3016 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 

1See 49 CFR 553.21 

2Optical 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. 

PART 73—Radio Broadcast Service 

■ 1. The authority citation for part 73 

continues to read as follows: 

Authority: 47 U.S.C. 154, 303, 334, 336, 

and 339. 

§ 73.622 [Amended] 

■ 2. In § 73.622(i), amend the PostTransition Table of DTV Allotments, 

under Minnesota, by removing channel 

11 and adding channel 31 at 

Minneapolis. 

[FR Doc. 2020–27277 Filed 1–13–21; 8:45 am] 

BILLING CODE 6712–01–P 

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. 

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 

michael.kuppersmith@dot.gov, 

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. 

(2) Tips for Preparing Your Comments 


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Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 3017 

3See 49 CFR part 512. 

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. 

6Credits may be either earned (for overcompliance 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. 

7A 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. 

8Public Law 110–140, sec. 104. 

9Memorandum 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. 

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. 

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 noncompliance 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: 

(penalty rate, in $ per 0.1 mpg per 

vehicle) × (amount of shortfall, in 

tenths of an mpg) × (# 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. 

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 


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3018 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 

10Memorandum 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. 

11Public Law 114–74, sec. 701(c). 

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). 

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. 

15 81 FR 95489 (December 28, 2016). 

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). 

17Order, 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.’’). 

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

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. 

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 noncompliance 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

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.’’ 

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. 

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-andVerDate Sep<11>2014 18:22 Jan 13, 2021 Jkt 253001 PO 00000 Frm 00066 Fmt 4700 Sfmt 4700 E:\FR\FM\14JAR1.SGM 14JAR1

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Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 3019 

18See 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). 

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 NonApplicability 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). 

21 IPI Petition, at 1–2. 

22The Alliance also submitted a supplement to its 

petition on October 22, 2020 (Alliance 

Supplement). 

23Alliance Petition, at 4. 

24 ‘‘Executive Order on Regulatory Relief to 

Support Economic Recovery,’’ E.O. 13924 (May 19, 

2020). 

25None 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. 

26See 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.’’). 

comment rulemaking. Absent any 

further action, the rate would have 

increased beginning with model year 

2019.18

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. 

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. 

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 noncompliances 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. 

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. 

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

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 


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28See, 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. 

29See 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). 

31See 49 U.S.C. 32912(c). 

32See 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). 

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

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

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). 

38NHTSA’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. 

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)). 

40The 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. 

41See, 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). 

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. 

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. 

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 noncompliance.’’ 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

As NHTSA explained previously, ‘‘the 

purpose of civil penalties for noncompliance 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

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 


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42 81 FR 41453, 41454 (June 27, 2016) (Federal 

Motor Carrier Safety Administration). 

43 81 FR 95489, 95490 (Dec. 28, 2016). 

44 81 FR 95489, 95490 (Dec. 28, 2016). 

45 81 FR 95489, 95490 (Dec. 28, 2016). 

46 83 FR 13904 (Apr. 2, 2018); 84 FR 36007 (July 

26, 2019). 

47Alliance Petition, at 4. 

48FCA N.V. Interim Report, 6–K (Current report) 

EX–99.1, at 41 (Sept. 30, 2020). 

49See, 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). 

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

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

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

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

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

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

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. 

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 noncompliances.’’ 45

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. 

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 Ö500 

million [nearly $600 million].’’ 48 To 

disregard the industry’s serious reliance 

interests would be unfair and 

improper.49

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 longestablished 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

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: 

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

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

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-fueleconomy models for model years that 

have not happened yet, which could 

help them to reduce or avoid CAFE noncompliance 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. 

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 


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

57Alliance 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). 

58Alliance 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-reportcoronavirus-ravaged-earnings.html). 

59Alliance 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). 

60Alliance Petition, at 5 (citing IHS MARKIT, IHS 

MARKIT MONTHLY AUTOMOTIVE UPDATE— 

AUGUST 2020 (Aug. 14, 2020)). 

61Alliance Petition, at 5 (citing IHS MARKIT, 

AUTOMOTIVE COVID–19 RECOVERY SERIES: 

THE OEM LANDSCAPE—FOCUS ON US (Sept. 8, 

2020)). 

