Federal Register / Vol. 66, No. 14 / Monday, January 22, 2001 / Proposed Rules 6523

The State submittal meets the

requirement for vehicle coverage of the

Federal I/M rule.

Section 51.371 On-Road Testing

Vehicles commuting into Dallas and

Tarrant Counties from Denton and

Collin Counties will continue to be

monitored via remote sensing through

April 30, 2002. Starting May 1, 2002, all

subject vehicles in Collin and Denton

County will receive a tailpipe emissions

test, as described in this proposal and

the revised SIP.

In addition, the State will comply

with the on-road testing requirements

by continuing to use remote sensing to

evaluate the on-road emissions

performance of at least 20,000 vehicles

(or 0.5 percent of the fleet) subject to

emissions testing in all I/M program

areas. All probable high-emitting

vehicles which are registered within

these counties are identified for

compliance follow-up.

The State submittal meets the

requirement for on-road testing of the

Federal I/M rule.

Section 51.373 Implementation

Deadlines

The Texas Motorist Choice Program

met the November 15, 1997, start date

requirement of the NHSDA. The Texas

Motorist Choice Program started in July

1996 in Dallas and Tarrant Counties and

in January 1997 in Harris and El Paso

Counties. It has been operating

continuously since that time.

The revised I/M SIP commits to a

schedule for start-up of ASM–2 testing

activities and OBD testing. All other

aspects of this regulation remain the

same as previously approved on an

interim basis.

The State submittal meets the

compliance with implementation plan

submission requirements of the Federal

I/M regulations for approval.

Notice of Proposed Rulemaking

Our review of this submittal indicates

that the proposed SIP revision meets the

minimum requirements of the Act and

Federal I/M rules. Based upon the

discussion contained in the previous

analysis sections and in the Technical

Support Document accompanying this

notice, we find that the State’s submittal

represents an acceptable approach to the

I/M requirements and meets the

requirements for approval.

We propose to grant full approval of

the Texas Motorist Choice I/M program

in the DFW area. We also propose to

approve the I/M SIP revision pertaining

to the Houston-Galveston Area and El

Paso nonattainment areas.

Nothing in this action should be

construed as permitting, allowing, or

establishing a precedent for any future

request for revision to any State

implementation plan. Each request for

revision to the State implementation

plan shall be considered separately in

light of specific technical, economic,

and environmental factors and in

relation to relevant statutory and

regulatory requirements.

Administrative Requirements

Under Executive Order 12866 (58 FR

51735, October 4, 1993), this proposed

action is not a ‘‘significant regulatory

action’’ and therefore is not subject to

review by the Office of Management and

Budget. This proposed action merely

approves state law as meeting federal

requirements and imposes no additional

requirements beyond those imposed by

state law. Accordingly, the

Administrator certifies that this

proposed rule will not have a significant

economic impact on a substantial

number of small entities under the

Regulatory Flexibility Act (5 U.S.C. 601

et seq.). Because this rule proposes to

approve pre-existing requirements

under state law and does not impose

any additional enforceable duty beyond

that required by state law, it does not

contain any unfunded mandate or

significantly or uniquely affect small

governments, as described in the

Unfunded Mandates Reform Act of 1995

(Public Law 104–4). For the same

reason, this proposed rule also does not

significantly or uniquely affect the

communities of tribal governments, as

specified by Executive Order 13084 (63

FR 27655, May 10, 1998). This proposed

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 (64

FR 43255, August 10, 1999), because it

merely approves a state rule

implementing a federal standard, and

does not alter the relationship or the

distribution of power and

responsibilities established in the Clean

Air Act. This proposed rule also is not

subject to Executive Order 13045 (62 FR

19885, April 23, 1997), because it is not

economically significant.

In reviewing SIP submissions, EPA’s

role is to approve state choices,

provided that they meet the criteria of

the Clean Air Act. In this context, in the

absence of a prior existing requirement

for the State to use voluntary consensus

standards (VCS), EPA has no authority

to disapprove a SIP submission for

failure to use VCS. It would thus be

inconsistent with applicable law for

EPA, when it reviews a SIP submission,

to use VCS in place of a SIP submission

that otherwise satisfies the provisions of

the Clean Air Act. Thus, the

requirements of section 12(d) of the

National Technology Transfer and

Advancement Act of 1995 (15 U.S.C.

272 note) do not apply. As required by

section 3 of Executive Order 12988 (61

FR 4729, February 7, 1996), in issuing

this proposed rule, EPA has taken the

necessary steps to eliminate drafting

errors and ambiguity, minimize

potential litigation, and provide a clear

legal standard for affected conduct. EPA

has complied with Executive Order

12630 (53 FR 8859, March 15, 1988) by

examining the takings implications of

the rule in accordance with the

‘‘Attorney General’s Supplemental

Guidelines for the Evaluation of Risk

and Avoidance of Unanticipated

Takings’’ issued under the executive

order. This rule does not impose an

information collection burden under the

provisions of the Paperwork Reduction

Act of 1995 (44 U.S.C. 3501 et seq.).

List of Subjects in 40 CFR part 52

Environmental protection, Air

pollution control, Carbon monoxide,

Hydrocarbons, Intergovernmental

relations, Nitrogen dioxide, Ozone,

Particulate matter, Reporting and

recordkeeping requirements, Sulfur

oxides, Volatile organic compounds.

Authority: 42 U.S.C. 7401 et seq.

Dated: January 4, 2001.

Gregg A. Cooke,

Regional Administrator, Region 6.

[FR Doc. 01–1519 Filed 1–19–01; 8:45 am]

BILLING CODE 6560–50–P

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety

Administration

49 CFR Part 534

[Docket No. NHTSA 2001–8668]

RIN 2127–AG97

Fuel Economy Standards—Rights and

Responsibilities of Manufacturers in

the Context of Changes in Corporate

Relationships

AGENCY: National Highway Traffic

Safety Administration (NHTSA),

Department of Transportation.

ACTION: Notice of proposed rulemaking.

SUMMARY: This document proposes a

new regulation to define the rights and

responsibilities of manufacturers under

6524 Federal Register / Vol. 66, No. 14 / Monday, January 22, 2001 / Proposed Rules

1Our 1990 letter referred to the language and

section numbers of the Motor Vehicle Information

and Cost Savings Act. Those provisions were

codified into 49 U.S.C. Chapter 329 by Pub. L. 103–

272 (July 5, 1994). Section 1(a) of that law stated

that the laws being codified were being done so

‘‘without substantive change’’.

the agency’s corporate average fuel

economy program in the context of

changes in corporate relationships. The

proposed regulation addresses the rights

and responsibilities of predecessors and

successors, as well the rights and

responsibilities of manufacturers in

other situations where there have been

changes in corporate relationships, e.g.,

changes in control. Among other things,

the proposed regulation would address

how fuel economy credits are allocated

in these types of situations.

DATES: Comments must be received by

March 23, 2001.

ADDRESSES: You should mention the

docket number of this document in your

comments and submit your comments

in writing to: Docket Management,

Room PL–401, 400 Seventh Street, S.W.,

Washington, D.C. 20590. Alternatively,

you may submit your comments to the

docket electronically by logging onto the

Dockets Management System website at

http://dms.dot.gov. Click on ‘‘Help &

Information’’ or ‘‘Help/Info’’ to obtain

instructions for filing the document

electronically. (This website also

enables you to view the materials in the

docket for this rulemaking.)

You may call Docket Management at

202–366–9324. You may visit the

Docket from 10:00 a.m. to 5:00 p.m.,

Monday through Friday.

