\136\ IPI Comment, at 15-16.
    \137\ 83 FR 13904, 13913 (Apr. 2, 2018).
    \138\ H.R. Rep. No. 95-1751, at 113 (1978) (Conf. Rep.) (``No
provision [in EPCA] is made for lowering the penalty.'').
---------------------------------------------------------------------------

    One comment argued that ``Congress . . . intended the Inflation
Adjustment Act to apply broadly and uniformly to federal civil monetary
penalties across all agencies unless specifically exempted, regardless
of how the subject penalty programs are structured.'' \139\ Even though
Congress did not ``specifically exempt[ ]'' CAFE by name in the 2015
Act, Congress unquestionably recognized that some penalty schemes would
not be covered: For example, it defined ``civil monetary penalty'' to
exclude some penalties, fines, and other sanctions.\140\ Nonetheless,
NHTSA agrees that Congress intended the 2015 Act to apply ``broadly''--
and in practice, the 2015 Act has applied broadly, across other
penalties administered by NHTSA and across a wide swath of Federal
agencies. But the unique nature of the CAFE program commands a
different result. Indeed, as NHTSA explained in the NPRM, the ``broad''
scope of the 2015 Act reinforces NHTSA's determination that when one of
the statutes is generalized and passed later--like the Inflation
Adjustment Act--it cannot be read to implicitly repeal an earlier, more
specific statute--like EPCA's establishment of the CAFE civil penalties
structure. This approach to statutory interpretation is consistent with
NHTSA's past practice.\141\
---------------------------------------------------------------------------

    \139\ Attorneys General Comment, at 11-12.
    \140\ 28 U.S.C. 2461 note, Federal Civil Penalties Inflation
Adjustment[thinsp]3(2).
    \141\ 83 FR 13904, 13912 (Apr. 2, 2018).
---------------------------------------------------------------------------

    The same reasoning responds to those commenters that argued the
2015 Act controls because it was passed more recently than EPCA and
EISA.\142\ Indeed, the sole case cited by one of the commenters
purportedly to support its point makes this clear: The more recent act
can only constitute an implied repeal if the intent of the legislature
to repeal is ``clear and manifest.'' \143\ No such intention is
apparent here at all.
---------------------------------------------------------------------------

    \142\ See, e.g., Workhorse Comment, at 1 (``Because the
Inflation Adjustment Act was enacted more recently than EPCA and
EISA, the Inflation Adjustment Act controls.''); Attorneys General
Comment, at 9 (``[B]ecause the penalty adjustments in the 2015 Act
are both mandatory and were enacted more recently than EPCA, they
should be given controlling effect.'') (citing Kremer v. Chem.
Constr. Corp., 456 U.S. 461, 468 (1982)).
    \143\ Kremer v. Chem. Constr. Corp., 456 U.S. 461, 468 (1982)
(cleaned up).
---------------------------------------------------------------------------

4. ``Negative Economic Impact''

    Some comments noted that NHTSA did not previously invoke the
``negative economic impact'' exception before the deadline to complete
the initial catch-up adjustment expressed in the 2015 Act or by the
date suggested in OMB's initial guidance on the statute.\144\ But the
passage of that deadline does not deprive an agency of its statutory
authority to act under the statute, including its authority to
reconsider its initial decision to issue an interim final rule and to
seek public comment on complex legal, factual, and policy questions
related to that action. An agency would not be prohibited from making
an otherwise required initial catch-up adjustment simply because it did
not meet the statutory deadline: It would still need to complete the
process.\145\ And there is no separate statutory deadline for when
agencies needed to invoke the ``negative economic impact'' exception:
It is part of making the initial catch-up adjustment. Congress could
have established a separate deadline for invoking the exception prior
to the deadline for making the initial catch-up adjustment if it deemed
it necessary, but it did not. Instead, Congress impliedly linked the
determination of the initial catch-up adjustment and exercise of the
``negative economic impact'' exception, and it established a procedure
through which the OMB Director would be required to concur with NHTSA's
assessment that adjusting the penalty the otherwise required amount
would have a negative economic impact before the agency could rely on
the exception. As the docketed opinion indicates, OMB has concurred
with NHTSA's assessment here.\146\ Notably, OMB staff indicated to the
Government Accountability Office that ``[b]ecause of the complex nature
of the initial catch-up inflation adjustments, . . . its preference was
for federal agencies to take the necessary time to publish accurate and
complete initial catch-up inflation adjustments . . . even if agencies
were not able to meet the Inflation Adjustment Act publication
deadline.'' \147\
---------------------------------------------------------------------------

    \144\ See, e.g., CARB Comment, at 14; Attorneys General Comment,
at 10, 14.
    \145\ Multiple agencies were unable to complete their initial
catch-up adjustments by the deadline identified in the 2015 Act, but
later completed those adjustments. U.S. Gov. Accountability Office,
GAO-17-634, ``Certain Federal Agencies Need to Improve Efforts to
Comply with Inflation Adjustment Requirements, at 6 (2017).
    \146\ OMB Negative Economic Impact Letter. Nothing about OMB's
concurrence with NHTSA's determination here calls into question
OMB's guidance that it ``expects determination concurrences to be
rare.'' 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, at 3
(Feb. 24, 2016), available online at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/memoranda/2016/m-16-06.pdf (last
accessed May 22, 2018). NHTSA is not aware of any other agency that
even sought such a concurrence determination. Thus, while OMB's
concurrence here is ``rare,'' it is appropriate given the uniqueness
of the CAFE civil penalty scheme.
    \147\ U.S. Gov. Accountability Office, GAO-17-634, ``Certain
Federal Agencies Need to Improve Efforts to Comply with Inflation
Adjustment Requirements, at 6 (2017).
---------------------------------------------------------------------------

    Moreover, nothing in the 2015 Act prohibits the head of an agency
from reconsidering its initial decision about the economic impact of
making the otherwise required initial adjustment to a civil monetary
penalty. To the contrary, Congress committed the authority to make such
a determination--with no substantive constraints--to the head of each
agency, provided that the agency head publishes an NPRM, provides an
opportunity for comment, and obtains concurrence from

the OMB Director.\148\ NHTSA has satisfied those procedural steps in
this rulemaking. As noted in the NPRM, ``[p]ursuant to OMB's guidance,
NHTSA has consulted with OMB before proposing this reduced catch-up
adjustment determination and submitted this notice of proposed
rulemaking (NPRM) to the Office of Information and Regulatory Affairs
(OIRA) for review.'' \149\ To the extent that NHTSA's interpretation of
``negative economic impact'' represents a change in position, the
agency has explained the reasons for that change, and its position in
this final rule is well-supported by the record and by careful legal
analysis.\150\
---------------------------------------------------------------------------

    \148\ 28 U.S.C. 2461 note, Federal Civil Penalties Inflation
Adjustment[thinsp]4(c).
    \149\ 83 FR 13904, 13908 (Apr. 2, 2018).
    \150\ Alliance and Global Comment, at 5 (citing FCC v. Fox
Television Stations, 556 U.S. 502, 515-16 (2009); Philip Morris USA
v. Vilsack, 736 F.3d 284, 290 (4th Cir. 2013)).
---------------------------------------------------------------------------

    The OMB Director's concurrence in NHTSA's determination not only
resolves the comments about NHTSA not meeting OMB's deadline, but also
carries considerable weight in establishing that NHTSA acted
appropriately with regards to the 2015 Act's deadline. Congress not
only provided the OMB Director with the authority to determine whether
a negative economic impact exists, but also expressly authorized the
OMB Director to issue guidance to agencies on implementing the 2015
Act, both of which establish that Congress conferred significant
deference to OMB's interpretation of the statute.\151\
---------------------------------------------------------------------------

    \151\ 28 U.S.C. 2461 note, Federal Civil Penalties Inflation
Adjustment[thinsp]7(a).
---------------------------------------------------------------------------

    Some comments stated or implied that the $14 rate is currently in
effect.\152\ That is wrong and misunderstands the effect of prior
agency actions. As a result of a recent decision by the United States
Court of Appeals for the Second Circuit, NHTSA's December 28, 2016
final rule is now in force.\153\ Pursuant to that rule, the current
CAFE civil penalty rate is $5.50 for model years before model year 2019
and, but for NHTSA's reconsideration, would not increase to $14 until
penalties are assessed for MY 2019.\154\ Thus, this final rule--which
maintains the $5.50 rate through model year 2019 and beyond--does not
serve as a reduction as applied to any shortfalls for vehicles fleets
in those model years.\155\ Although NHTSA's December 2016 final rule
had set a $14 CAFE civil penalty rate that--but for NHTSA's
reconsideration--would go into effect beginning with MY 2019, that
announcement had no practical effect before 2020--the earliest that
CAFE civil penalties could be assessed for noncompliance in MY
2019.\156\ Nothing in the CAFE statute or the 2015 Act precludes the
agency from reconsidering its earlier decision before that decision has
any practical significance. Indeed, NHTSA's earlier reconsideration
decision in December 2016, which recently took effect, did just
that.\157\
---------------------------------------------------------------------------

    \152\ See, e.g., CAP Comment, at 2 (describing NHTSA's proposed
action as ``reducing the penalty below the statutorily-mandated
rate''); CARB Comment, at 6, 14, 16 (``NHTSA's NPRM, therefore, is
improperly characterized as `retaining' the $5.50 penalty per tenth
of a mpg when in fact NHTSA would be decreasing from $14 back to
$5.50. . . .''; ``NHTSA's adjustment to $14 in its interim final
rule in July 2016 is already in effect anyway.''; characterizing
``what NHTSA is attempting to do here'' as ``a CAFE penalty decrease
. . . to lower the penalty from $14 to $5.50'').
    \153\ 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.'').
    \154\ 81 FR 95489, 95492 (Dec. 28, 2016).
    \155\ Because this final rule does not prescribe ``a higher
amount'' for the CAFE civil penalty rate, 49 U.S.C. 32912(c)(1)(D),
NHTSA does not need to give 18 months' lead time before it becomes
effective.
    \156\ 82 FR 32139, 32140 (July 12, 2017).
    \157\ 81 FR 95489, 95491 (Dec. 28, 2016).
---------------------------------------------------------------------------

    A few commenters critiqued NHTSA's proposed interpretation of the
2015 Act in light of EPCA as ``invert[ing] the burden of proof''
required by the 2015 Act.\158\ These comments misconstrued NHTSA's
interpretation. To determine whether increasing the CAFE civil penalty
rate by the amount calculated under the inflation adjustment formula
would have a ``negative economic impact,'' NHTSA must first interpret
the term ``negative economic impact.'' The statute does not define
``negative economic impact.'' OMB issued a memorandum providing
guidance to the heads of executive departments and agencies on how to
implement the Inflation Adjustment Act, but the guidance does not
define ``negative economic impact'' either.\159\ Instead, Congress
expressly delegated the authority to determine whether adjusting the
amount of any given civil monetary penalty by the otherwise required
amount would have a negative economic impact to the head of each
agency. Without further guidance about what constitutes a ``negative
economic impact,'' each agency has to make an independent determination
of what constitutes a ``negative economic impact'' and whether one
would result from making each adjustment within its purview.
---------------------------------------------------------------------------

