[Federal Register Volume 86, Number 9 (Thursday, January 14, 2021)]
[Rules and Regulations]
[Pages 3016-3026]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-00278]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 578

[Docket No. NHTSA-2021-0001]
RIN 2127-AM32


Civil Penalties

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

ACTION: Interim final rule; request for comments; response to petition 
for rulemaking.

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SUMMARY: On October 2, 2020, NHTSA received a petition for rulemaking 
from the Alliance for Automotive Innovation regarding when to apply an 
increase to the civil penalty rate applicable to automobile 
manufacturers that fail to meet applicable corporate average fuel 
economy (CAFE) standards and are unable to offset such a deficit with 
compliance credits. After carefully considering the issues raised, 
NHTSA has granted the petition and promulgates an interim final rule 
providing that the increase will go into effect beginning in model year 
2022 in accordance with NHTSA's December 2016 rule on the same issue, 
except if the August 31, 2020 decision of the United States Court of 
Appeals for the Second Circuit in Case No. 19-2395 is vacated. This 
interim final rule amends the relevant regulatory text accordingly and 
requests comment. This document also responds to a petition for 
reconsideration of NHTSA's July 2019 rule from the Institute for Policy 
Integrity at New York University School of Law.

DATES: 
    Effective date: This rule is effective January 14, 2021
    Comments: Comments must be received by January 25, 2021.

ADDRESSES: You may submit comments to the docket number identified in 
the heading of this document by any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting 
comments.
     Mail: Docket Management Facility, M-30, U.S. Department of 
Transportation, West Building, Ground Floor, Room W12-140, 1200 New 
Jersey Avenue SE, Washington, DC 20590.
     Hand Delivery or Courier: U.S. Department of 
Transportation, West Building, Ground Floor, Room W12-140, 1200 New 
Jersey Avenue SE, Washington, DC, between 9 a.m. and 5 p.m. Eastern 
time, Monday through Friday, except Federal holidays.
     Fax: 202-493-2251
     Instructions: NHTSA has established a docket for this 
action. Direct your comments to Docket ID No. NHTSA-2021-0001. See the 
SUPPLEMENTARY INFORMATION section on ``Public Participation'' for more 
information about submitting written comments.
     Docket: All documents in the docket are listed on the 
www.regulations.gov website. Although listed in the index, some 
information is not publicly available, e.g., confidential business 
information or other information whose disclosure is restricted by 
statute. Certain other material, such as copyrighted material, is not 
placed on the internet and will be publicly available only in hard copy 
form. Publicly available docket materials are available either 
electronically through www.regulations.gov or in hard copy at the 
following location: Docket Management Facility, M-30, U.S. Department 
of Transportation, West Building, Ground Floor, Rm. W12-140, 1200 New 
Jersey Avenue SE, Washington, DC 20590. The telephone number for the 
docket management facility is (202) 366-9324. The docket management 
facility is open between 9 a.m. and 5 p.m. Eastern Time, Monday through 
Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT: Michael Kuppersmith, Office of Chief 
Counsel, NHTSA, email [email protected], telephone (202) 366-
2992, facsimile (202) 366-3820, 1200 New Jersey Ave. SE, Washington, DC 
20590.

SUPPLEMENTARY INFORMATION:

Table of Contents

A. Public Participation
B. Statutory and Regulatory Background
C. Civil Penalties Inflationary Adjustment Act Improvements Act of 
2015
D. NHTSA's Actions to Date Regarding CAFE Civil Penalties
    1. Interim Final Rule
    2. Initial Petition for Reconsideration and Response
    3. NHTSA Reconsideration
E. IPI Petition for Reconsideration
F. The Alliance Petition for Rulemaking
G. NHTSA Response to Petitions
H. Interim Final Rule and Public Comment
I. Rulemaking Analyses and Notices
    1. Executive Order 12866, Executive Order 13563, and DOT 
Regulatory Policies and Procedures
    2. Regulatory Flexibility Act
    3. Executive Order 13132 (Federalism)
    4. Unfunded Mandates Reform Act of 1995
    5. National Environmental Policy Act
    6. Executive Order 12778 (Civil Justice Reform)
    7. Paperwork Reduction Act
    8. Privacy Act
    9. Congressional Review Act

A. Public Participation

    NHTSA requests comment on this interim final rule. This section 
describes how you can participate in this process.
    (1) How do I prepare and submit comments?
    Your comments must be written and in English. To ensure that your 
comments are correctly filed in the Docket, please include the Docket 
number NHTSA-2021-0001 in your comments. Your comments must not be more 
than 15 pages long.\1\ NHTSA established this limit to encourage you to 
write your primary comments in a concise fashion. However, you may 
attach necessary additional documents to your comments, and there is no 
limit on the length of the attachments. If you are submitting comments 
electronically as a PDF (Adobe) file, we ask that the documents 
submitted be scanned using the Optical Character Recognition (OCR) 
process, thus allowing the Agency to search and copy certain portions 
of your submissions.\2\ Please note that pursuant to the Data Quality 
Act, in order for the substantive data to be relied upon and used by 
the Agency, it must meet the information quality standards set forth in 
the OMB and Department of Transportation (DOT) Data Quality Act 
guidelines. Accordingly, we encourage you to consult the guidelines in 
preparing your comments. OMB's guidelines may be accessed at http://www.whitehouse.gov/omb/fedreg/reproducible.html. DOT's guidelines may 
be accessed at http://www.dot.gov/dataquality.htm.
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    \1\ See 49 CFR 553.21
    \2\ Optical character recognition (OCR) is the process of 
converting an image of text, such as a scanned paper document or 
electronic fax file, into computer-editable text.
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    (2) Tips for Preparing Your Comments

[[Page 3017]]

    When submitting comments, please remember to:
     Identify the rulemaking by docket number and other 
identifying information (subject heading, Federal Register date and 
page number).
     Explain why you agree or disagree, suggest alternatives, 
and substitute language for your requested changes.
     Describe any assumptions and provide any technical 
information and/or data that you used.
     If you estimate potential costs or burdens, explain how 
you arrived at your estimate in sufficient detail to allow for it to be 
reproduced.
     Provide specific examples to illustrate your concerns, and 
suggest alternatives.
     Explain your views as clearly as possible, avoiding the 
use of profanity or personal threats.
     Make sure to submit your comments by the comment period 
deadline identified in the DATES section above.
    (3) How can I be sure that my comments were received?
    If you submit your comments by mail and wish Docket Management to 
notify you upon its receipt of your comments, enclose a self-addressed, 
stamped postcard in the envelope containing your comments. Upon 
receiving your comments, Docket Management will return the postcard by 
mail.
    (4) How do I submit confidential business information?
    If you wish to submit any information under a claim of 
confidentiality, you should submit your complete submission, including 
the information you claim to be confidential business information 
(CBI), to the NHTSA Chief Counsel. When you send a comment containing 
CBI, you should include a cover letter setting forth the information 
specified in our CBI regulation.\3\ In addition, you should submit a 
copy from which you have deleted the claimed CBI to the Docket by one 
of the methods set forth above.
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    \3\ See 49 CFR part 512.
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    To facilitate social distancing due to COVID-19, NHTSA is treating 
electronic submission as an acceptable method for submitting CBI to the 
Agency under 49 CFR part 512. Any CBI submissions sent via email should 
be sent to an attorney in the Office of Chief Counsel at the address 
given above under FOR FURTHER INFORMATION CONTACT. Likewise, for CBI 
submissions via a secure file transfer application, an attorney in the 
Office of Chief Counsel must be set to receive a notification when 
files are submitted and have access to retrieve the submitted files. At 
this time, regulated entities should not send a duplicate hardcopy of 
their electronic CBI submissions to DOT headquarters.
    Please note that these modified submission procedures are only to 
facilitate continued operations while maintaining appropriate social 
distancing due to COVID-19. Regular procedures for part 512 submissions 
will resume upon further notice, when NHTSA and regulated entities 
discontinue operating primarily in telework status.
    If you have any questions about CBI or the procedures for claiming 
CBI, please consult the person identified in the FOR FURTHER 
INFORMATION CONTACT section.
    (5) How can I read the comments submitted by other people?
    You may read the materials placed in the docket for this document 
(e.g., the comments submitted in response to this document by other 
interested persons) at any time by going to http://www.regulations.gov. 
Follow the online instructions for accessing the dockets. You may also 
read the materials at the NHTSA Docket Management Facility by going to 
the street addresses given above under ADDRESSES.

B. Statutory and Regulatory Background

    NHTSA sets \4\ and enforces \5\ corporate average fuel economy 
(CAFE) standards for the United States light-duty automobile fleet, and 
in doing so, assesses civil penalties against manufacturers that fall 
short of their compliance obligations and are unable to make up the 
shortfall with credits obtained for exceeding the standards.\6\ The 
civil penalty amount for CAFE non-compliance was originally set by 
statute in 1975, and beginning in 1997, included a rate of $5.50 per 
each tenth of a mile per gallon (0.1) that a manufacturer's fleet 
average CAFE level falls short of its compliance obligation. This 
shortfall amount is then multiplied by the number of vehicles in that 
manufacturer's fleet.\7\ The basic equation for calculating a 
manufacturer's civil penalty amount before accounting for credits, is 
as follows:
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    \4\ 49 U.S.C. 32902. The authorities vested in the Secretary 
under chapter 329 of Title 49, U.S.C., have been delegated to NHTSA. 
49 CFR 1.95(a).
    \5\ 49 U.S.C. 32911, 32912.
    \6\ Credits may be either earned (for over-compliance by a given 
manufacturer's fleet, in a given model year), transferred (from one 
fleet to another), or purchased (in which case, another manufacturer 
earned the credits by over-complying and chose to sell that 
surplus). 49 U.S.C. 32903.
    \7\ A manufacturer may have up to three fleets of vehicles, for 
CAFE compliance purposes, in any given model year--a domestic 
passenger car fleet, an imported passenger car fleet, and a light 
truck fleet. Each fleet belonging to each manufacturer has its own 
compliance obligation, with the potential for either over-compliance 
or under-compliance. There is no overarching CAFE requirement for a 
manufacturer's total production.
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(penalty rate, in $ per 0.1 mpg per vehicle) x (amount of shortfall, in 
tenths of an mpg) x (# of vehicles in manufacturer's non-compliant 
fleet).

