Civil Penalties, 46811-46820 [2021-17842]

Download as PDF Federal Register / Vol. 86, No. 159 / Friday, August 20, 2021 / Proposed Rules relying on alert originators to repeat (reoriginate) alerts they deem significant enough to warrant such treatment. Significantly, the Commission raises as alternatives for comment whether FEMA’s proposal on keeping the alert information or notification persistent is more appropriately configured in a next generation EAS, and whether FEMA’s recommendation is more appropriately addressed in the Notice of Inquiry in this proceeding (seeking comment on internet related updates and improvements to the EAS). Throughout the FNPRM, the Commission has raised and requested comment on various issues relating to the technical feasibility, costs, benefits and the potential impact of implementing FEMA’s proposed EAS rule changes. This information will assist with the Commission’s evaluation of the economic impact on small entities, and to determine if the proposed FEMA rule changes are adopted, how to minimize any significant economic for small entities and will help identify potential alternatives not already considered. The Commission expects to more fully consider the economic impact and alternatives for small entities following the review of comments and reply comments filed in response to the FNPRM. Moreover, the Commission’s evaluation of the comments will shape the final alternatives it considers, the final conclusions it reaches, and the actions it ultimately takes in this proceeding to minimize any significant economic impact that may occur on small entities, if any of the proposed FEMA recommendations are adopted. khammond on DSKJM1Z7X2PROD with PROPOSALS F. Federal Rules That May Duplicate, Overlap, or Conflict With the Proposed Rules None. Ordering Clauses Accordingly, it is ordered, pursuant to sections 1, 2, 4(i), 4(o), 301, 303(r), 303(v), 307, 309, 335, 403, 624(g), 706, and 713 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i), 154(o), 301, 303(r), 303(v), 307, 309, 335, 403, 544(g), and 606, as well as by sections 602(a), (b), (c), (f), 603, 604 and 606 of the WARN Act, 47 U.S.C. 1202(a), (b), (c), (f), 1203, 1204 and 1206, Section 202 of the TwentyFirst Century Communications and Video Accessibility Act of 2010, as amended, 47 U.S.C. 613, and the National Defense Authorization Act for Fiscal Year 2021, Public Law 116–283, 134 Stat. 3388, section 9201, 47 U.S.C. 1201, 1206, that this Report and Order and Further Notice of Proposed VerDate Sep<11>2014 16:48 Aug 19, 2021 Jkt 253001 Rulemaking in PS Docket Nos. 15–94 and 15–91 is hereby adopted. It is further ordered that the Commission’s Consumer and Governmental Affairs Bureau, Reference Information Center, shall send a copy of this Further Notice of Proposed Rulemaking, including the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration. Federal Communications Commission. Marlene Dortch, Secretary. [FR Doc. 2021–15174 Filed 8–19–21; 8:45 am] BILLING CODE 6712–01–P DEPARTMENT OF TRANSPORTATION National Highway Traffic Safety Administration 49 CFR Part 578 [Docket No. NHTSA–2021–0001] RIN 2127–AM32 Civil Penalties National Highway Traffic Safety Administration (NHTSA), Department of Transportation (DOT). ACTION: Supplemental notice of proposed rulemaking. AGENCY: On January 14, 2021, NHTSA published an interim final rule in response to a petition for rulemaking from the Alliance for Automotive Innovation (Alliance). The interim final rule provided that an inflation adjustment to the civil penalty rate applicable to automobile manufacturers that violate applicable corporate average fuel economy (CAFE) standards would apply beginning with vehicle Model Year 2022. The interim final rule also requested comment. In light of a subsequent Executive Order and the agency’s review of comments, NHTSA is reviewing and reconsidering that interim final rule. Accordingly, NHTSA is issuing this supplemental notice of proposed rulemaking (SNPRM) to consider the appropriate path forward and to allow interested parties sufficient time to provide comments. DATES: Comments: Comments must be received by September 20, 2021. ADDRESSES: You may submit comments to the docket number identified in the heading of this document by any of the following methods: • Federal eRulemaking Portal: Go to https://www.regulations.gov. Follow the online instructions for submitting comments. SUMMARY: PO 00000 Frm 00019 Fmt 4702 Sfmt 4702 46811 • Mail: Docket Management Facility, M–30, U.S. Department of Transportation, West Building, Ground Floor, Room W12–140, 1200 New Jersey Avenue SE, Washington, DC 20590. • Hand Delivery or Courier: U.S. Department of Transportation, West Building, Ground Floor, Room W12– 140, 1200 New Jersey Avenue SE, Washington, DC, between 9 a.m. and 5 p.m. Eastern time, Monday through Friday, except Federal holidays. • Fax: 202–493–2251. • Instructions: NHTSA has established a docket for this action. Direct your comments to Docket ID No. NHTSA–2021–0001. See the SUPPLEMENTARY INFORMATION section on ‘‘Public Participation’’ for more information about submitting written comments. • Docket: All documents in the docket are listed on the www.regulations.gov website. Although listed in the index, some information is not publicly available, e.g., confidential business information or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically through www.regulations.gov or in hard copy at the following location: Docket Management Facility, M–30, U.S. Department of Transportation, West Building, Ground Floor, Rm. W12–140, 1200 New Jersey Avenue SE, Washington, DC 20590. The telephone number for the docket management facility is (202) 366–9324. The docket management facility is open between 9 a.m. and 5 p.m. Eastern Time, Monday through Friday, except Federal holidays. FOR FURTHER INFORMATION CONTACT: Michael Kuppersmith, Office of Chief Counsel, NHTSA, email michael.kuppersmith@dot.gov, telephone (202) 366–2992, facsimile (202) 366–3820, 1200 New Jersey Ave. SE, Washington, DC 20590. SUPPLEMENTARY INFORMATION: Table of Contents A. Public Participation B. CAFE Statutory and Regulatory Background C. Civil Penalties Inflation Adjustment Act Improvements Act of 2015 D. NHTSA’s Actions to Date Regarding CAFE Civil Penalties 1. Initial Interim Final Rule 2. Initial Petition for Reconsideration and Response 3. NHTSA Reconsideration 4. Subsequent Petitions and Interim Final Rule E:\FR\FM\20AUP1.SGM 20AUP1 46812 Federal Register / Vol. 86, No. 159 / Friday, August 20, 2021 / Proposed Rules E. Summary of Comments Received F. Supplemental Request for Public Comment G. Rulemaking Analyses and Notices 1. Executive Order 12866, Executive Order 13563, and DOT Regulatory Policies and Procedures 2. Regulatory Flexibility Act 3. Executive Order 13132 (Federalism) 4. Unfunded Mandates Reform Act of 1995 5. National Environmental Policy Act 6. Executive Order 12778 (Civil Justice Reform) 7. Paperwork Reduction Act 8. Privacy Act A. Public Participation This section describes how you can participate in the commenting process. (1) How do I prepare and submit comments? Your comments must be written. To ensure that your comments are correctly filed in the docket, please include the docket number NHTSA–2021–0001 in your comments. If you are submitting comments electronically as a PDF (Adobe) file, we ask that the documents submitted be scanned using the Optical Character Recognition (OCR) process, thus allowing NHTSA to search and copy certain portions of your submissions.1 Please note that pursuant to the Data Quality Act, in order for the substantive data to be relied upon and used by NHTSA, it must meet the information quality standards set forth in the Office of Management and Budget (OMB) and Department of Transportation (DOT) Data Quality Act guidelines. Accordingly, we encourage you to consult the guidelines in preparing your comments. OMB’s guidelines may be accessed at https:// www.whitehouse.gov/omb/informationregulatory-affairs/information-policy/. DOT’s guidelines may be accessed at https://www.transportation.gov/dotinformation-dissemination-qualityguidelines. khammond on DSKJM1Z7X2PROD with PROPOSALS (2) 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 1 OCR is the process of converting an image of text, such as a scanned paper document or electronic fax file, into computer-editable text. VerDate Sep<11>2014 16:48 Aug 19, 2021 Jkt 253001 your estimate in sufficient detail to allow for it to be reproduced. • Provide specific examples to illustrate your concerns, and suggest alternatives. • Explain your views as clearly as possible, avoiding the use of profanity or personal threats. • Make sure to submit your comments by the comment period deadline identified in the DATES section above. (3) How can I be sure that my comments were received? If you submit your comments by mail and wish Docket Management to notify you upon its receipt of your comments, enclose a self-addressed, stamped postcard in the envelope containing your comments. Upon receiving your comments, Docket Management will return the postcard by mail. If you submit information through email under a claim of confidentiality, as discussed below, you may request a delivery receipt. (4) How do I submit confidential business information? If you wish to submit any information under a claim of confidentiality, you should submit your complete submission, including the information you claim to be confidential business information (CBI), to the NHTSA Chief Counsel. When you send a comment containing CBI, you should include a cover letter setting forth the information specified in our CBI regulation.2 In addition, you should submit a copy from which you have deleted the claimed CBI to the docket by one of the methods set forth above. To facilitate social distancing due to COVID–19, NHTSA is treating electronic submission as an acceptable method for submitting CBI to NHTSA under 49 CFR part 512. Any CBI submissions sent via email should be sent to an attorney in the Office of Chief Counsel at the address given above under FOR FURTHER INFORMATION CONTACT. Likewise, for CBI submissions via a secure file transfer application, an attorney in the Office of Chief Counsel must be set to receive a notification when files are submitted and have access to retrieve the submitted files. At this time, regulated entities should not send a duplicate hardcopy of their electronic CBI submissions to DOT headquarters. Please note that these modified submission procedures are only to facilitate continued operations while maintaining appropriate social 2 See PO 00000 49 CFR part 512. Frm 00020 Fmt 4702 Sfmt 4702 distancing due to COVID–19. Regular procedures for Part 512 submissions will resume upon further notice, when NHTSA and regulated entities discontinue operating primarily in telework status. If you have any questions about CBI or the procedures for claiming CBI, please consult the person identified in the FOR FURTHER INFORMATION CONTACT section. (5) How can I read the comments submitted by other people? You may read the materials placed in the docket for this document (e.g., the comments submitted in response to this document by other interested persons) at any time by going to https:// www.regulations.gov. Follow the online instructions for accessing the dockets. You may also read the materials at the NHTSA Docket Management Facility by going to the street addresses given above under ADDRESSES. B. CAFE Statutory and Regulatory Background NHTSA sets 3 and enforces 4 corporate average fuel economy (CAFE) standards for the United States light-duty automobile fleet, and in doing so, assesses civil penalties against manufacturers that violate applicable standards and are unable to make up the shortfall with credits.5 The civil penalty amount for CAFE violations was originally set by statute in 1975, and beginning in 1997, included a rate of $5.50 per each tenth of a mile per gallon (0.1) that a manufacturer’s CAFE performance falls short of its compliance obligation. This shortfall amount is then multiplied by the number of vehicles in that manufacturer’s fleet.6 The basic equation for calculating a manufacturer’s civil penalty amount, before accounting for credits, is as follows: (penalty rate, in $ per 0.1 mpg per vehicle) × (amount of shortfall, in 3 49 U.S.C. 32902. The authorities vested in the Secretary under chapter 329 of Title 49, U.S.C., have been delegated to NHTSA. 49 CFR 1.95(a). 4 49 U.S.C. 32911, 32912. 5 Within statutory constraints, credits may be either earned (for over-compliance by a given manufacturer’s fleet, in a given model year), transferred (from one fleet to another), or purchased (in which case, another manufacturer earned the credits by over-complying and chose to sell that surplus). 49 U.S.C. 32903. 6 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. E:\FR\FM\20AUP1.SGM 20AUP1 khammond on DSKJM1Z7X2PROD with PROPOSALS Federal Register / Vol. 86, No. 159 / Friday, August 20, 2021 / Proposed Rules 46813 tenths of an mpg) × (# of vehicles in manufacturer’s fleet).7 C. Civil Penalties Inflation Adjustment Act Improvements Act of 2015 D. NHTSA’s Actions to Date Regarding CAFE Civil Penalties Starting with Model Year 2011, the Energy Independence and Security Act of 2007 (EISA) provided for credit transfers among a manufacturer’s various fleets.8 Starting with that model year, the law also provided for trading between vehicle manufacturers, which has allowed vehicle manufacturers the opportunity to acquire credits from competitors rather than paying civil penalties for violations. Manufacturers can choose to carry back credits to apply to any of three model years before they are earned or carry them forward to apply to any of the five model years after they are earned. In complement to NHTSA’s regulation of fuel economy, the Environmental Protection Agency (EPA) regulates the emissions of light-duty vehicles. These regulations include standards to regulate greenhouse gas emissions from the light-duty fleet. The Clean Air Act requires EPA to set greenhouse gas (GHG) emissions standards from lightduty vehicles since EPA has made an ‘‘endangerment finding’’ that greenhouse gases ‘‘cause[s] or contribute[s] to air pollution which may reasonably be anticipated to endanger public health or welfare.’’ 9 Although NHTSA and EPA have different roles and independent enforcement and compliance obligations, and operate under different statutory authority, the agencies work together to achieve the goals of their respective statutes. Since Model Year 2012, the agencies have issued joint rulemakings regulating fuel economy (NHTSA) and GHGs (EPA) from light-duty vehicles that have different requirements but are harmonized to the extent possible to work in tandem. The CAFE program is subject to various statutory requirements not applicable to the EPA GHG program. One such requirement, for example, requires automakers to meet a separate average fleet requirement for automobiles that are manufactured domestically.10 The Clean Air Act does not include a similar requirement for EPA’s GHG standards. On November 2, 2015, the Federal Civil Penalties Inflation Adjustment Act Improvements Act (Inflation Adjustment Act or 2015 Act), Public Law 114–74, Section 701, was signed into law. The 2015 Act required Federal agencies to promulgate an interim final rule to make an initial ‘‘catch-up’’ adjustment to the civil monetary penalties they administer, and then to make subsequent annual adjustments for inflation. The 2015 Act limited the initial inflation increase to 150 percent of the then-current penalty. In a February 24, 2016 memorandum, the Director of the Office of Management and Budget (OMB) provided initial guidance to all Federal agencies on how to calculate the initial adjustment required by the 2015 Act.11 The initial ‘‘catch-up’’ adjustment was based on the change between the Consumer Price Index for all Urban Consumers (CPI–U) for the month of October in the year the penalty amount was established or last adjusted by Congress and the October 2015 CPI–U. The February 24, 2016 memorandum contained a table with a multiplier for the change in CPI–U from the year the penalty was established or last adjusted to 2015. To arrive at the adjusted penalty, the agency multiplied the penalty amount when it was established or last adjusted by Congress, excluding adjustments under the 1990 Inflation Adjustment Act, by the multiplier for the increase in CPI–U from the year the penalty was established or adjusted. Ensuing guidance from OMB identifies the appropriate inflation multiplier for agencies to use to calculate the subsequent annual adjustments.12 1. Initial Interim Final Rule 7 The process of determining civil penalties occurs after the end of a model year, following NHTSA’s receipt of final reports from the Environmental Protection Agency (EPA). See 77 FR 62624, 63126 (Oct. 15, 2012). 8 Public Law 110–140, 104. 9 42 U.S.C. 7521, see also 74 FR 66495 (Dec. 15, 2009) (‘‘Endangerment and Cause or Contribute Findings for Greenhouse Gases under Section 202(a) of the Clean Air Act’’). 