Average Fuel Economy Standards, Passenger Cars and Light Trucks; Model Years 2011-2015, 24352-24487 [08-1186]
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Federal Register / Vol. 73, No. 86 / Friday, May 2, 2008 / Proposed Rules
DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety
Administration
49 CFR Parts 523, 531, 533, 534, 536
and 537
[Docket No. NHTSA–2008–0089]
RIN 2127–AK29
Average Fuel Economy Standards,
Passenger Cars and Light Trucks;
Model Years 2011–2015
National Highway Traffic
Safety Administration (NHTSA),
Department of Transportation (DOT).
ACTION: Notice of Proposed Rulemaking
(NPRM).
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AGENCY:
SUMMARY: This document proposes
substantial increases in the Corporate
Average Fuel Economy (CAFE)
standards for passenger cars and light
trucks that would enhance energy
security by improving fuel economy.
Since the carbon dioxide (CO2) emitted
from the tailpipes of new motor vehicles
is the natural by-product of the
combustion of fuel, the increased
standards would also address climate
change by reducing tailpipe emissions
of CO2. Those emissions represent 97
percent of the total greenhouse gas
emissions from motor vehicles.
Implementation of the new standards
would dramatically add to the billions
of barrels of fuel already saved since the
beginning of the CAFE program in 1975.
DATES: Comments must be received on
or before July 1, 2008.
ADDRESSES: You may submit comments
to the docket number identified in the
heading of this document by any of the
following methods:
• Federal eRulemaking Portal: Go to
https://www.regulations.gov. Follow the
online instructions for submitting
comments.
• Mail: Docket Management Facility,
M–30, U.S. Department of
Transportation, West Building, Ground
Floor, Rm. W12–140, 1200 New Jersey
Avenue, SE., Washington, DC 20590.
• Hand Delivery or Courier: West
Building Ground Floor, Room W12–140,
1200 New Jersey Avenue, SE., between
9 a.m. and 5 p.m. Eastern Time, Monday
through Friday, except Federal holidays.
• Fax: (202) 493–2251.
Regardless of how you submit your
comments, you should mention the
docket number of this document.
You may call the Docket Management
Facility at 202–366–9826.
Instructions: For detailed instructions
on submitting comments and additional
information on the rulemaking process,
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see the Public Participation heading of
the Supplementary Information section
of this document. Note that all
comments received will be posted
without change to https://
www.regulations.gov, including any
personal information provided.
Privacy Act: Please see the Privacy
Act heading under Rulemaking
Analyses and Notices.
FOR FURTHER INFORMATION CONTACT: For
policy and technical issues: Ms. Julie
Abraham or Mr. Peter Feather, Office of
Rulemaking, National Highway Traffic
Safety Administration, 1200 New Jersey
Avenue, SE., Washington, DC 20590.
Telephone: Ms. Abraham (202) 366–
1455; Mr. Feather (202) 366–0846.
For legal issues: Mr. Stephen Wood or
Ms. Rebecca Schade, Office of the Chief
Counsel, National Highway Traffic
Safety Administration, 1200 New Jersey
Avenue, SE., Washington, DC 20590.
Telephone: (202) 366–2992.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Executive overview
A. Summary
B. Energy Independence and Security Act
of 2007
C. Proposal
1. Standards
a. Stringency
b. Benefits
c. Costs
d. Flexibilities
2. Credits
II. Background
A. Contribution of fuel economy
improvements to addressing energy
independence and security and climate
change
1. Relationship between fuel economy and
CO2 tailpipe emissions
2. Fuel economy improvements/CO2
tailpipe emission reductions since 1975
B. Chronology of events since the National
Academy of Sciences called for
reforming and increasing CAFE
standards
1. National Academy of Sciences CAFE
report (February 2002)
a. Significantly increasing CAFE standards
without reforming them would adversely
affect safety
b. Environmental and other externalities
justify increasing the CAFE standards
2. Final rule establishing reformed
(attribute-based) CAFE standards for MY
2008–2011 light trucks (March 2006)
3. Twenty-in-Ten Initiative (January 2007)
4. Request for passenger car and light truck
product plans (February 2007)
5. Supreme Court decision in
Massachusetts v. EPA (April 2007)
6. Coordination between NHTSA and EPA
on development of rulemaking proposals
(Summer–Fall 2007)
7. Ninth Circuit decision re final rule for
MY 2008–2011 light trucks (November
2007)
8. Enactment of Energy Independence and
Security Act of 2007 (December 2007)
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C. Energy Policy and Conservation Act, as
amended
1. Vehicles subject to standards for
automobiles
2. Mandate to set standards for automobiles
3. Structure of standards
4. Factors governing or considered in the
setting of standards
5. Consultation in setting standards
6. Compliance flexibility and enforcement
III. Fuel economy enhancing technologies
A. Data sources for technology
assumptions
B. Technologies and estimates of costs and
effectiveness
1. Engine technologies
2. Transmission technologies
3. Vehicle technologies
4. Accessory technologies
5. Hybrid technologies
C. Technology synergies
D. Technology cost learning curve
E. Ensuring sufficient lead time
1. Linking to redesign and refresh
2. Technology phase-in caps
IV. Basis for attribute-based structure for
setting fuel economy standards
A. Why attribute-based instead of a single
industry-wide average?
B. Which attribute is most appropriate?
1. Footprint-based function
2. Functions based on other attributes
C. The continuous function
V. Volpe model/analysis/generic description
of function
A. The Volpe model
1. What is the Volpe model?
2. How does the Volpe model apply
technologies to manufacturers’ future
fleets?
3. What effects does the Volpe model
estimate?
4. How can the Volpe model be used to
calibrate and evaluate potential CAFE
standards?
5. How has the Volpe model been updated
since the April 2006 light truck CAFE
final rule?
a. Technology synergies
b. Technology learning curves
c. Calibration of reformed CAFE standards
6. What manufacturer information does the
Volpe model use?
7. What economic information does the
Volpe model use?
a. Costs of fuel economy technologies
b. Potential opportunity costs of improved
fuel economy
c. The on-road fuel economy ‘gap’
d. Fuel prices and the value of saving fuel
e. Consumer valuation of fuel economy and
payback period
f. Vehicle survival and use assumptions
g. Growth in total vehicle use
h. Accounting for the rebound effect of
higher fuel economy
i. Benefits from increased vehicle use
j. Added costs from congestion, crashes
and noise
k. Petroleum consumption and import
externalities
l. Air pollutant emissions
(i) Impacts on criteria air pollutant
emissions
(ii) Reductions in CO2 emissions
(iii) Economic value of reductions in CO2
emissions
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m. The value of increased driving range
n. Discounting future benefits and costs
o. Accounting for uncertainty in benefits
and costs
B. How has NHTSA used the Volpe model
to select the proposed standards?
1. Establishing a continuous function
standard
2. Calibration of initial continuous
function standards
3. Adjustments to address policy
considerations
a. Curve crossings
b. Steep curve for passenger cars
c. Risk of upsizing
VI. Proposed fuel economy standards
A. Standards for passenger cars and light
trucks
1. Proposed passenger car standards MY
2011–2015
2. Proposed light truck standards MY
2011–2015
3. Energy and environmental backstop
4. Combined fleet performance
B. Estimated technology utilization under
proposed standards
C. Costs and benefits of proposed standards
D. Flexibility mechanisms
E. Consistency of proposed standards with
EPCA statutory factors
1. Technological feasibility
2. Economic practicability
3. Effect of other motor vehicle standards
of the Government on fuel economy
4. Need of the U.S. to conserve energy
F. Other considerations in setting
standards under EPCA
1. Safety
2. Alternative fuel vehicle incentives
3. Manufacturer credits
G. Environmental impacts of the proposed
standards
H. Balancing the factors to determine
maximum feasible CAFE levels
VII. Standards for commercial medium- and
heavy-duty on-highway vehicles and
‘‘work trucks’’
VIII. Vehicle classification
A. Origins of the regulatory definitions
B. Rationale for the regulatory definitions
in light of the current automobile market
C. NHTSA is not proposing to change
regulatory definitions at this time
IX. Enforcement
A. Overview
B. CAFE credits
1. Credit trading
2. Credit transferring
3. Credit carry-forward/carry-back
C. Extension and phasing out of flexiblefuel incentive program
X. Regulatory alternatives
XI. Sensitivity and Monte Carlo analysis
XII. Public participation
XIII. Regulatory notices and analyses
A. Executive Order 12866 and DOT
Regulatory Policies and Procedures
B. National Environmental Policy Act
C. Regulatory Flexibility Act
D. Executive Order 13132 (Federalism)
E. Executive Order 12988 (Civil Justice
Reform)
F. Unfunded Mandates Reform Act
G. Paperwork Reduction Act
H. Regulation Identifier Number (RIN)
I. Executive Order 13045
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J. National Technology Transfer and
Advancement Act
K. Executive Order 13211
L. Department of Energy Review
M. Plain Language
N. Privacy Act
XIV. Regulatory Text
I. Executive overview
A. Summary
This document is being issued
pursuant to the Energy Independence
and Security Act of 2007 (EISA), which
Congress passed in December 2007.
EISA mandates the setting of separate
maximum feasible standards for
passenger cars and for light trucks at
levels sufficient to ensure that the
average fuel economy of the combined
fleet of all passenger cars and light
trucks sold by all manufacturers in the
U.S. in model year (MY) 2020 equals or
exceeds 35 miles per gallon. That is a 40
percent increase above the average of
approximately 25 miles per gallon for
the current combined fleet.
Congress enabled NHTSA to require
these substantial increases in fuel
economy by requiring that passenger car
standards be reformed through basing
them on one or more vehicle attributes.
The attribute-based approach was
originally recommended by the National
Academy of Sciences in 2002 and
adopted by NHTSA for light trucks in
2006. The new approach is a substantial
improvement over the old approach of
specifying the same numerical standard
for each manufacturer. It avoids creating
undue risks of adverse safety and
employment impacts and distributes
compliance responsibilities among the
vehicle manufacturers more equitably.
This document proposes standards for
MYs 2011–2015, the maximum number
of model years for which NHTSA can
establish standards in a single
rulemaking under EISA. Since lead time
is a significant consideration in
determining the stringency of future
standards, the agency needs to establish
the standards as far in advance as
possible so as to maximize the amount
of lead time for manufacturers to
develop and implement plans for
making the vehicle design changes
necessary to achieve the requirements of
EISA.
In developing the proposed standards,
the agency considered the four statutory
factors underlying maximum feasibility
(technological feasibility, economic
practicability, the effect of other
standards of the Government on fuel
economy, and the need of the nation to
conserve energy) as well as other
relevant considerations such as safety.
After assessing what fuel saving
technologies would be available, how
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effective they are, and how quickly they
could be introduced, and then factoring
that information into the computer
model its uses for applying technologies
to particular vehicle models, the agency
then balanced the factors relevant to
standard setting. In its decision making,
the agency used a marginal benefit-cost
analysis that placed monetary values on
relevant externalities (both energy
security and environmental
externalities, including the benefits of
reductions in CO2 emissions). In the
above process, the agency consulted
with the Department of Energy and
particularly the Environmental
Protection Agency regarding a wide
variety of matters, including, for
example, the cost and effectiveness of
available technologies, improvements to
the computer model, and the selection
of appropriate analytical assumptions.
This document also proposes to add
a new regulation designed to give
manufacturers added flexibility in using
credits earned by exceeding CAFE
standards. The regulation would
authorize the trading of credits between
manufacturers. In addition, it would
permit a manufacturer to transfer its
credits from one of its compliance
categories to another of its categories.
NHTSA is also publishing two
companion documents, one requesting
vehicle manufacturers to provide up-todate product plans for the model years
covered by this document, and the other
inviting Federal, State, and local
agencies, Indian tribes, and the public to
participate in identifying the
environmental issues and reasonable
alternatives to be examined in an
environmental impact statement.
B. Energy Independence and Security
Act of 2007
The Energy Independence and
Security Act of 2007 (EISA)1 builds on
the President’s ‘‘Twenty in Ten’’
initiative, which was announced in
January 2007. That initiative sought to
reduce gasoline usage by 20 percent in
the next 10 years. The enactment of
EISA represents a major step forward in
expanding the production of renewable
fuels, reducing oil consumption, and
confronting global climate change.
EISA will help reduce America’s
dependence on oil by reducing U.S.
demand for oil by setting a national fuel
economy standard of at least 35 miles
per gallon by 2020—which will increase
fuel economy standards by 40 percent
and save billions of gallons of fuel. In
January 2007, the President called for
the first statutory increase in fuel
economy standards for passenger
1 Pub.
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L. 110–140, 121 Stat. 1492 (Dec. 18, 2007).
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automobiles (referred to below as
‘‘passenger cars’’) since those standards
were mandated in 1975, and EISA
delivers on that request. EISA also
includes an important reform the
President has called for that allows the
Transportation Department to issue
‘‘attribute-based standards,’’ which will
ensure that increased fuel efficiency
does not come at the expense of
automotive safety. EISA also mandates
increases in the use of renewable fuels
by setting a mandatory Renewable Fuel
Standard requiring fuel producers to use
at least 36 billion gallons of renewable
fuels in 2022.
As the President noted in signing
EISA, the combined effect of the various
actions required by the Act will be to
produce some of the largest CO2
emission reductions in our nation’s
history.
EISA made a number of important
changes to the Energy Policy and
Conservation Act (EPCA) (Pub. L. 94–
163), the 1975 statute that governs the
CAFE program. EISA:
• Replaces the old statutory default
standard of 27.5 mpg for passenger cars
with a mandate to establish separate
passenger car and light truck standards
annually, beginning with MY 2011, set
at the maximum feasible level. The
standards for MYs 2011–2020 must, as
a minimum, be set sufficiently high to
ensure that the average fuel economy of
the combined industrywide fleet of all
new passenger cars and light trucks sold
in the United States during MY 2020 is
at least 35 mpg.2
• Limits to five the number of years
for which standards can be established
in a single rulemaking. That
requirement, in combination with the
requirement to start rulemaking with
MY 2011, necessitates limiting this
rulemaking to MYs 2011–2015.
• Mandates the reforming of CAFE
standards for passenger cars by
requiring that all CAFE standards be
based on one or more vehicle attributes,
thus ensuring that the improvements in
fuel economy do not come at the
expense of safety. NHTSA pioneered
that approach in its last rulemaking on
CAFE standards for light trucks.
• Requires that for each model year,
beginning with MY 2011, the domestic
passenger cars of each manufacturer of
those cars must achieve a measured
average fuel economy that is not less
than 92 percent of the average fuel
2 Although NHTSA established an attribute-based
standard for MY 2011 light trucks in its 2006 final
rule, EISA mandates a new rulemaking, reflecting
new statutory considerations and a new, up-to-date
administrative record, and consistent with EPCA as
amended by EISA, to establish the standard for
those light trucks.
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economy of the combined fleet of
domestic and non-domestic passenger
cars sold in the United States in that
model year.
• Provides greater flexibility for
automobile manufacturers by (a)
increasing from three to five the number
of years that a manufacturer can carry
forward the compliance credits it earns
for exceeding CAFE standards, (b)
allowing a manufacturer to transfer the
credits it has earned from one of its
classes of automobiles to another, and
(c) authorizing the trading of credits
between manufacturers.
C. Proposal
1. Standards
a. Stringency
This document proposes to set
attribute-based fuel economy standards
for passenger cars and light trucks
consistent with the Reformed CAFE
approach that NHTSA used in
establishing the light truck standards for
MY 2008–2011 light trucks. Separate
passenger car standards would be set for
MYs 2011–2015, and light truck
standards would be set for MYs 2011–
2015. As noted above, EISA limits the
number of model years for which
standards may be established in a single
rulemaking to five. We are proposing to
establish standards for five years to
maximize the amount of lead time that
we can provide the manufacturers. This
is necessary to make it possible to
achieve the levels of average fuel
economy required by MY 2020.
Each vehicle manufacturer’s required
level of CAFE would be based on target
levels of average fuel economy set for
vehicles of different sizes and on the
distribution of that manufacturer’s
vehicles among those sizes. Size would
be defined by vehicle footprint. The
level of the performance target for each
footprint would reflect the technological
and economic capabilities of the
industry. The target for each footprint
would be the same for all
manufacturers, regardless of differences
in their overall fleet mix. Compliance
would be determined by comparing a
manufacturer’s harmonically averaged
fleet fuel economy levels in a model
year with a required fuel economy level
calculated using the manufacturer’s
actual production levels and the targets
for each footprint of the vehicles that it
produces.
The proposed standards were
developed using a computer model
(known as the ‘‘Volpe Model’’) that, for
any given model year, applies
technologies to a manufacturer’s fleet
until the manufacturer reaches
compliance with the standard under
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consideration. The standards were
tentatively set at levels such that,
considering the seven largest
manufacturers, the cost of the last
technology application equaled the
benefits of the improvement in fuel
economy resulting from that
application. We reviewed these
proposed standards to consider the
underlying increased use of
technologies and the associated impact
on the industry. This process recognizes
that the relevance of costs in achieving
benefits, and uses benefit figures that
include the value of reducing the
negative externalities (economic and
environmental) from producing and
consuming fuel. These environmental
externalities include, among other
things, reducing tailpipe emissions of
CO2.3 In view of the process used to
develop the proposed standards, they
are also referred to as ‘‘optimized
standards.’’
Compared to the 2006 rulemaking that
established the MY 2008–11 CAFE
standards for light trucks, this
rulemaking much more fully captures
the value of the costs and benefits of
setting CAFE standards. This is
important because assumptions
regarding gasoline price projections,
along with assumptions for
externalities, are based on changed
economic and environmental and
energy security conditions and play a
big role in the agency’s balancing of the
statutory considerations in arriving at a
determination of maximum feasible. In
light of EISA and the need to balance
the statutory considerations in a way
that reflects the current need of the
nation to conserve energy, including the
current assessment of the climate
change problem, the agency revisited
the various assumptions used in the
Volpe Model to determine the level of
the standards. Specifically, in running
the Volpe Model and stopping at a point
where marginal costs equaled marginal
benefits or where net benefits to society
are maximized, the agency used higher
gasoline prices and higher estimates for
energy security values ($0.29 per gallon
instead of $0.09 per gallon). The agency
also monetized carbon dioxide (at
3 The externalities included in our analysis do
not, however, include those associated with the
reduction of the other GHG emitted by automobiles,
i.e., methane (CH4), nitrous oxide (N2O), and
hydroflurocarbons (HFCs). Actual air conditioner
operation is not included in the test procedures
used to obtain both (1) emission rates for purposes
of determining compliance with EPA criteria
pollutant emission standards and (2) fuel economy
values for purposes of determining compliance with
NHTSA CAFE standards, although air conditioner
operation is included in ‘‘supplemental’’ federal
test procedures used to determine compliance with
corresponding and separate EPA criteria pollutant
emission standards.
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$7.00/ton), which it did not do in the
previous rulemaking, and expanded its
technology list. In addition, the agency
used cost estimates that reflect
economies of scale and estimated
‘‘learning’’-driven reductions in the cost
of technologies as well as quicker
penetration rates for advanced
technologies. These changes to the
inputs to the model had a major impact
on increasing the benefits in certain
model years by allowing for greater
penetration of technologies.
The agency cannot set out the exact
level of CAFE that each manufacturer
will be required to meet for each model
year under the proposed passenger car
or light truck standards since the levels
will depend on information that will not
be available until the end of each of the
model years, i.e., the final actual
production figures for each of those
years. The agency can, however, project
what the industry wide level of average
fuel economy would be for passenger
cars and for light trucks if each
manufacturer produced its expected mix
of automobiles and just met its
obligations under the proposed
‘‘optimized’’ standards for each model
year. Adjacent to each average fuel
economy figure is the estimated
associated level of tailpipe emissions of
CO2 that would be achieved.4
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For passenger cars:
MY 2011: 31.2 mpg (285 g/mi of tailpipe
emissions of CO2)
MY 2012: 32.8 mpg (271 g/mi of tailpipe
emissions of CO2)
MY 2013: 34.0 mpg (261 g/mi of tailpipe
emissions of CO2)
4 Given the contributions made by CAFE
standards to addressing not only energy
independence and security, but also to reducing
tailpipe emissions of CO2, fleet performance is
stated in the above discussion both in terms of fuel
economy and the associated reductions in tailpipe
emissions of CO2 since the CAFE standard will have
the practical effect of limiting those emissions
approximately to the indicated levels during the
official CAFE test procedures established by EPA.
The relationship between fuel consumption and
carbon dioxide emissions is discussed ubiquitously,
such as at www.fueleconomy.gov, a fuel economyrelated Web site managed by DOE and EPA (see
https://www.fueleconomy.gov/feg/contentIncludes/
co2_inc.htm, which provides a rounded value of 20
pounds of CO2 per gallon of gasoline). (Last
accessed April 20, 2008.) The CO2 emission rates
shown are based on gasoline characteristics.
Because diesel fuel contains more carbon (per
gallon) than gasoline, the presence of diesel engines
in the fleet—which NHTSA expects to increase in
response to the proposed CAFE standards—will
cause the actual CO2 emission rate corresponding
to any given CAFE level to be slightly higher than
shown here. (The agency projects that 4 percent of
the MY 2015 passenger car fleet and 10 percent of
the MY 2015 light truck fleet will have diesel
engines.) Conversely (and hypothetically), applying
the same CO2 emission standard to both gasoline
and diesel vehicles would discourage
manufacturers from improving diesel engines,
which show considerable promise as a means to
improve fuel economy.
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MY 2014: 34.8 mpg (255 g/mi of tailpipe
emissions of CO2)
MY 2015: 35.7 mpg (249 g/mi of tailpipe
emissions of CO2)
For light trucks:
MY 2011: 25.0 mpg (355 g/mi of tailpipe
emissions of CO2)
MY 2012: 26.4 mpg (337 g/mi of tailpipe
emissions of CO2)
MY 2013: 27.8 mpg (320 g/mi of tailpipe
emissions of CO2)
MY 2014: 28.2 mpg (315 g/mi of tailpipe
emissions of CO2)
MY 2015: 28.6 mpg (310 g/mi of tailpipe
emissions of CO2)
The combined industry wide average
fuel economy (in miles per gallon, or
mpg) levels (in grams per mile, or g/mi)
for both cars and light trucks, if each
manufacturer just met its obligations
under the proposed ‘‘optimized’’
standards for each model year, would be
as follows:
MY 2011: 27.8 mpg (2.5 mpg increase above
MY 2010; 320 g/mi CO2)
MY 2012: 29.2 mpg (1.4 mpg increase above
MY 2011; 304 g/mi CO2)
MY 2013: 30.5 mpg (1.3 mpg increase above
MY 2012; 291 g/mi CO2)
MY 2014: 31.0 mpg (0.5 mpg increase above
MY 2013; 287 g/mi CO2)
MY 2015: 31.6 mpg (0.6 mpg increase above
MY 2014; 281 g/mi CO2)
The annual average increase during
this five year period is approximately
4.5 percent. Due to the uneven
distribution of new model introductions
during this period and to the fact that
significant technological changes can be
most readily made in conjunction with
those introductions, the annual
percentage increases are greater in the
early years in this period.
Given a starting point of 31.8 mpg in
MY 2015, the average annual increase
for MYs 2016–2020 would need to be
only 2.1 percent in order for the
projected combined industry wide
average to reach at least 35 mpg by MY
2020, as mandated by EISA.
In addition, per EISA, each
manufacturer’s domestic passenger fleet
is required in each model year to
achieve 27.5 mpg or 92 percent of the
CAFE of the industry wide combined
fleet of domestic and non-domestic
passenger cars 5 for that model year,
whichever is higher. This requirement
results in the following alternative
minimum standard (not attribute-based)
for domestic passenger cars:
MY 2011: 28.7 mpg (310 g/mi of tailpipe
emissions of CO2)
MY 2012: 30.2 mpg (294 g/mi of tailpipe
emissions of CO2)
MY 2013: 31.3 mpg (284 g/mi of tailpipe
emissions of CO2)
5 Those numbers set out several paragraphs
above.
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MY 2014: 32.0 mpg (278 g/mi of tailpipe
emissions of CO2)
MY 2015: 32.9 mpg (270 g/mi of tailpipe
emissions of CO2)
The agency is also issuing, along with
this document, a notice requesting
updated product plan information and
other data to assist in developing a final
rule. We recognize that the
manufacturer product plans relied upon
in developing this proposal—those
plans received in late spring of 2007 in
response to an early 2007 request for
information—may already be outdated
in some respects. We fully expect that
manufacturers have revised those plans
to reflect subsequent developments,
especially the enactment of EISA.
We solicit comment on all aspects of
this proposal, including the
methodology, economic assumptions,
analysis and tentative conclusions. In
particular, we solicit comment on
whether the proposed levels of CAFE
satisfy EPCA, e.g., reflect an appropriate
balancing of the explicit statutory
factors and other relevant factors. Other
specific areas where we request
comments are identified elsewhere in
this preamble and in the Preliminary
Regulatory Impact Analysis (PRIA).
Based on public comments and other
information, including new data and
analysis, and updated product plans,6
the standards adopted in the final rule
could well be different from those
proposed in this document.
b. Benefits
We estimate that the proposed
standards for passenger cars would save
approximately 18.7 billion gallons of
fuel and avoid tailpipe CO2 emissions
by 178 billion metric tons over the
lifetime of the passenger cars sold
during those model years, compared to
the fuel savings and emissions
reductions that would occur if the
standards remained at the adjusted
baseline (i.e., the higher of
manufacturer’s plans and the
manufacturer’s required level of average
fuel economy for MY 2010).
We estimate that the value of the total
benefits of the proposed passenger car
standards would be approximately $31
billion 7 over the lifetime of the 5 model
6 The proposed standards are, in the first
instance, based on the confidential product plans
submitted by the manufacturers in the spring of
2006. The final rule will be based on the
confidential plans submitted in the next several
months. The agency anticipates that those new
plans, which presumably will reflect in some
measure the enactment of EISA and the issuance of
this proposal, will project higher levels of average
fuel economy than the 2006 product plans.
7 The $22 billion estimate is based on a 7%
discount rate for valuing future impacts. NHTSA
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years combined. This estimate of
societal benefits includes direct impacts
from lower fuel consumption as well as
externalities and also reflects offsetting
societal costs resulting from the rebound
effect.
We estimate that the proposed
standards for light trucks would save
approximately 36 billion gallons of fuel
and prevent the tailpipe emission of 343
million metric tons of CO2 over the
lifetime of the light trucks sold during
those model years, compared to the fuel
savings and emissions reductions that
would occur if the standards remained
at the adjusted baseline. We estimate
that the value of the total benefits of the
proposed light truck standards would be
approximately $57 billion 8 over the
lifetime of the 5 model years of light
trucks combined. This estimate of
societal benefits includes direct impacts
from lower fuel consumption as well as
externalities and also reflects offsetting
societal costs resulting from the rebound
effect.
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c. Costs
The total costs for manufacturers just
complying with the standards for MY
2011–2015 passenger cars would be
approximately $16 billion, compared to
the costs they would incur if the
standards remained at the adjusted
baseline. The resulting vehicle price
increases to buyers of MY 2015
passenger cars would be recovered or
paid back 9 in additional fuel savings in
an average of 56 months, assuming fuel
prices ranging from $2.26 per gallon in
2016 to $2.51 per gallon in 2030.10
The total costs for manufacturers just
complying with the standards for MY
2011–2015 light trucks would be
approximately $31 billion, compared to
the costs they would incur if the
standards remained at the adjusted
baseline. The resulting vehicle price
estimated benefits using both 7% and 3% discount
rates. Under a 3% rate, net consumer benefits for
passenger car CAFE improvements total $28
million.
8 The $56 billion estimate is based on a 7%
discount rate for valuing future impacts. NHTSA
estimated benefits using both 7% and 3% discount
rates. Under a 3% rate, net consumer benefits for
light truck CAFE improvements total $70 million.
9 See Section V.A.7 below for discussion of
payback period.
10 The fuel prices (shown here in 2006 dollars)
used to calculate the length of the payback period
are those projected (Annual Energy Outlook 2008,
revised early release) by the Energy Information
Administration over the life of the MY 2011–2015
light trucks, not current fuel prices.
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increases to buyers of MY 2015 light
trucks would be paid back in additional
fuel savings in an average of 50 months,
assuming fuel prices ranging from $2.26
to $2.51 per gallon.
d. Flexibilities
The agency’s benefit and cost
estimates do not reflect the availability
and use of flexibility mechanisms, such
as compliance credits and credit trading
because EPCA prohibits NHTSA from
considering the effects of those
mechanisms in setting CAFE standards.
EPCA has precluded consideration of
the FFV adjustments ever since it was
amended to provide for those
adjustments. The prohibition against
considering compliance credits was
added by EISA.
The benefit and compliance cost
estimates used by the agency in
determining the maximum feasible level
of the CAFE standards assume that
manufacturers will rely solely on the
installation of fuel economy technology
to achieve compliance with the
proposed standards. In reality, however,
manufacturers are likely to rely to some
extent on flexibility mechanisms
provided by EPCA (as described in
Section VI) and will thereby reduce the
cost of complying with the proposed
standards to a meaningful extent.
2. Credits
NHTSA is also proposing a new Part
536 on use of ‘‘credits’’ earned for
exceeding applicable CAFE standards.
Part 536 will implement the provisions
in EISA authorizing NHTSA to establish
by regulation a credit trading program
and directing it to establish by
regulation a credit transfer program.11
Since its enactment, EPCA has
permitted manufacturers to earn credits
for exceeding the standards and to apply
those credits to compliance obligations
in years other than the model year in
which it was earned. EISA extended the
‘‘carry-forward’’ period to five model
years, and left the ‘‘carry-back’’ period
at three model years. Under the
proposed Part 536, credit holders
11 Congress
required that DOT establish a credit
‘‘transferring’’ regulation, to allow individual
manufacturers to move credits from one of their
fleets to another (e.g., using a credit earned for
exceeding the light truck standard for compliance
in the domestic passenger car standard). Congress
allowed DOT to establish a credit ‘‘trading’’
regulation, so that credits may be bought and sold
between manufacturers and other parties.
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(including, but not limited to,
manufacturers) will have credit
accounts with NHTSA, and will be able
to hold credits, apply them to
compliance with CAFE standards,
transfer them to another ‘‘compliance
category’’ for application to compliance
there, or trade them. A credit may also
be cancelled before its expiry date, if the
credit holder so chooses. Traded credits
will be subject to an ‘‘adjustment factor’’
to ensure total oil savings are preserved,
as required by EISA. EISA also prohibits
credits earned before MY 2011 from
being transferred, so NHTSA has
developed several regulatory restrictions
on trading and transferring to facilitate
Congress’ intent in this regard.
Additional information on the proposed
Part 536 is available in section IX below.
II. Background
A. Contribution of Fuel Economy
Improvements to Addressing Energy
Independence and Security and Climate
Change
1. Relationship Between Fuel Economy
and CO2 Tailpipe Emissions
Improving fuel economy reduces the
amount of tailpipe emissions of CO2.
CO2 emissions are directly linked to fuel
consumption because CO2 is the
ultimate end product of burning
gasoline. The more fuel a vehicle burns,
the more CO2 it emits. Since the CO2
emissions are essentially constant per
gallon of fuel combusted, the amount of
fuel consumption per mile is directly
related to the amount of CO2 emissions
per mile. Thus, requiring improvements
in fuel economy indirectly, but
necessarily requires reductions in
tailpipe emissions of CO2 emissions.
This can be seen in the table below. To
take the first value of fuel economy from
the table below as an example, a
standard of 21.0 mpg would indirectly
place substantially the same limit on
tailpipe CO2 emissions as a tailpipe CO2
emission standard of 423.2 g/mi of CO2,
and vice versa.12
12 To the extent that manufacturers comply with
a CAFE standard with diesel automobiles instead of
gasoline ones, the level of CO2 tailpipe emissions
would be less. As noted above, the agency projects
that 4 percent of the MY 2015 passenger car fleet
and 10 percent of the MY 2015 light truck fleet will
have diesel engines. The CO2 tailpipe emissions of
a diesel powered passenger car are 15 percent
higher than those of a comparable gasoline power
passenger car.
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TABLE II–1.—CAFE STANDARDS (MPG) AND THE LIMITS THEY INDIRECTLY PLACE ON TAILPIPE EMISSIONS OF
CO2 (G/MI)*
CAFE Std
21.0
22.0
23.0
24.0
25.0
.......
.......
.......
.......
.......
CO2
444.4
404.0
386.4
370.3
355.5
CAFE Std
26.0
27.0
28.0
29.0
30.0
CO2
CAFE Std
341.8
329.1
317.4
306.4
296.2
31.0
32.0
33.0
34.0
35.0
CO2
286.7
277.7
269.3
261.4
253.9
CAFE Std
36.0
37.0
38.0
39.0
40.0
CO2
CAFE Std
246.9
240.2
233.9
227.9
222.2
41.0
42.0
43.0
44.0
45.0
CO2
CAFE Std
216.8
211.6
206.7
202.0
197.5
46.0
47.0
48.0
49.0
50.0
CO2
193.2
188.3
189.1
181.4
177.7
This table is based on calculations that use the figure of 8,887 grams of CO2 per gallon of gasoline consumed, based on characteristics of
gasoline vehicle certification fuel. To convert a mpg value into CO2 g/mi, divide 8,887 by the mpg value.
2. Fuel Economy Improvements/CO2
Tailpipe Emission Reductions Since
1975
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The need to take action to reduce
greenhouse gas emissions, e.g., motor
vehicle tailpipe emissions of CO2, in
order to forestall and even mitigate
climate change is well recognized.13
Less well recognized are two related
facts. First, improving fuel economy is
the only method available to motor
vehicle manufacturers for making
significant reductions in the CO2
tailpipe emissions of motor vehicles and
thus must be the core element of any
effort to achieve those reductions.
Second, the significant improvements in
fuel economy since 1975, due to the
CAFE standards and in some measure to
market conditions as well, have directly
caused reductions in the rate of CO2
tailpipe emissions per vehicle.
13 IPCC (2007): Climate Change 2007: Mitigation
of Climate Change. Contribution of Working Group
III to the Fourth Assessment Report of the
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In 1975, passenger cars manufactured
for sale in the U.S. averaged only 15.8
mpg (562.5 grams of CO2 per mile or
562.5 g/mi of CO2). By 2007, the average
fuel economy of passenger cars had
increased to 31.3 mpg, causing g/mi of
CO2 to fall to 283.9. Similarly, in 1975,
light trucks averaged 13.7 mpg (648.7 g/
mi of CO2). By 2007, the average fuel
economy of light trucks had risen to
23.1 mpg, causing g/mi of CO2 to fall to
384.7.
TABLE II–3.—IMPROVEMENTS IN MPG/
REDUCTIONS IN G/MI OF CO2 LIGHT
TRUCKS
[1975–2007]
MPG
1975 ..................
2007 ..................
13.7
23.1
G/MI of CO2
648.7
384.7
If fuel economy had not increased
above the 1975 level, cars and light
trucks would have emitted an additional
TABLE II–2.—IMPROVEMENTS IN MPG/ 11 billion metric tons of CO into the
2
REDUCTIONS IN G/MI OF CO2 PAS- atmosphere between 1975 and 2005.
SENGER CARS
That is nearly the equivalent of
[1975–2007]
emissions from all U.S. fossil fuel
combustion for two years (2004 and
MPG
G/MI of CO2 2005). The figure below shows the
amount of CO2 emissions avoided due
1975 ..................
15.8
562.5
to increases in fuel economy.
2007 ..................
31.3
283.9
Intergovernmental Panel on Climate Change [B.
Metz, O. Davidson, P. Bosch, R. Dave, and L. Meyer
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BILLING CODE 4910–59–P
(eds.)]. Cambridge University Press, Cambridge,
United Kingdom and New York, NY, USA.
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B. Chronology of Events Since the
National Academy of Sciences Called
for Reforming and Increasing CAFE
Standards
1. National Academy of Sciences CAFE
Report (February 2002)
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a. Significantly Increasing CAFE
Standards Without Reforming Them
Would Adversely Affect Safety
In the congressionally-mandated
report entitled ‘‘Effectiveness and
Impact of Corporate Average Fuel
Economy (CAFE) Standards,’’ 14 a
committee of the National Academy of
Sciences (NAS) (‘‘2002 NAS Report’’)
concluded that the then-existing form of
passenger car and light truck CAFE
standards created an incentive for
vehicle manufacturers to comply in part
by downweighting and even downsizing
their vehicles and that these actions had
led to additional fatalities. The
committee explained that these
problems arose because the CAFE
standards subjected all passenger cars to
the same fuel economy target and all
light trucks to the same target,
regardless of their weight, size, or loadcarrying capacity. The committee said
that this experience suggests that
consideration should be given to
developing a new system of fuel
economy targets that reflects differences
in such vehicle attributes.
Looking to the future, the committee
said that while it is technically feasible
and potentially economically
practicable to improve fuel economy
without reducing vehicle weight or size
and, therefore, without significantly
affecting the safety of motor vehicle
travel, the actual strategies chosen by
manufacturers to improve fuel economy
will depend on a variety of factors. In
the committee’s judgment, the extensive
downweighting and downsizing that
occurred after fuel economy
requirements were established in the
1970s suggested that the likelihood of a
similar response to further increases in
fuel economy requirements must be
considered seriously. Any reduction in
vehicle size and weight would have
safety implications.
The committee cautioned that the
safety effects of downsizing and
14 National Research Council, ‘‘Effectiveness and
Impact of Corporate Average Fuel Economy (CAFE)
Standards,’’ National Academy Press, Washington,
DC (2002). Available at https://www.nap.edu/
openbook.php?isbn=0309076013 (last accessed
April 20, 2008). The conference committee report
for the Department of Transportation and Related
Agencies Appropriations Act for FY 2001 (Pub. L.
106–346) directed NHTSA to fund a study by NAS
to evaluate the effectiveness and impacts of CAFE
standards (H. Rep. No. 106–940, p. 117–118). In
response to the direction from Congress, NAS
published this lengthy report.
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downweighting are likely to be hidden
by the generally increasing safety of the
light-duty vehicle fleet.15 It said that
some might argue that this improving
safety picture means that there is room
to improve fuel economy without
adverse safety consequences; however,
such an approach would not achieve the
goal of avoiding the adverse safety
consequences of fuel economy
increases. Rather, the safety penalty
imposed by increased fuel economy (if
weight reduction is one of the measures)
will be more difficult to identify in light
of the continuing improvement in traffic
safety. Although it is anticipated that
these safety innovations will improve
the safety of vehicles of all sizes, that
does not mean that downsizing to
achieve fuel economy improvements
will not have any safety costs. If two
vehicles of the same size are modified,
one both by downsizing it and adding
the safety innovations and the other just
by adding the safety innovations, the
latter vehicle will in all likelihood be
safer.
The committee concluded that if an
increase in fuel economy were
implemented pursuant to standards that
are structured in a way that encourages
either downsizing or the increased
production of smaller vehicles, some
additional traffic fatalities would be
expected. Without a thoughtful
restructuring of the program, there
would be the trade-offs that must be
made if CAFE standards were increased
by any significant amount.16
In response to these conclusions,
NHTSA began issuing attribute-based
CAFE standards for light trucks and
sought legislative authority to issue
attribute-based CAFE standards for
passenger cars before undertaking to
raise the car standards. Congress went a
step further in enacting EISA, not only
authorizing the issuance of attributebased standards, but also mandating
them.
Fully realizing all of the safety and
other 17 benefits of these reforms will
15 Two
of the 12 members of the committee
dissented from the majority’s safety analysis and
conclusions.
16 NAS, p. 9.
17 Reformed CAFE has several advantages
compared to Unreformed CAFE:
First, Reformed CAFE increases energy savings.
The energy-saving potential of Unreformed CAFE is
limited because only a few full-line manufacturers
are required to make improvements. Under
Reformed CAFE, which accounts for size
differences in product mix, virtually all
manufacturers will be required to use advanced
fuel-saving technologies to achieve the requisite
fuel economy for their automobiles.
Second, Reformed CAFE reduces the chances of
adverse safety consequences. Downsizing of
vehicles as a CAFE compliance strategy is
discouraged under Reformed CAFE since as
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depend in part on whether the
unreformed, non-attribute based
greenhouse standards adopted by
California and other states are
implemented. Apart from issues of
relative stringency, the effects on
vehicle manufacturers of implementing
those state emission standards should
be substantially similar to the effects of
implementing non-attribute-based CAFE
standards, given the nearly identical
nature of most aspects of those emission
standards and CAFE standards in terms
of technological means of compliance
and methods of measuring performance.
b. Environmental and Other
Externalities Justify Increasing the CAFE
Standards
The 2002 NAS report also concluded
that the CAFE standards have
contributed to increased fuel economy,
which in turn has reduced dependence
on imported oil, improved the nation’s
terms of trade, and reduced emissions of
carbon dioxide (a principal greenhouse
gas), relative to what they otherwise
would have been. If fuel economy had
not improved, gasoline consumption
(and crude oil imports) would be about
2.8 million barrels per day (mmbd)
greater than it is.18 Reducing fuel
consumption in vehicles also reduces
carbon dioxide emissions. If the nation
were using 2.8 mmbd more gasoline,
carbon emissions would be more than
100 million metric tons of carbon
(mmtc) higher. Thus, improvements in
light-duty vehicle (4 wheeled motor
vehicles under 10,000 pounds gross
vehicle weight rating) fuel economy
have reduced overall U.S. emissions by
about 7 percent.19
The report concluded that
technologies exist that could
significantly further reduce fuel
consumption by passenger cars and
light trucks within 15 years, while
maintaining vehicle size, weight, utility
and performance.20 Light duty trucks
vehicles become smaller, the applicable fuel
economy target becomes more stringent.
Third, Reformed CAFE provides a more equitable
regulatory framework for different vehicle
manufacturers. Under Unreformed CAFE, the cost
burdens and compliance difficulties have been
imposed nearly exclusively on the full-line
manufacturers.
Fourth, Reformed CAFE is more market-oriented
because it more fully respects economic conditions
and consumer choice. Reformed CAFE does not
force vehicle manufacturers to adjust fleet mix
toward smaller vehicles although they can make
adjustments if that is what consumers are
demanding. Instead, it allows the manufacturers to
adjust the mix of their product offerings in response
to the market place.
18 NAS, pp. 3 and 20.
19 NAS, p. 20.
20 NAS, p. 3 (Finding 5).
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were said to offer the greatest potential
for reducing fuel consumption.21 The
report also noted that vehicle
development cycles—as well as future
economic, regulatory, safety and
consumer preferences—would influence
the extent to which these technologies
could lead to increased fuel economy in
the U.S. market. To assess the economic
trade-offs associated with the
introduction of existing and emerging
technologies to improve fuel economy,
the NAS conducted what it called a
‘‘cost-efficient analysis’’ based on the
direct benefits (value of saved fuel) to
the consumer—‘‘that is, the committee
identified packages of existing and
emerging technologies that could be
introduced over the next 10 to 15 years
that would improve fuel economy up to
the point where further increases in fuel
economy would not be reimbursed by
fuel savings.’’ 22
The committee emphasized that it is
critically important to be clear about the
reasons for considering improved fuel
economy. While the dollar value of the
saved fuel would be largest portion of
the potential benefits, the committee
noted that there is theoretically
insufficient reason for the government
to issue higher standards just to obtain
those direct benefits since consumers
have a wide variety of opportunities to
buy a fuel-efficient vehicle.23
The committee said that there are two
compelling concerns that justify a
government mandated increase in fuel
economy, both relating to externalities.
The most important concern, it argued,
is the one about the accumulation in the
atmosphere of greenhouse gases,
principally carbon dioxide.24
A second concern is that petroleum
imports have been steadily rising
because of the nation’s increasing
demand for gasoline without a
corresponding increase in domestic
supply. The high cost of oil imports
poses two risks: Downward pressure on
the strength of the dollar (which drives
up the cost of goods that Americans
import) and an increase in U.S.
vulnerability to macroeconomic shocks
that cost the economy considerable real
output.
To determine how much the fuel
economy standards should be increased,
the committee urged that all social
benefits be considered. That is, it urged
not only that the dollar value of the
saved fuel be considered, but also that
the dollar value to society of the
resulting reductions in greenhouse gas
emissions and in dependence on
imported oil should be calculated and
considered. The committee said that if
it is possible to assign dollar values to
these favorable effects, it becomes
possible to make at least crude
comparisons between the socially
beneficial effects of measures to
improve fuel economy on the one hand,
and the costs (both out-of-pocket and
more subtle) on the other. The
committee chose a value of about $0.30/
gal of gasoline for the externalities
associated with the combined impacts
of fuel consumption on greenhouse gas
emissions and on world oil market
conditions.25
The report expressed concerns about
increasing the standards under the
CAFE program as currently structured.
While raising CAFE standards under the
existing structure would reduce fuel
consumption, doing so under alternative
structures ‘‘could accomplish the same
end at lower cost, provide more
flexibility to manufacturers, or address
inequities arising from the present’’
structure.26 Further, the committee said,
‘‘to the extent that the size and weight
of the fleet have been constrained by
CAFE requirements * * * those
requirements have caused more injuries
and fatalities on the road than would
otherwise have occurred.’’ 27
Specifically, it noted: ‘‘The
downweighting and downsizing that
occurred in the late 1970s and early
1980s, some of which was due to CAFE
standards, probably resulted in an
additional 1300 to 2600 traffic fatalities
in 1993.’’ 28
To address those structural problems,
the report suggested various possible
reforms. The report found that the
‘‘CAFE program might be improved
significantly by converting it to a system
in which fuel targets depend on vehicle
attributes.’’ 29 The report noted further
that under an attribute-based approach,
the required CAFE levels could vary
among the manufacturers based on the
distribution of their product mix. NAS
stated that targets could vary among
passenger cars and among trucks, based
on some attribute of these vehicles such
as weight, size, or load-carrying
capacity. The report explained that a
particular manufacturer’s average target
for passenger cars or for trucks would
depend upon the fractions of vehicles it
sold with particular levels of these
attributes.30
25 NAS,
pp. 4 and 85–86.
pp. 4–5 (Finding 10).
27 NAS, p. 29.
28 NAS, p. 3 (Finding 2).
29 NAS, p. 5 (Finding 12).
30 NAS, p. 87.
26 NAS,
21 NAS,
p. 4 (Finding 5).
pp. 4 (Finding 6) and 64.
23 NAS, pp. 8–9.
24 NAS, pp. 2, 13, and 83.
22 NAS,
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In February 2002, Secretary Mineta
asked Congress ‘‘to provide the
Department of Transportation with the
necessary authority to reform the CAFE
program, guided by the NAS report’s
suggestions.’’
2. Final Rule Establishing Reformed
(Attribute-Based) CAFE Standards for
MY 2008–2011 Light Trucks (March
2006)
The 2006 final rule reformed the
structure of the CAFE program for light
trucks and established higher CAFE
standards for MY 2008–2011 light
trucks.31 Reforming the CAFE program
enables it to achieve larger fuel savings,
while enhancing safety and preventing
adverse economic consequences.
During a transition period of MYs
2008–2010, manufacturers may comply
with CAFE standards established under
the reformed structure (Reformed CAFE)
or with standards established in the
traditional way (Unreformed CAFE).
This permits manufacturers and the
agency to gain experience with
implementing the Reformed CAFE
standards. Under the 2006 rule, all
manufacturers were required to comply
with a Reformed CAFE standard in MY
2011.
Under Reformed CAFE, fuel economy
standards were restructured so that they
are based on a measure of vehicle size
called ‘‘footprint,’’ which is the product
of multiplying a vehicle’s wheelbase by
average its track width. A target level of
fuel economy was established for each
increment in footprint (0.1 ft2). Trucks
with smaller footprints have higher fuel
economy targets; conversely, larger ones
have lower targets. A particular
manufacturer’s compliance obligation
for a model year will be calculated as
the harmonic average of the fuel
economy targets for the manufacturer’s
vehicles, weighted by the distribution of
manufacturer’s production volumes
among the footprint increments. Thus,
each manufacturer will be required to
comply with a single overall average
fuel economy level for each model year
of production.
The approach for determining the fuel
economy targets was to set them just
below the level where the increased cost
of technologies that could be adopted by
manufacturers to improve fuel economy
would first outweigh the added benefits
that would result from such technology.
These targets translate into required
levels of average fuel economy that are
technologically feasible because
manufacturers can achieve them using
available technologies. Those levels also
reflect the need of the nation to reduce
31 71
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energy consumption because they
reflect the economic value of the savings
in resources, as well as of the reductions
in economic and environmental
externalities that result from producing
and using less fuel.
The Unreformed CAFE standards are:
22.5 miles per gallon (mpg) for MY
2008, 23.1 mpg for MY 2009, and 23.5
mpg for MY 2010. To aid the transition
to Reformed CAFE, the Reformed CAFE
standards for those years were set at
levels intended to ensure that the
industry-wide costs of the Reformed
standards are roughly equivalent to the
industry-wide costs of the Unreformed
CAFE standards in those model years.
For MY 2011, the Reformed CAFE
standard was set at the level that
maximizes net benefits. Net benefits
include the increase in light truck prices
due to technology improvements, the
decrease in fuel consumption, and a
number of other factors. All of the
standards were set at the maximum
feasible level, while accounting for
technological feasibility, economic
practicability and other relevant factors.
We carefully balanced the costs of the
rule with the benefits of reducing energy
consumption. Compared to Unreformed
CAFE, Reformed CAFE enhances overall
fuel savings while providing vehicle
manufacturers with the flexibility they
need to respond to changing market
conditions. Reformed CAFE will also
provide a more equitable regulatory
framework by creating a level-playing
field for manufacturers, regardless of
whether they are full-line or limited-line
manufacturers. We were particularly
encouraged that Reformed CAFE will
eliminate the incentive to downsize
some of their fleet as a CAFE
compliance strategy, thereby reducing
the adverse safety risks associated with
the Unreformed CAFE program.
3. Twenty-in-Ten Initiative (January
2007)
In his January 2007 State of the Union
address, the President announced his
Twenty-in-Ten initiative for increasing
the supply of renewable and alternative
fuels and reforming and increasing the
CAFE standards. Consistent with the
NAS report, he urged the authority be
provided to reform CAFE for passenger
cars by adopting an attribute-based
system (for example, a size-based
system) reduces the risk that vehicle
safety is compromised, helps preserve
consumer choice, and helps spread the
burden of compliance across all product
lines and manufacturers. He also urged
that authority be provided to set the
CAFE standards, based on cost/benefit
analysis, using sound science, and
without impacting safety.
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4. Request for Passenger Car and Light
Truck Product Plans (February 2007)
In late February 2007, NHTSA
published a notice to acquire new and
updated information regarding vehicle
manufacturers’ future product plans to
aid in implementing the President’s
plan for reforming and increasing CAFE
standards for passenger cars and further
increasing the already reformed light
truck standards. More specifically, the
agency said:
* * * we are seeking information related
to fuel economy improvements for MY 2007–
2017 passenger cars and MY 2010–2017 light
trucks. The agency is seeking information in
anticipation of obtaining statutory authority
to reform the passenger car CAFE program
and to set standards under that structure for
MY 2010–2017 passenger cars. The agency is
also seeking this information in anticipation
of setting standards for MY 2012–2017 light
trucks.32
5. Supreme Court Decision in
Massachusetts v. EPA (April 2007)
On April 2, 2007, the U.S. Supreme
Court issued its opinion in
Massachusetts v. EPA.33 The Court
ruled that the state of Massachusetts had
standing because it had already lost a
small amount of land and stood to lose
more due to global warming induced
increases in sea level; that some portion
of this harm was traceable to the
absence of a regulation issued by EPA
requiring reductions in GHG emissions
(CO2 emissions, most notably) by motor
vehicles; and that issuance of such an
EPA regulation by EPA would reduce
the risk of further harm to
Massachusetts. On the merits, the Court
ruled that greenhouse gases are
‘‘pollutants’’ under the Clean Air Act
and that the Act therefore authorizes
EPA to regulate greenhouse gas
emissions from motor vehicles if EPA
makes the necessary findings and
determinations under section 202 of the
Act.
The Court considered EPCA briefly,
noting that it and the Clean Air Act have
different overall purposes. It noted
further that the two acts overlap, but did
not define the nature or extent of that
overlap. It concluded that EPCA did not
relieve EPA of its statutory obligations
and expressed confidence that the two
acts could be consistently administered.
The Court did not address the express
preemption provision in EPCA.
6. Coordination Between NHTSA and
EPA on Development of Rulemaking
Proposals (Summer–Fall 2007)
In the wake of the Supreme Court’s
decision and in the absence of the
32 72
FR 8664; February 27, 2007.
S.Ct. 1438 (2007).
33 127
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legislation he called for in his 2007
State of the Union message, the
President called on NHTSA and EPA to
take the first steps toward regulations
that would cut gasoline consumption
and greenhouse gas emissions from
motor vehicles, using his Twenty-in-Ten
initiative as a starting point. He asked
them ‘‘to listen to public input, to
carefully consider safety, science, and
available technologies, and evaluate the
benefits and costs before they put forth
the new regulation.’’ He also issued an
executive order directing all of the
departments and agencies to work
together on the proposal.
Pursuant to the President’s directive,
NHTSA and EPA staff jointly assessed
which technologies would be available
and their effectiveness and cost. They
also jointly assessed the key economic
and other assumptions affecting the
stringency of future standards. Finally,
they worked together in updating and
further improving the Volpe model that
had been used to help determine the
stringency of the MY 2008–2011 light
truck CAFE standards. Much of the
work between NHTSA and EPA staff
was reflected in rulemaking proposals
being developed by NHTSA prior to the
enactment of EISA and was
substantially retained when NHTSA
revised its proposals to be consistent
with that legislation. Ultimately, the
proposals being published today are
based on NHTSA’s assessments of how
they meet EPCA, as amended by EISA.
7. Ninth Circuit Decision Re Final Rule
for MY 2008–2011 Light Trucks
(November 2007)
On November 15, 2007, the United
States Court of Appeals for the Ninth
Circuit issued its decision in Center for
Biological Diversity v. NHTSA,34 the
challenge to the MY 2008–11 light truck
CAFE rule. The Court rejected the
petitioners’ argument that EPCA
precludes the use of a marginal costbenefit analysis that attempted to weigh
all of the social benefits (i.e.,
externalities as well as direct benefits to
consumers) of improved fuel savings in
determining the stringency of the CAFE
standards. It cautioned, however, that it
had not reviewed whether the agency’s
balancing of the statutory factors in
setting those standards was arbitrary
and capricious. In that regard, it noted
that much had changed since a court of
appeals had last (i.e., in the late 1980’s)
reviewed the agency’s balancing of
those factors in a rulemaking.
Specifically, it noted increases in
scientific knowledge of climate change
34 508
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and in the need to reduce importation
of petroleum since that time.
Further, the Court found that NHTSA
had been arbitrary and capricious in its
treatment of the following issues:
• NHTSA’s decision not to monetize
the benefit of reducing CO2 emissions
and use that value in conducting its
marginal benefit-cost analysis based on
its view that the value of the benefit of
CO2 emission reductions resulting from
fuel consumption reductions was too
uncertain to permit the agency to
determine a value for those emission
reductions;35
• NHTSA’s decision not to establish a
‘‘backstop’’ (i.e., a fixed minimum CAFE
standard applicable to
manufacturers); 36
• NHTSA’s decision not to proceed to
revise the regulatory definitions for the
passenger car and light truck categories
of automobiles so that some vehicles
currently classified as light trucks are
instead classified as passenger cars; 37
• NHTSA’s decision not to subject
most medium- and heavy-duty pickups
and most medium- and heavy-duty
cargo vans (i.e., those between 8,500
and 10,000 pounds gross vehicle weight
rating (GVWR,) to the CAFE
standards; 38
• NHTSA’s limited assessment of
cumulative impacts and regulatory
alternatives in its Environmental
Assessment (EA) under the National
Environmental Policy Act (NEPA), and
its decision to prepare and publish an
EA, coupled with a finding of no
significant impact, instead of an
Environmental Impact Statement
(EIS).39
35 The agency has developed a value for those
reductions and used it in the analyses underlying
the standards proposed in this NPRM. For further
discussion, see section V of this preamble.
36 EISA’s requirement that standards be based on
one or more vehicle attributes and its specification
for domestic passenger cars, but not for
nondomestic passenger cars or light trucks of an
absolute CAFE level appear to preclude the
specification of such a backstop standard for the
latter two categories of automobiles. For further
discussion, see Section VI of this preamble.
37 In this NPRM, NHTSA examines the legislative
history of the statutory definitions of ‘‘automobile’’
and ‘‘passenger automobile’’ and the term
‘‘nonpassenger automobile’’ and analyses the
impact of that moving any vehicles out of the
nonpassenger automobile (light truck) category into
the passenger automobile (passenger car) category
would have the level of standards for both groups
of automobiles. For further discussion, see Section
VIII of this preamble.
38 EISA removed these vehicles from the statutory
definition of ‘‘automobile’’ and mandated the
establishment of CAFE standards for them
following the completion of reports by the National
Academy of Sciences and NHTSA.
39 On February 9, NHTSA filed a petition with the
Ninth Circuit for rehearing en banc on the issue of
whether the panel in CBD acted within its authority
in ordering the agency to prepare an EIS instead of
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The Court did not vacate the
standards, but instead said it would
remand the rule to NHTSA to
promulgate new standards consistent
with its opinion ‘‘as expeditiously as
possible and for the earliest model year
practicable.40 Under the decision, the
standards established by the April 2006
final rule would remain in effect unless
and until amended by NHTSA.
On February 6, 2008, the Government
petitioned for en banc rehearing by the
Ninth Circuit on the limited issue of
whether it was appropriate for the
panel, having held that the agency
insufficiently explored the
environmental implications of the MY
2008–11 rulemaking in its EA, to order
the agency to prepare an EIS rather than
simply remanding the matter to the
agency for further analysis.
As of the date of the issuance of this
proposal, the Court has not yet issued
its mandate in this case.
8. Enactment of Energy Security and
Independence Act of 2007 (December
2007)
As noted above in section I.B., EISA
significantly changed the provisions of
EPCA governing the establishment of
future CAFE standards. These changes
made it necessary for NHTSA to pause
in its efforts so that it could assess the
implications of the amendments made
by EISA and then, as required, revise
some aspects of the proposals it had
been developing (e.g., the model years
covered and credit issues).
C. Energy Policy and Conservation Act,
as Amended
EPCA, which was enacted in 1975,
mandates a motor vehicle fuel economy
regulatory program to improve the
nation’s energy security and energy
efficiency. It gives the authority under
remanding the issue to the agency and directing it
to conduct a new, fuller environmental analysis and
decide whether an EIS is required. In addition,
NHTSA has published a notice of intent to prepare
an environmental impact statement, thus beginning
the EIS process for this rulemaking, as discussed in
Section XIII.B. of this NPRM.
40 The deadline in EPCA for issuing a final rule
establishing, for the first time, a CAFE standard for
a model year is 18 months before the beginning of
that model year. 49 U.S.C. 32902(g)(2). The same
deadline applies to issuing a final rule amending an
existing CAFE standard so as to increase its
stringency. Given that the agency has long regarded
October 1 as the beginning of a model year, the
statutory deadline for increasing the MY 2009
standard was March 30, 2007, and the deadline for
increasing the MY 2010 standard is March 30, 2008.
Thus, the only model year for which there is
sufficient time to gather all of the necessary
information, conduct the necessary analyses and
complete a rulemaking is MY 2011. As noted earlier
in this document, however, EISA requires that a
new standard be established for that model year.
This rulemaking is being conducted pursuant to
that requirement.
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EPCA to regulate fuel economy to DOT,
which has delegated that authority to
NHTSA at 49 CFR 1.50. EPCA allocates
the responsibility for implementing the
program as follows: NHTSA sets CAFE
standards for passenger cars and light
trucks; EPA calculates the average fuel
economy of each manufacturer’s
passenger cars and light trucks; and
NHTSA enforces the standards based on
EPA’s calculations.
We have summarized below EPCA, as
amended by EISA. We request comment
on how EPCA should be implemented
to achieve the goals and meet the
requirements of EISA. For example,
what assumptions, methodologies and
computations should be used in
establishing and implementing the new
standards?
1. Vehicles Subject to Standards for
Automobiles
With two exceptions, all four-wheeled
motor vehicles with a gross vehicle
weight rating of 10,000 pounds or less
will be subject to the CAFE standards,
beginning with MY 2011. The
exceptions will be work trucks 41 and
multi-stage vehicles. Work trucks are
defined as vehicles that are:
—rated at between 8,500 and 10,000 pounds
gross vehicle weight; and
—are not a medium-duty passenger vehicle
(as defined in section 86.1803–01 of title
40, Code of Federal Regulations, as in
effect on the date of the enactment of the
Ten-in-Ten Fuel Economy Act).42
Medium-duty passenger vehicles
(MDPV) include 8,500 to 10,000 lb.
GVWR sport utility vehicles (SUVs),
short bed pick-up trucks, and passenger
vans, but exclude pickup trucks with
longer beds and cargo vans rated at
between 8,500 and 10,000 lbs GVWR. It
is those excluded pickup trucks and
cargo vans that are work trucks. ‘‘Multistage vehicle’’ includes any vehicle
manufactured in different stages by 2 or
more manufacturers, if no intermediate
or final-stage manufacturer of that
vehicle manufactures more than 10,000
multi-stage vehicles per year.43
Under EPCA, as it existed before
EISA, the agency had discretion
whether to regulate vehicles with a
GVWR between 6,000 and 10,000 lbs.,
GVWR. It could regulate the fuel
41 While EISA excluded work trucks from
‘‘automobiles,’’ it did not exclude them from
regulation under EPCA. EISA requires that work
trucks be subjected to CAFE standards, but only
first after the National Academy of Sciences
completes a study and then after NHTSA completes
a follow-on study. Congress thus recognized and
made allowances for the practical difficulties that
led NHTSA to decline to include work trucks in its
final rule for MY 2008–11 light trucks.
42 49 U.S.C. 32902(a)(19).
43 49 U.S.C. 32902(a)(3).
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economy of vehicles with a GVWR
within that range under CAFE if it
determined that (1) standards were
feasible for these vehicles, and (2) either
(a) that these vehicles were used for the
same purpose as vehicles rated at not
more than 6,000 lbs. GVWR, or (b) that
their regulation would result in
significant energy conservation.
EISA eliminated the need for
administrative determinations in order
to subject vehicles between 6,000 and
10,000 lbs. GVWR to the CAFE
standards for automobiles. Congress did
so by making the determination itself
that all vehicles within that GVWR
range should be included, with the
exceptions noted above.
2. Mandate To Set Standards for
Automobiles
As amended by EISA, EPCA requires
that the agency establish standards for
all new automobiles for each model year
at the maximum feasible levels for that
model year. A manufacturer’s
individual passenger cars and light
trucks are not required to meet a
particular fuel economy level. Instead,
the harmonically averaged fuel economy
of a manufacturer’s production of
passenger cars (or light trucks) in a
particular model year must meet the
standard for those automobiles for that
model year.
For model years 2011–2020, several
special requirements, in addition to the
maximum feasible requirement, are
specified.44 Each of the requirements
must be interpreted in light of the other
requirements. For those model years,
separate standards for passenger cars
and for light trucks must be set at high
enough levels to ensure that the CAFE
of the industry wide combined fleet of
new passenger cars and light trucks for
MY 2020 is not less than 35 mpg. The
35 mpg figure is not a standard
applicable to any individual
manufacturer. It is a requirement,
applicable to the agency, regarding the
combined effect of the separate
standards for passenger cars and light
trucks that NHTSA is to establish for
MY 2020. EISA does not specify
precisely how compliance with this
requirement is to be ensured or how or
when the CAFE of the industry wide
combined fleet for MY 2020 is to be
calculated for purposes of determining
compliance. As a practical matter, to
ensure that this level is achieved, the
standard for MY 2020 passenger cars
would have to be above 35 mpg and the
44 Under EPCA, prior to its amendment by EISA,
the standard for passenger cars was 27.5 mpg unless
amended to a higher or lower level by DOT. Per
EISA, the standard will remain at 27.5 mpg through
MY 2010.
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one for MY 2020 light trucks might or
might not be below 35 mpg. Similarly,
the CAFE of some manufacturers’
combined fleet of passenger cars and
light trucks would be above 35 mpg,
while the combined fleet of others might
or might not be below 35 mpg. The
standards for passenger cars and those
for light trucks must increase ratably
each year. The CAFE of each
manufacturer’s fleet of domestic
passenger cars must meet a sliding,
absolute minimum level in each model
year: 27.5 mpg or 92 percent of the
projected CAFE of the industry wide
fleet of new domestic passenger cars for
that model year.
EPCA, as it existed before EISA, EPCA
required that light truck standards be set
at the maximum feasible level for each
model year, but simply specified a
default standard of 27.5 mpg for
passenger cars for MY 1985 and
thereafter. It permitted, but did not
require that NHTSA establish a higher
or lower standard for passenger cars if
the agency found that the maximum
feasible level of fuel economy is higher
or lower than 27.5 mpg.
3. Structure of Standards
The standards for passenger cars and
light trucks must be based on one or
more vehicle attributes and expressed in
terms of a mathematical function. This
makes it possible to increase the CAFE
standards for both passenger cars and
light trucks significantly without
creating incentives to improve fuel
economy in ways that reduce safety.
Formerly, EPCA provided authority for
this approach for light trucks, but not
passenger cars.
4. Factors Governing or Considered in
the Setting of Standards
In determining the maximum feasible
level of average fuel economy for a
model year, EPCA requires that the
agency consider four factors:
technological feasibility, economic
practicability, the effect of other
standards of the Government on fuel
economy, and the need of the nation to
conserve energy. EPCA does not define
these terms or specify what weight to
give each concern in balancing them;
thus, NHTSA defines them and
determines the appropriate weighting
based on the circumstances in each
CAFE standard rulemaking.
‘‘Technological feasibility’’ means
whether a particular method of
improving fuel economy can be
available for commercial application in
the model year for which a standard is
being established.
‘‘Economic practicability’’ means
whether a standard is one ‘‘within the
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financial capability of the industry, but
not so stringent as to’’ lead to ‘‘adverse
economic consequences, such as a
significant loss of jobs or the
unreasonable elimination of consumer
choice.’’ 45 In an attempt to ensure the
economic practicability of attribute
based standards, the agency considers a
variety of factors, including the annual
rate at which manufacturers can
increase the percentage of its fleet that
has a particular type of fuel saving
technology, and cost to consumers.
Since consumer acceptability is an
element of economic practicability, the
agency has limited its consideration of
fuel saving technologies to be added to
vehicles to those that provide benefits
that match their costs.
Disproportionately expensive
technologies are not likely to be
accepted by consumers.
At the same time, the law does not
preclude a CAFE standard that poses
considerable challenges to any
individual manufacturer. The
Conference Report for EPCA, as enacted
in 1975, makes clear, and the case law
affirms, ‘‘(A) determination of maximum
feasible average fuel economy should
not be keyed to the single manufacturer
which might have the most difficulty
achieving a given level of average fuel
economy.’’46 Instead, the agency is
compelled ‘‘to weigh the benefits to the
nation of a higher fuel economy
standard against the difficulties of
individual automobile manufacturers.’’
Id. The law permits CAFE standards
exceeding the projected capability of
any particular manufacturer as long as
the standard is economically practicable
for the industry as a whole. Thus, while
a particular CAFE standard may pose
difficulties for one manufacturer, it may
also present opportunities for another.
The CAFE program is not necessarily
intended to maintain the competitive
positioning of each particular company.
Rather, it is intended to enhance fuel
economy of the vehicle fleet on
American roads, while protecting motor
vehicle safety and the totality of
American jobs and the overall United
States economy.
‘‘The effect of other motor vehicle
standards of the Government on fuel
economy’’ means ‘‘the unavoidable
adverse effects on fuel economy of
compliance with emission, safety, noise,
or damageability standards.’’ In the case
of emission standards, this includes
standards adopted by the Federal
government and can include standards
adopted by the States as well, since in
certain circumstances the Clean Air Act
45 67
FR 77015, 77021; December 16, 2002.
793 F.2d 1322, 1352 (DC Cir. 1986).
46 CEI–I,
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permits States to adopt and enforce
State standards in lieu of the Federal
ones. It does not, however, include State
standards expressly preempted by
EPCA.47
‘‘The need of the United States to
conserve energy’’ means ‘‘the consumer
cost, national balance of payments,
environmental, and foreign policy
implications of our need for large
quantities of petroleum, especially
imported petroleum.’’ Environmental
implications principally include
reductions in emissions of criteria
pollutants and carbon dioxide. A prime
example of foreign policy implications
are energy independence and security
concerns.
The agency has considered
environmental issues in making
decisions about the setting of standards
from the earliest days of the CAFE
program. As the three courts of appeal
have noted in decisions stretching over
the last 20 years,48 the agency defined
the ‘‘need of the Nation to conserve
energy’’ in the late 1970’s as including
‘‘the consumer cost, national balance of
payments, environmental, and foreign
policy implications of our need for large
quantities of petroleum, especially
imported petroleum.’’ 49 Pursuant to
that view, the agency declined to
include diesel engines in determining
the maximum feasible level of average
fuel economy for passenger cars and for
light trucks because particulate
emissions from diesels were then both
a source of concern and unregulated.50
In the late 1980’s, NHTSA cited
concerns about climate change as one of
its reasons for limiting the extent of its
reduction of the CAFE standard for MY
1989 passenger cars 51 and for declining
to reduce the standard for MY 1990
passenger cars.52 Since then, DOT has
considered the indirect benefits of
reducing tailpipe carbon dioxide
emissions in its fuel economy
rulemakings pursuant to the statutory
requirement to consider the nation’s
need to conserve energy by reducing
consumption. In this rulemaking,
consistent with the Ninth Circuit’s
decision and its observations about the
potential effect of changing information
about climate change on the balancing
of the EPCA factors and aided by the
2007 reports of the United Nations
Intergovernmental Panel on Climate
Change 53 and other information,
NHTSA is monetizing the reductions in
tailpipe emissions of CO2 that will
result from the CAFE standards and is
proposing to set the MY 2011–15 CAFE
standards at levels that reflect the value
of those reductions in CO2. as well as the
value of other benefits of those
standards. In setting CAFE standards,
NHTSA also considers environmental
impacts under NEPA, 42 U.S.C. 4321–
4347.
In addition, the agency is permitted to
consider additional relevant societal
considerations. For example,
historically, it has considered the
potential for adverse safety
consequences when deciding upon a
maximum feasible level. This practice is
sanctioned in case law.54
EPCA requires that the MY 2011–2019
CAFE standards for passenger cars and
for light trucks must both increase
ratably to at least the levels necessary to
meet 35 mpg requirement for MY 2020.
NHTSA interprets this to mean that the
standards must make steady progress
toward the levels necessary for the
average fuel economy of the combined
industry wide fleet of all new passenger
cars and light trucks sold in the United
States during MY 2020 to reach at least
35 mpg.
Finally, EPCA provides that in
determining the level at which it should
set CAFE standards for a particular
model year, NHTSA may not consider
the ability of manufacturers to take
advantage of several EPCA provisions
that facilitate compliance with the
CAFE standards and thereby reduce the
costs of compliance. As noted below in
Section II, manufacturers can earn
compliance credits by exceeding the
47 49 U.S.C. 32919 and 71 FR 17566, 17654–70;
April 6, 2006.
48 Center for Auto Safety v. NHTSA, 793 F.2d
1322, 1325 n. 12 (DC Cir. 1986); Public Citizen v.
NHTSA, 848 F.2d 256, 262–3 n. 27 (DC Cir. 1988)
(noting that ‘‘NHTSA itself has interpreted the
factors it must consider in setting CAFE standards
as including environmental effects’’); and Center for
Biological Diversity v. NHTSA, 508 F.3d 508, 529
(9th Cir. 2007).
49 42 FR 63,184, 63,188 (Dec. 15, 1977) (emphasis
added).
50 For example, the final rules establishing CAFE
standards for MY 1981–84 passenger cars, 42 FR
33,533, 33,540–1 and 33,551; June 30, 1977, and for
MY 1983–85 light trucks, 45 FR 81,593, 81,597;
December 11, 1980.
51 53 FR 39,275, 39,302; October 6, 1988.
52 54 FR 21985,
53 The IPCC 2007 reports can be found at
https://www.ipcc.ch/. (Last accessed April 20, 2008.)
54 See, e.g., Center for Auto Safety v. NHTSA
(CAS), 793 F. 2d 1322 (DC Cir. 1986)
(Administrator’s consideration of market demand as
component of economic practicability found to be
reasonable); Public Citizen 848 F.2d 256 (Congress
established broad guidelines in the fuel economy
statute; agency’s decision to set lower standard was
a reasonable accommodation of conflicting
policies). As the United States Court of Appeals
pointed out in upholding NHTSA’s exercise of
judgment in setting the 1987–1989 passenger car
standards, ‘‘NHTSA has always examined the safety
consequences of the CAFE standards in its overall
consideration of relevant factors since its earliest
rulemaking under the CAFE program.’’ Competitive
Enterprise Institute v. NHTSA (CEI I), 901 F.2d 107,
120 at n.11 (DC Cir. 1990).
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CAFE standards and then use those
credits to achieve compliance in years
in which their measured average fuel
economy falls below the standards.
Manufacturers can also increase their
CAFE levels through MY 2019 by
producing alternative fuel vehicles.
EPCA provides an incentive for
producing these vehicles by specifying
that their fuel economy is to be
determined using a special calculation
procedure that results in those vehicles
being assigned a high fuel economy
level.
5. Consultation in Setting Standards
EPCA provides that NHTSA is to
consult with the Department of Energy
(DOE) and Environmental Protection
Agency in prescribing CAFE standards.
It provides further that NHTSA is to
provide DOE with an opportunity to
provide written comments on draft
proposed and final CAFE standards.55
6. Compliance Flexibility and
Enforcement
EPCA specifies a precise formula for
determining the amount of civil
penalties for failure to comply with a
standard. The penalty, as adjusted for
inflation by law, is $5.50 for each tenth
of a mpg that a manufacturer’s average
fuel economy falls short of the standard
for a given model year multiplied by the
total volume of those vehicles in the
affected fleet (i.e., import or domestic
passenger car, or light truck),
manufactured for that model year. The
amount of the penalty may not be
reduced except under the unusual or
extreme circumstances specified in the
statute.
Likewise, EPCA provides that
manufacturers earn credits for
exceeding a standard. The amount of
credit earned is determined by
multiplying the number of tenths of a
mpg by which a manufacturer exceeds
a standard for a particular category of
automobiles by the total volume of
automobiles of that category
manufactured by the manufacturer for a
given model year.
EPA is responsible for measuring
automobile manufacturers’ CAFE so that
NHTSA can determine compliance with
the CAFE standards. In making these
measurements for passenger cars, EPA is
required by EPCA 56 to use the EPA test
55 In addition, Executive Order No. 13432
provides that a Federal agency undertaking a
regulatory action that can reasonably be expected to
directly regulate emissions, or to substantially and
predictably affect emissions, of greenhouse gases
from motor vehicles, shall act jointly and
consistently with other agencies to the extent
possible and to consider the views of other agencies
regarding such action.
56 49 U.S.C. 32904(c).
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procedures in place as of 1975 (or
procedures that give comparable
results), which are the city and highway
tests of today, with adjustments for
procedural changes that have occurred
since 1975.
EPA’s fuel economy test procedures
specify equations for calculating fuel
economy. These equations are based on
the carbon balance technique which
allows fuel economy to be determined
from measurement of exhaust
emissions. This technique relies upon
the premise that the quantity of carbon
in a vehicle’s exhaust gas is equal to the
quantity of carbon consumed by the
engine as fuel.
When NHTSA finds that a
manufacturer is not in compliance, it
notifies the manufacturer. Surplus
credits generated from the five previous
years can be used to make up the deficit.
If there are no (or not enough) credits
available, then the manufacturer can
either pay the fine, or submit a carry
back plan to the agency. A carry back
plan describes what the manufacturer
plans to do in the following three model
years to make up for the deficit in
credits. NHTSA must examine and
determine whether to approve the plan.
III. Fuel Economy Enhancing
Technologies
In the Agency’s last two rulemakings
covering light truck CAFE standards for
MYs 2005–2007 and MYs 2008–2011,
the agency relied on the 2002 National
Academy of Sciences’ report,
Effectiveness and Impact of Corporate
Average Fuel Economy Standards (‘‘the
2002 NAS Report’’) 57 for estimating
potential fuel economy benefits and
associated retail costs of applying
combinations of technologies in 10
classes of production vehicles. The NAS
cost and effectiveness numbers were the
best available estimates at this time,
determined by a panel of experts formed
by the National Academy of Sciences,
and the report had been peer reviewed
by individuals chosen for their diverse
perspectives and technical expertise in
accordance with procedures approved
by the Report Review Committee of the
National Research Council. However,
since the publication of the 2002 NAS
Report, there has been substantial
advancement in fuel-saving
technologies, including technologies not
discussed in the NAS Report that are
expected to appear on vehicles in the
MY 2011–2015 timeframe. There also
57 National Research Council, ‘‘Effectiveness and
Impact of Corporate Average Fuel Economy (CAFE)
Standards,’’ National Academy Press, Washington,
DC (2002). Available at https://www.nap.edu/
openbook.php?isbn=0309076013 (last accessed
April 20, 2008).
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have been reports issued and studies
conducted by several other
organizations and companies that
discuss fuel economy technologies and
their benefits and costs. NHTSA has
contracted with the NAS to update the
fuel economy section, Chapter 3, of the
2002 NAS Report. However, this update
will not be available in time for this
rulemaking. Due to the expedited nature
of this rulemaking, NHTSA, in
consultation with the Environmental
Protection Agency (EPA), developed an
updated technology cost and
effectiveness list to be used in this
document.
This list presents NHTSA and EPA
technical staff’s current assessment of
the costs and effectiveness from a broad
range of technologies which can be
applied to cars and light-duty trucks.
EPA published the results of this
collaboration in a report and submitted
it to the NAS committee.58 A copy of the
report and other studies used in the
technology update will be placed in
NHTSA’s docket.
NHTSA believes that the estimates
used for this document, which rely on
the best available public and
confidential information, are defensible
and reasonable predictions for the next
five years. Nevertheless, NHTSA still
believes that the ideal source for this
information comes from a peer reviewed
process such as the NAS. NHTSA will
continue to work with NAS to update
this list on a five year interval as
required by the Energy Independence
and Security Act of 2007.
The majority of the technologies
discussed in this section are in
production and available on vehicles
today, either in the United States, Japan,
or Europe. A number of the technologies
are commonly available, while others
have only recently been introduced into
the market. In a few cases, we provide
estimates on technologies which are not
currently in production, but are
expected to be so in the next few years.
These are technologies which can be
applied to cars and trucks that are
capable of achieving significant
improvements in fuel economy and
reductions in carbon dioxide emissions,
and improve vehicle fuel economy, at
reasonable costs.
NHTSA and EPA conducted the
technology examination using concepts
from the 2002 NAS report which
constituted a starting point for the
analysis. In the NAS Report, there were
three exemplary technology paths or
58 EPA Staff Technical Report: Cost and
Effectiveness Estimates of Technologies Used to
Reduce Light-duty Vehicle Carbon Dioxide
Emissions. EPA420–R–08–008, March, 2008.
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scenarios identified for each class of
production vehicles, which lead to
successively greater improvements in
fuel consumption and greater costs. Path
I included production-intent
technologies that will be available
within 10 years and could be
implemented under current economic
and regulatory conditions. Path II
included more costly production-intent
technologies that are technically feasible
for introduction within 10 years if
economic and regulatory conditions
justify their use. Path III included
emerging technologies that will be
available within 10 to 15 years but that
may require further development prior
to commercial introduction. These three
paths represented vehicle development
steps that would offer increasing levels
of fuel economy gains (as incremental
gains) at incrementally increasing cost.
As stated earlier, since the publication
of the 2002 NAS Report, automotive
technology has continued to advance
and many of the technologies that were
identified in the report as emerging have
already entered the marketplace.
In this rulemaking, NHTSA in
consultation with EPA have examined a
variety of technologies, looking beyond
path I and path II to path III and to
emerging technologies beyond path III.
These technologies were in their infancy
when the 2002 NAS Report was being
formulated. In addition, unlike for past
rulemakings where NHTSA projected
the use of different variants of a
technology as a combined technology,
in this rulemaking, NHTSA working
with EPA examined advanced forms
and subcategories of existing
technologies and reflected the
effectiveness and cost for each of the
variants separately for all ten vehicle
classes. The specific technologies
affected are variable valve timing (VVT),
variable valve lift and timing (VVLT)
and cylinder deactivation.
Manufacturers are currently using many
different types of VVTs and VVLTs,
which have a variety of different names
and methods. This rulemaking employs
specific cost and effectiveness estimates
for variants of VVT, including Intake
Camshaft Phasing (ICP), Coupled
Camshaft Phasing (CCP), and Dual
(Independent) Camshaft Phasing (DCP).
It also employs specific cost and
effectiveness estimates for variants of
VVLT, including Discrete Variable
Valve Lift (DVVL) and Continuous
Variable Valve Lift (CVVL). We also
now include the effectiveness and cost
estimates for each of the variants of
cylinder deactivation. The most
common type of cylinder deactivation is
one in which an eight-cylinder overhead
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valve engine disables four of its
cylinders under light loads. Cylinder
deactivation could be incorporated on
overhead cam engines, and can be
applied to four and six cylinder engines
as well (we have restricted application
to 6 and 8 cylinder engines). Thus, the
variants of cylinder deactivation that
now have specific cost and effectiveness
estimates include both overhead valve
engine cylinder deactivation and
overhead cam engine cylinder
deactivation.
