[Federal Register Volume 71, Number 163 (Wednesday, August 23, 2006)]
[Proposed Rules]
[Pages 49407-49410]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-13957]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 531

[Docket No. NHTSA-2006-25593]


Exemptions From Average Fuel Economy Standards; Passenger 
Automobile Average Fuel Economy Standards

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

ACTION: Proposed Decision to Grant Exemption.

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SUMMARY: This proposed decision responds to a petition filed by Spyker 
Automobielen B.V. (Spyker) requesting that it be exempted from the 
generally applicable average fuel economy standard of 27.5 miles per 
gallon (mpg) for model years 2006 and 2007, and that, for Spyker, lower 
alternative standards be established. In this document, NHTSA proposes 
that the requested exemption be granted to Spyker and that alternative 
standards of 18.9 mpg be established for MY's 2006 and 2007.

DATES: Comments on this proposed decision must be received on or before 
September 22, 2006.

ADDRESSES: You may submit comments by any of the following methods:
     Web site: http://dms.dot.gov. Follow the instructions for 
submitting comments on the DOT electronic docket site.
     Fax: 1-202-493-2251.
     Mail: Docket Management Facility; U.S. Department of 
Transportation, 400

[[Page 49408]]

Seventh Street, SW., Nassif Building, Room PL-401, Washington, DC 
20590-001.
     Hand Delivery: Room PL-401 on the plaza level of the 
Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 
a.m. and 5 p.m., Monday through Friday, except Federal holidays.
     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 Request for 
Comments 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 Rulemaking 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 a.m. and 5 p.m., Monday through Friday, 
except Federal holidays.

FOR FURTHER INFORMATION CONTACT: For technical issues, contact Ken 
Katz, Lead Engineer, Fuel Economy Division, Office of International 
Policy, Fuel Economy, and Consumer Programs, at (202) 366-0846, 
facsimile (202) 493-2290, electronic mail [email protected]. For 
legal issues, contact Stephen Wood of the Office of the Chief Counsel, 
at (202) 366-2992.

SUPPLEMENTARY INFORMATION:

Statutory Background

    Pursuant to 49 U.S.C. section 32902(d), NHTSA may exempt a low 
volume manufacturer of passenger automobiles from the generally 
applicable average fuel economy standards if NHTSA concludes that those 
standards are more stringent than the maximum feasible average fuel 
economy for that manufacturer and if NHTSA establishes an alternative 
standard for that manufacturer at its maximum feasible level. Under the 
statute, a low volume manufacturer is one that manufactured (worldwide) 
fewer than 10,000 passenger automobiles in the second model year before 
the model year for which the exemption is sought (the affected model 
year) and that will manufacture fewer than 10,000 passenger automobiles 
in the affected model year. In determining the maximum feasible average 
fuel economy, the agency is required under 49 U.S.C. 32902(f) to 
consider:
    (1) Technological feasibility
    (2) Economic practicability
    (3) The effect of other Federal motor vehicle standards on fuel 
economy, and
    (4) The need of the United States to conserve energy.
    The statute permits NHTSA to establish alternative average fuel 
economy standards applicable to exempted low volume manufacturers in 
one of three ways: (1) A separate standard for each exempted 
manufacturer; (2) a separate average fuel economy standard applicable 
to each class of exempted automobiles (classes would be based on 
design, size, price, or other factors); or (3) a single standard for 
all exempted manufacturers.

Background Information on Spyker

    Spyker is a Dutch company, which manufacturers limited-production 
sports cars, built to individual order. Spyker debuted its first in 
vehicle 2000. The company operations are located in Zeewolde, The 
Netherlands. The petitioner stated that in 2003, Spyker of North 
America LLC was incorporated in Delaware as a subsidiary of Spyker in 
order to address U.S. distribution. The petitioner also stated that in 
2004, Spyker took the company public by means of an initial public 
offering. It is listed on the Amsterdam Stock Exchange.
    As stated by petitioner, Spyker has teamed up with Cosworth 
Technologies, a 100 percent-owned subsidiary of Audi, to integrate the 
LEV V8 powertrain of the Audi A8 into the Spyker chassis.
    The petitioner stated that it manufactured a total of 51 vehicles 
between 2002 and 2004, and projects that it will manufacturer no more 
than 160 vehicles per year between 2005 and 2007. In 2006 and 2007, the 
years for which an alternative standard is requested, Spyker projects 
that 77 and 112 vehicles, respectively, will be exported to the U.S.