    Starting with model year 2011, the CAFE program was amended by the 
Energy Independence and Security Act of 2007 (EISA) to provide for 
credit transfers among a manufacturer's various fleets.\8\ Starting 
with that model year, the law also provided for trading between vehicle 
manufacturers, which has allowed vehicle manufacturers the opportunity 
to acquire credits from competitors rather than paying civil penalties 
for non-compliance. Credit purchases involve significant expenditures, 
and NHTSA believes that an increase in the penalty rate would correlate 
with an increase in such expenditures.
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    \8\ Public Law 110-140, sec. 104.
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C. Civil Penalties Inflation Adjustment Act Improvements Act of 2015

    On November 2, 2015, the Federal Civil Penalties Inflation 
Adjustment Act Improvements Act (Inflation Adjustment Act or 2015 Act), 
Public Law 114-74, Section 701, was signed into law. The 2015 Act 
required Federal agencies to make an initial ``catch-up'' adjustment to 
the ``civil monetary penalties,'' as defined, they administer through 
an interim final rule and then to make subsequent annual adjustments 
for inflation. The amount of increase for any ``catch-up'' adjustment 
to a civil monetary penalty pursuant to the 2015 Act was limited to 150 
percent of the then-current penalty. Agencies were required to issue an 
interim final rule for the initial ``catch-up'' adjustment by July 1, 
2016, without providing the opportunity for public comment ordinarily 
required under the Administrative Procedure Act.
    The Director of the Office of Management and Budget (OMB) provided 
guidance to all Federal agencies in a February 24, 2016 memorandum.\9\ 
For those penalties an agency determined to be ``civil monetary 
penalties,'' the memorandum provided guidance on how to calculate

[[Page 3018]]

the initial adjustment required by the 2015 Act. The initial catch up 
adjustment is based on the change between the Consumer Price Index for 
all Urban Consumers (CPI-U) for the month of October in the year the 
penalty amount was established or last adjusted by Congress and the 
October 2015 CPI-U. The February 24, 2016 memorandum contains a table 
with a multiplier for the change in CPI-U from the year the penalty was 
established or last adjusted to 2015. To arrive at the adjusted 
penalty, an agency must multiply the penalty amount when it was 
established or last adjusted by Congress, excluding adjustments under 
the 1990 Inflation Adjustment Act, by the multiplier for the increase 
in CPI-U from the year the penalty was established or adjusted as 
provided in the February 24, 2016 memorandum. The 2015 Act limits the 
initial inflationary increase to 150 percent of the current penalty. To 
determine whether the increase in the adjusted penalty is less than 150 
percent, an agency must multiply the current penalty by 250 percent. 
The adjusted penalty is the lesser of either the adjusted penalty based 
on the multiplier for CPI-U in Table A of the February 24, 2016 
memorandum or an amount equal to 250 percent of the current penalty. 
Ensuing guidance from OMB identifies the appropriate inflation 
multiplier for agencies to use to calculate the subsequent annual 
adjustments.\10\
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    \9\ Memorandum from the Director of OMB to Heads of Executive 
Departments and Agencies, Implementation of the Federal Civil 
Penalties Inflation Adjustment Act Improvements Act of 2015 (Feb. 
24, 2016), available online at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/memoranda/2016/m-16-06.pdf.
    \10\ Memorandum from the Director of OMB to Heads of Executive 
Departments and Agencies, Implementation of the 2017 Annual 
Adjustment Pursuant to the Federal Civil Penalties Inflation 
Adjustment Act Improvements Act of 2015 (Dec. 16, 2016), available 
online at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/memoranda/2017/m-17-11_0.pdf; Memorandum from the Director of OMB to 
Heads of Executive Departments and Agencies, Implementation of 
Penalty Inflation Adjustments for 2018, Pursuant to the Federal 
Civil Penalties Inflation Adjustment Act Improvements Act of 2015 
(Dec. 15, 2017), available online at https://www.whitehouse.gov/wp-content/uploads/2017/11/M-18-03.pdf; Memorandum from the Director of 
OMB to Heads of Executive Departments and Agencies, Implementation 
of Penalty Inflation Adjustments for 2019, Pursuant to the Federal 
Civil Penalties Inflation Adjustment Act Improvements Act of 2015 
(Dec. 14, 2018), available online at https://www.whitehouse.gov/wp-content/uploads/2017/11/m_19_04.pdf; Memorandum from the Acting 
Director of OMB to Heads of Executive Departments and Agencies, 
Implementation of Penalty Inflation Adjustments for 2020, Pursuant 
to the Federal Civil Penalties Inflation Adjustment Act Improvements 
Act of 2015 (Dec. 16, 2019), available online at https://www.whitehouse.gov/wp-content/uploads/2019/12/M-20-05.pdf; 
Memorandum from the Director of OMB to Heads of Executive 
Departments and Agencies, Implementation of Penalty Inflation 
Adjustments for 2021, Pursuant to the Federal Civil Penalties 
Inflation Adjustment Act Improvements Act of 2015 (Dec. 23, 2020), 
available online at https://www.whitehouse.gov/wp-content/uploads/2020/12/M-21-10.pdf.
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    The 2015 Act also gives agencies discretion to adjust the amount of 
a civil monetary penalty by less than otherwise required for the 
initial catch-up adjustment if an agency determines that increasing the 
civil monetary penalty by the otherwise required amount will have 
either a negative economic impact or if the social costs of the 
increased civil monetary penalty will outweigh the benefits.\11\ In 
either instance, the agency must publish a notice, take and consider 
comments on this finding, and receive concurrence on this determination 
from the Director of OMB prior to finalizing a lower civil penalty 
amount.
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    \11\ Public Law 114-74, sec. 701(c).
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D. NHTSA's Actions to Date Regarding CAFE Civil Penalties

1. Interim Final Rule

    On July 5, 2016, NHTSA published an interim final rule, adopting 
inflation adjustments for civil penalties under its administration, 
following the procedure and the formula in the 2015 Act. NHTSA did not 
analyze at that time whether the 2015 Act applied to all of its civil 
penalties, instead applying the inflation multiplier to increase all 
amounts found in its penalty schemes as a rote matter. One of the 
adjustments NHTSA made at the time was raising the civil penalty rate 
for CAFE non-compliance from $5.50 to $14 starting with model year 
2015.\12\ NHTSA also indicated in that interim final rule that the 
maximum penalty rate that the Secretary is permitted to establish for 
such violations would increase from $10 to $25, but did not codify this 
change in the regulatory text. NHTSA also raised the maximum civil 
penalty for other violations of EPCA, as amended, to $40,000.\13\
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    \12\ 81 FR 43524 (July 5, 2016). This interim final rule also 
updated the maximum civil penalty amounts for violations of all 
statutes and regulations administered by NHTSA and was not limited 
solely to penalties administered for CAFE violations.
    \13\ 81 FR 43524 (July 5, 2016).
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2. Initial Petition for Reconsideration and Response

    The then-Alliance of Automobile Manufacturers and the Association 
of Global Automakers (since combined to form the Alliance for 
Automotive Innovation) jointly petitioned NHTSA for reconsideration of 
the CAFE penalty provisions issued in the interim final rule.\14\ This 
petition raised concerns with the significant impact that the increased 
penalty rate would have on CAFE compliance costs, which they estimated 
to be at least $1 billion annually. Specifically, this petition 
identified the issue of retroactivity (applying the penalty increase 
associated with model years that have already been completed or for 
which a company's compliance plan had already been ``set''); which 
``base year'' (i.e., the year the penalty was established or last 
adjusted) NHTSA should use for calculating the adjusted penalty rate; 
and whether an increase in the penalty rate to $14 would cause a 
``negative economic impact.''
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    \14\ Jaguar Land Rover North America, LLC also filed a petition 
for reconsideration in response to the July 5, 2016, interim final 
rule raising the same concerns as those raised in the joint 
petition. Both petitions, along with a supplement to the joint 
petition, can be found in Docket ID NHTSA-2016-0075 at 
www.regulations.gov.
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    In response to the joint petition, NHTSA issued a final rule on 
December 28, 2016.\15\ In that rule, NHTSA agreed that raising the 
penalty rate for model years already fully complete would be 
inappropriate, given how courts generally disfavor the retroactive 
application of statutes and that doing so could not deter non-
compliance, incentivize compliance, or lead to any improvements in fuel 
economy. NHTSA also agreed that raising the rate for model years for 
which product changes were infeasible due to lack of lead time did not 
seem consistent with Congress' intent that the CAFE program be 
responsive to consumer demand. Accordingly, NHTSA stated that it would 
not apply the inflation-adjusted penalty rate of $14 until model year 
2019, as the Agency believed that would be the first year in which 
product changes could reasonably be made in response to the higher 
penalty rate.
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    \15\ 81 FR 95489 (December 28, 2016).
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3. NHTSA Reconsideration

    Beginning in January 2017, NHTSA took a series of actions to delay 
the effective date of the December 2016 final rule as it, for the first 
time, assessed whether the CAFE civil penalty rate was subject to the 
2015 Act.\16\ As a result of a subsequent decision of the United States 
Court of Appeals for the Second Circuit, however, that December 2016 
final rule was considered to be in force.\17\ That decision by the 
Second Circuit did not affect NHTSA's authority to reconsider the 
applicability of the 2015 Act to the EPCA CAFE civil penalty provision 
through notice-and-

