Civil Penalties, 32140-32145 [2017-14525]

Download as PDF 32140 Federal Register / Vol. 82, No. 132 / Wednesday, July 12, 2017 / Rules and Regulations published in this Federal Register, NHTSA is seeking comment on whether $14 per tenth of an mpg is the appropriate penalty level for civil penalties for violations of CAFE standards given the requirements of the Inflation Adjustment Act and the Energy Policy and Conservation Act (EPCA) of 1975, which authorizes civil penalties for violations of CAFE standards.4 Because NHTSA is reconsidering the final rule, NHTSA is delaying the effective date pending reconsideration. There is good cause to implement this delay without notice and comment under 5 U.S.C. 553(b)(B) and 553(d)(3) because those procedures are impracticable, unnecessary, and contrary to the public interest in these circumstances, where the effective date of the rule is imminent. Moreover, the agency is, through a separate document, already seeking out public comments on the underlying issues, which may be extensive, and additional time will be required to thoughtfully consider and address those comments before deciding on the appropriate course of regulatory action. A delay in the effective date is therefore consistent with NHTSA’s statutory authority to administer the CAFE standards program and its inherent authority to do so efficiently and in the public interest. In addition, no party will be harmed by the delay in the effective date of the rule. On the contrary, the rule does not increase CAFE penalties before Model Year 2019, and therefore, the delay will not affect the civil penalty amounts assessed against any manufacturer for violating a CAFE standard prior to the 2019 model year at the earliest, i.e., until sometime in 2020. Therefore, the increased penalty rate set forth in the rule would not be applied for current violations, so there is no immediate, concrete impact from the delay. Authority: Pub. L. 101–410, Pub. L. 104– 134, Pub. L. 109–59, Pub. L. 114–74, Pub L. 114–94, 49 U.S.C. 32902 and 32912; delegation of authority at 49 CFR 1.81, 1.95. Jack Danielson, Acting Deputy Administrator. [FR Doc. 2017–14526 Filed 7–7–17; 11:15 am] nlaroche on DSK30NT082PROD with RULES BILLING CODE 4910–59–P 4 NHTSA incorporates the discussions in the document seeking comment on the appropriate CAFE civil penalties level by reference. VerDate Sep<11>2014 14:05 Jul 11, 2017 Jkt 241001 DEPARTMENT OF TRANSPORTATION National Highway Traffic Safety Administration 49 CFR Part 578 [Docket No. NHTSA–2017–0059] Civil Penalties National Highway Traffic Safety Administration (NHTSA), Department of Transportation (DOT). ACTION: Reconsideration of final rule; request for comments. AGENCY: NHTSA seeks comment on whether and how to amend the civil penalty rate for violations of Corporate Average Fuel Economy (CAFE) standards. NHTSA initially raised the civil penalty rate for CAFE standard violations for inflation in 2016, but upon further consideration, NHTSA believes that obtaining additional public input on how to proceed with CAFE civil penalties in the future will be helpful. Therefore, NHTSA is issuing this document to seek public comment as it sua sponte reconsiders its final rule regarding the appropriate inflationary adjustment for CAFE civil penalties. DATES: Comments: Comments must be received by October 10, 2017. See the SUPPLEMENTARY INFORMATION section below for more information on submitting comments. ADDRESSES: You may submit comments to the docket number identified in the heading of this document by any of the following methods: • Federal eRulemaking Portal: Go to https://www.regulations.gov. Follow the online instructions for submitting comments. • Mail: Docket Management Facility, M–30, U.S. Department of Transportation, West Building, Ground Floor, Room W12–140, 1200 New Jersey Avenue SE., Washington, DC 20590. • Hand Delivery or Courier: U.S. Department of Transportation, West Building, Ground Floor, Room W12– 140, 1200 New Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m. Eastern time, Monday through Friday, except Federal holidays. • Fax: 202–493–2251. Regardless of how you submit your comments, you must include the docket number identified in the heading of this document. Note that all comments received, including any personal information provided, will be posted without change to https:// www.regulations.gov. Please see the ‘‘Privacy Act’’ heading below. You may call the Docket Management Facility at 202–366–9324. SUMMARY: PO 00000 Frm 00018 Fmt 4700 Sfmt 4700 Docket: For access to the docket to read background documents or comments received, go to https:// www.regulations.gov or the street address listed above. NHTSA will continue to file relevant information in the Docket as it becomes available. Privacy Act: In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its rulemaking process. DOT posts these comments, without edit, including any personal information the commenter provides, to https://www.regulations.gov, as described in the system of records notice (DOT/ALL–14 FDMS), which can be reviewed at https:// www.transportation.gov/privacy. Anyone is able to search the electronic form of all comments received into any of DOT’s dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). FOR FURTHER INFORMATION CONTACT: Thomas Healy, Office of the Chief Counsel, NHTSA, telephone (202) 366– 2992, facsimile (202) 366–3820, 1200 New Jersey Avenue SE., Washington, DC 20590. SUPPLEMENTARY INFORMATION: I. Statutory and Regulatory Background NHTSA sets 1 and enforces 2 CAFE standards for the United States, and in doing so, assesses civil penalties against vehicle manufacturers who fall short of their compliance obligations and are unable to make up the shortfall with credits.3 The amount of the civil penalty was originally set by statute in 1975, and for most of the duration of the CAFE program, has been $5.50 per each tenth of a mile per gallon that a manufacturer’s fleet average CAFE level falls short of its compliance obligation, multiplied by the number of vehicles in the fleet 4 that has the shortfall. The basic equation for calculating a manufacturer’s civil penalty amount is as follows: 1 49 U.S.C. 32902. U.S.C. 32911, 32912. 3 Credits may be either earned (for overcompliance by a given manufacturer’s fleet, in a given model year) or purchased (in which case, another manufacturer earned the credits by overcomplying and chose to sell that surplus). 49 U.S.C. 32903; 49 CFR part 538. 4 A manufacturer may have up to three fleets of vehicles, for CAFE compliance purposes, in any given model year—a domestic passenger car fleet, an imported passenger car fleet, and a light truck fleet. Each fleet belonging to each manufacturer has its own compliance obligation, with the potential for either over-compliance or under-compliance. There is no overarching CAFE requirement for a manufacturer’s total production. 2 49 E:\FR\FM\12JYR1.SGM 12JYR1 Federal Register / Vol. 82, No. 132 / Wednesday, July 12, 2017 / Rules and Regulations nlaroche on DSK30NT082PROD with RULES (penalty rate, in $) × (amount of shortfall, in tenths of an mpg) × (# of vehicles in manufacturer’s noncompliant fleet) = $ due as penalty for non-compliant fleet. To date, automakers have paid more than $890 million in penalties relating to the CAFE standards.5 Additionally, since the introduction of credit trading and transfers in MY 2011, some manufacturers have turned to acquiring credits from competitors rather than paying civil penalties for noncompliance, and it is likely that this involves significant expenditures. In light of the fact that CAFE standards are set to rise at a significant rate over the next several years, and since NHTSA’s Projected Fuel Economy Performance Report 6 indicates that many manufacturers are falling behind the standards for model year 2016 and increasingly so for model year 2017, it is likely that many manufacturers will face the possibility of paying larger CAFE penalties over the next several years than at present. NHTSA has long had authority under the Energy Policy and Conservation Act (EPCA) of 1975, Public Law 94–163, section 508, 89 Stat. 912 (1975), to raise the amount of the penalty for CAFE shortfalls if it can make certain findings,7 as well as the authority to compromise and remit such penalties under certain circumstances.8 If NHTSA were to raise penalties for CAFE shortfalls, the higher amount would apply to any manufacturer who owed them; the authority to compromise and remit penalties, however, is limited and on a case-by-case basis. For both raising penalties and compromising them under EPCA, NHTSA’s burden is considerable. If NHTSA seeks to raise CAFE penalties under EPCA, NHTSA may only do so if it concludes through rulemaking that the increase in the penalty both (1) will result in, or substantially further, substantial energy conservation for automobiles in model years in which the increased penalty may be imposed, and (2) will not have a substantial deleterious impact on the economy of the United States, a State, or a region of the State. A finding of ‘‘no substantial 5 The highest CAFE penalty paid to date for a shortfall in a single fleet was $30,257,920, paid by DaimlerChrysler for its imported passenger car fleet in MY 2006. Since MY 2012, only Jaguar Land Rover and Volvo have paid civil penalties. See https://one.nhtsa.gov/cafe_pic/CAFE_PIC_Fines_ LIVE.html. 6 Available at https://one.nhtsa.gov/CAFE_PIC/ MY%202016%20and%202017%20Projected% 20Fuel%20Economy% 20Performance%20Report%20Final.pdf. 7 49 U.S.C. 32912. 