FOR FURTHER INFORMATION CONTACT:

Edward Glancy, Office of the Chief

Counsel, National Highway Traffic

Safety Administration, 400 Seventh

Street, SW, Washington, DC 20590

(202–366–2992).

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background

A. Statutory Provisions

B. Past Positions Taken by NHTSA With

Respect to Predecessors and Successors

II. Proposal

A. Introduction

B. The Proposed Regulation

1. Definitions

2. Predecessors and Successors

3. Manufacturers within Control

Relationships

4. Changes in Corporate Relationships Not

Directly Addressed by the Proposed

Regulation

C. Supplementary Fuel Economy Reports

III. Rulemaking Analyses and Notices

A. Executive Order 12866 and DOT

Regulatory Policies and Procedures

B. Regulatory Flexibility Act

C. National Environmental Policy Act

D. Executive Order 13132 (Federalism)

E. Unfunded Mandates Act

F. Executive Order 12778 (Civil Justice

Reform)

G. Paperwork Reduction Act

H. Regulation Identifier Number (RIN)

I. Plain Language

J. Executive Order 13045

K. National Technology Transfer and

Advancement Act

IV. Submission of Comments

I. Background

A. Statutory Provisions

In December 1975, Congress enacted

the Energy Policy and Conservation Act

(EPCA) in response to the energy crisis

created by the oil embargo of 1973–74

and the level of oil imports, particularly

from OPEC sources. Congress included

a provision establishing an automotive

fuel economy regulatory program. That

provision added a new Title V,

‘‘Improving Automotive Efficiency,’’ to

the Motor Vehicle Information and Cost

Saving Act. Congress has made various

amendments to the fuel economy

provisions since 1975, and the fuel

economy provisions are now codified in

Chapter 329 of Title 49 of the United

States Code.

Under Chapter 329, manufacturers are

required to meet average fuel economy

standards for passenger automobiles and

light trucks. While separate fuel

economy standards apply for each

model year, manufacturers that fail to

achieve the level of a standard within a

particular model year do not necessarily

violate the statute. Instead, under

certain circumstances, a shortfall in one

year (or years) can be offset if a

manufacturer exceeds the standard in

another year (or years). Under the Act,

manufacturers earn credits for

exceeding average fuel economy

standards which may be carried back for

three model years or carried forward for

three model years.

Chapter 329 defines the term

‘‘manufacturer’’ as ‘‘a person engaged in

the business of manufacturing

automobiles, including a predecessor or

successor of the person to the extent

provided under regulations prescribed

by the Secretary * * *’’ (The Secretary

has delegated responsibility for the

automotive fuel economy program to

NHTSA. 49 CFR 1.50(f).) To date, we

have not issued any regulations

concerning predecessors and successors.

We have also not issued any regulations

concerning the rights and

responsibilities of manufacturers in

other situations where there have been

changes in corporate relationships, e.g.,

changes in control.

B. Past Positions Taken by NHTSA With

Respect to Predecessors and Successors

Under general principles of corporate

law, the term ‘‘successor’’ ordinarily

refers to a corporation which, through

amalgamation, consolidation, or other

legal succession, becomes invested with

the rights and assumes the burdens of

another corporation. See Black’s Law

Dictionary, West Publishing Co.

The automotive fuel economy

program contains provisions which

raise special issues related to the rights

and burdens of predecessors and

successors. Of particular significance

are the provisions related to credits.

Because credits may be carried

backward three years and forward three

years, compliance with a fuel economy

standard for a particular model year

may actually be determined over as

much as a seven-year period. A variety

of changes in corporate relationships

may occur during such a long period,

e.g., mergers, acquisitions, spin-offs,

etc., and these provisions raise the issue

of how credits and shortfalls should be

allocated when such changes occur.

In a 1990 letter to Chrysler, we

addressed how fuel economy values

should be calculated for Chrysler and

AMC during the model year in which

Chrysler acquired AMC, model year

(MY) 1987. We concluded that all of

Chrysler’s and AMC’s vehicles should

be treated as manufactured by the same

manufacturer for that model year. In

reaching this conclusion we stated the

following: 1

Fuel economy standards apply to

passenger automobiles manufactured by a

manufacturer, for a particular model year.

See section 502(a)(l). Moreover, average fuel

economy is calculated based on the total

number of passenger automobiles

manufactured in a given model year by a

manufacturer. See section 503(a)(l). Under

section 503(c), the term ‘‘passenger

automobiles manufactured by a

manufacturer’’ includes all automobiles

manufactured by persons who control, are

controlled by, or are under common control

with, such manufacturer.’’ Since Chrysler

controlled AMC prior to the end of the 1987

model year, and since fuel economy

standards apply to particular model years as

a whole and not to separate parts of a model

year, it is our opinion that all of the vehicles

produced by both Chrysler and AMC for

model year 1987 shall be treated as if

manufactured by the same manufacturer, i.e.,

placed into one fleet. Otherwise, one or both

of the manufacturers would have two

separate CAFE ́ values, pre-acquisition (or

pre-control) and post-acquisition (or postcontrol), for the same model year.

We also addressed generally the issue

of how credits may be applied between

predecessors and successors, along with

the legal and policy issues associated

with applying credits between

predecessors and successors. Among

other things, we stated the following:

Federal Register / Vol. 66, No. 14 / Monday, January 22, 2001 / Proposed Rules 6525

We will now address generally the issue of

how credits may be used where one

manufacturer is the successor of another. In

discussing the issue, we will refer to the

following hypothetical example: A and B are

both car manufacturers. After consolidation,

A is the only surviving corporation and is

invested with the rights and assumes the

burdens of B. Thus, A is the ‘‘successor’’ of

B.

While this example and subsequent

discussion is for passenger automobiles, the

relevant requirements concerning the earning

and availability of credits are essentially

identical for passenger automobile standards

and light truck standards. Compare section

502(l)(1)(B) and 49 CFR Part 535, and see 45

FR 83233–36, December 18, 1980. Thus, our

analysis for passenger automobile standards

is also relevant to light truck standards.

Section 502(l)(1)(B) states:

Whenever the average fuel economy of the

passenger automobiles manufactured by a

manufacturer in a particular model year

exceeds an applicable average fuel economy

standard * * *, such manufacturer shall be

entitled to a credit calculated under

subparagraph (C), which—

(i) shall be available to be taken into

account with respect to the average fuel

economy of that manufacturer for any of the

three consecutive model years immediately

prior to the model year in which such

manufacturer exceeds such applicable

average fuel economy standard, and

(ii) to the extent that such credit is not so

taken into account pursuant to clause (i),

shall be available to be taken into account

with respect to the average fuel economy of

that manufacturer for any of the three

consecutive model years immediately

following the model year in which such

manufacturer exceeds such applicable

average fuel economy standard.

We note first that credits earned by a

particular manufacturer are only

‘‘available to be taken into account with

respect to the average fuel economy of

that manufacturer,’’ for any of the three

model years before, or after, the model

year in which the credits are earned.

(Emphasis added.) In the example set

forth above, B is no longer a

manufacturer under the Cost Savings

Act. (Indeed, it is no longer a ‘‘person’’

under section 501(8).) Thus, in the

absence of some provision concerning

‘‘successors,’’ any unused credits that B

had earned prior to the consolidation

would expire unused, since the only

manufacturer to which they are

available no longer exists. However, for

some purposes B continues to exist as

part of A, its ‘‘successor.’’

