2017 and Later Model Year Light-Duty Vehicle Greenhouse Gas Emissions and Corporate Average Fuel Economy Standards, 74854-75420 [2011-30358]
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ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Parts 85, 86, and 600
DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety
Administration
49 CFR Parts 523, 531, 533, 536, and
537
[EPA–HQ–OAR–2010–0799; FRL–9495–2;
NHTSA–2010–0131]
RIN 2060–AQ54; RIN 2127–AK79
2017 and Later Model Year Light-Duty
Vehicle Greenhouse Gas Emissions
and Corporate Average Fuel Economy
Standards
Environmental Protection
Agency (EPA) and National Highway
Traffic Safety Administration (NHTSA).
ACTION: Proposed rule.
AGENCY:
EPA and NHTSA, on behalf of
the Department of Transportation, are
issuing this joint proposal to further
reduce greenhouse gas emissions and
improve fuel economy for light-duty
vehicles for model years 2017–2025.
This proposal extends the National
Program beyond the greenhouse gas and
corporate average fuel economy
standards set for model years 2012–
2016. On May 21, 2010, President
Obama issued a Presidential
Memorandum requesting that NHTSA
and EPA develop through notice and
comment rulemaking a coordinated
National Program to reduce greenhouse
gas emissions of light-duty vehicles for
model years 2017–2025. This proposal,
consistent with the President’s request,
responds to the country’s critical need
to address global climate change and to
reduce oil consumption. NHTSA is
proposing Corporate Average Fuel
Economy standards under the Energy
Policy and Conservation Act, as
amended by the Energy Independence
and Security Act, and EPA is proposing
greenhouse gas emissions standards
under the Clean Air Act. These
standards apply to passenger cars, lightduty trucks, and medium-duty
passenger vehicles, and represent a
continued harmonized and consistent
National Program. Under the National
Program for model years 2017–2025,
automobile manufacturers would be
able to continue building a single lightduty national fleet that satisfies all
requirements under both programs
while ensuring that consumers still have
a full range of vehicle choices. EPA is
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also proposing a minor change to the
regulations applicable to MY 2012–
2016, with respect to air conditioner
performance and measurement of
nitrous oxides.
DATES: Comments: Comments must be
received on or before January 30, 2012.
Under the Paperwork Reduction Act,
comments on the information collection
provisions must be received by the
Office of Management and Budget
(OMB) on or before January 3, 2012. See
the SUPPLEMENTARY INFORMATION section
on ‘‘Public Participation’’ for more
information about written comments.
Public Hearings: NHTSA and EPA
will jointly hold three public hearings
on the following dates: January 17,
2012, in Detroit, Michigan; January 19,
2012 in Philadelphia, Pennsylvania; and
January 24, 2012, in San Francisco,
California. EPA and NHTSA will
announce the addresses for each hearing
location in a supplemental Federal
Register Notice. The agencies will
accept comments to the rulemaking
documents, and NHTSA will also accept
comments to the Draft Environmental
Impact Statement (EIS) at these hearings
and to Docket No. NHTSA–2011–0056.
The hearings will start at 10 a.m. local
time and continue until everyone has
had a chance to speak. See the
SUPPLEMENTARY INFORMATION section on
‘‘Public Participation.’’ for more
information about the public hearings.
ADDRESSES: Submit your comments,
identified by Docket ID No. EPA–HQ–
OAR–2010–0799 and/or NHTSA–2010–
0131, by one of the following methods:
• Online: www.regulations.gov:
Follow the on-line instructions for
submitting comments.
• Email: a-and-r-Docket@epa.gov
• Fax: EPA: (202) 566–9744; NHTSA:
(202) 493–2251.
• Mail:
• EPA: Environmental Protection
Agency, EPA Docket Center (EPA/DC),
Air and Radiation Docket, Mail Code
28221T, 1200 Pennsylvania Avenue
NW., Washington, DC 20460, Attention
Docket ID No. EPA–HQ–OAR–2010–
0799. In addition, please mail a copy of
your comments on the information
collection provisions to the Office of
Information and Regulatory Affairs,
Office of Management and Budget
(OMB), Attn: Desk Officer for EPA, 725
17th St., NW., Washington, DC 20503.
• NHTSA: 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:
• EPA: Docket Center, (EPA/DC) EPA
West, Room B102, 1301 Constitution
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Ave. NW., Washington, DC, Attention
Docket ID No. EPA–HQ–OAR–2010–
0799. Such deliveries are only accepted
during the Docket’s normal hours of
operation, and special arrangements
should be made for deliveries of boxed
information.
