11419), the 
RFC requested comments on the recommendations in the National Energy 
Policy, the conclusions found in the NAS report on fuel economy, and 
the technical, economic and regulatory obstacles to improvements in 
fuel economy. The RFC sought to elicit comments on possible reforms to 
the CAFE program, as it applies to both passenger cars and light 
trucks, with an eye toward protecting passenger safety, advancing fuel-
efficient technologies, and obtaining the benefits of market-based 
approaches.
    We have received comments relating to CAFE reform both in response 
to the RFC and in response to our Notice of Proposed Rulemaking to 
establish light truck fuel economy standards for MYs 2005-2007.\6\ 
(Docket No. 2002-11419, Notice 2) Many argued for a variety of 
amendments to the current system and others argued against any form of 
reform--whether through revisions to the current regulatory scheme or 
more fundamental changes in the way corporate average fuel economy is 
measured and applied.
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    \6\ We received comments from, amongst others, Public Citizen, 
Insurance Institute for Highway Safety (IIHS), Sierra Club, American 
Council for an Energy-Efficient Economy (ACEEE), Union of Concerned 
Scientists (UCS), Alliance to Save Energy (Alliance) and Coalition 
for Vehicle Choice (CVC), the Recreation Vehicle Industry 
Association (RVIA), Japan Automobile Manufacturers Association, Inc. 
(JAMA), National Truck Equipment Association (NTEA), National 
Automobile Dealers Association (NADA), Association of International 
Automobile Manufacturers, Inc. (AIAM), Alliance of Automobile 
Manufacturers (AAM), and Rubber Manufacturers Association (RMA). 
Manufacturers filing comments included General Motors (GM), Daimler 
Chrysler (DC), Ford Motor Company (Ford), Toyota Motor Corporation 
(Toyota), American Honda Motor Company (Honda) and Nissan North 
America (Nissan). A number of individuals also provided comments--
Marc Ross from the University of Michigan both individually (Ross) 
and in conjunction with Tom Wenzel from the Lawrence Berkeley 
National Laboratory (Wenzel and Ross) and a class from Harvey Mudd 
College Engineering Department; Professor Patrick Little, Hans 
Meyer, Leryn Gorlitsky, Naomi Tomimatsu, Jordan Kwan, Anna Olson, 
Chris Holcomb, and Carman Ng.
---------------------------------------------------------------------------

    While we have considered these comments, the original RFC was quite 
general and the comments received tended to focus on the various 
alleged shortcomings of the current program--

[[Page 74914]]

or the generic admonishment against CAFE reform--and not on specific 
potential options or the various findings necessary to adopt them. This 
document, while not espousing any particular form of reform, seeks more 
specific input on various options set forth in an effort to adapt CAFE 
to today's vehicle fleet.
    A brief review of the comments relating to CAFE reform already 
received follows:

A. Attribute-Based Standards

    Our request for comments sought information on adopting an 
attribute-based system under which fuel economy standards would be tied 
to some vehicle attribute or attributes rather than having one fixed 
standard for passenger automobiles and another for light trucks. With 
some notable exceptions, many commenters supported adopting attribute-
based fuel economy standards.
    While private citizens generally favored attribute-based standards, 
a number of interest groups did not. Manufacturers and trade 
associations viewed them with caution. Public Citizen, Sierra Club, 
ACEEE, and UCS expressed concern that an attribute-based system may 
give manufacturers an incentive to increase production of vehicles in 
the attribute class with the lowest fuel economy. If an attribute 
system were to be used, ACEEE opposed weight-based standards and 
recommended consideration of an interior volume-based system stating 
that weight-based standards would provide automakers with an incentive 
to add mass to trucks in order to lower the fuel economy requirements 
for those vehicles. Professor Patrick Little suggested consideration of 
attributes that more accurately reflect likely usage of a vehicle, such 
as a ratio of unenclosed cargo space to passenger seating, in order to 
properly distinguish between passenger vehicles and light trucks and to 
avoid minivan/SUV loopholes that would incorrectly place these vehicles 
in the light truck category.
    Other commenters favored an attribute-based system. IIHS favored a 
system of fuel economy requirements indexed to weight, although it 
commented that the CAFE structure must be modified to ensure that 
increased fleet fuel economy does not come about through weight 
reductions of the lightest, least safe vehicles or through increased 
sales of those vehicles. The organization stated that such a system 
would remove downweighting as a means of compliance and force the use 
of new technologies. IIHS also suggested that an attribute system could 
be established requiring each automaker to meet a manufacturer-
specific, production-weighted average derived from the specific 
combination of vehicle types/weights sold by the automaker. This could 
be accomplished, according to IIHS, by the agency determining the 
target fuel economy for each vehicle weight, with the sum of any 
manufacturer's deviations from the target having to be zero or 
negative.
    Carman Ng suggested that an attribute-based system could include 
power to weight ratio, number of cylinders, coefficient of drag, 
maximum recommended load, engine type, fuel sources, and number of 
passengers as attributes to be considered because these attributes can 
be measured quantitatively and avoid the gray areas of qualitative 
judgment. The Coalition for Vehicle Choice advised caution, arguing 
that there are no universal ``bright lines'' along which vehicles may 
be grouped.
    DaimlerChrysler and Toyota objected to adoption of an attribute-
based system, arguing that no method discussed as of that time is 
superior to the current system. Toyota added that a weight-based 
system, wherein lighter vehicles would be required to meet a more 
stringent standard than heavier vehicles, would result in ``up-
weighing'' and increased fuel consumption. Ford and Nissan indicated 
that a weight based attribute system would be more equitable than the 
current system because vehicle weight directly correlates to vehicle 
fuel consumption. Ford also stated that it continues to believe that 
uniform industry fuel economy standards are inefficient and unfairly 
penalize full line manufacturers.
    GM did not support use of a weight based attribute system, but both 
GM and Ford stated that a well-designed attribute-based system would be 
an improvement in that it would make sales mix less of a factor in 
meeting the standards. GM further indicated that a weight-based system 
would promote safety by removing incentives to remove weight.
    Honda stated that there were several advantages to a size-based 
system as opposed to a weight-based system, including preserving 
incentives for fuel economy improvements through use of lightweight 
materials and improved vehicle packaging, less susceptibility to 
erosion of overall fleet economy, and safety. AIAM did not favor a 
weight or attribute-based system but believes that whatever system is 
chosen should be competitively neutral. In general, while some 
manufacturers believed a weight-based system had merit, there was 
considerable concern that the uncertainties of such a system might have 
untold effects.

B. Increasing GVWR Limit on Vehicles Subject to CAFE Standards

    An issue relating to classification is the size of vehicles subject 
to CAFE. We noted in the RFC that one aspect of the growth in the light 
truck fleet has been the appearance of increasing numbers of large SUVs 
whose GVWR is above the current CAFE upper weight limit of 8,500 
pounds. We asked commenters to provide us with views and data relating 
to raising the CAFE limit to the statutory maximum of 10,000 pounds 
GVWR to include larger vehicles in the light truck fleet. There was a 
general split between consumer groups and industry on whether expanding 
the scope of the CAFE program to encompass larger trucks is advisable.
    Public Citizen supported the expansion. Citing the GVWRs of several 
larger SUVs as alleged examples of how manufacturers made the vehicles 
just large enough to escape regulation, Public Citizen argued that both 
safety considerations and the need to conserve energy dictated that 
larger vehicles should be subject to CAFE. Similarly, the ACEEE, 20/20 
Vision, and Sierra Club also supported expanding the CAFE program's 
coverage to reach these larger vehicles, arguing that many of the large 
SUVs and pickup trucks are used as passenger vehicles (ACEEE). Chris 
Holcomb states that expanding CAFE would increase safety as 
manufacturers would discontinue production of vehicles at the high end 
of the weight range due to an inability to make them fuel efficient.
    With the exception of Honda, manufacturers did not support the 
expansion. They argue that most trucks in this category are 
domestically built to meet a special need for the commercial consumer 
needing heavy-duty pick-up truck capabilities for heavy cargo or 
passenger (more than six passenger) load. They stated that only a small 
fraction of these vehicles are SUVs and many of them were purchased to 
tow heavy loads.
    General Motors argued that raising the maximum GVWR for CAFE would 
severely damage domestic manufacturers and exacerbate the problems and 
inequities created by the CAFE program. Moreover, GM attacked the 
premise that these large vehicles should be considered because they are 
passenger vehicles by noting that models within the 8,500-10,000 pound 
segment have ``sisters'' or twins with

[[Page 74915]]

equivalent passenger carrying capability in the under 8,500 pound 
category. GM stated that customers interested in passenger capacity 
would not be interested in the heavier models, which cost more to 
purchase and operate and that the heavier vehicles are used and 
purchased by consumers needing features found only in these vehicles.
    DaimlerChrysler opposed the expansion on the basis that it would 
not produce a demonstrable benefit. According to DC, the market segment 
involved is so small that no significant fuel savings would be realized 
by including large vehicles in the CAFE fleet. In DC's view, such 
action would only serve to lower the truck fleet fuel economy average.
    The AAM, Ford, NTEA, and RVIA echoed the views of GM and DC. These 
organizations argued that expansion of the CAFE program into the 
heavier weight category would be unwarranted and unwise. Large 
vehicles, according to the Alliance, meet consumer needs and including 
these large vehicles in the CAFE fleet would force manufacturers to 
stop producing them or otherwise compromise the characteristics making 
them desirable to consumers.

C. Vehicle Classification

    The agency's request for comments observed that the tremendous 
changes in the light truck market compelled reexamination of the 
definitions of light trucks and passenger automobiles. We asked 
commenters to provide suggestions for modifications of the vehicle 
classification scheme now used in the CAFE program. In particular, we 
requested that commenters identify characteristics that would help 
delineate the differences between passenger automobiles and trucks and 
the pros and cons of various classification schemes.
    Public interest groups responding to this request were highly 
critical of the existing classification scheme, particularly the ``flat 
floor'' provision allowing vehicles (such as the PT Cruiser and many 
minivans) to be classified as light trucks based on the ability to 
enlarge their cargo carrying capacity by physically changing their 
passenger carrying ability into cargo carrying ability. The ACEEE and 
Sierra Club object to the ``flat floor'' provision, but without 
offering any specific recommendations for a new definition.
    Public Citizen also criticized the current classification scheme 
and offered its view that the light truck class should be restricted to 
vehicles with significant off-road characteristics, such as a very high 
ground clearance, or more commercial ``truck-like'' qualities, such as 
the ability to carry or tow their own weight. In Public Citizen's view, 
the truck category should be limited to vehicles that are used 
commercially rather than lighter truck-like vehicles that may also 
serve as personal transportation.
    Vehicle manufacturers and industry trade groups generally offered 
an opposite view--the existing classification system provides 
appropriate differentiation between passenger and non-passenger 
automobiles. This judgment is based on the view that the expansion of 
the light truck market has stemmed solely from consumer demand for more 
versatile and larger vehicles. DaimlerChrysler indicated that moving 
truck-like ``passenger vehicles,'' such as SUVs and minivans, from the 
truck fleet to the car fleet would require making the car standard less 
stringent or result in the elimination of an entire category of vehicle 
that consumers obviously value.
    Alternatively, in its response to the RFC, DC indicated that an 
attribute-based approach to segment the fleet might have advantages.\7\ 
However, DC indicated that no classification system was ideal and all 
systems would have their own set of rewards and drawbacks.
---------------------------------------------------------------------------

    \7\ However, in its comments to the light truck NPRM, DC was 
more cautious of any effort to reform the CAFE program, stating: 
``No method to modify CAFE that has been described in the literature 
or discussed in the political debate is clearly superior to the 
current CAFE system in ensuring energy savings or a fair 
distribution of tasks.''
---------------------------------------------------------------------------

