
[Federal Register Volume 80, Number 141 (Thursday, July 23, 2015)]
[Rules and Regulations]
[Pages 43631-43634]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-18073]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 535


Medium- and Heavy-Duty Vehicle Fuel Efficiency Program

CFR Correction

    In Title 49 of the Code of Federal Regulations, Parts 400 to 571, 
revised as of October 1, 2014, on page 146, Sec.  535.9 is reinstated 
to read as follows:


Sec.  535.9  Enforcement approach.

    (a) Compliance. (1) NHTSA will assess compliance with fuel 
consumption standards each year, based upon EPA final verified data 
submitted to NHTSA for its heavy-duty vehicle fuel efficiency program 
established pursuant to 49 U.S.C. 32902(k). NHTSA may conduct 
verification testing throughout a given model year in order to validate 
data received from manufacturers and will discuss any potential issues 
with EPA and the manufacturer.
    (2) Credit values in gallons are calculated based on the final 
CO2 emissions and fuel consumption data submitted by 
manufacturers and verified/validated by EPA.
    (3) NHTSA will verify a manufacturer's credit balance in each 
averaging set for each given model year. The average set balance is 
based upon the engines or vehicles performance above or below the 
applicable regulatory subcategory standards in each respective 
averaging set and any credits that are traded into or out of an 
averaging set during the model year.
    (i) If the balance is positive, the manufacturer is designated as 
having a credit surplus.
    (ii) If the balance is negative, the manufacturer is designated as 
having a credit deficit.
    (4) NHTSA will provide written notification to the manufacturer 
that has a negative balance for any averaging set for each model year. 
The manufacturer will be required to confirm the negative balance and 
submit a plan indicating how it will allocate existing credits or earn, 
and/or acquire by trade credits, or else be liable for a civil penalty 
as determined in paragraph (b) of this section. The manufacturer must 
submit a plan within 60 days of receiving agency notification.
    (5) Credit shortfall within an averaging set may be carried forward 
only three years, and if not offset by earned or traded credits, the 
manufacturer may be liable for a civil penalty as described in 
paragraph (b) of this section.
    (6) Credit allocation plans received from a manufacturer will be 
reviewed and approved by NHTSA. NHTSA will approve a credit allocation 
plan unless it determines that the proposed credits are unavailable or 
that it is unlikely that the plan will result in the manufacturer 
earning sufficient credits to offset the subject credit shortfall. If a 
plan is approved, NHTSA will revise the respective manufacturer's 
credit account accordingly by identifying which existing or traded 
credits are being used to address the credit shortfall, or by 
identifying the manufacturer's plan to earn future credits for 
addressing the respective credit shortfall. If a plan is rejected, 
NHTSA will notify the respective manufacturer and request a revised 
plan. The manufacturer must submit a revised plan within 14 days of 
receiving agency notification. The agency will provide a manufacturer 
one opportunity to submit a revised credit allocation plan before it 
initiates civil penalty proceedings.
    (7) For purposes of this regulation, NHTSA will treat the use of 
future credits for compliance, as through a credit allocation plan, as 
a deferral of civil penalties for non-compliance with an applicable 
fuel consumption standard.
    (8) If NHTSA receives and approves a manufacturer's credit 
allocation plan to earn future credits within the following three model 
years in order to comply with regulatory obligations, NHTSA will defer 
levying civil penalties for non-compliance until the date(s) when the 
manufacturer's approved plan indicates that credits will be earned or 
acquired to achieve compliance, and upon receiving confirmed 
CO2 emissions and fuel consumption data from EPA. If the 
manufacturer fails to acquire or earn sufficient credits by the plan 
dates, NHTSA will initiate civil penalty proceedings.
    (9) In the event that NHTSA fails to receive or is unable to 
approve a plan for a non-compliant manufacturer due to insufficiency or 
untimeliness,