8 49 U.S.C. 32913. VerDate Sep<11>2014 14:05 Jul 11, 2017 Jkt 241001 deleterious impact’’ may only be made if NHTSA determines that it is likely that the increase in the penalty (A) will not cause a significant increase in unemployment in a State or a region of a State, (B) adversely affect competition, or (C) cause a significant increase in automobile imports. Nowhere does EPCA define ‘‘substantial’’ or ‘‘significant’’ in the context of this provision. The rulemaking process to raise penalties includes specifically soliciting comments from the Federal Trade Commission, among others, and requires a public hearing following a comment period of at least 45 days. NHTSA has never adjusted the CAFE civil penalty using this EPCA provision. If NHTSA seeks to compromise or remit penalties for a given manufacturer, a rulemaking is not necessary, but the amount of a penalty may be compromised or remitted only to the extent (1) necessary to prevent a manufacturer’s insolvency or bankruptcy, (2) the manufacturer shows that the violation was caused by an act of God, a strike, or a fire, or (3) the Federal Trade Commission certifies that a reduction in the penalty is necessary to prevent a substantial lessening of competition. As with raising penalties, NHTSA has never previously attempted to undertake this process. The Center for Biological Diversity petitioned NHTSA on October 1, 2015, to conduct rulemaking to raise the amount of the penalty to $10, the maximum possible under EPCA at that time.9 A month later, while NHTSA was considering that petition, Congress enacted the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Inflation Adjustment Act),10 which applied to all civil penalties administered by federal agencies, as discussed in the prior Federal Register documents cited above. OMB guidance directed NHTSA and other federal agencies to follow a specific formula to adjust its civil penalties, pursuant to the Act’s requirements, including the penalty for CAFE shortfalls, pursuant to the Inflation Adjustment Act.11 On July 5, 2016, NHTSA published an interim final rule, adopting inflation adjustments for penalties under its administration, following the formula in the Act. One of these adjustments included raising the penalty rate for CAFE non-compliance from $5.50 to 9 A copy of this petition is available in the rulemaking docket. 10 Public Law 114–74, Sec. 701. 11 This OMB guidance is available at https:// www.whitehouse.gov/sites/whitehouse.gov/files/ omb/memoranda/2016/m-16-06.pdf (last accessed May 22, 2017). PO 00000 Frm 00019 Fmt 4700 Sfmt 4700 32141 $14.12 NHTSA also indicated in that document that the new maximum penalty rate that the Secretary is permitted to establish for such violations is $25. In response to the changes to the CAFE provisions promulgated in the interim final rule, the Auto Alliance and Global Automakers jointly petitioned NHTSA for reconsideration (the Industry Petition).13 The Industry Petition raised concerns with retroactivity (applying the penalty increase associated with model years that have already been completed or for which a company’s compliance plan had already been ‘‘set’’); which ‘‘base year’’ NHTSA should use for calculating the adjusted penalty rate; and whether an immediate increase in the penalty rate to $14 would cause a ‘‘negative economic impact.’’ In response to the Industry Petition, NHTSA issued a final rule published on December 28, 2016.14 NHTSA agreed that raising the penalty rate for model years already fully complete would be inappropriate, given how courts generally disfavor the retroactive application of statutes. NHTSA also agreed that raising the rate for model years for which product changes were infeasible due to lack of lead time, did not seem consistent with Congress’ intent that the CAFE program be responsive to consumer demand. NHTSA therefore stated that it would not apply the inflation-adjusted penalty rate of $14 until model year 2019, as that seemed to be the first year in which product changes could be made in response to the higher penalty rate. NHTSA further stated that its December final rule responded to the CBD petition for rulemaking. The December 28, 2016 final rule is not yet effective, and, in a separate document published in this Federal Register, NHTSA is delaying the effective date of the rule pending reconsideration to allow for public comment on this issue.15 12 81 FR 43524 (July 5, 2016). This interim final rule also updated the maximum civil penalty amounts for violations of all statutes and regulations administered by NHTSA, and was not limited solely to penalties administered for CAFE violations. 13 Jaguar Land Rover North America, LLC also filed a petition for reconsideration in response to the July 5, 2016 interim final rule raising the same concerns as those raised in the Industry Petition. Both petitions can be found in docket listed on this document accessible via www.regulations.gov. 14 81 FR 95489 (Dec. 28, 2016). 15 82 FR 8694 (Jan. 30, 2017); 82 FR 15302 (Mar. 28, 2017); 82 FR 29009 (June 27, 2017). E:\FR\FM\12JYR1.SGM 12JYR1 nlaroche on DSK30NT082PROD with RULES 32142 Federal Register / Vol. 82, No. 132 / Wednesday, July 12, 2017 / Rules and Regulations II. NHTSA’s Reconsideration of Final Rule and Request for Comment on How To Adjust CAFE Civil Penalties CAFE penalties are straightforward to administer, but determining the appropriate amount of inflation adjustment is more complicated than originally understood. As CAFE standard stringency continues to increase, the nation’s increased abundance of fuel resources has reduced fuel prices and is causing consumers to make purchasing decisions based on factors other than fuel economy, the potential effects of higher penalties for shortfalls may be more widely felt. In fact, NHTSA’s data indicates that many automakers are projected to fall behind the standards for model years 2016 and 2017. Moreover, as explained earlier, once NHTSA settles on an amount for CAFE penalties, that becomes the amount applicable to all shortfalls, and NHTSA has no leeway to compromise or remit penalties for manufacturers who feel that their compliance circumstances are dire, unless they are actually facing bankruptcy. The consequences of this decision, therefore, are considerable and fairly permanent. NHTSA is therefore sua sponte reconsidering the December 28, 2016 final rule. The Inflation Adjustment Act provides an exception to give federal agencies the ability to adjust the ‘‘catchup’’ amount of a civil monetary penalty by less than the required amount. In order to make such an adjustment, the head of the agency must determine through notice and comment rulemaking that either (1) increasing the penalty by the otherwise required amount will have a ‘‘negative economic impact,’’ or (2) the social costs of increasing the penalty by the otherwise required amount outweigh the benefits. The Director of the Office of Management and Budget must agree with either conclusion by an agency before an agency can act upon such a conclusion.16 The term ‘‘negative economic impact’’ is not defined in the Inflation Adjustment Act, though OMB’s guidance noted that it expected a concurrence that a penalty increase would have a ‘‘negative economic impact’’ to be ‘‘rare.’’ 17 Additionally, the OMB guidance directed agencies to calculate the initial ‘‘catch-up adjustment’’ based on either the year the penalty was originally established by Congress, or last adjusted (by Congress or by the agency), whichever is later.18 If NHTSA 16 See Section 701(c), Public Law 114–74. Guidance, at 3. 17 OMB 18 Id. VerDate Sep<11>2014 14:05 Jul 11, 2017 Jkt 241001 determined that it was appropriate to use a different base year than the 1975 base year used to calculate the adjustment in the interim final rule, that decision could have a significant impact on the future CAFE penalties level. After further consideration of these issues, and because the July 5, 2016 interim final rule did not provide an opportunity for interested parties to provide input fully, NHTSA has determined that it should seek public comment on whether and how NHTSA should consider the issues raised above in seeking to implement the Inflation Adjustment Act as it pertains to CAFE penalties. Both exceptions to the Inflation Adjustment Act require the agency to assess the economic effects of increasing the penalty amount. Relevant, therefore, to both exceptions is information concerning the costs and benefits of increased penalties. In general, the agency expects that increasing the level of the CAFE penalty rate will lead to both increased penalties being paid and increased compliance with CAFE standards, which would result in greater fuel savings and other benefits. We request comment on any information related to these costs and benefits, including: • What would be the aggregate increased cost of applying a higher fine rate? To what extent would this be based on increased fines versus increase compliance? • What would be the effect on penalty payments of applying a higher fine rate? • What would be the effect on the average price of passenger cars and light trucks sold in the U.S? • How much additional fuel would be saved by raising the CAFE penalty rate any amount between $5.50 per tenth of a mile per gallon and $14 per tenth of a mile per gallon, and based on current projections of fuel prices, what would be the monetized benefit to consumers, if any, as compared to additional costs to consumers associated with higher penalties? • What would be the environmental impacts of this fuel savings? • Are there any other costs or benefits the agency should consider? • Do commenters have data suggesting whether societal costs outweigh societal benefits? In acting under the ‘‘negative economic impact’’ exception, two slightly different overarching questions also present themselves: First, whether the ‘‘impact’’ resulting from raising the CAFE penalty rate leads to a ‘‘negative economic impact,’’ and second, whether and how the EPCA requirements in 49 U.S.C. 32912 for what NHTSA must PO 00000 Frm 00020 Fmt 4700 Sfmt 4700 consider in raising CAFE penalty rates under that section interact with NHTSA’s obligations under the Inflation Adjustment Act. NHTSA therefore seeks comment on the following: • If NHTSA were to consider potential ‘‘negative economic impacts’’ associated with raising the CAFE penalty rate, what impacts, specifically, should NHTSA evaluate, why are those impacts relevant and not others, and what magnitude of impacts should be regarded as constituting ‘‘negative economic impacts’’? • Do commenters have information that could be useful to NHTSA in evaluating ‘‘negative economic impacts’’ that they would be willing to provide? • ‘‘Negative economic impact’’ also potentially requires the agency to consider impacts that are similar to those