10 49 U.S.C. 32902(b)(4). VerDate Sep<11>2014 16:48 Aug 19, 2021 Jkt 253001 11 Memorandum from the Director of OMB to Heads of Executive Departments and Agencies, Implementation of the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Feb. 24, 2016), available online at https:// www.whitehouse.gov/sites/whitehouse.gov/files/ omb/memoranda/2016/m-16-06.pdf. 12 Memorandum from the Director of OMB to Heads of Executive Departments and Agencies, Implementation of the 2017 Annual Adjustment Pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Dec. 16, 2016), available online at https:// www.whitehouse.gov/sites/whitehouse.gov/files/ omb/memoranda/2017/m-17-11_0.pdf; Memorandum from the Director of OMB to Heads of Executive Departments and Agencies, Implementation of Penalty Inflation Adjustments for 2018, Pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Dec. 15, 2017), available online at https:// www.whitehouse.gov/wp-content/uploads/2017/11/ M-18-03.pdf; Memorandum from the Director of OMB to Heads of Executive Departments and Agencies, Implementation of Penalty Inflation Adjustments for 2019, Pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements PO 00000 Frm 00021 Fmt 4702 Sfmt 4702 On July 5, 2016, NHTSA published an interim final rule, adopting inflation adjustments for all civil penalties under its administration, following the procedure and the formula in the 2015 Act. One of the adjustments NHTSA made at the time was raising the civil penalty rate for CAFE violations from $5.50 to $14.13 NHTSA also indicated in that notice that the maximum penalty rate that the Secretary is permitted to establish for such violations would similarly increase to reflect inflation from the statutory cap of $10 to $25, but did not codify this change in the regulatory text. That initial interim final rule became effective on August 4, 2016. 2. Initial Petition for Reconsideration and Response On August 1, 2016, the then-Alliance of Automobile Manufacturers and the Association of Global Automakers (since combined to form the Alliance for Automotive Innovation) jointly petitioned NHTSA for reconsideration of the CAFE penalty provisions issued in the interim final rule.14 This petition raised concerns with the impact that the increased penalty rate would have on CAFE compliance costs, which they estimated to be at least $1 billion annually. Specifically, this petition identified several issues, including retroactivity. The petitioners were concerned that applying the penalty increase associated with model years that had already been completed or for which a company’s compliance plan had already been ‘‘set’’ was a retroactive application of the inflation adjustment. In response to the joint petition, NHTSA issued a final rule on December Act of 2015 (Dec. 14, 2018), available online at https://www.whitehouse.gov/wp-content/uploads/ 2017/11/m_19_04.pdf; Memorandum from the Acting Director of OMB to Heads of Executive Departments and Agencies, Implementation of Penalty Inflation Adjustments for 2020, Pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Dec. 16, 2019), available online at https://www.whitehouse.gov/wp-content/ uploads/2019/12/M-20-05.pdf; Memorandum from the Director of OMB to Heads of Executive Departments and Agencies, Implementation of Penalty Inflation Adjustments for 2021, Pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Dec. 23, 2020), available online at https://www.whitehouse.gov/wp-content/ uploads/2020/12/M-21-10.pdf. 13 81 FR 43524 (July 5, 2016). 14 Jaguar Land Rover North America, LLC also filed a petition for reconsideration in response to the July 5, 2016 interim final rule raising the same concerns as those raised in the joint petition. Both petitions, along with a supplement to the joint petition, can be found in Docket No. NHTSA–2016– 0075 at www.regulations.gov. E:\FR\FM\20AUP1.SGM 20AUP1 46814 Federal Register / Vol. 86, No. 159 / Friday, August 20, 2021 / Proposed Rules 28, 2016.15 In that rule, NHTSA agreed that raising the penalty rate for model years already fully complete at the time the 2015 Act was enacted would be inappropriate, given that courts generally disfavor the retroactive application of statutes, and that applying penalties to model years that were already completed could not deter non-compliance, incentivize compliance, or lead to any improvements in fuel economy. NHTSA also agreed that raising the rate for model years for which product changes were infeasible due to lack of lead time from the enactment of the 2015 Act did not seem consistent with Congress’ intent that the CAFE program be responsive to consumer demand. Accordingly, NHTSA stated that it would not apply the inflation-adjusted penalty rate of $14 (plus any adjustments for inflation that occurred or may occur) until Model Year 2019, as the agency believed that 2019 would be the first year after the 2015 Act in which product changes could reasonably be made in response to the higher penalty rate. This final rule had an effective date of January 27, 2017. 3. NHTSA Reconsideration Beginning in January 2017, NHTSA took a series of actions to delay the effective date of the December 2016 final rule, ultimately leading to a rule announcing that the effective date would be delayed indefinitely.16 In April 2018, the United States Court of Appeals for the Second Circuit vacated NHTSA’s indefinite delay of the rule’s effective date, clarifying that the December 2016 rule was in force.17 In July 2019, NHTSA finalized a rule determining that the 2015 Act did not apply to the CAFE civil penalty rate. On August 31, 2020, the United States Court of Appeals for the Second Circuit vacated the July 2019 rule and ruled that the December 2016 rule was back in force. The Second Circuit denied panel rehearing on November 2, 2020. khammond on DSKJM1Z7X2PROD with PROPOSALS 4. Subsequent Petitions and Interim Final Rule On September 9, 2019, the Institute for Policy Integrity at New York University School of Law (IPI) submitted a petition for reconsideration of NHTSA’s July 2019 final rule. IPI 15 81 FR 95489 (December 28, 2016). 16 82 FR 8694 (January 30, 2017); 82 FR 15302 (March 28, 2017); 82 FR 29009 (June 27, 2017); 82 FR 32139 (July 12, 2017). 17 Order, ECF No. 196, NRDC v. NHTSA, Case No. 17–2780 (2d Cir., Apr. 24, 2018); Opinion, ECF No. 205, NRDC v. NHTSA, Case No. 17–2780, at 44 (2d Cir., June 29, 2018) (‘‘The Civil Penalties Rule, 81 FR 95,489, 95,489–92 (December 28, 2016), no longer suspended, is now in force.’’). VerDate Sep<11>2014 16:48 Aug 19, 2021 Jkt 253001 argued that the rule was unreasonable and not in the public interest because it did not properly account for the associated costs and benefits. Additionally, IPI challenged NHTSA’s statutory interpretations. NHTSA did not issue a decision on the petition prior to the Second Circuit’s decision vacating the rule. Following the Second Circuit’s decision, on October 2, 2020, NHTSA received a petition for rulemaking from the Alliance for Automotive Innovation requesting that the adjustment to $14 not be applied until Model Year 2022.18 According to the Alliance Petition, ‘‘Model Years 2019 and 2020 are effectively lapsed now,’’ and ‘‘[m]anufacturers are unable to change MY 2021 plans at this point.’’ The Alliance argued that, as in the December 2016 rule, applying the increased penalty to any violations that are temporally impossible to avoid or cannot practically be remedied does not serve the statutory purposes of deterring prohibited conduct or incentivizing favored conduct. According to the Alliance, doing so would effectively be punishing violators retroactively. In addition to relying on the reasoning of the December 2016 rule as it applied to the increase based on the timing of the enactment of the 2015 Act, the Alliance Petition noted, but did not provide detailed evidence of, the significant economic impact suffered by the industry due to COVID–19. Accordingly, the Alliance Petition also cited the now-revoked Executive Order 13924,19 requiring Federal agencies to take appropriate action, consistent with applicable law, to combat the economic emergency caused by COVID–19. Several individual vehicle manufacturers submitted supplemental information to NHTSA further articulating the negative economic position they were in due to the COVID–19 public health emergency and the potential and significant adverse economic consequences of the increased civil penalty rate. After considering the issues raised, NHTSA granted the Alliance’s petition and promulgated an interim final rule providing that the increase 20 will apply beginning with Model Year 2022. The interim final rule contended that applying the increased civil penalty rate 18 The Alliance also submitted a supplement to its petition on October 22, 2020 (Alliance Supplement). 19 See Executive Order 14018, 86 FR 11855, ‘‘Revocation of Certain Presidential Actions’’ (Feb. 24, 2021). 20 The rate is increasing to $14, plus any adjustments for inflation that occurred or may occur. 49 CFR 578.6(h)(2). PO 00000 Frm 00022 Fmt 4702 Sfmt 4702 to vehicles in Model Years 2019, 2020, and 2021 would not result in additional fuel savings and would impose higher penalties retroactively because those model years were already completed, or, for Model Year 2021, production plans were set prior to the Second Circuit’s decision striking down the 2019 rule. The interim final rule relied in large part on the reasoning in the December 2016 final rule, though it did not discuss the extent to which the four years between the two rules should affect that reasoning. Additionally, the interim final rule attempted to account for the negative economic impact on the automotive sector caused by the global outbreak of COVID–19.21 That interim final rule amended the relevant regulatory text accordingly—effective immediately and without having afforded prior notice or the ability to comment in advance—and requested comment within ten days. The interim final rule also noted that IPI’s petition was moot, and, to the extent it was not moot, NHTSA denied it. The interim final rule is currently the subject of legal challenges in the Second Circuit and Ninth Circuit.22 E. Summary of Comments Received Before NHTSA’s interim final rule was published but after the agency had announced, through the publication of the Fall 2020 Unified Agenda of Regulatory and Deregulatory Actions, that it had initiated a rulemaking in response to the Alliance’s petition, NHTSA received two letters regarding the rulemaking: one jointly from the State of New York, the Natural Resources Defense Council, and the Sierra Club, and one from Tesla.23 These letters raised concerns with NHTSA’s rulemaking, particularly with the entities’ inability to comment on the Alliance’s petition for rulemaking in advance. NHTSA did not respond to these letters prior to the publication of the interim final rule, but included both letters in the docket when the interim final rule was published and noted that they ‘‘will be treated as comments for appropriate consideration.’’ 24 After the interim final rule was published, NHTSA received eight substantive comments.25 NHTSA received comments from: 21 The reasoning for the interim final rule is set forth more fully in the January 14, 2021 notice published at 86 FR 3016. 22 NRDC v. NHTSA, No. 21–139 (2d Cir.); New York v. NHTSA, No. 21–339 (2d Cir.); Tesla v. NHTSA, No. 21–70367 (9th Cir.). 23 NHTSA–2021–0001–0001; NHTSA–2021– 0001–0009. 24 86 FR 3016, 3023 n.74 (Jan. 14, 2021). 25 NHTSA received a ninth comment that simply said, ‘‘Help.’’ NHTSA–2021–0001–0018. Without E:\FR\FM\20AUP1.SGM 20AUP1 Federal Register / Vol. 86, No. 159 / Friday, August 20, 2021 / Proposed Rules khammond on DSKJM1Z7X2PROD with PROPOSALS • The Attorneys General of California, New York, Connecticut, Delaware, Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Jersey, Oregon, Pennsylvania, Rhode Island, Washington, and Vermont; 26 • American Council for an EnergyEfficient Economy, Center for Auto Safety, Center for Biological Diversity, Consumer Federation of America, Consumer Reports, The Ecology Center (Michigan), Environmental Law and Policy Center, Interfaith Power & Light, Sierra Club, Union of Concerned Scientists; 27 • Natural Resources Defense Council and Sierra Club; 28 • The Institute for Policy Integrity at New York University School of Law; 29 • Tesla; 30 • The Alliance for Automotive Innovation; 31 • The National Automobile Dealers Association (NADA); 32 and • An anonymous individual.33 Most of the comments opposed the interim final rule, raising serious procedural, legal, and substantive concerns. In general, these comments argued that NHTSA did not have the authority to delay the application of the inflation increase beyond Model Year 2019 and that, regardless, NHTSA would have to do so through notice-andcomment, not by an interim final rule that was effective immediately without prior notice and without the opportunity to comment in advance. In supporting these arguments, the commenters relied, in part, upon the two earlier decisions by the Second Circuit. Most of these comments also challenged the interim final rule as arbitrary and capricious on multiple grounds. For example, the comments discussed that applying the increased rate before Model Year 2022 would not be retroactive because the increased rate was originally applied in 2016 when it was still prospective, and NHTSA’s subsequent actions, which were all stricken down by the Second Circuit, did not change that fact. In these commenters’ view, manufacturers have been on notice of the increase well before Model Year 2019, and any reliance to the contrary was undue. any additional information, NHTSA cannot reasonably address or respond to this commenter’s concern. 26 NHTSA–2021–0001–0017. 27 NHTSA–2021–0001–0015. 28 NHTSA–2021–0001–0013. 29 NHTSA–2021–0001–0011. 30 NHTSA–2021–0001–0012. 31 NHTSA–2021–0001–0014. 32 NHTSA–2021–0001–0016. 33 NHTSA–2021–0001–0019. VerDate Sep<11>2014 16:48 Aug 19, 2021 Jkt 253001 These comments argued that this was particularly true given the rulings from the Second Circuit litigation, in which many of these commenters and the Alliance were involved, with the Alliance being an intervening party. The comments further argued that delaying the application of the increased rate would affect future compliance because manufacturers may be incentivized to hold credits for model years when the higher rate will apply. The comments also argued that the interim final rule improperly analyzed the economic effects of the COVID–19 pandemic, for example, by not accounting for any positive economic data and disregarding that some of the relevant conduct occurred before the pandemic. These comments also argued that the interim final rule violated the National Environmental Policy Act of 1969 (NEPA). Lastly, in response to NHTSA’s request for comment about whether the adjustment should be delayed further until Model Year 2023, these comments opposed any additional delay. Some of these comments also expressed concern with the short ten-day comment period provided by the interim final rule—and only after the rule was already effective without any opportunity to comment beforehand. Two comments supported the interim final rule. The Alliance reiterated the reasoning set forth in its petition, which NHTSA granted in the interim final rule. According to the Alliance, the interim final rule was consistent with NHTSA’s December 2016 rule; appropriately accounted for the industry’s production and design processes, including the unforeseen challenges of the COVID–19 public health emergency; and fairly implemented the Second Circuit’s decision. The Alliance also noted that Model Year 2022 vehicles could have begun being produced as early as January 2, 2021—about two weeks before the interim final rule was published—but it believes NHTSA was reasonable to make the inflation adjustment applicable beginning in Model Year 2022, declining to request a further delay in the adjustment to Model Year 2023. NADA supported the Alliance’s comment, adding that increased CAFE civil penalties before Model Year 2022 would lead to higher vehicle prices for consumers or manufacturer shifts in available offerings, without any associated environmental or safety benefits. F. Supplemental Request for Public Comment On January 20, 2021, the President issued Executive Order 13990, entitled PO 00000 Frm 00023 Fmt 4702 Sfmt 4702 46815 ‘‘Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis.’’ E.O. 13990 directs the heads of all agencies to immediately review all existing regulations, orders, guidance documents, policies, and any other similar agency actions promulgated, issued, or adopted between January 20, 2017 and January 20, 2021, that are or may be inconsistent with, or present obstacles to, the policy set forth in E.O. 13990: A policy ‘‘to listen to the science; to improve public health and protect our environment; to ensure access to clean air and water; to limit exposure to dangerous chemicals and pesticides; to hold polluters accountable, including those who disproportionately harm communities of color and low-income communities; to reduce greenhouse gas emissions; to bolster resilience to the impacts of climate change; to restore and expand our national treasures and monuments; and to prioritize both environmental justice and the creation of the well-paying union jobs necessary to deliver on these goals.’’ 34 The Secretary of Transportation expressly identified the January 14, 2021 CAFE civil penalties interim final rule as one to be reviewed pursuant to E.O. 13990.35 In accord with E.O. 13990 and the Secretary’s determination, and in light of the significant concerns raised by the commenters, NHTSA is reviewing and reconsidering the January 14, 2021 interim final rule. Specifically, NHTSA is considering withdrawing the interim final rule and reverting to the December 2016 final rule that would apply the inflation adjustment beginning with Model Year 2019—the rule that the Second Circuit has said twice is ‘‘now in force.’’ 