    Ford supported the existing scheme in response to the request for 
comments. According to Ford, light trucks, including SUVs, are 
purchased and used for different reasons than passenger automobiles. 
Ford stated that the utility and corresponding differences between 
passenger automobiles and light trucks should be carefully considered 
before implementing any vehicle classification modifications. Ford 
argued that removing SUVs, minivans, and multi-activity vehicles from 
the truck fleet and adding them to the car fleet, or even creating a 
third category would negatively impact both the car and truck CAFE 
compliance, and might also have negative safety consequences.
    GM similarly stated that no change in the system of vehicle 
classification is necessary. Although some vehicles have been 
introduced that combine various car-like and truck-like features, GM 
believes that the distinction between passenger automobiles and trucks 
has not been removed.
    Toyota stated that all manufacturers should be subject to the same 
set of standards for any given category, class, fleet or similar set of 
vehicles regulated under any type of CAFE program. Further, Toyota 
argued that NHTSA should not restructure the current CAFE system in 
such a way that would provide a disincentive for companies to achieve 
greater fuel economy than required.
    Honda stated that SUVs and vans should be removed from the truck 
fleet. In addition, Honda asserted that large pick-up trucks are often 
used for work purposes, but adds that any exemption criteria, with 
respect to pick-up trucks, should include a minimum bed width and 
length. AIAM commented that weight or size based systems could either 
be incorporated into a continuous function or market segment classes in 
an attempt to reconcile the truck/passenger car distinction.
    A number of individuals also responded to this question. Jordan 
Kwan suggested dividing the fleet into a separate and third category to 
include SUVs, minivans and extended cab pick-up trucks as light trucks 
used primarily for transporting passengers. Hans Meyer states that the 
classification of light trucks should be further broken down into 
subcategories by separating SUVs and minivans from pick-up trucks. He 
argues that manufacturers would have to improve the fuel efficiency of 
SUVs rather than use more fuel-efficient pick-up trucks to raise the 
average and suggests using passenger-seating space as a measurement to 
differentiate between the subclasses.

D. Credit Availability

    The RFC also sought comments on the possibility of manufacturers 
being allowed the opportunity to trade fuel economy credits--either 
with each other or by averaging their own credits across different 
classes of their own vehicles. The use of credits in these ways was not 
well received by public interest groups, while industry generally 
viewed it favorably.
    The Sierra Club outright opposed these uses of credits citing 
automakers' history of ``gaming'' the current credit program. ACEEE, 
Little, Gorlitsky, and Ng stated that cross-class averaging should not 
be permitted. Public Citizen suggested that any initial system should 
be designed conservatively so as not to create unexpected loopholes and 
was opposed to linking credits to a broader greenhouse gas reduction 
registry or credit system. The group was also concerned that allowing 
such uses of credits could jeopardize the effectiveness of penalties.
    Some industry members and trade groups believe credit averaging and

[[Page 74916]]

trading would improve the CAFE program by offering manufacturers a 
means of dealing with unexpected conditions and events. For example, 
AIAM noted that credit averaging between classes and between companies 
could provide manufacturers with increased compliance flexibility in 
dealing with unanticipated market shifts. AIAM also argued that a broad 
credit trading system would provide a strong incentive for 
manufacturers to earn credits through voluntary fuel economy 
improvements since there would be a strong likelihood that buyers would 
exist for the earned credits.
    DaimlerChrysler and Toyota supported credit trading for the same 
reasons. In addition, Honda believes that credit trading between 
companies in other sectors of the market would increase competitive 
bidding and pricing of the credits. However, Ford opposed a credit 
trading system on the basis that such a system would likely cause a 
transfer of wealth from domestic full line manufacturers to foreign 
companies.
    Although GM expressed reservations about NHTSA's authority to 
permit credit trading, the company indicated that a broad credit 
trading system would prompt all manufacturers to exceed CAFE standards. 
Nissan and Honda both applauded the flexibility that a broad-based 
credit-trading program would introduce into the CAFE program. Nissan 
believed that credit trading would encourage innovation by allowing 
manufacturers the ability to risk the use of new technologies.

E. Two-Fleet Rule

    Under what is known as the ``two-fleet rule,'' manufacturers must, 
for CAFE purposes, place their domestically manufactured vehicles and 
non-domestically manufactured vehicles in separate fleets. Commenters, 
especially domestic manufacturers, generally expressed the view that 
the elimination of the two-fleet rule would not have major impacts on 
manufacturer actions. More specifically, the Alliance of Automobile 
Manufacturers suggested that this scheme might have encouraged the 
sourcing of non-domestic parts. Foreign manufacturers and trade 
associations generally believe the two-fleet rule is outdated and may 
constitute a trade barrier.

F. Separate Standards for Cars and Light Trucks

    All public interest groups and individuals who commented believe 
that separate standards for cars and light trucks do not have any 
practical value under the CAFE standards. Sierra Club, ACEEE, IIHS, and 
PIRG called for the elimination of separate standards and advocated 
combining passenger automobiles and light trucks into a single class. 
IIHS suggested a single CAFE standard indexed to weight and cargo 
capacity. Public Citizen recognized that the car and truck fleets might 
not be combined absent Congressional authority, but stated that the 
loophole could be closed by substantially increasing the fuel standards 
for light trucks. If the rule is not eliminated, Public Citizen 
recommended utilizing a different set of criteria in distinguishing 
passenger automobiles from light trucks, such as ground clearance, 
four-wheel drive capacity, and/or tow weight.

G. Uniform Percentage Increase

    While not addressed specifically in the RFC, the NAS study 
discussed a Uniform Percentage Increase (UPI) approach that would 
require every manufacturer to increase its current CAFE level by a 
specific percentage. Toyota, AIAM and AIADA opposed any efforts to 
adopt a uniform percentage improvement format. Toyota argued that UPI 
encourages manufacturers to ``rush to the bottom'' and violates that 
concept of ``same vehicle, same standard.'' AIAM stated that a system 
that is fair and equitable to all manufacturers is one that applies the 
same standards to all manufacturers at the same time. AIADA argued that 
the UPI approach penalizes auto manufacturers who historically have 
made the greatest commitments to improving fuel economy.
    Similarly, the Alliance and DaimlerChrysler asserted several 
negatives to a UPI approach including penalizing manufacturers for 
early CAFE improvements, not accounting for fleet mix changes, focusing 
only on new vehicles, not affecting consumer behavior, and impacting 
manufacturers differently.

IV. The EPCA and CAFE Reform

    In its January 2002 report, the NAS suggested a number of reforms, 
including: applying an attribute-based system to a combined car and 
light truck fleet, creating a credit trading program between 
manufacturers, and eliminating the two fleet rule for foreign and 
domestic content. The agency does not believe that the EPCA provides it 
with the authority to implement such reforms. However, on February 1, 
2002, Transportation Secretary Norman Mineta wrote a letter to Congress 
requesting the necessary authority to reform the CAFE program, guided 
by the NAS report's suggestions. While Congress has not yet provided 
such express statutory authority, there have been legislative proposals 
that would require the agency to consider the NAS report when 
establishing CAFE standards.
    Unlike many statutes, the EPCA is a particularly prescriptive one. 
It contains a number of provisions providing specific definition and 
structure to the CAFE program. We set forth below those aspects of any 
CAFE program we tentatively believe to be required by the EPCA. 
However, we seek comment on whether the EPCA provides us with more or 
less authority to implement potential reforms to the CAFE program.
    Our review leads us to believe that the language and structure of 
the EPCA requires that we state any CAFE standard in terms of ``miles 
per gallon,'' that a CAFE standard for a class of any particular model 
year be considered as an ``average,'' and that we apply a single 
standard for all passenger automobiles. The statute provides more 
flexibility to establish classes of vehicles within the light truck 
category than is the case with passenger automobiles.
    The statute defines ``fuel economy'' in Section 32901(10) as the 
average number of miles traveled by an automobile for each gallon of 
gasoline used. The fuel economy of individual vehicle models is 
measured in accordance with procedures established pursuant to Section 
32904(c).\8\ For passenger automobiles, but not light trucks, Section 
32904(c) commands that testing and measurement procedures be the same 
as used in 1975. This data is then used to derive a manufacturer's 
average fuel economy level for each fleet. For passenger automobiles, 
Section 32904(a)(1)(B) requires use of a formula that results in 
derivation of the harmonic sales weighted average of a manufacturer's 
fleet. For light trucks, Section 32904(a)(1)(A) provides that a 
manufacturer's average fuel economy shall be calculated pursuant to a 
formula established by regulation.\9\
---------------------------------------------------------------------------

    \8\ Credit, penalty and alternative fuel incentive provisions 
are all predicated on the use of miles per gallon as a basic measure 
of fuel use. Because the statutory scheme relies on mpg as a basic 
unit of measure, we tentatively believe that any standard should 
either rely on mpg or be readily converted to a mpg measurement.
    \9\ The House Report for the Cost Savings Act suggests that 
Congress, while not mandating it, expected that a similar procedure 
would be used for light trucks: ``Average fuel economy (except when 
used with non-passenger automobiles) is a production-weighted 
average of the fuel economy of the manufacturer's entire production 
of passenger automobiles in a model year (subject to the special 
rules for imports). It is intended that the rules of the Secretary 
would provide for a similar computation for each class of non-
passenger automobile.''

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

[[Page 74917]]

    The EPCA expressly permits the implementation of different CAFE 
standards for differing classes of non-passenger automobiles (light 
trucks), but contains no evident corollary provision for passenger 
automobiles. Instead, embedded throughout the statute's terminology are 
references to a unified standard for passenger cars. The passenger car 
standard is established by statute. For non-passenger automobiles, 
Section 32902(a) directs the Secretary to establish average fuel 
economy standards and authorizes the establishment of different 
standards for different classes of these vehicles.
    In light of these statutory constraints, the following sections 
present alternatives in three major areas for which the agency believes 
it clearly has the authority to implement reforms to the CAFE system: 
(1) Revising the structure of light truck standards to create differing 
classes of light truck CAFE requirements; (2) revising the vehicle 
classification definitions for determining whether a vehicle is a light 
truck or passenger car for CAFE purposes; and (3) increasing the weight 
limit for vehicles covered by CAFE standards from 8,500 lbs. GVWR to 
10,000 lbs. GVWR. Although each option is presented separately on its 
own merits, the agency could consider combinations of various reforms. 
The impacts of various combinations have not been analyzed at this 
time. However, the agency welcomes comments regarding combinations of 
reforms.