    \158\ CBD Comment, at 12; see also CARB Comment, at 15-16
(``[T]he statutes build in opposing presumptions and require
opposite findings. . . .''); Attorneys General Comment, at 12-13
(``NHTSA impermissibly inverts the presumption Congress built into
the 2015 Act . . . .'').
    \159\ 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 at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/memoranda/2016/m-16-06.pdf.
---------------------------------------------------------------------------

    For NHTSA to determine whether increasing the CAFE civil penalty
rate by the otherwise required amount would have a ``negative economic
impact,'' it considered what Congress had previously identified for it
in EPCA--in the context of establishing the statutory standard required
to raise the CAFE civil penalty rate--as constituting a ``substantial
deleterious impact on the economy.'' Specifically, Congress had
decreed--unchanged for decades before the 2015 Act--that (i) a
significant increase in unemployment in a State or a region of a State,
(ii) an adverse effect on competition, or (iii) a significant increase
in automobile imports would represent ``a substantial deleterious
impact on the economy.''
    Additionally, Congress established in EPCA that, by requiring such
a substantial showing, the burden to increase the CAFE civil penalty
rate is heavy. NHTSA determined, as explained in the NPRM, that it is
reasonable to expect that, taking the EPCA factors into account,
increasing the CAFE civil penalty rate to $14 would result in a
``negative economic impact.'' Without sufficient data to the contrary,
NHTSA's determination remains unchanged: The likely effects raising the
CAFE civil penalty rate to $14 would have on unemployment, competition,
and automobile imports lead NHTSA to conclude that increasing the CAFE
civil penalty rate by the otherwise required amount would have a
negative economic impact.\160\
---------------------------------------------------------------------------

    \160\ One commenter asserted, without any citations or
reasoning, that to keep the CAFE civil penalty rate at $5.50, the
``negative economic impact'' exception of the 2015 Act requires
NHTSA to show that any upward adjustment to the CAFE civil penalty
rate will have a negative economic impact and that NHTSA failed to
meet this burden. CBD Comment, at 23; see also Attorneys General
Comment, at 16 (arguing that, if necessary, NHTSA should ``reduce
the catch-up inflation adjustment by as little as possible . . .
based on an analysis of the relevant factors, including but not
limited to an estimate of compliance costs, the number and types of
vehicles affected, the average increased cost to consumers, and how
that cost compares to fuel cost savings''). No such showing is
required. The 2015 Act authorizes the head of each agency to
``adjust the amount of a civil monetary penalty by less than the
otherwise required amount'' if the ``negative economic impact''
exception is satisfied (with the OMB Director's concurrence). But
neither the statute nor OMB guidance establish any standards that
the agency must use in determining how much less than the otherwise
required amount to make the adjustment. As NHTSA stated in the NPRM,
``[w]ithout any statutory direction or OMB guidance on how much to
adjust the rate, if at all, it falls to NHTSA to determine the
appropriate adjustment--and NHTSA has wide discretion in making this
determination.'' 83 FR 13904, 13916 (Apr. 2, 2018) (citing Nat'l
Shooting Sports Found., Inc. v. Jones, 716 F.3d 200, 214-15 (D.C.
Cir. 2013)); see also Alliance and Global Comment, at 15 & n.63.
Nonetheless, NHTSA believes it has made an adequate showing that any
increase in the CAFE civil penalty rate would have a ``negative
economic impact'' for the reasons detailed in the NPRM and
throughout this final rule. See, e.g., 83 FR 13904, 13916 (Apr. 2,
2018) (``In light of the regulatory concerns described above, and in
consideration of the unique regulatory structure with non-
discretionary penalties tied to standards that increase over time,
NHTSA is proposing to keep the CAFE civil penalty rate at $5.50
because it tentatively concludes that retaining the $5.50 rate would
avoid the `negative economic impact' caused by any adjustment
upwards.'').

---------------------------------------------------------------------------

    Some commenters contended that NHTSA's interpretation would make it
``impossible'' for the CAFE civil penalty to ever be increased.\161\
NHTSA acknowledges that it may be difficult to meet the high standard
Congress established in EPCA. In fact, NHTSA has never been able to
make the findings required to increase the rate before. However,
nothing in the 2015 Act relieves NHTSA of its statutory obligation to
make those findings as a prerequisite for increasing the CAFE civil
penalty rate.
---------------------------------------------------------------------------

    \161\ Workhorse Comment, at 4; see also CARB Comment, at 18.
---------------------------------------------------------------------------

    One commenter argued that EPCA's specific definitions of
``substantial deleterious impact on the economy'' should not be carried
over to the 2015 Act's term ``negative economic impact'' because the
2015 Act is ``is intended for broad application across a range of
regulatory schemes'' and the EPCA factors ``may simply be irrelevant in
enforcing compliance with other regulatory systems.'' \162\ The fact
that the EPCA factors are irrelevant to determinations by other
agencies (which do not administer the same statutory program) does not
make them irrelevant to NHTSA's determination, which requires the
agency to reconcile multiple statutory provisions. And both the 2015
Act and EPCA address the effect on the economy as part of their
respective statutory standards for determining the appropriateness of
an increase in a penalty rate.
---------------------------------------------------------------------------

    \162\ CBD Comment, at 13.
---------------------------------------------------------------------------

    Although the 2015 Act applies across all agencies, it is up to the
head of agency to determine whether ``increasing the civil monetary
penalty by the otherwise required amount will have a negative economic
impact.'' Each agency head must determine how to interpret that
statutory standard in light of other statutory constraints and any
other factors that may be appropriate for each agency to consider.\163\
---------------------------------------------------------------------------

    \163\ See Sutton v. United States, 65 Fed. Cl. 800, 806 (2005)
(deferring to the Army's interpretation of a statute that is
administered on a shared basis with the other military services
because ``there is no inconsistency'' between its interpretation and
that of another military branch and because the statutory language
``confers plenary discretion on each individual service secretary to
develop whatever procedures he or she deems appropriate''); Bd. of
Trade of City of Chicago v. SEC., 187 F.3d 713, 719 (7th Cir. 1999)
(``[I]t is possible to defer simultaneously to two incompatible
agency positions.''); see also F.T.C. v. Ken Roberts Co., 276 F.3d
583, 593 (D.C. Cir. 2001) (``Because we live in `an age of
overlapping and concurring regulatory jurisdiction,' a court must
proceed with the utmost caution before concluding that one agency
may not regulate merely because another may.'' (quoting Thompson
Med. Co. v. FTC, 791 F.2d 189, 192 (D.C. Cir. 1986))); National
Ass'n of Cas. & Sur. Agents v. Bd. of Governors of Fed. Reserve
Sys., 856 F.2d 282, 287 (D.C. Cir. 1988) (upholding different agency
interpretations of the same phrase because of ``their different
economic impact''); cf. Citizens Awareness Network, Inc. v. United
States, 391 F.3d 338, 349 (1st Cir. 2004) (``The APA lays out only
the most skeletal framework for conducting agency adjudications,
leaving broad discretion to the affected agencies in formulating
detailed procedural rules.'') (citation omitted). The Second Circuit
asserted in its opinion on the indefinite delay rule that NHTSA's
interpretation of the 2015 Act is entitled to no deference because
``the [2015] Act applies to all federal agencies, meaning NHTSA has
no special expertise in interpreting its language.'' Opinion, ECF
No. 205, NRD.C. v. NHTSA, Case No. 17-2780, at 34 n.10 (2d Cir.,
June 29, 2018) (citations omitted). To support this dictum, the
Court cited only Chevron, U.S.A., Inc. v. Nat. Res. Def. Council,
Inc., 467 U.S. 837 (1984), which predates all of the cases just
cited. The issue was not briefed to the Second Circuit, which gave
no indication that it considered NHTSA's position.
---------------------------------------------------------------------------

    Regardless, the concern about the possibility of inconsistent
interpretations of ``negative economic impact'' is purely hypothetical:
As far as NHTSA is aware, no other agency has invoked the ``negative
economic impact'' exception. Moreover, NHTSA's interpretation has now
gone through the notice-and-comment process, as required by the 2015
Act, and comports with the interpretation provided by OMB--the agency
that Congress vested with the authority to issue guidance on
implementing the statute.\164\ OMB has also concurred with NHTSA's
ultimate determination regarding the ``negative economic impact'' of
increasing the CAFE civil penalty rate for the reasons explained in its
opinion included in the docket for this rulemaking.\165\
---------------------------------------------------------------------------

    \164\ See generally OMB Negative Economic Impact Letter.
    \165\ Id.
---------------------------------------------------------------------------

    One commenter challenged NHTSA's proposed interpretation that ``
`negative economic impact,' as used in the Inflation Adjustment Act,
need not mean `net negative economic impact,' '' \166\ arguing that the
exception must be read to account for a net weighing of the positive
and negative impacts and that it would be arbitrary and capricious for
NHTSA to ignore the benefits of a regulatory action.\167\ NHTSA
disagrees. As NHTSA noted in the NPRM, the very next provision of the
2015 Act--the other exception to conducting the otherwise required
initial catch-up adjustment--depends upon a determination of whether
``the social costs of increasing the civil monetary penalty by the
otherwise required amount outweigh the benefits.'' \168\ Congress could
have stated the ``negative economic impact'' exception using similar
phrasing: ``the negative economic impact of increasing the civil
monetary penalty by the otherwise required amount outweighs the
positive economic impact.'' But it did not do so, implying that it must
mean something different. The commenter asserted that Congress' use of
the term ``negative'' ``must entail some analysis of what it means to
be `negative,' '' and ``the only rational way of understanding that
term is to look at it in comparison to the benefits.'' \169\ NHTSA did
analyze what ``negative'' means, thoroughly explaining its reasoning in
the NPRM and in this final rule. The agency can readily consider the
economic harms that would likely be caused by increasing the CAFE civil
penalty rate to $14--such as those identified in the EPCA factors--
without needing to compare them to any potential benefits.
---------------------------------------------------------------------------

    \166\ 83 FR 13904, 13913 (Apr. 2, 2018).
    \167\ IPI Comment, at 11-12; see also id. at 5-10 (arguing that
``NHTSA has caused forgone benefits'' and its ``failure to address
the forgone benefits is arbitrary and capricious''); cf. Workhorse
Comment, at 2-3 (arguing that setting the CAFE civil penalty rate at
$5.50 would have a negative economic impact on companies in the
electric vehicle industry and that NHTSA must quantify the economic
impact on all businesses, including manufacturers that will be
selling credits).
    \168\ 28 U.S.C. 2461 note, Federal Civil Penalties Inflation
Adjustment 4(c)(1)(B). NHTSA has not invoked this social costs
exception, so comments that discussed a social cost-benefit analysis
are irrelevant and do not merit a response. See, e.g., CBD Comment,
at 20-23; IPI Comment, at 6-10.
    \169\ IPI Comment, at 12.
---------------------------------------------------------------------------

a. EPCA Factors
i. Unemployment
    Some commenters provided data purporting to show that increasing
the CAFE civil penalty rate will not increase unemployment.\170\ These
comments omitted the larger employment context: employment across the
entire U.S. economy has grown over the period in question as the
economy recovered from the recession. Employment in the automobile
industry sector had plummeted during the recession, as new

vehicle sales dropped. After the economy recovered, automobile sales
and industry employment nearly doubled relative to the recession, but
are only marginally higher than historical levels.\171\
---------------------------------------------------------------------------