• NHTSA: West Building, Ground
Floor, Rm. W12–140, 1200 New Jersey
Avenue SE, Washington, DC 20590,
between 9 a.m. and 4 p.m. Eastern Time,
Monday through Friday, except Federal
Holidays.
Instructions: Direct your comments to
Docket ID No. EPA–HQ–OAR–2010–
0799 and/or NHTSA–2010–0131. See
the SUPPLEMENTARY INFORMATION section
on ‘‘Public Participation’’ for more
information about submitting written
comments.
Docket: All documents in the dockets
are listed in the https://
www.regulations.gov index. Although
listed in the index, some information is
not publicly available, e.g., confidential
business information (CBI) or other
information whose disclosure is
restricted by statute. Certain other
material, such as copyrighted material,
will be publicly available in hard copy
in EPA’s docket, and electronically in
NHTSA’s online docket. Publicly
available docket materials are available
either electronically in
www.regulations.gov or in hard copy at
the following locations: EPA: EPA
Docket Center, EPA/DC, EPA West,
Room 3334, 1301 Constitution Ave.
NW., Washington, DC. The Public
Reading Room is open from 8:30 a.m. to
4:30 p.m., Monday through Friday,
excluding legal holidays. The telephone
number for the Public Reading Room is
(202) 566–1744. NHTSA: 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. The Docket
Management Facility is open between 9
a.m. and 5 p.m. Eastern Time, Monday
through Friday, except Federal holidays.
FOR FURTHER INFORMATION CONTACT:
EPA: Christopher Lieske, Office of
Transportation and Air Quality,
Assessment and Standards Division,
Environmental Protection Agency, 2000
Traverwood Drive, Ann Arbor, MI
48105; telephone number: (734) 214–
4584; fax number: (734) 214–4816;
email address:
lieske.christopher@epa.gov, or contact
the Assessment and Standards Division;
email address: otaqpublicweb@epa.gov.
NHTSA: Rebecca Yoon, Office of the
Chief Counsel, National Highway Traffic
Safety Administration, 1200 New Jersey
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A. Does this action apply to me?
This action affects companies that
manufacture or sell new light-duty
vehicles, light-duty trucks, and
medium-duty passenger vehicles, as
SUPPLEMENTARY INFORMATION:
This list is not intended to be
exhaustive, but rather provides a guide
regarding entities likely to be regulated
by this action. To determine whether
particular activities may be regulated by
this action, you should carefully
examine the regulations. You may direct
questions regarding the applicability of
this action to the person listed in FOR
FURTHER INFORMATION CONTACT.
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B. Public Participation
NHTSA and EPA request comment on
all aspects of this joint proposed rule.
This section describes how you can
participate in this process.
1 ‘‘Light-duty vehicle,’’ ‘‘light-duty truck,’’ and
‘‘medium-duty passenger vehicle’’ are defined in
40 CFR 86.1803–01. Generally, the term ‘‘light-duty
vehicle’’ means a passenger car, the term ‘‘lightduty truck’’ means a pick-up truck, sport-utility
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defined under EPA’s CAA regulations,1
and passenger automobiles (passenger
cars) and non-passenger automobiles
(light trucks) as defined under NHTSA’s
CAFE regulations.2 Regulated categories
and entities include:
In this joint proposal, there are many
issues common to both EPA’s and
NHTSA’s proposals. For the
convenience of all parties, comments
submitted to the EPA docket will be
considered comments submitted to the
NHTSA docket, and vice versa. An
exception is that comments submitted to
the NHTSA docket on NHTSA’s Draft
Environmental Impact Statement (EIS)
will not be considered submitted to the
EPA docket. Therefore, the public only
needs to submit comments to either one
of the two agency dockets, although
they may submit comments to both if
they so choose. Comments that are
submitted for consideration by one
agency should be identified as such, and
comments that are submitted for
consideration by both agencies should
be identified as such. Absent such
identification, each agency will exercise
its best judgment to determine whether
a comment is submitted on its proposal.
Further instructions for submitting
comments to either the EPA or NHTSA
docket are described below.
