51414 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

DEPARTMENT OF TRANSPORTATION 

National Highway Traffic Safety 

Administration 

49 CFR Parts 523, 533 and 537 

[Docket No. 2005–22223] 

RIN 2127–AJ61 

Average Fuel Economy Standards for 

Light Trucks; Model Years 2008–2011 

AGENCY: National Highway Traffic 

Safety Administration (NHTSA), 

Department of Transportation. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: This notice proposes to 

reform the structure of the corporate 

average fuel economy (CAFE) program 

for light trucks and proposes to establish 

higher CAFE standards for model year 

(MY) 2008–2011 light trucks. Reforming 

the CAFE program would enable it to 

achieve larger fuel savings while 

enhancing safety and preventing 

adverse economic consequences. 

During a transition period of MYs 

2008–2010, manufacturers may comply 

with CAFE standards established under 

the reformed structure (Reformed CAFE) 

or with standards established in the 

traditional way (Unreformed CAFE). 

This will permit manufacturers to gain 

experience with the Reformed CAFE 

standards. In MY 2011, all 

manufacturers would be required to 

comply with a Reformed CAFE 

standard. 

The reform is based on vehicle size. 

Under Reformed CAFE, fuel economy 

standards are restructured so that they 

are based on a measure of vehicle size 

called ‘‘footprint,’’ the product of 

multiplying a vehicle’s wheelbase by its 

track width. Vehicles would be divided 

into footprint categories, each 

representing a different range of 

footprint. A target level of average fuel 

economy is proposed for each footprint 

category, with smaller footprint light 

trucks expected to achieve more fuel 

economy and larger ones, less. Each 

manufacturer would still be required to 

comply with a single overall average 

fuel economy level for each model year 

of production. A particular 

manufacturer’s compliance obligation 

for a model year is calculated as the 

harmonic average of the fuel economy 

targets in each size category, weighted 

by the distribution of manufacturer’s 

production volumes across the size 

categories. 

The proposed Unreformed CAFE 

standards are: 22.5 miles per gallon 

(mpg) for MY 2008, 23.1 mpg for MY 

2009, and 23.5 mpg for MY 2010. The 

Reformed CAFE standards for those 

model years would be set at levels 

intended to ensure that the industrywide costs of the Reformed standards 

are roughly equivalent to the industrywide costs of the Unreformed CAFE 

standards in those model years. For MY 

2011, the Reformed CAFE standard 

would be set at the level that maximizes 

net benefits, accounting for 

unquantified benefits and costs. We 

believe that all of the proposed 

standards would be set at the maximum 

feasible level, while accounting for 

technological feasibility, economic 

practicability and other relevant factors. 

Since a manufacturer’s compliance 

obligation for a model year under 

Reformed CAFE depends in part on its 

actual production in that model year, 

the obligation cannot be calculated with 

absolute precision until the final 

production figures for that model year 

become known. However, a 

manufacturer could calculate its 

obligation with a reasonably high degree 

of accuracy in advance of that model 

year, based on its product plans for the 

year. Prior to and during the model year, 

the manufacturer would be able to track 

all of the key variables in the formula 

used for calculating the obligation (e.g., 

distribution of production among the 

categories and vehicle fuel economy). 

This notice publishes estimates of the 

compliance obligations, by 

manufacturer, for MYs 2008–2011 under 

Reformed CAFE, using the fuel economy 

targets proposed by NHTSA and the 

product plans submitted to NHTSA by 

the manufacturers in response to a 

request for product plans published in 

December 2003. 

This rulemaking is mandated by the 

Energy Policy and Conservation Act 

(EPCA), which was enacted in the 

aftermath of the energy crisis created by 

the oil embargo of 1973–74. The 

concerns about energy security and the 

effects of energy prices and supply on 

national economic well-being that led to 

the enactment of EPCA remain alive 

today. Sustained growth in the demand 

for oil worldwide, coupled with tight 

crude oil supplies, is the driving force 

behind the sharp price increases seen 

over the past several years. Increasingly, 

the oil consumed in the U.S. originates 

in countries with political and 

economic situations that raise concerns 

about future oil supply and prices. 

We recognize that financial 

difficulties currently exist in the motor 

vehicle industry and that a substantial 

number of job losses have been 

announced recently at large full-line 

manufacturers. Accordingly, we have 

carefully balanced the cost of the rule 

with the benefits of conservation. We 

believe that, compared to Unreformed 

CAFE, Reformed CAFE would enhance 

overall fuel savings while providing 

vehicle makers the flexibility they need 

to respond to changing market 

conditions. Reformed CAFE would also 

provide a more equitable regulatory 

framework by creating a level-playing 

field for manufacturers, regardless of 

whether they are full-line or limited-line 

manufacturers. We are particularly 

encouraged that Reformed CAFE would 

reduce the adverse safety risks 

generated by the Unreformed CAFE 

program. The transition from the 

Unreformed to the Reformed system 

would begin soon, but ample lead time 

is provided before Reformed CAFE takes 

full effect in MY 2011. 

We recognize also that our proposals 

were derived from analyses of 

information from a variety of sources, 

including the product plans submitted 

by the manufacturers in early 2004. We 

fully anticipate that the manufacturers 

will respond to this proposal by 

providing revised plans that reflect 

events since then. We will evaluate the 

revised plans, the public comments, and 

other information and analysis in 

selecting the most appropriate standards 

for MYs 2008–2011. 

DATES: Comments must be received on 

or before November 22, 2005. We have 

provided more than the normal 60-day 

comment period because of the 

complexity of this rulemaking. 

However, because of that complexity, 

the necessity for ensuring sufficient 

time for careful analysis of the public 

comments and other available 

information, and for meeting the April 

1, 2006 statutory deadline for issuing a 

final rule on the CAFE standard for MY 

2008, extensions of the comment due 

date will not be possible. To ensure the 

agency’s consideration of their 

comments, the public should submit 

them to the agency not later than the 

comment due date. 

ADDRESSES: You may submit comments 

by any of the following methods: 

• Web site: http://dms.dot.gov. 

Follow the instructions for submitting 

comments on the DOT electronic docket 

site. 

• Fax: 1–202–493–2251. 

• Mail: Docket Management Facility; 

U.S. Department of Transportation, 400 

Seventh Street, SW., Nassif Building, 

Room PL–401, Washington, DC 20590– 

001. 

• Hand Delivery: Room PL–401 on 

the plaza level of the Nassif Building, 

400 Seventh Street, SW., Washington, 

DC, between 9 a.m. and 5 p.m., Monday 

through Friday, except Federal 

Holidays. 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51415 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov. Follow the 

online instructions for submitting 

comments. 

Instructions: All submissions must 

include the agency name and docket 

number or Regulatory Identification 

Number (RIN) for this rulemaking. For 

detailed instructions on submitting 

comments and additional information 

on the rulemaking process, see the 

Request for Comments heading of the 

SUPPLEMENTARY INFORMATION section of 

this document. Note that all comments 

received will be posted without change 

to http://dms.dot.gov, including any 

personal information provided. Please 

see the Privacy Act heading under 

Rulemaking Analyses and Notices. 

Docket: For access to the docket to 

read background documents or 

comments received, go to http:// 

dms.dot.gov at any time or to Room PL–

401 on the plaza level of the Nassif 

Building, 400 Seventh Street, SW., 

Washington, DC, between 9 a.m. and 5 

p.m., Monday through Friday, except 

Federal holidays. 

FOR FURTHER INFORMATION CONTACT: For 

technical issues, call Ken Katz, Lead 

Engineer, Fuel Economy Division, 

Office of International Policy, Fuel 

Economy, and Consumer Programs, at 

(202) 366–0846, facsimile (202) 493–

2290, electronic mail 

kkatz@nhtsa.dot.gov. For legal issues, 

call Stephen Wood or Christopher 

Calamita of the Office of the Chief 

Counsel, at (202) 366–2992, or e-mail 

them at swood@nhtsa.dot.gov or 

ccalamita@nhtsa.dot.gov. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Executive summary 

A. Our proposal 

B. Energy demand and supply and the 

value of conservation 

II. Background 

A. 1974 DOT/EPA report to Congress on 

potential for motor vehicle fuel economy 

improvements 

B. Energy Policy and Conservation Act of 

1975 

C. 1979–2002 light truck standards 

D. 2001 National Energy Policy 

E. 2002 NAS study of CAFE reform 

F. 2002 request for comments on NAS 

study 

G. 2003 final rule establishing MY 2005–

2007 light truck standards 

H. 2003 comprehensive plans for 

addressing vehicle rollover and 

compatibility 

I. 2003 ANPRM 

1. Need for reform 

2. Reform options 

J. Recent developments 

1. Factors underscoring need for reform 

2. Reports updating fuel economy potential 

III. The Unreformed CAFE proposal for MYs 

2008–2010 

A. Baseline for determining manufacturer 

capabilities in MYs 2008–2010 

1. General Motors 

2. Ford 

3. DaimlerChrysler 

4. Other manufacturers 

B. Selection of proposed Unreformed CAFE 

standards—process for determining 

maximum feasible levels 

C. Technologically feasible additions to 

baseline 

D. Economic practicability and other 

economic issues 

1. Costs 

2. Benefits 

3. Comparison of estimated costs to 

estimated benefits 

4. Uncertainty 

IV. The Reformed CAFE proposal for MYs 

2008–2011 

A. Proposed approach to reform 

1. Establishment of footprint categories 

2. Targets 

a. Overview of target selection process 

b. Industry-wide considerations in 

selecting the targets 

c. Relative position of the targets 

d. Level of the targets 

3. Standards and required CAFE levels for 

individual manufacturers 

4. Why this approach to reform and not 

another? 

a. Step-function vs. continuous function 

b. Categories and targets vs. classes and 

standards 

c. Footprint vs. shadow or weight 

d. Reformed standard vs. Reformed 

standard plus backstop 

5. Benefits of reform 

a. Increased energy savings 

b. Reduced incentive to respond to the 

CAFE program in ways harmful to safety 

i. Reduces incentive to offer smaller 

vehicles and to reduce vehicle size 

ii. Effectively reduces the difference 

between car and light truck CAFE 

standards 

c. More equitable regulatory framework 

d. More responsive to market changes 

B. Authority for proposed reform 

C. Comparison of estimated costs to 

estimated benefits 

1. Costs 

2. Benefits 

3. Uncertainty 

D. Proposed standards 

V. Implementation of options 

A. Choosing the Reformed or Unreformed 

CAFE system 

B. Application of credits between 

compliance options 

VII. Impact of other Federal Motor Vehicle 

Standards 

A. Federal Motor Vehicle Safety Standards 

1. FMVSS 138, tire pressure monitoring 

system 

2. FMVSS 202, head restraints 

3. FMVSS 208, occupant crash protection 

4. FMVSS 214, side impact protection 

5. FMVSS 301, fuel system integrity 

6. Cumulative weight impacts of the 

FMVSSs 

B. Federal Motor Vehicle Emissions 

Standards 

1. Tier 2 requirements 

2. Onboard vapor recovery 

3. California Air Resources Board LEV II 

C. Impacts on manufacturers’ baselines 

VIII. Need for nation to conserve energy 

IX. Applicability of the CAFE standards 

A. MDPVs 

B. ‘‘Flat-floor’’ provision 

X. Rulemaking analyses and notices 

A. Executive Order 12866 and DOT 

Regulatory Policies and Procedures 

B. National Environmental Policy Act 

C. Regulatory Flexibility Act 

D. Executive Order 13132 Federalism 

E. Executive Order 12988 (Civil Justice 

Reform) 

F. Unfunded Mandates Reform Act 

G. Paperwork Reduction Act 

H. Regulation Identifier Number (RIN) 

I. Executive Order 13045 

J. National Technology Transfer and 

Advancement Act 

K. Executive Order 13211 

L. Department of Energy review 

M. Plain language 

N. Privacy Act 

XI. Comments 

I. Executive Summary 

A. Our Proposal 

This proposal is part of a continuing 

effort by the Department of 

Transportation to reform the structure of 

the CAFE regulatory program so that it 

achieves higher fuel savings while 

enhancing safety and preventing 

adverse economic consequences. We 

have previously set forth our concerns 

about the way in which the current 

CAFE program operates and sought 

comment on approaches to reforming 

the CAFE program. We have also 

previously increased light truck CAFE 

standards, from the ‘‘frozen’’ level of 

20.7 mpg applicable from MY 1996 

through MY 2004, to a level of 22.2 mpg 

applicable to MY 2007. In adopting 

those increased standards, we noted that 

we were limited in our ability to make 

further increases without reforming the 

program. 

This notice proposes to reform the 

structure of the CAFE program for light 

trucks based on vehicle size and 

proposes to establish higher CAFE 

standards for MY 2008–2011 light 

trucks. Reforming the CAFE program 

would enable it to achieve larger fuel 

savings while enhancing safety and 

preventing adverse economic 

consequences. 

During a transition period of MYs 

2008–2010, manufacturers may comply 

with CAFE standards established under 

the reformed structure (Reformed CAFE) 

or with standards established in the 

traditional way (Unreformed CAFE). 

This will permit manufacturers to gain 

experience with the Reformed CAFE 

standards. The Reformed CAFE 

standards for those model years would 

51416 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

1The payback period represents the length of 

time required for a vehicle buyer to recoup the 

higher cost of purchasing a more fuel-efficient 

vehicle through savings in fuel use. When a more 

stringent CAFE standard requires a manufacturer to 

improve the fuel economy of some of its vehicle 

models, the manufacturer’s added costs for doing so 

are reflected in higher prices for these models. 

While buyers of these models pay higher prices to 

purchase these vehicles, their improved fuel 

economy lowers their owners’ costs for purchasing 

fuel to operate them. Over time, buyers thus recoup 

the higher purchase prices they pay for these 

vehicles in the form of savings in outlays for fuel. 

The length of time required to repay the higher cost 

of buying a more fuel-efficient vehicle is referred to 

as the buyer’s ‘‘payback period.’’

The length of this payback period depends on the 

initial increase in a vehicle’s purchase price, the 

improvement in its fuel economy, the number of 

miles it is driven each year, and the retail price of 

fuel. We calculated payback periods using the fuel 

economy improvement and average price increase 

for each manufacturer’s vehicles estimated to result 

from the proposed standard, the U.S. Energy 

Information Administration’s forecast of future 

retail gasoline prices, and estimates of the number 

of miles light trucks are driven each year as they 

age developed from U.S. Department of 

Transportation data. Energy Information 

Administration, Annual Energy Outlook 2005 (AEO 

2005), Table 100, http://www.eia.doe.gov/oiaf/aeo/ 

supplement/index.html; and U.S. Department of 

Transportation, 2001 National Household Travel 

Survey, http://nhts.ornl.gov/2001/index.shtml. 

Under these assumptions, payback periods ranged 

from as short as 22 months to as long as 48 months, 

averaging 35 months for the seven largest 

manufacturers of light trucks. 

2The fuel prices used to calculate the length of 

the payback periods are those expected over the life 

of the MY 2008–2011 light trucks, not the current 

fuel prices. Those future fuel prices were obtained 

from the AEO 2005. 

be set at levels intended to ensure that 

the industry-wide cost of those 

standards are roughly equivalent to the 

industry-wide cost of the Unreformed 

CAFE standards for those model years. 

The additional leadtime provided by the 

transition period would aid, for 

example, those manufacturers that 

would, for the first time, face a binding 

CAFE constraint and be required to 

make fuel economy improvements 

beyond those that they planned on their 

own to make. 

In MY 2011, all manufacturers would 

be required to comply with a Reformed 

CAFE standard. The Reformed CAFE 

standard for that model year would be 

set at the level that maximizes net 

benefits. 

The Unreformed standards for MYs 

2008–2010 are set with particular regard 

to the capabilities of and impacts on the 

‘‘least capable’’ full line manufacturer 

(i.e., one that produces a wide variety of 

types and sizes of vehicles) with a 

significant share of the market. A single 

CAFE level, applicable to each 

manufacturer, is established for each 

model year. 

The Unreformed CAFE standards for 

MYs 2008–2010 would be: 

MY 2008: 22.5 mpg 

MY 2009: 23.1 mpg 

MY 2010: 23.5 mpg 

We estimate that these standards 

could save 5.4 billion gallons of fuel 

over the lifetime of the vehicles sold 

during those model years, compared to 

the savings that would occur if the 

standards remained at the MY 2007 

level of 22.2 mpg. 

The Reformed CAFE approach to 

establishing light truck CAFE standards 

has the potential of providing even 

greater fuel savings. Under Reformed 

CAFE, each manufacturer’s required 

level of CAFE would be based on target 

levels of average fuel economy set for 

vehicles of various size categories. The 

categories would be defined by vehicle 

‘‘footprint’’—the product of the average 

track width (the distance between the 

centerline of the tires on the same axle) 

and wheelbase (basically, the distance 

between the centers of the axles). The 

target values would reflect the 

technological and economic capabilities 

of the industry within each of the 

footprint categories. The target for a 

given size category would be the same 

for all manufacturers, regardless of 

differences in their overall fleet mix. 

Compliance would be determined by 

comparing a manufacturer’s 

harmonically averaged fleet fuel 

economy in a model year with a 

required fuel economy level calculated 

using the manufacturer’s actual 

production levels and the category 

targets. 

The range of targets for each model 

year would be as follows: 

MY 2008: From 26.8 mpg for the 

smallest vehicles to 20.4 mpg for the 

largest; 

MY 2009: From 27.4 mpg for the 

smallest vehicles to 21.0 mpg for the 

largest; 

MY 2010: From 27.8 mpg for the 

smallest vehicles to 20.8 mpg for the 

largest; 

MY 2011: From 28.4 mpg for the 

smallest vehicles to 21.3 mpg for the 

largest. 

The standards based on these targets 

would save approximately 10.0 billion 

gallons of fuel over the lifetime of the 

vehicles sold during those four model 

years, compared to the savings that 

would occur if the standards remained 

at the MY 2007 level of 22.2 mpg. The 

Reformed standards for MYs 2008–2010 

would save 650 million more gallons of 

fuel than the Unreformed standards for 

those years. As noted above, the 

Reformed standard for MY 2011 would 

be the first Reformed standard set at the 

level that maximizes net benefits. It 

would save an additional 4.1 billion 

gallons of fuel. 

If all manufacturers complied with 

the Reformed CAFE standards, the total 

costs would be approximately $6.2 

billion for MYs 2008–2011, compared to 

the costs they would incur if the 

standards remained at the MY 2007 

level of 22.2 mpg. The resulting vehicle 

price increases to buyers of MY 2008 

light trucks would be paid back1 in 

additional fuel savings in an average of 

37 months and to buyers of MY 2011 

light trucks in an average of 47 months, 

assuming fuel prices ranging from $1.51 

to $1.58 per gallon.2 We estimate that 

the total benefits under the Unreformed 

CAFE standards for MYs 2008–2010 

plus the Reformed CAFE standard for 

MY 2011 would be approximately $7.0 

billion, and under the Reformed CAFE 

standards for MYs 2008–2011 would be 

approximately $7.5 billion. 

We have tentatively determined that 

the proposed standards under both 

Unreformed CAFE and Reformed CAFE 

represent the maximum feasible fuel 

economy level for each system. In 

reaching this conclusion, we have 

balanced the express statutory factors 

and other relevant considerations, such 

as safety concerns, effects on 

employment and the need for flexibility 

to transition to a Reformed CAFE 

program that can achieve greater fuel 

savings in a more economically efficient 

way. 

The Reformed CAFE approach 

incorporates several important elements 

of reform suggested by the National 

Academy of Sciences in its 2002 report 

(Effectiveness and Impact of Corporate 

Average Fuel Economy (CAFE) 

Standards). The agency believes that the 

Reformed CAFE approach has four basic 

advantages over the Unreformed CAFE 

approach. 

First, Reformed CAFE will enlarge 

energy savings. The energy-saving 

potential of Unreformed CAFE is 

limited because only a few full-line 

manufacturers are required to make 

improvements. In effect, the capabilities 

of these full-line manufacturers, whose 

offerings include larger and heavier 

light trucks, constrain the stringency of 

the uniform, industry-wide standard. As 

a result, the Unreformed CAFE standard 

is generally set below the capabilities of 

limited-line manufacturers, who sell 

predominantly lighter and smaller light 

trucks. Under Reformed CAFE, which 

accounts for size differences in product 

mix, virtually all light-truck 

manufacturers would be required to 

improve the fuel economy of their 

vehicles. Thus, Reformed CAFE will 

continue to require full-line 

manufacturers to improve the overall 

fuel economy of their fleets, while also 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51417 

3The sources of the figures in this section can be 

found below in section VIII, ‘‘Need for Nation to 

conserve energy.’’

4The 1974 report is available in the docket for 

this rulemaking. 

requiring limited-line manufacturers to 

enhance the fuel economy of the 

vehicles they sell. 

Second, Reformed CAFE will offer 

enhanced safety. The vehicle 

manufacturers constrained by 

Unreformed CAFE standards are 

encouraged to pursue the following 

compliance strategies that entail safety 

risks: downsizing of vehicles, design of 

some vehicles to permit classification as 

‘‘light trucks’’ for CAFE purposes, and 

offering smaller and lighter vehicles to 

offset sales of larger and heavier 

vehicles. The adverse safety effects of 

downsizing and downweighting have 

already been documented in the CAFE 

program for passenger cars. When a 

manufacturer designs a vehicle to 

permit its classification as a light truck, 

it may increase the vehicle’s propensity 

to roll over. 

Reformed CAFE is designed to lessen 

each of these safety risks. Downsizing of 

vehicles is discouraged under Reformed 

CAFE since smaller vehicles are 

expected to achieve greater fuel 

economy. Moreover, Reformed CAFE 

lessens the incentive to design smaller 

vehicles to achieve a ‘‘light truck’’

classification, since small light trucks 

would be regulated at roughly the same 

degree of stringency as passenger cars. 

Third, Reformed CAFE provides a 

more equitable regulatory framework for 

different vehicle manufacturers. Under 

Unreformed CAFE, the cost burdens and 

compliance difficulties have been 

imposed primarily on the full-line 

manufacturers who have large sales 

volumes at the larger and heavier end of 

the light-truck fleet. Reformed CAFE 

spreads the regulatory cost burden for 

fuel economy more broadly across 

vehicle manufacturers within the 

industry. 

Fourth, Reformed CAFE is more 

market-oriented because it more fully 

respects economic conditions and 

consumer choice. Reformed CAFE does 

not force vehicle manufacturers to 

adjust fleet mix toward smaller vehicles 

unless that is what consumers are 

demanding. As the industry’s sales 

volume and mix changes in response to 

economic conditions (e.g., gasoline 

prices and household income) and 

consumer preferences (e.g., desire for 

seating capacity or hauling capability), 

the level of CAFE required of 

manufacturers under Reformed CAFE 

will, at least partially, adjust 

automatically to these changes. 

Accordingly, Reformed CAFE may 

reduce the need for the agency to revisit 

previously established standards in light 

of changed market conditions, a difficult 

process that undermines regulatory 

certainty for the industry. In the mid1980’s, for example, the agency relaxed 

several Unreformed CAFE standards 

because fuel prices fell more than had 

been expected when those standards 

were established and, as a result, 

consumer demand for small vehicles 

with high fuel economy did not 

materialize as expected. By moving to a 

more market-oriented system, the 

agency may also be able to pursue more 

multi-year rulemakings that span larger 

time frames than the agency has 

attempted in the past. 

The agency is also issuing, along with 

this notice, a notice requesting updated 

product plan information and other data 

to assist in developing a final rule. We 

recognize that the manufacturer product 

plans relied upon in developing this 

proposal—those plans received in early 

2004 in response to a 2003 request for 

information—may already be outdated 

in some respects. We fully expect that 

manufacturers have revised those plans 

to reflect subsequent developments. 

We solicit comment on all aspects of 

this proposal. In particular, we solicit 

comment on (1) whether the proposed 

levels of maximum feasible CAFE reflect 

an appropriate balancing of the explicit 

statutory factors and other relevant 

factors, (2) whether CAFE reform should 

be designed based on size categories or 

as a continuous function, (3) whether 

the reform should be based on a single 

size attribute or whether adjustments 

should also be made for attributes such 

as towing capability and cargo hauling 

capability, and (4) whether the threeyear transition period is necessary or 

whether it can be reduced to achieve a 

more rapid transition to the Reformed 

CAFE system. Other specific areas 

where we request comments are 

identified elsewhere in this preamble 

and in the Preliminary Regulatory 

Impact Analysis (PRIA). Based on 

public comments and other information, 

including new data and analysis, and 

updated product plans, the standards 

adopted in the final rule could well be 

different. 

B. Energy demand and supply and the 

value of conservation 

Many of the concerns about energy 

security and the effects of energy prices 

and supply on national economic wellbeing that led to the enactment of EPCA 

in 1975 persist today.3 The demand for 

oil is steadily growing in the U.S. and 

around the world. By 2025, U.S. 

demand for oil is expected to increase 

40 percent and world oil demand is 

expected to increase by nearly 60 

percent. Most of these increases would 

occur in the transportation sector. To 

meet this projected increase in world 

demand, worldwide productive capacity 

would have to increase by more than 44 

million barrels per day over current 

levels. OPEC producers are expected to 

supply nearly 60 percent of the 

increased production. By 2025, nearly 

70 percent of the oil consumed in the 

U.S. would be imported oil. Strong 

growth in the demand for oil 

worldwide, coupled with tight crude oil 

supplies, is the driving force behind the 

sharp price increases seen over the past 

four years. Increasingly, the oil 

consumed in the U.S. originates in 

countries with political and economic 

situations that raise concerns about 

future oil supply and prices. 

Energy is an essential input to the 

U.S. economy and having a strong 

economy is essential to maintaining and 

strengthening our national security. 

Conserving energy, especially reducing 

the nation’s dependence on petroleum, 

benefits the U.S. in several ways. 

Reducing total petroleum use decreases 

our economy’s vulnerability to oil price 

shocks. Reducing dependence on oil 

imports from regions with uncertain 

conditions enhances our energy security 

and can reduce the flow of oil profits to 

certain states now hostile to the U.S. 

Reducing the growth rate of oil use will 

help relieve pressures on already 

strained domestic refinery capacity, 

decreasing the likelihood of future 

product price volatility. 

II. Background 

A. 1974 DOT/EPA report to Congress on 

potential for motor vehicle fuel economy 

improvements 

In 1974, the Department of 

Transportation (DOT) and 

Environmental Protection Agency (EPA) 

submitted to Congress a report entitled 

‘‘Potential for Motor Vehicle Fuel 

Economy Improvement’’ (1974 Report).4

This report was prepared in compliance 

with Section 10 of the Energy Supply 

and Environmental Coordination Act of 

1974, Public Law 93–319 (the Act). The 

Act directed EPA and DOT to report on 

the practicability of a productionweighted fuel economy improvement 

standard of 20 percent for new motor 

vehicles in the 1980 time frame. As 

required by Section 10 of the Act, the 

report included an assessment of the 

technological challenges of meeting any 

such standard, including lead times 

involved, the test procedures required to 

determine compliance, the economic 

51418 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

costs and benefits, the enforcement 

means, the effect on energy and other 

resources, and the relationship of safety 

and emission standards to CAFE. 

In the 1974 Report, DOT/EPA said 

that performance standards regulating 

fuel economy could take either of two 

modes: A production-weighted average 

standard for each manufacturer’s entire 

fleet of vehicles or a fuel economy 

standard tailored to individual classes 

of vehicles. They identified three forms 

that a production-weighted standard 

could take: 

• A common standard (e.g., 16.8 mpg 

for all manufacturers); 

• A standard stated as a uniform per 

cent improvement (e.g., 20% 

improvement for each manufacturer); or 

• A variable standard based on the 

costs or potential to improve for each 

manufacturer. 

(1974 Report, p. 77) 

As to standards for individual classes, 

they identified two different forms: 

• A standard stated as uniform 

quantity of improvement (e.g., 2.8 mpg 

for all classes); or 

• A variable standard based on the 

potential to improve each class. 

(1974 Report, p. 77–78) 

DOT/EPA concluded in the 1974 

Report that a production-weighted 

standard establishing one uniform 

specific fuel economy average for all 

manufacturers would, if sufficiently 

stringent to have the needed effect, 

impact most heavily on manufacturers 

who have lower fuel economy, while 

not requiring manufacturers of current 

vehicles with better fuel economy to 

maintain or improve their performance. 

(1974 Report, p. 12) Productionweighted standards specifically tailored 

to each manufacturer would eliminate 

some inequities, but were considered to 

be difficult to administer fairly. (Ibid.) 

B. Energy Policy and Conservation Act 

of 1975 

Congress enacted the Energy Policy 

and Conservation Act (EPCA Pub. L. 94–

163) during the aftermath of the energy 

crisis created by the oil embargo of 

1973–74. The Act established an 

automobile fuel economy regulatory 

program by adding Title V, ‘‘Improving 

Automotive Efficiency,’’ to the Motor 

Vehicle Information and Cost Savings 

Act. Title V has been amended from 

time to time and codified without 

substantive change as Chapter 329 of 

title 49, United States Code. Chapter 329 

provides for the issuance of average fuel 

economy standards for passenger 

automobiles and separate standards for 

automobiles that are not passenger 

automobiles (light trucks). 

For the purposes of the CAFE statute, 

‘‘automobiles’’ include any ‘‘4-wheeled 

vehicle that is propelled by fuel (or by 

alternative fuel) manufactured primarily 

for use on public streets, roads, and 

highways (except a vehicle operated 

only on a rail line), and rated at not 

more than 6,000 pounds gross vehicle 

weight.’’ They also include any such 

vehicle rated at between 6,000 and 

10,000 pounds gross vehicle weight 

(GVWR) if the Secretary decides by 

regulation that an average fuel economy 

standard for the vehicle is feasible, and 

that either such a standard will result in 

significant energy conservation or the 

vehicle is substantially used for the 

same purposes as a vehicle rated at not 

more than 6000 pounds GVWR. 

In 1978, NHTSA published a final 

rule in which we determined that 

standards for vehicles rated between 

6000 and 8500 pounds GVWR are 

feasible, that such standards will result 

in significant energy conservation on a 

per-vehicle basis and that those vehicles 

are used for substantially the same 

purposes as vehicles rated at not more 

than 6000 pounds GVWR (March 23, 

1978; 43 FR 11995, at 11997). Vehicles 

rated at between 6000 and 8500 pounds 

GVWR first became subject to the CAFE 

standards in MY 1980. 

The CAFE standards set a minimum 

performance requirement in terms of an 

average number of miles a vehicle 

travels per gallon of gasoline or diesel 

fuel. Individual vehicles and models are 

not required to meet the mileage 

standard. Instead, each manufacturer 

must achieve a harmonically averaged 

level of fuel economy for all specified 

vehicles manufactured by a 

manufacturer in a given MY. The statute 

distinguishes between ‘‘passenger 

automobiles’’ and ‘‘non-passenger 

automobiles.’’ We generally refer to nonpassenger automobiles as light trucks. 

In enacting EPCA, Congress made a 

clear and specific choice about the 

structure of the average fuel economy 

standard for passenger cars. After 

considering the variety of approaches 

presented in the 1974 Report, Congress 

established a common statutory CAFE 

standard applicable to each 

manufacturer’s fleet of passenger 

automobiles. The Secretary of 

Transportation has the authority to 

change the standard if it no longer 

represents the ‘‘maximum feasible’’

standard consistent with the criteria set 

forth in the statute. Pursuant to that 

authority, the Secretary amended the 

passenger car standard with regard to 

MYs 1986–1989 to address situations in 

which, despite manufacturers’ good 

faith compliance plans, market 

conditions rendered the statutory 

standard impracticable and infeasible. 

Since 1990, the CAFE standard for 

passenger automobiles has been 27.5 

mpg and compliance is determined in 

accordance with detailed procedures set 

forth in Section 32904(a) and (b). 

Congress was considerably less 

decided and prescriptive with respect to 

what sort of standards and procedures 

should be established for light trucks. It 

neither made a clear choice among the 

approaches (or among the forms of those 

approaches) identified in the 1974 

Report nor precluded the selection of 

any of those approaches or forms. 

Further, it did not establish by statute a 

CAFE standard for light trucks. Instead, 

Congress provided the Secretary with a 

choice of establishing a form of a 

production-weighted average standard 

for each manufacturer’s entire fleet of 

light trucks, as suggested in the 1974 

Report, or a form of productionweighted standards for classes of light 

trucks. Congress directed the Secretary 

to establish maximum feasible CAFE 

standards applicable to each 

manufacturer’s light truck fleet, or 

alternatively, to classes of light trucks, 

and to establish them at least 18 months 

prior to the start of each model year. 

When determining a ‘‘maximum feasible 

level of fuel economy,’’ the Secretary is 

directed to balance factors including the 

nation’s need to conserve energy, 

technological feasibility, economic 

practicability and the impact of other 

motor vehicle standards on fuel 

economy. 

Manufacturers are required to provide 

a series of fuel economy reports to both 

the EPA and NHTSA. NHTSA requires 

manufacturers to provide pre-model 

year and mid-model year reports. See 49 

CFR part 537. The reports to NHTSA 

must include, in part, vehicle model 

fuel economy values as calculated under 

the EPA regulations, projected sales 

volumes, and actual sales volumes as 

available. A manufacturer must supply 

similar information to the EPA at the 

end of a model year, along with actual 

production volumes so that its fleet 

wide average fuel economy can be 

calculated. The EPA then certifies these 

reports and submits them to NHTSA so 

that we may determine a manufacturer’s 

compliance with the CAFE standards. 

C. 1979–2002 light truck standards 

NHTSA established the first light 

truck CAFE standards for MY 1979 and 

applied them to light trucks with a 

GVWR up to 6,000 pounds (March 14, 

1977; 42 FR 13807). Beginning with MY 

1980, NHTSA raised this GVWR ceiling 

to 8,500 pounds. For MYs 1979–1981, 

the agency established separate 

standards for two-wheel drive (2WD) 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51419 

5 ‘‘Captive import’’ means, with respect to a light 

truck, one which is not domestically manufactured 

but which is imported by a manufacturer whose 

principal place of business is the United States. 49 

CFR 533.4(b)(2). 

