[Federal Register Volume 73, Number 117 (Tuesday, June 17, 2008)]
[Proposed Rules]
[Pages 34242-34245]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-13505]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 531

[Docket No. NHTSA-2008-0115]


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 rule; proposed decision to grant exemption.

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SUMMARY: This proposed decision responds to a petition filed by Mosler 
Automotive (Mosler) requesting that it be exempted from the generally 
applicable corporate average fuel economy (CAFE) standard of 27.5 miles 
per gallon (mpg) for model years 2008, 2009 and 2010, and that, for 
Mosler, lower alternative standards be established. In this document, 
NHTSA proposes that the requested exemption be granted to Mosler and 
that an alternative standard of 22.1 mpg be established for MYs 2008 
through 2010.

DATES: Comments must be received on or before July 17, 2008.

ADDRESSES: You may submit comments by any of the following methods:
     Web Site: http://www.regulations.gov. Follow the online 
instructions for submitting comments.
     Fax: 1-202-493-2251.
     Mail: Docket Management Facility; U.S. Department of 
Transportation, 1200 New Jersey Ave., SE., West Building, Ground Floor, 
Room W12-140, Washington, DC 20590-001.
     Hand Delivery: The Docket Management Facility is on the 
ground floor of the West Building, 1200 New Jersey Ave., SE. The Docket 
Management Facility is open 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 for this rulemaking. Note that all comments received will 
be posted without change to http://www.regulations.gov, including any 
personal information provided. Please see the Privacy Act heading at 
the end of this notice.
    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 W12-
140 on the ground floor of the West Building, 1200 New Jersey Ave., 
SE., 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 Rebecca Yoon of the Office of the Chief Counsel, 
at (202) 366-2992.

SUPPLEMENTARY INFORMATION: 

Statutory Background

    Pursuant to 49 U.S.C. 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 motor vehicle standards of the government 
on fuel economy, and

[[Page 34243]]

    (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 (49 U.S.C. 32902(d)(2)).

Background Information on Mosler

    Mosler is a U.S. company, organized as a Florida corporation, 
formed in 1987 and owned by a single American shareholder. The company 
headquarters are in Riveria Beach, Florida. There is an engineering/
assembly facility in Norfolk, England. The company has 25 U.S. 
employees. Race car development was initiated by the company in 1998, 
and the first street vehicle for the U.S. market was produced in 2004. 
Subsequently, U.S. street production was suspended because of issues 
with compliance with Federal Motor Vehicle Safety Standard (FMVSS) No. 
208, Occupant Crash Protection.
    The petitioner stated that it manufactured 15 vehicles in 2004. The 
petitioner estimates that it will produce 40 vehicles in 2008, 50 
vehicles in 2009, and 60 vehicles in 2010.\1\
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    \1\ As explained later in this notice, Mosler's production of 
any vehicles is contingent upon the grant of a pending petition for 
exemption under 49 CFR part 555.
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The Mosler Petition

    NHTSA's regulations on low volume exemptions from CAFE standards 
state that petitions for exemption must be 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 the petition from Mosler on June 19, 2007, seeking 
exemption from the passenger automobile fuel economy standards for MYs 
2008 through 2010. This petition was filed less than 24 months before 
the beginning of MYs 2008 and 2009, and was therefore untimely under 49 
CFR part 526 for those model years. Mosler indicated that it only 
decided to resume production for the U.S. market after it filed a 
petition for an exemption from the advanced air bag requirements in 
January 2007. The decision to file for this exemption was only made 
after NHTSA granted similar exemptions in September 2006.
    Under the circumstances, NHTSA concludes that Mosler took 
reasonable measures to submit a petition in as timely a manner as 
possible. The agency notes that Mosler's ability to enter the U.S. 
market apparently hinges on a favorable decision regarding its petition 
for an exemption from the advanced air bag requirements. Mosler has 
filed this petition while awaiting a decision on the other petition. 
Therefore, the agency has determined that good cause exists for the 
late submission of the petition. This is consistent with previous 
determinations made by the agency with regard to the timeliness of 
petitions submitted by Spyker Automobielen B.V. (see 71 FR 49407; 
August 23, 2006; Docket No. NHTSA-2006-25593) and 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 Mosler