    \170\ See, e.g., Workhorse Comment, at 1; CBD Comment, at 14;
CARB Comment, at 17.
    \171\ Employment and sales data available at https://fred.stlouisfed.org/series/N4222C0A173NBEA and https://fred.stlouisfed.org/series/ALTSALES.
---------------------------------------------------------------------------

    The data provided also should be viewed cautiously. For example,
the Synapse Energy Economics study cited acknowledges that positive
employment impacts it identifies that will result from implementation
of federal and state fuel economy standards ``are not large in the
context of the national economy''--``less than 0.2 percent of current
U.S. employment levels.'' \172\ But the study only discusses the net
employment effect on the United States as a whole; it does not discuss
unemployment in every state or every region of a state at all, as NHTSA
is required to consider under EPCA.\173\ As NHTSA explained in the
NPRM, job losses resulting from an increase in the CAFE civil penalty
rate ``may be concentrated in particular States and regions within
those States where automobile manufacturing plants are located [such as
those] located in the Midwest and Southeastern U.S.'' \174\ The Synapse
study does nothing to disprove this point.\175\
---------------------------------------------------------------------------

    \172\ Synapse Energy Economics, Cleaner Cars and Job Creation:
Macroeconomic Impacts of Federal and State Vehicle Standards, at 17
(Mar. 27, 2018), available at http://www.synapseenergy.com/sites/default/files/Cleaner-Cars-and%20Job-Creation-17-072.pdf. The study
also acknowledges that its results ``are necessarily uncertain,
especially farther out in the modeling period.''
    \173\ The EPCA requirement to consider the impact on the economy
of states and regions of states also demonstrates why the comment
arguing that NHTSA must ``us[e] an economy-wide analysis'' to
measure employment effects is misplaced. IPI Comment, at 17. By
statute, NHTSA is prohibited from only considering the impact of
raising the CAFE civil penalty rate on national unemployment.
Moreover, as noted in the NPRM, NHTSA also believes ``it is
appropriate to consider the impact raising the CAFE civil penalty
rate would have on individual manufacturers who fall short of fuel
economy standards, and those affected, such as dealers''--an impact
that the Synapse study also fails to discuss. 83 FR 13904, 13913
(Apr. 2, 2018).
    \174\ 83 FR 13904, 13914 (Apr. 2, 2018).
    \175\ The reports from the Blue Green Alliance cited in a couple
of comments suffers from similar shortcomings.
---------------------------------------------------------------------------

    Another commenter argued that ``the $14 penalty has been in effect
since August 2016 . . . , and there is no evidence that this has caused
an increase in the national unemployment rate or the unemployment rate
in any State or region of a State.'' \176\ The premise is faulty: NHTSA
disputes that ``the $14 penalty has been in effect since August 2016,''
as explained above. Furthermore, the comment only cited as evidence the
national unemployment rate for one month and a single state's
unemployment rate for one month, ``both of which are comparatively low
and reflect a robust economy.'' \177\ ``[C]omparatively low'' compared
to what? The comment provided no evidence of what the unemployment
rates it cites would be with a different CAFE civil penalty rate in
effect.
---------------------------------------------------------------------------

    \176\ CARB Comment, at 17.
    \177\ CARB Comment, at 17 n.64.
---------------------------------------------------------------------------

    Another commenter offered that ``a recent survey of Tier 1
automotive suppliers conducted by Ricardo concluded that the increased
stringency of the CAFE Standards encouraged job growth at their
companies.'' \178\ In fact, the survey question did not specifically
ask about ``the increased stringency of the CAFE standards.'' Rather,
the survey question asked, ``[i]n general, do US policies that
encourage or force the uptake of new technologies also encourage job
growth for your company in the US?'' \179\ Only 23 respondents answered
out of the 143 potential participants who received the survey,
including two that believed ``[a]dapting to such policies does not
change the number of jobs at our company.'' \180\ The suppliers were
not asked to and did not provide any empirical data supporting their
opinions nor were they asked to quantify the level of job growth they
believed was encouraged by the increased stringency. Additionally, the
geographical breakdown of the respondents was not provided. Without any
sense of magnitude or location, there is no way to evaluate the
economic impact on the United States, any State, or any region of a
State.
---------------------------------------------------------------------------

    \178\ Workhorse Comment, at 1 (citing Ricardo Energy &
Environment, Survey of Tier 1 automotive suppliers with respect to
the US 2025 LDV GHG emissions standards (Feb. 21, 2018), available
at http://www.calstart.org/Libraries/CALSTART_Press_Releases/CALSTART_Report_Supplier_Survey_Final_for_Web.sflb.ashx) (Ricardo
Report).
    \179\ Ricardo Report, at 20.
    \180\ Ricardo Report, at 2, 40.
---------------------------------------------------------------------------

    Note also that economic harms suffered by suppliers may be
different from those suffered by OEMs. In fact, a separate survey
question did ask specifically about the CAFE standards in connection to
the effect on employment nationally: ``Will the current 2025 standards
help encourage job growth in the wider US economy?'' \181\ In response
to this question, less than half of the respondents agreed that ``such
policies tend to encourage job growth in the industry overall.'' \182\
---------------------------------------------------------------------------

    \181\ Ricardo Report, at 20.
    \182\ Ricardo Report, at 41.
---------------------------------------------------------------------------

    In any event, the data provided conflicts with other available
studies, such as the peer-reviewed Indiana University study, which
shows the planned vehicle standards will result in short-term
macroeconomic losses, including job losses.\183\ Specifically, the
study concludes that ``the vehicle price effects, which increase as
standards become more stringent, cause significant losses of
employment, GDP, and disposable income through a decline in new vehicle
sales and higher vehicle prices for consumers, which in turn curbs
spending on other goods and services,'' potentially for more than a
decade.\184\ The study indicates that the negative economic effects hit
Illinois, Indiana, Michigan, Ohio, and Wisconsin particularly hard,
with the region taking longer than the national average to recover, and
that Arkansas, Louisiana, Oklahoma, and Texas never fully recover.\185\
Without a clearer picture, NHTSA does not have the evidence needed to
make the determination required under EPCA to raise the CAFE civil
penalty rate.
---------------------------------------------------------------------------

    \183\ Sanya Carley, Denvil Duncan, John D. Graham, Saba Siddiki
& Nikolaos Zirogiannis, A Macroeconomic Study of Federal and State
Automotive Regulations (Mar. 2017) (``IU Study''). Revised/corrected
versions of this report that ultimately come to the same conclusions
are also available at https://spea.indiana.edu/doc/research/working-groups/comet-2018.pdf (Jan. 2018), and https://spea.indiana.edu/doc/research/working-groups/comet-022018.pdf (Feb. 2018).
    \184\ IU Study, at 3.
    \185\ IU Study, at 3, 103.
---------------------------------------------------------------------------

    One commenter quoted EPA as projecting ``job growth in the
automotive manufacturing sector and automotive parts manufacturing
sector due specifically to the need to increase expenditures for the
vehicle technologies needed to meet the standards.'' \186\ EPA's
employment projection came with a number of caveats that the commenter
omitted. EPA was unable to ``quantitatively estimate the total effects
of the standards on the automobile industry, due to the significant
uncertainties underlying any estimate of the impacts of the standards
on vehicle sales.'' \187\ EPA also could not ``quantitatively estimate
the total effects on employment at the national level, because such
effects depend heavily on the state of overall employment in the
economy,'' but noted that, under conditions of full employment, any
changes in employment in the regulated sector would primarily be offset
by changes in

employment in other sectors.\188\ Ultimately, EPA concluded that it
would be unable to distinguish the effect of the standards on
employment ``from other factors affecting employment, especially
macroeconomic conditions and their effect on vehicle sales.'' \189\
---------------------------------------------------------------------------

    \186\ CBD Comment, at 14 (quoting ``Final Determination on the
Appropriateness of the Model Year 2022-2025 Light-Duty Vehicle
Greenhouse Gas Emissions Standards under the Midterm Evaluation,''
available at https://nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P100QQ91.pdf
(Final Determination), at 26).
    \187\ Final Determination, at 26.
    \188\ Final Determination, at 26.
    \189\ Final Determination, at 26.
---------------------------------------------------------------------------

    Regardless, since that projection, EPA--in reconsidering the
emission standards for model year 2022-2025 light-duty vehicles that
were ``based on outdated information''--has concluded that ``a more
rigorous analysis of job gains and losses is needed to determine the
net effects of alternate levels of the standards on employment and
believes this is an important factor to consider in adopting
appropriate standards.'' \190\
---------------------------------------------------------------------------

    \190\ 83 FR 16077, 16077, 16086 (Apr. 13, 2018).
---------------------------------------------------------------------------

    The same commenter also highlighted that ``industry groups like the
Motor and Equipment Manufacturers Association, and the Manufacturers of
Emissions Controls have expressed grave concerns about potential
rollbacks of federal standards, which would threaten the technological
and manufacturing investments they have already made.'' \191\ Notably,
neither of these industry groups submitted a comment on the NPRM.
Regardless, this rulemaking does not involve ``rollbacks of federal
standards.'' It relates to civil penalties for those who violate the
standards.
---------------------------------------------------------------------------

    \191\ CBD Comment, at 14.
---------------------------------------------------------------------------

ii. Competition
    As a threshold matter, one commenter contested NHTSA's
understanding of the competition factor in EPCA: ``EPCA does not
inquire into competitive effects among manufacturers. To the contrary,
EPCA expressly acknowledges that CAFE standards will treat different
manufacturers differently.'' \192\ EPCA does not define
``competition,'' and Congress gave sole discretion to the Secretary of
Transportation to decide whether it is likely that an increase in the
CAFE civil penalty rate would adversely affect competition, along with
the determinations of the other EPCA factors.\193\ In applying EPCA,
``NHTSA has consistently evaluated risks to competition, including the
potential effects on individual automakers.'' \194\ NHTSA has adopted
and followed this approach for decades. Accordingly, NHTSA believes
that it is appropriate for it to continue analyzing the potential
effect of its regulations on competition in this ``broad manner.''
\195\
---------------------------------------------------------------------------

    \192\ CBD Comment, at 15 (citing, as an example, 49 U.S.C.
32903, ``providing for credit trading, and allowing manufacturers
who have over-complied with standards to trade credits with
manufacturers who have failed to meet fuel economy requirements'').
    \193\ 49 U.S.C. 32912(c)(1)(C)(ii).
    \194\ 83 FR 13904, 13914 (Apr. 2, 2018).
    \195\ 83 FR 13904, 13914 (Apr. 2, 2018).
---------------------------------------------------------------------------