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NHTSA may initiate civil penalty proceedings.
    (10) In the event that a manufacturer fails to report accurate fuel 
consumption data for vehicles or engines covered under this rule, 
noncompliance will be assumed until corrected by submission of the 
required data, and NHTSA may initiate civil penalty proceedings.
    (b) Civil penalties. (1) Generally. NHTSA may assess a civil 
penalty for any violation of this part under 49 U.S.C. 32902(k). This 
section states the procedures for assessing civil penalties for 
violations of Sec.  535.5. The provisions of 5 U.S.C. 554, 556, and 557 
do not apply to any proceedings conducted pursuant to this section.
    (2) Initial determination of noncompliance. An action for civil 
penalties is commenced by the execution of a Notice of Violation. A 
determination by NHTSA's Office of Enforcement of noncompliance with 
applicable fuel consumption standards utilizing the certified and 
reported CO2 emissions and fuel consumption data provided by 
the Environmental Protection Agency as described in this part, and 
after considering all the flexibilities available under Sec.  535.7, 
underlies a Notice of Violation. If NHTSA Enforcement determines that a 
manufacturer's averaging set of vehicles or engines fails to comply 
with the applicable fuel consumption standard(s) by generating a credit 
shortfall, the chassis, vehicle or engine manufacturer, as relevant, 
shall be subject to a civil penalty.
    (3) Numbers of violations and maximum civil penalties. Any 
violation shall constitute a separate violation with respect to each 
vehicle or engine within the applicable regulatory averaging set. The 
maximum civil penalty is not more than $37,500.00 per vehicle or 
engine. The maximum civil penalty under this section for a related 
series of violations shall be determined by multiplying $37,500.00 
times the vehicle or engine production volume for the model year in 
question within the regulatory averaging set. NHTSA may adjust this 
civil penalty amount to account for inflation.
    (4) Factors for determining penalty amount. In determining the 
amount of any civil penalty proposed to be assessed or assessed under 
this section, NHTSA shall take into account the gravity of the 
violation, the size of the violator's business, the violator's history 
of compliance with applicable fuel consumption standards, the actual 
fuel consumption performance related to the applicable standards, the 
estimated cost to comply with the regulation and applicable standards, 
the quantity of vehicles or engines not complying, and the effect of 
the penalty on the violator's ability to continue in business. The 
``estimated cost to comply with the regulation and applicable 
standards,'' will be used to ensure that penalties for non-compliance 
will not be less than the cost of compliance.
    (5) NHTSA enforcement report of determination of non-compliance. 
(i) If NHTSA Enforcement determines that a violation has occurred, 
NHTSA Enforcement may prepare a report and send the report to the NHTSA 
Chief Counsel.
    (ii) The NHTSA Chief Counsel will review the report prepared by 
NHTSA Enforcement to determine if there is sufficient information to 
establish a likely violation.
    (iii) If the Chief Counsel determines that a violation has likely 
occurred, the Chief Counsel may issue a Notice of Violation to the 
party.
    (iv) If the Chief Counsel issues a Notice of Violation, he or she 
will prepare a case file with recommended actions. A record of any 
prior violations by the same party shall be forwarded with the case 
file.
    (6) Notice of violation. (i) The Notice of Violation will contain 
the following information:
    (A) The name and address of the party;
    (B) The alleged violation(s) and the applicable fuel consumption 
standard(s) violated;
    (C) The amount of the proposed penalty and basis for that amount;
    (D) The place to which, and the manner in which, payment is to be 
made;
    (E) A statement that the party may decline the Notice of Violation 
and that if the Notice of Violation is declined within 30 days of the 
date shown on the Notice of Violation, the party has the right to a 
hearing, if requested within 30 days of the date shown on the Notice of 
Violation, prior to a final assessment of a penalty by a Hearing 
Officer; and
    (F) A statement that failure to either pay the proposed penalty or 
to decline the Notice of Violation and request a hearing within 30 days 
of the date shown on the Notice of Violation will result in a finding 
of violation by default and that NHTSA will proceed with the civil 
penalty in the amount proposed on the Notice of Violation without 
processing the violation under the hearing procedures set forth in this 
subpart.
    (ii) The Notice of Violation may be delivered to the party by:
    (A) Mailing to the party (certified mail is not required);
    (B) Use of an overnight or express courier service; or
    (C) Facsimile transmission or electronic mail (with or without 
attachments) to the party or an employee of the party.
    (iii) At any time after the Notice of Violation is issued, NHTSA 
and the party may agree to reach a compromise on the payment amount.
    (iv) Once a penalty amount is paid in full, a finding of ``resolved 
with payment'' will be entered into the case file.
    (v) If the party agrees to pay the proposed penalty, but has not 
made payment within 30 days of the date shown on the Notice of 
Violation, NHTSA will enter a finding of violation by default in the 
matter and NHTSA will proceed with the civil penalty in the amount 
proposed on the Notice of Violation without processing the violation 
under the hearing procedures set forth in this subpart.
    (vi) If within 30 days of the date shown on the Notice of Violation 
a party fails to pay the proposed penalty on the Notice of Violation, 
and fails to request a hearing, then NHTSA will enter a finding of 
violation by default in the case file, and will assess the civil 
penalty in the amount set forth on the Notice of Violation without 
processing the violation under the hearing procedures set forth in this 
subpart.
    (vii) NHTSA's order assessing the civil penalty following a party's 
default is a final agency action.
    (7) Hearing Officer. (i) If a party timely requests a hearing after 
receiving a Notice of Violation, a Hearing Officer shall hear the case.
    (ii) The Hearing Officer will be appointed by the NHTSA 
Administrator, and is solely responsible for the case referred to him 
or her. The Hearing Officer shall have no other responsibility, direct 
or supervisory, for the investigation of cases referred for the 
assessment of civil penalties. The Hearing Officer shall have no duties 
related to the light-duty fuel economy or medium- and heavy-duty fuel 
efficiency programs.
    (iii) The Hearing Officer decides each case on the basis of the 
information before him or her.
    (8) Initiation of action before the Hearing Officer. (i) After the 
Hearing Officer receives the case file from the Chief Counsel, the 
Hearing Officer notifies the party in writing of:
    (A) The date, time, and location of the hearing and whether the 
hearing will be conducted telephonically or at the DOT Headquarters 
building in Washington, DC;