EPA: Direct your comments to Docket
ID No EPA–HQ–OAR–2010–0799. EPA’s
policy is that all comments received
will be included in the public docket
without change and may be made
available online at https://
www.regulations.gov, including any
personal information provided, unless
vehicle, or minivan of up to 8,500 lbs gross vehicle
weight rating, and ‘‘medium-duty passenger
vehicle’’ means a sport-utility vehicle or passenger
van from 8,500 to 10,000 lbs gross vehicle weight
rating. Medium-duty passenger vehicles do not
include pick-up trucks.
2 ‘‘Passenger car’’ and ‘‘light truck’’ are defined in
49 CFR part 523.
How do I prepare and submit
comments?
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Avenue SE., Washington, DC 20590.
Telephone: (202) 366–2992.
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the comment includes information
claimed to be Confidential Business
Information (CBI) or other information
whose disclosure is restricted by statute.
Do not submit information that you
consider to be CBI or otherwise
protected through https://
www.regulations.gov or email. The
https://www.regulations.gov Web site is
an ‘‘anonymous access’’ system, which
means EPA will not know your identity
or contact information unless you
provide it in the body of your comment.
If you send an email comment directly
to EPA without going through https://
www.regulations.gov your email address
will be automatically captured and
included as part of the comment that is
placed in the public docket and made
available on the Internet. If you submit
an electronic comment, EPA
recommends that you include your
name and other contact information in
the body of your comment and with any
disk or CD–ROM you submit. If EPA
cannot read your comment due to
technical difficulties and cannot contact
you for clarification, EPA may not be
able to consider your comment.
Electronic files should avoid the use of
special characters, any form of
encryption, and be free of any defects or
viruses. For additional information
about EPA’s public docket visit the EPA
Docket Center homepage at https://
www.epa.gov/epahome/dockets.htm.
NHTSA: Your comments must be
written and in English. To ensure that
your comments are correctly filed in the
Docket, please include the Docket
number NHTSA–2010–0131 in your
comments. Your comments must not be
more than 15 pages long.3 NHTSA
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, and there is no limit
on the length of the attachments. 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 agencies to
search and copy certain portions of your
submissions.4 Please note that pursuant
to the Data Quality Act, in order for the
substantive data to be relied upon and
used by the agency, it must meet the
information quality standards set forth
in the OMB and Department of
Transportation (DOT) Data Quality Act
guidelines. Accordingly, we encourage
3 See
49 CFR 553.21.
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.
4 Optical
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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://www.dot.gov/
dataquality.htm.
Tips for Preparing Your Comments
When submitting comments, please
remember to:
• Identify the rulemaking by docket
number and other identifying
information (subject heading, Federal
Register date and page number).
• Explain why you agree or disagree,
suggest alternatives, and substitute
language for your requested changes.
• Describe any assumptions and
provide any technical information and/
or data that you used.
• If you estimate potential costs or
burdens, explain how you arrived at
your estimate in sufficient detail to
allow for it to be reproduced.
• Provide specific examples to
illustrate your concerns, and suggest
alternatives.
• Explain your views as clearly as
possible, avoiding the use of profanity
or personal threats.
• Make sure to submit your
comments by the comment period
deadline identified in the DATES
section above.
How can I be sure that my comments
were received?
NHTSA: 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.
How do I submit confidential business
information?
Any confidential business
information (CBI) submitted to one of
the agencies will also be available to the
other agency. However, as with all
public comments, any CBI information
only needs to be submitted to either one
of the agencies’ dockets and it will be
available to the other. Following are
specific instructions for submitting CBI
to either agency.
EPA: Do not submit CBI to EPA
through https://www.regulations.gov or
email. Clearly mark the part or all of the
information that you claim to be CBI.
For CBI information in a disk or CD
ROM that you mail to EPA, mark the
outside of the disk or CD ROM as CBI
and then identify electronically within
the disk or CD ROM the specific
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information that is claimed as CBI. In
addition to one complete version of the
comment that includes information
claimed as CBI, a copy of the comment
that does not contain the information
claimed as CBI must be submitted for
inclusion in the public docket.
Information so marked will not be
disclosed except in accordance with
procedures set forth in 40 CFR Part 2.
NHTSA: 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 confidential
business information, you should
include a cover letter setting forth the
information specified in our
confidential business information
regulation.5
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 agencies consider late
comments?