    In any event, NHTSA also explained in the NPRM how increasing the
CAFE civil penalty rate could also adversely affect competition through
``an impact on the market itself by limiting consumer choice involving
vehicles and vehicle configurations that would otherwise be produced
with penalties at their current values.'' \196\ The same commenter
disputed this effect on consumer choice, declaring--without evidence--
that having the CAFE civil penalty rate at $5.50 ``disadvantages
consumers by reducing the number of more fuel-efficient vehicle choices
in the marketplace.'' \197\ NHTSA disagrees. The CAFE standards--and
the natural competitive incentive for manufacturers to design vehicles
that allow consumers to pay less for fuel--already ensure a significant
variety of fuel efficient vehicles in the marketplace, and those
manufacturers are unlikely to change a course if that CAFE civil
penalty rate is not increased. As NHTSA described in the NPRM,
increasing the CAFE civil penalty rate could actually have the opposite
effect of that described by the commenter, for example if a
manufacturer ``decide[s] that it makes financial sense to shift
resources from its planned investments in capital towards payment of
possible future penalties,'' or ``[i]f the possibility of paying
penalties looms too large,'' driving the manufacturer out of business
entirely.\198\
---------------------------------------------------------------------------

    \196\ 83 FR 13904, 13915 (Apr. 2, 2018).
    \197\ CBD Comment, at 23.
    \198\ 83 FR 13904, 13915 (Apr. 2, 2018); see also Comment by
Jaguar Land Rover North America LLC, NHTSA-2018-0017-0016, at 1 (``A
significant increase in the CAFE penalty rate would fundamentally
change the dynamics of how companies may make investment decisions,
and would force IVM specialist manufacturers to disregard consumer
demand by restricting the availability of vehicles that consumers
want.''). The commenter noted that EPA has previously stated that
under the standards, ``consumers can continue to have a full range
of vehicle choices that meet their needs.'' CBD Comment, at 16
(quoting Final Determination, at 9). But EPA has since reconsidered
the emission standards for model year 2022-2025 light-duty vehicles,
which were ``based on outdated information.'' 83 FR 16077, 16077
(Apr. 13, 2018). Accordingly, EPA cannot be held to its earlier
forecast regarding choices available to consumers.
---------------------------------------------------------------------------

    Another commenter argued that ``[a]llowing the penalty to remain
indexed to inflation as mandated by Congress does not adversely affect
competition, but actively changing the rate to a lower value does,'' by
``express[ing] a preference for companies that have failed or will fail
to comply with the standards and disrupt[ing] the normal market
competition by effectively subsidizing these companies.'' \199\ As
explained above, NHTSA is not ``actively changing the rate to a lower
value''; the rate was $5.50 during reconsideration, the rate is
currently $5.50, and the rate will continue to be $5.50 as a result of
this final rule, rather than increasing to $14 beginning with MY 2019.
But NHTSA agrees with the general principle that ``actively changing
the rate'' would ``disrupt[ ] the normal market competition.'' For the
reasons described in the NPRM, NHTSA believes that ``an increase in the
CAFE penalty rate could distort the normal market competition that
would be expected in a free market by favoring one group of
manufacturers over another.'' \200\ Thus, to avoid adversely affecting
competition by interfering, NHTSA will not increase the CAFE civil
penalty rate.
---------------------------------------------------------------------------

    \199\ CAP Comment, at 4; see also CBD Comment, at 15 (reasoning
that keeping the rate ``artificially low'' would ``create an unfair
market environment,'' in which less established, innovative
companies that have invested in technology to meet the standards
would find themselves at a competitive disadvantage to more
established, larger companies that may be more willing to pay
penalties, rather than comply).
    \200\ 83 FR 13904, 13914 (Apr. 2, 2018).
---------------------------------------------------------------------------

    Relatedly, one commenter argued that polling, reinforced by sales
data, shows that ``consumers value access to fuel-efficient vehicles.''
\201\ If true, then normal market competition will incentivize non-
compliant manufacturers to invest in increasingly efficient technology
and increasing compliance with the standards. NHTSA would have no need
to increase the CAFE civil penalty rate if it would never be applied
because market forces would ensure compliance.
---------------------------------------------------------------------------

    \201\ CBD Comment, at 16.
---------------------------------------------------------------------------

    The same commenter also argued that increasing the CAFE civil
penalty rate ``enhances the competitiveness of U.S.-made vehicles in
domestic and global markets.'' \202\ Specifically, the commenter
maintained that ``more U.S. fuel-efficient vehicles means fewer
consumer and production shifts when gas prices are volatile, and more
efficient fleets have increased chances of competing with the tighter
standards set in Europe and Asia, allowing automakers to build global
vehicle platforms and significantly reduce their costs.'' For similar
reasons as described above, automakers are already naturally
incentivized to ``reduce their costs.'' If becoming increasingly
efficient would

allow them to do so--and sell more vehicles in Europe and Asia--they
will do so. As explained in more detail below, domestic manufacturers
already must overcome hurdles that foreign manufacturers do not face,
such as a separate minimum standard for domestically-manufactured
passenger automobiles and prohibiting manufacturers from using traded
credits to satisfy a shortfall of passenger automobiles manufactured
domestically.
---------------------------------------------------------------------------

    \202\ CBD Comment, at 15-16. This argument overlaps to some
extent with the imports EPCA factor.
---------------------------------------------------------------------------

    Another commenter challenged NHTSA's rationale on the competition
factor, arguing that ``if the stringency of the penalty is not
maintained over time . . . , then manufacturers increasingly have the
incentive merely to pay the penalty and not further invest in greater
fuel efficiency.'' \203\ This is a moot point because the stringency of
CAFE civil penalties is maintained over time, just not through
inflation adjustments. As explained above, Congress chose an
alternative mechanism for ensuring that the CAFE stringency retains its
salience over time, by requiring the fuel economy standards to be set
at the maximum feasible level for each model year, rather than
requiring adjustments for inflation of the penalty rate alone.
Consequently, increasing the penalty rate would serve to ``adversely
impact the affected manufacturers through higher prices for their
products (without corresponding benefits to consumers), restricted
product offerings, and reduced profitability''--i.e., adversely
affecting competition.\204\
---------------------------------------------------------------------------

    \203\ CARB Comment, at 18.
    \204\ 83 FR 13904, 13914 (Apr. 2, 2018).
---------------------------------------------------------------------------

iii. Imports
    One commenter argued that ``if anything, the proper inflation
adjustment would aid domestic manufacturing,'' rather than cause a
significant increase in automobile imports.\205\ Specifically, the
comment noted that ``historically, the only manufacturers to pay fines
for non-compliance have been those who import a large fraction (and, in
many cases, all) of the vehicles sold in the United States.'' \206\
This misses a key part of the picture. In the NPRM, NHTSA noted that
``[f]inal model year fuel economy performance reports published by
NHTSA indicate import passenger car fleets are performing better than
domestic passenger car fleets.'' Since then, the model year 2016 fleet
performance report has been made available, indicating that the
performance of the import passenger car fleet again has an advantage
over the domestic passenger car fleet, now almost a full mile per
gallon difference.\207\ Although the magnitude of the advantage has
varied, the import passenger car fleet has consistently had a superior
fuel economy performance to the domestic passenger car fleet for over
ten years. Because of that existing advantage, increasing the CAFE
civil penalty rate would likely have a harsher impact on domestic
manufacturers, who would need to invest more to reduce fuel economy
shortfalls. As those increased investments get translated into higher
prices for vehicles, relatively cheaper imported vehicles become more
attractive to consumers. The comment seemed to grasp this point in its
very next paragraph, describing a situation in which ``a higher fine is
going to either push a manufacturer to deploy more technology to comply
. . . or ensure that domestic production of more efficient cars is
sufficient to offset the shortfall of its domestically produced''
vehicles--both of which must be paid for somehow.\208\
---------------------------------------------------------------------------

    \205\ CBD Comment, at 18-19.
    \206\ CBD Comment, at 18 (citing CAFE Public Information Center,
available at https://one.nhtsa.gov/cafe_pic/CAFE_PIC_Fines_LIVE.html).
    \207\ Available at https://one.nhtsa.gov/cafe_pic/CAFE_PIC_fleet_LIVE.html (last accessed May 22, 2018).
    \208\ CBD Comment, at 18.
---------------------------------------------------------------------------

    Moreover, the comment fails to mention that domestic manufacturers
face some heavier statutory burdens. For example, manufacturers are
barred by statute from using traded credits to satisfy a shortfall for
``the category of passenger automobiles manufactured domestically.''
\209\ Passenger automobiles manufactured internationally are not
subject to the same limitation, affording foreign manufacturers a
competitive advantage. Domestically-manufactured passenger automobiles
are also subject to a minimum standard, beyond the general average fuel
economy standards: 27.5 miles per gallon or ``92 percent of the average
fuel economy projected by the Secretary for the combined domestic and
non-domestic passenger automobile fleets manufactured for sale in the
United States by all manufacturers in the model year,'' whichever is
greater.\210\ In fact, this statutory domestic passenger vehicle
requirement has already resulted in the imposition of record penalties
for model year 2016. As noted in NHTSA's MY 2011-2018 Industry CAFE
Compliance report, one manufacturer paid over $77 million in civil
penalties for failing to meet or exceed the minimum domestic passenger
car standard for MY 2016--the single highest civil penalty assessed in
the history of the CAFE program. NHTSA anticipates that such penalties
will increase as stringency levels continue to rise. These disparities
against the domestic passenger automobile industry increase the
likelihood that an upward adjustment to the CAFE civil penalty rate
will create greater incentives for manufacturers to shift their
production of passenger vehicles overseas to avoid such penalties, and
that would have a negative economic impact on the United States--one
that is likely to hit particularly hard on states and regions of states
where domestic passenger automobile manufacturing is concentrated.
---------------------------------------------------------------------------

    \209\ 49 U.S.C. 32903(f)(2); see also 49 CFR 536.9(c).
    \210\ 49 U.S.C. 32902(b)(4). Since the minimum standard for
domestically-produced passenger automobiles was promulgated, the
``92 percent'' has always been greater than 27.5 mpg. For model year
2016, the most recent year for which data is publicly available,
some manufacturers were unable to meet the domestic passenger car
fleet standard. CAFE Public Information Center, https://one.nhtsa.gov/cafe_pic/CAFE_PIC_Mfr_LIVE.html.
---------------------------------------------------------------------------

    The comment also cited the ``history of Detroit manufacturing'' as
another illustration for how ``adjusting the fine upward acts to pull
manufacture of more efficient vehicles into domestic production as
opposed to overseas production and imported.'' \211\ The comment's
portrayal of history, however, omitted that many of the most efficient
vehicles already had thin margins and production had been moved, at
least in part, to plants in Mexico to reduce costs. Moreover, the
strength of the connection between the civil penalty rate and domestic
production is tenuous. An alternative explanation is that higher fuel
prices allow manufacturers to charge more for fuel efficient vehicles.
Consequently, manufacturers can spend more on production domestically
without having to shift production abroad for cheaper.
---------------------------------------------------------------------------

    \211\ CBD Comment, at 18-19.
---------------------------------------------------------------------------

b. Other Economic Considerations
    Even if the EPCA factors do not apply, NHTSA concludes that raising
the CAFE civil penalty rate to $14 would have a ``negative economic
impact'' for the reasons explained in the NPRM.\212\ One comment
asserted that NHTSA ``has not identified any facts or analysis that
would support its belated invocation of the `negative economic impact'
provision.'' \213\ This comment ignores that the NPRM expressly stated
that it was relying on ``the estimate provided by industry showing
annual costs of at least one billion dollars.'' \214\
---------------------------------------------------------------------------

    \212\ 83 FR 13904, 13916 (Apr. 2, 2018).
    \213\ Attorneys General Comment, at 14.
    \214\ 83 FR 13904, 13916 (Apr. 2, 2018).