6NHTSA similarly found it necessary on occasion 

to reduce the passenger car CAFE standards in 

response to new information. The agency reduced 

the MY 1986 passenger car standard because a 

continuing decline in gasoline prices prevented a 

projected shift in consumer demand toward smaller 

cars and smaller engines and because the only 

actions available to manufacturers to improve their 

fuel economy levels for MY 1986 would have 

involved product restrictions likely resulting in 

significant adverse economic impacts. (October 4, 

1985; 40 FR 40528) This action was upheld in 

Public Citizen vs. NHTSA, 848 F.2d 256 (D.C. Cir. 

1988). NHTSA also reduced the MY 1987–88 

passenger car standards (October 6, 1986; 51 FR 

35594) and MY 1989 passenger car standard 

(October 6, 1988; 53 FR 39275) for similar reasons. 

7http://www.whitehouse.gov/energy/NationalEnergy-Policy.pdf 

and four-wheel drive (4WD) light trucks 

without a ‘‘combined’’ standard 

reflecting the combined capabilities of 

2WD and 4WD light trucks. 

Manufacturers that produced both 2WD 

vehicles and 4WD vehicles could, 

however, decide to treat them as a single 

fleet and comply with the 2WD 

standard. 

Beginning with MY 1982, NHTSA 

established a combined standard 

reflecting the combined capabilities of 

2WD and 4WD light trucks, plus 

optional 2WD and 4WD standards. After 

MY 1991, NHTSA dropped the optional 

2WD and 4WD standards. During MYs 

1980–1995, NHTSA also separated the 

‘‘captive imports’’ 5 of U.S. light truck 

manufacturers from their other truck 

models in determining compliance with 

CAFE standards. 

Since the agency sets standards at the 

maximum feasible level of average fuel 

economy, as required by EPCA, and 

since the agency’s determinations about 

the maximum feasible level of average 

fuel economy in future model years are 

highly dependent on projections about 

the state of technology and market 

conditions in those years, NHTSA twice 

found it necessary to reduce a light 

truck standard when it received new 

information relating to the agency’s past 

projections. In 1979, the agency reduced 

the MY 1981 2WD standard after 

Chrysler demonstrated that there were 

smaller than expected fuel economy 

benefits from various technological 

improvements and larger than expected 

adverse impacts from other federal 

vehicle standards and test procedures 

(December 31 1979; 44 FR 77199). 

In 1984, the agency reduced the MY 

1985 light truck standards to the 

following levels: Combined standard19.5 mpg, 2WD standard-19.7 mpg and 

4WD standard-18.9 mpg (October 22, 

1984; 49 FR 41250). The agency 

concluded that market demand for light 

truck performance, as reflected in 

engine mix and axle ratio usage, had not 

materialized as anticipated when the 

agency initially established the MY 

1985 standards. The agency said that 

this resulted from lower than 

anticipated fuel prices. The agency 

concluded that the only actions then 

available to manufacturers to improve 

their fuel economy levels for MY 1986 

would have involved product 

restrictions likely resulting in 

significant adverse economic impacts. 

The reduction of the MY 1985 standard 

was upheld by the U.S. Circuit Court of 

Appeals for the District of Columbia. 

Center for Auto Safety v. NHTSA, 793 

F.2d 1322 (D.C. Cir. 1986) (rejecting the 

contention that the agency gave 

impermissible weight to the effects of 

shifts in consumer demand toward 

larger, less fuel-efficient trucks on the 

fuel economy levels manufacturers 

could achieve).6

In 1994, the agency departed from its 

usual past practice of considering light 

truck standards for one or two model 

years at a time and published an 

Advance Notice of Proposed 

Rulemaking (ANPRM) in the Federal 

Register outlining NHTSA’s intention to 

set standards for some, or all, of MYs 

1998–2006 (59 FR 16324; April 6, 1994). 

On November 15, 1995, the 

Department of Transportation and 

Related Agencies Appropriations Act for 

FY 1996 was enacted. Pub. L. 104–50. 

Section 330 of that Act provided: 

None of the funds in this Act shall be 

available to prepare, propose, or promulgate 

any regulations * * * prescribing corporate 

average fuel economy standards for 

automobiles * * * in any model year that 

differs from standards promulgated for such 

automobiles prior to enactment of this 

section. 

Pursuant to that Act, we then issued a 

final rule limited to MY 1998, setting 

the light truck CAFE standard for that 

year at 20.7 mpg, the same level as the 

standard we had set for MY 1997 (61 FR 

14680; April 3, 1996). 

On September 30, 1996, the 

Department of Transportation and 

Related Agencies Appropriations Act for 

FY 1997 was enacted (Pub. L. 104–205). 

Section 323 of that Act included the 

same limitation on appropriations 

regarding the CAFE standards contained 

in Section 330 of the FY 1996 

Appropriations Act. The agency 

followed the same process as the prior 

year and established a MY 1999 light 

truck CAFE standard of 20.7 mpg, the 

same level as the standard that had been 

set for MYs 1997 and 1998. Because the 

same limitation on the setting of CAFE 

standards was included in the 

Appropriations Acts for each of FYs 

1998–2001, the agency followed that 

same procedure during those fiscal 

years. 

While the Department of 

Transportation and Related Agencies 

Appropriations Act for FY 2001 (Pub. L. 

106–346) contained a restriction on 

CAFE rulemaking identical to that 

contained in prior appropriation acts, 

the conference committee report for that 

Act directed NHTSA to fund a study by 

the NAS to evaluate the effectiveness 

and impacts of CAFE standards (H. Rep. 

No. 106–940, at p. 117–118). 

In a letter dated July 10, 2001, 

following the release of the President’s 

National Energy Policy, Secretary of 

Transportation Mineta asked the House 

and Senate Appropriations Committees 

to lift the restriction on the agency 

spending funds for the purposes of 

improving CAFE standards. The 

Department of Transportation and 

Related Agencies Appropriations Act for 

FY 2002 (Pub. L. 107–87), which was 

enacted on December 18, 2001, did not 

contain a provision restricting the 

Secretary’s authority to prescribe fuel 

economy standards. 

D. 2001 National Energy Policy 

The National Energy Policy,7 released 

in May 2001, stated that ‘‘(a) 

fundamental imbalance between supply 

and demand defines our nation’s energy 

crisis’’ and that ‘‘(t)his imbalance, if 

allowed to continue, will inevitably 

undermine our economy, our standard 

of living, and our national security.’’

The National Energy Policy was 

designed to promote dependable, 

affordable and environmentally sound 

energy for the future. The Policy 

envisions a comprehensive long-term 

strategy that uses leading edge 

technology to produce an integrated 

energy, environmental and economic 

policy. It set forth five specific national 

goals: ‘‘modernize conservation, 

modernize our energy infrastructure, 

increase energy supplies, accelerate the 

protection and improvement of the 

environment, and increase our nation’s 

energy security.’’

The National Energy Policy included 

recommendations regarding the path 

that the Administration’s energy policy 

should take and included specific 

recommendations regarding vehicle fuel 

economy and CAFE. It recommended 

that the President direct the Secretary of 

Transportation to—

—Review and provide recommendations on 

establishing CAFE standards with due 

consideration of the National Academy of 

Sciences study released (in prepublication 

51420 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

8The NAS submitted its preliminary report to the 

Department of Transportation in July 2001 and 

released its final report in January 2002. 

9The report noted the following about the 

concept of equity: 

Potential Inequities 

The issue of equity or inequity is subjective. 

However, one concept of equity among 

manufacturers requires equal treatment of 

equivalent vehicles made by different 

manufacturers. The current CAFE standards fail this 

test. If one manufacturer was positioned in the 

market selling many large passenger cars and 

thereby was just meeting the CAFE standard, 

adding a 22-mpg car (below the 27.5-mpg standard) 

would result in a financial penalty or would require 

significant improvements in fuel economy for the 

remainder of the passenger cars. But, if another 

manufacturer was selling many small cars and was 

significantly exceeding the CAFE standard, adding 

a 22-mpg vehicle would have no negative 

consequences. 

(NAS, p. 102). 

10 In assessing and comparing possible reforms, 

the report urged consideration of the following 

factors: 

Fuel use responses encouraged by the policy, 

Effectiveness in reducing fuel use, 

Minimizing costs of fuel use reduction, 

Other potential consequences 

—Distributional impacts 

—Safety 

—Consumer satisfaction 

—Mobility 

—Environment 

—Potential inequities, and 

Administrative feasibility. 

(NAS, p. 94). 

form) in July 2001. Responsibly crafted 

CAFE standards should increase efficiency 

without negatively impacting the U.S. 

automotive industry. The determination of 

future fuel economy standards must 

therefore be addressed analytically and 

based on sound science. 

—Consider passenger safety, economic 

concerns, and disparate impact on the U.S. 

versus foreign fleet of automobiles. 

—Look at other market-based approaches to 

increasing the national average fuel 

economy of new motor vehicles. 

E. 2002 NAS Study of CAFE Reform 

In response to direction from 

Congress, NAS published a lengthy 

report in 2002 entitled ‘‘Effectiveness 

and Impact of Corporate Average Fuel 

Economy (CAFE) Standards.’’ 8

The report concludes that the CAFE 

program has clearly contributed to 

increased fuel economy and that it was 

appropriate to consider further increases 

in CAFE standards. (NAS, p. 3 (Finding 

1)) It cited not only the value of fuel 

savings, but also adverse consequences 

(i.e., externalities) associated with high 

levels of petroleum importation and use 

that are not reflected in the price of 

petroleum (e.g., the adverse impact on 

energy security). The report further 

concluded that technologies exist that 

could significantly reduce fuel 

consumption by passenger cars and 

light truck fuels within 15 years, while 

maintaining vehicle size, weight, utility 

and performance. (NAS, p. 3 (Finding 

5)) Light duty trucks were said to offer 

the greatest potential for reducing fuel 

consumption. (NAS, p. 4 (Finding 5)) 

The report also noted that vehicle 

development cycles—as well as future 

economic, regulatory, safety and 

consumer preferences—would influence 

the extent to which these technologies 

could lead to increased fuel economy in 

the U.S. market. To assess the economic 

trade-offs associated with the 

introduction of existing and emerging 

technologies to improve fuel economy, 

the NAS conducted what it called a 

‘‘cost-efficient analysis’’—‘‘that is, the 

committee [that authored the report] 

identified packages of existing and 

emerging technologies that could be 

introduced over the next 10 to 15 years 

that would improve fuel economy up to 

the point where further increases in fuel 

economy would not be reimbursed by 

fuel savings.’’ (NAS, p. 4 (Finding 6)) 

Recognizing the many trade-offs that 

must be considered in setting fuel 

economy standards, the report took no 

position on what CAFE standards would 

be appropriate for future years. It noted, 

‘‘(s)election of fuel economy targets will 

require uncertain and difficult trade-offs 

among environmental benefits, vehicle 

safety, cost, oil import dependence, and 

consumer preferences.’’

The report found that, to minimize 

financial impacts on manufacturers, and 

on their suppliers, employees, and 

consumers, sufficient lead-time 

(consistent with normal product life 

cycles) should be given when 

considering increases in CAFE 

standards. The report stated that there 

are advanced technologies that could be 

employed, without negatively affecting 

the automobile industry, if sufficient 

lead-time were provided to the 

manufacturers. 

The report expressed concerns about 

increasing the standards under the 

CAFE program as currently structured. 

While raising CAFE standards under the 

existing structure would reduce fuel 

consumption, doing so under alternative 

structures ‘‘could accomplish the same 

end at lower cost, provide more 

flexibility to manufacturers, or address 

inequities arising from the present’’

structure. (NAS, pp. 4–5 (Finding 10)) 9

Further, almost all of the committee that 

authored the report, including the 

committee’s safety specialists, said, ‘‘to 

the extent that the size and weight of the 

fleet have been constrained by CAFE 

requirements * * * those requirements 

have caused more injuries and fatalities 

on the road than would otherwise have 

occurred.’’ (NAS, p. 29) Specifically, 

they noted: ‘‘the downweighting and 

downsizing that occurred in the late 

1970s and early 1980s, some of which 

was due to CAFE standards, probably 

resulted in an additional 1300 to 2600 

traffic fatalities in 1993.’’ (NAS, p. 3 

(Finding 2)) 

To address those structural problems, 

the report suggested various possible 

reforms.10 The report found that the 

‘‘CAFE program might be improved 

significantly by converting it to a system 

in which fuel targets depend on vehicle 

attributes.’’ (NAS, p. 5 (Finding 12)) The 

report noted 

One such system would make the fuel 

economy target dependent on vehicle weight, 

with lower fuel consumption targets set for 

lighter vehicles and higher targets for heavier 

vehicles, up to some maximum weight, above 

which the target would be weightindependent. Such a system would create 

incentives to reduce the variance in vehicle 

weights between large and small vehicles, 

thus providing for overall vehicle safety. It 

has the potential to increase fuel economy 

with fewer negative effects on both safety and 

consumer choice. Above the maximum 

weight, vehicles would need additional 

advanced fuel economy technology to meet 

the targets. The committee believes that 

although such a change is promising, it 

requires more investigation than was possible 

in this study. 

(NAS, p. 5 (Finding 12)) 

The report noted further that under an 

attribute-based approach, the required 

CAFE levels could vary among the 

manufacturers based on the distribution 

of their product mix: 

Attribute-Based Fuel Economy Targets 

The government could change the way that 

fuel economy targets for individual vehicles 

are assigned. The current CAFE system sets 

one target for all passenger cars (27.5 mpg) 

and one target for all light-duty trucks (20.7 

mpg). Each manufacturer must meet a salesweighted average (more precisely, a 

harmonic mean * * *) of these targets. 

However, targets could vary among passenger 

cars and among trucks, based on some 

attribute of these vehicles such as weight, 

size, or load-carrying capacity. In that case a 

particular manufacturer’s average target for 

passenger cars or for trucks would depend 

upon the fractions of vehicles it sold with 

particular levels of these attributes. For 

example, if weight were the criterion, a 

manufacturer that sells mostly light vehicles 

would have to achieve higher average fuel 

economy than would a manufacturer that 

sells mostly heavy vehicles. 

(NAS, p. 87) 

Based on these findings, the report 

recommended 

Consideration should be given to designing 

and evaluating an approach with fuel 

economy targets that are dependent on 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51421 

11A fifth problem area was announced in 2004, 

improving traffic safety data. 

12See http://www-nrd.nhtsa.dot.gov/vrtc/ca/ 

capubs/IPTRolloverMitigationReport/; http://wwwnrd.nhtsa.dot.gov/departments/nrd-11/aggressivity/ 

IPTVehicleCompatibilityReport/. 

vehicle attributes, such as vehicle weight, 

that inherently influence fuel use. Any such 

system should be designed to have minimal 

adverse safety consequences. 

(NAS, p. 6, (Recommendation 3)) 

In February 2002, Secretary Mineta 

asked Congress ‘‘to provide the 

Department of Transportation with the 

necessary authority to reform the CAFE 

program, guided by the NAS report’s 

suggestions.’’

F. 2002 Request for Comments on NAS 

Study 

On February 7, 2002, we issued a 

Request for Comments (RFC) (67 FR 

5767; Docket No. 2002–11419) seeking 

data on which we could base an 

analysis of manufacturer capability for 

the purpose of determining the 

appropriate CAFE standards to set for 

light trucks for upcoming model years, 

beginning with MY 2005. We also 

sought comments on possible reforms to 

the CAFE program, as it applies to both 

passenger cars and light trucks, to 

protect passenger safety, advance fuelefficient technologies, and obtain the 

benefits of market-based approaches. 

While we have considered the 

comments, the original RFC was quite 

general and the comments received 

tended to focus on concerns with the 

current program or the generic 

admonishment against CAFE reform—

and not on specific potential options. A 

more detailed summary of comments 

can be found in the advanced notice of 

proposed rulemaking (2003 ANPRM) 

published on December 29, 2003 (68 FR 

74908; Docket No. 2003–16128). 

G. 2003 Final Rule Establishing MY 

2005–2007 Light Truck Standards 

On April 7, 2003, the agency 

published a final rule establishing light 

truck CAFE standards for MYs 2005–

2007: 21.0 mpg for MY 2005, 21.6 mpg 

for MY 2006, and 22.2 mpg for MY 2007 

(68 FR 16868; Docket No. 2002–11419; 

Notice 3). The agency determined that 

these levels are the maximum feasible 

CAFE levels for light trucks for those 

model years, balancing the express 

statutory factors and other included or 

relevant considerations such as the 

impact of the standard on motor vehicle 

safety and employment. NHTSA 

estimated that the fuel economy 

increases required by the standards for 

MYs 2005–2007 would generate 

approximately 3.6 billion gallons of 

gasoline savings over the 25-year 

lifetime of the affected vehicles. 

In establishing the standards, the 

agency analyzed cost-effective 

technological improvements that could 

be made to the product offerings 

planned by the manufacturers. The 

agency’s projection of CAFE capability 

was based on the manufacturers’ most 

recently submitted product plans and 

technological improvements we 

determined to be appropriate and 

feasible within the time frame. In the 

final rule, we stated that we did not 

believe the final rule will necessitate, 

nor did we believe it will result in, any 

‘‘mix shifting,’’ e.g., decreasing the 

production volumes of vehicles that are 

heavier or larger and thus have 

relatively low fuel economy and 

increasing the production volumes of 

lighter or smaller vehicles, which might 

result in significant employment and/or 

average weight reductions were it to 

occur. 

We further expressed our belief that 

the final rule for MYs 2005–2007 will 

neither necessitate nor induce 

manufacturers to make reductions in 

vehicle weight that will adversely affect 

the overall safety of people traveling on 

the roads of America. Indeed, as the 

NAS report noted, there are many 

technological means that are available to 

manufacturers for improving fuel 

economy and are much more costeffective than weight reduction through 

materials substitution. Accordingly, we 

did not rely on weight reduction. 

We recognized in the final rule that 

the standard established for MY 2007 

could be a challenge for General Motors. 

We recognized further that, between the 

issuance of the final rule and the last 

(MY 2007) of the model years for which 

standards were being established, there 

was more time than in previous light 

truck CAFE rulemakings for significant 

changes to occur in external factors 

capable of affecting the achievable 

levels of CAFE. These external factors 

include fuel prices and the demand for 

vehicles with advanced fuel saving 

technologies, such as hybrid electric 

and advanced diesel vehicles. We said 

that changes in these factors could lead 

to higher or lower levels of CAFE, 

particularly in MY 2007. Recognizing 

that it may be appropriate to re-examine 

the MY 2007 standard in light of any 

significant changes in those factors, the 

agency reaffirms its plans to monitor the 

compliance efforts of the manufacturers. 

H. 2003 comprehensive plans for 

addressing vehicle rollover and 

compatibility 

In September 2002, NHTSA 

completed a thorough examination of 

the opportunities for significantly 

improving vehicle and highway safety 

and announced the establishment of 

interdisciplinary teams to formulate 

comprehensive plans for addressing the 

four most promising problem areas.11

Based on the work of the teams, the 

agency issued detailed reports analyzing 

each of the problem areas and 

recommending coordinated strategies 

that, if implemented effectively, will 

lead to significant improvements in 

safety. 

Two of the problems areas are vehicle 

rollover and vehicle compatibility. The 

reports on those areas identify a series 

of vehicle, roadway and behavioral 

strategies for addressing the problems.12

Among the vehicle strategies, both 

reports identified reform of the CAFE 

program as one of the steps that needed 

to be taken to reduce those problems: 

The current structure of the CAFE system 

can provide an incentive to manufacturers to 

downweight vehicles, increase production of 

vehicle classes that are more susceptible to 

rollover crashes, and produce a less 

homogenous fleet mix. As a result, CAFE is 

critical to the vehicle compatibility and 

rollover problems. 

(a) Highlights of Current Program 

In its final rule setting new CAFE 

standards for MY 2005–2007 light trucks, 

NHTSA stated that it intends to examine 

possible reforms to the CAFE system, 

including those recommended in the 

National Academy of Sciences’ CAFE report. 

(b) Proposed Initiatives 

Consistent with its statutory authority, the 

agency plans to address issues relating to the 

structure, operation and effects of potential 

changes to the CAFE system and CAFE 

standards. In taking this broad view, the 

agency recognizes that the regulation of the 

(sic) fuel economy can have substantial 

effects on vehicle safety, the composition of 

the light vehicle fleet, the economic wellbeing of the automobile industry and, of 

course, our nation’s energy security. 

(c) Expected Program Outcomes 

It is NHTSA’s goal to identify and 

implement reforms to the CAFE system that 

will facilitate improvements in fuel economy 

without compromising motor vehicle safety 

or American jobs. * * * 

* * * NHTSA intends to examine the 

safety impacts, both positive and negative, 

that may result from any modifications to 

CAFE as it now exists. Regardless of the root 

causes, it is clear that the downsizing of 

vehicles that occurred during the first decade 

of the CAFE program had serious safety 

consequences. Changes to the existing system 

are likely to have equally significant impacts. 

NHTSA is determined to ensure that these 

impacts are positive. 

I. 2003 ANPRM 

On December 29, 2003, the agency 

published an ANPRM seeking comment 

on various issues relating to reforming 

the CAFE program (68 FR 74908; Docket 

51422 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

13On the same date, we also published a request 

for comments seeking manufacturer product plan 

information for MYs 2008–2012 to assist the agency 

in analyzing possible reforms to the CAFE program 

which are discussed in a companion notice 

published today. (68 FR 74931) The agency sought 

information that would help it assess the effect of 

these possible reforms on fuel economy, 

manufacturers, consumers, the economy, motor 

vehicle safety and American jobs. 

14Manufacturers can reduce weight without 

changing the fundamental structure of the vehicle 

by using lighter materials or eliminating available 

equipment or options. In contrast, reducing vehicle 

size, and particularly footprint, generally entails an 

alteration of the basic architecture of the vehicle. 

15However, both studies also suggest that if 

downweighting is concentrated on the heaviest 

light trucks in the fleet there would be no net safety 

impact, and there might even be a small fleet-wide 

safety benefit. There is substantial uncertainty 

about the curb weight cut-off above which this 

would occur. 

No. 2003–16128).13 The agency sought 

comment on possible enhancements to 

the program that would assist in further 

fuel conservation, while protecting 

motor vehicle safety and the economic 

vitality of the automobile industry. The 

agency indicated that it was particularly 

interested in structural reform. This 

document, while not espousing any 

particular form of reform, sought more 

specific input than the 2002 RFC on 

various options aimed at adapting the 

CAFE program to today’s vehicle fleet 

and needs. 

1. Need for reform 

The 2003 ANPRM discussed the 

principal criticisms of the current CAFE 

program that led the agency to explore 

light truck CAFE reform (68 FR 74908, 

at 74910–13. First, the energy-saving 

potential of the CAFE program is 

hampered by the current regulatory 

structure. The Unreformed approach to 

CAFE does not distinguish between the 

various market segments of light trucks, 

and therefore does not recognize that 

some vehicles designed for 

classification purposes as light trucks 

may achieve fuel economy similar to 

that of passenger cars. The Unreformed 

CAFE approach instead applies a single 

standard to the light truck fleet as a 

whole, encouraging manufacturers to 

offer small light trucks that will offset 

the larger vehicles that get lower fuel 

economy. A CAFE system that more 

closely links fuel economy standards to 

the various market segments reduces the 

incentive to design vehicles that are 

functionally similar to passenger cars 

but classified as light trucks. 

Second, because weight strongly 

affects fuel economy, the current light 

truck CAFE program encourages vehicle 

manufacturers to reduce weight in their 

light truck offerings to achieve greater 

fuel economy.14 As the NAS report and 

a more recent NHTSA study have found, 

downweighting of the light truck fleet, 

especially those trucks in the low and 

medium weight ranges, creates more 

safety risk for occupants of light trucks 

and all motorists combined.15

Third, the agency noted the adverse 

economic impacts that might result from 

steady future increases in the stringency 

of CAFE standards under the current 

regulatory structure. Rapid increases in 

the light truck CAFE standard could 

have serious adverse economic 

consequences. The vulnerability of fullline firms to tighter CAFE standards 

does not arise primarily from poor fuel 

economy ratings within weight classes, 

i.e., from less extensive use of fuel 

economy improving technologies. As 

explained in the 2003 ANPRM, their 

overall CAFE averages are low 

compared to manufacturers that 

produce more relatively light vehicles 

because their sales mixes service a 

market demand for bigger and heavier 

vehicles capable of more demanding 

utilitarian functions. An attribute-based 

(weight and/or size) system could avoid 

disparate impacts on full-line 

manufacturers that could result from a 

sustained increase in CAFE standards. 

2. Reform options 

In discussing potential changes, the 

agency focused primarily on structural 

improvements to the current CAFE 

program authorized under the current 

statutory authority, and secondarily on 

definitional changes to the current 

vehicle classification system and 

whether to include vehicles between 

8,500 to 10,000 lbs. GVWR. 

The ANRPM discussed two structural 

reforms. The first reform divided light 

trucks into two or more classes based on 

vehicle attributes. The second was an 

attribute-based ‘‘continuous-function’’

system, such as that discussed in the 

NAS report. We chose various measures 

of vehicle weight and/or size to 

illustrate the possible design of an 

attribute-based system. However, we 

also sought comment as to the merits of 

using other vehicle attributes as the 

basis of an attribute-based system. 

The 2003 ANPRM also presented two 

potential options under which vehicles 

with a GVWR of up to 10,000 lbs. could 

be included under the CAFE program, 

were the agency to make the requisite 

determinations to include them. One 

option would be to include vehicles 

defined by EPA as medium duty 

passenger vehicles (65 FR 6698, 6749–

50, 6851–6852) for use in the CAFE 

program. This definition would 

essentially make SUVs and passenger 

vans between 8,500 and 10,000 lbs. 

GVWR subject to CAFE, while 

continuing to exclude most mediumand heavy-duty pickups and most 

medium- and heavy-duty cargo vans 

that are primarily used for agricultural 

and commercial purposes. A second 

option would be to make all vehicles 

between 8,500 and 10,000 lbs GVWR 

subject to CAFE standards. 

Through the 2003 ANPRM, the agency 

intended to begin a public discussion on 

potential ways, within current statutory 

authority, to improve the CAFE program 

to better achieve our public policy 

objectives. The agency set forth a 

number of possible concepts and 

measures, and invited the public to 

present additional concepts. The agency 

expressed interest in any suggestions 

toward revamping the CAFE program in 

such a way as to enhance overall fuel 

economy while protecting occupant 

safety and the economic vitality of the 

auto market. 

The agency also discussed and sought 

comment on the classification of 

vehicles as passenger cars or light 

trucks. As suggested in numerous of the 

comments, we are proposing only to 

clarify the applicability of the flat floor 

provision to vehicles with folding seats. 

See section IX.B below. We are not 

otherwise changing those classification 

regulations at this time in part because 

we believe an orderly transition to 

Reformed CAFE could not be 

accomplished if we simultaneously 

change which vehicles are included in 

the light truck program and because, as 

applied in MY 2011, Reformed CAFE is 

likely to reduce the incentive to produce 

vehicles classified as light trucks 

instead of as passenger cars. We may 

revisit the definitional issues as 

appropriate in the future. 

J. Recent developments 

1. Factors underscoring need for reform 

Since our ANPRM was published in 

2003, there have been two important 

complicating factors that underscore the 

need for CAFE reform. One factor is the 

fiscal problems reported by General 

Motors and Ford, while the other is the 

recent surge in gasoline prices, a 

development that may be exacerbating 

the financial challenges faced by both 

companies. 

The two largest, full-line light-truck 

manufacturers, General Motors and 

Ford, have reported serious financial 

difficulties. The investment community 

has downgraded the bonds of both 

companies. Further, both companies 

have announced significant layoffs and 

other actions to improve their financial 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51423 

16See http://tonto.eia.doe.gov/oog/info/gdu/ 

gaspump.html. 

17See http://www.eia.doe.gov/oillgas/ 

petroleum/data_publications/wrgp/ 

mogas_home_page.html and http:// 

tonto.eia.doe.gov/oog/info/gdu/gasdiesel.asp. 

18To calculate the fuel savings for the light trucks 

manufactured in a model year, we consider the 

savings over a 26-year period. The number of light 

trucks manufactured during each model year that 

remains in service during each subsequent calendar 

year is estimated by applying estimates of the 

proportion of light trucks surviving to each age up 

to 26 years (see Table VIII–2 in the PRIA). At the 

end of 26 years, the proportion of light trucks 

remaining in service falls below 10 percent. 

19http://www.eia.doe.gov/oiaf/aeo/index.html. 

20See http://www-cta.ornl.gov/cta/Publications/ 

pdf/ORNL_TM_2004_181_HybridDiesel.pdf. 

21The ‘‘Stage’’ Analysis primarily involved 

application of the agency’s engineering judgment 

and expertise about possible adjustments to the 

detailed product plans submitted by manufacturers. 

The methodology of the Volpe model was described 

in detail in the NPRM and Final Rule establishing 

light truck CAFE standards for MYs 2005–2007. The 

model has been updated and refined, but remains 

fundamentally the same. The updated model has 

been peer reviewed. The model documentation, 

including a description of the input assumptions 

and process, as well as peer review reports, will be 

made available in the rulemaking docket for this 

Continued 

condition. While these financial 

problems did not give rise to the 

Administration’s CAFE reform 

initiative, the financial risks now faced 

by these companies, including their 

workers and suppliers, underscore the 

importance to full-line vehicle 

manufacturers of establishing an 

equitable CAFE regulatory framework. 

There has also been a sharp and 

sustained surge in gasoline prices since 

our last light truck final rule in April 

2003 and the December 2003 ANPRM 

on CAFE reform. According to the 

Energy Information Administration 

(EIA), the retail price for gasoline in 

April 2003 was $1.59 per gallon and in 

December 2003 was $1.48 per gallon.16

The weekly U.S. retail price for the 

week of August 15, 2005 was $2.55 per 

gallon.17

Although the surge of gasoline prices 

highlights the need for both more energy 

supplies and intensified conservation 

efforts, it is important to recognize that 

CAFE standards for MYs 2008–2011 

should not be based on current gasoline 

prices. They should be based on our 

best forecast of what average real 

gasoline prices will be in the U.S. 

during the years that these vehicles will 

be used by consumers: the 26-year 

period beginning in 2008 and extending 

almost to 2040.18 Since miles of travel 

tend to be concentrated in the early 

years of a vehicle’s lifetime, the 

projected gasoline price in the 2008–

2020 period is particularly relevant for 

this rulemaking. 

When we issued the April 2003 final 

rule for MY 2005–2007 light truck 

CAFE, we based the final economic 

assessment of that rule on estimated 

gasoline prices at the pump that ranged 

from $1.37 per gallon in 2005 to $1.46 

per gallon in 2030 (based on year 2000 

prices). Those prices, which are set forth 

year by year in our April 2003 Final 

Economic Assessment (Docket No. 

11419–18358, page VIII–7), were based 

on the Energy Information 

Administration’s ‘‘Annual Energy 

Outlook 2003.’’

The PRIA for this proposed rule has 

been based on projected gasoline prices 

from the more recent Annual Energy 

Outlook 2005 (AEO2005) (published in 

2004 before the recent price rises), 

which projected gasoline prices ranging 

from $1.51 to $1.58 per gallon.19 These 

are the most current long-term forecasts 

for gasoline prices available from EIA at 

this time. EIA has, however, issued 

revised short-term forecasts that project 

gasoline prices remaining above $2 

through late 2006, significantly higher 

than what was projected in AEO2005. 

Further, we note that in its August 

‘‘International Energy Outlook 2005,’’

EIA’s reference case for future oil prices 

‘‘has adopted the Annual Energy 

Outlook 2005 (AEO2005) October 

futures case, which has an assumption 

of higher prices than the AEO2005 

reference case and now appears to be a 

more likely projection for oil prices.’’

During the rulemaking, we will 

continue to consult with EIA and other 

experts on projections of likely gasoline 

prices over the anticipated lifetime of 

light trucks sold in MYs 2008–2011, 

including the development of gasoline 

price projections for EIA’s Annual 

Energy Outlook 2006 (AEO2006). EIA 

will be issuing AEO2006, with revised 

long-term forecasts, in November 2005. 

We are seeking public comment on the 

appropriate gasoline price forecast to 

use in the final rule, including 

consideration of the AEO2006 forecast. 

2. Reports updating fuel economy 

potential 

Additionally, the agency has placed 

in the docket for this notice a 2005 

document, prepared under the auspices 

of the Department of Energy (DOE) for 

NHTSA, updating the estimates of lighttruck fuel economy potential and costs 

in the 2001 NAS report, ‘‘Effectiveness 

and Import of Corporate Average Fuel 

Economy (CAFE) Standards. The agency 

seeks comments on this document. After 

having this document peer reviewed, 

the agency will place the peer 

reviewers’ reports in the docket for 

public comment. 

We note that the introduction of the 

2005 DOE document states that that 

document does not address the costs 

and benefits of hybrid and diesel 

technology because these matters have 

been documented in a 2004 Energy and 

Environmental Analysis, Inc. (EEA) 

study for the DOE. The title of that 

study is ‘‘Future Potential of Hybrid and 

Diesel Powertrains in the U.S. LightDuty Vehicle Market.’’20 The agency has 

placed that study in the docket and 

seeks comments on it as well. 

III. The Unreformed CAFE proposal for 

MYs 2008–2010 

As part of our Reformed CAFE 

proposal, we have crafted a transition 

period in which manufacturers have the 

option of complying with either the 

Reformed or the Unreformed CAFE 

systems. During the transition period, 

the requirements under the Reformed 

CAFE systems are linked to those of the 

Unreformed system. The Reformed 

CAFE standards for MYs 2008–2010 

would be set at levels intended to 

ensure that the industry-wide cost of the 

Reformed standards are roughly 

equivalent to the industry-wide cost of 

the Unreformed CAFE standards in 

those model years. This approach has 

several important advantages. If the 

Unreformed standards are judged to be 

economically practicable and since the 

Reformed standards spread the cost 

burden across the industry to a greater 

extent, equalizing the costs between the 

two systems ensures that the Reformed 

standards will be within the realm of 

economic practicability. Further, this 

approach promotes an orderly and 

effective transition to the Reformed 

CAFE system since experience will be 

gained prior to MY 2011. In this section, 

we describe how we developed the 

Unreformed CAFE standards. 