Section 501(8)’s definition of

‘‘manufacturer’’ does not provide that

the term ‘‘manufacturer’’ necessarily

includes any predecessor or successor

but instead provides that the term does

so ‘‘to the extent provided under rules

which the Secretary shall prescribe.’’

This provision was added by the

Automobile Fuel Efficiency Act of 1980

as a conforming amendment to the

section concerning modification of local

content requirements to encourage

domestic production of fuel efficient

automobiles and not to the section

concerning credits. The legislative

history does not provide any indication

as to why the provision was added, and,

to date, NHTSA’s administration of the

statutory provisions concerning

modification of the local content

requirements has not turned up a

situation for which such rules would be

relevant. Should rules be issued under

section 501(8), NHTSA would do so by

notice-and-comment rulemaking, taking

account of the purposes of that section

and the statutory scheme as a whole.

Notwithstanding the absence of rules,

we do not believe that Congress

intended to require the forfeit of a

manufacturer’s unused credits in a

situation where that manufacturer’s

substance continues to exist as part of

a ‘‘successor.’’ Thus, taking account of

section 501(8) and the statutory scheme

as a whole, we conclude that, in the

example set forth above, B can be

deemed as continuing to exist as part of

A, from the time of succession.

This conclusion does not, however,

permit the general integration of A’s and

B’s credits and shortfalls. Under section

502(l)(1)(B), credits earned by a

particular manufacturer are only

‘‘available to be taken into account with

respect to the average fuel economy of

that manufacturer.’’ Since B’s existence

as part of A only dates from the time of

succession, B is not the same

manufacturer as A prior to the time of

succession. Thus, any credits earned by

B would only be available to offset A’s

shortfalls for the model years during

which B exists as part of A, since it is

only at that time that the credits earned

by B and applied to A can be considered

to be taken into account with respect to

the average fuel economy of ‘‘that

manufacturer.’’ Similarly, the only

credits earned by A which would be

available to B would be those credits

earned during the time when B exists as

part of A.

The general integration of A’s and B’s

credits would be inconsistent with the

basic structure of section 502(l)(1).

Assume, for example, that A and B are

separate manufacturers for model years

1 through 6, and A is the successor of

B for model year 7. If general integration

of credits were permitted, credits earned

by B in model year 4 could be applied

to A’s CAFE ́ for model years 1–6, as

well as model year 7. However, the

structure of section 502(l)(1) does not

permit this result. Under paragraph

(B)(i), any credits earned by B in model

year 4 are available to be carried back

with respect to B’s CAFE ́ for any of

model years 1, 2 and 3. To the extent

that such credits are not so used,

paragraph (B)(ii) makes those credits

available to be carried forward with

respect to B’s CAFE ́ for any of model

years 5, 6 and 7. In order for credits

earned by B in model year 4 to be

applied to A’s CAFE ́ for model years 1–

6, B’s credits would first have to be

carried forward to model year 7 (the

model year where A is B’s successor)

and then be carried back to model years

1–6 (for application to A’s CAFE ́), a

process which has no statutory basis.

We will now apply the general

analysis discussed above to the

particular facts cited in Chrysler’s letter.

Prior to MY 1987, Chrysler and AMC

were two separate manufacturers.

Chrysler acquired AMC during MY

1987, and became the ‘‘successor’’ to

AMC at that time. Under section

502(l)(1)(B), credits earned by a

particular manufacturer are only

‘‘available to be taken into account with

respect to the average fuel economy of

that manufacturer.’’ Since AMC’s

existence as part of Chrysler only dates

from MY 1987, AMC was not the same

manufacturer as Chrysler prior to MY

1987. Thus, any credits earned by AMC

would only be available to Chrysler to

offset CAFE ́ shortfalls incurred in the

model years during which AMC exists

as part of Chrysler, i.e., MY 1987 and

thereafter, since it is only at that time

that the credits earned by AMC and

applied to Chrysler can be considered to

be taken into account with respect to the

average fuel economy of ‘‘that

manufacturer.’’ Similarly, the only

credits earned by Chrysler which would

be available to AMC would be those

credits earned during the time when

AMC exists as part of Chrysler, i.e.,

credits earned in MY 1987 and

thereafter.

The issue of the extent to which

Chrysler could use AMC’s credits was

subsequently raised in the context of an

enforcement proceeding brought by

NHTSA staff concerning Chrysler’s

apparent violation of the light truck

CAFE ́ standard for MY 1984. On January

8, 1992, DOT Chief Administrative Law

Judge John J. Mathias issued an Initial

Decision and Order (I.D.) in which he

stated that he agreed with the substance

of NHTSA Complaint Counsel’s position

but concluded that the Complaint

should be dismissed because NHTSA

had not prescribed rules pursuant to

section 501(8) of the Act (since

recodified at 49 U.S.C. 32901(a)(13)(A))

that define the extent to which the term

‘‘manufacturer’’ includes any

predecessor or successor of a

6526 Federal Register / Vol. 66, No. 14 / Monday, January 22, 2001 / Proposed Rules

manufacturer of automobiles.

CHRYSLER CORPORATION (NHTSA—

Fuel Economy Standards Enforcement),

U.S. Dep’t. of Transportation, Office of

Hearings, Washington, D.C., Docket

47414 (January 8, 1992). Later, NHTSA’s

Administrator set aside the I.D. and

issued an order directing that the agency

commence a proceeding to prescribe

such rules. In re CHRYSLER

CORPORATION; Corporate Average

Fuel Economy Enforcement Proceeding,

U.S. Dep’t. of Transportation, National

Highway Traffic Safety Administration,

Docket No. 47414 (March 31, 1992).

II. Proposal

A. Introduction

Our initial purpose in developing this

proposal was to define the extent to

which predecessors and successors of

manufacturers of automobiles should be

included within the term

‘‘manufacturer.’’ However, during the

development of the proposal, we

decided to expand that purpose. We

recognized that a number of the issues

concerning how credits may be used

between predecessors and successors

also arise in the context of other changes

in corporate relationships, e.g., changes

in control. While we could handle

issues related to changes in control by

interpretation of the statute, we believe

it would be helpful for both the industry

and the agency to have a regulation in

place which provides guidance in this

area.

In developing this proposal, we have

attempted to achieve two key goals.

First, we would like the regulation to be

as faithful as possible to the purpose of

the statute and the overall statutory

scheme. Second, we would like the

regulation to be as simple as possible,

while still providing the necessary

guidance for the agency and the

industry to use in determining how

changes in corporate relationships are to

be considered in determining

compliance with fuel economy

standards.

The purpose of Chapter 329 is, of

course, energy conservation. As to the

overall statutory scheme, we believe

there are several aspects that are

relevant to how we should treat changes

in corporate relationships.

First, to promote flexibility, Congress

decided to allow compliance with fuel

economy standards to be determined

over a multi-year period. In particular,

a manufacturer may offset a shortfall for

any given model year by using credits

it has earned or will earn in the three

prior model year or three succeeding

model years.

Second, Congress limited the use of

credits to the manufacturer which

earned them; credits may not be bought

or sold.

Third, average fuel economy is

measured, and compliance with fuel

economy standards determined, for

groups of companies within a control

relationship rather than for individual

companies.

We believe that each of these aspects

of the statutory scheme needs to be

reflected in the regulation concerning

the rights and responsibilities of

manufacturers in the context of changes

in corporate relationships.