---------------------------------------------------------------------------

    Some commenters challenged NHTSA's reliance on the Alliance and
Global's estimate of annual costs of at least one billion dollars under
NHTSA's augural standards for MY 2022 to 2025, largely relying on the
Union of Concerned Scientists' (UCS's) critique of the estimate.\215\
The Alliance and Global addressed UCS's criticisms in their
comment.\216\ Specifically, the Alliance and Global observed that ``UCS
did not factor in the costs of CAFE penalties in their analysis,'' as
NHTSA has in its analyses of the economic impact of CAFE
standards.\217\ Consistent with NHTSA's past methodology and in light
of the particular question at issue here, NHTSA continues to agree that
it was appropriate to incorporate the costs of civil penalties in an
analysis to determine whether raising the CAFE civil penalty rate would
have a ``negative economic impact.''
---------------------------------------------------------------------------

    \215\ See, e.g., CBD Comment, at 19; Attorneys General Comment,
at 10; IPI Comment, at 13-14. UCS's critique of the Alliance and
Global's analysis is available at https://www.regulations.gov/document?D=NHTSA-2017-0059-0019.
    \216\ Alliance and Global Comment, at 17-18.
    \217\ Alliance and Global Comment, at 17-18 (citing 77 FR 62624,
63047 (Oct. 15, 2012)). Contrary to one comment's critique,
Attorneys General Comment, at 15; cf. IPI Comment, at 16 (``[A]ny
negative effects of higher penalties on profits would be experienced
only by those firms that, in the absence of the inflation
adjustment, would not comply with the standards. . . .''), the
Alliance and Global's analysis did account for the increased costs
to manufacturers that would comply with the fuel economy standards.
---------------------------------------------------------------------------

    One commenter argued, relying on the July 2016 Draft Technical
Assessment Report (TAR), that because ``the model year 2022-25
greenhouse gas/CAFE standards were technologically feasible at
reasonable cost for auto manufacturers . . . the industry's $1 billion
penalty estimates are unreasonable since any `massive' increase would
be the result of the manufacturers' deliberate non-compliance rather
than any inability to comply.'' \218\ Since the draft TAR, however, the
EPA Administrator has reconsidered the emission standards for model
year 2022-2025 light-duty vehicles and determined that they ``are based
on outdated information, and that more recent information suggests that
the current standards may be too stringent.'' \219\ Accordingly, EPA
announced that it ``will initiate a notice and comment rulemaking in a
forthcoming Federal Register notice to further consider appropriate
standards for model year 2022-2025 light-duty vehicles, as
appropriate,'' in partnership with NHTSA.\220\ In particular, EPA
observed that due to a variety of challenges of feasibility and
practicability, many companies have already started to rely on banked
credits to remain in compliance, which may be increasingly difficult to
continue as the stringency standards tighten.\221\ To the extent that
the draft TAR expressed that ``the model year 2022-25 greenhouse gas/
CAFE standards were technologically feasible at reasonable cost for
auto manufacturers,'' that conclusion is no longer operative.
---------------------------------------------------------------------------

    \218\ Attorneys General Comment, at 10.
    \219\ 83 FR 16077, 16077 (Apr. 13, 2018).
    \220\ 83 FR 16077, 16077 (Apr. 13, 2018). As part of this
reconsideration, ``NHTSA is obligated to conduct a de novo
rulemaking, with fresh inputs and a fresh consideration and
balancing of all relevant factors, to establish final CAFE standards
for [MYs 2022-2025].'' 82 FR 34740, 34741 (July 26, 2017).
    \221\ 83 FR 16077, 16079 (Apr. 13, 2018).
---------------------------------------------------------------------------

    Another commenter identified purported ``substantial shortcomings''
with the CAFE model used by the Alliance and Global to formulate
generate its cost estimates, which it claimed ``will tend to
overestimate fuel economy costs.'' \222\ NHTSA disagrees strongly with
that statement. As the comment itself noted, ``the [CAFE] model is one
of the best publicly available tools for analyzing the effects of fuel
economy regulation and offers substantial transparency and
comparability for the analyses.'' \223\ Further, the CAFE model has
been used in numerous fuel economy rulemakings. Finally, the commenter
did not provide an alternative calculation of what it believes the
additional costs associated with increasing the CAFE civil penalty rate
would be. As such, NHTSA's reliance on the CAFE model is eminently
reasonable, and the agency continues to believe that ``the estimate
provided by the Alliance and Global showing annual costs of at least
one billion dollars is a reasonable estimate'' of what would occur if
the CAFE civil penalty rate was increased to $14 under the agency's
augural standards and that this would constitute a ``negative economic
impact'' under the 2015 Act.\224\
---------------------------------------------------------------------------

    \222\ IPI Comment, at 13-14.
    \223\ IPI Comment, at 13.
    \224\ 83 FR 13904, 13916 (Apr. 2, 2018).
---------------------------------------------------------------------------

    Some commenters argued that even assuming the Alliance and Global's
analysis was accurate, the impact of the additional costs it calculates
is minimal when spread across the industry.\225\ These arguments gloss
over the fact that if the Alliance and Global's analysis is correct,
there is a ``negative economic impact.'' Instead, these comments seem
to be directed towards the irrelevant question of how ``negative'' the
``economic impact'' would be.\226\
---------------------------------------------------------------------------

    \225\ See, e.g., Comment by Kendl Kobbervig, NHTSA-2018-0017-
0009, at 1; Attorneys General Comment, at 14-15; IPI Comment, at 15;
cf. IPI Comment, at 16 (arguing that ``the increase in costs should
not be thought of as severe'' because the total additional costs due
to an increase in the CAFE civil penalty ``will occur mostly for
luxurious and sports cars'').
    \226\ This question is irrelevant for the reasons discussed in
footnote 160: once NHTSA determines that increasing the civil
penalty to $14 would have a negative economic impact, it has broad
discretion to determine how much less than the otherwise required
amount the adjustment, if any, should be.
---------------------------------------------------------------------------

    Other commenters criticized NHTSA for purportedly not conducting a
sufficiently thorough analysis of the negative economic impact of the
increased penalty rate, asserting that NHTSA must consider factors,
such as ``which vehicles would be subject to penalties, how much of the
costs would be passed through to consumers, and whether the average per
vehicle cost would have any impact at all on consumer demand for
vehicles.'' \227\ The 2015 Act does not require such an analysis to
determine whether making an otherwise required adjustment would have a
``negative economic impact.'' As NHTSA explained in the NPRM and above,
because the term ``negative economic impact'' is not defined nor any
guidance provided by Congress or OMB, NHTSA has broad discretion to
determine how to determine whether a ``negative economic impact'' would
result from such an adjustment.\228\
---------------------------------------------------------------------------

    \227\ Attorneys General Comment, at 13-14; see also CARB
Comment, at 19 (commenting that NHTSA did ``not provide an estimate
of the increased compliance costs, the number and types of vehicles
affected, the average increased costs that consumers would bear, the
price sensitivity of consumers of the affected vehicles, or how the
cost increase compares to fuel cost savings and other benefits to
consumers resulting from increased compliance'').
    \228\ See 83 FR 13904, 13916 (Apr. 2, 2018) (citing Nat'l
Shooting Sports Found., Inc. v. Jones, 716 F.3d 200, 214-15 (D.C.
Cir. 2013)); Alliance and Global Comment, at 15 & n.63.
---------------------------------------------------------------------------

    Contrast the ``negative economic impact'' exception in the 2015 Act
with the statutory provision describing the relevant factors that
Congress requires NHTSA to consider in determining the amount of a
civil penalty imposed for a variety of violations of the Safety
Act.\229\ Congress has demonstrated that it can, and will, delineate
specific factors agencies should consider in making comparable
determinations. It chose not to do so in the 2015 Act, affording
agencies the ability to determine what would be most appropriate for
each.
---------------------------------------------------------------------------

    \229\ See 49 U.S.C. 30165(c) (requiring the Secretary to
``consider the nature, circumstances, extent, and gravity of the
violation'' in determining the amount of a civil penalty under that
section and detailing specific factors the Secretary must include,
as appropriate, in making such determination).
---------------------------------------------------------------------------

    Imposing an additional billion dollars in costs to the automobile
industry--

every year--would have the type of ``negative economic impact''
envisioned by Congress when it provided this exception, and this
negative economic impact is magnified by the statutory domestic minimum
standard for passenger vehicles, whose penalties cannot be avoided with
credits. In fact, in other instances when Congress has imposed
additional procedural requirements on agencies, it has drawn the line
at economic impacts around $100 million.\230\ It appears reasonable
that a projected economic impact ten times the amount required for a
rule to be considered ``major'' under the Congressional Review Act
would be more than enough to reach this threshold. Furthermore, as
noted above, it is apparent that a significant part of the negative
impact would occur within the United States--and specifically within
regions of the United States where traditional automobile manufacturing
is concentrated--because raising the penalty rate would not only harm
manufacturers generally. It would also create a specific incentive for
manufacturers to shift domestic production of small, low-profit-margin
passenger vehicles either to Mexico (where production costs are lower)
or outside of North America (because those vehicles would not be
subject to the domestic minimum standard).
---------------------------------------------------------------------------

    \230\ See, e.g., 5 U.S.C. 804(2)(A).
---------------------------------------------------------------------------

    Another commenter alleged that NHTSA did ``not analyze the obvious
alternative available to manufacturers who want to avoid the higher
penalty: compliance with the fuel economy standards'' and ``entirely
fail[ed] to address'' how increasing the CAFE civil penalty rate to $14
would raise the value of credits, ``making violations more expensive
for those manufacturers that voluntarily choose not to comply with the
CAFE standards.'' \231\ This comment is wrong: In the NPRM, NHTSA
expressly acknowledged manufacturers' option to comply with the
applicable fuel economy standards, the resulting effect on the value of
credits, and the economic impact.\232\ Further, the $1 billion estimate
was for total costs, including technology costs, not just increased
penalty payments.
---------------------------------------------------------------------------

    \231\ Attorneys General Comment, at 15-16.
    \232\ See, e.g., 83 FR 13904, 13916 (Apr. 2, 2018)
(``[I]ncreasing the penalty rate to $14 would lead to significantly
greater costs than the agency had anticipated when it set the CAFE
standards because manufacturers who had planned to use penalties as
one way to make up their shortfall would now need to pay increased
penalty amounts, purchase additional credits at likely higher
prices, or make modifications to their vehicles outside of their
ordinary redesign cycles. NHTSA believes all of these options would
increase manufacturers' compliance costs, many of which would be
passed along to consumers.'').
---------------------------------------------------------------------------