V. The Structure of Light Truck Standards

    In this section, two structural reforms for light truck standards 
are discussed. The first divides light trucks into two or more classes 
based on vehicle attributes. The second is an attribute-based 
``continuous-function'' system, such as that discussed in the NAS 
report. In the discussion below, we have chosen measures of vehicle 
weight and/or size to illustrate the possible design of an attribute-
based system. However, we also seek comment as to the merits of other 
vehicle attributes as the basis of an attribute-based system.
    An attribute-based standard for light trucks based on vehicle 
weight is worthy of serious consideration for several reasons. First, a 
weight-based standard, by applying more stringent standards to lighter 
trucks, would reduce or eliminate the incentive for manufacturers to 
comply through downsizing, downweighting, or through offering for sale 
more products at the lighter end of the weight spectrum. These CAFE 
compliance strategies can increase safety risks and, depending on their 
application, could have safety implications if used with light trucks 
in the future. Second, a weight-based standard would provide a level 
playing field for manufacturers who choose a product mix tilted toward 
the low, middle, or heavy end of the light truck spectrum. Finally, a 
weight-based standard would provide an alternative basis for 
establishing ``maximum feasible levels'' of fuel economy, since the top 
performing vehicles within each weight class could, subject to 
mitigating factors (e.g., acceleration capability and towing capacity), 
serve as a starting point for an analysis of the ``maximum feasible 
level'' of average fuel economy achievable by manufacturers competing 
in each weight class. Without the structure provided by weight classes, 
the determination of a ``maximum feasible level'' must be geared to the 
overall fleet.
    The Japanese government is already using a simple weight-based 
standard to reduce fuel consumption in the transportation sector of the 
Japanese economy. There are eight weight classes in the Japanese 
system, which encompasses both cars and light trucks. Average fuel 
economy targets are set within each weight class, and the targets are 
more stringent for the lighter weight classes and less stringent for 
the heavier weight classes. The targets for gasoline-powered passenger 
vehicles were set for 2010 and represent about a 23% improvement in 
fuel economy compared to the 1995 baseline. Fuel economy targets are 
selected by a ``top runner'' method, whereby the targets for each 
weight class are established in part based on the best performing 
vehicle in that weight class. The original system was established 
without any opportunity for a multi-class manufacturer to average 
compliance across classes, as is the case in the present U.S. system 
(where manufacturers can ``offset'' under-compliance in one vehicle 
class on a one-for-one basis with over-compliance in the other). 
However, more recently the Japanese system was modified to allow 
``offsets'' on a two-for-one basis: credits earned by a better-than-
required fuel economy performance in one weight class are discounted by 
50% when applied to compensate for worse-than-required performance in 
another weight class.
    There are two basic objections to a weight-based system. The first 
objection is that such a system will increase the cost of compliance to 
manufacturers and consumers by removing the substitution of lightweight 
materials as a compliance strategy. Although this objection is 
theoretically valid, the NAS--after examining a wide range of CAFE 
compliance strategies--did not find the substitution of lightweight 
materials to be one of the more cost-effective strategies. Thus, it is 
not clear how important this objection will be for near-term regulatory 
policy.
    The second objection is that a weight-based standard might not 
reduce fuel consumption because it will permit or cause light trucks to 
become larger and heavier over time. Consumers may demand larger light 
trucks and/or manufacturers may offer heavier light trucks if they are 
regulated less stringently. If more light trucks are offered in the 
heavier weight classes, it is theoretically possible that the overall 
fuel economy of the fleet would not increase significantly or might 
even decline under a weight-based standard. In order to prevent such an 
outcome, some have suggested that a weight-based standard must be 
accompanied by an overall fuel economy target for the entire light-
truck fleet.
    Although some of the fuel savings under a weight-based standard may 
be offset by ``upsizing'' or ``weight creep,'' it would not be wise to 
reject a weight-based standard on the basis of this argument alone. 
First, over time, the relative stringency of the standards for 
different weight classes can be adjusted or new weight classes created 
in order to dampen or eliminate any incentives to ``upsize'' into the 
less stringent class. Second, it is instructive to note that the 
Japanese government did not accompany their weight-based standards with 
a binding target for the entire fleet of new vehicles. It is too early 
to draw firm conclusions from the Japanese experience, but the early 
evidence suggests that the overall fuel economy of the Japanese fleet 
improved about 5% from 1995 to 2000, despite some upsizing trends in 
that fleet. Third, while vehicle manufacturers can be expected to make 
small, strategic adjustments in the weights of products that happen to 
be on the border between two weight classes, it is doubtful that they 
would make a vehicle significantly heavier (and possibly more 
expensive)--beyond what consumers demand--simply to be classified in a 
slightly more permissive weight class. Light truck manufacturers know 
that product design decisions must be made on the assumption that a 
particular design will be produced for at least 4 to 8 years and they 
know that fuel economy standards--and definitions of weight classes--
could be changed during the life of a product. Finally, any strategic 
behavior by vehicle manufacturers would be much greater under the

[[Page 74918]]

current CAFE system than under a Japanese-style, weight-based standard 
because the compliance incentive to ``upsize'' from cars to light 
trucks is quite large (27.5 mpg versus 20.7 mpg in model year 2004) now 
and would be lessened by the creation of multiple classes of light 
trucks.
    Although the Japanese system uses vehicle weight as the key 
attribute, a measure of vehicle size, such as ``shadow'' (defined as 
exterior length multiplied by vehicle width), warrants further 
examination. A size-based standard would reduce or eliminate any 
incentive to downsize vehicles, thus contributing to safety. Vehicle 
width contributes to a vehicle's stability (thereby reducing rollover 
risk) while vehicle length provides ``crush space'' for occupant 
protection. However, the empirical relationships between size and 
safety are less well known than the relationships between weight and 
safety. We seek further comments on the relative merits of a size 
versus weight-based approach.
    A key question for attribute-based class systems is whether a 
manufacturer should be permitted to count superior fuel economy in one 
class to compensate for less-than-required fuel economy in another 
class. The EPCA does not directly address this issue, and the 
legislative history with regard to it is ambiguous. The EPCA conference 
committee report suggests (at p. 159) that Congress either intended 
that credit trading be disallowed between passenger automobiles and 
non-passenger automobiles or that it be disallowed between established 
classes of non-passenger automobiles:

    ``Any credit earned under this provision by exceeding an average 
fuel economy standard applicable to passenger automobiles may only 
be applied against a civil penalty assessed for failure to comply 
with an average fuel economy standard applicable to passenger 
automobiles. With respect to non-passenger automobiles, any credit 
earned under this provision may only be applied to automobiles of 
the same class for which the credit was earned.

    The reference to ``the same class'' may imply a Congressional 
intent to limit credits to the particular class of non-passenger 
automobiles. The statute itself, however, appears to use the term more 
precisely to distinguish between passenger automobiles and non-
passenger automobiles. Section 32903(e) states that:

    Credits for a manufacturer of automobiles that are not passenger 
automobiles are earned and applied to a model year in which the 
average fuel economy of that class of automobiles is below the 
applicable average fuel economy standard under section 32902(a) of 
this title, to the same extent and in the same way as provided in 
this section for passenger automobiles.

The phrase ``that class of automobiles'' appears to refer to those that 
are not passenger automobiles, rather than to different classes of non-
passenger automobiles.
    When enacted in the 1970s, the EPCA anticipated averaging among 
classes, or 1-to-1 credit averaging. More recent credit trading 
constructs, however, may advance the goals of the EPCA in ways not 
directly anticipated during that time. For example, a credit system 
like the one employed by the Japanese could advance the energy 
conservation objectives of the statute (by encouraging over-compliance 
due to the 2-to-1 ratio in credits), while providing valuable 
compliance flexibility to vehicle manufacturers.
    Proponents of discounting credits, such as the Japanese averaging 
system described above, argue that discounts are beneficial because 
they guarantee greater fuel savings than would occur without 
discounting. In the Japanese example, only half the fuel economy in 
excess of a standard may be used to offset vehicles that would not 
otherwise meet the standard. The remaining half would effectively be 
applied to greater fuel economy. As a consequence, to the extent that 
manufacturers make use of averaging, the overall level of fuel economy 
they achieve will be greater with discounts than without, other things 
equal.
    Opponents of discounting point out that discounting effectively 
functions as a tax on averaging. As such, it will reduce the amount of 
averaging that would otherwise take place and diminish the cost savings 
that averaging could provide. The magnitude of the deterrent effect of 
a discount is directly related to its magnitude.
    The general trend in Federal averaging programs in environmental 
regulation is away from discounting credits. For example, the 
Environmental Protection Agency typically mandates discounts on 
averaging and trading programs only in special cases, such as to 
account for uncertainties in how credits are calculated or enforced. 
Comments on the merits of different options for averaging across 
vehicle classes, as well as comments on whether NHTSA has the statutory 
authority to consider such options, are requested.
    Below we discuss in more detail a range of different attribute-
based standards. We seek comment on each system presented with regard 
to practical considerations, such as lead-time, potential approaches to 
a phase-in and the treatment of credits and penalties during a 
transition period. We seek comment on potential ideas that would 
discourage or preclude the possibility of manufacturers' increasing the 
weight and size of their vehicles under each system, which could 
actually lower fleet fuel economy and--if concentrated at the high 
end--have negative safety implications. We also seek comments on 
whether other measures of vehicle utility, such as payload capacity, 
interior volume, number of designated seating positions, towing 
capacity, etc., could be utilized as attributes, and how each of these 
systems would possibly operate.

A. Two or More Classes of Light Trucks

    With the exception of different standards for 2-wheel vs. 4-wheel 
drive trucks, to date the agency has not attempted to create differing 
classes of light trucks. The creation of two or more light truck 
classes might have many benefits. The use of multiple classes might 
allow standards to better reflect the fuel economy potential of 
different vehicle types. Minivans, for example, tend to have greater 
fuel economy than SUVs, and many SUVs have greater fuel economy than 
pickup trucks. A system with multiple light truck classes could 
distinguish between these types of vehicles and more closely align them 
with their real-world use and performance.
    One possible approach would be to divide light trucks into two 
weight or size classes, one above and one below the vehicle weight 
identified in NHTSA's updated size and safety study as the point where 
weight reductions begin to produce fleet-wide or net safety benefits. 
The light trucks having an attribute that is above this weight ``break 
point'' (or a comparable size ``break point'' derived from the weight 
``break point'') would be subjected to a relatively more challenging 
(but still feasible and practicable) fuel economy standard than the 
other class of trucks. This would provide some incentive to downweight 
or downsize these larger vehicles to improve their fuel economy, and as 
a result, may improve the overall safety of the light vehicle fleet. 
This approach would appear to achieve some of the same objectives as 
the continuous function weight-based system suggested by the NAS 
committee.
    In determining possible classes under a weight-based or a size-
based system, an analysis was performed to attempt to identify 
analogous classes under both systems. This analysis attempted to 
identify a logical safety plateau for size that coincides with the 
weight safety plateau in a two-class system. The results show a good 
correlation between

[[Page 74919]]

size and weight. However, there are no absolute matches between 
vehicles in each of the size or weight classes. This is largely due to 
vehicles with a somewhat smaller size having the same or greater weight 
than larger vehicles. These vehicles are generally SUVs that are 
designed to be very capable in off-road situations in addition to their 
utility for carrying people and cargo.
    Under a weight-based scenario, it appears that a logical break 
point would be at a vehicle curb weight of above 4,900 pounds. This is 
consistent with the approximate safety plateau weight (5,085 lbs.) 
reported in NHTSA's updated size and safety study regarding the point 
at which weight reduction would have safety benefits.\10\ Setting the 
break point at this weight also enables multiple configurations of some 
vehicles to stay within the same weight class, providing manufacturers 
with flexibility in meeting the potential standard that could be 
established for this class. This weight is based on the composition of 
the MY 2002 light truck fleet and may need to be adjusted depending on 
the composition of the light truck fleet in future model years. The 
break point of 4,900 pounds was chosen because vehicles weighing in 
excess of that weight appear to be the ones most likely to be used for 
commercial and agricultural purposes. If the break point was raised to 
5,085 lbs., many vehicles designed for commercial and agricultural 
purposes would be lumped together with vehicles generally designed for 
carrying passengers in a lower weight class. Including many of these 
vehicles weighing in excess of 4,900 lbs. in a lower weight class could 
remove any incentive manufacturers may have to downweight or downsize 
these larger vehicles to improve their fuel economy, and as a result, 
possibly improve the overall safety of the light vehicle fleet.
---------------------------------------------------------------------------

    \10\ The interval estimate of the safety break point in the 
NHTSA study ranges from 4,224 to 6,121 pounds. The range suggests 
considerable uncertainty regarding the exact location of the safety 
break point in MY 1991-1999. Setting the upper weight class at over 
4,900 pounds is well within this range.
---------------------------------------------------------------------------