The update also revisited technology
lead time issues and took a fresh look
at technology application rates, how to
link certain technologies to certain
redesign and refresh patterns,
synergistic impacts resulting from
adding technology packaging, and
learning costs.
A. Data Sources for Technology
Assumptions
A large number of technical reports
and papers are available which contain
data and estimates of the fuel economy
improvements of various vehicle
technologies. In addition to specific
peer-reviewed papers respecting
individual technologies, we also
utilized a number of recent reports
which had been utilized by various
State and Federal Agencies and which
were specifically undertaken for the
purpose of estimating future vehicle fuel
economy reduction effectiveness or
improvements in fuel economy. The
reports we utilized most frequently
were:
• 2002 National Academy of Science
(NAS) report titled ‘‘Effectiveness and
Impact of Corporate Average Fuel
Economy Standards’’. At the time it was
published, the NAS report was
considered by many to be the most
comprehensive summary of current and
future fuel efficiencies improvements
which could be obtained by the
application of individual technologies.
The focus of this report was fuel
economy, which can be directly
correlated with CO2 emissions. The
2002 NAS report contains effectiveness
estimates for ten different vehicle
classifications (small car, mid-SUV,
large truck, etc), but did not differentiate
these effectiveness values across the
classes. Where other sources or
engineering principles indicated that a
differentiation was warranted, we
utilized the 2002 NAS effectiveness
estimates as a starting point and further
refined the estimate to one of the
vehicle classes using engineering
judgment or by consulting additional
reliable sources.
• 2004 Northeast States Center for a
Clean Air Future (NESCCAF) report
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‘‘Reducing Greenhouse Gas Emissions
from Light-Duty Motor Vehicles’’. This
report, which was utilized by the
California Air Resources Board for their
2004 regulatory action on vehicle CO2
emissions, includes a comprehensive
vehicle simulation study undertaken by
AVL, a world-recognized leader in
automotive technology and engineering.
In addition, the report included cost
estimates developed by the Martec
Group, a market-based research and
consulting firm which provides services
to the automotive industry. The
NESCCAF report considered a number
of technologies not examined in the
2002 NAS report. In addition, through
the use of vehicle simulation modeling,
the 2004 NESCCAF report provides a
scientifically rigorous estimation of the
synergistic impacts of applying multiple
fuel economy technologies to a given
vehicle.
• 2006 Energy and Environmental
Analysis Inc (EEA) report ‘‘Technology
to Improve the Fuel Economy of Light
Duty Trucks to 2015’’ Prepared for The
U.S. Department of Energy and The U.S.
Department of Transportation. This
update of technology characteristics is
based on new data obtained by EEA
from technology suppliers and automanufacturers, and these data are
compared to data from studies
conducted earlier by EEA, the National
Academy of Sciences (NAS), the
Northeast States Center for a Clean Air
future (NESCCAF) and California Air
Resources Board (CARB).
• Data from Vehicle Manufacturers,
Component Suppliers, and other
reports. We also evaluated confidential
data from a number of vehicle
manufacturers as well as a number of
technology component suppliers. In
February of 2007, the NHTSA published
a detailed Request for Comment (RFC)
in the Federal Register. This RFC
included, among other items, a request
for information from automotive
manufacturers and the public on the
fuel economy improvement potential of
a large number of vehicle technologies.
The manufacturer’s submissions to this
RFC were supplemented by confidential
briefing and data provided by vehicle
component suppliers, who for many of
the technologies considered are the
actual manufacturers of the specific
technology and often undertake their
own development and testing efforts to
investigate the fuel economy
improvement potential of their
products. Manufacturers that provided
NHTSA and EPA with fuel economy
cost and effectiveness estimates include
BMW, Chrysler, Ford, General Motors,
Honda, Nissan, Toyota and Volkswagen.
The major suppliers that provided
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NHTSA with fuel economy cost and
effectiveness estimates include BorgWarner, Bosch, Corning, Delphi, and
Siemens.
• Finally, to verify that the fuel
economy cost and effectiveness
estimates for each of the technologies
was reasonable and within currently
available estimates for these
technologies, NHTSA examined those
estimates provided by other reports or
sources, such as the Martec (contained
in the 2004 NESCAFF report) and Sierra
Research reports.59
B. Technologies and Estimates of Costs
and Effectiveness
This section describes each
technology and associated cost and
effectiveness numbers. The technologies
can be classified into five main groups
similar to how they were classified in
the NAS Report: engine technologies;
transmission technologies; accessory
technologies; vehicle technologies; and
hybrid technologies.
While NHTSA and EPA followed the
general approach taken by the NAS in
estimating the cost and effectiveness
numbers, we decided to update some of
these estimates to reflect better the
changed marketplace and regulatory
environment, as well as the
advancement in and greater penetration
of some production-intent and emerging
technologies, which have led to lower
costs. The values contained in the 2002
NAS report were used to establish a
baseline for the fuel economy cost and
effectiveness estimates for each of the
technologies. We then examined all
other estimates provided by
manufacturers and major suppliers or
other sources. In examining these
values, we gave more weight to values
or estimates provided by manufacturers
that have already implemented these
technologies in their fleet, especially
those that have introduced them in the
largest quantities. Likewise, for
technologies that have not penetrated
the fleet to date, but will by early in the
next decade (according to confidential
manufacturer plans), we gave more
weight to values or estimates provided
by manufacturers that have stated that
they will be introducing these
technologies in their fleet, especially
those that plan to introduce them in the
largest quantities. In addition, for the
technologies that will appear on
vehicles by early in the next decade, we
carefully examined the values provided
59 ‘‘Alternative and Future Technologies for
Reducing Greenhouse Gas Emission from Road
Vehicles’’ Sierra Research Report for Environment
Canada, 1999 (SR99–07–01). https://
www.sierraresearch.com/ReportListing.htm (Last
accessed April 20, 2008.)
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by those suppliers who have developed
these technologies and may have
contracts in place to provide them to
manufacturers.
Because not all technologies can be
applied on all types of vehicles, engines
or transmissions, we separately
evaluated 10 classes of vehicles to
estimate fuel economy cost and
effectiveness for each of the
technologies. As discussed above, these
ten classes, also used in NHTSA’s 2006
light truck CAFE rule, were derived
from the 2002 NAS Report, which
estimated the feasibility, potential
incremental fuel consumption benefit
and the incremental cost of three
product development paths for the
following ten vehicle classes:
Subcompact passenger cars, compact
passenger cars, midsize passenger cars,
large passenger cars, small sport utility
vehicles, midsize sport utility vehicles,
large sport utility vehicles, small
pickups, large pickups, and minivans.
The application of technologies to a
vehicle class is limited not only by
whether the manufacturer is capable of
applying it within a particular
development cycle, but also by whether
the technology may physically be
applied to the vehicle. For example,
continuously variable transmissions
(CVTs) were only allowed to be
projected on vehicles with unibody
construction, which includes all
passenger cars and minivans and some
small and midsize SUVs. CVTs could
not be projected for use on vehicles with
ladder-frame construction, which
includes all pickups and large SUVs and
some small and midsize SUVs. Another
example is cylinder deactivation being
limited to vehicles with 6- or 8-cylinder
engines. To simplify the analysis,
NHTSA assumed that each class of
vehicles would typically have vehicle
construction and engines with a specific
number of cylinders that is most
representative of that vehicle class.
Although we looked at ten vehicle
classes separately, for some technologies
the estimated incremental fuel
consumption benefit and incremental
cost were the same across all vehicle
classes (as for engine accessory
improvement), while for other
technologies the estimated incremental
fuel consumption benefit and
incremental cost differed across classes
(as for hybrid drivetrains). The main
difference was with which path(s) each
technology was expected to be
associated.
The exact cost and benefit of a given
technology depends on specific vehicle
characteristics (size, weight, base
engine, etc.) and the existence of
additional technologies that were
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already applied to the vehicle. In the
section below, ranges of incremental
cost and fuel consumption reduction
values are listed where the values
depend on vehicle characteristics and
are independent of the order in which
they are applied to a vehicle. All costs,
which are reflective of estimated retail
price equivalents (RPEs) were inflated
by the producer price index (if needed)
and are presented in year 2006 dollars,
because this is the last year for which
final economic indexing is available.
Some cost estimates are based on
supplier costs. In those instances,
multipliers were included in those costs
so that they would be treated in the
same manner as cost estimates that are
based on manufacturer costs. These
incremental values were calculated by
subtracting out all same-path synergies
associated with a given technology and
any preceding items on the same path.
Essentially, the incremental percent
reduction in fuel consumption and cost
impacts represent improvements
beyond the ones realized due to
technologies already applied to the
vehicle. As an example, a 5-speed
automatic transmission could
incrementally reduce fuel consumption
by 2 to 3 percent at an incremental cost
of $75 to $165 per vehicle, relative to a
4-speed automatic transmission. In turn,
a 6-speed automatic transmission could
incrementally reduce fuel consumption
by 4.5 to 6.5 percent at an incremental
cost of $10 to $20 per vehicle, relative
to a 5-speed transmission.
NHTSA acknowledges that this
approach is different from the one it
followed in establishing the reformed
light truck standards for MYs 2008–
2011, where we relied nearly
exclusively on the 2002 NAS report’s
estimates. Our preference remains to
rely upon peer-review and credible
studies, such as the 2002 NAS report;
however we believe that the estimates
made by the joint EPA/NHTSA team are
accurate and defensible. The agency
seeks comments on our assumptions
and the cost, effectiveness and
availability estimates provided. NHTSA
also seeks comments on whether the
order in which these technologies was
applied by the Volpe model is proper
and whether we have accurately
accounted for technologies already
included on vehicles and whether we
have accurately accounted for
technologies that are projected to be
applied to vehicles. The agency also
seeks comments on the ‘‘synergy’’
factors (discussed below) it has applied
in order to adjust the estimated
incremental effectiveness of some pairs
of technology and on whether similar
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adjustments to the estimated
incremental cost of some technologies
should be made. In preparation for a
final rule, NHTSA intends to update its
technology-related methodologies and
estimates, and expects that these
anticipated updates will affect the form
and stringency of the final standards.
a. Engine Technologies
Low-Friction Lubricants
The use of lower viscosity engine and
transmission lubricants can reduce fuel
consumption. More advanced multiviscosity engine and transmission oils
are now available with improved
performance in a wider temperature
band, with better lubricating properties.
However, even without any changes to
fuel economy standards, most MY
2011–2015 vehicles are likely to use
5W–30 motor oil, and some will use
even less viscous oils, such as 5W–20 or
possibly even 0W–20 to reduce cold
start friction. This may directionally
benefit the fuel economy improvements
of valvetrain technologies such as
cylinder deactivation, which rely on a
minimum oil temperature (viscosity) for
operation. Most manufacturers therefore
attributed smaller potential fuel
economy reductions and cost increases
to lubricant improvements.
The NAS Report estimated that lowfriction lubricants could incrementally
reduce fuel consumption by 1 percent at
an incremental cost of $8 to $11.60 The
NESCCAF study projected that lowfriction lubricants could incrementally
reduce fuel consumption by 1 percent at
an incremental cost of $5 to $15; while
the EEA report projected that lowfriction lubricants could incrementally
reduce fuel consumption by 1 percent at
an incremental cost of $10 to $20. In
contrast, manufacturer data projected an
estimated fuel consumption potential of
0 percent to 1 percent at an incremental
cost that ranged from $1 to $11, with
many of them stating the costs as
ranging from $1 to $5. NHTSA believes
that these manufacturer estimates are
more accurate and estimates that lowfriction lubricants could reduce fuel
consumption by 0.5 percent for all
vehicle types at an incremental cost of
$3, which represents the mid-point of
$2.50, rounded up to the next dollar.
Reduction of Engine Friction Losses
All reciprocating and rotating
components in the engine are
candidates for friction reduction, and
minute improvements in several
60 The price increases noted in this chapter are
slightly higher than shown in the NAS study, since
they have been converted into calendar year 2006
prices.
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components can add to a measurable
fuel economy improvement. The
amount of energy an engine loses to
friction can be reduced in a variety of
ways. Improvements in the design of
engine components and subsystems will
result in friction reduction, improved
engine operation, greater fuel economy
and reduced emissions. Examples
include low-tension piston rings, roller
cam followers, crankshaft design,
improved material coatings, material
substitution, more optimal thermal
management, piston surface treatments,
and as lubricant friction reduction.
Additionally, as computer-aided
modeling software continues to
improve, more opportunities for
incremental friction reduction might
become apparent. Even without any
changes to fuel economy standards,
most MY 2010–2015 vehicles are likely
to employ one or more such techniques
to reduce engine friction and other
mechanical and hydrodynamic losses.
The NAS Report estimated that such
technologies could incrementally
reduce fuel consumption by 1 to 5
percent at an incremental cost of $36 to
$146. NESCCAF predicted that such
technologies could incrementally
reduce fuel consumption by 0.5 percent
at an incremental cost of $5 to $15;
while the EEA report predicted that
such technologies could reduce fuel
consumption at an incremental cost of
$10 to $55. Confidential manufacturer
data indicates that engine friction
reduction could incrementally reduce
fuel consumption by 1 to 3 percent at
an incremental cost of $0 to $168. Based
on available information from these
reports and confidential manufacturer
data, NHTSA estimates that friction
reduction could reduce fuel
consumption for all vehicles by 1 to 3
percent at a cost of $21 per cylinder.
Thus, the incremental cost of engine
friction reduction for a 4-cylinder
engine is $0 to $84 (applicable to
subcompact and compact cars); for a 6cylinder engine is $0 to $126 (applicable
to midsize cars, large cars, small
pickups, small SUVs, minivans and
midsize SUVs); and for an 8-cylinder
engine is $0 to $168 (applicable to large
pickups and SUVs).
Multi-Valve Overhead Camshaft Engine
It appears likely that many vehicles
would still use overhead valve (OHV)
engines with pushrods and one intake
and one exhaust valve per cylinder
during the early part of the next decade.
Engines with overhead cams (OHC) and
more than two valves per cylinder
achieve increased airflow at high engine
speeds and reductions of the valve
train’s moving mass and enable central
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positioning of spark plugs. Such
engines, which are already used in some
light trucks, typically develop higher
power at high engine speeds. The NAS
Report projected that multi-valve OHC
engines could incrementally reduce fuel
consumption by 2 percent to 5 percent
at an incremental cost of $109 to $146,
and NHTSA found no sources to update
these projections.
For purposes of this rule, OHV
engines and OHC engines were
considered separately, and the model
was generally not allowed to apply
multivalve OHC technology to OHV
engines, except where continuous
variable valve timing and lift (CVVL) is
applied to OHV engines. In that case,
the model assumes conversion to DOHC
valvetrain, because DOHC valvetrains
are prerequisites for the application of
any advanced engine technology over
and above CVVL. Since applying CVVL
to an OHV is the last improvement that
could be made to such an engine, it’s
logical to assume that manufacturers
would redesign that engine as a DOHC
and include CVVL as part of that
redesign.
For 4-cylinder engines we estimated
that the cost to redesign an OHV engine
as a DOHC that includes CVVL would
be $599 ($169 for conversion to DVVL,
$254 for conversion to CVVL, and $176
for conversion to DOHC, which
comprises an additional camshaft and
valves), with estimated fuel
consumption reduction of 2 to 3
percent. For 6-cylinder engines we
estimated that the cost to redesign an
OHV engine as a DOHC that includes
CVVL would be $1262 ($246 for
conversion to DVVL, $488 for
conversion to CVVL, and $550 for
conversion to DOHC, which comprises
an additional camshaft and valves), with
estimated fuel consumption reduction
of 1 to 4 percent. For 8-cylinder engines
we estimated that the cost to redesign an
OHV engine as a DOHC that includes
CVVL would be $1380 ($322 for
conversion to DVVL, $508 for
conversion to CVVL, and $550 for
conversion to DOHC, which comprises
an additional camshaft and valves), with
estimated fuel consumption reduction
of 2 to 3 percent. Incremental cost
estimates for DVVL and CVVL are
discussed below.
NHTSA believes that the NESCCAF
report and confidential manufacturer
data are more accurate, and thereby
estimates that a conversion of an OHV
engine to a DOHC engine with CVVL
could incrementally reduce fuel
consumption by 1 to 4 percent at an
incremental cost of $599 to $1,380
compared to an OHV with VVT.
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Cylinder Deactivation
For the vast majority of vehicles, each
cylinder is always active while the
engine is running. Under partial load
conditions, the engine’s specific fuel
consumption could be reduced if some
cylinders could be disabled, such that
the active cylinders operate at higher
load. In cylinder deactivation, some
(usually half) of the cylinders are ‘‘shut
down’’ during light load operation—the
valves are kept closed, and no fuel is
injected—as a result, the trapped air
within the deactivated cylinders is
simply compressed and expanded as an
air spring, with minimal friction and
heat losses. The active cylinders
combust at almost double the load
required if all of the cylinders were
operating. Pumping losses are
significantly reduced as long as the
engine is operated in this ‘‘partcylinder’’ mode.
The theoretical engine operating
region for cylinder deactivation is
limited to no more than roughly 50
percent of peak power at any given
engine speed. In practice, however,
cylinder deactivation is employed
primarily at lower engine cruising loads
and speeds, where the transitions in and
out of deactivation mode are less
apparent to the operator and where the
noise and vibration (NVH) associated
with fewer firing cylinders may be less
of an issue. Manufacturers are exploring
the possibilities of increasing the
amount of time that part-cylinder mode
might be suitable to a vehicle with more
refined powertrain and NVH treatment
strategies.
General Motors and Chrysler Group
have incorporated cylinder deactivation
across a substantial portion of their V8powered lineups. Honda (Odyssey,
Pilot) and General Motors (Impala,
Monte Carlo) offer V6 models with
cylinder deactivation.
There are two variants of cylinder
deactivation. The most common type of
cylinder deactivation is one in which an
eight-cylinder overhead valve engine
disables four cylinders under light
loads. Thus an eight-cylinder engine
could disable four cylinders under light
loads, such as when the vehicle is
cruising at highway speed. This
technology could be applied to four and
six cylinder engines as well. General
Motors and Chrysler Group have
incorporated cylinder deactivation
across a substantial portion of their V8powered overhead valve lineups.
Cylinder deactivation could be
incorporated on overhead cam engines
and can be applied to four and six
cylinder engines as well. Honda has
already begun offering three V6 models
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with cylinder deactivation (Accord,
Odyssey, and Pilot) and GM will soon
release cylinder deactivation on its 3.9L
6-cylinder engine. Fuel economy
improvement potential scales roughly
with engine displacement-to-vehicle
weight ratio: the higher displacementto-weight vehicles, operating at lower
relative loads for normal driving, have
the potential to operate in part-cylinder
mode more frequently.
Honda’s technology includes the use
of active engine mounts and noise
damping amongst other items added to
its V6 engines with cylinder
deactivation. This, of course, increases
the cost relative to a four or eight
cylinder OHC engine.
Some manufacturers are getting
results in excess of 6 percent and most
are at the high end of the range. This
higher number is supported by official
fuel economy test data on a V6 Honda
Odyssey with cylinder deactivation
compared to the same vehicle (and
engine displacement) without cylinder
deactivation and by confidential
manufacturer information.
The NAS Report projected that
cylinder deactivation could
incrementally reduce fuel consumption
by 3 percent to 6 percent at an
incremental cost of $112 to $252. The
NESCCAF study projected that cylinder
deactivation could incrementally reduce
fuel consumption by 1.7 percent to 4.2
percent at an incremental cost of $161
to $210; while the EEA report projected
that cylinder deactivation could
incrementally reduce fuel consumption
by 5.2 percent to 7.2 percent at an
incremental cost of $105 to $135.
Confidential manufacturer data and
official fuel economy test data indicates
that cylinder deactivation could
incrementally reduce fuel consumption
by at least 6 percent at an incremental
cost of $203 to $229. NHTSA believes
that these manufacturer estimates are
more accurate and thus estimates that
cylinder deactivation could reduce fuel
consumption by 4.5 percent to 6 percent
at an incremental cost of $203 to $229.
Variable Valve Timing
Variable valve timing is a
classification of valvetrain designs that
alter the timing of the intake valve,
exhaust valve, or both, primarily to
reduce pumping losses, increase
specific power, and control residual
gases. VVT reduces pumping losses
when the engine is lightly loaded by
positioning the valve at the optimum
position needed to sustain horsepower
and torque. VVT can also improve
thermal efficiency at higher engine
speeds and loads. Additionally, VVT
can be used to alter (and optimize) the
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effective compression ratio where it is
advantageous for certain engine
operating modes.
Variable valve timing has been
available in the market for quite a while.
By the early 1990s, VVT had made a
significant market penetration with the
arrival of Honda’s ‘‘VTEC’’ line of
engines. VVT has now become a widely
adopted technology: for the 2007 model
year, over half of all new cars and light
trucks have engines with some method
of variable valve timing. Therefore, the
degree of further improvement across
the fleet is limited to vehicles that have
not already implemented this
technology.
Manufacturers are currently using
many different types of variable valve
timing, which have a variety of different
names and methods. The major types of
VVT are listed below:
Intake Camshaft Phasing (ICP)
Valvetrains with ICP—the simplest
type of cam phasing—can modify the
timing of the intake valve while the
exhaust valve timing remains fixed.
This requires the addition of a cam
phaser for each bank of intake valves on
the engine. An in-line 4-cylinder engine
has one bank of intake valves, while Vconfigured engines would have two
banks of intake valves. The NAS Report
projected that ICP could incrementally
reduce fuel consumption by 3 percent to
6 percent at an incremental cost of $35;
while the EEA report projected that ICP
could reduce fuel consumption at an
incremental cost of $35. The NESCCAF
study projected that ICP could
incrementally reduce fuel consumption
by 1 percent to 2 percent at an
incremental cost of $49. Consistent with
the EEA report and NESCCAF study, we
have used this $35 manufacturer cost to
arrive at incremental cost of $59 per
cam phaser or $59 for an in-line 4
cylinder and $119 for a V-type, thus
NHTSA estimates that ICP could
incrementally reduce fuel consumption
by 1 to 2 percent at an incremental cost
of $59 to $119.
Coupled Camshaft Phasing (CCP)
Coupled (or coordinated) cam phasing
is a design in which both the intake and
exhaust valve timing are varied with the
same cam phaser. For an overhead cam
engine, the same phaser added for ICP
would be used for CCP control. As a
result, its costs should be identical to
those for ICP. For an overhead valve
engine, only one phaser would be
required for both inline and Vconfigured engines since only one
camshaft exists. Therefore, for overhead
valve engines, the cost is estimated at
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$59 regardless of engine configuration,
using the logic provided for ICP.
The NESCCAF study projected that
CCP could incrementally reduce fuel
consumption by 1 percent to 3 percent
above that obtained by ICP. Confidential
manufacturer data also projects that that
CCP could incrementally reduce fuel
consumption by 1 percent to 3 percent
above that obtained by ICP. According
to the NESCCAF report and confidential
manufacturer data, NHTSA estimates
that CCP could incrementally reduce
fuel consumption by 1 to 3 percent at
an incremental cost of $59 to $119
above ICP valvetrains.
Dual (Independent) Camshaft Phasing
(DCP)
The most flexible VVT design is dual
cam phasing, where the intake and
exhaust valve opening and closing
events are controlled independently.
This design allows the option of
controlling valve overlap, which can be
used as an internal EGR strategy. Our
estimated incremental compliance cost
for this technology is built upon that for
VVT–ICP where an additional cam
phaser is added to control each bank of
exhaust valves less the cost to the
manufacturer of the removed EGR valve.
The incremental compliance cost for a
4-cylinder engine is estimated to be $59
for each bank of valves, plus an
estimated piece cost of $30 for the
valves, for a total incremental
compliance cost of $89. The incremental
compliance cost for a V6 or a V8 engine
is estimated to be $59 for each bank of
intake valves (i.e., two banks times $59/
bank = $119), $59 for each bank of
exhaust valves (i.e., another $119)
minus an estimated $29 incremental
compliance cost for the removed EGR
valve; the total incremental compliance
cost being $209.
According to the NESCCAF report
and confidential manufacturer data, it is
estimated that DCP could incrementally
reduce fuel consumption by 1 to 3
percent at an incremental cost of $89 to
$209 compared to engines with ICP or
CCP.
Because ICP and CCP have the same
cost and similar effectiveness, it is
assumed that manufacturers will choose
the technology that best fits the specific
engine architecture and application.
Variable Valve Lift and Timing
Some vehicles have engines for which
both valve timing and lift can be at least
partially optimized based on engine
operating conditions. Engines with
variable valve timing and lift (VVLT)
can achieve further reductions in
pumping losses and further increases in
thermal efficiency. Controlling the lift
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its Valvetronic engines, which employs
fully flexible valve timing to allow an
extra set of rocker arms to vary the valve
lift height. CVVL enables intake valve
throttling in engines, which allows for
the use of more complex systems of
sensors and electronic controls to enable
further optimization of valve lift.
The NESCCAF study projected
incremental costs from $210 to $420,
depending on vehicle class, while the
EEA report projected incremental costs
of $180 to $350, depending on vehicle
class. Confidential manufacturer data
projects that CVVL could incrementally
reduce fuel consumption by 1.5 by 4
percent at an incremental cost of $200
to $515. NHTSA believes that these
manufacturer estimates are more
accurate than NESCCAF estimates, thus
it gives more weight to them. According
to the NESCCAF report and confidential
manufacturer data, NHTSA estimates
that CVVL could incrementally reduce
fuel consumption by 1.5 by 4 percent at
an incremental cost of $254 to $508
compared to VVT with cost estimates
varying from $254, $466, and $508 for
a 4-, 6-, and 8-cylinder engine,
respectively.
Discrete Variable Valve Lift
Discrete variable valve lift (DVVL) is
a method in which the valvetrain
switches between multiple cam profiles,
usually 2 or 3, for each valve. These cam
profiles consist of a low and a high-lift
lobe, and may include an inert or blank
lobe to incorporate cylinder
deactivation (in the case of a 3-step
DVVL system). According to the
NESCCAF report and confidential
manufacturer data, it is estimated that
DVVL could incrementally reduce fuel
consumption by 0.5 to 3 percent at an
incremental cost of $169 to $322
compared to VVT depending on engine
size and overhead cam versus overhead
valve engines. Included in this cost
estimate is $25 for controls and
associated oil supply needs (these costs
not reflected in the NESCCAF study).
We also project that a single valve lifter
could control valve pairs, thus engines
with dual intake and/or dual exhaust
valves would require only one lifter per
pair of valves. Due to this, the estimated
costs for applying DVVL to overhead
cam and overhead valve engines are the
same.
rwilkins on PROD1PC63 with PROPOSALS2
height of the valves provides additional
flexibility and potential for further fuel
consumption reduction. By reducing the
valve lift, engines can decrease the
volumetric flow at lower operating
loads, improving fuel-air mixing and incylinder mixture motion which results
in improved thermodynamic efficiency
and also potentially reduced overall
valvetrain friction. Also, by moving the
throttling losses further downstream of
the throttle valve, the heat transfer
losses that occur from the throttling
process are directed into the fresh
charge-air mixture just prior to
compression, delaying the onset of
knock-limited combustion processes. At
the same time, such systems may also
incur increased parasitic losses
associated with their actuation
mechanisms.
The NAS report projected that VVLT
could incrementally reduce fuel
consumption by 1 to 2 percent over VVT
alone at an incremental cost of $73 to
218.
Manufacturers are currently using
many different types of variable valve
lift and timing, which have a variety of
different names and methods. The major
types of VVLT are listed below:
Camless Valve Actuation
efficiency advantage of camless
valvetrains.
The NAS Report projected that
camless valve actuation could
incrementally reduce fuel consumption
by 5 to 10 percent over VVLT at an
incremental cost of $336 to $673.
Confidential manufacturer information
provides incremental fuel consumption
losses that range from 2 to 10 percent at
costs that range from $300 to $1,100.
The NESCCAF study projected that
camless valve actuation could
incrementally reduce fuel consumption
by 11 to 13 percent at an incremental
cost of $805 to $1,820; while the EEA
report projected that camless valve
actuation could incrementally reduce
fuel consumption by 10 to 14 percent at
an incremental cost of $210 to $600.
These benefits and costs are believed to
be incremental to engines with VVT.
In reviewing our sources for costs, we
have determined that the adjusted costs
presented in the 2002 NAS study, which
ranged from $336 to $673—depending
on vehicle class—represent the best
available estimates. Subtracting out the
improvements associated with the
application of VVLT provides an
estimated fuel consumption reduction
of 2.5 percent.
Camless valve actuation relies on
electromechanical actuators instead of
camshafts to open and close the
cylinder valves. When
electromechanical actuators are used to
replace cams and coupled with sensors
and microprocessor controls, valve
timing and lift can be optimized over all
conditions. An engine valvetrain that
operates independently of any
mechanical means provides the ultimate
in flexibility for intake and exhaust
timing and lift optimization. With it
comes infinite valve overlap variability,
the rapid response required to change
between operating modes (such as HCCI
and GDI), intake valve throttling,
cylinder deactivation, and elimination
of the camshafts (reduced friction). This
level of control can enable even further
incremental reductions in fuel
consumption.
Camless valvetrains have been under
research for many decades due to the
design flexibility and the attractive fuel
economy improvement potential they
might provide. Despite the promising
features of camless valvetrains,
significant challenges remain. High
costs and design complexity have
reduced manufacturers’ enthusiasm for
camless engines in light of other
competing valvetrain technologies. The
advances in VVT, VVLT, and cylinder
deactivation systems demonstrated in
recent years have reduced the potential
Stoichiometric Gasoline Direct Injection
Technology
Gasoline direct injection (GDI, or
SIDI) engines inject fuel at high pressure
directly into the combustion chamber
(rather than the intake port in port fuel
injection). Direct injection improves
cooling of the air/fuel charge within the
cylinder, which allows for higher
compression ratios and increased
thermodynamic efficiency. Injector
design advances and increases in fuel
pressure have promoted better mixing of
the air and fuel, enhancing combustion
rates, increasing exhaust gas tolerance
and improving cold start emissions. GDI
engines achieve higher power density
and match well with other technologies,
such as boosting and variable valvetrain
designs.
Several manufacturers (Audi, BMW,
and Volkswagen) have recently released
GDI engines while General Motors and
Toyota will be introducing GDI engines.
In addition, BMW and GM have
announced their plans to dramatically
increase the number of GDI engines in
their portfolios.
The NESCCAF report projected that
the incremental cost for GDI of $189 to
$294; while the EEA report projected an
incremental cost of $77 to $135.
Confidential manufacturer data provides
data with higher upper end costs than
these estimates, with incremental fuel
consumption estimates ranging from 1
Continuous Variable Valve Lift
Continuous variable valve lift (CVVL)
employs a mechanism that varies the
pivot point in the rocker arm. This
design is realistically limited to
overhead cam engines. Currently, BMW
has implemented this type of system in
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to 2 percent. For our analysis, we have
estimated the costs of individual
components of a GDI system and used
a ‘‘bottom up’’ approach looking at
incremental costs for injectors, fuel
pumps, etc., to arrive at system
incremental compliance costs ranging
from $122 to $420 for small cars and up
to $228 to $525 for large trucks. The
lower end of the ranges represents our
best estimate using a bottom up
approach while the upper end of the
ranges represent levels more consistent
with the manufacturer CBI submittals.
As a result, we estimate that
stoichiometric GDI could incrementally
reduce fuel consumption by 1 to 2
percent at an incremental cost of $122
to $525 compared to engines of similar
power output.
rwilkins on PROD1PC63 with PROPOSALS2
Gasoline Engine Turbocharging and
Engine Downsizing
The specific power of a naturally
aspirated engine is limited, in part, by
the rate at which the engine is able to
draw air into the combustion chambers.
Turbocharging and supercharging are
two methods to increase the intake
manifold pressure and cylinder chargeair mass above naturally aspirated
levels. By increasing the pressure
differential between the atmosphere and
the charging cylinders, superchargers
and turbochargers increase this
available airflow, and thus increase the
specific power level, and with it the
ability to reduce engine size while
maintaining performance. This
effectively reduces the pumping losses
at lighter loads in comparison to a
larger, naturally aspirated engine, while
at the same time reducing net friction
losses
Almost every major manufacturer
currently markets a vehicle with some
form of boosting. While boosting has
been a common practice for increasing
performance for several decades, it has
considerable fuel economy potential
when the engine displacement is
reduced. Specific power levels for a
boosted engine often exceed 100 hp/L—
compared to average naturally aspirated
engine power density of roughly 70 hp/
L. As a result, engines can
conservatively be downsized roughly 30
percent to achieve similar peak output
levels.
In the last decade, improvements to
turbine design have improved their
reliability and performance across the
entire engine operating range. New
variable geometry turbines spool up to
speed faster (eliminating the oncecommon ‘‘turbo lag’’) while maintaining
high flow rates for increased boost at
high speeds.
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Turbocharging and downsizing
involve the addition of a boost system,
removal of two cylinders in most cases
(from an 8-cylinder to a 6, or a 6 to a
4) and associated valves, and the
addition of some form of cold start
control system (e.g., air injection) to
address possible cold start emission
control. The NAS Report projected that
turbocharging and downsizing could
incrementally reduce fuel consumption
by 5 to 7 percent at an incremental cost
of $364 to $582. The EEA report
projected turbocharging and downsizing
could incrementally reduce fuel
consumption by 5.2 to 7.8 percent.
In developing estimated costs for
turbocharging and downsizing an
engine, NHTSA, in conjunction with
EPA, relied upon piece cost estimates
contained in the NESCCAF report. The
cost estimates provided by the
NESCCAF report are as follows: $600 for
the turbocharger and associated parts;
$90 for an air injection pump and
associated parts (each turbocharger
requires an air injection pump); $75 per
cylinder and associated components;
$15 per each valve and associated
components; and $150 per camshaft.
In developing the cost estimates for
each of the 10 classes of vehicles, we
determined the most logical type of
downsizing that would occur for each
class and starting with the turbocharger
and air injector cost, either added or
deleted cost, depending on the
situation. For subcompact and compact
cars, we determined that the downsizing
wouldn’t involve the removal of any
cylinders, valves and camshafts, but
instead would result in a manufacturer
using a smaller displacement 4-cylinder
engine and adding the turbocharger and
the air injector to the smaller engine.
Thus, for subcompact and compact cars,
we estimated the cost of turbocharging
and downsizing to be $690 ($600 for the
turbocharger plus $90 for the air
injector).
For large trucks and large SUVs we
determined that the most logical engine
downsizing would involve replacing an
8-cylinder overhead valve engine with a
turbocharged 6-cylinder dual overhead
cam engine. This change would result in
the removal of 2 cylinders, and the
addition of a turbocharger, an air
injector, 8 valves and 2 camshafts. Thus,
we have estimated the cost of
turbocharging and downsizing to be
$810 ($600 for the turbocharger plus $90
for the air injector, plus $120 for eight
valves plus $150 for a camshaft and
minus $150 for the removal of two
cylinders).
For midsize cars, large cars, small
trucks, small SUVs, midsize SUVs and
minivans, we determined that the most
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logical engine downsizing would
involve replacing a 6-cylinder dual
overhead cam engine with a
turbocharged 4-cylinder dual overhead
cam engine. This change would result in
the removal of 2 cylinders, 8 valves and
2 camshafts and the addition of a
turbocharger and air injector. Thus, we
have estimated the cost of turbocharging
and downsizing to be $120 ($600 for the
turbocharger plus $90 for the air
injector, minus $150 for the removal of
two cylinders, minus $120 for the
removal of eight valves and minus $300
for the removal of two camshafts).
Thus, we have estimated the cost for
a boosted/downsized engine system at
$690 for small cars, $810 for large
trucks, and $120 for other vehicle
classes. Projections of the fuel
consumption reduction potential of a
turbocharged and downsized engine
from the NAS Report are backed by EEA
estimates and confidential manufacturer
data. According to the NAS Report, the
EEA report, cost estimates developed in
conjunction with EPA and confidential
manufacturer data, NHTSA estimates
that downsized turbocharged engines
could incrementally reduce fuel
consumption from 5 to 7.5 percent at an
incremental cost of $120 to $810.
Diesel Engine
Diesel engines have several
characteristics that give them superior
fuel efficiency to conventional gasoline,
spark-ignited engines. Pumping losses
are greatly reduced due to lack of (or
greatly reduced) throttling. The diesel
combustion cycle operates at a higher
compression ratio, with a very lean air/
fuel mixture, and typically at much
higher torque levels than an equivalentdisplacement gasoline engine.
Turbocharged light-duty diesels
typically achieve much higher torque
levels at lower engine speeds than
equivalent-displacement naturallyaspirated gasoline engines.
Additionally, diesel fuel has higher
energy content per gallon. However,
diesel engines have emissions
characteristics that present challenges to
meeting Tier 2 emissions standards.
Compliance strategies are expected to
include a combination of combustion
improvements and after-treatment.
Several key advances in diesel
technology have made it possible to
reduce emissions coming from the
engine (prior to after-treatment). These
technologies include improved fuel
systems (higher pressures and more
responsive injectors), advanced controls
and sensors to optimize combustion and
emissions performance, higher EGR
levels to reduce NOX, lower
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compression ratios and advanced
turbocharging systems.
For after-treatment, the traditional 3way catalyst found on gasoline-powered
vehicles is ineffective due to the leanburn combustion of a diesel. All diesels
will require a particulate filter, an
oxidation catalyst, and a NOX reduction
strategy to comply with Tier 2 emissions
standards.
The NOX reduction strategies most
common are outlined below:
rwilkins on PROD1PC63 with PROPOSALS2
Lean NOX Trap Catalyst AfterTreatment
A lean NOX trap (LNT) operates, in
principle, by storing NOX (NO and NO2)
when the engine is running in its
normal (lean) state. When the control
system determines (via mathematical
model or a NOX sensor) that the trap is
saturated with NOX, it switches to a rich
operating mode. This rich mode
produces excess hydrocarbons that act
as a reducing agent to convert the stored
NOX to N2 and water, thereby
‘‘regenerating’’ the LNT and opening up
more locations for NOX to be stored.
LNTs are sensitive to sulfur deposits
which can reduce catalytic performance,
but periodically undergo a desulfation
engine operating mode to clean it of
sulfur buildup.
According to confidential
manufacturer data, NHTSA estimates
that LNT-based diesels can
incrementally reduce fuel consumption
by 8 to 15 percent at an incremental cost
of $1,500 to $1,600 compared to a direct
injected turbocharged and downsized
internal combustion engine. These costs
are based on a ‘‘bottom up’’ cost
analysis that was performed with EPA
which then subtracted the costs of all
previous steps on the decision tree prior
to diesel engines.
Selective Catalytic Reduction NOX AfterTreatment
SCR uses a reductant (typically,
ammonia derived from urea)
continuously injected into the exhaust
stream ahead of the SCR catalyst.
Ammonia combines with NOX in the
SCR catalyst to form N2 and water. The
hardware configuration for an SCR
system is more complicated than that of
an LNT, due to the onboard urea storage
and delivery system (which requires a
urea pump and injector into the exhaust
stream). While there is no required rich
engine operating mode prescribed for
NOX reduction, the urea is typically
injected at a rate of 3 to 4 percent of that
of fuel consumed. Manufacturers
designing SCR systems are intending to
align urea tank refills with standard
maintenance practices such as oil
changes. Incremental fuel consumption
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reduction estimates for diesel engines
with an SCR system range from 11 to 20
percent at an incremental cost of $2,051
to $2,411 compared to a direct injected
turbocharged and downsized internal
combustion engine. These costs are
based on a ‘‘bottom up’’ cost analysis
that was performed with EPA, which
then subtracted the costs of all previous
steps on the decision tree prior to diesel
engines.
Based on public information and on
recent discussions that NHTSA and EPA
have had with auto manufacturers and
aftertreatment device manufacturers,
NHTSA has received strong indications
that LNT systems would probably be
used on smaller vehicles while the SCR
systems would be used on larger
vehicles and trucks. The primary reason
given for this choice is the trade off
between the rhodium needed for the
LNT and the urea injection system
needed for SCR. The breakeven point
between these two cost factors appears
to occur around 3.0 liters. Thus, it is
believed that it is cheaper to
manufacture diesel engines smaller than
3.0 liters with an LNT system, and that
conversely, it is cheaper to manufacture
diesel engines larger than 3.0 liters with
a SCR system. Of course, there are other
factors that influence a manufacturer’s
decision on which system to use, but we
have used this rule-of-thumb for our
analysis.
b. Transmission Technologies
Five-, Six-, Seven-, and Eight-Speed
Automatic Transmissions
The number of available transmission
speeds influences the width of gear ratio
spacing and overall coverage and,
therefore, the degree of transmission
ratio optimization available under
different operating conditions. In
general, transmissions can offer a greater
available degree of engine optimization
and can therefore achieve higher fuel
economy when the number of gears is
increased. However, potential gains may
be reduced by increases in transmission
weight and rotating mass. Regardless of
possible changes to fuel economy
standards, manufacturers are
increasingly introducing 5- and 6-speed
automatic transmissions on their
vehicles. Additionally, some
manufacturers are introducing 7-, and 8speed automatic transmissions, with 7speed automatic transmissions
appearing with increasing frequency.
Automatic 5-Speed Transmissions
As automatic transmissions have been
developed over the years, more forward
speeds have been added to improve fuel
efficiency and performance. Increasing
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the number of available ratios provides
the opportunity to optimize engine
operation under a wider variety of
vehicle speeds and load conditions.
Also, additional gears allow for
overdrive ratios (where the output shaft
of the transmission is turning at a higher
speed than the input shaft) which can
lower the engine speed at a given road
speed (provided the engine has
sufficient power at the lower rpm point)
to reduce pumping losses. However,
additional gears can add weight,
rotating mass, and friction.
Nevertheless, manufacturers are
increasingly adding 5-speed automatic
transmissions to replace 3- and 4-speed
automatic transmissions.
The 2002 NAS study projected that 5speed automatic transmissions could
incrementally reduce fuel consumption
by 2 to 3 percent at an incremental cost
of $76 to $167. The NESCCAF study
projected that 5-speed automatic
transmissions could incrementally
reduce fuel consumption by 1 percent at
an incremental cost of $140; while the
EEA report projected that 5-speed
automatic transmissions could
incrementally reduce fuel consumption
by 2 to 3 percent at an incremental cost
of $130. Confidential manufacturer data
projected that 5-speed automatic
transmissions could incrementally
reduce fuel consumption by 1 to 6
percent at an incremental cost of from
$60 to $281. NHTSA believes that the
NAS study’s estimates are still valid and
estimates that 5-speed automatic
transmissions could incrementally
reduce fuel consumption by 2.5 percent
at an incremental cost of $76 to $167
(relative to a 4-speed automatic
transmission).
Automatic 6-, 7-, and 8-Speed
Transmissions
In addition to 5-speed automatic
transmissions, manufacturers can also
choose to utilize 6-, 7-, or 8-speed
automatic transmissions. Additional
ratios allow for further optimization of
engine operation over a wider range of
conditions, but this is subject to
diminishing returns as the number of
speeds increases. As additional
planetary gear sets are added (which
may be necessary in some cases to
achieve the higher number of ratios),
additional weight and friction are
introduced. Also, the additional shifting
of such a transmission can be perceived
as bothersome to some consumers, so
manufacturers need to develop
strategies for smooth shifts. Some
manufacturers are replacing 4-speed
automatics with 6-speed automatics
(there are also increasing numbers of 5speed automatic transmissions that are
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rwilkins on PROD1PC63 with PROPOSALS2
being replaced by 6-speed automatic
transmissions), and 7-, and 8-speed
automatics have entered production,
albeit in lower-volume applications.
The NAS study projected that 6-, 7- or
8-speed transmissions could
incrementally reduce fuel consumption
by 1 to 2 percent at an incremental cost
of $70 to $126. Confidential
manufacturer data projected that 6-, 7or 8-speed transmissions could
incrementally reduce fuel consumption
by 1 to 3 percent at an incremental cost
of $20 to $120. However, according to
the EEA report, a Lepelletier gear set
design provides for 6-speeds at the same
cost as a 5-speed automatic. Based on
that analysis, we have estimated the cost
of a 6-speed automatic to be equivalent
to that for a 5-speed automatic. We have
not developed any estimate costs for 7or 8-speed transmissions because of the
diminishing returns in efficiency versus
the costs for transmissions beyond 6speeds. NHTSA estimates that 6-, 7-, or
8-speed automatic transmissions could
incrementally reduce fuel consumption
by 0.5 to 2.5 percent at an incremental
cost of $0 to $20 (relative to a 5-speed
automatic transmission). We are
estimating up to an additional $20 in
costs because we have tried to account
for the engineering effort in addition to
the hardware which we believe the EEA
did not and we wanted to capture some
of the higher costs reported by
manufacturers.
Aggressive Shift Logic
In operation, an automatic
transmission’s controller decides when
to upshift or downshift based on a
variety of inputs such as vehicle speed
and throttle position according to
programmed logic. Aggressive shift logic
(ASL) can be employed so that a
transmission is engineered in such a
way as to maximize fuel efficiency by
upshifting earlier and inhibiting
downshifts under some conditions.
Through partial lock-up under some
operating conditions and early lock-up
under others, automatic transmissions
can achieve some reduction in overall
fuel consumption. Aggressive shift logic
is applicable to all vehicle types with
automatic transmissions, and since in
most cases it would require no
significant hardware modifications, it
can be adopted during vehicle redesign
or refresh or even in the middle of a
vehicle’s product cycle. The application
of this technology does, however,
require a manufacturer to confirm that
driveability, durability, and noise,
vibration, and harshness (NVH) are not
significantly degraded.
The NAS study projected that
aggressive shift logic could
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incrementally reduce fuel consumption
by 1 to 2 percent at an incremental cost
of $0 to $70. Confidential manufacturer
data projected that aggressive shift logic
could incrementally reduce fuel
consumption by 0.5 to 3 percent at an
incremental cost of $18 to $70. The NAS
study estimates and confidential
manufacturer data are within the same
ranges, thus NHTSA believes that the
NAS estimates are still accurate. Thus,
NHTSA estimates aggressive shift logic
could incrementally reduce fuel
consumption by 1 to 2 percent at an
incremental cost of $38, which is
approximately the average of the
midpoint of the NAS cost range and the
manufacturer cost range.
Early Torque Converter Lockup
A torque converter is a fluid coupling
located between the engine and
transmission in vehicles with automatic
transmissions and continuously-variable
transmissions (CVTs). This fluid
coupling allows for slip so the engine
can run while the vehicle is idling in
gear, provides for smoothness of the
powertrain, and also provides for torque
multiplication during acceleration.
During light acceleration and cruising,
this slip causes increased fuel
consumption, so modern automatic
transmissions utilize a clutch in the
torque converter to lock it and prevent
this slippage. Fuel consumption can be
further reduced by locking up the torque
converter early, and/or by using partiallockup strategies to reduce slippage.
Some torque converters will require
upgraded clutch materials to withstand
additional loading and the slipping
conditions during partial lock-up. As
with aggressive shift logic, confirmation
of acceptable driveability, performance,
durability and NVH characteristics is
required to successfully implement this
technology.
The 2002 NAS study did not include
any estimates for this technology. The
NESCCAF study projected that early
torque converter lockup could
incrementally reduce fuel consumption
by 0.5 percent at an incremental cost of
$0 to $10; while the EEA report
projected that low-friction lubricants
could incrementally reduce fuel
consumption by 0.5 percent at an
incremental cost of $5. NHTSA
estimates the cost of this technology
(i.e., the calibration effort) at $30 based
in part on NESCCAF and the CBI
submissions which provided costs with
a midpoint of $30. We have used a
higher value here than NESCCAF and
EEA because we have tried to account
for the engineering effort in addition to
the hardware which we believe
NESCCAF and EEA did not do and
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which were captured in the
manufacturers’ higher costs.
NHTSA estimates that early torque
converter lockup could incrementally
reduce fuel consumption by
approximately 0.5 percent at an
incremental cost of approximately $30.
Automated Shift Manual Transmissions
An automated manual transmission
(AMT) is mechanically similar to a
conventional transmission, but shifting
and launch functions are controlled by
the vehicle. There are two basic types of
AMTs, single-clutch and dual-clutch. A
single-clutch AMT is essentially a
manual transmission with automated
clutch and shifting. Because there are
some shift quality issues with singleclutch designs, dual-clutch AMTs are
more common. A dual-clutch AMT uses
separate clutches for the even-numbered
gears and odd-numbered gears. In this
way, the next expected gear is preselected, which allows for faster and
smoother shifting.
Overall, AMTs likely offer the greatest
potential for fuel consumption
reduction among the various
transmission options presented in this
report because they offer the inherently
lower losses of a manual transmission
with the efficiency and shift quality
advantages of computer control. AMTs
offer the lower losses of a manual
transmission with the efficiency
advantages of computer control. The
lower losses stem from the elimination
of the conventional lock-up torque
converter and a greatly reduced need for
high pressure hydraulic circuits to hold
clutches to maintain gear ratios (in
automatic transmissions) or hold
pulleys in position to maintain gear
ratio (in continuously variable
transmissions, discussed below).
However, the lack of a torque converter
will affect how the vehicle launches
from rest, so an AMT will most likely
be paired with an engine that offers
enough torque in the low-RPM range to
allow for adequate launch performance.
An AMT is mechanically similar to a
conventional manual transmission, but
shifting and launch functions are
controlled by the vehicle rather than the
driver. A switch from a conventional
automatic transmission with torque
converter to an AMT incurs some costs
but also allows for some cost savings.
Savings can be realized through
elimination of the torque converter
which is a very costly part of a
traditional automatic transmission, and
through reduced need for high pressure
hydraulic circuits to hold clutches (to
maintain gear ratios in automatic
transmissions) or hold pulleys (to
maintain gear ratios in Continuously
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Variable Transmissions). Cost increases
would be incurred in the form of
calibration efforts since transmission
calibrations would have to be redone,
and the addition of a clutch assembly
for launce and gear changes.
The NESCCAF study projected that
AMTs could incrementally reduce fuel
consumption by 5 to 8 percent at an
incremental cost of $0 to $280; while
the EEA report projected that lowfriction lubricants could incrementally
reduce fuel consumption by 6 to 7
percent at an incremental cost of $195
to $225. Confidential manufacturer data
projected that AMTs could
incrementally reduce fuel consumption
by 2 to 5 percent at an incremental cost
of $70 to $400.
Taking all these estimates into
consideration, NHTSA estimates that
AMTs could incrementally reduce fuel
consumption by 4.5 to 7.5 percent at an
incremental cost of approximately $141.
We believe that, overall, the hardware
associated with an AMT, whether single
clutch or dual clutch, is no more costly
than that for a traditional automatic
transmission given the savings
associated with removal of the torque
converter and high pressure hydraulic
circuits, which is estimated to amount
to at least $30. Nonetheless, given the
need for engineering effort (e.g.,
calibration and vehicle integration
work) when transitioning from a
traditional automatic to an AMT, we
have estimated the incremental
compliance cost at $141, independent of
vehicle class, which is the midpoint of
the NESCCAF estimates and within the
range provided confidential
manufacturer data.
Continuously Variable Transmission
A Continuously Variable
Transmission (CVT) is unique in that it
does not use gears to provide ratios for
operation. Unlike manual and automatic
transmissions with fixed transmission
ratios, CVTs provide, within their
operating ranges, fully variable
transmission ratios with an infinite
number of gears. This enables even finer
optimization of the transmission ratio
under different operating conditions
and, therefore, some reduction of
pumping and engine friction losses.
CVTs use either a belt or chain on a
system of two pulleys.
The main advantage of a CVT is that
the engine can operate at its most
efficient point more often, since there
are no fixed ratios. Also, CVTs often
have a wider range of ratios than
conventional automatic transmissions.
The most common CVT design uses
two V-shaped pulleys connected by a
metal belt. Each pulley is split in half
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and a hydraulic actuator moves the
pulley halves together or apart. This
causes the belt to ride on either a larger
or smaller diameter section of the pulley
which changes the effective ratio of the
input to the output shafts.
It is assumed that CVTs will only be
used on cars, small SUVs, midsize
crossover vehicles and minivans
because they are currently used mainly
in lower-torque applications. While a
high-torque CVT could be developed for
small pickup trucks and large pickup
trucks and large SUVs, it would likely
have to be treated separately in terms of
effectiveness. We do not see
development in the area of high-torque
CVTs and therefore did not include this
type in our analysis.
The 2002 NAS study projected that
CVTs could incrementally reduce fuel
consumption by 4 to 8 percent at an
incremental cost of $140 to $350. The
NESCCAF study projected that CVTs
could incrementally reduce fuel
consumption by 4 percent at an
incremental cost of $210 to $245.
Confidential manufacturer data
projected that CVTs could incrementally
reduce fuel consumption by 3 to 9
percent at an incremental cost of $140
to $800. These values are incremental to
a 4-speed transmission.
Based on an aggregation of
manufacturers’ information, we estimate
a CVT benefit of about 6 percent over a
4-speed automatic. This is above the
NESCCAF value, but in the range of
NAS. In reviewing our sources for costs,
we have determined that the adjusted
costs presented in the 2002 NESCCAF
study represent the best available
estimates. Subtracting the estimated fuel
consumption reduction and costs of
replacing a 4-speed automatic
transmission with a 5-speed automatic
transmission results in NHTSA’s
projecting that CVTs could
incrementally reduce fuel consumption
by 3.5 percent when compared to a
conventional 5-speed automatic
transmission at an incremental cost of
$100 to $139.
Manual 6-, 7-, and 8-Speed
Transmissions
As with automatic transmissions,
increasing the number of available ratios
in a manual transmission can improve
fuel economy by allowing the driver to
select a ratio that optimizes engine
operation at a given speed. Typically,
this is achieved through adding
additional overdrive ratios to reduce
engine speed (which saves fuel through
reduced pumping losses). Six-speed
manual transmissions have already
achieved significant market penetration,
so manufacturers have considerable
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experience with them and the
associated costs. For those vehicles with
five-speed manual transmissions, an
upgrade to a six-speed could
incrementally reduce fuel consumption
by 0.5 percent. Based on CBI
submissions, which provided costs with
a midpoint of $107, NHTSA estimates
that 6-speed manual transmissions
could incrementally reduce fuel
consumption by 0.5 percent when
compared to 5-speed automatic
transmission at an incremental cost of
$107.
c. Vehicle Technologies
Rolling Resistance Reduction
Tire characteristics (e.g., materials,
construction, and tread design)
influence durability, traction control,
vehicle handling, and comfort. They
also influence rolling resistance—the 30
frictional losses associated mainly with
the energy dissipated in the deformation
of the tires under load—and therefore,
CO2 emissions. This technology is
applicable to all vehicles, except for
body-on-frame light trucks and
performance vehicles (described in the
next section). Based on a 2006 NAS/
NRC report, a 10 percent rolling
resistance reduction would provide an
increase in fuel economy of 1 to 2
percent. The same report estimates a $1
per tire cost for low rolling resistance
tires. For four tires, our incremental
compliance cost estimate is $6 per
vehicle, independent of vehicle class,
although not applicable to large trucks.
Low Drag Brakes
Low drag brakes reduce the sliding
friction of disc brake pads on rotors
when the brakes are not engaged
because the brake shoes are pulled away
from the rotating drum. While most
passenger cars have already adopted
this technology, there are indications
that this technology is still available for
body-on-frame trucks. According to
confidential manufacturer data, low
drag brakes could incrementally reduce
fuel consumption by 1 to 2 percent at
an incremental cost of $85 to $90.
NHTSA has adopted these values for its
analysis.
Front or Secondary Axle Disconnect for
Four-Wheel Drive Systems
To provide shift-on-the-fly
capabilities, many part-time four-wheel
drive systems use some type of axle
disconnect: Front axle disconnect in
ladder-frame vehicles, and secondary
(i.e., either front or rear) axle disconnect
in unibody vehicles. Front and
secondary axle disconnects serve two
basic purposes. Using front axle
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disconnect as an example, in two-wheel
drive mode, the technology disengages
the front axle from the front driveline so
the front wheels do not turn the front
driveline at road speed, saving wear and
tear. Then, when shifting from two- to
four-wheel drive ‘‘on the fly’’ (while
moving), the front axle disconnect
couples the front axle to the front
differential side gear only when the
transfer case’s synchronizing
mechanism has spun the front
driveshaft up to the same speed as the
rear driveshaft.
Four-wheel drive systems that have
axle disconnect typically do not have
either manual- or automatic-locking
hubs. To isolate (for example) the front
wheels from the rest of the front
driveline, front axle disconnects use a
sliding sleeve to connect or disconnect
an axle shaft from the front differential
side gear.
This technology has been used by
ladder-frame vehicles for some time, but
has only started to appear on unibody
vehicles recently. The incremental costs
and benefits of applying front axle
disconnect differ, depending on the
vehicle’s type of construction.
According to confidential manufacturer
data, front axle disconnects for ladder
frame vehicles could achieve
incremental fuel consumption
reductions of 1.5 percent at an
incremental cost of $114, while
secondary axle disconnects for unibody
vehicles could achieve incremental fuel
consumption reductions of 1 percent at
an incremental cost of $676. NHTSA has
adopted these estimates for its analysis.
Aerodynamic Drag Reduction
A vehicle’s size and shape determine
the amount of power needed to push the
vehicle through the air at different
speeds. Changes in vehicle shape or
frontal area can therefore reduce CO2
emissions. Areas for potential
aerodynamic drag improvements
include skirts, air dams, underbody
covers, and more aerodynamic side
view mirrors. NHTSA and EPA estimate
a fleet average of 20 percent total
aerodynamic drag reduction is
attainable for passenger cars, whereas a
fleet average of 10 percent reduction is
more realistic for trucks (with a caveat
for ‘‘high-performance’’ vehicles,
described below). These drag reductions
equate to increases in fuel economy of
2 percent and 3 percent for trucks and
cars, respectively. These numbers are in
agreement with the technical literature
and supported by confidential
manufacturer information. The CBI
submittals generally showed the RPE
associated with these changes at less
than $100. NHTSA and EPA estimate
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that the incremental compliance cost to
range from $0 to $75, independent of
vehicle class.
Aerodynamic drag reduction
technologies are readily available today,
although the phase-in time required to
distribute over a manufacturer’s fleet is
relatively long (6 years or so).
Weight Reduction
The term weight reduction
encompasses a variety of techniques
with a variety of costs and lead times.
These include lighter-weight materials,
higher strength materials, component
redesign, and size matching of
components. Lighter-weight materials
involve using lower density materials in
vehicle components, such as replacing
steel parts with aluminum or plastic.
The use of higher strength materials
involves the substitution of one material
for another that possesses higher
strength and less weight. An example
would be using high strength alloy steel
versus cold rolled steel. Component
redesign is an on-going process to
reduce costs and/or weight of
components, while improving
performance and reliability. An example
would be a subsystem replacing
multiple components and mounting
hardware.
The cost of reducing weight is
difficult to determine and is dependent
upon the methods used. For example, a
change in design that reduces weight on
a new model may or may not save
money. On the other hand, material
substitution can result in an increase in
price per application of the technology
if more expensive materials are used.
For purposes of this proposed rule,
NHTSA has considered only vehicles
weighing greater than 5,000 pounds for
weight reduction through materials
substitution. Provided that those
vehicles remain above 5,000 pounds
weight, vehicles may realize up to
roughly 2 percent incremental fuel
consumption through materials
substitution (corresponding to a 3
percent reduction in vehicle weight) at
incremental costs of $0.75 to $1.25 per
pound reduced.
d. Accessory Technologies
Electric Power Steering
Electric power steering (EPS) is
advantageous over hydraulic steering in
that it only draws power when the
wheels are being turned, which is only
a small percentage of a vehicle’s
operating time. EPS may be
implemented on many vehicles with a
standard 12V system; however, for
heavier vehicles, a 42V system may be
required, which adds cost and
complexity.
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The NAS study projected that a 12V
EPS system could incrementally reduce
fuel consumption by 1.5 to 2.5 percent
at an incremental cost of $105 to $150.
The NESCCAF study projected that a
12V EPS could incrementally reduce
fuel consumption by 1 percent at an
incremental cost of $28 to $56; while
the EEA report projected that a 12V EPS
could incrementally reduce fuel
consumption by 1.5 to 1.9 percent at an
incremental cost of $70 to $90.
According to confidential manufacturer
data, electric power steering could
achieve incremental fuel consumption
reductions of 1.5 to 2.0 percent at an
incremental cost of $118 to $197.
NHTSA believes that these
manufacturer estimates are more
accurate and thus estimates that a 12V
EPS system could incrementally reduce
fuel consumption by 1.5 to 2 percent at
an incremental cost of $118 to $197,
independent of vehicle class.
Engine Accessory Improvement
The accessories on an engine, like the
alternator, coolant, and oil pumps, are
traditionally driven by the accessory
belt. Improving the efficiency or
outright electrification (12V) of these
accessories (in the case of the
mechanically driven pumps) would
provide an opportunity to reduce the
accessory loads on the engine. However,
the potential for such replacement will
be greater for vehicles with 42V
electrical systems. Some large trucks
also employ mechanical fans, some of
which could also be improved or
electrified. Additionally, there are now
higher efficiency alternators which
require less of an accessory load to
achieve the same power flow to the
battery.
According to the NAS Report engine
accessory improvement could achieve
incremental fuel consumption
reductions of 1 to 2 percent at an
incremental cost of $124 to $166.
Confidential manufacturer information
is also within these ranges. The
NESCCAF study estimated a cost of $56,
but that estimate included only a high
efficiency generator and did not include
electrification of other accessories. In
reviewing our sources for costs, we have
determined that the adjusted costs
presented in the 2002 NAS study, which
ranged from $124 to $166—depending
on vehicle class—represent the best
available estimates. Based on the NAS
study and confidential manufacturer
information, NHTSA estimates that
accessory improvement could
incrementally reduce fuel consumption
by 1 to 2 percent at an incremental cost
of $124 to $166.
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Forty-Two Volt (42V) Electrical System
Most vehicles today (aside from
hybrids) operate on 12V electrical
systems. At higher voltages, which
appear to be under consideration to
meet expected increases in on-board
electrical demands, the power density of
motors, solenoids, and other electrical
components may increase to the point
that new and more efficient systems,
such as electric power steering, may be
feasible. A 42V system can also
accommodate an integrated starter
generator. According to the NAS Report,
42V engine accessory improvement
could achieve incremental fuel
consumption reductions of 1 to 2
percent at an incremental cost of $194
to $259. According to confidential
manufacturer data, a 42V system could
achieve incremental fuel consumption
reductions of 0 to 4 percent at an
incremental cost of $62 to $280.
We believe that the state of 42V
technology has evolved to where it is on
par with the incremental costs and
benefits of 12V engine accessory
improvement. In reviewing our sources,
we have determined that the numbers
provided in the 2002 NAS study, which
estimated that engine accessory
improvement could achieve incremental
fuel consumption reductions of 1 to 2
percent at an incremental cost of $124
to $166—depending on vehicle class—
represent the best available estimates for
both 12V and 42V systems. Thus, we are
estimating that a 42V electrical system
could achieve incremental fuel
consumption reductions of 1 to 2
percent at an incremental cost of $124
to $166. These estimates are
independent of vehicle class and
exclusive of improvements to the
efficiencies or electrification of 12V
accessories. These estimates are
incremental to a 12V system, regardless
of whether the 12V system has
improved efficiency or not.
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e. Hybrid Technologies
A hybrid describes a vehicle that
combines two or more sources of
propulsion energy, where one uses a
consumable fuel (like gasoline) and one
is rechargeable (during operation, or by
another energy source). Hybrids reduce
fuel consumption through three major
mechanisms: by optimizing the
operation of the internal combustion
engine (through downsizing, or other
control techniques) to operate at or near
its most efficient point more of the time;
by recapturing lost braking energy and
storing it for later use; and by turning off
the engine when it is not needed, such
as when the vehicle is coasting or when
stopped.
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Hybrid vehicles utilize some
combination of the above three
mechanisms to reduce fuel
consumption. The effectiveness of a
hybrid depends on the utilization of the
above mechanisms and how
aggressively they are pursued. Different
hybrid concepts utilize these
mechanisms differently, so they are
treated separately in this analysis.
Below is a discussion of the major
hybrid concepts judged to be available
for use within the timeframe of this
rulemaking.
Integrated Starter-Generator With IdleOff
Integrated Starter-Generator (ISG)
systems are the most basic of hybrid
systems and offer mainly idle-stop
capability. They offer the least power
assist and regeneration capability of the
hybrid approaches, but their low cost
and easy adaptability to existing
powertrains and platforms can make
them attractive for some applications.
ISG systems operate at around 42V and
so have smaller electric motors and less
battery capacity than other HEV designs
because of their lower power demand.
ISG systems replace the conventional
belt-driven alternator with a belt-driven,
higher power starter-alternator. The
starter-alternator starts the engine
during idle-stop operation, but often a
conventional 12V gear-reduction starter
is retained to ensure cold-weather
startability. Also, during idle-stop, some
functions such as power steering and
automatic transmission hydraulic
pressure are lost with conventional
arrangements, so electric power steering
and an auxiliary transmission pump are
added. These components are similar to
those that would be used in other
hybrid designs. An ISG system could be
capable of providing some launch assist,
but it would be limited in comparison
to other hybrid concepts. According to
the NAS Report, an EEA report and
confidential manufacturer data, ISG
systems could achieve incremental fuel
consumption reductions that range from
5 to 10 percent.
In addition, when idle-off is used (i.e.,
the petroleum fuelled engine is shut off
during idle operation), an electric power
steering and auxiliary transmission
pump are added to provide for
functioning of these systems which, in
a traditional vehicle, were powered by
the petroleum engine. The 2002 NAS
study estimated the cost of these
systems at $210 to $350 with a 12V
electrical system and independent of
vehicle class, while the NESCCAF study
estimated the cost for these systems at
$280 with a 12 Volt electrical system for
a small car. The 2002 NAS study
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estimated the cost of these systems to be
$210 to $350 with a 12 volt electrical
system and independent of vehicle
class, while the NESCCAF study
estimated the cost for these systems of
$280 with a 12 volt electrical system for
a small car. Confidential manufacturer
information provides cost estimates for
ISGs that range from $418 to $800. We
believe that the NAS and the NESCCAF
estimates are still accurate for ISGs with
a 12V system. Thus, if you add these
cost estimates to those we estimated for
42V systems plus associated equipment,
which results an estimated incremental
compliance cost of these systems,
including the costs associated with
upgrading to a 42 volt electrical system
of $563 to $600, depending on vehicle
class.
Therefore, NHTSA estimates that ISG
systems could achieve incremental fuel
consumption reductions of 5 to 10
percent at incremental costs of $563 to
$600, depending on vehicle class (this
includes the costs associated with
upgrading to a 42 volt electrical system).
Integrated Motor Assist (IMA)/Integrated
Starter-Alternator-Dampener (ISAD)
Hybrid
Honda is the only manufacturer that
uses Integrated Motor Assist (IMA),
which utilizes a thin axial electric motor
bolted to the engine’s crankshaft and
connected to the transmission through a
torque converter or clutch. This electric
motor acts as both a motor for helping
to launch the vehicle and a generator for
recovering energy while slowing down.
It also acts as the starter for the engine
and the electrical system’s main
generator. Since it is rigidly fixed to the
engine, if the motor turns, the engine
must turn also, but combustion does not
necessarily need to occur. The Civic
Hybrid uses cylinder deactivation on all
four cylinders for decelerations and
some cruise conditions.
The main advantage of the IMA
system is that it is relatively low cost
and adapts readily to conventional
vehicles and powertrains, while
providing excellent efficiency gains.
Packaging space is a concern for the
physically longer engine-motortransmission assembly as well as the
necessary battery pack, cabling and
power electronics. According to EPA
test data and confidential manufacturer
data, the IMA system could achieve
incremental fuel consumption
reductions of 3.5 to 8.5 percent.61
NHTSA has adopted these estimates for
its analysis.
61 The cost estimates are protected as confidential
business information.
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The 2002 NAS study did not consider
this technology while the NESCCAF
study estimated the cost for these
systems at $2,310 to $2,940 for a small
car and large car, respectively. We have
used these estimates combined with
confidential manufacturer data as the
basis for our incremental compliance
costs of $1,636 for the small car and
$2,274 for the large car, expressed in
2006 dollars. We have not estimated
incremental compliance costs for the
other vehicle classes because we do not
believe those classes would use this
technology and would, instead, use the
hybrid technologies discussed below.
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2-Mode Hybrids
GM, DaimlerChrysler, and BMW have
formed a joint venture to develop a new
HEV system based on HEV transmission
technology originally developed by
GM’s Allison Transmission Division for
heavy-duty vehicles like city buses. This
technology uses an adaptation of a
conventional stepped-ratio automatic
transmission by replacing some of the
transmission clutches with two electric
motors, which makes the transmission
act like a CVT. Like Toyota’s Power
Split design, these motors control the
ratio of engine speed to vehicle speed.
But unlike the Power Split system,
clutches allow the motors to be
bypassed, which improves both the
transmission’s torque capacity for
heavy-duty applications and fuel
economy at highway speeds. According
to confidential manufacturer data, 2mode hybrids could achieve
incremental fuel consumption
reductions of 25 to 40 percent. NHTSA
estimates that 2-mode hybrids could
achieve fuel reductions of 3.5 percent to
7 percent incremental to an Integrated
Motor Assist (IMA)/Integrated StarterAlternator-Dampener (ISAD) Hybrid.
The 2002 NAS study did not consider
this technology, while the NESCCAF
study estimated the costs to range from
$4,340 to $5,600, depending on vehicle
class. These estimates are not
incremental to an Integrated Motor
Assist (IMA)/Integrated StarterAlternator-Dampener (ISAD) Hybrid. To
accurately project the cost of 2-mode
hybrids when they were applied to
midsize and large cars, we subtracted
the estimated costs of an Integrated
Motor Assist (IMA)/Integrated StarterAlternator-Dampener (ISAD) Hybrid.
We have used the NESCCAF estimates
as the basis for our incremental
compliance costs of $1,501 to $5,127 in
2006 dollars, incremental to an
Integrated Motor Assist (IMA)/
Integrated Starter-Alternator-Dampener
(ISAD) Hybrid or an ISG system
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18:29 May 01, 2008
Jkt 214001
depending on vehicle class.62 We have
not estimated incremental compliance
costs for small cars because we believe
that this ISG or IMA/ISAD technology is
a better fit for small cars.
Power Split Hybrid
Toyota’s Hybrid Synergy Drive system
as used in the Prius is a completely
different approach than Honda’s IMA
system and uses a ‘‘Power Split’’ device
in place of a conventional transmission.
The Power Split system replaces the
vehicle’s transmission with a single
planetary gear and a motor/generator. A
second, more powerful motor/generator
is permanently connected to the
vehicle’s final drive and always turns
with the wheels. The planetary gear
splits the engine’s torque between the
first motor/generator and the drive
motor. The first motor/generator uses its
engine torque to either charge the
battery or supply additional power to
the drive motor. The speed of the first
motor/generator determines the relative
speed of the engine to the wheels. In
this way, the planetary gear allows the
engine to operate completely
independently of vehicle speed, much
like a CVT.
The Power Split system allows for
outstanding fuel economy in city
driving. The vehicle also avoids the cost
of a conventional transmission,
replacing it with a much simpler single
planetary and motor/generator.
However, it is less efficient at highway
speeds due to the requirement that the
first motor/generator must be constantly
spinning at a relatively high speed to
maintain the correct ratio. Also, load
capacity is limited to the first motor/
generator’s capacity to resist the
reaction torque of the drive train.
A version of Toyota’s Power Split
system is also used in the Lexus RX400h
and Toyota Highlander sport utility
vehicles. This version has more
powerful motor/generators to handle
higher loads and also adds a third
motor/generator on the rear axle of fourwheel-drive models. This provides the
vehicle with four wheel drive capability
and four wheel regenerative braking
capability. Ford’s eCVT system used in
the hybrid Escape is another version of
the Power Split system, but four-wheeldrive models use a conventional transfer
case and drive shaft to power the rear
wheels.
Other versions of this system are used
in the Lexus GS450h and Lexus LS600h
luxury sedans. These systems have
modifications and additional hardware
for sustained high-speed operation and/
62 GM’s cost estimates are protected as
confidential business information.
PO 00000
Frm 00027
Fmt 4701
Sfmt 4702
24377
or all-wheel-drive capability. However,
the Power Split system isn’t planned for
usage on full-size trucks and SUVs due
to its limited ability to provide the
torque needed by these vehicles. It’s
anticipated that full-size trucks and
SUVs would use the 2-mode hybrid
system. The 2002 NAS study didn’t
consider this technology, while the
NESCCAF study estimated the
incremental costs at to be $3,500 prior
to any cost adjustment. Based on the
NESCCAF study and fuel economy test
data from EPA’s certification database
which shows these systems being
capable of reducing fuel consumption
by 25 to 35 percent, NHTSA estimates
that Power Split hybrids can achieve
incremental fuel consumption
reductions of 25 to 35 percent over
conventionally powered vehicles at an
incremental cost of $3,700 to $3,850.
Because NHTSA applies technologies
incrementally to the technologies
preceding them on our decision trees,
the incremental fuel consumption
reductions for Power Split hybrids are
estimated to be 5 to 6.5 percent
incremental to 2-Mode Hybrids (the
technology that precedes Power Split
hybrids on the decision tree), because
the technologies applied prior to and
including 2-Mode hybrids are estimated
to have incremental fuel consumption
reductions of 20 to 28.5 percent over
conventionally powered vehicles. The
technologies discussed below were not
projected for use during the MY 2011 to
2015 timeframes because NHTSA isn’t
aware that any manufacturer is
including these technologies in any
vehicle for which we have production
plans for nor has any manufacturer
publicly stated that any of these
technologies will definitively be
included on future products. If NHTSA
receives such information regarding one
or more technologies, it will revisit this
decision for the final rule. NHTSA is
including its discussion of these
technologies and their estimated costs
and fuel consumption reductions as a
reference for commenters and in
anticipation of their possible inclusion
in the final rule.
Variable Compression Ratio
A spark-ignited engine’s specific
power is limited by the engine’s
compression ratio, which is, in turn,
currently limited by the engine’s
susceptibility to knock, particularly
under high load conditions. Engines
with variable compression ratio (VCR)
improve fuel economy by the use of
higher compression ratios at lower loads
and lower compression ratios under
higher loads. The NAS Report projected
that VCR could incrementally reduce
E:\FR\FM\02MYP2.SGM
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Federal Register / Vol. 73, No. 86 / Friday, May 2, 2008 / Proposed Rules
fuel consumption by 2 to 6 percent over
4-valve VVT at an incremental cost of
$218 to $510. NHTSA has no
information which suggests that VCR
will be included on any vehicles during
the MY 2011–2015 timeframe, thus
NHTSA does not use this technology in
its analysis. Additionally, no updates to
these estimates were sought.
rwilkins on PROD1PC63 with PROPOSALS2
Lean-Burn Gasoline Direct Injection
Technology
One way to improve dramatically an
engine’s thermodynamic efficiency is by
operating at a lean air-fuel mixture
(excess air). Fuel system improvements,
changes in combustion chamber design
and repositioning of the injectors have
allowed for better air/fuel mixing and
combustion efficiency. There is
currently a shift from wall-guided
injection to spray guided injection,
which improves injection precision and
targeting towards the spark plug,
increasing lean combustion stability.
Combined with advances in NOX aftertreatment, lean-burn GDI engines may
be a possibility in North America.
However, a key technical requirement
for lean-burn GDI engines to meet EPA’s
Tier 2 NOX emissions levels is the
availability of low-sulfur gasoline,
which is projected to be unavailable
during MY 2011–2015.
According to the NESCCAF report
and confidential manufacturer data
NHTSA estimates that lean-burn GDI
engines could incrementally reduce fuel
consumption from 9 to 16 percent at an
incremental cost of $500 to $750
compared to a port-fueled
(stoichiometric) engine. NHTSA did not
project the use of this technology during
the time frame covered by this proposal,
due to large uncertainties surrounding
the availability of low-sulfur gasoline.
Nonetheless, we have estimated the
incremental compliance cost for these
systems at $750, independent of vehicle
class, and incremental to a
stoichiometric GDI engine.
Homogeneous Charge Compression
Ignition
Homogeneous charge compression
ignition (HCCI), also referred to as
controlled auto ignition (CAI), is an
alternate engine operating mode that
does not rely on a spark event to initiate
combustion. The principles are more
closely aligned with a diesel
combustion cycle, in which the
compressed charge exceeds a
temperature and pressure necessary for
spontaneous ignition. The resulting
burn is much shorter in duration with
higher thermal efficiency.
An HCCI engine has inherent
advantages in its overall efficiency for
VerDate Aug<31>2005
18:29 May 01, 2008
Jkt 214001
several reasons. An extremely lean fuel/
air charge increases thermodynamic
efficiency. Shorter combustion times
and higher EGR tolerance permit very
high compression ratios (which also
increase thermodynamic efficiency).
Additionally, pumping losses are
reduced because the engine can run
unthrottled.
However, due to the nature of its
combustion process, HCCI is difficult to
control, requiring in-cylinder pressure
sensors and very fast engine control
logic to optimize combustion timing,
especially considering the variable
nature of operating conditions seen in a
vehicle. To be used in a commercially
acceptable vehicle application, an HCCIequipped engine would most likely be
‘‘dual-mode,’’ in which HCCI operation
is complemented with a traditional SI
combustion process at idle and at higher
loads and speeds.
Until recently, HCCI technology was
considered to still be in the research
phase. However, several manufacturers
have made public statements about the
viability of incorporating HCCI into
production vehicles over the next 10
years. The NESCCAF study estimated
the cost to range from $560 to $840,
depending on vehicle class, including
the costs for a stoichiometric GDI
system with DVVL. We have based our
estimated incremental compliance cost
on the NESCCAF estimates and, after
subtracting out the estimated
incremental cost for a stoichiometric
GDI system with DVVL, we estimate the
incremental cost for HCCI to be from
$263 to $685, depending on vehicle
class. This estimated incremental
compliance cost is incremental to a
stoichiometric GDI engine.
According to the NESCCAF report
and confidential manufacturer data,
NHTSA estimates that gasoline HCCI/
GDI dual-mode engines could
incrementally reduce fuel consumption
from 10 to 12 percent at an incremental
cost of $233 to $606, compared to a
comparable GDI engine.
Advanced CVT
Advanced CVTs have the ability to
deliver higher torques than existing
CVTs and have the potential for broader
market penetration. These new designs
incorporate toroidal friction elements or
cone-and-ring assemblies with varying
diameters. According to the NAS
Report, advanced CVT could
incrementally reduce fuel consumption
by up to 2 percent at an incremental
cost of $364 to $874. NHTSA has no
information which suggests that VCR
will be included on any vehicles during
the MY 2011–2015 timeframe, thus
NHTSA does not use this technology in
PO 00000
Frm 00028
Fmt 4701
Sfmt 4702
its analysis. Additionally, no updates to
these estimates were sought.
Plug-in Hybrids
Plug-In Hybrid Electric Vehicles
(PHEVs) are very similar to hybrid
electric vehicles, but with three
significant functional differences. The
first is the addition of a means to charge
the battery pack from an outside source
of electricity (usually the electric grid).
Second, a PHEV would have a larger
battery pack with more energy storage,
and a greater capability to be
discharged. Finally, a PHEV would have
a control system that allows the battery
pack to be significantly depleted during
normal operation.
Deriving some of their propulsion
energy from the electric grid provides
several advantages for PHEVs. PHEVs
offer a significant opportunity to replace
petroleum used for transportation
energy with domestically-produced
electricity. The reduction in petroleum
usage does, of course, depend on the
amount of electric drive the vehicle is
capable of under its duty cycle.
The fuel consumption reduction
potential of PHEVs depends on many
factors, the most important being the
electrical capacity designed into the
battery pack. To estimate the fuel
consumption reduction potential of
PHEVs, EPA has developed an in-house
vehicle energy model (PEREGRIN)
which is based on the PERE (Physical
Emission Rate Estimator) physics-based
model used as a fuel consumption input
for EPA’s MOVES mobile source
emissions modelB.
EPA modeled the PHEV small car,
large car, minivan and small trucks
using parameters from a midsize car
similar to today’s hybrids and scaled to
each vehicle’s weight. The large truck
PHEV was modeled separately assuming
very little engine downsizing. Each
PHEV was assumed to have enough
battery capacity for a 20-mile-equivalent
all-electric range and a power
requirement to provide similar
performance to a hybrid vehicle. A
twenty mile range was selected because
it offers a good compromise for vehicle
performance, weight, battery packaging
and cost.
To calculate the total energy use of a
PHEV, a vehicle can be thought of as
operating in two distinct modes, electric
(EV) mode, and hybrid (HEV) mode. The
energy consumed during EV operation
can be accounted for and calculated in
terms of gasoline-equivalent MPG by
using 10CFR474, Electric and Hybrid
Vehicle Research, Development, and
Demonstration Program; PetroleumEquivalent Fuel Economy Calculation.
The EV mode fuel economy can then be
E:\FR\FM\02MYP2.SGM
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Federal Register / Vol. 73, No. 86 / Friday, May 2, 2008 / Proposed Rules
combined with the HEV mode fuel
economy using the Utility Factor
calculation in SAE J1711 to determine a
total MPG value for the vehicle.