NHTSA and EPA will consider all
comments received before the close of
business on the comment closing date
indicated above under DATES. To the
extent practicable, we will also consider
comments received after that date. If
interested persons believe that any
information that the agencies place in
the docket after the issuance of the
NPRM affects their comments, they may
submit comments after the closing date
concerning how the agencies should
consider that information for the final
rule. However, the agencies’ ability to
consider any such late comments in this
rulemaking will be limited due to the
time frame for issuing a final rule.
If a comment is received too late for
us to practicably consider in developing
a final rule, 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
EPA Docket Center or NHTSA Docket
5 See
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Management Facility by going to the
street addresses given above under
ADDRESSES.
information. You may make
arrangements for copies of the transcript
directly with the court reporter.
How do I participate in the public
hearings?
NHTSA and EPA will jointly host
three public hearings on the dates and
locations described in the DATES
section above. At all hearings, both
agencies will accept comments on the
rulemaking, and NHTSA will also
accept comments on the EIS.
If you would like to present testimony
at the public hearings, we ask that you
notify the EPA and NHTSA contact
persons listed under FOR FURTHER
INFORMATION CONTACT at least ten days
before the hearing. Once EPA and
NHTSA learn how many people have
registered to speak at the public hearing,
we will allocate an appropriate amount
of time to each participant, allowing
time for lunch and necessary breaks
throughout the day. For planning
purposes, each speaker should
anticipate speaking for approximately
ten minutes, although we may need to
adjust the time for each speaker if there
is a large turnout. We suggest that you
bring copies of your statement or other
material for the EPA and NHTSA
panels. It would also be helpful if you
send us a copy of your statement or
other materials before the hearing. To
accommodate as many speakers as
possible, we prefer that speakers not use
technological aids (e.g., audio-visuals,
computer slideshows). However, if you
plan to do so, you must notify the
contact persons in the FOR FURTHER
INFORMATION CONTACT section above.
You also must make arrangements to
provide your presentation or any other
aids to NHTSA and EPA in advance of
the hearing in order to facilitate set-up.
In addition, we will reserve a block of
time for anyone else in the audience
who wants to give testimony. The
agencies will assume that comments
made at the hearings are directed to the
NPRM unless commenters specifically
reference NHTSA’s EIS in oral or
written testimony.
The hearing will be held at a site
accessible to individuals with
disabilities. Individuals who require
accommodations such as sign language
interpreters should contact the persons
listed under FOR FURTHER INFORMATION
CONTACT section above no later than ten
days before the date of the hearing.
NHTSA and EPA will conduct the
hearing informally, and technical rules
of evidence will not apply. We will
arrange for a written transcript of the
hearing and keep the official record of
the hearing open for 30 days to allow
you to submit supplementary
Table of Contents
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I. Overview of Joint EPA/NHTSA Proposed
2017–2025 National PROGRAM
A. Introduction
1. Continuation of the National Program
2. Additional Background on the National
Program
3. California’s Greenhouse Gas Program
4. Stakeholder Engagement
B. Summary of the Proposed 2017–2025
National Program
1. Joint Analytical Approach
2. Level of the Standards
3. Form of the Standards
4. Program Flexibilities for Achieving
Compliance
5. Mid-Term Evaluation
6. Coordinated Compliance
7. Additional Program Elements
C. Summary of Costs and Benefits for the
Proposed National Program
1. Summary of Costs and Benefits for the
Proposed NHTSA CAFE Standards
2. Summary of Costs and Benefits for the
Proposed EPA GHG Standards
D. Background and Comparison of NHTSA
and EPA Statutory Authority
1. NHTSA Statutory Authority
2. EPA Statutory Authority
3. Comparing the Agencies’ Authority
II. Joint Technical Work Completed for This
Proposal
A. Introduction
B. Developing the Future Fleet for
Assessing Costs, Benefits, and Effects
1. Why Did the Agencies Establish a
Baseline and Reference Vehicle Fleet?
2. How Did the Agencies Develop the
Baseline Vehicle Fleet?
3. How Did the Agencies Develop the
Projected MY 2017–2025 Vehicle
Reference Fleet?
C. Development of Attribute-Based Curve
Shapes
1. Why are standards attribute-based and
defined by a mathematical function?
2. What attribute are the agencies
proposing to use, and why?
3. What mathematical functions have the
agencies previously used, and why?
4. How have the agencies changed the
mathematical functions for the proposed
MYs 2017–2025 standards, and why?
5. What are the agencies proposing for the
MYs 2017–2025 curves?
6. Once the agencies determined the
appropriate slope for the sloped part,
how did the agencies determine the rest
of the mathematical function?