36 The vast majority of comments submitted to date support returning to the December 2016 final rule. Upon further consideration, automakers were aware as of December 2016 that the inflation adjustment would apply beginning with Model Year 2019. It was not until Model Year 2019 was already nearly complete that the agency issued a final rule changing that, which the Second Circuit subsequently determined was legally invalid. The Alliance participated in that litigation as 34 86 FR 7037, 7037 (Jan. 25, 2021). from the Acting General Counsel of DOT to the Chief Counsel and Acting Deputy Administrator of NHTSA and Special Advisor, ‘‘Implementation of Executive Order 13990, entitled ‘Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis’ ’’ (Feb. 22, 2021). https://www.transportation.gov/ sites/dot.gov/files/2021-02/Memo-to-NHTSA.pdf. 36 Nat. Res. Def. Council v. Nat’l Highway Traffic Safety Admin., 894 F.3d 95, 116 (2d Cir. 2018); New York v. Nat’l Highway Traffic Safety Admin., 974 F.3d 87, 101 (2d Cir. 2020). 35 Memorandum E:\FR\FM\20AUP1.SGM 20AUP1 khammond on DSKJM1Z7X2PROD with PROPOSALS 46816 Federal Register / Vol. 86, No. 159 / Friday, August 20, 2021 / Proposed Rules an intervenor and was well aware of the possibility that the Second Circuit would restore the applicability of the inflation increase beginning with Model Year 2019. In fact, the Second Circuit did just that. NHTSA is therefore of the view that it would be appropriate to revisit the characterization of the application of the inflation adjustment beginning with Model Year 2019 as ‘‘retroactive.’’ Moreover, commenters have raised valid concerns regarding the procedures that the agency used in issuing the interim final rule, which did not proceed through a more typical notice-and-comment process and made the rule effective immediately upon publication. In addition, based upon further review and consideration of the Second Circuit’s prior decisions and, in light of the ongoing litigation, the agency is assessing the legal risk of leaving the interim final rule in place, as the interim final rule was based on an assertion of discretion that NHTSA now tentatively believes is in conflict with the Inflation Adjustment Act and the Second Circuit’s decisions. For these reasons, the agency is now considering withdrawing the interim final rule and reverting to the December 2016 final rule. That said, the agency has not yet reached any final determinations, and instead believes that an additional period of public comment would aid the agency in its reexamination of the issues involved in the interim final rule. Considering the importance of this rulemaking and the short comment period—ten days—previously provided to interested parties, NHTSA is issuing this notice to provide the public with an appropriate amount of time to comment and to enable NHTSA to more fully review and consider the issues. In doing so, NHTSA is expressly requesting comment on whether it should proceed to a final rule that withdraws the interim final rule and reverts to the December 2016 final rule, restoring the application of the increased CAFE civil penalty rate beginning with Model Year 2019. NHTSA will also accept comments on whether the inflation adjustment should apply beginning with a model year later than Model Year 2019. Commenters arguing for such a position should explain how it is consistent with the 2015 Act and the Second Circuit’s decisions. NHTSA will also consider comments already submitted in response to the interim final rule as part of its ongoing review and the anticipated promulgation of a final rule following this comment period. VerDate Sep<11>2014 16:48 Aug 19, 2021 Jkt 253001 G. Rulemaking Analyses and Notices 1. Executive Order 12866, Executive Order 13563, and DOT Regulatory Policies and Procedures NHTSA has considered the impact of this rulemaking action under Executive Order 12866, Executive Order 13563, and the Department of Transportation’s regulatory policies and procedures. This rulemaking document has been considered a ‘‘significant regulatory action’’ under Executive Order 12866. NHTSA believes that this rulemaking will be ‘‘economically significant,’’ as NHTSA believes that the difference in the amount of penalties received by the government as a result of this rule are likely to exceed $100 million in at least one of the years affected by this rulemaking and that there may be some further economic effects as discussed below. As a general matter, the civil penalty rate as adjusted for inflation will likely induce some degree of greater compliance. Manufacturers that are paying civil penalties for CAFE violations have likely calculated that it is less costly or otherwise preferable to pay the penalties than to meet the statutory and regulatory requirements. An increased penalty rate changes this calculation, as it likely raises either the costs of credits a noncompliant manufacturer may choose to purchase, the total penalty amount a manufacturer will pay, or both. However, the Second Circuit has made clear that the Inflation Adjustment Act applies to these penalties and, thus, the question over whether these penalties should be adjusted for inflation has been settled. In this rule, NHTSA is proposing to remove the interim final rule, which delayed the inflation adjusted penalty rate by three model years, two of which are already complete and the last one which is considerably underway. An analysis here would be limited to estimating over this short time horizon: (1) Which manufacturers did not produce compliant fleets for Model Years 2019 and 2020 and are likely to not produce compliant fleets for Model Year 2021; (2) what the shortfalls will be for those non-compliant manufacturers; and (3) the extent to which those manufactures will choose to use credits (either their own or those purchased from over-compliant manufacturers) or pay penalties to address these shortfalls. Pointedly, this analysis does not have sufficient information to account for whether, and if so, how manufacturers will adjust the composition of the fleet for these model years in response to the penalty change. PO 00000 Frm 00024 Fmt 4702 Sfmt 4702 Any analysis would estimate what the compliance shortfalls will be and whether manufacturers will pay penalties or use credits. These estimates could be used to estimate the effects on individual manufactures in the form of higher penalty payments, higher payments to other manufacturers for credits, or higher receipts for overcomplying manufacturers for credits sold to other manufacturers. However, NHTSA has only limited ability to estimate what strategies manufacturers will take either to use credits or pay penalties to deal with any noncompliance, as that is a decision that each manufacturer must take based on their unique circumstances. In the past, the vast majority of manufacturers pay no penalties, as only five manufacturers have paid civil penalties since Model Year 2011.37 And only one of those manufacturers faced particularly heavy penalties—even before the $14 rate would have gone into effect—for failing to comply with the minimum domestic passenger car standard, which cannot be made up through the application of transferred or traded credits.38 Despite this uncertainty, NHTSA is confident that, based on the experience of recent model years, this rule would lead to at least $100 million difference in the amount of penalties in at least one model year. For example, based on mid-model year fuel economy performance data, NHTSA projected a shortfall of 1.3 miles per gallon across the U.S. fleet in Model Year 2019.39 Assuming a similar magnitude of production from Model Year 2018 for Model Year 2019 would result in a nationwide fleet-wide net shortfall of approximately $115.4 million at the $5.50 rate or an approximately $293.9 million shortfall at the $14 rate—an approximately $178.5 million difference.40 As noted, it is expected 37 See ‘‘Civil Penalties,’’ available at https:// one.nhtsa.gov/cafe_pic/CAFE_PIC_Fines_ LIVE.html. 38 49 U.S.C. 32903(f)(2), (g)(4); 49 CFR 536.9(c). 39 See ‘‘MYs 2018 and 2019 Projected Fuel Economy Performance Report,’’ available at https:// one.nhtsa.gov/cafe_pic/AdditionalInfo.htm. This projection is based on information received from manufacturers’ mid-model year reports required by 49 CFR part 537. The data from these reports has not been verified by EPA or NHTSA. NHTSA assesses manufacturers’ compliance only using EPA-verified final model year data. The final model year data may differ from the mid-model year projections due to the mixture of vehicles actually produced throughout the model year. 40 In looking at the total fleet performance across the country, manufacturers who over-complied with the standard may benefit from an expected increase in the value of credits as a result of an inflation increase in the penalty rate, while those that have made a business decision not to comply with the standards would likely have to pay more E:\FR\FM\20AUP1.SGM 20AUP1 khammond on DSKJM1Z7X2PROD with PROPOSALS Federal Register / Vol. 86, No. 159 / Friday, August 20, 2021 / Proposed Rules that much of this increase would likely fall on a single automobile manufacturer and likely due to a failure to comply with the minimum domestic passenger car standard. NHTSA does not yet have enough information for Model Year 2020, which is now complete, or Model Year 2021, which is still underway, to make a similar estimate, but requests comment, data, or analysis on the potential compliance shortfalls, penalty payments, and effect on credit sales for those model years. In addition, NHTSA believes that commenters have raised valid questions about further economic effects. These commenters have argued that, regardless of the impact of this rulemaking action on Model Year 2019 through 2021 vehicles, longer-term impacts may vary as a result of manufacturer multi-year planning, the transfer of credits across model years and between manufacturers, and the changing value of credits over time. According to these commenters, if such variation were to occur, applying the $14 penalty rate beginning in Model Year 2019 may result in manufacturers applying credit balances to Model Year 2019 through 2021 vehicles and being incentivized to make fuel economy improvements in their fleet beyond that timeframe. And for manufacturers that do not currently have credits or cannot transfer or trade for them to make up a shortfall of the minimum domestic passenger car standard, applying the inflation adjusted penalty rate beginning in Model Year 2019 places an even greater incentive on future compliance and fuel economy improvements to avoid additional higher penalties going forward. A brief explanation of the statutory scheme that governs the use of credits is helpful in understanding how this could work. Manufacturers comply separately with the domestic passenger car, imported passenger car, and light truck standards. Thus, a manufacturer can comply (or over comply) with all standards, comply with some but not all standards, or fail to comply with all standards. To the extent that a manufacturer over-complies with the standard for a particular fleet, the manufacturer generates a credit for that over-compliance, which the manufacturer can hold-on to for future compliance for that standard, ‘‘transfer’’ from one fleet (e.g., light trucks) to its other fleet (e.g., imported passenger cars), or trade those credits to another for those credits. To the extent that a manufacturer cannot meet their shortfall with these credits or, in the case of the minimum domestic passenger car standard, are prohibited from doing so by law, they would need to pay penalties. VerDate Sep<11>2014 16:48 Aug 19, 2021 Jkt 253001 manufacturer. Those manufacturers can either ‘‘bank’’ those credits for their own future use or sell them to non-compliant manufacturers, who seek the credit to make up for a shortfall. These earned credits can be ‘‘carried forward’’ to apply to any of the five model years after they are earned. Manufacturers can also choose to ‘‘carry back’’ credits to apply to any of three model years before they are earned. However, there are certain limitations on the use of credits, as manufacturers may not transfer more than 2.0 miles per gallon in credits from one of their fleets to another in a single model year and neither transferred nor traded credits may be used to meet the minimum domestic passenger car standard. Consistent with these constraints, if the rate for civil penalties instead remained at the $5.50 rate for Model Years 2019 through 2021, some manufacturers might choose to pay the lower penalty earlier and save the credits that could either carry forward or carry back for future model years when they are valued more due to the inflation adjustment. For example, a credit earned in Model Year 2017 could be used for any year up to Model Year 2022, and, thus, if the adjusted rate applied in Model Year 2019, they may use that credit at that point, while they may have saved that credit for Model Year 2022 under the delay provided in the interim final rule. Likewise, credits earned in Model Years 2019 through 2021 may be used through Model Years 2024 and 2026, respectively. Thus, if the penalty rate remained $5.50 until Model Year 2022, a manufacturer with shortfalls in one fleet in Model Years 2019 through 2021 may choose to pay penalties and hold on to any transferred or traded credits until the years in which the penalty rate has been adjusted for inflation, rather than using the credits earlier and making design changes to increase its compliance in the later model years. Likewise, a manufacturer who has a shortfall in its domestic passenger fleet might take actions to over-comply with the standard in future years when the penalty is increased to generate credits to apply to earlier years rather than paying the higher penalty.41 Finally, credits earned in Model Year 2022, which is not yet underway, could be applied back to Model Year 2019 shortfalls, which have not been assessed yet, which a manufacturer may be more 41 Although manufacturers’ design cycles vary, since they have been on notice since 2016 of an increase to the penalty beginning with Model Year 2019, they have had and will continue to have opportunities in the coming model years to make design choices to increase compliance. PO 00000 Frm 00025 Fmt 4702 Sfmt 4702 46817 likely to do if the penalty rate for Model Year 2019 is the rate as adjusted for inflation. The agency has tentatively determined that these actions are possible and, thus, may mean that the argument put forward in the interim final rule that no effects beyond increased penalty payments are possible may be incorrect. NHTSA requests further comments on such potential effects, particularly as industry commenters did not provide detail as to whether and the extent to which any such potential variations are actually likely to occur. In any event, based on further consideration of the 2015 Act and the Second Circuit’s decisions on this issue, NHTSA tentatively believes that that it does not have discretion over when the inflation adjustment should begin to take effect. Further, the Inflation Adjustment Act provided NHTSA no discretion over what the adjusted rate should be, as that is merely a function of the formula established by Congress and calculated by OMB, and mandated streamlined processes for making both the initial adjustment and any subsequent adjustments that do not require accompanying analyses or public comment.42 2. Regulatory Flexibility Act Pursuant to the Regulatory Flexibility Act (5 U.S.C. 601 et seq., as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996), whenever an agency is required to publish a notice of proposed rulemaking or final rule, it must prepare and make available for public comment a regulatory flexibility analysis that describes the effect of the rule on small entities (i.e., small businesses, small organizations, and small governmental jurisdictions). No regulatory flexibility analysis is required, however, if the head of an agency certifies the proposal will not have a significant economic impact on a substantial number of small entities. NHTSA has considered the impacts of this document under the Regulatory Flexibility Act and certifies that this rulemaking will not have a significant economic impact on a substantial number of small entities. The following provides the factual basis for this certification under 5 U.S.C. 605(b). 42 The 2015 Act, of course, did allow NHTSA one opportunity at the time of the initial catch-up to use the notice-and-comment process to adjust the rate ‘‘less than the otherwise required amount’’ under two conditions, but the Second Circuit rejected NHTSA’s belated attempt to use this provision in its decision on the July 2019 final rule. See New York, 974 F.3d at 100–01. E:\FR\FM\20AUP1.SGM 20AUP1 46818 Federal Register / Vol. 86, No. 159 / Friday, August 20, 2021 / Proposed Rules khammond on DSKJM1Z7X2PROD with PROPOSALS The Small Business Administration’s (SBA) regulations define a small business in part as a ‘‘business entity organized for profit, with a place of business located in the United States, and which operates primarily within the United States or which makes a significant contribution to the U.S. economy through payment of taxes or use of American products, materials or labor.’’ 13 CFR 121.105(a). SBA’s size standards were previously organized according to Standard Industrial Classification (‘‘SIC’’) Codes. SIC Code 336211 ‘‘Motor Vehicle Body Manufacturing’’ applied a small business size standard of 1,000 employees or fewer. SBA now uses size standards based on the North American Industry Classification System (‘‘NAICS’’), Subsector 336— Transportation Equipment Manufacturing. This action is expected to affect manufacturers of motor vehicles. Specifically, this action affects manufacturers from NAICS codes 336111—Automobile Manufacturing, and 336112—Light Truck and Utility Vehicle Manufacturing, which both have a small business size standard threshold of 1,500 employees. Though civil penalties collected under 49 CFR 578.6(h)(1) and (2) apply to some small manufacturers, lowvolume manufacturers can petition for an exemption from the Corporate Average Fuel Economy standards under 49 CFR part 525. This would lessen the impacts of this rulemaking on small business by allowing them to avoid liability for penalties under 49 CFR 578.6(h)(2). Small organizations and governmental jurisdictions will not be significantly affected, as the price of motor vehicles and equipment ought not change as the result of this rule. In the interim final rule, NHTSA stated that it did not believe that the rule would have a significant economic impact on a substantial number of small entities and requested comment on the issue. None of the comments NHTSA received discussed this issue. 