As to our desire to keep the regulation

as simple as possible, we are concerned

that an effort to comprehensively

address all of the various ways

corporate relationships may change over

time could get the agency bogged down

in defining endless situations that it

would probably never have to deal with

in practice. At the same time, we believe

there is a need for the regulation to

provide the necessary guidance for the

agency and the industry to use in

determining how changes in corporate

relationships are to be considered in

determining compliance with fuel

economy standards. We are proposing a

regulation that we believe would

accomplish this. A discussion of the

proposed regulation follows.

B. The Proposed Regulation

The proposed regulation is relatively

short. It begins by setting forth

definitions of several key terms,

including predecessor, successor and

control relationship. It includes a

section which specifically addresses

several situations concerning

predecessors and successors which have

either already occurred or might

reasonably be expected to occur.

Examples, in the form of specific factual

situations, are provided for purposes of

clarity. It also includes a section which

specifically addresses several potential

situations regarding changes in control

relationships. The details of the

proposed regulation are discussed

below. We specifically request

comments on whether the regulation

should specifically address any

additional types of changes in corporate

relationships, or provide additional

examples in the form of factual

situations and, if so, how. To the extent

that a situation arose that was not

directly addressed by the regulation, the

agency would make necessary

determinations based on interpretation

of the statute and the principles

reflected in the regulation.

We note that the proposed regulation

would adopt the same positions

concerning predecessors and successors

as we did in our 1990 letter to Chrysler.

1. Definitions

The proposed regulation includes four

definitions.

Control relationship. ‘‘Control

relationship’’ is defined to mean the

relationship that exists between

manufacturers that control, are

controlled by, or are under common

control with, one or more other

manufacturers. This definition reflects

the provision at 49 U.S.C. 32901(a)(4)

which specifies that the automobiles

manufactured by a manufacturer

include automobiles manufactured by a

person that controls, is controlled by, or

is under common control with the

manufacturer.

Successor. ‘‘Successor’’ is defined to

mean ‘‘a manufacturer which has

become vested with the rights and

assumed the burdens of another

manufacturer.’’ This definition reflects

the ordinary corporate law meaning of

the term ‘‘successor.’’

Predecessor. ‘‘Predecessor’’ is defined

to mean ‘‘a manufacturer whose rights

have been vested in and whose burdens

have been assumed by another

manufacturer.’’ This definition reflects

the ordinary corporate law meaning of

the term and mirrors the proposed

definition for ‘‘successor.’’

Identity. Under the proposed

regulation, ‘‘identity’’ is defined to

mean ‘‘the relationship between a

predecessor and a successor during the

time in which the successor owns 50

percent or more of the assets, based on

valuation, that had belonged to the

predecessor.’’ This is the time when we

believe it is reasonable to view the

predecessor manufacturer as continuing

to exist as part of the successor. The

proposed limitation with respect to

owning 50 percent or more of the assets

is to address a possible situation where

one company might purchase another,

become the successor, but then quickly

sell the assets to a third company. As

discussed below, we use the concept of

identity, in the context of predecessors

and successors, as part of specifications

to ensure that credits are only used by

a manufacturer which can reasonably be

considered to have earned them.

2. Predecessors and Successors

The proposed regulation has four

specifications which define the extent to

which predecessors and successors of

manufacturers of automobiles are

included within the definition of

‘‘manufacturer,’’ for purposes of the

automotive fuel economy program.

Examples, in the form of specific factual

Federal Register / Vol. 66, No. 14 / Monday, January 22, 2001 / Proposed Rules 6527

situations, are provided for purposes of

clarity.

Specification (a). The first proposed

specification provides that ‘‘(s)uccessors

are responsible for any civil penalties

that arise out of fuel economy shortfalls

incurred by predecessors.’’ We

recognize that this specification could

be considered unnecessary in the sense

that it simply states what follows

directly from corporate law: the

assumption of the burdens of a

predecessor corporation, as well as the

vesting of the rights of that corporation,

is an inherent part of being a successor

under corporate law. However, we

believe that any regulation which

specifies the extent to which

predecessors and successors of

manufacturers of automobiles are

included within the definition of

‘‘manufacturer,’’ for purposes of the

automotive fuel economy program,

should make this clear at the outset.

Specification (b). The second

specification provides that ‘‘(i)f one

manufacturer becomes the successor of

another manufacturer during a model

year, all of the vehicles produced by

those manufacturers during the model

year are treated as though they were

manufactured by the same

manufacturer.’’ It also provides that ‘‘(a)

manufacturer is considered to have

become the successor of another

manufacturer during a model year if it

is the successor on September 30 of the

corresponding calendar year and was

not the successor for the preceding

model year.’’

As we discussed in our 1990 letter to

Chrysler, fuel economy standards apply

to passenger automobiles manufactured

by a manufacturer, for a particular

model year, and average fuel economy

is calculated based on the total number

of passenger automobiles manufactured

in a given model year by a

manufacturer. We recently reiterated

that view in a January 13, 2000 letter to

Volvo Cars of North America. Since fuel

economy standards apply to particular

model years as a whole and not to

separate parts of a model year, we

believe that if one manufacturer

acquires another during a model year,

they should be deemed the same

manufacturer, with a single CAFE value,

for that model year.

In a 1990 letter to Ford, we concluded

that, for purposes of deciding the model

year in which one manufacturer

acquires another, the ‘‘traditional model

year,’’ starting approximately October 1,

is the appropriate frame of reference.

The second sentence in specification (b)

reflects this interpretation.

Specification (c). The third proposed

specification provides that ‘‘(c)redits

earned by a predecessor may be used by

a successor for those model years in

which there is an identity between the

predecessor and successor, subject to

availability of the credits and the

general three-year restriction on

carrying credits forward.’’

As we discussed in our letter to

Chrysler, the statute provides that

credits are available only to the

manufacturer which earned them.

Therefore, in the absence of some

regulatory provision concerning

successors, any unused credits of a

predecessor would simply expire

unused.

However, we continue to believe that

Congress did not intend to require the

forfeit of a manufacturer’s unused

credits in a situation where that

manufacturer’s substance continues to

exist as part of a ‘‘successor.’’ We are

therefore proposing that credits earned

by a predecessor may be used by a

successor for those model years in

which there is identity between the

predecessor and successor.

Credits earned by a predecessor could

not, however, be used by a successor for

model years in which there was no

identity between the predecessor and

successor. We believe that, in such a

situation, the credits could not

reasonably be considered to be used by

the manufacturer which had earned

them.

The following example helps

illustrate how this provision would

work in practice:

A purchases B in model year x and

becomes the successor of B. A’s CAFE

in model year x (which includes the

combined production of what had been

A and B) is less than the applicable

CAFE standard for that model year. B

had credits at the time of the acquisition

because it exceeded the applicable fuel

economy standard in the previous

model year. The credits of B (the

predecessor) could be used by A in

model year x, model year x+1 and

model year x+2, because there would be

an identity between B and A in those

model years. However, the credits of B

could not be used to offset any shortfall

incurred by A in model year x-1 or

before, since there was no identity

between B and A during those model

years.

As indicated above, we believe that

the use of B’s credits (the predecessor’s

credits) by A (the successor) for model

years x-1 or before (model years before

the acquisition) could not reasonably be

considered to be use by the

manufacturer which had earned them.

There was no relationship between A

and B model year x-1 and before; they

were two completely different

manufacturers.

Moreover, as we discussed in our

1990 letter to Chrysler, the statute does

not provide for the same credits being

carried both forward and backward; e.g.,

forward to A from before the time it

acquired B and then backward to A for

the model years prior to the acquisition

when A had shortfalls.

