Document ID: NHTSA-2016-0135-0001
Agency: nhtsa
Document Type: Proposed Rule
Title: Corporate Average Fuel Economy Standards; Credits
Posted Date: 2016-12-28T05:00Z

[Federal Register Volume 81, Number 249 (Wednesday, December 28, 2016)]
[Proposed Rules]
[Pages 95553-95554]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-31140]

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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Parts 531, 533 and 536

[Docket No. NHTSA-2016-0135]

Corporate Average Fuel Economy Standards; Credits

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

ACTION: Grant of petition for rulemaking.

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SUMMARY: This notice partially grants a petition for rulemaking 
submitted by the Alliance of Automobile Manufacturers and the 
Association of Global Automakers (hereinafter collectively referred to 
as ``Petitioners'') on June 20, 2016, to consider amending various 
aspects of the light vehicle Corporate Average Fuel Economy (CAFE) 
regulations. The Petitioners requested that NHTSA issue a direct final 
rule to implement the requested changes, but NHTSA believes that the 
issues and questions raised by the Petitioners are worthy of notice and 
comment. NHTSA will address the changes requested in the Petition in 
the course of the rulemaking proceeding, in accordance with statutory 
criteria.

DATES: December 21, 2016.

FOR FURTHER INFORMATION CONTACT: For technical issues, you may call Mr. 
James Tamm in the Fuel Economy Division of the Office of Rulemaking at 
(202) 493-0515. For legal issues, you may call Ms. Rebecca Yoon in the 
Office of Chief Counsel at (202) 366-2992. You may send mail to these 
officials at: National Highway Traffic Safety Administration, 1200 New 
Jersey Avenue SE., Washington, DC 20590.

SUPPLEMENTARY INFORMATION: On June 20, 2016, the Petitioners submitted 
a Petition to the National Highway Traffic Safety Administration 
(NHTSA) and the Environmental Protection Agency (EPA) requesting that 
the agencies issue a direct final rule to amend various aspects of the 
Corporate Average Fuel Economy (CAFE) and light-duty greenhouse gas 
(GHG) regulations. The Petitioners stated that these amendments are 
necessary to ``address various inconsistencies between'' NHTSA's CAFE 
program and EPA's GHG emissions program, and to ``address additional 
inefficiencies'' in the programs.
    Specifically, Petitioners requested that NHTSA (and EPA) \1\ modify 
the CAFE regulations as follows:
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    \1\ This decision addresses only those portions of the Petition 
that are within NHTSA's jurisdiction and responsibility. It does not 
address aspects of the Petition that are exclusively under EPA's 
jurisdiction.
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    (1) Include ``off-cycle'' credits in the calculation of 
manufacturers' fleet fuel economy levels for model years 2010 through 
2016;
    (2) Include air conditioning efficiency credits in the calculation 
of manufacturers' fleet fuel economy levels for model years 2010 
through 2016;
    (3) Apply the ``fuel savings adjustment factor'' for all uses of 
CAFE credits;
    (4) Apply the same estimate of Vehicle Miles Traveled for model 
years 2011 through 2016 that that the EPA GHG program uses;
    (5) Change the definition of ``credit transfer'' in 49 CFR part 536 
to state that the statutory cap on credit transfers applies at time of 
transfer rather than at time of use;
    (6) Amend regulations to clarify that manufacturers may manage and 
apply their credits regardless of their origin;
    (7) Amend 49 CFR 531(d) so that minimum domestic passenger car 
standards represent 92 percent of the overall passenger car CAFE 
standard for the fleet as a whole calculated at the end of each model 
year, rather than 92 percent of the overall standard as calculated at 
the time that the standards are/were originally issued;
    (8) Adjust the ``multiplier'' for full electric vehicles, plug-in 
hybrid electric vehicles, fuel cell vehicles, and compressed natural 
gas vehicles; and
    (9) ``Improve'' the off-cycle credit approval process and reaffirm 
several provisions.
    Some aspects of the Petition were directed to NHTSA, some to both 
NHTSA and EPA, and other requests were directed exclusively to EPA. The 
sixth item, seeking clarification that manufacturers may manage and 
apply their credits regardless of their origin, requests a change in an 
EPA regulation (40 CFR 86.1865(k)(5)) that does not appear applicable 
or relevant to the CAFE program. Calculation procedures for CAFE 
compliance are located at 40 CFR 600.510-12. Credits for CAFE over-
compliance are determined based on the difference between a 
manufacturer's calculated ``achieved'' CAFE value and the 
manufacturer's calculated ``required'' CAFE value. NHTSA believes that 
this request was not intended to be directed at the CAFE program, but 
NHTSA would welcome Petitioners' clarification if this is incorrect.
    Similarly, the eighth item, which addresses the ``multiplier'' for 
alternative fuel vehicles, applies exclusively to EPA's GHG program. 
NHTSA does not speak for EPA in this decision, and will not address 
this item in the upcoming rulemaking.
    The remaining items will be addressed in conjunction with the 
Agency's upcoming proposal for setting future CAFE standards. NHTSA 
believes that these issues are best considered concurrently with that 
rulemaking for both procedural and substantive reasons. Procedurally, 
reducing the number of rulemaking actions increases administrative 
efficiency and improves the ability to evaluate cumulative program 
impacts comprehensively. Substantively, while Petitioners' requests 
nominally focus on credit and flexibility issues, NHTSA believes that 
the underlying questions of whether and how to expand compliance 
flexibilities is closely related to the question of what CAFE standards 
are maximum feasible in future model years, which NHTSA will determine 
in the upcoming rulemaking as required by statute. The Petitioners 
appear to agree with this, as the Petition suggests that if a lack of 
compliance flexibilities leads manufacturers to pay civil penalties for 
CAFE non-compliance, the CAFE standards may be beyond maximum feasible 
levels. While NHTSA does not agree that the fact that any manufacturer 
would face civil penalties alone would suggest that CAFE standards 
would be