3. Executive Order 13132 (Federalism) Executive Order 13132 requires NHTSA to develop an accountable process to ensure ‘‘meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.’’ ‘‘Policies that have federalism implications’’ is defined in the Executive order to include regulations that have ‘‘substantial direct effects on the States, on the relationship between the [N]ational [G]overnment and the States, or on the distribution of power and responsibilities among the VerDate Sep<11>2014 16:48 Aug 19, 2021 Jkt 253001 various levels of government.’’ Under Executive Order 13132, the agency may not issue a regulation with federalism implications, that imposes substantial direct compliance costs, and that is not required by statute, unless the Federal Government provides the funds necessary to pay the direct compliance costs incurred by State and local governments, the agency consults with State and local governments, or the agency consults with State and local officials early in the process of developing the proposed regulation. As noted previously, this rulemaking 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 rulemaking is expected to generally apply to motor vehicle manufacturers. Thus, the requirements of Section 6 of the Executive Order do not apply. 4. Unfunded Mandates Reform Act of 1995 The Unfunded Mandates Reform Act of 1995, Public Law 104–4, requires agencies to prepare a written assessment of the cost, benefits, and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of more than $100 million annually. Because this rulemaking is not expected to include a Federal mandate, no unfunded mandate assessment will be prepared. 5. National Environmental Policy Act The National Environmental Policy Act of 1969 (NEPA) 43 directs that Federal agencies proposing ‘‘major Federal actions significantly affecting the quality of the human environment’’ must, ‘‘to the fullest extent possible,’’ prepare ‘‘a detailed statement’’ on the environmental impacts of the proposed action (including alternatives to the proposed action).44 However, there are some instances where NEPA does not apply to a particular proposed One consideration is whether the action at issue is a non-discretionary action to which NEPA may not apply or for which NEPA may require less detailed analysis.45 Under the 2015 Act, and as 43 42 U.S.C. 4321–4347. U.S.C. 4332. 45 See Dept. of Transp. v. Public Citizen, 541 U.S. 752, 768–69 (2014) (holding that the agency need not prepare an Environmental Impact Statement (EIS) or analyze certain environmental effects in its EA, and stating, ‘‘[s]ince FMCSA has no ability 44 42 PO 00000 Frm 00026 Fmt 4702 Sfmt 4702 confirmed by the Second Circuit, NHTSA has no discretion in whether to adjust the CAFE civil penalty rate to $14, and NHTSA tentatively believes it has no discretion in when to do so. Further, the 2015 Act provides no basis for the consideration of environmental effects in making the required inflation adjustments, outside of an exception not applicable here.46 Accordingly, in line with legal precedent concerning nondiscretionary agency action, NHTSA believes that no further analysis pursuant to NEPA is required regarding increasing the CAFE civil penalty rate for inflation. Although NHTSA does not have discretion on whether to increase the CAFE civil penalty rate for inflation, NHTSA has prepared this environmental assessment to evaluate the effects of the timing of such an increase on the environment. When a Federal agency prepares an environmental assessment, the CEQ NEPA implementing regulations require the agency to (1) ‘‘[b]riefly provide sufficient evidence and analysis for determining whether to prepare an environmental impact statement or a finding of no significant impact,’’ and (2) ‘‘[b]riefly discuss the purpose and need for the proposed action, alternatives . . . , and the environmental impacts of the proposed action and alternatives, and include a listing of [a]gencies and persons consulted.’’ 47 Generally, based on the environmental assessment, the agency must make a determination to prepare an environmental impact statement or ‘‘prepare a finding of no significant impact if the [a]gency determines, based on the environmental assessment, not to prepare an environmental impact statement because the proposed action will not have significant effects.’’ 48 The interim final rule included an Environmental Assessment (EA) and a Finding of No Significant Impact categorically to prevent the cross-border operations of Mexican motor carriers, the environmental impact of the cross-border operations would have no effect on FMCSA’s decisionmaking—FMCSA simply lacks the power to act on whatever information might be contained in the EIS.’’). 46 28 U.S.C. 2461 note, 4(c) (allowing an agency to make the first adjustment of the amount of a civil monetary penalty by less than the otherwise required amount if increasing the civil monetary penalty by the otherwise required amount would have a negative economic impact; or the social costs of increasing the civil monetary penalty by the otherwise required amount outweighed the benefits). NHTSA’s attempt to apply this exception through the ‘‘negative economic impact’’ prong was vacated by the Second Circuit as too late, and the statute provides that the exception could only be applied to the initial ‘‘catch-up’’ adjustment. 47 40 CFR 1501.5(c). 48 40 CFR 1501.6(a). E:\FR\FM\20AUP1.SGM 20AUP1 Federal Register / Vol. 86, No. 159 / Friday, August 20, 2021 / Proposed Rules (FONSI) regarding the agency’s decision to increase the CAFE civil penalty rate for inflation beginning with Model Year 2022. However, it sought comment on the environmental impacts of a longer delay to Model Year 2023. Two commenters alleged that the interim final rule violated NEPA because the agency did not consider the effect of CAFE penalties assessed in one year on manufacturers’ compliance decisions in future years.49 Like NHTSA’s approach in the interim final rule, this section may serve as NHTSA’s Draft Environmental Assessment (Draft EA). The issue raised by commenters on the EA presented in the interim final rule is addressed below. NHTSA invites public comments on the applicability of NEPA to this action and the contents and tentative conclusions of this Draft EA. I. Purpose and Need This SNPRM sets forth the purpose of and need for this action. Pursuant to the Inflation Adjustment Act and the Second Circuit’s decision, NHTSA is required to make an initial ‘‘catch-up’’ adjustment to the civil monetary penalties it administers for the CAFE program. The purpose of this SNPRM is to consider the timing of the application of the adjustment to the CAFE civil penalty rate, consistent with the statutory requirements. khammond on DSKJM1Z7X2PROD with PROPOSALS II. Alternatives The first alternative is to restore the status quo ante prior to the interim final rule, which is adjusting the CAFE civil penalty rate from $5.50 to $14 beginning in Model Year 2019. This timing was originally established by the December 2016 final rule and was twice made effective by decisions of the Second Circuit. The second alternative is applying the adjustment beginning in Model Year 2022, which reflects the action taken in the interim final rule. NHTSA is no longer considering the alternative of applying the adjustment beginning in Model Year 2023. NHTSA is accepting comments on whether it should consider other alternatives of the inflation adjustment applying beginning with a model year later than Model Year 2019. Commenters arguing for such a position should explain how it is consistent with the 2015 Act and the Second Circuit’s decisions. 49 Comment from Natural Resources Defense Council and Sierra Club, NHTSA–2021–0001–0013; Comment from the New York University School of Law Institute of Policy Integrity, NHTSA–2021– 0001–0011. VerDate Sep<11>2014 16:48 Aug 19, 2021 Jkt 253001 III. Environmental Impacts of the Action and Alternatives In the interim final rule, NHTSA asserted that it anticipated no differences in environmental impacts associated with the alternatives of applying the adjustment beginning in Model Years 2019, 2020, 2021, or 2022. NHTSA based this conclusion on the fact that vehicles for Model Years 2019 and 2020 had largely if not entirely been produced already, and many manufacturers were already selling Model Year 2021 vehicles. After reviewing the comments received in response to the interim final rule, NHTSA has reconsidered whether this assessment is complete. Commenters have argued that, regardless of the impact of this rulemaking action on Model Year 2019 through 2021 vehicles, longer-term impacts may vary as a result of manufacturer multi-year planning, the transfer of credits across model years and between manufacturers, and the changing value of credits over time. If this is correct, applying the adjustment earlier could result in manufacturers applying credit balances to Model Year 2019 through 2021 vehicles and being incentivized to make fuel economy improvements in their fleet beyond that timeframe, rather than paying civil penalties at the $5.50 rate for Model Years 2019 through 2021 and saving the credits for future model years when they could be valued more due to the inflation adjustment. Additionally, for manufacturers without credit balances, the potential application of a significantly higher civil penalty for Model Years 2019 through 2021 may spur more rapid implementation of fuelsaving technology in order to allow the manufacturer to accrue credits that may be carried back to cover the shortfall in Model Years 2019 through 2021. Overall, NHTSA anticipates that applying the adjustment beginning with Model Year 2019 may lead to the eventual application of more fuel-saving technology, resulting in fewer greenhouse gas emissions and reductions in many criteria and toxic air pollutants compared to applying the adjustment beginning in Model Year 2022.50 Although Model Years 2019 and 2020 are already completed, and Model Year 2021 is underway, the civil penalty 50 See NHTSA’s Final Environmental Impact Statements for the CAFE rulemaking for MYs 2017 and beyond (Docket No. NHTSA–2011–0056) and for MYs 2021–2026 (Docket No. NHTSA–2017– 0069), both of which illustrate these trends as fuel economy standard stringency increases across alternatives. Both EISs are also available on the agency’s fuel economy website: https:// www.nhtsa.gov/fuel-economy. PO 00000 Frm 00027 Fmt 4702 Sfmt 4702 46819 assessment process is not yet complete for any of them.51 As a result, NHTSA does not yet know the anticipated manufacturer compliance shortfall for these model years. Because manufacturers can apply credits across a multi-year window, their decisions about how to apply credits in earlier model years will affect the availability of credits and the application of fuelsaving technology in later model years. However, NHTSA does not know whether and to what degree manufacturers will choose to pay fines in lieu of applying accrued credits, trade credits with other manufacturers, or rely on multi-year planning and credit carryforward and carry-back to address shortfalls. NHTSA invites comments, information, and analyses from the public on the degree to which this may occur as a result of changes to the civil penalty rate in Model Year 2019 versus Model Year 2022. At this time, however, NHTSA anticipates the impacts to be small. The difference between the alternatives contemplated in this action is only whether or not the civil penalty rate increase applies to three Model Years: 2019, 2020, and 2021. NHTSA continues to believe the impacts on those Model Years alone is expected to be de minimis, as Model Years 2019 and 2020 have largely if not entirely been produced already, and manufacturers are already selling Model Year 2021 vehicles. Further, as NHTSA has addressed in its CAFE rulemakings, many manufacturers have been unwilling to pay civil penalties historically. Those manufacturers may continue to opt to apply credits even if a lower civil penalty rate applied, rather than hold credits for future model years when the civil penalty rate would be higher. NHTSA also seeks comments on these conclusions. IV. Agencies and Persons Consulted NHTSA and DOT have consulted with OMB and the U.S. Department of Justice and provided other Federal agencies with the opportunity to review and provide feedback on this rulemaking. V. Conclusion NHTSA has reviewed the information presented in this Draft EA and tentatively concludes that adjusting the CAFE civil penalty rate beginning with Model Year 2019, as compared to Model Year 2022, would have, at most, a more positive impact on the quality of the 51 Because NHTSA does not have final model year performance data verified by EPA for these model years, any quantitative projections of the environmental impact across multiple model years would be too speculative to rely upon at this time. E:\FR\FM\20AUP1.SGM 20AUP1 khammond on DSKJM1Z7X2PROD with PROPOSALS 46820 Federal Register / Vol. 86, No. 159 / Friday, August 20, 2021 / Proposed Rules human environment to the extent that manufacturers may be more likely to expend credit balances on Model Year 2019 through 2021 vehicles than if the civil penalty rate remained at $5.50 for those model years. Lacking such credits in future years, manufacturers would be more likely to make improvements to the fuel economy of their fleets to avoid paying the higher civil penalty rates that would occur under either alternative. Additionally, higher civil penalty rates in Model Years 2019 through 2021 may cause manufacturers to more rapidly implement fuel-saving technology so that they may accrue credits to be carried back to cover compliance shortfalls. But NHTSA does not expect any differences in the impacts under either of the alternatives to rise to the level of significance that would necessitate the preparation of an Environmental Impact Statement. Based on the information in this Draft EA, and assuming no additional information or changed circumstances, NHTSA expects to make a Finding of No Significant Impact (FONSI). Such a finding will not be made before careful review of all public comments received. If NHTSA determines it is appropriate to do so, a Final EA and a FONSI will be issued as part of the final rule. of the interim final rule or a subsequent final rule may be obtained pursuant to 5 U.S.C. 702. 6. Executive Order 12988 (Civil Justice Reform) PART 578—CIVIL AND CRIMINAL PENALTIES This rulemaking is not expected to have a preemptive effect. This rulemaking is also not expected to have a retroactive effect, and NHTSA requests comment on this point. Judicial review ■ VerDate Sep<11>2014 16:48 Aug 19, 2021 Jkt 253001 7. Paperwork Reduction Act In accordance with the Paperwork Reduction Act of 1980, NHTSA states that there are no requirements for information collection associated with this rulemaking action. 8. Privacy Act Please note that anyone is able to search the electronic form of all comments received into any of DOT’s dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT’s complete Privacy Act Statement in the Federal Register published on April 11, 2000 (65 FR 19477), or you may visit https:// www.transportation.gov/privacy. List of Subjects in 49 CFR Part 578 Imports, Motor vehicle safety, Motor vehicles, Penalties, Rubber and rubber products, Tires. In consideration of the foregoing, the National Highway Traffic Safety Administration proposes to amend 49 CFR part 578 as set forth below. 1. The authority citation for 49 CFR part 578 continues to read as follows: Authority: Pub. L. 101–410, 104 Stat. 890; Pub. L. 104–134, 110 Stat. 1321; Pub. L. 109– 59, 119 Stat. 1144; Pub. L. 114–74, 129 Stat. PO 00000 Frm 00028 Fmt 4702 Sfmt 9990 584; Pub. L. 114–94, 129 Stat. 1312; 49 U.S.C. 30165, 30170, 30505, 32308, 32309, 32507, 32709, 32710, 32902, 32912, and 33115; delegation of authority at 49 CFR 1.81, 1.95. 2. Amend § 578.6 by revising paragraph (h)(2) to read as follows: ■ § 578.6 Civil penalties for violations of specified provisions of Title 49 of the United States Code. * * * * * (h) * * * (2) Except as provided in 49 U.S.C. 32912(c), beginning with model year 2019, a manufacturer that violates a standard prescribed for a model year under 49 U.S.C. 32902 is liable to the United States Government for a civil penalty of $14, plus any adjustments for inflation that occurred or may occur (for model years before model year 2019, the civil penalty is $5.50), multiplied by each .1 of a mile a gallon by which the applicable average fuel economy standard under that section exceeds the average fuel economy— (i) Calculated under 49 U.S.C. 32904(a)(1)(A) or (B) for automobiles to which the standard applies produced by the manufacturer during the model year; (ii) Multiplied by the number of those automobiles; and (iii) Reduced by the credits available to the manufacturer under 49 U.S.C. 32903 for the model year. Issued in Washington, DC, under authority delegated in 49 CFR 1.95, and 501.5. Steven S. Cliff, Acting Administrator. [FR Doc. 2021–17842 Filed 8–18–21; 11:15 am] BILLING CODE 4910–59–P E:\FR\FM\20AUP1.SGM 20AUP1