considered in cost-benefit analysis. For example: Æ If there are increased prices due to increased penalties, what effect may that have on sales, including transfer of sales from new vehicles to used vehicles? Æ If any impact on sales exists, would there be any adverse safety, fuel economy, or environmental impacts if consumers remain in older vehicles, which are less likely to have advanced safety and environmental features, or may be less fuel efficient than new model year vehicles? Would rising prices have a disproportionate impact on rural and disadvantaged communities, including with respect to safety, fuel economy, and environmental benefits? Æ If prices are affected by raising the penalties, would this restrict consumer choice? Æ If the prices of new model year vehicles rise as a result of higher CAFE penalties, would there be an impact on the price of older model year vehicles, and what economic impact might there be as a result?; Æ If increased penalties increase the costs of vehicles, would that lead to any secondary economic impacts on the nation, on a state or group of states, or on a region within a state or group of states, if as a result consumers spend less money on other desired goods and services?; Æ If penalties rise, could that create disincentives for automakers to build certain types of vehicles with lower fuel economy, such as vehicles specially designed to accommodate Americans with disabilities? And if, as a result of higher CAFE penalties, the prices of such vehicles rise or the availability of such vehicles falls, what might be the impact on consumers of such vehicles? E:\FR\FM\12JYR1.SGM 12JYR1 nlaroche on DSK30NT082PROD with RULES Federal Register / Vol. 82, No. 132 / Wednesday, July 12, 2017 / Rules and Regulations • Do commenters believe that the EPCA considerations for raising CAFE penalty rates under 49 U.S.C. 32912 are relevant to the catch-up adjustment required by the Inflation Adjustment Act? Why or why not? • Do commenters believe that the EPCA considerations for ‘‘substantial deleterious impact’’ are relevant to a determination of ‘‘negative economic impact’’? If so, do commenters believe that those considerations must be accounted for in determining negative economic impact, or simply that they are informational, and what is the legal basis for that belief? • If the EPCA considerations are relevant, how should they be applied in this instance? • Do commenters have data suggesting what levels of ‘‘substantial energy conservation,’’ as envisioned by EPCA, would outweigh any ‘‘substantial deleterious impact’’ of raising penalties? Why or why not? • Assuming the factors under 32912 are relevant, can commenters provide specific, documented information (including references to the sources relied on) with regard to the following: Æ Would there be any potential effects on employment nationally, on specific states or groups of states, or within regions of a state or groups of states, which could result from raising the CAFE penalty rate any amount between $5.50 per tenth of a mile per gallon and $14 per tenth of a mile per gallon? Æ Would rising penalties affect employment on specific sectors of the economy? Æ Are there any potential effects on competition within the automotive sector and the market shares of individual automakers that could result from raising the CAFE penalty rate any amount between $5.50 per tenth of a mile per gallon and $14 per tenth of a mile per gallon? Æ Are there any potential effects on automobile imports that could result from raising the CAFE penalty rate any amount between $5.50 per tenth of a mile per gallon and $14 per tenth of a mile per gallon? Finally, regarding whether NHTSA used the appropriate base year to calculate the adjustment in the interim final rule, should NHTSA instead use the passage of EISA in 2007 as the ‘‘base year’’ for calculating the catch-up adjustment? Do commenters believe that Congress, as a whole, ‘‘adjusted’’ or re‘‘established’’ the CAFE penalty amount in EISA within the meaning of the Inflation Adjustment Act when Congress amended the penalty provision? What is the basis for VerDate Sep<11>2014 14:05 Jul 11, 2017 Jkt 241001 32143 commenters’ belief? That is, could it be argued that Congress, as a whole, explicitly considered and rejected a change to the specific civil penalty dollar amount in the statute ($5.00) and instead ratified the penalty while at the same time amending the penalty provision to authorize the use of civil penalty revenue to support NHTSA’s CAFE rulemaking and to support research and development of the advanced technology vehicles? 19 Under such an interpretation, Congress may have re-‘‘established’’ the CAFE penalty in 2007, meaning that it could be used as the base year to apply the inflation adjustment multiplier. If so, what would the economic consequences of such a change in base year be? In the event that NHTSA decides that it should adopt a CAFE civil penalty level other than $14, how much lead time (in model years) should NHTSA provide to manufacturers to allow them to adjust their production to the new penalty level? What is the factual and legal basis to support such lead time if NHTSA determines to adopt a different penalty level? NHTSA expects that its inflationary adjustment will provide lead time in advance of assessing a new CAFE penalty level.20 As NHTSA explained in the December 28, 2016 Federal Register document, absent lead time, increasing the civil penalties for falling short of CAFE standards would not lead to an increase in fuel economy. Most manufacturers could not alter their compliance plans in response to the increase in civil penalties for several model years, and therefore raising the penalty rate without lead time would seem to impose retroactive punishment without generating any additional fuel savings. Neither of these outcomes seems consistent with Congress’ intent either in EPCA or in the Inflation Adjustment Act. III. CAFE Penalty During Reconsideration To ensure that your comments are correctly filed in the Docket, please include the Docket Number NHTSA– 2017–0073 in your comments. Your comments must not be more than 15 pages long.21 NHTSA established this limit to encourage you to write your primary comments in a concise fashion. However, you may attach necessary additional documents to your comments, and there is no limit on the length of the attachments. If you are submitting comments electronically as a PDF (Adobe) file, NHTSA asks that the documents be submitted using the Optical Character Recognition (OCR) process, thus allowing NHTSA to search and copy certain portions of your submissions.22 Please note that pursuant to the Data Quality Act, in order for substantive data to be relied on and used by NHTSA, it must meet the information quality standards set forth in the OMB and DOT Data Quality Act guidelines. Accordingly, NHTSA encourages you to consult the guidelines in preparing your comments. DOT’s guidelines may be accessed at https://www.transportation.gov/ regulations/dot-informationdissemination-quality-guidelines. Since NHTSA is reconsidering its December 28, 2016 final rule, including whether $14 per tenth of a mile per gallon is the appropriate inflationaryadjusted penalty level, NHTSA is delaying the effective date of the final rule pending reconsideration in a separate document also published in this Federal Register. During reconsideration, the applicable civil penalty rate is $5.50 per tenth of a mile per gallon, which was the civil penalty rate prior to NHTSA’s inflationary adjustment. Since $5.50 is also the penalty rate that applies under the December 28, 2016 final rule until Model Year 2019, NHTSA expects that delaying the final rule pending reconsideration will not affect the actual payment of CAFE penalties that would have otherwise applied prior to Model Year 2019. 19 In a September 16, 2016 letter to NHTSA supplementing their August 1, 2016 petition for reconsideration of the July 5, 2016 interim final rule adjusting the CAFE penalties, the petitioners argued that Congress had considered increasing the CAFE penalty and instead ultimately ratified the existing one. As support for this argument, the petitioners cited a subcommittee discussion draft of June 1, 2007, published in the record of a hearing before the Subcommittee on Energy and Air Quality of the House Committee on Energy and Commerce entitled ‘‘Legislative Hearing on Discussion Draft Concerning Alternative Fuels, Infrastructure and Vehicles,’’ June 7, 2007, Serial Number 110–53, available at https://www.gpo.gov/fdsys/pkg/CHRG110hhrg42440/pdf/CHRG-110hhrg42440.pdf. PO 00000 Frm 00021 Fmt 4700 Sfmt 4700 IV. Public Participation NHTSA requests comment on all aspects of this document. This section describes how you can participate in this process. How do I prepare and submit comments? 20 The appropriate lead time is one of the issues on which NHTSA is seeking public comment. 21 See 49 CFR 553.21. 