In developing this proposal for 

Unreformed CAFE standards, we first 

analyzed the data submitted by the 

manufacturers using the same type of 

analyses we employed in establishing 

light truck CAFE standards for MYs 

2005–2007. We determined which 

manufacturers have a significant share 

of the light truck market, analyzed data 

to determine the CAFE ‘‘baseline’’ for 

each of those companies, and then 

conducted a manual engineering 

analysis (the Stage Analysis)—in 

conjunction with a computer-based 

engineering analysis (the Volpe 

Analysis)—to determine what 

technologies each company with a 

significant share of the market could use 

to enhance its overall fleet fuel economy 

average.21

51424 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

notice. The agency will respond to the reports, and 

the public comments on those reports, at the time 

of the final rule. 

22The agency does not consider the overall fleet 

fuel economy projection for a manufacturer to be 

entitled to confidential treatment, whether derived 

from our own analysis or provided by the 

manufacturer. The agency has consistently 

published this information in all prior rulemakings 

establishing CAFE standards. See for example, 68 

FR 16868; April 7, 2003, 67 FR 77015; December 

16, 2002, 59 FR 16312; April 6, 1994, and 53 FR 

11074; April 5, 1988. 

23The agency notes that some vehicles and 

vehicle lines that were included in a manufacturer’s 

product plan ultimately may not be produced. 

However, the agency relies on the product plans as 

submitted. Further, if any vehicles are dropped, 

they are expected to constitute a small percentage 

of a manufacturer’s fleet and have minimal impact 

on a manufacturer’s projected capabilities. 

24 In the past, these manufacturers have generally 

not provided such information since they have 

either chosen to pay civil penalties instead of 

complying with the CAFE standards or had fleet 

fuel economy averages far enough above the 

standards that it was not necessary for them to 

make additional improvements in fuel economy. 

Giving particular regard to the 

capabilities of the least capable 

manufacturer with a significant share of 

the market, we have tentatively 

determined the maximum feasible fuel 

economy levels for MYs 2008–2010. In 

doing so, we took into account the four 

statutory factors (the nation’s need to 

conserve energy, technological 

feasibility, economic practicability 

(including employment consequences) 

and the impact of other regulations on 

fuel economy) as well as other included 

or relevant considerations such as the 

need to protect against adverse safety 

consequences. 

As noted above, we have tentatively 

determined that the following fuel 

economy standards for MYs 2008–2010 

are the maximum feasible levels under 

the Unreformed approach to light truck 

CAFE: 

MY 2008—22.5 mpg 

MY 2009—23.1 mpg 

MY 2010—23.5 mpg 

A. Baseline for determining 

manufacturer capabilities in MYs 2008–

2010 

In evaluating the manufacturers’ fuel 

economy capabilities for MYs 2008–

2010, we analyzed manufacturers’

projections of their CAFE and their 

underlying product plans and 

considered what, if any, additional 

actions the manufacturers could take to 

improve their fuel economy. In order to 

determine the fuel economy capabilities 

of manufacturers during MYs 2008–

2010, we first determined the 

manufacturers’ fuel economy baselines 

for those years. That is, we determined 

the fuel economy levels that 

manufacturers are planning to achieve 

in those years, given the level of the 

CAFE standards that they were required 

to comply with in MY 2007. We relied 

upon the information submitted by 

manufacturers in response to the 

December 29, 2003 request for product 

plans and any additional manufacturer 

updates, to determine those plans. 

For those manufacturers that did not 

submit information for those model 

years, we relied on data from the latest 

model year for which information from 

the manufacturers is available. To the 

extent that additional public 

information was available regarding the 

MY 2008–2010 product plans, we 

incorporated that information into the 

baselines for those manufacturers. 

We note that although manufacturers 

may receive credit toward their CAFE 

compliance by placing alternative fuel 

vehicles into the market through MY 

2008, the statute prohibits us from 

taking such benefits into consideration 

in determining the maximum feasible 

fuel economy standard (49 U.S.C. 

32902(h)). Accordingly, the baselines 

and projections do not reflect those 

credits. 

1. General Motors 

General Motors’ share of the light 

truck market for MY 2004 was 31.8 

percent. In its submission of MY 2008–

2010 product plans, General Motors 

projected that, based on those plans, its 

light truck fleet would achieve a CAFE 

level of 21.2 mpg for MY 2008, 21.3 mpg 

for MY 2009, and 21.3 mpg for MY 

2010. Its plans were based on sales of 

GMC, Chevrolet, Pontiac, Buick, 

Cadillac, Hummer, SAAB, and Saturn 

vehicles.22

2. Ford 

Ford Motor Company controlled 25.7 

percent of the light truck market in the 

U.S. in MY 2004. Ford projected that its 

light truck fleet would achieve a CAFE 

level of 21.6 mpg for MY 2008, 22.0 mpg 

for MY 2009 mpg, and 22.3 mpg for MY 

2010. Its data were based on sales of 

Ford branded vehicles, as well as 

Lincoln, Mercury, Mazda, Land Rover 

and Volvo branded vehicles. 

3. DaimlerChrysler 

DaimlerChrysler controlled 19.8 

percent of the U.S. light truck market in 

MY 2004. DaimlerChrysler submitted 

product plans for MYs 2008–2010, and 

projected that its light truck fleet would 

achieve a CAFE level of 21.9 mpg for 

MY 2008, 22.3 mpg for MY 2009, and 

22.3 mpg for MY 2010. Its data were 

based on sales of Chrysler, Jeep, Dodge, 

Mercedes, Mitsubishi, Smart23, and 

Sprinter brand vehicles. 

4. Other manufacturers 

Of the remaining manufacturers, 

Nissan and Hyundai (including Kia) 

provided information regarding sales 

and fuel economy projections for their 

vehicles through MY 2010. 

The balance of the remaining 

manufacturers did not provide any MY 

2008–2010 information.24 For these 

manufacturers (Toyota, Honda, Subaru, 

Isuzu, Suzuki, BMW, Porsche, and 

Volkswagen), we relied on manufacturer 

information from the latest model year 

for which it was available, and publicly 

available information regarding their 

MY 2008–2010 product plans. Toyota, 

Honda, and Subaru provided fuel 

economy projections for MYs 2005–

2007. The projected levels of fuel 

economy provided by Toyota and 

Honda would comply with the CAFE 

standard for MY 2007. Accordingly, we 

used those projected levels for each of 

MYs 2008–2010. Subaru’s submission 

was supplemented by publicly available 

information regarding its future vehicle 

fleet to arrive at its MY 2008–2010 

baselines. 

Isuzu, Suzuki, BMW, Porsche, and 

Volkswagen did not submit any 

response. For Isuzu and Suzuki’s 

baselines, we used the latest year for 

which we had product data (MY 2005) 

and combined those data with publicly 

available information regarding Isuzu 

and Suzuki’s future product plans. 

Further, since all of the light trucks 

produced by Isuzu and Suzuki are sister 

vehicles to General Motors vehicles, we 

were able to determine the technical 

details for those vehicles. BMW, 

Porsche, and Volkswagen previously 

paid fines in lieu of complying with the 

MY 2002 and 2003 light truck CAFE 

standards. The agency assumes that 

because of that past history and their 

low light truck production volumes, 

BMW, Porsche, and Volkswagen will 

continue to pay fines instead of bringing 

their fleets into compliance. Therefore, 

we relied on the fuel economy levels 

from MY 2005 in projecting the baseline 

for these three manufacturers. 

Table 1 provides the baseline values 

for manufacturers other than General 

Motors, Ford, and DaimlerChrysler: 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51425 

25See, e.g., Center for Auto Safety v. NHTSA 

(CAS), 793 F. 2d 1322 (D.C. Cir. 1986) 

(Administrator’s consideration of market demand as 

component of economic practicability found to be 

reasonable); Public Citizen 848 F.2d 256 (Congress 

established broad guidelines in the fuel economy 

statute; agency’s decision to set lower standard was 

a reasonable accommodation of conflicting 

policies). As the United States Court of Appeals 

pointed out in upholding NHTSA’s exercise of 

judgment in setting the 1987–1989 passenger car 

standards, ‘‘NHTSA has always examined the safety 

consequences of the CAFE standards in its overall 

consideration of relevant factors since its earliest 

rulemaking under the CAFE program.’’ Competitive 

Enterprise Institute v. NHTSA (CEI I), 901 F.2d 107, 

120 at n.11 (D.C. Cir. 1990). 

26 In adopting this interpretation in the final rule 

establishing the MY 1981–1984 fuel economy 

standards for passenger cars (June 30, 1977; 42 FR 

33534, at 33536–7), the Department rejected several 

more restrictive interpretations. One was that the 

phrase means that the standards are statutorily 

required to be cost-beneficial. The Department 

pointed out that Congress had rejected a 

manufacturer-sponsored amendment to the Act that 

would have required standards to be set at a level 

at which benefits were commensurate with costs. It 

also dismissed the idea that economic practicability 

should limit standards to free market levels that 

would be achieved with no regulation. 

TABLE 1.—BASELINE VALUES FOR MANUFACTURERS OTHER THAN GENERAL MOTORS, FORD AND DAIMLERCHRYSLER

[In mpg] 

MY 2008 MY 2009 MY 2010 

Toyota .................................................................................................................................................................. 22.9 22.9 22.9 

Honda .................................................................................................................................................................. 24.4 24.4 24.4 

Nissan .................................................................................................................................................................. 20.7 20.8 21.2 

Hyundai ................................................................................................................................................................ 21.8 23.2 22.8 

Subaru ................................................................................................................................................................. 25.7 26.2 26.2 

BMW .................................................................................................................................................................... 21.3 21.3 21.3 

Porsche ................................................................................................................................................................ 16.8 16.8 16.8 

Isuzu .................................................................................................................................................................... 20.4 20.2 20.1 

Suzuki .................................................................................................................................................................. 21.9 21.9 21.9 

Volkswagen .......................................................................................................................................................... 18.8 18.8 18.8 

B. Selection of Proposed Unreformed 

CAFE Standards—Process for 

Determining Maximum Feasible Levels 

We have tentatively concluded that 

the proposed standards for the 

Unreformed CAFE system are 

technologically feasible and 

economically practicable for those 

manufacturers with a substantial share 

of the light truck market (General 

Motors, Ford, and DaimlerChrysler), are 

capable of being met without substantial 

product restrictions, and will enhance 

the ability of the nation to conserve fuel 

and reduce its dependence on foreign 

oil. 

In determining the maximum feasible 

fuel economy level, we are required to 

consider the four statutory factors and 

are permitted to consider additional 

societal considerations. The agency has 

historically included the potential for 

adverse safety consequences when 

deciding upon a maximum feasible 

level.25 The overarching principle that 

emerges from the enumerated factors 

and the court-sanctioned practice of 

considering safety and links them 

together is that CAFE standards should 

be set at a level that will achieve the 

greatest amount of fuel savings without 

leading to adverse economic or other 

societal consequences. 

As discussed in many past fuel 

economy notices, the legislative history 

of EPCA explicitly states that NHTSA is 

to take industry-wide considerations 

into account in determining the 

maximum feasible CAFE levels, and not 

necessarily base its determination on 

any particular company’s asserted or 

projected abilities. This means that 

CAFE standards will not necessarily be 

set at the precise level that is associated 

with the plans of the ‘‘least capable 

manufacturer’’ with a substantial share 

of the market or that is projected by the 

agency for that manufacturer. (For a 

discussion of the industry-wide 

considerations and the origins of the 

‘‘least capable manufacturer’’ concept, 

see section IV.A.2.b below.) 

It means further that we must take 

particular care in considering the 

statutory factors with regard to these 

manufacturers—weighing their asserted 

capabilities, product plans and 

economic conditions against agency 

projections of their capabilities, the 

need for the nation to conserve energy 

and the effect of other regulations 

(including motor vehicle safety and 

emissions regulations) and other public 

policy objectives. 

This approach is consistent with the 

Conference Report on the legislation 

enacting the CAFE statute: 

Such determination [of maximum feasible 

average fuel economy level] should take 

industry-wide considerations into account. 

For example, a determination of maximum 

feasible average fuel economy should not be 

keyed to the single manufacturer that might 

have the most difficulty achieving a given 

level of average fuel economy. Rather, the 

Secretary must weigh the benefits to the 

nation of a higher average fuel economy 

standard against the difficulties of individual 

manufacturers. Such difficulties, however, 

should be given appropriate weight in setting 

the standard in light of the small number of 

domestic manufacturers that currently exist 

and the possible implications for the national 

economy and for reduced competition 

association [sic] with a severe strain on any 

manufacturer. 

S. Rep. No. 94–516, 94th Congress, 1st 

Sess. 154–155 (1975). 

The agency has historically assessed 

whether a potential CAFE standard is 

economically practicable in terms of 

whether the standard is one ‘‘within the 

financial capability of the industry, but 

not so stringent as to threaten 

substantial economic hardship for the 

industry.’’ 26 See, e.g., Public Citizen, 

848 F.2d at 264. In essence, in 

determining the maximum feasible level 

of CAFE, the agency assesses what is 

technologically feasible for 

manufacturers to achieve without 

leading to adverse economic 

consequences, such as a significant loss 

of jobs or the unreasonable elimination 

of consumer choice. 

At the same time, the law does not 

preclude a CAFE standard that poses 

considerable challenges to any 

individual manufacturer. The 

Conference Report makes clear, and the 

case law affirms: ‘‘(A) determination of 

maximum feasible average fuel economy 

should not be keyed to the single 

manufacturer which might have the 

most difficulty achieving a given level 

of average fuel economy.’’ CAS, 793 

F.2d at 1338–9. Instead, the agency is 

compelled ‘‘to weigh the benefits to the 

nation of a higher fuel economy 

standard against the difficulties of 

individual automobile manufacturers.’’

Id. The statute permits the imposition of 

reasonable, ‘‘technology forcing’’

challenges on any individual 

manufacturer, but does not contemplate 

standards that will result in ‘‘severe’’

economic hardship by forcing 

51426 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

27 In the past, the agency has set CAFE standards 

above its estimate of the capabilities of a 

manufacturer with less than a substantial, but more 

than a de minimus, share of the market. See, e.g., 

CAS, 793 F.2d at 1326 (noting that the agency set 

the MY 1982 light truck standard at a level that 

might be above the capabilities of Chrysler, based 

on the conclusion that the energy benefits 

associated with the higher standard would 

outweigh the harm to Chrysler, and further noting 

that Chrysler had 10–15 percent market share while 

Ford had 35 percent market share). On other 

occasions, the agency reduced an established CAFE 

standard to address unanticipated market 

conditions that rendered the standard unreasonable 

and likely to lead to severe economic consequences. 

49 FR 41250, 50 FR 40528, 53 FR 39275; see Public 

Citizen, 848 F.2d at 264. 

28A more detailed discussion of these issues is 

contained in the agency’s PRIA, which has been 

placed in the docket for this notice. Some of the 

information included in the PRIA, including the 

details of manufacturers’ future product plans, has 

been determined by the Agency to be confidential 

business information the release of which could 

cause competitive harm. The public version of the 

PRIA omits the confidential information. The PRIA 

discusses in detail the fuel economy enhancing 

technologies expected to be available during the 

MY 2008–2010 time period. 

29Additionally, as noted above, the agency has 

placed in the docket for this notice a document, 

prepared under the auspices of the U.S. Department 

of Energy for NHTSA, that updates the estimates of 

light-truck fuel economy potential in the 2001 

National Academy of Sciences (NAS) report, 

‘‘Effectiveness and Impact of Corporate Average 

Fuel Economy (CAFE) Standards.’’

30The amount of projected weight reduction was 

two percent for light trucks with a curb weight 

between 5,000 and 6,000 lbs and up to four percent 

for light trucks with a curb weight over 6,000 lbs. 

31 Kahane, Charles J., PhD, Vehicle Weight, 

Fatality Risk and Crash Compatibility of Model 

Year 1991–99 Passenger Cars and Light Trucks, 

October 2003. DOT HS 809 662. Page 161. Docket 

No. NHTSA–2003–16318 (http://www.nhtsa.dot.

gov/cars/rules/regrev/evaluate/pdf/809662.pdf). 

reductions in employment affecting the 

overall motor vehicle industry.27

As a first step toward ensuring that 

the CAFE levels selected as the 

maximum feasible levels under 

Unreformed CAFE will not lead to 

adverse consequences, we reviewed in 

detail the confidential product plans 

provided by the manufacturers with a 

substantial share of the light truck 

market (General Motors, Ford and 

DaimlerChrysler) and assessed their 

technological capabilities to go beyond 

those plans. By doing so, we are able to 

determine tentatively the extent to 

which each can enhance their fuel 

economy performance using technology. 

C. Technologically Feasible Additions to 

Baseline 

The agency has analyzed potential 

technological improvements to the 

product offerings for each manufacturer 

with a substantial share of the light 

truck market and for the remaining light 

truck manufacturers.28 Under the 

Unreformed system, we focused on 

General Motors, Ford, and 

DaimlerChrysler as the manufacturers 

with substantial shares of the light truck 

market. We also conducted analyses of 

the potential for the other manufacturers 

to achieve fuel economy levels above 

their baselines. 

For the purpose of analyzing the 

potential technological improvements, 

we applied a three-stage engineering 

analysis that we relied upon in previous 

light truck fuel economy rulemakings 

(Stage Analysis). 

At each stage of that analysis, we 

added technologies based on our 

engineering judgment and expertise 

about possible adjustments to the 

detailed product plans submitted in 

response to the 2003 request for product 

plans. Our decision whether and when 

to add a technology reflected our 

consideration of the practicability of 

applying a specific technology and the 

necessity for lead-time in its 

application. 

The agency recognized that vehicle 

manufacturers must have sufficient lead 

time to incorporate changes and new 

features into their vehicles. Further, in 

making its lead time determinations, the 

agency considered the fact that vehicle 

manufacturers follow design cycles 

when introducing or significantly 

modifying a product. In addition to 

considering lead time, the agency added 

technologies in a cost-minimizing 

fashion. That is, it generally first added 

technologies that were most costeffective. 

In evaluating which technologies to 

apply, and the sequence in which to 

apply them, we followed closely the 

NAS report. The NAS report estimated 

the incremental benefits and the 

incremental costs of technologies that 

may be applicable to actual vehicles of 

different classes and intended uses (see 

NAS p. 40).29 The NAS report also 

identified what it called ‘‘cost-efficient 

technology packages,’’ i.e., 

combinations of technologies that 

would result in fuel economy 

improvements sufficient to cover the 

purchase price increases that such 

technologies would require (see NAS p. 

64). 

The Stage I analysis includes 

technologies that manufacturers state as 

being available for use by MY 2008 or 

earlier, but are choosing not to use them 

in their product plans. Many of these 

technologies are currently being used in 

today’s light duty truck fleet. These 

technologies include non-powertrain 

applications such as low rolling 

resistance tires, low friction lubricants, 

aerodynamic drag reduction, and 

electric power steering pumps. 

The Stage II analysis includes two 

major categories of technological 

improvements to the manufacturer’s 

fleets, the timing of which is tied as 

nearly as possible to planned model 

change and engine introduction years. 

The first of these categories is 

transmission improvements, which 

consists of the introduction and 

expanded use of 5-speed and 6-speed 

transmissions and continuously variable 

transmissions (CVTs). The application 

of CVTs was restricted to vehicles that 

are not designed for rugged off-road 

applications and/or the need to haul 

heavy loads, such as smaller unibody 

SUVs. The second category was engine 

improvements, and consisted of 

gradually upgrading all light truck 

engines to include multi-valve overhead 

camshafts, introducing engines with 

more than 2-valves per cylinder, 

applying variable valve timing/variable 

valve lift and timing to multi-valve 

overhead camshaft engines, and 

applying cylinder deactivation to 6- and 

8-cylinder engines. 

The Stage III analysis included 

projections of the potential CAFE 

increase that could result from the 

application of diesel engines and hybrid 

powertrains to some products. Both 

diesel engines and hybrid powertrains 

appear in several manufacturers plans 

within the MY 2008–2010 timeframe, 

and other manufacturers have publicly 

indicated that they are looking seriously 

into both technologies. 

Some of the technologies considered 

under the Stage Analysis have been 

used in production for over a decade; 

e.g., engine friction reduction and low 

friction lubricants. Some have only 

recently been incorporated in light 

trucks; e.g., 5-speed and 6-speed 

automatic transmissions and variable 

valve timing. Others have been under 

development for a number of years, but 

have not yet been produced in 

significant quantity for an extended 

period of time (e.g., cylinder 

deactivation, variable valve lift and 

timing, CVT, integrated starter 

generator, and hybrid drive trains). 

Our analysis included the possibility 

of limited vehicle weight reduction for 

vehicles over 5,000 lbs. curb weight 

where we determined that weight 

reduction would not reduce overall 

safety and would be a cost effective 

choice.30 We determined that reducing 

the weight of these vehicles would not 

reduce overall safety. The Kahane study 

found that the net safety effect of 

removing 100 pounds from a light truck 

is zero for light trucks with a curb 

weight greater than 3,900 lbs.31

However, given the significant statistical 

uncertainty around that figure, we 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51427 

32See the discussion of ‘‘Effect of Weight and 

Performance Reductions on Light Truck Fuel 

Economy’’ in Chapter V of the PRIA. 

33 In the current model year, the system begins by 

carrying over any technologies applied in the 

preceding model year, based on commonality of 

engines and transmissions, as well as any identified 

predecessor/successor relationships among vehicle 

models. At each subsequent step toward 

compliance by a given manufacturer in the current 

model year, the system considers all engines, 

transmissions, and vehicles produced by the 

manufacturer and all technologies that may be 

applied to those engines, transmissions, and 

vehicles, where the applicability of technologies is 

governed by a number of constraints related to 

engineering and product planning. The system 

selects the specific application of a technology (i.e., 

the application of a given technology to a given 

engine, transmission, vehicle model, or group of 

vehicle models) that yields the lowest ‘‘effective 

cost’’, which the system calculates by taking (1) the 

cost (retail price equivalent) to apply the technology 

times the number of affected vehicles, and 

subtracting (2) the reduction of civil penalties 

achieved by applying the technology, and 

subtracting (3) the estimated value to vehicle buyers 

of the reduction in fuel outlays achieved by 

applying the technology, and dividing the sum of 

these components by the number of affected 

vehicles. 

34The determination of technology application 

that could be employed by a specific manufacturer 

was based on confidential information provided by 

each manufacturer. The nature of this confidential 

information would become apparent from listing 

the technologies applied by the agency and 

therefore our discussion in the public document is 

of a general nature. 

35The NAS report (p. 42) assessed the fuel 

consumption impact of technologies applicable to 

light trucks, including emerging technologies. For 

most of these technologies, the NAS report 

presented a range of potential fuel consumption 

improvement attributable to each technology. 

assumed a confidence bound of 

approximately 1,000 lbs. and used 5,000 

lbs. as the threshold for considering 

weight reduction.32 We used weight 

reduction primarily in conjunction with 

a planned vehicle redesign or freshening 

and sometimes in concert with a 

reduction in aerodynamic drag. 

Further, our Stage Analysis does not 

apply technologies where it is not 

technically sensible to do so. For 

instance, we estimate that replacing an 

overhead valve engine with a multivalve overhead camshaft engine of the 

same displacement and replacing a 4- 

speed automatic transmission with a 5- 

or 6-speed automatic transmission offer 

about the same potential level of 

improvement. One of them may be more 

attractive to a particular manufacturer 

because of its cost, ease of 

manufacturing, or the model lines to 

which it would apply. 

The technologically feasible fuel 

economy levels determined under the 

Stage Analysis were then input into the 

Volpe model. The Volpe model uses a 

technology application algorithm 

developed by Volpe Center staff to 

apply technologies to manufacturers’

baselines in order to achieve the fuel 

economy levels produced under the 

Stage Analysis. This algorithm 

systematically applies consistent cost 

and performance assumptions to the 

entire industry, as well as consistent 

assumptions regarding economic 

decision-making by manufacturers. 

Technologies were selected and applied 

in order of ‘‘effective cost,’’ (total 

cost ¥ fine reduction ¥ fuel savings 

value) / (number of affected vehicles).33

This formula is a private cost concept, 

i.e., it looks at costs to the manufacturer. 

It is used to predict how a manufacturer 

would sequence the addition of 

technologies to meet a given standard. 

The level of fuel economy 

improvement resulting from the Stage 

Analysis provides the basis for the 

proposed Unreformed CAFE standards. 

The Volpe model was then used to 

estimate benefits and costs. The Volpe 

model is given, as an input, the level of 

fuel economy improvement and then 

proceeds to analyze what technologies 

can be added to meet the standard 

determined by the Stage Analysis. 

Although similar, the two analyses do 

not apply exactly the same technologies. 

Both are merely ways of achieving the 

given standard, not predictions of how 

manufacturers will actually meet it. As 

explained below in the section on 

economic practicability and other 

economic issues, additional analysis 

was performed to ensure that the 

proposed Unreformed CAFE standards 

are economically practicable for the 

industry. 

In its submission, General Motors 

described a variety of technologies that 

could be used to improve fuel economy. 

For each such technology, General 

Motors included its estimated fuel 

economy benefit, the basis for that 

estimate, whether the benefit was direct 

or interactive, a description of how the 

technology works and how it increases 

fuel economy, when the technology 

would be available for use, its potential 

applications, where it is currently 

employed in General Motors’ light truck 

fleets, where the technology could 

potentially be used, risks in employing 

the technology, and potential impacts 

on noise, vibration and harshness 

(NVH), safety, emissions, cargo and 

towing capacity. 

The agency relied on these 

descriptions in determining which 

technologies General Motors could 

employ in its fleet during MYs 2008–

2010.34 To assess the fuel economy 

impacts of these technologies, we used 

either the NAS report’s mid-range 

numbers 35 or, when General Motors 

submitted higher numbers for a 

particular technology, we used General 

Motors’ numbers. 

As a result of the Stage Analysis, we 

have tentatively concluded that, for 

MYs 2008–2010, General Motors is the 

least capable of the manufacturers that 

have a significant share of the light 

truck market. To ensure that the 

proposed Unreformed CAFE 

improvements would not lead to 

economically severe consequences for 

the industry, we have given particular 

regard to General Motors’ projected 

capabilities when balancing the 

statutory factors to arrive at the 

proposed standards. 

We note that when we established the 

light truck CAFE standards for MYs 

2005–2007, we set the standard for MY 

2007 at a level somewhat beyond that 

we had determined technologically 

achievable by General Motors, then also 

the ‘‘least capable manufacturer.’’ We 

will carefully review the updated 

product plans that we anticipate 

General Motors will submit and will 

review the projections for General 

Motors’ capability when deciding upon 

final light truck standards for these 

model years. As directed by law, we 

will balance all the statutory factors, as 

well as our concern for motor vehicle 

safety, before conclusively determining 

the appropriate level of light truck 

CAFE standards for MYs 2008–2010. 

Ford and DaimlerChrysler each 

submitted information similar to that 

provided by General Motors. The agency 

engaged in the same type of analysis in 

assessing the potential fuel economy 

capabilities for those manufacturers. 

The agency also engaged in the same 

type of analysis in assessing the 

potential fuel economy capabilities for 

Honda, Hyundai, Nissan and Toyota, 

although the information provided by 

those companies was less detailed than 

that of DaimlerChrysler, Ford and 

General Motors. 

Upon reviewing the product plans 

and making adjustments as described—

and balancing the nation’s need to 

conserve energy with what is 

technologically feasible, economically 

practicable and unlikely to produce 

adverse consequences—we have 

tentatively determined that the 

following light truck CAFE standards 

are the maximum feasible fuel economy 

levels achievable: 

MY 2008–22.5. 

MY 2009–23.1. 

MY 2010–23.5. 

D. Economic Practicability and Other 

Economic Issues 

As explained above, the agency has 

historically reviewed whether a CAFE 

standard is economically practicable in 

51428 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

terms of whether the standard is one 

‘‘within the financial capability of the 

industry, but not so stringent as to 

threaten substantial economic hardship 

for the industry.’’ See, e.g., Public 

Citizen, 848 F.2d at 264. In the Stage 

Analysis, technologies are applied to 

project fuel economy levels that would 

be technologically feasible for a 

manufacturer. When considering 

economic practicability, the agency 

reviews whether technologically 

feasible levels may lead to adverse 

economic consequences, such as a 

significant loss of sales or the 

unreasonable elimination of consumer 

choice. The agency must ‘‘weigh the 

benefits to the nation of a higher fuel 

economy standard against the 

difficulties of individual automobile 

manufacturers.’’ CAS, 793 F.2d at 1332. 

The agency has estimated not only the 

anticipated costs that would be borne by 

General Motors, Ford, DaimlerChrysler, 

Honda, Hyundai, Nissan and Toyota to 

comply with the standards under the 

Unreformed CAFE system, but also the 

significance of the societal benefits 

anticipated to be achieved through fuel 

savings and other economic benefits 

from reduced petroleum use. In regard 

to economic impacts on manufacturers 

and societal benefits, we have relied on 

the Volpe model to determine a 

probable range of costs and benefits. 

The Volpe model was used to 

evaluate the standards initially 

produced under the Stage Analysis in 

order to estimate their overall economic 

impact as measured in terms of 

increases in new vehicle prices on a 

manufacturer-wide, industry-wide, and 

average per-vehicle basis. Like the Stage 

Analysis, the Volpe model relies on the 

detailed product plans submitted by 

manufacturers, as well as available data 

relating to manufacturers that had not 

submitted detailed information. The 

Volpe model is used to trace the 

incremental steps (and their associated 

costs) that a manufacturer would take 

toward achieving the standards initially 

suggested by the Stage Analysis. 

Based on the Stage and Volpe 

analyses, we have concluded that these 

standards would not significantly affect 

employment or competition, and that—

while challenging—they are achievable 

within the framework described above, 

and that they would benefit society 

considerably. For this analysis, we have 

where possible translated the benefits 

into dollar values and compared those 

values to our estimated costs for this 

proposed rule. 

1. Costs 

In order to comply with the proposed 

Unreformed CAFE standards, we 

estimate the average incremental cost 

per vehicle to be $56 for MY 2008, $130 

for MY 2009, and $185 for MY 2010. 

The total incremental cost (the cost 

necessary to bring the corporate average 

fuel economy for light trucks from 22.2 

mpg (the standard for MY 2007) to the 

proposed standards) is estimated to be 

$528 million for MY 2008, $1,244 

million for MY 2009, and $1,798 million 

for MY 2010. 

Our cost estimates for the proposed 

standards under the Unreformed CAFE 

system were based on the application of 

technologies and the resulting costs to 

individual manufacturers. We assumed 

that manufacturers would apply 

technologies on a cost-effectiveness 

basis (as described above). More 

specifically, within the range of values 

anticipated for each technology, we 

selected the most plausible cost impacts 

and fuel consumption impacts during 

the model years under consideration. 

Using the estimated costs and fuel 

savings for the different technologies, 

the agency then examined the 

projections provided by different 

manufacturers for their light truck fleet 

fuel economy for MYs 2008–2010. 

Although the details of the projections 

by individual manufacturers are 

confidential, present fuel economy 

performance indicates that some 

manufacturers would, if their planned 

fleets remain unchanged, be able to 

meet the proposed standards without 

significant expenditures. Other 

manufacturers would need to expend 

significantly more effort than that called 

for in their product plans to meet the 

proposed standards. 

Some manufacturers might achieve 

more fuel savings than others using 

similar technologies on a vehicle-byvehicle basis due to differences in 

vehicle weight and other technologies 

present. However, this analysis assumes 

an equal impact from specific 

technologies for all manufacturers and 

vehicles. The technologies were ranked 

based on the cost per percentage point 

improvement in fuel consumption and 

applied where available to each 

manufacturer’s fleet in their order of 

rank. The complete list of the 

technologies and the agency’s estimates 

of cost and associated fuel savings can 

be found in the PRIA. 

The level of additional expenditure 

necessary beyond already planned 

investment varies for each individual 

manufacturer. We based expenditures 

on cost estimates we developed for 

various technologies that are both 

available to and technologically feasible 

for manufacturers within the time frame 

covered by this NPRM. 

Our cost analysis recognizes the 

importance of the competitive market. 

We believe that the standards proposed 

under the Unreformed CAFE system 

will not limit the availability of vehicles 

that consumers need and want. We 

believe that the standards established in 

this final rule will not result in 

noticeable changes to power-to-weight 

ratios, towing capacity or cargo and 

passenger hauling ability. In short, the 

standards will not affect the utility of 

available vehicles and therefore should 

not conflict with consumer preferences. 

2. Benefits 

In the PRIA, the agency analyzes the 

economic and environmental benefits of 

the proposed Unreformed CAFE 

standards by estimating fuel savings 

over the lifetime of each model year 

(approximately 26 years). Benefit 

estimates include both the benefits to 

consumers in terms of reduced fuel use 

and other savings such as the reduced 

externalities generated by the importing, 

refining and consuming of petroleum 

products. 

The benefits of the proposed increases 

in the Unreformed CAFE standards are 

estimated to be $64 per vehicle for MY 

2008, $142 per vehicle for MY 2009, and 

$206 per vehicle for MY 2010. The total 

value of these benefits is estimated to be 

$605 million for MY 2008, $1,366 

million for MY 2009 and $2,007 million 

for MY 2010, based on fuel prices 

ranging from $1.51 to $1.58 per gallon. 

(See the discussion of current fuel 

prices vs. the fuel prices during the 

lifetime of the MY 2008–2010 light 

trucks in section II.J. Recent 

developments, above.) 

3. Comparison of estimated costs to 

estimated benefits 

Table 2 compares the incremental 

costs and benefits for the Unreformed 

CAFE standards. 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51429 

36As described in detail in the PRIA, we use a 

20% rebound effect based on a thorough review of 

the literature. We are nonetheless aware that there 

is ongoing research in this area, and will continue 

to assess this assumption in light of new evidence. 

37The criteria pollutants used for the agency’s 

analysis are carbon monoxide, volatile organic 

compounds, nitrogen oxides, fine particulate 

matter, and sulfur dioxide. Tailpipe emissions from 

light trucks are predicted to increase under this 

rulemaking due to the rebound effect, while 

emissions from refineries and gasoline tanker trucks 

are predicted to decrease due to a reduction in 

gasoline consumption. 