[[Page 3019]]

comment rulemaking. Absent any further action, the rate would have 
increased beginning with model year 2019.\18\
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    \16\ 82 FR 8694 (January 30, 2017); 82 FR 15302 (March 28, 
2017); 82 FR 29009 (June 27, 2017); 82 FR 32139 (July 12, 2017).
    \17\ Order, ECF No. 196, NRDC v. NHTSA, Case No. 17-2780 (2d 
Cir., Apr. 24, 2018); Opinion, ECF No. 205, NRDC v. NHTSA, Case No. 
17-2780, at 44 (2d Cir., June 29, 2018) (``The Civil Penalties Rule, 
81 FR 95,489, 95,489-92 (December 28, 2016), no longer suspended, is 
now in force.'').
    \18\ See 81 FR 95489, 95492 (Dec. 28, 2016). Civil penalties are 
determined after the end of a model year, following NHTSA's receipt 
of final reports from the Environmental Protection Agency (EPA), 
i.e., no earlier than April for the previous model year's non-
compliance. See 77 FR 62624, 63126 (Oct. 15, 2012).
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    In July 2019, NHTSA finalized a rule determining that the 2015 Act 
did not apply to the CAFE civil penalty rate. In line with its 
statutory role and pursuant to its previous guidance to all Federal 
Agencies, OMB provided guidance to NHTSA agreeing with this statutory 
interpretation.\19\ The July 2019 rule also stated that, in the 
alternative, even if the 2015 Act applied, increasing the CAFE civil 
penalty rate would have a negative economic impact. As discussed in the 
July 2019 rule, OMB concurred with this negative economic impact 
determination, as required by the 2015 Act.\20\ In either case, NHTSA 
concluded that the current CAFE civil penalty rate of $5.50 should be 
retained, instead of increasing to $14 beginning with model year 2019.
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    \19\ July 12, 2019 Letter from Russell T. Vought, Acting 
Director of the Office of Management and Budget, to Elaine L. Chao, 
Secretary of the United States Department of Transportation, 
available at Docket No. NHTSA-2018-0017-0018 (OMB Non-Applicability 
Letter).
    \20\ July 12, 2019 Letter from Russell T. Vought, Acting 
Director of the Office of Management and Budget, to Elaine L. Chao, 
Secretary of the United States Department of Transportation, 
available at Docket No. NHTSA-2018-0017-0019 (OMB Negative Economic 
Impact Letter).
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    On August 31, 2020, the United States Court of Appeals for the 
Second Circuit issued a ruling vacating the July 2019 rule and 
announcing that the December 2016 rule is back in force. The Second 
Circuit denied panel rehearing on November 2, 2020. NHTSA stands by the 
reasoning set forth in its July 2019 rule, but recognizes that the 
Second Circuit's decision is currently binding and remains in effect 
absent a Supreme Court decision to the contrary.

E. IPI Petition for Reconsideration

    On September 9, 2019, the Institute for Policy Integrity at New 
York University School of Law (IPI) submitted a petition for 
reconsideration of NHTSA's July 2019 final rule. IPI argued that the 
rule was unreasonable and not in the public interest for ignoring and 
improperly weighing the costs and benefits.\21\ IPI also alleged that 
the OMB letters NHTSA relied on were not presented for public comment, 
contained factual misstatements, and contradicted NHTSA's reasoning. 
Lastly, IPI challenged NHTSA's statutory interpretations.
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    \21\ IPI Petition, at 1-2.
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F. The Alliance Petition for Rulemaking

    On October 2, 2020, the Alliance for Automotive Innovation (the 
Alliance) submitted a petition for rulemaking (Alliance Petition) to 
delay the applicability of the increased $14 CAFE civil penalty rate 
until model year 2022 for largely the same reasons NHTSA relied on in 
the December 2016 rule.\22\ According to the Alliance Petition, ``Model 
Years 2019 and 2020 are effectively lapsed now,'' and ``[m]anufacturers 
are unable to change MY 2021 plans at this point.'' \23\ The Alliance 
argued that applying the increased penalty to any non-compliances that 
are temporally impossible to avoid or cannot practically be remedied 
does not serve the statutory purposes of deterring prohibited conduct 
or incentivizing favored conduct. Doing so would effectively be 
punishing violators retroactively.
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    \22\ The Alliance also submitted a supplement to its petition on 
October 22, 2020 (Alliance Supplement).
    \23\ Alliance Petition, at 4.
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    In addition to relying on the reasoning of the December 2016 rule, 
the Alliance Petition notes the significant economic impact suffered by 
the industry due to COVID-19. Accordingly, the Alliance Petition also 
cites Executive Order 13924, requiring Federal Agencies to take 
appropriate action, consistent with applicable law, to combat the 
economic emergency caused by COVID-19.\24\ Several individual vehicle 
manufacturers submitted supplemental information to NHTSA further 
articulating the negative economic position they are in due to COVID-19 
and the potential and significant adverse economic consequences of the 
increased civil penalty rate, particularly during this time of stress 
on the industry.
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    \24\ ``Executive Order on Regulatory Relief to Support Economic 
Recovery,'' E.O. 13924 (May 19, 2020).
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G. NHTSA Response to Petitions

    NHTSA granted the Alliance Petition and commenced this rulemaking 
action. Having carefully considered the issues raised by the petitioner 
and other available information, NHTSA issues this interim final rule 
and requests comment. If the August 31, 2020 decision of the United 
States Court of Appeals for the Second Circuit in Case No. 19-2395 is 
vacated, NHTSA's July 2019 rule keeping the CAFE civil penalty rate at 
$5.50 will be reinstated. If that decision is not vacated, however, the 
CAFE civil penalty rate will increase to $14 beginning with model year 
2022, pursuant to the 2015 Act. NHTSA will make any subsequent annual 
adjustments as necessary and appropriate.\25\
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    \25\ None of the annual inflation adjustment multipliers since 
the initial catch-up adjustment has been high enough to require a 
subsequent adjustment of the CAFE civil penalty rate. That is, if 
the catch-up adjustment to $14 had applied beginning in 2016, the 
rate would still be $14 through at least 2021.
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    Prior to granting the petition, NHTSA had to determine whether it 
had authority to issue the requested rule as a threshold matter. NHTSA 
notes first that it has authority to administer the CAFE program.\26\ 
It is common practice for agencies--including NHTSA--to exercise their 
authority to administer programs they oversee.\27\ NHTSA also

[[Page 3020]]

has specific statutory authority to administer the program \28\ and 
possesses the general authority--beyond its inherent authority--to do 
so efficiently and in the public interest.\29\ NHTSA's obligation to 
administer the CAFE program consistent with law includes the statutory 
requirement to establish maximum feasible fuel economy standards 
through a balancing of competing factors, including economic 
practicability, and to do so at least eighteen months in advance for 
more stringent standards.\30\ CAFE civil penalties are merely one 
component of this overall program.
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    \26\ See Morton v. Ruiz, 415 U.S. 199, 231 (1974) (``The power 
of an administrative agency to administer a congressionally created 
and funded program necessarily requires the formulation of policy 
and the making of rules to fill any gap left, implicitly or 
explicitly, by Congress.''); see also Friends of Boundary Waters 
Wilderness v. Bosworth, 437 F.3d 815, 823-24 (8th Cir. 2006) 
(``Agencies given the authority to promulgate a quota are presumed 
to have the authority to adjust that quota.''); S. California Edison 
Co. v. F.E.R.C., 415 F.3d 17, 22-23 (D.C. Cir. 2005) (``[O]f course, 
agencies may alter regulations. Agencies may even alter their own 
regulations sua sponte, in the absence of complaints, provided they 
have sufficient reason to do so and follow applicable 
procedures.''); Ober v. Whitman, 243 F.3d 1190, 1194-95 (9th Cir. 
2001) (indicating that agencies have the inherent authority to 
exempt de minimis violations from regulation if not prohibited by 
statute); Tate & Lyle, Inc. v. C.I.R., 87 F.3d 99, 104 (3d Cir. 
1996) (``Inherent in the powers of an administrative agency is the 
authority to formulate policies and to promulgate rules to fill any 
gaps left, either implicitly or explicitly, by Congress.'') (citing 
Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 
843 (1984)); Fla. Cellular Mobil Commc'ns Corp. v. F.C.C., 28 F.3d 
191, 196 (D.C. Cir. 1994) (``If an agency is to function 
effectively, however, it must have some opportunity to amend its 
rules and regulations in light of its experience.''); Rainbow Broad. 
Co. v. F.C.C., 949 F.2d 405, 409 (D.C. Cir. 1991) (``Agencies enjoy 
wide latitude when using rulemaking to change their own policies and 
the manner by which their policies are implemented.''); Nat. Res. 
Def. Council, Inc. v. Sec. & Exch. Comm'n, 606 F.2d 1031, 1056 (D.C. 
Cir. 1979) (``An agency is allowed to be master of its own house, 
lest effective agency decisionmaking not occur in [a]ny 
proceeding.'').
    \27\ 76 FR 22565, 22578 (Apr. 21, 2011) (``[A]n agency may 
reconsider its methodologies and application of its statutory 
requirements and may even completely reverse course, regardless of 
whether a court has determined that its original regulation is 
flawed, so long as the agency explains its bases for doing so.'') 
(citations omitted); 75 FR 6883, 6884 (Feb. 12, 2010) (``The 
Department [of Labor] has inherent authority to change its 
regulations in accordance with the Administrative Procedure Act 
(APA).''); 64 FR 60556, 60580 (Nov. 5, 1999) (NHTSA ``believe[s] 
that nothing in [the statute] derogates our inherent authority to 
make temporary adjustments in the requirements we adopt if, in our 
judgment, such adjustments are necessary or prudent to promote the 
smooth and effective achievement of the goals of the amendments.'').
    \28\ See, e.g., 49 U.S.C. 32902, 32912. The Secretary's 
authority under EPCA is delegated to NHTSA. 49 CFR 1.95(a), (j) 
(delegating authority to NHTSA to exercise the authority vested in 
the Secretary under chapter 329 of title 49 of the U.S. Code and 
certain sections of the Energy Independence and Security Act of 
2007, Public Law 110-140); see also 49 CFR 1.94(c). Moreover, 
NHTSA's regulations provide that ``[t]he Administrator may initiate 
any further rulemaking proceedings that he finds necessary or 
desirable.'' 49 CFR 553.25.
    \29\ See 49 U.S.C. 302(a) (stating the Secretary of 
Transportation is governed by the transportation policy described in 
part in 49 U.S.C. 13101(b), which provides that oversight of the 
modes of transportation ``shall be administered and enforced to 
carry out the policy of this section and to promote the public 
interest''); 49 U.S.C. 322(a) (``The Secretary of Transportation may 
prescribe regulations to carry out the duties and powers of the 
Secretary. An officer of the Department of Transportation may 
prescribe regulations to carry out the duties and powers of the 
officer.''); 49 U.S.C. 105(c)(2) (directing the NHTSA Administrator 
to ``carry out . . . additional duties and powers prescribed by the 
Secretary''); 49 CFR 1.81(a)(3) (``Except as prescribed by the 
Secretary of Transportation, each Administrator is authorized to . . 
. [e]xercise the authority vested in the Secretary to prescribe 
regulations under 49 U.S.C. 322(a) with respect to statutory 
provisions for which authority is delegated by other sections in 
this part.'').
    \30\ 49 U.S.C. 32902(a), (f), (g)(2).
---------------------------------------------------------------------------