Calculating a total fuel consumption
reduction based on model outputs,
gasoline-equivalent calculations, and
the Utility Factor calculations, results in
a 28 percent fuel consumption
reduction for small cars, large cars,
minivans, and small trucks and a 31
percent fuel consumption reduction for
large trucks.
The fuel consumption reduction
potential of PHEVs will vary based on
the electrical capacity designed into the
battery pack. Assuming a 20-mile ‘‘allelectric range’’ design, a PHEV might
incrementally reduce fuel consumption
by 28 to 31 percent.63 Based on
discussions with EPA, we have
estimated the incremental cost of PHEVs
to be from $4,500 to $10,200, depending
on vehicle class.
However, all indications suggest that
any PHEVs that may be available within
the time frame of this rulemaking will
be concept vehicles and not production
vehicles. Additionally, NHTSA is
unaware of the existence of any batteries
that are deemed acceptable for the
performance characteristics necessary
for a plug-in hybrid. Therefore, although
we discuss them here, the model does
not apply them.
NHTSA would like to note that if it
receives new and/or updated
information from manufacturers
regarding the likelihood of PHEV
production during the MY 2011 to 2015
timeframe, it will make every effort to
include PHEVs as a technology in its
final rule. To enable the possible
inclusion of PHEVs as a technology,
NHTSA would also have to configure
the Volpe model to account for the
estimated source(s) that would supply
the electricity for electrical grid
charging of the battery. Work has started
on this effort, but has not yet been
completed.
Tables III–1 through III–3 below
summarize for each of the 10 classes of
vehicles the cost and effectiveness
assumptions used in this rulemaking as
well as the year of availability of each
technology. The agency seeks comments
on our assumptions and the cost and
effectiveness estimates provided.
TABLE III–1.—TECHNOLOGY COST ESTIMATES
Vehicle technology incremental retail price equivalent per vehicle ($) by vehicle class
Technologies
Subcompact
car
rwilkins on PROD1PC63 with PROPOSALS2
Low friction lubricants—incremental to base engine ....
Engine friction reduction—incremental to base engine
Overhead Cam Branch .................................................
VVT—intake cam phasing ............................................
VVT—coupled cam phasing .........................................
VVT—dual cam phasing ...............................................
Cylinder deactivation .....................................................
Discrete VVLT ...............................................................
Continuous VVLT ..........................................................
Overhead Valve Branch ................................................
Cylinder deactivation .....................................................
VVT—coupled cam phasing .........................................
Discrete VVLT ...............................................................
Continuous VVLT (includes conversion to Overhead
Cam) ..........................................................................
Camless valvetrain (electromagnetic) ...........................
GDI—stoichiometric ......................................................
GDI—lean burn .............................................................
Gasoline HCCI dual-mode ............................................
Turbocharge & downsize ..............................................
Diesel—Lean NOX trap .................................................
Diesel—urea SCR .........................................................
Aggressive shift logic ....................................................
Early torque converter lockup .......................................
5-speed automatic .........................................................
6-speed automatic .........................................................
6-speed AMT .................................................................
6-speed manual ............................................................
CVT ...............................................................................
Stop-Start with 42 volt system ......................................
IMA/ISA/BSG (includes engine downsize) ....................
2-Mode hybrid electric vehicle ......................................
Power-split hybrid electric vehicle (P–S HEV) ..............
Plug-in hybrid electric vehicle (PHEV) ..........................
Improved high efficiency alternator & electrification of
accessories (12 volt) .................................................
Electric power steering (12 or 42 volt) ..........................
Improved high efficiency alternator & electrification of
accessories (42 volt) .................................................
Aero drag reduction (20% on cars, 10% on trucks) .....
Low rolling resistance tires (10%) .................................
Low drag brakes (ladder frame only) ............................
Secondary axle disconnect (unibody only) ...................
Front axle disconnect (ladder frame only) ....................
Weight reduction (1%)—above 5,000 lbs only .............
Weight reduction (2%)—incremental to 1% ..................
63 This estimate is based on the EPA test cycle.
We are unable to provide cost estimates for PHEV
VerDate Aug<31>2005
18:29 May 01, 2008
Jkt 214001
Compact car
Midsize
car
Large
car
Small
pickup
Small
SUV
Minivan
Midsize
SUV
Large
pickup
Large
SUV
3
0–84
..............
59
59
89
n.a.
169
254
..............
n.a.
59
169
3
0–84
..............
59
59
89
n.a.
169
254
..............
n.a.
59
169
3
0–126
..............
119
119
209
203
246
466
..............
203
59
246
3
0–126
..............
119
119
209
203
246
466
..............
203
59
246
3
0–126
..............
119
119
209
203
246
466
..............
203
59
246
3
0–126
..............
119
119
209
203
246
466
..............
203
59
246
3
0–126
..............
119
119
209
203
246
466
..............
203
59
246
3
0–126
..............
119
119
209
203
246
466
..............
203
59
246
3
0–168
..............
119
119
209
229
322
508
..............
229
59
322
3
0–168
..............
119
119
209
229
322
508
..............
229
59
322
599
336–673
122–420
750
263
690
1586
..............
38
30
76–167
76–187
141
107
100
563
1636
n.a.
3700–
3850
4500
599
336–673
122–420
750
263
690
1586
..............
38
30
76–167
76–187
141
107
100
563
1636
n.a.
3700–
3850
4500
1262
336–673
204–525
750
390
120
..............
2051
38
30
76–167
76–187
141
107
139
600
2274
4655
3700–
3850
6750
1262
336–673
204–525
750
390
120
..............
2051
38
30
76–167
76–187
141
107
139
600
2274
4655
3700–
3850
6750
1262
336–673
204–525
750
390
120
..............
2411
38
30
76–167
76–187
141
107
n.a.
600
n.a
4655
3700–
3850
6750
1262
336–673
204–525
750
390
120
..............
2411
38
30
76–167
76–187
141
107
139
600
n.a
4655
3700–
3850
6750
1262
336–673
204–525
750
390
120
..............
2126
38
30
76–167
76–187
141
107
139
600
n.a
4655
3700–
3850
6750
1262
336–673
204–525
750
390
120
..............
2411
38
30
76–167
76–187
141
107
139
600
n.a
4655
3700–
3850
6750
1380
336–673
228–525
750
685
810
..............
2261
38
30
76–167
76–187
141
107
n.a.
600
n.a
6006
..............
1380
336–673
228–525
750
685
810
..............
2261
38
30
76–167
76–187
141
107
n.a.
600
n.a
6006
..............
10200
10200
124–166
118–197
124–166
118–197
124–166
118–197
124–166
118–197
124–166
118–197
124–166
118–197
124–166
118–197
124–166
118–197
124–166
118–197
124–166
118–197
124–166
0–75
6
..............
676
..............
..............
..............
124–166
0–75
6
..............
676
..............
..............
..............
124–166
0–75
6
..............
676
..............
..............
..............
124–166
0–75
6
..............
676
..............
..............
..............
124–166
0–75
6
87
676
114
..............
..............
124–166
0–75
6
87
676
114
..............
..............
124–166
0–75
6
..............
676
..............
..............
..............
124–166
0–75
6
87
676
114
..............
..............
124–166
0–75
..............
87
..............
114
124–166
0–75
..............
87
..............
114
1
1
1
1
technology due to the great amount of uncertainty
PO 00000
Frm 00029
Fmt 4701
Sfmt 4702
in deciding the appropriate battery chemistry to be
used.
E:\FR\FM\02MYP2.SGM
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Federal Register / Vol. 73, No. 86 / Friday, May 2, 2008 / Proposed Rules
TABLE III–1.—TECHNOLOGY COST ESTIMATES—Continued
Vehicle technology incremental retail price equivalent per vehicle ($) by vehicle class
Technologies
Subcompact
car
Weight reduction (3%)—incremental to 2% ..................
Compact car
Midsize
car
Large
car
Small
pickup
Small
SUV
Minivan
Midsize
SUV
..............
..............
..............
..............
..............
..............
..............
..............
Large
pickup
Large
SUV
2
2
1 2/pound.
2 3/pound.
TABLE III–2.—TECHNOLOGY PERCENT EFFECTIVENESS ESTIMATES
Vehicle technology incremental fuel consumption reduction (%) by vehicle class
Technologies
Subcompact
car
rwilkins on PROD1PC63 with PROPOSALS2
Low friction lubricants—incremental to base engine ....
Engine friction reduction—incremental to base engine
Overhead Cam Branch
VVT—intake cam phasing ............................................
VVT—coupled cam phasing .........................................
VVT—dual cam phasing ...............................................
Cylinder deactivation .....................................................
Discrete VVLT ...............................................................
Continuous VVLT ..........................................................
Overhead Valve Branch
Cylinder deactivation .....................................................
VVT—coupled cam phasing .........................................
Discrete VVLT ...............................................................
Continuous VVLT (includes conversion to Overhead
Cam) ..........................................................................
Camless valvetrain (electromagnetic) ...........................
GDI—stoichiometric ......................................................
GDI—lean burn .............................................................
Gasoline HCCI dual-mode ............................................
Turbocharge & Downsize ..............................................
Diesel—Lean NOx trap .................................................
Diesel—urea SCR .........................................................
Aggressive shift logic ....................................................
Early torque converter lockup .......................................
5-speed automatic .........................................................
6-speed automatic .........................................................
6-speed AMT .................................................................
6-speed manual ............................................................
CVT ...............................................................................
Stop-Start with 42 volt system ......................................
IMA/ISA/BSG
(includes
engine
downsize) ...................................................................
2-Mode hybrid electric vehicle ......................................
Power-split hybrid electric vehicle (P–S HEV) ..............
Plug-in hybrid electric vehicle (PHEV) ..........................
Improved high efficiency alternator & electrification of
accessories (12 volt) .................................................
Electric power steering (12 or 42 volt) ..........................
Improved high efficiency alternator & electrification of
accessories (42 volt) .................................................
Aero drag reduction (20% on cars, 10% on trucks) .....
Low rolling resistance tires (10%) .................................
Low drag brakes (ladder frame only) ............................
Secondary axle disconnect (unibody only) ...................
Front axle disconnect (ladder frame only) ....................
Weight reduction (1%)—above 5,000 lbs only .............
Weight reduction (2%)—incremental to 1% ..................
Weight reduction (3%)—incremental to 2% ..................
VerDate Aug<31>2005
18:29 May 01, 2008
Jkt 214001
Compact car
Midsize
car
0.5
1–3
0.5
1–3
0.5
1–3
0.5
1–3
0.5
1–3
2
1
1
n/a
3
4
2
1
1
n/a
3
4
1
3
3
4.5
1.5
3.5
1
3
3
4.5
1.5
3.5
n/a
3
1.5
n/a
3
1.5
6
2.5
1.5
2.5
2.5
1–2
—
10–12
5.0–7.5
11.5
n/a
1–2
0.5
2.5
0.5–2.5
4.5–7.5
0.5
3.5
7.5
2.5
2.5
1–2
—
10–12
5.0–7.5
11.5
n/a
1–2
0.5
2.5
0.5–2.5
4.5–7.5
0.5
3.5
7.5
8.5
n/a
5
28
PO 00000
Minivan
Midsize
SUV
0.5
1–3
0.5
1–3
0.5
1–3
0.5
1–3
0.5
1–3
1
2
1
4.5
1.5
2.5
1
2
1
4.5
1.5
2.5
1
1
1
4.5
0.5
1.5
1
1
1
4.5
0.5
1.5
2
2
2
4.5
1.5
2.5
2
2
2
4.5
1.5
2.5
6
2.5
1.5
6
1.5
1.5
6
1.5
1.5
6
0.5
0.5
6
0.5
0.5
6
2.5
1.5
6
2.5
1.5
3.5
2.5
1–2
—
10–12
5.0–7.5
n/a
15.5
1–2
0.5
2.5
0.5–2.5
4.5–7.5
0.5
3.5
7.5
3.5
2.5
1–2
—
10–12
5.0–7.5
n/a
15.5
1–2
0.5
2.5
0.5–2.5
4.5–7.5
0.5
3.5
7.5
2.5
2.5
1–2
—
10–12
5.0–7.5
n/a
15.5
1–2
0.5
2.5
0.5–2.5
4.5–7.5
0.5
n/a
7.5
2.5
2.5
1–2
—
10–12
5.0–7.5
n/a
15.5
1–2
0.5
2.5
0.5–2.5
4.5–7.5
0.5
3.5
7.5
1.5
2.5
1–2
—
10–12
5.0–7.5
n/a
15.5
1–2
0.5
2.5
0.5–2.5
4.5–7.5
0.5
3.5
7.5
1.5
2.5
1–2
—
10–12
5.0–7.5
n/a
15.5
1–2
0.5
2.5
0.5–2.5
4.5–7.5
0.5
3.5
7.5
2.5
2.5
1–2
—
10–12
5.0–7.5
n/a
15.5
1–2
0.5
2.5
0.5–2.5
4.5–7.5
0.5
n/a
7.5
2.5
2.5
1–2
—
10–12
5.0–7.5
n/a
15.5
1–2
0.5
2.5
0.5–2.5
4.5–7.5
0.5
n/a
7.5
8.5
n/a
5
28
3.5
3.5
6.5
28
3.5
3.5
6.5
28
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6.5
28
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28
n/a
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6.5
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7
6.5
28
n/a
3.5
n/a
31
n/a
3.5
n/a
31
1–2
1.5
1–2
1.5
1–2
1.5–2
1–2
1.5–2
1–2
2
1–2
2
1–2
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1–2
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1
1
1.5
n/a
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1–2
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1
1.5
n/a
n/a
n/a
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3
1–2
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1
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n/a
n/a
n/a
1–2
3
1–2
n/a
1
n/a
n/a
n/a
n/a
1–2
2
n/a
1
n/a
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0.7
0.7
0.7
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1
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1.5
0.7
0.7
0.7
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Federal Register / Vol. 73, No. 86 / Friday, May 2, 2008 / Proposed Rules
TABLE III–3.—YEAR OF AVAILABILITY
rwilkins on PROD1PC63 with PROPOSALS2
Technologies
Low friction lubricants—incremental to base engine.
Engine friction reduction—incremental to base engine.
Overhead Cam Branch
VVT—intake cam phasing.
VVT—coupled cam phasing.
VVT—dual cam phasing
Cylinder deactivation ......
Discrete VVLT .................
Continuous VVLT ............
Overhead Valve Branch
Cylinder deactivation ......
VVT—coupled cam phasing.
Discrete VVLT .................
Continuous VVLT (includes conversion to
Overhead Cam).
Camless valvetrain (electromagnetic).
GDI—stoichiometric ...............
GDI—lean burn ......................
Gasoline HCCI dual-mode .....
Turbocharging & Downsizing
Diesel—Lean NOX trap ..........
Diesel—urea SCR ..................
Aggressive shift logic .............
Early torque converter lockup
5-speed automatic .................
6-speed automatic .................
6-speed AMT .........................
6-speed manual .....................
CVT ........................................
Stop-Start with 42 volt system
IMA/ISA/BSG (includes engine downsize).
2-Mode hybrid electric vehicle
Power-split hybrid electric vehicle (P–S HEV).
Full-Series hydraulic hybrid ...
Plug-in hybrid electric vehicle
(PHEV).
Full electric vehicle (EV) ........
Improved high efficiency alternator & electrification of accessories (12 volt).
Electric power steering (12 or
42 volt).
Improved high efficiency alternator & electrification of accessories (42 volt).
Aero drag reduction (20% on
cars, 10% on trucks).
Low rolling resistance tires
(10%).
Low drag brakes (ladder
frame only).
Secondary axle disconnect
(unibody only).
Front axle disconnect (ladder
frame only).
Weight reduction (1%)—
above 6,000 lbs only.
Weight reduction (2%)—incremental to 1%.
Weight reduction (3%)—incremental to 2%.
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Year of
availability
Present.
Present.
Present.
Present.
Present.
Present.
Present.
Present.
Present.
Present.
Present.
Present.
2020.
Present.
2020.
2016.
2010.
2010.
2010.
Present.
Present.
Present.
Present.
2010.
Present.
Present.
2014.
2014.
2014.
2014.
NA.
NA.
NA.
Present.
Present.
Present.
Present.
Present.
Present.
2012.
Present.
Present.
Present.
Present.
C. Technology Synergies
When two or more technologies are
added to a particular vehicle model to
improve its fuel efficiency, the resultant
fuel consumption reduction may
sometimes be higher or lower than the
product of the individual effectiveness
values for those items. This may occur
because one or more technologies
applied to the same vehicle partially
address the same source or sources of
engine or vehicle losses. Alternately,
this effect may be seen when one
technology shifts the engine operating
points, and therefore increases or
reduces the fuel consumption reduction
achieved by another technology or set of
technologies. The difference between
the observed fuel consumption
reduction associated with a set of
technologies and the product of the
individual effectiveness values in that
set is sometimes referred to as a
‘‘synergy.’’ Synergies may be positive
(increased fuel consumption reduction
compared to the product of the
individual effects) or negative
(decreased fuel consumption reduction).
The NAS committee which authored
the 2002 Report was aware of
technology synergies and considered
criticisms as part of the peer-review
process that its analysis was ‘‘judgmentsimplified,’’ but concluded overall that
its approach was ‘‘sufficiently rigorous’’
for purposes of the report.64 After
examining its analysis again, the
committee stated that ‘‘* * * the path 1
and path 2 estimate average fuel
consumption improvements * * *
appear quite reasonable, although the
uncertainty in the analysis grows as
more technology features are
considered.’’65 In essence, as more
technology features are considered, the
features are more likely to overlap and
result in synergies. Because NAS did
not expect vehicle manufacturers to
reach ‘‘path 3’’ in the timeframe
considered, it did not concern itself
deeply with the effect of technology
synergies in its analysis.
NHTSA’s rulemaking regarding CAFE
standards for MY 2008–MY 2011 light
trucks made significant use of NAS’
‘‘path 2’’ estimates of the effectiveness
and cost of available technologies. In
part because its analysis did not extend
to the more aggressive ‘‘path 3,’’ the
agency concluded that the NAS-based
multiplicative approach it followed
when aggregating these technologies
was reasonable. In contrast, the agency’s
current proposal is based on an analysis
that includes a broader range of
64 NAS
Report, p. 151.
65 Id.
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24381
technologies than was considered by
NAS in 2001 and 2002. Also, the extent
to which technologies are included in
the current analysis is more consistent
with NAS’ prior ‘‘path 3’’ approach.
Therefore, the agency’s current analysis
uses estimated ‘‘synergies’’ to address
the uncertainties mentioned in the 2002
NAS report.
The Volpe model has been modified
to estimate the interactions of
technologies using estimates of
incremental synergies associated with a
number of technology pairs identified
by NHTSA, Volpe Center, and EPA staff.
The use of discrete technology pair
incremental synergies is similar to that
in DOE’s National Energy Modeling
System (NEMS).66 Inputs to the Volpe
model incorporate NEMS-identified
pairs, as well as additional pairs from
the set of technologies considered in the
Volpe model. However, to maintain an
approach that was consistent with the
technology sequencing developed by
NHTSA, Volpe Center, and EPA staff,
new incremental synergy estimates for
all pairs were obtained from a first-order
‘‘lumped parameter’’ analysis tool
created by EPA.67 Results of this
analysis were generally consistent with
those of full-scale vehicle simulation
modeling performed by Ricardo, Inc.68
NHTSA’s analysis applies these
incremental synergy values, obtained
from the tool using baseline passenger
car engine and vehicle inputs, to all
vehicle classes.
Incremental synergy values are
specified in Volpe model input files in
two ways: as part of the incremental
effectiveness values table (same path
technologies) and in a separate
incremental synergies table (separate
path technologies). In the case of same
path technologies, each technology’s
incremental effectiveness value was
obtained from the technical literature
and manufacturers’ submitted
information, and then the sum of all
66 U.S. Department of Energy, Energy Information
Administration, Transportation Sector Module of
the National Energy Modeling System: Model
Documentation 2007, May 2007, Washington, DC,
DOE/EIA–M070(2007), pp. 29–30.
67 This tool is a simple spreadsheet model that
represents energy consumption in terns of average
performance over the fuel economy test procedure,
rather than explicitly analyzing specific drive
cycles. The tool begins with an apportionment of
fuel consumption across several loss mechanisms,
and accounts for the average extent to which
different technologies affect these loss mechanisms,
using estimates of engine and motor characteristics
and other variables that are averaged over a driving
cycle.
68 EPA contracted with Ricardo, Inc. (an
independent consulting firm) to study the potential
effectiveness of carbon dioxide-reducing (and thus,
fuel economy-improving) vehicle technologies. The
Ricardo study is available in the docket for this
NPRM.
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Federal Register / Vol. 73, No. 86 / Friday, May 2, 2008 / Proposed Rules
incremental synergies associated with
that technology and each technology
located higher on the same path was
subtracted to determine the incremental
effectiveness. For example, all engine
technologies take into account
incremental synergy factors of preceding
engine technologies; all transmission
technologies take into account
incremental synergy factors of preceding
transmission technologies. These factors
are expressed in the fuel consumption
improvement factors in the input files
used by the Volpe model.
For applying incremental synergy
factors in separate path technologies,
the Volpe model uses an input table
which lists technology pairings and
incremental synergy factors associated
with those pairings, most of which are
between engine technologies and
transmission technologies. When a
technology is applied to a vehicle by the
Volpe model, all instances of that
technology in the incremental synergy
table which match technologies already
applied to the vehicle (either preexisting or previously applied by the
Volpe model) are summed and applied
to the fuel consumption improvement
factor of the technology being applied.
When the Volpe model applies
incremental synergies, the fuel
consumption improvement factors
cannot be reduced below zero.
Incremental synergy values were
calculated assuming the prior
application (implying succession in
some cases) of all technologies located
higher along both paths than the pair
considered. This is usually a true
reflection of a given vehicle’s equipment
at any point in the model run and thus
the method is expected to produce
reasonable results in most cases.
NHTSA considered other methods for
estimating interactions between
technologies. For example, the agency
has considered integrating detailed
simulation of individual vehicles’
performance into the Volpe model.69
However, while application of such
simulation techniques could provide a
useful source of information when
developing inputs to the Volpe model,
the agency believes that applying
detailed simulation when analyzing the
entire fleet of future vehicles is neither
necessary nor feasible. NHTSA is
charged with setting standards at the
maximum feasible level. To understand
the potential impacts of its standards,
the agency analyzes entire fleets of
vehicles expected to be produced in the
69 In other words, this would mean having the
Volpe model run a full vehicle simulation every
time the Volpe model is evaluating the potential
effect of applying a specific technology to a specific
vehicle model.
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future. Although some expected
engineering characteristics of these
vehicles are available, the level of detail
needed for full vehicle simulation—a
level of detail that would be important
if NHTSA were actually designing
vehicles—is not available.
As another possible alternative to
using ‘‘synergy’’ factors, NHTSA has
also considered modifying the Volpe
model to accept as inputs different
measures of efficiency for each engine,
transmission, and vehicle model in the
product plans. For instance,
manufacturers could provide estimates
of mechanical and drivetrain
efficiencies. Mechanical efficiency
(usually between 70 and 90 percent)
gives an estimate of the amount of fuel
consumed by engine friction and
pumping losses. Drivetrain efficiency
(usually between 80 and 90 percent)
gives an estimate of the amount of fuel
consumed by parasitic loads, gearbox
friction, and torque converter losses.
From these efficiencies along with other
inputs such as compression ratio,
aerodynamic drag, rolling resistance,
and vehicle mass, the model could
estimate the fuel consumption
associated with each loss mechanism
and enforce a maximum fuel
consumption reduction for each vehicle
model based on those estimates and the
technologies applied. Like the use of
incremental synergies, this method
could help the model avoid double
counting fuel consumption benefits
when applying multiple technologies to
the same vehicle model.70 The agency
believes that this approach, like the use
of ‘‘synergy’’ factors currently used by
the Volpe model, could conceivably
provide a means of addressing
uncertainty in fuel consumption
estimation within the context of CAFE
analysis. However, the agency is not
confident that model-by-model
estimates of baseline fuel consumption
partitioning would be available. Also,
partitioned estimates of the effects of all
the technologies considered in the
analysis of this proposal were not
available. If both of these concerns
could be addressed, NHTSA believes it
would be possible to implement
partitioned accounting of fuel
consumption. However, the agency is
unsure whether and, if so, to what
extent doing so would represent an
70 This approach was proposed in a paper
criticizing NAS’ approach to synergies in the 2001–
02 peer-review process for the NAS Report. See
Patton, et al., ‘‘Aggregating Technologies for
Reduced Fuel Consumption: A Review of the
Technical Content in the 2002 National Research
Council Report on CAFE’’, SAE 2002–01–0628,
March 2002.
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improvement over our current approach
of using incremental synergy factors.
The agency solicits comments on its
use of incremental synergy factors to
address uncertainty in the estimation of
the extent to which fuel consumption is
reduced by applying technologies. For
additional detail on the synergies used,
please see Section V of this document.
In particular, the agency solicits
comment on (a) the values of the factors
the agency has applied, (b) possible
variations across the ten categories of
vehicles the agency has considered, and
(c) additional technology pairs that may
involve such interactions. The proposal
of any additional methodologies, such
as prototyping and testing, full vehicle
simulation, or partitioned accounting,
should address information and
resource requirements, particularly as
related to the analysis of entire fleets of
future vehicles expected to be produced
through MY 2015. Synergies used for
this analysis can be found in Section V
of this document.
D. Technology Cost Learning Curve
In past rulemaking analyses, NHTSA
did not explicitly account for the cost
reductions a manufacturer may realize
through learning achieved from
experience in actually applying a given
technology. NHTSA understood
technology cost-estimates to reflect
already the full learning costs of
technology. EPA felt that for some of the
newer, emerging technologies, cost
estimates did not reflect the full impact
of learning. NHTSA tentatively agreed,
but is seeking comment on the impact
of learning on cost and the production
volumes where it occurs. NHTSA has
modified its previous approach in this
rulemaking for that reason. In this
rulemaking we have included a learning
factor for some of the technologies. The
‘‘learning curve’’ describes the
reduction in unit incremental
production costs as a function of
accumulated production volume and
small redesigns that reduce costs.
NHTSA implemented technology
learning curves by using three
parameters: (1) The initial production
volume that must be reached before cost
reductions begin to be realized (referred
to as ‘‘threshold volume’’); (2) the
percent reduction in average unit cost
that results from each successive
doubling of cumulative production
volume (usually referred to as the
‘‘learning rate’’); and (3) the initial cost
of the technology. Section V below
describing the Volpe model contains
additional information on learning
curve functions.
Figure III–1 illustrates a learning
curve for a vehicle technology with an
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Federal Register / Vol. 73, No. 86 / Friday, May 2, 2008 / Proposed Rules
24383
the initial production volume before
cost reductions begin to be realized is
set at 12,000 units and the production
volume at the cost floor is set at roughly
50,000 units with a cost of $64.
Most studies of the effect of the
learning curve on production costs
appear to assume that cost reductions
begin only after some initial volume
threshold has been reached, but not all
of these studies specify what this
threshold volume is. The rate at which
costs decline beyond the initial
threshold is usually expressed as the
percent reduction in average unit cost
that results from each successive
doubling of cumulative production
volume, sometimes referred to as the
learning rate. Many estimates of
learning experience curves do not
specify a cumulative production volume
beyond which cost reductions no longer
occur, instead depending on the
asymptotic behavior of the above
expression of (CQ) for learning rates
below 100 percent to establish a floor on
costs.
For this analysis, NHTSA has applied
learning curve cost reductions on a
manufacturer-specific basis, and has
assumed that learning-based reductions
in technology costs occur at the point
that a manufacturer applies the given
technology to the first 25,000 cars or
trucks, and are repeated a second time
as it produces another 25,000 cars or
trucks for the second learning step (car
and truck volumes are treated separately
for determining these sales volumes).
The volumes chosen represent our best
estimate for where learning would
occur. As such, we believe that these
estimates are better suited to this
analysis than a more general approach
of a single number for the learning curve
factor, because each manufacturer
would be implementing technologies at
its own pace in this rule, rather than
assuming that all manufacturers
implement identical technology at the
same time. NHTSA is aware that some
of the cost estimates that it has relied
upon were derived from suppliers and
has added multipliers so that these costs
are reflective of what manufacturers
would pay for this technology. NHTSA
seeks comments on the estimated level
of price markups that manufacturers pay
for technologies purchased from
suppliers and whether different learning
curves should be applied to those types
of technologies. In addition, NHTSA
seeks comments on how learning curves
should be adjusted if a supplier supplies
more than one manufacturer.
Ideally, we would know the
development production cycle and
maturity level for each technology so
that we could calculate learning curves
precisely. Without that knowledge, we
have to use engineering judgment. After
having produced 25,000 cars or trucks
with a specific part or system, we
believe that sufficient learning will have
taken place such that costs will be lower
by 20 percent for some technologies and
10 percent for others. After another
25,000 units, it is expected that, for
some technologies, such as 6-speed
AMTs, another cost reduction will have
been realized.
For each of the technologies, we have
considered whether we could project
future cost reductions due to
manufacturer learning. In making this
determination, we considered whether
or not the technology was in widespread use today or expected to be by
the model year 2011–2012 time frame,
in which case no future learning curve
would apply because the technology
would already be in wide-spread
production by the automotive industry
by that timeframe, e.g., on the order of
multi-millions of units per year.
(Examples of these include 5-speed
automatic transmissions and intake-cam
phasing variable valve timing. These
technologies have been in production
for light-duty vehicles for more than 10
years.) In addition, we carefully
considered the underlying source data
for our cost estimates. If the source data
specifically stated that manufacturer
cost reduction from future learning
would occur, we took that information
into account in determining whether we
would apply manufacturer learning in
our cost projections. Thus, for many of
the technologies, we have not applied
any future cost reduction learning
curve.
However, there are a number of
technologies which are not yet in mass
production for which we have applied
a learning curve. As indicated in Table
III–4 below, we have applied the
learning curve beginning in MY 2011 to
one set of technologies, and for a
number of additional technologies we
did not apply manufacturer learning
until MY 2014. The distinction between
MYs 2011 and 2014 is due to our source
data for our cost estimates. For those
technologies where we have applied
manufacturer learning in MY 2011, the
source of our cost estimate did not rely
on manufacturer learning to develop the
initial cost estimate we have used—
therefore we apply the manufacturer
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initial average unit cost of $100 and a
learning rate of approximately 20
percent. In this hypothetical example,
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Federal Register / Vol. 73, No. 86 / Friday, May 2, 2008 / Proposed Rules
learning methodology beginning in MY
2011.
TABLE III.–4.—LEARNING CURVE APPLICATION TO TECHNOLOGIES
First year of
application
Technology
Overhead Cam Branch Cylinder deactivation .................................................................................................................
Continuous VVLT .............................................................................................................................................................
Camless valvetrain (electromagnetic) .............................................................................................................................
GDI—lean burn ................................................................................................................................................................
Gasoline HCCI dual-mode ...............................................................................................................................................
Turbocharging & downsizing ...........................................................................................................................................
Diesel—Lean NOX trap* ..................................................................................................................................................
Diesel—urea SCR* ..........................................................................................................................................................
6-speed AMT ...................................................................................................................................................................
Stop-Start with 42 volt system .........................................................................................................................................
IMA/ISA/BSG (includes engine downsize) ......................................................................................................................
2-Mode hybrid electric vehicle .........................................................................................................................................
Power-split hybrid electric vehicle (P–S HEV) ................................................................................................................
Plug-in hybrid electric vehicle (PHEV) ............................................................................................................................
Improved high efficiency alternator & electrification of accessories (42 volt) .................................................................
Secondary axle disconnect (unibody only) ......................................................................................................................
Weight reduction (1%)—above 6,000 lbs only ................................................................................................................
Weight reduction (2%)—incremental to 1% ....................................................................................................................
Weight reduction (3%)—incremental to 2% ....................................................................................................................
Learning
factor
(percent)
2014
2014
2011
2011
2011
2014
2011
2011
2011
2014
2014
2014
2014
2011
2011
2011
2011
2011
2011
20
20
20
20
20
20
10
10
20
20
20
20
20
20
20
20
20
20
20
* For diesel technologies, learning is only applied to the cost of the emission control equipment, not the cost for the entire diesel system.
rwilkins on PROD1PC63 with PROPOSALS2
The technologies for which we do not
begin applying learning until 2014 all
have the same reference source, the
2004 NESCCAF study, for which the
sub-contractor was The Martec Group.
In the work done for the 2004 NESCCAF
report, Martec relied upon actual price
quotes from Tier 1 automotive suppliers
to develop automotive manufacturer
cost estimates. Based on information
presented by Martec to the National
Academy of Sciences (NAS) Committee
during their January 24, 2008, public
meeting in Dearborn, Michigan,71 we
understand that the Martec cost
estimates incorporated some element of
manufacturer learning. Martec stated
that the Tier 1 suppliers were
specifically requested to provide price
quotes which would be valid for three
years (2009–2011), and that for some
components the Tier 1 supplier
included cost reductions in years two
and three which the supplier
anticipated could occur, and which they
anticipated would be necessary in order
for their quote to be competitive with
other suppliers. Therefore, for this
analysis, we did not apply any learning
curve to any of the Martec-sourced costs
for the first three years of this proposal
(2011–2013). However, the theory of
manufacturer learning is that it is a
71 ‘‘Variable Costs of Fuel Economy
Technologies’’ Martec Group, Inc Report Presented
to: Committee to Assess Technologies for Improving
Light-Duty Vehicle Fuel Economy. Division on
Engineering and Physical Systems, Board on Energy
and Environmental Systems, the National Academy
of Sciences, January 24, 2008.
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continuous process, though the rate of
improvement decreases as the number
of units produced increases. While we
were not able to gain access to the
detailed submissions from Tier 1
suppliers which Martec relied upon for
their estimates, we do believe that
additional cost reductions will occur in
the future for a number of the
technologies for which we relied upon
the Martec cost estimates for the reasons
stated above in reference to the general
learning curve effect. For those
technologies we applied a learning
curve beginning in 2014. Martec has
recently submitted a study to the NAS
Committee comparing the 2004
NESCCAF study with new updated cost
information. Given that this study had
just been completed, the agency could
not take it into consideration for the
NPRM. However, the agency will review
the new study and consider its findings
in time for the final rule.
Manufacturers’ actual costs for
applying these technologies to specific
vehicle models are likely to include
significant additional outlays for
accompanying design or engineering
changes to each model, development
and testing of prototype versions,
recalibrating engine operating
parameters, and integrating the
technology with other attributes of the
vehicle. Manufacturers may also incur
additional corporate overhead,
marketing, or distribution and selling
expenses as a consequence of their
efforts to improve the fuel economy of
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individual vehicle models and their
overall product lines.
In order to account for these
additional costs, NHTSA has applied an
indirect cost multiplier of 1.5 to its
estimate of the vehicle manufacturers’
direct costs for producing or acquiring
each fuel economy-improving
technology to arrive at a consumer cost.
This estimate was developed by
Argonne National Laboratory in a recent
review of vehicle manufacturers’
indirect costs. The Argonne study was
specifically intended to improve the
accuracy of future cost estimates for
production of vehicles that achieve high
fuel economy by employing many of the
same advanced technologies considered
in the agency’s analysis.72 Thus, its
recommendation that a multiplier of 1.5
be applied to direct manufacturing costs
to reflect manufacturers’ increased
indirect costs for deploying advanced
fuel economy technologies appears to be
appropriate for use in the current
analysis. Historically, NHTSA has used
almost the exact same multiplier, a
multiplier of 1.51, as the markup from
variable costs or direct manufacturing
costs to consumer costs. This markup
takes into account fixed costs, burden,
manufacturer’s profit, and dealer’s
profit. Table VII–2 of the PRIA shows
the estimated incremental consumer
costs for each vehicle type.73
72 Vyas, Anant, Dan Santini, and Roy Cuenca,
Comparison of Indirect Cost Multipliers for Vehicle
Manufacturing, Center for Transportation Research,
Argonne National Laboratory, April 2000.
73 PRIA, VII–9.
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Federal Register / Vol. 73, No. 86 / Friday, May 2, 2008 / Proposed Rules
E. Ensuring Sufficient Lead Time
In analyzing potential technological
improvements to the product offerings
for each manufacturer with a substantial
share of the market, NHTSA added
technologies based on our engineering
judgment and expertise about possible
adjustments to the detailed product
plans submitted to NHTSA. Our
decision whether and when to add a
technology reflected our consideration
of the practicability of applying a
specific technology and the necessity for
lead time in its application. NHTSA
recognizes that vehicle manufacturers
must have sufficient lead time to
incorporate changes and new features
into their vehicles and hence added
technologies in a cost-minimizing
fashion. That is, we generally added
technologies that were most costeffective and took into account the year
of availability of the technologies.
NHTSA realizes that not all
technologies will be available
immediately or could be applied
immediately and that there are different
phase-in rates (how rapidly a
technology is able to be applied across
a manufacturer’s fleet of vehicles)
applicable to each technology as well as
windows of opportunities when certain
technologies could be applied (i.e.,
when a product is redesigned or
refreshed).
a. Linking To Redesign and Refresh
In the automobile industry there are
two terms that describe when changes to
vehicles occur: redesign and refresh. In
projecting the technologies that could be
applied to specific vehicle models,
NHTSA tied the application of the
majority of the technologies to a
vehicle’s refresh/redesign cycle. Vehicle
redesign usually encompasses changes
24385
to a vehicle’s appearance, shape,
dimensions, and powertrain and is
traditionally associated with the
introduction of ‘‘new’’ vehicles into the
market, and often is characterized as the
next generation of a vehicle. In contrast
vehicle refresh usually only
encompasses changes to a vehicle’s
appearance, and may include an
upgraded powertrain and is
traditionally associated with mid-cycle
cosmetic changes to a vehicle within its
current generation to make it appear
‘‘fresh.’’ Vehicle refresh traditionally
occurs no earlier than two years after a
vehicle redesign or at least two years
before a scheduled redesign. Table III–
5 below contains a complete list of the
technologies that were applied and
whether NHTSA allowed them to be
applied during a redesign year, a refresh
year or during any model year is shown
in the table below.
TABLE III–5.—TECHNOLOGY REFRESH AND REDESIGN APPLICATION
rwilkins on PROD1PC63 with PROPOSALS2
Technology
Abbr.
Can be
applied during redesign
model year
only
Low Friction Lubricants ......................................................................................................
Engine Friction Reduction .................................................................................................
Variable Valve Timing (ICP) ..............................................................................................
Variable Valve Timing (CCP) ............................................................................................
Variable Valve Timing (DCP) ............................................................................................
Cylinder Deactivation .........................................................................................................
Variable Valve Lift & Timing (CVVL) .................................................................................
Variable Valve Lift & Timing (DVVL) .................................................................................
Cylinder Deactivation on OHV ...........................................................................................
Variable Valve Timing (CCP) on OHV ..............................................................................
Multivalve Overhead Cam with CVVL ...............................................................................
Variable Valve Lift & Timing (DVVL) on OHV ...................................................................
Camless Valve Actuation ...................................................................................................
Stoichiometric GDI .............................................................................................................
Lean Burn GDI ...................................................................................................................
Turbocharging and Downsizing .........................................................................................
HCCI ..................................................................................................................................
Diesel with LNT .................................................................................................................
Diesel with SCR .................................................................................................................
5 Speed Automatic Transmission ......................................................................................
Aggressive Shift Logic .......................................................................................................
Early Torque Converter Lockup ........................................................................................
6 Speed Automatic Transmission ......................................................................................
Automatic Manual Transmission .......................................................................................
Continuously Variable Transmission .................................................................................
6 Speed Manual ................................................................................................................
Improved Accessories .......................................................................................................
Electronic Power Steering .................................................................................................
42-Volt Electrical System ...................................................................................................
Low Rolling Resistance Tires ............................................................................................
Low Drag Brakes ...............................................................................................................
Secondary Axle Disconnect—Unibody ..............................................................................
Secondary Axle Disconnect—Ladder Frame ....................................................................
Aero Drag Reduction .........................................................................................................
Material Substitution (1%) .................................................................................................
Material Substitution (2%) .................................................................................................
Material Substitution (5%) .................................................................................................
ISG with Idle-Off ................................................................................................................
IMA/ISAD/BSG Hybrid (includes engine downsizing) .......................................................
2-Mode Hybrid ...................................................................................................................
LUB ..........
EFR .........
VVTI .........
VVTC .......
VVTD .......
DISP ........
VVLTC .....
VVLTD .....
DISPO .....
VVTO .......
DOHC ......
VVLTO .....
CVA .........
SIDI ..........
LBDI .........
TURB .......
HCCI ........
DSLL ........
DSLS .......
5SP ..........
ASL ..........
TORQ ......
6SP ..........
AMT .........
CVT .........
6MAN ......
IACC ........
EPS .........
42V ..........
ROLL .......
LDB ..........
SAXU .......
SAXL .......
AERO ......
MS1 .........
MS2 .........
MS5 .........
ISGO ........
IHYB ........
2HYB .......
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Can be
applied during a redesign or
refresh
model year
Can be
applied
during any
model year
X
X
X
X
X
X
....................
....................
X
X
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X
X
X
X
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Federal Register / Vol. 73, No. 86 / Friday, May 2, 2008 / Proposed Rules
TABLE III–5.—TECHNOLOGY REFRESH AND REDESIGN APPLICATION—Continued
Abbr.
Power Split Hybrid .............................................................................................................
rwilkins on PROD1PC63 with PROPOSALS2
Technology
Can be
applied during redesign
model year
only
PHYB .......
X
As can be seen in the above table,
most technologies would only be
applied by the Volpe model when a
specific vehicle was due for a redesign
or refresh. However, for a limited set of
technologies, the model was not
restricted to applying them during a
refresh/redesign year and thus they
were made available for application at
any time.
These specific technologies are:
• Low Friction Lubricants
• Improved Accessories
• Low Rolling Resistance Tires
• Low Drag Brakes
All of these technologies are very
cost-effective, can apply to multiple
vehicle models/platforms and can be
applied across multiple vehicle models/
platforms in one year. Although they
can also be applied during a refresh/
redesign year, they are not restricted to
that timeframe because their application
is not viewed as necessitating a major
engineering redesign and testing/
calibration.
There is an additional technology
whose application is not tied to refresh/
redesign, which is Aggressive Shift
Logic (ASL). ASL is accomplished
through reprogramming the shift points
for a transmission to be more like a
manual transmission. Upgrading a
transmission to utilize ASL can happen
at refresh/redesign, but because it is not
a hardware change, it can also occur at
other points in a vehicle’s design cycle.
If a model that is scheduled for refresh/
redesign has a transmission that is being
upgraded to ASL, it is possible that all
other vehicles that utilize the same
transmission (which is usually
produced at the same manufacturing
plant) could be upgraded at the same
time to incorporate ASL and that ASL
could permeate other vehicle models in
years other than a refresh/redesign year.
NHTSA based the redesign rates used
in the Volpe Model on a combination of
the manufacturers’ confidential product
plans and NHTSA’s engineering
judgment. In most instances, NHTSA
has accepted the projected redesign
periods from the companies who
provided them through MY 2013. If
companies did not provide product plan
date, NHTSA used publicly available
data about vehicle redesigns to establish
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the redesign rates for the vehicles
produced by these companies.
NHTSA assumes that passenger cars
will be redesigned every 5 years, based
on the trend over the last 10–15 years
for passenger cars to be redesigned
every 5 years. These trends are reflected
in the manufacturer production plans
that NHTSA received in response to its
request for product plan information
and was confirmed by many automakers
in meetings held with NHTSA to
discuss various issues with
manufacturers.
NHTSA believes that the vehicle
design process has progressed and
improved rapidly over the last decade
and these improvements have resulted
in the ability of manufacturers to
shorten the design process and to
introduce vehicles more frequently to
respond to competitive market forces.
Almost all passenger cars will be on a
5-year redesign cycle by the end of the
decade, with the exception being some
high performance vehicles and vehicles’
with specific market niches.
Currently, light trucks are redesigned
every 5 to 7 years, with some vehicles
having longer redesign periods (e.g.,
full-size vans). In the most competitive
SUV and crossover vehicle segments,
the redesign cycle currently averages
slightly above 5 years. It is expected that
the light truck redesign schedule will be
shortened in the future due to
competitive market forces and in
response to fuel economy and other
regulatory requirements. It is expected
that by MY 2014, almost all light trucks
will be redesigned on a 5-year cycle.
Thus, for almost all vehicles scheduled
for a redesign in model year 2014 and
later, NHTSA estimated that all vehicles
would be redesigned on a 5-year cycle.
Exceptions were made for high
performance vehicles and other vehicles
that traditionally had longer than
average design cycles (e.g., 2-seater
sports cars). For those vehicles, NHTSA
attempted to preserve the historic
redesign cycle rates.
b. Technology Phase-in Caps
In analyzing potential technological
improvements to the product offerings
for each manufacturer with a substantial
share of the market, NHTSA added
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applied during a redesign or
refresh
model year
Can be
applied
during any
model year
....................
....................
technologies based on our engineering
judgment and expertise about possible
adjustments to the detailed product
plans submitted to NHTSA. Our
decision whether and when to add a
technology reflected our consideration
of the practicability of applying a
specific technology and the necessity for
lead-time in its application.
NHTSA recognizes that vehicle
manufacturers must have sufficient lead
time to incorporate changes and new
features into their vehicles and that
these changes cannot occur all at once,
but must be phased in over time. As
discussed above, our analysis addresses
these realities in part by timing the
estimated application of most
technologies to coincide with
anticipated vehicle redesigns and/or
freshenings. We have estimated that
future vehicle redesigns can be
implemented on a 5-year cycle with
mid-cycle freshening, except where
manufacturers have indicated plans for
shorter redesign cycles.
However, the agency further
recognizes that engineering, planning
and financial constraints prohibit most
technologies from being applied across
an entire fleet of vehicles within a year.
Thus, as for the analysis supporting its
2006 rulemaking regarding light truck
CAFE, the agency is employing overall
constraints on the rates at which each
technology can penetrate a
manufacturer’s fleet. The Volpe model
applies these ‘‘phase-in caps’’ by
ceasing to add a given technology to a
manufacturer’s fleet in a specific model
year once it has increased the
corresponding penetration rate by at
least amount of the cap. Having done so,
the model proceeds to apply other
technologies in lieu of the ‘‘capped’’
technology.
For its regulatory analysis in 2006,
NHTSA applied phase-in caps expected
to be consistent with NAS’ indication in
its 2002 report that even existing
technologies would require 4 to 8 years
to achieve widespread penetration of
the fleet. The NAS report, which is
believed to be the only peer-reviewed
source which provides phase-in rates,
was relied upon for establishing the
phase-in caps that we used for all
E:\FR\FM\02MYP2.SGM
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Federal Register / Vol. 73, No. 86 / Friday, May 2, 2008 / Proposed Rules
technologies, except diesels and
hybrids, for which the report didn’t
include that information. Most of the
phase-in caps applied by the agency in
2006 ranged from 25 percent (4 year
introduction) to 17 percent
(approximately 6 years, the midpoint of
the NAS estimate). The agency assumed
shorter implementation rates for
technologies that did not require
changes to the manufacturing line. For
other technologies (e.g., hybrid and
diesel powertrains), the agency
employed phase-in caps as low as 3
percent, to reflect the major redesign
efforts and capital investments required
to implement these technologies.
Considerable changes have occurred
since NHTSA’s 2006 analysis, and even
more since the 2002 NAS report. Not
only have fuel prices increased, but
official forecasts of future fuel prices
have increased, as well. This suggests a
market environment in which
consumers are more likely to demand
fuel-saving technologies than previously
anticipated, and it suggests a financial
environment in which investors are
more likely to invest in companies
developing and producing such
technologies. Indeed, some technologies
have penetrated the marketplace more
quickly than projected in 2006.
Confidential product plan information
submitted to NHTSA in 2007 and
information from suppliers confirm that
the rate of technology penetration has
increased as compared to 2006.
Also, the statutory environment has
changed since 2006. With the enactment
of EISA, Congress has adopted the
specific objectives of increasing new
vehicle fuel economy to at least 35 mpg
by 2020 and making ratable progress
toward that objective in earlier model
years. This reduces manufacturers’
uncertainty about the general direction
of future fuel economy standards in the
United States. Moreover, developments
in other regions (e.g., Europe) and
countries (e.g., Canada and China)
suggest that the generalized expectation
that future vehicles will perform well
with respect to energy efficiency is not
unique to the United States. Discussions
with manufacturers in late 2007 and
early 2008 indicate that the industry is
highly sensitive to all of these
developments and has been anticipating
the need to accelerate the rate of
technology deployment in response to
the passage of major energy legislation
in the U.S.
Considering these developments, the
agency revisited the phase-in caps it had
applied in 2006 and determined that it
would be appropriate to relax many of
them. In our judgment, most of the
engine technologies could penetrate the
fleet in as quickly as five years—rather
than in the six we previously
estimated—as long as they are applied
during redesign. Low friction lubricants
are already widely used, and our
expectation is that they can quickly
penetrate the remainder of the fleet.
Therefore, we relaxed the 25 percent (4year) phase-in cap to 50 percent (2
years). Similarly, product plans indicate
that transmissions with 5 or more
forward gears will widely penetrate the
fleet even without the current proposal.
24387
Also, given the technology cost and
effectiveness estimates discussed above,
the Volpe model frequently estimates
that manufacturers will ‘‘leapfrog’’ past
5-speed transmissions to apply more
advanced transmissions (e.g., 6-speed or
AMT). We have therefore increased the
phase-in cap for 5-speed transmissions
from 25 percent (4 years) to 100 percent
(1 year). However, in our judgment,
phase-in caps of 17 percent (6 years) are
currently still appropriate for most other
transmission technologies.
Although NHTSA has applied phasein caps of 25 percent (4 years) for most
remaining technologies, we continue to
anticipate that phase-in caps of 3
percent are appropriate for some
advanced technologies, such as hybrids
and diesels. Although engine, vehicle,
and exhaust aftertreatment
manufacturers have, more recently,
expressed greater optimism than before
regarding the outlook for light vehicle
diesel engines, our expectation is that
the phase-in cap that we have chosen is
appropriate at this time. We also
estimate that a 3 percent rate is
appropriate for hybrid technologies,
which are very complex, require
significant engineering resources to
implement, but are just now starting to
penetrate the market.
Table III–6 below presents the phasein caps applied in the current analysis,
with rates from the analysis of the 2006
final rule provided for comparison.
NHTSA requests comments on the
phase-in caps shown here, and on
whether slower or faster rates would be
more appropriate and, if so, why.
TABLE III.—6. PHASE-IN CAP APPLICATION
rwilkins on PROD1PC63 with PROPOSALS2
Technology
2006 final
rule
Low Friction Lubricants ....................................................................................................................................................
Engine Friction Reduction ...............................................................................................................................................
Variable Valve Timing (ICP) ............................................................................................................................................
Variable Valve Timing (CCP) ..........................................................................................................................................
Variable Valve Timing (DCP) ..........................................................................................................................................
Cylinder Deactivation .......................................................................................................................................................
Variable Valve Lift & Timing (CVVL) ...............................................................................................................................
Variable Valve Lift & Timing (DVVL) ...............................................................................................................................
Cylinder Deactivation on OHV .........................................................................................................................................
Variable Valve Timing (CCP) on OHV ............................................................................................................................
Multivalve Overhead Cam with CVVL .............................................................................................................................
Variable Valve Lift & Timing (DVVL) on OHV .................................................................................................................
Camless Valve Actuation .................................................................................................................................................
Stoichiometric GDI ...........................................................................................................................................................
Diesel following GDI-S (SIDI) ..........................................................................................................................................
Lean Burn GDI .................................................................................................................................................................
Turbocharging and Downsizing .......................................................................................................................................
Diesel following Turbo D/S ..............................................................................................................................................
HCCI ................................................................................................................................................................................
Diesel following HCCI ......................................................................................................................................................
5 Speed Automatic Transmission ....................................................................................................................................
Aggressive Shift Logic .....................................................................................................................................................
Early Torque Converter Lockup ......................................................................................................................................
6 Speed Automatic Transmission ....................................................................................................................................
25
17
17
17
17
17
17
17
17
17
17
17
10
3
3
....................
17
3
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3
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17
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17
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25
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24388
Federal Register / Vol. 73, No. 86 / Friday, May 2, 2008 / Proposed Rules
TABLE III.—6. PHASE-IN CAP APPLICATION—Continued
Technology
2006 final
rule
Automated Manual Transmission ....................................................................................................................................
Continuously Variable Transmission ...............................................................................................................................
6 Speed Manual ..............................................................................................................................................................
Improved Accessories .....................................................................................................................................................
Electric Power Steering ...................................................................................................................................................
42-Volt Electrical System .................................................................................................................................................
Low Rolling Resistance Tires ..........................................................................................................................................
Low Drag Brakes .............................................................................................................................................................
Secondary Axle Disconnect—Unibody ............................................................................................................................
Secondary Axle Disconnect—Ladder Frame ..................................................................................................................
Aero Drag Reduction .......................................................................................................................................................
Material Substitution (1%) ...............................................................................................................................................
Material Substitution (2%) ...............................................................................................................................................
Material Substitution (5%) ...............................................................................................................................................
ISG with Idle-Off ..............................................................................................................................................................
IMA/ISAD/BSG Hybrid (includes engine downsizing) .....................................................................................................
2-Mode Hybrid .................................................................................................................................................................
Power Split Hybrid ...........................................................................................................................................................
Plug-in Hybrid ..................................................................................................................................................................
17
17
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25
17
17
25
17
17
17
17
17
17
17
5
5
5
5
....................
IV. Basis for Attribute-Based Structure
for Setting Fuel Economy Standards
rwilkins on PROD1PC63 with PROPOSALS2
A. Why attribute-based instead of a
single industry-wide average?
NHTSA is obligated under 49 U.S.C.
32902(a)(3)(A), recently added by
Congress, to set attribute-based fuel
economy standards for passenger cars
and light trucks. NHTSA welcomes
Congress’ affirmation through EISA of
the value of setting attribute-based fuel
economy standards, because we believe
that an attribute-based structure is
preferable to a single industry-wide
average standard for the following
reasons. First, attribute-based standards
increase fuel savings and reduce
emissions when compared to an
equivalent industry-wide standard
under which each manufacturer is
subject to the same numerical
requirement. Under such a single
industry-wide average standard, there
are always some manufacturers that are
not required to make any improvements
for any given year because they already
exceed the standard. Under an attributebased system, in contrast, every
manufacturer can potentially be
required to continue improving each
year. Because each manufacturer
produces a different mix of vehicles,
attribute-based standards are
individualized for each manufacturer’s
different product mix. All
manufacturers must ensure they have
used available technologies to enhance
fuel economy levels of the vehicles they
sell. Therefore, fuel savings and
emissions reductions will always be
higher under an attribute-based system
than under a comparable industry-wide
standard.
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Second, attribute-based standards
eliminate the incentive for
manufacturers to respond to CAFE
standards in ways harmful to safety.74
Because each vehicle model has its own
target (based on the attribute chosen),
attribute-based standards provide no
incentive to build smaller vehicles
simply to meet a fleet-wide average,
because the smaller vehicles will be
subject to more stringent fuel economy
and emissions targets.
Third, attribute-based standards
provide a more equitable regulatory
framework for different vehicle
manufacturers.75 A single industry-wide
average standard imposes
disproportionate cost burdens and
compliance difficulties on the
manufacturers that need to change their
product plans and no obligation on
those manufacturers that have no need
to change their plans. Attribute-based
standards spread the regulatory cost
burden for fuel economy more broadly
across all of the vehicle manufacturers
within the industry.
And fourth, attribute-based standards
respect economic conditions and
consumer choice, instead of having the
government mandate a certain fleet mix.
Manufacturers are required to invest in
74 The 2002 NAS Report, on which NHTSA relied
in reforming the CAFE program for light trucks,
described at length and quantified the potential
safety problem with average fuel economy
standards that specify a single numerical
requirement for the entire industry. See National
Academy of Sciences, ‘‘Effectiveness and Impact of
Corporate Average Fuel Economy (CAFE)
Standards,’’ (‘‘NAS Report’’) National Academy
Press, Washington, DC (2002), 5, finding 12.
Available at https://www.nap.edu/openbook.
php?record_
id=10172page=R1 (last accessed April 20, 2008).
75Id. at 4–5, finding 10.
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technologies that improve the fuel
economy achieved by the vehicles they
sell, regardless of their size.
B. Which attribute is most effective?
Although NHTSA previously set the
MY 2008–2011 light truck fuel economy
standards based on vehicle footprint as
the relevant attribute, the agency took a
fresh look for purposes of this
rulemaking. Although several attributes
offer benefits, NHTSA has preliminarily
concluded that a footprint-based
function will again be the most effective
and efficient for both passenger car and
light truck standards. The discussion
below explains our conclusion in favor
of footprint, and also examines the
relative benefits and drawbacks of the
other attributes considered.
1. Footprint-Based Function
NHTSA is proposing to set fuel
economy standards for manufacturers
according to vehicle footprint, as light
truck CAFE standards are currently set
by NHTSA. A vehicle’s ‘‘footprint’’ is
the product of the average track width
(the distance between the centerline of
the tires 76 ) and wheelbase (basically,
the distance between the centers of the
axles 77 ). Each vehicle footprint value is
assigned a mile per gallon target specific
to that footprint value. Footprint-based
76 The proposed definition for track width is the
same as that used in NHTSA’s April 2006 light
truck CAFE rule, which is ‘‘the lateral distance
between the centerlines of the base tires at ground,
including camber angle.’’ 49 CFR 523.2, 71 FR
19450 (Apr. 14, 2006).
77 The proposed definition for wheelbase is also
the same as that used in NHTSA’s April 2006 light
truck CAFE rule. Wheelbase is ‘‘the longitudinal
distance between front and rear wheel centerlines.’’
Id.
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rwilkins on PROD1PC63 with PROPOSALS2
standards have a number of benefits, as
described below.
First, NHTSA tentatively concludes
that use of the footprint-attribute helps
us achieve greater fuel economy/
emissions reductions without having a
potentially negative impact on safety.
While past analytic work 78 focused on
the relationship between vehicle weight
and safety, weight was understood to
encompass a constellation of sizerelated factors, not just weight. More
recent studies 79 have begun to consider
whether the relationship between
vehicle size and safety differs. To the
extent that reduction of mass has
historically been associated with
reductions in many other size attributes,
and given the construct of the current
fleet, we believe that the relationship
between size or weight (on the one
hand) and safety (on the other) has been
similar.
Overall, use of vehicle footprint is
‘‘weight-neutral’’ and thus does not
exacerbate the vehicle compatibility
safety problem.80 A footprint-based
system does not encourage
manufacturers to add weight to move
vehicles to a higher footprint category,
because additional weight makes no
difference to the required target. Nor
would the system penalize
manufacturers for making limited
weight reductions. By using vehicle
footprint in lieu of a weight-based
metric, the standards would also
facilitate the use of promising
lightweight materials that, although
perhaps not cost-effective in mass
production today, may ultimately
achieve wider use in the fleet, become
less expensive, and enhance emissions
reductions, vehicle safety, and fuel
economy.81
78 See Kahane, Charles J., PhD, DOT HS 809 662,
‘‘Vehicle Weight, Fatality Risk and Crash
Compatibility of Model Year 1991–99 Passenger
Cars and Light Trucks,’’ October 2003. Available at
https://www.nhtsa.dot.gov/cars/rules/regrev/
Evaluate/809662.html (last accessed April 20,
2008). See also Van Auken, R.M. and J.W. Zellner,
‘‘An Assessment of the Effects of Vehicle Weight on
Fatality Risk in Model Year 1985–98 Passenger Cars
and 1985–97 Light Trucks,’’ Dynamic Research,
Inc., February 2002. Available at Docket No.
NHTSA–2003–16318–2.
79 See Van Auken, R.M. and J.W. Zellner,
Supplemental Results on the Independent Effects of
Curb Weight, Wheelbase, and Track on Fatality Risk
in 1985–1997 Model Year LTVs, Dynamic Research,
Inc., May 2005. Available at Docket No. NHTSA–
2003–16318–17.
80 The vehicle compatibility safety problem refers
to the disparity in effects experienced by smaller
lighter vehicles in crashes with larger heavier
vehicles.
81 For example, the Aluminum Association
indicated in the April 2006 light truck CAFE
rulemaking that using aluminum to decrease a
vehicle’s weight by 10 percent could improve its
fuel economy (and thus, reduce its CO2 emissions)
by 5–8 percent, without reducing performance in
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Finally, vehicle footprint is more
difficult to modify than other attributes.
It is more integral to a vehicle’s design
than either vehicle weight or shadow,
and cannot easily be altered between
model years in order to move a vehicle
into a different category with a lower
fuel economy target. Footprint is
dictated by the vehicle platform, which
is typically used for a multi-year model
lifecycle. Short-term changes to a
vehicle’s platform would be expensive
and difficult to accomplish without
disrupting multi-year product planning.
In some cases, several models share a
common platform, thus adding to the
cost, difficulty, and therefore
unlikelihood of short-term changes.
Concurrent with the NPRM, NHTSA
will develop a test procedure for
measuring wheelbase and track width
and for calculating footprint. This test
procedure will be available on NHTSA’s
Web site. We note that the test
procedure will be used to validate the
corresponding wheelbase, track width,
and footprint data provided to us by the
manufacturers in their pre-model year
reports but could include other CAFErelated enforcement activities in the
future. We seek comment on the test
procedure.
2. Functions Based on Other Attributes
Although NHTSA has concluded that
footprint is the best attribute for CAFE
standards, we considered a number of
other attributes on which to base the
standards, including, but not limited to,
curb weight, engine displacement,
interior volume, passenger capacity,
towing capability, and cargo hauling
capability. Below we have described the
relative merits and drawbacks of the
other attributes considered.
Curb weight: One of the benefits of
choosing curb weight as the relevant
attribute for the standards is that it
correlates with fuel economy and
emissions controls better than vehicle
footprint. Additionally, because
reductions in weight would lead to
higher targets, weight-based standards
prevent the systemic downweighting of
vehicles and the associated detriment to
safety. However, weight-based standards
also discourage the down-weighting of
vehicles through the use of lightweight
materials that could improve fuel
economy and safety and reduce
emissions. Weight-based standards are
also more susceptible to gaming and
creep, because weight can be altered
very easily compared to other attributes.
Weight is also only rarely considered by
frontal barrier crash tests. See comments provided
by the Aluminum Association, Inc., at Docket No.
NHTSA–2003–16128–1120, pp. 5 and 12.
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consumers, in contrast to size (which is
reflected in footprint and shadow), and
can be raised considerably (thus
decreasing fuel economy/increasing CO2
emissions) without consumers being
aware of the change.
Engine displacement: The primary
benefit of choosing engine displacement
as the relevant attribute for the
standards is that it correlates well with
fuel economy, since a larger engine
consumes fuel at a faster rate. However,
engine-displacement-based standards
would be highly susceptible to gaming
and creep, given that many vehicle
manufacturers already offer identical
models with different size engines.
Additionally, engine-displacementbased standards would discourage the
use of small turbo-charged engines,
which have the potential to improve
fuel economy without sacrificing the
engine power that American consumers
generally seek.
Interior volume: Standards based on
interior volume would have virtually no
correlation with fuel economy, so they
were not extensively considered. Such
standards would have the advantage of
not encouraging downsizing, so they
could have a positive impact on safety
in that respect, but few other benefits
were discerned.
Passenger capacity: Besides having
virtually no correlation with fuel
economy, passenger capacity has the
disadvantage of being identical for a
substantial portion of the light-duty
vehicle population (i.e., many vehicles
have five seats). Thus, using passenger
capacity as the attribute on which to
base fuel economy standards would
essentially result in a single industrywide average standard, which is
precisely what Congress sought to avoid
in requiring attribute-based standards.
Towing or cargo-hauling capability: In
its light truck rulemaking for MYs 2008–
2011, NHTSA sought comment on
whether towing or cargo-hauling
capability should be used as an attribute
in addition to footprint—in other words,
whether the footprint attribute should
be modified in any way due to towing
or cargo-hauling capability. The reason
that NHTSA sought comment was that
two vehicles with equal footprint would
nevertheless achieve different fuel
economies if one’s towing or cargohauling capability was greater, because
engineering a vehicle to provide that
kind of power occurs at the expense of
engineering for fuel economy. NHTSA
posited that perhaps for vehicle
manufacturers that have a product mix
weighted toward vehicles with superior
towing and/or cargo-hauling
capabilities, a footprint-based Reformed
CAFE standard might not provide a
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fully equitable competitive
environment. Based on comments to the
final rule for the MY 2008–2011 light
truck rulemaking, however, NHTSA
concluded that the lack of an objective
measure for tow rating and the potential
for gaming of a system based on this
attribute made towing or cargo-hauling
capacity an inappropriate attribute at
that time. NHTSA tentatively concludes
that such is still the case.
In summary, then, NHTSA has
tentatively decided that a footprintbased system will be optimal for this
rulemaking. However, we seek comment
on whether the proposed standards
should be based on vehicle footprint
alone, or whether other attributes such
as the ones described above should be
considered. If any commenters advocate
one or more additional attributes, the
agency requests those commenters to
supply a specific, objective measure for
each attribute that is accepted within
the industry and that can be applied to
the full range of light-duty vehicles
covered by this rulemaking.
C. The Continuous Function
NHTSA considered this issue of how
to set attribute-based functions in its
2006 light truck CAFE rulemaking, and
examined the relative merits of both
step functions and continuous
functions. In the CAFE context, a step
function would separate the vehicle
models along the spectrum of attribute
magnitudes into discrete groups, and
each group would be assigned a fuel
economy target (that end up looking like
steps), so that the average of the groups
would be the average fleet fuel
economy. A continuous function, in
contrast, would not separate the
vehicles into a set of discrete categories.
Each vehicle model produced by a
manufacturer would have its own fuel
economy target, based on its particular
footprint. In other words, a continuous
function is a mathematical function that
defines attribute-based targets across the
entire range of possible footprint values,
and applies them through a
harmonically weighted formula to
derive regulatory obligations for fleet
averages.
In proposing the current standards in
this rulemaking, NHTSA relied on its
experience in the last light truck
rulemaking. In that rulemaking, NHTSA
decided in favor of the continuous
function for three main reasons.
• First, under a step function,
manufacturers who build vehicle
models whose footprints fall near the
upper boundary of a step have a
considerable incentive to upsize the
vehicle in order to receive the lower
target of the next step. A continuous
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function reduces the incentive created
by a step function to upsize a vehicle
whose footprint is near a category
boundary, because on an uninterrupted
spectrum, upsizing slightly can never
cause a drastic decrease in the
stringency of the applicable target.
• Second, the continuous function
minimizes the incentive to downsize a
vehicle as a way to meet the standards,
because any downsizing results in
higher targets being applicable.
• And finally, the continuous
function provides manufacturers with
greater regulatory certainty, because
there are no category boundaries that
could be redefined in future rulemaking.
The considerations in favor of
NHTSA’s decision to base the MY 2008–
11 light truck CAFE standards on a
continuous function are also applicable
to the current rulemaking, which would
set footprint-based fuel economy
standards for both light trucks and
passenger cars. Thus, NHTSA has
tentatively decided that a continuous
function is the best choice for applying
the footprint-based standards.
We note, however, that there are a
variety of mathematical forms available
to estimate the relationship between
vehicle footprint and fuel economy that
could be used as a continuous function.
In the MY 2008–11 light truck CAFE
rule, NHTSA considered a simple linear
(straight-line) function, a quadratic (Ushaped) function, an exponential (curve
that continuously becomes steeper or
shallower) function, and an
unconstrained logistic (S-shaped)
function. Each of these relationships
was estimated in gallons per mile (gpm)
rather than in miles per gallon (mpg),
because the relationship between fuel
economy measured in mpg and fuel
savings is not linear.82 NHTSA plotted
the optimized fleets in terms of footprint
versus gpm, and once a shape of a
function was determined in terms of
gpm, the agency then converted the
functions to mpg for the purpose of
evaluating the potential target values.
See 71 FR 17600–17607 (Apr. 6, 2006)
for a fuller discussion of the agency’s
process.
Ultimately, NHTSA decided in the
light truck CAFE rule that none of those
four functional forms as presented
82 That is to say, an increase of one mpg in a
vehicle with low fuel economy (e.g., 20 mpg to 21
mpg) results in higher fuel savings than if the
change occurs in a vehicle with high fuel economy
(e.g., 30 mpg to 31 mpg). Increasing fuel economy
by equal increments of gallons per mile provides
equal fuel savings regardless of the fuel economy
of a vehicle. For example, increasing the fuel
economy of a vehicle from 0.06 gpm to 0.05 gpm
saves exactly the same amount of fuel as increasing
the fuel economy of a vehicle from 0.03 gpm to 0.02
gpm.
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would be appropriate for the CAFE
program because they tended toward
excessively high stringency levels at the
smaller end of the footprint range,
excessively low stringency levels at the
larger end of the footprint range, or
both. Too high stringency levels for
smaller vehicles could potentially result
in target values beyond the
technological capabilities of
manufacturers, while too low levels for
larger vehicles would reduce fuel
savings below that of the optimized
fleet. NHTSA determined that a
constrained logistic function 83 provided
a relatively good fit to the data points
without creating problems associated
with some or all of the other forms, i.e.,
excessively high targets for small
vehicles, excessively low targets for
large vehicles, or regions in which
targets for large vehicles exceeded those
for small vehicles. The constrained
logistic function also limited the
potential for the curve to be
disproportionately influenced by a
single vehicle model located at either
end of the range (i.e., by outliers).
Because most vehicle models are
clustered in the middle of the footprint
range, models toward either end have a
greater influence on their target value,
and thus on the overall shape of the
curve that fits the data points. The
constrained logistic function minimizes
this problem.
NHTSA’s constrained logistic
function in the light truck rule was
defined by four parameters. Two
parameters established the function’s
upper and lower bounds (asymptotes),
respectively. A third parameter
specified the footprint at which the
function was halfway between the
upper and lower bounds. The last
parameter established the rate or
‘‘steepness’’ of the function’s transition
between the upper (at low footprint) and
lower (at high footprint) boundaries.84
83 A ‘‘constrained’’ logistic function is still Sshaped, like an unconstrained logistic function, but
plateaus at the top and bottom rather than
continuing to increase or decrease to infinity.
84 NHTSA determined the values of the
parameters establishing the upper and lower
asymptotes by calculating the sales-weighted
harmonic average values of optimized fuel economy
levels for light trucks with footprints below 43
square feet and above 65 square feet, respectively.
Because these ranges respectively included the
smallest and largest models represented at that time
in the light truck fleet, the agency determined that
these two segments of the light truck fleet were
appropriate for establishing the upper and lower
fuel economy bounds of a continuous function.
The remaining two parameters (i.e., the
‘‘midpoint’’ and ‘‘curvature’’ parameters) were
estimated using production-weighted nonlinear
least-squares regression to achieve the closest fit to
data on footprint and optimized fuel economy for
all light truck models expected to be produced
during each of the model years 2008–2011. More
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The resulting curve was an elongated
reverse ‘‘S’’ shape, with fuel economy
targets decreasing as footprint increased.
NHTSA has tentatively concluded
that a constrained logistic function
would continue to be appropriate for
setting CAFE standards for both
passenger cars and light trucks. We have
reached that conclusion because the
concerns that prevented NHTSA from
choosing another mathematical function
in the light truck CAFE rule continue to
be relevant to the new standards. The
description below of the Volpe model
and how it works explains in much
more detail how the constrained logistic
function has been updated for purposes
of this rulemaking. NHTSA seeks
comment on whether another
mathematical function might result in
improved standards consistent with
EPCA and EISA.
V. Volpe Model/Analysis/Generic
Description of Function
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A. The Volpe model
1. What is the Volpe model?
As it did for the development and
analysis of the April 2006 light truck
final rule, in developing this proposal
NHTSA made significant use of a peerreviewed modeling system developed
by the Department of Transportation’s
Volpe National Transportation Systems
Center (Volpe Center). The CAFE
Compliance and Effects Modeling
System (referred to herein as the Volpe
model) serves two fundamental
purposes: Identifying technologies each
manufacturer could apply in order to
comply with a specified set of CAFE
standards, and calculating the costs and
effects of manufacturers’ application of
technologies.
Before working with the Volpe Center
to develop and apply this model,
NHTSA had considered other options,
including other modeling systems.
NHTSA was unable to identify any
other system that could operate at a
sufficient level of detail with respect to
manufacturers’ future products, which
involve thousands of unique vehicle
models using hundreds of unique
engines and hundreds of unique
transmissions. NHTSA was also unable
to identify any other system that could
simulate a range of different possible
reforms to CAFE standards. The Volpe
model provides these and other
capabilities, and helps NHTSA examine
potential regulatory options.
precisely, these two parameters determine the range
between the vehicle footprints where the upper and
lower limits of fuel economy are reached, and the
value of footprint for which the value of fuel
economy is midway between its upper and lower
bounds.
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2. How does the Volpe model apply
technologies to manufacturers’ future
fleets?
The Volpe model begins with an
‘‘initial state’’ of the domestic vehicle
market, which in this case is the market
for passenger cars and light trucks to be
sold during the period covered by the
proposed rule. The vehicle market is
defined on a model-by-model, engineby-engine, and transmission-bytransmission basis, such that each
defined vehicle model refers to a
separately-defined engine and a
separately-defined transmission.
For the model years covered by the
current proposal, the light vehicle
(passenger car and light truck) market
forecast included more than 3,000
vehicle models, more than 400 specific
engines, and nearly 400 specific
transmissions.85 This level of detail in
the representation of the vehicle market
is vital to an accurate analysis of
manufacturer-specific costs and the
analysis of reformed CAFE standards,
and is much greater than the level of
detail used by many other models and
analyses relevant to light vehicle fuel
economy. Because CAFE standards
apply to the average performance of
each manufacturer’s fleets of cars and
light trucks, the impact of potential
standards on individual manufacturers
cannot be credibly estimated without
analysis of manufacturers’ planned
fleets. NHTSA has used this level of
detail in CAFE analysis throughout the
history of the program. Furthermore,
because required CAFE levels under an
attribute-based CAFE standard depend
on manufacturers’ fleet composition, the
stringency of an attribute-based
standard cannot be predicted without
performing analysis at this level of
detail.
Examples of other models and
analyses that NHTSA and Volpe Center
staff have considered include DOE’s
NEMS, Oak Ridge National Laboratory’s
(ORNL) Transitional Alternative Fuels
and Vehicles (TAFV) model, and the
California Air Resources Board’s (CARB)
analysis supporting California’s adopted
greenhouse gas emissions standards for
light vehicles.
DOE’s NEMS represents the light-duty
fleet in terms of four ‘‘manufacturers’’
(domestic cars, imported cars, domestic
85 The market forecast is an input to the Volpe
model developed by NHTSA using product plan
information provided to the agency by individual
vehicle manufacturers in response to NHTSA’s
requests. The submitted product plans contain
confidential business information (CBI), which the
agency is prohibited by federal law from disclosing.
As the agency receives new product plan
information in response to future requests, the
market forecast is updated.
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light trucks, and imported light trucks),
twelve vehicle market classes (e.g.,
‘‘standard pickup’’), and sixteen power
train/fuel combinations (e.g., methanol
fuel-cell vehicle).86 Therefore, as
currently structured, NEMS is unable to
estimate manufacturer-specific
implications of attribute-based CAFE
standards.
TAFV accounts for many power train/
fuel combinations, having been
originally designed to aid understanding
of possible transitions to alternative
fueled vehicles, but it represents the
light-duty fleet as four aggregated (i.e.,
industry-wide) categories of vehicles:
Small cars, large cars, small light trucks,
and large light trucks.87 Thus, again, as
currently structured, TAFV is unable to
estimate manufacturer-specific
implications of attribute-based CAFE
standards.
CARB’s analysis of light vehicle GHG
emissions standards uses two levels of
accounting. First, based on a report
prepared for Northeast States Center for
a Clean Air Future (NESCCAF), CARB
represents the light-duty fleet in terms
of five ‘‘representative’’ vehicles. Use of
these ‘‘representative’’ vehicles ignores
the fact that the engineering
characteristics of individual vehicle
models vary widely both among
manufacturers and within
manufacturers’ individual fleets. For
each of these five vehicles, NESCCAF’s
report contains the results of full vehicle
simulation given several pre-specified
technology ‘‘packages.’’88 Second, to
evaluate manufacturer-specific
regulatory costs, CARB essentially
reduces each manufacturer’s fleet to
only two average test weights, one for
each of California’s two regulatory
86 U.S. Department of Energy, ‘‘Transportation
Sector Module of the National Energy Modeling
System: Model Documentation 2007,’’ DOE/EIA–
M070, May 2007. Available at https://
tonto.eia.doe.gov/FTPROOT/modeldoc/
m070(2007).pdf (last accessed April 20, 2008).
NEMS’s Manufacturers Technology Choice
Submodule (MTCS) is believed to have logical
structures similar to those in Energy and
Environmental Analysis, Inc.’s (EEA’s) Fuel
Economy Regulatory Analysis Model (FERAM).
However, FERAM documentation and source code
have not been made available to NHTSA or Volpe
Center staff.
87 Greene, David. ‘‘TAFV Alternative Fuels and
Vehicles Choice Model Documentation,’’ ORNL//
TM–2001//134, July 2001. Available at https://wwwcta.ornl.gov/cta/Publications/Reports/
ORNL_TM_2001_134.pdf (last accessed April 20,
2008).
88 Northeast States Center for a Clean Air Future
(NESCCAF), Reducing Greenhouse Gases from
Light-Duty Vehicles (2004). Available at https://
bronze.nescaum.org/committees/mobile/
rpt040923ghglightduty.pdf (last accessed April 20,
2008).
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classes.89 Even for a flat standard such
as considered by California, NHTSA
would not base its analysis of
manufacturer-level costs on this level of
aggregation. Use of CARB’s methods
would not enable NHTSA to estimate
manufacturer-specific implications of
the attribute-based CAFE standards
proposed today.90
The Volpe model also uses several
additional categories of data and
estimates provided in various external
input files:
One input file specifies the
characteristics of fuel-saving
technologies to be represented, and
includes, for each technology, the first
year in which the technology is
expected to be ready for commercial
application; upper and lower estimates
of the effectiveness and cost (retail price
equivalent) of the technology;
coefficients defining the extent to which
costs are expected to decline as a result
of ‘‘learning effects’’ (discussed below);
inclusion or exclusion of the technology
on up to three technology ‘‘paths’’; and
constraints (‘‘phase-in caps’’) on the
annual rate at which manufacturers are
estimated to be able to increase the
technology’s penetration rate. These
technology characteristics and estimates
are specified separately for each of the
following categories of vehicles: Small
sport/utility vehicles (SUVs), midsize
SUVs, large SUVs, small pickups, large
pickups, minivans, subcompact cars,
compact cars, midsize cars, and large
cars. In addition, the input file defining
technology characteristics can (but need
not) contain specified ‘‘synergies’’
between technologies—that is,
differences in a given technology’s effect
on fuel consumption that result from the
presence of other technologies.
Another input file specifies vehicular
emission rates for the following
pollutants: Carbon monoxide (CO),
volatile organic compounds (VOCs),
nitrogen oxides (NOX), particulate
matter (PM), and sulfur dioxide (SO2).
These rates are defined on a model year89 California Environmental Protection Agency,
Air Resources Board, Staff Report: Initial Statement
of Reasons (CARB ISOR) (2004), at 111–114.
Available at https://www.arb.ca.gov/regact/
grnhsgas/isor.pdf (last accessed April 20, 2008). We
note that California has adopted these standards but
is currently unable to enforce them, due to EPA’s
February 29, 2008, denial of California’s request for
waiver of federal preemption under Section 209 of
the Clean Air Act. For information on EPA’s
decision, see https://www.epa.gov/otaq/cawaiver.htm. (Last accessed April 20, 2008.)
California filed a petition in the Ninth Circuit Court
of Appeals challenging EPA’s denial of the waiver
on January 2, 2008.
90 Although CARB’s analysis covered a wider
range of model years than does NHTSA’s analysis,
this does not lessen the importance of a detailed
representation of manufacturers’ fleets.
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by-model year and calendar year-bycalendar year basis, and are used to
estimate changes in emissions that
result from changes in vehicular travel
(i.e., vehicle-miles traveled or VMT).
A third input file specifies a variety
of economic and other data and
estimates. The model can accommodate
vehicle survival (i.e., percent of vehicles
of a given vintage that remain in service)
and mileage accumulation (i.e., annual
travel by vehicles of a given vintage)
rates extending as many years beyond
the year of sale as for which estimates
are available and use those for
estimating VMT, fuel consumption, and
emissions. The model can also
accommodate forecasts of price and fuel
taxation rates for up to seven fuels (e.g.,
gasoline, diesel) over a similar period.
The model uses pump prices (i.e.,
including taxes) to estimate the value
manufacturers expect vehicle
purchasers to place on saved fuel,
because they indicate the amount by
which the manufacturer is expected to
consider itself able to increase the retail
price of the vehicle based on the
purchaser’s consideration of the
vehicle’s increased fuel economy.