The Spyker Petition

    NHTSA's regulations on low volume exemptions from CAFE standards 
state that petitions for exemption are submitted ``not later than 24 
months before the beginning of the affected model year, unless good 
cause for later submission is shown'' (49 CFR 525.6(b)).
    NHTSA received a petition from Spyker on May 11, 2005, seeking 
exemption from the passenger automobile fuel economy standards for MYs 
2006 and 2007. This petition was filed less than 24 months before the 
beginning of MYs 2006 and 2007 and was therefore untimely under 49 CFR 
526.6(b). Spyker indicated that its decision to enter the U.S. market 
for MY 2006 was not made until late 2004 after it reached an agreement 
with Audi that allowed Spyker to use a U.S. certified powerplant.
    Under the circumstances, NHTSA concludes that Spyker took 
reasonable measures to submit a petition in as timely a manner as 
possible. The agency notes that Spyker's ability to enter the U.S. 
market apparently hinged on obtaining a U.S.-certified powerplant. 
This, according to Spyker, was not possible or feasible until it 
reached an agreement with Audi to provide the required engine. 
Therefore, the agency has determined that good cause exists for the 
late submission of the petition. This is consistent with a previous 
determination made by the agency with regard to the timeliness of a 
petition submitted by DeTomaso Automobiles, Ltd. (see, 64 FR 73476; 
December 30, 1999; Docket No. NHTSA-99-6676).

Methodology Used To Project Maximum Feasible Average Fuel Economy Level 
for Spyker

Baseline Fuel Economy

    To project the level of fuel economy which could be achieved by 
Spyker in the 2006 and 2007 model years, NHTSA considered whether there 
were technical or other improvements that would be feasible for these 
vehicles, and whether the company currently plans to incorporate such 
improvements in the vehicles. The agency reviewed the technological 
feasibility of any changes and their economic practicability.
    NHTSA interprets ``technological feasibility'' as meaning that 
technology which would be available to Spyker for use on its 2006 and 
2007 model year automobiles, and which would improve the fuel economy 
of those automobiles. The areas examined for technologically feasible 
improvements were weight reduction, aerodynamic improvements, engine 
improvements, drive line improvements, and reduced rolling resistance.
    The agency interprets ``economic practicability'' for the purpose 
of petitions filed under 49 CFR part 525 as meaning the financial 
capability of the manufacturer to improve its average fuel economy by 
incorporating technologically feasible changes to its 2006 and 2007 
model year automobiles. In assuming that capability, the agency has 
always considered market demand

[[Page 49409]]

as an implicit part of the concept of economic practicability. 
Consumers need not purchase what they do not want.
    In accordance with the concerns of economic practicability, NHTSA 
has considered only those improvements that would be compatible with 
the basic design concepts of Spyker's automobile. Since NHTSA assumes 
that Spyker will continue to build high performance cars, design 
changes that would remove items traditionally offered on these types of 
vehicles were not considered. Such changes to the basic design would be 
economically impracticable since they might well significantly reduce 
the demand for these automobiles, thereby reducing sales and causing 
significant economic injury to the low volume manufacturer.

Technology for Fuel Economy Improvement

    The nature of Spyker's vehicles generally do not result in high 
fuel economy values. Also, Spyker lags in having the latest 
developments in fuel efficiency technology because suppliers generally 
provide components and technology to small manufacturers only after 
supplying large manufacturers.
    Spyker states that the requested alternative fuel economy values 
represent the best possible CAFE that Spyker can achieve for the 2006 
and 2007 model years. For MYs 2006 and 2007, Spyker stated that the 
fuel economy value of 18.9 mpg \1\ represents the best possible CAFE 
that it can achieve.
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    \1\ Spyker based this fuel economy on the combined fuel economy 
of 19.1 obtained at the U.S. EPA, reduced by 0.15 mpg in order to 
allow for potential production variation. As opposed to reducing 
19.1 mpg value by 0.15 mpg, Spyker added 0.15 mpg to the value in 
the petition. Given that fuel economy compliance is determined in 
tenths of mpg, the agency confirmed with a representative of Spyker 
that the petition is requesting an alternative fuel economy 
requirement of 18.9 mpg.
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    Spyker produces a small lightweight innovative sports vehicle. 
Performance is achieved through obtaining maximum output per unit of 
engine displacement and the use of lightweight aerodynamic body 
designs. The vehicle's compact dimensions provide efficient performance 
coupled with a strong and relatively lightweight aerodynamic body 
construction. Since the chassis/body configuration is small, 
aerodynamic and lightweight, further fuel economy improvements through 
changes to the chassis and body appear to be limited.
    Spyker has stated that it is unable to change the supplier of the 
vehicle's engine and that the engine is the most advanced engine 
available to a small vehicle manufacturer from an outside source. As 
such, the ability to obtain further fuel economy improvements from 
engine and drive train modifications is limited. The petitioner also 
stated that the fuel economy label values of the vehicle are similar to 
those of similar vehicles, e.g., Cadillac XLR, Dodge Viper, Porsche 
911.