Agencies

[Federal Register Volume 86, Number 159 (Friday, August 20, 2021)]
[Proposed Rules]
[Pages 46811-46820]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-17842]


=======================================================================
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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 578

[Docket No. NHTSA-2021-0001]
RIN 2127-AM32


Civil Penalties

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

ACTION: Supplemental notice of proposed rulemaking.

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SUMMARY: On January 14, 2021, NHTSA published an interim final rule in 
response to a petition for rulemaking from the Alliance for Automotive 
Innovation (Alliance). The interim final rule provided that an 
inflation adjustment to the civil penalty rate applicable to automobile 
manufacturers that violate applicable corporate average fuel economy 
(CAFE) standards would apply beginning with vehicle Model Year 2022. 
The interim final rule also requested comment. In light of a subsequent 
Executive Order and the agency's review of comments, NHTSA is reviewing 
and reconsidering that interim final rule. Accordingly, NHTSA is 
issuing this supplemental notice of proposed rulemaking (SNPRM) to 
consider the appropriate path forward and to allow interested parties 
sufficient time to provide comments.

DATES: Comments: Comments must be received by September 20, 2021.

ADDRESSES: You may submit comments to the docket number identified in 
the heading of this document by any of the following methods:
     Federal eRulemaking Portal: Go to 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.
     Instructions: NHTSA has established a docket for this 
action. Direct your comments to Docket ID No. NHTSA-2021-0001. See the 
SUPPLEMENTARY INFORMATION section on ``Public Participation'' for more 
information about submitting written comments.
     Docket: All documents in the docket are listed on the 
www.regulations.gov website. Although listed in the index, some 
information is not publicly available, e.g., confidential business 
information or other information whose disclosure is restricted by 
statute. Certain other material, such as copyrighted material, is not 
placed on the internet and will be publicly available only in hard copy 
form. Publicly available docket materials are available either 
electronically through www.regulations.gov or in hard copy at the 
following location: Docket Management Facility, M-30, U.S. Department 
of Transportation, West Building, Ground Floor, Rm. W12-140, 1200 New 
Jersey Avenue SE, Washington, DC 20590. The telephone number for the 
docket management facility is (202) 366-9324. The docket management 
facility is open between 9 a.m. and 5 p.m. Eastern Time, Monday through 
Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT: Michael Kuppersmith, Office of Chief 
Counsel, NHTSA, email [email protected], telephone (202) 366-
2992, facsimile (202) 366-3820, 1200 New Jersey Ave. SE, Washington, DC 
20590.

SUPPLEMENTARY INFORMATION:

Table of Contents

A. Public Participation
B. CAFE Statutory and Regulatory Background
C. Civil Penalties Inflation Adjustment Act Improvements Act of 2015
D. NHTSA's Actions to Date Regarding CAFE Civil Penalties
    1. Initial Interim Final Rule
    2. Initial Petition for Reconsideration and Response
    3. NHTSA Reconsideration
    4. Subsequent Petitions and Interim Final Rule

[[Page 46812]]

E. Summary of Comments Received
F. Supplemental Request for Public Comment
G. Rulemaking Analyses and Notices
    1. Executive Order 12866, Executive Order 13563, and DOT 
Regulatory Policies and Procedures
    2. Regulatory Flexibility Act
    3. Executive Order 13132 (Federalism)
    4. Unfunded Mandates Reform Act of 1995
    5. National Environmental Policy Act
    6. Executive Order 12778 (Civil Justice Reform)
    7. Paperwork Reduction Act
    8. Privacy Act

A. Public Participation

    This section describes how you can participate in the commenting 
process.

(1) How do I prepare and submit comments?

    Your comments must be written. To ensure that your comments are 
correctly filed in the docket, please include the docket number NHTSA-
2021-0001 in your comments. If you are submitting comments 
electronically as a PDF (Adobe) file, we ask that the documents 
submitted be scanned using the Optical Character Recognition (OCR) 
process, thus allowing NHTSA to search and copy certain portions of 
your submissions.\1\ Please note that pursuant to the Data Quality Act, 
in order for the substantive data to be relied upon and used by NHTSA, 
it must meet the information quality standards set forth in the Office 
of Management and Budget (OMB) and Department of Transportation (DOT) 
Data Quality Act guidelines. Accordingly, we encourage you to consult 
the guidelines in preparing your comments. OMB's guidelines may be 
accessed at https://www.whitehouse.gov/omb/information-regulatory-affairs/information-policy/. DOT's guidelines may be accessed at 
https://www.transportation.gov/dot-information-dissemination-quality-guidelines.
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    \1\ 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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(2) 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.

(3) How can I be sure that my comments were received?

    If you submit your comments by mail and wish Docket Management to 
notify you upon its receipt of your comments, enclose a self-addressed, 
stamped postcard in the envelope containing your comments. Upon 
receiving your comments, Docket Management will return the postcard by 
mail. If you submit information through email under a claim of 
confidentiality, as discussed below, you may request a delivery 
receipt.

(4) How do I submit confidential business information?

    If you wish to submit any information under a claim of 
confidentiality, you should submit your complete submission, including 
the information you claim to be confidential business information 
(CBI), to the NHTSA Chief Counsel. When you send a comment containing 
CBI, you should include a cover letter setting forth the information 
specified in our CBI regulation.\2\ In addition, you should submit a 
copy from which you have deleted the claimed CBI to the docket by one 
of the methods set forth above.
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    \2\ See 49 CFR part 512.
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    To facilitate social distancing due to COVID-19, NHTSA is treating 
electronic submission as an acceptable method for submitting CBI to 
NHTSA under 49 CFR part 512. Any CBI submissions sent via email should 
be sent to an attorney in the Office of Chief Counsel at the address 
given above under FOR FURTHER INFORMATION CONTACT. Likewise, for CBI 
submissions via a secure file transfer application, an attorney in the 
Office of Chief Counsel must be set to receive a notification when 
files are submitted and have access to retrieve the submitted files. At 
this time, regulated entities should not send a duplicate hardcopy of 
their electronic CBI submissions to DOT headquarters.
    Please note that these modified submission procedures are only to 
facilitate continued operations while maintaining appropriate social 
distancing due to COVID-19. Regular procedures for Part 512 submissions 
will resume upon further notice, when NHTSA and regulated entities 
discontinue operating primarily in telework status.
    If you have any questions about CBI or the procedures for claiming 
CBI, please consult the person identified in the FOR FURTHER 
INFORMATION CONTACT section.

(5) How can I read the comments submitted by other people?

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

B. CAFE Statutory and Regulatory Background

    NHTSA sets \3\ and enforces \4\ corporate average fuel economy 
(CAFE) standards for the United States light-duty automobile fleet, and 
in doing so, assesses civil penalties against manufacturers that 
violate applicable standards and are unable to make up the shortfall 
with credits.\5\ The civil penalty amount for CAFE violations was 
originally set by statute in 1975, and beginning in 1997, included a 
rate of $5.50 per each tenth of a mile per gallon (0.1) that a 
manufacturer's CAFE performance falls short of its compliance 
obligation. This shortfall amount is then multiplied by the number of 
vehicles in that manufacturer's fleet.\6\ The basic equation for 
calculating a manufacturer's civil penalty amount, before accounting 
for credits, is as follows:
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    \3\ 49 U.S.C. 32902. The authorities vested in the Secretary 
under chapter 329 of Title 49, U.S.C., have been delegated to NHTSA. 
49 CFR 1.95(a).
    \4\ 49 U.S.C. 32911, 32912.
    \5\ Within statutory constraints, credits may be either earned 
(for over-compliance by a given manufacturer's fleet, in a given 
model year), transferred (from one fleet to another), or purchased 
(in which case, another manufacturer earned the credits by over-
complying and chose to sell that surplus). 49 U.S.C. 32903.
    \6\ 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.

(penalty rate, in $ per 0.1 mpg per vehicle) x (amount of shortfall, in

[[Page 46813]]

tenths of an mpg) x (# of vehicles in manufacturer's fleet).\7\
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    \7\ The process of determining civil penalties occurs after the 
end of a model year, following NHTSA's receipt of final reports from 
the Environmental Protection Agency (EPA). See 77 FR 62624, 63126 
(Oct. 15, 2012).

    Starting with Model Year 2011, the Energy Independence and Security 
Act of 2007 (EISA) provided for credit transfers among a manufacturer's 
various fleets.\8\ Starting with that model year, the law also provided 
for trading between vehicle manufacturers, which has allowed vehicle 
manufacturers the opportunity to acquire credits from competitors 
rather than paying civil penalties for violations. Manufacturers can 
choose to carry back credits to apply to any of three model years 
before they are earned or carry them forward to apply to any of the 
five model years after they are earned.
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    \8\ Public Law 110-140, 104.
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    In complement to NHTSA's regulation of fuel economy, the 
Environmental Protection Agency (EPA) regulates the emissions of light-
duty vehicles. These regulations include standards to regulate 
greenhouse gas emissions from the light-duty fleet. The Clean Air Act 
requires EPA to set greenhouse gas (GHG) emissions standards from 
light-duty vehicles since EPA has made an ``endangerment finding'' that 
greenhouse gases ``cause[s] or contribute[s] to air pollution which may 
reasonably be anticipated to endanger public health or welfare.'' \9\ 
Although NHTSA and EPA have different roles and independent enforcement 
and compliance obligations, and operate under different statutory 
authority, the agencies work together to achieve the goals of their 
respective statutes. Since Model Year 2012, the agencies have issued 
joint rulemakings regulating fuel economy (NHTSA) and GHGs (EPA) from 
light-duty vehicles that have different requirements but are harmonized 
to the extent possible to work in tandem. The CAFE program is subject 
to various statutory requirements not applicable to the EPA GHG 
program. One such requirement, for example, requires automakers to meet 
a separate average fleet requirement for automobiles that are 
manufactured domestically.\10\ The Clean Air Act does not include a 
similar requirement for EPA's GHG standards.
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    \9\ 42 U.S.C. 7521, see also 74 FR 66495 (Dec. 15, 2009) 
(``Endangerment and Cause or Contribute Findings for Greenhouse 
Gases under Section 202(a) of the Clean Air Act'').
    \10\ 49 U.S.C. 32902(b)(4).
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C. Civil Penalties Inflation Adjustment Act Improvements Act of 2015

    On November 2, 2015, the Federal Civil Penalties Inflation 
Adjustment Act Improvements Act (Inflation Adjustment Act or 2015 Act), 
Public Law 114-74, Section 701, was signed into law. The 2015 Act 
required Federal agencies to promulgate an interim final rule to make 
an initial ``catch-up'' adjustment to the civil monetary penalties they 
administer, and then to make subsequent annual adjustments for 
inflation. The 2015 Act limited the initial inflation increase to 150 
percent of the then-current penalty.
    In a February 24, 2016 memorandum, the Director of the Office of 
Management and Budget (OMB) provided initial guidance to all Federal 
agencies on how to calculate the initial adjustment required by the 
2015 Act.\11\ The initial ``catch-up'' adjustment was based on the 
change between the Consumer Price Index for all Urban Consumers (CPI-U) 
for the month of October in the year the penalty amount was established 
or last adjusted by Congress and the October 2015 CPI-U. The February 
24, 2016 memorandum contained a table with a multiplier for the change 
in CPI-U from the year the penalty was established or last adjusted to 
2015. To arrive at the adjusted penalty, the agency multiplied the 
penalty amount when it was established or last adjusted by Congress, 
excluding adjustments under the 1990 Inflation Adjustment Act, by the 
multiplier for the increase in CPI-U from the year the penalty was 
established or adjusted. Ensuing guidance from OMB identifies the 
appropriate inflation multiplier for agencies to use to calculate the 
subsequent annual adjustments.\12\
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    \11\ Memorandum from the Director of OMB to Heads of Executive 
Departments and Agencies, Implementation of the Federal Civil 
Penalties Inflation Adjustment Act Improvements Act of 2015 (Feb. 
24, 2016), available online at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/memoranda/2016/m-16-06.pdf.
    \12\ Memorandum from the Director of OMB to Heads of Executive 
Departments and Agencies, Implementation of the 2017 Annual 
Adjustment Pursuant to the Federal Civil Penalties Inflation 
Adjustment Act Improvements Act of 2015 (Dec. 16, 2016), available 
online at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/memoranda/2017/m-17-11_0.pdf; Memorandum from the Director of OMB to 
Heads of Executive Departments and Agencies, Implementation of 
Penalty Inflation Adjustments for 2018, Pursuant to the Federal 
Civil Penalties Inflation Adjustment Act Improvements Act of 2015 
(Dec. 15, 2017), available online at https://www.whitehouse.gov/wp-content/uploads/2017/11/M-18-03.pdf; Memorandum from the Director of 
OMB to Heads of Executive Departments and Agencies, Implementation 
of Penalty Inflation Adjustments for 2019, Pursuant to the Federal 
Civil Penalties Inflation Adjustment Act Improvements Act of 2015 
(Dec. 14, 2018), available online at https://www.whitehouse.gov/wp-content/uploads/2017/11/m_19_04.pdf; Memorandum from the Acting 
Director of OMB to Heads of Executive Departments and Agencies, 
Implementation of Penalty Inflation Adjustments for 2020, Pursuant 
to the Federal Civil Penalties Inflation Adjustment Act Improvements 
Act of 2015 (Dec. 16, 2019), available online at https://www.whitehouse.gov/wp-content/uploads/2019/12/M-20-05.pdf; 
Memorandum from the Director of OMB to Heads of Executive 
Departments and Agencies, Implementation of Penalty Inflation 
Adjustments for 2021, Pursuant to the Federal Civil Penalties 
Inflation Adjustment Act Improvements Act of 2015 (Dec. 23, 2020), 
available online at https://www.whitehouse.gov/wp-content/uploads/2020/12/M-21-10.pdf.
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D. NHTSA's Actions to Date Regarding CAFE Civil Penalties