Finally, it would be inappropriate to

allow A (the successor) to succeed to

rights with respect to B’s credits that are

greater than B had at the time of the

acquisition. As of the time of the

acquisition, the only right B had with

respect to carrying its existing credits

backward was the right to apply them to

its own fleet; it did not have the right

to apply them to the fleets of other

manufacturers or to sell them to be

applied to such fleets.

Specification (d). The fourth proposed

specification provides that ‘‘(c)redits

earned by a successor during model

years in which there is an identity

between the successor and predecessor

may be used to offset a predecessor’s

shortfall, subject to availability of the

credits and the general three-year

restriction on carrying credits

backward.’’

Under the statute, a manufacturer that

experiences a shortfall which it cannot

offset by using credits it has earned

during the past three model years has

three additional model years to earn

offsetting credits. However, given that

the statute provides that credits may

only be used by the manufacturer that

earned them, there would be no way of

offsetting a predecessor’s remaining

shortfalls in the absence of a regulatory

provision.

We do not believe that Congress

intended to require the forfeiture of a

manufacturer’s ability to offset CAFE

shortfalls by earning future credits

simply because it was acquired by

another manufacturer; i.e., in a situation

where that manufacturer’s substance

continues to exist as part of a

‘‘successor.’’ We are therefore proposing

that credits earned by a successor

during model years in which there is an

identity between the successor and

predecessor may be applied to a

predecessor’s shortfall.

Specifications (c) and (d), taken

together, give the successor all the rights

the predecessor had with respect to

credits, both as to the use of existing

credits and the ability to earn future

credits to offset existing shortfalls. We

are aware that some manufacturers

would like the successor to somehow

have greater rights than those enjoyed

by the predecessor. For example, while

AMC’s rights to its MY 1984 credits, as

6528 Federal Register / Vol. 66, No. 14 / Monday, January 22, 2001 / Proposed Rules

of the time of its acquisition in MY

1987, were to apply them to its own

fleet in MY 1981–1983 and 1985–1986

(since it had no successor in that time

period) and to apply them to itself (as

part of Chrysler) in MY 1987, Chrysler,

as successor to AMC, wanted to be able

to apply AMC’s 1984 credits to offset

shortfalls incurred by its own

(Chrysler’s) pre-MY 1987 fleet.

However, such use of AMC’s credits

could not reasonably be considered a

use by the manufacturer which had

earned them and therefore would be

inconsistent with the statute.

We also note that permitting such use

of credits would discourage energy

conservation. For example, to the extent

that a successor had been planning to

exceed standards in the future to earn

credits that could be carried back to

cover pre-acquisition shortfalls,

permitting the successor to use the

predecessor’s previously earned credits

to cover those shortfalls would remove

the incentive to exceed those standards.

3. Manufacturers within Control

Relationships

The proposed regulation has eight

specifications concerning the rights and

responsibilities of manufacturers within

control relationships. These

specifications are generally based on the

same principles we considered in

developing the proposed specifications

concerning predecessors and successors.

A discussion of the eight specifications

follows.

Specification (a). The first proposed

specification provides that ‘‘(i)f a civil

penalty arises out of a fuel economy

shortfall incurred by a group of

manufacturers within a control

relationship, each manufacturer within

that group is jointly and severally liable

for the civil penalty.’’ This specification

follows directly from the statutory

provisions which provide that average

fuel economy is measured, and

compliance with fuel economy

standards determined, for groups of

companies within a control relationship

rather than for individual companies.

However, we believe that any regulation

which specifies the rights and

responsibilities of manufacturers within

control relationships should make this

clear at the outset. As a practical matter,

we would initially seek payment of any

civil penalties arising from the fuel

economy performance of a group of

manufacturers within a control

relationship from whoever that group

designated as being responsible.

Specification (b). The second

proposed specification provides that

‘‘(a) manufacturer is considered to be

within a control relationship for an

entire model year if and only if it is

within that relationship on September

30 of the calendar year in which the

model year ends.’’ This specification

corresponds directly to the proposed

specification (b) for predecessors and

successors, and reflects the same

rationale.

Specification (c). The third proposed

specification provides that ‘‘(t)o the

extent that a manufacturer within a

control relationship was outside that

relationship for a previous model year

and not within any other control

relationship, credits earned by the

manufacturer during such model year

may be used by the group of

manufacturers within the control

relationship for those model years in

which the manufacturer is within that

relationship, subject to the agreement of

the manufacturer, the availability of the

credits, and the general three-year

restriction on carrying credits forward.’’

This specification is very similar to

the proposed specification (c) for

predecessors and successors. If a

previously independent manufacturer

has been purchased or otherwise

brought within a control relationship,

its credits do not expire but can

continue to be used by it under the same

conditions as before. For model years in

which it is now part of a group of

manufacturers, application of its credits

to itself would mean application to the

entire group of manufacturers since

average fuel economy is measured, and

compliance with fuel economy

standards determined, for groups of

companies within a control relationship

rather than for individual companies.

We note that one difference between

this proposed specification and the

corresponding one we are proposing for

predecessors and successors is the

statement that use of the credits is

subject to the agreement of the

manufacturer which earned them. In the

case of a predecessor/successor

situation, the predecessor no longer

exists and the successor has assumed all

of its rights and duties. In this situation,

however, the previously independent

company continues to exist and could

have different interests than the group

of manufacturers. We therefore believe

it is appropriate to make use of the

credits subject to the agreement of that

company. Similar provisions are

included in several of the other

proposed specifications for

manufacturers within control

relationships.

Specification (d). The fourth proposed

specification provides that ‘‘(t)o the

extent that a manufacturer within a

control relationship was outside that

relationship for a previous model year

and not within any other control

relationship, shortfalls incurred by the

manufacturer for such model year may

be offset by credits earned by the group

of manufacturers within the control

relationship for subsequent model years

in which the manufacturer is within the

relationship, subject to the agreement of

the other manufacturers, the availability

of the credits, and the general three-year

restriction on carrying credits

backward.’’

This specification is very similar to

the proposed specification (d) for

predecessors and successors.

Specifications (e) through (h). The

final four proposed specifications for

manufacturers within control

relationships address situations in

which a manufacturer which is

controlled by another manufacturer is

sold or otherwise spun off. We note that,

given the general trend toward

consolidation in the auto industry, this

situation appears less likely to arise

than the ones discussed earlier.

Nonetheless, we believe that there is

sufficient possibility that spin-offs may

occur that it is reasonable to address

spin-offs in the proposed regulation.

The proposed specifications generally

provide that a company which has been

spun off may use credits that were

earned while it was part of a group of

manufacturers, subject to the agreement

of the other manufacturer or

manufacturers in the group. They also

generally provide that credits which the

spun-off company earns may be carried

back to the group of manufacturers for

model years in which it was part of the

group, subject to the spun-off company’s

approval.

We recognize that in situations where

a manufacturer which is controlled by

another manufacturer is sold to a third

manufacturer, there is a possibility that

the manufacturers might wish to

transfer a greater number of credits than

can reasonably be considered to be

related to the transaction at issue. The

following example illustrates such a

possibility:

A, a very large manufacturer with a large

credit balance, controls B, a very small

manufacturer which only produces vehicles

with low fuel economy, by virtue of owning

B’s stock. A sells B to C, a very large

manufacturer with a large credit deficit. C

would like to get as many credits as possible

in this transaction.