22 Optical character recognition (OCR) is the process of converting an image of text, such as a scanned paper document or electronic fax file, into computer-editable text. E:\FR\FM\12JYR1.SGM 12JYR1 32144 Federal Register / Vol. 82, No. 132 / Wednesday, July 12, 2017 / Rules and Regulations Tips for Preparing Your Comments When submitting comments, please remember to: • Identify the rulemaking by docket number and other identifying information (subject heading, Federal Register date and page number). • Explain why you agree or disagree, suggest alternatives, and substitute language for your requested changes. • Describe any assumptions and provide any technical information and/ or data that you used. • If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced. • Provide specific examples to illustrate your concerns, and suggest alternatives. • Explain your views as clearly as possible, avoiding the use of profanity or personal threats. • Make sure to submit your comments by the comment period deadline identified in the DATES section above. How can I be sure that my comments were received? If you submit your comments by mail and wish Docket Management to notify you upon its receipt of your comments, enclose a self-addressed, stamped postcard in the envelope containing your comments. Upon receiving your comments, Docket Management will return the postcard by mail. nlaroche on DSK30NT082PROD with RULES 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. When you send a comment containing confidential business information, you should include a cover letter setting forth the information specified in NHTSA’s confidential business information regulation.23 In addition, you should submit a copy from which you have deleted the claimed confidential business information to the Docket by one of the methods set forth above. Will NHTSA consider late comments? NHTSA will consider all comments received before midnight Eastern Standard Time on the comment closing date indicated above under DATES. To the extent practicable, NHTSA will also 23 49 CFR part 512. VerDate Sep<11>2014 14:05 Jul 11, 2017 Jkt 241001 consider comments received after that date. If a comment is received too late for us to practicably consider as part of this action, NHTSA will consider that comment as an informal suggestion for a future rulemaking action. How can I read the comments submitted by other people? You may read the materials placed in the docket for this document (e.g., the comments submitted in response to this document by other interested persons) at any time by going to https:// www.regulations.gov and following the online instructions for accessing the dockets. You may also read the materials at the DOT Docket Management Facility by going to the street address given above under ADDRESSES. V. Regulatory Notices and Analyses A. Executive Order 12866, Executive Order 13563, and DOT Regulatory Policies and Procedures NHTSA has considered the impact of this rulemaking action under Executive Order 12866, Executive Order 13563, and the Department of Transportation’s regulatory policies and procedures. This rulemaking document was not reviewed under Executive Order 12866 or Executive Order 13563. This action is limited to seeking comment on an adjustment of a civil penalty under a statute that NHTSA enforces, and has been determined not to be ‘‘significant’’ under the Department of Transportation’s regulatory policies and procedures and the policies of the Office of Management and Budget. Because this rulemaking seeks comment on the penalty amounts enacted under the IFR and does not change the number of entities that are subject to civil penalties, the impacts are anticipated to be non-significant. B. Regulatory Flexibility Act NHTSA has also considered the impacts of this rule under the Regulatory Flexibility Act. I certify that this rule will not have a significant impact on a substantial number of small entities. The following provides the factual basis for this certification under 5 U.S.C. 605(b). The amendments only affect manufacturers of motor vehicles. Low-volume manufacturers can petition NHTSA for an alternate CAFE standard under 49 CFR part 525, which lessens the impacts of this rulemaking on small businesses by allowing them to avoid liability for potential penalties under 49 CFR 578.6(h)(2). Small organizations and governmental jurisdictions will not be significantly affected as the price of PO 00000 Frm 00022 Fmt 4700 Sfmt 4700 motor vehicles and equipment ought not change as the result of this rule. C. Executive Order 13132 (Federalism) Executive Order 13132 requires NHTSA to develop an accountable process to ensure ‘‘meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.’’ ‘‘Policies that have federalism implications’’ is defined in the Executive Order to include regulations that have ‘‘substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.’’ Under Executive Order 13132, the agency may not issue a regulation with Federalism implications, that imposes substantial direct compliance costs, and that is not required by statute, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by State and local governments, or the agency consults with State and local governments early in the process of developing the proposed regulation. This rule will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. The reason is that this rule applies to motor vehicle manufacturers. Thus, the requirements of Section 6 of the Executive Order do not apply. D. Unfunded Mandates Reform Act of 1995 (UMRA) The Unfunded Mandates Reform Act of 1995, Public Law 104–4, requires agencies to prepare a written assessment of the cost, benefits, and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of more than $100 million annually. Because NHTSA does not believe that this rule will necessarily have a $100 million effect, no Unfunded Mandates assessment will be prepared. E. Executive Order 12778 (Civil Justice Reform) This rule does not have a retroactive or preemptive effect. Judicial review of this rule may be obtained pursuant to 5 U.S.C. 702. That section does not require that a petition for E:\FR\FM\12JYR1.SGM 12JYR1 Federal Register / Vol. 82, No. 132 / Wednesday, July 12, 2017 / Rules and Regulations reconsideration be filed prior to seeking judicial review. F. Paperwork Reduction Act In accordance with the Paperwork Reduction Act of 1980, NHTSA states that there are no requirements for information collection associated with this rulemaking action. G. Privacy Act Please note that anyone is able to search the electronic form of all comments received into any of DOT’s dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT’s complete Privacy Act statement in the Federal Register published on April 11, 2000 (65 FR 19477–78) or you may visit https://www.transportation.gov/privacy. Jack Danielson, Acting Deputy Administrator. [FR Doc. 2017–14525 Filed 7–7–17; 11:15 am] BILLING CODE 4910–59–P DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 648 [Docket Number 170314267–7566–02] RIN 0648–BG48 Fisheries of the Northeastern United States; Monkfish; Framework Adjustment 10 National Marine Fisheries Service (NMFS), National Oceanic and AGENCY: Atmospheric Administration (NOAA), Commerce. ACTION: Final rule. This action approves and implements regulations submitted by the New England and Mid-Atlantic Fishery Management Councils in Framework Adjustment 10 to the Monkfish Fishery Management Plan. This action sets monkfish specifications for fishing years 2017–2019 (May 1, 2017 through April 30, 2020). It also increases current days-at-sea allocations and trip limits. This action is intended to allow the fishery to more effectively harvest its optimum yield. DATES: This rule is effective July 12, 2017. ADDRESSES: Copies of Framework Adjustment 10 and the accompanying environmental assessment (EA) are available on request from: John K. Bullard, Regional Administrator, National Marine Fisheries Service, 55 Great Republic Drive, Gloucester, MA 01930. Framework 10 and the EA are also accessible via the Internet at: https:// www.greateratlantic.fisheries.noaa.gov/ sustainable/species/monkfish/ index.html. These documents are also accessible via the Federal eRulemaking Portal: https://www.regulations.gov. FOR FURTHER INFORMATION CONTACT: William Whitmore, Fishery Policy Analyst, (978) 281–9182. SUPPLEMENTARY INFORMATION: SUMMARY: Background The New England and the MidAtlantic Fishery Management Councils jointly manage the Monkfish Fishery Management Plan (FMP). The fishery 32145 extends from Maine to North Carolina from the coast out to the end of the continental shelf. The Councils manage the fishery as two management units, with the Northern Fishery Management Area (NFMA) covering the Gulf of Maine (GOM) and northern part of Georges Bank, and the Southern Fishery Management Area (SFMA) extending from the southern flank of Georges Bank through Southern New England and into the Mid-Atlantic Bight to North Carolina. The monkfish fishery is primarily managed by landing limits and a yearly allocation of monkfish days-at-sea (DAS) calculated to enable vessels participating in the fishery to catch, but not exceed, the target total allowable landings (TAL) for each management area. The catch limits are calculated to maximize yield in the fishery over the long term. Based on a yearly evaluation of the monkfish fishery, the Councils may revise existing management measures through the framework provisions of the FMP to better achieve the goals and objectives of the FMP and achieve optimum yield, as required by the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act). The monkfish fishery has not fully harvested its quota since 2011. The fishery underharvested its available quota in the last three years (Table 1). The Councils developed Framework 10 to enhance the operational efficiency of existing management measures in an effort to better achieve optimum yield. TABLE 1—MONKFISH LANDINGS COMPARISON FOR FISHING YEARS 2013–2015 Target TAL (mt) for fishing years 2013–2015 Management area 2013 Landings (mt) 2014 Landings (mt) 2015 Landings (mt) Average percent (%) of TAL landed 2013–2015 5,854 8,925 3,596 5,088 3,403 5,415 4,080 4,733 63 57 NFMA ................................................................................... SFMA ................................................................................... nlaroche on DSK30NT082PROD with RULES Approved Measures 1. Establish Specifications for Fishing Years 2017–2019 This action retains the biological reference points previously established in Framework 8 (79 FR 41919; July 8, 2014). The overfishing limit (OFL) for fishing years 2017–2019 (May 1, 2017 through April 30, 2020) is 17,805 mt for VerDate Sep<11>2014 14:05 Jul 11, 2017 Jkt 241001 the NFMA and 23,204 mt for the SFMA. The acceptable biological catch (ABC) for each area, which equals the annual catch limit (ACL), is 7,592 mt for the NFMA and 12,316 mt for the SFMA. Additional background information on these specifications is available in the proposed rule (82 FR 21498; May 9, 2017), and is not repeated here. PO 00000 Frm 00023 Fmt 4700 Sfmt 4700 Although the biological reference points are unchanged, this action increases monkfish total allowable landings (TAL), or quotas, for the next three fishing years (Table 2). The TALs are derived after reducing an assumed amount of discards and a management uncertainty buffer from the ABC. E:\FR\FM\12JYR1.SGM 12JYR1