1. Initial Interim Final Rule

    On July 5, 2016, NHTSA published an interim final rule, adopting 
inflation adjustments for all civil penalties under its administration, 
following the procedure and the formula in the 2015 Act. One of the 
adjustments NHTSA made at the time was raising the civil penalty rate 
for CAFE violations from $5.50 to $14.\13\ NHTSA also indicated in that 
notice that the maximum penalty rate that the Secretary is permitted to 
establish for such violations would similarly increase to reflect 
inflation from the statutory cap of $10 to $25, but did not codify this 
change in the regulatory text. That initial interim final rule became 
effective on August 4, 2016.
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    \13\ 81 FR 43524 (July 5, 2016).
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2. Initial Petition for Reconsideration and Response

    On August 1, 2016, the then-Alliance of Automobile Manufacturers 
and the Association of Global Automakers (since combined to form the 
Alliance for Automotive Innovation) jointly petitioned NHTSA for 
reconsideration of the CAFE penalty provisions issued in the interim 
final rule.\14\ This petition raised concerns with the impact that the 
increased penalty rate would have on CAFE compliance costs, which they 
estimated to be at least $1 billion annually. Specifically, this 
petition identified several issues, including retroactivity. The 
petitioners were concerned that applying the penalty increase 
associated with model years that had already been completed or for 
which a company's compliance plan had already been ``set'' was a 
retroactive application of the inflation adjustment.
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    \14\ Jaguar Land Rover North America, LLC also filed a petition 
for reconsideration in response to the July 5, 2016 interim final 
rule raising the same concerns as those raised in the joint 
petition. Both petitions, along with a supplement to the joint 
petition, can be found in Docket No. NHTSA-2016-0075 at 
www.regulations.gov.
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    In response to the joint petition, NHTSA issued a final rule on 
December

[[Page 46814]]

28, 2016.\15\ In that rule, NHTSA agreed that raising the penalty rate 
for model years already fully complete at the time the 2015 Act was 
enacted would be inappropriate, given that courts generally disfavor 
the retroactive application of statutes, and that applying penalties to 
model years that were already completed could not deter non-compliance, 
incentivize compliance, or lead to any improvements in fuel economy. 
NHTSA also agreed that raising the rate for model years for which 
product changes were infeasible due to lack of lead time from the 
enactment of the 2015 Act did not seem consistent with Congress' intent 
that the CAFE program be responsive to consumer demand. Accordingly, 
NHTSA stated that it would not apply the inflation-adjusted penalty 
rate of $14 (plus any adjustments for inflation that occurred or may 
occur) until Model Year 2019, as the agency believed that 2019 would be 
the first year after the 2015 Act in which product changes could 
reasonably be made in response to the higher penalty rate. This final 
rule had an effective date of January 27, 2017.
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    \15\ 81 FR 95489 (December 28, 2016).
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3. NHTSA Reconsideration

    Beginning in January 2017, NHTSA took a series of actions to delay 
the effective date of the December 2016 final rule, ultimately leading 
to a rule announcing that the effective date would be delayed 
indefinitely.\16\ In April 2018, the United States Court of Appeals for 
the Second Circuit vacated NHTSA's indefinite delay of the rule's 
effective date, clarifying that the December 2016 rule was in 
force.\17\
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    \16\ 82 FR 8694 (January 30, 2017); 82 FR 15302 (March 28, 
2017); 82 FR 29009 (June 27, 2017); 82 FR 32139 (July 12, 2017).
    \17\ Order, ECF No. 196, NRDC v. NHTSA, Case No. 17-2780 (2d 
Cir., Apr. 24, 2018); Opinion, ECF No. 205, NRDC v. NHTSA, Case No. 
17-2780, at 44 (2d Cir., June 29, 2018) (``The Civil Penalties Rule, 
81 FR 95,489, 95,489-92 (December 28, 2016), no longer suspended, is 
now in force.'').
---------------------------------------------------------------------------

    In July 2019, NHTSA finalized a rule determining that the 2015 Act 
did not apply to the CAFE civil penalty rate. On August 31, 2020, the 
United States Court of Appeals for the Second Circuit vacated the July 
2019 rule and ruled that the December 2016 rule was back in force. The 
Second Circuit denied panel rehearing on November 2, 2020.

4. Subsequent Petitions and Interim Final Rule

    On September 9, 2019, the Institute for Policy Integrity at New 
York University School of Law (IPI) submitted a petition for 
reconsideration of NHTSA's July 2019 final rule. IPI argued that the 
rule was unreasonable and not in the public interest because it did not 
properly account for the associated costs and benefits. Additionally, 
IPI challenged NHTSA's statutory interpretations. NHTSA did not issue a 
decision on the petition prior to the Second Circuit's decision 
vacating the rule.
    Following the Second Circuit's decision, on October 2, 2020, NHTSA 
received a petition for rulemaking from the Alliance for Automotive 
Innovation requesting that the adjustment to $14 not be applied until 
Model Year 2022.\18\ According to the Alliance Petition, ``Model Years 
2019 and 2020 are effectively lapsed now,'' and ``[m]anufacturers are 
unable to change MY 2021 plans at this point.'' The Alliance argued 
that, as in the December 2016 rule, applying the increased penalty to 
any violations that are temporally impossible to avoid or cannot 
practically be remedied does not serve the statutory purposes of 
deterring prohibited conduct or incentivizing favored conduct. 
According to the Alliance, doing so would effectively be punishing 
violators retroactively.
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    \18\ The Alliance also submitted a supplement to its petition on 
October 22, 2020 (Alliance Supplement).
---------------------------------------------------------------------------

    In addition to relying on the reasoning of the December 2016 rule 
as it applied to the increase based on the timing of the enactment of 
the 2015 Act, the Alliance Petition noted, but did not provide detailed 
evidence of, the significant economic impact suffered by the industry 
due to COVID-19. Accordingly, the Alliance Petition also cited the now-
revoked Executive Order 13924,\19\ requiring Federal agencies to take 
appropriate action, consistent with applicable law, to combat the 
economic emergency caused by COVID-19. Several individual vehicle 
manufacturers submitted supplemental information to NHTSA further 
articulating the negative economic position they were in due to the 
COVID-19 public health emergency and the potential and significant 
adverse economic consequences of the increased civil penalty rate.
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    \19\ See Executive Order 14018, 86 FR 11855, ``Revocation of 
Certain Presidential Actions'' (Feb. 24, 2021).
---------------------------------------------------------------------------

    After considering the issues raised, NHTSA granted the Alliance's 
petition and promulgated an interim final rule providing that the 
increase \20\ will apply beginning with Model Year 2022. The interim 
final rule contended that applying the increased civil penalty rate to 
vehicles in Model Years 2019, 2020, and 2021 would not result in 
additional fuel savings and would impose higher penalties retroactively 
because those model years were already completed, or, for Model Year 
2021, production plans were set prior to the Second Circuit's decision 
striking down the 2019 rule. The interim final rule relied in large 
part on the reasoning in the December 2016 final rule, though it did 
not discuss the extent to which the four years between the two rules 
should affect that reasoning. Additionally, the interim final rule 
attempted to account for the negative economic impact on the automotive 
sector caused by the global outbreak of COVID-19.\21\ That interim 
final rule amended the relevant regulatory text accordingly--effective 
immediately and without having afforded prior notice or the ability to 
comment in advance--and requested comment within ten days. The interim 
final rule also noted that IPI's petition was moot, and, to the extent 
it was not moot, NHTSA denied it.
---------------------------------------------------------------------------

    \20\ The rate is increasing to $14, plus any adjustments for 
inflation that occurred or may occur. 49 CFR 578.6(h)(2).
    \21\ The reasoning for the interim final rule is set forth more 
fully in the January 14, 2021 notice published at 86 FR 3016.
---------------------------------------------------------------------------

    The interim final rule is currently the subject of legal challenges 
in the Second Circuit and Ninth Circuit.\22\
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    \22\ NRDC v. NHTSA, No. 21-139 (2d Cir.); New York v. NHTSA, No. 
21-339 (2d Cir.); Tesla v. NHTSA, No. 21-70367 (9th Cir.).
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E. Summary of Comments Received

    Before NHTSA's interim final rule was published but after the 
agency had announced, through the publication of the Fall 2020 Unified 
Agenda of Regulatory and Deregulatory Actions, that it had initiated a 
rulemaking in response to the Alliance's petition, NHTSA received two 
letters regarding the rulemaking: one jointly from the State of New 
York, the Natural Resources Defense Council, and the Sierra Club, and 
one from Tesla.\23\ These letters raised concerns with NHTSA's 
rulemaking, particularly with the entities' inability to comment on the 
Alliance's petition for rulemaking in advance. NHTSA did not respond to 
these letters prior to the publication of the interim final rule, but 
included both letters in the docket when the interim final rule was 
published and noted that they ``will be treated as comments for 
appropriate consideration.'' \24\
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    \23\ NHTSA-2021-0001-0001; NHTSA-2021-0001-0009.
    \24\ 86 FR 3016, 3023 n.74 (Jan. 14, 2021).
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    After the interim final rule was published, NHTSA received eight 
substantive comments.\25\ NHTSA received comments from:
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    \25\ NHTSA received a ninth comment that simply said, ``Help.'' 
NHTSA-2021-0001-0018. Without any additional information, NHTSA 
cannot reasonably address or respond to this commenter's concern.

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[[Page 46815]]

     The Attorneys General of California, New York, 
Connecticut, Delaware, Illinois, Iowa, Maine, Maryland, Massachusetts, 
Minnesota, New Jersey, Oregon, Pennsylvania, Rhode Island, Washington, 
and Vermont; \26\
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    \26\ NHTSA-2021-0001-0017.
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     American Council for an Energy-Efficient Economy, Center 
for Auto Safety, Center for Biological Diversity, Consumer Federation 
of America, Consumer Reports, The Ecology Center (Michigan), 
Environmental Law and Policy Center, Interfaith Power & Light, Sierra 
Club, Union of Concerned Scientists; \27\
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    \27\ NHTSA-2021-0001-0015.
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     Natural Resources Defense Council and Sierra Club; \28\
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    \28\ NHTSA-2021-0001-0013.
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     The Institute for Policy Integrity at New York University 
School of Law; \29\
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    \29\ NHTSA-2021-0001-0011.
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     Tesla; \30\
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    \30\ NHTSA-2021-0001-0012.
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     The Alliance for Automotive Innovation; \31\
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    \31\ NHTSA-2021-0001-0014.
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     The National Automobile Dealers Association (NADA); \32\ 
and
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    \32\ NHTSA-2021-0001-0016.
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     An anonymous individual.\33\
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    \33\ NHTSA-2021-0001-0019.
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    Most of the comments opposed the interim final rule, raising 
serious procedural, legal, and substantive concerns. In general, these 
comments argued that NHTSA did not have the authority to delay the 
application of the inflation increase beyond Model Year 2019 and that, 
regardless, NHTSA would have to do so through notice-and-comment, not 
by an interim final rule that was effective immediately without prior 
notice and without the opportunity to comment in advance. In supporting 
these arguments, the commenters relied, in part, upon the two earlier 
decisions by the Second Circuit.
    Most of these comments also challenged the interim final rule as 
arbitrary and capricious on multiple grounds. For example, the comments 
discussed that applying the increased rate before Model Year 2022 would 
not be retroactive because the increased rate was originally applied in 
2016 when it was still prospective, and NHTSA's subsequent actions, 
which were all stricken down by the Second Circuit, did not change that 
fact. In these commenters' view, manufacturers have been on notice of 
the increase well before Model Year 2019, and any reliance to the 
contrary was undue. These comments argued that this was particularly 
true given the rulings from the Second Circuit litigation, in which 
many of these commenters and the Alliance were involved, with the 
Alliance being an intervening party. The comments further argued that 
delaying the application of the increased rate would affect future 
compliance because manufacturers may be incentivized to hold credits 
for model years when the higher rate will apply. The comments also 
argued that the interim final rule improperly analyzed the economic 
effects of the COVID-19 pandemic, for example, by not accounting for 
any positive economic data and disregarding that some of the relevant 
conduct occurred before the pandemic.
    These comments also argued that the interim final rule violated the 
National Environmental Policy Act of 1969 (NEPA). Lastly, in response 
to NHTSA's request for comment about whether the adjustment should be 
delayed further until Model Year 2023, these comments opposed any 
additional delay. Some of these comments also expressed concern with 
the short ten-day comment period provided by the interim final rule--
and only after the rule was already effective without any opportunity 
to comment beforehand.
    Two comments supported the interim final rule. The Alliance 
reiterated the reasoning set forth in its petition, which NHTSA granted 
in the interim final rule. According to the Alliance, the interim final 
rule was consistent with NHTSA's December 2016 rule; appropriately 
accounted for the industry's production and design processes, including 
the unforeseen challenges of the COVID-19 public health emergency; and 
fairly implemented the Second Circuit's decision. The Alliance also 
noted that Model Year 2022 vehicles could have begun being produced as 
early as January 2, 2021--about two weeks before the interim final rule 
was published--but it believes NHTSA was reasonable to make the 
inflation adjustment applicable beginning in Model Year 2022, declining 
to request a further delay in the adjustment to Model Year 2023. NADA 
supported the Alliance's comment, adding that increased CAFE civil 
penalties before Model Year 2022 would lead to higher vehicle prices 
for consumers or manufacturer shifts in available offerings, without 
any associated environmental or safety benefits.