    Moreover, EPCA expressly details a procedure for NHTSA, as 
delegated by the Secretary, to increase the CAFE civil penalty 
rate.\31\ EPCA's delegation necessarily implies that NHTSA also has 
authority to oversee the administration and enforcement of the rate 
more generally.\32\ Indeed, NHTSA already promulgated a similar rule in 
December 2016 establishing the first model years to which the increased 
CAFE civil penalty rate would apply, which was not challenged and has 
been held to be operative twice by the Second Circuit. The 2015 Act 
also applies only to penalties that are ``assessed or enforced by an 
Agency pursuant to Federal law.'' \33\ For the CAFE civil penalty rate 
to be covered under the 2015 Act, NHTSA must have authority to assess 
or enforce it, and thus inevitably the authority to oversee and 
administer it as appropriate. To the extent there is any statutory 
ambiguity, NHTSA is the expert agency on its CAFE program, has been 
given authority to administer the Federal fuel economy program, and has 
expert authority to interpret and apply the requirements of EPCA and 
EISA, including the civil penalty provisions.
---------------------------------------------------------------------------

    \31\ See 49 U.S.C. 32912(c).
    \32\ See Thomas W. Merrill & Kristin E. Hickman, Chevron's 
Domain, 89 Geo. L.J. 833, 876 (2001) (``All administrative agencies 
have certain powers inherent in their status as units of the 
executive branch; all executive officers have inherent authority to 
interpret the law.'' (footnote omitted)).
    \33\ 28 U.S.C. 2461 note, sec. 3(2)(B).
---------------------------------------------------------------------------

    If the August 31, 2020 decision of the United States Court of 
Appeals for the Second Circuit in Case No. 19-2395 is vacated, NHTSA's 
July 2019 rule will be reinstated, keeping the CAFE civil penalty rate 
at $5.50. But turning to the merits of the Alliance Petition, NHTSA 
will assume arguendo that the July 2019 rule remains vacated. Under 
those circumstances, NHTSA agrees with the petitioner that the 
reasoning of the Agency's December 2016 rule applies here. As NHTSA 
said then, ``[i]f all the vehicles for a model year have already been 
produced, then there is no way for their manufacturers to raise the 
fuel economy level of those vehicles in order to avoid higher penalty 
rates for non-compliance.'' \34\ At the time, NHTSA noted that by 
November 2015, ``nearly all manufacturers subject to the CAFE standards 
had completed both model years 2014 and 2015, and no further vehicles 
in those model years were being produced in significant numbers.'' 
Likewise now, vehicles for model years 2019 and 2020 have largely if 
not entirely been produced already, many manufacturers are already 
selling model year 2021 vehicles, and since some manufacturers launch 
subsequent model year vehicles as early as the spring, it is reasonable 
to assume that model year 2022 vehicles will be launched in the coming 
months. Applying the increased civil penalty rate to violations in 
these model years ``would not result in additional fuel savings, and 
thus would seem to impose retroactive punishment without accomplishing 
Congress' specific intent in establishing the civil penalty provision 
of the Energy Policy and Conservation Act (`EPCA').'' \35\
---------------------------------------------------------------------------

    \34\ 81 FR 95489, 95490 (Dec. 28, 2016).
    \35\ 81 FR 95489, 95490 (Dec. 28, 2016).
---------------------------------------------------------------------------

    As NHTSA explained previously, ``the purpose of civil penalties for 
non-compliance is to encourage manufacturers to comply with the CAFE 
standards.'' \36\ And more generally, one of the stated purposes of the 
2015 Act is to ``maintain the deterrent effect of civil monetary 
penalties and promote compliance with the law.'' \37\ NHTSA agrees with 
the petitioner that it would be inappropriate to apply the adjustment 
to model years that could have no deterrence effect and promote no 
additional compliance with the law.\38\
---------------------------------------------------------------------------

    \36\ 81 FR 95489, 95490 (Dec. 28, 2016) (citing 49 CFR 578.2) 
(section addressing penalties states that a ``purpose of this part 
is to effectuate the remedial impact of civil penalties and to 
foster compliance with the law''); see generally, 49 U.S.C. 32911-
32912; United States v. General Motors, 385 F. Supp. 598, 604 
(D.D.C. 1974), vacated on other grounds, 527 F.2d 853 (D.C. Cir. 
1975) (``The policy of the Act with regard to civil penalties is 
clearly to discourage noncompliance'').
    \37\ 28 U.S.C. 2461 note, sec. 2(b)(2).
    \38\ NHTSA's proposal to retain the $5.50 rate was published 
weeks before the Second Circuit's decision vacating the indefinite 
delay of the December 2016 rule. Accordingly, manufacturers were 
aware of NHTSA's tentative reconsideration decision and could begin 
planning accordingly, despite the December 2016 rule being in force.
---------------------------------------------------------------------------

    In addition to failing to serve the purpose of the statutory 
framework and the regulatory scheme, applying the increased civil 
penalty rate to completed or largely completed model years would raise 
serious retroactivity concerns. As NHTSA explained in the December 2016 
rule, and in various other contexts, ``[r]etroactivity is not favored 
in the law.'' \39\ NHTSA does not believe that it is appropriate to 
impose a higher civil penalty rate for model years when doing so would 
not have incentivized improvements to fuel economy--one of the core 
purposes of EPCA.\40\ Moreover, as NHTSA noted in the December 2016 
rule, ``[t]he decision not to apply the increased penalties 
retroactively is similar to the approach taken by various other 
[F]ederal [a]gencies in implementing the Federal Civil Penalties 
Inflation Adjustment Act Improvements Act of 2015.'' \41\ For instance, 
a fellow DOT agency concluded that applying an inflation adjustment 
when a penalty had been proposed but not finalized ``would not induce 
further compliance'' and would

[[Page 3021]]

thus be contrary to the goals of its specific enforcement statute.\42\ 
Accordingly, the agency announced it would not retroactively adjust the 
proposed penalty amounts for violations that predated the inflation 
adjustments.
---------------------------------------------------------------------------

    \39\ 81 FR 95489, 95490 n.8 (Dec. 28, 2016). The Supreme Court 
has stated that ``congressional enactments . . . will not be 
construed to have retroactive effect unless their language requires 
this result.'' Landgraf v. USI Film Products, 511 U.S. 244, 280 
(1994) (citing Bowen v. Georgetown University Hospital, 488 U.S. 
204, 208 (1988)).
    \40\ The 2015 Act provides that any increases to civil monetary 
penalties only apply to penalties that ``are assessed after the date 
the increase takes effect.'' 28 U.S.C. 2461 note, sec. 6. Therefore, 
at a minimum, any adjustment to the CAFE civil penalty rate would 
not apply to any penalties that have already been assessed.
    \41\ See, e.g., Department of Justice, interim final rule with 
request for comments: Civil Monetary Penalties Inflation Adjustment, 
81 FR 42491 (June 30, 2016) (applying increased penalties only to 
violations after November 2, 2015, the date of the Act's enactment); 
Federal Aviation Administration, interim final rule: Revisions to 
Civil Penalty Inflation Adjustment Tables, 81 FR 43463 (July 5, 
2016) (applying increased penalties only to violations after August 
1, 2016).
    \42\ 81 FR 41453, 41454 (June 27, 2016) (Federal Motor Carrier 
Safety Administration).
---------------------------------------------------------------------------

    For similar reasons--and applying the same reasoning as in the 
December 2016 rule--NHTSA concludes that it would be inappropriate to 
apply the increased civil penalty rate to model year 2021 as well. In 
the December 2016 rule, NHTSA recognized the reality of the timeline 
for the design, development, and production of new vehicles: ``because 
of industry design, development, and production cycles, vehicle designs 
(including drivetrains, which are where many fuel economy improvements 
are made) are often fixed years in advance, making adjustments to fleet 
fuel economy difficult without a lead time of multiple years.'' \43\ At 
the time of the recent judicial decision indicating that the increase 
would go into effect, the industry plans for what remains of model year 
2020 and model year 2021 were ``fixed and inalterable.'' \44\ 
Accordingly, ``it is too late at this juncture to make significant 
changes to those plans and avoid non-compliances.'' \45\
---------------------------------------------------------------------------