    Therefore, the agency continues to believe that the estimate
provided by the Alliance and Global is a reasonable estimate of the
economic impact of increasing the penalty rate under the augural
standards--perhaps even be understated--and that this impact is
sufficient for the agency to conclude that the CAFE civil penalty rate
statute falls within the ``negative economic impact'' exception to the
2015 Act.
    In addition, two recent NHTSA publications--NHTSA and EPA's Safer
Affordable Fuel-Efficient (SAFE) Vehicles proposed rule as well as the
MY 2011-2018 Industry CAFE Compliance Report--provide further
confirmation for NHTSA's conclusion that increasing the CAFE civil
penalty rate pursuant to the 2015 Act would have a ``negative economic
impact.'' \233\ The SAFE Vehicles rule proposed CAFE and greenhouse gas
(GHG) standards for model years 2020 through 2026 and used the most
recent version of the CAFE model. As discussed in greater detail in
that rulemaking, at a high level, the CAFE model is the tool the
agencies use to determine how the industry could respond to potential
standards. It includes a wide range of assumptions on the cost,
effectiveness, and availability of different technologies, and then a
decision-making tool to determine how each manufacturer could apply
technologies, while accounting for various considerations that
manufacturers typically evaluate when establishing, choosing, and
incorporating the technologies. In the case of the CAFE standards, the
model also estimates when a manufacturer is likely to use existing
credits or pay penalties in lieu of meeting the required standards.
Using the same publicly-available modeling and underlying data as that
relied upon in the SAFE Vehicles NPRM, the negative economic impact of
increasing the CAFE civil penalty rate to $14 remains apparent.
Analyses conducted for the SAFE Vehicles NPRM to determine the effect
of other inputs--in this case, the CAFE civil penalty rate--on the
sensitivity of results show that, as seen in Table 1 in Appendix A,
under the augural standards, manufacturers are projected to face more
than $500 million in additional civil penalty liability before
accounting for credits every year through at least MY 2026 if the rate
is increased to $14 in MY 2019, as compared to retaining the rate at
$5.50--with the added burden exceeding $1 billion for some model
years.\234\ Even under the proposed standards,\235\ which were the
least stringent option analyzed in that rule, the additional projected
penalty liability before accounting for credits from an increase in the
rate to $14 would be substantial: Over $750 million in the first model
year for which the increase would be in effect and over $100 million
every year through model year 2025, as shown in Table 2 in Appendix A.
These additional penalties are on top of any increased costs
manufacturers would incur in making technological or design changes to
reduce their shortfalls--costs that would likely be passed along to
consumers. It is important to note that, as described above, these
added potential penalties could be offset through the application

of credits earned, transferred, or traded in ways the model cannot
predict--subject to the limitations on domestic fleets described
above--but NHTSA expects that if the civil penalty rate was increased,
the price of credits would increase as well.
---------------------------------------------------------------------------

    \233\ 83 FR 42986 (Aug. 24, 2018). Although the SAFE Vehicles
NPRM and the CAFE Compliance Report were published after the comment
period in this rulemaking had closed, ``an agency may use
supplementary data, unavailable during the notice and comment
period, that expands on and confirms information contained in the
proposed rulemaking and addresses alleged deficiencies in the pre-
existing data, so long as no prejudice is shown.'' Solite Corp. v.
U.S. E.P.A., 952 F.2d 473, 484 (D.C. Cir. 1991) (cleaned up) (citing
Cmty. Nutrition Inst. v. Block, 749 F.2d 50, 57-58 (D.C. Cir.
1984)). Moreover, since the SAFE rule was published, NHTSA has not
received any additional comments on--or any requests to re-open the
comment period for--this CAFE civil penalty rate rulemaking.
Pursuant to NHTSA's regulations, ``[l]ate filed comments will be
considered to the extent practicable.'' 49 CFR 553.23.
    \234\ A description of the modeling assumptions and parameters
for the SAFE NPRM are located at 83 FR 43000- 43188 (Aug. 24, 2018)
(``Technical Foundation for NPRM Analysis''). The data supporting
the calculations presented here are available at https://www.nhtsa.gov/corporate-average-fuel-economy/compliance-and-effects-modeling-system in the ``Central Analysis'' and ``Sensitivity
Analysis'' for the ``2018 NPRM for Model Years 2021-2026 Passenger
Cars and Light Trucks.'' The data utilized are the same data
presented in the SAFE Vehicles NPRM ``Sensitivity Analysis'' section
(beginning at 83 FR 43352), but tabulated to show the impacts of
this particular action. The calculations here specifically compare
the total projected fines across all manufacturers and all fleets,
both under the augural standards and the proposed standards, in the
central analysis that assumes the rate will remain at $5.50 and the
sensitivity analysis that, holding all else in the central analysis
the same, assumes the rate would be increased to $14. The numbers
presented here are based on the ``unconstrained'' analysis of the
CAFE model--which allows for the possibility that credits may be
earned, transferred, and applied to CAFE shortfalls--rather than the
standard-setting analysis--which assumes that each fleet must comply
with the CAFE standard separately in each year because of the
statutory limitation in EPCA and EISA that prohibits NHTSA from
considering the availability of credits when setting standards--but
the magnitudes of the amounts and the trends are similar under both
analyses. For additional information about the assumptions
underlying this data, please refer to the Preliminary Regulatory
Impact Analysis (PRIA) and the NPRM for the SAFE Vehicles
rulemaking, both available at https://www.nhtsa.gov/corporate-average-fuel-economy/safe.
    \235\ The analysis provided by the Alliance and Global was
conducted and submitted before the proposed standards were publicly
available.
---------------------------------------------------------------------------

    Moreover, the MY 2011-2018 Industry CAFE Compliance report recently
published by NHTSA shows that the number of fleets with credit
shortfalls has substantially increased since 2011, while the number of
fleets generating credit surpluses has decreased, leading to the MY
2018 estimate of 28 fleets with projected shortfalls and only 11 with
projected surpluses.\236\ While most manufacturers have so far avoided
making civil penalty payments by using earned and traded credits, more
manufacturers are expected to need to pay penalties going forward
because credit surpluses across the entire fleet are diminishing; \237\
manufacturers will no longer be able to use their own credits or
purchase credits from other entities to fully satisfy their shortfalls.
The shrinking credit surplus is particularly challenging for domestic
fleets: The MY 2011-2018 Industry CAFE Compliance report shows that the
remaining surplus credits for domestically-produced vehicles were cut
nearly in half from MY 2014 to MY 2016.\238\ In addition, since non-
compliance with the domestic passenger car minimum standard required by
49 U.S.C. 32903(g)(3) and 49 CFR 536.9 cannot be covered with credits
acquired by another automaker or transferred from another fleet,
shortfalls for domestic vehicles must be covered by penalty payments
when a manufacturer's domestic surplus credits run out. Manufacturers
are already beginning to realize this impact: As noted above, one
manufacturer paid over $77 million in civil penalties for failing to
meet the minimum domestic passenger car standard for MY 2016, which is
the single highest civil penalty assessed in the history of the CAFE
program. These facts show that the estimate provided by the Alliance
and Global is supported by the actual behavior of the industry in the
face of increasing standards, which bears out the conclusions already
reached by NHTSA in this rulemaking.
---------------------------------------------------------------------------

    \236\ NHTSA, ``MY 2011-2018 Industry CAFE Compliance,'' https://one.nhtsa.gov/cafe_pic/MY%202011%20-%20MY%202018%20Credit%20Shortfall%20Report.pdf (Dec. 21, 2018).
    \237\ Id.
    \238\ Id.
---------------------------------------------------------------------------

5. $10 Cap

    Two comments claimed that NHTSA failed to provide a ``reasoned
explanation'' for why it departed from its previous position that the
$10 cap for the CAFE civil penalty rate, established by Congress in
1978 in 49 U.S.C. 32912(c)(1)(B), needs to be adjusted pursuant to the
2015 Act.\239\ As explained above, NHTSA is permitted to change its
views. And in doing so here, NHTSA provided a ``reasoned explanation''
in its NPRM: The $10 cap is not ``assessed or enforced'' and thus is
not a ``civil monetary penalty'' that requires adjustment under the
2015 Act.
---------------------------------------------------------------------------

    \239\ CBD Comment, at 23; Attorneys General Comment, at 17. The
Attorneys General comment also claimed that NHTSA adjusted the cap
from $10 to $25 in its interim final rule and that this adjustment
``has never been suspended or reversed, and remains in effect.''
Attorneys General Comment, at 16. As NHTSA noted in its NPRM,
however, while NHTSA did announce in the interim final rule that the
adjusted maximum civil penalty would be increased from $10 to $25,
81 FR 43524, 43526 (July 5, 2016), ``this change was never formally
codified in the Code of Federal Regulations nor adopted by
Congress.'' 83 FR 13904, 13916 n.96 (Apr. 2, 2018). Regardless,
NHTSA gave notice that ``[e]ven if the adjustment is considered to
have been adopted, however, NHTSA is now reconsidering that decision
for the reasons explained'' in the notice. 83 FR 13904, 13916 n.96
(Apr. 2, 2018).
---------------------------------------------------------------------------

    Multiple commenters disagreed with NHTSA's proposed determination
in the alternative that any potential adjustment NHTSA makes to the
CAFE civil penalty rate be capped by the $10 limit, without adjusting
the cap to $25.\240\ These comments--including those that had argued
that NHTSA's adjustment in 1997 from $5 to $5.50 constitutes evidence
that an adjustment is warranted here--almost unanimously ignored that
this cap was not adjusted when the previous inflation adjustment was
made in 1997. These comments also failed to reconcile the fact the $10
cap was left intact when Congress amended the civil penalty provision
by enacting EISA in 2007.
---------------------------------------------------------------------------

    \240\ See, e.g., CAP Comment, at 3; CBD Comment, at 23.
---------------------------------------------------------------------------

    Instead, the comments focused largely on the ``maximum amount''
provision of definition of ``civil monetary penalty'' in the 2015 Act.
One comment observed that the statutory language establishing the $10
cap is ``virtually identical'' to the statutory language establishing
the general EPCA penalty of $10,000, which NHTSA adjusted, only
identifying the shared phrase ``not more than'' to indicate that they
are both maximum amounts.\241\ But NHTSA did not, and still does not,
dispute that the $10 cap is a ``maximum amount.'' Rather, NHTSA
tentatively determined, and today finalizes, that the $10 cap is not
``assessed or enforced'' as required to be a ``civil monetary penalty''
under the 2015 Act.\242\ Other penalties that have a maximum amount,
such as the general EPCA penalty, can actually be ``assessed or
enforced'': A violator could theoretically be assessed a civil penalty
of the now-adjusted maximum amount.
---------------------------------------------------------------------------

    \241\ CARB Comment, 9.
    \242\ 28 U.S.C. 2461 note, Federal Civil Penalties Inflation
Adjustment[thinsp]3(2)(B), (C).
---------------------------------------------------------------------------

    Only two comments provided any argument on this specific
point.\243\ One of those comments conceded that the cap ``is not being
assessed or enforced now.'' \244\ Nonetheless, that comment maintained
that the cap ``may'' be assessed or enforced ``in the future if [NHTSA]
exercises its discretionary authority to increase the penalty to
further energy conservation.'' \245\ Similarly, the other comment
asserted that ``the condition of contemporaneous enforceability of the
statutory maximum amount is not a condition precedent in order to
qualify as a `civil monetary penalty.' . . . [T]he maximum itself does
not need to be actively assessed or enforced.'' \246\ Even setting
aside the hypothetical circumstances that NHTSA would need to establish
to raise the EPCA rate all the way to the cap (discussed above), it is
not the cap that is ever ``assessed or enforced''; it is the ``civil
penalty,'' as defined in 49 U.S.C. 32912(b). The statutory cap merely
sets a limit to which the $5.50 multiplier--which is used to calculate
the ``civil penalty''--can be raised.
---------------------------------------------------------------------------