F. Supplemental Request for Public Comment

    On January 20, 2021, the President issued Executive Order 13990, 
entitled ``Protecting Public Health and the Environment and Restoring 
Science to Tackle the Climate Crisis.'' E.O. 13990 directs the heads of 
all agencies to immediately review all existing regulations, orders, 
guidance documents, policies, and any other similar agency actions 
promulgated, issued, or adopted between January 20, 2017 and January 
20, 2021, that are or may be inconsistent with, or present obstacles 
to, the policy set forth in E.O. 13990: A policy ``to listen to the 
science; to improve public health and protect our environment; to 
ensure access to clean air and water; to limit exposure to dangerous 
chemicals and pesticides; to hold polluters accountable, including 
those who disproportionately harm communities of color and low-income 
communities; to reduce greenhouse gas emissions; to bolster resilience 
to the impacts of climate change; to restore and expand our national 
treasures and monuments; and to prioritize both environmental justice 
and the creation of the well-paying union jobs necessary to deliver on 
these goals.'' \34\ The Secretary of Transportation expressly 
identified the January 14, 2021 CAFE civil penalties interim final rule 
as one to be reviewed pursuant to E.O. 13990.\35\
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    \34\ 86 FR 7037, 7037 (Jan. 25, 2021).
    \35\ Memorandum from the Acting General Counsel of DOT to the 
Chief Counsel and Acting Deputy Administrator of NHTSA and Special 
Advisor, ``Implementation of Executive Order 13990, entitled 
`Protecting Public Health and the Environment and Restoring Science 
to Tackle the Climate Crisis' '' (Feb. 22, 2021). https://www.transportation.gov/sites/dot.gov/files/2021-02/Memo-to-NHTSA.pdf.
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    In accord with E.O. 13990 and the Secretary's determination, and in 
light of the significant concerns raised by the commenters, NHTSA is 
reviewing and reconsidering the January 14, 2021 interim final rule. 
Specifically, NHTSA is considering withdrawing the interim final rule 
and reverting to the December 2016 final rule that would apply the 
inflation adjustment beginning with Model Year 2019--the rule that the 
Second Circuit has said twice is ``now in force.'' \36\ The vast 
majority of comments submitted to date support returning to the 
December 2016 final rule. Upon further consideration, automakers were 
aware as of December 2016 that the inflation adjustment would apply 
beginning with Model Year 2019. It was not until Model Year 2019 was 
already nearly complete that the agency issued a final rule changing 
that, which the Second Circuit subsequently determined was legally 
invalid. The Alliance participated in that litigation as

[[Page 46816]]

an intervenor and was well aware of the possibility that the Second 
Circuit would restore the applicability of the inflation increase 
beginning with Model Year 2019. In fact, the Second Circuit did just 
that. NHTSA is therefore of the view that it would be appropriate to 
revisit the characterization of the application of the inflation 
adjustment beginning with Model Year 2019 as ``retroactive.'' Moreover, 
commenters have raised valid concerns regarding the procedures that the 
agency used in issuing the interim final rule, which did not proceed 
through a more typical notice-and-comment process and made the rule 
effective immediately upon publication. In addition, based upon further 
review and consideration of the Second Circuit's prior decisions and, 
in light of the ongoing litigation, the agency is assessing the legal 
risk of leaving the interim final rule in place, as the interim final 
rule was based on an assertion of discretion that NHTSA now tentatively 
believes is in conflict with the Inflation Adjustment Act and the 
Second Circuit's decisions.
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    \36\ Nat. Res. Def. Council v. Nat'l Highway Traffic Safety 
Admin., 894 F.3d 95, 116 (2d Cir. 2018); New York v. Nat'l Highway 
Traffic Safety Admin., 974 F.3d 87, 101 (2d Cir. 2020).
---------------------------------------------------------------------------

    For these reasons, the agency is now considering withdrawing the 
interim final rule and reverting to the December 2016 final rule.
    That said, the agency has not yet reached any final determinations, 
and instead believes that an additional period of public comment would 
aid the agency in its reexamination of the issues involved in the 
interim final rule. Considering the importance of this rulemaking and 
the short comment period--ten days--previously provided to interested 
parties, NHTSA is issuing this notice to provide the public with an 
appropriate amount of time to comment and to enable NHTSA to more fully 
review and consider the issues. In doing so, NHTSA is expressly 
requesting comment on whether it should proceed to a final rule that 
withdraws the interim final rule and reverts to the December 2016 final 
rule, restoring the application of the increased CAFE civil penalty 
rate beginning with Model Year 2019. NHTSA will also accept comments on 
whether the inflation adjustment should apply beginning with a model 
year later than Model Year 2019. Commenters arguing for such a position 
should explain how it is consistent with the 2015 Act and the Second 
Circuit's decisions. NHTSA will also consider comments already 
submitted in response to the interim final rule as part of its ongoing 
review and the anticipated promulgation of a final rule following this 
comment period.

G. Rulemaking Analyses and Notices

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

    NHTSA has considered the impact of this rulemaking action under 
Executive Order 12866, Executive Order 13563, and the Department of 
Transportation's regulatory policies and procedures. This rulemaking 
document has been considered a ``significant regulatory action'' under 
Executive Order 12866. NHTSA believes that this rulemaking will be 
``economically significant,'' as NHTSA believes that the difference in 
the amount of penalties received by the government as a result of this 
rule are likely to exceed $100 million in at least one of the years 
affected by this rulemaking and that there may be some further economic 
effects as discussed below.
    As a general matter, the civil penalty rate as adjusted for 
inflation will likely induce some degree of greater compliance. 
Manufacturers that are paying civil penalties for CAFE violations have 
likely calculated that it is less costly or otherwise preferable to pay 
the penalties than to meet the statutory and regulatory requirements. 
An increased penalty rate changes this calculation, as it likely raises 
either the costs of credits a noncompliant manufacturer may choose to 
purchase, the total penalty amount a manufacturer will pay, or both. 
However, the Second Circuit has made clear that the Inflation 
Adjustment Act applies to these penalties and, thus, the question over 
whether these penalties should be adjusted for inflation has been 
settled.
    In this rule, NHTSA is proposing to remove the interim final rule, 
which delayed the inflation adjusted penalty rate by three model years, 
two of which are already complete and the last one which is 
considerably underway. An analysis here would be limited to estimating 
over this short time horizon: (1) Which manufacturers did not produce 
compliant fleets for Model Years 2019 and 2020 and are likely to not 
produce compliant fleets for Model Year 2021; (2) what the shortfalls 
will be for those non-compliant manufacturers; and (3) the extent to 
which those manufactures will choose to use credits (either their own 
or those purchased from over-compliant manufacturers) or pay penalties 
to address these shortfalls. Pointedly, this analysis does not have 
sufficient information to account for whether, and if so, how 
manufacturers will adjust the composition of the fleet for these model 
years in response to the penalty change.
    Any analysis would estimate what the compliance shortfalls will be 
and whether manufacturers will pay penalties or use credits. These 
estimates could be used to estimate the effects on individual 
manufactures in the form of higher penalty payments, higher payments to 
other manufacturers for credits, or higher receipts for overcomplying 
manufacturers for credits sold to other manufacturers. However, NHTSA 
has only limited ability to estimate what strategies manufacturers will 
take either to use credits or pay penalties to deal with any 
noncompliance, as that is a decision that each manufacturer must take 
based on their unique circumstances. In the past, the vast majority of 
manufacturers pay no penalties, as only five manufacturers have paid 
civil penalties since Model Year 2011.\37\ And only one of those 
manufacturers faced particularly heavy penalties--even before the $14 
rate would have gone into effect--for failing to comply with the 
minimum domestic passenger car standard, which cannot be made up 
through the application of transferred or traded credits.\38\
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    \37\ See ``Civil Penalties,'' available at https://one.nhtsa.gov/cafe_pic/CAFE_PIC_Fines_LIVE.html.
    \38\ 49 U.S.C. 32903(f)(2), (g)(4); 49 CFR 536.9(c).
---------------------------------------------------------------------------

    Despite this uncertainty, NHTSA is confident that, based on the 
experience of recent model years, this rule would lead to at least $100 
million difference in the amount of penalties in at least one model 
year. For example, based on mid-model year fuel economy performance 
data, NHTSA projected a shortfall of 1.3 miles per gallon across the 
U.S. fleet in Model Year 2019.\39\ Assuming a similar magnitude of 
production from Model Year 2018 for Model Year 2019 would result in a 
nationwide fleet-wide net shortfall of approximately $115.4 million at 
the $5.50 rate or an approximately $293.9 million shortfall at the $14 
rate--an approximately $178.5 million difference.\40\ As noted, it is 
expected

[[Page 46817]]

that much of this increase would likely fall on a single automobile 
manufacturer and likely due to a failure to comply with the minimum 
domestic passenger car standard. NHTSA does not yet have enough 
information for Model Year 2020, which is now complete, or Model Year 
2021, which is still underway, to make a similar estimate, but requests 
comment, data, or analysis on the potential compliance shortfalls, 
penalty payments, and effect on credit sales for those model years.
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    \39\ See ``MYs 2018 and 2019 Projected Fuel Economy Performance 
Report,'' available at https://one.nhtsa.gov/cafe_pic/AdditionalInfo.htm. This projection is based on information received 
from manufacturers' mid[hyphen]model year reports required by 49 CFR 
part 537. The data from these reports has not been verified by EPA 
or NHTSA. NHTSA assesses manufacturers' compliance only using EPA-
verified final model year data. The final model year data may differ 
from the mid-model year projections due to the mixture of vehicles 
actually produced throughout the model year.
    \40\ In looking at the total fleet performance across the 
country, manufacturers who over-complied with the standard may 
benefit from an expected increase in the value of credits as a 
result of an inflation increase in the penalty rate, while those 
that have made a business decision not to comply with the standards 
would likely have to pay more for those credits. To the extent that 
a manufacturer cannot meet their shortfall with these credits or, in 
the case of the minimum domestic passenger car standard, are 
prohibited from doing so by law, they would need to pay penalties.
---------------------------------------------------------------------------

    In addition, NHTSA believes that commenters have raised valid 
questions about further economic effects. These commenters have argued 
that, regardless of the impact of this rulemaking action on Model Year 
2019 through 2021 vehicles, longer-term impacts may vary as a result of 
manufacturer multi-year planning, the transfer of credits across model 
years and between manufacturers, and the changing value of credits over 
time. According to these commenters, if such variation were to occur, 
applying the $14 penalty rate beginning in Model Year 2019 may result 
in manufacturers applying credit balances to Model Year 2019 through 
2021 vehicles and being incentivized to make fuel economy improvements 
in their fleet beyond that timeframe. And for manufacturers that do not 
currently have credits or cannot transfer or trade for them to make up 
a shortfall of the minimum domestic passenger car standard, applying 
the inflation adjusted penalty rate beginning in Model Year 2019 places 
an even greater incentive on future compliance and fuel economy 
improvements to avoid additional higher penalties going forward.
    A brief explanation of the statutory scheme that governs the use of 
credits is helpful in understanding how this could work. Manufacturers 
comply separately with the domestic passenger car, imported passenger 
car, and light truck standards. Thus, a manufacturer can comply (or 
over comply) with all standards, comply with some but not all 
standards, or fail to comply with all standards. To the extent that a 
manufacturer over-complies with the standard for a particular fleet, 
the manufacturer generates a credit for that over-compliance, which the 
manufacturer can hold-on to for future compliance for that standard, 
``transfer'' from one fleet (e.g., light trucks) to its other fleet 
(e.g., imported passenger cars), or trade those credits to another 
manufacturer. Those manufacturers can either ``bank'' those credits for 
their own future use or sell them to non-compliant manufacturers, who 
seek the credit to make up for a shortfall. These earned credits can be 
``carried forward'' to apply to any of the five model years after they 
are earned. Manufacturers can also choose to ``carry back'' credits to 
apply to any of three model years before they are earned. However, 
there are certain limitations on the use of credits, as manufacturers 
may not transfer more than 2.0 miles per gallon in credits from one of 
their fleets to another in a single model year and neither transferred 
nor traded credits may be used to meet the minimum domestic passenger 
car standard.
    Consistent with these constraints, if the rate for civil penalties 
instead remained at the $5.50 rate for Model Years 2019 through 2021, 
some manufacturers might choose to pay the lower penalty earlier and 
save the credits that could either carry forward or carry back for 
future model years when they are valued more due to the inflation 
adjustment. For example, a credit earned in Model Year 2017 could be 
used for any year up to Model Year 2022, and, thus, if the adjusted 
rate applied in Model Year 2019, they may use that credit at that 
point, while they may have saved that credit for Model Year 2022 under 
the delay provided in the interim final rule. Likewise, credits earned 
in Model Years 2019 through 2021 may be used through Model Years 2024 
and 2026, respectively. Thus, if the penalty rate remained $5.50 until 
Model Year 2022, a manufacturer with shortfalls in one fleet in Model 
Years 2019 through 2021 may choose to pay penalties and hold on to any 
transferred or traded credits until the years in which the penalty rate 
has been adjusted for inflation, rather than using the credits earlier 
and making design changes to increase its compliance in the later model 
years. Likewise, a manufacturer who has a shortfall in its domestic 
passenger fleet might take actions to over-comply with the standard in 
future years when the penalty is increased to generate credits to apply 
to earlier years rather than paying the higher penalty.\41\ Finally, 
credits earned in Model Year 2022, which is not yet underway, could be 
applied back to Model Year 2019 shortfalls, which have not been 
assessed yet, which a manufacturer may be more likely to do if the 
penalty rate for Model Year 2019 is the rate as adjusted for inflation. 
The agency has tentatively determined that these actions are possible 
and, thus, may mean that the argument put forward in the interim final 
rule that no effects beyond increased penalty payments are possible may 
be incorrect. NHTSA requests further comments on such potential 
effects, particularly as industry commenters did not provide detail as 
to whether and the extent to which any such potential variations are 
actually likely to occur.
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    \41\ Although manufacturers' design cycles vary, since they have 
been on notice since 2016 of an increase to the penalty beginning 
with Model Year 2019, they have had and will continue to have 
opportunities in the coming model years to make design choices to 
increase compliance.
---------------------------------------------------------------------------

    In any event, based on further consideration of the 2015 Act and 
the Second Circuit's decisions on this issue, NHTSA tentatively 
believes that that it does not have discretion over when the inflation 
adjustment should begin to take effect. Further, the Inflation 
Adjustment Act provided NHTSA no discretion over what the adjusted rate 
should be, as that is merely a function of the formula established by 
Congress and calculated by OMB, and mandated streamlined processes for 
making both the initial adjustment and any subsequent adjustments that 
do not require accompanying analyses or public comment.\42\
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    \42\ The 2015 Act, of course, did allow NHTSA one opportunity at 
the time of the initial catch-up to use the notice-and-comment 
process to adjust the rate ``less than the otherwise required 
amount'' under two conditions, but the Second Circuit rejected 
NHTSA's belated attempt to use this provision in its decision on the 
July 2019 final rule. See New York, 974 F.3d at 100-01.
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2. Regulatory Flexibility Act

    Pursuant to the Regulatory Flexibility Act (5 U.S.C. 601 et seq., 
as amended by the Small Business Regulatory Enforcement Fairness Act 
(SBREFA) of 1996), whenever an agency is required to publish a notice 
of proposed rulemaking or final rule, it must prepare and make 
available for public comment a regulatory flexibility analysis that 
describes the effect of the rule on small entities (i.e., small 
businesses, small organizations, and small governmental jurisdictions). 
No regulatory flexibility analysis is required, however, if the head of 
an agency certifies the proposal will not have a significant economic 
impact on a substantial number of small entities.
    NHTSA has considered the impacts of this document under the 
Regulatory Flexibility Act and certifies that this rulemaking will not 
have a significant economic impact on a substantial number of small 
entities. The following provides the factual basis for this 
certification under 5 U.S.C. 605(b).

[[Page 46818]]

    The Small Business Administration's (SBA) regulations define a 
small business in part as a ``business entity organized for profit, 
with a place of business located in the United States, and which 
operates primarily within the United States or which makes a 
significant contribution to the U.S. economy through payment of taxes 
or use of American products, materials or labor.'' 13 CFR 121.105(a). 
SBA's size standards were previously organized according to Standard 
Industrial Classification (``SIC'') Codes. SIC Code 336211 ``Motor 
Vehicle Body Manufacturing'' applied a small business size standard of 
1,000 employees or fewer. SBA now uses size standards based on the 
North American Industry Classification System (``NAICS''), Subsector 
336--Transportation Equipment Manufacturing. This action is expected to 
affect manufacturers of motor vehicles. Specifically, this action 
affects manufacturers from NAICS codes 336111--Automobile 
Manufacturing, and 336112--Light Truck and Utility Vehicle 
Manufacturing, which both have a small business size standard threshold 
of 1,500 employees.
    Though civil penalties collected under 49 CFR 578.6(h)(1) and (2) 
apply to some small manufacturers, low-volume manufacturers can 
petition for an exemption from the Corporate Average Fuel Economy 
standards under 49 CFR part 525. This would lessen the impacts of this 
rulemaking on small business by allowing them to avoid liability for 
penalties under 49 CFR 578.6(h)(2). Small organizations and 
governmental jurisdictions will not be significantly affected, as the 
price of motor vehicles and equipment ought not change as the result of 
this rule.
    In the interim final rule, NHTSA stated that it did not believe 
that the rule would have a significant economic impact on a substantial 
number of small entities and requested comment on the issue. None of 
the comments NHTSA received discussed this issue.