Agencies

[Federal Register Volume 82, Number 132 (Wednesday, July 12, 2017)]
[Rules and Regulations]
[Pages 32140-32145]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-14525]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 578

[Docket No. NHTSA-2017-0059]


Civil Penalties

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

ACTION: Reconsideration of final rule; request for comments.

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SUMMARY: NHTSA seeks comment on whether and how to amend the civil 
penalty rate for violations of Corporate Average Fuel Economy (CAFE) 
standards. NHTSA initially raised the civil penalty rate for CAFE 
standard violations for inflation in 2016, but upon further 
consideration, NHTSA believes that obtaining additional public input on 
how to proceed with CAFE civil penalties in the future will be helpful. 
Therefore, NHTSA is issuing this document to seek public comment as it 
sua sponte reconsiders its final rule regarding the appropriate 
inflationary adjustment for CAFE civil penalties.

DATES: Comments: Comments must be received by October 10, 2017. See the 
SUPPLEMENTARY INFORMATION section below for more information on 
submitting comments.

ADDRESSES: You may submit comments to the docket number identified in 
the heading of this document by any of the following methods:
     Federal eRulemaking Portal: Go to https://www.regulations.gov. Follow the online instructions for submitting 
comments.
     Mail: Docket Management Facility, M-30, U.S. Department of 
Transportation, West Building, Ground Floor, Room W12-140, 1200 New 
Jersey Avenue SE., Washington, DC 20590.
     Hand Delivery or Courier: U.S. Department of 
Transportation, West Building, Ground Floor, Room W12-140, 1200 New 
Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m. Eastern 
time, Monday through Friday, except Federal holidays.
     Fax: 202-493-2251.
    Regardless of how you submit your comments, you must include the 
docket number identified in the heading of this document. Note that all 
comments received, including any personal information provided, will be 
posted without change to https://www.regulations.gov. Please see the 
``Privacy Act'' heading below.
    You may call the Docket Management Facility at 202-366-9324.
    Docket: For access to the docket to read background documents or 
comments received, go to https://www.regulations.gov or the street 
address listed above. NHTSA will continue to file relevant information 
in the Docket as it becomes available.
    Privacy Act: In accordance with 5 U.S.C. 553(c), DOT solicits 
comments from the public to better inform its rulemaking process. DOT 
posts these comments, without edit, including any personal information 
the commenter provides, to https://www.regulations.gov, as described in 
the system of records notice (DOT/ALL-14 FDMS), which can be reviewed 
at https://www.transportation.gov/privacy. Anyone is able to search the 
electronic form of all comments received into any of DOT's dockets by 
the name of the individual submitting the comment (or signing the 
comment, if submitted on behalf of an association, business, labor 
union, etc.).

FOR FURTHER INFORMATION CONTACT: Thomas Healy, Office of the Chief 
Counsel, NHTSA, telephone (202) 366-2992, facsimile (202) 366-3820, 
1200 New Jersey Avenue SE., Washington, DC 20590.

SUPPLEMENTARY INFORMATION:

I. Statutory and Regulatory Background

    NHTSA sets \1\ and enforces \2\ CAFE standards for the United 
States, and in doing so, assesses civil penalties against vehicle 
manufacturers who fall short of their compliance obligations and are 
unable to make up the shortfall with credits.\3\ The amount of the 
civil penalty was originally set by statute in 1975, and for most of 
the duration of the CAFE program, has been $5.50 per each tenth of a 
mile per gallon that a manufacturer's fleet average CAFE level falls 
short of its compliance obligation, multiplied by the number of 
vehicles in the fleet \4\ that has the shortfall. The basic equation 
for calculating a manufacturer's civil penalty amount is as follows:
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    \1\ 49 U.S.C. 32902.
    \2\ 49 U.S.C. 32911, 32912.
    \3\ Credits may be either earned (for over-compliance by a given 
manufacturer's fleet, in a given model year) or purchased (in which 
case, another manufacturer earned the credits by over-complying and 
chose to sell that surplus). 49 U.S.C. 32903; 49 CFR part 538.
    \4\ A manufacturer may have up to three fleets of vehicles, for 
CAFE compliance purposes, in any given model year--a domestic 
passenger car fleet, an imported passenger car fleet, and a light 
truck fleet. Each fleet belonging to each manufacturer has its own 
compliance obligation, with the potential for either over-compliance 
or under-compliance. There is no overarching CAFE requirement for a 
manufacturer's total production.


[[Page 32141]]


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(penalty rate, in $) x (amount of shortfall, in tenths of an mpg) x (# 
of vehicles in manufacturer's non-compliant fleet) = $ due as penalty 
for non-compliant fleet.