Model Mix

    Spyker has no opportunity to improve its fuel economy by changing 
its fleet mix since it has stated that it will only export one model to 
the U.S. during the years for which this petition was filed.

Effect of Other Federal Motor Vehicle Standards

    Federal motor vehicle safety standards (FMVSS) and regulations are 
anticipated to have an adverse effect on the fuel economy of Spyker's 
vehicles. These standards include 49 CFR part 581, Bumper Standard and 
FMVSS 208, Occupant crash protection. These standards may reduce 
achievable fuel economy values, since they result in increased vehicle 
weight. Spyker's projection reflected the impact of these standards. 
Spyker is a small company and engineering resources are limited, 
limiting the amount of resources Spyker can apply to comply with both 
the mandatory standards and the fuel economy requirements.
    Additionally, as a small volume manufacturer, the more stringent 
California evaporative emission standards will apply to Spyker 
beginning in MY 2006, and the U.S. EPA Tier 2-LEV II exhaust standards 
will be applicable in MY 2007. A portion of Spyker's limited 
engineering resources will have to be expended to comply with these 
more stringent emissions standards including, but not limited to, 
evaporative emission standards.

The Need of the United States To Conserve Energy

    The agency recognizes there is a need to conserve energy, to 
promote energy security, and to improve balance of payments. However, 
as stated above, NHTSA has tentatively determined that it is not 
technologically feasible or economically practicable for Spyker to 
achieve an average fuel economy in MYs 2006 and 2007 above the levels 
set forth in this proposed decision. Granting an exemption to Spyker 
and setting an alternative standard at that level would result in only 
a negligible increase in fuel consumption and would not affect the need 
of the United States to conserve energy. In fact, there would not be 
any increase since Spyker cannot attain those generally applicable 
standards. Nevertheless, the agency estimates that the additional fuel 
consumed by operating the MYs 2006 and 2007 fleets of Spyker vehicles 
at the CAFE of 18.9 mpg (compared to a hypothetical 27.5 mpg fleet) is 
13,138 barrels of fuel. Obviously, this is insignificant compared to 
the fuel used daily by the entire motor vehicle fleet, which amounts to 
8.4 million barrels per day for passenger cars in the United States in 
2003 (USDOE/EIA, Monthly Energy Review, April 2005, Table 11.2).

Maximum Feasible Average Fuel Economy for Spyker

    The agency has tentatively concluded that it would not be 
technologically feasible and economically practicable for Spyker to 
improve the fuel economy of its MY 2006 and 2007 fleet above an average 
of 18.9 mpg for those years, that Federal automobile standards would 
not adversely affect achievable fuel economy beyond the amount already 
factored into Spyker's projections, and that the national effort to 
conserve energy would not be affected by granting the requested 
exemption and establishing an alternative standard.
    Consequently, the agency tentatively concludes that the maximum 
feasible average fuel economy for Spyker is 18.9 mpg for MYs 2006 and 
2007.
    Chapter 329 permits NHTSA to establish an alternative average fuel 
economy standard applicable to exempted manufacturers in one of three 
ways: (1) A separate standard may be established for each exempted 
manufacturer; (2) classes, based on design, size, price or other 
factors, may be established for the automobiles of exempted 
manufacturers, with a separate fuel economy standard applicable to each 
class; or (3) a single standard may be established for all exempted 
manufacturers. The agency tentatively concludes that it would be 
appropriate to establish a separate standard for Spyker.
    While the agency has the option of establishing a single standard 
for all exempted manufacturers, we note that previous exemptions have 
been granted to manufacturers of high-performance cars, luxury cars and 
specialized vehicles for the transportation of persons with physical 
impairments. The agency's experience in establishing exemptions 
indicates that selection of a single standard would be inappropriate. 
Such a standard would have little impact on energy conservation while 
doing little to ease the burdens faced by small manufacturers which 
cannot meet the fuel economy standards applicable to larger 
manufacturers. Similarly, the

[[Page 49410]]

agency is not proposing to establish alternative standards based on 
different classes of vehicles. Again, the agency's experience has been 
that vehicles manufactured by low volume manufacturers may differ 
widely in size, price, design or other factors. Based on the 
information available at this time, we do not believe it would be 
appropriate to establish class-based alternative standards.