However, the model uses pretax fuel
prices to estimate the monetized societal
benefits of reduced fuel consumption,
because fuel taxes represent transfers of
resources from fuel buyers to
government agencies rather than real
resources that are consumed in the
process of supplying or using fuel, so
their value must be deducted from retail
fuel prices to determine the value of fuel
savings to the U.S. economy.
Other economic inputs include the
rebound effect coefficient (i.e., the
elasticity of VMT with respect to the
per-mile cost of fuel); the discount rate;
the ‘‘payback period’’ (i.e., the number
of years manufacturers are estimated to
assume vehicle purchasers consider
when taking into account fuel savings);
the ‘‘gap’’ between laboratory and actual
fuel economy; the per-vehicle value of
travel time (in dollars per hour); the
economic costs (in dollars per gallon) of
petroleum consumption; various
external costs (all in dollars per mile)
associated with changes in vehicle use;
damage costs (all on a dollar per ton
basis) for each of the above-mentioned
criteria pollutants; and the rate at which
noncompliance causes civil penalties.
Section V below describes in much
more detail how these inputs are
included and used by the model.
The model also accommodates input
data and estimates addressing the
properties of different fuels. These
include upstream carbon dioxide and
criteria pollutant emission rates (i.e.,
U.S. emissions resulting from the
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production and distribution of each
fuel), density (pounds/gallon), energy
density (BTU/gallon), carbon content,
shares of fuel savings leading to reduced
domestic refining, and relative shares of
different gasoline blends. These fuel
properties and related estimates are
used to calculate changes in domestic
upstream emissions resulting from
changes in fuel consumption.
Coefficients defining the probability
distributions to apply when performing
sensitivity analysis (i.e., Monte Carlo
simulation) are also specified in this
input file.91 These coefficients
determine the likelihood that any given
value will be selected when performing
this type of analysis (e.g., the likelihood
that a rebound effect of -0.1 will be
tested). High and low fuel price
forecasts are also specified in this input
file for this purpose.
The final input file contains CAFE
scenarios to be examined. The model
accommodates a baseline (i.e., businessas-usual) scenario and different
alternative scenarios. Effects of the
alternative scenarios are calculated
relative to results for the baseline
scenario. Each scenario defines the
coverage, structure, and stringency of
CAFE standards for each of the covered
model years.
With all of the above input data and
estimates, the modeling system
develops an estimate of a set of
technologies each manufacturer could
apply in response to each specified
CAFE scenario. Because manufacturers
have many choices regarding how to
respond to CAFE standards, it is
impossible to predict precisely how a
given manufacturer would respond to a
given set of standards. The modeling
system begins with the ‘‘initial state’’
(i.e., business-as-usual) of each
manufacturer’s future vehicles, and
accumulates the estimated costs of
progressive additions of fuel-saving
technologies. Within a set of specified
constraints, the system adds
technologies following a costminimizing approach, because this is
what NHTSA expects a manufacturer
would do in real life. At each step, the
system evaluates the effective cost of
applying available technologies to
individual vehicle models, engines, or
transmissions, and selects the
application of technology that produces
the lowest effective cost. The effective
cost estimated to be considered by the
manufacturer is calculated by adding
the total incurred technology costs (in
retail price equivalent or RPE),
subtracting the reduction in civil
91 The sensitivity analysis and its usefulness are
explained more fully below.
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penalties owed for noncompliance with
the CAFE standard, subtracting the
estimated value 92 of the reduction in
fuel costs, and dividing the result by the
number of affected vehicles.
In representing manufacturer
decision-making in response to a given
CAFE standard, the modeling system
accounts for the fact that historically
some manufacturers have been
unwilling to pay penalties and some
have been willing to do so. Thus, the
system applies technologies until any of
the following conditions are met: the
manufacturer no longer owes civil
penalties for failing to meet the
applicable standard, the manufacturer
has exhausted technologies expected to
be available in that model year, or the
manufacturer is estimated to be willing
to pay civil penalties, and doing so is
estimated to be less expensive than
continuing to add technologies. The
system then progresses to the next
model year (if included in the vehicle
market and scenario input files),
‘‘carrying over’’ technologies where
vehicle models are projected to be
succeeded by other vehicle models.93
In the modeling system, this
‘‘compliance simulation’’ is constrained
in several ways. First, technologies are
defined as being applicable or not
applicable to each of the ten vehicle
categories listed above. The vehicle
market forecast input file may also
define some technologies as being
already present or not applicable to
specific vehicles, engines or
transmissions. For example, a
manufacturer may have indicated it
plans to use low-drag brakes on some
specific vehicle model, or NHTSA may
expect that another manufacturer is not
likely to apply a 7- or 8-speed
transmission after it installs a 6-speed
transmission on a vehicle. Second, some
technologies are subject to specific
‘‘engineering constraints.’’ For example,
secondary-axle disconnect can only be
applied to vehicles with four-wheel (or
all-wheel) drive. Third, some
technologies (e.g., conversion from
pushrod valve actuation to overhead
cam actuation) are nearly always
92 The estimated value of the reduction in fuel
costs represents the amount by which the
manufacturer is expected to consider itself able to
increase the retail price of the vehicle based on the
purchaser’s consideration of the vehicle’s increased
fuel economy. This calculation considers the
change in the discounted outlays for fuel (and fuel
taxes) during a ‘‘payback period’’ specified as an
input to the model.
93 For example, if Honda is expected to produce
the Civic in 2012 and 2013, a version of the Civic
estimated to be produced in 2013 may carry over
technologies from a version of the Civic produced
in 2012 if the latter is identified as a ‘‘predecessor’’
of the former.
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applied only when the vehicle is
expected to be redesigned and others
(e.g., cylinder deactivation) are applied
only when the vehicle is expected to be
refreshed or redesigned, so the model
will only apply them at those particular
points. Fourth, once the system applies
a given technology to a percentage of a
given manufacturers’ fleet exceeding a
specified phase-in cap, the system
instead applies other technologies. The
third and fourth of these constraints are
intended to produce results consistent
with manufacturers’ product planning
practices and with limitations on how
quickly technologies can penetrate the
fleet.
One important aspect of this
compliance simulation is that it does
not attempt to account for either CAFE
credits or intentional over-compliance.
In the real world, manufacturers may
earn CAFE credits by selling flex-fueled
vehicles (FFVs) and/or by exceeding
CAFE standards, and may, within
limitations, count those credits toward
compliance in future or prior model
years. However, EPCA and EISA do not
allow NHTSA to consider these
flexibilities in setting the standards.
Therefore, the Volpe model does not
attempt to account for these flexibilities.
Another possibility NHTSA and
Volpe Center staff have considered, but
do not yet know how to analyze, is the
potential that manufacturers might
‘‘pull ahead’’ the implementation of
some technologies in response to CAFE
standards that they know will be
steadily increasing over time. For
example, if a manufacturer plans to
redesign many vehicles in MY2011 and
not in MY2013, but the standard for
MY2013 is considerably higher than
that for MY2011, the manufacturer
might find it less expensive during
MY2011–MY2013 (taken together) to
apply more technology in MY2011 than
is necessary for compliance with the
MY2011 standard. Under some
circumstances, doing so might make
sense even without regard to the
potential to earn and bank CAFE credits.
NHTSA and Volpe Center staff have
discussed the potential to represent this
type of response, but have thus far
encountered two challenges. First,
NHTSA is not certain that in
determining the maximum feasible
standard in a given model year, it would
be appropriate to count on
manufacturers overcomplying with
standards in preceding model years.
Second, considering other inter-model
year dependencies (e.g., technologies
that carry over between model years,
phase-in caps that accumulate across
model years, volume-based learning
curves), Volpe Center staff currently
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anticipate that some iterative procedure
would likely be necessary. Also, the
agency wonders whether trying to
represent this type of response would
require make undue implicit
assumptions regarding manufacturers’
ability to predict future market
conditions. Although NHTSA and Volpe
Center staff will continue to explore the
potential to represent inter-model year
timing, it is not yet clear that it will be
appropriate and feasible to do so in the
near term.
The agency requests comment on the
appropriateness under EPCA of
considering (in the standard-setting
context) this type of anticipatory
application of technology. The agency
further requests comment on
appropriate methodologies for
projecting and representing such
decisions by manufacturers.
3. What effects does the Volpe model
estimate?
Having completed this compliance
simulation for all manufacturers and all
model years, the system calculates the
total cost of all applied technologies, as
well as a variety of effects of changes in
fuel economy. The system calculates
year-by-year mileage accumulation,
taking into account any increased
driving estimated to result from the
rebound effect. Based on the calculated
mileage accumulation and on fuel
economy and the estimated gap between
laboratory and actual fuel economy, the
system calculates year-by-year fuel
consumption. Based on calculated
mileage accumulation and fuel
consumption, and on specified emission
factors, the system calculates future full
fuel-cycle domestic carbon dioxide and
criteria pollutant emissions. The system
calculates total discounted and
undiscounted national societal costs of
year-by-year fuel consumption, taking
into account estimated future fuel prices
(before taxes) and the estimated
economic externalities of fuel
consumption. Based on changes in yearby-year mileage accumulation, the
system calculates changes in consumer
surplus related to additional travel, as
well as economic externalities related to
additional congestion, accidents, and
noise stemming from additional travel.
The system calculates the value of time
saved because increases in fuel
economy produce increases in driving
range, thereby reducing the frequency
with which some vehicles require
refueling. The system calculates the
monetary value of damages resulting
from criteria pollutants. Finally, the
system accumulates all discounted and
undiscounted societal benefits of each
scenario as compared to the baseline
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scenario. For each model year, the
system compares total incurred
technology costs to the total present
value of societal benefits for each model
year, calculating net societal benefits
(i.e., discounted societal benefits minus
total incurred technology costs) and the
benefit-cost ratio (i.e., discounted
societal benefits divided by total
incurred technology costs).
One effect not currently estimated by
the Volpe model is the market response
to CAFE-induced changes in vehicle
prices and fuel economy levels. NHTSA
and Volpe Center staff have worked to
try and develop and apply a market
share model capable of estimating
changes in sales of individual vehicle
models. Doing so would allow
estimation of the feedback between
market shifts and CAFE requirements.
For example, if the relative market share
of vehicles with small footprints
increases, the average required CAFE
level under a footprint-based standard
will also increase.
In an early experimental version of
the Volpe model, Volpe Center staff
included a market share model using a
nested multinomial logit specification to
calculate model-by-model changes in
sales volumes. This allowed the Volpe
model to calculate the resulting changes
in manufacturers’ required CAFE levels,
and to seek iteratively a solution at
which prices, fuel economy levels, sales
volumes, and required CAFE levels
converged to stable values. Although the
market share model appeared to operate
properly (and to converge rapidly),
Volpe Center staff suspended its
development because of three
challenges:
First, Volpe Center staff were not
successful in calibrating a logically
consistent set of coefficients for the
underlying multinomial logit model.
The analysis, performed using
1
1
+
LIMITUPPER LIMITLOWER
manufacturer decisions could be
reasonably estimated.
NHTSA and Volpe Center staff are
continuing to explore options for
including these types of effects. At the
same time, EPA has contracted with
Resources for the Future (RFF) to
develop a potential market share model.
Depending on the extent to which these
efforts are successful, the Volpe model
could at some point be modified to
include cost allocation and market share
models. NHTSA seeks comments on
possible methodologies for
incorporating market responses to
CAFE-induced changes in vehicle price
and fuel economy in the Volpe model.
In particular, NHTSA seeks comments
addressing the concerns identified
above regarding the formulation and
calibration of a market share model, the
estimation of future vehicle prices, and
the estimation of manufacturers’
decisions regarding the allocation of
compliance costs.
4. How can the Volpe model be used to
calibrate and evaluate potential CAFE
standards?
The modeling system can also be
applied in a more highly-automated
mode whereby the optimal shape of an
attribute-based CAFE standard may be
estimated and its stringency may be set
at a level that produces a specified total
technology cost or average required
CAFE level among a specified set of
manufacturers, or that is estimated to
maximize net societal benefits. The first
step in this operating mode involves
identifying manufacturer-bymanufacturer CAFE levels at which
societal benefits are estimated to be
maximized. The second step involves
combining the resultant fleets and
statistically fitting a constrained logistic
curve of the following form:
1
T
e( FOOTPRINT −MIDPOINT )/WIDTH
1
−
LIMITUPPER 1 + e( FOOTPRINT −MIDPOINT )/WIDTH
Here, TARGET is the fuel economy
target (in mpg) applicable to vehicles of
a given footprint (FOOTPRINT, in
square feet), LIMITLOWER and
LIMITUPPER are the function’s lower and
upper asymptotes (also in mpg), e is
approximately equal to 2.718,94
MIDPOINT is the footprint (in square
feet) at which the inverse of the fuel
economy target falls halfway between
the inverses of the lower and upper
asymptotes, and WIDTH is a parameter
(in square feet) that determines how
gradually the fuel economy target
transitions from the upper toward the
lower asymptote as the footprint
increases. Figure V–1 below shows an
example of a logistic target function,
where LIMITLOWER = 20 mpg,
LIMITUPPER = 30 mpg, MIDPOINT =
40 square feet, and WIDTH = 5 square
feet:
94 The number e is one of the most important
numbers in mathematics and statistics. The
function has a hockey stick appearance when
plotted. The value of e itself is a never ending
number whose first 8 digits equal 2.7182818.
NHTSA uses it here because it occurs in many
natural processes and tends to fit data well. In the
last light truck rulemaking, NHTSA examined
several functional forms that did not rely on e, but
they were judged not to provide as good a fit for
the data. We are using the same conclusion here.
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TARGET =
information from a known (2002 model
year) fleet, consistently yielded one or
more coefficients that were either
directionally incorrect (e.g., indicating
that some attributes actually detract
from value) or implausibly large (e.g.,
indicating that some attributes were of
overwhelming value). Although Volpe
Center staff tested many different
specifications of the market share
model, none produced results that
appeared to merit further consideration.
Second, NHTSA and Volpe Center
staff are not confident that baseline sales
prices for individual vehicle models,
which would be required by a market
share model, can be reliably predicted.
Although NHTSA requests that
manufacturers include planned MSRPs
in product plans submitted to NHTSA,
MSRPs do not include the effect of
various sales incentives that can change
actual selling prices. The availability
and dollar value of such incentives have
been observed to vary considerably, but
not necessarily predictably.
Finally, before applying a market
share model, it would be necessary to
estimate how manufacturers would
allocate compliance costs among vehicle
models. Although one obvious approach
would be to assume that all costs would
be passed through in the form of higher
prices for those vehicle models with
improved fuel economy, other
approaches are perhaps equally
plausible. For example, a manufacturer
might shift compliance costs toward
high-demand vehicles in order to
compete better in certain market
segments. Although the abovementioned experimental version of the
Volpe model included a ‘‘cost
allocation’’ model that offered several
different allocation options, NHTSA and
Volpe Center staff never achieved
confidence that these aspects of
The lower asymptote is determined by
calculating the average fuel economy of
the largest vehicles in the ‘‘optimized’’
fleet discussed above, where the
percentage of the fleet to consider is
specified externally. Similarly, the
upper asymptote is determined by
calculating the average fuel economy of
the smallest vehicles in the same fleet.
Initial values of the other two
coefficients of the logistic function are
determined through a standard
statistical technique (nonlinear leastsquare regression), except as discussed
in sections V and VI below regarding the
adjusting of the original curve for the
passenger car function.
Following this initial calibration of
the target function, the system adjusts
the lower and upper asymptotes
uniformly (on a gallon per mile basis)
until one of the following externally
specified conditions is met: the average
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CAFE level required of the included
manufacturers approximately equals an
externally specified goal; net societal
benefits (i.e., total benefits minus total
costs) are maximized, or total benefits
are as close as observed (among
evaluated stringency levels) to total
costs. Due to rounding of fuel economy
and CAFE levels, the first condition can
only be satisfied on an approximate
basis.
The modeling system provides
another type of higher-level
automation—the ability to perform
uncertainty analysis, also referred to as
Monte Carlo simulation. For some input
parameters, such as technology costs,
values can be tested over a specified
continuous probability distribution. For
others, such as fuel prices, discrete
scenarios (e.g., high, low, and reference
cases), each with a specified probability,
can be tested. The system performs
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sensitivity analysis by randomly
selecting values for parameters to be
varied, performing the compliance
simulation and effects calculations,
repeating these results many times and
recording results for external analysis.
This operating mode enables the
examination of the uncertainty of highlevel results (e.g., total costs, fuel
savings, or net societal benefits), as well
as their sensitivity to variations in the
model’s input parameters.
5. How has the Volpe model been
updated since the April 2006 light truck
CAFE final rule?
Several changes were made to the
Volpe model between the analysis
reported in the April 2006 light truck
final rule and the analysis of the current
NPRM. As discussed above, the set of
technologies represented was updated,
the logical sequence for progressing
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through these technologies was
changed, methods to account for
‘‘synergies’’ (i.e., interactions) between
technologies and technology cost
reductions associated with a
manufacturer’s ‘‘learning’’ were added,
the effective cost calculation used in the
technology application algorithm was
modified, and the procedure for
calibrating a reformed standard was
changed, as was the procedure for
estimating the optimal stringency of a
reformed standard.
As discussed in Section III above, the
set of technologies considered by the
agency has evolved since the previous
light truck CAFE rulemaking. The set of
technologies now included in the Volpe
model is shown below in Table V–1,
with codes used by the model to refer
to each technology.
TABLE V–1.—REVISED TECHNOLOGY
SET FOR VOLPE MODEL
Code
(for
Model)
Technology
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Low Friction Lubricants ...................
Engine Friction Reduction ...............
Variable Valve Timing (Intake Cam
Phasing).
Variable Valve Timing (Coupled
Cam Phasing).
Variable Valve Timing (Dual Cam
Phasing).
Cylinder Deactivation ......................
Variable Valve Lift & Timing (Continuous VVL).
Variable Valve Lift & Timing (Discrete VVL).
Cylinder Deactivation on Overhead
Valve (OHV).
Variable Valve Timing (CCP) on
OHV.
Multivalve Overhead Cam with
CVVL.
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EFR
VVTI
VVTC
VVTD
DISP
VVLTC
VVLTD
DISPO
VVTO
DOHC
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TABLE V–1.—REVISED TECHNOLOGY
SET FOR VOLPE MODEL—Continued
Code
(for
Model)
Technology
Variable Valve Lift & Timing (DVVL)
on OHV.
Camless Valve Actuation ................
Stoichiometric Gasoline Direct Injection (GDI).
Lean Burn GDI ................................
Turbocharging and Downsizing ......
Homogeneous Charge Compression Ignition.
Diesel with Lean NOX Trap (LNT) ..
Diesel with Selective Catalytic Reduction (SCR).
5 Speed Automatic Transmission ...
Aggressive Shift Logic ....................
Early Torque Converter Lockup ......
6 Speed Automatic Transmission ...
Automatic Manual Transmission .....
Continuously Variable Transmission
6 Speed Manual ..............................
Improved Accessories .....................
Electronic Power Steering ..............
42-Volt Electrical System ................
Low Rolling Resistance Tires .........
Low Drag Brakes ............................
Secondary
Axle
Disconnect—
Unibody.
Secondary Axle Disconnect—Ladder Frame.
Aero Drag Reduction ......................
Material Substitution (1%) ...............
Material Substitution (2%) ...............
Material Substitution (5%) ...............
Integrated Starter/Generator (ISG)
with Idle-Off.
IMA/ISAD/BSG Hybrid (includes engine downsizing).
2-Mode Hybrid ................................
Power Split Hybrid ..........................
Full Diesel Hybrid ............................
VVLTO
CVA
SIDI
LBDI
TURB
HCCI
DSLL
DSLS
5SP
ASL
TORQ
6SP
AMT
CVT
6MAN
IACC
EPS
42V
ROLL
LDB
SAXU
SAXL
AERO
MS1
MS2
MS5
ISGO
IHYB
2HYB
PHYB
DHYB
The logical sequence for progressing
between these technologies has also
been changed. As in the previous
version of the Volpe model,
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technologies are assigned to groups (e.g.,
engine technologies) and the model
follows a cost-minimizing approach to
selecting technologies. However, the
model now includes some ‘‘branch
points’’ at which it selects from two or
more technologies within the same
group. This enables a more detailed
representation of some technologies that
have multiple variants (e.g., variable
valve timing) and, as relevant to the
applicability of different technologies,
more specific differentiation between
technologies that have already been
applied to vehicles (e.g., single versus
dual overhead cam engines). This
revised logical sequencing is expected
to produce results that are more realistic
in terms of the application of
technologies to different vehicle models.
For example, in this analysis OHV
engines and OHC engines were
considered separately, and the model
was generally not allowed to apply
multivalve OHC technology to OHV
engines (except where continuous
variable valve timing and lift is applied
to OHV engines, in which case the
model assumes conversion to DOHC
valvetrain).
Figure V–2 below shows the resultant
‘‘decision tree’’ for the group of engine
technologies. As an example of the
‘‘branching’’ mentioned above, having
applied cylinder deactivation and
coupled cam phasing to an overhead
valve engine, the Volpe model selects
either discrete valve lift or an engine
redesign to multivalve overhead cam
with continuous variable valve lift.
Figure V–3 shows the decision tree for
transmission technologies, and Figure
V–4 shows the decision trees for other
technologies.
BILLING CODE 4910–59–P
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Each time the model applies a
technology to a vehicle in the fleet, it
considers the next available technology
on every available path. An available
technology is one that is not included in
the base vehicle, has not been applied
by the model, and is not disqualified
due to the vehicle’s characteristics
(discussed below). For a given path, the
next available technology is the first
available item (if no technologies on the
path have yet been applied) or the first
available item following the most
recently applied technology on that
path. An available path is any path that
includes available technologies.
The engine and transmission paths
contain several forks where the model
may choose among two or more samepath items along with items from other
paths. At some of these forks, conditions
on the connecting arrows require the
model to follow a particular branch.
These conditions are based on
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previously applied technologies or
vehicle characteristics. For example,
ladder frame vehicles must follow the
left branch of the transmission
technology path, while unibody
vehicles can follow either the right or
left branch. The consequence is that the
model considers both aggressive shift
logic (ASL) and CVT for unibody
vehicles, but only ASL for ladder frame
vehicles. Conditions along the engine
technologies path are based on
valvetrain design (OHV, OHC, SOHC,
and DOHC).
Other conditions require the model to
discontinue considering technologies
along a given path. For example, 2Mode Hybrid and Power Split Hybrid
drivetrains can be applied only to
vehicles equipped with automatic
transmissions. If the model has already
chosen a manual transmission and IMA/
ISAD/BSG Hybrid drivetrain (or if the
base vehicle is equipped with these), the
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24399
hybrid path becomes unavailable and
the model must choose subsequent
technologies from other paths.
a. Technology Synergies
In some cases, the change in fuel
economy achieved by applying a given
technology depends on what other
technologies are already present. The
Volpe model has been modified to
provide the ability to represent such
‘‘synergies’’ between technologies, as
discussed above. These effects are
specified in one of the model’s input
files. As shown below in Table V–2,
which uses technology codes listed in
Table V–1 above, most of the synergies
represented in the analysis of this
proposal are negative. In other words,
most of the interactions are such that a
given technology has a smaller effect on
fuel economy if some other technologies
have already been applied. The
inclusion of such effects in the model is
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expected to produce more realistic
estimates of the benefit of applying
various technologies.
TABLE V–2.—‘‘SYNERGIES’’ FROM TECHNOLOGY INPUT FILE FOR VOLPE MODEL
[In percent]
Synergies
Synergy values by vehicle class.
Positive values are synergies, negative values are dissynergies.
Technology A
Technology B
VVTI ..............................................
VVTI ..............................................
VVTC ............................................
VVTC ............................................
VVTC ............................................
DISP .............................................
DISP .............................................
DISP .............................................
DISP .............................................
VVLTC ..........................................
VVLTC ..........................................
VVLTC ..........................................
VVLTC ..........................................
VVLTD ..........................................
VVLTD ..........................................
DISPO ...........................................
DISPO ...........................................
DISPO ...........................................
DISPO ...........................................
DISPO ...........................................
VVTO ............................................
VVTO ............................................
DOHC ...........................................
DOHC ...........................................
DOHC ...........................................
DOHC ...........................................
DOHC ...........................................
DOHC ...........................................
VVLTO ..........................................
VVLTO ..........................................
VVLTO ..........................................
5SP ...............................................
ISGO .............................................
5SP ...............................................
CVT ...............................................
ASL ...............................................
5SP ...............................................
CVT ...............................................
ASL ...............................................
ISGO .............................................
5SP ...............................................
CVT ...............................................
ASL ...............................................
6MAN ............................................
CVT ...............................................
6SP ...............................................
5SP ...............................................
CVT ...............................................
ASL ...............................................
6SP ...............................................
ISGO .............................................
CVT ...............................................
6MAN ............................................
5SP ...............................................
CVT ...............................................
ASL ...............................................
6SP ...............................................
6MAN ............................................
ISGO .............................................
5SP ...............................................
CVT ...............................................
6SP ...............................................
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¥0.50
¥0.50
¥1.00
¥1.00
¥0.50
¥0.50
¥0.50
¥0.50
¥0.50
¥0.50
¥0.50
¥0.50
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¥1.00
¥0.50
¥0.50
¥1.00
¥0.50
0.50
¥1.00
¥1.00
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¥0.50
¥0.50
0.50
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¥1.00
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¥0.50
¥0.50
0.50
¥0.50
¥0.50
¥0.50
Minivan
¥0.50
¥0.50
¥0.50
¥0.50
¥0.50
¥1.00
¥1.00
¥0.50
¥0.50
¥0.50
¥0.50
¥0.50
¥0.50
¥0.50
¥0.50
¥1.50
¥1.00
¥0.50
¥0.50
¥1.00
¥0.50
0.50
¥1.00
¥1.00
¥0.50
¥0.50
¥0.50
0.50
¥0.50
¥0.50
¥0.50
PickupSmall
¥0.50
¥0.50
¥0.50
¥0.50
¥0.50
¥1.00
¥1.00
¥0.50
¥0.50
¥0.50
¥0.50
¥0.50
¥0.50
¥0.50
¥0.50
¥1.50
¥1.00
¥0.50
¥0.50
¥1.00
¥0.50
0.50
¥1.00
¥1.00
¥0.50
¥0.50
¥0.50
0.50
¥0.50
¥0.50
¥0.50
[In percent]
Synergies
Synergy values by vehicle class
Positive values are synergies, negative values are dissynergies.
rwilkins on PROD1PC63 with PROPOSALS2
Technology A
Technology B
CVA ..............................................
CVA ..............................................
CVA ..............................................
CVA ..............................................
CVA ..............................................
HCCI .............................................
HCCI .............................................
TURB ............................................
TURB ............................................
TURB ............................................
TURB ............................................
TURB ............................................
E25 ...............................................
E25 ...............................................
E25 ...............................................
ISGO .............................................
ISGO .............................................
ISGO .............................................
DSLT .............................................
DSLT .............................................
DSLT .............................................
DSLT .............................................
DSLH ............................................
DSLH ............................................
DSLH ............................................
5SP ...............................................
CVT ...............................................
ASL ...............................................
6SP ...............................................
6MAN ............................................
CVT ...............................................
6SP ...............................................
5SP ...............................................
CVT ...............................................
ASL ...............................................
6SP ...............................................
6MAN ............................................
5SP ...............................................
6MAN ............................................
ISGO .............................................
IACC .............................................
EPS ...............................................
42V ...............................................
5SP ...............................................
CVT ...............................................
ISGO .............................................
ASL ...............................................
5SP ...............................................
CVT ...............................................
6SP ...............................................
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[In percent]
Synergies
Technology A
DSLH
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DSLS
DSLS
Synergy values by vehicle class
Positive values are synergies, negative values are dissynergies.
Technology B
............................................
............................................
............................................
............................................
............................................
............................................
............................................
SUV-Small
6MAN ............................................
ISGO .............................................
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6SP ...............................................
6MAN ............................................
ISGO .............................................
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0.50
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[In percent]
Synergies
Synergy values by vehicle class.
Positive values are synergies, negative values are dissynergies.
Technology A
Technology B
PickupLarge
VVTI ..............................................
VVTI ..............................................
VVTC ............................................
VVTC ............................................
VVTC ............................................
DISP .............................................
DISP .............................................
DISP .............................................
DISP .............................................
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DOHC ...........................................
DOHC ...........................................
DOHC ...........................................
DOHC ...........................................
DOHC ...........................................
VVLTO ..........................................
VVLTO ..........................................
VVLTO ..........................................
5SP ...............................................
ISGO .............................................
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CVT ...............................................
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5SP ...............................................
CVT ...............................................
ASL ...............................................
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CVT ...............................................
6SP ...............................................
5SP ...............................................
CVT ...............................................
ASL ...............................................
6SP ...............................................
ISGO .............................................
CVT ...............................................
6MAN ............................................
5SP ...............................................
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ASL ...............................................
6SP ...............................................
6MAN ............................................
ISGO .............................................
5SP ...............................................
CVT ...............................................
6SP ...............................................
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0.50
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0.50
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[In percent]
Synergies
Synergy values by vehicle class.
Positive values are synergies, negative values are dissynergies.
rwilkins on PROD1PC63 with PROPOSALS2
Technology A
Technology B
CVA ..............................................
CVA ..............................................
CVA ..............................................
CVA ..............................................
CVA ..............................................
HCCI .............................................
HCCI .............................................
TURB ............................................
TURB ............................................
TURB ............................................
TURB ............................................
TURB ............................................
E25 ...............................................
E25 ...............................................
5SP ...............................................
CVT ...............................................
ASL ...............................................
6SP ...............................................
6MAN ............................................
CVT ...............................................
6SP ...............................................
5SP ...............................................
CVT ...............................................
ASL ...............................................
6SP ...............................................
6MAN ............................................
5SP ...............................................
6MAN ............................................
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24402
Federal Register / Vol. 73, No. 86 / Friday, May 2, 2008 / Proposed Rules
[In percent]
Synergies
Synergy values by vehicle class.
Positive values are synergies, negative values are dissynergies.
Technology B
E25 ...............................................
ISGO .............................................
ISGO .............................................
ISGO .............................................
DSLT .............................................
DSLT .............................................
DSLT .............................................
DSLT .............................................
DSLH ............................................
DSLH ............................................
DSLH ............................................
DSLH ............................................
DSLH ............................................
DSLS ............................................
DSLS ............................................
DSLS ............................................
DSLS ............................................
DSLS ............................................
rwilkins on PROD1PC63 with PROPOSALS2
Technology A
ISGO .............................................
IACC .............................................
EPS ...............................................
42V ...............................................
5SP ...............................................
CVT ...............................................
ISGO .............................................
ASL ...............................................
5SP ...............................................
CVT ...............................................
6SP ...............................................
6MAN ............................................
ISGO .............................................
5SP ...............................................
CVT ...............................................
6SP ...............................................
6MAN ............................................
ISGO .............................................
b. Technology learning curves
The Volpe model has also been
modified to provide the ability to
account for cost reductions a
manufacturer may realize through
learning achieved from experience in
actually applying a given technology.
Thus, for some of the technologies, we
have included a learning factor. Stated
another way, the ‘‘learning curve’’
describes the reduction in unit
production costs as a function of
accumulated production volume and
small redesigns that reduce costs.
As explained above, a typical learning
curve can be described by three
parameters: (1) The initial production
volume before cost reductions begin to
be realized; (2) the rate at which cost
reductions occur with increases in
cumulative production beyond this
initial volume (usually referred to as the
‘‘learning rate’’); and (3) the production
volume after which costs reach a
‘‘floor,’’ and further cost reductions no
longer occur. Over the region where
costs decline with accumulating
production volume, an experience curve
can be expressed as C(Q) = aQ¥b, where
a is a constant coefficient, Q represents
cumulative production, and b is a
coefficient corresponding to the
assumed learning rate. In turn, the
learning rate L, which is usually
expressed as the percent by which
average unit cost declines with a
doubling of cumulative production, and
is related to the value of the coefficient
b by L = 100*(1 ¥ 2–b).95
95 See, e.g., Robert H. Williams, ‘‘Toward Cost
Buydown via Learning-by-Doing for Environmental
Energy Technologies,’’ paper presented at
Workshop on Learning-by-Doing in Energy
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The new learning curves are
described in greater detail above in
Section III. We seek comment on the
assumptions used to develop the new
proposed learning curves.
c. Calibration of reformed CAFE
standards
The procedure used by the Volpe
model to develop (i.e., calibrate) the
initial shape of a reformed standard was
also modified. In the version of the
model used to analyze NHTSA’s April
2006 light truck final rule, the
asymptotes for the constrained logistic
function defining fuel economy targets
were assigned based on the set of
vehicles that would have been assigned
to the lowest and highest bins defined
in that rule’s 2005 NPRM. The Volpe
model has been modified to accept
specified percentages (in terms of either
models or sales) of the fleet to include
when assigning asymptotes.
The procedure used by the Volpe
model to estimate the ‘‘optimized’’
stringency of a reformed standard was
also modified. In the version of the
model used to analyze the 2006 light
truck final rule, the shape of the
function (i.e., the constrained logistic
function) defining fuel economy targets
was recalibrated every model year and
then shifted up and down to estimate
the stringency at which marginal costs
Technologies, Resources for the Future,
Washington, DC, June 17–18, 2003, pp. 1–2.
Another common but equivalent formulation of the
relationship between L and b is (1-L) = 2 b, where
(1-L) is referred to as the progress ratio; see Richard
P. Rumelt, ‘‘Note on Strategic Cost Dynamics,’’ POL
2001–1.1, Anderson School of Business, University
of California, Los Angeles, California, 2001, pp. 4–
5.
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begin to exceed marginal benefits or,
equivalently, the point at which net
societal benefits are maximized.
However, analysis conducted by the
agency to prepare for the current
rulemaking revealed several
opportunities to refine the procedure
described above before applying it to an
action that spans several model years.
The first refinement is a method for
gradually transforming the shape of the
continuous function between model
years and guarding against erratic
fluctuations in the shape (though not
necessarily the stringency) of the
continuous function. The second is the
implementation of several antibacksliding measures that prevents the
average required CAFE level from
falling between model years and
prevents the continuous function for a
given model from crossing or falling
below that of the preceding model year.
The third, applied to passenger cars
only, is an option to specify a fixed
relationship between the function’s
midpoint and width coefficients. These
refinements are discussed in greater
detail in Section V.B below.
6. What manufacturer information does
the Volpe model use?
For purposes of determining and
analyzing CAFE standards, NHTSA has
historically made significant use of
detailed product plan information
provided to the agency by individual
manufacturers, supplementing this
information where appropriate with
information from other sources, such as
data submitted to the agency in relation
to CAFE compliance. Such information
is considered confidential business
E:\FR\FM\02MYP2.SGM
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Federal Register / Vol. 73, No. 86 / Friday, May 2, 2008 / Proposed Rules
information (CBI) under federal law.
Although NHTSA shares the
information with other agencies (Volpe,
EPA, and DOE) involved in CAFE
activities, neither NHTSA nor any other
agency may release the information to
the public.
Consistent with this practice, the
Volpe model uses detailed
representations of (i.e., model-by-model,
linked to specific engines and
transmissions) the fleets manufacturers
are expected to produce for sale in the
U.S. In preparation for today’s action,
the agency issued in the spring of 2006
a request that manufacturers provide
updated product plans for passenger
cars and light trucks.
NHTSA received product plan
information from Chrysler, Ford, GM,
Honda, Nissan, Mitsubishi, Porsche and
Toyota. The agency did not receive any
product plan information from BMW,
Ferrari, Hyundai, Mercedes or VW.
Chrysler, Ford, GM, Honda, Nissan,
Mitsubishi, Porsche and Toyota
provided information covering multiple
model years. However, only Chrysler
and Mitsubishi provided us with
product plans that showed differing
production quantities, vehicle
introductions, vehicle redesigns/
refreshes changes, without any
carryover production quantities, from
MY 2007 to MY 2015. The agency
incorporated their product plan
information as part of the input file to
the model without the need to project or
carryover any vehicle production data.
For the other companies that provided
data, the agency carried over production
quantities for their vehicles, allowing
for growth, starting with the year after
their product plan data showed changes
in production quantities or showed the
introduction or redesign/refresh of
vehicles. Product plan information was
provided until MY 2013 for Ford and
Toyota, thus the first year that we
started to carry over production
quantities for those companies was MY
2014. Product plan information was
provided until MY 2012 for GM and
Nissan, thus the first year that we
started to carry over production
quantities for those companies was MY
2013. Product plan information was
provided by Honda until MY 2008.
Honda asked the agency to carry over
those plans and also provided data for
the last redesign of a vehicle and asked
us to carry them forward.
Product plan information was
provided until MY 2008 for Porsche,
thus the first year that we started to
carry over production quantities for
Porsche was MY 2009.
For Hyundai, given that it is one of
the largest 7 manufacturers, the agency
used the mid-year 2007 data contained
in the agency’s CAFE database to
establish the baseline models and
production quantities for their vehicles.
For the other manufacturers, because of
the time constraint the agency was
under to meet the statutory deadline, we
used the 2005 information from our
database, which is the latest information
used in the current analysis. To the
extent possible, because, the CAFE
database does not capture all of the
product plan data that we request from
companies, we supplemented the CAFE
database information with information
on public Web sites, from commercial
information sources and for Hyundai,
from the MY 2008–2011 light truck rule.
In all cases, manufacturers’ respective
sales volumes were normalized to
produce passenger car and light truck
fleets that reflected manufacturers’
MY2006 market shares and to reflect
passenger car and light truck fleets of
projected aggregate volume consistent
with forecasts in the EIA’s 2007 Annual
Energy Outlook. The agency requests
comment on whether alternative
methods should be used to estimate
manufacturers’ market shares and the
overall sizes of the future passenger car
and light truck fleets.
24403
In a companion notice, the agency is
requesting updated product plan
information from all companies, and as
in previous fuel economy rulemakings,
we will be using those plans for the
final rule. These plans will impact the
standards for the final rule. To that end,
the agency is requesting that these plans
be as detailed and as accurate as
possible.
7. What economic information does the
Volpe model use?
NHTSA’s preliminary analysis of
alternative CAFE standards for the
model years covered by this proposed
rulemaking relies on a range of
information, economic estimates, and
input parameters. This section describes
this information and each assumption
and specific parameter values, and
discusses the rationale for tentatively
choosing each one. Like the product
plan information, these economic
assumptions play a role in the
determination of the level of the
standards, with some having greater
impacts than others. The cost of
technologies and as discussed below,
the price of gasoline and discount rate
used for discounting future benefits
have the greatest influence over the
level of the standards. The agency seeks
comment on the economic assumptions
presented below. On the first question,
based on the comparisons of the side
cases to the base case that Jim did on
Friday, the order of impact for the
economic assumptions is: (1)
Technology cost and effectiveness; (2)
fuel prices; (3) discount rate; (4) oil
import externalities; (5) rebound effect;
(6) criteria air pollutant damage costs;
(7) carbon costs. This reflects the base
case assumptions, and could change
slightly if we used different
assumptions to start, but 1st through 3rd
should stay the same.
For the reader’s reference, Table V–3
below summarizes the values used to
calculate the impacts of each scenario:
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TABLE V–3.—ECONOMIC VALUES FOR BENEFITS COMPUTATIONS (2006$)
Rebound Effect (VMT Elasticity w/respect to Fuel Cost per Mile) ..........................................................................................................
Discount Rate Applied to Future Benefits ...............................................................................................................................................
Payback Period (years) ...........................................................................................................................................................................
‘‘Gap’’ between Test and On-Road mpg .................................................................................................................................................
Value of Travel Time per Vehicle ($/hour) ..............................................................................................................................................
Economic Costs of Oil Imports ($/gallon)
‘‘Monopsony’’ Component .........................................................................................................................................................
Price Shock Component ...........................................................................................................................................................
Military Security Component .....................................................................................................................................................
Total Economic Costs ($/gallon) ......................................................................................................................................................
Total Economic Costs ($/BBL) ..................................................................................................................................................
External Costs from Additional Automobile Use Due to ‘‘Rebound’’ Effect ($/vehicle-mile)
Congestion ................................................................................................................................................................................
Accidents ...................................................................................................................................................................................
Noise .........................................................................................................................................................................................
External Costs from Additional Light Truck Use Due to ‘‘Rebound’’ Effect ($/vehicle-mile)
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7%
5.0
20%
$24.00
$0.176
$0.109
$—
$0.285
$11.97
$0.047
$0.025
$0.001
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TABLE V–3.—ECONOMIC VALUES FOR BENEFITS COMPUTATIONS (2006$)—Continued
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Congestion ................................................................................................................................................................................
Accidents ...................................................................................................................................................................................
Noise .........................................................................................................................................................................................
Emission Damage Costs
Carbon Monoxide ($/ton) ..........................................................................................................................................................
Volatile Organic Compounds ($/ton) .........................................................................................................................................
Nitrogen Oxides ($/ton) .............................................................................................................................................................
Particulate Matter ($/ton) ...........................................................................................................................................................
Sulfur Dioxide ($/ton) ................................................................................................................................................................
Carbon Dioxide ($/metric ton) ...................................................................................................................................................
Annual Increase in CO2 Damage Cost ......................................................................................................................
a. Costs of Fuel Economy Technologies
We developed detailed estimates of
the costs of applying fuel economyimproving technologies to vehicle
models for use in analyzing the impacts
of alternative standards considered in
this rulemaking. The estimates were
based on those reported by the 2002
NAS Report analyzing costs for
increasing fuel economy, but were
modified for purposes of this analysis as
a result of extensive consultations
among engineers from NHTSA, EPA,
and the Volpe Center. As part of this
process, the agency also developed
varying cost estimates for applying
certain fuel economy technologies to
vehicles of different sizes and body
styles. We may adjust these cost
estimates based on comments received
to this NPRM.
The technology cost estimates used in
this analysis are intended to represent
manufacturers’ direct costs for highvolume production of vehicles with
these technologies and sufficient
experience with their application so that
all cost reductions due to ‘‘learning
curve’’ effects have been fully realized.
However, NHTSA recognizes that
manufacturers’ actual costs for applying
these technologies to specific vehicle
models are likely to include additional
outlays for accompanying design or
engineering changes to each model,
development and testing of prototype
versions, recalibrating engine operating
parameters, and integrating the
technology with other attributes of the
vehicle. Manufacturers may also incur
additional corporate overhead,
marketing, or distribution and selling
expenses as a consequence of their
efforts to improve the fuel economy of
individual vehicle models and their
overall product lines.
In order to account for these
additional costs, NHTSA applies an
indirect cost multiplier of 1.5 to the
estimate of the vehicle manufacturers’
direct costs for producing or acquiring
each fuel economy-improving/CO2
emission-reducing technology.
Historically, NHTSA has used an almost
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identical multiplier, 1.51, for the
markup from variable costs or direct
manufacturing costs to consumer costs.
This markup takes into account fixed
costs, burden, manufacturer’s profit, and
dealers’ profit. NHTSA’s methodology
for determining this markup was
recently peer reviewed.96
This estimate was confirmed by
Argonne National Laboratory in a recent
review of vehicle manufacturers’
indirect costs. The Argonne study was
specifically intended to improve the
accuracy of future cost estimates for
production of vehicles that achieve high
fuel economy/low CO2 emissions by
employing many of the same advanced
technologies considered in our
analysis.97 Thus, we believe that its
recommendation that a multiplier of 1.5
be applied to direct manufacturing costs
to reflect manufacturers’ increased
indirect costs for deploying advanced
fuel economy technologies is
appropriate for use in the analysis for
this rulemaking.
b. Potential Opportunity Costs of
Improved Fuel Economy
An important concern is whether
achieving the fuel economy
improvements required by alternative
CAFE standards would require
manufacturers to compromise the
performance, carrying capacity, safety,
or comfort of their vehicle models. If it
did so, the resulting sacrifice in the
value of these attributes to consumers
would represent an additional cost of
achieving the required improvements in
fuel economy, and thus of
manufacturers’ compliance with stricter
CAFE standards. While exact dollar
values of these attributes to consumers
are difficult to infer from vehicle
purchase prices, changing vehicle
attributes can affect the utility that
96 See
Docket No. NHTSA–2007–27454, Item 4.
Anant, Dan Santini, and Roy Cuenca,
Comparison of Indirect Cost Multipliers for Vehicle
Manufacturing, Center for Transportation Research,
Argonne National Laboratory, April 2000. Available
at https://www.transportation.anl.gov/pdfs/TA/
57.pdf (last accessed April 20, 2008).
97 Vyas,
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$0.023
$0.001
$—
$1,700
$3,900
$164,000
$16,000
$7.00
2.4%
vehicles provide to their owners, and
thus their value to potential buyers.
NHTSA has approached this potential
problem by developing tentative cost
estimates for fuel economy-improving
technologies that include any additional
manufacturing costs that would be
necessary to maintain the product plan
levels of performance, comfort, capacity,
or safety of any light-duty vehicle model
to which those technologies are applied.
In doing so, we primarily followed the
precedent established by the 2002 NAS
Report, although we updated its
assumptions as necessary for the
purposes of the current rulemaking. The
NAS study estimated ‘‘constant
performance and utility’’ costs for fuel
economy technologies, and NHTSA has
used these as the basis for their further
efforts to develop the technology costs
employed in analyzing manufacturer’s
costs for complying with alternative
light truck standards.
NHTSA acknowledges the difficulty
of estimating technology costs that
include costs for the accompanying
changes in vehicle design that are
necessary to maintain performance,
capacity, and utility. However, we
believe that our tentative cost estimates
for fuel economy/CO2 emissionreduction technologies should be
generally sufficient to prevent
significant reductions in consumer
welfare provided by vehicle models to
which manufacturers apply those
technologies. Nevertheless, we seek
comments on alternative ways to deal
with these issues.
c. The On-Road Fuel Economy ‘‘Gap’’
Actual fuel economy levels achieved
by light-duty vehicles in on-road driving
fall somewhat short of their levels
measured under the laboratory-like test
conditions used by EPA to establish its
published fuel economy ratings for
different models. In analyzing the fuel
savings from alternative CAFE
standards, NHTSA has previously
adjusted the actual fuel economy
performance of each light truck model
downward from its rated value to reflect
the expected size of this on-road fuel
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economy ‘‘gap.’’ On December 27, 2006,
EPA adopted changes to its regulations
on fuel economy labeling, which were
intended to bring vehicles’ rated fuel
economy levels closer to their actual onroad fuel economy levels.98
In its Final Rule, EPA estimated that
actual on-road fuel economy for lightduty vehicles averages 20 percent lower
than published fuel economy levels. For
example, if the overall EPA fuel
economy rating of a light truck is 20
mpg, the on-road fuel economy actually
achieved by a typical driver of that
vehicle is expected to be 16 mpg
(20*.80). NHTSA has employed EPA’s
revised estimate of this on-road fuel
economy gap in its analysis of the fuel
savings resulting from alternative CAFE
standards proposed in this rulemaking.
d. Fuel Prices and the Value of Saving
Fuel
Projected future fuel prices are a
critical input into the preliminary
economic analysis of alternative CAFE
standards, because they determine the
value of fuel savings both to new
vehicle buyers and to society. NHTSA
relied on the most recent fuel price
projections from the U.S. Energy
Information Administration’s (EIA)
Annual Energy Outlook (AEO) for this
analysis. Specifically, we used the AEO
2008 Early Release forecasts of inflationadjusted (constant-dollar) retail gasoline
and diesel fuel prices, which represent
the EIA’s most up-to-date estimate of the
most likely course of future prices for
petroleum products.99 Federal
government agencies generally use EIA’s
projections in their assessments of
future energy-related policies.
The retail fuel price forecasts
presented in AEO 2008 span the period
from 2008 through 2030. Measured in
constant 2006 dollars, the Reference
Case forecast of retail gasoline prices
during calendar year 2020 is $2.36 per
gallon, rising gradually to $2.51 by the
year 2030 (these values include federal,
state and local taxes). However, valuing
fuel savings over the 36-year maximum
lifetime of light trucks assumed in this
analysis requires fuel price forecasts
that extend through 2050, the last year
during which a significant number of
MY 2015 vehicles will remain in
service.100 To obtain fuel price forecasts
98 71
FR 77871 (Dec. 27, 2006).
Information Administration, Annual
Energy Outlook 2008, Early Release, Reference Case
Table 12. Available at https://www.eia.doe.gov/oiaf/
aeo/pdf/aeotab_12.pdf (last accessed April 20,
2008). EIA says that it will release the complete
version of AEO 2008—including the High and Low
Price and other side cases—at the end of April. The
agency will use those figures for the final rule.
100 The agency defines the maximum lifetime of
vehicles as the highest age at which more than 2
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for the years 2031 through 2050, the
agency assumes that retail fuel prices
forecast in the Reference Case for 2030
will remain constant (in 2006 dollars)
through 2050.
The value of fuel savings resulting
from improved fuel economy/reduced
CO2 emissions to buyers of light-duty
vehicles is determined by the retail
price of fuel, which includes federal,
state, and any local taxes imposed on
fuel sales. Total taxes on gasoline
averaged $0.47 per gallon during 2006,
while those levied on diesel averaged
$0.53. State fuel taxes are weighted by
sales. Because fuel taxes represent
transfers of resources from fuel buyers
to government agencies, however, rather
than real resources that are consumed in
the process of supplying or using fuel,
their value must be deducted from retail
fuel prices to determine the value of fuel
savings resulting from more stringent
CAFE standards to the U.S. economy as
a whole.
In estimating the economy-wide or
‘‘social’’ value of fuel savings of
increasing CAFE/reducing CO2
emissions levels, NHTSA assumes that
current fuel taxes will remain constant
in real or inflation-adjusted terms over
the lifetimes of the vehicles proposed to
be regulated. In effect, this assumes that
the average value per gallon of taxes on
gasoline and diesel fuel levied by all
levels of government will rise at the rate
of inflation over that period. This value
is deducted from each future year’s
forecast of retail gasoline and diesel
prices reported in AEO 2008 to
determine the social value of each
gallon of fuel saved during that year as
a result of improved fuel economy/
reduced CO2 emissions. Subtracting fuel
taxes results in a projected value for
saving gasoline of $1.83 per gallon
during 2020, rising to $2.02 per gallon
by the year 2030.
In conducting the preliminary
uncertainty analysis of benefits and
costs from alternative CAFE standards,
as required by OMB, NHTSA also
considered higher and lower forecasts of
future fuel prices. The results of the
sensitivity runs can be found in the
PRIA. EIA includes ‘‘High Price Case’’
and ‘‘Low Price Case’’ in AEO analyses
that reflect uncertainties regarding
future levels of oil production, but those
cases are not meant to be probabilistic,
and simply illustrate the range of
uncertainty that exists. Because AEO
2008 Early Release included only a
Reference Case of forecast of fuel prices
percent of those originally produced during a model
year remain in service. In the case of light-duty
trucks, for example, this age has typically been 36
years for recent model years.
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and did not include the High and Low
Price cases, the agency estimated high
and low fuel prices corresponding to the
AEO 2008 Reference Case forecast by
assuming that high and low price
forecasts would bear the same
relationship to the Reference Case
forecast as reported in AEO 2007.101
These alternative scenarios project retail
gasoline prices that range from a low of
$1.94 per gallon to a high of $3.26 per
gallon during 2020, and from $2.03 to
$3.70 per gallon during 2030. In
conjunction with our assumption that
fuel taxes will remain constant in real
or inflation-adjusted terms over this
period, these forecasts imply social
values of saving fuel ranging from $1.47
to $2.79 per gallon during 2020, and
from $1.56 to $3.23 per gallon in 2030.
EIA is widely-recognized as an
impartial and authoritative source of
analysis and forecasts of U.S. energy
production, consumption, and prices.
The agency has published annual
forecasts of energy prices and
consumption levels for the U.S.
economy since 1982 in its Annual
Energy Outlook (AEO). These forecasts
have been widely relied upon by federal
agencies for use in regulatory analysis
and for other purposes. Since 1994,
EIA’s annual forecasts have been based
upon the agency’s National Energy
Modeling System (NEMS), which
includes detailed representation of
supply pathways, sources of demand,
and their interaction to determine prices
for different forms of energy.
From 1982 through 1993, EIA’s
forecasts of world oil prices—the
primary determinant of prices for
gasoline, diesel, and other
transportation fuels derived from
petroleum—consistently overestimated
actual prices during future years, often
very significantly. Of the total of 119
forecasts of future world oil prices for
the years 1985 through 2005 that EIA
reported in its 1982–1993 editions of
AEO, 109 overestimated the subsequent
actual values for those years, on average
exceeding their corresponding actual
values by 75 percent.
Since that time, however, EIA’s
forecasts of future world oil prices show
a more mixed record for accuracy. The
1994–2005 editions of AEO reported 91
separate forecasts of world oil prices for
the years 1995–2005, of which 33 have
subsequently proven too high while the
101 Energy Information Administration, Annual
Energy Outlook 2007, High Price Case, Table 12,
https://www.eia.doe.gov/oiaf/aeo/pdf/
aeohptab_12.pdf (last accessed April 20, 2008) and
Energy Information Administration, Annual Energy
Outlook 2007 Low Price Case, Table 12, https://
www.eia.doe.gov/oiaf/aeo/pdf/aeolptab_12.pdf (last
accessed April 20, 2008).
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remaining 58 have underestimated
actual prices. The average absolute error
(i.e., regardless of its direction) of these
forecasts has been 21 percent, but overand underestimates have tended to
offset one another, so that on average
EIA’s more recent forecasts have
underestimated actual world oil prices
by 7 percent. Although both its
overestimates and underestimates of
future world oil prices for recent years
have often been large, the most recent
editions of AEO have significantly
underestimated petroleum prices during
those years for which actual prices are
now available.
However, NHTSA does not regard
EIA’s recent tendency to underestimate
future prices for petroleum and refined
products or the high level of current fuel
prices as adequate justification to
employ forecasts that differ from the
Reference Case forecast presented in
EIA’s Annual Energy Outlook 2008
Revised Early Release. This is
particularly the case because this
forecast has been revised upward
significantly since the initial release of
AEO 2008, which in turn represented a
major upward revision from EIA’s fuel
price forecast reported previously in
AEO 2007. NHTSA also notes that retail
gasoline prices across the U.S. have
averaged $2.94 per gallon (expressed in
2005 dollars) for the first three months
of 2008, slightly below EIA’s recently
revised forecast that gasoline prices will
average $2.98 per gallon (also in 2005
dollars) throughout 2008.
Comparing different forecasts of
world oil prices also shows that EIA’s
Reference Case forecast reported in
Annual Energy Outlook 2007 (AEO
2007) was actually the highest of all six
publicly-available forecasts of world oil
prices over the 2010–30 time horizon.102
Because world petroleum prices are the
primary determinant of retail prices for
refined petroleum products such as
transportation fuels, this suggests that
the Reference Case forecast of U.S. fuel
prices reported in AEO 2007 is likely to
be the highest of those projected by
major forecasting services. Further, as
indicated above, EIA’s most recent fuel
price forecasts have been revised
significantly upward from those
previously projected in AEO 2007.
e. Consumer Valuation of Fuel Economy
and Payback Period
In estimating the value of fuel
economy improvements that would
result from alternative CAFE standards
to potential vehicle buyers, NHTSA
assumes that buyers value the resulting
102 See https://www.eia.doe.gov/oiaf/archive/
aeo07/pdf/forecast.pdf, Table 19, p. 106.
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fuel savings over only part of the
expected lifetime of the vehicles they
purchase. Specifically, we assume that
buyers value fuel savings over the first
five years of a new vehicle’s lifetime,
and that buyers behave as if they do not
discount the value of these future fuel
savings. The five-year figure represents
the current average term of consumer
loans to finance the purchase of new
vehicles. We recognize that the period
over which individual buyers finance
new vehicle purchases may not
correspond to the time horizons they
apply in valuing fuel savings from
higher fuel economy. However, NHTSA
believes that five years represents a
reasonable estimate of the average
period over which buyers who finance
their purchases of new vehicle receive—
and thus must recognize—the monetary
value of future fuel savings resulting
from higher fuel economy.
The value of fuel savings over the first
five years of a vehicle model’s lifetime
that would result under each alternative
fuel economy standard is calculated
using the projections of retail fuel prices
described above. It is then deducted
from the technology costs incurred by
its manufacturer to produce the
improvement in that model’s fuel
economy estimated for each alternative
standard, to determine the increase in
the ‘‘effective price’’ to buyers of that
vehicle model. The Volpe model uses
these estimates of effective costs for
increasing the fuel economy of each
vehicle model to identify the order in
which manufacturers would be likely to
select models for the application of fuel
economy-improving technologies in
order to comply with stricter standards.
The average value of the resulting
increase in effective cost from each
manufacturer’s simulated compliance
strategy is also used to estimate the
impact of alternative standards on its
total sales for future model years.
However, it is important to recognize
that NHTSA estimates the aggregate
value to the U.S. economy of fuel
savings resulting from alternative
standards—or their ‘‘social’’ value—over
the entire expected lifetimes of vehicles
manufactured under those standards,
rather than over this shorter ‘‘payback
period’’ we assume for their buyers.
This is discussed directly below in
section f on ‘‘Vehicle survival and use
assumptions.’’ As indicated previously,
the maximum vehicle lifetimes used to
analyze the effects of alternative fuel
economy standards are estimated to be
25 years for automobiles and 36 years
for light trucks.
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f. Vehicle Survival and Use
Assumptions
NHTSA’s preliminary analysis of fuel/
CO2 emissions savings and related
benefits from adopting alternative
standards for MY 2011–2015 passenger
cars and light trucks is based on
estimates of the resulting changes in
fuel use over their entire lifetimes in the
U.S. vehicle fleet. The first step in
estimating lifetime fuel consumption by
vehicles produced during a model year
is to calculate the number that is
expected to remain in service during
each future year after they are produced
and sold.103 This number is calculated
by multiplying the number of vehicles
originally produced during a model year
by the proportion expected to remain in
service at the age they will have reached
during each subsequent year, often
referred to as a ‘‘survival rate.’’
The agency relies on projections of
the number of passenger cars and light
trucks that will be produced during
future years reported by the EIA in its
AEO Reference Case forecast.104 It uses
updated values of age-specific survival
rates for cars and light trucks estimated
from yearly registration data for vehicles
produced during recent model years, to
ensure that forecasts of the number of
vehicles in use reflect recent increases
in the durability and expected life spans
of cars and light trucks.105
The next step in estimating fuel use
is to calculate the total number of miles
that the cars and light trucks produced
in each model year affected by the
proposed CAFE standards will be driven
during each year of their lifetimes. To
103 Vehicles are defined to be of age 1 during the
calendar year corresponding to the model year in
which they are produced; thus for example, model
year 2000 vehicles are considered to be of age 1
during calendar year 2000, age 1 during calendar
year 2001, and to reach their maximum age of 26
years during calendar year 2025. NHTSA considers
the maximum lifetime of vehicles to be the age after
which less than 2% of the vehicles originally
produced during a model year remain in service.
Applying these conventions to vehicle registration
data indicates that passenger cars have a maximum
age of 26 years, while light trucks have a maximum
lifetime of 36 years. See Lu, S., NHTSA, Regulatory
Analysis and Evaluation Division, ‘‘Vehicle
Survivability and Travel Mileage Schedules,’’ DOT
HS 809 952, 8–11 (January 2006). Available at
https://www-nrd.nhtsa.dot.gov/pdf/nrd-30/NCSA/
Rpts/2006/809952.pdf (last accessed April 20,
2008).
104 The most recent edition is Energy Information
Administration, Annual Energy Outlook 2008: Early
Release. Available at https://www.eia.doe.gov/oiaf/
aeo/ (last accessed April 20, 2008).
105 Lu, S., NHTSA, Regulatory Analysis and
Evaluation Division, ‘‘Vehicle Survivability and
Travel Mileage Schedules,’’ DOT HS 809 952, 8–11
(January 2006). Available at https://wwwnrd.nhtsa.dot.gov/pdf/nrd-30/NCSA/Rpts/2006/
809952.pdf (last accessed April 20, 2008). These
updated survival rates suggest that the expected
lifetimes of recent-model passenger cars and light
trucks are 13.8 and 14.5 years.
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estimate total miles driven, the number
of cars and light trucks projected to
remain in use during each future year
(calculated as described above) is
multiplied by the average number of
miles they are expected to be driven at
the age they will have reached in that
year. The agency estimated the average
number of miles driven annually by cars
and light trucks of each age using data
from the Federal Highway
Administration’s 2001 National
Household Transportation Survey
(NHTS).106
Finally, fuel consumption during each
year of a model year’s lifetime is
estimated by dividing the total number
of miles its surviving vehicles are driven
by the fuel economy they are expected
to achieve under each alternative CAFE
standard. Each model year’s total
lifetime fuel consumption is the sum of
fuel use by the cars or light trucks
produced during that model year that
are projected to remain in use during
each year of their maximum life spans.
In turn, the savings in a model year’s
lifetime fuel use that will result from
each alternative CAFE standard is the
difference between its lifetime fuel use
at the fuel economy level it attains
under the Baseline alternative, and its
lifetime fuel use at the higher fuel
economy level it is projected to achieve
under that alternative standard.
To illustrate these calculations, the
most recent edition of the AEO
projections that 8.52 million light trucks
will be produced during 2012, and the
agency’s updated survival rates show
that slightly more than half of these
—50.1 percent, or 4.27 million—are
projected to remain in service during
the year 2027, when they will have
reached an age of 14 years. At that age,
light trucks achieving the fuel economy
level required under the Baseline
alternative are driven an average of
about 10,400 miles, so model year 2012
light trucks will be driven a total of 44.4
billion miles (= 4.27 million surviving
vehicles × 10,400 miles per vehicle)
during 2027. Summing the results of
similar calculations for each year of
their 36-year maximum lifetime, model
year 2012 light trucks will be driven a
total of 1,502 billion miles under the
Baseline alternative. Under that
alternative, they are projected to achieve
a test fuel economy level of 23.8 mpg,
which corresponds to actual on-road
fuel economy of 19.0 mpg (= 23.8 mpg
× 80 percent). Thus their lifetime fuel
use under the Baseline alternative is
projected to be 79.0 billion gallons (=
106 For a description of the Survey, see https://
nhts.ornl.gov/quickStart.shtml (last accessed April
20, 2008).
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1,502 billion miles divided by 19.0
miles per gallon).
g. Growth in Total Vehicle Use
By assuming that the annual number
of miles driven by cars and light trucks
at any age will remain constant over the
future, NHTSA’s procedure for
estimating the number of miles driven
by cars and light trucks over their
lifetimes in effect assumes that all future
growth in total vehicle-miles driven
stems from increases in the number of
vehicles in service, rather than from
increases in the average number of miles
they are driven each year. Similarly,
because the survival rates used to
estimate the number of cars and light
trucks remaining in service to various
ages are assumed to remain fixed for
future model years, growth in the total
number of cars and light trucks in use
is effectively assumed to result only
from increasing sales of new vehicles. In
order to determine the validity of these
assumptions, the agency conducted a
detailed analysis of the causes of recent
growth in car and light truck use.
From 1985 through 2005, the total
number of miles driven (usually referred
to as vehicle-miles traveled, or VMT) by
passenger cars increased 35 percent,
equivalent to a compound annual
growth rate of 1.5 percent.107 During
that time, the total number of passenger
cars registered for in the U.S. grew by
about 0.3 percent annually, almost
exclusively as a result of increasing
sales of new cars.108 Thus growth in the
average number of miles automobiles
are driven each year accounted for the
remaining 1.2 percent (= 1.5 percent—
0.3 percent) annual growth in total
automobile use.109
Over this same period, total VMT by
light trucks increased much faster,
growing at an annual rate of 5.1 percent.
In contrast to the causes of growth in
automobile use, however, nearly all
growth in light truck use over these two
decades was attributable to rapid
increases in the number of light trucks
in use.110 In turn, growth in the size of
107 Calculated from data reported in FHWA,
Highway Statistics, Summary to 1995, Table
vm201at https://www.fhwa.dot.gov/ohim/
summary95/vm201a.xlw, (last accessed April 20,
2008).and annual editions 1996–2005, Table VM–1
at https://www.fhwa.dot.gov/policy/ohpi/hss/
hsspubs.htm (last accessed April 20, 2008).
108 A slight increase in the fraction of new
passenger cars remaining in service beyond age 10
has accounted for a small share of growth in the
U.S. automobile fleet. The fraction of new
automobiles remaining in service to various ages
was computed from R.L. Polk vehicle registration
data for 1977 through 2005 by the agency’s Center
for Statistical Analysis.
109 See supra note [2 above here]
110 FHWA data show that growth in total miles
driven by ‘‘Two-axle, four-tire trucks,’’ a category
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the nation’s light truck fleet has resulted
almost exclusively from rising sales of
new light trucks, since the fraction of
new light trucks remaining in service to
various ages has remained stable or even
declined slightly over the past two
decades.111
On the basis of this analysis, the
agency tentatively concludes that its
projections of future growth in light
truck VMT account fully for the primary
cause of its recent growth, which has
been the rapid increase in sales of new
light trucks during recent model years.
However, the assumption that average
annual use of passenger cars will remain
fixed over the future appears to ignore
an important source of recent growth in
their total use, the gradual increase in
the average number of miles they are
driven. To the extent that this factor
continues to represent a significant
source of growth in future passenger car
use, the agency’s analysis is likely to
underestimate the reductions in fuel use
and related environmental impacts
resulting from stricter CAFE standards
for passenger cars.112 The agency plans
to account explicitly for potential future
growth in average annual use of both
cars and light trucks in the analysis
accompanying its Final Rule
establishing CAFE standards for model
years 2011–15.
h. Accounting for the Rebound Effect of
Higher Fuel Economy
The rebound effect refers to the
tendency for owners to increase the
number of miles they drive a vehicle in
response to an increase in its fuel
economy, as would result from more
stringent fuel economy standards. The
rebound effect occurs because an
increase in a vehicle’s fuel economy
reduces its owner’s fuel cost for driving
each mile, which is typically the largest
that includes most or all light trucks used as
passenger vehicles, averaged 5.1% annually from
1985 through 2005. However, the number of miles
light trucks are driven each year averaged 11,114
during 2005, almost unchanged from the average
figure of 11,016 miles during 1985. Id.
111 Unpublished analysis of R.L. Polk vehicle
registration data conducted by NHTSA Center for
Statistical Analysis, 2005.
112 Assuming that average annual miles driven
per automobile will continue to increase over the
future would increase the agency’s estimates of total
lifetime mileage for MY 2011–18 passenger cars.
Their estimated lifetime fuel use would also
increase under each alternative standard considered
in this analysis, but in inverse relation to their fuel
economy. Thus lifetime fuel use will increase by
more under the No Increase alternative than under
any of the alternatives that would increase
passenger car CAFE standards, and by progressively
less for the alternatives that impose stricter
standards. Taking account of this factor would thus
increase the agency’s estimates of fuel savings for
those alternatives, and omitting it will cause the
agency’s analysis to underestimate those fuel
savings.
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single component of the cost of
operating a vehicle. Even with the
vehicle’s higher fuel economy, this
additional driving uses some fuel, so the
rebound effect will reduce the net fuel
savings that result when the fuel
economy standards require
manufacturers to increase fuel economy.
The rebound effect is usually expressed
as the percentage by which annual
vehicle use increases when average fuel
cost per mile driven decreases in
response to a change in the marginal
cost of driving an extra mile, due either
an increase in fuel economy or a
reduction in the price of fuel.
The magnitude of the rebound effect
is one of the determinants of the actual
fuel savings that are likely to result from
adopting stricter standards, and thus an
important parameter affecting NHTSA’s
evaluation of alternative standards for
future model years. The rebound effect
can be measured directly by estimating
the elasticity of vehicle use with respect
to fuel economy itself, or indirectly by
the elasticity of vehicle use with respect
to fuel cost per mile driven.113 When
expressed as a positive percentage,
either of these parameters gives the
fraction of fuel savings that would
otherwise result from adopting stricter
standards, but is offset by the increase
in fuel consumption that results when
vehicles with increased fuel economy
are driven more.
Research on the magnitude of the
rebound effect in light-duty vehicle use
dates to the early 1980s, and almost
unanimously concludes that a
statistically significant rebound effect
occurs when vehicle fuel efficiency
improves.114 The most common
approach to estimating its magnitude
has been to analyze statistically
household survey data on vehicle use,
fuel consumption, fuel prices (often
obtained from external sources), and
other determinants of household travel
demand to isolate the response of
vehicle use to higher fuel economy.
Other studies have relied on
econometric analysis of annual U.S.
data on vehicle use, fuel economy, fuel
prices, and other variables to identify
the response of total or average vehicle
use to changes in fleet-wide average fuel
economy and its effect of fuel cost per
mile driven. Two recent studies
analyzed yearly variation in vehicle
ownership and use, fuel prices, and fuel
economy among individual states over
an extended time period in order to
measure the response of vehicle use to
changing fuel economy.115
An important distinction among
studies of the rebound effect is whether
they assume that the effect is constant,
or varies over time in response to the
absolute levels of fuel costs, personal
income, or household vehicle
ownership. Most studies using aggregate
annual data for the U.S. assume a
constant rebound effect, although some
of these studies test whether the effect
can vary as changes in retail fuel prices
or average fuel economy alter fuel cost
per mile driven. Many studies using
household survey data estimate
significantly different rebound effects
for households owning varying numbers
of vehicles, although they arrive at
differing conclusions about whether the
rebound effect is larger among
households that own more vehicles.
One recent study using state-level data
concludes that the rebound effect varies
directly in response to changes in
personal income and the degree of
urbanization of U.S. cities, as well as
fuel costs.
In order to arrive at a preliminary
estimate of the rebound effect for use in
assessing the fuel savings, emissions
reductions, and other impacts of
alternative standards, NHTSA reviewed
22 studies of the rebound effect
conducted from 1983 through 2005. We
then conducted a detailed analysis of
the 66 separate estimates of the long-run
rebound effect reported in these studies,
which is summarized in the table
below.116 As the table indicates, these
66 estimates of the long-run rebound
effect range from as low as 7 percent to
as high as 75 percent, with a mean value
of 23 percent.
Limiting the sample to 50 estimates
reported in the 17 published studies of
the rebound effect yields the same range
but a slightly higher mean (24 percent),
while focusing on the authors’ preferred
estimates from published studies
narrows this range and lowers its
average only slightly. The median
estimate of the rebound effect in all
three samples, which is generally
regarded as a more reliable indicator of
their central tendency than the average
because it is less influenced by
unusually small and large estimates, is
22 percent. As Table V–4 indicates,
approximately two-thirds of all
estimates reviewed, of all published
estimates, and of authors’ preferred
estimates fall in the range of 10–30
percent.
TABLE V–4.—SUMMARY OF REBOUND EFFECT ESTIMATES
Number
of studies
Category of estimates
Number
of
estimates
22
17
17
7
13
2
15
66
50
17
34
23
9
37
7%
7%
9%
7%
9%
8%
7%
75%
75%
75%
45%
75%
58%
75%
22%
22%
22%
14%
31%
22%
20%
23%
24%
22%
18%
31%
25%
23%
14%
14%
15%
9%
16%
14%
16%
10
10
29
29
10%
6%
45%
46%
23%
16%
23%
19%
10%
12%
All Estimates ........................................................................
Published Estimates ............................................................
Authors’ Preferred Estimates ...............................................
U.S. Time-Series Estimates .................................................
Household Survey Estimates ...............................................
Pooled U.S. State Estimates ...............................................
Constant Rebound Effect (1) ...............................................
Variable Rebound Effect: (1).
Reported Estimates .............................................................
Updated to 2006 (2) .............................................................
Range
Low
Distribution
High
Median
Mean
Std. Dev.
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(1) Three studies estimate both constant and variable rebound effects.
113 Fuel cost per mile is equal to the price of fuel
in dollars per gallon divided by fuel economy in
miles per gallon, so this figure declines when a
vehicle’s fuel economy increases.
114 Some studies estimate that the long-run
rebound effect is significantly larger than the
immediate response to increased fuel efficiency.
Although their estimates of the adjustment period
required for the rebound effect to reach its long-run
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magnitude vary, this long-run effect is most
appropriate for evaluating the fuel savings and
emissions reductions resulting from stricter
standards that would apply to future model years.
115 In effect, these studies treat U.S. states as a
data ‘‘panel’’ by applying appropriate estimation
procedures to data consisting of each year’s average
values of these variables for the separate states.
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116 In some cases, NHTSA derived estimates of
the overall rebound effect from more detailed
results reported in the studies. For example, where
studies estimated different rebound effects for
households owning different numbers of vehicles
but did not report an overall value, we computed
a weighted average of the reported values using the
distribution of households among vehicle
ownership categories.
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(2) Reported estimates updated to reflect 2006 values of vehicle use, fuel prices, fleet fuel efficiency, household income, and household vehicle ownership.
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The type of data used and authors’
assumption about whether the rebound
effect varies over time have important
effects on its estimated magnitude. The
34 estimates derived from analysis of
U.S. annual time-series data produce a
median estimate of 14 percent for the
long-run rebound effect, while the
median of 23 estimates based on
household survey data is more than
twice as large (31 percent), and the
median of 9 estimates based on pooled
state data matches that of the entire
sample (22 percent). The 37 estimates
assuming a constant rebound effect
produce a median of 20 percent, while
the 29 originally reported estimates of a
variable rebound effect have a slightly
higher median value (23 percent).
In selecting a single value for the
rebound effect to use in analyzing
alternative standards for future model
years, NHTSA tentatively attaches
greater significance to studies that allow
the rebound effect to vary in response to
changes in the various factors that have
been found to affect its magnitude.
However, it is also important to update
authors’ originally-reported estimates of
variable rebound effects to reflect
current conditions. Recalculating the 29
original estimates of variable rebound
effects to reflect current (2006) values
for retail fuel prices, average fuel
economy, personal income, and
household vehicle ownership reduces
their median estimate to 16 percent.117
NHTSA also tentatively attaches greater
significance to the recent study by Small
and Van Dender (2005), which finds
that the rebound effect tends to decline
117 As an illustration, Small and Van Dender
(2005) allow the rebound effect to vary over time
in response to changes in real per capita income as
well as average fuel cost per mile driven. While
their estimate for the entire interval (1966–2001)
they analyze is 22 percent, updating this estimate
using 2006 values of these variables reduces the
rebound effect to approximately 10 percent.
Similarly, updating Greene’s 1992 original estimate
of a 15 percent rebound effect to reflect 2006 fuel
prices and average fuel economy reduces it to 6
percent. See David L. Greene, ‘‘Vehicle Use and
Fuel Economy: How Big is the Rebound Effect?’’
The Energy Journal, 13:1 (1992), 117–143. In
contrast, the distribution of households among
vehicle ownership categories in the data samples
used by Hensher et al. (1990) and Greene et al.
(1999) are nearly identical to the most recent
estimates for the U.S., so updating their original
estimates to current U.S. conditions changes them
very little. See David A. Hensher, Frank W.
Milthorpe, and Nariida C. Smith, ‘‘The Demand for
Vehicle Use in the Urban Household Sector: Theory
and Empirical Evidence,’’ Journal of Transport
Economics and Policy, 24:2 (1990), 119–137; and
David L. Greene, James R. Kahn, and Robert C.
Gibson, ‘‘Fuel Economy Rebound Effect for
Household Vehicles,’’ The Energy Journal, 20:3
(1999), 1–21.
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as average fuel economy, personal
income, and suburbanization of U.S.
cities increase, but—in accordance with
previous studies—rises with increasing
fuel prices.118
Considering the empirical evidence
on the rebound effect as a whole, but
according greater importance to the
updated estimates from studies allowing
the rebound effect to vary—particularly
the Small and Van Dender study—
NHTSA has selected a rebound effect of
15 percent to evaluate the fuel savings
and other effects of alternative standards
for the time period covered by this
rulemaking. However, we do not believe
that evidence of the rebound effect’s
dependence on fuel prices or household
income is sufficiently convincing to
justify allowing its future value to vary
in response to forecast changes in these
variables. A range extending from 10
percent to at least 20 percent—and
perhaps as high as 25 percent—appears
to be appropriate for the required
analysis of the uncertainty surrounding
these estimates. While the agency
selected 15 percent, it also ran
sensitivity analyses at 10 and 20
percent. The results are shown in the
PRIA.
i. Benefits From Increased Vehicle Use
The increase in vehicle use from the
rebound effect provides additional
benefits to their owners, who may make
more frequent trips or travel farther to
reach more desirable destinations. This
additional travel provides benefits to
drivers and their passengers by
improving their access to social and
economic opportunities away from
home. As evidenced by their decisions
to make more frequent or longer trips
when improved fuel economy reduces
their costs for driving, the benefits from
this additional travel exceed the costs
drivers and passengers incur in making
more frequent or longer trips.
The amount by which the benefits
from this additional travel exceed its
costs (for fuel and other operating
expenses) measures the net benefits that
118 In the most recent light truck CAFE
rulemaking, NHTSA chose not to preference the
Small and Van Dender study over other published
estimates of the value of the rebound effect, stating
that since it ‘‘remains an unpublished working
paper that has not been subjected to formal peer
review, ‘‘the agency does not yet consider the
estimates it provides to have the same credibility
as the published and widely-cited estimates it
relied upon.’’ See 71 FR 17633 (Apr. 6, 2006). The
study has subsequently been published and peerreviewed, so NHTSA is now prepared to ‘‘consider
it in developing its own estimate of the rebound
effect for use in subsequent CAFE rulemakings.’’
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drivers receive from the additional
travel, usually referred to as increased
consumer surplus. NHTSA’s analysis
estimates the economic value of the
increased consumer surplus provided
by added driving using the conventional
approximation, which is one half of the
product of the decline in vehicle
operating costs per vehicle-mile and the
resulting increase in the annual number
of miles driven. The magnitude of these
benefits represents a small fraction of
the total benefits from the alternative
fuel economy standards considered.
j. Added Costs From Congestion,
Crashes and Noise
Although it provides some benefits to
drivers, increased vehicle use associated
with the rebound effect also contributes
to increased traffic congestion, motor
vehicle accidents, and highway noise.
Depending on how the additional travel
is distributed over the day and on where
it takes place, additional vehicle use can
contribute to traffic congestion and
delays by increasing traffic volumes on
facilities that are already heavily
traveled during peak periods. These
added delays impose higher costs on
drivers and other vehicle occupants in
the form of increased travel time and
operating expenses. Because drivers do
not take these added costs into account
in deciding when and where to travel,
they must be accounted for separately as
a cost of the added driving associated
with the rebound effect.
Increased vehicle use due to the
rebound effect may also increase the
costs associated with traffic accidents.
Drivers may take account of the
potential costs they (and their
passengers) face from the possibility of
being involved in an accident when
they decide to make additional trips.
However, they probably do not consider
all of the potential costs they impose on
occupants of other vehicles and on
pedestrians when accidents occur, so
any increase in these ‘‘external’’
accident costs must be considered as
another cost of additional reboundeffect driving. Like increased delay
costs, any increase in these external
accident costs caused by added driving
is likely to depend on the traffic
conditions under which it takes place,
since accidents are more frequent in
heavier traffic (although their severity
may be reduced by the slower speeds at
which heavier traffic typically moves).
Finally, added vehicle use from the
rebound effect may also increase traffic
noise. Noise generated by vehicles
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causes inconvenience, irritation, and
potentially even discomfort to
occupants of other vehicles, to
pedestrians and other bystanders, and to
residents or occupants of surrounding
property. Because these effects are
unlikely to be taken into account by the
drivers whose vehicles contribute to
traffic noise, they represent additional
externalities associated with motor
vehicle use. Although there is
considerable uncertainty in measuring
their value, any increase in the
economic costs of traffic noise resulting
from added vehicle use must be
included together with other increased
external costs from the rebound effect.
NHTSA relies on estimates of
congestion, accident, and noise costs
caused by automobiles and light trucks
developed by the Federal Highway
Administration to estimate the
increased external costs caused by
added driving due to the rebound
effect.119 These estimates are intended
to measure the increases in costs from
added congestion, property damages
and injuries in traffic accidents, and
noise levels caused by automobiles and
light trucks that are borne by persons
other than their drivers (or ‘‘marginal’’
external costs). Updated to 2006 dollars,
FHWA’s ‘‘Middle’’ estimates for
marginal congestion, accident, and
noise costs caused by automobile use
amount to 5.2 cents, 2.3 cents, and 0.1
cents per vehicle-mile (for a total of 7.6
cents per mile), while those for pickup
trucks and vans are 4.7 cents, 2.5 cents,
and 0.1 cents per vehicle-mile (for a
total of 7.3 cents per mile).120, 121 These
costs are multiplied by the annual
increases in automobile and light truck
use from the rebound effect to yield the
estimated increases in congestion,
accident, and noise externality costs
during each future year.
rwilkins on PROD1PC63 with PROPOSALS2
119 These
estimates were developed by FHWA for
use in its 1997 Federal Highway Cost Allocation
Study; see https://www.fhwa.dot.gov/policy/hcas/
final/index.htm (last accessed April 20, 2008).
120 See Federal Highway Administration, 1997
Federal Highway Cost Allocation Study, https://
www.fhwa.dot.gov/policy/hcas/final/index.htm,
Tables V–22, V–23, and V–24 (last accessed April
20, 2008).
121 The Federal Highway Administration’s
estimates of these costs agree closely with some
other recent estimates. For example, recent
published research conducted by Resources for the
Future (RFF) estimates marginal congestion and
external accident costs for increased light-duty
vehicle use in the U.S. to be 3.5 and 3.0 cents per
vehicle-mile in year-2002 dollars. See Ian W.H.