In this situation, we believe it would

be reasonable to permit B to take some

credits with it. It was part of the group

of manufacturers which earned the

credits. Moreover, B might be able to

argue that it did not improve its fuel

economy in the past because it was part

Federal Register / Vol. 66, No. 14 / Monday, January 22, 2001 / Proposed Rules 6529

of a group of manufacturers that

together exceeded the CAFE standard.

However, given that the statute does

not permit the selling of credits, we do

not believe it would be reasonable to

permit B to take with it a greater number

of credits than it could use if it had

become independent. B has not

produced any vehicles which exceed

the fuel economy standard, and, if we

permitted a large-scale transfer of

credits, the sale of B might be nothing

more than a disguised transaction to

transfer credits. We have therefore

included provisions in the proposed

specifications to limit the transfer of

credits in this and similar types of

situations to numbers that can

reasonably be considered to be directly

related to the sale of the company at

issue.

4. Changes in Corporate Relationships

Not Directly Addressed by the Proposed

Regulation

We believe the proposed regulation

addresses the types of changes in

corporate relationships that are most

likely to occur. Moreover, we are

requesting comments on whether the

regulation should specifically address

any additional types of changes in

corporate relationships, or provide

additional examples in the form of

factual situations and, if so, how.

Depending on the comments, we may

include provisions in the final rule

addressing additional types of changes

in corporate relationships and/or

additional examples in the form of

factual situations. Since we do not

believe it would be possible to

comprehensively address every

conceivable situation that could arise,

the proposed regulation includes a

provision stating that to the extent that

the regulation does not directly address

an issue concerning the rights and

responsibilities of manufacturers in the

context of a change in corporate

relationships, the agency will make

determinations based on interpretation

of the statute and the principles

reflected in the regulation.

C. Supplementary Fuel Economy

Reports

One of our regulations, 49 CFR Part

537, Automotive Fuel Economy Reports,

requires automobile manufacturers to

submit to the agency reports concerning

their plans to comply with fuel

economy standards. While we are not

proposing any changes to Part 537, we

would note that successors must submit

supplementary reports if required by

section 537.8 of that regulation.

III. Rulemaking Analyses and Notices

A. Executive Order 12866 and DOT

Regulatory Policies and Procedures

NHTSA has considered the impact of

this rulemaking action under Executive

Order 12866 and the Department of

Transportation’s regulatory policies and

procedures. This rulemaking document

is not economically significant. It was

reviewed by the Office of Management

and Budget under E.O. 12866,

‘‘Regulatory Planning and Review.’’ The

rulemaking action has been determined

to be significant under the Department’s

regulatory policies and procedures,

given the public interest in the

automotive fuel economy program.

The proposed regulation would not

create any new obligations. It would

adopt the same positions concerning

predecessors and successors as we have

previously taken in interpretation

letters.

As discussed earlier in this notice, if

we did not adopt regulations governing

the use of CAFE credits by predecessors

and successors, a predecessor’s unused

credits would simply expire, since the

only manufacturer which could use

them would no longer exist. Similarly,

there would be no way of offsetting a

predecessor’s remaining CAFE shortfalls

in the absence of some provision

concerning successors. The successor

would thus be required to pay the

predecessor’s penalties, a responsibility

which it assumed with the rest of the

predecessor’s obligations, but would

have no ability to earn future credits to

offset the predecessor’s shortfalls.

To address this inequity, the proposed

rule, like our prior interpretation, would

give the successor all the rights the

predecessor had with respect to the use

of preexisting credits and the ability to

earn future credits.

The proposed provisions concerning

the rights and responsibilities of

manufacturers in other situations where

there have been changes in corporate

relationships, e.g., changes in control,

are essentially a statement of our

interpretation of the statute and reflect

the same principles as the provisions

relating to predecessors and successors.

B. Regulatory Flexibility Act

We have considered the effects of this

rulemaking action under the Regulatory

Flexibility Act (5 U.S.C. § 601 et seq.) I

hereby certify that the proposed rule

would not have a significant economic

impact on a substantial number of small

entities. Therefore, a regulatory

flexibility analysis is not required for

this action. As discussed above, the

proposed regulation would not create

any new obligations but would simply

adopt the same positions concerning

predecessors and successors as we have

previously taken in interpretation

letters. Similarly, the proposed

provisions concerning the rights and

responsibilities of manufacturers in

other situations where there have been

changes in corporate relationships, e.g.,

changes in control, are essentially a

statement of our interpretation of the

statute and reflect the same principles

as the provisions relating to

predecessors and successors. Moreover,

as a practical matter, the acquiring

corporations most likely to be affected

by this regulation are not small

businesses.

C. National Environmental Policy Act

NHTSA has analyzed this proposed

amendment for the purposes of the

National Environmental Policy Act and

determined that it would not have any

significant impact on the quality of the

human environment.

D. Executive Order 13132 (Federalism)

The agency has analyzed this

proposal in accordance with the

principles and criteria set forth in

Executive Order 13132 and has

determined that it does not have

sufficient federalism implications to

warrant consultation with State and

local officials or the preparation of a

federalism summary impact statement.

The proposed rule would have no

substantial effects on the States, or on

the current Federalism-State

relationship, or on the current

distribution of power and

responsibilities among the various local

officials.

E. Unfunded Mandates Act

The Unfunded Mandates Reform Act

of 1995 requires agencies to prepare a

written assessment of the costs, 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

(adjusted for inflation with base year of

1995). The proposed rule would not

result in the expenditure by State, local

or tribal governments, in the aggregate,

or by the private sector, of more than

$100 million annually.

F. Executive Order 12778 (Civil Justice

Reform)

This proposed rule does not have any

retroactive effect. However, we would,

as a practical matter, consider the

regulation in any enforcement action

regarding predecessors and successors

6530 Federal Register / Vol. 66, No. 14 / Monday, January 22, 2001 / Proposed Rules

2 Voluntary consensus standards are technical

standards developed or adopted by voluntary

consensus standards bodies. Technical standards

are defined by the NTTAA as ‘‘performance-based

or design-specific technical specifications and

related management systems practices.’’ They

pertain to ‘‘products and processes, such as size,

strength, or technical performance of a product,

process or material.’’

that involved conduct that occurred

before the regulation became effective.

As discussed earlier, the proposed

regulation would not create any new

obligations but would adopt the same

positions concerning predecessors and

successors as we have previously taken

in interpretation letters. If we did not

adopt special provisions governing the

use of CAFE credits by predecessors and

successors, a predecessor’s unused

credits would simply expire, since the

only manufacturer which could use

them would no longer exist. Similarly,

there would be no way of offsetting a

predecessor’s remaining CAFE shortfalls

in the absence of some provision

concerning successors.

The proposed rule, like our prior

interpretation, would address this

inequity and give the successor all the

rights the predecessor had with respect

to credits. Thus, to the extent we

considered and followed the approach

of the proposed rule in any enforcement

action regarding predecessors and

successors that involved conduct that

occurred before the regulation became

effective, any effect on the amount of

penalties would be beneficial for the

manufacturers.

We would similarly consider the

regulation in any enforcement action

regarding other situations where there

have been changes in corporate

relationships, e.g., changes in control,

that involved conduct that occurred

before the regulation became effective.

However, the proposed provisions are

essentially a statement of our

interpretation of the statute.

States are preempted from

promulgating laws and regulations

contrary to the provisions of this rule.

The rule does not require submission of

a petition for reconsideration or other

administrative proceedings before

parties may file suit in court.

G. Paperwork Reduction Act

This rulemaking action does not

include any collections of information.