[[Page 95554]]

beyond maximum feasible, the Agency does agree that manufacturers' 
ability to comply with standards is a vital consideration in any CAFE 
rulemaking.
    Thus, NHTSA finds that considering these questions concurrently, as 
part of the same action, will best allow the Agency to maintain a well-
structured program that maximizes fuel economy gains in the most cost-
effective way possible. NHTSA further concludes that a direct final 
rule would not be an appropriate mechanism for responding to 
Petitioners' requests, because: (i) The opportunity for notice and 
public comment on the Agency's response is important and valuable, 
particularly given (ii) the linkage between compliance flexibilities 
and the maximum feasible levels of CAFE standards. Moreover, NHTSA 
regulations do not allow for a direct final rule to be issued as such 
if the rule may be controversial or is likely to result in adverse 
comment. NHTSA is aware that various stakeholders have strong views for 
and against the expansion of compliance flexibilities in the CAFE 
program, and the Agency would expect those stakeholders to comment to a 
direct final rule accordingly, which would require the Agency per its 
own regulations to initiate notice and comment. See 49 CFR 553.14. 
Thus, NHTSA denies the petition to the extent that it seeks a direct 
final rule.
    NHTSA's fuel economy standards are final through 2021 and the 
upcoming rulemaking is required in order to set standards for 2022 and 
subsequent years. However, in streamlining consideration of the 
Petitioners' inquiry with the required NPRM, NHTSA will fully evaluate 
the items relevant to the CAFE program and standards, including their 
impacts on the program if applied prior to 2022. If in considering the 
Petitioner's inquiry, NHTSA finds it appropriate to initiate a separate 
rulemaking, NHTSA may do so. NHTSA is updating its analysis for the 
NPRM and welcomes input from all stakeholders, including in advance of 
developing its notice of proposed rulemaking. NHTSA encourages 
stakeholders to submit comments and to meet with the Agency to discuss 
their comments, concerns, and suggestions. NHTSA and EPA remain 
committed to working together to harmonize the CAFE and GHG program 
provisions to the extent possible under the agencies' statutes.
    Considering all of the information before the Agency, including but 
not limited to the information referenced in the petition, NHTSA grants 
the petition in part and denies it in part. The Agency expects to 
initiate a rulemaking proceeding in the coming months that will address 
those of the Petitioners' requests that are within the Agency's 
jurisdiction and power to address. The granting of the petition does 
not mean that the Agency will issue a final rule. The determination of 
whether to issue a rule will be made after study of the requested 
actions and the various alternatives in the course of the rulemaking 
proceeding, in accordance with statutory criteria.

    Authority: 49 U.S.C. 32901, 32902, and 32903; delegation of 
authority at 49 CFR 1.95.

    Issued on December 21, 2016, in Washington, DC, under authority 
delegated in 49 CFR 1.95, 501.5, and 501.7.
Raymond R. Posten,
Associate Administrator for Rulemaking.
[FR Doc. 2016-31140 Filed 12-27-16; 8:45 am]
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