    \43\ 81 FR 95489, 95490 (Dec. 28, 2016).
    \44\ 81 FR 95489, 95490 (Dec. 28, 2016).
    \45\ 81 FR 95489, 95490 (Dec. 28, 2016).
---------------------------------------------------------------------------

    NHTSA's decision here also takes account of the industry's serious 
reliance interests, having made design, development, and production 
plans based on the $5.50 rate. And reliance upon that rate was 
reasonable, as NHTSA reconsidered application of the 2015 Act by 
proposing in 2018 that the 2015 Act did not apply and finalizing the 
proposal in 2019.\46\ The Director of the Office of Management and 
Budget--the Agency charged with overseeing implementation of the 2015 
Act--also issued guidance concurring with NHTSA that the 2015 Act did 
not apply to the CAFE penalty rate with the final rule, further 
increasing the reasonableness of such reliance.
---------------------------------------------------------------------------

    \46\ 83 FR 13904 (Apr. 2, 2018); 84 FR 36007 (July 26, 2019).
---------------------------------------------------------------------------

    The Alliance Petition observes that ``[m]anufacturers long ago made 
their technology choices, locked in suppliers and production 
requirements, developed credit purchase/sales strategies, and have 
largely begun to implement their planned production runs for Model Year 
2021''--all with the $5.50 rate in effect.\47\ The issue of credits is 
particularly noteworthy as manufacturers can apply credits well beyond 
one or two model years. Manufacturers can choose to carry back credits 
to apply to any of three model years before they are earned or carry 
them forward to apply to any of the five model years after they are 
earned. With such a long window of potential applicability, it is 
likely that manufacturers make long-term plans in determining how to 
acquire and apply credits. Increasing the rate is likely to lead to an 
increase in the price of credits, many of which have already been 
planned around and negotiated and contracted for. For example, in a 
recent securities filing, Fiat Chrysler Automobiles N.V. stated that it 
``has accrued estimated amounts for any probable CAFE penalty based on 
the $5.50 rate,'' but if the rate was applied to model year 2019, ``FCA 
may need to accrue additional amounts due to increased CAFE penalties 
and additional amounts owed under certain agreements for the purchase 
of regulatory emissions credits'' and ``[t]he amounts accrued could be 
up to [euro]500 million [nearly $600 million].'' \48\ To disregard the 
industry's serious reliance interests would be unfair and improper.\49\
---------------------------------------------------------------------------

    \47\ Alliance Petition, at 4.
    \48\ FCA N.V. Interim Report, 6-K (Current report) EX-99.1, at 
41 (Sept. 30, 2020).
    \49\ See, e.g., Encino Motorcars LLC v. Navarro, 136 S. Ct. 
2117, 2125 (2016); FCC v. Fox Television Stations, Inc., 556 U.S. 
502, 515-16 (2009).
---------------------------------------------------------------------------

    Accounting for the timeline of vehicle development comports with 
NHTSA's broader approach to establishing fuel economy standards. As 
NHTSA explained in the December 2016 rule, NHTSA ``includes product 
cadence in its assessment of CAFE standards, by limiting application of 
technology in its analytical model to years in which vehicles are 
refreshed or redesigned.'' \50\ Not only does this consideration 
function within the industry's long-established development cycle, 
``NHTSA believes that this approach facilitates continued fuel economy 
improvements over the longer term by accounting for the fact that 
manufacturers will seek to make improvements when and where they are 
most cost-effective.'' \51\
---------------------------------------------------------------------------

    \50\ 81 FR 95489, 95491 (Dec. 28, 2016).
    \51\ 81 FR 95489, 95491 (Dec. 28, 2016).
---------------------------------------------------------------------------

    In the December 2016 rule, NHTSA also analogized the need to 
provide appropriate lead time for an increase in the civil penalty rate 
to the EPCA provision requiring that when NHTSA amends a fuel economy 
standard to make it more stringent, NHTSA must promulgate the standard 
``at least 18 months before the beginning of the model year to which 
the amendment applies.'' \52\ As NHTSA explained:
---------------------------------------------------------------------------

    \52\ 49 U.S.C. 32902(a)(2).
---------------------------------------------------------------------------

    The 18 months' notice requirement for increases in fuel economy 
standards represents a congressional acknowledgement of the importance 
of advance notice to vehicle manufacturers to allow them the lead time 
necessary to adjust their product plans, designs, and compliance plans 
to address changes in fuel economy standards. Similarly here, affording 
manufacturers lead time to adjust their products and compliance plans 
helps them to account for such an increase in the civil penalty amount. 
In this unique case, the 18-month lead time for increases in the 
stringency of fuel economy standards provides a reasonable proxy for 
appropriate advance notice of the application of substantially 
increased--here nearly tripled--civil penalties.\53\
---------------------------------------------------------------------------

    \53\ 81 FR 95489, 95491 (Dec. 28, 2016).
---------------------------------------------------------------------------

    Similarly, EPCA provides that an increase in the CAFE civil penalty 
rate prescribed through the statutory process can also only take effect 
``for the model year beginning at least 18 months after the regulation 
stating the higher amount becomes final.'' \54\
---------------------------------------------------------------------------

    \54\ See 49 U.S.C. 32912(c)(1)(D).
---------------------------------------------------------------------------

    As in the December 2016 rule, NHTSA acknowledges that--while none 
of the individual manufacturers that submitted supplemental information 
indicated this to be the case--it is conceivable that some 
manufacturers might be able to change production volumes of certain 
lower- or higher-fuel-economy models for model years that have not 
happened yet, which could help them to reduce or avoid CAFE non-
compliance penalties. However, NHTSA noted then and reiterates here 
that compelling such a change by immediately adjusting the civil 
penalty rate to apply to design decisions that are already locked in 
would contravene a fundamental purpose of the CAFE program--namely, the 
statutory requirement that fuel economy standards be attribute-based 
and thus responsive to consumer demand.\55\ Affording some lead time to 
manufacturers mitigates the concern that manufacturers will be forced 
to disregard consumer demand, for example by having to restrict the 
availability of vehicles that consumers want.
---------------------------------------------------------------------------

    \55\ See 49 U.S.C. 32902(b)(3).
---------------------------------------------------------------------------

    The Alliance Petition was submitted on October 2, 2020, and 
requested that the adjustment apply beginning in model year 2022. While 
NHTSA accepts that the petitioner believes that timeline provides a 
sufficient and reasonable

[[Page 3022]]

lead time under the circumstances for its industry members to adjust 
reasonably to the increased penalty rate and, in this interim final 
rule, postpones the increased rate until that model year, NHTSA also 
seeks comment on whether it should provide 18 months of lead time 
before the increase becomes effective. Since NHTSA treats model years 
as commencing in October of the calendar year prior to the model year, 
an 18-month lead time would have the $14 penalty rate apply to the 2023 
model year under this approach. Such an approach would be consistent 
with the December 2016 rule's application of the adjustment beginning 
in model year 2019.
    NHTSA also recognizes the significant negative economic 
consequences caused by the global outbreak of COVID-19. On May 19, 
2020, President Trump issued Executive Order (E.O.) 13924, ``Regulatory 
Relief to Support Economic Recovery,'' ordering agencies to address the 
economic emergency caused by the pandemic ``by rescinding, modifying, 
waiving, or providing exemptions from regulations and other 
requirements that may inhibit economic recovery, consistent with 
applicable law and with protection of the public health and safety, 
with national and homeland security, and with budgetary priorities and 
operational feasibility.'' \56\ Where such measures are made 
temporarily, agencies must evaluate whether those measures would 
``promote economic recovery if made permanent.''
---------------------------------------------------------------------------

    \56\ 85 FR 31353, 31354 (May 22, 2020).
---------------------------------------------------------------------------

    The Alliance Petition provided information about the significant 
negative economic impact on the automotive sector caused by COVID-19. 
All domestic auto factories were closed by April 2020, for the first 
time since World War II, for approximately eight weeks.\57\ One analyst 
described the second quarter of 2020 as ``likely to be the toughest in 
modern history'' for the automotive sector, as companies ``grappled 
with close to a zero revenue environment for a few months.'' \58\ 
Market projections as of September 2020 indicate that domestic vehicle 
sales for all of 2020 will be down by as much as 26 percent from 
2019.\59\ And beyond the immediate economic hit, this negative economic 
impact is expected to have effects beyond 2020. One market analyst 
predicts that the auto sector recovery will take several years and that 
the market will not reach the sales that were previously projected for 
2020 until at least 2025.\60\ The analyst also notes that because of 
the COVID-19 effects on sales and revenue, manufacturers have been 
forced to delay capital-intensive product actions to conserve 
resources, with the greatest impact to showrooms in calendar years 2023 
and 2024.\61\
---------------------------------------------------------------------------