38Footprint is an aspect of vehicle size—the 

product of multiplying a vehicle’s wheelbase by its 

average track width. 

TABLE 2.—COMPARISON OF INCREMENTAL COSTS AND BENEFITS FOR THE PROPOSED UNREFORMED CAFE STANDARDS

(In millions) 

MY 2008 MY 2009 MY 2010 

Total incremental costs* ...................................................................................................................................... $528 $1,244 $1,798 

Total incremental benefits* .................................................................................................................................. $605 $1,366 $2,007 

* Relative to the 22.2 mpg standard for MY 2007. 

These estimates are provided as 

present values determined by applying 

a 7 percent discount rate to the future 

impacts. In the PRIA, we also use a 3 

percent discount rate for discounting 

benefits and costs, and request comment 

on what discount rates are appropriate 

for this rulemaking, including 3, 7, and 

10 percent (see Section VIII in the PRIA 

for a more detailed discussion). To the 

extent possible, we translated impacts 

other than direct fuel savings into dollar 

values and then factored them into our 

cumulative estimates. We obtained 

forecasts of light truck sales for future 

years from AEO2005. Based on these 

forecasts, NHTSA estimated that 

approximately 9,480,200 light trucks 

would be sold in MY 2008. For MYs 

2009 and 2010, we estimated 9,613,100 

and 9,754,000 light truck sales, 

respectively. 

We calculated the reduced fuel 

consumption of MY 2008–2010 light 

trucks by comparing their consumption 

under the proposed standards for those 

years to the consumption they would 

have if the MY 2007 CAFE standard of 

22.2 mpg remained in effect during 

those years. First, the estimated fuel 

consumption of MY 2008–2010 light 

trucks was determined by dividing the 

total number of miles driven during the 

vehicles’ remaining lifetime by the fuel 

economy level they were projected to 

achieve under the 22.2 mpg standard. 

Then, we assumed that if these same 

light trucks were produced to comply 

with higher CAFE standards for those 

years, their total fuel consumption 

during each future calendar year would 

equal the total number of miles driven 

(including the increased number of 

miles driven because of the ‘‘rebound 

effect,’’ the tendency of drivers to 

respond to increases in fuel economy in 

the same manner as they respond to 

decreases in fuel prices, i.e., by driving 

more),36 divided by the higher fuel 

economy they would achieve as a result 

of that standard. The fuel savings during 

each future year that would result from 

the higher CAFE standard is the 

difference between each model year’s 

fuel use and the fuel use that would 

occur if the MY 2007 standard remained 

in effect. This analysis results in 

estimated lifetime fuel savings of 0.8 

billion, 1.9 billion, and 2.7 billion 

gallons for MYs 2008, 2009, and 2010, 

respectively. 

Finally, we assessed the present value 

of each year’s fuel savings by 

multiplying the total number of gallons 

saved by the forecast fuel prices for that 

year and applying a 7 percent discount 

rate. (As noted above, we also used a 3 

percent discount rate in the PRIA.) Fuel 

price forecasts were obtained from EIA’s 

Annual Energy Outlook 2005 and 

adjusted to exclude state and local 

taxes. This analysis resulted in values 

for estimated lifetime fuel savings of 

$938 million, $2,114 million, and 

$3,092 million under the proposed 

Unreformed CAFE standards for MY 

2008, 2009, and 2010, respectively, 

based on fuel prices ranging from $1.51 

to $1.58 per gallon. 

In the PRIA, we also analyze other 

effects of the proposed standards, e.g., 

the impact on vehicle and refinery 

emissions, gasoline tanker truck 

emissions, and the rebound effect. Our 

analysis indicates that the MY 2008 

standard would result in a net reduction 

of criteria pollutants with a present 

value of $15.5 million. For MY 2009, 

this net reduction would have a present 

value of $34.8 million and for MY 2010 

the net reduction of criteria pollutants 

would have a present value of $52.1 

million. We calculate per mile emission 

rates using EPA’s Mobile 6.2 motor 

vehicle emissions factor model, and 

monetized changes in total emission 

levels for criteria pollutants associated 

with gasoline production, distribution, 

and combustion.37 We also discuss nonmonetized effects. 

A more detailed explanation of our 

analysis is provided in the PRIA and the 

draft Environmental Assessment. 

4. Uncertainty 

The agency recognizes that science 

does not permit precise estimates of 

benefits and costs. NHTSA performed a 

probabilistic uncertainty analysis to 

examine the degree of uncertainty in the 

costs and benefits. Factors examined 

included technology costs, technology 

effectiveness in improving fuel 

economy, fuel prices, the value of oil 

import externalities, and the rebound 

effect. This analysis employed Monte 

Carlo simulation techniques to examine 

the range of possible variation in these 

factors. The analysis indicates that the 

agency is highly certain that the social 

benefits of the proposed CAFE levels 

will exceed their costs for all 3 model 

years of Unreformed standards included 

in the proposal. 

We solicit comment on whether 

proposed levels of maximum feasible 

CAFE reflect an appropriate balancing 

of the statutory and other relevant 

factors. Based on those comments and 

other information, including additional 

data and analysis, the standards adopted 

in the final rule could well be different. 

IV. The Reformed CAFE Proposal for 

MYs 2008–2011 

We are proposing to establish 

Reformed standards for MYs 2008–2011. 

As noted above, manufacturers would 

have a choice of complying with either 

Unreformed standards or Reformed 

standards during the transition period 

spanning MYs 2008–2010. The 

transition process should assist the 

agency in learning about the industry’s 

experiences with Reformed CAFE and 

determining the best approach in future 

rulemakings. 

A. Proposed Approach to Reform 

The structure of Reformed CAFE for 

each model year would have three basic 

elements—

(1)—Six footprint 38 categories of 

vehicles. 

(2)—A target level of average fuel 

economy for each footprint category, as 

expressed by a step function. (The step 

or ‘‘staircase’’ nature of the function can 

be seen in Figure 2 below.) 

51430 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

39Since the calculation of a manufacturer’s 

required level of average fuel economy for a 

particular model year would require knowing the 

final production figures for that model year, the 

final formal calculation of that level would not 

occur until after those figures are submitted by the 

manufacturer to EPA. That submission would not, 

of course, be made until after the end of that model 

year. 

40Our effort to do so explains why the boundary 

between categories 4 and 5 is between integers. The 

agency chose a non-integer boundary for this 

boundary because, in doing so, it kept vehicles with 

the same nameplate and utility within the same 

grouping. 

(3)—a Reformed CAFE standard based 

on the harmonic production-weighted 

average of the fuel economy targets for 

each category. 

The required level of CAFE for a 

particular manufacturer for a model year 

would be calculated after inserting the 

following data into the standard for that 

model year: That manufacturer’s actual 

total production and its production in 

each footprint category for that model 

year.39 The calculation of the required 

level would be made by dividing the 

manufacturer’s total production for the 

model year by the sum of the six 

fractions (one for each category) 

obtained by dividing the manufacturer’s 

production in a category by the 

category’s target. 

1. Distribution into footprint categories 

Initially, the agency has made a 

preliminary determination to place light 

trucks up to 8,500 lbs. GVWR into six 

categories based on vehicle footprint. As 

discussed more fully below, the agency 

chose vehicle footprint as the best 

potential attribute to use as the basis of 

a Reformed CAFE program because it is 

an attribute which would best assure 

consistency in vehicle design and 

structure between model years, is 

consistent with our safety concerns, and 

may encourage the development and 

availability of light-weight materials 

whose use might advance fuel economy 

and preserve or maybe even enhance 

safety. 

The six categories were defined after 

placing planned light truck production 

onto a distribution plot by footprint. We 

then sought to place the category 

boundaries generally at points 

indicating low volume immediately to 

the left and high volume immediately to 

the right. Our intent in doing so was to 

avoid providing an incentive to increase 

vehicle size in order to move a model 

into a category with a lower target. We 

sought to create a reasonable number of 

categories that would also combine, to 

the extent practicable, similar vehicle 

types into the same category 

structures.40

Our preliminary assessment of the 

categories is based on the product plan 

information available to us when 

devising this proposal. These categories 

may change based upon our review of 

updated product plans received in 

response to this NPRM. 

Figure 1 provides the distribution of 

projected MY 2008–2010 aggregate sales 

for the industry: 

BILLING CODE 4910–59–P 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51431 

BILLING CODE 4910–59–C 

In determining the number and 

location of categories, the agency used 

its best judgment applying the 

considerations set forth above. The 

agency has made the preliminary 

determination to establish 6 categories 

for purposes of this rulemaking, based 

on vehicle footprint, as shown in Table 

2: 


EP30AU05.003</GPH>
51432 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

41The seven manufacturers are General Motors, 

Ford, DaimlerChrysler, Toyota, Honda, Hyundai 

and Nissan. We did not include four additional 

manufacturers that sell light trucks—Volkswagen, 

BMW, Porsche and Subaru—because the first three 

historically have paid civil penalties in lieu of 

selling a compliant fleet of light trucks and Subaru’s 

market share is considerably smaller than any other 

company in this market. Together, the seven largest 

manufacturers account for approximately 95 

percent of the market. 

Looking at each manufacturer in this group of 

manufacturers, instead of just the least capable 

manufacturer as under Unreformed CAFE, provides 

us with a much fuller, more robust, and 

representative, understanding and estimate of 

industry-wide capabilities. 

TABLE 2.—PROPOSED FOOTPRINT CATEGORIES

Footprint categories 1 2 3 4 5 6 

Range of vehicle footprint (sq. ft.) ................................... ≤ 43.0 > 43.0–47.0 > 47.0–52.0 > 52.0–56.5 > 56.5–65.0 > 65.0 

In future rulemakings, the agency may 

adjust the footprint categories if 

necessary to better represent the fleets 

projected for the model years covered. 

2. Targets 

For each of MYs 2008–2011, the 

agency established a target average fuel 

economy level for each of the six 

footprint categories. The CAFE standard 

would be the harmonic productionweighted average of those targets. Thus, 

the average fuel economy of a 

manufacturer’s vehicles in any 

particular footprint category need not 

meet the target for that footprint 

category. However, to the extent a 

manufacturer’s vehicles fall short of the 

target in any footprint category, that 

shortfall would need to be offset by 

exceeding the target in one or more 

other footprint categories. 

a. Overview of target selection process 

We used a three-phase process for 

determining targets that represent the 

social optimum for the manufacturers as 

a group: 

In phase one, we applied technologies 

to the fleet of each of the seven largest 

manufacturers individually until we 

reached the point at which the marginal 

cost of adding technology equaled the 

marginal benefit of that technology for 

that manufacturer. We then placed the 

modified fleets into the categories.41

In phase two, for each category, we 

determined the position of the targets 

relative to each other and a temporary 

level of the targets by calculating the 

average CAFE of those of the seven 

largest manufacturers that had vehicles 

in that category. 

In phase three, we determined the 

proposed level of the targets by 

simultaneously adjusting all of the 

targets upward or downward by a 

uniform increment of fuel consumption 

until we reached the level at which the 

marginal cost of adding technology to 

meet that level equaled the marginal 

benefit of that technology for the seven 

largest manufacturers, as a group. 

This process for determining targets 

was based on the application of 

technology under the Volpe model. 

Unlike the Unreformed CAFE system, 

the Stage Analysis was not used. 

b. Industry-wide considerations in 

selecting the targets 

An Unreformed CAFE standard 

specifies a ‘‘one size fits all’’ (uniform) 

level of CAFE that applies to each 

manufacturer and is set with particular 

regard to the lowest projected level of 

CAFE among the manufacturers that 

have a significant share of the market. 

The manufacturer with the lowest 

projected CAFE level has typically been 

referred to as the ‘‘least capable’’

manufacturer. 

As noted above, in selecting the 

Reformed CAFE targets, we looked at 

the seven largest manufacturers, instead 

of focusing primarily on the least 

capable manufacturer, because under 

Reformed CAFE, it is unnecessary to set 

standards with particular regard to the 

capabilities of a single manufacturer in 

order to ensure that the standards are 

technologically feasible and 

economically practicable for all 

manufacturers with a significant share 

of the market. This is true both fleet 

wide and within any individual 

category of vehicles. 

We note that the term ‘‘least capable’’

manufacturer is something of a 

misnomer since a manufacturer’s 

projected level of CAFE is determined 

by two factors: the extent to which small 

or large vehicles predominate in the 

manufacturer’s planned production mix, 

and the type and amount of fuel saving 

technologies that the manufacturer is 

deemed capable of applying. Two 

manufacturers may apply the same type 

and amount of fuel saving technologies 

to their fleets, yet have differing CAFE 

levels, if the proportions of small 

vehicles and large vehicles in each 

manufacturer’s fleet are not identical. 

Thus, a full line manufacturer may have 

a lower overall CAFE than a 

manufacturer concentrating its 

production in the smaller footprint 

categories, even though the former 

manufacturer has applied as much (or 

more) technology as the latter 

manufacturer. 

We have set the Unreformed 

standards with particular regard to the 

‘‘least capable’’ manufacturer in 

response to the direction in the 

conference report on the CAFE statute 

language to consider industry-wide 

considerations, but not necessarily base 

the standards on the manufacturer with 

the greatest compliance difficulties. By 

focusing primarily on the least capable 

manufacturer with a significant share of 

the market, this approach has ensured 

that the standards are technologically 

feasible and economically practicable 

for all or most of the manufacturers with 

a significant share of the market. If a 

standard is technologically feasible and 

economically practicable for the ‘‘least 

capable’’ manufacturer, it can be 

presumed to be so for the ‘‘more 

capable’’ manufacturers. Together, the 

manufacturers with a significant share 

of the market represented a very 

substantial majority of the light trucks 

manufactured and thus were deemed to 

represent ‘‘industry-wide 

considerations.’’

However, this approach limits the 

amount of fuel saving possible under 

Unreformed CAFE. In the Unreformed 

system, the agency is constrained by the 

least capable manufacturer to a much 

larger degree than in the Reformed 

system. Since the Unreformed system is 

a uniform, one-size-fits-all standard, the 

least capable manufacturer is the one 

that specializes primarily in larger light 

trucks. Even though these vehicles may 

be efficient, they have low fuel 

economy. The Unreformed standard is 

set relative to the baseline fuel economy 

of the least capable manufacturer. This 

means that other manufacturers making 

smaller vehicles are not required to 

make improvements in order to comply 

because their vehicles get higher fuel 

economy yet may not be very efficient. 

The Reformed system takes 

manufacturer fleet mix into account and 

requires everyone to improve fuel 

economy by mandating similar levels of 

efficiency. 

There is only one way under 

Unreformed CAFE of requiring the 

‘‘more capable’’ manufacturers with a 

significant share of the market, i.e., 

those with projected levels of CAFE 

higher than the level projected for the 

‘‘least capable’’ manufacturer, to apply 

more fuel saving technologies than they 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51433 

42 61 FR 145, 154; January 3, 1996. 

43An important distinction needs to be made 

between the baseline and the manufacturer’s 

product plan mpg. As discussed earlier, ‘‘baseline’’

is defined as the fuel economy that would exist 

absent of the rulemaking, i.e., the model year 2007 

standard of 22.2 mpg. The 22.2 mpg baseline differs 

from the mpg level reported in a manufacturer’s 

product plan. Some manufacturers report fuel 

economy levels that are below 22.2 mpg. In that 

case, the cost and benefits of going from the product 

plan mpg to the baseline (22.2) mpg are not counted 

as costs and benefits of the rulemaking, as they 

were already counted in the MY 2005–2007 final 

rule. Only costs and benefits associated with going 

from baseline mpg to a higher standard are counted. 

It is important to note that since technology is 

applied on a cost effective basis, the most cost 

effective technologies will be used to get a 

manufacturer from the product plan mpg to the 

baseline mpg. 

44Although the height of each step in the 

hypothetical shown in the figure is identical, it is 

unlikely that any two steps would be identical in 

height. 

were already planning to apply. That 

way would be for the agency to set a 

standard above the capabilities of the 

‘‘least capable’’ manufacturer. 

There is no need under Reformed 

CAFE to set the standards with 

particular regard to the capabilities of 

the ‘‘least capable’’ manufacturer. 

Indeed, it would often be difficult to 

identify which manufacturer should be 

deemed the ‘‘least capable’’

manufacturer under Reformed CAFE. 

The ‘‘least capable’’ manufacturer 

approach was simply a way of 

implementing the guidance in the 

conference report in the specific context 

of Unreformed CAFE. 

This proposal would change the 

context. The very structure of Reformed 

CAFE standards makes it unnecessary to 

continue to use that particular approach 

in order to be responsive to guidance in 

the conference report. Instead of 

specifying a common level of CAFE, a 

Reformed CAFE standard specifies a 

variable level of CAFE that varies based 

on the production mix of each 

manufacturer. By basing the level 

required for an individual manufacturer 

on that manufacturer’s own mix, a 

Reformed CAFE standard in effect 

recognizes and accommodates 

differences in production mix between 

full- and part-line manufacturers, and 

between manufacturers that concentrate 

on small vehicles and those that 

concentrate on large ones. 

There is an additional reason for 

ceasing to use the ‘‘least capable’’

manufacturer approach. There would be 

relatively limited added fuel savings 

under Reformed CAFE if we continued 

to use the ‘‘least capable’’ manufacturer 

approach even though there ceased to be 

a need to use it. (This reasoning is very 

similar to the reasoning the agency used 

under Unreformed CAFE when we 

rejected the suggestion by Mercedes 

Benz that we should set the standards 

at the level achievable by very small 

manufacturers.42 In rejecting that 

suggestion, we cited the language from 

the conference report about considering 

industry-wide considerations and not 

basing the standards on the 

manufacturer with the greatest 

difficulties.) 

c. Relative position of the targets 

The first phase in determining the 

footprint category targets was to 

determine separately for each 

manufacturer the overall level of CAFE 

that would maximize the net benefits for 

that manufacturer’s vehicles. 

In this phase, as noted above, we 

considered the fleet of each of the seven 

largest manufacturers without respect to 

specific footprint category to which 

each of their vehicles is assigned. To 

find the socially optimal point for each 

of these seven manufacturers, i.e., the 

point at which the incremental or 

marginal change in costs equals the 

incremental or marginal change in 

benefits for that manufacturer, we used 

the Volpe model to compute the total 

costs and total benefits of exceeding the 

baseline 43 CAFE by progressively larger 

increments. We began by exceeding the 

baseline by 0.1 mpg. We then used the 

model to calculate the total costs and 

total benefits of exceeding the baseline 

by 0.2 mpg. The marginal costs and 

benefits were then computed as the 

difference between the total costs and 

total benefits resulting from exceeding 

the baseline by 0.1 mpg and the total 

costs and benefits resulting from 

exceeding the baseline by 0.2 mpg. We 

then used the Volpe model to calculate 

the total costs and total benefits of 

exceeding the baseline by 0.3 mpg and 

computed the difference between the 

total costs and benefits between 0.2 mpg 

and 0.3 mpg to determine the marginal 

costs and benefits. 

We continued making similar 

iterations until marginal costs equaled 

marginal benefits for that manufacturer. 

Performing this iterative process 

individually for each manufacturer 

pushed each of the seven largest 

manufacturers to a point at which net 

benefits are maximized for each 

manufacturer’s vehicles. 

In the second phase, we took the 

results of phase one, i.e., each 

manufacturer’s vehicles as modified by 

the technologies added to them in that 

phase, and placed the vehicles into the 

categories based on their footprints. 

Then, for each category, we determined 

the average fuel economy of each of the 

largest seven manufacturers that had 

vehicles in that footprint category. We 

then calculated a single harmonic mean 

for each footprint category based on the 

average fuel economy of each of the 

manufacturers selling vehicles in that 

footprint category. 

The level of the single harmonic 

average or temporary target for each 

footprint category relative to the levels 

of the temporary targets for the other 

footprint categories defines the ‘‘shape’’

of the function on which the standard 

is based. The shape remains unchanged 

throughout the equal increment 

adjustments in phase three below since 

the absolute differences (on a gallon per 

mile basis) between the targets are 

unaffected by those adjustments. 

Figure 2 provides an illustrative 

example. The figure depicts a step or 

‘‘staircase’’ function that steps down, 

left to right, from the highest target (for 

the footprint category with the vehicles 

having the smallest footprints, i.e., 

footprint category 1) to the lowest target 

(for the footprint category with the 

vehicles having the largest footprints, 

i.e., footprint category 6).44 For any 

value of footprint within the range of 

footprints included in a particular 

category, the fuel economy target is the 

same. 

51434 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

45The relationship between miles per gallon and 

fuel savings is not linear. An increase from 20 mpg 

to 21 mpg results in a greater fuel savings than an 

increase from 30 mpg to 31 mpg. Conversely, the 

relationship between gallons per mile and fuel 

savings is linear. A change from 0.10 gallons per 

mile to 0.09 gallons per mile provides the same fuel 

savings as going from 0.20 gallons per mile to 0.19 

gallons per mile. 

d. Level of the targets 

For each model year after the 

transition period of MYs 2008–2010, 

i.e., beginning with MY 2011, the third 

phase involves determining the level of 

the CAFE targets (and thus the level of 

the standard) that would require the 

economically efficient amount of effort 

by the seven largest manufacturers, as a 

group, to improve fuel economy. The 

process for determining the targets that 

require that amount of overall effort 

resembles, but is not identical to the 

process used in phase one for 

determining the optimum levels of each 

individual manufacturer. 

This third phase of adjustment is 

necessary because while the 

economically efficient level of CAFE for 

each individual manufacturer was 

determined in phase one, the 

calculation in phase two of the category 

averages of those manufacturer-specific 

levels does not necessarily result in 

values that correspond to the optimized 

level of effort for the entire industry, as 

represented by the seven largest 

manufacturers, as a group. To ensure 

that the step function is placed at the 

level that results in a standard that is 

optimal for the seven largest 

manufacturers, as a group, phase three 

involves the computation of total and 

marginal costs and benefits across the 

entire industry (using the combination 

of the largest seven manufacturers as a 

proxy for the entire industry), instead of 

manufacturer by manufacturer. 

We begin phase three where we began 

phase one, i.e., with each 

manufacturer’s baseline CAFE derived, 

where available, from its product plans. 

For MY 2011, we used the same 

baselines as we did for MY 2010, except 

for manufacturers for which we had MY 

2011 product plans from the 

manufacturer and thus had a MY 2011 

baseline. After converting each 

temporary target (determined in phase 

two) from miles per gallon to gallons per 

mile so that we could adjust the 

footprint category targets by a uniform 

increment of fuel savings,45 we adjusted 

all six targets by an equal increment and 

then converted them back to miles per 

gallon. We adjusted each category target 

by an equal increment so that the final 

category target remained relatively close 

to each manufacturer’s individual 

optimal level in that category (i.e., the 

manufacturer-specific levels determined 

in the first phase). 

The direction of these adjustments 

can be either upward or downward, 

depending on the marginal costs and 

benefits. An example of the process of 

adjusting the targets, while maintaining 

the shape of the step function, is 

illustrated in Figure 3: 


EP30AU05.004</GPH>
Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51435 

Using the Volpe model, we applied to 

each manufacturer’s baseline the 

technologies necessary for that 

manufacturer to reach the adjusted 

targets. Based on each manufacturer’s 

baseline, we then calculated total costs 

and benefits for each manufacturer. 

Then we added the costs for each of the 

seven manufacturers together. Likewise, 

we added the benefits together. 

We then adjusted each target a second 

time by the same increment. Again we 

added the technologies to the baselines 

and again calculated the total costs and 

benefits for the seven manufacturers. 

Then we compared those totals (for the 

seven manufacturers) for the second 

adjusted level to the totals for reaching 

the first adjusted level, yielding the 

marginal costs and benefits of the 

adjustment. After each additional 

adjustment in the targets, we 

determined marginal costs and benefits. 

We stopped adjusting the targets when 

we reached the point where marginal 

costs equaled marginal benefits for the 

industry as a whole. This is the point at 

which industry-wide net benefits are 

maximized. The required levels of CAFE 

that are determined for each 

manufacturer based on this final 

adjustment of targets in phase three 

differ from the levels of CAFE 

determined for each individual 

manufacturer in phase one. The 

difference ranges from 1.2 mpg higher 

for one manufacturer to 0.8 mpg lower 

for another manufacturer. 

We are proposing this approach 

because we believe it can achieve the 

maximum level of technologically 

feasible and economically practicable 

fuel savings. We recognize that we are 

premising our preliminary assessment 

of economic practicability on finding 

the level of optimal economic 

efficiency. We also recognize that the 

agency in the past has expressed its 

belief that the statutory consideration of 

economic practicability differs from, but 

does not preclude consideration of, 

cost/benefit analysis. (See, e.g., June 30, 

1977; 42 FR 33534, at 33536–7) 

We note, however, that the cost/ 

benefit analyses conducted today 

(especially in light of the more recent 

addition of an uncertainty analysis 

required by OMB Circular A–4) are 

substantially more robust than those 

conducted in decades past and provide 

a more substantial basis for 

consideration of economic 

practicability. We also believe that the 

structure of the proposed Reformed 

CAFE standard, which respects the mix 

the manufacturer is able to sell, but 

demands reasonable fuel economy 

increases for all vehicle sizes, reduces 

the need to focus on more companyspecific and short-term economic 

considerations because it provides more 

flexibility for the CAFE program to 

respond to changing economic and 

market conditions. 

We note further that the regulatory 

philosophy set forth in Executive Order 

12866, ‘‘Regulatory Planning and 

Review,’’ is that a rulemaking agency 

should set its regulatory requirements at 

the level that maximizes net benefits 

unless its statute prohibits doing so. 

EPCA neither requires nor prohibits the 

setting of standards at the level at which 

net benefits are maximized. 

The agency did identify and consider 

a variety of benefits and costs that could 

not be monetized. On the benefit side, 

for example, there is a significant 

reduction in carbon dioxide emissions. 

On the cost side, for example, there is 

a risk of adverse safety impacts from 

downweighting. Overall, the agency 

determined that there is no compelling 

evidence that these unmonetized 

benefits and costs would, taken 

together, alter its assessment of the level 

of the standard for MY 2011 that would 

maximize net benefits. Thus, the agency 

determined the stringency of that 

standard on the basis of monetized net 

benefits. 

EPCA does, however, require that the 

maximum feasible level be determined 

after considering economic 

practicability. Thus, it is possible that, 

under certain circumstances, NHTSA 

might be required to set CAFE standards 

below the level at which net benefits are 

maximized if considerations of 

economic practicability make it 

necessary or prudent to set standards at 

a lower level. The agency seeks 

comment on the advisability and 

potential form of any supplementary 

methodological approach—beyond 

economic efficiency—to ensuring that 

Reformed CAFE standards are set at the 

level capable of achieving the maximum 

feasible fuel savings, as determined after 

consideration of the statutory and other 

relevant factors. 

MYs 2008–2010. In each of the 

transition years, we did not adjust the 

targets to the optimal level. Instead, we 

adjusted the footprint category targets in 

equal increments until the total industry 

costs under the Reformed program 

approximately equaled the total 

industry costs under the Unreformed 

program. Cost equalization has several 

important advantages. Since the 

Unreformed standards were judged to be 

economically practicable and since the 


EP30AU05.005</GPH>
51436 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

46We equalized aggregate industry costs between 

Reformed and Unreformed CAFE. The costs are not 

borne by manufacturers in the same way and costs 

for individual manufacturers may differ between 

the two systems. 

47 In response to the agency’s December 1979 

proposal of light truck standards for model years 

1983–85, the Regulatory Analysis Review Group 

(RARG) suggested a similar approach in March 

1980: ‘‘setting fuel economy targets for different 

categories of trucks, and using a pre-determined 

fleet mix for each manufacturer to turn these targets 

into a composite standard.’’ See Report of the 

Regulatory Analysis Review Group, Council on 

Wage and Price Stability, March 31, 1980, 

submitted as attachment to letter from R. Robert 

Russell, Director of the Council, to Joan Claybrook, 

Administrator, NHTSA (FE–78–01–N01–175). The 

RARG was established by President Carter to review 

up to 10 of the most important regulations each year 

classified as significant under Executive Order 

12044. It was chaired by the Council of Economic 

Advisors (CEA) and was composed of 

representatives of OMB and the economic and 

regulatory agencies. It relied on the staff of Council 

on Wage and Price Stability and the CEA to develop 

evaluations of agency regulations and the associated 

economic analyses and to place these analyses in 

the public record of the agency proposing to issue 

the regulation. 

Reformed standards spread the cost 

burden across the industry to a greater 

extent, equalizing the costs between the 

two systems ensures that the Reformed 

standards are within the realm of 

economic practicability.46 Also, cost 

equalization promotes an orderly and 

effective transition to the Reformed 

system by minimizing the cost 

differences between the two choices. 

3. Standards and required CAFE levels 

for individual manufacturers 

The Reformed CAFE standard is an 

equation for calculating productionweighted, harmonically-averaged fuel 

economy in which the footprint 

category targets are constants, total 

production and footprint category 

production are variables, and the 

required level of CAFE must be solved. 

The equation is separately solved for 

each individual manufacturer, using its 

total production and its production in 

each footprint category. The solution or 

answer is the manufacturer’s required 

level of CAFE.47

The required level of CAFE for a 

manufacturer for a model year would be 

the production-weighted harmonic 

average fuel economy of that 

manufacturer’s entire product line for 

that model year, as determined by 

inserting the manufacturer’s total 

production and production in each 

footprint category into the formula. Each 

manufacturer would be subject to the 

same fuel economy targets for the same 

footprint categories and all 

manufacturers would be required to 

meet the level of CAFE calculated for it 

under the same formula. Individual 

manufacturers would face different 

required levels of CAFE only to the 

extent that they produced different 

mixes of vehicle models. In this respect, 

the proposal would be no different than 

if the agency established multiple 

classes. Under a multiple class system, 

manufacturers would implicitly have 

different requirements at the fleet level 

as a result of differences in their fleet 

mixes. 

The required level would then be 

compared to the production-weighted 

harmonic average fuel economy of a 

manufacturer’s entire product line, 

based on the actual fuel economy levels 

achieved by each model line. If the 

value based on the actual fuel economy 

levels were at least equal to the required 

level of average fuel economy, then a 

manufacturer would be in compliance. 

If it were greater than that level, the 

manufacturer would earn credits usable 

in any of the three preceding or 

following model years. 

More specifically, the manner in 

which a manufacturer’s required overall 

CAFE for a model year is computed is 

similar to the way in which a 

manufacturer’s actual CAFE for a model 

year is calculated. The required level is 

computed on the basis of the number of 

vehicles in each footprint category and 

the footprint category targets as follows: 

Manufacturer X'

X s producti etc

s Total Production of Light Trucks

on in category 1

Target for category 1

X' s production in category 2 

Target for category 2

X' s required level of CAFE ' + +=

This formula can be restated more 

compactly as follows: 

Required CAFE Level = 

N bi / / Target i

i=1

6

( ) 









 ∑

(Required CAFE level sum formula) 

N is the total number (sum) of light 

trucks produced by a manufacturer, 

bi is the number (sum) of light trucks 

produced by that manufacturer in 

the i-th light truck footprint 

category, and 

Targeti is fuel economy target of the 

i-th footprint category. 

The required level is then compared 

to the CAFE that the manufacturer 

actually achieves in the model year in 

question: 

Actual CAFE = 

N bi / / Target i

i=1

6

( ) 









 ∑

N is the total number (sum) of light 

trucks produced by the 

manufacturer, 

nj is the number (sum) of the j-th 

model light trucks produced by the 

manufacturer, 

mpgj is the fuel economy of the j-th 

model light truck, and 

m is the total number of light truck 

models produced. 

A manufacturer is in compliance if 

the actual CAFE meets or exceeds the 

required CAFE. 

The method of assessing compliance 

under Reformed CAFE can be further 

explained using an illustrative example 

of a manufacturer that produces four 

models in two footprint categories with 

targets assumed for the purposes of the 

example shown in Table 3: 

TABLE 3.—ILLUSTRATIVE EXAMPLE OF METHOD OF ASSESSING COMPLIANCE UNDER A STEP FUNCTION APPROACH

Model 

Fuel 

economy 

(mpg) 

Production 

(units) 

Footprint 

(sq. ft.) 

Footprint 

category 

Footprint 

category 

target (mpg) 

A ............................................................................................................... 27 100,000 43 1 27.3 

B ............................................................................................................... 24 100,000 42 1 27.3 

C .............................................................................................................. 22 100,000 52 4 22.9 

D .............................................................................................................. 19 100,000 54 4 22.9 


EP30AU05.006</MATH> EP30AU05.007</MATH> EP30AU05.008</MATH>
Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51437 

48 In the context of products placed in a multicategory or multi-class system for regulatory 

purposes, the term ‘‘edge effects’’ refers to the 

incentive for the manufacturers of those products to 

modify them, particularly the ones located near the 

boundary of an adjacent category or class, i.e., an 

‘‘edge,’’ so as to move them into a different category 

or class where they will receive more favorable 

regulatory treatment. 

49Under a continuous function based on 

footprint, any increase (or decrease) in footprint 

would result in a decrease (or increase) in the fuel 

economy target. Under a step function based on 

footprint, the fuel economy target does not change 

continuously in response to changes in footprint. 

The target would increase only at discrete points 

over the range of footprint. Under this proposal, the 

targets increase only at the boundaries between 

adjacent footprint categories. 

Under Reformed CAFE, the 

manufacturer would be required to 

achieve an average fuel economy level 

of: 

N n j / / mpgj

j=1

m

( ) 

















 ∑

This fuel economy figure would be 

compared with the manufacturer’s 

actual CAFE for its entire fleet, i.e., the 

production-weighted harmonic mean 

fuel economy level for four models in its 

fleet: 

Actual CAFE = 400,000

100,000

27.0 mpg mpg mpg mpg

 mpg

+++

= 100 000

24 0

100 000

22 0

100 000

19 0

22 6 ,

.

,

.

,

.

.

In the illustrative example, the 

manufacturer’s actual CAFE (22.6 mpg) 

is less than the required level (24.9 

mpg), indicating that the manufacturer 

is not in compliance. 