To date, automakers have paid more than $890 million in penalties 
relating to the CAFE standards.\5\ Additionally, since the introduction 
of credit trading and transfers in MY 2011, some manufacturers have 
turned to acquiring credits from competitors rather than paying civil 
penalties for non-compliance, and it is likely that this involves 
significant expenditures. In light of the fact that CAFE standards are 
set to rise at a significant rate over the next several years, and 
since NHTSA's Projected Fuel Economy Performance Report \6\ indicates 
that many manufacturers are falling behind the standards for model year 
2016 and increasingly so for model year 2017, it is likely that many 
manufacturers will face the possibility of paying larger CAFE penalties 
over the next several years than at present.
---------------------------------------------------------------------------

    \5\ The highest CAFE penalty paid to date for a shortfall in a 
single fleet was $30,257,920, paid by DaimlerChrysler for its 
imported passenger car fleet in MY 2006. Since MY 2012, only Jaguar 
Land Rover and Volvo have paid civil penalties. See https://one.nhtsa.gov/cafe_pic/CAFE_PIC_Fines_LIVE.html.
    \6\ Available at https://one.nhtsa.gov/CAFE_PIC/MY%202016%20and%202017%20Projected%20Fuel%20Economy%20Performance%20Report%20Final.pdf.
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    NHTSA has long had authority under the Energy Policy and 
Conservation Act (EPCA) of 1975, Public Law 94-163, section 508, 89 
Stat. 912 (1975), to raise the amount of the penalty for CAFE 
shortfalls if it can make certain findings,\7\ as well as the authority 
to compromise and remit such penalties under certain circumstances.\8\ 
If NHTSA were to raise penalties for CAFE shortfalls, the higher amount 
would apply to any manufacturer who owed them; the authority to 
compromise and remit penalties, however, is limited and on a case-by-
case basis.
---------------------------------------------------------------------------

    \7\ 49 U.S.C. 32912.
    \8\ 49 U.S.C. 32913.
---------------------------------------------------------------------------

    For both raising penalties and compromising them under EPCA, 
NHTSA's burden is considerable. If NHTSA seeks to raise CAFE penalties 
under EPCA, NHTSA may only do so if it concludes through rulemaking 
that the increase in the penalty both (1) will result in, or 
substantially further, substantial energy conservation for automobiles 
in model years in which the increased penalty may be imposed, and (2) 
will not have a substantial deleterious impact on the economy of the 
United States, a State, or a region of the State. A finding of ``no 
substantial deleterious impact'' may only be made if NHTSA determines 
that it is likely that the increase in the penalty (A) will not cause a 
significant increase in unemployment in a State or a region of a State, 
(B) adversely affect competition, or (C) cause a significant increase 
in automobile imports. Nowhere does EPCA define ``substantial'' or 
``significant'' in the context of this provision. The rulemaking 
process to raise penalties includes specifically soliciting comments 
from the Federal Trade Commission, among others, and requires a public 
hearing following a comment period of at least 45 days. NHTSA has never 
adjusted the CAFE civil penalty using this EPCA provision.
    If NHTSA seeks to compromise or remit penalties for a given 
manufacturer, a rulemaking is not necessary, but the amount of a 
penalty may be compromised or remitted only to the extent (1) necessary 
to prevent a manufacturer's insolvency or bankruptcy, (2) the 
manufacturer shows that the violation was caused by an act of God, a 
strike, or a fire, or (3) the Federal Trade Commission certifies that a 
reduction in the penalty is necessary to prevent a substantial 
lessening of competition. As with raising penalties, NHTSA has never 
previously attempted to undertake this process.
    The Center for Biological Diversity petitioned NHTSA on October 1, 
2015, to conduct rulemaking to raise the amount of the penalty to $10, 
the maximum possible under EPCA at that time.\9\ A month later, while 
NHTSA was considering that petition, Congress enacted the Federal Civil 
Penalties Inflation Adjustment Act Improvements Act of 2015 (Inflation 
Adjustment Act),\10\ which applied to all civil penalties administered 
by federal agencies, as discussed in the prior Federal Register 
documents cited above. OMB guidance directed NHTSA and other federal 
agencies to follow a specific formula to adjust its civil penalties, 
pursuant to the Act's requirements, including the penalty for CAFE 
shortfalls, pursuant to the Inflation Adjustment Act.\11\
---------------------------------------------------------------------------

    \9\ A copy of this petition is available in the rulemaking 
docket.
    \10\ Public Law 114-74, Sec. 701.
    \11\ This OMB guidance is available at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/memoranda/2016/m-16-06.pdf (last accessed May 22, 2017).
---------------------------------------------------------------------------

    On July 5, 2016, NHTSA published an interim final rule, adopting 
inflation adjustments for penalties under its administration, following 
the formula in the Act. One of these adjustments included raising the 
penalty rate for CAFE non-compliance from $5.50 to $14.\12\ NHTSA also 
indicated in that document that the new maximum penalty rate that the 
Secretary is permitted to establish for such violations is $25.
---------------------------------------------------------------------------

    \12\ 81 FR 43524 (July 5, 2016). This interim final rule also 
updated the maximum civil penalty amounts for violations of all 
statutes and regulations administered by NHTSA, and was not limited 
solely to penalties administered for CAFE violations.
---------------------------------------------------------------------------

    In response to the changes to the CAFE provisions promulgated in 
the interim final rule, the Auto Alliance and Global Automakers jointly 
petitioned NHTSA for reconsideration (the Industry Petition).\13\ The 
Industry Petition raised concerns with retroactivity (applying the 
penalty increase associated with model years that have already been 
completed or for which a company's compliance plan had already been 
``set''); which ``base year'' NHTSA should use for calculating the 
adjusted penalty rate; and whether an immediate increase in the penalty 
rate to $14 would cause a ``negative economic impact.''
---------------------------------------------------------------------------

    \13\ Jaguar Land Rover North America, LLC also filed a petition 
for reconsideration in response to the July 5, 2016 interim final 
rule raising the same concerns as those raised in the Industry 
Petition. Both petitions can be found in docket listed on this 
document accessible via www.regulations.gov.
---------------------------------------------------------------------------

    In response to the Industry Petition, NHTSA issued a final rule 
published on December 28, 2016.\14\ NHTSA agreed that raising the 
penalty rate for model years already fully complete would be 
inappropriate, given how courts generally disfavor the retroactive 
application of statutes. NHTSA also agreed that raising the rate for 
model years for which product changes were infeasible due to lack of 
lead time, did not seem consistent with Congress' intent that the CAFE 
program be responsive to consumer demand. NHTSA therefore stated that 
it would not apply the inflation-adjusted penalty rate of $14 until 
model year 2019, as that seemed to be the first year in which product 
changes could be made in response to the higher penalty rate. NHTSA 
further stated that its December final rule responded to the CBD 
petition for rulemaking. The December 28, 2016 final rule is not yet 
effective, and, in a separate document published in this Federal 
Register, NHTSA is delaying the effective date of the rule pending 
reconsideration to allow for public comment on this issue.\15\
---------------------------------------------------------------------------

    \14\ 81 FR 95489 (Dec. 28, 2016).
    \15\ 82 FR 8694 (Jan. 30, 2017); 82 FR 15302 (Mar. 28, 2017); 82 
FR 29009 (June 27, 2017).

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[[Page 32142]]

II. NHTSA's Reconsideration of Final Rule and Request for Comment on 
How To Adjust CAFE Civil Penalties

    CAFE penalties are straightforward to administer, but determining 
the appropriate amount of inflation adjustment is more complicated than 
originally understood. As CAFE standard stringency continues to 
increase, the nation's increased abundance of fuel resources has 
reduced fuel prices and is causing consumers to make purchasing 
decisions based on factors other than fuel economy, the potential 
effects of higher penalties for shortfalls may be more widely felt. In 
fact, NHTSA's data indicates that many automakers are projected to fall 
behind the standards for model years 2016 and 2017. Moreover, as 
explained earlier, once NHTSA settles on an amount for CAFE penalties, 
that becomes the amount applicable to all shortfalls, and NHTSA has no 
leeway to compromise or remit penalties for manufacturers who feel that 
their compliance circumstances are dire, unless they are actually 
facing bankruptcy. The consequences of this decision, therefore, are 
considerable and fairly permanent. NHTSA is therefore sua sponte 
reconsidering the December 28, 2016 final rule.
    The Inflation Adjustment Act provides an exception to give federal 
agencies the ability to adjust the ``catch-up'' amount of a civil 
monetary penalty by less than the required amount. In order to make 
such an adjustment, the head of the agency must determine through 
notice and comment rulemaking that either (1) increasing the penalty by 
the otherwise required amount will have a ``negative economic impact,'' 
or (2) the social costs of increasing the penalty by the otherwise 
required amount outweigh the benefits. The Director of the Office of 
Management and Budget must agree with either conclusion by an agency 
before an agency can act upon such a conclusion.\16\ The term 
``negative economic impact'' is not defined in the Inflation Adjustment 
Act, though OMB's guidance noted that it expected a concurrence that a 
penalty increase would have a ``negative economic impact'' to be 
``rare.'' \17\
---------------------------------------------------------------------------