Regulatory Impact Analyses

    NHTSA has analyzed this proposal and determined that neither 
Executive Order 12866 nor the Department of Transportation's regulatory 
policies and procedures apply. Under Executive Order 12866, the 
proposal would not establish a ``rule,'' which is defined in the 
Executive Order as ``an agency statement of general applicability and 
future effect.'' The proposed exemption is not generally applicable, 
since it would apply only to Spyker, as discussed in this notice. Under 
DOT regulatory policies and procedures, the proposed exemption would 
not be a ``significant regulation.'' If Departmental policies and 
procedures were applicable, the agency would have determined that this 
proposed action is not significant. The principal impact of this 
proposal is that the exempted company would not be required to pay 
civil penalties if its maximum feasible average fuel economy were 
achieved, and purchasers of those vehicles would not have to bear the 
indirect burden of those civil penalties in the form of higher prices. 
Since this proposal is for an alternative standard at the level 
tentatively determined to be the maximum feasible levels for Spyker for 
MYs 2006 and 2007, no fuel would be saved by establishing a higher 
alternative standard. NHTSA finds in the Section on ``The Need of the 
United States to Conserve Energy'' that because of the small size of 
the Spyker fleet, that incremental usage of gasoline by Spyker's 
customers would not affect the United States' need to conserve 
gasoline. There would not be any impacts for the public at large.
    The agency has also considered the environmental implications of 
this proposed exemption in accordance with the Environmental Policy Act 
and determined that this proposed exemption if adopted, would not 
significantly affect the human environment. Regardless of the fuel 
economy of the exempted vehicles, they must pass the emissions 
standards which measure the amount of emissions per mile traveled. 
Thus, the quality of the air is not affected by the proposed exemptions 
and alternative standards. Further, since the exempted passenger 
automobiles cannot achieve better fuel economy than is proposed herein, 
granting these proposed exemptions would not affect the amount of fuel 
used.

How You May Comment on the Spyker Application

    We invite you to submit comments on the application described 
above. You may submit comments [identified by the DOT Docket number in 
the heading of this document] by any of the following methods:
     Web site: http://dms.dot.gov. Follow the instructions for 
submitting comments on the DOT electronic docket site by clicking on 
``Help and Information'' or ``Help/Info.''
     Fax: 1-202-493-2251.
     Mail: Docket Management Facility, U.S. Department of 
Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, 
Washington, DC 20590.
     Hand Delivery: Room PL-401 on the plaza level of the 
Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 
a.m. and 5 p.m., Monday through Friday, except Federal holidays.
     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. Note that all comments received will be posted without 
change to http://dms.dot.gov, including any personal information 
provided.
    Docket: For access to the docket in order 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 a.m. and 5 p.m., Monday through 
Friday, except Federal holidays.
    Privacy Act: Anyone is able to search the electronic form of all 
comments 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.
    We will consider all comments received before the close of business 
on the comment closing date indicated below. To the extent possible, we 
shall also consider comments filed after the closing date. We will 
publish a notice of final action on the application in the Federal 
Register pursuant to the authority indicated below.

List of Subjects in 49 CFR Part 531

    Energy conservation, Gasoline, Imports, Motor Vehicles.

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

PART 531--[AMENDED]

    1. The authority citation for part 531 continues to read as 
follows:

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

    2. Section 531.5 would be amended by adding paragraph (b)(15) to 
read as follows:


Sec.  531.5  Fuel economy standards.

* * * * *
    (b) * * *
    (15) Spyker Automobielen B.V.

                      Average Fuel Economy Standard
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                                                             (Miles per
                        Model year                             gallon)
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2006......................................................          18.9
2007......................................................          18.9
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    Issued on: August 17, 2006.
H. Keith Brewer,
Director, Crash Avoidance Standards.
[FR Doc. E6-13957 Filed 8-22-06; 8:45 am]
BILLING CODE 4910-59-P