    Vehicles with curb weights above 4,900 pounds include the heaviest 
SUVs. They also include the heavier full-size pickup trucks, such as 
those with a larger cab and those with long cargo beds, and long-
wheelbase cargo and passenger vans. If manufacturers choose to reduce 
the weight of these heavier light trucks to achieve higher fuel 
economy, there might be an overall improvement in the safety and 
compatibility of the light-duty fleet.
    Under a size-based scenario, the analysis looked at a measure of 
vehicle ``shadow'' (length multiplied by width in square inches) as the 
size parameter. We determined a logical safety break point to be a size 
of at least 16,001 square inches. As noted, this break point is derived 
from the weight break point. This class of vehicles would include the 
biggest SUVs, but not necessarily all of the vehicles in the over 4,900 
lb GVWR weight class. It would also include all full-size pickup trucks 
and all full-size cargo and passenger vans. These vehicles appear to be 
the ones most likely to be used for commercial and agricultural 
purposes and generally have lower fuel economies than other light 
trucks.
    Another approach to refining the light truck CAFE program would be 
to create multiple classes of light trucks based on vehicle weight or 
size. Such a system might increase fuel savings by giving regulators 
the ability to set different standards for vehicles with different 
capabilities. A multiple size class system recognizes that some 
vehicles must, to fulfill their functions as trucks, be large and use 
more fuel. Such a system would create a variety of classes, each aimed 
at a particular segment of the light truck fleet.
    An example of a multiple class system can be found in Japan. The 
Japanese government has implemented fuel economy standards pursuant to 
the Law Concerning the Rational Use of Energy. With regard to light 
trucks, the Japanese have established fuel economy performance targets 
for eight classes of gasoline-fueled trucks. These eight classes are 
divided by vehicle weight and range from small cars (under 1,547 lbs) 
up to large trucks (above 3,342 lbs).
    The lightest two classes each encompass 125 kilogram (275 lb.) 
intervals, while the largest 6 classes encompass 250 kilogram (551 lb.) 
intervals. Standards are set by identifying a ``top runner''--a vehicle 
with the best fuel economy performance within a particular segment--and 
requiring the sales weighted average of all vehicles within that 
segment to meet the top runner's performance at a future date. If a 
manufacturer exceeds the performance required in a certain segment, it 
earns credits that may be applied to offset a failure to meet the 
requirements in another segment. However, any credits used in this 
fashion are discounted by 50% before they are applied.
    The ``top runner'' concept emphasizes the technological feasibility 
of achieving fuel economy within a certain class. While NHTSA must also 
consider other factors such as economic practicability and safety when 
establishing CAFE standards, the Japanese concept of creating various 
classes of light trucks might be employed. In determining possible 
classes under a weight-based or a size-based system, an analysis was 
performed to attempt to identify logical classes. This analysis 
attempted to identify a logical safety break point for both weight and 
size in a four- and five-class system based on available data for MY 
2002 light trucks.
    The agency has attempted to separate vehicles into possible classes 
with those having similar utility, function and capability. In arriving 
at the possible weight and size classes, NHTSA took into consideration 
all available information regarding the future light truck market and 
took measures to assure that new vehicles would be placed in 
appropriate classes. NHTSA is well aware that many of the attributes of 
the MY 2002 fleet may change by MY 2008, with some of these vehicles 
being discontinued and others being newly introduced into the market.
    The agency is also considering defining either a weight-based, 
multi-class system or a size-based, multi-class system. Each system 
incorporates the safety break point discussed in the two-class system 
described above (4,900 lbs. or comparable size), and then creates 
either three or four additional classes.
    Under a four-class system, the possible weight classes are (1) up 
to 3,400 pounds curb weight; (2) from 3,401 pounds to 4,300 pounds curb 
weight; (3) from 4,301 pounds curb weight to 4,900 pounds curb weight; 
and (4) above 4,900 pounds curb weight. In a five-class system, the 
second weight class could be broken out into two separate weight 
classes: (i) from 3,401 pounds to 3,900 pounds curb weight and (ii) 
from 3,901 pounds to 4,300 pounds curb weight.
    The class of light trucks up to 3,400 pounds curb weight would 
comprise almost all car-based SUVs, many small pickup trucks powered by 
4-cylinder engines with standard cabs and short beds, and some smaller 
SUVs with off-road capability. As a class, these vehicles had an 
average fuel economy of 26.6 mpg based on the MY 2002 fleet.
    The 3,401 pounds to 4,300 pounds curb weight class would comprise 
many small- to medium-sized 2WD SUVs, most minivans, medium-sized 
crossover vehicles, small pickup trucks powered by 6-cylinder engines 
with extended cabs and long beds, some full-size pickup trucks with 
standard cabs and short beds, and medium-sized cargo and passenger 
vans. As a class, these vehicles had an average fuel economy of 22.0 
mpg based on the MY 2002 fleet.

[[Page 74920]]

    This weight range can be broken down into two additional weight 
classes. These separate weight classes would be from 3,401 pounds to 
3,900 pounds curb weight and from 3,901 pounds to 4,300 pounds curb 
weight. The lighter weight class would comprise mostly smaller SUVs, 
medium-sized crossover vehicles and 2WD small pickup trucks. As a 
class, these vehicles would have an average fuel economy of 22.6 mpg 
based on the MY 2002 fleet.
    The higher weight class would mostly comprise medium-sized 2WD 
SUVs, the larger minivans, 4WD small pickup trucks, some full-size 
pickup trucks with standard cabs and short beds, and medium-sized cargo 
and passenger vans. As a class, these vehicles would have an average 
fuel economy of 21.8 mpg based on the MY 2002 fleet.
    The 4,301 pounds to 4,900 pounds curb weight class would comprise 
many medium-sized 4WD SUVs, some medium-sized 2WD SUVs, a few larger 
minivans including those with 4WD, medium-sized pickup trucks, some 
full-size pickup trucks with standard cabs and short beds, some with 
4WD, and some short-wheelbase cargo and passenger vans. As a class, 
these vehicles would have an average fuel economy of 19.7 mpg based on 
the MY 2002 fleet.
    As noted above, vehicles with curb weights above 4,900 pounds 
include the heaviest SUVs and the heavier full-size pickup trucks, such 
as those with larger than the standard cab and those with long cargo 
beds, and long-wheelbase cargo and passenger vans. As a class, these 
vehicles would have a MY 2002 average fuel economy of 17.7 mpg.
    Under a size-based scenario, the analysis looked at exterior 
vehicle ``length times width'' (sq. in.) as the size parameter. It 
appears that a logical safety break point is vehicles that have a size 
above 16,000 sq. in. (111 sq. ft.) As a class it appears that these 
vehicles would have an average fuel economy of 18.3 mpg based on the MY 
2002 fleet. This size delineation generally corresponds to the 
distinction between vehicles weighing less and more than 4900 lbs.
    Under a 4-class system, the possible size classes are (1) up to 
12,450 sq. in. (86.5 sq. ft.); (2) from 12,451 sq. in. to 14,500 sq. 
in. (86.5 sq. ft. to 100.7 sq. ft.); (3) from 14,501 sq. in. to 16,000 
sq. in. (100.7 sq. ft. to 111 sq. ft.); and (4) greater than 16,000 sq. 
in. (112 sq. ft. or more). Under a 5-class system, the second size 
class could be broken out into two separate size classes (i) from 
12,451 sq. in. to 13,100 sq. in. and (ii) from 13,101 sq. in. to 14,500 
sq. in.
    The up to 12,450 sq. in. size class would comprise almost all car-
based SUVs and many smaller SUVs that have very capable off-road 
ability, such as Jeep Wranglers. As a class, these vehicles would have 
an average fuel economy of 23.8 mpg based on the MY 2002 fleet. In 
comparing the smallest size class to that of the lightest weight class, 
one may have expected the average fuel economy for each class to be 
much closer. The lower average fuel economy associated with the 
smallest size class is largely caused by the inclusion of some small, 
heavy SUVs in this class. Many of those same vehicles would reside 
within heavier weight classes under a possible weight-based system.
    The 12,451 sq. in. to 14,500 sq. in. size class would comprise the 
vast majority of the personal use SUV and crossover market, all small 
and medium-sized pickup trucks (except those with ``crew cabs'') and 
minivans with smaller wheelbases than those in the next largest size 
class. As a class, these vehicles would have an average fuel economy of 
20.9 mpg based on the MY 2002 fleet.
    This size class can be broken down into two additional size 
classes. As discussed earlier, these separate size classes would be 
from 12,451 sq. in. to 13,100 sq. in. and from 13,101 sq. in. to 14,500 
sq. in. The smaller size class would comprise mostly smaller personal 
use SUVs, and many of the smaller pickup trucks. As a class, these 
vehicles would have an average fuel economy of 22.4 mpg based on the MY 
2002 fleet. The larger size class would comprise the vast majority of 
the medium-sized personal use SUV and crossover market, the remaining 
small and medium-sized pickup trucks (except those with ``crew cabs''), 
and minivans with smaller wheelbases. As a class, these vehicles would 
have an average fuel economy of 20.7 mpg based on the MY 2002 fleet.
    The 14,501 sq. in. to 16,000 sq. in. size class would comprise many 
full-sized SUVs (i.e., those without extended wheelbases), many larger 
minivans, some large crossover vehicles, some medium-sized pickup 
trucks with ``crew cabs,'' and all medium-sized cargo and passenger 
vans. As a class, these vehicles would have an average fuel economy of 
20.8 mpg based on the MY 2002 fleet. Although it is logical to expect 
the 14,501 sq. in. to 16,000 sq. in. size class to have a lower CAFE 
than the next smallest size class, it's instructive to note that this 
size class is comprised of a large quantity of minivans that possess 
relatively high fuel economies. Because CAFE is a sales-weighted 
average, the MY 2002 average fuel economy for this class is not 
unexpected.
    The 16,001 sq. in. and up size class would comprise all full-size 
pickups, all full-size cargo/passenger vans, and the largest of the 
full-size SUVs (i.e., those with extended wheelbases). As a class, 
these vehicles would have an average fuel economy of 18.3 mpg based on 
the MY 2002 fleet.
    Although these possible weight and size classes exhibit a fair 
correlation between classes, especially in regards to the overall 
quantity of vehicles in each relative class, there are no absolute 
matches between vehicles in each of the relative classes. This is 
largely due to vehicles with smaller sizes weighing more than other 
vehicles in the same size class. Specific examples include some of the 
larger minivans, some luxury imported SUVs, and some small off-road 
capable SUVs (i.e., Wrangler, Rodeo Sport).
    The above discussion focused on two, three and four category class 
systems with specific boundaries. There is no reason that systems with 
more categories, or different category boundaries cannot be considered. 
The agency invites comment on both the number of classes in a system 
and the delineation of categories within a classification system.
    While it has advantages, a multiple class weight or size-based 
classification system may also present some disadvantages. Because the 
CAFE standard for each class would likely decrease as the weight or 
size of the vehicles in each class increased, the system might 
encourage manufacturers to increase vehicle weight or size at or near 
each upper boundary. This ``size or weight creep'' could result in 
increased overall fuel consumption. The agency notes that a size-based 
system might be less susceptible to that problem. Further, if 
manufacturers are unable to average credits between classes, a system 
with many classes would lack the flexibility of one with a single class 
or just two classes.