    \16\ See Section 701(c), Public Law 114-74.
    \17\ OMB Guidance, at 3.
---------------------------------------------------------------------------

    Additionally, the OMB guidance directed agencies to calculate the 
initial ``catch-up adjustment'' based on either the year the penalty 
was originally established by Congress, or last adjusted (by Congress 
or by the agency), whichever is later.\18\ If NHTSA determined that it 
was appropriate to use a different base year than the 1975 base year 
used to calculate the adjustment in the interim final rule, that 
decision could have a significant impact on the future CAFE penalties 
level.
---------------------------------------------------------------------------

    \18\ Id.
---------------------------------------------------------------------------

    After further consideration of these issues, and because the July 
5, 2016 interim final rule did not provide an opportunity for 
interested parties to provide input fully, NHTSA has determined that it 
should seek public comment on whether and how NHTSA should consider the 
issues raised above in seeking to implement the Inflation Adjustment 
Act as it pertains to CAFE penalties.
    Both exceptions to the Inflation Adjustment Act require the agency 
to assess the economic effects of increasing the penalty amount. 
Relevant, therefore, to both exceptions is information concerning the 
costs and benefits of increased penalties. In general, the agency 
expects that increasing the level of the CAFE penalty rate will lead to 
both increased penalties being paid and increased compliance with CAFE 
standards, which would result in greater fuel savings and other 
benefits. We request comment on any information related to these costs 
and benefits, including:
     What would be the aggregate increased cost of applying a 
higher fine rate? To what extent would this be based on increased fines 
versus increase compliance?
     What would be the effect on penalty payments of applying a 
higher fine rate?
     What would be the effect on the average price of passenger 
cars and light trucks sold in the U.S?
     How much additional fuel would be saved by raising the 
CAFE penalty rate any amount between $5.50 per tenth of a mile per 
gallon and $14 per tenth of a mile per gallon, and based on current 
projections of fuel prices, what would be the monetized benefit to 
consumers, if any, as compared to additional costs to consumers 
associated with higher penalties?
     What would be the environmental impacts of this fuel 
savings?
     Are there any other costs or benefits the agency should 
consider?
     Do commenters have data suggesting whether societal costs 
outweigh societal benefits?
    In acting under the ``negative economic impact'' exception, two 
slightly different overarching questions also present themselves: 
First, whether the ``impact'' resulting from raising the CAFE penalty 
rate leads to a ``negative economic impact,'' and second, whether and 
how the EPCA requirements in 49 U.S.C. 32912 for what NHTSA must 
consider in raising CAFE penalty rates under that section interact with 
NHTSA's obligations under the Inflation Adjustment Act. NHTSA therefore 
seeks comment on the following:
     If NHTSA were to consider potential ``negative economic 
impacts'' associated with raising the CAFE penalty rate, what impacts, 
specifically, should NHTSA evaluate, why are those impacts relevant and 
not others, and what magnitude of impacts should be regarded as 
constituting ``negative economic impacts''?
     Do commenters have information that could be useful to 
NHTSA in evaluating ``negative economic impacts'' that they would be 
willing to provide?
     ``Negative economic impact'' also potentially requires the 
agency to consider impacts that are similar to those considered in 
cost-benefit analysis. For example:
    [cir] If there are increased prices due to increased penalties, 
what effect may that have on sales, including transfer of sales from 
new vehicles to used vehicles?
    [cir] If any impact on sales exists, would there be any adverse 
safety, fuel economy, or environmental impacts if consumers remain in 
older vehicles, which are less likely to have advanced safety and 
environmental features, or may be less fuel efficient than new model 
year vehicles? Would rising prices have a disproportionate impact on 
rural and disadvantaged communities, including with respect to safety, 
fuel economy, and environmental benefits?
    [cir] If prices are affected by raising the penalties, would this 
restrict consumer choice?
    [cir] If the prices of new model year vehicles rise as a result of 
higher CAFE penalties, would there be an impact on the price of older 
model year vehicles, and what economic impact might there be as a 
result?;
    [cir] If increased penalties increase the costs of vehicles, would 
that lead to any secondary economic impacts on the nation, on a state 
or group of states, or on a region within a state or group of states, 
if as a result consumers spend less money on other desired goods and 
services?;
    [cir] If penalties rise, could that create disincentives for 
automakers to build certain types of vehicles with lower fuel economy, 
such as vehicles specially designed to accommodate Americans with 
disabilities? And if, as a result of higher CAFE penalties, the prices 
of such vehicles rise or the availability of such vehicles falls, what 
might be the impact on consumers of such vehicles?

[[Page 32143]]

     Do commenters believe that the EPCA considerations for 
raising CAFE penalty rates under 49 U.S.C. 32912 are relevant to the 
catch-up adjustment required by the Inflation Adjustment Act? Why or 
why not?
     Do commenters believe that the EPCA considerations for 
``substantial deleterious impact'' are relevant to a determination of 
``negative economic impact''? If so, do commenters believe that those 
considerations must be accounted for in determining negative economic 
impact, or simply that they are informational, and what is the legal 
basis for that belief?
     If the EPCA considerations are relevant, how should they 
be applied in this instance?
     Do commenters have data suggesting what levels of 
``substantial energy conservation,'' as envisioned by EPCA, would 
outweigh any ``substantial deleterious impact'' of raising penalties? 
Why or why not?
     Assuming the factors under 32912 are relevant, can 
commenters provide specific, documented information (including 
references to the sources relied on) with regard to the following:
    [cir] Would there be any potential effects on employment 
nationally, on specific states or groups of states, or within regions 
of a state or groups of states, which could result from raising the 
CAFE penalty rate any amount between $5.50 per tenth of a mile per 
gallon and $14 per tenth of a mile per gallon?
    [cir] Would rising penalties affect employment on specific sectors 
of the economy?
    [cir] Are there any potential effects on competition within the 
automotive sector and the market shares of individual automakers that 
could result from raising the CAFE penalty rate any amount between 
$5.50 per tenth of a mile per gallon and $14 per tenth of a mile per 
gallon?
    [cir] Are there any potential effects on automobile imports that 
could result from raising the CAFE penalty rate any amount between 
$5.50 per tenth of a mile per gallon and $14 per tenth of a mile per 
gallon?
    Finally, regarding whether NHTSA used the appropriate base year to 
calculate the adjustment in the interim final rule, should NHTSA 
instead use the passage of EISA in 2007 as the ``base year'' for 
calculating the catch-up adjustment? Do commenters believe that 
Congress, as a whole, ``adjusted'' or re-``established'' the CAFE 
penalty amount in EISA within the meaning of the Inflation Adjustment 
Act when Congress amended the penalty provision? What is the basis for 
commenters' belief? That is, could it be argued that Congress, as a 
whole, explicitly considered and rejected a change to the specific 
civil penalty dollar amount in the statute ($5.00) and instead ratified 
the penalty while at the same time amending the penalty provision to 
authorize the use of civil penalty revenue to support NHTSA's CAFE 
rulemaking and to support research and development of the advanced 
technology vehicles? \19\ Under such an interpretation, Congress may 
have re-``established'' the CAFE penalty in 2007, meaning that it could 
be used as the base year to apply the inflation adjustment multiplier. 
If so, what would the economic consequences of such a change in base 
year be?
---------------------------------------------------------------------------

    \19\ In a September 16, 2016 letter to NHTSA supplementing their 
August 1, 2016 petition for reconsideration of the July 5, 2016 
interim final rule adjusting the CAFE penalties, the petitioners 
argued that Congress had considered increasing the CAFE penalty and 
instead ultimately ratified the existing one. As support for this 
argument, the petitioners cited a subcommittee discussion draft of 
June 1, 2007, published in the record of a hearing before the 
Subcommittee on Energy and Air Quality of the House Committee on 
Energy and Commerce entitled ``Legislative Hearing on Discussion 
Draft Concerning Alternative Fuels, Infrastructure and Vehicles,'' 
June 7, 2007, Serial Number 110-53, available at https://www.gpo.gov/fdsys/pkg/CHRG-110hhrg42440/pdf/CHRG-110hhrg42440.pdf.
---------------------------------------------------------------------------

    In the event that NHTSA decides that it should adopt a CAFE civil 
penalty level other than $14, how much lead time (in model years) 
should NHTSA provide to manufacturers to allow them to adjust their 
production to the new penalty level? What is the factual and legal 
basis to support such lead time if NHTSA determines to adopt a 
different penalty level?