Baseline Fuel Economy

    To project the level of fuel economy which could be achieved by 
Mosler in the 2008 through 2010 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 
technology which would be available to Mosler for use on its 2008 
through 2010 model year 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 2008 through 2010 
model year automobiles. In assuming that capability, the agency has 
always considered market demand as an implicit part of the concept of 
economic practicability.
    In accordance with the concerns of economic practicability, NHTSA 
has considered only those potential fuel economy improvements that 
would be compatible with the basic design concepts of Mosler's 
automobiles. Since NHTSA assumes that Mosler 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 could 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

    Mosler states that the requested fuel economy value of 22.1 mpg \2\ 
represents the best possible CAFE that Mosler can achieve for the 2008 
through 2010 model years. Mosler argues that, as racing-derived sports 
cars, its vehicles by their nature cannot maximize fuel economy at the 
expense of speed or power. Also, Mosler lags in being able to apply the 
latest developments in fuel efficiency technology because suppliers 
generally provide components and technology to small manufacturers only 
after supplying large manufacturers. Mosler argues that it cannot 
achieve substantial fuel economy gains from changes to its chassis or 
body design.
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    \2\ This number is .05 mpg less than forecasted in order to 
allow for potential development and production variation. NHTSA also 
notes that fuel economy compliance is determined in tenths of mpg.
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    Mosler is producing innovative sports cars using state-of-the-art 
design. Mosler's current vehicle, the MT900, is ultra lightweight. The 
double-wishbone suspension is unique. For its primary structure, the 
MT900 utilizes a high tech, high strength, lightweight advanced 
composite over an aluminum honeycomb monocoque chassis. The MT900 is 
aerodynamic, with a drag coefficient of 0.34cd. The weight of the 
vehicle is only 2440 pounds. 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.
    Mosler also stated that it is unable to change the supplier of the 
vehicle's Corvette V8 engine. Mosler stated that is has revised the 
gear ratios in the transmission so that the average operating engine 
RPM is 15% lower, improving gas mileage compared to the 2004 model year 
vehicle. Mosler also stated that the fuel economy label values of the 
vehicle (15 mpg city and 22 mpg highway) are equal to or better than 
those of similar vehicles, e.g., Cadillac XLR (15/22), MB 550 SL (14/
22), Lamborghini Gallardo (12/18), Ferrari F 430 (13/17), and Aston 
Martin V8 (13/19).

[[Page 34244]]

Model Mix

    Mosler 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 Motor Vehicle Standards of the Government

    The need to comply with the FMVSS and other regulations are 
anticipated to have an adverse effect on the fuel economy of Mosler's 
vehicles and on Mosler's ability to improve its fuel economy. These 
standards include FMVSS No. 208, Occupant Crash Protection, and FMVSS 
No. 214, Side Impact Protection, and upcoming amendments to FMVSS No. 
216, Roof Crush Resistance. These standards may reduce achievable fuel 
economy values, since they result in increased vehicle weight. Mosler's 
projection reflected the impact of these standards. Mosler is a small 
company and engineering resources are limited, limiting the amount of 
resources Mosler 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 and the U.S. EPA Tier 2-LEV 
II exhaust standards will be applicable. A portion of Mosler's limited 
engineering resources will have to be expended to comply with these 
more stringent 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 Mosler to 
achieve an average fuel economy in model years 2008 through 2010 above 
the levels set forth in this proposed decision. Granting an exemption 
to Mosler and setting an alternative standard at that level would not 
result in an increase in fuel consumption since Mosler cannot attain 
the generally applicable standards. Nevertheless, the agency estimates 
that the additional fuel that could be consumed by operating the MYs 
2008 through 2010 fleets of Mosler's vehicles for the expected lifetime 
of these vehicles at the CAFE of 22.1 mpg (compared to a 27.5 mpg 
fleet) is 10,315 barrels of fuel, or about 1.09 barrels per day for the 
entire fleet of Mosler vehicles.\3\ This is insignificant compared to 
the fuel used daily by the entire motor vehicle fleet, which amounts to 
over 9 million barrels per day for motor vehicles in the United States 
(USDOE/EIA, Monthly Energy Review, September 2007, Table 5.13c).\4\
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    \3\ To estimate the additional fuel that could be consumed, 
NHTSA uses estimates of the average number of vehicles miles 
traveled (VMT) for the entire vehicle fleet over the lifetime of the 
vehicle (26 years). We then divide this figure by 22.1 mpg and 27.5 
mpg, and the difference between the two amounts is the additional 
fuel usage per vehicle over its lifetime at the reduced CAFE 
standard. The total additional fuel usage figure for the Mosler 
fleet is determined by multiplying this figure by the estimated 
sales figures provided by Mosler. It is likely that this is actually 
an overestimate of the additional fuel that will be consumed, as 
these vehicles will likely have a VMT below the fleet average.
    \4\ http://www.eia.doe.gov/emeu/mer/
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Maximum Feasible Average Fuel Economy for Mosler