Parry and Kenneth A. Small, ‘‘Does Britain or the
U.S. Have the Right Gasoline Tax?’’ Discussion
Paper 02–12, Resources for the Future, 19 and Table
1 (March 2002). Available at https://www.rff.org/rff/
Documents/RFF–DP–02–12.pdf (last accessed April
20, 2008).
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k. Petroleum Consumption and Import
Externalities
U.S. consumption and imports of
petroleum products also impose costs
on the domestic economy that are not
reflected in the market price for crude
petroleum, or in the prices paid by
consumers of petroleum products such
as gasoline. In economics literature on
this subject, these costs include (1)
higher prices for petroleum products
resulting from the effect of U.S. oil
import demand on the world oil price;
(2) the risk of disruptions to the U.S.
economy caused by sudden reductions
in the supply of imported oil to the U.S.;
and (3) expenses for maintaining a U.S.
military presence to secure imported oil
supplies from unstable regions, and for
maintaining the strategic petroleum
reserve (SPR) to cushion against
resulting price increases.122 Higher U.S.
imports of crude oil or refined
petroleum products increase the
magnitude of these external economic
costs, thus increasing the true economic
cost of supplying transportation fuels
above the resource costs of producing
them. Conversely, reducing U.S. imports
of crude petroleum or refined fuels or
reducing fuel consumption can reduce
these external costs. Any reduction in
their total value that results from
improved light truck fuel economy
represents an economic benefit of
setting more stringent CAFE standards
in addition to the value of fuel savings
and emissions reductions itself.
Increased U.S. oil imports can impose
higher costs on all purchasers of
petroleum products, because the U.S. is
a sufficiently large purchaser of foreign
oil supplies that changes in U.S.
demand can affect the world price. The
effect of U.S. petroleum imports on
world oil prices is determined by the
degree of OPEC monopoly power over
global oil supplies, and the degree of
monopsony power over world oil
demand exerted by the U.S. The
combination of these two factors means
that increases in domestic demand for
petroleum products that are met through
higher oil imports can cause the price of
oil in the world market to rise, which
imposes economic costs on all other
purchasers in the global petroleum
market in excess of the higher prices
122 See, e.g., Bohi, Douglas R. and W. David
Montgomery (1982). Oil Prices, Energy Security,
and Import Policy Washington, DC: Resources for
the Future, Johns Hopkins University Press; Bohi,
D. R., and M. A. Toman (1993). ‘‘Energy and
Security: Externalities and Policies,’’ Energy Policy
21:1093–1109; and Toman, M. A. (1993). ‘‘The
Economics of Energy Security: Theory, Evidence,
Policy,’’ in A. V. Kneese and J. L. Sweeney, eds.
(1993). Handbook of Natural Resource and Energy
Economics, Vol. III. Amsterdam: North-Holland, pp.
1167–1218.
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paid by U.S. consumers.123 Conversely,
reducing U.S. oil imports can lower the
world petroleum price, and thus
generate benefits to other oil purchasers
by reducing these ‘‘monopsony costs.’’
Although the degree of current OPEC
monopoly power is subject to debate,
the consensus appears to be that OPEC
remains able to exercise some degree of
control over the response of world oil
supplies to variation in world oil prices,
so that the world oil market does not
behave completely competitively.124
The extent of U.S. monopsony power is
determined by a complex set of factors
including the relative importance of
U.S. imports in the world oil market,
and the sensitivity of petroleum supply
and demand to its world price among
other participants in the international
oil market. Most evidence appears to
suggest that variation in U.S. demand
for imported petroleum continues to
exert some influence on world oil
prices, although this influence appears
to be limited.125
The second component of external
economic costs imposed by U.S.
petroleum imports arises partly because
an increase in oil prices triggered by a
disruption in the supply of imported oil
reduces the level of output that the U.S.
economy can produce. The reduction in
potential U.S. economic output depends
on the extent and duration of the
increases in petroleum product prices
that result from a disruption in the
supply of imported oil, as well as on
whether and how rapidly these prices
return to pre-disruption levels. Even if
prices for imported oil return
completely to their original levels,
however, economic output will be at
least temporarily reduced from the level
that would have been possible without
a disruption in oil supplies.
Because supply disruptions and
resulting price increases tend to occur
123 For example, if the U.S. imports 10 million
barrels of petroleum per day at a world oil price of
$20 per barrel, its total daily import bill is $200
million. If increasing imports to 11 million barrels
per day causes the world oil price to rise to $21 per
barrel, the daily U.S. import bill rises to $231
million. The resulting increase of $31 million per
day ($231 million minus $200 million) is
attributable to increasing daily imports by only 1
million barrels. This means that the incremental
cost of importing each additional barrel is $31, or
$10 more than the newly-increased world price of
$21 per barrel. This additional $10 per barrel
represents a cost imposed on all other purchasers
in the global petroleum market by U.S. buyers, in
excess of the price they pay to obtain those
additional imports.
124 For a summary see Leiby, Paul N., Donald W.
Jones, T. Randall Curlee, and Russell Lee, Oil
Imports: An Assessment of Benefits and Costs,
ORNL–6851, Oak Ridge National Laboratory,
November 1, 1997, 17. Available at https://
pzl1.ed.ornl.gov/ORNL6851.pdf (last accessed April
20, 2008).
125 Id. 18–19.
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suddenly rather than gradually, they can
also impose costs on businesses and
households for adjusting their use of
petroleum products more rapidly than if
the same price increase had occurred
gradually over time. These adjustments
impose costs because they temporarily
reduce economic output even below the
level that would ultimately be reached
once the U.S. economy completely
adapted to higher petroleum prices. The
additional costs to businesses and
households reflect their inability to
adjust prices, output levels, and their
use of energy and other resources
quickly and smoothly in response to
rapid changes in prices for petroleum
products.
Since future disruptions in foreign oil
supplies are an uncertain prospect, each
of these disruption costs must be
adjusted by the probability that the
supply of imported oil to the U.S. will
actually be disrupted. The ‘‘expected
value’’ of these costs— the product of
the probability that an oil import
disruption will occur and the costs of
reduced economic output and abrupt
adjustment to sharply higher petroleum
prices—is the appropriate measure of
their magnitude. Any reduction in these
expected disruption costs resulting from
a measure that lowers U.S. oil imports
represents an additional economic
benefit beyond the direct value of
savings from reduced purchases of
petroleum products.
While the vulnerability of the U.S.
economy to oil price shocks is widely
thought to depend on total petroleum
consumption rather than on the level of
oil imports, variation in imports is still
likely to have some effect on the
magnitude of price increases resulting
from a disruption of import supply. In
addition, changing the quantity of
petroleum imported into the U.S. may
also affect the probability that such a
disruption will occur. If either the size
of the likely price increase or the
probability that U.S. oil supplies will be
disrupted is affected by oil imports, the
expected value of the costs from a
supply disruption will also depend on
the level of imports.
Businesses and households use a
variety of market mechanisms,
including oil futures markets, energy
conservation measures, and
technologies that permit rapid fuel
switching to ‘‘insure’’ against higher
petroleum prices and reduce their costs
for adjusting to sudden price increases.
While the availability of these market
mechanisms has likely reduced the
potential costs of disruptions to the
supply of imported oil, consumers of
petroleum products are unlikely to take
account of costs they impose on others,
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so these costs are probably not reflected
in the price of imported oil. Thus
changes in oil import levels probably
continue to affect the expected cost to
the U.S. economy from potential oil
supply disruptions, although this
component of oil import costs is likely
to be significantly smaller than
estimated by studies conducted in the
wake of the oil supply disruptions
during the 1970s.
The third component of the external
economic costs of importing oil into the
U.S. includes government outlays for
maintaining a military presence to
secure the supply of oil imports from
potentially unstable regions of the world
and to protect against their interruption.
Some analysts also include outlays for
maintaining the U.S. Strategic
Petroleum Reserve (SPR), which is
intended to cushion the U.S. economy
against the consequences of disruption
in the supply of imported oil, as
additional costs of protecting the U.S.
economy from oil supply disruptions.
NHTSA believes that while costs for
U.S. military security may vary over
time in response to long-term changes in
the actual level of oil imports into the
U.S., these costs are unlikely to decline
in response to any reduction in U.S. oil
imports resulting from raising future
CAFE standards for passenger cars and
light trucks. U.S. military activities in
regions that represent vital sources of oil
imports also serve a broader range of
security and foreign policy objectives
than simply protecting oil supplies, and
as a consequence are unlikely to vary
significantly in response to changes in
the level of oil imports prompted by
higher standards.
Similarly, while the optimal size of
the SPR from the standpoint of its
potential influence on domestic oil
prices during a supply disruption may
be related to the level of U.S. oil
consumption and imports, its actual size
has not appeared to vary in response to
recent changes in oil imports. Thus
while the budgetary costs for
maintaining the Reserve are similar to
other external costs in that they are not
likely to be reflected in the market price
for imported oil, these costs do not
appear to have varied in response to
changes in oil import levels.
In analyzing benefits from its recent
actions to increase light truck CAFE
standards for model years 2005–07 and
2008–11, NHTSA relied on a 1997 study
by Oak Ridge National Laboratory
(ORNL) to estimate the value of reduced
economic externalities from petroleum
consumption and imports.126 More
126 Leiby, Paul N., Donald W. Jones, T. Randall
Curlee, and Russell Lee, Oil Imports: An
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recently, ORNL updated its estimates of
the value of these externalities, using
the analytic framework developed in its
original 1997 study in conjunction with
recent estimates of the variables and
parameters that determine their
value.127 These include world oil prices,
current and anticipated future levels of
OPEC petroleum production, U.S. oil
import levels, the estimated
responsiveness of oil supplies and
demands to prices in different regions of
the world, and the likelihood of oil
supply disruptions. ORNL prepared its
updated estimates of oil import
externalities for use by EPA in
evaluating the benefits of reductions in
U.S. oil consumption and imports
expected to result from its Renewable
Fuel Standard Rule of 2007 (RFS).128
The updated ORNL study was
subjected to a detailed peer review by
experts selected by EPA, and its
estimates of the value of oil import
externalities were subsequently revised
to reflect their comments and
recommendations.129 Specifically,
reviewers recommended that ORNL
increase its estimates of the sensitivity
of oil supply by non-OPEC producers
and oil demand by nations other than
the U.S. to changes in the world oil
price, as well as reduce its estimate of
the sensitivity of U.S. gross domestic
product (GDP) to potential sudden
increases in world oil prices.
After making the revisions
recommended by peer reviewers,
ORNL’s updated estimates of the
monopsony cost associated with U.S. oil
imports range from $5.22 to $9.68 per
barrel, with a most likely estimate of
$7.41 per barrel. These estimates imply
that each gallon of fuel saved as a result
of adopting higher CAFE standards will
reduce the monopsony costs of U.S. oil
imports by $0.124 to $0.230 per gallon,
with the actual value most likely to be
$0.176 per gallon saved. ORNL’s
updated and revised estimates of the
increase in the expected costs associated
with oil supply disruptions to the U.S.
and the resulting rapid increase in
prices for petroleum products amount to
$4.54 to $5.84 per barrel, although its
Assessment of Benefits and Costs, ORNL–6851, Oak
Ridge National Laboratory, November 1, 1997.
Available at https://pzl1.ed.ornl.gov/ORNL6851.pdf
(last accessed April 20, 2008).
127 Leiby, Paul N. ‘‘Estimating the Energy Security
Benefits of Reduced U.S. Oil Imports,’’ Oak Ridge
National Laboratory, ORNL/TM–2007/028, Revised
July 23, 2007. Available at https://pzl1.ed.ornl.gov/
energysecurity.html (click on link below ‘‘Oil
Imports Costs and Benefits’’) (last accessed April
20, 2008).
128 72 FR 23899 (May 1, 2007).
129 Peer Review Report Summary: Estimating the
Energy Security Benefits of Reduced U.S. Oil
Imports, ICF, Inc., September 2007.
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most likely estimate of $4.59 per barrel
is very close to the lower end of this
range. According to these estimates,
each gallon of fuel saved will reduce the
expected costs disruptions to the U.S.
economy by $0.108 to $0.139, with the
actual value most likely to be $0.109 per
gallon.
The updated and revised ORNL
estimates suggest that the combined
reduction in monopsony costs and
expected costs to the U.S. economy from
oil supply disruptions resulting from
lower fuel consumption total $0.232 to
$0.370 per gallon, with a most likely
estimate of $0.286 per gallon. This
represents the additional economic
benefit likely to result from each gallon
of fuel saved by higher CAFE standards,
beyond the savings in resource costs for
producing and distributing each gallon
of fuel saved. NHTSA employs this
midpoint estimate in its analysis of the
benefits from fuel savings projected to
result from alternative CAFE standards
for model years 2011–15. It also
analyzes the effect on these benefits
estimates from variation in this value
over the range from $0.232 to $0.370 per
gallon of fuel saved.
NHTSA’s analysis of benefits from
alternative CAFE standards does not
include cost savings from either reduced
outlays for U.S. military operations or
maintaining a smaller SPR among the
external benefits of reducing gasoline
consumption and petroleum imports by
means of tightening future standards.
This view concurs with that of both the
original ORNL study of economic costs
from U.S. oil imports and its recent
update, which conclude that savings in
government outlays for these purposes
are unlikely to result from reductions in
consumption of petroleum products and
oil imports on the scale of those likely
to result from the alternative increases
in CAFE standards considered for model
years 2011–15.
l. Air Pollutant Emissions
rwilkins on PROD1PC63 with PROPOSALS2
(i) Impacts on Criteria Air Pollutant
Emissions
While reductions in domestic fuel
refining and distribution that result
from lower fuel consumption will
reduce U.S. emissions of criteria
pollutants, additional vehicle use
associated with the rebound effect from
higher fuel economy will increase
emissions of these pollutants. Thus the
net effect of stricter CAFE standards on
emissions of each criteria pollutant
depends on the relative magnitudes of
its reduced emissions in fuel refining
and distribution, and increases in its
emissions from vehicle use. Because the
relationship between emissions rates
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(emissions per gallon refined of fuel or
mile driven) in fuel refining and vehicle
use is different for each criteria
pollutant, the net effect of fuel savings
from the proposed standards on total
emissions of each pollutant is likely to
differ. Criteria air pollutants emitted by
vehicles and during fuel production
include carbon monoxide (CO),
hydrocarbon compounds (usually
referred to as ‘‘volatile organic
compounds,’’ or VOC), nitrogen oxides
(NOX), fine particulate matter (PM2.5),
and sulfur oxides (SOX).
The increase in emissions of these
pollutants from additional vehicle use
due to the rebound effect is estimated by
multiplying the increase in total miles
driven by vehicles of each model year
and age by age-specific emission rates
per vehicle-mile for each pollutant.
NHTSA developed these emission rates
using EPA’s MOBILE6.2 motor vehicle
emissions factor model.130 Emissions of
these pollutants also occur during crude
oil extraction and transportation, fuel
refining, and fuel storage and
distribution. The reduction in total
emissions from each of these sources
thus depends on the extent to which
fuel savings result in lower imports of
refined fuel, or in reduced domestic fuel
refining. To a lesser extent, they also
depend on whether any reduction in
domestic gasoline refining is translated
into reduced imports of crude oil or
reduced domestic extraction of
petroleum.
Based on analysis of changes in U.S.
gasoline imports and domestic gasoline
consumption forecast in AEO’s 2008
Early Release, NHTSA tentatively
estimates that 50 percent of fuel savings
resulting from higher CAFE standards
will result in reduced imports of refined
gasoline, while the remaining 50
percent will reduce domestic fuel
refining.131 The reduction in domestic
refining is assumed to leave its sources
of crude petroleum unchanged from the
mix of 90 percent imports and 10
percent domestic production projected
by AEO.
NHTSA proposes to estimate
reductions in criteria pollutant
emissions from gasoline refining and
distribution using emission rates
130 U.S. Environmental Protection Agency,
MOBILE6 Vehicle Emission Modeling Software,
available at https://www.epa.gov/otaq/m6.htm#m60
(last accessed April 20, 2008).
131 Estimates of the response of gasoline imports
and domestic refining to fuel savings from stricter
standards are variable and highly uncertain, but our
preliminary analysis indicates that under any
reasonable assumption about these responses, the
magnitude of the net change in criteria pollutant
emissions (accounting for both the rebound effect
and changes in refining emissions) is extremely low
relative to their current total.
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obtained from Argonne National
Laboratories’ Greenhouse Gases and
Regulated Emissions in Transportation
(GREET) model.132 The GREET model
provides separate estimates of air
pollutant emissions that occur in four
phases of fuel production and
distribution: crude oil extraction, crude
oil transportation and storage, fuel
refining, and fuel distribution and
storage.133 We tentatively assume that
reductions in imports of refined fuel
would reduce criteria pollutant
emissions during fuel storage and
distribution only. Reductions in
domestic fuel refining using imported
crude oil as a feedstock are tentatively
assumed to reduce emissions during
crude oil transportation and storage, as
well as during gasoline refining,
distribution, and storage, because less of
each of these activities would be
occurring. Similarly, reduced domestic
fuel refining using domesticallyproduced crude oil is tentatively
assumed to reduce emissions during all
phases of gasoline production and
distribution.134
The net changes in emissions of each
criteria pollutant are calculated by
adding the increases in their emissions
that result from increased vehicle use
and the reductions that result from
lower domestic fuel refining and
distribution. The net change in
emissions of each criteria pollutant is
converted to an economic value using
estimates of the economic costs per ton
emitted (which result primarily from
damages to human health) developed by
EPA and submitted to the federal Office
of Management and Budget for review.
For certain criteria pollutants, EPA
estimates different per-ton costs for
emissions from vehicle use than for
emissions of the same pollutant during
fuel production, reflecting differences in
their typical geographic distributions,
132 Argonne National Laboratories, The
Greenhouse Gas and Regulated Emissions from
Transportation (GREET) Model, Version 1.8, June
2007, available at https://
www.transportation.anl.gov/software/GREET/
index.html (last accessed April 20, 2008).
133 Emissions that occur during vehicle refueling
at retail gasoline stations (primarily evaporative
emissions of volatile organic compounds, or VOCs)
are already accounted for in the ‘‘tailpipe’’ emission
factors used to estimate the emissions generated by
increased light truck use. GREET estimates
emissions in each phase of gasoline production and
distribution in mass per unit of gasoline energy
content; these factors are then converted to mass
per gallon of gasoline using the average energy
content of gasoline.
134 In effect, this assumes that the distances crude
oil travels to U.S. refineries are approximately the
same regardless of whether it travels from domestic
oilfields or import terminals, and that the distances
that gasoline travels from refineries to retail stations
are approximately the same as those from import
terminals to gasoline stations.
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Federal Register / Vol. 73, No. 86 / Friday, May 2, 2008 / Proposed Rules
contributions to ambient pollution
levels, and resulting population
exposure.
rwilkins on PROD1PC63 with PROPOSALS2
(ii) Reductions in CO2 Emissions
Fuel savings from stricter CAFE
standards also result in lower emissions
of carbon dioxide (CO2), the main
greenhouse gas emitted as a result of
refining, distribution, and use of
transportation fuels.135 Lower fuel
consumption reduces carbon dioxide
emissions directly, because the primary
source of transportation-related CO2
emissions is fuel combustion in internal
combustion engines. NHTSA tentatively
estimates reductions in carbon dioxide
emissions resulting from fuel savings by
assuming that the entire carbon content
of gasoline, diesel, and other fuels is
converted to carbon dioxide during the
combustion process.136
Reduced fuel consumption also
reduces carbon dioxide emissions that
result from the use of carbon-based
energy sources during fuel production
and distribution.137 NHTSA currently
estimates the reductions in CO2
emissions during each phase of fuel
135 For purposes of this rulemaking, NHTSA
estimated emissions of vehicular CO2 emissions,
but did not estimate vehicular emissions of
methane, nitrous oxide, and hydroflourocarbons.
Methane and nitrous oxide account for less than 3
percent of the tailpipe GHG emissions from
passenger cars and light trucks, and CO2 emissions
accounted for the remaining 97 percent. Of the total
(including non-tailpipe) GHG emissions from
passenger cars and light trucks, tailpipe CO2
represents about 93.1 percent, tailpipe methane and
nitrous oxide represent about 2.4 percent, and
hydroflourocarbons (i.e., air conditioner leaks)
represent about 4.5 percent. Calculated from U.S
CO2. EPA, Inventory of U.S> Greenhouse Gas
Emissions and Sinks 1990–2006, EPA430–R–08–05,
April 15, 2008. Available at https://www.epa.gov/
climatechange/emissions/downloads/08_CR.pdf,
Table 215. (Last accessed April 20, 2008.)
136 This assumption results in a slight
overestimate of carbon dioxide emissions, since a
small fraction of the carbon content of gasoline is
emitted in the forms of carbon monoxide and
unburned hydrocarbons. However, the magnitude
of this overestimate is likely to be extremely small.
This approach is consistent with the
recommendation of the Intergovernmental Panel on
Climate Change for ‘‘Tier 1’’ national greenhouse
gas emissions inventories. Cf. Intergovernmental
Panel on Climate Change, 2006 Guidelines for
National Greenhouse Gas Inventories, Volume 2,
Energy, p. 3.16.
137 NHTSA did not, for purposes of this proposed
rulemaking, attempt to estimate changes in
‘‘upstream’’ emissions of greenhouse gases (GHGs)
other than CO2. This was because carbon dioxide
from final combustion itself accounts for nearly 97
percent of the total CO2-equivalent emissions from
petroleum production and use, even with other
GHGs that result from those activities (principally
methane and nitrous oxide) weighted by their
higher global warming potentials (GWPs) relative to
CO2. Calculated from U.S. EPA, Inventory of U.S.
Greenhouse Gas Emissions and Sinks 1990–2006,
EPA430–R–08–05, April 15, 2008. Available at
https://epa.gov/climatechange/emissions/
downloads/08_CR.pdf, Tables 3–3, 3–39, and 3–41.
(Last accessed April 20, 2008.)
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production and distribution using CO2
emission rates obtained from the GREET
model, using the previous assumptions
about how fuel savings are reflected in
reductions in each phase. The total
reduction in CO2 emissions from the
improvement in fuel economy under
each alternative CAFE standard is the
sum of the reductions in emissions from
reduced fuel use and from lower fuel
production and distribution.
NHTSA has not attempted to estimate
changes in emissions of other
greenhouse gases, in particular methane,
nitrous oxide, and hydrofluorocarbons.
The agency invites comment on the
importance and potential implications
of doing so under NEPA.
(iii) Economic value of reductions in
CO2 emissions
NHTSA has taken the economic
benefits of reducing CO2 emission into
account in this rulemaking, both in
developing proposed CAFE standards
and in assessing the economic benefits
of each alternative that was considered.
As noted above, the Ninth Circuit found
in CBD that NHTSA had been arbitrary
and capricious in deciding not to
monetize the benefit of reducing CO2
emissions, saying that the agency had
not substantiated the conclusion in its
April 2006 final rule that the
appropriate course was not to monetize
(i.e., quantify the value of) carbon
emissions reduction at all.
To this end, NHTSA reviewed
published estimates of the ‘‘social cost
of carbon emissions’’ (SCC). The SCC
refers to the marginal cost of additional
damages caused by the increase in
expected climate impacts resulting from
the emission of each additional metric
ton of carbon, which is emitted in the
form of CO2.138 It is typically estimated
as the net present value of the impact
over some time period (100 years or
longer) of one additional ton of carbon
emitted into the atmosphere. Because
accumulated concentrations of
greenhouse gases in the atmosphere and
the projected impacts on global climate
are increasing over time, the economic
damages resulting from each additional
ton of CO2 emissions in future years are
believed to be greater as a result. Thus
estimates of the SCC are typically
reported for a specific year, and these
138 Carbon itself accounts for 12/44, or about
27%, of the mass of carbon dioxide (12/44 is the
ratio of the molecular weight of carbon to that of
carbon dioxide). Thus each ton of carbon emitted
is associated with 44/12, or 3.67, tons of carbon
dioxide emissions. Estimates of the SCC are
typically reported in dollars per ton of carbon, and
must be divided by 3.67 to determine their
equivalent value per ton of carbon dioxide
emissions.
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24413
estimates are generally larger for
emissions in more distant future years.
There is substantial variation among
different authors’ estimates of the SCC,
much of which can be traced to
differences in their underlying
assumptions about several variables.
These include the sensitivity of global
temperatures and other climate
attributes to increasing atmospheric
concentrations of greenhouse gases,
discount rates applied to future
economic damages from climate change,
whether damages sustained by
developing regions of the globe should
be weighted more heavily than damages
to developed nations, how long climate
changes persist once they occur, and the
economic valuation of specific climate
impacts.139
Taken as a whole, recent estimates of
the SCC may underestimate the true
damage costs of carbon emissions
because they often exclude damages
caused by extreme weather events or
climate response scenarios with low
probabilities but potentially extreme
impacts, and may underestimate the
climate impacts and damages that could
result from multiple stresses on the
global climatic system. At the same
time, however, many studies fail to
consider potentially beneficial impacts
of climate change, and do not
adequately account for how future
development patterns and adaptations
could reduce potential impacts from
climate change or the economic
damages they cause.
Given the uncertainty surrounding
estimates of the SCC, the use of any
single study may not be advisable since
its estimate of the SCC will depend on
many assumptions made by its authors.
The Working Group II’s contribution to
the Fourth Assessment Report of the
United Nations Intergovernmental Panel
on Climate Change (IPCC)140 notes that:
The large ranges of SCC are due in the large
part to differences in assumptions regarding
climate sensitivity, response lags, the
treatment of risk and equity, economic and
non-economic impacts, the inclusion of
potentially catastrophic losses, and discount
rates.
139 For a discussion of these factors, see Yohe,
G.W., R.D. Lasco, Q.K. Ahmad, N.W. Arnell, S.J.
Cohen, C. Hope, A.C. Janetos and R.T. Perez, 2007:
Perspectives on climate change and sustainability.
Climate Change 2007: Impacts, Adaptation and
Vulnerability. Contribution of Working Group II to
the Fourth Assessment Report of the
Intergovernmental Panel on Climate Change, M.L.
Parry, O.F. Canziani, J.P. Palutikof, P.J. van der
Linden and C.E. Hanson, Eds., Cambridge
University Press, Cambridge, UK, pp. 821–824.
140 Climate Change 2007—Impacts, Adaptation
and Vulnerability, Contribution of Working Group
II to the Fourth Assessment Report of the IPCC, 17.
Available at https://www.ipcc-wg2.org (last accessed
<Feb. 4, 2008>).
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Although the IPCC does not
recommend a single estimate of the
SCC, it does cite the Tol (2005) study on
four separate occasions (pages 17, 65,
813, 822) as the only available survey of
the peer-reviewed literature that has
itself been subjected to peer review. Tol
developed a probability function using
the SCC estimates of the peer reviewed
literature and found estimates ranging
from less than zero to over $200 per
metric ton of carbon. In an effort to
resolve some of the uncertainty in
reported estimates of climate damage
costs from carbon emissions, Tol (2005)
reviewed and summarized one hundred
and three estimates of the SCC from 28
published studies. He concluded that
when only peer-reviewed studies
published in recognized journals are
considered, ‘‘* * * climate change
impacts may be very uncertain but is
unlikely that the marginal damage costs
of carbon dioxide emissions exceed $50
per [metric] ton carbon [about $14 per
metric ton of CO2].’’ 141 He also
concluded that the costs may be less
than $14.
Because of the number of assumptions
required by each study, the wide range
of uncertainty surrounding these
assumptions, and their critical influence
on the resulting estimates of climate
damage costs, some studies have
undoubtedly produced estimates of the
SCC that are unrealistically high, while
others are likely to have estimated
values that are improbably low. Using a
value for the SCC that reflects the
central tendency of estimates drawn
from many studies reduces the chances
of relying on a single estimate that
subsequently proves to be biased.
It is important to note that estimates
of the SCC almost invariably include the
value of worldwide damages from
potential climate impacts caused by
carbon dioxide emissions, and are not
confined to damages likely to be
suffered within the U.S. In contrast, the
other estimates of costs and benefits of
increasing fuel economy included in
this proposal include only the economic
values of impacts that occur within the
U.S. For example, the economic value of
reducing criteria air pollutant emissions
from overseas oil refineries is not
counted as a benefit resulting from this
rule, because any reduction in damages
to health and property caused by
overseas emissions are unlikely to be
experienced within the U.S.
141 Tol, Richard. The marginal damage costs of
carbon dioxide emissions: an assessment of the
uncertainties. Energy Policy 33 (2005) 2064–2074,
2072. The summary SCC estimates reported by Tol
are assumed to be denominated in U.S. dollars of
the year of publication, 2005.
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In contrast, the reduced value of
transfer payments from U.S. oil
purchasers to foreign oil suppliers that
results when lower U.S. oil demand
reduces the world price of petroleum
(the reduced ‘‘monopsony effect’’) is
counted as a benefit of reducing fuel
use.142 If the agency’s analysis was
conducted from a worldwide rather than
a U.S. perspective, however, the benefit
from reducing air pollution overseas
would be included, while reduced
payments from U.S. oil consumers to
foreign suppliers would not.
In order to be consistent with
NHTSA’s use of exclusively domestic
costs and benefits in prior CAFE
rulemakings, the appropriate value to be
placed on changes climate damages
caused by carbon emissions should be
one that reflects the change in damages
to the United States alone. Accordingly,
NHTSA notes that the value for the
benefits of reducing CO2 emissions
might be restricted to the fraction of
those benefits that are likely to be
experienced within the United States.
Although no estimates of benefits to
the U.S. itself that are likely to result
from reducing CO2 emissions are
currently available, NHTSA expects that
if such values were developed, the
agency would employ those rather than
global benefit estimates in its analysis.
NHTSA also anticipates that if such
values were developed, they would be
lower than comparable global values,
since the U.S. is likely to sustain only
a fraction of total global damages
resulting from climate change.
In the meantime, the agency has
elected to use the IPCC estimate of $43
per metric ton of carbon as an upper
bound on the benefits resulting from
reducing each metric ton of U.S.
emissions.143 This corresponds to
approximately $12 per metric ton of CO2
when expressed in 2006 dollars. This
estimate is based on the 2005 Tol
study.144 The Tol study is cited
repeatedly as an authoritative survey in
various IPCC reports, which are widely
142 The reduction in payments from U.S. oil
purchasers to domestic petroleum producers is not
included as a benefit, since it represents a transfer
that occurs entirely within the U.S. economy.
143 The estimate of $43 per ton of carbon
emissions is reported by Tol (p. 2070) as the mean
of the ‘‘best’’ estimates reported in peer-reviewed
studies (see fn. 144). It thus differs from the mean
of all estimates reported in the peer-reviewed
studies surveyed by Tol. The $43 per ton value is
also attributed to Tol by IPCC Working Group II
(2007), p. 822.
144 Tol’s more recent (2007) and inclusive survey
has been published online with peer-review
comments. The agency has elected not to rely on
the estimates it reports, but will consider doing so
in its analysis of the final rule if the survey has been
published, and will also consider any other newlypublished evidence.
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accepted as representing the general
consensus in the scientific community
on climate change science. Since the
IPCC estimate includes the worldwide
costs of potential damages from carbon
dioxide emissions, NHTSA has elected
to employ it as an upper bound on the
estimated value of the reduction in U.S.
domestic damage costs that is likely to
result from lower CO2 emissions.145
The IPCC Working Group II Fourth
Assessment Report (2007, p. 822)
further suggests that the SCC of carbon
is growing at an annual 2.4 percent
growth rate, based on estimated
increases in damages from future
emissions reported in published studies.
NHTSA has also elected to apply this
growth rate to Tol’s original 2005
estimate. Thus by 2011, the agency
estimates that the upper bound on the
benefits of reducing CO2 emissions will
have reached about $14 per metric ton
of CO2, and will continue to increase by
2.4 percent annually thereafter.
In setting a lower bound, the agency
agrees with the IPCC Working Group II
(2007) report that ‘‘significant warming
across the globe and the locations of
significant observed changes in many
systems consistent with warming is very
unlikely to be due solely to natural
variability of temperatures or natural
variability of the systems’’ (pp. 9).
Although this finding suggests that the
global value of economic benefits from
reducing carbon dioxide emissions is
unlikely to be zero, it does not
necessarily rule out low or zero values
for the benefit to the U.S. itself from
reducing emissions.
For most of the analysis it performed
to develop this proposal, NHTSA
required a single estimate for the value
of reducing CO2 emissions. The agency
thus elected to use the midpoint of the
range from $0 to $14 (or $7.00) per
metric ton of CO2 as the initial value for
the year 2011, and assumed that this
value would grow at 2.4 percent
annually thereafter. This estimate is
employed for the analyses conducted
using the Volpe CAFE model to support
development of the proposed standards.
The agency also conducted sensitivity
analyses of the benefits from reducing
CO2 emissions using both the upper
($14 per metric ton) and lower ($0 per
metric ton) bounds of this range.
NHTSA seeks comment on its
tentative conclusions for the value of
145 For purposes of comparison, we note that in
the rulemaking to establish CAFE standards for MY
2008–11 light trucks, NRDC recommended a value
of $10 to $25 per ton of CO2 emissions reduced by
fuel savings and both Environmental Defense and
Union of Concerned Scientists recommended a
value of $50 per ton of carbon (equivalent to about
$14 per ton of CO2 emissions).
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the SCC, the use of a domestic versus
global value for the economic benefit of
reducing CO2 emissions, the rate at
which the value of the SCC grows over
time, the desirability of and procedures
for incorporating benefits from reducing
emissions of greenhouse gases other
than CO2, and any other aspects of
developing a reliable SCC value for
purposes of establishing CAFE
standards.
m. The Value of Increased Driving
Range
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Improving vehicles’ fuel economy
may also increase their driving range
before they require refueling. By
reducing the frequency with which
drivers typically refuel their vehicles,
and by extending the upper limit of the
range they can travel before requiring
refueling, improving fuel economy thus
provides some additional benefits to
their owners. (Alternatively, if
manufacturers respond to improved fuel
economy by reducing the size of fuel
tanks to maintain a constant driving
range, the resulting cost saving will
presumably be reflected in lower
vehicle sales prices.)
No direct estimates of the value of
extended vehicle range are readily
available, so NHTSA’s analysis
calculates the reduction in the annual
number of required refueling cycles that
results from improved fuel economy,
and applies DOT-recommended values
of travel time savings to convert the
resulting time savings to their economic
value.146 As an illustration of how the
value of extended refueling range is
estimated, a typical small light truck
model has an average fuel tank size of
approximately 20 gallons. Assuming
that drivers typically refuel when their
tanks are 20 percent full (i.e., 4 gallons
in reserve), increasing this model’s
actual on-road fuel economy from 24 to
25 mpg would extend its driving range
from 384 miles (= 16 gallons × 24 mpg)
to 400 miles (= 16 gallons × 25 mpg).
Assuming that it is driven 12,000 miles/
year, this reduces the number of times
it needs to be refueled each year from
31.3 (= 12,000 miles per year/384 miles
per refueling) to 30.0 (= 12,000 miles
per year/400 miles per refueling), or by
1.3 refuelings per year.
Weighted by the nationwide mix of
urban (about 2/3) and rural (about 1/3)
146 See Department of Transportation, Guidance
Memorandum, ‘‘The Value of Saving Travel Time:
Departmental Guidance for Conducting Economic
Evaluations,’’ Apr. 9, 1997. Available at https://
ostpxweb.dot.gov/policy/Data/VOT97guid.pdf (last
accessed October 20, 2007); update available at
https://ostpxweb.dot.gov/policy/Data/
VOTrevision1_2-11-03.pdf (last accessed October
20, 2007).
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driving and average vehicle occupancy
for all driving trips (1.6 persons), the
DOT-recommended value of travel time
per vehicle-hour is $24.00 (in 2006
dollars).147 Assuming that locating a
station and filling up requires ten
minutes, the annual value of time saved
as a result of less frequent refueling
amounts to $5.20 (calculated as 10/60 ×
1.3 × $24.00). This calculation is
repeated for each future calendar year
that vehicles of each model year affected
by the alternative CAFE standards
proposed in this rule would remain in
service. Like fuel savings and other
benefits, however, the value of this
benefit declines over a model year’s
lifetime, because a smaller number of
vehicles originally produced during that
model year remain in service each year,
and those remaining in service are
driven fewer miles.
n. Discounting Future Benefits and
Costs
Discounting future fuel savings and
other benefits is intended to account for
the reduction in their value to society
when they are deferred until some
future date rather than received
immediately. The discount rate
expresses the percent decline in the
value of these benefits—as viewed from
today’s perspective—for each year they
are deferred into the future. NHTSA
uses a rate of 7 percent per year to
discount the value of future fuel savings
and other benefits to analyze the
potential impacts of alternative CAFE
standards. However, the agency also
performed an alternative analysis of
benefits from alternative increases in
CAFE standards using a 3 percent
discount rate, and seeks comment on
whether the standards should be set
using a 3 percent rate instead of a 7
percent rate.
There are several reasons that NHTSA
relies primarily on 7 percent as the
appropriate rate for discounting future
benefits from increased CAFE standards.
First, OMB Circular A–4 indicates that
this rate reflects the economy-wide
opportunity cost of capital.148 It also
147 The hourly wage rate during 2006 is estimated
to be $24.00. Personal travel (94.4 percent of urban
travel) is valued at 50 percent of the hourly wage
rate. Business travel (5.6 percent or urban travel) is
valued at 100 percent of the hourly wage rate. For
intercity travel, personal travel (87 percent) is
valued at 70 percent of the wage rate, while
business travel (13 percent) is valued at 100 percent
of the wage rate. The resulting values of travel time
are $12.67 for urban travel and $17.66 for intercity
travel, and must be multiplied by vehicle
occupancy (1.6) to obtain the estimate value of time
per vehicle hour.
148 Office of Management and Budget, Circular A–
4, ‘‘Regulatory Analysis,’’ September 17, 2003, 33.
Available at https://www.whitehouse.gov/omb/
circulars/a004/a-4.pdf (last accessed Feb. 14, 2008).
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states that this ‘‘is the appropriate
discount rate whenever the main effect
of a regulation is to displace or alter the
use of capital in the private sector.’’149
We believe that a substantial portion of
the cost of this regulation may come at
the expense of other investments the
auto manufacturers might otherwise
make. Several large manufacturers are
resource-constrained with respect to
their engineering and productdevelopment capabilities. As a result,
other uses of these resources will be
foregone while they are required to be
applied to technologies that improve
fuel economy.
Second, 7 percent also appears to be
an appropriate rate to the extent that the
costs of the regulation come at the
expense of consumption as opposed to
investment. NHTSA believes that
financing rates on vehicle loans
represent an appropriate discount rate,
because they reflect the opportunity
costs faced by consumers when buying
vehicles with greater fuel economy and
a higher purchase price. Most new and
used vehicle purchases are financed,
and because most of the benefits from
higher fuel economy standards accrue to
vehicle purchasers in the form of fuel
savings, the appropriate discount rate is
the interest rate buyers pay on loans to
finance their vehicle purchases.150
According to the Federal Reserve, the
interest rate on new car loans made
through commercial banks has closely
tracked the rate on 10-year treasury
notes, but exceeded it by about 3
percent.151 The official Administration
forecast is that real (or inflationadjusted) interest rates on 10-year
treasury notes will average about 3
percent through 2016, implying that 6
percent is a reasonable forecast for the
real interest rate on new car loans.152 In
turn, the interest rate on used car loans
149 Id.
150 Some empirical evidence also demonstrates
that used car purchasers are willing to pay higher
prices for greater fuel economy; see, e.g., James A.
Kahn, ‘‘Gasoline Price Expectations and the Used
Automobile Market: A Rational Expectations Asset
Price Approach,’’ Quarterly Journal of Economics,
Vol. 101 (May 1986), 323–339.
151 See Federal Reserve Bank, Statistical Release
H.15, Selected Interest Rates (Weekly) (click on
‘‘Historical Data,’’ then ‘‘Treasury constant
maturities,’’ then ‘‘10-year, monthly’’), available at
https://www.federalreserve.gov/Releases/H15/data/
Monthly/H15_TCMNOM_Y10.txt (last accessed
February 13, 2008); and Federal Reserve Bank,
Statistical Release G.19, Consumer Credit, (click on
‘‘Historical Data,’’ then ‘‘Terms of Credit’’) available
at https://www.federalreserve.gov/releases/g19/hist/
cc_hist_tc.html (last accessed February 13, 2008).
152 See The White House, Joint Press Release of
the Council of Economic Advisors, the Department
of the Treasury, and the Office of Management and
Budget, November 29, 2007, available at https://
www.whitehouse.gov/news/releases/2007/11/
20071129-4.html (last accessed February 13, 2008).
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made through automobile financing
companies has closely tracked the rate
on new car loans made through
commercial banks, but exceeded it by
about 3 percent.153 (We consider rates
on loans that finance used car
purchases, because some of the fuel
savings resulting from improved fuel
economy accrue to used car buyers.)
Given the 6 percent estimate for new car
loans, a reasonable forecast for used car
loans is thus 9 percent.
Because the benefits of fuel economy
accrue to both new and used car
owners, a discount rate between 6
percent and 9 percent is thus
appropriate for evaluating future
benefits resulting from more stringent
fuel economy standards. Assuming that
new car buyers discount fuel savings at
6 percent for 5 years (the average
duration of a new car loan) 154 and that
used car buyers discount fuel savings at
9 percent for 5 years (the average
duration of a used car loan), 155 the
single constant discount rate that yields
equivalent present value fuel savings is
very close to 7 percent.
However, NHTSA also seeks comment
on whether a discount rate of 3 percent
would be more appropriate for this
proposed rulemaking. OMB Circular A–
4 also states that when regulation
primarily and directly affects private
consumption (e.g., through higher
consumer prices for goods and services),
instead of primarily affecting the
allocation of capital, a lower discount
rate may be appropriate. The alternative
discount rate that is most appropriate in
this case is the social rate of time
preference, which refers to the rate at
which society discounts future
consumption to determine its value at
the present time. The rate that savers are
willing to accept to defer consumption
into the future when there is no risk that
borrowers will fail to pay them back
offers one possible measure of the social
rate of time preference. As noted above,
the real rate of return on long-term
government debt, which has averaged
around 3 percent over the last 30 years,
provides a reasonable estimate of this
value.
In the context of CAFE standards for
motor vehicles, the appropriate discount
rate depends on one’s view of how the
costs and benefits of more stringent
standards are distributed between
vehicle manufacturers and consumers.
153 See supra [2 above here] and Federal Reserve
Bank, Statistical Release G.20, Finance Companies,
(click on ‘‘Historical Data,’’ then ‘‘Terms of Credit’’)
available at https://www.federalreserve.gov/releases/
g20/hist/fc_hist_tc.html (last accessed February 13,
2008).
154 Id.
155 Id.
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Given that the discount rate plays a
significant role in determining the level
of the standards under a ‘‘social
optimization’’ context, NHTSA
conducted an analysis of what the
standards and associated costs and
benefits would be if the future benefits
were discounted at 3 percent. The
results of this analysis can be found in
the PRIA. We estimated that following
the same methods and criteria discussed
below, but applying a 3 percent
discount rate rather than a 7 percent
discount rate, would suggest standards
reaching about 33.6 mpg (average
required fuel economy among both
passenger cars and light trucks) in
MY2015, 2 mpg higher than the 31.6
mpg average resulting from the
standards we are proposing based on a
7 percent discount rate. The more
stringent standards during MY2011–
MY2015 would reduce CO2 emissions
by 672 million metric tons (mmt), or 29
percent more than the 521 mmt
achieved by the proposed standards. On
the other hand, we estimated that
standards increasing at this pace would
require about $85b in technology
outlays during MY2011–MY2015, or 89
percent more than the $45b in
technology outlays associated with the
standards proposed today.
Thus, although our proposed
standards are based on a 7 percent
discount rate, NHTSA seeks comment
on whether it should set standards
based on discount rate assumptions of 3
percent, instead of 7 percent.
o. Accounting for Uncertainty in
Benefits and Costs
In analyzing the uncertainty
surrounding its estimates of benefits and
costs from alternative CAFE standards,
NHTSA has considered alternative
estimates of those assumptions and
parameters likely to have the largest
effect. These include the projected costs
of fuel economy-improving technologies
and their expected effectiveness in
reducing vehicle fuel consumption,
forecasts of future fuel prices, the
magnitude of the rebound effect, the
reduction in external economic costs
resulting from lower U.S. oil imports,
the value to the U.S. economy of
reducing carbon dioxide emissions, and
the discount rate applied to future
benefits and costs. The range for each of
these variables employed in the
uncertainty analysis is presented in the
section of this document discussing
each variable.
The uncertainty analysis was
conducted by assuming independent
normal probability distributions for
each of these variables, using the low
and high estimates for each variable as
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the values below which 5 percent and
95 percent of observed values are
believed to fall. Each trial of the
uncertainty analysis employed a set of
values randomly drawn from each of
these probability distributions,
assuming that the value of each variable
is independent of the others. Benefits
and costs of each alternative standard
were estimated using each combination
of variables. A total of 1,000 trials were
used to establish the likely probability
distributions of estimated benefits and
costs for each alternative standard.
B. How Has NHTSA Used the Volpe
Model To Select the Proposed
Standards?
1. Establishing a Continuous Function
Standard
NHTSA’s analysis supporting
determination of the proposed
continuous function standard builds on
the analysis that supported the
determination of the standards in
NHTSA’s 2006 light truck final rule.
That process involved three steps.156
In ‘‘phase one,’’ NHTSA added fuel
saving technologies to each
manufacturer’s fleet, model by model,
for a model year until the net benefit
from doing so reached its maximum
value (i.e., until the incremental cost of
improving its fuel economy further just
equals the incremental value of fuel
savings and other benefits from doing
so). This was done for each of the seven
largest manufacturers. Data points
representing each vehicle’s size and
‘‘optimized’’ fuel economy from the
light truck fleets of those manufacturers
were then combined into a single data
set.
In ‘‘phase two,’’ a preliminary
continuous function was statistically
fitted through these data points, subject
to constraints at the upper and lower
ends of the footprint range.
Once a preliminary continuous
function was statistically fitted to the
data for a model year, ‘‘phase three’’ was
performed. In that phase, the level of the
function was adjusted to maximize net
benefits, that is, the preliminary
continuous function was raised or
lowered until industry-wide (limited to
the seven largest manufacturers)
benefits were maximized.
For NHTSA’s 2006 light truck
rulemaking, the optimization procedure
was applied in its entirety only for MY
2011. The levels of the functions for
MYs 2008–2010 were set at levels
producing incremental costs
approximately equivalent to those
produced by the alternative Unreformed
156 See 71 FR 17596–97 (Apr. 6, 2006) for a more
complete discussion of this process.
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CAFE standards promulgated for those
model years in the same rulemaking.
Analysis conducted by NHTSA to
prepare for the current proposed
rulemaking revealed several
opportunities to refine the procedure
described above before applying it to
this action, which spans several model
years. The resultant procedure is
described below.
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2. Calibration of Initial Continuous
Function Standards
For the optimized standards, the first
step in the current procedure involves
all three phases described above.
Separately, for each of the seven largest
manufacturers, the agency determined
the level of additional technology that
would maximize net benefits. The
agency then combined the resultant
fleets and used standard statistical
analysis procedures to specify a
continuous function (i.e., a function
without abrupt changes) with
asymptotes 157 set at the average fuel
economy levels of the smallest and
largest vehicles in this ‘‘optimized’’
fleet.158
In the 2006 light truck final rule,
NHTSA created an attribute-based fuel
economy standard based upon a
continuous function using a logistic
curve. The 2006 rulemaking, and its
antecedent advanced notice of proposed
rulemaking, contain an extended
discussion of alternative approaches,
including a bin-based system and
different potential curves. As discussed
below, that final rule explains NHTSA’s
decision to promulgate a standard based
on a logistic (‘‘S shaped’’) curve with
constrained asymptotes (upper and
lower limits).
Although we did not explicitly
discuss it in the MY 2008–2011 light
truck rulemaking, NHTSA now wishes
to explain that any continuous function
with lower asymptotes, as was
promulgated in the last rulemaking and
is proposed in this rulemaking, provides
an absolute lower fuel economy level
157 Some functions are not bounded. For example,
a line that is not flat will increase in one direction
without limit and will, in the other direction,
decrease without limit. The continuous function
applied by the agency is of a form with upper and
lower boundaries. Even as vehicle footprint
declines or increases, the function’s value (in mpg
or grams/mile) will never exceed or fall below a
specific value. These upper and lower limits are
called asymptotes.
158 Consistent with EPCA, the passenger car and
light truck fleets were analyzed separately. For
passenger cars, the agency determined the
asymptotes of the continuous function by
calculating the average fuel economy of the smallest
8 percent and the largest 5 percent of the fleet. For
light trucks, the agency considered the smallest 11
percent and the largest 10 percent of the fleet. These
cohorts were determined by identifying gaps in the
distribution of vehicles according to footprint.
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which guards against manufacturers
having an unlimited economic incentive
to upsize their vehicles in order to lower
their fuel economy requirement. As
vehicle footprint continues to increase,
decreases in the corresponding fuel
economy target become progressively
smaller, such that the target approaches
but never reaches the value of the lower
asymptote. Because the required level of
CAFE is the harmonic average of targets
applicable to a manufacturer’s vehicle
models, the value of the standard can
approach but will never fall to the value
of this lower asymptote, no matter how
far the manufacturer’s product mix
shifts toward larger vehicles. This will
limit any loss of fuel savings due to
manufacturer decisions to upsize their
vehicles.
In a perfect world, NHTSA would
develop the continuous functions for
setting passenger car and light truck
standards by letting the vehicle attribute
(footprint) completely control the shape
of the curves used for the functions in
a way that provides the clearest
observed relationship between this
attribute and its fuel economy. But,
NHTSA must balance many real world
practical and public policy aspects in
order to ensure that the standards are
achieving the purpose set forth by EPCA
and EISA. In developing the Agency’s
last light truck rule, the curve used to
fit the data (attribute versus fuel
economy) was a sales-weighted leastsquares logistic curve. During this
rulemaking, as NHTSA continued to
look for ways to improve its standard
setting methodology, consideration was
given to other methods that could be
used to develop the continuous
functions. One such method that
NHTSA explored and is using in this
proposal is unweighted analysis of the
data using the Mean Absolute Deviation
(MAD) statistical procedure.
Unweighted regression involves
counting each vehicle model once,
rather than as many times as vehicles
included in that model are to be
produced. MAD involves weighting
deviations from predicted values based
on their absolute rather than squared
magnitude. As discussed below, NHTSA
has tentatively concluded that,
compared to sales-weighted leastsquares analysis, unweighted MAD is
better suited to data with wide
disparities in weight (i.e., sales volumes)
and with many outliers.
In establishing footprint-based CAFE
standards, the agency does not have the
sole objective of seeking to reflect a
clear engineering relationship between
footprint and fuel economy. Attributes
other than footprint would be more
closely correlated with fuel economy.
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The agency’s objective is to make CAFE
regulations more consistent with public
policy goals, in particular (1) a
rebalancing of requirements such that
full-line manufacturers are not
disproportionately burdened and (2) the
establishment of an incentive that
discourages manufacturers from
responding to CAFE standards in ways
that could compromise occupant
protection and highway safety. While it
is helpful that the attribute—in this case
footprint—has an observed relationship
to fuel economy, it is not necessary that
this relationship be isolated from
accompanying relationships (e.g.,
between weight and fuel economy) that
can be better related to estimable
physical processes. Similarly, it is more
important that the functional form for
the attribute-based standard yield
desirable outcomes than that it singly
seek a clear foundation in estimable
physical processes.
In general, public policy
considerations and available vehicle
data combine to suggest that the fuel
economy standard should be generally
downward sloping (on a fuel economy
basis) with respect to NHTSA’s chosen
attribute, vehicle footprint. The
arguments that favor an attribute-based
system (maintaining consumer choice,
protecting safety, more equitable
distribution of costs, reducing the cost
of regulation) all argue for a downward
sloping curve. Larger vehicles should, in
principle, have higher drag, weigh more,
and therefore have greater inertia than
otherwise identical smaller vehicles.
Hence, all other factors remaining equal,
larger vehicles should have lower fuel
economy than smaller vehicles.
Therefore, the selection of vehicle
footprint as the reference attribute
should produce downward sloping
curves. Also, the tendency of larger
vehicles to have lower fuel economy
than smaller vehicles should provide
some disincentive to shift to larger
vehicles rather than adding technology;
although doing so would tend to reduce
the required CAFE level, it would also
tend to reduce the achieved CAFE level.
However, vehicle data, by itself, does
not necessarily define what functional
form that the curve ought to take. In the
2006 light truck rulemaking, NHTSA
considered linear, quadratic,
exponential, unconstrained logistic, and
constrained logistic functions as
possible alternatives. For light trucks,
the various approaches produced
broadly similar standards through the
most commonly used vehicle sizes, but
drastically different standards at the
high and low ends of the range.
• Linear functions produced very
high fuel economy standards for the
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smallest vehicles, and low standards for
the largest vehicles.
• The quadratic function generated a
minimum at about 75 square feet, and
then perversely turned upward for
vehicles with larger footprints. The
standard for very small vehicles was
unreasonably high.
• The exponential and unconstrained
logistic functions produced
unreasonably high standards for small
vehicles, but flattened out for larger
vehicles.
• The constrained logistic function
provided a broadly linear downwardsloping through the most commonly
used vehicle sizes, along with basically
flat standards for very large and very
small vehicles.
On this basis, NHTSA believed that,
while the data did not dictate a
particular functional form, public policy
considerations made the constrained
logistic function particularly attractive.
The considerations include:
• A relatively flat standard for larger
vehicles acts as a de facto ‘backstop’ for
the standard in the event that future
market conditions encourage
manufacturers to build very large
vehicles. Nothing prevents
manufacturers from building larger
vehicles. With a logistic curve, however,
vehicles upsizing beyond some limit
face a flat standard that is increasingly
difficult to meet.
• A constrained logistic curve doesn’t
impose unachievable fuel economy
standards on vehicles that have
unusually small footprints, thus
continuing to keep manufacturing fuelefficient small vehicles available as a
compliance option.
• A curve fitted without upper and
lower constraints could reach very high
fuel economy levels for small vehicles
and very low fuel economy vehicles for
large vehicles. While such a curve might
produce similar required CAFE levels
for the industry as a whole, it could
have a particular adverse impact on
manufacturers that specialize in very
small vehicles, for example, two-seater
sports cars. By the same token, it could
require little or nothing of
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manufacturers specializing in very large
vehicles.
• The transition from the ‘flat’
portions of the curve to the ‘slope’
portions of the curve is smooth and
gradual, reducing the incentive for
manufacturers to achieve compliance
through marginal changes in vehicle
size.
• The inflection points are set by the
data and can potentially vary from year
to year, rather than being chosen by
NHTSA.
On the other hand, a constrained
logistic curve shares with other
functional forms a risk of an excessively
steep or excessively flat slope. The slope
of the compliance curve may be
considered as ‘too steep’ for public
policy purposes when manufacturers
can achieve appreciable reductions in
compliance costs by marginally
increasing the size of a vehicle’s
footprint—e.g., the cost of compliance
from upsizing is lower than other costeffective compliance methods open to
manufacturers.
A slope is ‘too flat’ for public policy
purposes when it negates the advantages
of an attribute-based system: Where the
standard doesn’t meaningfully vary with
respect to changes in the underlying
attribute, it cannot be said to be an
attribute-based system within the
meaning of the statute.
NHTSA chose footprint as the best
attribute for an attribute-based standard
in part because we believed changing a
vehicle’s footprint would involve
significant costs for manufacturers,
probably requiring a redesign of the
vehicle.
While ‘‘too steep’’ or ‘‘too flat’’
inevitably cannot be defined with
precision, they need to be kept in mind.
For the proposed standards, the
agency defined the continuous function
using the following formula:
T=
1
x −c / d
1 1 1 e( )
+ −
a b a 1 + e( x − c ) / d
Where:
T = the fuel economy target (in mpg)
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a = the maximum fuel economy target (in
mpg)
b = the minimum fuel economy target (in
mpg)
c = the footprint value (in square feet) at
which the fuel economy target is midway
between a and b 159
d = the parameter (in square feet) defining
the rate at which the value of targets
decline from the largest to smallest
values
e = 2.718160
x = footprint (in square feet, rounded to the
nearest tenth) of the vehicle model
NHTSA invites comment regarding
the relative importance of the curve as
a means of (1) providing a basis for
describing the observed relationship
between footprint and fuel economy, (2)
providing a basis for describing a
theoretical physical relationship
(assuming one can be defined) between
footprint and fuel economy, and (3)
providing socially desirable incentives
to manufacturers. The agency further
invites comment on functional forms
that would be consistent with each of
these purposes.
As for analysis of the light truck rule
promulgated in 2006, NHTSA
constrained this function by
determining the maximum and
minimum targets (a and b) and then
holding those targets constant while
using statistical techniques to fit the
other two coefficients (c and d) in this
equation.
In the current analysis for passenger
cars, the upper and lower asymptotes
are based on the smallest three percent
and largest four percent, respectively, of
the fleet. These reflect footprint values
defining distinct cohorts outside the
bulk of the fleet, and correspond to
footprint values of less than 39.5 square
feet (i.e., up to the approximate size of
a Honda Fit) and greater than 52.5
square feet (i.e., at least as great as the
approximate size of a Toyota Avalon),
respectively:
159 That
is, the midpoint.
the purpose of the Reformed CAFE
standard, we are carrying e out to only three
decimal places.
160 For
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percent of the fleet, and the lower
asymptote is based on the largest six
percent of the fleet. These cohorts
correspond to footprint values of less
than 44.5 square feet (i.e., up to the
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approximate size of a Honda CR–V) and
greater than 72.5 square feet (i.e.,
comprised primarily of extended vans
and long-bed pickup trucks),
respectively:
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For light trucks, the upper asymptote
(i.e., the highest mpg value of the
continuous function defining fuel
economy targets) is based on the
smallest (in terms of footprint) eleven
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NHTSA invites comment on the
identification of vehicle cohorts for
purposes of establishing upper and
lower limits (asymptotes) bounding the
attribute-based standard. After updating
its baseline market forecast in
consideration of new product plan
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information from manufacturers, the
agency plans to reevaluate these cohorts
for both passenger cars and light trucks
before promulgating a final rule, and
notes that changes in approach could
lead to changes in stringency.
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Given the above asymptotes, fitting
the above functional form to the
‘‘optimized’’ passenger car fleet resulted
in the following initial continuous
functions:
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were maximized for the seven largest
manufacturers (in total). Without
subsequent recalibrations discussed
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below, this produced the following
continuous functions for passenger cars:
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For each model year, NHTSA then
raised or lowered the resultant
continuous function until net benefits
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The agency followed the same
procedures for setting light truck
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standards and doing so resulted in the
following continuous functions:
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significantly higher fuel economy than
the fleet as a whole and, even more so,
than vehicles of similar footprint. For
passenger cars, the function, as
estimated by weighted ordinary least
squares, was exceptionally steep within
the range considered. This observation,
in turn, led NHTSA to consider
alternative approaches to statistically
fitting the continuous function.
Among the options considered by
NHTSA were the following: dropping
the outlying vehicles from the
estimation process, weighted and
unweighted ordinary least squares, and
weighted and unweighted mean
absolute deviation (MAD). MAD is a
statistical procedure that has been
demonstrated to produce more efficient
parameter estimates in the presence of
significant outliers.161 As examples, the
following two charts show the MY2015
passenger car and light truck fleets after
the application of technologies to each
manufacturer’s fleet. These charts reveal
numerous outliers for the passenger car
fleet and, to a lesser extent, the light
truck fleet:
161 In the case of a dataset not drawn from a
sample with a Gaussian, or normal, distribution,
there is often a need to employ robust estimation
methods rather than rely on least-squares approach
to curve fitting. The least-squares approach has, as
an underlying assumption, that the data are drawn
from a normal distribution, and hence fits a curve
using a sum-of-squares method to minimize errors.
This approach will, in a sample drawn from a nonnormal distribution, give excessive weight to
outliers by making their presence felt in proportion
to the square of their distance from the fitted curve,
and, hence, distort the resulting fit. With outliers in
the sample, the typical solution is to use a robust
method such as a minimum absolute deviation,
rather than a squared term, to estimate the fit (see,
e.g., ‘‘AI Access: Your Access to Data Modeling,’’
at https://www.aiaccess.net/English/Glossaries/
GlosMod/e_gm_O_Pa.htm#Outlier). The effect on
the estimation is to let the presence of each
observation be felt more uniformly, resulting in a
curve more representative of the data (see, e.g.,
Peter Kennedy, A Guide to Econometrics, 3rd
edition, 1992, MIT Press, Cambridge, MA).
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In fitting the continuous function,
NHTSA considered a range of statistical
estimation techniques. In the 2006 light
truck rulemaking, NHTSA estimated the
parameters of the logistic function using
fuel consumption (measured in gallons
per mile) for each vehicle produced in
a particular model year, weighted by
sales.
For this rulemaking, we observed that
estimated fuel consumption functions
for passenger cars were significantly
affected by several outliers—a small
number of popular vehicles that had
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NHTSA requests comment on the best
method for statistically fitting the
continuous function.
There are good theoretical arguments
for using an unweighted (rather than
weighted) analysis. Although the
purpose of the attribute-based standard
is to discourage downsizing (because of
safety implications) and more equitably
distribute compliance burdens among
manufacturers, we strive to develop the
curves based on the observed physical
relationship between vehicle size (i.e.,
footprint) and fuel economy. The curve
developed using unweighted sales data
better reflects this relationship.
However, the process by which we
select the stringency (as distinct from
the form) of the standard must consider
sales volumes because the standards are
based on sales-weighted average
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performance. Therefore, even if we use
unweighted analysis develop the form
of the standard, we would continue to
evaluate the standard’s stringency (and,
therefore, its costs and benefits) based
on sales-weighted average calculations
done on a manufacturer-bymanufacturer basis.
There is already precedent for using
unweighted data to produce curves that
are descriptive of engineering
relationships. In NHTSA’s Preliminary
Regulatory Impact Analysis for FMVSS
216 roof crush standards, a series of
force-versus-deflection curves were
produced for individual vehicle models
and then averaged together. In that case,
the agency was seeking observed
relationships that reflect engineering
possibilities, rather than a profile of the
existing sales fleet.
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In terms of relative emphasis on
different vehicle models, the distinction
between unweighted and weighted
analysis is profound in the light vehicle
market, in part because of the way
‘‘models’’ are defined for purposes of
CAFE. The highest-selling passenger car
model represents 356,000 units, and the
lowest-selling model represents only 5
units. As a group, the five lowest-selling
models represent only 305 units. Thus,
weighted analysis places more than
1,000 times the emphasis on the
highest-selling model than on the five
lowest-selling models, and more than
70,000 times the emphasis than on the
single lowest-selling model. The
following histograms show the broader
distributions of models and sales with
respect to model-level sales (first for
passenger cars, then for light trucks):
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For purposes of setting the stringency
of the corporate average fuel economy
standard, this is vital because
enforcement is based on the salesweighted average. However, for
purposes of developing a curve
intended to represent fuel economy
levels achieved at a given footprint,
weighted analysis effectively ignores
many models.
On the other hand, unweighted
estimation is depending on the
definition of a ‘‘model’’. Manufacturers
will sometimes offer substantially
similar vehicles with different badges
(i.e., Ford Taurus/Mercury Sable) as two
different models. The distinction
between differing ‘‘options packages’’
on a single model and two distinct
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models is inevitably a bit blurry. When
estimating fuel economy standards
using a sales-weighted regression, this
distinction is not material, since the
estimation process will produce
substantially the same results
independently of the number of
distribution of those sales into larger or
smaller numbers of models. In
unweighted estimation, however,
dividing a particular vehicle family into
a larger number of distinct models give
that family some extra influence in the
analysis. Nonetheless, considering that
such parsing less than does sales
weighting. NHTSA has tentatively
concluded that unweighted estimation
remains preferable to sales-weighted
estimation, but invites comment on
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whether and, if so how substantially
similar vehicles should be combined for
purposes of fitting an attribute-based
function when using unweighted
estimation.
The following charts show, for
MY2015 passenger cars and light trucks,
how the use of sales-weighted leastsquares estimation compares to the
proposed approach, which uses
unweighted mean absolute deviation.
For passenger cars, the curve resulting
from proposed approach is somewhat
shallower than the curve resulting from
sales-weighted least squares estimation.
For light trucks, the curve resulting from
proposed approach is somewhat steeper:
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NHTSA invites comment on the
relative merits of unweighted and
weighted estimation, as well as on the
other curve fitting options (e.g., the use
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of mean absolute deviation) raised here.
The agency plans to reevaluate curve
fitting approaches for both passenger
cars and light trucks before
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promulgating a final rule, and notes that
changes in approach could lead to
changes in stringency and impacts on
different manufacturers.
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3. Adjustments To Address Policy
Considerations
NHTSA believes that the resultant
curve characteristics discussed above
are empirically correct in that they
correspond to the footprint and fuel
economy values of the fleet obtained by
adding fuel saving technologies to each
manufacturer’s fleet until the net benefit
from doing so reached its maximum
value.
However, there are three issues
(described above) which may tend to
reduce the effectiveness of fuel economy
regulation over time. These concerns
are:
• Curve crossings;
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• Excessive steepness of the
passenger car curve;
• Risk of upsizing.
In this rule, NHTSA proposes a
solution to the curve crossing issue,
requests comment on various methods
of reducing the steepness of the
passenger car, and examines the
potential for upsizing generally under
the provisions of this proposed rule.
a. Curve Crossings
For both passenger cars and light
trucks, NHTSA observed some curve
crossings from one model year to the
next (i.e., for the same footprint, some
targets fell below the levels attained in
the previous model year), as revealed in
the above charts. The upper limit of the
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MY 2012 passenger car curve falls
slightly (about 0.1 mpg) below the MY
2011 value. For light trucks, the lower
asymptote in MY 2012 is 0.9 mpg below
the lower asymptote in MY 2011. This
was not observed during the last round
of light truck rulemaking because
reformed CAFE was fully implemented
only in MY 2011. During the transition
period (MYs 2008–2010), the standards
were set at levels equivalent in cost to
unreformed CAFE. However, for this
rulemaking, because the projected fleet
composition changes between model
years and the fuel economy target
function is optimized in every model
year, the initial continuous functions do
not change monotonically (i.e., in only
one direction—increasing) from year to
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year at every footprint value. Given the
availability of lead time and the
importance of improving fuel economy,
NHTSA has decided that, in the setting
of the standards, we should ensure that
the fuel economy targets do not fall from
one year to the next at any footprint
value.
To address the year-to-year
fluctuations in the functions, which
may lead to these curve crossings,
NHTSA recalibrated each continuous
function to prevent it from crossing the
continuous function from any previous
model year. In doing so, the agency
attempted to avoid continuous functions
that would artificially encourage the
product mix to approximate that of
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earlier years. Instead, the agency
recalibrated by gradually shifting the
initial continuous functions for each
model year toward the initial
continuous function determined above
for the product mix for MY 2015. For
both passenger cars and light trucks, the
agency adjusted each of the four
coefficients in the formula determining
the continuous function such that
regular steps were taken year by year
between the values determined above
for MY 2011 and those for MY 2015. For
example, the inflection point (the
coefficient determining the footprint at
which the target falls halfway between
its minimum and maximum values)
defining the light truck target function
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was increased by 0.034 square feet
annually from 51.9 square feet in MY
2011 to 52.1 square feet in MY 2015.
NHTSA also recalibrated the
continuous function for each model year
by adding, as needed, anti-backsliding
constraints that prevent the function
from either (a) yielding an industry
wide average level of CAFE lower than
that for the preceding model year, (b) for
a given footprint, having targets that fall
below the level of previous year, and (c)
having an asymptote lower than that of
the preceding model year. The
‘‘decision tree’’ for determining for each
model year the need for each of these
constraints is summarized below in
Figure V 16.
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The industry-wide average CAFE is
prevented from decreasing between
model years in order to prevent
standards from falling below the level
that was determined to be achievable for
the model year before. To allow the
industry-wide CAFE level to fall
between successive model years would
be to promulgate a standard that,
notwithstanding maximizing net
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benefits, falls below what the agency
has determined to be feasible in
previous years. In a model year in
which simple maximization of net
benefits would have caused this to
occur, NHTSA shifted the resultant
curve upward (without changing the
curve’s shape) in order to produce an
industry-wide CAFE equal to that of the
preceding model year.
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Application of the decision tree
shown above results in the following
target functions for passenger cars and
light trucks, respectively. These target
functions are identical to those shown
below in Section VI, which discusses
the standards proposed today by
NHTSA:
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b. Steep Curves for Pasenger Cars
NHTSA has developed a set of
attribute-based curves for passenger cars
for this proposal consistent with the
methodology used in the 2008–2011
light duty truck rule. However, unlike
the relatively gradually sloped curve
related fuel economy to footprint for
trucks, our analysis for cars when
utilizing a constained logistic curve
produces a comparatively steep ‘‘S’’shaped curve for passenger cars. This
occurs primarily because—unlike
trucks—current passenger car sales
include vehicles with a wide range of
fuel economy spanning a relatively
narrow footprint range. Consequently,
there is a relatively steep curve applied
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to the middle range of footprint values
with a more rapid change of slope in the
tails to flatten curve and thus satisfy the
constrained logistic functional form.
In this rule, NHTSA is proposing a
relatively ‘‘steep’’ curve. The agency has
considered and experimented with
several methods of reducing the
steepness of the passenger car curve.
However, each of these approaches has
created challenges that may potentially
be worse than the problem they are
trying to cure. The Agency is
questioning whether the steep slope
portion of the curve could potentially
motivate vehicle manufacturers to
reduce their compliance obligation
under the standard by slightly
increasing its footprint when they
redesign their vehicles. We do not know
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the extent to which this is a real
problem, but the agency has considered
this possibility and has worked to
minimize steepness of the slope while
maintaining the scientific integrity
behind our methodology.
However, any attempt to ‘‘fix’’ the
steepness of the passenger car curve
appears to come at a price: First,
flattening the curve by any particular
method will move the curve away from
the actual vehicle data. Second, flatter
curves are generally place greater
compliance burdens on full-line
manufacturers than comparatively
stringent (in terms of average require
CAFE) standards. Furthermore, NHTSA
believes that this could increase the
overall costs required to achieve a given
amount of fuel savings and societal
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benefits, and it increases the risk that
NHTSA would need to return to a ‘‘least
capable manufacturer’’ approach in
order to ensure economic practicability.
Doing so would likely reduce
stringency, and reduce fuel savings. In
deciding on a particular approach,
NHTSA must balance the certainty of
high costs and lost fuel savings through
a less ‘‘efficient’’ standard against the
risk that the steepness of the curve
might stimulate manufacturers to evade
the standard over time by redesigning
their vehicles over time.
In proposing the steep curve for this
rule, NHTSA has tentatively decided
that the cures that we have identified
come at too high a price, i.e., lost
stringency or undesirable side effects.
However, NHTSA requests comment on
these and other potential solutions to
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reduce the steepness of the proposed car
curves for passenger cars.
Some of the approaches considered or
tested by NHTSA include:
Linear standards. When the fuel
consumption of vehicles with added
technologies is plotted against footprint,
we note a roughly linear relationship
over the existing range of footprint
values. Hence, a simple alternative to
the current constrained logistic function
would be to estimate a linear form of the
curve with the sales data. However,
NHTSA is concerned that such an
approach may result in very low fuel
economy standards for the largest
footprint vehicles, very high fuel
economy standards for the smallest
vehicles, and loss of the inherent
backstop properties of the constrained
logistic function.
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In addition, the slope of a line
estimated through a ‘‘cloud’’ of data
may be very sensitive to the exact
characteristics of vehicles with the
largest and smallest footprints. It may
turn out that small changes in vehicle
characteristics in the tails could shift
the slope of a linear estimate. Further,
it may be impossible to materially adjust
the slope of a linear standard in future
years without accepting curve crossing.
The following two charts compare linear
regression results for MY2015 to the
curves proposed today by NHTSA. The
result for passenger cars illustrates the
concern regarding behavior at large and
small footprints. Over the range of
footprints in which light trucks are
expected to be offered in MY2015, the
result for light trucks shows less
difference from the proposed curve.
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linearization of the constrained logistic
function. The same minima and maxima
would be used to bound the vertical
extent of the linear form. The following
two charts suggest that, at least for the
MY2015 passenger car and light truck
fleets considered today, a constrained
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linear standard would, compared to the
standard proposed today, likely result in
a similar distribution of compliance
burdens among manufacturers (because
the stringency at each footprint would
be similar):
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Constrained linear standards.
Another possible approach would be to
retain the flattened tails proposed today
but reduce the steepness of the middle
portion by allowing it to directly reflect
a linear relationship. This approach
could be likened to a simplification or
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However, the agency remains
concerned that the slope could exhibit
greater year-to-year variation than the
proposed logistic form (although further
analysis would be required in order to
address this concern). Also, as
discussed in the preamble to the 2006
Federal Register notice regarding light
truck CAFE standards, the agency
remains concerned that the upper and
lower ‘‘kinks’’ in the function could
offer unexpected incentives for
manufacturers to redesign vehicles with
footprints close to the kink-point.
Dual Attribute Approaches. A third
possible solution would be to use
additional attribute-based information
to spread out the distribution of
passenger cars across the x-axis. In
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effect, this approach uses a second
attribute to normalize the footprint-fuel
economy relationship. This second
attribute might be horsepower, weight,
or horsepower-to-weight.
In analyzing the expected passenger
car market, NHTSA observes that the
ratio of engine horsepower to vehicle
weight generally increases with
increasing footprint. Higher power-toweight ratios tend to imply lower fuel
economy, as the engine is typically
larger and operating less efficiently
under driving conditions applicable to
certification. Thus, the fuel
consumption versus footprint curves for
passenger cars reflect this relationship.
For trucks, there does not appear to be
a relationship between footprint and the
power-to-weight ratio. For passenger
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cars, then, adjusting fuel consumption
values to normalize for differences in
power-to-weight ratio may produce a
flatter curve providing less of an
upsizing incentive for middle footprint
values.
NHTSA has experimented with
normalizing footprint by horsepower-toweight ratio. The result was a nearly flat
standard with respect to footprint across
the most popular size ranges. This did
not appear to deliver the benefits of an
attribute-based system. In addition, it
involves significant downward
adjustments to the fuel economy of
hybrid electric vehicles (such as the
Toyota Prius), for which the engine is
not the sole source of motive power.
Also, it involves significant upward
adjustments to the fuel economy of
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as such normalization implies that
NHTSA should adopt a two-attributed
standard (e.g., in which the target
depends on footprint and power-toweight ratio), it may be challenging and
time consuming to come up with a
sufficiently precise vehicle-by-vehicle
definition of horsepower or horsepowerto-weight to be used for regulatory
purposes.
Shape Based on Combined Fleet. A
fourth possible solution would be to
combine the passenger car and light
truck fleet to determine the shape of the
constrained logistic curve, and then
determine the stringency (i.e., height) of
that curve separately for each fleet. On
one hand, this approach would base the
curve’s shape on the widest available
range of information. On the other, the
resultant initial shape for each fleet
would be based on vehicles from the
other fleet. For example, the initial
shape applied to passenger cars would
be based, in part, on large SUVs and
pickup trucks, and the initial shape
applied to light trucks would be based,
in part, on subcompact cars. Stringency
would still be determined separately for
passenger cars and light trucks. NHTSA
invites comments on the consistency of
this approach with the requirement in
EPCA to establish separate standards for
passenger cars and light trucks.
NHTSA performed a preliminary
analysis of this approach. Considering
the very wide range of fuel consumption
levels in the combined fleet, NHTSA
developed the asymptotes based on the
average fuel consumption of all
passenger cars and light trucks,
respectively, rather than on the smallest
passenger cars and the largest light
trucks. The resultant MY2015 curve,
shown below, is similar in curvature to
the proposed curve for passenger cars
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vehicles with high power-to-weight
ratios (such as the Chevrolet Corvette).
Some of these upward and downward
adjustments are large enough to suggest
radical changes in the nature of the
original vehicles. Furthermore, insofar
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and notably steeper than the proposed
curve for light trucks.
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Ignoring Outliers. A fifth possible
solution would be to ignore outliers
(data points that are unique and skew
the curve). Lacking an objective means
of classifying specific vehicle models as
outliers that should be excluded from
the analysis, NHTSA explored the
possibility of excluding all hybrid
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electric vehicles (HEVs). The Japanese
government also excluded HEVs for
purposes of developing Japan’s light
vehicle efficiency standards. However,
doing so yields initial curves of shapes
similar to those proposed, but displaced
slightly in the direction of lower fuel
consumption. The similarity of the
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shapes of these curves suggests that
optimization against the full fleet (with
HEVs) would produce standards whose
stringency is similar to that of those
proposed today.
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NHTSA invites comments on the
importance of addressing the relative
steepness of the proposed curves for
passenger cars, and on the feasibility of,
technical basis for, and implications of
any options for doing so. The agency
plans to reevaluate standards for both
passenger cars and light trucks before
promulgating a final rule, and notes that
changes in approach—including
measures to address the steepness of the
passenger car curves—could lead to
changes in stringency as well as
different impacts on different
manufacturers.
c. Risk of Upsizing
The steepness of the proposed curve
for passenger cars presents a localized
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risk that manufacturers will respond in
ways that compromise expected fuel
savings. That is, although the
constrained logistic curve has a steep
region, that region does not cover a wide
range of footprints. However, any
attribute-based system involves the
broader risk that manufacturers will
shift toward vehicles with the lowest
fuel economy targets to the extent that
upsizing can be accomplished
sufficiently cheaply and without so
much weight increase as to nullify the
effect of a lower target. As mentioned
above, the constrained logistic curve
proposed by NHTSA provides an
absolute floor. That is, even if
manufacturers discontinue all but the
very largest known passenger cars and
light trucks, they would still be required
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to meet CAFE standards no lower than
the lower asymptote (on an mpg basis)
of the constrained logistic curve. Also,
for domestic passenger cars, EISA
establishes a floor or ‘‘backstop’’ equal
to 92 percent of the average required
CAFE level for passenger cars. This
backstop is discussed below in Section
VI.
It is difficult to assess the risk that
manufacturers may shift the mix of
vehicles enough to approach the EISA
floor for domestic passenger cars, or to
approach the lower asymptotes for light
trucks or imported passenger cars.
However, considering the footprint
distribution of vehicles (as indicated by
the various histograms and scatter plots
shown above in this section) expected to
be covered by the proposed rule,
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NHTSA anticipates that manufacturers
would not be able to approach these
reductions in stringency without
dramatically altering product mix. The
agency doubts that manufacturers could
do so unless consumer preferences for
larger vehicles also shift dramatically.
NHTSA also notes that under
attribute-based CAFE standards such as
the agency is proposing today, shifts in
consumer preferences could cause
manufacturers’ required CAFE levels
and, therefore, achieved fuel savings
(and perhaps costs) to increase. For
example, if changes in fuel prices
combine with demographic and/or other
factors to cause market preferences to
shift significantly toward vehicles with
smaller footprints, manufacturers
shifting (relative to current estimates) in
that direction will face higher required
CAFE levels than the agency has
estimated.
unweighted mean absolute deviation
(MAD) regression and determined
through a gradual transformation of
curves to guard against erratic
fluctuations and through a series of antibacksliding measures that prevents the
average required CAFE level from
falling between model years and
prevents the continuous function for a
given model from crossing or falling
below that of the preceding model year.
These refinements are discussed in
greater detail in Section V of the notice.
VI. Proposed Fuel Economy Standards
A. Standards for Passenger Cars and
Light Trucks
For both passenger cars and light
trucks, the agency is proposing CAFE
standards estimated, as for the
previously-promulgated reformed MY
2008–2011 light truck standards, to
maximize net benefits to society.
However, as discussed in Section V, the
agency considered and analyzed
modified approaches to calibrating the
continuous function and fitting the data
in order to address characteristics of the
data (vehicles with outlying fuel
economy, footprint, and or sales), and to
address the issues of backsliding,
steepness of the curve, and curve
crossings from one model year to the
next. While the agency is proposing the
curves below, we continue to be
concerned about the steepness of the
passenger car curve and about gaming
potential and are seeking comments on
different approaches to address the
steepness, as discussed in Section V.
The proposed curves below and their
respective shapes are calibrated using
1. Proposed Passenger Car Standards
MY 2011–2015
We have tentatively determined that
the proposed standards for MY 2011–
2015 passenger cars would result in
required fuel economy levels that are
technologically feasible, economically
practicable, and set by taking into
account both the effect of other motor
vehicle standards of the Government on
fuel economy and the need of the
United States to conserve energy. Values
for the parameters defining the target
functions defining these proposed
standards for cars are as follows:
Model year
Parameter
2011
a
b
c
d
...............................................................................................................
...............................................................................................................
...............................................................................................................