4. Why this approach to reform and not 

another? 

a. Step-function vs. continuous function 

While manufacturers generally 

recognized the potential advantages of 

an attribute-based system, several 

commenters (including manufacturers) 

on the 2003 ANPRM stated that a 

continuous function based on one or 

more vehicle attributes would be 

preferable to a multi-class attributebased system. Commenters stated that a 

system based on a continuous function 

would remove the ‘‘edge effects’’ 48

associated with a multi-class system, 

that determination of the maximum 

feasible standard for a continuous 

function would prove simpler than 

determining maximum feasible 

standards for a series of classes, and that 

a continuous function could be 

structured to eliminate concern 

regarding the agency’s authority to 

permit credit transfer between classes.49

The continuous function approach 

uses a statistically estimated 

relationship between vehicle size and 

fuel economy to determine the overall 

required level for each manufacturer. 

Compliance is calculated in virtually 

the same manner. In the step-function 

approach, the denominator of the 

required overall target is the sum of the 

number of vehicles in each category 

divided by the required fuel economy of 

the category. In the continuous function 

approach, the denominator of the 

required overall target is the sum of the 

number of vehicle models divided by 

the required fuel economy for that 

model derived from the function. 

Figure 4 shows an illustrative 

example of a continuous function. 


EP30AU05.009</MATH> EP30AU05.010</MATH>
51438 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

The illustrative continuous function 

shown in Error! Reference source not 

found.4 is defined by the following 

mathematical function: 

1

1 1 1

A B

FOOTPRINT

C − − 





 exp

In the illustrative function, 

A = 20.0 mpg 

B = 12.9 mpg 

C = 15.3 square feet 

The mechanics of defining the 

continuous function would be similar to 

the procedure used to develop the 

proposed MY2011 standard. The 

iterative process described above in 

‘‘phase one’’ would be used to add fuel 

saving technologies to the baseline 

technologies for each manufacturer’s 

vehicles. Data points representing each 

vehicle’s size and fuel economy (as 

improved through the phase one 

process) would then be plotted on a 

graph. Using statistical techniques, a 

function would then be fitted through 

the data to obtain the continuous 

function. The last step would be the 

same as described above in ‘‘phase 

three’’ for the step function, i.e., the 

function would be adjusted (raised or 

lowered) until industry-wide net 

benefits are maximized, in the case of 

MY 2011, or until industry-wide costs 

are equal to those of the Unreformed 

standards, in the case of MYs 2008–

2010. 

Determination of the required level of 

CAFE (and of compliance with that 

level) is accomplished under a 

continuous function system in exactly 

the same fashion as under the step 

function system, except that there are 

vehicle model-specific targets, instead 

of category targets. For each vehicle 

model, the function shown above in 

Figure 4 is used to define a target that 

depends on footprint. Examples are 

shown in the last column of Table 4. 

TABLE 4.—ILUSTRATIVE EXAMPLE OF METHOD OF ASSESSING COMPLIANCE UNDER A CONTINUOUS FUNCTION APPROACH

Model 

Fuel 

Economy 

(mpg) 

Production 

(units) 

Footprint 

(sq. ft.) 

Vehicle 

Model Specific Target 

(mpg) 

A ....................................................................................................................................... 27 100,000 43 26.8 

B ....................................................................................................................................... 24 100,000 42 27.4 

C ...................................................................................................................................... 22 100,000 52 23.3 

D ...................................................................................................................................... 19 100,000 54 22.8 

Under Reformed CAFE using this 

illustrative continuous function, the 

manufacturer would be required to 

achieve a CAFE of: 


EP30AU05.011</GPH> EP30AU05.012</GPH>
Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51439 

50The 2003 ANPRM on reforming CAFE noted 

that the agency had previously concluded that the 

credits earned in one class could not be transferred 

to another class, but re-examined the legislative 

history of the CAFE statute and called that 

interpretation into question. 

Re ,

.4

,

.

,

.

quired CAFE = . 400,000

100,000

26.8 mpg mpg mpg mpg

 mpg

+++

= 100 000

27

100 000

23 3

100 000

22 8

24 9

The manufacturer’s required CAFE 

would be compared with the 

manufacturer’s actual CAFE, i.e., the 

production-weighted harmonic mean 

fuel economy level for four models in its 

fleet: 

Actual CAFE = 400,000

100,000

27.0 mpg mpg mpg mpg

 mpg

+++

= 100 000

24 0

100 000

22 0

100 000

19 0

22 6 ,

.

,

.

,

.

.

In the illustrative example in Figure 4, 

the manufacturer’s actual CAFE (22.6 

mpg) is less than the required level (24.9 

mpg), indicating that the manufacturer 

is not in compliance. 

A continuous function and a step 

function can have similar properties. As 

the number of steps in a step function 

increases, the difference between the 

step function and a continuous function 

decreases. If the number of steps 

becomes large enough, a graph of the 

step function approaches being a 

smooth straight or curved line. In other 

words, the step function approaches 

being a continuous function as the 

number of steps becomes large. 

If the step function is composed of 

only a few categories, then the incentive 

to upsize may be strong because the 

rewards for doing so will be significant. 

The present car/light truck system is a 

good example. This is a system with 

basically two steps and the burden of 

regulatory compliance decreases if a 

vehicle can be designed to be classified 

as a light truck instead of as a passenger 

car. 

The same is true for mix shifting. 

When the number of categories is large, 

the rewards for mix shifting are limited. 

This is because the difference in fuel 

economy targets between two adjacent 

categories is small and would diminish 

the credit that could be earned and used 

to subsidize vehicles in other categories. 

In contrast, in the Unreformed CAFE 

system with a single step from cars to 

light trucks, the rewards—in terms of 

CAFE compliance—for mix shifting may 

be significant. A small SUV can be used 

to subsidize a larger vehicle with lower 

fuel economy. In the Reformed system, 

the rewards of mix shifting are 

considerably less. 

DaimlerChrysler, Ford, General 

Motors, Subaru, and Toyota argued that 

the creation of multiple classes might 

encourage some manufacturers to 

increase weight (or size) or to make 

other product changes not desired by 

the market solely to optimize 

compliance with the regulatory 

structure, resulting in edge effects. 

Environmental Defense stated that 

product offerings would concentrate at 

points that minimize the price of the 

design constraint imposed by the CAFE 

regulations. Manufacturers argued that, 

under a continuous function scheme, 

any change to the measured attribute 

would result in a vehicle being 

subjected to a different standard. They 

then stated that because each vehicle 

model would be subjected to a different 

standard, manufacturers would be 

limited in their ability to redesign 

vehicles in order to subject a vehicle to 

a less stringent standard. Manufacturers 

further stated that a continuous weight 

based function would allow a 

manufacturer to align its products more 

with the market. 

Conversely, manufacturers stated that, 

as the number of classes increased 

under a multi-class system, the ‘‘edge 

effects’’ of the system would be 

amplified because more light trucks 

would be adjacent to a boundary 

between adjacent classes. Manufacturers 

argued that the likelihood of redesign in 

order to subject a vehicle to a less 

stringent standard would increase. 

Environmental Defense stated that even 

using a continuous or piecewise linear 

function would not completely avoid 

the problem of manufacturers shifting 

vehicles to a point with a less stringent 

standard to minimize compliance costs. 

We note that most of the comments 

compared a continuous function to a 

simple multi-class structure approach, 

as opposed to the multiple-category 

approach we are proposing. We believe 

a step function is easier for the public 

to understand than a continuous 

function, and would facilitate product 

planning. We also believe our proposed 

approach minimizes the potential 

disadvantages articulated by the 

commenters. Specifically, both the 

number and the location of the 

boundaries for the footprint categories 

are designed to minimize any edge 

effects. 

NHTSA remains interested in the 

concept of a continuous function 

standard. This concept was explored 

both by NAS in its study (chapter 5 and 

attachment 5A) and by NHTSA in its 

2003 ANPRM on CAFE reform. Now 

that the agency has refined its potential 

approach to reforming light truck CAFE, 

the agency believes that would be useful 

to seek more detailed comments and 

analyses regarding the relative 

advantages of step function standards 

and continuous function standards. 

b. Categories and targets vs. classes and 

standards 

We considered an approach under 

which we would establish each 

footprint category as a separate class 

with its own standard. Thus, for each 

model year under reform, there would 

have been six different standards, 

depending upon the footprint size of the 

vehicle. However, there were two 

primary shortcomings that led us to 

evaluate other approaches for our 

Reformed CAFE. 

First, transfers of credits earned in a 

footprint class in a model year to a 

different footprint class in a different 

model year would have required a 

complicated process of adjustments to 

ensure that fuel savings are 

maintained.50 This is because credits 

earned under the multiple classes and 

standards approach would have 

differing energy value. Credits earned 

for exceeding the higher fuel economy 

standard for the smaller footprint 

vehicles would have less energy value 

than exceeding the lower fuel economy 

standard for the larger footprint vehicles 

by an equal increment. In fact, if credits 

were generated in a class with relatively 

high CAFE standards and transferred to 

another class with relatively low CAFE 

standards, total fuel use by all vehicles 

in the two classes might increase. That 


EP30AU05.013</GPH> EP30AU05.014</GPH>
51440 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

result would undermine the entire 

reform effort by producing lessened 

energy security. 

One can calculate the appropriate 

adjustments for such a credit transfer 

system to ensure no loss of fuel savings. 

This would ensure equivalent energy 

savings. However, instituting a 

complicated new process of credit 

adjustments would detract from the 

benefits of reforming the CAFE program 

by making it more difficult to plan for 

and determine compliance. Further, 

taking this step would not cure another 

problem associated with credits. Credits 

earned by exceeding a standard in a 

model year may be used in any of the 

three model years preceding that model 

year and, to the extent not so used, in 

any of the three model years following 

that model year (49 U.S.C. 32903(a)). 

They may not, however, be used within 

the model year in which they were 

earned (Ibid.). 

Second, establishing separate 

standards for each footprint category 

would needlessly restrict manufacturer 

flexibility in complying with the CAFE 

program. A requirement for 

manufacturers to comply with six 

separate standards, combined with the 

inability either to apply credits within 

the same model year or to average 

performance across the classes during a 

model year, could increase costs 

without saving fuel. This would happen 

by forcing the use of technologies that 

might not be cost-effective. Further, 

Congressional dialogue when 

considering the enactment of the EPCA 

and amendments to it has repeatedly 

expressed the view that manufacturers 

should have flexibility in complying 

with a CAFE program so that they can 

ensure fuel savings, while still 

responding to other external factors. 

Our proposal avoids these 

shortcomings. Instead of establishing six 

distinct standards for each footprint 

category, our proposal establishes six 

targets and applies them through a 

harmonically weighted formula to 

derive regulatory obligations. Credits are 

earned and applied under our proposal 

in the same way as they are earned and 

applied under Unreformed CAFE and in 

a manner fully consistent with the 

statute. Thus, no complicated new 

provisions for credits are needed. 

Further, the use of targets instead of 

standards allows us to retain the 

benefits of a harmonically weighted 

fleet average for compliance. This 

ensures that manufacturers must 

provide the requisite fuel economy in 

their light truck fleet, while giving the 

manufacturers the ability to average 

performance across their entire fleet and 

thus the flexibility to provide that level 

of fuel economy in the most appropriate 

manner. 

c. Footprint vs. shadow or weight 

In the 2003 ANPRM, we posited the 

possibility of establishing classes of 

light trucks defined by various 

attributes. We focused our discussion on 

vehicle weight and vehicle ‘‘shadow’’

(vehicle length × width), but invited 

additional ideas. 

Recognizing the links between weight 

and vehicle safety, the Alliance, Daimler 

Chrysler, Ford, General Motors, Toyota, 

and Nissan expressed a preference for 

using weight in an attribute-based 

system. They also asserted that weight 

appears to have the best correlation to 

fuel economy, and that weight is 

currently used in fuel economy testing. 

Further, a weight-based system would 

distribute the burden of reducing fuel 

consumption equally to all 

manufacturers, preventing the systemic 

downsizing of vehicles and the 

associated detriment to safety. 

Honda and other commenters 

identified other benefits of a weight 

based system: weight based systems are 

less complex, have more readily 

available data, and are conducive to 

grouping all light trucks together in a 

single system. However, Honda stated 

that weight based systems have 

potentially severe consequences on light 

truck safety design, are more susceptible 

to erosion of fuel economy, and offer 

less potential for cost-effective fuel 

economy gains. 

Other manufacturers noted the 

weaknesses in a weight-based system. 

DaimlerChrysler commented that a 

weight-based system would discourage 

investments in weight reduction for 

material substitution, and result in lost 

opportunities to improve real-world fuel 

economy. Volkswagen believes a 

weight-based system will reduce the 

regulatory incentive to reduce vehicle 

weight. 

Honda considered the most 

constructive alternative to weight to be 

a length x width (shadow) attributebased system. Honda stated that such a 

system would provide proper safety 

incentives. Honda and Rocky Mountain 

Institute (RMI) stated that a size-based 

system would likely be subject to less 

gaming than a weight-based system. As 

discussed above, Honda determined that 

changes in size are readily apparent to 

prospective buyers and change how 

they perceive a vehicle competitively, 

while weight can be changed 

substantially without most customers 

being aware of the change. Honda stated 

that when purchasing vehicles, 

customers typically consider functional 

characteristics that are more related to 

size and utility (such as passenger and 

hauling capacity), rather than weight. 

Other commenters such as 

Environmental Defense and Natural 

Resource Defense Council stated that if 

the agency were to pursue attributebased system, a size-based system 

would be preferable to a weight-based 

system. 

Toyota and Ford questioned the 

correlation between size and fuel 

economy. Ford stated that there is a very 

poor correlation, unlike the correlation 

with weight. Ford stated that as the 

mass of a vehicle increases, more energy 

is required to move it, which results in 

increased fuel consumption. However, 

Ford continued, the relationship 

between size and fuel economy is not as 

clear; increases in size do not 

necessarily require increased fuel 

consumption because a larger sized 

vehicle can have a similar weight to a 

smaller sized vehicle. Further, General 

Motors asserted that weight is the 

primary factor affecting safety; therefore, 

NHTSA should not adopt a size-based 

system. 

The agency recognizes that size and/ 

or weight creep are legitimate concerns 

about an attribute-based class system. 

There is the potential under such a 

system for manufacturers to design 

vehicles toward the larger or heavier 

categories that may have lower 

compliance obligations. 

We have decided against premising 

our proposal on vehicle weight or 

vehicle shadow, and instead decided to 

premise it on vehicle footprint. We 

share commenters’ concern that vehicle 

weight could be tailored more easily 

than size to move vehicles into heavier 

weight categories with lower CAFE 

targets. Weight could be added to a 

vehicle near the edge of a category with 

minimal impact on design or 

performance at relatively low cost. 

Similarly, vehicle shadow (in a size 

based system) could be tailored for the 

same purpose by the simple addition of 

bumpers or other vehicle lengthening 

features. As a result, both of those 

attributes, if used as the foundation of 

our program, could fail to achieve our 

goals of enhancing fuel economy and 

safety with a Reformed CAFE program. 

We believe that vehicle footprint is a 

better vehicle attribute and an 

appropriate foundation for reforming 

the CAFE program to advance energy 

security and safety. Basing categories on 

footprint permits grouping of vehicles in 

similar market segments, thus avoiding 

grouping light trucks designed to carry 

large payloads or a large number of 

passengers together with light trucks 

designed to carry smaller payloads or a 

smaller number of passengers. 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51441 

51See, Kahane (2003) and Van Auken, R.M. and 

J.W. Zellner, An Assessment of the Effects of 

Vehicle Weight on Fatality Risk in Model Year 

1985–98 Passenger Cars and 1985–97 Light Trucks, 

Dynamic Research, Inc. February 2002. Docket No. 

NHTSA 2003–16318–2. 

52See, Van Auken, R.M. and J.W. Zellner, 

Supplemental Results on the Independent Effects of 

Curb Weight, Wheelbase, and Track on Fatality Risk 

in 1985–1997 Model Year LTVs, Dynamic Research, 

Inc. May 2005. Docket No. NHTSA 2003–16318–17. 

53The Aluminum Association commented that 

using aluminum to decrease a vehicle’s weight by 

10 percent could improve its fuel economy by 5–

8 percent. The commenter noted that the Honda 

Insight, an all aluminum vehicle, is 40 percent 

lighter than a comparable steel vehicle. It also 

provided data to demonstrate that all aluminum 

vehicles have comparable performance in frontal 

barrier crash tests as comparable steel vehicles. See 

comments provided by the Aluminum Association, 

Inc. (Docket No. 2003–16128–1120, pp. 5 and 12). 

54We noted the importance of these capabilities 

in the ANPRM: 

The market suggests that while some light trucks 

may be used primarily to transport passengers, their 

‘‘peak use or value’’ capability (towing boats, 

hauling heavy loads, etc.) may be a critical factor 

in the purchase decision. In other words, a 

consumer may require substantial towing capability 

only periodically, but nevertheless may base his 

purchasing decision on a vehicle’s ability to meet 

that peak need rather than his daily needs. The 

motor vehicle market has thus developed a demand 

for vehicles capable of cross-servicing traditional 

needs—that is, for vehicles capable of transporting 

people and cargo, for vehicles capable of servicing 

personal transportation needs as well as 

recreational and commercial ones, and for vehicles 

capable of substantial performance, even if such 

performance is only needed periodically. 

68 FR 74908, at 74913. 

Vehicle footprint is more integral to a 

vehicle’s design than either vehicle 

weight or shadow and cannot easily be 

altered between model years in order to 

move a vehicle into a different category 

with a lower fuel economy target. 

Footprint is dictated by the vehicle 

platform, which is typically used for a 

multi-year model life cycle. Short-term 

changes to a vehicle’s platform would 

be expensive and difficult to accomplish 

without disrupting multi-year product 

planning. In some cases, several models 

share a common platform, thus adding 

to the cost and difficulty and therefore 

unlikelihood of short-term changes. 

Moreover, as Honda commented, the 

ability to change footprint would be 

subject to the limits imposed by 

consumer acceptance and preference. 

Changes in footprint result in 

perceptible changes in performance and 

design (e.g., a longer and/or wider 

vehicle). The responsiveness of 

consumers to those changes is 

pronounced, as is evidenced by the fact 

that manufacturers market size variant 

models, e.g., pick-up trucks in long and 

short beds, and light truck models in 

longer wheelbase versions. Changes in 

footprint solely for the purpose of 

moving a vehicle to a footprint category 

with a less stringent fuel economy target 

could adversely impact consumer 

demand for that product and/or increase 

cost to the manufacturer. These 

considerations regarding footprint allow 

us to establish footprint category target 

levels and to design our Reformed CAFE 

program with more certainty that we 

can achieve our objectives. 

We also believe that use of the vehicle 

footprint attribute helps us achieve 

greater fuel economy without having a 

potential negative impact on safety. 

While past analytic work 51 focused on 

the relationship between vehicle weight 

and safety, weight was understood to 

encompass a constellation of sizerelated factors, not just weight. More 

recent studies 52 have begun to consider 

whether the relationship between 

vehicle size and safety differs. To the 

extent that mass reduction has 

historically been associated with 

reductions in many other size attributes 

and given the construct of the current 

fleet, we believe that the relationship 

between size or weight (on the one 

hand) and safety (on the other) has been 

similar, except for rollover risks. 

Developing CAFE standards based on 

vehicle footprint could encourage 

compliance strategies that would 

decrease rollover risk. Manufacturers 

would be encouraged to maintain track 

width because reducing it could subject 

the vehicle to a more stringent fuel 

economy target. Maintaining track 

width would potentially allow some 

degree of weight reduction without a 

decrease in overall safety. Moreover, by 

setting fuel economy targets for small 

footprint light trucks that approach (or 

exceeds) 27.5 mpg, the agency would 

provide little incentive, or even a 

disincentive, to design vehicles to be 

classified as light trucks in order to 

comply or offset the fuel economy of 

larger light trucks. 

The influence of Reformed CAFE on 

track width would be reinforced by our 

NCAP rollover ratings. Track width is 

one of the elements of our Static 

Stability Factor, which constitutes a 

significant part of our NCAP rollover 

ratings and which correlates closely 

with real world rollover risk. The 

rollover NCAP program (as well as real 

world rollover risk) would reinforce 

Reformed CAFE by a separate 

disincentive to decrease track width. 

Overall, use of vehicle footprint 

would be ‘‘weight neutral’’ and thus 

would not exacerbate the vehicle 

compatibility problem. A footprintbased system would not encourage 

manufacturers to add weight to move 

vehicles to a higher footprint category. 

Nor would the system penalize 

manufacturers for making limited 

weight reductions. By using vehicle 

footprint in lieu of a weight based 

metric, we intend to facilitate the use of 

promising lightweight materials that, 

although perhaps not cost-effective in 

mass production today, may ultimately 

achieve wider use in the fleet, become 

less expensive, and enhance both 

vehicle safety and fuel economy.53 In 

Reformed CAFE, lightweight materials 

can be incorporated into vehicle design 

without moving a vehicle into a 

footprint category with a more stringent 

average fuel economy target. 

The agency is aware that basing the 

Reformed CAFE proposal solely on 

footprint can be criticized on the 

grounds that it does not fully account 

for other vehicle attributes that are 

valuable to consumers and influence 

fuel economy. For example, vehicles A 

and B may have equal footprint, but 

vehicle A may be designed to have 

superior towing and/or cargo-hauling 

capabilities than vehicle B.54 Vehicle A 

may therefore have lower fuel economy 

than vehicle B because it is designed to 

provide greater utility for consumers. 

For vehicle manufacturers that have a 

product mix weighted toward vehicles 

with superior towing and/or cargohauling capabilities, even Reformed 

CAFE, based on a single size attribute, 

may not provide a fully equitable 

competitive environment. The agency is 

seeking comment on whether Reformed 

CAFE should be based on vehicle size 

(footprint) alone, or whether other 

attributes, such as towing capability 

and/or cargo hauling capability, should 

be considered. If any commenters 

advocate one or more additional 

attributes, the agency requests those 

commenters to supply a specific, 

objective measure for each attribute that 

is accepted within the industry and that 

can be applied to the full range of lighttruck products. 

d. Reformed standard vs. Reformed 

standard plus backstop 

Several commenters argued that a 

backstop would be needed under 

attribute-based Reformed CAFE. In the 

context of Reformed CAFE, NHTSA 

understands the term ‘‘backstop’’ to 

mean an absolute minimum CAFE 

requirement that would apply to a 

manufacturer’s overall fleet if the level 

of average fuel economy otherwise 

required of a manufacturer under a 

Reformed CAFE standard fell below the 

level of that absolute minimum 

requirement. Such a requirement would 

essentially be the same as an 

Unreformed CAFE standard. Stated 

another way, the Reformed standard 

with a backstop would require 

51442 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

compliance with the greater of the 

following fleet wide requirements: 

average fuel economy level calculated 

under Reformed standard or an equal 

cost Unreformed CAFE standard. 

These commenters suggested that 

unless a backstop in the form of an 

absolute fleet wide CAFE standard were 

established to supplement attributebased Reformed CAFE standards based 

on size or weight, there might be an 

overall loss in fleet economy resulting 

from mix shifts or from upward weight 

or size ‘‘creep.’’ For example, 

manufacturers might redesign some of 

their vehicles to make them larger or 

heavier or they might shift their 

production mix so as to increase their 

production of vehicles subject to less 

stringent standards). 

Environmental groups such as the 

NRDC and Environmental Defense 

urged the agency to adopt a backstop as 

a part of any proposed reform. These 

commenters suggested that a backstop 

would provide a guarantee against any 

loss of fuel economy due to increase in 

vehicle weight or size. 

While some vehicle manufacturers 

noted some commenters were likely to 

suggest that a backstop might be needed 

to prevent erosion of overall fuel 

economy, the manufacturers opposed 

the concept. DaimlerChrysler and 

General Motors stated that these 

commenters might argue that a backstop 

would be necessary to ensure no loss in 

overall economy. These manufacturers 

noted that a backstop would have 

disparate impacts on manufacturers 

because of differences in their fleet 

mixes, and that a backstop would lead 

to downweighting under a weight based 

system. Ford opposed a backstop, 

stating that the ‘‘assumption of 

wholesale ‘‘upsizing’’ or ‘‘upweighting’’

‘‘is erroneous.’’ General Motors also said 

that the risk of such upsizing or 

upweighting was overstated. 

Manufacturers expressed concern that a 

backstop would unduly increase the 

complexity of the CAFE program by 

applying essentially two different types 

of standards. General Motors argued that 

establishing separate class standards as 

well as a fleet wide standard would be 

contrary to legislative scheme 

established under the Energy Policy and 

Conservation Act in which a vehicle is 

placed in a single compliance fleet. 

NHTSA is not proposing a backstop 

for the following reasons. First, 

manufacturers cannot increase the size 

or weight of their vehicles or introduce 

new, larger vehicles without regard to 

consumer demand. They can make 

those changes only to the extent that 

there is market acceptance of them. 

Absent a reliable indication of likely 

market acceptance, manufacturers 

would be unlikely to assume the risks 

involved in taking these actions. As 

Toyota noted, ‘‘Manufacturers must still 

be cognizant of other aspects of vehicle 

design, such as acceleration, handling, 

cornering, and other factors. Adding 

weight would be counterproductive to 

many of the attributes, and thus careful 

consideration would be given by 

manufacturers before simply adding 

weight for no otherwise apparent 

reason.’’

Further, NHTSA believes that given 

the cost and difficulty of increasing 

vehicle size, the agency’s choice of 

footprint, instead of weight or shadow, 

as the attribute used in Reformed CAFE 

would significantly limit the possibility 

that manufacturers would increase 

vehicle size beyond the extent sought by 

consumers. Increasing vehicle footprint, 

like increasing vehicle weight, would 

require addressing the other aspects of 

vehicle design mentioned in Toyota’s 

comment. 

Second, establishing a backstop 

would not preclude future mix shifts 

and design changes. The comments 

urging the establishment of a backstop 

appear to be premised on a 

misconception of how CAFE standards 

have been set and adjusted over the life 

of the CAFE program. The Unreformed 

CAFE program has not sought, and does 

not seek, to ignore consumer demand 

and freeze the mix or design of vehicles. 

The agency has set Unreformed CAFE 

standards with particular regard to the 

least capable manufacturer’s own 

projections about its mix and vehicle 

designs in the years to which the 

standards will apply ‘‘ adjusted 

according to the agency’s 

determinations of available costeffective, fuel-efficient technologies that 

could be added to that company’s fleet. 

Thus, the standards are market based, 

set in a fashion that accommodates that 

manufacturer’s judgment, adjusted by 

the agency for fuel economy 

improvements, as to how consumer 

demand will change between the time of 

a light truck CAFE rulemaking and 

those future model years. 

Establishing a backstop would also 

not preclude the growth in vehicle 

weight as a result of the manufacturers’

continued introduction of new 

mandatory and voluntary safety features 

and non-safety features that would 

enhance vehicle utility and consumer 

choice. In fact, the agency has 

consciously set Unreformed CAFE 

standards in the past so as to 

accommodate any anticipated 

installation of mandatory and voluntary 

safety features, as required by statute. 

Plans for the installation of these 

features and items of equipment are 

reflected in the manufacturers’ baselines 

for the purpose of determining their 

future capability to improve fuel 

economy. To the extent that new safety 

requirements are implemented, and to 

the extent there is consumer demand for 

voluntarily installed equipment, average 

weight may increase further. The 

implementation of Reformed CAFE 

would not and should not change the 

practice of accommodating those 

manufacturer actions. 

In addition, the proponents of the 

backstop concept erroneously assume 

that unreformed CAFE does not change 

when good faith compliance efforts fall 

short. When manufacturer plans for 

complying with established CAFE 

standards have proven insufficient 

because of factors outside the control of 

the industry, the agency has revisited 

both light truck and passenger car CAFE 

standards and adjusted them to reflect 

more up-to-date, corrected projections 

of mix. NHTSA’s actions in this regard 

were twice reviewed and upheld by the 

U.S. Circuit Court of Appeals for the 

District of Columbia, once with respect 

to light trucks, and the other time with 

respect to passenger cars. See, CAS, 793 

F.2d 1322; Public Citizen, 848 F.2d 256. 

Third, the agency plans to 

periodically adjust the location of the 

boundaries between footprint categories. 

Since the agency is likely to adjust the 

boundaries each time a new round of 

CAFE standards is established, there 

would be limited advantage to a 

manufacturer’s upsizing some of its 

vehicles. Further, it would be difficult 

for a manufacturer to predict how 

category boundaries might change over 

the four to eight year life of a vehicle 

design. 

Fourth, the agency believes that 

supplementing the Reformed CAFE 

standards with a backstop would negate 

the value of establishing the attributebased standards for some manufacturers 

and perpetuate the shortcomings of 

Unreformed CAFE. The level of the 

backstop would presumably be set at (or 

close to) the level of the manufacturer 

that would be determined to be the least 

capable manufacturer under 

Unreformed CAFE. Any manufacturer 

that, under Reformed CAFE, would have 

a required level of average fuel economy 

less than the level of the least capable 

manufacturer would have to comply 

with the backstop instead. 

Fifth, and finally, making vehicles 

larger for CAFE compliance purposes is 

not cost-free. All else being equal, larger 

vehicles are more costly to build and 

operate. Market forces or fuel price 

increases will restrain consumer 

demand for large light trucks with low 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51443 

55Shifting production mix down toward smaller 

vehicles involves decreasing the production 

volumes of vehicles that are heavier or larger and 

thus have relatively low fuel economy and 

increasing the production volumes of lighter or 

smaller vehicles. 

56NAS, p. 3. 

fuel economy, unless the need for utility 

justifies the expense to the 

manufacturers of producing and to the 

consumers of operating large trucks. 

5. Benefits of reform 

a. Increased energy savings 

The Reformed CAFE system would 

increase the energy savings of the CAFE 

program over the longer term because 

fuel economy technologies would be 

required to be applied to light trucks 

throughout the entire industry, not just 

by a limited number of manufacturers. 

The energy-saving potential of 

Unreformed CAFE is limited because 

only a few full-line manufacturers are 

required to make improvements. In 

effect, the capabilities of these full-line 

manufacturers, whose offerings include 

larger and heavier light trucks, constrain 

the stringency of the uniform, industrywide standard. The Unreformed CAFE 

standard is generally set below the 

capabilities of limited-line 

manufacturers, who sell predominantly 

lighter and smaller light trucks. Under 

Reformed CAFE, which accounts for 

size differences in product mix, 

virtually all light-truck manufacturers 

will be required to improve the fuel 

economy of their vehicles. Thus, 

Reformed CAFE will continue to require 

full-line manufacturers to improve the 

overall fuel economy of their fleets, 

while also requiring limited-line 

manufacturers to enhance the fuel 

economy of the vehicles they sell. 

Our estimates indicate that the 

Reformed CAFE system would result in 

greater fuel savings than the 

Unreformed CAFE system during the 

transition period, though the industrywide compliance costs were equalized 

for those model years: 

TABLE 4.—ESTIMATED FUEL SAVINGS

FROM REFORMED AND UNREFORMED

CAFE SYSTEMS FOR MYS 2008–

2010 

[In billions of gallons] 

MY 

2008 

MY 

2009 

MY 

2010 

Reformed CAFE 

system ........... 0.9 2.2 2.9 

Unreformed 

CAFE system 0.8 1.9 2.7 

The improvement in fuel savings 

would be even greater beginning MY 

2011 when targets are set at the level 

that maximizes net benefits. By 

promoting improvements across the 

entire industry, without as much 

influence imposed by the manufacturer 

that would be regarded as the least 

capable manufacturer under the 

Unreformed CAFE system, the Reformed 

CAFE system would allow for greater 

fuel savings at levels that remain 

economically practicable. We believe 

that the Reformed CAFE system would 

continue to increase overall fuel 

conservation substantially over time. 

b. Reduced incentive to respond to the 

CAFE program in ways harmful to safety 

To appreciate the potential safety 

impacts of reforming CAFE, it is 

necessary first to understand the key 

trends in the light vehicle population 

and in the crashes that produce serious 

and fatal injuries. Today’s light vehicle 

fleet is very different from the fleet of 30 

years ago when EPCA was enacted and 

even from the fleet of 20 years ago. A 

more complex and diverse fleet, 

including large numbers of vehicles 

such as minivans and SUVs that 

scarcely existed before, has replaced the 

fleet that was once dominated by 

passenger cars. There are now over 102 

million light trucks on the road, 

including pickups, minivans, and SUVs, 

representing about 41 percent of 

registered light vehicles in the United 

States. Since light trucks now account 

for more than 50 percent of new light 

vehicle sales, their share of the total 

fleet is growing steadily. SUVs account 

for about 35 percent of light truck sales. 

While the overall light vehicle fleet is 

safer as a result of the addition of many 

safety features, the new fleet 

composition presents new safety issues. 

Two issues stand out. Rollovers and 

crash compatibility. Both are related to 

reforming CAFE. 

Pickups and SUVs have a higher 

center of gravity than passenger cars and 

thus are more susceptible to rolling 

over, if all other variables are identical. 

Their rate of involvement in fatal 

rollovers is higher than that for 

passenger cars—the rate of fatal 

rollovers for pickups, like the rate for 

SUVs, is twice that for passenger cars. 

Rollovers are a particularly dangerous 

type of crash. Overall, rollover affects 

about three percent of light vehicles 

involved in crashes, but accounts for 33 

percent of light vehicle occupant 

fatalities. Single vehicle rollover crashes 

account for nearly 8,500 fatalities 

annually. Rollover crashes involving 

more than one vehicle account for 

another 1,900 fatalities, bringing the 

total annual rollover fatality count to 

more than 10,000. 

Crash compatibility is the other 

prominent issue. Light trucks are 

involved in about half of all fatal twovehicle crashes involving passenger 

cars. In the crashes between light trucks 

and passenger cars, over 80 percent of 

the fatally injured people are occupants 

of the passenger cars. 