    \243\ CARB Comment, at 9; Attorneys General Comment, at 17.
    \244\ Attorneys General Comment, at 17.
    \245\ Attorneys General Comment, at 17.
    \246\ CARB Comment, at 9.
---------------------------------------------------------------------------

    Other commenters discussed how the $10 cap must be adjusted to
avoid undermining the purpose of the 2015 Act.\247\ As discussed above,
NHTSA disagrees that retaining the CAFE civil penalty rate runs counter
to the purposes of the 2015 Act, even if the 2015 Act applies to the
CAFE civil penalty rate. Congress chose means other than inflation
adjustments to maintain the deterrent effect of the CAFE civil penalty
formula over time (and to incentivize energy conservation under EPCA).
Regardless, the purpose of the statute would not justify completing an
adjustment unauthorized by Congress. The $10 cap does not satisfy the
definition of a ``civil monetary penalty'' required by Congress to be

adjusted, and therefore, the 2015 Act is not a basis for NHTSA to
adjust the $10 cap.
---------------------------------------------------------------------------

    \247\ See, e.g., CARB Comment, at 19-20 (Not adjusting the $10
cap ``would completely defeat the purpose of the 2015 Act in
avoiding the eroded value and deterrence of penalties by
inflation.''); Attorneys General Comment, at 17 (``[T]o read the
2015 Act as not applying to the CAFE standards' statutory maximum
would undermine the purpose of both the 2015 Act and EPCA.''); IPI
Comment, at 4 (``[I]f the $10 maximum were a permanent cap never
subject to inflation, that would defeat Congress's stated purposes
for the 2015 Act. . . .'').
---------------------------------------------------------------------------

    One commenter proposed the $10 cap be subject to an inflationary
adjustment calculated from 2007.\248\ Because NHTSA has concluded that
the $10 cap should not be adjusted at all under the 2015 Act, it is
unnecessary for NHTSA to determine what the appropriate base year would
be if such an adjustment were required, and NHTSA declines to do so.
---------------------------------------------------------------------------

    \248\ Workhorse Comment, at 3.
---------------------------------------------------------------------------

E. 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 is
``economically significant'' because this rule avoids imposing a future
economic impact of $100 million or more annually.
    Certain commenters criticized the agency's decision to not include
a separate economic analysis. The agency notes first that nothing in
either the 2015 Act or EPCA require that NHTSA conduct a cost-benefit
analysis when determining issues related to CAFE penalties. Further,
the agency's first argument in this final rule that these penalties are
not ``civil monetary penalties'' under the 2015 Act would not be
affected by any cost-benefit analysis, as it relies on purely legal
reasoning, not on any economic finding. Similarly, although one could
argue that other arguments relied on in this final rule require some
degree of analysis, the relevant statutes expressly identify specific
factors the agency must consider, and the agency made the appropriate
considerations of substantial deleterious harm under EPCA and negative
economic impact under the 2015 Act. In addition, since this rule merely
maintains the existing penalty rate, it has no economic impact.
Certainly, some alternatives, particularly raising it to $14 or even
just $10, would have had economic impacts, but analyzing the impacts of
alternatives that would have changed the status quo is different than
analyzing an actual rule that does so. In some ways, this compares to
an agency's decision to deny a petition rulemaking, where the denial
does not ordinarily include a thorough economic analysis, but any
regulatory action in response granting a petition would likely benefit
from some an analysis the reflects the impacts of any change. Finally,
Executive Order 12866 by its own terms does not, ``does not create any
right or benefit, substantive or procedural, enforceable at law or
equity by a party against the United States, its agencies or
instrumentalities, its officers or employees, or any other person.''
Therefore, whether the agency complies with the Order is not grounds
for legal challenge. To the extent there is any ambiguity as to what
analysis is required, OMB not only reviewed both the NPRM and final
rule, but also affirmatively concurred with NHTSA's economic
determination and the interpretations of the 2015 Act in this final
rule.\249\
---------------------------------------------------------------------------

    \249\ OMB Non-Applicability Letter; OMB Negative Economic Impact
Letter.
---------------------------------------------------------------------------

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 if the head of an agency
certifies the proposal will not have a significant economic impact on a
substantial number of small entities. SBREFA amended the Regulatory
Flexibility Act to require Federal agencies to provide a statement of
the factual basis for certifying that a proposal will not have a
significant economic impact on a substantial number of small entities.
    NHTSA has considered the impacts of this notice under the
Regulatory Flexibility Act and certifies that this rule would 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).
    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.

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 national government and the States, or on the
distribution of power and responsibilities among the various levels of
government.'' Under Executive Order 13132, the agency may not issue a
regulation with federalism implications, that imposes substantial
direct compliance costs, and that is not required by statute, unless
the Federal Government provides the funds necessary to pay the direct
compliance costs incurred by State and local governments, 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.
    This rule will not have substantial direct effects on the States,
on the

relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government, as specified in Executive Order 13132.
    The reason is that this rule will 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 rule does not include a Federal
mandate, no Unfunded Mandates assessment will be prepared.

5. National Environmental Policy Act

    The National Environmental Policy Act of 1969 (NEPA) (42 U.S.C.
4321-4347) requires Federal agencies to analyze the environmental
impacts of proposed major Federal actions significantly affecting the
quality of the human environment, as well as the impacts of
alternatives to the proposed action.\250\ When a Federal agency
prepares an environmental assessment, the Council on Environmental
Quality (CEQ) NEPA implementing regulations (40 CFR parts 1500-1508)
require it to ``include brief discussions of the need for the proposal,
of alternatives . . ., of the environmental impacts of the proposed
action and alternatives, and a listing of agencies and persons
consulted.'' \251\ Based on the environmental assessment, the agency
must ``make its determination whether to prepare an environmental
impact statement'' and ``prepare a finding of no significant impact . .
. if the agency determines on the basis of the environmental assessment
not to prepare a statement.'' \252\ NHTSA prepared a Draft
Environmental Assessment (Draft EA), which was included in the preamble
of the NPRM. This section serves as the agency's Final Environmental
Assessment (Final EA) and Finding of No Significant Impact (FONSI).
---------------------------------------------------------------------------

    \250\ 42 U.S.C. 4332(2)(C).
    \251\ 40 CFR 1508.9(b).
    \252\ 40 CFR 1501.4(c) & (e).
---------------------------------------------------------------------------

i. Purpose and Need
    This final rule sets forth the purpose of and need for this action.
NHTSA considered whether it is appropriate, pursuant to the Inflation
Adjustment Act, to make an initial ``catch-up'' adjustment to the civil
monetary penalties it administers for the CAFE program. Further, if the
Inflation Adjustment Act does apply, it has considered the appropriate
approach to undertake pursuant to the legislation and consistent with
the agency's responsibilities under EPCA (as amended by EISA). NHTSA
has considered the findings of this Final EA prior to selecting the
$5.50 rate in this final rule.
ii. Alternatives
    NHTSA considered a range of alternatives for this action, including
a civil penalty amount of $5.50 per each tenth of a mile per gallon
\253\ and a civil penalty amount of $14.00 per each tenth of a mile per
gallon.\254\ NHTSA also considered a civil penalty amount of $6.00 per
each tenth of a mile per gallon (rounding to the nearest dollar
pursuant to the 2015 Act) and whether the civil penalty amount is
capped at $10.00 per each tenth of a mile per gallon (pursuant to
EPCA). This allowed the agency to consider selecting any value along
this range of alternatives, including any civil penalty amount between
$5.50 and $14.00. In consideration of the information presented in this
Final EA, NHTSA is selecting a civil penalty rate of $5.50 per each
tenth of a mile per gallon as its final rule. NHTSA is also increasing
the ``general penalty'' to a maximum penalty of $42,530,\255\ pursuant
to the requirements of the Inflation Adjustment Act.
---------------------------------------------------------------------------

    \253\ As previously noted, the rate was $5.50 during
reconsideration, the rate is currently $5.50, and the rate will
continue to be $5.50 as a result of this final rule, rather than
increasing to $14 beginning with MY 2019. Manufacturers would at no
time be responsible for paying a higher civil penalty rate.
    \254\ Absent this final rule, the $14 rate would have gone into
effect beginning with model year 2019.
    \255\ NHTSA adjusted this penalty to a maximum of $40,000 in its
July 2016 IFR. Applying 1.01636 multiplier for 2017 inflationary
adjustments, as specified in OMB's December 16, 2016 guidance,
results in an adjusted maximum penalty of $40,654. Applying the
multiplier for 2018 of 1.02041, as specified in OMB's December 15,
2017, results in an adjusted maximum penalty of $41,484. Applying
the multiplier for 2019 of 1.02522, as specified in OMB's December
14, 2018, results in an adjusted maximum penalty of $42,530.
---------------------------------------------------------------------------

    In the Draft EA, NHTSA identified $5.50 as the agency's No Action
Alternative. Two commenters noted that, as a result of the U.S. Court
Appeals for the Second Circuit decision, the $14 rate should be
considered the agency's No Action Alternative.\256\ NHTSA believes this
notice adequately explains the complicated factual and legal
circumstances that apply to this rulemaking. This Final EA considers
the environmental impacts associated with the $5.50 and $14 rates in
comparison with each other, thus allowing a reasoned consideration of
the greatest potential environmental impacts regardless of which is
appropriately considered the No Action Alternative.
---------------------------------------------------------------------------