...............................................................................................................
rwilkins on PROD1PC63 with PROPOSALS2
Where, per the adjusted continuous function
formula above in Section V:
a = the maximum fuel economy target (in
mpg)
b = the minimum fuel economy target (in
mpg)
c = the footprint value (in square feet) at
which the fuel economy target is midway
between a and b
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2012
38.2
25.9
45.9
1.6
d = the parameter (in square feet) defining
the rate at which the value of targets
decline from the largest to smallest
values
The resultant target functions have
the following shapes:
Based on the product plan
information provided by manufacturers
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2013
40.0
27.4
45.8
1.5
40.8
28.7
45.7
1.5
2014
41.2
29.9
45.6
1.4
2015
41.7
31.2
45.5
1.4
in response to the February 2007 request
for information and the incorporation of
publicly available supplemental data
and information, NHTSA has estimated
the required average fuel economy
levels under the proposed adjusted
standards for MYs 2011–2015 as
follows:
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TABLE VI–1.—REQUIRED CAFE LEVELS (MPG) FOR PASSENGER CARS
MY 2011
MY 2012
MY 2013
MY 2014
MY 2015
BMW ........................................................................................................
Chrysler ....................................................................................................
Ferrari ......................................................................................................
Ford ..........................................................................................................
Fuji (Subaru) ............................................................................................
General Motors ........................................................................................
Honda ......................................................................................................
Hyundai ....................................................................................................
Lotus ........................................................................................................
Maserati ...................................................................................................
Mercedes .................................................................................................
Mitsubishi .................................................................................................
Nissan ......................................................................................................
Porsche ....................................................................................................
Suzuki ......................................................................................................
Toyota ......................................................................................................
Volkswagen ..............................................................................................
33.3
28.7
30.4
31.0
36.9
30.0
32.1
33.4
38.1
28.9
31.7
33.0
31.2
37.6
37.3
30.1
35.4
35.0
29.3
32.0
32.7
38.7
31.7
33.8
35.1
40.0
30.6
33.3
35.1
33.2
39.4
39.2
31.5
37.2
36.0
32.2
33.1
33.7
39.6
32.8
34.8
36.0
40.8
31.8
34.4
35.9
34.2
40.3
40.1
32.7
38.2
36.8
32.6
33.9
34.5
40.1
33.7
35.5
36.7
41.2
32.8
35.3
37.0
35.0
40.7
40.6
33.6
38.8
37.7
33.6
34.9
35.5
40.8
34.7
36.4
37.5
41.7
34.0
36.2
37.9
35.9
41.3
41.2
34.6
39.5
Total/Average ...................................................................................
31.2
32.8
34.0
34.8
35.7
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2. Proposed Standards for Light Trucks
MY 2011–2015
NHTSA is proposing light truck fuel
economy standards for MYs 2011
through 2015. In taking a fresh look at
what truck standard should be
established for MY 2011, as required by
EISA, NHTSA used the newer set of
assumptions that it had developed for
the purpose of this rulemaking. These
assumptions differ from those used by
the agency in setting the MY 2008–2011
light truck standards in early 2006, and
result in an increase in the projected
overall average fuel economy for MY
2011. The agency used the most up-todate EIA projections for available
gasoline prices. These projections are,
on average, at approximately $0.25 per
tentatively determined that the
proposed light truck standards for MYs
2011–2015 represent the maximum
feasible fuel economy level for that
approach. In reaching this tentative
conclusion, we have balanced the
express statutory factors and other
relevant considerations, such as safety
and effects on employment, and we will
also consider our NEPA analysis in the
agency’s final action.
The proposed standards are
determined by a continuous function
specifying fuel economy targets
applicable at different vehicle footprint
sizes, the equation for which is given
above in Section V Values for the
parameters defining the target functions
defining these proposed standards for
light trucks are as follows:
gallon higher than the projections used
in the last light truck rulemaking. Other
differences in assumptions include
more current product plan information
(i.e., spring 2007 product plans
reflecting persistently higher fuel prices,
instead of the fall 2005 plans used in the
2006 final rule), an updated technology
list and updated costs estimates and
penetration rates for technologies, and
updated values for externalities such as
energy security and placing a value of
carbon dioxide emission reductions.
NHTSA is proposing ‘‘optimized’’
standards for MY 2011–2015 light
trucks, the process for establishing
which is described at length above, but
which may be briefly described as
maximizing net social benefits plus antibacksliding measures. We have
Model year
Parameter
2011
A
B
C
D
...............................................................................................................
...............................................................................................................
..............................................................................................................
..............................................................................................................
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Where:
a = the maximum fuel economy target (in
mpg)
b = the minimum fuel economy target (in
mpg)
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2012
30.9
21.5
51.9
3.8
c = the footprint value (in square feet) at
which the fuel economy target is midway
between a and b
d = the parameter (in square feet) defining
the rate at which the value of targets
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2013
32.7
22.8
52.0
3.8
34.1
23.8
52.0
3.8
2014
2015
34.1
24.3
52.1
3.9
34.3
24.8
52.1
3.9
decline from the largest to smallest
values
The resultant target functions have
the following shapes:
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Federal Register / Vol. 73, No. 86 / Friday, May 2, 2008 / Proposed Rules
Based on the product plans provided
by manufacturers in response to the
February 2007 request for information
and the incorporation of publicly
available supplemental data and
information, the agency has estimated
the required average fuel economy
levels under the proposed optimized
standards for MYs 2011–2015 as
follows:
TABLE VI–2.—REQUIRED CAFE LEVELS (MPG) FOR LIGHT TRUCKS
MY 2011
BMW ........................................................................................................
Chrysler ....................................................................................................
Ford ..........................................................................................................
Fuji (Subaru) ............................................................................................
General Motors ........................................................................................
Honda ......................................................................................................
Hyundai ....................................................................................................
Mercedes .................................................................................................
Mitsubishi .................................................................................................
Nissan ......................................................................................................
Porsche ....................................................................................................
Suzuki ......................................................................................................
Toyota ......................................................................................................
Volkswagen ..............................................................................................
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MY 2012
28.2
25.2
24.7
30.0
23.9
26.1
27.5
28.4
29.4
24.9
25.9
30.3
24.9
26.2
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29.9
26.6
26.1
31.7
25.4
27.7
29.1
30.1
30.8
26.2
27.4
32.1
26.0
27.8
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MY 2013
31.2
28.0
28.0
33.1
26.5
28.9
30.4
31.4
32.2
27.3
28.7
33.5
27.2
29.0
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MY 2014
31.4
28.5
28.3
33.2
27.0
29.2
30.6
31.6
32.3
27.7
29.0
33.5
27.6
29.3
MY 2015
31.7
29.1
28.8
33.4
27.4
29.6
31.0
31.9
32.6
28.2
29.4
33.7
28.0
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TABLE VI–2.—REQUIRED CAFE LEVELS (MPG) FOR LIGHT TRUCKS—Continued
Manufacturer
MY 2011
Total/Average ...................................................................................
We recognize that the manufacturer
product plans that we used in
developing the manufacturers’ required
fuel economy levels for both passenger
cars and light trucks will be updated in
some respects before the final rule is
published. To that end, the agency is
publishing a separate request for
product plans at the same time as this
NPRM to obtain whatever updates have
been made already. Further, we note
that a manufacturer’s required fuel
economy level for a model year under
the adjusted standards would be based
on its actual production numbers in that
model year. Therefore, its official
required fuel economy level would not
be known until the end of that model
year. However, because the targets for
each vehicle footprint would be
established in advance of the model
year, a manufacturer should be able to
estimate its required level accurately
and develop a product plan that would
comply with that level.
3. Energy and Environmental Backstop
EISA requires each manufacturer to
meet a minimum fuel economy standard
for domestically manufactured
passenger cars in addition to meeting
the standards set by NHTSA. The
minimum standard ‘‘shall be the greater
of (A) 27.5 miles per gallon; or (B) 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. * * *’’ 162 The agency must
publish the projected minimum
standards in the Federal Register when
the passenger car standards for the
model year in question are promulgated.
NHTSA calculated 92 percent of the
proposed projected passenger car
standards as the minimum standard,
which is presented below. The
calculated minimum standards will be
updated for the final rule to reflect any
changes in the projected passenger car
standards.
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Model year
2011
2012
2013
2014
Minimum
standard
..........................................
..........................................
..........................................
..........................................
162 49
28.7
30.2
31.3
32.0
U.S.C. 32902(b)(4).
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MY 2012
25.0
26.4
Minimum
standard
Model year
2015 ..........................................
32.9
The agency would like to note that
EISA requires the minimum domestic
passenger car standard to be the greater
of 27.5 mpg or the calculated 92
percent, the calculated minimum
standard. In all five model years, the
percentage-based value exceeded 27.5
mpg. We also note that the minimum
standards apply only to domestically
manufactured passenger cars, not to
non-domestically manufactured
passenger cars or to light trucks.
In CBD, the Ninth Circuit agreed with
the agency that EPCA, as it was then
written, did not explicitly require the
adoption of a backstop, i.e., a minimum
CAFE standard that is fixed. A fixed
minimum standard is one that does not
change in response to changes in a
manufacturer’s vehicle mix.
The Court said, however, that the
issue was not whether the adoption was
expressly required, but whether it was
arbitrary and capricious for the agency
to decline to adopt a backstop. The
Court said that Congress was silent in
EPCA on this issue. The Court
concluded that it was arbitrary and
capricious for the agency to decline to
adopt a backstop because it did not, in
the view of the Court, address the
statutory factors for determining the
maximum feasible level of average fuel
economy.
NHTSA believes that it considered
and discussed the express statutory
factors such as technological feasibility
and economic practicability and related
factors such as safety in deciding not to
adopt a backstop. We do not believe that
further discussion is warranted because
Congress has spoken directly on this
issue since the Ninth Circuit’s decision.
The enactment of EISA resolved this
issue. Congress expressly mandated that
CAFE standards for automobiles be
attribute-based. That is, they must be
based on an attribute related to fuel
economy, e.g., footprint and they must
adjust in response to changes in vehicle
mix. Taken by itself, this mandate
precludes the agency from adopting a
fixed minimum standard. The only
exception to that mandate is the
provision in which Congress mandated
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MY 2013
27.8
MY 2014
28.2
MY 2015
28.6
a fixed and flat 163 minimum standard
for one of the three compliance
categories. It required one for domestic
passenger cars, but not for either
nondomestic passenger cars or light
trucks.
Given the clarity of the requirement
for attribute-based standards and the
equally clear narrow exception to that
requirement, the agency tentatively
concludes that had Congress intended
backstops to be established for either of
the other two compliance categories, it
would have required them. Congress did
not, however, do so. Absent explicit
statutory language that provides the
agency authority to set flat standards,
the agency believes that the setting of a
supplementary minimum flat standard
for the other two compliance categories
would be contrary to the requirement to
set an attribute-based standard under
EISA.
Regardless, the agency notes that the
curve of an attribute-based standard has
features that limit backsliding. Some of
these features, which are fully described
in Section V.B of the notice, were added
as the agency refined and modified the
Volpe model for the purpose of this
rulemaking. Others, such as the lower
asymptote, which serves as a backstop,
are inherent in the logistic function. We
believe that these features help address
the concern that has been expressed
regarding the possibility of vehicle
upsizing without compromising the
benefits of reform. In addition, the
agency notes that the 35 mpg
requirement in and of itself serves as a
backstop. The agency must set the
standards high enough to ensure that
the average fuel economy level of the
combined car and light fleet is making
steady progress toward and achieves the
statutory requirement of at least 35 mpg
by 2020. If the agency finds that this
requirement might not be achieved, it
will consider setting standards for
model years 2016 through 2015 early
enough and in any event high enough to
ensure reaching the 35 mpg
requirement.
4. Combined Fleet Performance
The combined industry wide average
fuel economy (in miles per gallon, or
mpg) levels for both cars and light
163 A flat standard is one that requires each
manufacturer to achieve the same numerical level
of CAFE.
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trucks, if each manufacturer just met its
obligations under the proposed
‘‘optimized’’ standards for each model
year, would be as follows:
MY 2011: 27.8 mpg
MY 2012: 29.2 mpg
MY 2013: 30.5 mpg
MY 2014: 31.0 mpg
MY 2015: 31.6 mpg
The annual average increase during
this five year period is approximately
4.5 percent. Due to the uneven
distribution of new model introductions
during this period and to the fact that
significant technological changes can be
most readily made in conjunction with
those introductions, the annual
percentage increases are greater in the
early years in this period. In order for
the combined industry wide average
fuel economy to reach at least 35 mpg
by MY 2020, it would have to increase
an average of 2.1 percent per year for
MYs 2016 through 2020.
B. Estimated Technology Utilization
Under Proposed Standards
NHTSA anticipates that
manufacturers will significantly
increase the use of fuel-saving
technologies in response to the
standards we are proposing for
passenger cars. Although it is
impossible to predict exactly how
manufacturers will respond, the Volpe
model provides estimates of
technologies manufacturers could apply
in order to comply with the proposed
standards. The preliminary Regulatory
Impact Analysis (PRIA) presents
estimated increases in the industry-wide
utilization of each technology included
in agency’s analysis. Tables VI–3 and
VI–4 show rates at which the seven
largest manufacturers’ product plans
indicated plans to use some selected
technologies, as well as rates at which
the Volpe model estimated that the
same technologies might penetrate these
manufacturers’ passenger car fleet in
response to the baseline and proposed
standards.
The average penetration rate is the
percentage of the entire fleet to which
the technology is applied. For example,
tables VI–3 and VI–4 show that these
manufacturers could apply hybrid
powertrains to 15 percent of the entire
passenger car fleet in MY 2015, as
opposed to the 5 percent shown in their
product plans. However, not all
manufacturers begin with the same
technology penetration rates, and not all
manufacturers are affected equally by
the proposed standards. The next
column shows the maximum
penetration rate among the seven
manufacturers with a significant market
share (Chrysler, Ford, GM, Honda,
Hyundai, Nissan, and Toyota). For
example, the Volpe model estimated
that one of these manufacturers would
apply hybrid powertrains to 19 percent
of its passenger car fleet to comply with
the proposed MY 2015 standard.
As tables VI–3 and VI–4 demonstrate,
the Volpe model estimated that
manufacturers might need to apply
significant numbers of advanced
engines, advanced transmissions, and
hybrid powertrains in order to comply
with the proposed standards. (Most of
the hybrids are integrated starter
generators, although significant
numbers of IMA and power-split
hybrids also penetrate the fleet.) For
example, the Volpe model estimated
that one of the seven largest light truck
manufacturers could be including diesel
engines in 45 percent of its light trucks
by MY2015 in response to the proposed
standards.
TABLE VI.—3. ESTIMATED TECHNOLOGY PENETRATION RATES IN MY2015 FOR PASSENGER CARS
[In percent]
Average among seven largest manufacturers
Technology
Product plan
Under
proposed
standard
Adjusted
baseline
Maximum among seven largest manufacturers
Product plan
Under
proposed
standard
Adjusted
baseline
Passenger Cars
Automatically Shifted Manual Transmission .................................................
Spark Ignited Direct Injection ...................
Turbocharging & Engine Downsizing ......
Diesel Engine ...........................................
Hybrid Electric Vehicles ...........................
10
22
5
0
5
10
22
5
0
5
39
30
17
2
15
59
76
11
0
14
59
76
11
0
14
86
82
51
5
19
TABLE VI.—4. ESTIMATED TECHNOLOGY PENETRATION RATES IN MY2015 FOR LIGHT TRUCKS
[In percent]
Maximum among seven largest manufacturers
Technology
rwilkins on PROD1PC63 with PROPOSALS2
Product plan
Automatically Shifted Manual Transmission .................................................
Spark Ignited Direct Injection ...................
Turbocharing & Engine Downsizing ........
Diesel Engine ...........................................
Hybrid Electric Vehicles ...........................
10
23
9
3
2
The agency uses Volpe model analysis
of technology application rates as a way
of determining the economic
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proposed
standard
Adjusted
baseline
14
24
11
6
6
Product plan
55
40
31
10
25
practicability and technological
feasibility of the proposed standards,
but we note that manufacturers may
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41
46
32
7
5
Under
proposed
tandard
Adjusted
baseline
41
46
32
29
13
always comply with the standards by
applying different technologies in
different orders and at different rates.
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45
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Insofar as our conclusion of what the
maximum feasible standards would be
is predicated on our analysis, however,
the agency requests comment on the
feasibility of these rates of increase in
the penetration of these advanced
technologies, and for other technologies
discussed in the PRIA.
C. Benefits and Costs of Proposed
Standards
1. Benefits
We estimate that the proposed
standards for passenger cars would save
approximately 19 billion gallons of fuel
and prevent 178 billion metric tons of
tailpipe CO2 emissions over the lifetime
of the passenger cars sold during those
model years, compared to the fuel
savings and emissions reductions that
would occur if the standards remained
at the adjusted baseline (i.e., the higher
of manufacturer’s plans and the
manufacturer’s required level of average
fuel economy for MY 2010).164
We estimate that the value of the total
benefits of the proposed passenger car
standards would be approximately $31
billion 165 over the lifetime of the 5
model years combined. This estimate of
societal benefits includes direct impacts
from lower fuel consumption as well as
externalities, and also reflects offsetting
societal costs resulting from the rebound
effect. Direct benefits to consumers,
including fuel savings, account for 85
percent ($29.5 billion) of the roughly
$35 billion in gross 166 consumer
24449
benefits resulting from increased
passenger car CAFE. Petroleum market
externalities account for roughly 10
percent ($3.6 billion). Environmental
externalities, i.e., reduction of air
pollutants accounts for roughly 5
percent ($1.8 billion). Over half of this
$1.8 billion figure is the result of
greenhouse gas (primarily CO2)
reduction ($1.0 billion). Increased
congestion, noise and accidents from
increased driving will offset roughly
$3.8 billion of the $35 billion in
consumer benefits, leaving net
consumer benefits of $31 billion.
The following table sets out the
relative dollar value of the various
benefits of this rulemaking on a per
gallon saved basis:
TABLE VI–5.—ECONOMIC BENEFITS AND COSTS PER GALLON OF FUEL SAVED
[Undiscounted]
Value
(2006 $ per
gallon)
Category
Variable
Benefits .....................................................
Savings in Fuel Production Cost .................................................................................
Reduction in Oil Import Externalities ...........................................................................
Value of Additional Rebound-Effect Driving ................................................................
Reduction in Criteria Pollutant Emissions ....................................................................
Value of Reduced Refueling Time ...............................................................................
Reduction in CO2 Emissions ........................................................................................
$1.99
.28
.24
.16
.12
167 .02
Costs .........................................................
Gross Benefits ..............................................................................................................
Externalities from Additional Rebound-Effect Driving ..................................................
2.81
0.30
Net Benefits ..............................................
Net Benefits ..................................................................................................................
2.51
We estimate that the proposed
standards for light trucks would save
approximately 36 billion gallons of fuel
and prevent 343 million metric tons of
tailpipe CO2 emissions over the lifetime
of the light trucks sold during those
model years, compared to the fuel
savings and emissions reductions that
would occur if the standards remained
at the adjusted baseline.
We estimate that the value of the total
benefits of the proposed light truck
standards would be approximately $57
billion 168 over the lifetime of the 5
model years of light trucks combined.
This estimate of societal benefits
includes direct impacts from lower fuel
consumption as well as externalities
and also reflects offsetting societal costs
resulting from the rebound effect. Direct
164 See
supra text accompanying note 103.
$31 billion estimate is based on a 7%
discount rate for valuing future impacts. NHTSA
estimated benefits using both 7% and 3% discount
rates. Under a 3% rate, total consumer benefits for
passenger car CAFE improvements total $36 billion.
166 Gross consumer benefits are benefits measured
prior to accounting for the negative impacts of the
rebound effect. They include fuel savings,
consumer surplus from additional driving, reduced
rwilkins on PROD1PC63 with PROPOSALS2
165 The
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benefits to consumers, including fuel
savings, account for 84 percent ($52.7
billion) of the roughly $63 billion in
gross consumer benefits resulting from
increased light truck CAFE. Petroleum
market externalities account for roughly
10 percent ($6.5 billion). Environmental
externalities, i.e., reduction of air
pollutants accounts for roughly 6
percent ($3.5 billion). Over half of this
figure is the result of greenhouse gas
(primarily CO2) reduction ($1.9 billion).
Increased congestion, noise and
accidents from increased driving will
offset roughly $5.4 billion of the $63
billion in consumer benefits, leaving net
consumer benefits of $57 billion.
2. Costs
The total costs for manufacturers just
complying with the standards for MY
2011–2015 passenger cars would be
approximately $16 billion, compared to
the costs they would incur if the
standards remained at the adjusted
baseline. The resulting vehicle price
increases to buyers of MY 2015
passenger cars would be recovered or
paid back 169 in additional fuel savings
in an average of 56 months, assuming
fuel prices ranging from $2.26 per gallon
in 2016 to $2.51 per gallon in 2030.170
The total costs for manufacturers just
complying with the standards for MY
2011–2015 light trucks would be
approximately $31 billion, compared to
the costs they would incur if the
standards remained at the adjusted
refueling time, reduced criteria pollutants, and
reduced greenhouse gas production. Negative
impacts from the rebound effect include added
congestion, noise, and crash costs due to additional
driving.
167 Based on a value of $7.00 per ton of carbon
dioxide.
168 The $57 billion estimate is based on a 7%
discount rate for valuing future impacts. NHTSA
estimated benefits using both 7% and 3% discount
rates. Under a 3% rate, total consumer benefits for
light truck CAFE improvements are $72 billion.
169 See Section V.A.7 below for discussion of
payback period.
170 The fuel prices (shown here in 2006 dollars)
used to calculate the length of the payback period
are those projected (Annual Energy Outlook 2008,
revised early release) by the Energy Information
Administration over the life of the MY 2011–2015
light trucks, not current fuel prices.
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baseline. The resulting vehicle price
increases to buyers of MY 2015 light
trucks would be paid back in additional
fuel savings in an average of 50 months,
assuming fuel prices ranging from $2.26
to $2.51 per gallon.
Comparison of Estimated Benefits to
Estimated Costs
car and light truck CAFE standards, in
millions of dollars.
The table below compares the
incremental benefits and costs for the
TABLE VI–6.—PASSENGER CARS
Model year
2011
Benefits ....................................................
Costs ........................................................
Net Benefits .............................................
2012
2,596
1,884
712
2013
4,933
2,373
2,560
Total
2014
6,148
2,879
3,269
2015
7,889
3,798
4,091
9,420
4,862
4,558
2011–2015
30,986
15,796
15,190
TABLE VI–7.—LIGHT TRUCKS
Model Year
2011
Benefits ....................................................
Costs ........................................................
Net Benefits .............................................
3,909
1,649
2,260
rwilkins on PROD1PC63 with PROPOSALS2
The average annual per vehicle cost
increases are shown in the PRIA.
D. Flexibility Mechanisms
The agency’s benefit and cost
estimates do not reflect the availability
and use of flexibility mechanisms, such
as compliance credits and credit trading
because EPCA prohibits NHTSA from
considering the effects of those
mechanisms in setting CAFE standards.
EPCA has precluded consideration of
the FFV adjustments ever since it was
amended to provide for those
adjustments. The prohibition against
considering compliance credits was
added by EISA.
The benefit and compliance cost
estimates used by the agency in
determining the maximum feasible level
of the CAFE standards assume that
manufacturers will rely solely on the
installation of fuel economy technology
to achieve compliance with the
proposed standards. In reality, however,
manufacturers are likely to rely to some
extent on three flexibility mechanisms
provided by EPCA and will thereby
reduce the cost of complying with the
proposed standards. First, some
manufacturers will rely on a
combination of technology and
compliance credits that they earn
(including credits transferred from one
compliance category to another) as their
compliance strategy. Second, they may
also supplement their technological
efforts by relying on the special fuel
economy adjustment procedures
provided by EPCA as an incentive for
manufacturers to produce flexible fuel
vehicles (FFV). Third, the agency is
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2012
2013
8,779
4,986
3,793
13,560
7,394
6,166
instituting a credit trading program that,
if taken advantage of, would further
provide flexibility.
The agency believes that
manufacturers are likely to take
advantage of these flexibility
mechanisms, thereby reducing benefits
and costs meaningfully, but does not
have any reliable basis for predicting
which manufacturers might use
compliance credits, how they might use
them or the extent to which they might
do so.
With respect to earned credits through
over-compliance NHTSA notes that
while the manufacturers have relatively
few light truck credits, several
manufacturers already have a
substantial amount of banked passenger
car credits earned under the long term
27.5 mpg flat or nonattributed-based
standard for those automobiles. Further,
they will earn significant additional
passenger car credits through MY 2010,
the last year before the passenger car
standards are increased and the first
year in which those standards will be
attribute-based. These pre-MY 2011
passenger car credits can be carried
forward into the MY 2011–2015 period.
While manufacturers might use
credits to a significant extent, thereby
reducing benefits and costs to a
meaningful level, the agency believes it
important to note that the potential
effect of these flexibility mechanisms is
largely limited to MY 2011–2015. The
earning of credits will become more
difficult in MY 2011. MY 2011 is the
first year in which all manufacturers
will be required to comply with
attribute-based CAFE standards for
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Total
2014
2015
14,915
8,160
6,755
16,192
8,761
7,431
2011–2015
57,355
30,949
26,406
passenger cars and light trucks. The
earning of compliance credits will be
more challenging under attribute-based
standards since each manufacturer’s
legal obligation to improve CAFE will
be based, in part, on that manufacturer’s
own product mix. Further, the standards
will significantly increase every year.
On the other hand, credits earned in MY
2011 or thereafter can be transferred
across fleets to a limited extent, adding
additional flexibility to the system.
With respect to overcompliance
through production of FFV vehicles,
EISA also extended the FFV adjustment
through 2019. Manufacturers can build
enough FFV vehicles to raise the CAFE
of their fleets. FFVs are assigned high
fuel economy values using a formula
specified in the Alternative Motor Fuels
Act (AMFA). For example, a Ford
Taurus has a fuel economy of 26.39
mpg—if it is converted to a FFV, its fuel
economy increases to 44.88 mpg.
Converting a vehicle into an FFV is
more cost-effective than converting it,
for example, into a diesel, which is
more costly and achieves lower fuel
economy. However, the maximum
extent to which the adjustments can be
used to raise the CAFE of a
manufacturer’s fleet is 1.2 mpg in MY
2011–2014. In MY 2015, the cap begins
to decline. The cap continues to decline
each year thereafter by 0.2 mpg until it
reaches 0 mpg in MY 2020 and beyond.
Given that there will be considerably
less opportunity to use credits in lieu of
installing fuel saving technologies after
MY 2015, the manufacturers may elect
to apply technology early in the MY
2011–2020 period when redesign
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opportunities arise rather than relying
on credits or FFV adjustments, but then
face being limited compliance options
in later years. The declining influence of
the flexibility mechanisms during this
period guarantees that the standards for
that year will be met almost entirely
through the use of technology, thus
helping to ensure the 35.0 mpg goal of
EISA will be achieved.
Finally, with respect to cost reduction
through reliance on credit trading,
credits earned in MY 2011 or thereafter
can be traded. There is a study in which
the Congressional Budget Office
estimated that credit trading would cut
the costs of achieving a combined 27.5
mpg standard by 16 percent.171 This
study assumed that manufacturer
compliance costs varied widely and that
manufacturers were willing to engage in
trading. While some manufacturers have
expressed reluctance to trade with
competitors, we believe that the credit
trading program has the potential to
reduce compliance costs meaningfully
without any impact on overall fuel
savings.
rwilkins on PROD1PC63 with PROPOSALS2
E. Consistency of Proposed Passenger
Car and Light Truck Standards With
EPCA Statutory Factors
As explained above, EPCA requires
the agency to set fuel economy
standards for each model year and for
each fleet separately at the maximum
feasible level for that model year and
fleet. In determining the ‘‘maximum
feasible’’ level of average fuel economy,
the agency considers the four statutory
factors: Technological feasibility,
economic practicability, the effect of
other motor vehicle standards of the
Government on fuel economy, and the
need of the United States to conserve
energy, along with additional relevant
factors such as safety. In determining
how to weigh these considerations, we
are mindful of EPCA’s overarching
purpose of energy conservation.
NHTSA’s NEPA analysis for this
rulemaking (see Section XIII.B of this
document) also will inform the agency’s
final action.
The section above proposes footprintbased CAFE standards for MY 2011–
2015 passenger cars and light truck. The
agency has considered this set of
standards in light of both the relevant
factors and EPCA’s overarching purpose
of energy conservation, and seeks
comment on whether the public agrees
that the agency’s analysis is sound or
should have considered the factors
171 ‘‘The Economic Costs of Fuel Economy
Standards Versus a Gasoline Tax’’, Report from the
Congressional Budget Office, December, 2003.
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differently or considered additional
factors.
We have tentatively determined that
the proposed passenger car and light
truck standards are at the maximum
feasible level for passenger car and light
truck manufacturers for MY 2011–2015.
As discussed above, the standards are
basically determined by following the
same procedure as for setting the
optimized light truck standards for
2008–2011.
1. Technological Feasibility
We tentatively conclude that the
proposed standards are technologically
feasible. Whether a technology may be
feasibly applied in a given model year
is not simply a function of whether the
technology will exist in that model year,
but also whether the data sources
reviewed by the agency indicate that the
technology is mature enough to be
applied in that year, whether it will
conflict with other technologies being
applied, and so on. The Volpe model
maximizes net benefits by applying fuelsaving technologies to vehicle models in
a cost-effective manner, which generally
prevents it from applying technologies
to vehicles before manufacturers would
be ready to do so. Thus, we tentatively
conclude that standards that maximize
net benefits based on Volpe model
analysis are technologically feasible.
We described above how we
tentatively conclude that the additional
measures used to set the optimized
standards do not take the standards out
of the realm of technological feasibility,
because if targets are feasible in one
year, they will continue to be feasible.
2. Economic Practicability
NHTSA has historically assessed
whether a potential CAFE standard is
economically practicable in terms of
whether the standard is one ‘‘within the
financial capability of the industry, but
not so stringent as to threaten
substantial economic hardship for the
industry.’’ See, e.g., Public Citizen v.
NHTSA, 848 F.2d 256, 264 (DC Cir.
1988). We tentatively conclude that the
proposed standards are economically
feasible. Making appropriate
assumptions about key factors such as
leadtime and using them in the Volpe
model provides a benchmark for
assessing the economic practicability of
a proposed standard, because it avoids
applying technologies at an infeasible
rate and avoids application of
technologies whose benefits are
insufficient to justify their costs when
the agency determines a manufacturer’s
capability. In other words, this approach
ensures that each identified private
technology investment projected by the
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24451
model produces marginal benefits at
least equal to marginal cost. The Volpe
model also takes into account other
factors closely associated with economic
practicability, such as lead time and
phase-in rates for technologies that it
applies. By limiting the consideration of
technologies to those that will be
available and limiting their rate of
application using these assumptions,
the cost-benefit analysis assumes that
manufactures will make improvements
that are cost-justified.
In addition to carefully making these
assumptions and using cost-benefit
analysis, the agency also performs sales
and employment impacts analysis on
individual manufacturers. The sales
analysis looks at a purchasing decision
from the eyes of a knowledgeable and
rational consumer, comparing the
estimated cost increases versus the
payback in fuel savings over 5 years (the
average new vehicle loan) for each
manufacturer. This relationship
depends on the cost-effectiveness of
technologies available to each
manufacturer. Overall, based on a 7
percent discount rate for future fuel
savings, we expect there would be no
significant sales or job losses for these
proposed standards. Therefore, we
tentatively conclude that the proposed
standards are economically practicable.
3. Effect of Other Motor Vehicle
Standards of the Government on Fuel
Economy
We tentatively conclude that the
proposed standards for passenger cars
and light trucks account for the effect of
other motor vehicle standards of the
Government on fuel economy. This
statutory factor constitutes an express
recognition that fuel economy standards
should not be set without due
consideration given to the effects of
efforts to address other regulatory
concerns, such as motor vehicle safety
and pollutant emissions. The primary
influence of many of these regulations is
the addition of weight to the vehicle,
with the commensurate reduction in
fuel economy. Manufacturers
incorporate this information in their
product plans, which are accounted for
as part of the Volpe model analysis used
to set the standards. Because the
addition of weight to the vehicle is only
relevant if it occurs within the
timeframe of the regulations (i.e., MY
2011–2015), we consider the Federal
Motor Vehicle Safety Standards set by
NHTSA and the Federal Motor Vehicle
Emissions Standards set by EPA which
become effective during the timeframe.
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Federal Motor Vehicle Safety Standards
NHTSA has completed a preliminary
evaluation of the impact of the Federal
motor vehicle safety standards
(FMVSSs) using MY 2010 vehicles as a
baseline for passenger cars. We have
issued or proposed to issue a number of
FMVSSs that become effective between
the baselines and MY 2015. These have
been analyzed for their potential impact
on vehicle weights for vehicles
manufactured in these years: The fuel
economy impact, if any, of these new
requirements will take the form of
increased vehicle weight resulting from
the design changes needed to meet the
new FMVSSs.
The average test weight (curb weight
plus 300 pounds) of the passenger car
fleet is currently 3,570 lbs. During the
time period addressed by this
rulemaking, the average test weight is
the passenger car fleet is projected to be
between 3,608 and 3,635 lbs. The
average test weight of Chrysler’s
passenger car fleet is currently 3,928 lbs.
The average test weight of Chrysler’s
passenger car fleet is projected to be
between 3,844 and 3,993 lbs in the
future. For Ford, the average test weight
of the passenger car fleet is currently
3,660 lbs, and is projected to be between
3,649 and 3,677 lbs. For GM, the average
test weight of the passenger car fleet is
currently 3,649 lbs, and is projected to
be between 3,768 and 3,855 lbs. For
Toyota, the average test weight of the
passenger car fleet is currently 3,330 lbs,
and is projected to be between 3,416
and 3,451 lbs.
The average test weight (curb weight
plus 300 pounds) of the light truck fleet
is 4,727 pounds, and during the time
period addressed by this rulemaking,
the average test weight of the light truck
fleet is projected to be between 4,824
and 4,924 lbs. The average test weight
of Chrysler’s light truck fleet is currently
4,673 lbs, while during the time period
addressed by this rulemaking, the
average test weight of Chrysler’s light
truck fleet is projected to be between
4,830 and 4,906 lbs. For Ford, the light
truck fleet’s average test weight is
currently 4,887 lbs, while during the
time period addressed by this
rulemaking, the average test weight is
projected to be between 4,619 and 4,941
lbs. For GM, the light truck fleet’s
average test weight is currently 5,024
lbs, while during the time period
addressed by this rulemaking, the
average test weight is projected to be
between 5,324 and 5,415 lbs. For
Toyota, the light truck fleet’s average
test weight is currently 4,567 lbs, while
during the time period addressed by this
rulemaking, the average test weight is
projected to be between 4,535 and 4,583
lbs.
Model year
2009
2010
2011
2012
September
September
September
September
rwilkins on PROD1PC63 with PROPOSALS2
The final rule requires 75 percent of
all light vehicles to meet the ESC
requirement for MY 2010, 95 percent of
all light vehicles to meet the ESC
requirements by MY 2011, and all light
vehicles to meet the requirements by
MY 2012. Thus, in MY 2010,
manufacturers must add ESC to 20
percent of vehicles; in MY 2011, to an
additional 20 percent of vehicles; and in
MY 2012, to another 5 percent of
vehicles.
The agency’s analysis of weight
impacts found that ABS adds 10.7 lbs.
and ESC adds 1.8 lbs. per vehicle for a
total of 12.5 lbs. Based on
1,
1,
1,
1,
2008
2009
2010
2011
1. FMVSS No. 126, Electronic Stability
Control
2. FMVSS No. 214, Side Impact Oblique Pole
Test
FMVSS No. 126, Electronic Stability
Control:
The phase-in schedule for vehicle
manufacturers is:
...........
...........
...........
...........
55% with carryover credit.
75% with carryover credit.
95% with carryover credit.
All light vehicles.
FMVSS No. 214, Side Impact Protection
NHTSA recently issued a final rule to
incorporate a dynamic pole test into
FMVSS No. 214, ‘‘Side Impact
Protection.’’ 172 The rule will lead to the
installation of new technologies, such as
side curtain air bags and torso side air
bags, which are capable of improving
head and thorax protection to occupants
of vehicles and that crash into poles and
trees and vehicles that are laterally
struck by a higher vehicle. The phasein requirements for the side impact test
are as shown below: 173
Percent of each manufacturer’s light vehicles that must
comply during the production period
September 1, 2009 to August 31, 2010 .............
September 1, 2010 to August 31, 2011 .............
September 1, 2011 to August 31, 2012 .............
FR 51907 (Sept. 11, 2007).
18:29 May 01, 2008
NHTSA has issued two final rules on
safety standards that become effective
for passenger cars and light trucks
between MY 2011 and MY 2015. These
have been analyzed for their potential
impact on passenger car and light truck
weights, using MY 2010 as a baseline.
Requirement
manufacturers’ plans for voluntary
installation of ESC, 85 percent of
passenger cars in MY 2010 would have
ABS and 52 percent would have ESC.
Thus, the total added weight in MY
2011 for passenger cars would be about
2.5 lbs. (0.15 × 10.7 + 0.48 × 1.8), and
in MY 2012 would be about 0.6 lbs. For
light trucks, manufacturers’ plans
indicate that 99 percent of all light
trucks would have ABS by MY 2011 and
that 52 percent would have ESC by that
time. Thus for light trucks, the
incremental weight impacts of adding
ESC would be slightly less than 1 pound
(0.01 × 10.7 + 0.48 × 1.8).
Phase-in date
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Weight Impacts of Required Safety
Standards (Final Rules)
Production beginning date
................................................................
................................................................
................................................................
................................................................
172 72
Thus, overall, the four largest
manufacturers of light-duty vehicles
expect the average weight of their
vehicles to remain mostly unchanged,
with slight weight increases projected
during the time period addressed by this
rulemaking. The changes in weight
include all factors, such as changes in
the fleet mix of vehicles, required safety
improvements, voluntary safety
improvements, and other changes for
marketing purposes. These changes in
weight over the model years in question
would have a negligible impact on fuel
economy of their vehicles.
20 percent (excluding vehicles GVWR > 8,500 lbs.).
50 percent of vehicles (excluding vehicles GVWR > 8,500 lbs.).
75 percent of vehicles (excluding vehicles GVWR > 8,500 lbs.).
173 Id.
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Phase-in date
Percent of each manufacturer’s light vehicles that must
comply during the production period
September 1, 2012 to August 31, 2013 .............
All vehicles including limited line vehicles, except vehicles with GVWR > 8,500 lbs., alterers,
and multi-stage manufacturers.
All vehicles, including vehicles with GVWR > 8,500 lbs., alterers and multi-stage manufacturers.
On or after September 1, 2013 ..........................
Based on manufacturers’ plans to
provide window curtains and torso bags
voluntarily, we estimate that 90 percent
of passenger cars and light trucks would
have window curtains and 72 percent
would have torso bags for MY 2010. A
very similar percentage is estimated for
MY 2011. A teardown study of 5 thorax
air bags resulted in an average weight
increase per vehicle of 4.77 pounds
(2.17 kg).174 A second study performed
teardowns of 5 window curtain
systems.175 One of the window curtain
systems was very heavy (23.45 pounds).
The other four window curtain systems
had an average weight increase per
vehicle of 6.78 pounds (3.08 kg), a figure
which is assumed to be average for all
vehicles in the future.
Assuming in the future that the
typical system used to comply with the
requirements of FMVSS No. 214 will be
thorax bags with a window curtain, the
average weight increase would be 2
pounds (0.10 × 6.78 + 0.28 × 4.77).
However, there is the potential that
some light trucks might need to add
structure to meet the test. The agency
has no estimate of this potential weight
impact for structure.
Weight Impacts of Proposed/Planned
Standards
Proposed FMVSS No. 216, Roof Crush
On August 23, 2005, NHTSA
proposed amending the roof crush
standard to increase the roof crush
standard from 1.5 times the vehicle
weight to 2.5 times the vehicle
weight.176 The NPRM proposed to
extend the standard to vehicles with a
GVWR of 10,000 pounds or less, thus
including many light trucks that had not
been required to meet the standard in
the past. The proposed effective date
was the first September 1 occurring
three years after publication of the final
rule. Thus, it is still possible that the
final rule could be effective with MY
2011. In the PRIA, the average light
truck weight was estimated to increase
by 6.1 pounds for a 2.5 strength to
weight ratio. Based on comments on the
NPRM, the agency believes that this
weight estimate is likely to increase.
However, the agency does not yet have
an estimate for the final rule.
Planned NHTSA Initiative on Ejection
Mitigation
The agency is planning on issuing a
proposal on ejection mitigation. The
likely result of the planned proposal is
for window curtain side air bags to be
made larger and for a rollover sensor to
be installed. The likely result will be an
increase in weight of at least 1 pound;
however, this analysis is not completed.
In addition, advanced glazing is one
alternative that manufacturers might
pursue for specific window applications
(possibly for fixed windows for third
row applications) or more broadly.
Advanced glazing is likely to have
weight implications. Again, the agency
has not made an estimate of the
likelihood that advanced glazing might
be used or its weight implications.
Summary—Overview of Anticipated
Weight Increases
The following table summarizes
estimates made by NHTSA regarding the
weight added in MY 2010 or later to
institute the above discussed standards
or likely rulemakings. In summary,
NHTSA estimates that weight additions
required by final rules and likely
NHTSA regulations effective in MY
2011 and beyond for passenger cars,
compared to the MY 2010 fleet, will
increase passenger car weight by an
average of 12.2 pounds or more (5.5 kg
or more). The agency estimates that
weight additions required by final rules
and likely NHTSA regulations effective
in MY 2011 and beyond for light trucks,
compared to the MY 2010 fleet, will
increase light truck weight by an
average of 10.1 pounds or more.
TABLE VI–8.—MINIMUM WEIGHT ADDITIONS DUE TO FINAL RULES OR LIKELY NHTSA REGULATIONS COMPARED TO MY
2010 BASELINE FLEET
Added weight
in pounds
Added weight
in kilograms
126 ...........................................................................................................................................................................
214 ...........................................................................................................................................................................
216 ...........................................................................................................................................................................
Ejection Mitigation ....................................................................................................................................................
3.1
2.0
6.1–?
1.0–?
1.4
0.9
2.8–?
0.4–?
Total ..................................................................................................................................................................
12.2–?
5.5–?
rwilkins on PROD1PC63 with PROPOSALS2
Standard no.
Based on NHTSA’s weight-versusfuel-economy algorithms, a 3–4 pound
increase in weight equates to a loss of
0.01 mpg in fuel economy. Thus, the
agency’s estimate of the safety/weight
effects is 0.025 to 0.04 mpg or more for
already issued or likely future safety
standards.
Federal Motor Vehicle Emissions
Standards
174 Khadilkar, et al. ‘‘Teardown Cost Estimates of
Automotive Equipment Manufactured to Comply
with Motor Vehicle Standard—FMVSS 214(D)—
Side Impact Protection, Side Air Bag Features’’,
April 2003, DOT HS 809 809.
175 Ludtke & Associates, ‘‘Perform Cost and
Weight Analysis, Head Protection Air Bag Systems,
FMVSS 201’’, page 4–3 to 4–5, DOT HS 809 842.
176 70 FR 49223 (Aug. 23, 2005). The PRIA for this
NPRM is available at Docket No. NHTSA–2005–
22143–2.
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EPA’s Fuel Economy Labeling Rule
employs a new vehicle-specific, 5-cycle
approach to calculating fuel economy
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labels which incorporates estimates of
the fuel efficiency of each vehicle
during high speed, aggressive driving,
air conditioning operation and cold
temperatures into each vehicle’s fuel
economy label.177 The rule became
effective January 26, 2007, and will take
effect starting with MY 2008.
The new testing procedures will
combine measured fuel economy over
the two current fuel economy tests, the
FTP and HFET, as well as that over the
US06, SC03 and cold FTP tests into
estimates of city and highway fuel
economy for labeling purposes. The test
results from each cycle will be weighted
to represent the contribution of each
cycle’s attributes to onroad driving and
fuel consumption. The labeling rule
does not alter the FTP and HFET driving
cycles, the measurement techniques, or
the calculation methods used to
determine CAFE.
The EPA Labeling Rule will not
impact CAFE standards or test
procedures or other USG regulations.178
Rather, the changes to existing test
procedures will allow for the collection
of appropriate fuel economy data to
ensure that existing test procedures
better represent real-world
conditions.179 Further, the labeling rule
does not have a direct effect upon a
vehicle’s weight, nor on the fuel
economy level that a vehicle can
177 See
71 FR 77872 (December 26, 2006).
section I.F.
179 Id. sections II, IV.
achieve. Instead, the labeling rule serves
to provide consumers with a more
accurate estimate of fuel economy based
on more comprehensive factors
reflecting real-world driving use.
There are two groups of State
emissions standards do not qualify
under 49 U.S.C. 32902(f), and therefore
are not considered. One is consists of
State standards that cannot be adopted
and enforced by any State because there
has been no waiver granted by the EPA
under the preemption waiver provision
in the Clean Air Act.180 The other
consists of State emissions standards
that are expressly or impliedly
preempted under EPCA, regardless of
whether or not they have received such
a waiver. Preempted standards include,
for example:
(1) A fuel economy standard; and
(2) A law or regulation that has essentially
all of the effects of a fuel economy standard,
but is not labeled as one (i.e., a State tailpipe
CO2 standard).
4. Need of the U.S. To Conserve Energy
Congress’ requirement to set
standards at the maximum feasible level
and inclusion of the need of the nation
to conserve energy as a factor to
consider in setting CAFE standards
ensures that standard setting decisions
are made with this purpose and all of
the associated benefits in mind. As
discussed above, ‘‘the need of the
United States to conserve energy’’
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178 Id.
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180 42
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means ‘‘the consumer cost, national
balance of payments, environmental,
and foreign policy implications of our
need for large quantities of petroleum,
especially imported petroleum.’’
Environmental implications principally
include reductions in emissions of
criteria pollutants and carbon dioxide.
The need to conserve energy is, from
several different standpoints, more
crucial today as it was at the time of
EPCA’s enactment in the late 1970s.
U.S. energy consumption has been
outstripping U.S. energy production at
an increasing rate. Crude oil prices are
currently around $100 per barrel,
despite having averaged about $13 per
barrel as recently as 1998, and gasoline
prices have doubled in this period.181
Net petroleum imports now account for
60 percent of U.S. domestic petroleum
consumption.182 World crude oil
production continues to be highly
concentrated, exacerbating the risks of
supply disruptions and their negative
effects on both the U.S. and global
economies. Figure VI–3 below shows
the increase of crude oil imports and the
decline of U.S. oil production since
1920.
181 Energy Information Administration, Annual
Energy Review 2006, Table 5.21, p. 171. Available
at https://www.eia.doe.gov/emeu/aer/pdf/pages/
sec5_51.pdf (last accessed Nov. 29, 2007).
182 Energy Information Administration, Annual
Energy Review 2006, Table 5.1, p. 125. Available at
https://www.eia.doe.gov/emeu/aer/pdf/pages/
sec5_5.pdf (last accessed Nov. 29, 2007).
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The need to conserve energy is also
more crucial today because of growing
greenhouse gas emissions from
petroleum consumption by motor
vehicles and growing concerns about
the effects of those emissions. Since
1999, the transportation sector has led
all U.S. end-use sectors in emissions of
carbon dioxide. Transportation sector
CO2 emissions in 2006 were 407.5
million metric tons higher than in 1990,
an increase that represents 46.4 percent
of the growth in unadjusted energy
related carbon dioxide emissions from
all sectors over the period. Petroleum
consumption, which is directly related
to fuel economy, is the largest source of
carbon dioxide emissions in the
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transportation sector.183 Moreover,
transportation sector emissions from
gasoline and diesel fuel combustion
generally parallel total vehicle miles
traveled. The need of the nation to
conserve energy also encompasses all of
these issues, insofar as carbon dioxide
emissions from passenger cars and light
trucks decrease as fuel economy
improves and more energy is
conserved.184
183 However, increases in ethanol fuel
consumption have mitigated the growth in
transportation-related emissions somewhat
(emissions from energy inputs to ethanol
production plants are counted in the industrial
sector).
184 The above statistics are derived from Energy
Information Administration, ‘‘Emissions of
Greenhouse Gases Report,’’ Report # DOE/EIA–0573
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24455
The need of the nation to reduce
energy consumption would be properly
reflected in the buying decisions of
vehicle purchasers, if:
• Vehicle buyers behave as if they
have unbiased expectations of their
future driving patterns and fuel prices;
and
• The public social, economic,
security, and environmental impacts of
petroleum consumption are fully
identified, quantified and reflected in
current and future gasoline prices; and
• Vehicle buyers behave as if they
account for the impact of fuel economy
(2006), released November 28, 2007. Available at
https://www.eia.doe.gov/oiaf/1605/ggrpt/
carbon.html (last accessed Feb. 3, 2008).
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on their future driving costs in their
purchasing decisions.
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Basic economic theory suggests that the
price of vehicles should reflect the value
that the consumer places on the fuel
economy attribute of his or her vehicle.
It is not clear that consumers have the
information or inclination to value the
impact of fuel economy in their vehicle
purchasing decisions. Consumers
generally have no direct incentive to
value benefits that are not included in
the price of fuel—for example, benefits
such as energy security and limiting
global climate change. These are the
market failures which EPCA requires
NHTSA to address.
By accounting for the need of the
nation to conserve energy in setting
CAFE standards, NHTSA helps to
mitigate the risks posed by petroleum
consumption. In its analysis, NHTSA
quantifies the need of the nation to
conserve energy by calculating how
much fuel economy a vehicle buyer
ought to purchase, or rather, how much
a vehicle buyer ought to value fuel
economy, based both on fuel prices and
potentially estimable externalities
(including energy security, the benefits
of mitigating a ton of CO2 emissions,
criteria pollutant emissions, noise,
safety, and others).
The Volpe model uses values for these
effects in helping to determine each
model year’s CAFE standards. Thus,
each model year’s CAFE standards are
set based on an attempt to quantify the
need of the United States to conserve
energy, balanced against the other
factors considered in the Volpe model,
such as the technology inputs that help
the model establish economically
practicable and technologically feasible
standards.
Also, as Congress intended, by
accounting for the need of the nation to
conserve energy in setting CAFE
standards, NHTSA fulfills EPCA’s
overall goal of improving energy
conservation. Factors that increase the
need of the nation to conserve energy,
such as rising oil prices or
environmental concerns, may be
reflected in more stringent, but still
demonstrably economically practicable
fuel economy standards. Balancing the
EPCA factors against each other, and
considering NHTSA’s NEPA analysis for
this rulemaking (see Section XIII.B. of
this document), NHTSA may decide to
set higher CAFE standards, and achieve
more fuel savings and CO2 emissions
reduction, by expressly including the
quantifiable values of the factors that
affect the need of the nation to conserve
energy.
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These standards will enhance the
normal market response to higher fuel
prices, and will reduce light duty
vehicle fuel consumption and CO2
tailpipe emissions over the next several
decades, responding to the need of the
nation to conserve energy, as EPCA
intended. More specifically, the
proposed standards will save 55 billion
gallons of fuel and 521 million metric
tons of CO2 over the lifetime of the
regulated vehicles. NHTSA will
evaluate the potential environmental
impacts associated with such CO2
emissions reductions and other
environmental impacts of the proposed
standards through the NEPA process.
F. Other Considerations in Setting
Standards Under EPCA
As explained above, EPCA requires
NHTSA to balance the four factors of
technological feasibility, economic
practicability, the effect of other motor
vehicle standards of the Government on
fuel economy, and the need of the
United States to conserve energy in
setting CAFE standards for passenger
cars and light trucks. As discussed
above, EPCA also prohibits NHTSA
from considering certain factors (e.g.,
credits) in setting CAFE standards. The
next section highlights some of the
issues that NHTSA may (and does) and
may not take into account in setting
CAFE standards under EPCA.
1. Safety
NHTSA has historically included the
potential for adverse safety
consequences when deciding upon a
maximum feasible level, and has been
upheld by courts in doing so.185
Currently, we account for safety in the
model as we develop the standards:
Because downweighting is a common
compliance strategy, and because the
agency believes that downweighting of
lighter vehicles makes them less safe,
our model does not rely on weight
reductions to achieve the standards for
vehicles under 5,000 pounds GVWR,186
and then only up to 5 percent. As
explained above, the overarching
principle that emerges from the
enumerated factors and the courtsanctioned practice of considering
safety and links them together is that
CAFE standards should be set at a level
that will achieve the greatest amount of
fuel savings without leading to adverse
185 See, e.g., Competitive Enterprise Institute v.
NHTSA (CEI I), 901 F.2d 107, 120 at n. 11 (DC Cir.
1990) (‘‘NHTSA has always examined the safety
consequences of the CAFE standards in its overall
consideration of relevant factors since its earliest
rulemaking under the CAFE program.’’)
186 Kahane study, supra note 78.
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economic or other societal
consequences.
2. Alternative Fuel Vehicle Incentives
49 U.S.C. 32902(h) expressly prohibits
NHTSA from considering the fuel
economy of ‘‘dedicated’’ automobiles in
setting CAFE standards. Dedicated
automobiles are those that operate only
on an alternative fuel, like all-electric or
natural gas vehicles.187 Dedicated
vehicles often achieve higher mile per
gallon (or equivalent) ratings than
regular gasoline vehicles, so this
prohibition prevents NHTSA from
raising CAFE standards by averaging
these vehicles into our determination of
a manufacturer’s maximum feasible fuel
economy level.
Section 32902(h) also directs NHTSA
to ignore the fuel economy incentives
for dual-fueled (e.g., E85-capable)
automobiles in setting CAFE standards.
§ 32905(b) and (d) use special
calculations for determining the fuel
economy of dual-fueled automobiles
that give those vehicles higher fuel
economy ratings than identical regular
automobiles. Through MY 2014,
manufacturers may use this ‘‘dual-fuel’’
incentive to raise their average fuel
economy up to 1.2 miles a gallon higher
than it would otherwise be; after MY
2014, Congress has set a schedule by
which the dual-fuel incentive
diminishes ratably until it is
extinguished after MY 2019.188
Although manufacturers may use this
additional credit for their CAFE
compliance, NHTSA may not consider it
in setting standards. As above, this
prohibition prevents NHTSA from
raising CAFE standards by averaging
these vehicles into our determination of
a manufacturer’s maximum feasible fuel
economy level.
3. Manufacturer Credits
Section 32903 was recently revised by
EISA, and allows manufacturers to earn
credits for exceeding CAFE standards in
a given year and to apply them to CAFE
compliance for up to three model years
before and five model years after the
year in which they were earned.
However, section 32903(a) states
expressly that fuel economy standards
must be ‘‘determined * * * without
regard to credits under this section.’’
Thus, NHTSA may not raise CAFE
standards because manufacturers have
enough credits to meet the higher
standards, nor may NHTSA lower
standards because manufacturers do not
have enough credits to meet existing
standards.
187 49
188 49
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U.S.C. 32901(a)(7).
U.S.C. 32906(a).
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standards, consistent with NEPA and
EPCA.
As noted above, environmental
concerns are among the issues bearing
on the need of the nation to conserve
energy. They are also relevant under the
National Environmental Policy Act
(NEPA), 42 U.S.C. 4321–4347. Requiring
improvements in fuel economy will
necessarily reduce CO2 emissions,
because the less fuel a vehicle burns, the
less CO2 it emits. Reductions in CO2
emissions, in turn, may slow or mitigate
climate change and associated
environmental impacts. Increased fuel
economy also may affect other aspects
of the environment, such as emissions
of criteria air pollutants and air
quality.189 In order to inform its
consideration of the proposed
standards, NHTSA has initiated an
environmental review of the proposed
standards and reasonable alternatives
pursuant to NEPA. On March 28, 2008,
NHTSA published a notice of intent to
prepare an environmental impact
statement and requested scoping
comments (73 FR 16615). NHTSA is
publishing a supplemental notice of
public scoping and request for scoping
comments that invites Federal, State,
and local agencies, Indian tribes, and
the public to participate in the scoping
process and to help identify the
environmental issues and reasonable
alternatives to be examined in the EIS.
The scoping notice also provides
information about the proposed
standards, the alternatives NHTSA
expects to consider in its NEPA
analysis, and the scoping process.
As discussed in the scoping notice, in
preparing an EIS for this rulemaking,
NHTSA expects to consider potential
environmental impacts of the proposed
standards and reasonable alternatives,
including impacts associated with CO2
emissions and climate change. NHTSA
expects that its NEPA analysis will
include: direct impacts related to fuel
and energy use and emissions of CO2
and air pollutants; indirect impacts
related to emissions and climate change,
such as impacts on air quality and
temperature and resulting impacts on
natural resources and on the human
environment; and other indirect
impacts. NHTSA’s NEPA analysis will
inform its decisions on the proposed
rwilkins on PROD1PC63 with PROPOSALS2
G. Environmental Impacts of the
Proposed Standards
H. Balancing the Factors to Determine
Maximum Feasible CAFE Levels
While the agency carefully considered
alternative stringencies as discussed in
section X, it tentatively concludes that
in stopping at the point that maximizes
net benefits, it has achieved the best
balancing of all of the statutory
requirements, including the 35 mpg
requirement. In striking that balance,
the agency was mindful of the growing
need of the nation to conserve energy
for reasons that include increasing
energy independence and security and
protecting the environment. It was
mindful also that this is the first
rulemaking in which the agency has
simultaneously proposed to raise both
passenger car and light truck standards,
and that it was doing so in the context
of statutory requirements for significant
annual increases over an extended
period of years.
Among the steps it took in its analysis
and balancing were the following:
• First, the agency pushed many of
the manufacturers in their application of
technology. NHTSA is proposing
standards that it estimates will entail
risk that some manufacturers will
exhaust available technologies in some
model years. However, the agency has
tentatively concluded that the
additional risk is outweighed by the
significant increase in estimated net
benefits to society.
• Second, as observed in the
technology penetration table above, the
agency believes that more and more
advanced, but expensive fuel economy
technologies will penetrate the fleet by
2015. However, the agency was careful
to ensure that those technologies are
applied in an economically and
technologically feasible manner by
focusing on linking certain expensive
technologies to redesign and refresh
dates and by phasing in technologies
over time as it is difficult for companies
to implement many of the technologies
on 100 percent of their vehicles all at
once. Sections III and V describe in
fuller detail how the agency addressed
these issues in its modeling.
• Third, in assessing costs and
benefits, the agency took into account
the private and social benefits,
including environmental and energy
security benefits (e.g., it monetized
important externalities, such as energy
security and CO2) and ensured that for
every dollar of investment the country
gets at least 1 dollar of benefits.
• Fourth, in setting attribute based
standards as required by EISA, the
agency will minimize safety
189 Because CO accounts for such a large fraction
2
of total greenhouse gases (GHG) emitted during fuel
production and use—more than 95%, even after
accounting for the higher global warming potentials
of other GHG—NHTSA’s analysis of the GHG
impacts of increasing CAFE standards focuses on
reductions in CO2 emissions resulting from the
savings in fuel use that accompany higher fuel
economy.
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24457
implications and preserve consumer
choice. Further, through its choice of
footprint as an attribute, the agency
minimized the risk of upsizing as it is
more difficult to change the footprint
than to simply add weight to the
vehicle.
• Fifth, the agency evaluated the costs
and benefits described above and
ensured that the standards were
achievable without the industry’s being
economically harmed through
significant sales losses.
• Sixth, the agency weighed those
`
costs and benefits vis-a-vis the need of
the nation to conserve energy for
reasons that include increasing energy
independence and security and
protecting the environment and
compared the results for a wide variety
of alternatives as discussed in Chapter
X.
• NHTSA tentatively concludes that
it has exercised sound judgment and
discretion in considering degrees of
technology utilization and degrees of
risk, and has appropriately balanced
these considerations against estimates of
the resultant costs and benefits to
society, thereby arriving at standards
that represent the maximum feasible
standards as required by EPCA. The
agency invites comment regarding
whether it has struck a proper balance
and, if not, how it should do so.
VII. Standards for Commercial
Medium- and Heavy-Duty On-Highway
Vehicles and ‘‘Work Trucks’’
NHTSA is not promulgating standards
for commercial medium- and heavyduty on-highway vehicles or ‘‘work
trucks’’ 190 as part of this proposed rule.
EISA added a new provision to 49
U.S.C. 32902 requiring DOT, in
consultation with the Department of
Energy and the EPA, to examine the fuel
efficiency of commercial medium- and
heavy-duty on-highway vehicles and
work trucks, and determine the
appropriate test procedures and
methodologies for measuring the fuel
efficiency of these vehicles, as well as
the appropriate metric for measuring
and expressing their fuel efficiency
performance and the range of factors
that affect their fuel efficiency. This
study would need to be performed
within 1 year of the publication of the
NAS study required by section 108 of
EISA.191
Within 2 years of the completion of
the study, DOT would need to
undertake rulemaking to ‘‘determine’’
190 ‘‘Work trucks’’ are vehicles rated between
8,500 and 10,000 lbs GVWR and which are not
medium-duty passenger vehicles. 49 U.S.C.
32901(a)(19).
191 49 U.S.C. 32902(k)(1).
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Thus under the statute, any vehicle
that has a ‘‘significant feature’’ and also
is either 4-wheel drive or over 6,000 lbs
GVWR can never be a passenger vehicle.
Generally speaking, the ‘‘significant
feature’’ that NHTSA’s regulation
focuses on relates to high ground
clearance. EPCA does not prohibit us
from choosing other or additional
significant features, but Congress has
had multiple opportunities to disagree
with our interpretation and has not
done so.
In its final rule establishing its vehicle
classification regulation, NHTSA noted
the ambiguity of the statutory
definitions of ‘‘automobile’’ and
‘‘passenger automobile’’ and considered
at length the legislative history of those
VIII. Vehicle Classification
definitions.194 The agency concluded
that ‘‘* * * both houses of Congress
A. Origins of the Regulatory Definitions
had expressed an intent that vehicles
NHTSA developed the regulatory
classed by EPA as light duty vehicles be
definitions for passenger cars and light
subject to average fuel economy
trucks based on our interpretation of
standards separate from the standards
EPCA’s language and of Congress’ intent imposed on passenger cars.’’195 The
as evidenced through the legislative
agency thus found it necessary to
history. The statutory language is clear
analyze what Congress meant by
that some vehicles must be passenger
‘‘primarily.’’
automobiles and some must be nonIn establishing 49 CFR part 523 in the
passenger automobiles. Passenger
1970s, we determined that Congress
automobiles were defined as ‘‘any
intended ‘‘primarily’’ to mean ‘‘chiefly’’
automobile (other than an automobile
[or firstly, in the first place], not
capable of off-highway operation) which ‘‘substantially’’ [or largely, in large
the Secretary [i.e., NHTSA] decides by
part],196 for two main reasons. First, if
rule is manufactured primarily for use
‘‘primarily’’ meant ‘‘substantially’’ or
in the transportation of not more than
‘‘in large part,’’ ‘‘then almost every
10 individuals.’’ EPCA § 501(2), 89 Stat. automobile would be a passenger
901.
automobile, since a substantial function
Thus, under EPCA, there are two
of almost all automobiles is to transport
general groups of automobiles that
at least two persons. The only nonqualify as non-passenger automobiles:
passenger automobiles under this
(1) Those defined by NHTSA in its
interpretation would be those
regulations as other than passenger
specifically excluded by the definition
automobiles due to their having not
* * * ’’197 Because Congress gave
been manufactured ‘‘primarily’’ for
NHTSA authority to develop the
transporting up to ten individuals; and
definitions by regulation, it did not
(2) those expressly excluded from the
make sense to read ‘‘primarily’’ as
passenger category by statute due to
limiting the category of non-passenger
their capability for off-highway
automobiles to just those specifically
operation regardless of whether they
excluded by the precise language of the
were manufactured primarily for
statute.
passenger transportation. NHTSA’s
And second, we concluded that
classification rule directly tracks those
considering ‘‘primarily’’ ‘‘against a
two broad groups of non-passenger
legislative backdrop of other statutes
automobiles in subsections (a) and (b),
using the identical phrase, and the
respectively, of 49 CFR 523.5.
remedial purposes of this Act,’’ justified
EPCA also defined vehicle ‘‘capable of a broad interpretation of ‘‘non-passenger
off-highway operation’’ as one that
automobile.’’198 The remedial purposes
NHTSA decides by regulation:
of EPCA—to improve fuel efficiency and
rwilkins on PROD1PC63 with PROPOSALS2
* * * how to implement a commercial
medium- and heavy-duty on-highway
vehicle and work truck fuel efficiency
improvement program designed to
achieve the maximum feasible
improvement, and * * * adopt and
implement appropriate test methods,
measurement metrics, fuel economy
standards, and compliance and
enforcement protocols that are
appropriate, cost-effective, and
technologically feasible’’ for these
vehicles.192 EISA also requires a fouryear lead time for fuel economy
standards promulgated under this
section, and would allow separate
standards to be prescribed for different
classes of vehicles.193
has a ‘‘significant feature’’ (other than 4wheel drive) which is designed to equip such
automobile for off-highway operation, and
either (i) is a 4-wheel drive automobile or (ii)
is rated at more than 6,000 pounds gross
vehicle weight.’’
192 49
193 49
U.S.C. 32902(k)(2).
U.S.C. 32902(k)(2) and (3).
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194 42
FR 38362, 38365–67; July 28, 1977.
38366.
196 We stated that ‘‘the word ‘primarily’ has two
ordinary, everyday meanings in legal usage—
‘chiefly’ and ‘substantially.’ ’’ See Board of
Governors of the Federal Reserve System v. Agnew,
329 U.S. 441, 446 (1947).
197 42 FR 38362, 38365 (Jul. 28, 1977).
198 Id. at 38365–66.
195 Id.
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increase fuel savings—do not require all
vehicles to be classified as passenger
automobiles. Since non-passenger
automobile CAFE standards must still
be set at the maximum feasible level,
fuel economy of all vehicles would be
improved regardless of how the vehicles
were classified.199 Additionally,
interpreting ‘‘non-passenger
automobile’’ broadly was determined to
be consistent with the Vehicle Safety
Act 200 and EPA emissions regulations
promulgated under the Clean Air Act. A
broad interpretation of ‘‘non-passenger
automobile’’ served to ‘‘minimize the
possibility of inconsistent regulatory
requirements.’’201 And finally,
analyzing the legislative history,
NHTSA concluded that ‘‘By using
existing terms with existing applications
[such as ‘‘light duty truck’’ as used by
EPA], Congress gave a clear indication
of the types of automobiles that were
intended to be treated separately from
passenger automobiles.’’202 203
Thus, as NHTSA developed the
regulatory definitions, we kept these
indications from Congress in mind,
which resulted in four basic types of
non-passenger automobiles:
(1) Automobiles designed primarily to
transport more than 10 persons.
As a practical matter, this category
basically encompasses large passenger vans.
(2) Automobiles designed primarily for
purposes of transportation of property.
NHTSA has included in this category
both vehicles with open beds like
pickup trucks, and vehicles which
provide greater cargo-carrying than
passenger-carrying volume. As we
stated in the 1977 final rule, pickup
trucks are not ‘‘manufactured chiefly to
transport individuals, since well over
half of the available space on those
automobiles consists of the cargo bed,
which is exclusively cargo-carrying
area. Further, this type of automobile is
designed to carry heavy loads.’’ 204
Regarding vehicles which provide
greater cargo-carrying than passengercarrying volume, we stated that ‘‘Since
more of the space inside the vehicle has
been dedicated to transporting cargo,
and such vehicles are typically designed
to carry heavy loads, this agency
199 Id.
at 38366.
Vehicle Safety Act distinguished between
‘‘passenger cars’’ and ‘‘trucks.’’
201 42 FR 38362, 38366.
202 Id.
203 We note that the 2003 ANPRM that preceded
the 2006 CAFE rule incorrectly summarized the
agency’s review of the legislative history in the late
1970s. The 2003 ANPRM erroneously stated that
Congress intended that passenger automobiles be
defined as those used primarily for the transport of
individuals. 68 FR 74926 (Dec. 29, 2003)
204 Id. at 38367.
200 The
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concludes that the chief consideration
in designing the vehicle was the ability
to transport property.’’ This included,
for example, cargo vans and multistop
vehicles.
(3) Automobiles which are derivatives of
automobiles designed primarily for the
transportation of property.
This could include vehicles in which
the cargo-carrying area has been
converted to provide temporary living
quarters, because they would typically
be a derivative of a cargo van or a
pickup truck. Additionally, these could
include a passenger van with seating
positions for less than 10 people. Such
a vehicle would be basically a cargo van
with readily removable seats, so
removing the seats would create more
cargo-carrying than passenger-carrying
volume. These vehicles would be
distinguished from station wagons,
which have seats that can fold down to
create a flat cargo space, but are not
‘‘derivatives,’’ in that their parent
vehicle is not a non-passenger
automobile, and do not have the same
chassis, springs, or suspension system
as a non-passenger automobile.
(4) Automobiles which are capable of offhighway operation.
NHTSA generally defines ‘‘capable of
off-highway operation’’ as meeting the
high ground clearance characteristics of
§ 523.5(b)(2) and either having 4-wheel
drive or being rated at more than 6,000
pounds gross vehicle weight, or both.
We note that a vehicle is considered as
having 4-wheel drive only if it is
manufactured with 4-wheel drive. The
fact that the same model is available in
4-wheel drive would not be sufficient to
classify a 2-wheel drive vehicle as one
that ‘‘has’’ 4-wheel drive under
§ 523.5(b)(1)(i).
rwilkins on PROD1PC63 with PROPOSALS2
B. The Rationale for the Regulatory
Definitions in Light of the Current
Automobile Market
The categories listed above make up
the various criteria which allow
classification of a vehicle as a light truck
under Part 523. However, as the 2002
NAS Report noted, the national vehicle
market has evolved, and the fleets have
changed. Until the passage of the Energy
Independence and Security Act of 2007,
Congress had provided no further
insight since EPCA’s enactment into
how new types of vehicles that have
developed since the 1970s should be
classified. NHTSA had to classify these
vehicles based on the words of the
statute and on its own interpretation of
what Congress appears to have wanted.
The following section identifies the
main vehicle types currently classified
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as light trucks, and explains the
agency’s reasoning for each.
Pickup trucks were among the
original automobiles identified by
Congress in EPCA’s legislative history as
vehicles that would not be passenger
automobiles.205 As mentioned earlier,
we originally identified automobiles
‘‘which can transport property on an
open bed’’ as ones ‘‘not manufactured
chiefly to transport individuals, since
well over half of the available space on
those automobiles consists of the cargo
bed, which is exclusively cargo carrying
area.’’ 206 We stated further that ‘‘this
type of automobile is designed to carry
heavy loads,’’ and is therefore properly
a non-passenger automobile or light
truck.
NHTSA recognizes that pickup trucks
have evolved since the 1970s, and that
some now come with extended cabs for
extra passenger room and smaller open
beds. These features, however, do not
change the fact that pickup trucks are
designed to carry loads. Moreover, even
with an extended cab and a smaller
open bed, the fact that the open bed is
still present indicates to us that the
vehicle was manufactured chiefly for
transporting cargo. If the manufacturer
intended the vehicle’s first purpose to
be the carrying of passengers, it could
have enclosed the entire vehicle. Thus,
as 49 CFR 523.5(a)(3) indicates, a
pickup truck with an open bed is to be
classified as a light truck regardless of
any other features it may possess.
Sport utility vehicles (SUVs), which
possess a substantial market share
today, had not yet developed when
EPCA was enacted or when NHTSA first
promulgated Part 523, although their
forebears like the AMC Jeep and other
off-road and military style vehicles were
known at the time. These vehicles
originally tended to be classified as light
trucks because they were capable of offhighway operation, and possessed either
the necessary high ground clearance
characteristics or 4-wheel drive or both.
They may also be greater than 6,000
pounds GVWR, and/or manufactured to
permit expanded use of the automobile
for cargo-carrying or other
nonpassenger-carrying purposes.
Part of the overall popularity of SUVs
is due to the great variety of forms in
which they are available. For example,
consumer demand has led
manufacturers to offer smaller SUVs
(i.e., less than 6,000 pounds GVWR)
with features such as the high ground
205 EPA included pickup trucks as ‘‘light duty
trucks,’’ and the Senate bill which became EPCA
used EPA’s definition of light duty trucks as
examples of vehicles that would be non-passenger
automobiles. 42 FR 38362, 38366 (Jul. 28, 1977).
206 Id. 38367.
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clearance that many drivers enjoy.
These vehicles may come with two or
even three rows of seats as standard. If
these smaller vehicles actually have 4wheel drive and the requisite number of
clearance characteristics, they would
properly be classified as light trucks
under § 523.5(b) without regard to
functional considerations such as cargo
volume.
However, if these lighter vehicles (i.e.,
under 6,000 pounds) have 2-wheel
drive, they would not qualify as light
trucks under § 523.5(b) despite having
the clearance characteristics. Such
vehicles may nevertheless be classified
as light trucks if they meet one or more
of the functional criteria in § 523.5(a).
For example, if a vehicle has three
standard rows of seats, it should be
classified in accordance with
§ 523.5(a)(5)(ii), on the same basis as
many minivans are currently
classified—that it provides a certain
minimum potential cargo-carrying
capacity that NHTSA has believed is
consistent with what Congress had in
mind when it originally considered the
distinction between passenger and nonpassenger automobiles. Alternatively, a
2-wheel drive automobile may properly
be classified as a light truck under
§ 523.5(a)(4) if it provides ‘‘greater
cargo-carrying than passenger-carrying
volume’’ as discussed in one of
NHTSA’s longstanding
interpretations.207
Minivans are another general category
of vehicles that essentially developed
after the enactment of EPCA and the
promulgation of Part 523 are minivans.
Minivans are classified as light trucks
under the ‘‘flat floor’’ provision of
§ 523.5(a)(5), because their seats may be
easily removed or folded down to create
a large flat level surface for cargocarrying. The flat floor provision was
originally based on the agency’s
207 In 1981, General Motors asked NHTSA
whether a 2-wheel drive utility vehicle would be
properly classified as a light truck as long as the
cargo-carrying volume exceeded the passengercarrying volume. We agreed in a letter of
interpretation responding to GM that ‘‘two-wheel
drive utility vehicles which are truck derivatives
and which, in base form, have greater cargocarrying volume than passenger-carrying volume
should be classified as light trucks for fuel economy
purposes.’’ (Emphasis added.) This letter of
interpretation indicates that in order to be properly
classified as a light truck under § 523.5(a)(4), a 2wheel drive SUV must have greater cargo-carrying
volume than passenger-carrying volume ‘‘in base
form.’’ Base form means the version of the vehicle
sold as ‘‘standard,’’ without optional equipment
installed, and does not include a version that would
meet the cargo volume criterion only if ‘‘delete
options’’ were exercised to remove standard
equipment. For example, a base vehicle that comes
equipped with a standard second-row seat would
not be classified as a light truck merely because the
purchaser has an option to delete the second-row
seat.
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determination that passenger vans with
removable seats and a flat load floor
were derived from cargo vans, and
should therefore be classified as light
trucks.208
In the preamble to the final rule
establishing the MY 1983–1985 light
truck fuel economy standards, in
response to a comment by Chrysler, we
explained that the regulations classified
‘‘large passenger vans as light trucks
based on the ability of passenger van
users to readily remove the rear seats to
produce a flat, floor level cargo-carrying
space.’’ 209 Manufacturers generally
responded to NHTSA’s statement by
building compact passenger vans—i.e.,
minivans—with readily removable rear
seats in order to qualify as light trucks
under the flat floor provision. In short,
because minivans often have removable
seats and a flat floor, they have
traditionally been classified as light
trucks for fuel economy purposes. EPA
also classifies minivans as light duty
trucks for emissions purposes, as
derivatives of light trucks.
In recent years, many minivans have
been designed with seats that fold down
flat or into the floor pan, rather than
being completely removable. In the 2006
light truck CAFE final rule, NHTSA
revised § 523.5(a)(5) to allow these
minivans to continue to qualify for
classification as light trucks, requiring
‘‘vehicles equipped with at least 3 rows
of seats’’ to be able to create a ‘‘flat,
leveled cargo surface’’ instead of a ‘‘flat,
floor level, surface.’’ We believe that this
is consistent with Congress’ intent that
vehicles manufactured with the capacity
to permit expanded use of the
automobile for cargo-carrying or other
nonpassenger-carrying purposes be
classified as light trucks. Minivans have
this capacity just as passenger vans do.
In order to distinguish them from other
vehicles like station wagons that also
arguably have this capacity, we require
vehicles to have three rows of seats in
order to qualify as light trucks on this
basis. This helps to guarantee a certain
amount of potential cargo-carrying
volume, since manufacturers will not be
able to fit an additional row of seats in
a vehicle under a certain size. Congress
did not specify how much cargo volume
was necessary for a vehicle to be
classified as a light truck. We believe
that this requirement for light truck
classification is both consistent with
Congress’ intent that light trucks permit
expanded use for cargo-carrying
purposes, and accommodates the
evolution of this section of the modern
vehicle fleet.
208 42
209 45
FR 38362, 38367 (Jul. 28, 1977).
FR 81593, 81599 (Dec. 11, 1980).
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The latest vehicle type growing
rapidly in the U.S. market today is the
‘‘crossover’’ vehicle. Crossover vehicles
are generally designed on passenger carlike platforms (unibody construction),
but are also designed with the
functionality of SUVs and minivans.
Crossover vehicles blur the typical
divisions between passenger cars, SUVs
and minivans (higher ground clearance,
two or three rows of seats, and varying
amounts of cargo space). These vehicles
can come in any shape or size, they may
or may not look like traditional
passenger cars, SUVs or minivans, and
they may be available in a variety of
drive configurations (2WD, 4WD, AWD,
or some combination). As more and
more of these vehicles become available
it will become more difficult to
categorize them into one particular
vehicle category. The majority of
existing crossover vehicles have been
categorized by vehicle manufacturers as
light trucks under section 523.5(b) if
they are off-highway capable, or under
section 523.5(a) due to their functional
characteristics. NHTSA plans to
continue to allow these vehicles to be
classified as light trucks as long as they
continue to meet the light truck
classification requirements as specified
in part 523. As with SUVs, when
determining off road capability, a
vehicle ‘‘has’’ 4-wheel drive (or AWD) if
it is actually equipped with it; a 2-wheel
drive vehicle is counted as a 2-wheel
drive vehicle regardless of whether the
same model is available in 4-wheel
drive. Furthermore, when evaluating the
functional capabilities against the
requirements of section 523.5(a),
vehicles should be classified by model,
including all vehicles of a particular
model. When the light truck
determination is made based upon the
functional characteristics requirements
of section 523.5(a), the base or standard
vehicle (vehicle with no options) is used
to classify the associated model. For
example, if a vehicle model does not
come standard with a third row of seats,
but can be purchased with an optional
third row seat, the vehicle, and all the
vehicles within that model line, cannot
be classified as a light truck under
523.5(a)(5), which requires vehicles to
be equipped, as standard equipment,
with at least 3 rows of seats and able to
create a ‘‘flat, leveled cargo’’ surface.
C. NHTSA Is Not Proposing To Change
the Regulatory Definitions at This Time
As explained above, NHTSA’s
regulations defining vehicle
classifications for fuel economy
purposes (49 CFR part 523) are based on
the underlying statute. We continue to
believe that they are valid, as discussed
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above. In addition, EISA Congress
specifically addressed the vehicle
classification issue. It redefined
‘‘automobile,’’ added a definition of
‘‘commercial medium- and heavy-duty
on-highway vehicle,’’ defined nonpassenger automobile and defined
‘‘work truck.’’ Significantly, it did not
change other definitions and its new
definition of ‘‘non-passenger
automobile,’’ which is most relevant in
this context, in no way contradicted
how NHTSA has long construed that
term. In enacting EISA, Congress
demonstrated its full awareness of how
NHTSA classifies vehicles for fuel
economy purposes and chose not to
alter those classifications. That strongly
suggests Congressional approval of the
agency’s 30-year approach to vehicle
classification.
Accordingly, other than by
incorporating EISA’s new and revised
definitions, we are not proposing to
change the agency’s regulations defining
vehicle classification. Congress has
indicated no need for us to do so and
such changes would not help achieve
Congress’ objectives.
Moreover, Congress has given clear
direction that overall objectives must be
obtained regardless of vehicle
classification. The EISA adds a
significant requirement to EPCA—the
combined car and light truck fleet must
achieve at least 35 mpg in the 2020
model year. Thus, regardless of whether
the entire fleet is classified as cars or
light trucks, or any proportion of each,
the result must still be a fleet
performance of at least 35 mpg in 2020.
This suggests that Congress did not
want to spend additional time on the
subject of whether vehicles are cars or
light trucks. Instead, Congress focused
on mandating fuel economy
performance, regardless of
classifications.
With respect to the impact on fuel
savings, our tentative conclusion is that
moving large numbers of vehicles from
the light truck to the passenger car
category would not increase fuel savings
or stringency of the standards. Under a
Reformed attribute-based CAFE system,
passenger car and light truck CAFE
standards will simply be reoptimized if
vehicles are moved from one category to
another. To the extent that some
relatively fuel-efficient vehicles are
moved out of the light truck category,
the optimization for the remainder of
the group would likely result in lower
standards, because there would now be
fewer higher performers in the light
truck category. However, when these
trucks are moved into the car category,
they are likely to be less fuel-efficient
than similarly sized cars. Thus,
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including those vehicles could well drag
down the optimized targets for the car
category. Preliminary analyses have
suggested that this is what happens, but
the agency specifically requests
comments on this and any supporting
data for the commenter’s position.