The agency believes that the manner 

in which fuel economy is regulated can 

have substantial effects on vehicle 

design and the composition of the light 

vehicle fleet. Reforming CAFE is 

important for vehicle safety because the 

current structure of the CAFE system 

provides an incentive to manufacturers 

to reduce the weight and size of 

vehicles, and to increase the production 

of vehicle types (particularly pickup 

trucks and SUVs) that are more 

susceptible to rollover crashes and are 

less compatible with other light 

vehicles. For these reasons, reforming 

CAFE is a critical part of the agency’s 

effort to address the vehicle rollover and 

compatibility problems. 

i. Reduces the incentive to offer smaller 

vehicles and to reduce vehicle size 

Fuel price increases and competitive 

pressures in the 1970’s and early 1980’s 

induced vehicle manufacturers to shift 

their production mix toward their 

smaller and lighter vehicles to offset the 

lower fuel economy of larger and 

heavier vehicles and to redesign their 

vehicles by reducing their size and/or 

weight.55 The need for manufacturers to 

make rapid and substantial increases in 

passenger car and light truck CAFE in 

response to the CAFE standards in late 

1970’s and early 1980’s provided an 

added incentive for them to take those 

actions. Those actions contributed to 

many additional deaths and injuries.56

While the adoption of additional safety 

performance requirements for those 

vehicles has saved lives, even more 

lives would have been saved if the 

shifting of production mix toward 

smaller vehicles and the reduction in 

size and/or weight had not occurred. 

Without CAFE reform, history is 

likely to repeat itself. Significant 

increases in Unreformed light truck 

CAFE standards, especially if 

accompanied by high fuel prices, would 

likely induce a similar wave of shifting 

production mix toward smaller light 

trucks and reducing the size and/or 

weight of light trucks. 

By choosing to base Reformed CAFE 

on a measure of vehicle size (footprint) 

instead of weight, the agency is aware 

that the CAFE program will continue to 

permit and to some extent reward 

weight reduction as a compliance 

strategy. The safety ramifications of 

51444 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

57 Kahane, C.J., Response to Docket Comments on 

NHTSA Technical Report, Vehicle Weight, Fatality 

Risk and Crash Compatibility of Model Year 1991–

99 Passenger Cars and Light Trucks, Docket No. 

NHTSA–2003–16318–16, 2004 discusses the 

historic correlation and difficulty of disaggregating 

weight and ‘‘size.’’ Except for a strong correlation 

of track width with rollover risk, it shows weak and 

inconsistent relationships between fatality risk and 

two specific ‘‘size’’ measures, track width and 

wheelbase, when these are included with weight in 

the analyses. See also Kahane, C.J., Vehicle Weight, 

Fatality Risk and Crash Compatibility of Model 

Year 1991–99 Passenger Cars and Light Trucks, 

NHTSA Technical Report No. DOT HS 809 662, 

Washington, 2003, pp. 2–6. Evans, L. and Frick, 

M.C., Car Size or Car Mass—Which Has Greater 

Influence on Fatality Risk? American Journal of 

Public Health 82:1009–1112, 1992, discusses the 

intense historical correlation of mass and wheelbase 

and finds that relative mass, not relative wheelbase 

is the principal determinant of relative fatality risk 

in two-car collisions. See also, Evans, L. ‘‘Causal 

Influence of Car Mass and Size on Driver Fatality 

Risk, ‘‘ American Journal of Public Health, 91:1076–

81, 2001. 

58NAS (p. 88) noted that that gap created an 

incentive to design vehicles as light trucks instead 

of cars. 

59The term ‘‘approach angle’’ is defined by 

NHTSA in 49 CFR 523.2 as meaning ‘‘the smallest 

angle, in a plane side view of an automobile, 

formed by the level surface on which the 

automobile is standing and a line tangent to the 

front tire static loaded radius arc and touching the 

underside of the automobile forward of the front 

tire.’’

downweighting—especially 

downweighting that is not achieved 

through downsizing—will need to be 

examined on a case-by-case basis in 

future rulemakings. Historically, the 

size and weight of light-duty vehicles 

have been so highly correlated that it 

has not been technically feasible to fully 

disentangle their independent effects on 

safety.57 The agency remains concerned 

about compliance strategies that might 

have adverse safety consequences. 

Fortunately, it is possible that some of 

the lightweight materials used in a 

downweighting strategy may have the 

strength and flexibility to retain or even 

improve the crashworthiness of vehicles 

and the safety of occupants. Moreover, 

if downweighting were concentrated 

among the heaviest of the light trucks, 

any extra risk to the occupants of those 

vehicles might be more than offset be 

lessened risk in multi-vehicle crashes to 

occupants of smaller light trucks and 

cars. As manufacturers respond to the 

requirements of Reformed CAFE, the 

agency intends to monitor whether 

downweighting is chosen as a 

compliance strategy and, if so, how 

downweighting is accomplished, which 

vehicles are downweighted, and what 

the possible effects on safety (beneficial 

and adverse) may be. 

Reforming CAFE by basing it on 

footprint categories would discourage 

reductions in vehicle size and reduce 

the likelihood of any new wave of mix 

shifting toward smaller vehicles. 

Reformed CAFE reduces the incentive to 

take those actions because both mix 

shifting and reducing vehicle size 

would increase the manufacturers’

required level of CAFE for that model 

year. 

The way in which Reformed CAFE 

dilutes the effect of both of those actions 

as compliance strategies can be seen by 

looking at a Reformed CAFE standard. 

The target average fuel economy values 

for the footprint categories are 

constants. Regardless of what 

compliance strategy is chosen by a 

manufacturer, nothing that the 

manufacturer does will change those 

values. 

The distribution of vehicle models 

among the categories and the 

production volume of each models, 

however, are variables under the control 

of the manufacturers. Further, they are 

variables not only in the formula for 

calculating a manufacturer’s actual level 

of CAFE for a model year, but also in the 

formula for calculating a manufacturer’s 

required level of CAFE for that model 

year. 

Thus, by changing the distribution of 

its production among the footprint 

categories, a manufacturer would 

change not only its actual level of CAFE, 

but also its required level of CAFE. For 

example, all other things being equal, if 

a manufacturer were to increase the 

production of one of its higher fuel 

economy models and decrease the 

production of one of its lower fuel 

economy models, both its actual level of 

CAFE and its required level of CAFE 

would increase. Likewise, again all 

other things being equal, if a 

manufacturer were to redesign a model 

so as to decrease its footprint (thereby 

presumably also decreasing its weight) 

sufficiently to move it into a smaller 

footprint category, the model would 

become subject to a higher target. Again, 

as a result, both the manufacturer’s 

actual CAFE and required CAFE would 

increase. 

The reduced effectiveness of those 

actions as compliance strategies under 

Reformed CAFE would make it more 

likely that the manufacturers would 

choose two other actions as the primary 

means of closing the gap between those 

two levels: reducing vehicle weight 

while keeping footprint constant, and 

adding fuel-saving technologies. Both of 

those actions would increase a 

manufacturer’s actual CAFE without 

changing its required CAFE. 

Nevertheless, since a move into other 

footprint categories would result in a 

change in both actual and required 

CAFE, manufacturers would have more 

flexibility to respond to consumer 

demand for vehicles in other size 

categories without harming their ability 

to comply with CAFE standards or 

adversely affecting safety. 

Unreformed CAFE creates an 

incentive to reduce weight regardless of 

whether footprint also is reduced. 

Reformed CAFE reduces that incentive 

by linking the level of the average fuel 

economy targets to the size of footprint 

so that there is an incentive to reduce 

weight only to the extent one can do so 

while also preserving size. Reformed 

CAFE discourages footprint reduction 

because as a vehicle model’s footprint is 

reduced, the vehicle moves into 

categories with smaller footprints and 

higher targets. 

We have designed the categories to 

increase the extent to which Reformed 

CAFE standards will not affect vehicle 

size. First, we are dividing the overall 

fleet of light trucks into a large enough 

number of footprint categories that each 

category includes only a relatively 

narrow range of footprint. This would 

ensure that only a fairly modest 

decrease in a model’s footprint would 

cause the model to move down into the 

next footprint category and become 

subject to a higher target. Second, as 

noted above, we set the boundaries 

between the footprint categories so that 

a substantial portion of the vehicles in 

each category is located near the lower 

end of that category. In that location, 

any reduction in a vehicle’s footprint 

would be sufficient to move the vehicle 

into a lower footprint category and thus 

subject it to a higher average fuel 

economy target. 

ii. Effectively reduces the difference 

between car and light truck CAFE 

standards 

The average fuel economy targets for 

the smaller footprint categories of light 

trucks would, by MY 2011, be at or near 

(and for the smallest light trucks above) 

the level of the current 27.5 mpg CAFE 

standard for cars. The reduction of the 

disparity between car and light truck 

CAFE standards—the so-called ‘‘SUV 

loophole’’—would promote increased 

safety because the disparity has created 

an incentive (beyond that provided by 

the market by itself) to design vehicles 

to be classified as light trucks instead of 

cars.58

One way to design vehicles so that 

they are classified as light trucks instead 

of passenger cars is to design them so 

that they have higher ground clearance 

and higher approach angles.59 Designing 

vehicles with higher ground clearance 

results in their having a higher center of 

gravity. Generally speaking, light trucks 

have a higher center of gravity than cars, 

and thus are more likely to rollover. 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51445 

Moreover, in order to create a higher 

approach angle, it is necessary to raise 

or minimize the front structure below 

the front bumper, which increases the 

likelihood that a light truck will 

override a car in a front or rear end 

crash with a car. It also increases the 

likelihood that when a light truck 

crashes into the side of a car, its front 

end will pass over the car’s door sill and 

intrude farther into the car’s occupant 

compartment. In addition to not being 

structurally aligned with cars, light 

trucks are generally heavier than cars, 

which adds to their compatibility 

problems with cars. 

c. More equitable regulatory framework 

The Unreformed CAFE system does 

not provide an equitable regulatory 

framework for different vehicle 

manufacturers. Regardless of their 

product mix, all vehicle manufacturers 

are required to comply with the same 

fleet-wide average CAFE requirement. 

For full-line manufacturers, this creates 

an especially burdensome task. We note 

that these manufacturers often offer 

vehicles that have high fuel economy 

performance relative to others in the 

same size class, yet because they sell 

many vehicles in the larger end of the 

light truck market, their overall CAFE is 

low relative to those manufacturers that 

concentrate in offering smaller light 

trucks. As a result, Unreformed CAFE is 

binding for such full-line 

manufacturers, but not for limited-line 

manufacturers that predominantly sell 

smaller light trucks. The full-line 

vehicle manufacturers have expressed a 

legitimate competitive concern that the 

part-line vehicle manufacturers are 

entering the larger end of the light-truck 

market with an accumulation of CAFE 

credits. While this concern has merit, it 

is also the case that some part-line 

manufacturers (e.g., Toyota and Honda) 

have been industry innovators in certain 

technological aspects of fuel-economy 

improvement. 

The reformed CAFE system will 

provide a more equitable regulatory 

framework for full-line vehicle 

manufacturers without denying a level 

playing field to the part-line vehicle 

makers. In order to test this proposition 

empirically, the agency has presented 

simulations of Reformed CAFE in 

chapter III of the PRIA for MYs 2002, 

2003 and 2004. The two largest full-line 

makers (General Motors and Ford) 

would have achieved a significantly 

improved compliance outcome under 

Reformed CAFE, while some part-line 

vehicle manufacturers would have faced 

a more challenging compliance 

obligation. 

d. More responsive to market changes 

Reformed CAFE is more marketoriented because it respects economic 

conditions and consumer choice. 

Reformed CAFE does not force vehicle 

manufacturers to adjust fleet mix toward 

smaller vehicles unless that is what 

consumers are demanding. As the 

industry’s sales volume and mix 

changes in response to economic 

conditions (e.g., gasoline prices and 

household income) and consumer 

preferences (e.g., desire for seating 

capacity or hauling capability), the 

expectations of manufacturers under 

Reformed CAFE will, at least partially, 

adjust automatically to these changes. 

Accordingly, Reformed CAFE may 

reduce the need for the Agency to revisit 

previously established standards in light 

of changed market conditions, a difficult 

process that undermines regulatory 

certainty for the industry. In the mid1980’s, for example, the Agency relaxed 

several unreformed CAFE standards 

because fuel prices fell more than 

expected when those standards were 

established and, as a result, consumer 

demand for small vehicles with high 

fuel economy did not materialize as 

expected. By moving to a marketoriented system, the agency may also be 

able to pursue more multi-year 

rulemakings that span larger time 

frames than the agency has attempted in 

the past. 

B. Authority for Reformed CAFE 

proposal 

We believe the proposed CAFE 

program is both consistent with the 

statute and better achieves the 

Congressional policy objectives 

embedded within it. The proposed 

program conforms to the mandates to 

establish maximum feasible fuel 

economy standards applicable on a fleet 

average basis and to the Congressional 

intent to establish those standards only 

after balancing the nation’s need to 

conserve energy, the effect of other 

standards on fuel economy, 

technological feasibility, economic 

practicability and other public policy 

considerations. 

The statute provides considerable 

flexibility with regard to the 

establishment and implementation of 

light truck standards. Congress 

recognized that the universe of light 

trucks is comprised of varying types of 

vehicles meeting different consumer 

needs. The CAFE statute mandates that 

we issue one or more average fuel 

economy standards for light trucks for 

each model year. Congress chose 

harmonic averaging over standards 

applicable to individual vehicles so that 

the CAFE statute’s overriding goal of 

conserving energy would be pursued in 

a manner that preserves manufacturer 

flexibility and consumer choice. H. Rpt. 

94–340, p. 87; S. Rpt. 94–179, p. 6. 

An ‘‘average fuel economy standard’’

is defined as ‘‘a performance standard 

specifying a minimum level of average 

fuel economy applicable to a 

manufacturer in a model year.’’ 49 

U.S.C. 32901(a)(6). The statute directs 

NHTSA to prescribe through regulation 

average fuel economy standards for 

automobiles (except passenger 

automobiles) manufactured by a 

manufacturer in a model year. 49 U.S.C. 

32902(a). The standard is linked to 

‘‘automobiles manufactured by a 

manufacturer,’’ which is defined as 

including ‘‘every automobile 

manufactured by a person that controls, 

is controlled by, or is under common 

control with the manufacturer, but does 

not include an automobile 

manufactured by the person that is 

exported not later than 30 days after the 

end of the model year in which the 

automobile is manufactured.’’ 49 U.S.C. 

32901(a)(4). 

While NHTSA historically has 

established a light truck standard with 

a single level common to all 

manufacturers, the statute does not 

require us to do so. Indeed, the statute 

expressly defines ‘‘an average fuel 

economy standard’’ as a performance 

standard applicable to ‘‘a 

manufacturer,’’ and directly links the 

establishment of standards to the 

manufacturer-specific definition of 

‘‘automobiles manufactured by a 

manufacturer.’’ It appears clear that 

Congress left to the agency’s discretion 

the determination of whether to 

establish a single standard applicable 

collectively to all manufacturers or to 

set a series of standards applicable to 

individual manufacturers to ensure that 

each manufacturer achieves the 

maximum feasible level it can achieve, 

given its product mix. 

We note that the statutory text 

phrasing with regard to setting 

‘‘maximum feasible’’ standards for light 

truck manufacturers is susceptible to 

more than one interpretation. We are 

directed to establish standards for each 

model year and instructed: ‘‘each 

standard shall be the maximum feasible 

average fuel economy level that the 

Secretary decides the manufacturers can 

achieve in that model year.’’ 49 U.S.C. 

32902(a). The use of the plural 

‘‘manufacturers,’’ instead of the 

singular, could be read to indicate that 

Congress intended that the standard for 

any given model year collectively be the 

maximum feasible level applicable to all 

manufacturers. When read in 

51446 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

60 In considering a composite standard approach 

suggested by Ford, the agency seemed to confuse 

that approach with a class based approach. The 

agency noted its belief that a single all-inclusive 

standard would provide more flexibility than class 

based standards. 45 FR 11997–98. In the final rule, 

the agency raised a question about its authority to 

implement a composite standard, but did so 

without reaching any conclusions and without 

offering any analysis of its own or even adopting 

that of any participant in the rulemaking. 45 FR 

81593 at 81594. We have now conducted our own 

legal analysis, which agrees with the RARG’s 

analysis. 

conjunction with the other sentences in 

that provision, however, the statutory 

phrasing could also indicate that, by 

using the plural, Congress anticipated 

that the standards would reflect the 

different product offerings of 

manufacturers, but that each standard 

would be the maximum feasible for the 

manufacturer to which it applied. 

Reference beyond the phrasing of that 

particular sentence does not provide 

much additional clarity. The language 

used in the remainder of Section 

32902(a) suggests that Congress 

anticipated the possibility of standards 

set at different levels for different 

manufacturers, yet a discussion of 

industry-wide considerations in the 

legislative history (conference report) 

suggests an expectation of a single CAFE 

level applicable to all manufacturers. 

We believe that Congress left to 

NHTSA the discretion to establish light 

truck standards in the most effective 

way possible to achieve the maximum 

level of fuel conservation that is feasible 

for each manufacturer. NHTSA must, 

consistent with the statute, take 

industry-wide considerations into 

account to ensure that the methodology 

used to establish these levels ensures, 

on an industry-wide basis, technological 

feasibility and economic practicability 

and accounts for the impact of other 

regulatory activity. 

Our proposal for an approach 

requiring improvement by most 

manufacturers and resulting in higher 

overall fuel savings implements better 

and more fully the statutory mandate to 

set maximum feasible standards and 

adheres more faithfully to the guidance 

in the legislative history to base the 

standards on industry-wide 

considerations than an approach 

requiring improvement by only a few 

manufacturers in the industry. On both 

an industry-wide basis and an 

individual manufacturer basis, the 

former approach provides no less 

assurance than the latter approach that 

the resulting standards are 

technologically feasible or economically 

practicable. In fact, since the former 

approach is based on a manufacturer’s 

own product mix, it ensures that the 

level of average fuel economy required 

of each manufacturer is tailored to the 

circumstances and thus the capabilities 

of that manufacturer. 

The methodology proposed today is 

similar to an approach suggested to, but 

not adopted by, NHTSA in a study 

submitted to the agency in 1980. See 

Report of the Regulatory Analysis 

Review Group, Council on Wage and 

Price Stability, March 31, 1980, 

submitted as attachment to letter from 

R. Robert Russell, Director of the 

Council, to Joan Claybrook, 

Administrator, NHTSA. FE–78–01–

No1–175 (Document 175 under Notice 1 

in Docket FE–78–01.) After considering 

a class-based CAFE system, the RARG 

suggested a composite standard 

developed by setting fuel economy 

targets for various categories of light 

trucks and then using a predetermined 

fleet mix for each manufacturer to turn 

these targets into a composite standard. 

In assessing the permissibility of its 

suggested approach, the RARG was 

considering the CAFE statute in the 

wake of its enactment and with an eye 

toward developing a system that would 

best achieve the Congressional 

objectives arising from the oil crisis of 

the 1970s. The RARG noted its generally 

contemporaneous understanding of the 

statutory parameters: 

Nothing in the statute forbids this 

approach. The statute requires that passenger 

car standards be the same for all 

manufacturers. There is no similar 

requirement for the truck standards. Indeed, 

the statute explicitly authorizes separate 

standards for different classes of trucks, 

which would inevitably result in varying 

effects on the different manufacturers. Since 

this is explicitly permitted, it seems unlikely 

that composite standards, which would 

result in similarly varying effects, are 

forbidden. NHTSA’s treatment of this issue 

in the preamble to its final truck standards 

for model years 1980–81 suggests that it 

agrees. 43 FR 11997–8. There, NHTSA 

discussed a proposed fleet-average standard 

at some length ‘‘ eventually rejecting it on 

policy grounds ‘‘ without suggesting that it 

might be illegal. 

RARG Report at 29.60

We agree. In deciding which approach 

to propose in this rulemaking for 

establishing standards for a model year, 

the agency narrowed its choices to two 

approaches: establishing conventional 

average fuel economy standards, one for 

each of several classes, with or without 

credit transfer between classes in 

accordance with 49 U.S.C. 32903(a), or 

establishing average fuel economy 

targets, one for each of several attributebased categories, and an overall average 

fuel economy standard in the form of a 

production-weighted, harmonically 

averaged step-function based on a 

combination of those targets and each 

manufacturer’s total production and 

product mix for that year. NHTSA 

believes that either approach is 

permissible under the CAFE statute. The 

agency also believes that a continuous 

function approach would satisfy the 

statute. 

The statute explicitly authorizes the 

former approach, separate standards for 

different classes of light trucks. That 

class approach would inevitably result 

in varying effects on the different 

manufacturers, at least partially due to 

differences in product mix. If each 

manufacturer exactly complied with the 

standard for each class, a manufacturer’s 

overall CAFE would differ from those of 

other manufacturers solely as a function 

of each manufacturer’s product mix. 

Since the CAFE statute explicitly 

permits this, NHTSA believes that the 

step-function approach, which would 

result in similarly varying effects, is 

permissible. Nothing in the statute 

explicitly forbids the step-function 

approach. While the statute requires 

that passenger car standards be the same 

for all manufacturers, there is no similar 

requirement for the light truck 

standards. 

The step-function approach is 

thoroughly grounded in the CAFE 

statute. Under that approach, the 

foundation of the standard for each 

model year would be the targets for the 

categories. The target for each footprint 

category would be the same for, and 

applicable to, all manufacturers that 

produce vehicles in that footprint 

category. The selection of the target for 

a footprint category would be based on 

industry-wide considerations, as 

contemplated in the conference report. 

Such determination [of maximum feasible 

average fuel economy level] should take 

industry-wide considerations into account. 

For example, a determination of maximum 

feasible average fuel economy should not be 

keyed to the single manufacturer that might 

have the most difficulty achieving a given 

level of average fuel economy. Rather, the 

Secretary must weigh the benefits to the 

nation of a higher average fuel economy 

standard against the difficulties of individual 

manufacturers. Such difficulties, however, 

should be given appropriate weight in setting 

the standard in light of the small number of 

domestic manufacturers that currently exist 

and the possible implications for the national 

economy and for reduced competition 

association [sic] with a severe strain on any 

manufacturer. * * * 

S. Rep. No. 94–516, 94th Congress, 1st 

Sess. 154–155 (1975). 

Specifically, the agency would select 

a target based on an average of the levels 

of fuel economy improvement that are 

technologically feasible and 

economically efficient for a much more 

substantial part of the industry than is 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51447 

61Under Reformed CAFE, as under Unreformed 

CAFE, the agency is proposing to establish 

standards for future model years based, in the first 

instance, on the manufacturers’ own plans 

regarding the types and sizes of vehicles they plan 

to produce in those years and their projected 

production volumes of those vehicles. In 

determining the level of the proposed standards, the 

agency also increases the level of CAFE above that 

achievable under those plans through identifying 

technologies that it deems feasible, practicable and 

cost-effective. 

If manufacturers follow their plans, enhanced to 

the extent necessary by the incorporation of 

additional fuel savings technologies, their required 

level of CAFE will not change. However, under 

Reformed CAFE, if they depart from their plans 

regarding the size of their vehicles and/or the 

distribution of their production and thus produce 

vehicles whose size is, on average, larger or smaller 

than that of the vehicles in their original plans, 

their required level of CAFE will change. If they do 

depart from their plans, they could determine, with 

a high degree of mathematical precision, the 

magnitude of that change. 

focused upon in setting standards 

through the traditional method. Each 

standard would rest in large part on a 

composite of determinations regarding 

the average fuel economy achievable by 

the manufacturers in each of the 

footprint categories. While CAFE 

traditionally gave particular regard to 

the least capable of the largest three 

manufacturers in determining fuel 

economy standards, this proposal would 

use an average based on the largest 

seven manufacturers in setting the 

targets. Reliance on a more substantial 

portion of the industry for this purpose 

would build in a measure of assurance 

that the targets are technologically 

feasible and economically practicable. 

The step-function ultimately picked 

as the standard would also be the result 

of further consideration of industrywide considerations as well as the 

careful balancing, as mandated by 

Congress, of the statutory factors, 

including the economic practicability 

for the industry. Since the product mix 

used to help determine a manufacturer’s 

required level of fuel economy for a 

particular model year would be the 

manufacturer’s actual mix in that model 

year, instead of in a prior reference year, 

a manufacturer would have the 

flexibility necessary to vary its mix in 

response to changes in consumer 

preferences. This aspect of the stepfunction approach automatically builds 

in a further measure of assurance that 

the standards will not necessitate 

product restrictions and thus will be 

economically practicable. 

Each step-function standard would 

apply equally to all manufacturers. To 

the extent that different manufacturers 

have different product mixes, they 

would be subject to different required 

levels of average fuel economy. 

However, if two manufacturers had the 

same product mix and thus were 

similarly situated, they would be subject 

to the same required level of average 

fuel economy. 

Each manufacturer’s compliance 

obligation is determined through 

application of the target numbers to the 

step function calculation. The obligation 

remains premised on average fuel 

economy level for each manufacturer’s 

fleet and permits manufacturers to earn 

credits or requires them to pay civil 

penalties for exceeding or failing to 

reach the fuel economy level applicable 

to them. The footprint category targets 

and standards would be established 

within the statutory lead time of 18 

months 61 and, because the 

manufacturers know the formula for 

compliance, they have the flexibility to 

ensure compliance by monitoring and 

adjusting their product offerings. A 

manufacturer’s compliance would be 

determined at the end of each model 

year by comparing the step function 

standard derived with the target 

numbers to the step function standard 

derived with the company’s actual 

production weighted fuel economy 

performance. 

We are proposing to permit 

manufacturers the option of complying 

with either the Unreformed system or 

the Reformed system during the threemodel year transition period. We 

believe that the levels established for 

each system constitute the maximum 

feasible levels for each system. We 

recognize that, depending on 

manufacturer’s choices, the fuel savings 

(and cost burdens) associated with these 

three model years may be lower than the 

fuel savings that would result if either 

the Unreformed or Reformed program 

were used alone. NHTSA believes that 

this is an acceptable outcome that is 

justified by ensuring an orderly 

transition to a fully phased-in Reformed 

program in MY 2011. 

We believe that this proposal presents 

an approach having the potential over 

time to achieve substantially more 

overall fuel savings than the historical 

approach to establishing CAFE 

standards. In order to ensure both 

technological feasibility and economic 

practicability, CAFE standards have 

traditionally been set with particular 

regard to the capabilities of the least 

capable manufacturer with a significant 

share of the market. This approach 

helps to account for the fact that fullline manufacturers, with product 

offerings serving the full range of 

consumer needs and demand, generally 

will have a fleet average fuel economy 

level less than those manufacturers who 

choose to serve only part of the 

market—typically offering products in 

the smaller and lighter light truck 

category. The traditional approach to 

CAFE provides no regulatory incentive 

for limited line manufacturers to 

incorporate additional technologies 

because none are needed to meet CAFE 

standards established at an appropriate 

level for full-line manufacturers. 

Under the program proposed today, 

CAFE standards will ultimately be 

established in a way that encourages 

technology use by all companies, not 

just those with lower fleet average fuel 

economy levels. By incorporating 

available technologies across all 

manufacturers, we believe that the 

Reformed program will enhance overall 

fuel savings over time. This is especially 

true after we transition fully to a system 

in which the category targets are 

established at a level based on 

maximizing net benefits. 

However, we recognize the inequity of 

potentially implementing unanticipated 

additional requirements and costs 

without providing adequate lead-time. 

Just as the law permits us to consider 

motor vehicle safety in addition to the 

express factors when setting CAFE 

standards, we believe the need for 

transition is a factor that we should take 

into account when moving toward the 

Reformed CAFE system. Our 

preliminary determination is that 

providing a three-year transition period 

with a compliance option will provide 

an opportunity for experimentation by 

the manufacturers and effect a quicker 

transition to a system likely to save 

more fuel savings over time than would 

either implementing an abrupt change 

after providing appropriate lead time or 

maintaining the status quo. The agency 

requests comments on whether a 

transition period shorter than three 

years would be feasible. 

Today’s proposal seeks to ensure that 

either system remains economically 

practicable and technologically feasible. 

By equating overall industry costs 

during the transition period with the 

overall costs associated with the 

traditional approach, we are confident 

that the Reformed proposal will not 

impose industry costs beyond those 

otherwise incurred. In addition, the 

same technologies are used in both 

analyses, although applied somewhat 

differently. 

We believe the Reformed proposal 

better incorporates the Congressional 

intent that we establish CAFE 

obligations with an eye toward industrywide considerations. The category 

targets are established not by focusing 

on one manufacturer, but rather by 

averaging the manufacturer-specific 

levels derived through the marginal 

51448 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

cost/benefit analysis, thus including all 

complying companies in determining 

CAFE responsibilities. The new program 

also provides better flexibility—a 

significant Congressional concern when 

enacting and later amending the CAFE 

statute—by better linking CAFE 

obligations to each manufacturer’s 

actual product sales. 

Reformed CAFE continues all the 

essential elements required by the 

statute. It states CAFE requirements in 

terms of miles per gallon, retains the 

necessary fleet averaging, allows 

manufacturers to earn credits and 

requires them to pay fines for shortfalls 

and applies a consistent methodology to 

all manufacturers with equivalent 

category target levels. Reformed CAFE 

provides manufacturers with adequate 

notice of their responsibilities, 

complying with the 18-month lead time 

for establishing a standard, while 

simultaneously providing the flexibility 

to alter their product plans and offerings 

in response to changes in market 

conditions (a problem that has required 

the agency at times to lower previously 

established CAFE standards). Reformed 

CAFE also enhances our ability to 

achieve maximum feasible fuel 

economy by focusing on the addition of 

available technology to all product lines 

and encouraging greater fuel savings 

and lower overall industry costs. 

C. Comparison of estimated costs and 

estimated benefits 

1. Costs 

In order to comply with the proposed 

Reformed CAFE standards, we estimate 

the average incremental cost per vehicle 

to be $54 for MY 2008, $142 for MY 

2009, and $186 for MY 2010. In MY 

2011, the incremental cost would be 

$275. Under the Reformed CAFE 

system, a greater number of 

manufacturers would be required to 

improve their fleets and make 

additional expenditures than under the 

Unreformed CAFE system. The total 

incremental cost (the cost necessary to 

bring the corporate average fuel 

economy for light trucks from 22.2 mpg 

to the proposed standards) is estimated 

to be $505 million for MY 2008, $1,332 

million for MY 2009, and $1,802 million 

for MY 2010. In MY 2011, the total 

incremental cost is estimated to be 

$2,656 million. The level of additional 

expenditure that would be necessary 

beyond already planned investment 

varies for each individual manufacturer. 

These individual expenditures are 

discussed in more detail in the PRIA. 

However, as stated above, because the 

costs are distributed across a greater 

share of the industry, the costs required 

of the least capable manufacturer with 

a significant share of the market are 

lower under the Reformed system than 

under the Unreformed system. 

2. Benefits 

The benefits analysis applied to the 

proposed standards under the 

Unreformed CAFE system was also 

applied to the standards proposed under 

the Reformed CAFE system. Benefit 

estimates include both the benefits from 

fuel savings and other economic 

benefits from reduced petroleum use. 

The agency relied on the same factors 

and assumptions as discussed above for 

the proposed Unreformed CAFE 

standards. A more detailed discussion 

of the application of this analysis to the 

required fuel economy levels under the 

Reformed CAFE system can be located 

in the PRIA. 

Adding benefits from fuel savings to 

other economic benefits from reduced 

petroleum use as a result of the 

Reformed CAFE standards produced an 

estimated incremental benefit to society, 

of $73 per vehicle for MY 2008, $170 

per vehicle for MY 2009 and $220 per 

vehicle for MY 2010. In MY 2011, the 

incremental benefits were estimated to 

be $315 per vehicle. The total value of 

these benefits is estimated to be $694 

million for MY 2008, $1,633 million for 

MY 2009, $2,144 million for MY 2010, 

$3,069 million for MY 2011, based on 

fuel prices ranging from $1.51 to $1.58 

per gallon. The benefits analysis for 

Reformed CAFE is based on the same 

assumptions as the benefits analysis for 

Unreformed CAFE, as described above 

in III.D.2. 

Based on the forecasted light truck 

sales from AEO 2005 and an assumed 

baseline fuel economy of 22.2 mpg (the 

MY 2007 standard), we estimated the 

fuel savings from the Reformed CAFE 

program. These estimates are provided 

as present values determined by 

applying a 7 percent discount rate to the 

future impacts. We translated impacts 

other than fuel savings into dollar 

values, where possible, and then 

factored them into our total benefit 

estimates. This analysis resulted in 

estimated lifetime fuel savings of 0.9 

billion, 2.2 billion, and 2.9 billion 

gallons under the proposed Reformed 

CAFE standards for MY 2008, 2009, and 

2010 respectively. We estimated the fuel 

savings for MY 2011 at 4.1 billion 

gallons. 

NHTSA estimates that the direct fuelsavings to consumers account for the 

majority of the total benefits, and by 

themselves exceed the estimated costs 

of adopting more fuel-efficient 

technologies. In sum, the total 

incremental costs by model year 

compared to the incremental societal 

benefits by model year are as follows: 

TABLE 5.—COMPARISON OF INCREMENTAL COSTS AND INCREMENTAL BENEFITS FOR THE PROPOSED REFORMED CAFE 

STANDARDS

[In millions] 

MY 2008 MY 2009 MY 2010 MY 2011 

Total Incremental Costs * ................................................................................................................. $505 $1,332 $1,802 $2,656 

Total Incremental Benefits * ............................................................................................................. 694 1,633 2,144 3,069 

* Relative to the 22.2 mpg standard for MY 2007. 

In light of these figures, we have 

tentatively concluded that the standards 

proposed under the Reformed CAFE 

system serve the overall interests of the 

American people and is consistent with 

the balancing that Congress has directed 

us to do when establishing CAFE 

standards. For all the reasons stated 

above, we believe the proposed 

Reformed CAFE standards represent 

fuel economy levels that are 

economically practicable and, 

independently, that are a cost beneficial 

advancement for American society. A 

more detailed explanation of our 

analysis is provided in the PRIA. 

3. Uncertainty 

The agency performed a probabilistic 

uncertainty analysis to examine the 

variation in estimates of factors that 

determine the costs and benefits of 

higher CAFE requirements. The analysis 

indicates that the Agency is highly 

certain that the benefits of the proposed 

CAFE levels will exceed their costs for 

all 4 model years of Reformed standards 

included in the proposal. 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51449 

D. Proposed standards 

We have tentatively determined that 

the Reformed CAFE system and 

associated target levels for MYs 2008–

2011 would result in required fuel 

economy levels that are both 

technologically feasible and 

economically practicable for 

manufacturers. The proposed standard 

and target levels are as follows: 

BILLING CODE 4910–59–P 

51450 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

BILLING CODE 4910–59–C 


EP30AU05.015</GPH>
Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51451 

62The reformed standards are a result of the 

product plan data. If the distribution of vehicles or 

fuel economies of vehicles changes from year to 

year, those changes will be reflected in the category 

targets. Because of the process of determining the 

category targets, sometimes the targets will not 

increase over time in a specific category. This is the 

case for 20.8 in category 6 in MY2010. The target 

goes from 21.0 in MY2009 to 20.8 in MY2010—a 

decrease of 0.2 mpg. This is a result of the product 

plan data changing. 