H. Regulation Identifier Number (RIN)

The Department of Transportation

assigns a regulation identifier number

(RIN) to each regulatory action listed in

the Unified Agenda of Federal

Regulations. The Regulatory Information

Service Center publishes the Unified

Agenda in April and October of each

year. You may use the RIN contained in

the heading at the beginning of this

document to find this action in the

Unified Agenda.

I. Plain Language

Executive Order 12866 and the

President’s memorandum of June 1,

1998, require each agency to write all

rules in plain language. Application of

the principles of plain language

includes consideration of the following

questions:

—Have we organized the material to suit

the public’s needs?

—Are the requirements in the rule

clearly stated?

—Does the rule contain technical

language or jargon that is not clear?

—Would a different format (grouping

and order of sections, use of headings,

paragraphing) make the rule easier to

understand?

—Would more (but shorter) sections be

better?

—Could we improve clarity by adding

tables, lists, or diagrams?

—What else could we do to make the

rule easier to understand?

If you have any responses to these

questions, please include them in your

comments on this NPRM.

J. Executive Order 13045

Executive Order 13045 (62 FR 19885,

April 23, 1997) applies to any rule that:

(1) is determined to be ‘‘economically

significant’’ as defined under E.O.

12866, and (2) concerns an

environmental, health or safety risk that

NHTSA has reason to believe may have

a disproportionate effect on children.

This regulatory action does not meet

either of those criteria.

K. National Technology Transfer and

Advancement Act

Section 12(d) of the National

Technology Transfer and Advancement

Act (NTTAA) requires NHTSA to

evaluate and use existing voluntary

consensus standards 2 in its regulatory

activities unless doing so would be

inconsistent with applicable law (e.g.,

the statutory provisions regarding

NHTSA’s vehicle safety authority) or

otherwise impractical. This requirement

is not relevant to this rulemaking action.

IV. Submission of Comments

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 of this document in your

comments.

Your comments must not be more

than 15 pages long. (49 CFR 553.21). We

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. There is no limit on

the length of the attachments.

Please submit two copies of your

comments, including the attachments,

to Docket Management at the address

given above under ADDRESSES.

Comments may also be submitted to

the docket electronically by logging onto

the Dockets Management System

website at http://dms.dot.gov. Click on

‘‘Help & Information’’ or ‘‘Help/Info’’ to

obtain instructions for filing the

document electronically.

How can I be sure that my comments

were received?

If you 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.

How do I submit confidential business

information?

If you wish to submit any information

under a claim of confidentiality, you

should submit three copies of your

complete submission, including the

information you claim to be confidential

business information, to the Chief

Counsel, NHTSA, at the address given

above under FOR FURTHER INFORMATION

CONTACT. In addition, you should

submit two copies, from which you

have deleted the claimed confidential

business information, to Docket

Management at the address given above

under ADDRESSES. When you send a

comment containing information

claimed to be confidential business

information, you should include a cover

letter setting forth the information

specified in our confidential business

information regulation. (49 CFR Part

512.)

Will the agency consider late

comments?

We will consider all comments that

Docket Management receives before the

close of business on the comment

closing date indicated above under

DATES. To the extent possible, we will

also consider comments that Docket

Management receives after that date. If

Docket Management receives a comment

too late for us to consider it in

developing a final rule (assuming that

one is issued), we will consider that

Federal Register / Vol. 66, No. 14 / Monday, January 22, 2001 / Proposed Rules 6531

comment as an informal suggestion for

future rulemaking action.

How can I read the comments submitted

by other people?

You may read the comments received

by Docket Management at the address

given above under ADDRESSES. The

hours of the Docket are indicated above

in the same location.

You may also see the comments on

the Internet. To read the comments on

the Internet, take the following steps:

(1) Go to the Docket Management

System (DMS) Web page of the

Department of Transportation (http://

dms.dot.gov/).

(2) On that page, click on ‘‘search.’’

(3) On the next page (http://

dms.dot.gov/search/), type in the fourdigit docket number shown at the

beginning of this document. Example: If

the docket number were ‘‘NHTSA–

1998–1234,’’ you would type ‘‘1234.’’

After typing the docket number, click on

‘‘search.’’

(4) On the next page, which contains

docket summary information for the

docket you selected, click on the desired

comments. You may download the

comments.

Please note that even after the

comment closing date, we will continue

to file relevant information in the

Docket as it becomes available. Further,

some people may submit late comments.

Accordingly, we recommend that you

periodically check the Docket for new

material.

List of Subjects in 49 CFR Part 534

Fuel economy, Motor vehicles.

In consideration of the foregoing, we

propose to amend chapter V of title 49

of the Code of Federal Regulations by

adding a new part 534 to read as

follows:

PART 534—RIGHTS AND

RESPONSIBILITIES OF

MANUFACTURERS IN THE CONTEXT

OF CHANGES IN CORPORATE

RELATIONSHIPS

Sec.

534.1 Scope.

534.2 Applicability.

534.3 Definitions.

534.4 Predecessors and successors.

534.5 Manufacturers within control

relationships.

534.6 Situations not directly addressed by

this regulation.

Authority: 49 U.S.C. 32901; delegation of

authority at 49 CFR 1.50.

§ 534.1 Scope.

This part defines the rights and

responsibilities of manufacturers in the

context of changes in corporate

relationships for purposes of the

automotive fuel economy program

established by 49 U.S.C. chapter 329.

§ 534.2 Applicability.

This part applies to manufacturers of

passenger automobiles and light trucks.

§ 534.3 Definitions.

(a) Statutory definitions and terms.

All terms used in 49 U.S.C. chapter 329

are used according to their statutory

meaning.

(b) As used in this part—

Control relationship means the

relationship that exists between

manufacturers that control, are

controlled by, or are under common

control with, one or more other

manufacturers.

Identity means the relationship

between a predecessor and a successor

during the time in which the successor

owns 50 percent or more of the assets,

based on valuation, that had belonged to

the predecessor.

Predecessor means a manufacturer

whose rights have been vested in and

whose burdens have been assumed by

another manufacturer.

Successor means a manufacturer

which has become vested with the

rights and assumed the burdens of

another manufacturer.

§ 534.4 Predecessors and successors.

For purposes of the automotive fuel

economy program, ‘‘manufacturer’’

includes ‘‘predecessors’’ and

‘‘successors’’ to the extent specified in

paragraphs (a) through (d) of this

section.

(a) Successors are responsible for any

civil penalties that arise out of fuel

economy shortfalls incurred by

predecessors.

Example: A purchases B in model year x

and is generally invested with the rights and

duties of B. B had a fuel economy shortfall

two model years before (model year x-2) for

which credits are not available and is subject

to civil penalties which have not yet been

paid. A is responsible for those civil

penalties.

(b) If one manufacturer has become

the successor of another manufacturer

during a model year, all of the vehicles

produced by those manufacturers

during the model year are treated as

though they were manufactured by the

same manufacturer. A manufacturer is

considered to have become the

successor of another manufacturer

during a model year if it is the successor

on September 30 of the corresponding

calendar year and was not the successor

for the preceding model year.

(c) Credits earned by a predecessor

may be used by a successor for those

model years in which there is an

identity between the predecessor and

successor, subject to availability of the

credits and the general three-year

restriction on carrying credits forward.