    The agency has tentatively concluded that it would not be 
technologically feasible and economically practicable for Mosler to 
improve the fuel economy of its MY 2008 through 2010 fleets above an 
average of 22.1 mpg for those years, that Federal automobile standards 
would not adversely affect achievable fuel economy beyond the amount 
already factored into Mosler'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 Mosler should be 22.1 mpg for MYs 
2008, 2009 and 2010.
    As discussed above, 49 U.S.C. 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 (49 U.S.C. 32902(d)(2)). The 
agency tentatively concludes that it would be appropriate to establish 
a separate standard for Mosler.
    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 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 decision and determined that neither 
Executive Order 12866 nor the Department of Transportation's regulatory 
policies and procedures apply. Under Executive Order 12866, the 
decision would not establish a rule, which is defined in the Executive 
Order as ``an agency statement of general applicability and future 
effect.'' The decision is not generally applicable, since it would 
apply only to Mosler, as discussed in this notice. Under DOT regulatory 
policies and procedures, the decision would not be a ``significant 
regulation.'' If Departmental policies and procedures were applicable, 
the agency would have determined that this decision is not significant. 
The principal impact of the decision to exempt Mosler from the 27.5 mpg 
standard is that they would not be required to pay civil penalties if 
its maximum feasible average fuel economy (22.1 mpg) were achieved. 
Since this tentative decision sets an alternative standard at the level 
determined to be the maximum feasible levels for Mosler for MYs 2008 
through 2010, no fuel would be saved by establishing a higher 
alternative standard.
    NHTSA found in the Section on ``The Need of the United States To 
Conserve Energy'' that because of the small size of the Mosler fleet, 
that incremental usage of gasoline by Mosler's customers would not 
affect the United States' need to conserve gasoline. Mosler is planning 
to produce 150 vehicles for the U.S. market by MY 2010. Given that over 
7,602,000 passenger cars were produced for sale in the U.S. market in 
MY 2006,\5\ Mosler's production of these vehicles would amount to .001% 
of the U.S.

[[Page 34245]]

market. Thus, there are not any impacts for the public at large.
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    \5\ ``Summary of Fuel Economy Performance, March 2007'' (Docket 
NHTSA-2007-28040-1).
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    The agency has also considered the environmental implications of 
this decision in accordance with the National Environmental Policy Act 
(NEPA) and determined that it would not significantly affect the 
quality of the human environment. Regardless of the fuel economy of the 
exempted vehicles, they must pass EPA emissions standards which measure 
the amount of regulated pollutant emissions per mile traveled. The 
incremental carbon dioxide emissions that might result from the 
proposed alternative standards would have a de minimus effect on air 
quality, due to the extremely small size of the Mosler vehicle fleet 
and the difference in miles per gallon required by the proposed 
alternative standards. Further, since the exempted passenger 
automobiles cannot achieve better fuel economy than provided, the 
decision does not affect the amount of fuel used or the amount of 
carbon dioxide emitted.

Privacy Act

    Please note that 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 
at http://www.regulations.gov.

List of Subjects in 49 CFR Part 531

    Energy conservation, Gasoline, Imports, Motor vehicles.

    In consideration of the foregoing, 49 CFR part 531 is proposed to 
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 is amended by adding paragraph (b)(15) to read as 
follows:


Sec.  531.5  Fuel economy standards.

* * * * *
    (b) * * *
* * * * *
    (16) Mosler Automotive.

                      Average Fuel Economy Standard
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                                                              Miles per
                         Model year                             gallon
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2008.......................................................         22.1
2009.......................................................         22.1
2010.......................................................         22.1
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    Issued on: June 10, 2008.

Stephen R. Kratzke,
Associate Administrator for Rulemaking.
 [FR Doc. E8-13505 Filed 6-16-08; 8:45 am]
BILLING CODE 4910-59-P