Although this goes against intuition, the essential 

point is that the overall fuel economy goal for each 

manufacturer increases in each year. This type of 

phenomenon could be avoided through the use of 

a continuous function. See IV.A.4.a. Step-function 

vs. continuous function above. 

TABLE 6.—PROPOSED TARGETS

Category 1 2 3 4 5 6 

Range of vehicle footprint (sq. ft.) ................................... ≤43.0 >43.0–47.0 >47.0–52.0 >52.0–56.5 >56.5–65.0 >65.0 

MY 2008 Targets ............................................................. 26.8 25.6 22.3 22.2 20.7 20.4 

MY 2009 Targets ............................................................. 27.4 26.4 23.5 22.7 21.0 21.0 

MY 2010 Targets ............................................................. 27.8 26.4 24.0 22.9 21.6 62 20.8 

MY 2011 Targets ............................................................. 28.4 27.1 24.5 23.3 21.9 21.3 

These targets would result in the 

required fuel economy levels increasing 

each successive year for all 

manufacturers except Hyundai. Based 

on the product plans provided by 

manufacturers in response to the 

December 2003 request for information 

and the incorporation of publicly 

available supplemental data and 

information, the agency has estimated 

the required fuel economy levels for the 

individual manufacturers as follows: 

TABLE 7.—ESTIMATES OF REQUIRED FUEL ECONOMY LEVELS BASED ON THE PROPOSED TARGET LEVELS AND CURRENT

INFORMATION

[in mpg] 

Manufacturer MY 2008 MY 2009 MY 2010 MY 2011 

BMW ................................................................................................................................................ 23.8 24.8 25.1 25.7 

Suzuki .............................................................................................................................................. 26.0 26.7 26.8 27.5 

Volkswagen ...................................................................................................................................... 22.7 23.9 24.3 24.8 

General Motors ................................................................................................................................ 22.2 22.8 23.2 23.7 

Ford .................................................................................................................................................. 22.4 22.9 23.1 23.6 

DaimlerChrysler ............................................................................................................................... 22.8 23.5 23.7 24.2 

Honda .............................................................................................................................................. 23.1 24.0 24.2 24.8 

Hyundai ............................................................................................................................................ 24.2 25.9 25.7 26.3 

Nissan .............................................................................................................................................. 22.1 22.8 23.2 23.7 

Toyota .............................................................................................................................................. 23.2 24.1 24.5 25.0 

Fuji (Subaru) .................................................................................................................................... 24.8 25.6 25.8 26.4 

Porsche ............................................................................................................................................ 22.3 23.5 24.0 24.5 

Isuzu ................................................................................................................................................ 22.3 22.9 23.2 23.7 

As stated previously, we recognize 

that the manufacturer product plans that 

we used in developing the 

manufacturers’ required fuel economy 

levels are likely already outdated in 

some respects. We fully expect the 

manufacturers to revise those plans to 

reflect subsequent developments. 

Further, we note that a manufacturer’s 

required fuel economy level for a model 

year under the Reformed CAFE system 

would be based on its actual production 

numbers in that model year. Therefore, 

its official required fuel economy level 

would not be known until the end of 

that model year. However, because the 

category targets would be established in 

advance of the model year, a 

manufacturer should be able to estimate 

its required level accurately and 

develop a product plan that would 

comply with that level. 

V. Implementation of options 

A. Choosing the Reformed or 

Unreformed CAFE system 

As part of the transition to a fully 

phased-in Reform CAFE system in MY 

2011, the agency is proposing that for 

MYs 2008–2010, manufacturers have 

the option of complying under the 

Reformed CAFE system or the 

Unreformed CAFE system. 

Manufacturers would be required to 

announce their selection for a model 

year in the mid-model year report 

required for that model year in 49 CFR 

537.7. The mid-model year report is the 

most accurate report that the 

manufacturers currently provide 

directly to NHTSA and does not differ 

significantly from their final report. A 

manufacturer’s selection would be 

irrevocable for that MY. However, a 

manufacturer would be permitted to 

select the alternate compliance option 

in the following MY. Beginning MY 

2011, we are proposing to permit 

compliance only under the Reformed 

CAFE system. 

The proposed CAFE levels for both 

systems have been presented in the 

above discussion. However, after 

receiving comments and reviewing any 

additionally provided data, we may 

decide to set the standards at different 

levels than those proposed. Factual 

uncertainties that could result in lower 

standards include the possibility that 

planned technological actions may not 

achieve anticipated fuel economy 

benefits or may prove to be infeasible. 

Similarly, factual uncertainties that 

could result in higher standards include 

the possibility that manufacturers may 

be able to improve fuel economy in their 

fleets by further technological advances 

beyond those currently planned. 

B. Application of credits between 

compliance options 

The EPCA credit provisions would 

operate under the Reformed CAFE 

system in the same manner as they do 

under the Unreformed CAFE system. 

51452 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

63 70 FR 18136, 18139; April 8, 2005; Docket No. 

2005–28506. 

64Tarbet, Marcia J., ‘‘Cost and Weight Added by 

Federal Motor Vehicle Safety Standards for Model 

Years 1968–2001 in Passenger Cars and Light 

Trucks’’, NHTSA, December 2004, DOT–HS–809–

834. Pg. 51. (http://www.nhtsa.dot.gov/cars/rules/

regrev/evaluate/80934.html). 

65 ‘‘Final Regulatory Impact Analysis, FMVSS No. 

202 Head Restraints for Passenger Vehicles’’, 

NHTSA, November 2004, Docket No. 19807–1, pg. 

74. 

66 ‘‘Final Economic Assessment and Regulatory 

Flexibility Analysis, Cost and Benefits of Putting a 

Shoulder Belt in the Center Seats of Passenger Cars 

and Light Trucks’’, NHTSA, June 2004, Docket No. 

18726–2, pg. 33. 

67Tarbet 2004, p. 84. 

The harmonic averages used to 

determine compliance under the 

Reformed CAFE system permit the 

amount, if any, of credits earned to be 

calculated as under the Unreformed 

CAFE system: 

Credits = (Actual CAFE¥Standard 

CAFE) * 10 * Total Production 

Credits earned in a model year could 

be carried backward or forward as 

currently done in the Unreformed CAFE 

system. 

Further, credits would be transferable 

between the two systems. Both 

Unreformed CAFE and Reformed CAFE 

use harmonic averaging to determine 

fuel economy performance of a 

manufacturer’s fleet. Under the 

Reformed CAFE, fuel savings from 

under- and over-performance with each 

category are generated and applied 

almost identically to the way in which 

this occurs under the Unreformed CAFE 

system. As a result, the two systems 

generate credits with equal fuel savings 

value. Therefore, credits earned in a 

model year under Unreformed CAFE 

would be fully transferable forward to a 

model year under the Reformed CAFE 

system, up to the statutory limit of three 

years. Likewise, credits under Reformed 

CAFE could be carried back to 

Unreformed CAFE. 

VII. Impact of other Federal Motor 

Vehicle Standards 

The statute specifically directs us to 

consider the impact of other Federal 

vehicle standards on fuel economy. This 

statutory factor constitutes an express 

recognition that fuel economy standards 

should not be set without due 

consideration given to the effects of 

efforts to address other regulatory 

concerns, such as motor vehicle safety 

and emissions. The primary influence of 

many of these regulations is the 

addition of weight to the vehicle, with 

the commensurate reduction in fuel 

economy. 

A. Federal Motor Vehicle Safety 

Standards 

The agency has evaluated the impact 

of the Federal motor vehicle safety 

standards (FMVSS) using MY 2007 

vehicles as a baseline. We have issued 

or proposed to issue a number of 

FMVSS that become effective between 

the MY 2007 baseline and MY 2010. 

The fuel economy impact, if any, of 

these new requirements will take the 

form of increased vehicle weight 

resulting from the design changes 

needed to meet new FMVSSs. 

The average test weights (curb weight 

plus 300 pounds) of the light truck fleet 

for General Motors, Ford, and 

DaimlerChrysler in MY 2008, MY 2009, 

and MY 2010 are 4,904, 4,897, and 

4,909, respectively. Thus, overall, the 

three largest manufacturers of light 

trucks expect weight to remain almost 

unchanged during the time period 

addressed by this rulemaking. The 

changes in weight include all factors, 

such as changes in the fleet mix of 

vehicles, required safety improvements, 

voluntary safety improvements, and 

other changes for marketing purposes. 

These changes in weight over the three 

model years would have a negligible 

impact on fuel economy. 

NHTSA has issued a number of 

proposed and final rules on safety 

standards that are proposed to be 

effective or are effective between MYs 

2008–2010. These have been analyzed 

for their potential impact on light truck 

fuel economy weights for MYs 2008–

2010: 

1. FMVSS 138, tire pressure monitoring 

system 

As required by the Transportation 

Recall Enhancement, Accountability, 

and Documentation (TREAD) Act, 

NHTSA is requiring a Tire Pressure 

Monitoring System (TPMS) be installed 

in all passenger cars, multipurpose 

passenger vehicles, trucks and buses 

that have a Gross Vehicle Weight Rating 

of 10,000 pounds or less. The effective 

dates are based on the following phasein schedule: 

20 percent of light vehicles produced 

between September 1, 2005 and August 

31, 2006, 

70 percent of light vehicles produced 

between September 1, 2006 and August 

31, 2007, 

100 percent of light vehicles produced after 

September 1, 2007 are required to 

comply. 

Thus, for MY 2008, an additional 30 

percent of the fleet will be required to 

meet the standard as compared to MY 

2007. We estimate from a cost teardown 

study that the added weight for an 

indirect system is about 0.156 lbs. and 

for a direct system is 0.275 to 0.425 lbs. 

Initially, direct systems will be more 

prevalent, thus, the increased weight is 

estimated to be average 0.35 lbs. (0.16 

kilograms). Beginning in MY 2008, the 

weight increase from FMVSS No. 138 is 

anticipated to be 0.11 pounds (0.05 

kilograms) [0.35 lbs. * 0.3 and 0.16 kg 

* 0.3]. 

As stated in the TPMS final rule,63 by 

promoting proper tire inflation, the 

installation of TPMS will result in better 

fuel economy for vehicle owners that 

previously had operated their vehicles 

with under-inflated tires. However, this 

will not impact a manufacturer’s 

compliance under the CAFE program. 

Under the CAFE program, a vehicle’s 

fuel economy is calculated with the 

vehicle’s tires at proper inflation. 

Therefore, the fuel economy benefits of 

TPMS have not been considered in this 

rulemaking. 

2. FMVSS 202, head restraints 

The final rule requires an increase in 

the height of front seat outboard head 

restraints in pickups, vans, and utility 

vehicles, effective September 1, 2008 

(MY 2009). If the vehicle has a rear seat 

head restraint, it is required to be at 

least a certain height. The initial head 

restraint requirement, established in 

1969, resulted in the average front seat 

head restraints being 3 inches taller than 

pre-standard head restraints and adding 

5.63 pounds 64 to the weight of a 

passenger car. With the new final rule, 

we estimate the increase in height for 

the front seats to be 1.3 inches and for 

the rear seat to be 0.26 inch, for a 

combined average of 1.56 inches.65

Based on the relationship of pounds to 

inches from current head restraints, we 

estimate the average weight gain across 

light trucks would be 2.9 pounds (1.3 

kilograms). (5.63/3 * 1.56 = 2.93 lbs.) 

3. FMVSS 208, occupant crash 

protection 

This final rule requires a lap/shoulder 

belt in the center rear seat of light 

trucks. There are an estimated 

5,061,07966 seating positions in light 

trucks needing a shoulder belt, where 

they currently have a lap belt. This 

estimate of seating positions is a 

combination of light trucks, SUVs, 

minivans and 15 passenger vans that 

have either no rear seat, or one to four 

rear seats that need shoulder belts. This 

estimate was based on sales of 7,521,302 

light trucks in MY 2000. Thus, the 

average light truck needs 0.67 shoulder 

belts. The average weight of a rear seat 

lap belt is 0.92 lbs. and the average 

weight of a manual lap/shoulder belt 

with retractor is 3.56 lbs.67 Thus, the 

anticipated weight gain is 2.64 pounds 

per shoulder belt. We estimate the 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51453 

68 Khadilkar, et al. ‘‘Teardown Cost Estimates of 

Automotive Equipment Manufactured to Comply 

with Motor Vehicle Standard—FMVSS 214(D)—

Side Impact Protection, Side Air Bag Features’’, 

April 2003, DOT HS 809 809. 

69Ludtke & Associates, ‘‘Perform Cost and Weight 

Analysis, Head Protection Air Bag Systems, FMVSS 

201’’, page 4–3 to 4–5, DOT HS 809 842. 

70For a definition and discussion of these 

vehicles, see section IX, Applicability of the 

standards. 

average weight gain per light truck for 

the shoulder belt would be 1.8 pounds 

(0.8 kilograms) (2.64 * .67 = 1.77 lbs.). 

A second, potentially more important, 

weight increase depends upon how the 

center seat lap/shoulder belt is 

anchored. The agency has allowed a 

detachable shoulder belt in this seating 

position, which could be anchored to 

the ceiling or other position, without a 

large increase in weight (less than 1 lb.). 

If the center seat lap/shoulder belt were 

anchored to the seat itself, typically the 

seat would need to be strengthened to 

handle this load (the agency requests 

comments on this weight increase). If 

the manufacturer decides to change all 

of the seats to integral seats, having all 

three seating positions anchored 

through the seat, then both the seat and 

flooring needs to be strengthened (again 

the agency requests comments on this 

weight increase, which could be 10 to 

20 lbs.). The agency requests 

manufacturer’s plans in this area and 

predicted weight increases. 

The effective dates are based on the 

following phase-in schedule: 

50 percent of light vehicles produced 

between September 1, 2005 and August 

31, 2006, 

80 percent of light vehicles produced 

between September 1, 2006 and August 

31, 2007, 

100 percent of light vehicles produced after 

September 1, 2007. 

Thus, for MY 2008, an additional 20 

percent of the fleet will be required to 

meet the standard. We estimate the 

average weight gain per light truck for 

the shoulder belt would be 0.36 lbs 

(0.16 kg) [1.8 pounds (0.8 kilograms) * 

0.2] compared to MY 2007. For the 

anchorage, the average weight increase 

would be 0.2 pounds (0.09 kg) or more. 

4. FMVSS 214, side impact protection 

On May 17, 2004, NHTSA proposed 

to upgrade Federal Motor Vehicle Safety 

Standard (FMVSS) No. 214, ‘‘Side 

impact protection,’’ to require vehicle 

manufacturers to provide head 

protection to occupants involved in side 

impacts with narrow fixed objects, such 

as telephone poles and trees, and in 

vehicle-to-vehicle collisions. The 

Standard already requires thoracic 

protection in a dynamic test (69 FR 

27990). If this proposal is adopted as a 

final rule, the agency anticipates, based 

on current technology, that vehicle 

manufacturers would respond by 

installing either a combination head/ 

thorax side air bag or window curtains. 

A teardown study of 5 thorax air bags 

resulted in an average weight increase 

per vehicle of 4.77 pounds (2.17 kg).68

A second teardown study of 3 

combination head/thorax air bags 

resulted in a similar average weight 

increase per vehicle of 4.38 pounds 

(1.99 kg).69 This second study also 

performed teardowns of 5 window 

curtain systems. One of the window 

curtain systems was very heavy (23.45 

pounds). The other four window curtain 

systems had an average weight increase 

per vehicle of 6.78 pounds (3.08 kg) and 

that increase is assumed to be the 

average for all vehicles in the future. 

If manufacturers install thorax bags 

with a window curtain, the average 

weight increase would be 11.55 pounds 

(4.77 + 6.78) or 5.25 kg (2.07 + 3.08). In 

MY 2003, about 17 percent of the fleet 

had thorax air bags, 7 percent had 

combination air bags, and 10 percent 

had window curtains. The combined 

average weight for these systems in MY 

2003 was 1.8 pounds (0.82 kg). Thus, 

the future increase in weight for side 

impact air bags and window curtains 

compared to MY 2003 installations is 

9.75 pounds (11.55¥1.8) or 4.43 kg 

(5.25¥0.82). 

We recognize that many 

manufacturers are incorporating side 

impact air bags on a voluntary basis. 

Therefore, we have included the weight 

associated with the proposed FMVSS 

No. 214 upgrade in the impacts of the 

voluntary improvements discussed 

below. 

5. FMVSS 301, fuel system integrity 

This final rule amends the testing 

standards for rear end crashes and 

resulting fuel leaks. Many vehicles 

already pass the more stringent 

standards, and those affected are not 

likely to be pick-up trucks or vans. It is 

estimated that weight added will be 

only lightweight items such as a flexible 

filler neck. We estimate the average 

weight gain across this vehicle class 

would be 0.24 pounds (0.11 kilograms). 

The effective dates are based on the 

following phase-in schedule: 

40 percent of light vehicles produced 

between September 1, 2006 and August 

31, 2007, 

70 percent of light vehicles produced 

between September 1, 2007 and August 

31, 2008, 

100 percent of light vehicles produced after 

September 1, 2008 are required to 

comply. 

Thus, 60 percent of the fleet must 

meet FMVSS 301 during the MY 2008–

2010 time period. Thus, the average 

weight gain during this period would be 

0.14 pounds (0.07 kilograms). 

6. Cumulative weight impacts of the 

FMVSSs 

In summary, NHTSA estimates that 

weight additions required by FMVSS 

regulations that will be effective in MYs 

2008–2010, compared to the MY 2007 

fleet will increase light truck weight by 

an average of 3.71 pounds (1.67 kg.). 

The agency recognizes that there are 

several safety improvements being made 

voluntarily. Some of these are for 

marketing purposes and others are to do 

better on government or insurance 

industry tests involving vehicle ratings. 

Likely voluntary safety improvements 

will add 11.75 pounds or more (5.34 kg 

or more) compared to MY 2003 

installations. A more detailed 

discussion of the impact of voluntary 

safety improvements is provided in the 

PRIA. 

B. Federal Motor Vehicle Emissions 

Standards 

With input from EPA, NHTSA has 

evaluated the impact of a number of 

vehicle related emissions standards on 

fuel economy. In addition, NHTSA’s 

draft Environmental Assessment 

examines how the CAFE standards 

would impact air quality by affecting 

emissions of criteria pollutants. Many of 

these standards and regulations are 

currently being implemented through a 

multi-year phase-in. NHTSA believes 

there will not be any fuel economy 

impact between the MY 2007 baseline 

and MY 2010 resulting from federal or 

state emissions standards or regulations. 

1. Tier 2 requirements 

On February 10, 2000, the EPA 

published a final rule (65 FR 6698) 

establishing new federal emissions 

standards for passenger cars and light 

trucks. These new emissions standards, 

known as Tier 2 standards, focus on 

reducing the emissions most responsible 

for the ozone and particulate matter 

(PM) impact from these vehicles—

nitrogen oxides (NOX) and non-methane 

organic gases (NMOG), consisting 

primarily of hydrocarbons (HC) and 

contributing to ambient volatile organic 

compounds (VOC). Passenger cars, 

SUVs, pickups, vans, and medium duty 

passenger vehicles (MDPVs) 70 are 

subject to the same national emission 

standards. Vehicles and fuels are treated 

51454 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

71See, U.S. EPA, Tire 2 Motor Vehicle Emissions 

Standards and Gasoline Sulfur Control 

Requirements: Response to Comments, EPA420–R–

99–024, December 20, 1999, pp. 26–11 and 26–12. 

72Title 13, California Code of Regulations 

§§ 1900, 1956.8, 1960.1, 1960.5, 1961, 1962, 1962.1, 

1965, 1976, 1978, 2062, and 2101. 

73See http://www.eia.doe.gov/oiaf/ieo/pdf/ 

0484(2005).pdf. 

as a system, so cleaner vehicles will 

have low-sulfur gasoline to facilitate 

greater emission reductions. The Tier 2 

emission standards apply to all 

passenger vehicles, regardless of 

whether they run on gasoline or diesel 

fuel. 

Tier 2 standards are fully 

implemented for passenger cars and 

light trucks (LDT1 and LDT2) in 2007, 

and for MDPVs by 2009 at the latest. 

Thus, all vehicles subject to the 2008 

light truck rulemaking are affected. 

When issuing the Tier 2 standards, 

EPA responded to comments regarding 

the Tier 2 standard and its impact on 

CAFE by indicating that it believed that 

the Tier 2 standards would not have an 

adverse effect on fuel economy. The 

EPA stated that it saw no real energy 

impacts with respect to the Tier 2 

vehicle program and that the 

technologies needed for conventional 

gasoline engines to meet the Tier 2 

standards should have no significant 

effect on fuel economy for those 

engines, which represent over 99 

percent of the current light-duty fleets. 

Similarly, EPA states that it does not 

believe that the stringent Tier 2 

emission standards will preclude 

promising fuel efficient technologies.71

EPA Tier 2 emission standards increase 

the stringency of the emission standards 

of diesel engines starting in 2008. 

Several manufacturers have stated that 

they have working diesel engines that 

will meet the Tier 2 standards. In 

addition, the EPA test facility in Ann 

Arbor, Michigan has a working 

prototype diesel engine that meets the 

Tier 2 standard. The agency did not 

apply diesel engines frequently as a 

CAFE compliance technology because 

there were other technologies that were 

more cost effective in meeting the 

standard. 

2. Onboard vapor recovery 

On April 6, 1994, EPA published a 

final rule (59 FR 16262) controlling 

vehicle-refueling emissions through the 

use of onboard refueling vapor recovery 

(ORVR) vehicle-based systems. These 

requirements applied to light-duty 

vehicles beginning in MY 1998, and 

phased-in over three model years. The 

ORVR requirements also apply to lightduty trucks with a GVWR of 6,000 

pounds or less beginning in MY 2001 

and phasing-in over three model years. 

For light-duty trucks with a GVWR of 

6,001–8,500 lbs, the ORVR requirements 

first apply in MY 2004 and phase-in 

over three model years. 

The ORVR requirements impose a 

weight penalty on vehicles as they 

necessitate the installation of vapor 

recovery canisters and associated tubing 

and hardware. However, the operation 

of the ORVR system results in fuel 

vapors being made available to the 

engine for combustion while the vehicle 

is being operated. As these vapors 

provide an additional source of energy 

that would otherwise be lost to the 

atmosphere through evaporation, the 

ORVR requirements do not have a 

negative impact on fuel economy. 

3. California Air Resources Board LEV II 

The State of California Low Emission 

Vehicle II regulations (LEV II) apply to 

passenger cars and light trucks as of MY 

2004.72 The LEV II amendments 

restructure the light-duty truck category 

so that trucks with gross vehicle weight 

rating of 8,500 pounds or lower are 

subject to the same low-emission 

vehicle standards as passenger cars. LEV 

II requirements also include more 

stringent emission standards for 

passenger car and light-duty truck LEVs 

and ultra low emission vehicles 

(ULEVs), and establish a four-year 

phase-in requirement that begins in 

2004. 

The agency notes that compliance 

with increased emission requirements is 

most often achieved through more 

sophisticated combustion management. 

The improvements and refinement in 

engine controls to achieve this end 

generally improve fuel economy. 

In summary, the agency believes there 

will be no impact from emissions 

standards on light truck fuel economy 

between the baseline MY 2007 and MY 

2010 fleets. 

C. Impacts on Manufacturers’ Baselines 

Based on NHTSA weight versus fuel 

economy algorithms, a 3–4 pound 

increase in weight equates to 0.01 mpg 

fuel economy penalty. Thus, the 

agency’s estimate of the safety weight 

effects are 0.01 mpg or more for required 

additions and 0.03 mpg or more for 

voluntary safety improvements for a 

total of 0.04 mpg or more. 

However, the agency is not certain 

whether the additional weight 

associated with the FMVSSs that will 

(or may) take effect between MY 2007 

and 2008, as well as the weight 

associated with voluntary safety 

improvements, were incorporated into 

the manufacturers’ product plans 

submitted to the agency. Such increases 

may have been reflected in the available 

data relied upon by the agency to 

supplement manufacturer submissions. 

Therefore, the agency seeks clarification 

on this point. 

VIII. Need for Nation to Conserve 

Energy 

EPCA specifically directs the 

Department to balance the technological 

and economic challenges with the 

nation’s need to conserve energy. While 

EPCA grew out of the energy crisis of 

the 1970s, the United States still faces 

considerable energy challenges today. 

Increasingly, U.S. energy consumption 

has been outstripping U.S. energy 

production. This imbalance, if allowed 

to continue, will undermine our 

economy, our standard of living, and 

our national security. (May 2001 

National Energy Policy (NEP) Overview, 

p. viii) 

As was made clear in the first chapter 

of the NEP, efficient energy use and 

conservation are important elements of 

a comprehensive program to address the 

nation’s current energy challenges: 

America’s current energy challenges can be 

met with rapidly improving technology, 

dedicated leadership, and a comprehensive 

approach to our energy needs. Our challenge 

is clear—we must use technology to reduce 

demand for energy, repair and maintain our 

energy infrastructure, and increase energy 

supply. Today, the United States remains the 

world’s undisputed technological leader: but 

recent events have demonstrated that we 

have yet to integrate 21st-century technology 

into an energy plan that is focused on wise 

energy use, production, efficiency, and 

conservation. 

(Page 1–1) 

The concerns about energy security 

and the effects of energy prices and 

supply on national economic well-being 

that led to the enactment of EPCA 

persist today. The demand for 

petroleum is steadily growing in the 

U.S. and around the world. 

The Energy Information 

Administration’s International Energy 

Outlook 2005 (IEO2005) 73 and Annual 

Energy Outlook (2005) (AEO2005) 

indicate growing demand for petroleum 

in the U.S. and around the world. U.S. 

demand for oil is expected to increase 

from 20 million barrels per day in 2003 

to 28 million barrels per day in 2025. In 

the IEO2005 reference case, world oil 

demand increases through 2025 at a rate 

of 1.9 percent annually, from 78 million 

barrels per day in 2002 to 119 million 

barrels per day in 2025. Fifty-nine 

percent of the increase in world demand 

is projected to occur in the North 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51455 

74U.S. oil use has become increasingly 

concentrated in the transportation sector. In 1973, 

the U.S. transportation sector accounted for 51 

percent of total U.S. petroleum use (8.4 of 16.5 

million barrels per day (mmbd)). By 2003, 

transportation’s share of U.S. oil had increased to 

66 percent (13.2 out of 20.0 mmbd). (USDOE/EIA, 

Monthly Energy Review, April 2005, Table 11.2) 

Energy demand for transportation is projected to 

grow by over 67 percent between 2003 and 2025. 

(USDOE/EIA, Annual Energy Outlook (Report # 

DOE/EIA–0383), January 2005) Demand for lightduty vehicle fuels is projected to increase at a 

similar pace. (Id.) 

75EPA defines these vehicles as follows: 

Medium-duty passenger vehicle (MDPV) means 

any heavy-duty vehicle (as defined in this subpart) 

with a gross vehicle weight rating (GVWR) of less 

than 10,000 pounds that is designed primarily for 

the transportation of persons. The MDPV definition 

does not include any vehicle which: 

(1) Is an ‘‘incomplete truck’’ as defined in this 

subpart; or 

(2) Has a seating capacity of more than 12 

persons; or 

(3) is designed for more than 9 persons in seating 

rearward of the driver’s seat; or 

(4) Is equipped with an open cargo area (for 

example, a pick-up truck box or bed) of 72.0 inches 

in interior length or more. A covered box not 

readily accessible from the passenger compartment 

will be considered an open cargo area for purposes 

of this definition. 

(40 CFR § 86.1803–01.) 

America and emerging Asia. Most (61 

percent) of the worldwide increases 

would occur in the transportation 

sector.74

To meet this projected increase in 

demand, worldwide productive capacity 

would have to increase by more than 42 

million barrels per day over current 

levels. OPEC producers are expected to 

supply 60 percent of the increased 

production. In contrast, U.S. crude oil 

production is projected to increase from 

5.7 million barrels per day in 2003 to 

6.2 million in 2009, and then begin 

declining in 2010, falling to 4.7 million 

barrels per day in 2025. By 2025, nearly 

70 percent of the oil consumed in the 

U.S. would be imported oil. 

Energy is an essential input to the 

U.S. economy and having a strong 

economy is essential to maintaining and 

strengthening our national security. 

Secure, reliable, and affordable energy 

sources are fundamental to economic 

stability and development. Rising 

energy demand poses a challenge to 

energy security given increased reliance 

on global energy markets. As noted 

above, U.S. energy consumption has 

increasingly been outstripping U.S. 

energy production. Conserving energy, 

especially reducing the nation’s 

dependence on petroleum, benefits the 

U.S. in several ways. Improving energy 

efficiency has benefits for economic 

growth and the environment as well as 

other benefits such reducing pollution 

and improving security of energy 

supply. More specifically, reducing total 

petroleum use decreases our economy’s 

vulnerability to oil price shocks. 

Reducing dependence on oil imports 

from regions with uncertain conditions 

enhances our energy security and can 

reduce the flow of oil profits to certain 

states now hostile to the U.S. Reducing 

the growth rate of oil use will help 

relieve pressures on already strained 

domestic refinery capacity, decreasing 

the likelihood of product price 

volatility. 

We believe that the continued 

development of advanced technology, 

such as fuel cell technology, and an 

infrastructure to support it, may help in 

the long term to achieve reductions in 

foreign oil dependence and stability in 

the world oil market. The continued 

infusion of advanced diesels and hybrid 

propulsion vehicles into the U.S. light 

truck fleet may also contribute to 

reduced dependence on petroleum. In 

the shorter term, our Reformed CAFE 

proposal would encourage broader use 

of fuel saving technologies, resulting in 

more fuel-efficient vehicles and greater 

overall fuel economy. 

We have concluded that the proposed 

increases in the light truck CAFE 

standards would contribute 

appropriately to energy conservation 

and the comprehensive energy program 

set forth in the NEP. In assessing the 

impact of the standards, we accounted 

for the increased vehicle mileage that 

accompanies reduced costs to 

consumers associated with greater fuel 

economy and have concluded that the 

final rule will lead to considerable fuel 

savings. While increasing fuel economy 

without increasing the cost of fuel will 

lead to some additional vehicle travel, 

the overall impact on fuel conservation 

remains decidedly positive. 

We acknowledge that, despite the 

CAFE program, the United States’

dependence on foreign oil and 

petroleum consumption has increased 

in recent years. Nonetheless, data 

suggest that past fuel economy increases 

have had a major impact on U.S. 

petroleum use. The NAS determined 

that if the fuel economy of the vehicle 

fleet had not improved since the 1970s, 

the U.S. gasoline consumption and oil 

imports would be about 2.8 million 

barrels per day higher than they are 

today. Increasing fuel economy by 10 

percent would produce an estimated 8 

percent reduction in fuel consumption. 

Increases in the fuel economy of new 

vehicles eventually raise the fuel 

economy of all vehicles as older cars 

and trucks are scrapped. 

Further, we do not believe that the 

increases in the light truck CAFE 

standards applicable to MYs 2008–2011 

would unduly lead to so-called ‘‘energy 

waste.’’ This theory, presented in public 

comments during the rulemaking on the 

MY 2005–07 light truck standards, rests 

on the notion that efforts to reduce 

energy use can result in negative 

economic effects from losses in product 

values, profits and worker incomes. As 

discussed above, the agency believes 

that the CAFE standards could be 

achieved without significant adverse 

economic or safety consequences. 

Within the bounds of technological 

feasibility and economic practicability, 

the proposed standards would, in fact, 

enhance ‘‘energy efficiency’’ without 

significant adverse ancillary effects. 

Our analysis in the Environmental 

Assessment indicates that proposed 

Reformed standards will result in an 

estimated 37.4 million metric tons of 

avoided greenhouse gas emissions 

(expressed in carbon equivalents) over 

the lifetime of the vehicles. They will 

further reduce the greenhouse gas 

emissions intensity of the transportation 

sector of the national economy, 

consistent with the President’s overall 

climate change policies. In the past, 

NHTSA has received comments 

regarding the monetary value of the 

benefit of avoided greenhouse gas 

emissions. However, NHTSA has not 

monetized greenhouse gas reduction 

benefits in this rule, given the scientific 

and economic uncertainties associated 

with developing a proper estimation of 

avoided costs due to climate change. We 

invite comments on this approach. 

IX. Applicability of the CAFE 

Standards 

A. MDPVs 

In the 2003 ANPRM, the agency 

sought comment on whether to extend 

the applicability of the CAFE program to 

include vehicles with a GVWR between 

8,500 lb. and 10,000 lb., especially those 

that are defined by the EPA as medium 

duty passenger vehicles (MDPVs).75

Under EPCA, the agency can regulate 

vehicles with a GVWR between 6,000 lb. 

and 10,000 lb. under CAFE if we 

determine that (1) Standards are feasible 

for these vehicles, and (2) either that 

these vehicles are used for the same 

purpose as vehicles rated at not more 

than 6,000 GVWR, or that their 

regulation will result in significant 

energy conservation. The MDPV 

category includes vehicles with a GVWR 

greater than 8,500 lb but less than 

10,000 lb. and that were designed 

primarily to transport passengers, i.e., 

large vans and SUVs. 

In preparing the NPRM, the agency 

analyzed the feasibility of including 

MDPVs and the impact of their 

51456 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

inclusion on the fuel savings of the 

CAFE standards. The agency believes 

that fuel economy technologies 

applicable to vehicles with a GVWR 

below 8,500 lb. might be applicable to 

MDPVs, e.g., low-friction lubricants and 

cylinder deactivation. MDPVs are 

already required by EPA to undergo a 

portion of the testing necessary to 

determine fuel economy performance 

under the CAFE program. See, 40 CFR 

Part 600 Subpart F. If MDPVs were 

included in the CAFE standards, 

manufacturers would be able to rely on 

this testing to generate a portion of the 

data necessary to determine fuel 

economy performance. A similar test 

procedure could be used to generate the 

remaining necessary data. Accordingly, 

we do not believe that, if MDPVs were 

included in the CAFE program, meeting 

the additional testing requirements 

would be burdensome. 

