I believe the story is - (please do not hold me to this) -
- while in 'closed-loop' mode (the PCM determining the fuel/air but using the O2 sensors to meet a pre-determine value) - the LS could only meet the CAFE fuel consumption requirement by being in 2nd. While in first, the car came very close but could not achieve the number. The car can achieve it in D5 - since the car controls the shift and engagement points.
- the 03+ LSes had VVT that was able to be more efficient and therefore meet the CAFE standard while in 1st.
- while in SST on the pre-03 - if you step on it (go past 60% throttle) then the car drops into 1st - but the CAFE rule does not apply to the car when it is not in a 'closed-loop' condition. During 'open-loop' - the car relies more on a data table of air/fuel ratio to manage itself by - not the O2 sensors.
- losing their CAFE standard would have meant a severe gas-guzzler tax to be added to the car's price.