Example: A purchases B in model year x

and becomes the successor of B. A’s CAFE in

model year x (which includes the combined

production of what had been A and B) is less

than the applicable CAFE standard for that

model year. B had credits at the time of the

acquisition because it exceeded the

applicable fuel economy standard in the

previous model year. The credits of B (the

predecessor) could be used by A in model

year x, model year x+1 and model year x+2,

because there would be an identity between

B and A in those model years. However, the

credits of B could not be used to offset any

shortfall incurred by A in model year x-1 or

before, since there was no identity between

B and A during those model years.

(d) Credits earned by a successor

during model years in which there is an

identity between the successor and

predecessor may be used to offset a

predecessor’s shortfall, subject to

availability of the credits and the

general three-year restriction on

carrying credits backward.

Example: A purchases B in model year x

and becomes the successor of B. B had a fuel

economy shortfall two model years before

(model year x-2). Any credits earned by A in

model year x and model year x+1 could be

applied to B’s shortfall, since there is an

identity between A and B in model year x

and model year x+1. However, credits earned

by A in any model year before model year x

could not be applied to B’s shortfall, since

there was no identity between A and B in

model year x-1.

§ 534.5 Manufacturers within control

relationships.

(a) If a civil penalty arises out of a fuel

economy shortfall incurred by a group

of manufacturers within a control

relationship, each manufacturer within

that group is jointly and severally liable

for the civil penalty.

(b) A manufacturer is considered to be

within a control relationship for an

entire model year if and only if it is

within that relationship on September

30 of the calendar year in which the

model year ends.

(c) To the extent that a manufacturer

within a control relationship was

outside that relationship for a previous

model year and not within any other

control relationship, credits earned by

the manufacturer during such model

year may be used by the group of

manufacturers within the control

relationship for those model years in

which the manufacturer is within that

relationship, subject to the agreement of

the manufacturer, the availability of the

credits, and the general three-year

restriction on carrying credits forward.

6532 Federal Register / Vol. 66, No. 14 / Monday, January 22, 2001 / Proposed Rules

(d) To the extent that a manufacturer

within a control relationship was

outside that relationship for a previous

model year and not within any other

control relationship, shortfalls incurred

by the manufacturer for such model year

may be offset by credits earned by the

group of manufacturers within the

control relationship for subsequent

model years in which the manufacturer

is within the relationship, subject to the

agreement of the other manufacturers,

the availability of the credits, and the

general three-year restriction on

carrying credits backward.

(e) If a manufacturer which is

controlled by another manufacturer is

sold or otherwise spun off so that it is

no longer within that control

relationship and is not within any other

control relationship, it may use credits

that were earned by the group of

manufacturers within the control

relationship while the manufacturer was

within that relationship, subject to the

agreement of the other manufacturers,

the availability of the credits and the

general restriction on carrying credits

forward.

(f) If a manufacturer which is

controlled by another manufacturer is

sold or otherwise spun off so that it is

no longer within that control

relationship but is within another

control relationship, it may use credits

that were earned by the group of

manufacturers within the former control

relationship while the manufacturer was

within that relationship, subject to the

agreement of the other manufacturers,

the availability of the credits, and the

general restriction on carrying credits

forward, and subject to a demonstration

by the manufacturer, and approved by

the Administrator, that the credits to be

used are no more than the manufacturer

could use if it were not within another

control relationship.

(g) If a manufacturer which is

controlled by another manufacturer is

sold or otherwise spun off so that it is

no longer within that control

relationship and is not within any other

control relationship, credits earned by

that manufacturer may be used by the

manufacturer or group of manufacturers

previously within the control

relationship for model years in which

the manufacturer was within that

relationship, subject to the agreement of

the previously controlled manufacturer,

the availability of the credits and the

general restriction on carrying credits

backward.

(h) If a manufacturer which is

controlled by another manufacturer is

sold or otherwise spun off so that it is

no longer within that control

relationship but is within another

control relationship, credits earned by

manufacturers within the latter control

relationship for model years in which

the manufacturer is within that

relationship may be used by the

manufacturer or group of manufacturers

within the former control relationship

for model years in which the

manufacturer was within that

relationship, subject to the agreement of

the group of manufacturers within the

latter control relationship, the

availability of the credits, and the

general restriction on carrying credits

backward, and subject to a

demonstration by the manufacturer, and

approved by the Administrator, that the

credits to be used are no more than the

manufacturer would have earned if it

were not within another control

relationship.

§ 534.6 Situations not directly addressed

by this regulation.

To the extent that this regulation does

not directly address an issue concerning

the rights and responsibilities of

manufacturers in the context of a

changes in corporate relationships, the

agency will make determinations based

on interpretation of the statute and the

principles reflected in the regulation.

Issued on: January 10, 2001.

Stephen R. Kratzke,

Associate Administrator for Safety

Performance Standards.

[FR Doc. 01–1524 Filed 1–19–01; 8:45 am]

BILLING CODE 4910–59–P

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety

Administration

49 CFR Parts 554, 573, and 576

[Docket No. NHTSA 2001–8677; Notice 1]

RIN 2127–AI25

Standards Enforcement and Defect

Investigation; Defect and

Noncompliance Reports; Record

Retention

AGENCY: National Highway Traffic

Safety Administration (NHTSA), DOT.

ACTION: Advance Notice of Proposed

Rulemaking (ANPRM).

SUMMARY: This document requests

comments on ways that the National

Highway Traffic Safety Administration

(NHTSA) may implement the ‘‘early

warning reporting requirements’’ of the

Transportation Recall Enhancement,

Accountability, and Documentation

(TREAD) Act. The TREAD Act directs

NHTSA to publish a rule requiring

vehicle and equipment manufacturers to

report claims data and other

information, whether originating in the

United States or in a foreign country,

that may assist in identifying defects

related to motor vehicle safety in

vehicles or equipment in the United

States. The Act further authorizes

NHTSA to require the reporting of other

information. These manufacturers must

also report to us all incidents, of which

they receive notice, involving fatalities

or serious injuries which are alleged or

proven to have been caused by a

possible defect in their products,

whether in the United States or abroad,

when the possible defective vehicle or

equipment is identical or substantially

similar to a vehicle or equipment

offered for sale in the United States. We

intend to issue a notice of proposed

rulemaking (NPRM) later in 2001 to

amend our procedural regulations on

standards enforcement and defect

investigation, reporting requirements,

and recordkeeping, on the basis of

comments we receive in response to this

ANPRM.

DATES: Comment closing date:

Comments must be received on or

before March 23, 2001.

ADDRESSES: All comments on this notice

should refer to the docket and notice

number set forth above and be

submitted to Docket Management, Room

PL–401, 400 Seventh Street, SW.,

Washington, DC 20590. The docket

room hours are from 9:30 a.m. to 5:00

p.m., Monday through Friday.

FOR FURTHER INFORMATION CONTACT: For

non-legal issues, contact George Person,

Office of Defects Investigation, NHTSA

(phone: 202–366–5210). For legal issues,

contact Taylor Vinson, Office of Chief

Counsel, NHTSA (phone: 202–366–

5263).

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background:

A. The Firestone ATX and Wilderness tire

recall.

B. Information and data in the possession

of NHTSA before May 2, 2000, related to

possible safety problems with Firestone

ATX and Wilderness tires.

C. Information and data in the possession

of Firestone and Ford indicating that the

tires might contain a safety-related

defect.

D. Reporting requirements before the

TREAD Act.

E. The TREAD Act (Pub. L. 106–414).

II. General Definitions.

III. Who is Covered by the New Reporting

Requirements?

IV. What Information Should Be Reported?

V. When Should Information be Reported?

VI. How Should Information be Reported?