[[Page 43633]]

    (B) The right to be represented at all stages of the proceeding by 
counsel as set forth in paragraph (b)(9) of this section;
    (C) The right to a free copy of all written evidence in the case 
file.
    (ii) On the request of a party, or at the Hearing Officer's 
direction, multiple proceedings may be consolidated if at any time it 
appears that such consolidation is necessary or desirable.
    (9) Counsel. A party has the right to be represented at all stages 
of the proceeding by counsel. A party electing to be represented by 
counsel must notify the Hearing Officer of this election in writing, 
after which point the Hearing Officer will direct all further 
communications to that counsel. A party represented by counsel bears 
all of its own attorneys' fees and costs.
    (10) Hearing location and costs. (i) Unless the party requests a 
hearing at which the party appears before the Hearing Officer in 
Washington, DC, the hearing may be held telephonically. In Washington, 
DC, the hearing is held at the headquarters of the U.S. Department of 
Transportation.
    (ii) The Hearing Officer may transfer a case to another Hearing 
Officer at a party's request or at the Hearing Officer's direction.
    (iii) A party is responsible for all fees and costs (including 
attorneys' fees and costs, and costs that may be associated with travel 
or accommodations) associated with attending a hearing.
    (11) Hearing procedures. (i) There is no right to discovery in any 
proceedings conducted pursuant to this subpart.
    (ii) The material in the case file pertinent to the issues to be 
determined by the Hearing Officer is presented by the Chief Counsel or 
his or her designee.
    (iii) The Chief Counsel may supplement the case file with 
information prior to the hearing. A copy of such information will be 
provided to the party no later than 3 business days before the hearing.
    (iv) At the close of the Chief Counsel's presentation of evidence, 
the party has the right to examine respond to and rebut material in the 
case file and other information presented by the Chief Counsel. In the 
case of witness testimony, both parties have the right of cross-
examination.
    (v) In receiving evidence, the Hearing Officer is not bound by 
strict rules of evidence. In evaluating the evidence presented, the 
Hearing Officer must give due consideration to the reliability and 
relevance of each item of evidence.
    (vi) At the close of the party's presentation of evidence, the 
Hearing Officer may allow the introduction of rebuttal evidence that 
may be presented by the Chief Counsel.
    (vii) The Hearing Officer may allow the party to respond to any 
rebuttal evidence submitted.
    (viii) After the evidence in the case has been presented, the Chief 
Counsel and the party may present arguments on the issues in the case. 
The party may also request an opportunity to submit a written statement 
for consideration by the Hearing Officer and for further review. If 
granted, the Hearing Officer shall allow a reasonable time for 
submission of the statement and shall specify the date by which it must 
be received. If the statement is not received within the time 
prescribed, or within the limits of any extension of time granted by 
the Hearing Officer, it need not be considered by the Hearing Officer.
    (ix) A verbatim transcript of the hearing will not normally be 
prepared. A party may, solely at its own expense, cause a verbatim 
transcript to be made. If a verbatim transcript is made, the party 
shall submit two copies to the Hearing Officer not later than 15 days 
after the hearing. The Hearing Officer shall include such transcript in 
the record.
    (12) Determination of violations and assessment of civil penalties. 
(i) Not later than 30 days following the close of the hearing, the 
Hearing Officer shall issue a written decision on the Notice of 
Violation, based on the hearing record. This may be extended by the 
Hearing officer if the submissions by the Chief Counsel or the party 
are voluminous. The decision shall address each alleged violation, and 
may do so collectively. For each alleged violation, the decision shall 
find a violation or no violation and provide a basis for the finding. 
The decision shall set forth the basis for the Hearing Officer's 
assessment of a civil penalty, or decision not to assess a civil 
penalty. In determining the amount of the civil penalty, the gravity of 