The agency’s analysis of the impact of 

including MDPVs on fuel savings 

indicated that their inclusion in MYs 

2008–2010 would lead to a net loss of 

industry-wide fuel savings. Under the 

Unreformed CAFE structure, maximum 

feasible standards are set with particular 

consideration given to the least capable 

manufacturer, which has been 

determined to be General Motors for this 

proposed rule. Almost all of the MDPVs 

are produced by General Motors and, 

due to their weight, have very low fuel 

economy. The inclusion of these 

vehicles would lead to greater fuel 

savings by General Motors, but less by 

the other manufacturers. This would 

occur because the addition of the low 

fuel economy MDPVs in MYs 2008–

2010 would depress the level of General 

Motors’ CAFE and therefore depress the 

level of the Unreformed CAFE 

standards. We calculate that the 

Unreformed CAFE standards for MYs 

2008–2010 would be 0.3 mpg lower if 

MDPVs were included in those years. 

This would affect not only General 

Motors, but also some other 

manufacturers. Since the MY 2008–2010 

Reformed CAFE standards would be set 

so as to roughly equalize industry-wide 

costs with the MY 2008–2010 

Unreformed CAFE standards, 

depressing the Unreformed CAFE 

standards for MYs 2008–2010 would 

also depress the Reformed CAFE 

standards for those years. The net effect 

of including MDPVs in the MY 2008–

2010 Reformed CAFE standards would 

be a reduction in overall fuel savings of 

almost 1.1 billion gallons. 

The agency seeks comment on 

whether MDPVs should be included in 

final rule for MY 2011. If the agency 

were to include MDPVs, we would 

adopt essentially the EPA definition of 

‘‘medium duty passenger vehicles.’’

Inclusion of MDPVs in the MY 2011 

Reformed CAFE standard could save an 

additional 0.5 billion gallons of fuels. 

The associated costs are $200 million 

with a per vehicle cost ranging from 

$900 to $2800 per vehicle. Based on the 

product plans received, the compliance 

costs would be borne primarily by one 

manufacturer. The agency seeks 

comments on the merits of subjecting 

these vehicles to the MY 2011 standard. 

If we do not regulate MDPVs, 

manufacturers could very well decide, 

nevertheless, to install fuel-efficient 

technologies in their MDPVs as they 

become more widely used in their nonMDPV fleet, and thereby less expensive, 

in order to improve market demand for 

their vehicles. The agency invites 

comment on whether ways, other than 

inclusion of 8,500–10,000 lb GVWR 

light trucks in the CAFE standards, can 

be found in EPCA to encourage the 

making of improvements in fuel 

economy of those vehicles. Can the 

agency create mechanisms by which 

manufacturers who improve the fuel 

economy of those vehicles can receive 

credit toward compliance with the light 

truck CAFE standards? The provisions 

in EPCA regarding credits for light 

trucks are less precise than those 

relating to passenger cars, although 

EPCA does provide that credits for light 

trucks are to be earned in the same way 

as credits for cars are earned. If the 

agency can create such mechanisms, 

what requirements and limitations 

should the agency establish? For 

example, in the absence of an applicable 

standard, what reference level of CAFE 

could be used to determine the amount 

of credit earned by a manufacturer? 

B. ‘‘Flat-Floor’’ Provision 

The agency has tentatively decided to 

amend the ‘‘flat floor provision’’ in the 

light truck definition (49 CFR 523.5) to 

include expressly vehicles with seats 

that fold and stow in a vehicle’s floor 

pan. The agency has tentatively 

determined that these seats are 

functionally equivalent to removable 

seats and minimize safety concerns that 

arise from the potential of improperly 

re-installed seats. 

The current regulation classifies as a 

light truck any vehicle with readily 

removable seats that, once removed, 

leave a flat, floor-level surface extending 

from the forward most removable seat 

mount to the rear of the vehicle (the flat 

floor provision). The flat floor provision 

originally was based on the agency’s 

determination that passenger vans with 

removable seats and a flat load floor 

were derived from cargo vans (42 FR 

38367; July 28, 1977) and should be 

classified as trucks. Because these 

passenger vans were derived from cargo 

vans, the agency distinguished them 

from station wagons—which also had 

large flat areas with their seats folded—

and were based on a car chassis. 

Currently, the vast majority of 

vehicles equipped with stowable seats 

are minivans, which tend not to be 

based on car chassis and typically 

perform very well in crash rating tests. 

The stowing of such seats results in a 

flat, floor-level surface comparable to 

that if the seats were removed. The 

cargo space created is functionally 

equivalent between the stowable and 

removable seats. 

Moreover, removable seats are heavy 

and cumbersome. The agency 

recognizes that consumers could injure 

themselves while removing and 

reinstalling these seats. Additionally, if 

the seats are improperly re-installed, the 

seats and related occupant crash 

protection systems may not provide the 

necessary protection in a collision. 

Stowable seats minimize this concern. 

The agency has tentatively 

determined that by including stowable 

seats in the flat floor provision, we 

would facilitate the production of 

vehicles that achieve high safety ratings, 

that have a degree of consumer 

preference, and that minimize safety 

risks from improper reinstallation/ 

redeployment. The primary effect of this 

amendment would be on the design of 

seating in mini-vans, which have 

traditionally been classified as light 

trucks. With the adoption of this 

amendment, mini-vans would be treated 

as light trucks regardless of whether 

they have removable or fold down 

seating. 

X. Rulemaking Analyses and Notices 

A. Executive Order 12866 and DOT 

Regulatory Policies and Procedures 

Executive Order 12866, ‘‘Regulatory 

Planning and Review’’ (58 FR 51735, 

October 4, 1993), provides for making 

determinations whether a regulatory 

action is ‘‘significant’’ and therefore 

subject to OMB review and to the 

requirements of the Executive Order. 

The Order defines a ‘‘significant 

regulatory action’’ as one that is likely 

to result in a rule that may: 

(1) Have an annual effect on the 

economy of $100 million or more or 

adversely affect in a material way the 

economy, a sector of the economy, 

productivity, competition, jobs, the 

environment, public health or safety, or 

State, local or Tribal governments or 

communities; 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51457 

(2) Create a serious inconsistency or 

otherwise interfere with an action taken 

or planned by another agency; 

(3) Materially alter the budgetary 

impact of entitlements, grants, user fees, 

or loan programs or the rights and 

obligations of recipients thereof; or 

(4) Raise novel legal or policy issues 

arising out of legal mandates, the 

President’s priorities, or the principles 

set forth in the Executive Order. 

The rulemaking proposed in this 

NPRM will be economically significant 

if adopted. Accordingly, OMB reviewed 

it under Executive Order 12866. The 

rule, if adopted, would also be 

significant within the meaning of the 

Department of Transportation’s 

Regulatory Policies and Procedures. 

We estimate that the total benefits 

under the Unreformed CAFE standards 

for MYs 2008–2010 and the Reformed 

CAFE standard for MY 2011 would be 

approximately $7.0 billion at a 7 percent 

discount rate and at fuel prices ranging 

from $1.51 to $1.58 per gallon: $605 

million for MY 2008, $1,366 million for 

MY 2009, $2,007 million for MY 2010, 

and $3,069 million for MY 2011. We 

estimate that the total cost under those 

standards, as compared to the MY 2007 

standard of 22.2 mpg, would be a total 

of $6.2 billion: $528 million for MY 

2008, $1,244 million for MY 2009, 

$1,798 million for MY 2010, and $2,656 

million for MY 2011. 

Under the Reformed CAFE standards 

for MYs 2008–2011, as compared to the 

MY 2007 standard of 22.2 mpg, we 

estimate the total benefits under the 

Reformed CAFE system for MYs 2008–

2011 at $7.5 billion, at a 7 percent 

discount rate and at fuel prices ranging 

from $1.51 to $1.58 per gallon: $694 

million for MY 2008, $1,633 million for 

MY 2009, $2,144 million for MY 2010, 

and $3,069 million for MY 2011. We 

estimate the total cost to be 

approximately the same as the cost 

under the Unreformed CAFE system, 

$6.2 billion. 

Because the proposed rule if adopted 

would be significant under both the 

Department of Transportation’s 

procedures and OMB’s guidelines, the 

agency has prepared a Preliminary 

Regulatory Impact Analysis and placed 

it in the docket and on the agency’s Web 

site. 

B. National Environmental Policy Act 

Consistent with the requirements of 

the National Environmental Policy Act 

and the regulations of the Council on 

Environmental Quality, the agency has 

prepared a Draft Environmental 

Assessment of this proposed action, and 

has placed the analysis in the docket. 

Based on the Draft Environmental 

Assessment, the agency does not, at this 

time, anticipate that the proposed action 

would have a significant effect on the 

quality of the human environment. The 

agency seeks comments on the Draft 

Environmental Assessment. 

C. 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 rulemaking for 

any proposed 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). The 

Small Business Administration’s 

regulations at 13 CFR part 121 define a 

small business, in part, as a business 

entity ‘‘which operates primarily within 

the United States.’’ (13 CFR 121.105(a)). 

No regulatory flexibility analysis is 

required if the head of an agency 

certifies the rule will not have a 

significant economic impact on a 

substantial number of small entities. 

I certify that the proposed amendment 

would not have a significant economic 

impact on a substantial number of small 

entities. The following is the agency’s 

statement providing the factual basis for 

the certification (5 U.S.C. 605(b)). 

If adopted, the proposal would 

directly affect thirteen single stage light 

truck manufacturers. According to the 

Small Business Administration’s small 

business size standards (see 5 CFR 

121.201), a single stage light truck 

manufacturer (NAICS code 336112, 

Light Truck and Utility Vehicle 

Manufacturing) must have 1,000 or 

fewer employees to qualify as a small 

business. None of the affected single 

stage light truck manufacturers are small 

businesses under this definition. All of 

the manufacturers of light trucks have 

thousands of employees. Given that 

none of the businesses directly affected 

are small business for purposes of the 

Regulatory Flexibility Act, a regulatory 

flexibility analysis was not prepared. 

D. 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.’’ Executive Order 13132 

defines the term ‘‘Policies that have 

federalism implications’’ to include 

regulations that 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.’’ Under 

Executive Order 13132, NHTSA may not 

issue a regulation that has 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, or NHTSA consults with 

State and local officials early in the 

process of developing the proposed 

regulation. 

We reaffirm our view that a state may 

not impose a legal requirement relating 

to fuel economy, whether by statute, 

regulation or otherwise, that conflicts 

with this rule. A state law that seeks to 

reduce motor vehicle carbon dioxide 

emissions is both expressly and 

impliedly preempted. 

Our statute contains a broad 

preemption provision making clear the 

need for a uniform, federal system: 

‘‘When an average fuel economy 

standard prescribed under this chapter 

is in effect, a State or a political 

subdivision of a State may not adopt or 

enforce a law or regulation related to 

fuel economy standards or average fuel 

economy standards for automobiles 

covered by an average fuel economy 

standard under this chapter.’’ 49 U.S.C. 

32919(a). Since the way to reduce 

carbon dioxide emissions is to improve 

fuel economy, a state regulation seeking 

to reduce those emissions is a 

‘‘regulation related to fuel economy 

standards or average fuel economy 

standards.’’

Further, such a regulation would be 

impliedly preempted, as it would 

interfere with our implementation of the 

CAFE statute. For example, it would 

interfere the careful balancing of various 

statutory factors and other related 

considerations, as contemplated in the 

conference report on EPCA, we must do 

in order to establish average fuel 

economy standards at the maximum 

feasible level. It would also interfere 

with our effort to reform CAFE so to 

achieve higher fuel savings, while 

reducing the risk of adverse economic 

and safety consequences. 

E. Executive Order 12988 (Civil Justice 

Reform) 

Pursuant to Executive Order 12988, 

‘‘Civil Justice Reform’’ (61 FR 4729, 

February 7, 1996), the agency has 

considered whether this rulemaking 

would have any retroactive effect. This 

final rule does not have any retroactive 

effect. 

51458 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

F. Unfunded Mandates Reform Act 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

requires Federal 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 in any one year 

(adjusted for inflation with base year of 

1995). Before promulgating a rule for 

which a written statement is needed, 

section 205 of the UMRA generally 

requires NHTSA to identify and 

consider a reasonable number of 

regulatory alternatives and adopt the 

least costly, most cost-effective, or least 

burdensome alternative that achieves 

the objectives of the rule. The 

provisions of section 205 do not apply 

when they are inconsistent with 

applicable law. Moreover, section 205 

allows NHTSA to adopt an alternative 

other than the least costly, most costeffective, or least burdensome 

alternative if the agency publishes with 

the final rule an explanation why that 

alternative was not adopted. 

This final rule will not result in the 

expenditure by State, local, or tribal 

governments, in the aggregate, of more 

than $100 million annually, but it will 

result in the expenditure of that 

magnitude by vehicle manufacturers 

and/or their suppliers. In promulgating 

this proposal, NHTSA considered 

whether average fuel economy 

standards lower and higher than those 

proposed would be appropriate. NHTSA 

is statutorily required to set standards at 

the maximum feasible level achievable 

by manufacturers and has tentatively 

concluded that the proposed standards 

are the maximum feasible standards for 

the light truck fleet for MYs 2008–2011 

in light of the statutory considerations. 

G. Paperwork Reduction Act 

Under the procedures established by 

the Paperwork Reduction Act of 1995, a 

person is not required to respond to a 

collection of information by a Federal 

agency unless the collection displays a 

valid OMB control number. The 

proposed rule would amend the 

reporting requirements under the 49 

CFR part 537, Automotive Fuel 

Economy Reports. In addition to the 

vehicle model information collected 

under the approved data collection 

(OMB control number 2127–0019) in 

Part 537, light truck manufacturers 

would also be required provide data on 

vehicle footprint. During the transition 

period, manufacturers would also be 

required to specify with which CAFE 

system they were complying. 

In compliance with the PRA, we 

announce that NHTSA is seeking 

comment on the proposed revisions to 

the collection. 

Agency: National Highway Traffic 

Safety Administration (NHTSA). 

Title: 49 CFR part 537, Automotive 

Fuel Economy Reports (F.E.) Reports. 

Type of Request: Amend existing 

collection. 

OMB Clearance Number: 2127–0019. 

Form Number: This collection of 

information will not use any standard 

forms. 

Requested Expiration Date of 

Approval: Three years from the date of 

approval. 

Summary of the Collection of 

Information 

For MYs 2008–2010, we are proposing 

to provide manufacturers an option to 

comply with one of two CAFE systems. 

A manufacturer would be required to 

report under which system it chose to 

comply during those years. 

Manufacturers complying under the 

Reformed CAFE system would also be 

required to provide data on vehicle 

footprint so that the agency could 

determine a manufacturer’s required 

fuel economy level. 

This information collection would be 

included as part of the existing fuel 

economy reporting requirements. 

Description of the Need for the 

Information and Proposed Use of the 

Information 

NHTSA would require this 

information to ensure that vehicle 

manufacturers were complying with the 

light truck fuel economy standards. 

NHTSA would use this information to 

determine if a manufacturer’s fuel 

economy level should be calculated 

under the Unreformed or Reformed 

CAFE system. NHTSA would use the 

footprint data to determine a 

manufacturer’s required fuel economy 

level under the Reformed CAFE system. 

Description of the Likely Respondents 

(Including Estimated Number, and 

Proposed Frequency of Response to the 

Collection of Information) 

NHTSA estimates that 13 light truck 

manufacturers would submit the 

required information. The frequency of 

reporting would not change from that 

currently authorized under collection 

number 2127–0019. 

Estimate of the Total Annual Reporting 

and Recordkeeping Burden Resulting 

from the Collection of Information 

NHTSA estimates that each 

manufacturer will incur an increase of 

two burden hours per year per report. 

This estimate is based on the fact that 

data collection will involve only 

computer tabulation and that 

manufacturers will provide the 

information to NHTSA in an electronic 

(as opposed to paper) format. 

NHTSA estimates that the 

recordkeeping burden resulting from the 

collection of information will be 0 hours 

because the information will be retained 

on each manufacturer’s existing 

computer systems for each 

manufacturer’s internal administrative 

purposes. 

NHTSA estimates that the total 

annual cost burden would be increased 

by 551.58 dollars (2 additional burden 

hours per light truck manufacturer x 13 

light truck manufacturers × 21.23 

dollars/hour). There would be no capital 

or start-up costs as a result of this 

collection. Manufacturers can collect 

and tabulate the information by using 

existing equipment. Thus, there would 

be no additional costs to respondents or 

recordkeepers. 

NHTSA requests comment on its 

estimates of the total annual hour and 

cost burdens resulting from this 

collection of information. Please submit 

any comments to the NHTSA Docket 

Number referenced in the heading of 

this notice or to: Ken Katz, Lead 

Engineer, Fuel Economy Division, 

Office of International Policy, Fuel 

Economy, and Consumer Programs, at 

400 Seventh Street, SW., Washington, 

DC 20590. He can also be contacted by 

phone, (202) 366–0846; facsimile (202) 

493–2290; and electronic mail, 

kkatz@nhtsa.dot.gov. Comments are due 

by October 31, 2005. 

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. 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. If 

the regulatory action meets both criteria, 

we must evaluate the environmental 

health or safety effects of the planned 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51459 

rule on children, and explain why the 

planned regulation is preferable to other 

potentially effective and reasonably 

feasible alternatives considered by us. 

This proposed rule does not have a 

disproportionate effect on children. The 

primary effect of this proposal is to 

conserve energy resources by setting 

fuel economy standards for light trucks. 

J. 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 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. 

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 specification and related 

management systems practices.’’ They 

pertain to ‘‘products and processes, 

such as size, strength, or technical 

performance of a product, process or 

material.’’

In meeting the requirement of the 

NTTAA, we are required to consult with 

voluntary, private sector, consensus 

standards bodies. Examples of 

organizations generally regarded as 

voluntary consensus standards bodies 

include the American Society for 

Testing and Materials (ASTM), the 

Society of Automotive Engineers (SAE), 

and the American National Standards 

Institute (ANSI). If NHTSA does not use 

available and potentially applicable 

voluntary consensus standards, we are 

required by the Act to provide Congress, 

through OMB, an explanation of the 

reasons for not using such standards. 

The notice proposes to categorize 

light trucks according to vehicle 

footprint (average track width X 

wheelbase). For the purpose of this 

calculation, the agency proposes to base 

these measurements on those by the 

automotive industry. Determination of 

wheelbase would be consistent with 

L101-wheelbase, defined in SAE J1100 

MAY95, Motor vehicle dimensions. The 

agency’s proposal uses a modified 

version of the SAE definitions for track 

width (W101-tread-front and W102- 

tread-rear as defined in SAE J1100 

MAY95). The proposed definition of 

track width reduces a manufacturer’s 

ability to adjust a vehicle’s track width 

through minor alterations. 

K. Executive Order 13211 

Executive Order 13211 (66 FR 28355, 

May 18, 2001) applies to any rule that: 

(1) Is determined to be economically 

significant as defined under E.O. 12866, 

and is likely to have a significant 

adverse effect on the supply, 

distribution, or use of energy; or (2) that 

is designated by the Administrator of 

the Office of Information and Regulatory 

Affairs as a significant energy action. If 

the regulatory action meets either 

criterion, we must evaluate the adverse 

energy effects of the planned rule and 

explain why the planned regulation is 

preferable to other potentially effective 

and reasonably feasible alternatives 

considered by us. 

The proposed rule seeks to establish 

light truck fuel economy standards that 

will reduce the consumption of 

petroleum and will not have any 

adverse energy effects. Accordingly, this 

rulemaking action is not designated as 

a significant energy action. 

L. Department of Energy Review 

In accordance with 49 U.S.C. 32902(j), 

we submitted this proposed rule to the 

Department of Energy for review. That 

Department did not make any comments 

that we have not addressed. 

M. Plain Language 

Executive Order 12866 requires 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 isn’t 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 proposal. 

N. Privacy Act 

Anyone is able to search the 

electronic form of all comments 

received into any of our dockets by the 

name of the individual submitting the 

comment (or signing the comment, if 

submitted on behalf of an association, 

business, labor union, etc.). You may 

review DOT’s complete Privacy Act 

Statement in the Federal Register 

published on April 11, 2000 (Volume 

65, Number 70; Pages 19477–78) or you 

may visit http://dms.dot.gov. 

XI. Comments 

Submission of Comments 

How Can I Influence NHTSA’s Thinking 

on This Notice? 

In developing this notice, we tried to 

address the concerns of all our 

stakeholders. Your comments will help 

us determine what standards should be 

set for light truck fuel economy. We 

invite you to provide different views on 

questions we ask, new approaches and 

technologies we did not ask about, new 

data, how this notice may affect you, or 

other relevant information. We welcome 

your views on all aspects of this notice, 

but request comments on specific issues 

throughout this notice. We grouped 

these specific requests near the end of 

the sections in which we discuss the 

relevant issues. Your comments will be 

most effective if you follow the 

suggestions below: 

• Explain your views and reasoning 

as clearly as possible. 

• Provide empirical evidence, 

wherever possible, to support your 

views. 

• If you estimate potential costs, 

explain how you arrived at the estimate. 

• Provide specific examples to 

illustrate your concerns. 

• Offer specific alternatives. 

• Refer your comments to specific 

sections of the notice, such as the units 

or page numbers of the preamble, or the 

regulatory sections. 

• Be sure to include the name, date, 

and docket number of the proceeding 

with your 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 Web 

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

51460 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

‘‘Help’’ 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. Each electronic filer will receive 

electronic confirmation that his or her 

submission has been received. 

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 timely submitted 

comments, i.e., those that Docket 

Management receives before the close of 

business on the comment closing date 

indicated above under DATES. Due to 

the statutory deadline (April 1, 2006), 

we will be very limited in our ability to 

consider late-filled comments. If Docket 

Management receives a comment too 

late for us to consider it in developing 

a final rule, we will consider that 

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 fivedigit docket number shown at the 

beginning of this document. Example: If 

the docket number were ‘‘NHTSA–

2002–12345,’’ you would type ‘‘12345.’’

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. However, since the 

comments are imaged documents, 

instead of word processing documents, 

the downloaded comments are not word 

searchable. 

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 Parts 523, 

533, and 537 

Fuel economy and Reporting and 

recordkeeping requirements. 

In consideration of the foregoing, 49 

CFR Chapter V would be amended as 

follows: 

PART 523—VEHICLE CLASSIFICATION 

1. The authority citation for part 523 

would continue to read as follows: 

Authority: 49 U.S.C. 32902; delegation of 

authority at 49 CFR 1.50. 

2. Section 523.2 would be amended 

by adding a definition of ‘‘footprint’’ to 

read as follows: 

§ 523.2 Definitions. 

* * * 

Footprint means the product, in 

square feet, of multiplying a vehicle’s 

average track width by its wheelbase. 

For purposes of this definition, track 

width is the lateral distance between the 

centerlines of the tires at ground when 

the tires are mounted on rims with zero 

offset. For purposes of this definition, 

wheelbase is the longitudinal distance 

between front and rear wheel 

centerlines. In case of multiple rear 

axles, wheelbase is measured to the 

midpoint of the centerlines of the 

wheels on the rearmost axle. 

* * * * * 

3. Section 523.5(a) would be amended 

to read as follows: 

§ 523.5 Light truck. 

* * * * * 

(a) * * * 

(5) Permit expanded use of the 

automobile for cargo-carrying purposes 

or other nonpassenger-carrying 

purposes through: 

(i) The removal of seats by means 

installed for that purpose by the 

automobile’s manufacturer or with 

simple tools, such as screwdrivers and 

wrenches, so as to create a flat, floor 

level, surface extending from the 

forwardmost point of installation of 

those seats to the rear of the 

automobile’s interior; or 

(ii) The stowing of foldable seats in 

the automobile’s floor pan, so as to 

create a flat, floor level, surface 

extending from the forwardmost point 

of installation of those seats to the rear 

of the automobile’s interior. 

* * * * * 

PART 533—LIGHT TRUCK FUEL 

ECONOMY STANDARDS 

4. The authority citation for part 533 

would continue to read as follows: 

Authority: 49 U.S.C. 32902; delegation of 

authority at 49 CFR 1.50. 

5. Part 533.5 would be amended by: 

A. In paragraph (a) by revising Table 

IV and adding Figure I and Table V; and 

B. Adding paragraphs (g) and (h). 

The revisions and additions read as 

follows: 

§ 533.5 Requirements. 

(a) * * * 

TABLE IV 

Model year Standard 

2001 .......................................... 20.7 

2002 .......................................... 20.7 

2003 .......................................... 20.7 

2004 .......................................... 20.7 

2005 .......................................... 21.0 

2006 .......................................... 21.6 

2007 .......................................... 22.2 

2008 .......................................... 22.5 

2009 .......................................... 23.1 

2010 .......................................... 23.5 

BILLING CODE 4910–59–P 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51461 

BILLING CODE 4910–59–C 


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TABLE V.—CATEGORIES FOR MYS 2008–2011 BASED ON VEHICLE FOOTPRINT (FOOT2) AND THE ASSOCIATED TARGET

FUEL ECONOMY LEVELS (MPG) 

Category 1 2 3 4 5 6 

Range of vehicle footprint ................................................ ≤43.0 >43.0–47.0 >47.0–52.0 >52.0–56.5 >56.5–65.0 >65.0 

MY 2008 Targets ............................................................. 26.8 25.6 22.3 22.2 20.7 20.4 

MY 2009 Targets ............................................................. 27.4 25.4 23.5 22.7 21.0 21.0 

MY 2010 Targets ............................................................. 27.8 26.4 24.0 22.9 21.6 20.8 

MY 2011 Targets ............................................................. 28.4 27.1 24.5 23.3 21.9 21.3 

* * * * * 

(g) For model years 2008–2010, at a 

manufacturer’s option, a manufacturer’s 

light truck fleet may comply with the 

fuel economy level calculated according 

to Figure I and the appropriate values in 

Table V, with said option being 

irrevocably chosen for that model year 

and reported at the time a mid-model 

year report is submitted under § 537.7. 

(h) For model year 2011, a 

manufacturer’s light truck fleet shall 

comply with the fuel economy level, 

calculated according to Figure I and the 

appropriate values in Figures V and VI. 

5a. Part 533 would be amended by 

adding Appendix A to read as follows: 

Appendix A—Example of Calculating 

Compliance Under § 533.5 Paragraph (g) 

Assume a hypothetical manufacturer 

(Manufacturer X) produces a fleet of light 

trucks in MY 2008 as follows: 

Model Fuel 

economy Volume Footprint (ft2) Category 

A ....................................................................................................................................................... 27.0 1,000 42 1 

B ....................................................................................................................................................... 25.6 1,500 44 2 

C ...................................................................................................................................................... 25.4 1,000 46 2 

D ...................................................................................................................................................... 22.1 2,000 50 3 

E ....................................................................................................................................................... 22.4 3,000 55 4 

F ....................................................................................................................................................... 20.2 1,000 66 6 

Note to Appendix A Table 1. Manufacturer 

X’s required corporate average fuel economy 

level under § 533.5(g) would be calculated as 

illustrated in Appendix A Figure 1: 

BILLING CODE 4910–59–P 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51463 

BILLING CODE 4910–59–P Note to Appendix A Figure 1. Manufacturer 

X did not produce any light trucks in 

Category 5 during MY 2005. Therefore 

calculation of Manufacturer X’s required 


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51464 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

corporate average fuel economy level for MY 

2008 would only incorporate the fuel 

economy target levels for Categories 1, 2, 3, 

4, and 6. 

Manufacturer X’s actual CAFE level would 

be calculated as illustrated in Appendix A 

Figure 2. 

BILLING CODE 4910–59–P 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51465 

BILLING CODE 4910–59–C Note to Appendix A Figure 2. Manufacturer 

X’s required fuel economy level is 23.2 mpg. 

Its actual fuel economy level is 23.2 mpg. 


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51466 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

Therefore, Manufacturer X complies with the 

CAFE requirement set forth in § 533.7(g). 

PART 537—AUTOMOTIVE FUEL 

ECONOMY REPORTS 

6. The authority citation for Part 537 

would continue to read as follows: 

Authority: 15 U.S.C. 2005; 49 CFR 1.50. 

7. Section 537.7 would be amended 

by revising paragraphs (c)(4)(xvi) 

through (xxi) to read as follows: 

§ 537.7 Pre-model year and mid-model 

year reports. 

* * * * * 

(c) Model type and configuration fuel 

economy and technical information. 

* * * 

(4) * * * 

(xvi)(A) In the case of passenger 

automobiles: 

(1) Interior volume index, determined 

in accordance with subpart D of 40 CFR 

part 600, and 

(2) Body style; 

(B) In the case of light trucks: 

(1) Passenger-carrying volume, 

(2) Cargo-carrying volume; and 

(3) Footprint as defined in 49 CFR 

§ 523.2. 

(xvii) Performance of the function 

described in § 523.5(a)(5) of this chapter 

(indicate yes or no); 

(xviii) Existence of temporary living 

quarters (indicate yes or no); 

(xix) Frontal area; 

(xx) Road load power at 50 miles per 

hour, if determined by the manufacturer 

for purposes other than compliance 

with this part to differ from the road 

load setting prescribed in 40 CFR 

86.177–11(d); 

(xxi) Optional equipment that the 

manufacturer is required under 40 CFR 

parts 86 and 600 to have actually 

installed on the vehicle configuration, 

or the weight of which must be included 

in the curb weight computation for the 

vehicle configuration, for fuel economy 

testing purposes. 

* * * * * 

Issued: August 23, 2005. 

Stephen R. Kratzke, 

Associate Administrator for Rulemaking. 

[FR Doc. 05–17006 Filed 8–24–05; 8:45 am] 

BILLING CODE 4910–59–P 

DEPARTMENT OF TRANSPORTATION 

National Highway Traffic Safety 

Administration 

49 CFR Part 533 

[Docket No. 2005–22144] 

RIN 2127–AJ71 

Light Truck Average Fuel Economy 

Standards—Model Years 2008–2011; 

Request for Product Plan Information 

AGENCY: National Highway Traffic 

Safety Administration (NHTSA), 

Department of Transportation (DOT). 

ACTION: Request for comments. 

SUMMARY: The purpose of this request 

for comments is to acquire new and 

updated information regarding vehicle 

manufacturers’ future product plans to 

assist the agency in analyzing the 

proposed light truck corporate average 

fuel economy (CAFE) standards for MY 

2008–2011, which are discussed in a 

companion document published 

elsewhere in this issue of the Federal 

Register. The agency is seeking 

information that will help it assess the 

effect of the proposed standards on fuel 

economy, manufacturers, consumers, 

the economy, and motor vehicle safety. 

DATE: Comments must be received on or 

before November 22, 2005. 

ADDRESSES: You may submit comments 

[identified by DOT DMS Docket Number 

2005–22144] by any of the following 

methods: 

• Web site: http://dms.dot.gov. 

Follow the instructions for submitting 

comments on the DOT electronic docket 

site. 

• Fax: 1–202–493–2251. 

• Mail: Docket Management Facility; 

U.S. Department of Transportation, 400 

Seventh Street, SW., Nassif Building, 

Room PL–401, Washington, DC 20590–

001. 

• Hand Delivery: Room PL–401 on 

the plaza level of the Nassif Building, 

400 Seventh Street, SW., Washington, 

DC, between 9 a.m. and 5 p.m., Monday 

through Friday, except Federal 

Holidays. 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov. Follow the 

online instructions for submitting 

comments. 

FOR FURTHER INFORMATION CONTACT: For 

non-legal issues, call Ken Katz, Lead 

Engineer, Fuel Economy Division, 

Office of International Policy, Fuel 

Economy and Consumer Programs, at 

(202) 366–0846, facsimile (202) 493–

2290, electronic mail 

kkatz@nhtsa.dot.gov. For legal issues, 

call Steve Wood or Christopher 

Calamita, Office of the Chief Counsel, at 

(202) 366–2992 or by facsimile at (202) 

366–3820. 

SUPPLEMENTARY INFORMATION: 

I. Introduction 

In December 1975, during the 

aftermath of the energy crisis created by 

the oil embargo of 1973–74, Congress 

enacted the Energy Policy and 

Conservation Act (EPCA). The Act 

established an automotive fuel economy 

regulatory program by adding Title V, 

‘‘Improving Automotive Efficiency,’’ to 

the Motor Vehicle Information and Cost 

Saving Act. Title V has been amended 

from time to time and codified without 

substantive change as Chapter 329 of 

Title 49 of the United States Code. 

Chapter 329 provides for the issuance of 

average fuel economy standards for 

passenger automobiles and automobiles 

that are not passenger automobiles (light 

trucks). 

Section 32902(a) of Chapter 329 states 

that the Secretary of Transportation 

shall prescribe by regulation corporate 

average fuel economy (CAFE) standards 

for light trucks for each model year. 

That section also states that ‘‘[e]ach 

standard shall be the maximum feasible 

average fuel economy level that the 

Secretary decides the manufacturers can 

achieve in that model year.’’ (The 

Secretary has delegated the authority to 

implement the automotive fuel economy 

program to the Administrator of 

NHTSA. 49 CFR 1.50(f).) Section 

32902(f) provides that, in determining 

the maximum feasible average fuel 

economy level, we shall consider four 

criteria: technological feasibility, 

economic practicability, the effect of 

other motor vehicle standards of the 

Government on fuel economy, and the 

need of the United States to conserve 

energy. 

In a companion document, a notice of 

proposed rulemaking, published 

elsewhere in this issue of the Federal 

Register, NHTSA is proposing light 

truck average fuel economy standards 

for model years (MYs) 2008–2011 under 

a new reformed structure. To assist the 

agency in analyzing these proposed 

CAFE standards, NHTSA has included a 

number of additional questions, found 

in an appendix to this notice, directed 

primarily toward vehicle manufacturers. 

To facilitate our analysis of the 

potential impacts of the proposal, we 

are seeking detailed comments relative 

to the requests found in the appendix of 

this document. The Appendix requests 

information from manufacturers 

regarding their product plans—

including data about engines and 

transmissions—MY 2005 through MY