Further, since EISA now permits
manufacturers to transfer CAFE credits
earned for their passenger car fleet to
their light truck fleet and vice versa, it
makes even less difference how a
vehicle is classified, because the benefit
a manufacturer gets for exceeding a
standard may be applied anywhere. If
there is no fuel savings benefit to be
gained from revising the regulatory
definitions, NHTSA does not see how
doing so would facilitate achieving
EPCA’s overarching goal of improving
fuel savings. Although NHTSA does not
propose to change the vehicle
classification standards, the agency does
intend to apply those definitions strictly
and in accordance with agency
interpretations, as set out above, and the
standards presented in the final rule
will reflect this. NHTSA seeks comment
on its reading of the statute with regard
to vehicle classification and its decision
not to change its definitions.
rwilkins on PROD1PC63 with PROPOSALS2
IX. Enforcement
A. Overview
NHTSA’s enforcement under the
CAFE program essentially consists of
gauging a manufacturer’s compliance in
each model year with the passenger car
and light truck standards against their
credit status. If a manufacturer’s average
miles per gallon for a given fleet falls
below the relevant standard, and the
manufacturer cannot make up the
difference by using credits earned
previously or anticipated to be earned
for over-compliance, the manufacturer
is subject to penalties. The penalty, as
adjusted for inflation by law,210 is $5.50
for each tenth of a mpg that a
manufacturer’s average fuel economy
falls short of the standard for a given
model year multiplied by the total
volume of those vehicles in the affected
fleet (i.e., import or domestic passenger
car, or light truck), manufactured for
that model year. NHTSA has collected
$735,422,635.50 to date in CAFE
penalties, the largest ever being paid by
DaimlerChrysler for its MY 2006 import
passenger car fleet, $30,257,920.00. For
their MY 2006 fleets, six manufacturers
paid CAFE fines for not meeting an
applicable standard—Ferrari, Maserati,
BMW, Porsche, Volkswagen, and
210 Federal Civil Penalties Inflation Adjustment
Act of 1990, 28 U.S.C. 2461 note, as amended by
the Debt Collection Improvement Act of 1996, Pub.
L. 104–134, 110 Stat. 1320, § 31001(s).
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DaimlerChrysler—for a total of
$43,170,896.50.
EPCA authorizes increasing the civil
penalty up to $10.00, exclusive of
inflationary adjustments, if NHTSA
decides that the increase in the
penalty—
(i) Will result in, or substantially further,
substantial energy conservation for
automobiles in model years in which the
increased penalty may be imposed; and
(ii) Will not have a substantial deleterious
impact on the economy of the United States,
a State, or a region of a State.211
The agency requests comment on
whether it should initiate a proceeding
to consider raising the civil penalty.
Paying civil penalties represents a
substantial less expensive alternative to
installing fuel saving technology in
order to achieve compliance with the
CAFE standards or buying credits from
another manufacturer. (See discussion
of credit trading below.)
Manufacturers can earn CAFE credits
to offset deficiencies in their CAFE
performances under 49 U.S.C. 32903.
Specifically, when the average fuel
economy of either the domestic or
imported passenger car or light truck
fleet for a particular model year exceeds
the established standard for that
category of vehicles, the manufacturer
earns credits. The amount of credit a
manufacturer earns is determined by
multiplying the tenths of a mile per
gallon that the manufacturer exceeded
the CAFE standard in that model year
by the number of vehicles in that
category it manufactured in that model
year. Credits are discussed at much
greater length in the section below.
NHTSA begins to determine CAFE
compliance by considering pre- and
mid-model year reports submitted by
manufacturers pursuant to 49 CFR part
537, Automotive Fuel Economy Reports.
The reports for the current model year
are submitted to NHTSA every
December and July. Although the
reports are used for NHTSA’s reference
only, they help the agency, and the
manufacturers who prepare them,
anticipate potential compliance issues
as early as possible, and help
manufacturers plan compliance
strategies.
NHTSA makes its ultimate
determination of manufacturers’ CAFE
compliance based on EPA’s official
calculations, which are in turn based on
final model year data submitted by
manufacturers to EPA pursuant to 40
CFR 600.512, Model Year Report, no
later than 90 days after the end of the
calendar year. EPA then verifies the data
submitted by manufacturers and issues
211 49
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24461
final CAFE reports to manufacturers and
to NHTSA between April and October of
each year (for the previous model year).
NHTSA identifies the manufacturers’
fleets that have failed to meet the
applicable CAFE fleet standards, and
issues enforcement letters to
manufacturers not meeting one or more
of the standards. Letters are generally
issued within one to two weeks of
receipt of EPA’s final CAFE reports.
For the enforcement letters, NHTSA
calculates a cumulative credit status for
each of a manufacturer’s vehicle
categories according to 49 U.S.C. 32903.
If sufficient credits are available,
NHTSA determines a carry-forward
credit allocation plan. If the
manufacturer does not have enough
credits to offset the shortfall, NHTSA
requests payment of a corresponding
civil penalty unless the manufacturer
submits a carry-back credit allocation
plan. We note that any penalties paid
are paid to the U.S. Treasury and not to
NHTSA itself.
After enforcement letters are sent,
NHTSA continues to monitor civil
penalty payments that are due within 60
days from the date of receipt of the letter
by the vehicle manufacturer, and takes
further action if the manufacturer is
delinquent in payment. NHTSA also
monitors receipt of carry-back plans
from manufacturers who choose this
compliance alternative. Plans are
required within 60 days from the date
of receipt of the enforcement letter by
the vehicle manufacturer.
B. CAFE Credits
The ability to earn and apply credits
has existed since EPCA’s original
enactment,212 but the issue of the ability
to trade credits, i.e., to sell credits to
other manufacturers or buy credits from
them, was first raised in the 2002 NAS
Report. NAS found that
changing the current CAFE system to one
featuring tradable fuel economy credits and
a ‘‘cap’’ on the price of these credits appears
to be particularly attractive. It would provide
incentives for all manufacturers, including
those that exceed the fuel economy targets,
to continually increase fuel economy, while
allowing manufacturers flexibility to meet
consumer preferences.213
After receiving the 2002 NAS Report,
Secretary of Transportation Mineta
wrote to Congress asking for authority to
implement all of NAS’’
recommendations.
While waiting for that express
authority, NHTSA raised the issue of
212 The credit provision (currently codified at 49
U.S.C. 32903) was originally section 508 of EPCA’s
Public Law version.
213 NAS, Finding 11, 113.
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credit trading in both its 2002 Request
for Comments 214 and its 2003
ANPRM.215 The initial response to the
idea was mixed: environmental and
consumer groups expressed concern
that vehicle manufacturers would use a
credit trading system in lieu of
increasing fuel economy to meet the
CAFE standards, while vehicle
manufacturers generally supported the
prospect of increased flexibility in the
CAFE program.216 However, without
clear authority to implement a credit
trading program, NHTSA was unable to
take further action at the time.
NHTSA raised the issue of credit
transfer, i.e., the application of credits
earned by manufacturer in one
compliance category to another
compliance category, in its 2005
NPRM 217 and 2006 final rule for the MY
2008–11 light truck standards, but
concluded that it would interfere with
the transition to Reformed CAFE by
making it more difficult for
manufacturers to determine their
compliance obligations.218 The 2006
final rule also stated that the agency
would not adopt a credit trading
program, again on the basis that its
authority to do so was unclear.219
However, NHTSA submitted several
draft bills to Congress during this time
period and after, most recently in
February 2007. In an address to the
Senate Committee on Commerce,
Science, and Transportation on March
6, 2007 regarding the February 2007 bill,
Administrator Nason stated that credit
trading was a ‘‘natural extension’’ of the
existing EPCA credit framework, and
that trading would be ‘‘purely
voluntary, and [that] we believe[d] it
will help lower the industry’s cost of
complying with CAFE.’’ 220
EISA provided express authority for
both credit trading and transferring and
made other changes as well to EPCA
regarding credits:
• Authorizing the establishment of a
credit trading program;
• Requiring the establishment of a
credit transferring program; and
214 67
215 68
FR 5767, 5772 (Feb. 7, 2002).
FR 74908, 74915–16 (Dec. 29, 2003).
216 Id.
217 70
FR 51414, 51439–40 (Aug. 30, 2005).
FR 17566, 17616 (Apr. 6, 2006).
219 Id. 17653–54.
220 Transcript available at https://
commerce.senate.gov/public/
index.cfm?FuseAction=Hearings.Testimony
Hearing_ID=1827_Witness_ID=2362 (last accessed
Feb. 2, 2008).
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218 71
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• Extending the carry-forward period
from 3 to 5 years.
NHTSA has developed a proposal for
a new Part 536 setting up these two
credit programs. We believe that our
proposal is consistent with Congress’
intent. The agency seeks comment
generally on the following three topics
with respect to the proposed Part 536:
(1) Whether the agency has correctly
interpreted Congress’ intent; (2) whether
there are any ways to improve the
proposed credit trading and transferring
system consistent with EISA and
Congress’ intent that the agency might
have overlooked; and (3) whether any of
the aspects of the programs proposed by
the agency are either inconsistent with
EISA and Congress’ intent or the rest of
the CAFE regulations, or are otherwise
unworkable. The following section
describes the proposed credit trading
and transfer programs, as well as several
other related ideas that the agency is
considering.
1. Credit Trading
EPCA, as amended by EISA, states
The Secretary of Transportation [by
delegation, the Administrator of NHTSA]
may establish by regulation a fuel economy
credit trading program to allow
manufacturers whose automobiles exceed the
average fuel economy standards prescribed
under section 32902 to earn credits to be sold
to manufacturers whose automobiles fail to
achieve the prescribed standards such that
the total oil savings associated with
manufacturers that exceed the prescribed
standards are preserved when trading credits
to manufacturers that fail to achieve the
prescribed standards.221
EISA also prevents traded credits from
being used by a manufacturer to meet
the minimum fuel economy standard for
domestically-manufactured passenger
cars.222
Proposed new part 536 would permit
credit trading, beginning with credits
earned in MY 2011. Although only
manufacturers may earn credits and
apply them toward compliance, NHTSA
would allow credits to be purchased
and traded by both manufacturers and
non-manufacturers in order to facilitate
greater flexibility in the credit market.
NHTSA proposes that credit trading
be conducted as follows: If a credit
holder wishes to trade credits to another
party, the current credit holder and the
receiving party must jointly issue an
instruction to NHTSA, identifying the
specific credits to be traded by quantity,
221 49
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U.S.C. 32903(f)(2).
Frm 00112
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vintage (model year of origin),
compliance category of origin (domestic
passenger cars, imported passenger cars,
or light trucks), and originating
manufacturer. These identification
requirements are intended to help
ensure accurate calculation for
preserving total oil savings. If the credit
recipient is not already an account
holder, it must provide sufficient
information for NHTSA to establish an
account for them. Once an account has
been established or identified, NHTSA
will complete the trade by debiting the
transferor’s account and crediting the
recipient’s account. NHTSA will track
the quantity, vintage, compliance
category, and originator of all credits
held or traded by all account-holders.
Manufacturers need not restrict their
use of traded credits to the compliance
category from which the credits were
earned. However, if a manufacturer
wishes to transfer a credit received by
trade to another compliance category, it
must instruct NHTSA of its intention so
that NHTSA can apply an adjustment
factor in order to preserve ‘‘total oil
savings,’’ as required by EISA.223 EISA
requires total oil savings to be preserved
because one credit is not necessarily
equal to another, as Congress realized.
For example, the fuel savings lost if the
average fuel economy of a manufacturer
falls one-tenth of a mpg below the level
of a relatively low standard are greater
than the fuel savings gained by raising
the average fuel economy of a
manufacturer one-tenth of a mpg above
the level of a relatively high CAFE
standard.
Table IX–1 shows a simple numerical
example of this on an individual vehicle
level. Vehicle A has a fuel economy of
30 mpg and is driven 150,000 miles over
its lifetime, consuming 5,000 gallons of
fuel. Increasing the fuel economy of
vehicle A by one mpg lowers the
lifetime fuel consumption by 161
gallons to 4,839 gallons. Vehicle B has
a fuel economy of 15 mpg and is driven
150,000 miles over its lifetime,
consuming 10,000 gallons of fuel.
Increasing the fuel economy of vehicle
B by one mpg lowers the lifetime fuel
consumption by 625 gallons to 9,375
gallons. Both vehicles’ fuel economy
rises by the same amount, one mpg, but
much more fuel is saved by vehicle B
because it uses much more gas per mile
than does vehicle A.
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TABLE IX–I.—COMPARISON OF FUEL SAVINGS AT DIFFERENT FUEL ECONOMY BASELINES
Vehicle A
Lifetime Miles Driven ...............................................................................................................................................
Initial Fuel Economy ................................................................................................................................................
Initial Lifetime Fuel Consumption ............................................................................................................................
Final Fuel Economy .................................................................................................................................................
Final Lifetime Fuel Consumption .............................................................................................................................
Savings ....................................................................................................................................................................
To preserve total oil savings in credit
trading, NHTSA would apply an
adjustment factor to traded credits.
More specifically, the agency would
multiply the value of each credit (with
a nominal value of 0.1 mpg per vehicle)
150,000
30
5,000
31
4,839
161
Vehicle B
150,000
15
10,000
16
9,375
625
by an adjustment factor calculated by
the following formula:
rwilkins on PROD1PC63 with PROPOSALS2
Where:
A = adjustment factor applied to traded
credits by multiplying mpg for a
particular credit;
VMTe = lifetime vehicle miles traveled for
the compliance category in which the
credit was earned (152,000 miles for
domestic and imported passenger cars;
179,000 miles for light trucks);
VMTu = lifetime vehicle miles traveled for
the compliance category in which the
credit is used for compliance (152,000
miles for domestic and imported
passenger cars; 179,000 miles for light
trucks);
MPGe = fuel economy standard for the
originating manufacturer, compliance
category, and model year in which the
credit was earned;
MPGu = fuel economy standard for the
manufacturer, compliance category, and
model year in which the credit will be
used.
The effect of applying this formula
would be to increase the value of credits
that were earned for exceeding a
relatively low CAFE standard and are to
be applied to a compliance category
with a relatively high CAFE standard
and decrease the value of credits that
were earned for exceeding a relatively
high CAFE standard and are to be
applied to a compliance category with a
relatively low CAFE standard. NHTSA
is proposing to use the fuel economy
standard in the formula rather than the
actual fuel economy or some average of
the two, primarily because we believe it
will be more predictable for credit
holders and traders. However, we seek
comment on those two alternatives,
since they may be more precise in their
ability to account for fuel savings.
Congress also restricted the use of
credit trading in EISA by providing that
manufacturers must comply with the
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minimum domestic passenger car
standard specified in 49 U.S.C.
32902(b)(4) without the aid of credits
obtained through trading. The minimum
standard equals the greater of 27.5 mph
or 92 percent of the projected average
fuel economy level for all passenger cars
for the model year in question. 49 U.S.C.
32903(f)(2) states that trading and
transferring of credits to the domestic
passenger car compliance category are
limited to the extent that the fuel
economy of such automobiles shall
comply with the minimum standard
without regard to trading or transferring
of credits from other compliance
categories. Thus, our proposed credit
trading regulation prevents the use of
traded credits to comply with the
minimum domestic passenger car
standard.
In developing this regulation, NHTSA
has proposed additional restrictions on
the use of credits as necessary for
consistency with Congress’ intent in
EISA. For example, a credit that has
been traded and is then traded back to
the originating manufacturer is deemed
never to have been traded, to avoid
manufacturers gaining value from the
same credit twice.
2. Credit Transferring
If a credit holding manufacturer
wishes to transfer credits that it has
earned, it need simply instruct NHTSA
which credits to transfer to which
alternate compliance category,
identifying the quantity, vintage, and
original compliance category in which
the credits were earned. NHTSA will
then transfer the credits. As explained
above, if a credit holding manufacturer
wishes to transfer credits that it has
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received by trade, it must similarly
instruct NHTSA. NHTSA will apply an
adjustment factor to the traded credits to
ensure, pursuant to EISA, that total oil
(fuel) savings are preserved.
Credit transfers are limited by EISA
both in the extent to which they may
increase a manufacturer’s average fuel
economy in a compliance category, and
when they may be begun to be used.
Section 32903(g)(3) states that a
manufacturer’s average fuel economy in
a compliance category cannot be
increased through the use of transferred
credits by more than 1 mpg in MYs
2011–2013, more than 1.5 mpg in MYs
2014–2017, or more than 2 mpg in MYs
2018 and after. Section 32903(g)(5) also
states that credits can only be
transferred if they are earned after MY
2010. Our proposed credit transferring
regulation reflects these limitations.
Congress also restricted the use of
credit transferring in EISA by providing
that manufacturers must comply with
the minimum domestic passenger car
standard without the aid of credits
obtained through transfer. 49 U.S.C.
32903(g)(4) states that transferring of
credits to the domestic passenger car
compliance category is limited to the
extent that the fuel economy of such
automobiles shall comply with the
minimum standard without regard to
transferring of credits from other
compliance categories. Thus, our
proposed credit transferring regulation
prevents the use of transferred credits to
comply with the minimum domestic
passenger car standard.
NHTSA is proposing to denominate
credits in miles per gallon (mpg), not in
gallons. NHTSA requests comments,
however, on whether transferred credits
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−
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/A =
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−
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should be denominated in gallons,
because doing so would ensure that no
transfers result in any loss of fuel
savings or in a missed opportunity to
reduce CO2 emissions.224 The risk of
fuel savings loss can be illustrated by
the following example. Suppose there
were a manufacturer that produces the
same number of automobiles in two
different compliance categories. Each of
the two categories is required to meet
the same level of CAFE. If the
manufacturer exceeds the standard for
one category by one mile per gallon and
falls short of the other standard by the
same amount, the additional fuel saved
by the automobiles subject to the first
standard would be less than the
additional fuel consumed by the
automobiles subject to the second
standard. The risk is even greater if the
example is changed so that the
standards are different and the
manufacturer exceeds the higher
standard and falls short of the lower
standard.
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3. Credit Carry-Forward/Carry-Back
Credit lifespan has always been
dictated by statute. A manufacturer may
only use credits for a certain number of
model years before and after the year in
which it was earned. Congress intended
credits to provide manufacturers greater
compliance flexibility, but did not wish
that flexibility to be so great as to
obviate the need to continue improving
fleet fuel economy. Before EISA’s
enactment, EPCA permitted credits to be
used for 3 model years before and after
the model year in which a credit was
earned; EISA extended the ‘‘carryforward’’ time to 5 model years. Because
EISA was enacted in the middle of
model year 2008,225 NHTSA concluded
that the best interpretation of this
change in lifespan was to apply it only
to vehicles manufactured in or after MY
2009; the alternative of finding some
way to prorate the change in lifespan
presents considerable administrative
difficulties, especially since credits are
denominated by year of origin, not
month and year of origin. Thus, credits
earned for MYs 2008 and earlier will
continue to have a 3-year carry-forward/
carry-back lifespan; credits earned in
MY 2009 or thereafter will have a 5-year
carry-forward and a 3-year carry-back
lifespan.
224 NHTSA previously addressed this issue in the
2006 final rule establishing CAFE standards for MY
2008–2011 light trucks. See 71 FR 17566, 17616.
225 EISA’s effective date was December 20, 2007;
the 2008 model year began on October 1, 2007.
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C. Extension and Phasing Out of
Flexible-Fuel Incentive Program
EPCA encourages manufacturers to
build alternative-fueled and dual-fueled
vehicles. This is accomplished by using
a special, statutorily specified
calculation procedure for determining
the fuel economy of these vehicles. The
specially calculated fuel economy figure
is based on the assumption that the
vehicle operates on the alternative fuel
a significant portion of the time. This
approach gives such vehicles a muchhigher fuel economy level compared to
similar gasoline-fueled vehicles. These
vehicles can then be factored into a
manufacturer’s general fleet fuel
economy calculation, thus raising the
average fuel economy level of the fleet.
EPCA limited the extent to which a
manufacturer could raise its fuel
economy level due to the incentive to
1.2 mpg per compliance category.
Prior to the enactment of EISA, this
incentive was only available through
MY 2010. EISA extended the incentive,
but also provided for phasing it out
between MYs 2015 and 2019, by
progressively reducing the amount by
which fleet fuel economy could be
raised due to the incentive.226 Thus, the
maximum fuel economy increase which
may be attributed to the incentive is as
follows for:
mpg
MYs 1993–2014 ...........................
MY 2015 .......................................
MY 2016 .......................................
MY 2017 .......................................
MY 2018 .......................................
MY 2019 .......................................
After MY 2019 ..............................
1.2
1.0
0.8
0.6
0.4
0.2
0
NHTSA promulgated 49 CFR part 538
to implement the statutory alternativefueled and dual-fueled vehicle
manufacturing incentive. We are not
now proposing to amend Part 538 to
reflect the EISA changes, due to the
already-large scope of the current
rulemaking, but will do so in an
upcoming rulemaking.
X. Regulatory Alternatives
As noted above, in developing the
proposed standards, the agency
considered the four statutory factors
underlying maximum feasibility
(technological feasibility, economic
practicability, the effect of other
standards of the Government on fuel
economy, and the need of the nation to
conserve energy) as well as other
relevant considerations such as safety.
NHTSA assessed what fuel saving
226 49
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technologies would be available, how
effective they are, and how quickly they
could be introduced. This assessment
considered technological feasibility,
economic practicability and associated
energy conservation. We also
considered other standards to the extent
captured by EPCA 227 and
environmental and safety concerns. This
information was factored into the
computer model used by NHTSA for
applying technologies to particular
vehicle models. The agency then
balanced the factors relevant to standard
setting. NHTSA’s NEPA analysis,
discussed in Section XIII.B. of this
document, also will inform NHTSA’s
consideration of the proposed standards
and reasonable alternatives in
developing a final rule.
In balancing these factors, NHTSA
generally observes that the increasing
application of technologies increases
fuel economy and associated benefits,
but it also increases costs. Initial
applications of technologies provide far
more fuel savings per dollar of
expenditure on them than applications
of remaining technologies, which
provide less incremental fuel savings at
greater cost and, with progressive
additions of technologies, eventually far
greater cost. At some stage, the
increasing application of technologies is
not justified. A significant question is
what methodology and decisionmaking
criteria are used in the balancing to
determine when to cease adding
technologies and thus arrive at
regulatory fuel economy targets.
In developing its proposed standards,
the agency used a net benefitmaximizing analysis that placed
monetary values on relevant
externalities (both energy security and
environmental externalities, including
the benefits of reductions in CO2
emissions) and produced what is called
the ‘‘optimized scenario.’’ The
optimized standards reflect levels such
that, considering the seven largest
manufacturers, net benefits (that is, total
benefits minus total costs) are higher
than at every other examined level of
stringency. The agency also reviewed
the results of the model’s estimates of
stringencies maximizing net benefits to
assure that the results made sense in
terms of balancing EPCA’s statutory
factors and in meeting EISA’s
requirements for improved fuel
economy.
In addition to the optimized scenario,
NHTSA considered and analyzed five
additional regulatory alternatives that
do not rely upon marginal benefit-cost
227 71
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cost (technology exhaustion
alternative).229
NHTSA chose these alternatives in
order to consider and evaluate the
impacts of balancing the EPCA factors
differently in determining maximum
feasibility than the agency has in prior
rulemakings. In Center for Biological
Diversity v. NHTSA, the Ninth Circuit
Court recognized that ‘‘EPCA gives
NHTSA discretion to decide how to
balance the statutory factors—as long as
NHTSA’s balancing does not undermine
the fundamental purpose of EPCA:
Energy conservation.’’ 508 F.3d 508, 527
(9th Cir. 2007). The Court also raised the
possibility that NHTSA’s current
balancing of the statutory factors might
be different from the agency’s balancing
in the past, given the greater importance
today of the need of the nation to
conserve energy and more advanced
understanding of climate change. Id. at
530–31.
Given EPCA’s mandate that NHTSA
consider four specific factors in setting
CAFE standards and NEPA’s instruction
that agencies give effect to NEPA’s
policies as well, NHTSA recognizes that
numerous alternative CAFE levels are
theoretically conceivable and that the
228 The agency considered the ‘‘TC = TB’’
alternative because one or more commenters in the
rulemaking on standards for MY 2008–2011 light
trucks urged NHTSA to consider setting the
standards on this basis rather than on the basis of
maximizing net benefits. In addition, while the
Ninth Circuit Court of Appeals concluded that
EPCA neither requires nor prohibits the setting of
standards at the level at which net benefits are
maximized, the Court raised the possibility of
tilting the balance more toward reducing energy
consumption and CO2.
rwilkins on PROD1PC63 with PROPOSALS2
analysis. In ascending order of
stringency, the six alternatives are:
• Standards that fall below the
optimized scenario by the same absolute
amount by which the +25 percent
alternative exceeds the optimized
scenario (‘‘25 percent below optimized’’
alternative),
• Standards based on applying
technologies until net benefits are
maximized (optimized scenario), and
• Standards that exceed the
optimized scenario by 25 percent of the
interval between the optimized scenario
and the TC = TB alternative (see below)
(‘‘25 percent above optimized’’
alternative),
• Standards that exceed the
optimized scenario by 50 percent of the
interval between the optimized scenario
and the TC = TB alternative (‘‘50
percent above optimized’’ alternative),
• Standards based on applying
technologies until total costs equal total
benefits (zero net benefits) (TC = TB
alternative),228 and
• Standards based on applying all
feasible technologies without regard to
229 This was accomplished by determining the
stringency at which a reformed standard would
require every manufacturer to apply every
technology estimated to be potentially available. At
such stringencies, all but one manufacturer would
be expected to fail to comply with the standard, and
many manufacturers would owe large civil
penalties as a result. The agency considered this
alternative because the agency wished to explore
the stringency and consequences of standards based
solely on the potential availability of technologies
at the individual manufacturer level.
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alternatives described above essentially
represent only several on a continuum
of alternatives. Along the continuum,
each alternative represents a different
way in which NHTSA conceivably
could assign weight to each of the four
EPCA factors and NEPA’s policies. For
the alternatives that fall above the
optimized scenario (the +25, +50 and
TC = TB alternatives), the agency would
evaluate policies that put increasingly
more emphasis on reducing energy
consumption and CO2 emissions, given
their impact on global warming, and
less on the other factors, including the
economic impacts on the industry.
Conversely, for the alternative that falls
below the optimum scenario, the agency
would evaluate policies that place
relatively more weight on the economic
situation of the industry and less on
reducing energy consumption and CO2
emissions.
The graphs below show, for passenger
cars, light trucks, and the combined
fleet, the average annual fuel economy
levels for the four alternatives as
compared to the proposed standards.
Subsequent graphs and tables present
their estimated costs, benefits, and net
benefits (in billions of dollars). In
addition, tables that are provided
summarized the average extent to which
manufacturers’ CAFE levels are
projected to fall short of CAFE
standards—i.e., the average shortfall—
under each of these alternatives.
Manufacturer-specific shortfall is shown
for the proposed and TC=TB alternative.
BILLING CODE 4910–59–P
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BILLING CODE 4910–59–C
For the proposal and each regulatory
alternative, the Tables X–1 and X–3
show the total net benefits in millions
of dollars at a 7 percent discount rate for
the projected fleet of sales for each
model year.
TABLE X–1.—TOTAL BENEFITS OVER THE VEHICLE’S LIFETIME—PRESENT VALUE
[Millions of 2006 dollars, discounted 7%]
Passenger Cars:
25% Below ....................................................................
Optimized ......................................................................
25% Above ...................................................................
50% Above ...................................................................
TC = TB ........................................................................
Technology Exhaust .....................................................
Light Trucks:
25% Below ....................................................................
Optimized ......................................................................
25% Above ...................................................................
50% Above ...................................................................
TC = TB ........................................................................
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MY
2012
MY
2013
MY
2014
MY
2015
1,156
2,596
3,755
4,274
5,769
5,834
2,104
4,933
7,280
8,825
10,878
11,282
3,235
6,148
8,454
10,213
12,087
12,968
5,197
7,889
10,638
12,576
14,644
15,930
6,799
9,420
12,083
14,495
16,492
18,061
3,508
3,909
4,201
4,642
5,027
7,910
8,779
9,990
10,507
11,453
12,603
13,560
14,236
15,011
16,330
12,433
14,915
16,587
17,687
19,515
12,441
16,192
19,457
20,892
22,367
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MY
2011
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TABLE X–1.—TOTAL BENEFITS OVER THE VEHICLE’S LIFETIME—PRESENT VALUE—Continued
[Millions of 2006 dollars, discounted 7%]
MY
2011
Technology Exhaust .....................................................
Combined PC+LT:
25% Below ....................................................................
Optimized ......................................................................
25% Above ...................................................................
50% Above ...................................................................
TC = TB ........................................................................
Technology Exhaust .....................................................
MY
2012
MY
2013
MY
2014
MY
2015
5,088
11,512
19,395
22,074
24,779
4,664
6,505
7,956
8,916
10,796
10,922
10,014
13,712
17,270
19,331
22,331
22,795
15,838
19,708
22,690
25,224
28,417
32,363
17,630
22,804
27,225
30,263
34,159
38,004
19,240
25,612
31,540
35,387
38,860
42,820
TABLE X–2.—TOTAL COSTS
[Millions of 2006 dollars, discounted 7%]
MY
2011
Passenger Cars:
25% Below ....................................................................
Optimized ......................................................................
25% Above ...................................................................
50% Above ...................................................................
TC = TB ........................................................................
Technology Exhaust .....................................................
Light Trucks:
25% Below ....................................................................
Optimized ......................................................................
25% Above ...................................................................
50% Above ...................................................................
TC = TB ........................................................................
Technology Exhaust .....................................................
Combined PC+LT:
25% Below ....................................................................
Optimized ......................................................................
25% Above ...................................................................
50% Above ...................................................................
TC = TB ........................................................................
Technology Exhaust .....................................................
MY
2012
MY
2013
MY
2014
MY
2015
835
1,884
3,387
4,010
5,913
6,079
818
2,373
5,653
7,885
10,796
12,595
1,253
2,879
6,445
8,986
12,303
14,701
2,153
3,798
8,240
11,207
15,403
18,759
3,209
4,862
9,084
12,981
17,398
21,110
1,349
1,649
2,072
2,922
3,788
3,933
4,296
4,986
7,034
8,098
10,525
10,670
6,329
7,394
9,815
11,586
15,196
18,275
6,212
8,160
11,903
14,386
18,762
21,051
6,326
8,761
14,781
17,969
21,364
23,479
2,184
3,534
5,459
6,932
9,702
10,013
5,114
7,358
12,687
15,983
21,321
23,266
7,582
10,273
16,261
20,572
27,499
32,976
8,365
11,957
20,143
25,593
34,164
39,810
9,534
13,623
23,865
30,950
38,761
44,589
TABLE X–3.—NET TOTAL BENEFITS OVER THE VEHICLE’S LIFETIME—PRESENT VALUE *
[Millions of 2006 dollars, discounted 7%]
rwilkins on PROD1PC63 with PROPOSALS2
MY
2011
Passenger Cars:
25% Below ....................................................................
Optimized ......................................................................
25% Above ...................................................................
50% Above ...................................................................
TC = TB ........................................................................
Technology Exhaust .....................................................
Light Trucks:
25% Below ....................................................................
Optimized ......................................................................
25% Above ...................................................................
50% Above ...................................................................
TC = TB ........................................................................
Technology Exhaust .....................................................
Combined PC+LT:
25% Below ....................................................................
Optimized ......................................................................
25% Above ...................................................................
50% Above ...................................................................
TC = TB ........................................................................
Technology Exhaust .....................................................
MY
2012
MY
2013
MY
2014
321
711
368
264
¥144
¥245
1,285
2,560
1,627
940
82
¥1,313
1,982
3,269
2,009
1,226
¥216
¥1,733
3,045
4,092
2,398
1,370
¥759
¥2,829
3,590
4,558
2,999
1,514
¥906
¥3,049
2,154
2,260
2,129
1,720
1,239
1,155
3,633
3,793
2,956
2,408
928
843
6,348
6,167
4,421
3,426
1,134
1,120
6,288
6,755
4,684
3,301
753
1,023
6,258
7,432
4,676
2,924
1,003
1,280
2,476
2,971
2,497
1,984
1,094
909
4,919
6,353
4,583
3,349
1,010
¥471
8,330
9,435
6,430
4,652
918
¥613
9,333
10,847
7,082
4,670
¥5
¥1,806
9,848
11,989
7,675
4,437
98
¥1,769
* Negative values mean that costs exceed benefits.
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In tentatively deciding which
alternative to propose, the agency
looked at a variety of factors. The
agency notes that once stringency levels
exceed the point at which net benefits
are maximized, the societal costs of each
incremental increase in stringency
exceed the accompanying societal
benefits. If we have valued benefits
appropriately, it does not make
economic sense to mandate the
spending of more money than society
receives in return. The resources used to
meet overly stringent CAFE standards,
instead of the optimized scenario
standards, would better be allocated to
other uses such as technology research
and development, or improvements in
vehicle safety.
The agency considered the burden
placed on specific manufacturers,
consumers and employment. As CAFE
standards increase, the incremental
benefits are approximately constant
while the incremental costs increase
rapidly. Figure X–5 above shows that as
stringency is increased, costs rise out of
proportion compared to the benefits or
the fuel savings. Increasingly higher
costs have a negative impact on sales
and employment. Each of the
alternatives that is more stringent than
the optimized alternative negatively
impact sales and employment.
The agency also considered
technological feasibility. The Volpe
model assumes that major
manufacturers will exhaust all available
technology before paying
noncompliance civil penalties, even
though the latter is often less costly.
Historically, the large manufacturers
have never paid civil penalties. In the
more stringent alternatives, the Volpe
model predicts that increasing numbers
of manufacturers will run out of
technology to apply and, theoretically,
resort to penalty payment. NHTSA
provisionally believes that setting
standards this high is not
technologically feasible, nor does it
serve the need of the nation to conserve
fuel. Paying a CAFE penalty does not
result in any fuel savings.
In analyzing the ‘‘¥25 percent below
optimized’’ alternative, the agency notes
that these standards are more aggressive
than the standards that the agency has
proposed since the first years of the
program and would impose
unprecedented costs on manufacturers.
The agency also recognizes that even
this pace of increase in the standards
may burden some of the manufacturers,
particularly since the agency is now
increasing car and light truck standards
simultaneously. However, in light of the
need of the nation to conserve energy
and reduce global warming, the agency
does not believe that this alternative
would be maximum feasible under the
statute. The agency is also concerned
that the combined fleet might not reach
the 35 mpg requirement by 2020 under
EISA.
Underlying the differences in costs,
benefits, and net benefits for the other
alternatives are differences in the degree
to which NHTSA has estimated that
technologies might be applied in
response to the standards corresponding
to each of these alternatives. The
following tables show estimates of the
average penetration rates of some
selected technologies in the MY2015
passenger car and light truck fleets
under each of the alternatives discussed
here:
TABLE X–4.—ESTIMATED AVERAGE TECHNOLOGY PENETRATION (LARGEST SEVEN MANUFACTURERS) MY2015
PASSENGER CARS
[In percent]
Average among seven largest manufacturers
Technology
Automatically Shifted
Manual Transmissions
Spark Ignited Direct Injection Engines ..................
Turbocharging & Engine
Downsizing ...................
Diesel Engines .................
Hybrid Electric Vehicles ...
Product
plan
Adjusted
baseline
25% Below
proposed
Proposed
standard
25% Above
proposed
50% Above
proposed
TC = TB
Tech.
exhaustion
10
10
23
39
47
55
63
69
22
22
22
30
37
48
68
63
5
0
5
5
0
5
8
3
14
17
2
15
30
7
22
40
13
28
62
18
35
57
21
38
TABLE X–5.—ESTIMATED AVERAGE TECHNOLOGY PENETRATION (LARGEST SEVEN MANUFACTURERS) MY2015 LIGHT
TRUCKS
[In percent]
Average among seven largest manufacturers
rwilkins on PROD1PC63 with PROPOSALS2
Technology
Automatically Shifted
Manual Transmissions
Spark Ignited Direct Injection Engines ..................
Turbocharging & Engine
Downsizing ...................
Diesel Engines .................
Hybrid Electric Vehicles ...
Product
plan
Adjusted
baseline
18:29 May 01, 2008
Proposed
standard
25% Above
proposed
50% Above
proposed
TC = TB
Tech.
exhaustion
10
14
42
55
58
60
59
70
23
24
31
40
42
55
60
69
9
3
2
11
6
6
21
8
15
31
10
25
38
20
29
51
23
31
54
26
30
65
28
30
As the first of the above tables
indicates, the Volpe model estimated
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proposed
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magnitude. This table also shows a
significant difference between the
proposed and ‘‘25% above proposed’’
alternative, including an additional
doubling in the utilization of diesel
engines.
NHTSA has examined the extent to
which each alternative would (as
estimated by the Volpe model and using
the input information discussed in
preceding sections) cause manufacturers
to exhaust technologies projected to be
available during MY2011–MY2015. The
following chart summarizes the
frequency with which this was
estimated to occur—i.e., the number of
instances in which an individual
manufacturer exhausted technologies
and thus fell below a standard in
individual model years divided by 35
(seven manufacturers times five model
years).
As this analysis indicates, the ‘‘25%
below proposed’’ alternative caused
technologies to be exhausted 3 percent
of the time for passenger cars, and 17
percent of the time for light trucks.
Under the proposed standards, the rate
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passenger car fleet. This table also
indicates that the use of turbochargers
in passenger cars might increase by an
additional factor of two under the ‘‘25%
above proposed’’ alternative.
Similarly, the second table indicates
that manufacturers might triple the
planned utilization of diesel engines in
the light truck fleet, and increase the
utilization of hybrid electric
powertrains by more than an order of
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of technology exhaustion increased to
11 percent for passenger cars, but did
not change for light trucks. However,
under the ‘‘25% above proposed’’
alternative, the corresponding rates
increased to 26 percent and 37 percent,
respectively. In other words, under this
alternative, the Volpe model estimated
that, more than a quarter of the time,
manufacturers would be unable to
comply with the passenger car
standards solely using technologies
expected to be available, and that they
would be unable to comply with the
light truck standards using available
technologies more than a third of the
time. These rates were estimated to be
considerably higher for the remaining
three alternatives.
These estimates of technology
utilization and the exhaustion of
available technologies indicate that all
of the alternatives NHTSA has
considered entail risk that one or more
manufacturers would not be able to
comply with both the passenger car and
light truck standards in every model
year solely by applying technology. This
risk is mitigated somewhat by the fact
that our analysis may not encompass
every technology that will potentially be
available during MY2011–MY2015. For
example, some manufacturers have
made public statements regarding hopes
to offer ‘‘plug-in’’ HEVs before MY2015,
but such vehicles are not represented in
our analysis.230 Nonetheless, the agency
has tentatively concluded that the scope
of technologies it has included is
comprehensive enough that the analysis
shown above indicates that under some
alternatives, there is considerable risk
that some manufacturers would exhaust
available technologies in some model
years.
In tentatively concluding that the
proposed standards are the maximum
feasible standards, NHTSA has balanced
this risk against the other considerations
it must take into account, in particular
the need of the nation to conserve
energy, which encompasses concerns
regarding carbon dioxide emissions. The
agency’s analysis includes economic
measures of these needs—that is,
economic measures of the externalities
of petroleum consumption and the
damages associated with carbon dioxide
emissions. These measures are reflected
in the agency’s estimates of the total and
net benefits of each of the alternatives.
NHTSA is proposing standards that it
estimates will entail risk that some
manufacturers will exhaust available
technologies in some model years.
230 If included in the new product plans that the
agency is requesting, these vehicles will be
included in our analysis for the final rule.
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However, relative to the less stringent
‘‘25% below proposed’’ alternative, the
agency has tentatively concluded that
the additional risk is outweighed by the
significant increase in estimated net
benefits to society, ranging from an
additional $0.5b in MY2011 to an
additional $2.1b in MY2015.
Conversely, the agency has tentatively
concluded that, relative to the proposed
standards, the more than doubling of
risk posed by the ‘‘25% above
proposed’’ alternative is not warranted,
especially considering that this
alternative is estimated to significantly
reduce net benefits, by $0.5b in MY2011
and, eventually, $4.3b in MY2015.
NHTSA tentatively concludes that it
has exercised reasonable judgment in
considering degrees of technology
utilization and degrees of risk, and has
appropriately balanced these
considerations against estimates of the
resultant costs and benefits to society.
Notwithstanding the tentative
conclusions described above, NHTSA
seeks comment on these and other
regulatory alternatives to aid in
determining what standards to adopt in
the final rule.231 The agency invites
comment regarding whether it has
struck a proper balance and, if not, how
it should do so. The alternatives
identified by the agency are intended to
aid public commenters in helping the
agency to explore that issue. NHTSA’s
NEPA analysis also will inform its
further action on today’s proposal and
may influence the final standards.
Specific sensitivity runs that vary fuel
prices, the rebound effect, CO2 and
discount rate were conducted for the
proposed Optimized standards. These
analyses have an impact on the
standards, costs and benefits. For
example, in analyzing the ‘‘optimized
alternative’’, we estimated that
following the same methods and criteria
for setting the standards, but applying a
3 percent discount rate rather than a 7
percent discount rate, would suggest
standards reaching about 33.6 mpg
(average required fuel economy among
both passenger cars and light trucks) in
MY2015, 2 mpg higher than the 31.6
mpg average resulting from the
standards we are proposing based on a
7 percent discount rate. The more
231 In assessing the alternatives set out in this
document, commenters may find it useful to
examine the approaches being taken by other
countries to improving fuel economy and reducing
tailpipe CO2 emissions, e.g., Canada, https://
www.tc.gc.ca/pol/en/environment/
FuelConsumption/ (last accessed April
20, 2008); European Union, https://ec.europa.eu/
environment/co2/co2_home.htm (last accessed
April 20, 2008); and Japan, https://www.eccj.or.jp/
top_runner/pdf/vehicles_gasdiesel_feb2007.pdf (last
accessed April 20, 2008).
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24475
stringent standards during MY2011–
MY2015 would reduce CO2 emissions
by 672 million metric tons (mmt), or 29
percent more than the 521 mmt
achieved by the proposed standards. On
the other hand, we estimate that
standards increasing at this pace would
require about $85b in technology
outlays during MY2011–MY2015, or 89
percent more than the $45b in
technology outlays associated with the
standards proposed today. The impact
of the 3 percent rate is shown in the
body of the PRIA along with the 6
formal alternatives. All other sensitivity
analyses are shown in Chapter IX of the
PRIA.
XI. Sensitivity and Monte Carlo
Analysis
NHTSA is proposing fuel economy
standards that maximize net societal
benefits, based on the Volpe model.
That is, where the estimated benefits to
society exceed the estimated cost of the
rule by the highest amount. This
analysis is based, among other things,
on many underlying estimates, all of
which entail uncertainty. Future fuel
prices, the cost and effectiveness of
available technologies, the damage cost
of carbon dioxide emissions, the
economic externalities of petroleum
consumption, and other factors cannot
be predicted with certainty.
Recognizing these uncertainties,
NHTSA has used the Volpe model to
conduct both sensitivity analyses, by
changing one factor at a time, and a
probabilistic uncertainty analysis (a
Monte Carlo analysis that allows
simultaneous variation in these factors)
to examine how key measures (e.g., mpg
levels of the standard, total costs and
total benefits) vary in response to
changes in these factors.
However, NHTSA has not conducted
a probabilistic uncertainty analysis to
evaluate how optimized stringency
levels respond to such changes in these
factors. The Volpe model currently does
not have the capability to integrate
Monte Carlo simulation with stringency
optimization.
The results of the sensitivity analyses
indicate that the value of CO2, the value
of externalities, and the value of the
rebound effect have almost no impact
on the level of the standards. Assuming
a higher price of gasoline has the largest
impact of the sensitivity analyses
examined (raising the MY 2015
passenger car standard level by 6.7 mpg
and the light truck level by 0.8 mpg). It
appears that the light truck levels are
not as sensitive as the passenger car
levels to changes in the estimated
benefits. This can occur because the
technologies that have not been used
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under the Optimized alternative, and
are still available for light trucks, are not
that close to being cost effective and it
takes a larger increase in benefits to
bring them over the cost-benefit
threshold.
NHTSA’s sensitivity analysis found
that changes in the damage cost of
carbon dioxide emissions and the
economic externalities of petroleum
consumption had very little impact on
the stringency levels of the proposed
standards (at most 0.1 mpg per year).
The agency varied estimated carbon
dioxide damage costs over a range of $0
to $14 per metric ton and varied the
economic externalities of petroleum
consumption over a range of $0.120 to
$0.504 per gallon.
However, the sensitivity analysis did
show significant changes in the
stringency of the standards in response
to large increases in the projected future
cost of gasoline. By increasing the price
of gasoline by an average of $0.88 in
2016 to $1.22 in 2020 per gallon, the
passenger car standard that maximized
net societal benefits for MY 2015
increased from 35.7 mpg to 42.4 mpg
and the light truck standard for MY
2015 increases from 28.6 mpg to 29.4
mpg. NHTSA notes that, unlike carbon
dioxide damage costs and the economic
externalities of petroleum consumption,
the price of gasoline is not an
externality. The Volpe model assumes
manufacturers consider fuel prices
when selecting among available
technologies.
OMB Circular A–4 requires formal
probabilistic uncertainty analysis of
complex rules where there are large,
multiple uncertainties whose analysis
raises technical challenges or where
effects cascade and where the impacts of
the rule exceed $1 billion. The agency
identified and quantified the major
uncertainties in the preliminary
regulatory impact analysis and
estimated the probability distribution of
how those uncertainties affect the
benefits, costs, and net benefits of the
alternatives considered in a Monte Carlo
analysis. The results of that analysis,
summarized for the combined passenger
car and light truck fleet across both the
7 percent (typically the lower range) and
3 percent (typically upper range)
discount rates 232 are as follows:
Fuel Savings: The analysis indicates
that MY 2011 vehicles (both passenger
cars and light trucks) will experience
between 3,370 million and 4,735
232 In a few cases the upper range results were
obtained from the 7% rate and the lower range
results were obtained from the 3% rate. While this
may seem counterintuitive, it results from the
random selection process that is inherent in the
Monte Carlo technique.
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18:29 May 01, 2008
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million gallons of fuel savings over their
useful lifespan. MY 2012 vehicles will
experience between 7,476 million and
9,639 million gallons of fuel savings
over their useful lifespan. MY 2013
vehicles will experience between 10,863
million and 13,763 million gallons of
fuel savings over their useful lifespan.
MY 2014 vehicles will experience
between 12,568 and 15,664 million
gallons of fuel savings over their useful
lifespan. MY 2015 vehicles will
experience between 14,188 and 17,659
million gallons of fuel savings over their
useful lifespan. Over the combined
lifespan of the five model years,
between 48.5 billion and 61.4 billion
gallons of fuel will be saved.
Total Costs: The analysis indicates
that owners of MY 2011 passenger cars
and light trucks will pay between
$2,447 million and $5,256 million in
higher vehicle prices to purchase
vehicles with improved fuel efficiency.
MY 2012 owners will pay between
$5,817 million and $10,427 million
more. MY 2013 owners will pay
between $7,942 million and $15,288
million more. MY 2014 owners will pay
between $9,338 million and $17,189
million more. MY 2015 owners will pay
between $10,940 million and $19,842
million more. Owners of all five model
years vehicles combined will pay
between $36.5 billion and $67.9 billion
in higher vehicle prices to purchase
vehicles with improved fuel efficiency.
Societal Benefits: The analysis
indicates that changes to MY 2011
passenger cars and light trucks to meet
the proposed CAFE standards will
produce overall societal benefits valued
between $4,375 million and $13,041
million. MY 2012 vehicles will produce
benefits valued between $9,363 million
and $28,214 million. MY 2013 vehicles
will produce benefits valued between
$13,370 million and $41,027 million.
MY 2014 vehicles will produce benefits
valued between $15,586 million and
$47,087 million. MY 2015 vehicles will
produce benefits valued between
$17,486 million and $53,708 million.
Over the combined lifespan of the five
model years, societal benefits valued
between $60.1 billion and $183.1 billion
will be produced.
Net Benefits: The uncertainty analysis
indicates that the net impact of the
higher CAFE requirements for MY 2011
passenger cars and light trucks will be
a net benefit of between $937 million
and $9,678 million. There is at least a
99.3 percent certainty that changes
made to MY 2011 vehicles to achieve
the higher CAFE standards will produce
a net benefit. The net impact of the
higher CAFE requirements for MY 2012
will be a net benefit of between $283
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million and a net benefit of $21,139
million. There is at least a 99.6 percent
certainty that changes made to MY 2012
vehicles to achieve the CAFE standards
will produce a net benefit. The net
impact of the higher CAFE requirements
for MY 2013 will be a net benefit of
between $494 million and a net benefit
of $31,311 million. There is at least a
99.6 percent certainty that changes
made to MY 2013 vehicles to achieve
the higher CAFE standards will produce
a net benefit. The net impact of the
higher CAFE requirements for MY 2014
will be a net benefit of between $711
million and $35,746 million. There is
100 percent certainty that changes made
to MY 2014 vehicles to achieve the
CAFE standards will produce a net
benefit. The net impact of the higher
CAFE requirements for MY 2015 will be
a net benefit of between $654 million
and $40,703 million. There is 100
percent certainty that changes made to
MY 2015 vehicles to achieve the CAFE
standards will produce a net benefit.
Over all five model years, the higher
CAFE standards will produce net
benefits ranging from $3.1 billion to
$138.6 billion. There is at least a 99.3
percent certainty that higher CAFE
standards will produce a net societal
benefit in each of the model years
covered by this final rule. In most years,
this probability is 100 percent.
XII. Public Participation
How do I prepare and submit
comments?
Your comments must be written and
in English. To ensure that your
comments are correctly filed in the
Docket, please include the docket
number of this document in your
comments. Your comments must not be
more than 15 pages long.233 We
established this limit to encourage you
to write your primary comments in a
concise fashion. However, you may
attach necessary additional documents
to your comments. There is no limit on
the length of the attachments.
Please submit your comments by any
of the following methods:
• Federal eRulemaking Portal: Go to
https://www.regulations.gov. Follow the
online instructions for submitting
comments.
• Mail: Docket Management Facility,
M–30, U.S. Department of
Transportation, West Building, Ground
Floor, Rm. W12–140, 1200 New Jersey
Avenue, SE., Washington, DC 20590.
• Hand Delivery or Courier: West
Building Ground Floor, Room W12–140,
1200 New Jersey Avenue, SE., between
233 See
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9 a.m. and 5 p.m. Eastern Time, Monday
through Friday, except Federal holidays.
• Fax: (202) 493–2251.
If you are submitting comments
electronically as a PDF (Adobe) file, we
ask that the documents submitted be
scanned using the Optical Character
Recognition (OCR) process, thus
allowing the agency to search and copy
certain portions of your submissions.234
Please note that pursuant to the Data
Quality Act, in order for substantive
data to be relied upon and used by the
agency, it must meet the information
quality standards set forth in the OMB
and DOT Data Quality Act guidelines.
Accordingly, we encourage you to
consult the guidelines in preparing your
comments. OMB’s guidelines may be
accessed at https://www.whitehouse.gov/
omb/fedreg/reproducible.html. DOT’s
guidelines may be accessed at https://
dmses.dot.gov/submit/
DataQualityGuidelines.pdf.
How can I be sure that my comments
were received?
If you submit your comments by mail
and wish Docket Management to notify
you upon its receipt of your comments,
enclose a self-addressed, stamped
postcard in the envelope containing
your comments. Upon receiving your
comments, Docket Management will
return the postcard by mail.
rwilkins on PROD1PC63 with PROPOSALS2
How do I submit confidential business
information?
If you wish to submit any information
under a claim of confidentiality, you
should submit three copies of your
complete submission, including the
information you claim to be confidential
business information, to the Chief
Counsel, NHTSA, at the address given
above under FOR FURTHER INFORMATION
CONTACT. When you send a comment
containing information claimed to be
confidential business information, you
should include a cover letter setting
forth the information specified in our
confidential business information
regulation.235
In addition, you should submit a
copy, from which you have deleted the
claimed confidential business
information, to the Docket by one of the
methods set forth above.
Will the agency consider late
comments?
We will consider all comments
received before the close of business on
the comment closing date indicated
234 Optical character recognition (OCR) is the
process of converting an image of text, such as a
scanned paper document or electronic fax file, into
computer-editable text.
235 See 49 CFR 512.
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18:29 May 01, 2008
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above under DATES. To the extent
possible, we will also consider
comments received after that date. If
interested persons believe that any new
information the agency places in the
docket affects their comments, they may
submit comments after the closing date
concerning how the agency should
consider that information for the final
rule. However, the agency’s ability to
consider late comments in this
rulemaking will be limited as the agency
anticipates issuing a final rule this fall.
If a comment is received too late for
us to consider in developing a final rule
(assuming that one is issued), we will
consider that comment as an informal
suggestion for future rulemaking action.
How can I read the comments submitted
by other people?
You may read the materials placed in
the docket for this document (e.g., the
comments submitted in response to this
document by other interested persons)
at any time by going to https://
www.regulations.gov. Follow the online
instructions for accessing the dockets.
You may also read the materials at the
Docket Management Facility by going to
the street address given above under
ADDRESSES. The Docket Management
Facility is open between 9 a.m. and 5
p.m. Eastern Time, Monday through
Friday, except Federal holidays.
XIII. Regulatory Notices and Analyses
A. Executive Order 12866 and DOT
Regulatory Policies and Procedures
Executive Order 12866, ‘‘Regulatory
Planning and Review’’ (58 FR 51735,
Oct. 4, 1993), provides for making
determinations whether a regulatory
action is ‘‘significant’’ and therefore
subject to OMB review and to the
requirements of the Executive Order.
The Order defines a ‘‘significant
regulatory action’’ as one that is likely
to result in a rule that may:
(1) Have an annual effect on the
economy of $100 million or more or
adversely affect in a material way the
economy, a sector of the economy,
productivity, competition, jobs, the
environment, public health or safety, or
State, local or Tribal governments or
communities;
(2) Create a serious inconsistency or
otherwise interfere with an action taken
or planned by another agency;
(3) Materially alter the budgetary
impact of entitlements, grants, user fees,
or loan programs or the rights and
obligations of recipients thereof; or
(4) Raise novel legal or policy issues
arising out of legal mandates, the
President’s priorities, or the principles
set forth in the Executive Order.
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The rulemaking proposed in this
NPRM will be economically significant
if adopted. Accordingly, OMB reviewed
it under Executive Order 12866. The
rule, if adopted, would also be
significant within the meaning of the
Department of Transportation’s
Regulatory Policies and Procedures.
The benefits and costs of this proposal
are described above. Because the
proposed rule would, if adopted, be
economically significant under both the
Department of Transportation’s
procedures and OMB guidelines, the
agency has prepared a Preliminary
Regulatory Impact Analysis (PRIA) and
placed it in the docket and on the
agency’s Web site. Further, pursuant to
OMB Circular A–4, we have prepared a
formal probabilistic uncertainty analysis
for this proposal. The circular requires
such an analysis for complex rules
where there are large, multiple
uncertainties whose analysis raises
technical challenges or where effects
cascade and where the impacts of the
rule exceed $1 billion. This proposal
meets these criteria on all counts.
B. National Environmental Policy Act
In litigation concerning NHTSA’s
2006 final rule, ‘‘Average Fuel Economy
Standards for Light Trucks, Model Years
2008–2011,’’ 71 FR 17566, April 6, 2006
(Final Rule), the U.S. Court of Appeals
for the Ninth Circuit ordered NHTSA to
prepare an Environmental Impact
Statement (EIS) for that rule. Center for
Biological Diversity v. NHTSA, 508 F.3d
508, 558 (9th Cir. 2007). The
Government is seeking rehearing on the
appropriateness of that remedy, instead
of a remand of the agency’s
Environmental Assessment (EA) and
Finding of No Significant Impact
(FONSI) for further consideration.
Simultaneously, NHTSA has initiated
the EIS process under the National
Environmental Policy Act (NEPA), 42
U.S.C. 4321–4347, and implementing
regulations issued by the Council on
Environmental Quality (CEQ), 40 CFR
part 1500, and NHTSA, 49 CFR part
520. On March 28, 2008, NHTSA
published a notice of intent to prepare
an EIS for this rulemaking and
requested scoping comments. (73 FR
16615) NHTSA is publishing a
supplemental notice of public scoping
and request for scoping comments that
invites Federal, State, and local
agencies, Indian tribes, and the public to
participate in the scoping process and to
help identify the environmental issues
and reasonable alternatives to be
examined in the EIS. The scoping notice
also provides information about the
proposed standards, the alternatives
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NHTSA expects to consider in its NEPA
analysis, and the scoping process.
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C. 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 rulemaking for
any proposed 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). The
Small Business Administration’s
regulations at 13 CFR part 121 define a
small business, in part, as a business
entity ‘‘which operates primarily within
the United States.’’ 13 CFR 121.105(a).
No regulatory flexibility analysis is
required if the head of an agency
certifies the rule will not have a
significant economic impact on a
substantial number of small entities.
I certify that the proposed rule would
not have a significant economic impact
on a substantial number of small
entities. The following is NHTSA’s
statement providing the factual basis for
the certification (5 U.S.C. 605(b)).
If adopted, the proposal would
directly affect seventeen large single
stage motor vehicle manufacturers.236
The proposal would also affect four
small domestic single stage motor
vehicle manufacturers.237 According to
the Small Business Administration’s
small business size standards (see 13
CFR 121.201), a single stage automobile
or light truck manufacturer (NAICS code
336111, Automobile Manufacturing;
336112, Light Truck and Utility Vehicle
Manufacturing) must have 1,000 or
fewer employees to qualify as a small
business. All four of the vehicle
manufacturers have less than 1,000
employees and make less than 1,000
vehicles per year. We believe that the
rulemaking would not have a significant
economic impact on the small vehicle
manufacturers because under Part 525,
passenger car manufacturer making less
than 10,000 vehicles per year can
petition NHTSA to have alternative
standards set for those manufacturers.
These manufacturers currently don’t
meet the 27.5 mpg standard and must
236 BMW, Mercedes, Chrysler, Ferrari, Ford,
Subaru, General Motors, Honda, Hyundai, Lotus,
Maserati, Mitsubishi, Nissan, Porsche, Suzuki,
Toyota, and Volkswagen.
237 The Regulatory Flexibility Act only requires
analysis of small domestic manufacturers. There are
four passenger car manufacturers we know of and
no light truck manufacturers: Avanti, Panoz, Saleen,
and Shelby.
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already petition the agency for relief. If
the standard is raised, it has no
meaningful impact on these
manufacturers, they still must go
through the same process and petition
for relief. Given that there already is a
mechanism for handling small
businesses, which is the purpose of the
Regulatory Flexibility Act, a regulatory
flexibility analysis was not prepared.
D. 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.’’ The Order defines the
term ‘‘Policies that have federalism
implications’ 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 the Order,
NHTSA may not issue a regulation that
has 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, or NHTSA consults
with State and local officials early in the
process of developing the proposed
regulation. The agency has complied
with Order’s requirements.
The issue of preemption of State
emissions standard under EPCA is not
a new one; there is an ongoing public
dialogue regarding the preemptive
impact of CAFE standards whose
beginning pre-dates this rulemaking.
This dialogue has involved a variety of
parties (i.e., the States, the federal
government and the general public) and
has taken place through a variety of
means, including several rulemaking
proceedings. NHTSA first addressed the
issue in its rulemaking on CAFE
standards for MY 2005–2007 light
trucks 238 and explored it at great length,
after receiving extensive public
comment, in its rulemaking for MY
2008–2011 light trucks.239 Throughout
this time, NHTSA has consistently taken
the position that state regulations
regulating CO2 tailpipe emissions from
automobiles are expressly and impliedly
preempted.
NHTSA’s position remains
unchanged, notwithstanding the
238 67 FR 77015, 77025; December 16, 2002, and
68 FR 16868, 16895; April 7, 2003.
239 70 FR 51414, 51457; August 30, 2005, and 71
FR 17566, 17654–17670; April 6, 2006.
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occurrence of several significant events
since the issuance of the final rule for
MY 2008–2011 light trucks in April
2006. In 2007, the Supreme Court ruled
Massachusetts v. EPA that carbon
dioxide is an ‘‘air pollutant’’ within the
meaning of the Clean Air Act and thus
potentially subject to regulation under
that statute. Later that year, two Federal
district courts ruled in Vermont and
California that the GHG motor vehicle
emission standards adopted by those
states are not preempted under EPCA.
Still later that year, Congress enacted
EISA, amending EPCA by mandating
substantial and sustained annual
increases in the passenger car and light
truck CAFE standards. As further
amended by EISA, EPCA also mandates
that standards be attribute-based and
established and implemented separately
for passenger cars and light trucks. As
it did before EISA, EPCA permits
manufacturers to adjust their product
mix on a national basis in order to
achieve compliance while meeting
consumer demand.
NHTSA has carefully considered
those events and reexamined the
detailed technological and scientific
analyses and conclusions it presented in
its 2006 final rule. The agency reaffirms
those analyses and conclusions.
The Supreme Court did not consider
the issue of preemption under EPCA of
state regulations regulating CO2 tailpipe
emissions from automobiles. Instead, it
addressed the relationship of EPA and
NHTSA rulemaking.
We respectfully disagree with the two
district court rulings. We note that an
appeal has been filed concerning the
Vermont decision and that the
appellants’ briefs have already been
filed. EPCA’s express preemption
provision preempts state standards
‘‘related to’’ average fuel economy
standards. Under the relatedness test,
preemption is not dependent on the
existence or nonexistence of any
inconsistency or any difference between
those State standards and the CAFE
standards. Likewise, it is not dependent
upon a state standard or a portion of a
state standard’s being identical to or
equivalent to a CAFE standard.
The enactment of EISA has increased
the conflict between state regulations
regulating CO2 tailpipe emissions from
automobiles and EPCA. A conflict
between state and federal law arises
when compliance with both federal and
state regulations is a physical
impossibility or when state law stands
as an obstacle to the accomplishment
and execution of the full purposes and
objectives of Congress. Contrary to the
recommendations of NAS, the judgment
of NHTSA, and the mandate of
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Congress, the state regulations
regulating CO2 tailpipe emissions,
which are equivalent in effect to fuel
economy standards, are not attributebased, thus presenting risks to safety
and employment. Contrary also to EISA,
the state regulations do not establish
separate standards.
In reaffirming its position, NHTSA
fully appreciates the great importance to
the environment of addressing and
reducing GHG emissions. Given that
substantially reducing CO2 tailpipe
emissions from automobiles is
unavoidably and overwhelmingly
dependent upon substantially
increasing fuel economy through
installation of engine technologies;
transmission technologies; accessory
technologies; vehicle technologies; and
hybrid technologies, increases in fuel
economy will produce commensurate
reductions in CO2 tailpipe emissions.
And as noted above, through EISA,
Congress has ensured that there will be
substantial and sustained, long term
improvements in fuel economy.
Given the importance of an effective,
smooth functioning national program to
improve fuel economy and in light of
the fact that district court considered
this agency’s analysis and carefully
crafted position on preemption, NHTSA
is considering taking the further step of
summarizing that position in
appendices to be added to the parts in
the Code of Federal Regulations setting
forth the passenger car and light truck
CAFE standards. That summary is as
follows:
(a) To the extent that any state regulation
regulates tailpipe carbon dioxide emissions
from automobiles, such a regulation relates to
average fuel economy standards within the
meaning of 49 U.S.C. 32919.
1. Automobile fuel economy is directly and
very substantially related to automobile
tailpipe emissions of carbon dioxide.
2. Carbon dioxide is the natural by-product
of automobile fuel consumption.
3. The most significant and controlling
factor in making the measurements necessary
to determine the compliance of automobiles
with the fuel economy standards in this Part
is their rate of tailpipe carbon dioxide
emissions.
4. Most of the technologically feasible
reduction of tailpipe emissions of carbon
dioxide is achievable only through improving
fuel economy, thereby reducing both the
consumption of fuel and the creation and
emission of carbon dioxide.
5. Accordingly, as a practical matter,
regulating fuel economy controls the amount
of tailpipe emissions of carbon dioxide to a
very substantial extent, and regulating the
tailpipe emissions of carbon dioxide controls
fuel economy to a very substantial extent.
(b) As a state regulation related to fuel
economy standards, any state regulation
regulating tailpipe carbon dioxide emissions
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from automobiles is expressly preempted
under 49 U.S.C. 32919.
(c) A state regulation regulating tailpipe
carbon dioxide emissions from automobiles,
particularly a regulation that is not attributebased and does not separately regulate
passenger cars and light trucks, conflicts with
1. The fuel economy standards in this Part,
2. The judgments made by the agency in
establishing those standards, and
3. The achievement of the objectives of the
statute (49 U.S.C. Chapter 329) under which
those standards were established, including
objectives relating to reducing fuel
consumption in a manner and to the extent
consistent with manufacturer flexibility,
consumer choice, and automobile safety.
(d) Any state regulation regulating tailpipe
carbon dioxide emissions from automobiles
is impliedly preempted under 49 U.S.C.
Chapter 329.
We have closely examined our
authority and obligations under EPCA
and that statute’s express preemption
provision. For those rulemaking actions
undertaken at an agency’s discretion,
Section 3(a) of Executive Order 13132
instructs agencies to closely examine
their statutory authority supporting any
action that would limit the
policymaking discretion of the States
and assess the necessity for such action.
This is not such a rulemaking action.
NHTSA has no discretion not to issue
the CAFE standards proposed in this
document. EPCA mandates that the
issuance of CAFE standards for
passenger cars and light trucks for
model years 2011–2015. Given that a
State regulation for tailpipe emissions of
CO2 is the functional equivalent of a
CAFE standard, there is no way that
NHTSA can tailor a fuel economy
standard so as to avoid preemption.
Further, EPCA itself precludes a State
from adopting or enforcing a law or
regulation related to fuel economy (49
U.S.C. 32919(a)).
E. Executive Order 12988 (Civil Justice
Reform)
Pursuant to Executive Order 12988,
‘‘Civil Justice Reform,’’ 240 NHTSA has
considered whether this rulemaking
would have any retroactive effect. This
proposed rule does not have any
retroactive effect.
F. Unfunded Mandates Reform Act
Section 202 of the Unfunded
Mandates Reform Act of 1995 (UMRA)
requires Federal agencies to prepare a
written assessment of the costs, benefits,
and other effects of a proposed or final
rule that includes 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 in any one year
240 61
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(adjusted for inflation with base year of
1995). Adjusting this amount by the
implicit gross domestic product price
deflator for 2006 results in $126 million
(116.043/92.106 = 1.26). Before
promulgating a rule for which a written
statement is needed, section 205 of
UMRA generally requires NHTSA to
identify and consider a reasonable
number of regulatory alternatives and
adopt the least costly, most costeffective, or least burdensome
alternative that achieves the objectives
of the rule. The provisions of section
205 do not apply when they are
inconsistent with applicable law.
Moreover, section 205 allows NHTSA to
adopt an alternative other than the least
costly, most cost-effective, or least
burdensome alternative if the agency
publishes with the final rule an
explanation why that alternative was
not adopted.
This proposed rule will not result in
the expenditure by State, local, or tribal
governments, in the aggregate, of more
than $126 million annually, but it will
result in the expenditure of that
magnitude by vehicle manufacturers
and/or their suppliers. In promulgating
this proposal, NHTSA considered a
variety of alternative average fuel
economy standards lower and higher
than those proposed. NHTSA is
statutorily required to set standards at
the maximum feasible level achievable
by manufacturers and has tentatively
concluded that the proposed fuel
economy standards are the maximum
feasible standards for the passenger car
fleet for MYs 2011–2015 and for the
light truck fleet for MYs 2011–2015 in
light of the statutory considerations.
G. Paperwork Reduction Act
Under the procedures established by
the Paperwork Reduction Act of 1995, a
person is not required to respond to a
collection of information by a Federal
agency unless the collection displays a
valid OMB control number. The
proposed rule would amend the
reporting requirements under 49 CFR
part 537, Automotive Fuel Economy
Reports. In addition to the vehicle
model information collected under the
approved data collection (OMB control
number 2127–0019) in Part 537,
passenger car manufacturers would also
be required to provide data on vehicle
footprint. Manufacturers and other
persons wishing to trade fuel economy
credits would be required to provide an
instruction to NHTSA on the credits to
be traded.
In compliance with the PRA, we
announce that NHTSA is seeking
comment on the proposed revisions to
the collection.
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Agency: National Highway Traffic
Safety Administration (NHTSA).
Title: 49 CFR part 537, Automotive
Fuel Economy (F.E.) Reports.
Type of Request: Amend existing
collection.
OMB Clearance Number: 2127–0019.
Form Number: This collection of
information will not use any standard
forms.
Requested Expiration Date of
Approval: Three years from the date of
approval.
Summary of the Collection of
Information
NHTSA is proposing that
manufacturers would be required to
provide data on vehicle (including
passenger car) footprint so that the
agency could determine a
manufacturer’s required fuel economy
level. This information collection would
be included as part of the existing fuel
economy reporting requirements.
NHTSA is also proposing that
manufacturers and other persons
wishing to trade fuel economy credits
would be required to provide an
instruction to NHTSA on the credits to
be traded.
Description of the Need for the
Information and Proposed Use of the
Information
NHTSA would need the footprint
information to determine a
manufacturer’s required fuel economy
level and its compliance with that level.
NHTSA would need the credit trading
instruction to ensure that its records of
a manufacturer’s available credits are
accurate in order to determine whether
a manufacturer has sufficient credits
available to offset any non-compliance
with the CAFE requirements in a given
year.
Description of the Likely Respondents
(Including Estimated Number, and
Proposed Frequency of Response to the
Collection of Information)
NHTSA estimates that 20
manufacturers would submit the
required information. The frequency of
reporting would not change from that
currently authorized under collection
number 2127–0019.
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Estimate of the Total Annual Reporting
and Recordkeeping Burden Resulting
from the Collection of Information
For footprint, NHTSA estimates that
each passenger car manufacturer would
incur an additional 10 burden hours per
year. This estimate is based on the fact
that data collection would involve only
computer tabulation. Thus, each
passenger car manufacturer would incur
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an additional burden of 10 hours or a
total on industry of an additional 200
hours a year (assuming there are 20
manufacturers). At an assumed rate of
$21.23 an hour, the annual, estimated
cost of collecting and preparing the
additional passenger car footprint
information is $4,246.
For credit trading, NHTSA estimates
that each instruction would incur an
additional burden hour per year. This
estimate is based on the fact that the
data required is already available and
thus the only burden is the actual
preparation of the instruction. NHTSA
estimates that the maximum
instructions it would receive each year
is 20. While non-manufacturers may
also participate in credit trading,
NHTSA does not believe that every
manufacturer would need to, or be able
to, participate in credit trading every
year. NHTSA does not, at this time,
have a way of estimating how many
non-manufacturers may wish to
participate in credit trading. Therefore
NHTSA believes that the total number
of manufacturers is a reasonable
estimate, for a total annual additional
burden of 20 hours a year. At an
assumed rate of $21.23 an hour, the
annual estimated cost of collecting and
preparing the credit trading instruction
is $425.
NHTSA estimates that the
recordkeeping burden resulting from the
collection of information would be 0
hours because the information would be
retained on each manufacturer’s existing
computer systems for each
manufacturer’s internal administrative
purposes. There would be no capital or
start-up costs as a result of this
collection. Manufacturers can collect
and tabulate the information by using
existing equipment. Thus, there would
be no additional costs to respondents or
record keepers.
NHTSA requests comment on its
estimates of the total annual hour and
cost burdens resulting from this
collection of information. Please submit
any comments to the NHTSA Docket
Number referenced in the heading of
this document, and to Ken Katz, Lead
Engineer, Fuel Economy Division,
Office of International Policy, Fuel
Economy, and Consumer Programs,
National Highway Traffic Safety
Administration, 1200 New Jersey
Avenue, SE., Washington, DC 20590.
You may also contact him by phone at
(202) 366–0846, by fax at (202) 493–
2290, or by e-mail at ken.katz@dot.gov.
Comments are due by July 1, 2008.
H. Regulation Identifier Number (RIN)
The Department of Transportation
assigns a regulation identifier number
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(RIN) to each regulatory action listed in
the Unified Agenda of Federal
Regulations. The Regulatory Information
Service Center publishes the Unified
Agenda in April and October of each
year. You may use the RIN contained in
the heading at the beginning of this
document to find this action in the
Unified Agenda.
I. Executive Order 13045
Executive Order 13045 1A 241 applies
to any rule that: (1) Is determined to be
economically significant as defined
under E.O. 12866, and (2) concerns an
environmental, health or safety risk that
NHTSA has reason to believe may have
a disproportionate effect on children. If
the regulatory action meets both criteria,
we must evaluate the environmental
health or safety effects of the proposed
rule on children, and explain why the
proposed regulation is preferable to
other potentially effective and
reasonably feasible alternatives
considered by us.
This proposed rule does not pose
such a risk for children. The primary
effects of this proposal are to conserve
energy and to reduce tailpipe emissions
of CO2, the primary greenhouse gas, by
setting fuel economy standards for
motor vehicles.
J. National Technology Transfer and
Advancement Act
Section 12(d) of the National
Technology Transfer and Advancement
Act (NTTAA) requires NHTSA to
evaluate and use existing voluntary
consensus standards in its regulatory
activities unless doing so would be
inconsistent with applicable law (e.g.,
the statutory provisions regarding
NHTSA’s vehicle safety authority) or
otherwise impractical.
Voluntary consensus standards are
technical standards developed or
adopted by voluntary consensus
standards bodies. Technical standards
are defined by the NTTAA as
‘‘performance-based or design-specific
technical specification and related
management systems practices.’’ They
pertain to ‘‘products and processes,
such as size, strength, or technical
performance of a product, process or
material.’’
Examples of organizations generally
regarded as voluntary consensus
standards bodies include the American
Society for Testing and Materials
(ASTM), the Society of Automotive
Engineers (SAE), and the American
National Standards Institute (ANSI). If
NHTSA does not use available and
potentially applicable voluntary
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consensus standards, we are required by
the Act to provide Congress, through
OMB, an explanation of the reasons for
not using such standards.
The document proposes to categorize
passenger cars according to vehicle
footprint (average track width X
wheelbase). For purposes of this
calculation, NHTSA proposes to base
these measurements on those developed
by the automotive industry.
Determination of wheelbase would be
consistent with L101-wheelbase,
defined in SAE J1100 MAY95, Motor
vehicle dimensions. NHTSA’s proposal
uses a modified version of the SAE
definitions for track width (W101-treadfront and W102-tread-rear as defined in
SAE J1100 MAY95). The proposed
definition of track width reduces a
manufacturer’s ability to adjust a
vehicle’s track width through minor
alterations.
K. Executive Order 13211
Executive Order 13211 242 applies to
any rule that: (1) Is determined to be
economically significant as defined
under E.O. 12866, and is likely to have
a significant adverse effect on the
supply, distribution, or use of energy; or
(2) that is designated by the
Administrator of the Office of
Information and Regulatory Affairs as a
significant energy action. If the
regulatory action meets either criterion,
we must evaluate the adverse energy
effects of the proposed rule and explain
why the proposed regulation is
preferable to other potentially effective
and reasonably feasible alternatives
considered by us.
The proposed rule seeks to establish
passenger car and light truck fuel
economy standards that will reduce the
consumption of petroleum and will not
have any adverse energy effects.
Accordingly, this proposed rulemaking
action is not designated as a significant
energy action.
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L. Department of Energy Review
In accordance with 49 U.S.C.
32902(j)(1), we submitted this proposed
rule to the Department of Energy for
review. That Department did not make
any comments that we have not
addressed.
M. Plain Language
Executive Order 12866 requires each
agency to write all rules in plain
language. Application of the principles
of plain language includes consideration
of the following questions:
• Have we organized the material to
suit the public’s needs?
242 66
FR 28355 (May 18, 2001).
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• Are the requirements in the rule
clearly stated?
• Does the rule contain technical
language or jargon that isn’t clear?
• Would a different format (grouping
and order of sections, use of headings,
paragraphing) make the rule easier to
understand?
• Would more (but shorter) sections
be better?
• Could we improve clarity by adding
tables, lists, or diagrams?
• What else could we do to make the
rule easier to understand?
If you have any responses to these
questions, please include them in your
comments on this proposal.
N. Privacy Act
Anyone is able to search the
electronic form of all comments
received into any of our dockets by the
name of the individual submitting the
comment (or signing the comment, if
submitted on behalf of an organization,
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 https://www.dot.gov/
privacy.html.
XIV. Regulatory Text
List of Subjects in 49 CFR Parts 523,
531, 533, 534, 535, 536, and 537
Fuel economy and Reporting and
recordkeeping requirements.
In consideration of the foregoing,
under the authority of 49 U.S.C. 32901,
32902, 32903, and 32907, and
delegation of authority at 49 CFR 1.50,
NHTSA proposes to amend 49 CFR
Chapter V as follows:
PART 523—VEHICLE CLASSIFICATION
1. Amend the authority citation for
part 523 by revising to read as follows:
Authority: 49 U.S.C. 32901, delegation of
authority at 49 CFR 1.50.
2. Amend § 523.2 by adding, in
alphabetical order, definitions of ‘‘light
truck’’ and ‘‘work truck’’ to read as
follows:
§ 523.2
Definitions.
*
*
*
*
*
Light truck means a non-passenger
automobile as defined in § 523.5.
*
*
*
*
*
Work truck means a vehicle that is
rated at more than 8,500 and less than
or equal to 10,000 pounds gross vehicle
weight, and is not a medium-duty
passenger vehicle as defined in 40 CFR
86.1803–01 as in effect on December 20,
2007.
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3. Amend § 523.3 by revising
paragraph (a) to read as follows:
§ 523.3
Automobile.
(a) An automobile is any 4-wheeled
vehicle that is propelled by fuel, or by
alternative fuel, manufactured primarily
for use on public streets, roads, and
highways and rated at less than 10,000
pounds gross vehicle weight, except:
(1) A vehicle operated only on a rail
line;
(2) A vehicle manufactured in
different stages by 2 or more
manufacturers, if no intermediate or
final-stage manufacturer of that vehicle
manufactures more than 10,000 multistage vehicles per year; or
(3) A work truck.
*
*
*
*
*
4. Amend § 523.5 by revising the
introductory text, and paragraphs (a)
introductory text, (b) introductory text,
(b)(1), and (b)(2) introductory text to
read as follows:
§ 523.5
Non-passenger automobile.
A non-passenger automobile means
an automobile that is not a passenger
automobile or a work truck and includes
vehicles described in paragraphs (a) or
(b) of this section:
(a) An automobile designed to
perform at least one of the following
functions:
*
*
*
*
*
(b) An automobile capable of offhighway operation, as indicated by the
fact that it:
(1)(i) Has 4-wheel drive or
(ii) Is rated at more than 6,000 pounds
gross vehicle weight; and
(2) Has at least four of the following
characteristics—
*
*
*
*
*
PART 531—PASSENGER
AUTOMOBILE AVERAGE FUEL
ECONOMY STANDARDS
5. The authority citation for part 531
continues to read as follows:
Authority: 49 U.S.C. 32902; delegation of
authority at 49 CFR 1.50.
6. Amend § 531.5 by revising
paragraph (a), redesignating paragraph
(b) as paragraph (d), and adding
paragraphs (b) and (c) to read as follows:
§ 531.5
Fuel economy standards.
(a) Except as provided in paragraph
(d) of this section, each manufacturer of
passenger automobiles shall comply
with the average fuel economy
standards in Table I, expressed in miles
per gallon, in the model year specified
as applicable:
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TABLE I
Model year
1978
1979
1980
1981
1982
1983
1984
TABLE I—Continued
Standard
......................................
......................................
......................................
......................................
......................................
......................................
......................................
Model year
18.0
19.0
20.0
22.0
24.0
26.0
27.0
Standard
1985 ......................................
1986 ......................................
1987 ......................................
1988 ......................................
1989 ......................................
1990–2010 ............................
27.5
26.0
26.0
26.0
26.5
27.5
(b) For each of model years 2011
through 2015, a manufacturer’s
passenger automobile fleet shall comply
with the fuel economy level calculated
for that model year according to Figure
1 and the appropriate values in Table II.
FIGURE 1
Required_Fuel_Economy_Level =
e
Where:
N is the total number (sum) of passenger
automobiles produced by a
manufacturer,
Ni is the number (sum) of the ith model
passenger automobile produced by the
manufacturer, and
Ti is fuel economy target of the ith model
passenger automobile, which is determined
N
N
∑ Ti
i
i
according to the following formula, rounded
to the nearest hundredth:
T=
Parameters a, b, c, and d are defined in
Table II;
e = 2.718; and
x = footprint (in square feet, rounded to the
nearest tenth) of the vehicle model.
1
x −c / d
1 1 1 e( )
+ −
a b a 1 + e( x − c ) / d
Where,
TABLE II.—PARAMETERS FOR THE PASSENGER AUTOMOBILE FUEL ECONOMY TARGETS
Parameters
Model year
a
(c) In addition to the requirement of
paragraph (b) of this section, each
manufacturer shall also meet the
minimum standard for domestically
manufactured passenger automobiles
expressed in Table III:
TABLE III
Model year
2011
2012
2013
2014
2015
Minimum
standard
..........................................
..........................................
..........................................
..........................................
..........................................