7. Once the agencies determined the
complete mathematical function shape,
how did the agencies adjust the curves
to develop the proposed standards and
regulatory alternatives?
D. Joint Vehicle Technology Assumptions
1. What Technologies did the Agencies
Consider?
2. How did the Agencies Determine the
Costs of Each of these Technologies?
3. How Did the Agencies Determine the
Effectiveness of Each of these
Technologies?
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E. Joint Economic and Other Assumptions
F. Air Conditioning Efficiency CO2 Credits
and Fuel Consumption Improvement
Values, Off-cycle Reductions, and Fullsize Pickup Trucks
1. Proposed Air Conditioning CO2 Credits
and Fuel Consumption Improvement
Values
2. Off-Cycle CO2 Credits
3. Advanced Technology Incentives for
Full Sized Pickup Trucks
G. Safety Considerations in Establishing
CAFE/GHG Standards
1. Why do the agencies consider safety?
2. How do the agencies consider safety?
3. What is the current state of the research
on statistical analysis of historical crash
data?
4. How do the agencies think technological
solutions might affect the safety
estimates indicated by the statistical
analysis?
5. How have the agencies estimated safety
effects for the proposed standards?
III. EPA Proposal For MYS 2017–2025
Greenhouse Gas Vehicle Standards
A. Overview of EPA Rule
1. Introduction
2. Why is EPA Proposing this Rule?
3. What is EPA Proposing?
4. Basis for the GHG Standards under
Section 202(a)
5. Other Related EPA Motor Vehicle
Regulations
B. Proposed Model Year 2017–2025 GHG
Standards for Light-duty Vehicles, Lightduty Trucks, and Medium duty
Passenger Vehicles
1. What Fleet-wide Emissions Levels
Correspond to the CO2 Standards?
2. What Are the Proposed CO2 Attributebased Standards?
3. Mid-Term Evaluation
4. Averaging, Banking, and Trading
Provisions for CO2 Standards
5. Small Volume Manufacturer Standards
6. Nitrous Oxide, Methane, and CO2equivalent Approaches
7. Small Entity Exemption
8. Additional Leadtime Issues
9. Police and Emergency Vehicle
Exemption From CO2 Standards
10. Test Procedures
C. Additional Manufacturer Compliance
Flexibilities
1. Air Conditioning Related Credits
2. Incentive for Electric Vehicles, Plug-in
Hybrid Electric Vehicles, and Fuel Cell
Vehicles
3. Incentives for ‘‘Game-Changing’’
Technologies Including use of
Hybridization and Other Advanced
Technologies for Full-Size Pickup
Trucks
4. Treatment of Plug-in Hybrid Electric
Vehicles, Dual Fuel Compressed Natural
Gas Vehicles, and Ethanol Flexible Fuel
Vehicles for GHG Emissions Compliance
5. Off-cycle Technology Credits
D. Technical Assessment of the Proposed
CO2 Standards
1. How did EPA develop a reference and
control fleet for evaluating standards?
2. What are the Effectiveness and Costs of
CO2-reducing technologies?
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3. How were technologies combined into
‘‘packages’’ and what is the cost and
effectiveness of packages?
4. How does EPA Project how a
manufacturer would decide between
options to improve CO2 performance to
meet a fleet average standard?
5. Projected Compliance Costs and
Technology Penetrations
6. How does the technical assessment
support the proposed CO2 standards as
compared to the alternatives has EPA
considered?
7. To what extent do any of today’s
vehicles meet or surpass the proposed
MY 2017–2025 CO2 footprint-based
targets with current powertrain designs?
E. Certification, Compliance, and
Enforcement
1. Compliance Program Overview
2. Compliance With Fleet-Average CO2
Standards
3. Vehicle Certification
4. Useful Life Compliance
5. Credit Program Implementation
6. Enforcement
7. Other Certification Issues
8. Warranty, Defect Reporting, and Other
Emission-related Components Provisions
9. Miscellaneous Technical Amendments
and Corrections
10. Base Tire Definition
11. Treatment of Driver-Selectable Modes
and Conditions
F. How Would This Proposal Reduce GHG
Emissions and Their Associated Effects?
1. Impact on GHG Emissions
2. Climate Change Impacts From GHG
Emissions
3. Changes in Global Climate Indicators
Associated With the Proposal’s GHG
Emissions Reductions
G. How would the proposal impact nonGHG emissions and their associated
effects?