the violation, the size of the violator's business, the violator's 
history of compliance with applicable fuel consumption standards, the 
actual fuel consumption performance related to the applicable standard, 
the estimated cost to comply with the regulation and applicable 
standard, the quantity of vehicles or engines not complying, and the 
effect of the penalty on the violator's ability to continue in 
business. The assessment of a civil penalty by the Hearing Officer 
shall be set forth in an accompanying final order. The Hearing 
Officer's written final order is a final agency action.
    (ii) If the Hearing Officer assesses civil penalties in excess of 
$1,000,000, the Hearing Officer's decision shall contain a statement 
advising the party of the right to an administrative appeal to the 
Administrator within a specified period of time. The party is advised 
that failure to submit an appeal within the prescribed time will bar 
its consideration and that failure to appeal on the basis of a 
particular issue will constitute a waiver of that issue in its appeal 
before the Administrator.
    (iii) The filing of a timely and complete appeal to the 
Administrator of a Hearing Officer's order assessing a civil penalty 
shall suspend the operation of the Hearing Officer's penalty, which 
shall no longer be a final agency action.
    (iv) There shall be no administrative appeals of civil penalties 
assessed by a Hearing Officer of less than $1,000,000.
    (13) Appeals of civil penalties in excess of $1,000,000. (i) A 
party may appeal the Hearing Officer's order assessing civil penalties 
over $1,000,000 to the Administrator within 21 days of the date of the 
issuance of the Hearing Officer's order.
    (ii) The Administrator will review the decision of the Hearing 
Officer de novo, and may affirm the decision of the hearing officer and 
assess a civil penalty, or
    (iii) The Administrator may:
    (A) Modify a civil penalty;
    (B) Rescind the Notice of Violation; or
    (C) Remand the case back to the Hearing Officer for new or 
additional proceedings.
    (iv) In the absence of a remand, the decision of the Administrator 
in an appeal is a final agency action.
    (14) Collection of assessed or compromised civil penalties. (i) 
Payment of a civil penalty, whether assessed or compromised, shall be 
made by check, postal money order, or electronic transfer of funds, as 
provided in instructions by the agency. A payment of civil penalties 
shall not be considered a request for a hearing.
    (ii) The party must remit payment of any assessed civil penalty to 
NHTSA within 30 days after receipt of the Hearing Officer's order 
assessing civil penalties, or, in the case of an appeal to the 
Administrator, within 30 days after receipt of the Administrator's 
decision on the appeal.
    (iii) The party must remit payment of any compromised civil penalty 
to NHTSA on the date and under such terms and conditions as agreed to 
by the party and NHTSA. Failure to pay may result in NHTSA entering a 
finding of violation by default and assessing a civil penalty in the 
amount proposed in the Notice of Violation without processing

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the violation under the hearing procedures set forth in this part.
    (c) Changes in corporate ownership and control. Manufacturers must 
inform NHTSA of corporate relationship changes to ensure that credit 
accounts are identified correctly and credits are assigned and 
allocated properly.
    (1) In general, if two manufacturers merge in any way, they must 
inform NHTSA how they plan to merge their credit accounts. NHTSA will 
subsequently assess corporate fuel consumption and compliance status of 
the merged fleet instead of the original separate fleets.
    (2) If a manufacturer divides or divests itself of a portion of its 
automobile manufacturing business, it must inform NHTSA how it plans to 
divide the manufacturer's credit holdings into two or more accounts. 
NHTSA will subsequently distribute holdings as directed by the 
manufacturer, subject to provision for reasonably anticipated 
compliance obligations.
    (3) If a manufacturer is a successor to another manufacturer's 
business, it must inform NHTSA how it plans to allocate credits and 
resolve liabilities per 49 CFR part 534.

[FR Doc. 2015-18073 Filed 7-22-15; 8:45 am]
BILLING CODE 1505-01-D