    \57\ Alliance Petition, at 5 (citing ALLIANCE FOR AUTOMOTIVE 
INNOVATION, READING THE METER: SEPTEMBER 30, 2020, https://www.autosinnovate.org/wp-content/uploads/2020/10/Meter-State-of-the-Industry-9-30-2020.pdf at page 16).
    \58\ Alliance Petition, at 5 (citing Michael Wayland, Five 
Things Investors are Watching as GM and Ford Report Coronavirus-
Ravaged Earnings, CNBC (July 28, 2020 8:27 a.m.), https://www.cnbc.com/2020/07/28/what-to-watch-for-as-gm-and-ford-report-coronavirus-ravaged-earnings.html).
    \59\ Alliance Petition, at 5 (citing ALLIANCE FOR AUTOMOTIVE 
INNOVATION, READING THE METER: SEPTEMBER 23, 2020, https://www.autosinnovate.org/wp-content/uploads/2020/09/Meter-State-of-the-Industry-9-23-2020.pdf at pages 2-3).
    \60\ Alliance Petition, at 5 (citing IHS MARKIT, IHS MARKIT 
MONTHLY AUTOMOTIVE UPDATE--AUGUST 2020 (Aug. 14, 2020)).
    \61\ Alliance Petition, at 5 (citing IHS MARKIT, AUTOMOTIVE 
COVID-19 RECOVERY SERIES: THE OEM LANDSCAPE--FOCUS ON US (Sept. 8, 
2020)).
---------------------------------------------------------------------------

    NHTSA also received information from five individual vehicle 
manufacturers supplementing the Alliance Petition: Mercedes-Benz AG, 
Jaguar Land Rover North America, LLC, FCA US LLC, Ford Motor Company, 
and Ferrari North America, Inc.\62\ Each cited the ongoing pandemic in 
concluding that applying the increased CAFE civil penalty rate prior to 
model year 2022 would present a substantial hardship.
---------------------------------------------------------------------------

    \62\ The companies have requested confidential treatment for 
some of the business information included in each of their 
individual submissions, pursuant to 49 CFR part 512. The publicly 
available portions of their submissions can be found in the docket 
for this action at www.regulations.gov.
---------------------------------------------------------------------------

    Mercedes-Benz indicated that since March of this year, it has 
experienced pandemic-related disruption of supply chains, production, 
and work force, which has caused unforeseen financial loss for the 
company and has created a tenuous financial climate. Jaguar Land Rover 
indicated that due to the pandemic, it had to close showrooms and 
manufacturing plants, and pause engineering work for months, resulting 
in reduced sale revenue and the prevention of investment in future 
fuel-efficient technology product programs. FCA and Ford detailed 
similar negative economic impacts to their companies. Each company 
argued that a decision to apply the civil penalty of $14 vehicles prior 
to MY 2022 would only aggravate their financial hardships during this 
economic emergency. These economic consequences are on top of those 
NHTSA already projected for the increase from $5.50 to $14, including 
the significant increase in costs to manufacturers, increased 
unemployment, adverse effects on competition, and increases in 
automobile imports.\63\ And these impacts come at a time where NHTSA 
data shows that the number of fleets with credit shortfalls has 
substantially increased, while the number of fleets generating credit 
surpluses has decreased, indicating that more manufacturers--
particularly domestic manufacturers--are expected to need to pay 
penalties going forward.\64\ The financial burden on domestic 
manufacturers is exacerbated by the statutory prohibition against the 
use of credits acquired by another automaker or transferred from 
another fleet to offset any non-compliance with the domestic passenger 
car minimum standard.\65\ Manufacturers have already begun to realize 
this impact: One manufacturer paid over $77 million in civil penalties 
for failing to meet the minimum domestic passenger car standard for 
model year 2016 and over $79 million in model year 2017, the highest 
civil penalties assessed in the history of the CAFE program. Ferrari 
stated that applying the $14 rate before model year 2022 would save no 
fuel, instead serving only as a wealth transfer to the manufacturers 
that have surplus CAFE credits. Other facets of the CAFE program, such 
as credit transfer caps, credit adjustment factors, availability and 
price of tradeable credits, and credit banking, are causing similar 
economic pressures.\66\
---------------------------------------------------------------------------

    \63\ 84 FR 36007, 36023-36029 (July 26, 2019).
    \64\ 84 FR 36007, 36029 (July 26, 2019); see also Alliance 
Supplement, at 1-2.
    \65\ 84 FR 36007, 36029 (July 26, 2019); 49 U.S.C. 32903(f)(2), 
(g)(4); 49 CFR 536.9.
    \66\ See Alliance Supplement, at 2-4.
---------------------------------------------------------------------------

    Based on the available information, NHTSA believes that applying 
the adjustment to the CAFE civil penalty rate beginning in model year 
2019 ``may inhibit economic recovery,'' while applying the adjustment 
beginning in model year 2022 is an appropriate action to take ``for the 
purpose of promoting job creation and economic growth.'' \67\
---------------------------------------------------------------------------

    \67\ 85 FR 31353, 31354 (May 22, 2020).
---------------------------------------------------------------------------

    If the August 31, 2020 decision of the United States Court of 
Appeals for the Second Circuit in Case No. 19-2395 is vacated, NHTSA's 
July 2019 rule will be reinstated, keeping the CAFE civil penalty rate 
at $5.50. Regardless, NHTSA will continue to apply the $5.50 civil 
penalty rate for violations that occur prior to model year 2022. If the 
July 2019 rule remains vacated, per the Second Circuit's ruling, the 
rate will be adjusted to $14 beginning in model year 2022 under this 
interim final rule for all of the foregoing reasons. And if

[[Page 3023]]

NHTSA's determination in the July 2019 rule that the CAFE civil penalty 
rate is not a ``civil monetary penalty'' under the 2015 Act is not 
restored, NHTSA expects to make subsequent annual adjustments to the 
rate as appropriate, pursuant to the 2015 Act and in accordance with 
EPCA and EISA.\68\ As it did in the December 2016 rule, ``NHTSA 
believes this approach appropriately harmonizes the two congressional 
directives of adjusting civil penalties to account for inflation and 
maintaining attribute-based, consumer-demand-focused standards, applied 
in the context of the presumption against retroactive application of 
statutes'' and particularly ``in the unique context of multi-year 
vehicle product cycles.'' \69\
---------------------------------------------------------------------------

    \68\ See Public Law 114-74, Sec. 701(b)(2).
    \69\ 81 FR 95489, 95491 (Dec. 28, 2016).
---------------------------------------------------------------------------

    Either the Second Circuit's vacatur of the July 2019 final rule or 
the promulgation of this interim final rule is sufficient to render 
IPI's petition for reconsideration of the July 2019 final rule moot, 
since NHTSA's July 2019 final rule is no longer operative. To the 
extent that the petition is not moot, it is denied. As IPI noted, many 
of the arguments raised in its petition were already presented to NHTSA 
in its comments to the April 2018 NPRM.\70\ NHTSA adequately responded 
to these comments in the July 2019 final rule and reaffirms those 
points here.\71\ In accord with OMB's government-wide guidance on 
implementing the statute, NHTSA sought clarifying guidance from OMB 
and, as required by the 2015 Act, NHTSA requested OMB's concurrence in 
its ``negative economic impact'' determination. OMB's interpretations 
were consistent with those presented in NHTSA's NPRM, on which IPI 
commented. And OMB's guidance did not contain any material 
misstatements that undercut NHTSA's determinations in the July 2019 
final rule.
---------------------------------------------------------------------------

    \70\ IPI Petition, at 2.
    \71\ See, e.g., 84 FR 36007, 36016, 36023, 36030 (July 26, 
2019); see also 49 CFR 553.35(c) (``The Administrator does not 
consider repetitious petitions.'').
---------------------------------------------------------------------------

H. Interim Final Rule and Public Comment

    Pursuant to the 2015 Act and 5 U.S.C. 553(b)(3)(B), NHTSA finds 
that good cause exists for immediate implementation of this interim 
final rule without prior notice and comment because it would be 
impracticable to delay publication of this rule for notice and comment, 
public comment is unnecessary, and doing so is in the public interest. 
As explained above, manufacturers have a compelling need for ample 
advance notice of an increase to the CAFE civil penalty rate in order 
to modify their design, development, and production plans accordingly, 
in order for the inflation adjustment to have its statutorily-intended 
effect, and as a matter of fairness. It would be impracticable to 
follow notice-and-comment procedures, further delaying a decision on 
when the rate should be adjusted. That would leave in place an 
increased rate applicable to model years 2019 and 2020, which are 
complete, as well as model year 2021, which is underway. To the extent 
any manufacturers would have been able to adjust their production 
volumes in response to an increased penalty rate, NHTSA cannot 
effectively compel them to do so because it would disregard consumer 
demand, in contravention of NHTSA's statutory duties. Thus, there is 
good cause for an immediate effective date to avoid any retroactive 
application of an increased rate to model years for which manufacturers 
could not plan to accommodate.
    Public comment is also unnecessary. The 2015 Act provides that the 
first adjustment shall be made through an interim final rulemaking. 
Because this action is establishing the parameters of NHTSA's first 
adjustment of the CAFE civil penalty rate, NHTSA is utilizing the 
process provided by the 2015 Act. NHTSA also notes that pursuant to the 
2015 Act, its initial catch-up adjustment was promulgated through an 
interim final rule without public comment and, more significantly, the 
December 2016 rule on which this action is largely based was also 
promulgated without public comment.
    The public interest also counsels towards NHTSA's issuance of an 
interim final rule. As discussed above, the automotive industry has 
faced unprecedented economic challenges arising from the COVID-19 
national emergency situation.\72\ The entire manufacturing base was 
effectively shut down mere months ago, and the industry still faces 
severe supply chain constraints that have reduced automobile 
production. Similarly, the general economic difficulties facing the 
nation have significantly reduced vehicle sales, reducing revenue for 
manufacturers. Applying the adjustment to the CAFE civil penalty rate 
beginning in model year 2019 will result in serious harm, including 
increased penalties for manufacturers with no corresponding societal 
gain and could very well inhibit economic recovery by reducing the 
capital manufacturers would have to invest in their product. Applying 
the adjustment beginning in model year 2022 is an appropriate action to 
take to avoid serious harm and ``for the purpose of promoting job 
creation and economic growth.'' \73\
---------------------------------------------------------------------------