3. Executive Order 13132 (Federalism)

    Executive Order 13132 requires NHTSA to develop an accountable 
process to ensure ``meaningful and timely input by State and local 
officials in the development of regulatory policies that have 
federalism implications.'' ``Policies that have federalism 
implications'' is defined in the Executive order to include regulations 
that have ``substantial direct effects on the States, on the 
relationship between the [N]ational [G]overnment and the States, or on 
the distribution of power and responsibilities among the various levels 
of government.'' Under Executive Order 13132, the agency may not issue 
a regulation with federalism implications, that imposes substantial 
direct compliance costs, and that is not required by statute, unless 
the Federal Government provides the funds necessary to pay the direct 
compliance costs incurred by State and local governments, the agency 
consults with State and local governments, or the agency consults with 
State and local officials early in the process of developing the 
proposed regulation.
    As noted previously, this rulemaking 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 rulemaking is 
expected to generally apply to motor vehicle manufacturers. Thus, the 
requirements of Section 6 of the Executive Order do not apply.

4. Unfunded Mandates Reform Act of 1995

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

5. National Environmental Policy Act

    The National Environmental Policy Act of 1969 (NEPA) \43\ directs 
that Federal agencies proposing ``major Federal actions significantly 
affecting the quality of the human environment'' must, ``to the fullest 
extent possible,'' prepare ``a detailed statement'' on the 
environmental impacts of the proposed action (including alternatives to 
the proposed action).\44\ However, there are some instances where NEPA 
does not apply to a particular proposed One consideration is whether 
the action at issue is a non-discretionary action to which NEPA may not 
apply or for which NEPA may require less detailed analysis.\45\ Under 
the 2015 Act, and as confirmed by the Second Circuit, NHTSA has no 
discretion in whether to adjust the CAFE civil penalty rate to $14, and 
NHTSA tentatively believes it has no discretion in when to do so. 
Further, the 2015 Act provides no basis for the consideration of 
environmental effects in making the required inflation adjustments, 
outside of an exception not applicable here.\46\ Accordingly, in line 
with legal precedent concerning non-discretionary agency action, NHTSA 
believes that no further analysis pursuant to NEPA is required 
regarding increasing the CAFE civil penalty rate for inflation.
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    \43\ 42 U.S.C. 4321-4347.
    \44\ 42 U.S.C. 4332.
    \45\ See Dept. of Transp. v. Public Citizen, 541 U.S. 752, 768-
69 (2014) (holding that the agency need not prepare an Environmental 
Impact Statement (EIS) or analyze certain environmental effects in 
its EA, and stating, ``[s]ince FMCSA has no ability categorically to 
prevent the cross-border operations of Mexican motor carriers, the 
environmental impact of the cross-border operations would have no 
effect on FMCSA's decisionmaking--FMCSA simply lacks the power to 
act on whatever information might be contained in the EIS.'').
    \46\ 28 U.S.C. 2461 note, 4(c) (allowing an agency to make the 
first adjustment of the amount of a civil monetary penalty by less 
than the otherwise required amount if increasing the civil monetary 
penalty by the otherwise required amount would have a negative 
economic impact; or the social costs of increasing the civil 
monetary penalty by the otherwise required amount outweighed the 
benefits). NHTSA's attempt to apply this exception through the 
``negative economic impact'' prong was vacated by the Second Circuit 
as too late, and the statute provides that the exception could only 
be applied to the initial ``catch-up'' adjustment.
---------------------------------------------------------------------------

    Although NHTSA does not have discretion on whether to increase the 
CAFE civil penalty rate for inflation, NHTSA has prepared this 
environmental assessment to evaluate the effects of the timing of such 
an increase on the environment. When a Federal agency prepares an 
environmental assessment, the CEQ NEPA implementing regulations require 
the agency to (1) ``[b]riefly provide sufficient evidence and analysis 
for determining whether to prepare an environmental impact statement or 
a finding of no significant impact,'' and (2) ``[b]riefly discuss the 
purpose and need for the proposed action, alternatives . . . , and the 
environmental impacts of the proposed action and alternatives, and 
include a listing of [a]gencies and persons consulted.'' \47\ 
Generally, based on the environmental assessment, the agency must make 
a determination to prepare an environmental impact statement or 
``prepare a finding of no significant impact if the [a]gency 
determines, based on the environmental assessment, not to prepare an 
environmental impact statement because the proposed action will not 
have significant effects.'' \48\
---------------------------------------------------------------------------

    \47\ 40 CFR 1501.5(c).
    \48\ 40 CFR 1501.6(a).
---------------------------------------------------------------------------

    The interim final rule included an Environmental Assessment (EA) 
and a Finding of No Significant Impact

[[Page 46819]]

(FONSI) regarding the agency's decision to increase the CAFE civil 
penalty rate for inflation beginning with Model Year 2022. However, it 
sought comment on the environmental impacts of a longer delay to Model 
Year 2023. Two commenters alleged that the interim final rule violated 
NEPA because the agency did not consider the effect of CAFE penalties 
assessed in one year on manufacturers' compliance decisions in future 
years.\49\ Like NHTSA's approach in the interim final rule, this 
section may serve as NHTSA's Draft Environmental Assessment (Draft EA). 
The issue raised by commenters on the EA presented in the interim final 
rule is addressed below. NHTSA invites public comments on the 
applicability of NEPA to this action and the contents and tentative 
conclusions of this Draft EA.
---------------------------------------------------------------------------

    \49\ Comment from Natural Resources Defense Council and Sierra 
Club, NHTSA-2021-0001-0013; Comment from the New York University 
School of Law Institute of Policy Integrity, NHTSA-2021-0001-0011.
---------------------------------------------------------------------------

I. Purpose and Need
    This SNPRM sets forth the purpose of and need for this action. 
Pursuant to the Inflation Adjustment Act and the Second Circuit's 
decision, NHTSA is required to make an initial ``catch-up'' adjustment 
to the civil monetary penalties it administers for the CAFE program. 
The purpose of this SNPRM is to consider the timing of the application 
of the adjustment to the CAFE civil penalty rate, consistent with the 
statutory requirements.
II. Alternatives
    The first alternative is to restore the status quo ante prior to 
the interim final rule, which is adjusting the CAFE civil penalty rate 
from $5.50 to $14 beginning in Model Year 2019. This timing was 
originally established by the December 2016 final rule and was twice 
made effective by decisions of the Second Circuit. The second 
alternative is applying the adjustment beginning in Model Year 2022, 
which reflects the action taken in the interim final rule. NHTSA is no 
longer considering the alternative of applying the adjustment beginning 
in Model Year 2023. NHTSA is accepting comments on whether it should 
consider other alternatives of the inflation adjustment applying 
beginning with a model year later than Model Year 2019. Commenters 
arguing for such a position should explain how it is consistent with 
the 2015 Act and the Second Circuit's decisions.
III. Environmental Impacts of the Action and Alternatives
    In the interim final rule, NHTSA asserted that it anticipated no 
differences in environmental impacts associated with the alternatives 
of applying the adjustment beginning in Model Years 2019, 2020, 2021, 
or 2022. NHTSA based this conclusion on the fact that vehicles for 
Model Years 2019 and 2020 had largely if not entirely been produced 
already, and many manufacturers were already selling Model Year 2021 
vehicles.
    After reviewing the comments received in response to the interim 
final rule, NHTSA has reconsidered whether this assessment is complete. 
Commenters have argued that, regardless of the impact of this 
rulemaking action on Model Year 2019 through 2021 vehicles, longer-term 
impacts may vary as a result of manufacturer multi-year planning, the 
transfer of credits across model years and between manufacturers, and 
the changing value of credits over time. If this is correct, applying 
the adjustment earlier could result in manufacturers applying credit 
balances to Model Year 2019 through 2021 vehicles and being 
incentivized to make fuel economy improvements in their fleet beyond 
that timeframe, rather than paying civil penalties at the $5.50 rate 
for Model Years 2019 through 2021 and saving the credits for future 
model years when they could be valued more due to the inflation 
adjustment. Additionally, for manufacturers without credit balances, 
the potential application of a significantly higher civil penalty for 
Model Years 2019 through 2021 may spur more rapid implementation of 
fuel-saving technology in order to allow the manufacturer to accrue 
credits that may be carried back to cover the shortfall in Model Years 
2019 through 2021.
    Overall, NHTSA anticipates that applying the adjustment beginning 
with Model Year 2019 may lead to the eventual application of more fuel-
saving technology, resulting in fewer greenhouse gas emissions and 
reductions in many criteria and toxic air pollutants compared to 
applying the adjustment beginning in Model Year 2022.\50\ Although 
Model Years 2019 and 2020 are already completed, and Model Year 2021 is 
underway, the civil penalty assessment process is not yet complete for 
any of them.\51\ As a result, NHTSA does not yet know the anticipated 
manufacturer compliance shortfall for these model years. Because 
manufacturers can apply credits across a multi-year window, their 
decisions about how to apply credits in earlier model years will affect 
the availability of credits and the application of fuel-saving 
technology in later model years. However, NHTSA does not know whether 
and to what degree manufacturers will choose to pay fines in lieu of 
applying accrued credits, trade credits with other manufacturers, or 
rely on multi-year planning and credit carry-forward and carry-back to 
address shortfalls. NHTSA invites comments, information, and analyses 
from the public on the degree to which this may occur as a result of 
changes to the civil penalty rate in Model Year 2019 versus Model Year 
2022.
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    \50\ See NHTSA's Final Environmental Impact Statements for the 
CAFE rulemaking for MYs 2017 and beyond (Docket No. NHTSA-2011-0056) 
and for MYs 2021-2026 (Docket No. NHTSA-2017-0069), both of which 
illustrate these trends as fuel economy standard stringency 
increases across alternatives. Both EISs are also available on the 
agency's fuel economy website: https://www.nhtsa.gov/fuel-economy.
    \51\ Because NHTSA does not have final model year performance 
data verified by EPA for these model years, any quantitative 
projections of the environmental impact across multiple model years 
would be too speculative to rely upon at this time.
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    At this time, however, NHTSA anticipates the impacts to be small. 
The difference between the alternatives contemplated in this action is 
only whether or not the civil penalty rate increase applies to three 
Model Years: 2019, 2020, and 2021. NHTSA continues to believe the 
impacts on those Model Years alone is expected to be de minimis, as 
Model Years 2019 and 2020 have largely if not entirely been produced 
already, and manufacturers are already selling Model Year 2021 
vehicles. Further, as NHTSA has addressed in its CAFE rulemakings, many 
manufacturers have been unwilling to pay civil penalties historically. 
Those manufacturers may continue to opt to apply credits even if a 
lower civil penalty rate applied, rather than hold credits for future 
model years when the civil penalty rate would be higher. NHTSA also 
seeks comments on these conclusions.
IV. Agencies and Persons Consulted
    NHTSA and DOT have consulted with OMB and the U.S. Department of 
Justice and provided other Federal agencies with the opportunity to 
review and provide feedback on this rulemaking.
V. Conclusion
    NHTSA has reviewed the information presented in this Draft EA and 
tentatively concludes that adjusting the CAFE civil penalty rate 
beginning with Model Year 2019, as compared to Model Year 2022, would 
have, at most, a more positive impact on the quality of the

[[Page 46820]]

human environment to the extent that manufacturers may be more likely 
to expend credit balances on Model Year 2019 through 2021 vehicles than 
if the civil penalty rate remained at $5.50 for those model years. 
Lacking such credits in future years, manufacturers would be more 
likely to make improvements to the fuel economy of their fleets to 
avoid paying the higher civil penalty rates that would occur under 
either alternative. Additionally, higher civil penalty rates in Model 
Years 2019 through 2021 may cause manufacturers to more rapidly 
implement fuel-saving technology so that they may accrue credits to be 
carried back to cover compliance shortfalls. But NHTSA does not expect 
any differences in the impacts under either of the alternatives to rise 
to the level of significance that would necessitate the preparation of 
an Environmental Impact Statement.
    Based on the information in this Draft EA, and assuming no 
additional information or changed circumstances, NHTSA expects to make 
a Finding of No Significant Impact (FONSI). Such a finding will not be 
made before careful review of all public comments received. If NHTSA 
determines it is appropriate to do so, a Final EA and a FONSI will be 
issued as part of the final rule.

6. Executive Order 12988 (Civil Justice Reform)

    This rulemaking is not expected to have a preemptive effect. This 
rulemaking is also not expected to have a retroactive effect, and NHTSA 
requests comment on this point. Judicial review of the interim final 
rule or a subsequent final rule may be obtained pursuant to 5 U.S.C. 
702.

7. Paperwork Reduction Act

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

8. Privacy Act

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

List of Subjects in 49 CFR Part 578

    Imports, Motor vehicle safety, Motor vehicles, Penalties, Rubber 
and rubber products, Tires.

    In consideration of the foregoing, the National Highway Traffic 
Safety Administration proposes to amend 49 CFR part 578 as set forth 
below.

PART 578--CIVIL AND CRIMINAL PENALTIES

0
1. The authority citation for 49 CFR part 578 continues to read as 
follows:

    Authority: Pub. L. 101-410, 104 Stat. 890; Pub. L. 104-134, 110 
Stat. 1321; Pub. L. 109-59, 119 Stat. 1144; Pub. L. 114-74, 129 
Stat. 584; Pub. L. 114-94, 129 Stat. 1312; 49 U.S.C. 30165, 30170, 
30505, 32308, 32309, 32507, 32709, 32710, 32902, 32912, and 33115; 
delegation of authority at 49 CFR 1.81, 1.95.

0
2. Amend Sec.  578.6 by revising paragraph (h)(2) to read as follows:


Sec.  578.6  Civil penalties for violations of specified provisions of 
Title 49 of the United States Code.

* * * * *
    (h) * * *
    (2) Except as provided in 49 U.S.C. 32912(c), beginning with model 
year 2019, a manufacturer that violates a standard prescribed for a 
model year under 49 U.S.C. 32902 is liable to the United States 
Government for a civil penalty of $14, plus any adjustments for 
inflation that occurred or may occur (for model years before model year 
2019, the civil penalty is $5.50), multiplied by each .1 of a mile a 
gallon by which the applicable average fuel economy standard under that 
section exceeds the average fuel economy--
    (i) Calculated under 49 U.S.C. 32904(a)(1)(A) or (B) for 
automobiles to which the standard applies produced by the manufacturer 
during the model year;
    (ii) Multiplied by the number of those automobiles; and
    (iii) Reduced by the credits available to the manufacturer under 49 
U.S.C. 32903 for the model year.

    Issued in Washington, DC, under authority delegated in 49 CFR 
1.95, and 501.5.
Steven S. Cliff,
Acting Administrator.
[FR Doc. 2021-17842 Filed 8-18-21; 11:15 am]
BILLING CODE 4910-59-P