    \256\ IPI Comment, at 10; Attorneys General Comment, at 19.
---------------------------------------------------------------------------

iii. Environmental Impacts of the Proposed Action and Alternatives
    NHTSA considered a range of alternatives from a rate of $5.50 to a
rate of $14 as the civil penalty amount for a manufacturer's failure to
meet its fleet's average fuel economy target (assuming the manufacturer
does not have sufficient credits available to cover the shortfall).
When deciding whether to add fuel-saving technology to its vehicles, a
manufacturer might consider the cost to add the technology, the price
and availability of credits, the potential reduction in its civil
penalty liability, and the value to the vehicle purchaser of the change
in fuel outlays over a specified ``payback period.'' A higher civil
penalty amount could encourage manufacturers to improve the average
fuel economy of their passenger car and light truck fleets if the
benefits of installing fuel-saving technology (i.e., lower civil
penalty liability and increased revenue from vehicle sales) outweigh
the costs of installing the technology.
    However, there are many reasons why this might not occur to the
degree anticipated. Apart from the civil penalty rate, as CAFE
standards increase in stringency, manufacturers have needed to research
and install increasingly less cost-effective technology that may not
obtain levels of consumer acceptance necessary to offset the
investment. A higher civil penalty amount combined with the value of
the potential added fuel economy benefit of new, advanced technology to
the vehicle purchaser may not be sufficient to outweigh the added
technology costs (including both the financial outlays and the risk
that consumers may not value the technology or accept its impact on the
driving experience, therefore opting not to purchase those models).
This may be especially true when gas prices are low. If the added cost
in civil penalty payments is borne by the manufacturer, this may result
in reduced investment in fuel saving technology or reduced consumer
choice. If the added cost in

civil penalty payments is passed on to the consumer, the consumer would
see higher vehicle purchase costs without a corresponding fuel economy
benefit or other benefits, resulting in fewer purchases of newer, more
fuel-efficient vehicles. Based on the foregoing, NHTSA believes that
the levels of compliance with the applicable fuel economy targets for
each of the alternatives under consideration in this notice could
result, at most, in relatively small differences in levels of
compliance with the applicable fuel economy targets.
    An increase in a motor vehicle's fuel economy is associated with
reductions in fuel consumption and greenhouse gas (GHG) emissions for
an equivalent distance of travel. Increased global GHG emissions are
associated with climate change, which includes increasing average
global temperatures, rising sea levels, changing precipitation
patterns, increasing intensity of severe weather events, and increasing
impacts on water resources. These, in turn, could affect human health
and safety, infrastructure, food and water supplies, and natural
ecosystems. Fewer GHG emissions would reduce the likelihood of these
impacts. Changes in motor vehicle fuel economy are also associated with
impacts on criteria and hazardous air pollutant emissions, safety,
life-cycle environmental impacts, and more.
    As part of recent rulemaking actions establishing CAFE standards,
NHTSA evaluated the impacts of increasing fuel economy standards for
passenger cars and light trucks on these and other environmental impact
areas.\257\ The analyses assumed a civil monetary penalty of $5.50 per
each tenth of a mile per gallon. The agency has considered the
information and trends presented in those Final Environmental Impact
Statements (Final EISs). For example, the MY 2017-2025 CAFE EIS showed
that the large stringency increases in the fuel economy standards as a
result of that rulemaking would result in reductions of global mean
surface temperature increases of no more than 0.016 [deg]C by 2100.
Further, that EIS showed those fuel economy standards resulting in
modest nationwide reductions in most criteria pollutant emissions in
2040 (usually in ranges of 10% or less) and small increases or
reductions in most toxic pollutant emissions in 2040 (usually in ranges
of 3% or less). NHTSA believes the impacts on fuel economy resulting
from this action would be very small compared to the impacts on fuel
economy resulting from the stringency increases that were reported in
those EISs. In fact, one commenter used NHTSA's CAFE Model from its
most recent CAFE stringency rulemaking to approximate the potential
impact on compliance.\258\ That commenter concluded that, compared to a
$14 rate, the $5.50 rate would ``cause average passenger car fuel
economy to drop almost 5 mpg [in the year 2032], from a baseline
scenario of 54.75 mpg to 49.75 mpg. . . . For the total fleet, the
expected increased fuel consumption amounts to 54 billion gallons
between 2017 and 2032.'' \259\ In the MY 2017-2025 CAFE EIS, the final
rule was associated with reductions in fuel consumption for calendar
years 2017 through 2060 ranging from 585 billion gallons to 1,508
billion gallons, depending on the analysis. Thus, the commenter's
analysis confirms that a civil penalty rate of $5.50, as compared to
$14, would result in environmental impacts that are a fraction of those
shown in the MY 2017-2025 CAFE EIS. Such impacts would mean global mean
surface temperature increases even less than 0.016 [deg]C by 2100, and
criteria and toxic pollutant emissions changes well less than those
reported in that EIS. Therefore, NHTSA anticipates that the
environmental impacts resulting from any of the alternatives would be
very small and consistent with, but to a much smaller degree than, the
trends reported in the Final EISs associated with its stringency
rulemakings.
---------------------------------------------------------------------------

    \257\ See, e.g., NHTSA, Final Environmental Impact Statement,
Corporate Average Fuel Economy Standards, Passenger Cars and Light
Trucks, Model Years 2017-2025, Docket No. NHTSA-2011-0056 (July
2012).
    \258\ IPI comment, at 11.
    \259\ Id.
---------------------------------------------------------------------------

    As stated in the NPRM, NHTSA believes that the environmental impact
trends reported in its recent Final EISs remain adequate and valid for
purposes of this Final EA even if the particular values reported are no
longer replicable due to updated assumptions and new information
obtained since their publication. In fact, since the NPRM, NHTSA
prepared a Draft EIS for its proposal for new CAFE standards, called
the Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule.\260\ The
Draft EIS affirms NHTSA's reliance in this Final EA on its prior Final
EISs as it reported similar environmental impact trends and values at a
similar scale to those reported in those prior documents. NHTSA
received public comments associated with the Draft EIS and is currently
reviewing those comments in anticipation of issuing a Final EIS. The
agency does not believe the civil penalty rate being finalized in this
rulemaking will limit its ability to set ``maximum feasible'' standards
pursuant to 49 U.S.C. 32902(b)(2)(B), nor will it unreasonably
constrain the potential environmental outcomes associated with future
rulemakings.
---------------------------------------------------------------------------

    \260\ The Draft EIS is available on http://www.regulations.gov,
Docket No. NHTSA-2017-0069-0178 and on NHTSA's website at http://www.nhtsa.gov/safe.
---------------------------------------------------------------------------

    NHTSA is also finalizing an increase to the ``general penalty''
pursuant to the Inflation Adjustment Act. This increase is not
anticipated to have impacts on the quality of the human environment.
The ``general penalty'' is applicable to other violations, such as a
manufacturer's failure to submit pre-model year and mid-model year
reports to NHTSA on whether they will comply with the average fuel
economy standards. These violations are not directly related to on-road
fuel economy, and therefore the penalties are not anticipated to
directly or indirectly affect fuel use or emissions.
iv. Agencies and Persons Consulted
    NHTSA and DOT have consulted with OMB as described earlier in this
preamble. NHTSA and DOT have also consulted with 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 Final EA and
concludes that the final rule and alternatives would have minimal
impacts on the quality of the human environment. Regardless of whether
a rate of $5.50 is considered no change, as compared to current law, or
a reduction from a rate of $14, the environmental impacts are
anticipated to be very small. Further, the change to the ``general
penalty'' is not anticipated to affect on-road emissions.
vi. Finding of No Significant Impact
    I have reviewed this Final EA. In determining whether this action
``significantly'' affects the quality of the human environment, I have
considered 40 CFR 1508.27, in which CEQ explains that ``significantly .
. . requires consideration of both context and intensity.'' In this
action, the context for the environmental impacts includes localities
for issues such as air pollutant emissions and the world as a whole for
issues such as GHG emissions. In terms of intensity, the impacts of
this rule would be spread across the entire nation or the entire world,
depending on the particular environmental impact. Viewed in light of
recent CAFE

stringency rulemakings, the potential environmental impacts of this
rule are expected to be small. Based on the Final EA, I conclude that
implementation of any of the action alternatives (including the final
rule) will not have a significant effect on the human environment and
that a ``finding of no significant impact'' (see 40 CFR 1501.4(e)(1)
and 1508.13) is appropriate. This statement constitutes the agency's
``finding of no significant impact,'' and an environmental impact
statement will not be prepared.

6. Executive Order 12778 (Civil Justice Reform)

    This rule does not have a retroactive or preemptive effect. Even if
some MY 2019 vehicles are already being sold, compliance determinations
will not be made until 2020 at the earliest, after this rule has gone
into effect. Moreover, compliance determinations and penalty
calculations are based on the average fuel economy of the fleet, not
individual vehicles that have been sold prior to the rule going into
effect. Judicial review of this 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 submissions received into any of DOT's dockets by the name of the
individual submitting the document (or signing the document, if
submitted on behalf of an association, business, labor union, etc.).
You may review DOT's complete Privacy Act Statement in the Federal
Register published on April 11, 2000 (Volume 65, Number 70; Pages
19477-78), or you may visit http://dms.dot.gov.

9. Executive Order 13771

    This final rule is a deregulatory action under Executive Order
13771. Potential economic impacts are reported in Appendix A.

Appendix A

              Table 1--Projected Additional Penalties Under Augural Standards if Rate is Increased
----------------------------------------------------------------------------------------------------------------
                                                        Projected            Projected
                                                     penalties under      penalties under         Difference
                                                       $5.50 rate,           $14 rate,            (projected
                    Model year                       central analysis       sensitivity           additional
                                                         (augural        analysis (augural    penalties if rate
                                                        standards)           standards)         is increased)
----------------------------------------------------------------------------------------------------------------
2019.............................................      $402,661,295.97      $979,857,995.69      $577,196,699.71
2020.............................................       424,626,535.48     1,074,571,984.97       649,945,449.49
2021.............................................       296,664,715.42       858,535,520.00       561,870,804.58
2022.............................................       435,761,242.00     1,161,920,853.58       726,159,611.58
2023.............................................       493,426,421.72     1,323,396,714.35       829,970,292.63
2024.............................................       806,729,507.15     2,108,481,177.18     1,301,751,670.03
2025.............................................     1,038,128,818.83     2,695,259,330.77     1,657,130,511.93
2026.............................................       674,517,279.88     1,541,685,503.03       867,168,223.15
                                                  --------------------------------------------------------------
    Total........................................     4,572,515,816.46    11,743,709,079.56     7,171,193,263.09
----------------------------------------------------------------------------------------------------------------
Note: Projected penalties could be offset by the application of credits.

              Table 2--Projected Additional Penalties Under Proposed Standards if Rate is Increased
----------------------------------------------------------------------------------------------------------------
                                                        Projected            Projected
                                                     penalties under      penalties under         Difference
                                                       $5.50 rate,           $14 rate,            (projected
                    Model year                       central analysis       sensitivity           additional
                                                        (proposed        analysis (proposed   penalties if rate
                                                        standards)           standards)         is increased)
----------------------------------------------------------------------------------------------------------------
2019.............................................      $505,612,917.19    $1,269,742,039.02      $764,129,121.83
2020.............................................       455,216,572.77     1,131,135,706.97       675,919,134.20
2021.............................................       302,262,154.89       704,833,149.24       402,570,994.35
2022.............................................       257,659,098.79       575,460,915.48       317,801,816.69
2023.............................................       188,672,069.76       384,423,537.48       195,751,467.72
2024.............................................       183,904,369.42       355,182,994.82       171,278,625.40
2025.............................................       165,483,877.30       312,608,273.21       147,124,395.91
2026.............................................       103,265,737.66       188,049,420.14        84,783,682.48
                                                  --------------------------------------------------------------
    Total........................................     2,162,076,797.79     4,921,436,036.37     2,759,359,238.58
----------------------------------------------------------------------------------------------------------------
Note: Projected penalties could be offset by the application of credits.

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, 49 CFR part 578 is amended as
set forth below.

PART 578--CIVIL AND CRIMINAL PENALTIES

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

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

* * * * *
    (h) Automobile fuel economy. (1) A person that violates 49 U.S.C.
32911(a) is liable to the United States Government for a civil penalty
of not more than $42,530 for each violation. A separate violation
occurs for each day the violation continues.
    (2) Except as provided in 49 U.S.C. 32912(c), 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 $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 manufactured 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
1.81, 1.95, and 501.5.
Heidi R. King,
Deputy Administrator.
[FR Doc. 2019-15259 Filed 7-25-19; 8:45 am]
 BILLING CODE 4910-59-P