62The 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. 

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. 66See Alliance Supplement, at 2–4. 67 85 FR 31353, 31354 (May 22, 2020). 

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.’’ 

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

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. 

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 fuelefficient 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

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

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 


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68See Public Law 114–74, Sec. 701(b)(2). 

69 81 FR 95489, 95491 (Dec. 28, 2016). 

70 IPI Petition, at 2. 

71See, 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.’’). 

72See ‘‘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/presidentialactions/proclamation-declaring-nationalemergency-concerning-novel-coronavirus-diseasecovid-19-outbreak/. 

73 85 FR 31353, 31354 (May 22, 2020). 

74Shortly 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. 

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

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. 

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-andcomment 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

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

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 


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3024 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 

75NHTSA reaffirms the position on economic 

analysis taken its July 2019 rule. 84 FR 36007, 

36030 (July 26, 2019). 

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. 

80 40 CFR 1501.1(a)(3). 81 81 FR at 95490. 

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. 

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

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 


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Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 3025 

82 28 U.S.C. 2461 note, sec. 2(b)(2). 

83 40 CFR 1501.5(b). 

84 40 CFR 1501.5(c). 

85 40 CFR 1501.6(a). 

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. 

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. 

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’’ 


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3026 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 

86 40 CFR 1501.6(a). 

1The Board also has various criminal penalty 

authority, enforceable in a federal criminal court. 

Congress has not, however, authorized federal 

agencies to adjust statutorily prescribed criminal 

penalty provisions for inflation, and this rule does 

not address those provisions. 

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. 

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 

■ 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. 

■ 2. Amend § 578.6 by revising 

paragraph (h) to read as follows: 

§ 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 

SURFACE TRANSPORTATION BOARD 

49 CFR Part 1022 

[Docket No. EP 716 (Sub-No. 6)] 

Civil Monetary Penalties—2021 

Adjustment 

AGENCY: Surface Transportation Board. 

ACTION: Final rule. 

SUMMARY: The Surface Transportation 

Board (Board) is issuing a final rule to 

implement the annual inflationary 

adjustment to its civil monetary 

penalties, pursuant to the Federal Civil 

Penalties Inflation Adjustment Act 

Improvements Act of 2015. 

DATES: This final rule is effective 

January 14, 2021. 

FOR FURTHER INFORMATION CONTACT: 

Sarah Fancher at (202) 245–0355. 

Assistance for the hearing impaired is 

available through the Federal Relay 

Service at (800) 877–8339. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Federal Civil Penalties Inflation 

Adjustment Act Improvements Act of 

2015 (2015 Act), enacted as part of the 

Bipartisan Budget Act of 2015, Public 

Law 114–74, sec. 701, 129 Stat. 584, 

599–601, requires agencies to adjust 

their civil penalties for inflation 

annually, beginning on July 1, 2016, and 

no later than January 15 of every year 

thereafter. In accordance with the 2015 

Act, annual inflation adjustments are to 

be based on the percent change between 

the Consumer Price Index for all Urban 

Consumers (CPI–U) for October of the 

previous year and the October CPI–U of 

the year before that. Penalty level 

adjustments should be rounded to the 

nearest dollar. 

II. Discussion 

The statutory definition of civil 

monetary penalty covers various civil 

penalty provisions under the Rail (Part 

A); Motor Carriers, Water Carriers, 

Brokers, and Freight Forwarders (Part 

B); and Pipeline Carriers (Part C) 

provisions of the Interstate Commerce 

Act, as amended. The Board’s civil (and 

criminal) penalty authority related to 

rail transportation appears at 49 U.S.C. 

11901–11908. The Board’s penalty 

authority related to motor carriers, water 

carriers, brokers, and freight forwarders 

appears at 49 U.S.C. 14901–14916. The 

Board’s penalty authority related to 

pipeline carriers appears at 49 U.S.C. 

16101–16106.1 The Board has 

regulations at 49 CFR part 1022 that 

codify the method set forth in the 2015 

Act for annually adjusting for inflation 

the civil monetary penalties within the 

Board’s jurisdiction. 

As set forth in this final rule, the 

Board is amending 49 CFR part 1022 to 


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