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Federal Register / Vol. 86, No. 169 / Friday, September 3, 2021 / Proposed Rules
523.5b2? What drawbacks exist in linking both provisions? Using the longstanding off-road features for fuel economy provides could clarify the means for certifying that a vehicle meets the definition for MPV in 571.3 when manufacturers may otherwise be uncertain as to how to classify a vehicle.
B. Complying With the NHTSA CAFE
Program
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1. Annual Compliance Process Manufacturers production decisions drive the mixture of automobiles on the road. Manufacturers largely produce a mixture of vehicles both to influence and meet consumer demand and address compliance with CAFE
standards though the application of fuel economy improving technologies to those vehicles, and by using compliance flexibilities and incentives that are available in the CAFE program. As discussed earlier in this NPRM, each vehicle manufacturer is subject to separate CAFE standards for passenger cars and light trucks, and for the passenger car standards, a manufacturers domesticallymanufactured and imported passenger car fleets are required to comply separately.498 Additionally, domestically-manufactured passenger cars are subject to a statutory minimum standard. Some CAFE program flexibilities are described by statute.
Other flexibilities are established by NHTSA through regulation in accordance with the EPCA and EISA, such as fuel economy improvements for air conditioning efficiency, off-cycle, and pickup truck advanced technologies that are not expressly specified by CAFE
statute, but are implemented consistent with EPCAs provisions regarding the calculation of fuel economy authorized for EPA.
Compliance with the CAFE program begins each year with manufacturers submitting required reports to NHTSA
in advance and during the model year that contain information, specifications, data, and projections about their fleets.499 Manufacturers report early product projections to NHTSA
describing their efforts to comply with CAFE standards per EPCAs reporting requirements.500 Manufacturers early projections are required to identify any of the flexibilities and incentives manufacturers plan to use for airconditioning A/C efficiency, off-cycle and, through MY 2021, which this action proposes to extend through MY
498 49

U.S.C. 32904b.
499 49 U.S.C. 32907a; 49 CFR 537.7.
500 49 U.S.C. 32907a.

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2026, full-size pickup truck advanced technologies. EPA consults with NHTSA when reviewing and considering manufacturers requests for fuel consumption improvement values for A/C and off-cycle technologies that improve fuel economy. NHTSA
evaluates and monitors the performance of the industry using compliance data.
NHTSA also audits manufacturers projected data for conformance and verifies vehicle conformance through measurements e.g., vehicle footprints to ensure manufacturers are complying.
After the model year ends, manufacturers submit final reports to EPA, that include final information on all the flexibilities and incentives allowed or approved for the given model year.501 EPA then verifies manufacturers reported information and values and calculates the final fuel economy level of each fleet produced by each manufacturer, and transmits that information to NHTSA.502
In previous years, the normal processes for CAFE compliance between NHTSA and EPA have been effective at administering the CAFE program for decades. EPA sends NHTSA its final CAFE results usually between November to December after the given model year. In recent years, this process has been disrupted by manufacturers submitting requests for A/C and offcycle benefits during the model year and at times well after the end of the model year. As EPA cannot finalize CAFE results until all A/C and off-cycle credits for a model year are accounted for, the belated submissions have significantly delayed NHTSA receiving final CAFE results for many manufacturers. Late submissions place significant burdens on the agencies and complicate administering the CAFE
program, including delaying the exchange and use of credits. In the following sections, NHTSA discusses the adverse impacts on the CAFE
program resulting from late and retroactive A/C and off-cycle requests and proposes regulatory modifications to mitigate late submissions and help expedite processes for future off-cycle requests.
501 For example, alternative fueled vehicles get special calculations under EPCA 49 U.S.C. 32905
06, and fuel economy levels can also be adjusted to reflect air conditioning efficiency and off-cycle improvements.
502 49 U.S.C. 32904ce. EPCA granted EPA
authority to establish fuel economy testing and calculation procedures; EPA uses a two-year early certification process to qualify manufacturers to start selling vehicles, coordinates manufacturer testing throughout the model year, and validates manufacturer-submitted final test results after the close of the model year.

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After receiving EPAs final reports, NHTSA completes the remainder of its compliance processes for manufacturers usually one to three months after receiving EPAs final reports. The process starts with NHTSA using EPAs final verified information to determine the CAFE standard for each of the manufacturers fleets, and each fleets compliance level. Those results are then used to determine credits, credit shortfalls and credit balances, and NHTSA sends letters to manufacturers stating the outcome of that assessment.
Credit shortfall letters specify the obligated credit deficiency a manufacturer must resolve to comply with the applicable CAFE standard for the given model year. Credit balance letters specify the official balance of credits NHTSA has allotted to the manufacturer in each of its credit accounts and a ledger of the credit transactions the manufacturer has executed. Upon receipt of NHTSAs compliance letters, manufacturers are required to submit plans explaining how they plan to resolve any shortfalls.
NHTSA periodically releases data and reports to the public through its CAFE
Public Information Center PIC based on information in the EPA final reports for the given compliance model year and based on the projections manufacturers provide to NHTSA for the next two model years.503
Some flexibilities are defined, and sometimes limited by statutefor example, while Congress allowed manufacturers to transfer credits earned for over-compliance from their car fleet to their truck fleet and vice versa, Congress also limited the amount by which manufacturers could increase their CAFE levels using those transfers.504 Consistent with the limits Congress placed on certain statutory flexibilities and incentives, NHTSA
crafted and implemented credit transfer and trading regulations authorized by EISA ensure that total fuel savings are preserved when manufacturers exercise statutory compliance flexibilities required by statute.
NHTSA and EPA have previously developed other compliance flexibilities and incentives for the CAFE program consistent with the statutory provisions regarding EPAs calculation of manufacturers fuel economy levels. As discussed previously, NHTSA finalized in the 2012 final rule an approach for manufacturers credits under EPAs program to be applied as fuel economy 503 The NHTSA Public Information Center PIC is located at https one.nhtsa.gov/cafe_pic/CAFE_
PIC_Home.htm.
504 See 49 U.S.C. 32903g.

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