    \72\ See ``Proclamation on Declaring a National Emergency 
Concerning the Novel Coronavirus Disease (COVID-19) Outbreak,'' 
Presidential Proclamation 9994 (Mar. 13, 2020), available online at 
https://www.whitehouse.gov/presidential-actions/proclamation-declaring-national-emergency-concerning-novel-coronavirus-disease-covid-19-outbreak/.
    \73\ 85 FR 31353, 31354 (May 22, 2020).
---------------------------------------------------------------------------

    Issuing an interim final rule now while the COVID-19 emergency is 
ongoing is particularly in the public interest, and consistent with the 
Executive order to promote the economic recovery. For these reasons, 
NHTSA finds that notice-and-comment before the interim final rule is 
promulgated would be impracticable, is unnecessary in this situation, 
and is contrary to the public interest. NHTSA is nonetheless providing 
an opportunity for interested parties to comment on the interim final 
rule.\74\
---------------------------------------------------------------------------

    \74\ Shortly prior to publication of this interim final rule, 
NHTSA received two letters regarding this rulemaking. Both letters 
are included in the docket for this matter and will be treated as 
comments for appropriate consideration.
---------------------------------------------------------------------------

    For these reasons, the Agency has also determined that it has good 
cause under 5 U.S.C. 553(d)(3) and 5 U.S.C. 808(2) to issue this rule 
with an immediate effective date. In addition, a delayed effective in 
not required under 5 U.S.C 553(d)(2) because it ``relieves a 
restriction'' by allowing additional time before the higher penalty 
rate begins to apply.

I. Rulemaking Analyses and Notices

1. Executive Order 12866, Executive Order 13563, and DOT Regulatory 
Policies and Procedures

    NHTSA has considered the impact of this rulemaking action under 
Executive Order 12866, Executive Order 13563, and the Department of 
Transportation's regulatory policies and procedures. This rulemaking 
document has been considered a ``significant regulatory action'' under 
Executive Order 12866. NHTSA also believes that this rulemaking is 
``economically significant,'' as the Agency believes that the 
difference in the amount of penalties received by the government as a 
result of this rule, classified as ``transfers,'' are likely to exceed 
$100 million in at least one of the years affected by this rulemaking. 
As noted above, the Agency believes this rule will have a limited 
effect, in any, on the composition of the fleet, as model years 2019 
and 2020 are complete and model year 2021 is

[[Page 3024]]

already well under way.\75\ If the August 31, 2020 decision of the 
United States Court of Appeals for the Second Circuit in Case No. 19-
2395 is not vacated, NHTSA would have no discretion in whether to make 
the adjustment to $14 and thus no regulatory impact analysis is 
required. If the August 31, 2020 decision of the United States Court of 
Appeals for the Second Circuit in Case No. 19-2395 is vacated, NHTSA's 
July 2019 rule keeping the CAFE civil penalty rate at $5.50 will be 
reinstated, and as noted in that rule, it has no economic impact 
because it merely maintains the existing penalty rate.
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    \75\ NHTSA reaffirms the position on economic analysis taken its 
July 2019 rule. 84 FR 36007, 36030 (July 26, 2019).
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2. Regulatory Flexibility Act

    Pursuant to the Regulatory Flexibility Act (5 U.S.C. 601 et seq., 
as amended by the Small Business Regulatory Enforcement Fairness Act 
(SBREFA) of 1996), whenever an agency is required to publish a notice 
of proposed rulemaking or final rule, it must prepare and make 
available for public comment a regulatory flexibility analysis that 
describes the effect of the rule on small entities (i.e., small 
businesses, small organizations, and small governmental jurisdictions). 
Because this is an interim final rule, no regulatory flexibility 
analysis is required. In any event, no regulatory flexibility analysis 
is required if the head of an agency certifies the proposal will not 
have a significant economic impact on a substantial number of small 
entities.
    Even though this is an interim final rule for which no regulatory 
flexibility analysis is required, NHTSA has considered the impacts of 
this notice under the Regulatory Flexibility Act and does not believe 
that this rule would have a significant economic impact on a 
substantial number of small entities. NHTSA requests comment on the 
economic impact of this interim final rule on small entities.
    The Small Business Administration's (SBA) regulations define a 
small business in part as a ``business entity organized for profit, 
with a place of business located in the United States, and which 
operates primarily within the United States or which makes a 
significant contribution to the U.S. economy through payment of taxes 
or use of American products, materials or labor.'' 13 CFR 121.105(a). 
SBA's size standards were previously organized according to Standard 
Industrial Classification (``SIC'') Codes. SIC Code 336211 ``Motor 
Vehicle Body Manufacturing'' applied a small business size standard of 
1,000 employees or fewer. SBA now uses size standards based on the 
North American Industry Classification System (``NAICS''), Subsector 
336--Transportation Equipment Manufacturing. This action is expected to 
affect manufacturers of motor vehicles. Specifically, this action 
affects manufacturers from NAICS codes 336111--Automobile 
Manufacturing, and 336112--Light Truck and Utility Vehicle 
Manufacturing, which both have a small business size standard threshold 
of 1,500 employees.
    Though civil penalties collected under 49 CFR 578.6(h)(1) and (2) 
apply to some small manufacturers, low volume manufacturers can 
petition for an exemption from the Corporate Average Fuel Economy 
standards under 49 CFR part 525. This would lessen the impacts of this 
rulemaking on small business by allowing them to avoid liability for 
penalties under 49 CFR 578.6(h)(2). Small organizations and 
governmental jurisdictions will not be significantly affected as the 
price of motor vehicles and equipment ought not change as the result of 
this rule.

3. Executive Order 13132 (Federalism)

    Executive Order 13132 requires NHTSA to develop an accountable 
process to ensure ``meaningful and timely input by State and local 
officials in the development of regulatory policies that have 
federalism implications.'' ``Policies that have federalism 
implications'' is defined in the Executive order to include regulations 
that have ``substantial direct effects on the States, on the 
relationship between the [N]ational [G]overnment and the States, or on 
the distribution of power and responsibilities among the various levels 
of government.'' Under Executive Order 13132, the Agency may not issue 
a regulation with federalism implications, that imposes substantial 
direct compliance costs, and that is not required by statute, unless 
the Federal Government provides the funds necessary to pay the direct 
compliance costs incurred by State and local governments, the agency 
consults with State and local governments, or the agency consults with 
State and local officials early in the process of developing the 
proposed regulation.
    This rule will not have substantial direct effects on the States, 
on the relationship between the National Government and the States, or 
on the distribution of power and responsibilities among the various 
levels of government, as specified in Executive Order 13132.
    The reason is that this rule will generally apply to motor vehicle 
manufacturers. Thus, the requirements of Section 6 of the Executive 
order do not apply.

4. Unfunded Mandates Reform Act of 1995

    The Unfunded Mandates Reform Act of 1995, Public Law 104-4, 
requires agencies to prepare a written assessment of the cost, benefits 
and other effects of proposed or final rules that include a Federal 
mandate likely to result in the expenditure by State, local, or tribal 
governments, in the aggregate, or by the private sector, of more than 
$100 million annually. Because this rule is not expected to include a 
Federal mandate, no unfunded mandate assessment will be prepared.

5. National Environmental Policy Act

    The National Environmental Policy Act of 1969 (NEPA) \76\ directs 
that Federal agencies proposing ``major Federal actions significantly 
affecting the quality of the human environment'' must, ``to the fullest 
extent possible,'' prepare ``a detailed statement'' on the 
environmental impacts of the proposed action (including alternatives to 
the proposed action).\77\ However, as a threshold question, Federal 
agencies must assess whether NEPA applies to a particular proposed 
activity or decision.\78\ If an agency determines that NEPA is 
inapplicable, no further analysis is required pursuant to NEPA or the 
Council on Environmental Quality's (CEQ) NEPA implementing 
regulations.\79\
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    \76\ 42 U.S.C. 4321-4347.
    \77\ 42 U.S.C. 4332.
    \78\ 40 CFR 1501.1(a).
    \79\ 40 CFR parts 1500-1508. NHTSA has not yet revised its own 
NEPA implementing regulations (49 CFR part 520) to conform with 
CEQ's recently revised regulations. See 40 CFR 1507.3. However, 
where an agency's existing NEPA procedures are inconsistent with the 
CEQ's regulations, the CEQ regulations control. 40 CFR 1507.3(a). If 
NEPA is inapplicable under 40 CFR 1501.1(a), then NHTSA's own NEPA 
implementing regulations, promulgated pursuant to NEPA and CEQ 
guidelines, similarly do not apply.
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    In assessing whether NEPA applies, NHTSA has considered ``[w]hether 
compliance with NEPA would be inconsistent with Congressional intent 
expressed in another statute.'' \80\ In particular, NHTSA has 
considered the Congressional intent with regard to both EPCA (as 
amended by EISA) and the 2015 Act. As quoted above from the December 
2016 rule, ``the purpose of civil penalties for non-compliance is to 
encourage manufacturers to comply with the CAFE standards.'' \81\ And 
more

[[Page 3025]]

generally, one of the stated purposes of the 2015 Act is to ``maintain 
the deterrent effect of civil monetary penalties and promote compliance 
with the law.'' \82\ Further, as part of the statutory scheme 
established by EPCA and the 2015 Act, Congress requires NHTSA to 
account for such issues as lead time, consumer demand, and negative 
economic impacts of its actions (especially in light of COVID-19 and 
the Executive order to combat the economic emergency caused by it). 
Assuming arguendo that NHTSA is obligated to raise the civil penalty 
rate to $14, the aforementioned factors, as well as legal doctrines of 
retroactivity and fairness, all point to the necessity of delaying 
effectiveness until at least model year 2022. Consideration of 
environmental impacts is inconsistent with these obligations and 
Congressional intent, and no further analysis pursuant to NEPA is 
required.
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    \80\ 40 CFR 1501.1(a)(3).
    \81\ 81 FR at 95490.
    \82\ 28 U.S.C. 2461 note, sec. 2(b)(2).
---------------------------------------------------------------------------