1. Inventory
2. Health Effects of Non-GHG Pollutants
3. Environmental Effects of Non-GHG
Pollutants
4. Air Quality Impacts of Non-GHG
Pollutants
5. Other Unquantified Health and
Environmental Effects
H. What are the estimated cost, economic,
and other impacts of the proposal?
1. Conceptual Framework for Evaluating
Consumer Impacts
2. Costs Associated With the Vehicle
Standards
3. Cost per ton of Emissions Reduced
4. Reduction in Fuel Consumption and its
Impacts
5. CO2 Emission Reduction Benefits
6. Non-Greenhouse Gas Health and
Environmental Impacts
7. Energy Security Impacts
8. Additional Impacts
9. Summary of Costs and Benefits
10. U.S. Vehicle Sales Impacts and Payback
Period
11. Employment Impacts
I. Statutory and Executive Order Reviews
J. Statutory Provisions and Legal Authority
IV. NHTSA Proposed Rule for Passenger car
and Light Truck Cafe Standards for
Model Years 2017–2025
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A. Executive Overview of NHTSA
Proposed Rule
1. Introduction
2. Why does NHTSA set CAFE standards
for passenger cars and light trucks?
3. Why is NHTSA proposing CAFE
standards for MYs 2017–2025 now?
B. Background
1. Chronology of events since the MY
2012–2016 final rule was issued
2. How has NHTSA developed the
proposed CAFE standards since the
President’s announcement?
C. Development and Feasibility of the
Proposed Standards
1. How was the baseline vehicle fleet
developed?
2. How were the technology inputs
developed?
3. How did NHTSA develop its economic
assumptions?
4. How does NHTSA use the assumptions
in its modeling analysis?
D. Statutory Requirements
1. EPCA, as Amended by EISA
2. Administrative Procedure Act
3. National Environmental Policy Act
E. What are the proposed CAFE standards?
1. Form of the Standards
2. Passenger Car Standards for MYs 2017–
2025
3. Minimum Domestic Passenger Car
Standards
4. Light Truck Standards
F. How do the proposed standards fulfill
NHTSA’s statutory obligations?
1. What are NHTSA’s statutory obligations?
2. How did the agency balance the factors
for this NPRM?
G. Impacts of the Proposed CAFE
Standards
1. How will these standards improve fuel
economy and reduce GHG emissions for
MY 2017–2025 vehicles?
2. How will these standards improve fleetwide fuel economy and reduce GHG
emissions beyond MY 2025?
3. How will these proposed standards
impact non-GHG emissions and their
associated effects?
4. What are the estimated costs and
benefits of these proposed standards?
5. How would these proposed standards
impact vehicle sales?
6. Social Benefits, Private Benefits, and
Potential Unquantified Consumer
Welfare Impacts of the Proposed
Standards
7. What other impacts (quantitative and
unquantifiable) will these proposed
standards have?
H. Vehicle Classification
I. Compliance and Enforcement
1. Overview
2. How does NHTSA determine
compliance?
3. What compliance flexibilities are
available under the CAFE program and
how do manufacturers use them?
4. What new incentives are being added to
the CAFE program for MYs 2017–2025?
5. Other CAFE enforcement issues
J. Regulatory notices and analyses
1. Executive Order 12866, Executive Order
13563, and DOT Regulatory Policies and
Procedures
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2. National Environmental Policy Act
3. Regulatory Flexibility Act
4. Executive Order 13132 (Federalism)
5. Executive Order 12988 (Civil Justice
Reform)
6. Unfunded Mandates Reform Act
7. Regulation Identifier Number
8. Executive Order 13045
9. National Technology Transfer and
Advancement Act
10. Executive Order 13211
11. Department of Energy Review
12. Plain Language
13. Privacy Act
I. Overview of Joint EPA/NHTSA
Proposed 2017–2025 National Program
Executive Summary
EPA and NHTSA are each announcing
proposed rules that call for strong and
coordinated Federal greenhouse gas and
fuel economy standards for passenger
cars, light-duty trucks, and mediumduty passenger vehicles (hereafter lightduty vehicles or LDVs). Together, these
vehicle categories, which include
passenger cars, sport utility vehicles,
crossover utility vehicles, minivans, and
pickup trucks, among others, are
presently responsible for approximately
60 percent of all U.S. transportationrelated greenhouse gas (GHG) emissions
and fuel consumption. This proposal
would extend the National Program of
Federal light-duty vehicle GHG
emissions and corporate average fuel
economy (CAFE) standards to model
years (MYs) 2017–2025. This proposed
coordinated program would achieve
important reductions in GHG emissions
and fuel consumption from the lightduty vehicle part of the transportation
sector, based on technologies that either
are commercially available or that the
agencies project will be commercially
available in the rulemaking timeframe
and that can be incorporated at a
reasonable cost. Higher initial vehicle
costs will be more than offset by
significant fuel savings for consumers
over the lives of the vehicles covered by
this rulemaking.