28.7
30.2
31.3
32.0
32.9
*
*
*
*
7. Part 531 is amended by adding the
following new Appendix A at the end:
rwilkins on PROD1PC63 with PROPOSALS2
*
Appendix A to Part 531—Preemption of
State Regulations Regulating Tailpipe
Carbon Dioxide Emissions From
Automobiles
(a) To the extent that any state regulation
regulates tailpipe carbon dioxide emissions
from automobiles, such a regulation relates to
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38.20
40.00
40.80
41.20
41.70
average fuel economy standards within the
meaning of 49 U.S.C. 32919.
1. Automobile fuel economy is directly and
very substantially related to automobile
tailpipe emissions of carbon dioxide.
2. Carbon dioxide is the natural by-product
of automobile fuel consumption.
3. The most significant and controlling
factor in making the measurements necessary
to determine the compliance of automobiles
with the fuel economy standards in this Part
is their rate of tailpipe carbon dioxide
emissions.
4. Most of the technologically feasible
reduction of tailpipe emissions of carbon
dioxide is achievable only through improving
fuel economy, thereby reducing both the
consumption of fuel and the creation and
emission of carbon dioxide.
5. Accordingly, as a practical matter,
regulating fuel economy controls the amount
of tailpipe emissions of carbon dioxide to a
very substantial extent, and regulating the
tailpipe emissions of carbon dioxide controls
fuel economy to a very substantial extent.
(b) As a state regulation related to fuel
economy standards, any state regulation
regulating tailpipe carbon dioxide emissions
from automobiles is expressly preempted
under 49 U.S.C. 32919.
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25.80
27.40
28.70
29.90
31.20
d
45.88
45.79
45.70
45.61
45.51
1.60
1.54
1.48
1.42
1.36
(c) A state regulation regulating tailpipe
carbon dioxide emissions from automobiles,
particularly a regulation that is not attributebased and does not separately regulate
passenger cars and light trucks, conflicts with
1. The fuel economy standards in this Part,
2. The judgments made by the agency in
establishing those standards, and
3. The achievement of the objectives of the
statute (49 U.S.C. Chapter 329) under which
those standards were established, including
objectives relating to reducing fuel
consumption in a manner and to the extent
consistent with manufacturer flexibility,
consumer choice, and automobile safety.
(d) Any state regulation regulating tailpipe
carbon dioxide emissions from automobiles
is impliedly preempted under 49 U.S.C.
Chapter 329.
PART 533—LIGHT TRUCK FUEL
ECONOMY STANDARDS
8. The authority citation for part 533
continues to read as follows:
Authority: 49 U.S.C. 32902; delegation of
authority at 49 CFR 1.50.
9. Amend § 533.5 by revising Table V
of paragraph (a) and revising paragraph
(h) to read as follows:
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.................................................................................................................................
.................................................................................................................................
.................................................................................................................................
.................................................................................................................................
.................................................................................................................................
c
EP02MY08.042</MATH>
2011
2012
2013
2014
2015
b
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§ 533.5
Requirements.
(a) * * *
TABLE V.—PARAMETERS FOR THE LIGHT TRUCK FUEL ECONOMY TARGETS
Parameters
Model year
a
2008
2009
2010
2011
2012
2013
2014
2015
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
*
*
*
*
*
(h) For each of model years 2011–
2015, a manufacturer’s light truck fleet
shall comply with the fuel economy
level calculated for that model year
according to Figure 1 and the
appropriate values in Table V.
10. Part 533 is amended by adding the
following new Appendix B at the end:
rwilkins on PROD1PC63 with PROPOSALS2
Appendix B to Part 533—Preemption of
state regulations regulating tailpipe
carbon dioxide emissions from
automobiles
(a) To the extent that any state regulation
regulates tailpipe carbon dioxide emissions
from automobiles, such a regulation relates to
average fuel economy standards within the
meaning of 49 U.S.C. 32919.
1. Automobile fuel economy is directly and
very substantially related to automobile
tailpipe emissions of carbon dioxide.
2. Carbon dioxide is the natural by-product
of automobile fuel consumption.
3. The most significant and controlling
factor in making the measurements necessary
to determine the compliance of automobiles
with the fuel economy standards in this Part
is their rate of tailpipe carbon dioxide
emissions.
4. Most of the technologically feasible
reduction of tailpipe emissions of carbon
dioxide is achievable only through improving
fuel economy, thereby reducing both the
consumption of fuel and the creation and
emission of carbon dioxide.
5. Accordingly, as a practical matter,
regulating fuel economy controls the amount
of tailpipe emissions of carbon dioxide to a
very substantial extent, and regulating the
tailpipe emissions of carbon dioxide controls
fuel economy to a very substantial extent.
(b) As a state regulation related to fuel
economy standards, any state regulation
regulating tailpipe carbon dioxide emissions
from automobiles is expressly preempted
under 49 U.S.C. 32919.
(c) A state regulation regulating tailpipe
carbon dioxide emissions from automobiles,
particularly a regulation that is not attributebased and does not separately regulate
passenger cars and light trucks, conflicts with
1. The fuel economy standards in this Part,
2. The judgments made by the agency in
establishing those standards, and
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b
28.56
30.07
29.96
30.90
32.70
34.10
34.10
34.30
3. The achievement of the objectives of the
statute (49 U.S.C. Chapter 329) under which
those standards were established, including
objectives relating to reducing fuel
consumption in a manner and to the extent
consistent with manufacturer flexibility,
consumer choice, and automobile safety.
(d) Any state regulation regulating tailpipe
carbon dioxide emissions from automobiles
is impliedly preempted under 49 U.S.C.
Chapter 329.
PART 534—RIGHTS AND
RESPONSIBILITIES OF
MANUFACTURERS IN THE CONTEXT
OF CHANGES IN CORPORATE
RELATIONSHIPS
11. The authority citation for part 534
continues to read as follows:
Authority: 49 U.S.C. 32901; delegation of
authority at 49 CFR 1.50.
12. Amend § 534.4 by revising
paragraphs (c) and (d) to read as follows:
§ 534.4
Successors and predecessors.
*
*
*
*
*
(c) Credits earned by a predecessor
before or during model year 2008 may
be used by a successor, subject to the
availability of credits and the general
three-year restriction on carrying credits
forward and the general three-year
restriction on carrying credits backward.
Credits earned by a predecessor after
model year 2008 may be used by a
successor, subject to the availability of
credits and the general five-year
restriction on carrying credits forward
and the general three-year restriction on
carrying credits backward.
(d) Credits earned by a successor
before or during model year 2008 may
be used to offset a predecessor’s
shortfall, subject to the availability of
credits and the general three-year
restriction on carrying credits forward
and the general three-year restriction on
carrying credits backward. Credits
earned by a successor after model year
2008 may be used to offset a
predecessor’s shortfall, subject to the
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c
19.99
20.87
21.20
21.50
22.80
23.80
24.30
24.80
d
49.30
48.00
48.49
51.94
51.98
52.02
52.06
52.11
5.58
5.81
5.50
3.80
3.82
3.84
3.86
3.87
availability of credits and the general
five-year restriction on carrying credits
forward and the general three-year
restriction on carrying credits backward.
13. Amend § 534.5 by revising
paragraphs (c) and (d) to read as follows:
§ 534.5 Manufacturers within control
relationships.
*
*
*
*
*
(c) Credits of a manufacturer within a
control relationship may be used by the
group of manufacturers within the
control relationship to offset shortfalls,
subject to the agreement of the other
manufacturers, the availability of the
credits, and the general three-year
restriction on carrying credits forward
or backward prior to or during model
year 2008, or the general five-year
restriction on carrying credits forward
and the general three-year restriction on
carrying credits backward after model
year 2008.
(d) If a manufacturer within a group
of manufacturers is sold or otherwise
spun off so that it is no longer within
that control relationship, the
manufacturer may use credits that were
earned by the group of manufacturers
within the control relationship while
the manufacturer was within that
relationship, subject to the agreement of
the other manufacturers, the availability
of the credits, and the general three-year
restriction on carrying credits forward
or backward prior to or during model
year 2008, or the general five-year
restriction on carrying credits forward
and the general three-year restriction on
carrying credits backward after model
year 2008.
*
*
*
*
*
PART 535—[REMOVED]
14. Remove Part 535.
15. Part 536 is added to read as
follows:
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PART 536—TRANSFER AND TRADING
OF FUEL ECONOMY CREDITS
Sec.
536.1 Scope.
536.2 Application.
536.3 Definitions.
536.4 Credits.
536.5 Trading infrastructure.
536.6 Treatment of credits earned prior to
model year 2011.
536.7 Treatment of carryback credits.
536.8 Conditions for trading of credits.
536.9 Use of credits with regard to the
domestically manufactured passenger
automobile minimum standard.
536.10 Treatment of dual-fuel and
alternative fuel vehicles—consistency
with 49 CFR Part 538.
Authority: 49 U.S.C. 32903; delegation of
authority at 49 CFR 1.50.
§ 536.1
Scope.
This part establishes regulations
governing the use and application of
CAFE credits up to three model years
before and five model years after the
model year in which the credit was
earned. It also specifies requirements for
manufacturers wishing to transfer fuel
economy credits between their fleets
and for manufacturers and other persons
wishing to trade fuel economy credits to
achieve compliance with prescribed fuel
economy standards.
§ 536.2
Application.
This part applies to all credits earned
(and transferable and tradable) for
exceeding applicable average fuel
economy standards in a given model
year for domestically manufactured
passenger cars, imported passenger cars,
and light trucks.
rwilkins on PROD1PC63 with PROPOSALS2
§ 536.3
Definitions.
(a) Statutory terms. In this part, all
terms defined in 49 U.S.C. 32901(a) are
used in their statutory meaning.
(b) Other terms. As used in this part:
Above standard fuel economy means,
with respect to a compliance category,
that the automobiles manufactured by a
manufacturer in that compliance
category in a particular model year have
greater average fuel economy (calculated
in a manner that reflects the incentives
for alternative fuel automobiles per 49
U.S.C. 32905) than that manufacturer’s
fuel economy standard for that
compliance category and model year.
Adjustment factor means a factor used
to adjust the value of a traded credit for
compliance purposes to ensure that the
compliance value of the credit reflects
the total volume of oil saved when the
credit was earned.
Below standard fuel economy means,
with respect to a compliance category,
that the automobiles manufactured by a
manufacturer in that compliance
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category in a particular model year have
lower average fuel economy (calculated
in a manner that reflects the incentives
for alternative fuel automobiles per 49
U.S.C. 32905) than that manufacturer’s
fuel economy standard for that
compliance category and model year.
Compliance. (1) Compliance means a
manufacturer achieves compliance in a
particular compliance category when:
(i) The average fuel economy of the
vehicles in that category exceed or meet
the fuel economy standard for that
category, or
(ii) The average fuel economy of the
vehicles in that category do not meet the
fuel economy standard for that category,
but the manufacturer proffers a
sufficient number of valid credits,
adjusted for total oil savings, to cover
the gap between the average fuel
economy of the vehicles in that category
and the required average fuel economy.
(2) A manufacturer achieves
compliance for its fleet if conditions
(1)(i) or (1)(ii) of this definition are
simultaneously met for all compliance
categories.
Compliance category means any of
three categories of automobiles subject
to Federal fuel economy regulations.
The three compliance categories
recognized by 49 U.S.C. 32903(g)(6) are
domestically manufactured passenger
automobiles, imported passenger
automobiles, and non-passenger
automobiles (‘‘light trucks’’).
Credit holder (or holder) means a legal
person that has valid possession of
credits, either because they are a
manufacturer who has earned credits by
exceeding an applicable fuel economy
standard, or because they are a
designated recipient who has received
credits from another holder. Credit
holders need not be manufacturers,
although all manufacturers may be
credit holders.
Credits (or fuel economy credits)
means an earned or purchased
allowance recognizing that the average
fuel economy of a particular
manufacturer’s vehicles within a
particular compliance category and
model year exceeds that manufacturer’s
fuel economy standard for that
compliance category and model year.
One credit is equal to 1⁄10 of a mile per
gallon above the fuel economy standard
per one vehicle within a compliance
category. Credits are denominated
according to model year in which they
are earned (vintage), originating
manufacturer, and compliance category.
Expiry date means the model year
after which fuel economy credits may
no longer be used to achieve compliance
with fuel economy regulations. Expiry
Dates are calculated in terms of model
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years: For example, if a manufacturer
earns credits for model year 2011, these
credits may be used for compliance in
model years 2008–2016.
Fleet means all automobiles that are
manufactured by a manufacturer in a
particular model year and are subject to
fuel economy standards under 49 CFR
Part 531 and 533. For the purposes of
this regulation, a manufacturer’s fleet
means all domestically manufactured
and imported passenger automobiles
and non-passenger automobiles (‘‘light
trucks’’). ‘‘Work trucks’’ and medium
and heavy trucks are not included in
this definition for purposes of this
regulation.
Light truck means the same as ‘‘nonpassenger automobile,’’ as that term is
defined in 49 U.S.C. 32901(a)(17), and
as ‘‘light truck,’’ as that term is defined
at 49 CFR 523.5.
Originating manufacturer means the
manufacturer that originally earned a
particular credit. Each credit earned will
be identified with the name of the
originating manufacturer.
Trade means the receipt by NHTSA of
an instruction from a credit holder to
place one of its credits in the account of
another credit holder. A credit that has
been traded can be identified because
the originating manufacturer will be a
different party than the current credit
holder. If a credit has been traded to
another credit holder and is
subsequently traded back to the
originating manufacture, it will be
deemed not to have been traded for
compliance purposes.
Transfer means the application by a
manufacturer of credits earned by that
manufacturer in one compliance
category or credits acquired by trade
(and originally earned by another
manufacturer in that category) to
achieve compliance with fuel economy
standards with respect to a different
compliance category. For example, a
manufacturer may purchase light truck
credits from another manufacturer, and
transfer them to achieve compliance in
the manufacturer’s domestically
manufactured passenger car fleet.
Vintage means, with respect to a
credit, the model year in which the
credit was earned.
§ 536.4
Credits.
(a) Type and vintage. All credits are
identified and distinguished in the
accounts by originating manufacturer,
compliance category, and model year of
origin (vintage).
(b) Application of credits. All credits
earned and applied are calculated, per
49 U.S.C. 32903(c), in tenths of a mile
per gallon by which the average fuel
economy of vehicles in a particular
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compliance category manufactured by a
manufacturer in the model year in
which the credits are earned exceeds the
applicable average fuel economy
standard, multiplied by the number of
vehicles sold in that compliance
category. However, credits that have
been traded, defined as credits that are
used for compliance by a manufacturer
other than the originating manufacturer,
are valued for compliance purposes
using the adjustment factor specified in
paragraph (c) of this section, pursuant to
the ‘‘total oil savings’’ requirement of 49
U.S.C. 32903(f)(1).
(c) Adjustment factor. Vehicle fuel
economy, measured in miles per gallon
24485
(mpg), is adjusted to ensure constant oil
savings when traded between
manufacturers. Adjusted mpg is shown
by multiplying the value of each credit
(with a nominal value of 0.1 mpg per
vehicle) by an adjustment factor
calculated by the following formula:
Where:
A = Adjustment Factor applied to traded
credits by multiplying mpg for a
particular credit;
VMTe = Lifetime vehicle miles traveled for
the compliance category in which the
credit was earned: 152,000 miles for
domestically manufactured and
imported passenger cars, 179,000 miles
for light trucks;
VMTu = Lifetime vehicle miles traveled for
the compliance category in which the
credit is used for compliance: 152,000
miles for domestically manufactured and
imported passenger cars, 179,000 miles
for light trucks;
MPGe = Fuel economy standard for the
originating manufacturer, compliance
category, and model year in which the
credit was earned;
MPGu = Fuel economy standard for the
manufacturer, compliance category, and
model year in which the credit will be
used.
rwilkins on PROD1PC63 with PROPOSALS2
§ 536.5
Trading Infrastructure.
(a) Accounts. NHTSA maintains
‘‘accounts’’ for each credit holder. The
account consists of a balance of credits
in each compliance category and vintage
held by the holder.
(b) Who may hold credits. Every
manufacturer subject to fuel economy
standards under 49 CFR parts 531 or
533 is automatically an account holder.
If the manufacturer earns credits
pursuant to this part, or receives credits
from another party, so that the
manufacturer’s account has a non-zero
balance, then the manufacturer is also a
credit holder. Any party designated as a
recipient of credits by a current credit
holder will receive an account from
NHTSA and become a credit holder,
subject to the following conditions:
(1) A designated recipient must
provide name, address, contacting
information, and a valid taxpayer
identification number or social security
number;
(2) NHTSA does not grant a request to
open a new account by any party other
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than a party designated as a recipient of
credits by a credit holder;
(3) NHTSA maintains accounts with
zero balances for a period of time, but
reserves the right to close accounts that
have had zero balances for more than
one year.
(c) Automatic debits and credits of
accounts.
(1) Upon receipt of a verified
instruction to trade credits from an
existing credit holder, NHTSA verifies
the presence of sufficient credits in the
account of the trader, then debit the
account of the trader and credit the
account of the recipient with credits of
the vintage, origin, and compliance
category designated. If the recipient is
not a current account holder, NHTSA
establishes the account subject to the
conditions described in paragraph (b) of
this section, and shifts the credits to the
newly-opened account.
(2) NHTSA automatically deletes
unused credits from holders’ accounts
as they reach their expiry date.
(d) Compliance.
(1) NHTSA assesses compliance with
fuel economy standards each year,
utilizing the certified and reported
CAFE data provided by the
Environmental Protection Agency for
enforcement of the CAFE program
pursuant to 49 U.S.C. 32904(e). Credit
values are calculated based on the CAFE
data from the EPA. If a particular
compliance category within a
manufacturer’s fleet has above standard
fuel economy, NHTSA adds credits to
the manufacturer’s account for that
compliance category and vintage in the
appropriate amount by which the
manufacturer has exceeded the
applicable standard.
(2) If a manufacturer’s vehicles in a
particular compliance category have
below standard fuel economy, NHTSA
automatically debits the manufacturer’s
unexpired credits, earned or obtained
through trading, within the compliance
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category from the manufacturer’s
account, beginning with the oldest
credits held by the manufacturer.
(3) If there are insufficient credits
within the compliance category to
enable the manufacturer to achieve
compliance in that category, NHTSA
automatically transfers any available
existing surplus credits, including
credits obtained through trading, from
other compliance categories to the
extent permitted by 49 U.S.C.
32903(g)(3) and this regulation,
beginning with the oldest vintage of
available surplus credits.
(4) The value, when used for
compliance, of any credits received via
trade is adjusted, using the adjustment
factor described in § 536.4(c), pursuant
to 49 U.S.C. 32902(f)(1).
(5) If a manufacturer is still unable to
comply with the applicable standards
for one or more compliance categories
after NHTSA has applied all available
credits from within and without the
compliance category, NHTSA shall
inform the manufacturer of its noncompliant status and their liability for
fines, which may be avoided by
submitting additional credits obtained
through trading, or deferred by
submitting a carryback plan for
NHTSA’s approval pursuant to 49
U.S.C. 32903(b)(2).
(6) NHTSA will enforce the CAFE
program using the certified and reported
CAFE values provided by the
Environmental Protection Agency as
required by 49 U.S.C. 32904(c) and (e).
Credit values will be calculated from the
CAFE numbers issued from EPA.
(e) Reporting.
(1) NHTSA periodically publishes the
names and credit holdings of all credit
holders. NHTSA does not publish
individual transactions, nor respond to
individual requests for updated
balances from any party other than the
account holder.
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1
1
VMTe *
−
MPGe MPGe − 0.1
/A =
1
1
VMTu *
−
MPGu MPGu − 0.1
24486
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(2) NHTSA issues an annual credit
status letter to each party that is a credit
holder at that time. The letter to a credit
holder includes a credit accounting
record that identifies the credit status of
the credit holder including any activity
(earned, expired, transferred, traded,
carry-forward and carry-back credit
transactions/allocations) that took place
during the identified activity period.
§ 536.6 Treatment of credits earned prior
to model year 2011.
(a) Credits earned in a compliance
category before and during model year
2008 may be applied by the
manufacturer that earned them to
carryback plans for that compliance
category approved up to three model
years prior to the year in which the
credits were earned, or may be applied
to compliance in that compliance
category for up to three model years
after the year in which the credits were
earned.
(b) Credits earned in a compliance
category after model year 2008 may be
applied by the manufacturer that earned
them to carryback plans for that
compliance category approved up to
three years prior to the year in which
the credits were earned, or may be held
or applied for up to five model years
after the year in which the credits were
earned.
(c) Credits earned in a compliance
category prior to model year 2011 may
not be transferred or traded by a
manufacturer to another compliance
category.
rwilkins on PROD1PC63 with PROPOSALS2
§ 536.7
Treatment of carryback credits.
(a) Credits earned in a compliance
category in any model year may be used
in carryback plans approved by NHTSA,
pursuant to 49 U.S.C. 32903(b), for up
to three model years prior to the year in
which the credit was earned.
(b) For purposes of this regulation,
NHTSA will treat the use of future
credits for compliance, as through a
carryback plan, as a deferral of penalties
for non-compliance with an applicable
fuel economy standard.
(c) If NHTSA receives and approves a
manufacturer’s carryback plan to earn
future credits within the following three
model years in order to comply with
current regulatory obligations, NHTSA
will defer levying fines for noncompliance 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 CAFE data from
EPA. If the manufacturer fails to acquire
or earn sufficient credits by the plan
dates, NHTSA will initiate compliance
proceedings.
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18:29 May 01, 2008
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(d) In the event that NHTSA fails to
receive or approve a plan for a noncompliant manufacturer, NHTSA will
levy fines pursuant to statute. If within
three years, the non-compliant
manufacturer earns or acquires
additional credits to reduce or eliminate
the non-compliance, NHTSA will
reduce any fines owed, or repay fines to
the extent that credits received reduce
the non-compliance.
(e) No credits from any source will be
accepted in lieu of compliance after
three model years after the noncompliance.
(f) If a manufacturer is unable to
comply in any compliance category in
any model year, NHTSA will
automatically deduct and extinguish
any eligible credits subsequently held,
earned, or acquired to reduce the oldest
instance of non-compliance before
allowing credits to accumulate or
applying credits to achieve compliance
in later years.
(g) A carryback plan may not include
the use of credits earned before model
year 2011 that have been subsequently
traded or transferred to another party.
§ 536.8
Conditions for trading of credits.
(a) Trading of credits. If a credit
holder wishes to trade credits to another
party, the current credit holder and the
receiving party must jointly issue an
instruction to NHTSA, identifying the
quantity, vintage, compliance category,
and originator of the credits to be
traded. If the recipient is not a current
account holder, the recipient must
provide sufficient information for
NHTSA to establish an account for the
recipient. Once an account has been
established or identified for the
recipient, NHTSA completes the trade
by debiting the transferor’s account and
crediting the recipient’s account.
NHTSA will track the quantity, vintage,
compliance category, and originator of
all credits held or traded by all accountholders.
(b) Trading between and within
compliance categories. For credits
earned in model year 2011 or thereafter,
and used to satisfy compliance
obligations for model year 2011 or
thereafter:
(1) Manufacturers may use credits
originally earned by another
manufacturer in a particular compliance
category to satisfy compliance
obligations within the same compliance
category.
(2) Once a manufacturer acquires by
trade credits originally earned by
another manufacturer in a particular
compliance category, the manufacturer
may transfer the credits to satisfy its
compliance obligations in a different
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Sfmt 4702
compliance category, but only to the
extent that the CAFE increase
attributable to the transferred credits
does not exceed the limits in 49 U.S.C.
32903(g)(3). For any compliance
category, the sum of a manufacturer’s
transferred credits earned by that
manufacturer and transferred credits
obtained by that manufacturer through
trade must not exceed that limit.
(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
economy 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, Rights and Responsibilities of
Manufacturers in the Context of
Corporate Relationships.
(d) No short or forward sales. NHTSA
will not honor any instructions to trade
or transfer more credits than are
currently held in any account. NHTSA
will not honor instructions to trade or
transfer credits from any future vintage
(i.e., credits not yet earned). NHTSA
will not participate in or facilitate
contingent trades.
(e) Cancellation of credits. A credit
holder may instruct NHTSA to cancel
its currently held credits, specifying the
originating manufacturer, vintage, and
compliance category of the credits to be
cancelled. These credits will be
permanently null and void; NHTSA will
remove the specific credits from the
credit holder’s account, and will not
reissue them to any other party.
(f) Errors or fraud in earning credits.
If NHTSA determines that a
manufacturer has been credited, through
error or fraud, with earning credits,
NHTSA will cancel those credits if
possible. If the manufacturer credited
with having earned those credits has
already traded them when the error or
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fraud is discovered, NHTSA will hold
the receiving manufacturer responsible
for returning the same or equivalent
credits to NHTSA for cancellation.
(g) Error or fraud in trading. In
general, all trades are final and
irrevocable once executed, and may
only be reversed by a new, mutuallyagreed transaction. If NHTSA executes
an erroneous instruction to trade credits
from one holder to another through
error or fraud, NHTSA will reverse the
transaction if possible. If those credits
have been traded away, the recipient
holder is responsible for obtaining the
same or equivalent credits for return to
the previous holder.
§ 536.9 Use of credits with regard to the
domestically manufactured passenger
automobile minimum standard.
(a) Transferred or traded credits may
not be used, pursuant to 49 U.S.C.
32903(g)(4), to meet the domestically
manufactured passenger automobile
minimum standard specified in 49
U.S.C. 32902(b)(4).
(b) Each manufacturer is responsible
for compliance with both the minimum
standard and the attribute-based
standard.
(c) If a manufacturer’s average fuel
economy level for domestically
manufactured passenger automobiles is
lower than the attribute-based standard,
but higher than the minimum standard,
then the manufacturer may achieve
compliance with the attribute-based
standard by applying credits.
(d) If a manufacturer’s average fuel
economy level for domestically
manufactured passenger automobiles is
lower than both the attribute-based
standard and the minimum standard,
then the difference between the
attribute-based standard and the
minimum standard may be relieved by
the use of credits, but the difference
between the minimum standard and the
manufacturer’s actual fuel economy
level may not be relieved by credits and
will be subject to penalties.
rwilkins on PROD1PC63 with PROPOSALS2
§ 536.10 Treatment of dual-fuel and
alternative fuel vehicles—consistency with
49 CFR Part 538.
(a) Statutory alternative fuel and dualfuel vehicle calculations are treated as a
change in the underlying fuel economy
of the vehicle for purposes of this
regulation, not as a credit that may be
transferred or traded. Improvements in
alternative fuel or dual fuel vehicle fuel
economy as calculated pursuant to 49
U.S.C. 32905 and limited by 49 U.S.C.
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18:29 May 01, 2008
Jkt 214001
32906 are therefore attributable only to
the particular compliance category and
model year to which the alternative or
dual-fuel vehicle belongs.
(b) If a manufacturer’s calculated fuel
economy for a particular compliance
category, including any required
calculations for alternative fuel and dual
fuel vehicles, is higher or lower than the
applicable fuel economy standard,
manufacturers will earn credits or must
apply credits or pay fines equal to the
difference between the calculated fuel
economy level in that compliance
category and the applicable standard.
Credits earned are the same as any other
credits, and may be held, transferred, or
traded by the manufacturer subject to
the limitations of the statute and this
regulation.
(c) If a manufacturer builds enough
alternative fuel or dual fuel vehicles to
improve the calculated fuel economy in
a particular compliance category by
more than the limits set forth in 49
U.S.C. 32906(a), the improvement in
fuel economy for compliance purposes
is restricted to the statutory limit.
Manufacturers may not earn credits nor
reduce the application of credits or fines
for calculated improvements in fuel
economy based on alternative or dual
fuel vehicles beyond the statutory limit.
PART 537—AUTOMOTIVE FUEL
ECONOMY REPORTS
16. The authority citation for part 537
continues to read as follows:
Authority: 49 U.S.C. 32907, delegation of
authority at 49 CFR 1.50.
17. Amend § 537.7 by revising
paragraphs (b) and (c)(4)(xvi)(A) to read
as follows:
§ 537.7 Pre-model year and mid-model
year reports.
*
*
*
*
*
(b) Projected average and target fuel
economy. (1) State the projected average
fuel economy for the manufacturer’s
automobiles determined in accordance
with § 537.9 and based upon the fuel
economy values and projected sales
figures provided under paragraph (c)(2)
of this section.
(2) State the projected final average
fuel economy that the manufacturer
anticipates having if changes
implemented during the model year will
cause that average to be different from
the average fuel economy projected
under paragraph (b)(1) of this section.
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24487
(3) State the projected target fuel
economy for the manufacturer’s
passenger automobiles and light trucks
determined in accordance with 49 CFR
531.5(c) and 49 CFR 533.5(h) and based
upon the projected sales figures
provided under paragraph (c)(2) of this
section.
(4) State the projected final target fuel
economy that the manufacturer
anticipates having if changes
implemented during the model year will
cause the targets to be different from the
target fuel economy projected under
paragraph (b)(3) of this section.
(5) State whether the manufacturer
believes that the projections it provides
under paragraphs (b)(2) and (b)(4) of this
section, or if it does not provide an
average or target under those
paragraphs, the projections it provides
under paragraphs (b)(1) and (b)(3) of this
section, sufficiently represent the
manufacturer’s average and target fuel
economy for the current model year for
purposes of the Act. In the case of a
manufacturer that believes that the
projections are not sufficiently
representative for those purposes, state
the specific nature of any reason for the
insufficiency and the specific additional
testing or derivation of fuel economy
values by analytical methods believed
by the manufacturer necessary to
eliminate the insufficiency and any
plans of the manufacturer to undertake
that testing or derivation voluntarily
and submit the resulting data to the
Environmental Protection Agency under
40 CFR 600.509.
*
*
*
*
*
(c) * * *
(4) * * *
(xvi)(A) In the case of passenger
automobiles:
(1) Interior volume index, determined
in accordance with subpart D of 40 CFR
part 600,
(2) Body style,
(3) Beginning model year 2010, track
width as defined in 49 CFR 523.2,
(4) Beginning model year 2010,
wheelbase as defined in 49 CFR 523.2,
and
(5) Beginning model year 2010,
footprint as defined in 49 CFR 523.2.
*
*
*
*
*
Issued: April 22, 2008.
Nicole R. Nason,
Administrator.
[FR Doc. 08–1186 Filed 4–23–08; 9:16 am]
BILLING CODE 4910–59–P
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]]>Agencies
[Federal Register Volume 73, Number 86 (Friday, May 2, 2008)]
[Proposed Rules]
[Pages 24352-24487]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 08-1186]
[[Page 24351]]
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Part II
Department of Transportation
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National Highway Traffic Safety Administration
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49 CFR Parts 523, 531, 533, 534, 536 and 537
Average Fuel Economy Standards, Passenger Cars and Light Trucks; Model
Years 2011-2015; Proposed Rule
Federal Register / Vol. 73, No. 86 / Friday, May 2, 2008 / Proposed
Rules
[[Page 24352]]
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DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety Administration
49 CFR Parts 523, 531, 533, 534, 536 and 537
[Docket No. NHTSA-2008-0089]
RIN 2127-AK29
Average Fuel Economy Standards, Passenger Cars and Light Trucks;
Model Years 2011-2015
AGENCY: National Highway Traffic Safety Administration (NHTSA),
Department of Transportation (DOT).
ACTION: Notice of Proposed Rulemaking (NPRM).
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SUMMARY: This document proposes substantial increases in the Corporate
Average Fuel Economy (CAFE) standards for passenger cars and light
trucks that would enhance energy security by improving fuel economy.
Since the carbon dioxide (CO2) emitted from the tailpipes of
new motor vehicles is the natural by-product of the combustion of fuel,
the increased standards would also address climate change by reducing
tailpipe emissions of CO2. Those emissions represent 97
percent of the total greenhouse gas emissions from motor vehicles.
Implementation of the new standards would dramatically add to the
billions of barrels of fuel already saved since the beginning of the
CAFE program in 1975.
DATES: Comments must be received on or before July 1, 2008.
ADDRESSES: You may submit comments to the docket number identified in
the heading of this document by any of the following methods:
Federal eRulemaking Portal: Go to https://
www.regulations.gov. Follow the online instructions for submitting
comments.
Mail: Docket Management Facility, M-30, U.S. Department of
Transportation, West Building, Ground Floor, Rm. W12-140, 1200 New
Jersey Avenue, SE., Washington, DC 20590.
Hand Delivery or Courier: West Building Ground Floor, Room
W12-140, 1200 New Jersey Avenue, SE., between 9 a.m. and 5 p.m. Eastern
Time, Monday through Friday, except Federal holidays.
Fax: (202) 493-2251.
Regardless of how you submit your comments, you should mention the
docket number of this document.
You may call the Docket Management Facility at 202-366-9826.
Instructions: For detailed instructions on submitting comments and
additional information on the rulemaking process, see the Public
Participation heading of the Supplementary Information section of this
document. Note that all comments received will be posted without change
to https://www.regulations.gov, including any personal information
provided.
Privacy Act: Please see the Privacy Act heading under Rulemaking
Analyses and Notices.
FOR FURTHER INFORMATION CONTACT: For policy and technical issues: Ms.
Julie Abraham or Mr. Peter Feather, Office of Rulemaking, National
Highway Traffic Safety Administration, 1200 New Jersey Avenue, SE.,
Washington, DC 20590. Telephone: Ms. Abraham (202) 366-1455; Mr.
Feather (202) 366-0846.
For legal issues: Mr. Stephen Wood or Ms. Rebecca Schade, Office of
the Chief Counsel, National Highway Traffic Safety Administration, 1200
New Jersey Avenue, SE., Washington, DC 20590. Telephone: (202) 366-
2992.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Executive overview
A. Summary
B. Energy Independence and Security Act of 2007
C. Proposal
1. Standards
a. Stringency
b. Benefits
c. Costs
d. Flexibilities
2. Credits
II. Background
A. Contribution of fuel economy improvements to addressing
energy independence and security and climate change
1. Relationship between fuel economy and CO2 tailpipe
emissions
2. Fuel economy improvements/CO2 tailpipe emission
reductions since 1975
B. Chronology of events since the National Academy of Sciences
called for reforming and increasing CAFE standards
1. National Academy of Sciences CAFE report (February 2002)
a. Significantly increasing CAFE standards without reforming
them would adversely affect safety
b. Environmental and other externalities justify increasing the
CAFE standards
2. Final rule establishing reformed (attribute-based) CAFE
standards for MY 2008-2011 light trucks (March 2006)
3. Twenty-in-Ten Initiative (January 2007)
4. Request for passenger car and light truck product plans
(February 2007)
5. Supreme Court decision in Massachusetts v. EPA (April 2007)
6. Coordination between NHTSA and EPA on development of
rulemaking proposals (Summer-Fall 2007)
7. Ninth Circuit decision re final rule for MY 2008-2011 light
trucks (November 2007)
8. Enactment of Energy Independence and Security Act of 2007
(December 2007)
C. Energy Policy and Conservation Act, as amended
1. Vehicles subject to standards for automobiles
2. Mandate to set standards for automobiles
3. Structure of standards
4. Factors governing or considered in the setting of standards
5. Consultation in setting standards
6. Compliance flexibility and enforcement
III. Fuel economy enhancing technologies
A. Data sources for technology assumptions
B. Technologies and estimates of costs and effectiveness
1. Engine technologies
2. Transmission technologies
3. Vehicle technologies
4. Accessory technologies
5. Hybrid technologies
C. Technology synergies
D. Technology cost learning curve
E. Ensuring sufficient lead time
1. Linking to redesign and refresh
2. Technology phase-in caps
IV. Basis for attribute-based structure for setting fuel economy
standards
A. Why attribute-based instead of a single industry-wide
average?
B. Which attribute is most appropriate?
1. Footprint-based function
2. Functions based on other attributes
C. The continuous function
V. Volpe model/analysis/generic description of function
A. The Volpe model
1. What is the Volpe model?
2. How does the Volpe model apply technologies to manufacturers'
future fleets?
3. What effects does the Volpe model estimate?
4. How can the Volpe model be used to calibrate and evaluate
potential CAFE standards?
5. How has the Volpe model been updated since the April 2006
light truck CAFE final rule?
a. Technology synergies
b. Technology learning curves
c. Calibration of reformed CAFE standards
6. What manufacturer information does the Volpe model use?
7. What economic information does the Volpe model use?
a. Costs of fuel economy technologies
b. Potential opportunity costs of improved fuel economy
c. The on-road fuel economy `gap'
d. Fuel prices and the value of saving fuel
e. Consumer valuation of fuel economy and payback period
f. Vehicle survival and use assumptions
g. Growth in total vehicle use
h. Accounting for the rebound effect of higher fuel economy
i. Benefits from increased vehicle use
j. Added costs from congestion, crashes and noise
k. Petroleum consumption and import externalities
l. Air pollutant emissions
(i) Impacts on criteria air pollutant emissions
(ii) Reductions in CO2 emissions
(iii) Economic value of reductions in CO2 emissions
[[Page 24353]]
m. The value of increased driving range
n. Discounting future benefits and costs
o. Accounting for uncertainty in benefits and costs
B. How has NHTSA used the Volpe model to select the proposed
standards?
1. Establishing a continuous function standard
2. Calibration of initial continuous function standards
3. Adjustments to address policy considerations
a. Curve crossings
b. Steep curve for passenger cars
c. Risk of upsizing
VI. Proposed fuel economy standards
A. Standards for passenger cars and light trucks
1. Proposed passenger car standards MY 2011-2015
2. Proposed light truck standards MY 2011-2015
3. Energy and environmental backstop
4. Combined fleet performance
B. Estimated technology utilization under proposed standards
C. Costs and benefits of proposed standards
D. Flexibility mechanisms
E. Consistency of proposed standards with EPCA statutory factors
1. Technological feasibility
2. Economic practicability
3. Effect of other motor vehicle standards of the Government on
fuel economy
4. Need of the U.S. to conserve energy
F. Other considerations in setting standards under EPCA
1. Safety
2. Alternative fuel vehicle incentives
3. Manufacturer credits
G. Environmental impacts of the proposed standards
H. Balancing the factors to determine maximum feasible CAFE
levels
VII. Standards for commercial medium- and heavy-duty on-highway
vehicles and ``work trucks''
VIII. Vehicle classification
A. Origins of the regulatory definitions
B. Rationale for the regulatory definitions in light of the
current automobile market
C. NHTSA is not proposing to change regulatory definitions at
this time
IX. Enforcement
A. Overview
B. CAFE credits
1. Credit trading
2. Credit transferring
3. Credit carry-forward/carry-back
C. Extension and phasing out of flexible-fuel incentive program
X. Regulatory alternatives
XI. Sensitivity and Monte Carlo analysis
XII. Public participation
XIII. Regulatory notices and analyses
A. Executive Order 12866 and DOT Regulatory Policies and
Procedures
B. National Environmental Policy Act
C. Regulatory Flexibility Act
D. Executive Order 13132 (Federalism)
E. Executive Order 12988 (Civil Justice Reform)
F. Unfunded Mandates Reform Act
G. Paperwork Reduction Act
H. Regulation Identifier Number (RIN)
I. Executive Order 13045
J. National Technology Transfer and Advancement Act
K. Executive Order 13211
L. Department of Energy Review
M. Plain Language
N. Privacy Act
XIV. Regulatory Text
I. Executive overview
A. Summary
This document is being issued pursuant to the Energy Independence
and Security Act of 2007 (EISA), which Congress passed in December
2007. EISA mandates the setting of separate maximum feasible standards
for passenger cars and for light trucks at levels sufficient to ensure
that the average fuel economy of the combined fleet of all passenger
cars and light trucks sold by all manufacturers in the U.S. in model
year (MY) 2020 equals or exceeds 35 miles per gallon. That is a 40
percent increase above the average of approximately 25 miles per gallon
for the current combined fleet.
Congress enabled NHTSA to require these substantial increases in
fuel economy by requiring that passenger car standards be reformed
through basing them on one or more vehicle attributes. The attribute-
based approach was originally recommended by the National Academy of
Sciences in 2002 and adopted by NHTSA for light trucks in 2006. The new
approach is a substantial improvement over the old approach of
specifying the same numerical standard for each manufacturer. It avoids
creating undue risks of adverse safety and employment impacts and
distributes compliance responsibilities among the vehicle manufacturers
more equitably.
This document proposes standards for MYs 2011-2015, the maximum
number of model years for which NHTSA can establish standards in a
single rulemaking under EISA. Since lead time is a significant
consideration in determining the stringency of future standards, the
agency needs to establish the standards as far in advance as possible
so as to maximize the amount of lead time for manufacturers to develop
and implement plans for making the vehicle design changes necessary to
achieve the requirements of EISA.
In developing the proposed standards, the agency considered the
four statutory factors underlying maximum feasibility (technological
feasibility, economic practicability, the effect of other standards of
the Government on fuel economy, and the need of the nation to conserve
energy) as well as other relevant considerations such as safety. After
assessing what fuel saving technologies would be available, how
effective they are, and how quickly they could be introduced, and then
factoring that information into the computer model its uses for
applying technologies to particular vehicle models, the agency then
balanced the factors relevant to standard setting. In its decision
making, the agency used a marginal benefit-cost analysis that placed
monetary values on relevant externalities (both energy security and
environmental externalities, including the benefits of reductions in
CO2 emissions). In the above process, the agency consulted
with the Department of Energy and particularly the Environmental
Protection Agency regarding a wide variety of matters, including, for
example, the cost and effectiveness of available technologies,
improvements to the computer model, and the selection of appropriate
analytical assumptions.
This document also proposes to add a new regulation designed to
give manufacturers added flexibility in using credits earned by
exceeding CAFE standards. The regulation would authorize the trading of
credits between manufacturers. In addition, it would permit a
manufacturer to transfer its credits from one of its compliance
categories to another of its categories.
NHTSA is also publishing two companion documents, one requesting
vehicle manufacturers to provide up-to-date product plans for the model
years covered by this document, and the other inviting Federal, State,
and local agencies, Indian tribes, and the public to participate in
identifying the environmental issues and reasonable alternatives to be
examined in an environmental impact statement.
B. Energy Independence and Security Act of 2007
The Energy Independence and Security Act of 2007 (EISA)\1\ builds
on the President's ``Twenty in Ten'' initiative, which was announced in
January 2007. That initiative sought to reduce gasoline usage by 20
percent in the next 10 years. The enactment of EISA represents a major
step forward in expanding the production of renewable fuels, reducing
oil consumption, and confronting global climate change.
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\1\ Pub. L. 110-140, 121 Stat. 1492 (Dec. 18, 2007).
---------------------------------------------------------------------------
EISA will help reduce America's dependence on oil by reducing U.S.
demand for oil by setting a national fuel economy standard of at least
35 miles per gallon by 2020--which will increase fuel economy standards
by 40 percent and save billions of gallons of fuel. In January 2007,
the President called for the first statutory increase in fuel economy
standards for passenger
[[Page 24354]]
automobiles (referred to below as ``passenger cars'') since those
standards were mandated in 1975, and EISA delivers on that request.
EISA also includes an important reform the President has called for
that allows the Transportation Department to issue ``attribute-based
standards,'' which will ensure that increased fuel efficiency does not
come at the expense of automotive safety. EISA also mandates increases
in the use of renewable fuels by setting a mandatory Renewable Fuel
Standard requiring fuel producers to use at least 36 billion gallons of
renewable fuels in 2022.
As the President noted in signing EISA, the combined effect of the
various actions required by the Act will be to produce some of the
largest CO2 emission reductions in our nation's history.
EISA made a number of important changes to the Energy Policy and
Conservation Act (EPCA) (Pub. L. 94-163), the 1975 statute that governs
the CAFE program. EISA:
Replaces the old statutory default standard of 27.5 mpg
for passenger cars with a mandate to establish separate passenger car
and light truck standards annually, beginning with MY 2011, set at the
maximum feasible level. The standards for MYs 2011-2020 must, as a
minimum, be set sufficiently high to ensure that the average fuel
economy of the combined industrywide fleet of all new passenger cars
and light trucks sold in the United States during MY 2020 is at least
35 mpg.\2\
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\2\ Although NHTSA established an attribute-based standard for
MY 2011 light trucks in its 2006 final rule, EISA mandates a new
rulemaking, reflecting new statutory considerations and a new, up-
to-date administrative record, and consistent with EPCA as amended
by EISA, to establish the standard for those light trucks.
---------------------------------------------------------------------------
Limits to five the number of years for which standards can
be established in a single rulemaking. That requirement, in combination
with the requirement to start rulemaking with MY 2011, necessitates
limiting this rulemaking to MYs 2011-2015.
Mandates the reforming of CAFE standards for passenger
cars by requiring that all CAFE standards be based on one or more
vehicle attributes, thus ensuring that the improvements in fuel economy
do not come at the expense of safety. NHTSA pioneered that approach in
its last rulemaking on CAFE standards for light trucks.
Requires that for each model year, beginning with MY 2011,
the domestic passenger cars of each manufacturer of those cars must
achieve a measured average fuel economy that is not less than 92
percent of the average fuel economy of the combined fleet of domestic
and non-domestic passenger cars sold in the United States in that model
year.
Provides greater flexibility for automobile manufacturers
by (a) increasing from three to five the number of years that a
manufacturer can carry forward the compliance credits it earns for
exceeding CAFE standards, (b) allowing a manufacturer to transfer the
credits it has earned from one of its classes of automobiles to
another, and (c) authorizing the trading of credits between
manufacturers.
C. Proposal
1. Standards
a. Stringency
This document proposes to set attribute-based fuel economy
standards for passenger cars and light trucks consistent with the
Reformed CAFE approach that NHTSA used in establishing the light truck
standards for MY 2008-2011 light trucks. Separate passenger car
standards would be set for MYs 2011-2015, and light truck standards
would be set for MYs 2011-2015. As noted above, EISA limits the number
of model years for which standards may be established in a single
rulemaking to five. We are proposing to establish standards for five
years to maximize the amount of lead time that we can provide the
manufacturers. This is necessary to make it possible to achieve the
levels of average fuel economy required by MY 2020.
Each vehicle manufacturer's required level of CAFE would be based
on target levels of average fuel economy set for vehicles of different
sizes and on the distribution of that manufacturer's vehicles among
those sizes. Size would be defined by vehicle footprint. The level of
the performance target for each footprint would reflect the
technological and economic capabilities of the industry. The target for
each footprint would be the same for all manufacturers, regardless of
differences in their overall fleet mix. Compliance would be determined
by comparing a manufacturer's harmonically averaged fleet fuel economy
levels in a model year with a required fuel economy level calculated
using the manufacturer's actual production levels and the targets for
each footprint of the vehicles that it produces.
The proposed standards were developed using a computer model (known
as the ``Volpe Model'') that, for any given model year, applies
technologies to a manufacturer's fleet until the manufacturer reaches
compliance with the standard under consideration. The standards were
tentatively set at levels such that, considering the seven largest
manufacturers, the cost of the last technology application equaled the
benefits of the improvement in fuel economy resulting from that
application. We reviewed these proposed standards to consider the
underlying increased use of technologies and the associated impact on
the industry. This process recognizes that the relevance of costs in
achieving benefits, and uses benefit figures that include the value of
reducing the negative externalities (economic and environmental) from
producing and consuming fuel. These environmental externalities
include, among other things, reducing tailpipe emissions of CO2.\3\ In
view of the process used to develop the proposed standards, they are
also referred to as ``optimized standards.''
---------------------------------------------------------------------------
\3\ The externalities included in our analysis do not, however,
include those associated with the reduction of the other GHG emitted
by automobiles, i.e., methane (CH4), nitrous oxide (N2O), and
hydroflurocarbons (HFCs). Actual air conditioner operation is not
included in the test procedures used to obtain both (1) emission
rates for purposes of determining compliance with EPA criteria
pollutant emission standards and (2) fuel economy values for
purposes of determining compliance with NHTSA CAFE standards,
although air conditioner operation is included in ``supplemental''
federal test procedures used to determine compliance with
corresponding and separate EPA criteria pollutant emission
standards.
---------------------------------------------------------------------------
Compared to the 2006 rulemaking that established the MY 2008-11
CAFE standards for light trucks, this rulemaking much more fully
captures the value of the costs and benefits of setting CAFE standards.
This is important because assumptions regarding gasoline price
projections, along with assumptions for externalities, are based on
changed economic and environmental and energy security conditions and
play a big role in the agency's balancing of the statutory
considerations in arriving at a determination of maximum feasible. In
light of EISA and the need to balance the statutory considerations in a
way that reflects the current need of the nation to conserve energy,
including the current assessment of the climate change problem, the
agency revisited the various assumptions used in the Volpe Model to
determine the level of the standards. Specifically, in running the
Volpe Model and stopping at a point where marginal costs equaled
marginal benefits or where net benefits to society are maximized, the
agency used higher gasoline prices and higher estimates for energy
security values ($0.29 per gallon instead of $0.09 per gallon). The
agency also monetized carbon dioxide (at
[[Page 24355]]
$7.00/ton), which it did not do in the previous rulemaking, and
expanded its technology list. In addition, the agency used cost
estimates that reflect economies of scale and estimated ``learning''-
driven reductions in the cost of technologies as well as quicker
penetration rates for advanced technologies. These changes to the
inputs to the model had a major impact on increasing the benefits in
certain model years by allowing for greater penetration of
technologies.
The agency cannot set out the exact level of CAFE that each
manufacturer will be required to meet for each model year under the
proposed passenger car or light truck standards since the levels will
depend on information that will not be available until the end of each
of the model years, i.e., the final actual production figures for each
of those years. The agency can, however, project what the industry wide
level of average fuel economy would be for passenger cars and for light
trucks if each manufacturer produced its expected mix of automobiles
and just met its obligations under the proposed ``optimized'' standards
for each model year. Adjacent to each average fuel economy figure is
the estimated associated level of tailpipe emissions of CO2 that would
be achieved.\4\
---------------------------------------------------------------------------
\4\ Given the contributions made by CAFE standards to addressing
not only energy independence and security, but also to reducing
tailpipe emissions of CO2, fleet performance is stated in the above
discussion both in terms of fuel economy and the associated
reductions in tailpipe emissions of CO2 since the CAFE standard will
have the practical effect of limiting those emissions approximately
to the indicated levels during the official CAFE test procedures
established by EPA. The relationship between fuel consumption and
carbon dioxide emissions is discussed ubiquitously, such as at
www.fueleconomy.gov, a fuel economy-related Web site managed by DOE
and EPA (see https://www.fueleconomy.gov/feg/contentIncludes/co2_
inc.htm, which provides a rounded value of 20 pounds of CO2 per
gallon of gasoline). (Last accessed April 20, 2008.) The CO2
emission rates shown are based on gasoline characteristics. Because
diesel fuel contains more carbon (per gallon) than gasoline, the
presence of diesel engines in the fleet--which NHTSA expects to
increase in response to the proposed CAFE standards--will cause the
actual CO2 emission rate corresponding to any given CAFE level to be
slightly higher than shown here. (The agency projects that 4 percent
of the MY 2015 passenger car fleet and 10 percent of the MY 2015
light truck fleet will have diesel engines.) Conversely (and
hypothetically), applying the same CO2 emission standard to both
gasoline and diesel vehicles would discourage manufacturers from
improving diesel engines, which show considerable promise as a means
to improve fuel economy.
For passenger cars:
MY 2011: 31.2 mpg (285 g/mi of tailpipe emissions of CO2)
MY 2012: 32.8 mpg (271 g/mi of tailpipe emissions of CO2)
MY 2013: 34.0 mpg (261 g/mi of tailpipe emissions of CO2)
MY 2014: 34.8 mpg (255 g/mi of tailpipe emissions of CO2)
MY 2015: 35.7 mpg (249 g/mi of tailpipe emissions of CO2)
For light trucks:
MY 2011: 25.0 mpg (355 g/mi of tailpipe emissions of CO2)
MY 2012: 26.4 mpg (337 g/mi of tailpipe emissions of CO2)
MY 2013: 27.8 mpg (320 g/mi of tailpipe emissions of CO2)
MY 2014: 28.2 mpg (315 g/mi of tailpipe emissions of CO2)
MY 2015: 28.6 mpg (310 g/mi of tailpipe emissions of CO2)
The combined industry wide average fuel economy (in miles per
gallon, or mpg) levels (in grams per mile, or g/mi) for both cars and
light trucks, if each manufacturer just met its obligations under the
proposed ``optimized'' standards for each model year, would be as
follows:
MY 2011: 27.8 mpg (2.5 mpg increase above MY 2010; 320 g/mi CO2)
MY 2012: 29.2 mpg (1.4 mpg increase above MY 2011; 304 g/mi CO2)
MY 2013: 30.5 mpg (1.3 mpg increase above MY 2012; 291 g/mi CO2)
MY 2014: 31.0 mpg (0.5 mpg increase above MY 2013; 287 g/mi CO2)
MY 2015: 31.6 mpg (0.6 mpg increase above MY 2014; 281 g/mi CO2)
The annual average increase during this five year period is
approximately 4.5 percent. Due to the uneven distribution of new model
introductions during this period and to the fact that significant
technological changes can be most readily made in conjunction with
those introductions, the annual percentage increases are greater in the
early years in this period.
Given a starting point of 31.8 mpg in MY 2015, the average annual
increase for MYs 2016-2020 would need to be only 2.1 percent in order
for the projected combined industry wide average to reach at least 35
mpg by MY 2020, as mandated by EISA.
In addition, per EISA, each manufacturer's domestic passenger fleet
is required in each model year to achieve 27.5 mpg or 92 percent of the
CAFE of the industry wide combined fleet of domestic and non-domestic
passenger cars \5\ for that model year, whichever is higher. This
requirement results in the following alternative minimum standard (not
attribute-based) for domestic passenger cars:
---------------------------------------------------------------------------
\5\ Those numbers set out several paragraphs above.
MY 2011: 28.7 mpg (310 g/mi of tailpipe emissions of CO2)
MY 2012: 30.2 mpg (294 g/mi of tailpipe emissions of CO2)
MY 2013: 31.3 mpg (284 g/mi of tailpipe emissions of CO2)
MY 2014: 32.0 mpg (278 g/mi of tailpipe emissions of CO2)
MY 2015: 32.9 mpg (270 g/mi of tailpipe emissions of CO2)
The agency is also issuing, along with this document, a notice
requesting updated product plan information and other data to assist in
developing a final rule. We recognize that the manufacturer product
plans relied upon in developing this proposal--those plans received in
late spring of 2007 in response to an early 2007 request for
information--may already be outdated in some respects. We fully expect
that manufacturers have revised those plans to reflect subsequent
developments, especially the enactment of EISA.
We solicit comment on all aspects of this proposal, including the
methodology, economic assumptions, analysis and tentative conclusions.
In particular, we solicit comment on whether the proposed levels of
CAFE satisfy EPCA, e.g., reflect an appropriate balancing of the
explicit statutory factors and other relevant factors. Other specific
areas where we request comments are identified elsewhere in this
preamble and in the Preliminary Regulatory Impact Analysis (PRIA).
Based on public comments and other information, including new data and
analysis, and updated product plans,\6\ the standards adopted in the
final rule could well be different from those proposed in this
document.
---------------------------------------------------------------------------
\6\ The proposed standards are, in the first instance, based on
the confidential product plans submitted by the manufacturers in the
spring of 2006. The final rule will be based on the confidential
plans submitted in the next several months. The agency anticipates
that those new plans, which presumably will reflect in some measure
the enactment of EISA and the issuance of this proposal, will
project higher levels of average fuel economy than the 2006 product
plans.
---------------------------------------------------------------------------
b. Benefits
We estimate that the proposed standards for passenger cars would
save approximately 18.7 billion gallons of fuel and avoid tailpipe
CO2 emissions by 178 billion metric tons over the lifetime
of the passenger cars sold during those model years, compared to the
fuel savings and emissions reductions that would occur if the standards
remained at the adjusted baseline (i.e., the higher of manufacturer's
plans and the manufacturer's required level of average fuel economy for
MY 2010).
We estimate that the value of the total benefits of the proposed
passenger car standards would be approximately $31 billion \7\ over the
lifetime of the 5 model
[[Page 24356]]
years combined. This estimate of societal benefits includes direct
impacts from lower fuel consumption as well as externalities and also
reflects offsetting societal costs resulting from the rebound effect.
---------------------------------------------------------------------------
\7\ The $22 billion estimate is based on a 7% discount rate for
valuing future impacts. NHTSA estimated benefits using both 7% and
3% discount rates. Under a 3% rate, net consumer benefits for
passenger car CAFE improvements total $28 million.
---------------------------------------------------------------------------
We estimate that the proposed standards for light trucks would save
approximately 36 billion gallons of fuel and prevent the tailpipe
emission of 343 million metric tons of CO2 over the lifetime
of the light trucks sold during those model years, compared to the fuel
savings and emissions reductions that would occur if the standards
remained at the adjusted baseline. We estimate that the value of the
total benefits of the proposed light truck standards would be
approximately $57 billion \8\ over the lifetime of the 5 model years of
light trucks combined. This estimate of societal benefits includes
direct impacts from lower fuel consumption as well as externalities and
also reflects offsetting societal costs resulting from the rebound
effect.
---------------------------------------------------------------------------
\8\ The $56 billion estimate is based on a 7% discount rate for
valuing future impacts. NHTSA estimated benefits using both 7% and
3% discount rates. Under a 3% rate, net consumer benefits for light
truck CAFE improvements total $70 million.
---------------------------------------------------------------------------
c. Costs
The total costs for manufacturers just complying with the standards
for MY 2011-2015 passenger cars would be approximately $16 billion,
compared to the costs they would incur if the standards remained at the
adjusted baseline. The resulting vehicle price increases to buyers of
MY 2015 passenger cars would be recovered or paid back \9\ in
additional fuel savings in an average of 56 months, assuming fuel
prices ranging from $2.26 per gallon in 2016 to $2.51 per gallon in
2030.\10\
---------------------------------------------------------------------------
\9\ See Section V.A.7 below for discussion of payback period.
\10\ The fuel prices (shown here in 2006 dollars) used to
calculate the length of the payback period are those projected
(Annual Energy Outlook 2008, revised early release) by the Energy
Information Administration over the life of the MY 2011-2015 light
trucks, not current fuel prices.
---------------------------------------------------------------------------
The total costs for manufacturers just complying with the standards
for MY 2011-2015 light trucks would be approximately $31 billion,
compared to the costs they would incur if the standards remained at the
adjusted baseline. The resulting vehicle price increases to buyers of
MY 2015 light trucks would be paid back in additional fuel savings in
an average of 50 months, assuming fuel prices ranging from $2.26 to
$2.51 per gallon.
d. Flexibilities
The agency's benefit and cost estimates do not reflect the
availability and use of flexibility mechanisms, such as compliance
credits and credit trading because EPCA prohibits NHTSA from
considering the effects of those mechanisms in setting CAFE standards.
EPCA has precluded consideration of the FFV adjustments ever since it
was amended to provide for those adjustments. The prohibition against
considering compliance credits was added by EISA.
The benefit and compliance cost estimates used by the agency in
determining the maximum feasible level of the CAFE standards assume
that manufacturers will rely solely on the installation of fuel economy
technology to achieve compliance with the proposed standards. In
reality, however, manufacturers are likely to rely to some extent on
flexibility mechanisms provided by EPCA (as described in Section VI)
and will thereby reduce the cost of complying with the proposed
standards to a meaningful extent.
2. Credits
NHTSA is also proposing a new Part 536 on use of ``credits'' earned
for exceeding applicable CAFE standards. Part 536 will implement the
provisions in EISA authorizing NHTSA to establish by regulation a
credit trading program and directing it to establish by regulation a
credit transfer program.\11\ Since its enactment, EPCA has permitted
manufacturers to earn credits for exceeding the standards and to apply
those credits to compliance obligations in years other than the model
year in which it was earned. EISA extended the ``carry-forward'' period
to five model years, and left the ``carry-back'' period at three model
years. Under the proposed Part 536, credit holders (including, but not
limited to, manufacturers) will have credit accounts with NHTSA, and
will be able to hold credits, apply them to compliance with CAFE
standards, transfer them to another ``compliance category'' for
application to compliance there, or trade them. A credit may also be
cancelled before its expiry date, if the credit holder so chooses.
Traded credits will be subject to an ``adjustment factor'' to ensure
total oil savings are preserved, as required by EISA. EISA also
prohibits credits earned before MY 2011 from being transferred, so
NHTSA has developed several regulatory restrictions on trading and
transferring to facilitate Congress' intent in this regard. Additional
information on the proposed Part 536 is available in section IX below.
---------------------------------------------------------------------------
\11\ Congress required that DOT establish a credit
``transferring'' regulation, to allow individual manufacturers to
move credits from one of their fleets to another (e.g., using a
credit earned for exceeding the light truck standard for compliance
in the domestic passenger car standard). Congress allowed DOT to
establish a credit ``trading'' regulation, so that credits may be
bought and sold between manufacturers and other parties.
---------------------------------------------------------------------------
II. Background
A. Contribution of Fuel Economy Improvements to Addressing Energy
Independence and Security and Climate Change
1. Relationship Between Fuel Economy and CO2 Tailpipe Emissions
Improving fuel economy reduces the amount of tailpipe emissions of
CO2. CO2 emissions are directly linked to fuel consumption because CO2
is the ultimate end product of burning gasoline. The more fuel a
vehicle burns, the more CO2 it emits. Since the CO2 emissions are
essentially constant per gallon of fuel combusted, the amount of fuel
consumption per mile is directly related to the amount of CO2 emissions
per mile. Thus, requiring improvements in fuel economy indirectly, but
necessarily requires reductions in tailpipe emissions of CO2 emissions.
This can be seen in the table below. To take the first value of fuel
economy from the table below as an example, a standard of 21.0 mpg
would indirectly place substantially the same limit on tailpipe CO2
emissions as a tailpipe CO2 emission standard of 423.2 g/mi of CO2, and
vice versa.\12\
---------------------------------------------------------------------------
\12\ To the extent that manufacturers comply with a CAFE
standard with diesel automobiles instead of gasoline ones, the level
of CO2 tailpipe emissions would be less. As noted above, the agency
projects that 4 percent of the MY 2015 passenger car fleet and 10
percent of the MY 2015 light truck fleet will have diesel engines.
The CO2 tailpipe emissions of a diesel powered passenger car are 15
percent higher than those of a comparable gasoline power passenger
car.
[[Page 24357]]
Table II-1.--CAFE Standards (mpg) and the Limits They Indirectly Place on Tailpipe Emissions of CO2 (g/mi)*
--------------------------------------------------------------------------------------------------------------------------------------------------------
CAFE Std CO2 CAFE Std CO2 CAFE Std CO2 CAFE Std CO2 CAFE Std CO2 CAFE Std CO2
--------------------------------------------------------------------------------------------------------------------------------------------------------
21.0....................................... 444.4 26.0 341.8 31.0 286.7 36.0 246.9 41.0 216.8 46.0 193.2
22.0....................................... 404.0 27.0 329.1 32.0 277.7 37.0 240.2 42.0 211.6 47.0 188.3
23.0....................................... 386.4 28.0 317.4 33.0 269.3 38.0 233.9 43.0 206.7 48.0 189.1
24.0....................................... 370.3 29.0 306.4 34.0 261.4 39.0 227.9 44.0 202.0 49.0 181.4
25.0....................................... 355.5 30.0 296.2 35.0 253.9 40.0 222.2 45.0 197.5 50.0 177.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
This table is based on calculations that use the figure of 8,887 grams of CO2 per gallon of gasoline consumed, based on characteristics of gasoline
vehicle certification fuel. To convert a mpg value into CO2 g/mi, divide 8,887 by the mpg value.
2. Fuel Economy Improvements/CO2 Tailpipe Emission
Reductions Since 1975
The need to take action to reduce greenhouse gas emissions, e.g.,
motor vehicle tailpipe emissions of CO2, in order to forestall and even
mitigate climate change is well recognized.\13\ Less well recognized
are two related facts. First, improving fuel economy is the only method
available to motor vehicle manufacturers for making significant
reductions in the CO2 tailpipe emissions of motor vehicles and thus
must be the core element of any effort to achieve those reductions.
Second, the significant improvements in fuel economy since 1975, due to
the CAFE standards and in some measure to market conditions as well,
have directly caused reductions in the rate of CO2 tailpipe emissions
per vehicle.
---------------------------------------------------------------------------
\13\ IPCC (2007): Climate Change 2007: Mitigation of Climate
Change. Contribution of Working Group III to the Fourth Assessment
Report of the Intergovernmental Panel on Climate Change [B. Metz, O.
Davidson, P. Bosch, R. Dave, and L. Meyer (eds.)]. Cambridge
University Press, Cambridge, United Kingdom and New York, NY, USA.
---------------------------------------------------------------------------
In 1975, passenger cars manufactured for sale in the U.S. averaged
only 15.8 mpg (562.5 grams of CO2 per mile or 562.5 g/mi of CO2). By
2007, the average fuel economy of passenger cars had increased to 31.3
mpg, causing g/mi of CO2 to fall to 283.9. Similarly, in 1975, light
trucks averaged 13.7 mpg (648.7 g/mi of CO2). By 2007, the average fuel
economy of light trucks had risen to 23.1 mpg, causing g/mi of CO2 to
fall to 384.7.
Table II-2.--Improvements in MPG/Reductions in G/MI of CO2 Passenger
Cars
[1975-2007]
------------------------------------------------------------------------
MPG G/MI of CO2
------------------------------------------------------------------------
1975.......................................... 15.8 562.5
2007.......................................... 31.3 283.9
------------------------------------------------------------------------
Table II-3.--Improvements in MPG/Reductions in G/MI of CO2 Light Trucks
[1975-2007]
------------------------------------------------------------------------
MPG G/MI of CO2
------------------------------------------------------------------------
1975.......................................... 13.7 648.7
2007.......................................... 23.1 384.7
------------------------------------------------------------------------
If fuel economy had not increased above the 1975 level, cars and
light trucks would have emitted an additional 11 billion metric tons of
CO2 into the atmosphere between 1975 and 2005. That is nearly the
equivalent of emissions from all U.S. fossil fuel combustion for two
years (2004 and 2005). The figure below shows the amount of CO2
emissions avoided due to increases in fuel economy.
BILLING CODE 4910-59-P
[[Page 24358]]
[GRAPHIC] [TIFF OMITTED] TP02MY08.000
[[Page 24359]]
B. Chronology of Events Since the National Academy of Sciences Called
for Reforming and Increasing CAFE Standards
1. National Academy of Sciences CAFE Report (February 2002)
a. Significantly Increasing CAFE Standards Without Reforming Them Would
Adversely Affect Safety
In the congressionally-mandated report entitled ``Effectiveness and
Impact of Corporate Average Fuel Economy (CAFE) Standards,'' \14\ a
committee of the National Academy of Sciences (NAS) (``2002 NAS
Report'') concluded that the then-existing form of passenger car and
light truck CAFE standards created an incentive for vehicle
manufacturers to comply in part by downweighting and even downsizing
their vehicles and that these actions had led to additional fatalities.
The committee explained that these problems arose because the CAFE
standards subjected all passenger cars to the same fuel economy target
and all light trucks to the same target, regardless of their weight,
size, or load-carrying capacity. The committee said that this
experience suggests that consideration should be given to developing a
new system of fuel economy targets that reflects differences in such
vehicle attributes.
---------------------------------------------------------------------------
\14\ National Research Council, ``Effectiveness and Impact of
Corporate Average Fuel Economy (CAFE) Standards,'' National Academy
Press, Washington, DC (2002). Available at https://www.nap.edu/
openbook.php?isbn=0309076013 (last accessed April 20, 2008). The
conference committee report for the Department of Transportation and
Related Agencies Appropriations Act for FY 2001 (Pub. L. 106-346)
directed NHTSA to fund a study by NAS to evaluate the effectiveness
and impacts of CAFE standards (H. Rep. No. 106-940, p. 117-118). In
response to the direction from Congress, NAS published this lengthy
report.
---------------------------------------------------------------------------
Looking to the future, the committee said that while it is
technically feasible and potentially economically practicable to
improve fuel economy without reducing vehicle weight or size and,
therefore, without significantly affecting the safety of motor vehicle
travel, the actual strategies chosen by manufacturers to improve fuel
economy will depend on a variety of factors. In the committee's
judgment, the extensive downweighting and downsizing that occurred
after fuel economy requirements were established in the 1970s suggested
that the likelihood of a similar response to further increases in fuel
economy requirements must be considered seriously. Any reduction in
vehicle size and weight would have safety implications.
The committee cautioned that the safety effects of downsizing and
downweighting are likely to be hidden by the generally increasing
safety of the light-duty vehicle fleet.\15\ It said that some might
argue that this improving safety picture means that there is room to
improve fuel economy without adverse safety consequences; however, such
an approach would not achieve the goal of avoiding the adverse safety
consequences of fuel economy increases. Rather, the safety penalty
imposed by increased fuel economy (if weight reduction is one of the
measures) will be more difficult to identify in light of the continuing
improvement in traffic safety. Although it is anticipated that these
safety innovations will improve the safety of vehicles of all sizes,
that does not mean that downsizing to achieve fuel economy improvements
will not have any safety costs. If two vehicles of the same size are
modified, one both by downsizing it and adding the safety innovations
and the other just by adding the safety innovations, the latter vehicle
will in all likelihood be safer.
---------------------------------------------------------------------------
\15\ Two of the 12 members of the committee dissented from the
majority's safety analysis and conclusions.
---------------------------------------------------------------------------
The committee concluded that if an increase in fuel economy were
implemented pursuant to standards that are structured in a way that
encourages either downsizing or the increased production of smaller
vehicles, some additional traffic fatalities would be expected. Without
a thoughtful restructuring of the program, there would be the trade-
offs that must be made if CAFE standards were increased by any
significant amount.\16\
---------------------------------------------------------------------------
\16\ NAS, p. 9.
---------------------------------------------------------------------------
In response to these conclusions, NHTSA began issuing attribute-
based CAFE standards for light trucks and sought legislative authority
to issue attribute-based CAFE standards for passenger cars before
undertaking to raise the car standards. Congress went a step further in
enacting EISA, not only authorizing the issuance of attribute-based
standards, but also mandating them.
Fully realizing all of the safety and other \17\ benefits of these
reforms will depend in part on whether the unreformed, non-attribute
based greenhouse standards adopted by California and other states are
implemented. Apart from issues of relative stringency, the effects on
vehicle manufacturers of implementing those state emission standards
should be substantially similar to the effects of implementing non-
attribute-based CAFE standards, given the nearly identical nature of
most aspects of those emission standards and CAFE standards in terms of
technological means of compliance and methods of measuring performance.
---------------------------------------------------------------------------
\17\ Reformed CAFE has several advantages compared to Unreformed
CAFE:
First, Reformed CAFE increases energy savings. The energy-saving
potential of Unreformed CAFE is limited because only a few full-line
manufacturers are required to make improvements. Under Reformed
CAFE, which accounts for size differences in product mix, virtually
all manufacturers will be required to use advanced fuel-saving
technologies to achieve the requisite fuel economy for their
automobiles.
Second, Reformed CAFE reduces the chances of adverse safety
consequences. Downsizing of vehicles as a CAFE compliance strategy
is discouraged under Reformed CAFE since as vehicles become smaller,
the applicable fuel economy target becomes more stringent.
Third, Reformed CAFE provides a more equitable regulatory
framework for different vehicle manufacturers. Under Unreformed
CAFE, the cost burdens and compliance difficulties have been imposed
nearly exclusively on the full-line manufacturers.
Fourth, Reformed CAFE is more market-oriented because it more
fully respects economic conditions and consumer choice. Reformed
CAFE does not force vehicle manufacturers to adjust fleet mix toward
smaller vehicles although they can make adjustments if that is what
consumers are demanding. Instead, it allows the manufacturers to
adjust the mix of their product offerings in response to the market
place.
---------------------------------------------------------------------------
b. Environmental and Other Externalities Justify Increasing the CAFE
Standards
The 2002 NAS report also concluded that the CAFE standards have
contributed to increased fuel economy, which in turn has reduced
dependence on imported oil, improved the nation's terms of trade, and
reduced emissions of carbon dioxide (a principal greenhouse gas),
relative to what they otherwise would have been. If fuel economy had
not improved, gasoline consumption (and crude oil imports) would be
about 2.8 million barrels per day (mmbd) greater than it is.\18\
Reducing fuel consumption in vehicles also reduces carbon dioxide
emissions. If the nation were using 2.8 mmbd more gasoline, carbon
emissions would be more than 100 million metric tons of carbon (mmtc)
higher. Thus, improvements in light-duty vehicle (4 wheeled motor
vehicles under 10,000 pounds gross vehicle weight rating) fuel economy
have reduced overall U.S. emissions by about 7 percent.\19\
---------------------------------------------------------------------------
\18\ NAS, pp. 3 and 20.
\19\ NAS, p. 20.
---------------------------------------------------------------------------
The report concluded that technologies exist that could
significantly further reduce fuel consumption by passenger cars and
light trucks within 15 years, while maintaining vehicle size, weight,
utility and performance.\20\ Light duty trucks
[[Page 24360]]
were said to offer the greatest potential for reducing fuel
consumption.\21\ The report also noted that vehicle development
cycles--as well as future economic, regulatory, safety and consumer
preferences--would influence the extent to which these technologies
could lead to increased fuel economy in the U.S. market. To assess the
economic trade-offs associated with the introduction of existing and
emerging technologies to improve fuel economy, the NAS conducted what
it called a ``cost-efficient analysis'' based on the direct benefits
(value of saved fuel) to the consumer--``that is, the committee
identified packages of existing and emerging technologies that could be
introduced over the next 10 to 15 years that would improve fuel economy
up to the point where further increases in fuel economy would not be
reimbursed by fuel savings.'' \22\
---------------------------------------------------------------------------
\20\ NAS, p. 3 (Finding 5).
\21\ NAS, p. 4 (Finding 5).
\22\ NAS, pp. 4 (Finding 6) and 64.
---------------------------------------------------------------------------
The committee emphasized that it is critically important to be
clear about the reasons for considering improved fuel economy. While
the dollar value of the saved fuel would be largest portion of the
potential benefits, the committee noted that there is theoretically
insufficient reason for the government to issue higher standards just
to obtain those direct benefits since consumers have a wide variety of
opportunities to buy a fuel-efficient vehicle.\23\
---------------------------------------------------------------------------
\23\ NAS, pp. 8-9.
---------------------------------------------------------------------------
The committee said that there are two compelling concerns that
justify a government mandated increase in fuel economy, both relating
to externalities. The most important concern, it argued, is the one
about the accumulation in the atmosphere of greenhouse gases,
principally carbon dioxide.\24\
---------------------------------------------------------------------------
\24\ NAS, pp. 2, 13, and 83.
---------------------------------------------------------------------------
A second concern is that petroleum imports have been steadily
rising because of the nation's increasing demand for gasoline without a
corresponding increase in domestic supply. The high cost of oil imports
poses two risks: Downward pressure on the strength of the dollar (which
drives up the cost of goods that Americans import) and an increase in
U.S. vulnerability to macroeconomic shocks that cost the economy
considerable real output.
To determine how much the fuel economy standards should be
increased, the committee urged that all social benefits be considered.
That is, it urged not only that the dollar value of the saved fuel be
considered, but also that the dollar value to society of the resulting
reductions in greenhouse gas emissions and in dependence on imported
oil should be calculated and considered. The committee said that if it
is possible to assign dollar values to these favorable effects, it
becomes possible to make at least crude comparisons between the
socially beneficial effects of measures to improve fuel economy on the
one hand, and the costs (both out-of-pocket and more subtle) on the
other. The committee chose a value of about $0.30/gal of gasoline for
the externalities associated with the combined impacts of fuel
consumption on greenhouse gas emissions and on world oil market
conditions.\25\
---------------------------------------------------------------------------
\25\ NAS, pp. 4 and 85-86.
---------------------------------------------------------------------------
The report expressed concerns about increasing the standards under
the CAFE program as currently structured. While raising CAFE standards
under the existing structure would reduce fuel consumption, doing so
under alternative structures ``could accomplish the same end at lower
cost, provide more flexibility to manufacturers, or address inequities
arising from the present'' structure.\26\ Further, the committee said,
``to the extent that the size and weight of the fleet have been
constrained by CAFE requirements * * * those requirements have caused
more injuries and fatalities on the road than would otherwise have
occurred.'' \27\ Specifically, it noted: ``The downweighting and
downsizing that occurred in the late 1970s and early 1980s, some of
which was due to CAFE standards, probably resulted in an additional
1300 to 2600 traffic fatalities in 1993.'' \28\
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\26\ NAS, pp. 4-5 (Finding 10).
\27\ NAS, p. 29.
\28\ NAS, p. 3 (Finding 2).
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To address those structural problems, the report suggested various
possible reforms. The report found that the ``CAFE program might be
improved significantly by converting it to a system in which fuel
targets depend on vehicle attributes.'' \29\ The report noted further
that under an attribute-based approach, the required CAFE levels could
vary among the manufacturers based on the distribution of their product
mix. NAS stated that targets could vary among passenger cars and among
trucks, based on some attribute of these vehicles such as weight, size,
or load-carrying capacity. The report explained that a particular
manufacturer's average target for passenger cars or for trucks would
depend upon the fractions of vehicles it sold with particular levels of
these attributes.\30\
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\29\ NAS, p. 5 (Finding 12).
\30\ NAS, p. 87.
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In February 2002, Secretary Mineta asked Congress ``to provide the
Department of Transportation with the necessary authority to reform the
CAFE program, guided by the NAS report's suggestions.''
2. Final Rule Establishing Reformed (Attribute-Based) CAFE Standards
for MY 2008-2011 Light Trucks (March 2006)
The 2006 final rule reformed the structure of the CAFE program for
light trucks and established higher CAFE standards for MY 2008-2011
light trucks.\31\ Reforming the CAFE program enables it to achieve
larger fuel savings, while enhancing safety and preventing adverse
economic consequences.
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\31\ 71 FR 17566; April 6, 2006.
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During a transition period of MYs 2008-2010, manufacturers may
comply with CAFE standards established under the reformed structure
(Reformed CAFE) or with standards established in the traditional way
(Unreformed CAFE). This permits manufacturers and the agency to gain
experience with implementing the Reformed CAFE standards. Under the
2006 rule, all manufacturers were required to comply with a Reformed
CAFE standard in MY 2011.
Under Reformed CAFE, fuel economy standards were restructured so
that they are based on a measure of vehicle size called ``footprint,''
which is the product of multiplying a vehicle's wheelbase by average
its track width. A target level of fuel economy was established for
each increment in footprint (0.1 ft\2\). Trucks with smaller footprints
have higher fuel economy targets; conversely, larger ones have lower
targets. A particular manufacturer's compliance obligation for a model
year will be calculated as the harmonic average of the fuel economy
targets for the manufacturer's vehicles, weighted by the distribution
of manufacturer's production volumes among the footprint increments.
Thus, each manufacturer will be required to comply with a single
overall average fuel economy level for each model year of production.
The approach for determining the fuel economy targets was to set
them just below the level where the increased cost of technologies that
could be adopted by manufacturers to improve fuel economy would first
outweigh the added benefits that would result from such technology.
These targets translate into required levels of average fuel economy
that are technologically feasible because manufacturers can achieve
them using available technologies. Those levels also reflect the need
of the nation to reduce
[[Page 24361]]
energy consumption because they reflect the economic value of the
savings in resources, as well as of the reductions in economic and
environmental externalities that result from producing and using less
fuel.
The Unreformed CAFE standards are: 22.5 miles per gallon (mpg) for
MY 2008, 23.1 mpg for MY 2009, and 23.5 mpg for MY 2010. To aid the
transition to Reformed CAFE, the Reformed CAFE standards for those
years were set at levels intended to ensure that the industry-wide
costs of the Reformed standards are roughly equivalent to the industry-
wide costs of the Unreformed CAFE standards in those model years. For
MY 2011, the Reformed CAFE standard was set at the level that maximizes
net benefits. Net benefits include the increase in light truck prices
due to technology improvements, the decrease in fuel consumption, and a
number of other factors. All of the standards were set at the maximum
feasible level, while accounting for technological feasibility,
economic practicability and other relevant factors.
We carefully balanced the costs of the rule with the benefits of
reducing energy consumption. Compared to Unreformed CAFE, Reformed CAFE
enhances overall fuel savings while providing vehicle manufacturers
with the flexibility they need to respond to changing market
conditions. Reformed CAFE will also provide a more equitable regulatory
framework by creating a level-playing field for manufacturers,
regardless of whether they are full-line or limited-line manufacturers.
We were particularly encouraged that Reformed CAFE will eliminate the
incentive to downsize some of their fleet as a CAFE compliance
strategy, thereby reducing the adverse safety risks associated with the
Unreformed CAFE program.
3. Twenty-in-Ten Initiative (January 2007)
In his January 2007 State of the Union address, the President
announced his Twenty-in-Ten initiative for increasing the supply of
renewable and alternative fuels and reforming and increasing the CAFE
standards. Consistent with the NAS report, he urged the authority be
provided to reform CAFE for passenger cars by adopting an attribute-
based system (for example, a size-based system) reduces the risk that
vehicle safety is compromised, helps preserve consumer choice, and
helps spread the burden of compliance across all product lines and
manufacturers. He also urged that authority be provided to set the CAFE
standards, based on cost/benefit analysis, using sound science, and
without impacting safety.
4. Request for Passenger Car and Light Truck Product Plans (February
2007)
In late February 2007, NHTSA published a notice to acquire new and
updated information regarding vehicle manufacturers' future product
plans to aid in implementing the President's plan for reforming and
increasing CAFE standards for passenger cars and further increasing the
already reformed light truck standards. More sp