B. Functional Attribute-Based System

1. Weight-Based Standard
    It is possible that future CAFE standards could be based on a 
continuous function relating one or more attributes to fuel economy. 
The NAS report suggested the adoption of a fuel economy standard that 
decreases as vehicle weight increased. One of the principal advantages 
of a weight-based system, according to the NAS, is that it removes the 
incentive to reduce vehicle

[[Page 74921]]

weight to improve fleet fuel economy, and thereby helps to improve 
safety.
    A simple weight-based standard could be based on a relationship in 
which fuel consumption (gallons per mile) varies with respect to curb 
weight. Compared to a single value standard, a simple weight-based 
standard could discourage manufacturers from complying by reducing 
vehicle weight or reduce the incentive that exists under the current 
program. However, NHTSA's updated size and safety study suggests that 
fleet-wide safety is unlikely to be compromised--and may actually be 
enhanced--by modest reductions in the weight of vehicles of curb weight 
greater than approximately 5,000 pounds. Such considerations led the 
NAS to suggest a standard that would be weight-based below 4,000 pounds 
and fixed for vehicles weighing above 4,000 pounds.\11\ This concept is 
illustrated in Figure 1.
---------------------------------------------------------------------------

    \11\ It should be noted that the 4,000 lb. break point 
identified by NAS is not based on the updated NHTSA size and safety 
study, and that the point selected by NAS reflects a system that 
combines both cars and light trucks into a single category. 
Therefore, that break point might not be appropriate under the 
system considered here.
[GRAPHIC] [TIFF OMITTED] TP29DE03.007

    As observed by the NAS, while limiting the incentive to reduce the 
weight of lighter vehicles, this approach would create ``a strong set 
of incentives to improve the fuel economy of the heaviest vehicles.'' 
(NAS, p. 108) As is true under the current fixed-value CAFE system, the 
E-CAFE standard would not discourage weight reduction as a compliance 
strategy above this 4,000-pound break point.
    Using the NAS E-CAFE concept as a model, we have considered how 
such a weight-based standard might be applied to the light truck fleet. 
We considered a similarly discontinuous function with a fixed value at 
curb weights over 5,000 pounds. However, our analysis is focused on 
light trucks alone, rather than light trucks and cars together. For 
illustrative purposes, we used the prevailing standard for passenger 
cars, 27.5 mpg, as a constant at the lower end of the truck weight 
range. Because this function involves discontinuities near which 
behavior might be distorted, we also examined a continuous function (in 
this case, a logistic function) that approaches limits equal to the 
constant-value segments of the discontinuous function.
    To better understand the implications of these two potential 
standards, we used data for the MY 2002 fleet and adjusted the 
constants for each function until the stringency as applied to the 
overall industry was equivalent to the stringency under the baseline 
standard (i.e., a constant-value standard of 20.7 mpg). The individual 
data points plotted in Figure 2 show the curb weights and fuel 
economies of different light truck models sold in MY 2002. The dashed 
line shows the constant-value 20.7 mpg standard applicable in MY 2002. 
The two solid lines show weight-based standards that would have been 
equivalent in stringency (i.e., that given the same mix of vehicles, 
would have resulted in the same net fines required) to the constant-
value 20.7 mpg standard. The cross-marked solid line shows a standard 
modeled on the NAS E-CAFE approach and an underlying linear dependence 
of fuel consumption on curb weight. The unmarked solid line shows a 
standard that uses an underlying logistic dependence of fuel 
consumption on curb weight. While these examples both originated from 
statistical analysis of the MY 2002 data, because a CAFE standard 
fulfills a prescriptive rather than descriptive purpose, there is no a 
priori reason any attribute-based standard for a future model year 
would need to fit the historical data.

[[Page 74922]]

[GRAPHIC] [TIFF OMITTED] TP29DE03.008

Figure 2. Weight-Based Standards

    A primary concern with any attribute-based standard is the impact 
that such a standard could have on safety. Because fuel economy is 
heavily influenced by vehicle weight, the current standard for light 
trucks provides an incentive to reduce vehicle weight throughout the 
entire range of light trucks. Agency analysis indicates that safety 
would likely be preserved or even improved if such weight reductions 
were applied primarily to heavier light trucks. Therefore, the weight-
based standards considered here would introduce a disincentive to 
reduce the weight of vehicles with curb weights below 5,000 pounds, but 
would also provide an incentive to reduce the weight of heavier 
vehicles.
    A weight-based standard would have different impacts on different 
manufacturers based on the characteristics of their respective fleets. 
Depending on the uncertain economics and market implications of weight 
increases for vehicles below 5,000 pounds, a weight-based standard 
could possibly induce manufacturers to increase the weight of these 
vehicles and inhibit substantial increases in fuel economy. 
Nevertheless, the existence and extent of this effect will depend on 
the precise level of stringency that is established in future 
rulemaking, which will set the CAFE standard at the ``maximum 
feasible'' level subject to the existing statutory criteria.
2. Size-Based Standards
    Vehicle size, expressed as ``shadow,'' may present an alternative 
measure for a similar system. A size-based CAFE standard would help to 
hold size, rather than weight, constant while improving fuel economy. 
While the relationship between weight and safety has been more fully 
reviewed (and generally focuses on the effects of vehicle 
incompatibility), using shadow as a measure may encourage manufacturers 
to build vehicles with greater rollover resistance.
    In order to evaluate the possibility of using a size-based system, 
we performed a similar analysis to that described above for weight-
based standards. Consistent with the class-based approach discussed 
above, we considered standards that assumed or approached a constant 
value for all trucks whose ``size'' or shadow was greater than 111 
square feet (16,000 square inches) in order to preserve neutrality with 
respect to downsizing as a compliance strategy for the largest 
vehicles. We also limited this standard to a maximum of 27.5 mpg for 
the smallest vehicles. As we did for weight-based standards, the agency 
considered both a discontinuous (piecewise linear) standard and a 
continuous (logistic) standard.
    After developing these formulas, we then applied them to the MY 
2002 model year in a fashion similar to that shown above for the 
weight-based standards. Using model year 2002 data, both standards were 
constructed to provide industry-wide stringency equivalent to the 
baseline constant-value standard of 20.7 mpg. These size-based 
standards are shown graphically in Figure 3, where the MY 2002 CAFE 
standard of 20.7 mpg is represented by a dashed line.

[[Page 74923]]

[GRAPHIC] [TIFF OMITTED] TP29DE03.009

Figure 3. Size-Based Standards

    Analogous to the weight-based standards shown in Figure 3, the 
size-based standards shown in Figure 3 would introduce a disincentive 
to reduce the size of most vehicles of size less than approximately 110 
square feet. Because of the relationships between size, weight, and 
fuel economy, NHTSA expects that this would provide a more positive 
safety incentive than a constant-value function due to the fact that, 
given similar height and weight, a larger vehicle usually provides 
greater occupant self-protection than the smaller vehicle.
    A size-based standard would also entail similar concerns regarding 
the potential that fuel savings would be lower than expected because 
manufacturers would increase the size of many smaller vehicles (below 
110 square feet). As under either a constant-value or weight-based 
standard, though, NHTSA would address this concern through the normal 
process of regularly updating light truck standards.
3. Mixed Attribute-Based Standards
    Because weight-based and size-based standards would likely have 
different safety and economic implications, we also considered 
standards defined by functions of both weight and size. The first 
approach we considered was based on a functional form suggested in a 
recent report by Argonne National Laboratory.\12\ This form begins with 
a linear dependence of fuel consumption (in gallons per mile, or gpm) 
on curb weight, but then provides ``extra credit'' for ``weight-
efficient'' vehicles--that is, vehicles with curb weights that are not 
unusually heavy relative to their sizes. Table 3 and Figure 4 show how 
such a mixed standard might appear if applied to the light truck fleet 
at a level of overall stringency equivalent to a 20.7 mpg constant-
value CAFE standard.\13\
---------------------------------------------------------------------------

    \12\ Argonne National Laboratory, ``Examining the Potential for 
voluntary Fuel Economy Standards in the United States and Canada'' 
Argonne, IL, October 2002.
    \13\ The standard shown is of the following form: gpm = a*(b*CW-
c)*[d-e*CW/(f*A-g)], where CW is curb weight, A is area, and a, b, 
c, d, e, f, and g are constants.

                                  Table 3.--Weight-Based Standard (mpg) With ``Extra Credit'' for ``Weight Efficiency''
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         Area (square feet)
             Curb weight (lb)              -------------------------------------------------------------------------------------------------------------
                                                60         70         80         90        100        110        120        130        140        150
--------------------------------------------------------------------------------------------------------------------------------------------------------
2000......................................       33.5       32.7       32.2       31.9       31.6       31.3       31.1       30.9       30.8       30.7
2500......................................       30.3       29.5       28.9       28.4       28.1       27.8       27.6       27.4       27.2       27.1
3000......................................       27.9       27.0       26.3       25.8       25.4       25.1       24.9       24.7       24.5       24.3
3500......................................       26.1       25.0       24.3       23.8       23.3       23.0       22.7       22.5       22.3       22.2

[[Page 74924]]

 
4000......................................       24.7       23.5       22.7       22.1       21.7       21.3       21.0       20.8       20.6       20.4
4500......................................       23.7       22.3       21.4       20.8       20.3       19.9       19.6       19.3       19.1       18.9
5000......................................       22.9       21.4       20.4       19.7       19.2       18.7       18.4       18.1       17.9       17.7
5500......................................       22.3       20.6       19.6       18.8       18.2       17.8       17.4       17.1       16.9       16.7
6000......................................       21.9       20.1       18.9       18.0       17.4       16.9       16.6       16.3       16.0       15.8
6500......................................       21.7       19.6       18.3       17.4       16.7       16.2       15.8       15.5       15.2       15.0
7000......................................       21.6       19.3       17.9       16.9       16.2       15.6       15.2       14.9       14.6       14.3
7500......................................       21.7       19.1       17.5       16.4       15.7       15.1       14.7       14.3       14.0       13.8
8000......................................       22.0       19.0       17.2       16.1       15.3       14.7       14.2       13.8       13.5       13.2
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                                                                                                                               [GRAPHIC] [TIFF OMITTED] TP29DE03.010
                                                                                                                                               Figure 4. Weight-Based Standard with ``Extra Credit'' for ``Weight 
Efficiency''

    Similar to the weight-based standard shown in Figure 2, this 
standard would generally discourage weight reduction as a compliance 
strategy. This standard would also generally discourage size reduction, 
though not as strongly as the size-based standard shown in Figure 3.
    Depending on the specific constants chosen, the standard could 
theoretically encourage compliance through weight reduction rather than 
other means (such as powertrain efficiency) for some vehicles. For the 
function shown in Figure 4, this would occur for vehicles that are 
simultaneously smaller than 70 square feet and heavier than 7000 
pounds. Manufacturers may opt to reduce the weight of such vehicles in 
order to take advantage of a lower standard at lighter vehicle weights. 
However, such vehicles would be both smaller and heavier than all of 
the vehicles in the current U.S. fleet. Thus, further weight reduction 
appears to be an unlikely compliance strategy. Additionally, reducing 
the weight of such heavy vehicles would most likely improve highway 
safety.
    The mixed standard would also discourage weight reduction as a 
compliance strategy even for vehicles with curb weights well above 
5,000 pounds and, as mentioned above, would not strongly discourage 
size reduction. At low curb weights (less than 3,000 lbs.) and small 
sizes, this standard would impose class targets that exceed the 
existing 27.5 mpg standard for passenger cars.
    We also considered a mixed standard that would combine the logistic 
weight- and size-based standards shown in Figure 2 and Figure 3, 
respectively. This approach is illustrated by the standard shown in 
Table 4 and Figure 5. Like the standard shown in Table 3 and Figure 4, 
this standard has a gradual ``bowl'' shape over most of the relevant 
region.

[[Page 74925]]

However, this logistic standard approaches an upper limit of 27.5 mpg 
limit at low curb weights and sizes as well as a lower limit at high 
curb weights and sizes.\14\
---------------------------------------------------------------------------

    \14\ Approximately 16.8 mpg for an overall stringency equivalent 
to a constant-value standard of 20.7 mpg.