    Still, NHTSA ``may prepare an environmental assessment on any 
action in order to assist agency planning and decision making.'' \83\ 
When a Federal agency prepares an environmental assessment, the CEQ 
NEPA implementing regulations require it to (1) ``[b]riefly provide 
sufficient evidence and analysis for determining whether to prepare an 
environmental impact statement or a finding of no significant impact'' 
and (2) ``[b]riefly discuss the purpose and need for the proposed 
action, alternatives . . . , and the environmental impacts of the 
proposed action and alternatives, and include a listing of [a]gencies 
and persons consulted.'' \84\ Generally, based on the environmental 
assessment, the agency must make a determination to prepare an 
environmental impact statement or ``prepare a finding of no significant 
impact if the [a]gency determines, based on the environmental 
assessment, not to prepare an environmental impact statement because 
the proposed action will not have significant effects.'' \85\ Although 
NHTSA concludes that a NEPA analysis is not required, this section may 
serve as the Agency's Environmental Assessment (EA) and Finding of No 
Significant Impact (FONSI) for this interim final rule.
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    \83\ 40 CFR 1501.5(b).
    \84\ 40 CFR 1501.5(c).
    \85\ 40 CFR 1501.6(a).
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I. Purpose and Need

    This interim final rule sets forth the purpose of and need for this 
action. In response to the Alliance Petition, NHTSA considered whether 
it is appropriate, pursuant to the Inflation Adjustment Act and EPCA 
(as amended by EISA), to increase the CAFE civil penalty rate beginning 
in model year 2022. The Alliance Petition cited cost, retroactivity, 
and lead time as reasons why a delay in effectiveness until model year 
2022 is required. NHTSA considered the findings of this EA prior to 
deciding that the adjusted rate will go into effect beginning in model 
year 2022.

II. Alternatives

    NHTSA considered a range of alternatives for this action, including 
the No Action Alternative of adjusting the CAFE civil penalty rate from 
$5.50 to $14 beginning in model year 2019 (as originally established by 
the December 2016 final rule), and the alternatives of applying the 
adjustment beginning in model years 2020, 2021, 2022, and 2023. This EA 
describes the potential environmental impacts associated with the 
various model years in comparison with each other.
    Upon consideration of the information presented in this EA, NHTSA 
is deciding to apply the adjustment beginning in model year 2022 in 
this interim final rule. NHTSA is seeking comment on whether to instead 
apply the increase beginning in model year 2023, and commenters should 
consider NEPA in their discussions of such an approach.

III. Environmental Impacts of the Action and Alternatives

    NHTSA considered a range of alternatives for when to apply the 
inflation adjustment in the CAFE civil penalty rate from $5.50 to $14. 
For the reasons explained in the preamble, NHTSA anticipates no 
differences in environmental impacts associated with the alternatives 
of applying the adjustment beginning in model years 2019, 2020, 2021, 
or 2022. Vehicles for model years 2019 and 2020 have largely if not 
entirely been produced already, and many manufacturers are already 
selling model year 2021 vehicles. Since some manufacturers launch 
subsequent model year vehicles as early as the spring, it is reasonable 
to assume that model year 2022 vehicles will be launched in the coming 
months. It is impossible for manufacturers to change the design and 
manufacture of vehicles that are already on the market, and the 
logistical realities of the industry make it infeasible for 
manufacturers to change course in the middle of a model year that is 
already underway or just prior to the start of a model year. Imposing a 
higher penalty on manufacturers for vehicles that, at this point, 
cannot be manufactured with improved fuel economy and for which 
adjustment in production volumes costs manufacturers significantly more 
compared to the higher civil penalty rate would have no environmental 
benefit--only incurring costs to those manufacturers (which are likely 
to be passed on to consumers). In fact, imposing those costs on 
manufacturers now may make it even harder financially for those 
manufacturers to make further gains in fuel economy in the future, with 
less capital to invest in fuel-saving technology, design, marketing of 
the benefits, and production.
    While this interim final rule adjusts the CAFE civil penalty rate 
beginning no earlier than model year 2022, NHTSA is seeking comment on 
whether to apply the adjustment beginning in model year 2023. Based on 
the information included in NHTSA's Final EA in its July 2019 rule, 
NHTSA tentatively expects that applying the adjustment beginning in 
model year 2023 would have a minimal environmental impact. NHTSA seeks 
comments on the environmental impacts of applying the adjustment 
beginning in model year 2023.

IV. Agencies and Persons Consulted

    NHTSA and DOT have consulted with OMB and the U.S. Department of 
Justice and provided other Federal agencies with the opportunity to 
review and provide feedback on this rulemaking.

V. Conclusion

    NHTSA has reviewed the information presented in this EA and 
concludes that the alternatives to adjust the CAFE civil penalty rate 
beginning in model years 2019, 2020, 2021, or 2022 all would have the 
same environmental impacts on the quality of the human environment (or 
the differences among alternatives would be de minimis). Given the 
practical realities of the design and production process, the 
environmental impact of adjusting the CAFE civil penalty rate in model 
year 2022 is expected to be negligible as compared to the No Action 
Alternative. NHTSA has not made a final decision on whether to apply 
the adjustment beginning in model year 2023 and seeks comments on the 
environmental impacts of that alternative.

VI. Finding of No Significant Impact

    I have reviewed this EA. Based on the EA, I conclude that 
implementation of any of the action alternatives through model year 
2022 (including the interim final rule) will not have a significant 
effect on the human environment and that a ``finding of no significant 
impact''

[[Page 3026]]

is appropriate. This statement constitutes the Agency's ``finding of no 
significant impact,'' and an environmental impact statement will not be 
prepared.\86\ NHTSA will review comments regarding applying the 
adjustment beginning in model year 2023 as appropriate.
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    \86\ 40 CFR 1501.6(a).
---------------------------------------------------------------------------

6. Executive Order 12778 (Civil Justice Reform)

    This rule does not have a preemptive or retroactive effect--
specifically, it modifies a regulation to avoid having a retroactive 
effect. Judicial review of a rule based on this interim final rule may 
be obtained pursuant to 5 U.S.C. 702.

7. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1980, NHTSA 
states that there are no requirements for information collection 
associated with this rulemaking action.

8. Privacy Act

    Please note that anyone is able to search the electronic form of 
all comments received into any of DOT's 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 (65 FR 19477), or you may visit http://dms.dot.gov.

9. Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Office of Information and Regulatory Affairs designated this action 
as a ``major rule,'' as defined by 5 U.S.C. 804(2). For the reasons 
explained above, NHTSA finds that notice and public comment are 
impracticable, unnecessary, and contrary to the public interest. NHTSA 
will submit a rule report to each House of the Congress and to the 
Comptroller General of the United States.

List of Subjects in 49 CFR Part 578

    Imports, Motor vehicle safety, Motor vehicles, Penalties, Rubber 
and rubber products, Tires.
    In consideration of the foregoing, 49 CFR part 578 is amended as 
set forth below.

PART 578--CIVIL AND CRIMINAL PENALTIES

0
1. The authority citation for 49 CFR part 578 continues to read as 
follows:

    Authority: Pub. L. 101-410, 104 Stat. 890; Pub. L. 104-134, 110 
Stat. 1321; Pub. L. 109-59, 119 Stat. 1144; Pub. L. 114-74, 129 
Stat. 584; Pub. L. 114-94, 129 Stat. 1312; 49 U.S.C. 30165, 30170, 
30505, 32308, 32309, 32507, 32709, 32710, 32902, 32912, and 33115; 
delegation of authority at 49 CFR 1.81, 1.95.

0
2. Amend Sec.  578.6 by revising paragraph (h) to read as follows:


Sec.  578.6  Civil penalties for violations of specified provisions of 
Title 49 of the United States Code.

* * * * *
    (h) Automobile fuel economy. (1) A person that violates 49 U.S.C. 
32911(a) is liable to the United States Government for a civil penalty 
of not more than $43,280 for each violation. A separate violation 
occurs for each day the violation continues.
    (2) Except as provided in 49 U.S.C. 32912(c), beginning with model 
year 2022, a manufacturer that violates a standard prescribed for a 
model year under 49 U.S.C. 32902 is liable to the United States 
Government for a civil penalty of $14, plus any adjustments for 
inflation that occurred or may occur (for model years before model year 
2022), multiplied by each .1 of a mile a gallon by which the applicable 
average fuel economy standard under that section exceeds the average 
fuel economy--
    (i) Calculated under 49 U.S.C. 32904(a)(1)(A) or (B) for 
automobiles to which the standard applies manufactured by the 
manufacturer during the model year;
    (ii) Multiplied by the number of those automobiles; and
    (iii) Reduced by the credits available to the manufacturer under 49 
U.S.C. 32903 for the model year.
    Note 1 to paragraph (h)(2): If the August 31, 2020 decision of the 
United States Court of Appeals for the Second Circuit in Case No. 19-
2395 is vacated, 49 CFR 578.6(h)(2), revised October 1, 2019, would 
apply to all model years, instead of paragraph (h)(2) of this section. 
In such instance, NHTSA would amend this section in accordance with 
such vacatur.

    Issued in Washington, DC, under authority delegated in 49 CFR 
1.95, and 501.5.
James Clayton Owens,
Deputy Administrator.
[FR Doc. 2021-00278 Filed 1-12-21; 11:15 am]
BILLING CODE 4910-59-P