III. CAFE Penalty During Reconsideration

    Since NHTSA is reconsidering its December 28, 2016 final rule, 
including whether $14 per tenth of a mile per gallon is the appropriate 
inflationary-adjusted penalty level, NHTSA is delaying the effective 
date of the final rule pending reconsideration in a separate document 
also published in this Federal Register. During reconsideration, the 
applicable civil penalty rate is $5.50 per tenth of a mile per gallon, 
which was the civil penalty rate prior to NHTSA's inflationary 
adjustment. Since $5.50 is also the penalty rate that applies under the 
December 28, 2016 final rule until Model Year 2019, NHTSA expects that 
delaying the final rule pending reconsideration will not affect the 
actual payment of CAFE penalties that would have otherwise applied 
prior to Model Year 2019.
    NHTSA expects that its inflationary adjustment will provide lead 
time in advance of assessing a new CAFE penalty level.\20\ As NHTSA 
explained in the December 28, 2016 Federal Register document, absent 
lead time, increasing the civil penalties for falling short of CAFE 
standards would not lead to an increase in fuel economy. Most 
manufacturers could not alter their compliance plans in response to the 
increase in civil penalties for several model years, and therefore 
raising the penalty rate without lead time would seem to impose 
retroactive punishment without generating any additional fuel savings. 
Neither of these outcomes seems consistent with Congress' intent either 
in EPCA or in the Inflation Adjustment Act.
---------------------------------------------------------------------------

    \20\ The appropriate lead time is one of the issues on which 
NHTSA is seeking public comment.
---------------------------------------------------------------------------

IV. Public Participation

    NHTSA requests comment on all aspects of this document. This 
section describes how you can participate in this process.

How do I prepare and submit comments?

    To ensure that your comments are correctly filed in the Docket, 
please include the Docket Number NHTSA-2017-0073 in your comments. Your 
comments must not be more than 15 pages long.\21\ NHTSA established 
this limit to encourage you to write your primary comments in a concise 
fashion. However, you may attach necessary additional documents to your 
comments, and there is no limit on the length of the attachments. If 
you are submitting comments electronically as a PDF (Adobe) file, NHTSA 
asks that the documents be submitted using the Optical Character 
Recognition (OCR) process, thus allowing NHTSA to search and copy 
certain portions of your submissions.\22\ Please note that pursuant to 
the Data Quality Act, in order for substantive data to be relied on and 
used by NHTSA, it must meet the information quality standards set forth 
in the OMB and DOT Data Quality Act guidelines. Accordingly, NHTSA 
encourages you to consult the guidelines in preparing your comments. 
DOT's guidelines may be accessed at https://www.transportation.gov/regulations/dot-information-dissemination-quality-guidelines.
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    \21\ See 49 CFR 553.21.
    \22\ Optical character recognition (OCR) is the process of 
converting an image of text, such as a scanned paper document or 
electronic fax file, into computer-editable text.

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[[Page 32144]]

Tips for Preparing Your Comments

    When submitting comments, please remember to:
     Identify the rulemaking by docket number and other 
identifying information (subject heading, Federal Register date and 
page number).
     Explain why you agree or disagree, suggest alternatives, 
and substitute language for your requested changes.
     Describe any assumptions and provide any technical 
information and/or data that you used.
     If you estimate potential costs or burdens, explain how 
you arrived at your estimate in sufficient detail to allow for it to be 
reproduced.
     Provide specific examples to illustrate your concerns, and 
suggest alternatives.
     Explain your views as clearly as possible, avoiding the 
use of profanity or personal threats.
     Make sure to submit your comments by the comment period 
deadline identified in the DATES section above.

How can I be sure that my comments were received?

    If you submit your comments by mail and wish Docket Management to 
notify you upon its receipt of your comments, enclose a self-addressed, 
stamped postcard in the envelope containing your comments. Upon 
receiving your comments, Docket Management will return the postcard by 
mail.

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. When you send a comment 
containing confidential business information, you should include a 
cover letter setting forth the information specified in NHTSA's 
confidential business information regulation.\23\
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    \23\ 49 CFR part 512.
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    In addition, you should submit a copy from which you have deleted 
the claimed confidential business information to the Docket by one of 
the methods set forth above.

Will NHTSA consider late comments?

    NHTSA will consider all comments received before midnight Eastern 
Standard Time on the comment closing date indicated above under DATES. 
To the extent practicable, NHTSA will also consider comments received 
after that date. If a comment is received too late for us to 
practicably consider as part of this action, NHTSA will consider that 
comment as an informal suggestion for a future rulemaking action.

How can I read the comments submitted by other people?

    You may read the materials placed in the docket for this document 
(e.g., the comments submitted in response to this document by other 
interested persons) at any time by going to https://www.regulations.gov 
and following the online instructions for accessing the dockets. You 
may also read the materials at the DOT Docket Management Facility by 
going to the street address given above under ADDRESSES.

V. Regulatory Notices and Analyses

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

    NHTSA has considered the impact of this rulemaking action under 
Executive Order 12866, Executive Order 13563, and the Department of 
Transportation's regulatory policies and procedures. This rulemaking 
document was not reviewed under Executive Order 12866 or Executive 
Order 13563. This action is limited to seeking comment on an adjustment 
of a civil penalty under a statute that NHTSA enforces, and has been 
determined not to be ``significant'' under the Department of 
Transportation's regulatory policies and procedures and the policies of 
the Office of Management and Budget. Because this rulemaking seeks 
comment on the penalty amounts enacted under the IFR and does not 
change the number of entities that are subject to civil penalties, the 
impacts are anticipated to be non-significant.

B. Regulatory Flexibility Act

    NHTSA has also considered the impacts of this rule under the 
Regulatory Flexibility Act. I certify that this rule will not have a 
significant impact on a substantial number of small entities. The 
following provides the factual basis for this certification under 5 
U.S.C. 605(b). The amendments only affect manufacturers of motor 
vehicles. Low-volume manufacturers can petition NHTSA for an alternate 
CAFE standard under 49 CFR part 525, which lessens the impacts of this 
rulemaking on small businesses by allowing them to avoid liability for 
potential penalties under 49 CFR 578.6(h)(2). Small organizations and 
governmental jurisdictions will not be significantly affected as the 
price of motor vehicles and equipment ought not change as the result of 
this rule.

C. Executive Order 13132 (Federalism)

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

D. Unfunded Mandates Reform Act of 1995 (UMRA)

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

E. Executive Order 12778 (Civil Justice Reform)

    This rule does not have a retroactive or preemptive effect. 
Judicial review of this rule may be obtained pursuant to 5 U.S.C. 702. 
That section does not require that a petition for

[[Page 32145]]

reconsideration be filed prior to seeking judicial review.

F. Paperwork Reduction Act

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

G. Privacy Act

    Please note that anyone is able to search the electronic form of 
all comments received into any of DOT's dockets by the name of the 
individual submitting the comment (or signing the comment, if submitted 
on behalf of an association, business, labor union, etc.). You may 
review DOT's complete Privacy Act statement in the Federal Register 
published on April 11, 2000 (65 FR 19477-78) or you may visit https://www.transportation.gov/privacy.

Jack Danielson,
Acting Deputy Administrator.
[FR Doc. 2017-14525 Filed 7-7-17; 11:15 am]
BILLING CODE 4910-59-P

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