                        Table 4.--Logistic Weight- and Size-Based Standard (mpg) With ``Extra Credit'' for ``Weight Efficiency''
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         Area (square feet)
             Curb weight (lb)              -------------------------------------------------------------------------------------------------------------
                                                60         70         80         90        100        110        120        130        140        150
--------------------------------------------------------------------------------------------------------------------------------------------------------
2000......................................       27.5       27.5       27.4       27.3       27.2       27.1       27.1       27.1       27.1       27.1
2500......................................       27.5       27.4       27.2       26.9       26.6       26.5       26.4       26.4       26.4       26.4
3000......................................       27.4       27.3       26.8       26.1       25.5       25.2       25.0       25.0       25.0       25.0
3500......................................       27.3       27.0       26.1       24.8       23.6       23.0       22.7       22.7       22.7       22.6
4000......................................       27.2       26.6       25.3       23.1       21.4       20.6       20.3       20.2       20.1       20.1
4500......................................       27.1       26.3       24.5       21.9       19.8       18.9       18.5       18.4       18.4       18.4
5000......................................       27.1       26.2       24.2       21.2       19.0       18.0       17.7       17.5       17.5       17.5
5500......................................       27.0       26.1       24.0       21.0       18.7       17.7       17.3       17.2       17.1       17.1
6000......................................       27.0       26.1       23.9       20.9       18.6       17.5       17.2       17.0       17.0       17.0
6500......................................       27.0       26.1       23.9       20.8       18.5       17.5       17.1       17.0       17.0       16.9
7000......................................       27.0       26.1       23.9       20.8       18.5       17.4       17.1       17.0       16.9       16.9
7500......................................       27.0       26.1       23.9       20.8       18.5       17.4       17.1       17.0       16.9       16.9
8000......................................       27.0       26.1       23.9       20.8       18.5       17.4       17.1       17.0       16.9       16.9
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                                                                                                                               [GRAPHIC] [TIFF OMITTED] TP29DE03.011
                                                                                                                                               
Figure 5. Logistic Weight- and Size-Based Standard

    Similar to the standard shown in Figure 4, this standard would 
discourage both weight and size reduction. However, the logistic 
weight- and size-based standard shown in Figure 5 would more clearly 
focus this disincentive on those vehicles for which such reductions 
would most likely entail safety penalties. This standard would remain 
neutral with respect to

[[Page 74926]]

size and weight reduction as a compliance strategy for the largest 
vehicles. For the smallest vehicles, this standard would be constrained 
by the constant-value standard for passenger automobiles.

C. Fixed Attribute System

    A variant of the functional attribute system described above is a 
``fixed'' attribute system.\15\ The key difference is that, under a 
fixed attribute system, the relevant vehicle attribute(s) are ``fixed'' 
for each manufacturer at the levels reflecting that manufacturer's 
fleet mix in some prior (``reference'') model year. For example, each 
manufacturer's vehicle weight mix might be ``fixed'' for as long as the 
standard remains in place.\16\ The manufacturer would, of course, be 
free to vary the attribute levels in subsequent years, but its CAFE 
target in any future year would continue to be based on its vehicle 
attribute level in the reference year. A fixed attribute system would, 
in essence, ``lock in'' a corporate fleet's reference-year attribute 
(e.g., weight or size) for the purpose of regulation. This approach was 
devised to address the potential for upsizing/weight-creep that could 
occur in a functional weight-based system.
---------------------------------------------------------------------------

    \15\ DeCicco, John. ``Use a Vehicle-Based Approach, but Lock-In 
Each Company's Target.'' American Council for an Energy-Efficient 
Economy. 1992. This paper uses the example of a uniform percentage 
increase (UPI) to implement this approach. UPI is not an essential 
feature of this approach. NHTSA welcomes comments on alternative 
ways to implement this approach.
    \16\ The reference year could be modified periodically to 
reflect changing trends in the vehicle fleet.
---------------------------------------------------------------------------

    Under a fixed attribute system, each manufacturer's overall 
effective CAFE for any given model year is determined by the CAFE 
standard and the mix of vehicles it produced in some prior 
(``reference'') model year. For any given model year subject to a 
fixed-attribute standard, each manufacturer's effective CAFE target is 
independent of the mix of vehicles it produces. If, for example, 
manufacturer A produced a lighter vehicle mix than manufacturer B in 
the reference year, it would be subject to a more stringent effective 
CAFE than manufacturer B, even if manufacturer B chose a lighter 
vehicle mix than manufacturer A in a subsequent model year. Thus, 
compared to a functional attribute system, a fixed attribute system 
provides a somewhat different set of incentives. If, for example, 
weight is the relevant attribute, a fixed attribute system provides a 
relatively greater disincentive to increase (and relatively greater 
incentive to decrease) weight and than under a functional attribute 
system.
    Given the relationship between weight and fuel economy, a fixed-
attribute weight-based system such as that described above would, like 
the current system, provide an incentive to reduce vehicle weight 
throughout the range of light trucks. As discussed previously, the risk 
of adverse safety impacts caused by the current CAFE system could be 
mitigated by focusing weight reduction on some comparatively heavy 
vehicles, and discouraging weight reduction on some comparatively light 
vehicles. One possible means of focusing this incentive on the vehicle 
weight range in which weight reduction is the most compatible with 
safety considerations would be to apply a safety-based adjustment when 
calculating the CAFE level that would be required under a fixed-
attribute system. For example, if weight reduction is expected to 
compromise overall safety when applied to vehicles below 5,000 pounds, 
but not when applied to vehicles above 5,000 pounds, the fixed-
attribute CAFE level required of a given manufacturer could be adjusted 
using a ``safety adjustment factor'' that is based on that 
manufacturer's distribution of vehicle weights (e.g., the fraction and 
average weight of that manufacturer's light trucks having curb weights 
above 5,000 pounds). The implications of such an adjustment would 
depend on each manufacturer's product mix. The Agency invites comment 
on how a practical fixed-attribute system should be designed and 
implemented, including both advantages and disadvantages.

VI. Definitional Changes to the Current Vehicle Classification System

    In the EPCA, Congress created the basic distinction between 
passenger automobiles and non-passenger automobiles. Section 32901(16) 
defines a ``passenger automobile'' as an ``automobile that is 
manufactured primarily for transporting not more than 10 individuals, 
but does not include an automobile capable of off-highway operation 
that the Secretary decides by regulation--(A) has a significant feature 
(except 4 wheel drive) designed for off-highway operation; and (B) is a 
4-wheel drive automobile or is rated at more than 6,000 pounds gross 
vehicle weight.'' This definition effectively divides the class of 
automobiles subject to CAFE into passenger and non-passenger 
automobiles (light trucks).
    In December 1976, the agency promulgated a Notice of Proposed 
Rulemaking to further define the distinction between passenger and non-
passenger automobiles for purposes of the CAFE program.\17\ The agency 
reviewed the legislative history and concluded that Congress intended 
that passenger automobiles be defined as those used primarily for the 
transport of individuals and that all other vehicles would fall within 
the category of non-passenger automobiles. The agency pointed to the 
relevant text in the EPCA conference reports (H. Rept. 94-700):
---------------------------------------------------------------------------

    \17\ We note that the NPRM makes clear that one of the purposes 
of the classification scheme adopted was to encourage manufacturers 
to reduce the weight of their larger passenger cars. As the NAS 
report found, this weight reduction has had a negative impact on 
motor vehicle safety.

    The passenger automobile category would exclude vehicles not 
manufactured primarily for transportation of individuals--such as 
light duty trucks, mobile homes, and multipurpose vehicles not 
---------------------------------------------------------------------------
manufactured primarily for transportation of individuals.

    The agency then determined that, based on the nature of the vehicle 
fleet in the mid-1970s, it could best differentiate between vehicles 
built primarily to transport people from those built primarily for 
utilitarian purposes by focusing on whether the vehicle was built on a 
passenger car chassis versus a truck chassis. The agency also 
acknowledged, however, that this approach would not always achieve the 
distinction it was trying to create.
    The agency issued regulations creating a specific classification 
scheme, which has served to distinguish between passenger car fleets 
and light truck fleets throughout the lifespan of the CAFE program. In 
49 CFR 523.3, the agency defined what constitutes an ``automobile'' 
subject to the CAFE program. That provision includes automobiles 
weighing 6,000 lbs. GVWR or less and vehicles having a GVWR between 
6,000-10,000 lbs. that the NHTSA Administrator has determined may 
feasibly be subject to the CAFE program. Feasibility is determined with 
regard to whether the vehicles are used substantially in the same way 
as other vehicles subject to the CAFE program and whether including 
those vehicles will result in significant energy conservation.
    As part of that regulation, the NHTSA Administrator determined that 
vehicles satisfying the criteria for passenger automobiles set forth in 
49 CFR 523.4 and certain vehicles satisfying the criteria for light 
trucks set forth in 49 CFR 523.5, except for their GVWR, would be 
considered automobiles for purposes of CAFE. The Administrator further 
determined that light trucks should be subject to the CAFE program if 
they have a basic frontal area of 45 square feet or less, have a curb 
weight

[[Page 74927]]

of 6,000 pounds or less and have a GVWR of 8,500 pounds or less.
    In 49 CFR 523.4, the agency defined a passenger automobile as ``any 
automobile (other than an automobile capable of off-highway operation) 
manufactured primarily for use in the transportation of not more than 
10 individuals.'' Under this definition, the remaining vehicles--the 
non-passenger or light truck category--not only includes vehicles 
capable of off-highway operation, but also includes other vehicles that 
are not manufactured primarily for transporting individuals. Therefore, 
a pickup truck that does not have features designed for off-highway 
operation is, because it is manufactured for carrying cargo, a light 
truck for CAFE purposes.
    The agency's definition of a light truck (49 CFR 523.5) is 
substantially more detailed and sets up the parameters of what 
constitutes a vehicle capable of off-highway operation or other 
utilitarian uses. The regulation provides that an automobile is capable 
of off-highway operation if it has 4 wheel drive or if its GVWR is more 
than 6,000 pounds and it meets at least four out of five specified 
geometric measures (approach angle, break-over angle, departure angle, 
running clearance and front and rear axle clearance). The agency also 
included as light trucks vehicles designed to perform at least one of 
the following: (1) Transport more than 10 persons; (2) provide 
temporary living quarters; (3) transport property on an open bed; (4) 
provide greater cargo-carrying than passenger-carrying volume; or (5) 
permit expanded use of the automobile for cargo-carrying purposes or 
other non-passenger-carrying purposes through the removal of seats by 
means installed for that purpose by the automobile's manufacturer or 
with simple tools, such as screwdrivers and wrenches, so as to create a 
flat, floor level, surface extending from the forward most point of 
installation of those seats to the rear of the automobile's interior.
    As discussed above, the regulatory scheme was adopted before the 
emergence of a more versatile vehicle fleet designed to accommodate 
today's consumer preferences. The regulation predated the widespread 
influx of minivans and SUVs. It did not anticipate the development of a 
market for vehicles that could easily be transformed to serve a variety 
of functions and which also provide basic passenger transportation 
needs. Nor did the regulation anticipate the emerging class of ``cross-
over vehicles,'' containing aspects of both passenger and non-passenger 
automobiles.\18\
---------------------------------------------------------------------------

    \18\ In developing the regulation, the agency struggled with 
defining pickup trucks constructed on passenger car frames. Pickups 
built on passenger car frames were to be considered light trucks, 
because, from a design perspective, they ``have much less passenger 
carrying capacity and much more property carrying capacity than the 
passenger cars from which they are derived.'' This passage seems to 
suggest that, when issuing the regulation, the agency intended that 
a vehicle should be considered a non-passenger automobile unless it 
clearly was designed primarily for the transportation of people 
rather than cargo (42 FR 38362, 38367).
---------------------------------------------------------------------------

    The application of the regulation to the current vehicle fleet 
(designed with the regulatory distinctions in mind) less clearly 
differentiates between passenger cars and light trucks than it did in 
the 1970s. Many vehicles produced today, while smaller than many other 
passenger cars, qualify as light trucks because they have been designed 
so that their seats can be easily removed and their cargo carrying 
capacity significantly enhanced.\19\ Other vehicles, while appearing no 
different than counterpart passenger automobiles, qualify through 
having designs that meet four out of five geometric criteria set forth 
in 49 CFR 523.5. And yet other vehicles are designed in such a way that 
they can be easily transformed from passenger carrying motor vehicles 
to motor vehicles with open cargo beds without the use of substantial 
tools.
---------------------------------------------------------------------------

    \19\ In a letter dated March 21, 2000 to Gerald Plante (and 
published on the agency's Web site), the agency considered whether 
the flat floor provision was intended to permit vehicles to be 
classified as light trucks if their seats are folded into a flat 
floor, rather than removed to create a flat floor. The agency 
considered the vehicles under consideration when the regulatory 
provision was first issued and determined that the regulation did 
not anticipate that vehicles would be classified as light trucks by 
virtue of folding seats. This was based, in part, on the fact that 
seats that folded into a vehicle floor were found only in station 
wagons using a car chassis. Contemporary minivans are built on their 
own chassis and are not derived from either a car or a truck. If the 
resulting cargo area is indicative of a dual use beyond simply 
carrying passengers, it may not matter if the seats fold or are 
removable. Were we in the future to permit the folding of seats to 
create a flat floor to serve as the basis for classifying vehicles 
as light trucks, the enhancement of the cargo carrying capabilities 
of the vehicle must be significant, just as it would were the seats 
removed.
---------------------------------------------------------------------------

    We recognize that any system of distinctions will drive vehicle 
design and result in its own set of ambiguities and ultimately may lead 
to unintended results as vehicle designs continue to evolve. We seek 
input on whether amendments to the current classification regulation 
can be made to better clarify the distinction between passenger 
automobiles and non-passenger automobiles in light of the current and 
emerging motor vehicle fleet.
    Possible approaches to updating the classification rules are set 
forth below. In seeking comments on these alternatives, the agency 
recognizes that any successful classification scheme must adequately 
account for the tremendous variety of needs that are served by light 
vehicles. Some need only carry one or two persons to work, while others 
must be able to carry large, relatively heavy loads. While some light 
trucks may be used primarily to transport passengers, their ``peak 
use'' or ``peak value'' (e.g., towing boats, hauling heavy loads) may 
require substantial performance capabilities. In considering potential 
changes to the classification definitions, we intend to preserve the 
ability of consumers to obtain vehicles that meet their needs, while 
providing competitive equity among vehicle manufacturers, improving 
vehicle safety, and enhancing fuel economy.
    We expect to receive comments both with regard to the concepts set 
forth below and with regard to some of the practical necessities that 
might accompany any amendments to the classification regulations. These 
would include any necessary lead-time, possible approaches to phasing-
in new definitions and the treatment of credits and penalties during 
the transition period.

A. Vehicle Classification Using a Single Attribute

    The definitions contained in 49 CFR 523.5 provide multiple methods 
of classifying a vehicle as a light truck. Alternatively, the agency 
could define a particular vehicle attribute as that most appropriate to 
distinguish between light trucks and passenger cars. Such a system has 
the advantage of being simple to apply and could help to avoid 
criticism that manufacturers can ``game'' the classification system by 
taking advantage of certain features, such as the flat floor provision, 
to include vehicles in their light truck fleet that are otherwise 
classified as passenger cars. In considering attributes that may be 
used, we must be cognizant of the need to choose distinctions that 
would continue to serve consumer choices, and thus would discourage any 
incentive to design vehicles just beyond the minimum necessary to be 
classified as a light truck.
    We have considered two attributes, which could be used to 
distinguish between the light truck and passenger car fleets: vehicle 
curb weight and interior volume. To employ this type of classification 
system, the agency would need first to determine that a vehicle with 
either curb weight or interior

[[Page 74928]]

volume above a specified minimum is not one manufactured primarily for 
transporting not more than ten individuals.\20\ If curb weight were 
used as the determining factor in deciding whether to classify a 
vehicle as a passenger car or light truck, based on MY 2002 fleet and 
available information on MY 2003-2004 vehicles, the agency believes 
that a curb weight of approximately 3,700 pounds could serve as a 
possible minimum curb weight to classify vehicles as light trucks. MY 
2002 data shows that all minivans and mid-size SUVs have curb weights 
of at least 3,700 pounds.
---------------------------------------------------------------------------

    \20\ The application of this concept might result in the 
substitution of a minimum curb weight or interior volume for the 
various definitions contained within 49 CFR 523.5(a). Of course, a 
vehicle meeting the other statutory criteria addressing vehicles 
capable of off-highway operation, as defined in 49 CFR 523.3(b), 
might continue to qualify as a light truck.
---------------------------------------------------------------------------

    In examining the MY 2002 CAFE data, the agency found that there are 
two main types of passenger cars that might be classified as light 
trucks if the minimum curb weight was established at 3,700 pounds: 
large sedans and ``exotic'' sport cars. There are also several types of 
light trucks that might be classified as passenger cars if the minimum 
curb weight was established at 3,700 pounds: small unibody SUVs, small 
ladder-on-frame SUVs, and some small pickups.
    Interior volume presents another possible approach to using a 
single attribute to distinguish between passenger cars and light 
trucks. The agency used three methods for determining an interior 
volume measurement: (1) For cars with trunks, interior volume may be 
defined as the passenger compartment volume plus trunk volume; (2) for 
station wagons, SUVs, and crossover vehicles, interior volume may be 
defined as the volume enclosed within the combined passenger and cargo 
area; (3) for pickup trucks, interior volume may be defined as the 
interior volume of the cab plus twice the cargo bed volume.
    In examining the MY 2002 fleet and available information on MY 
2003-2004 vehicles, we believe that an interior volume measure in the 
range of 130-135 cubic feet could serve as a possible minimum interior 
volume to classify vehicles as light trucks. In examining the MY 2002 
CAFE data, the agency found that there are two main types of passenger 
cars that might be classified as light trucks under such a system: 
large sedans and large station wagons. The agency also found that there 
are two main types of light trucks that might be classified as 
passenger cars: small two-wheel drive unibody SUVs and small two-wheel 
drive ladder-on-frame SUVs. \21\
---------------------------------------------------------------------------

    \21\ Vehicles that are either four-wheel drive or have a gross 
vehicle weight above 6000 pounds are light trucks if they also have 
a significant feature (as defined by agency regulations) designed 
for off-highway operation (Sec.  32901(a)(16)). Four-wheel drive 
SUVs, regardless of their weight, would be classified as light 
trucks if they had features which NHTSA deemed to be indicative of 
design for off-road use.
---------------------------------------------------------------------------

B. The Flat Floor Provision

    The current regulation classifies as a light truck any vehicle with 
readily removable seats that, once removed, leave a flat floor level 
surface extending from the forward most removable seat mount to the 
rear of the vehicle. The flat floor provision originally was based on 
the agency's determination that passenger vans with removable seats and 
a flat load floor were derived from cargo vans (42 FR 38367; July 28, 
1977) and should be classified as trucks. Because these passenger vans 
were derived from cargo vans, the agency distinguished them from 
station wagons--which also had large flat areas with their seats 
folded--and were based on a car chassis.
    In the preamble to the final rule establishing the 1983-1985 fuel 
economy standards, NHTSA responded to a request from Chrysler to revise 
the definition of light truck to assure that future compact passenger 
vans would be classified as light trucks. At that time, we indicated 
that the regulations classify large passenger vans as light trucks 
based on the ability of passenger van users to readily remove the rear 
seats to produce a flat, floor level cargo-carrying space (45 FR 81593; 
Dec., 11 1980). It is believed that this decision contributed to the 
development of the minivan market.
    Many contemporary minivans are built on their own individual 
chassis or platform. Most of these vehicles are available only as 
passenger vans without any cargo variant. While they may be trucks in 
their own right, they do not necessarily share a common chassis or 
platform with cargo trucks. However, because minivans have removable 
seats and a flat floor, they have traditionally been classified as 
trucks for fuel economy purposes.\22\ As the agency's recently updated 
size and safety study shows, minivans are among the safest vehicles on 
the road. In fact, the study found that large 4-door cars and minivans 
had the lowest overall fatal crash involvement rates per billion 
vehicle miles during the years studied (1991-1999).
---------------------------------------------------------------------------

    \22\ EPA also classifies minivans as light duty trucks for 
emissions purposes as derivatives of trucks.
---------------------------------------------------------------------------

    We recognize that the flat floor provision may be essential to the 
minivan market and that many cross-over vehicles, which carry 
significant numbers of passengers while sporting a lower center of 
gravity than more traditional SUVs, are classified as light trucks as a 
result of the flat floor provision. We are concerned that the 
elimination of the flat floor provision may deter the emerging fleet of 
crossover vehicles and significantly impair the minivan market.
    However, we also believe the program would benefit if the flat 
floor definition reflected more accurately those vehicles serving 
significant cargo carrying, recreational or utilitarian use, as opposed 
to those more generally classified as passenger cars. We have 
accordingly considered potential approaches to modifying the flat floor 
provision.
    One such approach might be to establish a minimum flat floor length 
that vehicles must meet to be classified a light truck. A possible 
minimum length is 60 inches. Other potential approaches might include: 
(1) restricting the class of light trucks relying on the flat floor 
provision to those of a certain minimum level of interior volume, (such 
as 75 to 80 cubic feet) and (2) premising the flat floor provision on 
having a certain ratio of cargo space to passenger carrying space. The 
minimum flat floor length and the range for the minimum level of 
interior volume are offered as possible values because currently 
designed light trucks that have flat floor lengths and interior volumes 
above those values have ladder-on-frame designs, which are more closely 
associated with traditional light truck design and are generally 
designed for off-road use. Light trucks with flat floor lengths and 
interior volumes below these possible minimum values are generally 
those with unibody designs, which resemble passenger cars in size and 
shape and possess very limited off-road capability. A range for the 
possible minimum level of interior volume, rather than an absolute 
value, is provided due to the current mixture of unibody and ladder-on-
frame designed light trucks within this range. These possible minimum 
values will be reassessed in light of the comments received from 
manufacturers and others.
    We encourage specific comments on the possible revisions set forth 
above, and any other comments that would assist NHTSA in refining this 
part of the light truck regulatory definition.

[[Page 74929]]

C. Open Cargo Bed

    49 CFR 523.5(a)(3) provides that a vehicle that transports property 
on an open bed is a light truck. However, this section contains no 
minimum dimension for how small an open bed may be before a vehicle can 
no longer be classified as a truck on that basis. Some new vehicle 
designs include relatively small open cargo beds or cargo beds that 
transform easily into passenger carrying compartments.\23\ While these 
vehicles are designed for transporting cargo as well as people, it may 
be possible to differentiate between those more likely to be used in 
utilitarian fashion by specifying a minimum dimensional requirement for 
the cargo bed.
---------------------------------------------------------------------------

    \23\ For example, the Subaru Baja is an open bed vehicle that is 
built on the same platform as the Subaru Outback wagon. Although the 
Baja has all-wheel drive, it does not meet the criterion for 
classification as an off-road vehicle. It is classified as a truck 
on the basis of having an open bed slightly less than three and one-
half feet long.
---------------------------------------------------------------------------

    The Society of Automotive Engineers (SAE) Recommended Practice 
J1100, for example, provides a means for calculating the cargo volume 
of open bed trucks. The SAE formula (V5) uses a standard measure of the 
interior length of the bed, the interior width of the bed (width at 
floor plus width at wheelhouse divided by two), and the height of the 
cargo area (from the cargo floor to the uppermost point on the side of 
the bed). Measured in this fashion, most small \1/2\ ton pickup trucks 
in today's market have a cargo volume of approximately 40 cubic feet. A 
number of truck configurations, particularly those with ``crew cabs,'' 
have smaller beds whose cargo volumes are approximately 30 cubic feet.
    Using SAE Recommended Practice J1100 it is also possible to 
calculate the cargo area of open bed trucks. According to the cargo 
volume calculation specified in J1100, the area of an open cargo bed 
can be obtained by multiplying the interior length of the bed by the 
interior width of the bed. Measured in this fashion, most small \1/2\ 
ton pickup trucks in today's market have a cargo area of approximately 
3,500 square inches. A number of truck configurations, particularly 
those with ``crew cabs,'' have smaller beds whose cargo areas can be as 
small as 3,100 square inches.
    The agency seeks comment on whether cargo volume, cargo area, or 
some other measure, might be an appropriate means for determining when 
an open bed vehicle should be classified as a car or a truck and what 
minimum dimensions should be used to differentiate between passenger 
cars and light trucks. We also invite comment on what cubic foot or 
square inch minimum could be specified for cargo carrying capability 
that would still provide manufacturers with sufficient design 
flexibility to build open bed vehicles that meet certain market needs, 
including vehicles with ``crew cabs'' or other extended cabs, necessary 
to provide both passenger carrying and cargo carrying capability. We 
are also interested in comments addressing other measurement criteria 
that would enable vehicles with ``crew cabs'' and extended cabs to be 
classified as light trucks.

D. Off-Highway Operation

    Congress directed that the characteristics of vehicles capable of 
off-highway operation be established through regulations promulgated by 
NHTSA. 49 CFR 523.5(b) sets out the definition of an automobile capable 
of off-highway operation. Following the definition contained in Sec.  
32901 of Chapter 329, the regulation considers an automobile as being 
capable of off-highway operation if it has either 4-wheel drive or a 
GVWR above 6,000 pounds and meets four out of five characteristics.
    The characteristics are: (A) an approach angle of not less than 28 
degrees; (B) a break-over angle of not less than 14 degrees; (C) a 
departure angle of not less than 20 degrees; (D) a running clearance of 
not less than 20 centimeters; and (E) front and rear axle clearances of 
not less than 18 centimeters each. As NHTSA observed in the Notice of 
Proposed Rulemaking introducing these criteria, the dimensions were 
derived from examining the characteristics of off-road vehicles 
manufactured in the mid-1970's (41 FR 55368, 55371; December 20, 1976).
    Four-wheel drive, found almost exclusively on larger trucks when 
the CAFE program was established, is now found on vehicles of all 
shapes and sizes. As technological advances have made four-wheel drive 
more suitable for use on smaller vehicles and easier for drivers to 
use, it is now appearing more frequently on sedans and station wagons 
as well as light trucks.\24\ Some of these vehicles are classified as 
passenger cars for CAFE purposes while others have been classified as 
light trucks. As applied to passenger cars, four-wheel drive is 
intended to improve on-road performance in adverse weather and these 
vehicles do not have sufficient ground clearances for off-highway use. 
By itself, four-wheel drive is now far less indicative of whether a 
vehicle is likely to be used off-highway than it was when EPCA was 
enacted.
---------------------------------------------------------------------------

    \24\ A number of manufacturers, including Audi and others, 
produce four-wheel drive performance cars. At least one 
manufacturer, Subaru, exclusively produces four-wheel drive 
passenger cars. In recent years, Volvo produced a two-wheel and 
four-wheel drive station wagon where the two-wheel drive version was 
classified as a car and the four-wheel drive model was classified as 
a truck.
---------------------------------------------------------------------------

    In the current fleet of utility vehicles that are classified as 
trucks for CAFE purposes because of their off-road attributes, the 
physical characteristics of the vehicles vary significantly. Approach 
angles, for example, vary from approximately 26 to 72 degrees. 
Departure angles range from approximately 14 to 42 degrees, while 
break-over angles range from 14 to 27.5 degrees. Axle clearances, for 
both axles and running clearance, also vary substantially.\25\ Changing 
the definitions of the angles might serve to distinguish better the 
characteristics of vehicles currently used off-road from those 
currently used primarily on the public roads. Doing so, however, might 
also create the incentive to build vehicles meeting the new dimensions. 
Because amended dimensions are likely to lead to vehicles with higher 
centers of gravity, altering them might generally increase rollover 
risks and additional harm due to rollover crashes.
---------------------------------------------------------------------------

    \25\ Not surprisingly, vehicles with extreme off-road 
capability--such as the Hummer H1--are at the upper range of these 
dimensions, while utility vehicles aimed more for on-road use are at 
the lower end of the range of these dimensions.
---------------------------------------------------------------------------

    A different approach might be to modify 49 CFR 523.5(b) to provide 
that vehicles meeting certain individual qualifying criteria, or 
certain combinations of them, be classified as a light truck. For 
example, a vehicle that meets both the approach and departure angle 
criteria and any two out of the remaining three criteria (break-over 
angle, axle clearance or running clearance) might be less likely to be 
derived from a car. Having sufficiently large approach and departure 
angles are important for off-road vehicles when navigating steep and 
uneven terrain. Four-wheel drive vehicles derived from passenger cars 
are more likely to meet either the approach angle or departure angle 
criteria, but less likely to meet both.

VII. Expanding the Application of the CAFE Program

    As noted above, beginning with MY 1980, the NHTSA Administrator 
determined that the CAFE program should include vehicles with a GVWR of 
up to 8,500 pounds. Some groups have espoused increasing the 
application of the CAFE program to the statutory limit of 10,000 lbs. 
GVWR to

[[Page 74930]]

include some of the larger SUVs that have entered the market in recent 
years. During this time, a small number of vehicles classified as SUVs 
have been of sufficient GVWR to be beyond the reach of the CAFE 
program. These very large SUVs account for approximately 10% of the 
total number (approximately 500,000) of vehicles with a GVWR between 
8,500 and 10,000 pounds, and less than 1% of all SUVs. Sales of these 
very large SUVs have remained stable over the last several years. 
Including additional vehicles within the CAFE program requires a 
finding that doing so is feasible and that it would significantly 
enhance energy conservation.
    This document presents two potential options under which vehicles 
with a GVWR of up to 10,000 lbs. could be included under the CAFE 
program. One option would be adopting the definition established by EPA 
for medium duty passenger vehicles (65 FR 6698, 6749-50, 6851-6852) for 
use in the CAFE program. The definition applies to a heavy-duty vehicle 
with a gross vehicle weight rating of 8,501 to 10,000 pounds that is 
designed primarily for the transportation of persons. However, medium 
duty passenger vehicles (MDPV's) do not include vehicles that:
    1. Are ``incomplete trucks''; or
    2. Have a seating capacity of more than 12 persons; or
    3. Are designed for more than 9 persons seated rearward of the 
driver's seat; or
    4. Are equipped with an open cargo area of 72 inches in interior 
length or more, or a covered box not readily accessible from the 
passenger compartment that is 72 inches or more in interior length.
    This definition would essentially make SUVs between 8,500 and 
10,000 lbs. GVWR subject to CAFE, while continuing to exclude most 
medium- and heavy-duty pickups and most medium- and heavy-duty cargo 
vans that are primarily used for agricultural and commercial purposes. 
The inclusion of these larger SUVs in CAFE could help reduce petroleum 
consumption. In addition, public policy directed towards reducing the 
weight of these vehicles may help address vehicle incompatibility and 
thus improve safety.
    A second option would be to make all vehicles between 8,500 and 
10,000 lbs GVWR subject to CAFE standards. Since the majority of trucks 
in this weight class are pickup trucks, the agency is concerned about 
the impacts this might have on farmers and small businesses, and in 
particular, the potential adverse impacts on the cost and utility of 
these vehicles. The agency nonetheless invites comments on this reform 
alternative, as well as the option to cover a more limited set of 
vehicles with a GVWR between 8,500 and 10,000 lbs.

VIII. Conclusion

    The current structure of the CAFE program was created in the 1970s. 
It reflects efforts made to distinguish between vehicles prevalent at 
the time and bearing little resemblance to today's motor vehicle market 
or the current and emerging vehicle fleet. The Congressional ``freeze'' 
imposed during much of the 1990s prohibited the agency from reviewing 
the efficacy of the regulations defining passenger cars and light 
trucks, or the manner in which the CAFE program is structured. The 
current structure of the CAFE program encourages the development of 
vehicles that are larger and heavier, and which may have higher centers 
of gravity. Thus, the CAFE program may contribute to the two principal 
vehicle safety problems on the road today: vehicle compatibility and 
rollover.
    Through this document, the agency intends to begin a public 
discussion on potential ways, within current statutory authority, to 
modernize the CAFE program and to make it more consistent with our 
public policy objectives. The agency has set forth a number of possible 
concepts and measures, and invites the public to present additional 
concepts not presented here. This discussion is not intended to address 
the stringency of proposed CAFE standards in the future, but rather the 
basic structure of the CAFE program. The agency is interested in any 
suggestions towards revamping the CAFE program in such a way as to 
enhance overall fuel economy while protecting occupant safety and the 
economic vitality of the auto market.

IX. Public Participation

    Interested persons are invited to comment on this advance notice of 
proposed rulemaking. It is requested, but not required, that two copies 
be submitted to the Office of Docket Management, Room PL-401, Nassif 
Building, 400 Seventh Street, SW., Washington, DC 20590.
    All comments must be limited to 15 pages in length. Necessary 
attachments may be appended to those submissions without regard to the 
15-page limit (49 CFR 553.21). This limitation is intended to encourage 
commenters to detail their primary arguments in a concise fashion.
    Written comments to the public docket must be received by April 27, 
2004.
    All comments received before the close of business on the comment 
closing date will be considered and will be available for examination 
in the docket at the above address before and after that date. To the 
extent possible, comments filed after the closing date will also be 
considered. However, the rulemaking action may proceed at any time 
after that date.
    NHTSA will continue to file relevant material in the docket as it 
becomes available after the closing date, and it is recommended that 
interested persons continue to examine the docket for new material.
    Those persons who wish to be notified upon receipt of their 
comments in the docket should enclose, in the envelope with their 
comments, a self-addressed stamped postcard. Upon receiving the 
comments, the docket supervisor will return the postcard by mail.
    Copies of all comments will be placed in the Docket for this 
advance notice of proposed rulemaking in the Office of Docket 
Management, Room PL-401, Nassif Building, 400 Seventh Street, SW., 
Washington, DC 20590.

X. Regulatory Analyses and Notices

Executive Order 12866 and DOT Regulatory Policies and Procedures

    NHTSA has considered the potential impacts of this advance notice 
of proposed rulemaking under Executive Order 12866 and the Department 
of Transportation's regulatory policies and procedures. The Office of 
Management and Budget reviewed this document under E.O. 12866, 
``Regulatory Planning and Review.'' This document has been determined 
to be significant under the Department's regulatory policies and 
procedures.
    This document seeks comment on potential changes to the agency's 
regulations relating to Corporate Average Fuel Economy, including 
potential changes to vehicle classification and to the fuel economy 
standards applicable to those vehicles. The agency could take a variety 
of regulatory actions regarding these issues. Further, this agency has 
not identified any regulatory actions sufficiently likely to warrant 
calculation of possible benefits and costs. If NHTSA were to initiate 
rulemaking and develop a rulemaking proposal, the agency would 
calculate the costs and benefits associated with the specific proposal 
and place its analysis in the docket for that proposal. The agency 
would also conduct the various other rulemaking analyses required by 
applicable statutes and Executive Orders.

[[Page 74931]]

    NHTSA will reassess this rulemaking in relation to the Executive 
Order, the DOT Regulatory Policies and Procedures, the Regulatory 
Flexibility Act, the Unfunded Mandates Reform Act of 1995 and other 
requirements for analyzing rulemaking impacts if, after using the 
information received in response to this advanced notice, the agency 
decides to issue a proposal to amend its current regulations. To that 
end, the agency solicits comments, information, and data useful in 
assessing the impacts of making the potential changes discussed in this 
document.

Privacy Act

    Anyone is able to search the electronic form of all submissions 
received into any of our dockets by the name of the individual 
submitting the comment (or signing the comment, if submitted on behalf 
of an association, business, labor union, etc.). You may review DOT's 
complete Privacy Act Statement in the Federal Register published on 
April 11, 2000 (Volume 65, Number 70; Pages 19477-78) or you may visit 
http://dms.dot.gov.

    Issued: December 22, 2003.
Stephen R. Kratzke,
Associate Administrator for Rulemaking.
[FR Doc. 03-31890 Filed 12-22-03; 3:44 pm]
BILLING CODE 4910-59-P