This proposal builds on the success of
the first phase of the National Program
to regulate fuel economy and GHG
emissions from U.S. light-duty vehicles,
which established strong and
coordinated standards for model years
(MY) 2012–2016. As with the first phase
of the National Program, collaboration
with California Air Resources Board
(CARB) and with automobile
manufacturers and other stakeholders
has been a key element in developing
the agencies’ proposed rules.
Continuing the National Program would
ensure that all manufacturers can build
a single fleet of U.S. vehicles that would
satisfy all requirements under both
programs as well as under California’s
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program, helping to reduce costs and
regulatory complexity while providing
significant energy security and
environmental benefits.
Combined with the standards already
in effect for MYs 2012–2016, as well as
the MY 2011 CAFE standards, the
proposed standards would result in MY
2025 light-duty vehicles with nearly
double the fuel economy, and
approximately one-half of the GHG
emissions compared to MY 2010
vehicles—representing the most
significant federal action ever taken to
reduce GHG emissions and improve fuel
economy in the U.S. EPA is proposing
standards that are projected to require,
on an average industry fleet wide basis,
163 grams/mile of carbon dioxide (CO2)
in model year 2025, which is equivalent
to 54.5 mpg if this level were achieved
solely through improvements in fuel
efficiency.6 Consistent with its statutory
authority, NHTSA is proposing
passenger car and light truck standards
for MYs 2017–2025 in two phases. The
first phase, from MYs 2017–2021,
includes proposed standards that are
projected to require, on an average
industry fleet wide basis, 40.9 mpg in
MY 2021. The second phase of the
CAFE program, from MYs 2022–2025,
represents conditional 7 proposed
standards that are projected to require,
on an average industry fleet wide basis,
49.6 mpg in model year 2025. Both the
EPA and NHTSA standards are
projected to be achieved through a range
of technologies, including
improvements in air conditioning
efficiency, which reduces both GHG
emissions and fuel consumption; the
EPA standards also are projected to be
achieved with the use of air
conditioning refrigerants with a lower
global warming potential (GWP), which
reduce GHGs (i.e., hydrofluorocarbons)
but do not improve fuel economy. The
agencies are proposing separate
standards for passenger cars and trucks,
based on a vehicle’s size or ‘‘footprint.’’
For the MYs 2022–2025 standards, EPA
and NHTSA are proposing a
comprehensive mid-term evaluation and
agency decision-making process, given
6 Real-world CO is typically 25 percent higher
2
and real-world fuel economy is typically 20 percent
lower than the CO2 and CAFE compliance values
discussed here. The reference to CO2 here refers to
CO2 equivalent reductions, as this included some
degree of reductions in greenhouse gases other than
CO2, as one part of the air conditioning related
reductions.
7 By ‘‘conditional,’’ NHTSA means to say that the
proposed standards for MYs 2022–2025 represent
the agency’s current best estimate of what levels of
stringency would be maximum feasible in those
model years, but in order for the standards for those
model years to be legally binding a subsequent
rulemaking must be undertaken by the agency at a
later time. See Section IV for more information.
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both the long time frame and NHTSA’s
obligation to conduct a separate
rulemaking in order to establish final
standards for vehicles for those model
years.
From a societal standpoint, this
second phase of the National Program is
projected to save approximately 4
billion barrels of oil and 2 billion metric
tons of GHG emissions over the
lifetimes of those vehicles sold in MY
2017–2025. The agencies estimate that
fuel savings will far outweigh higher
vehicle costs, and that the net benefits
to society of the MYs 2017–2025
National Program will be in the range of
$311 billion to $421 billion (7 and 3
percent discount rates, respectively)
over the lifetimes of those vehicles sold
in MY 2017–2025.
These proposed standards would have
significant savings for consumers at the
pump. Higher costs for new vehicle
technology will add, on average, about
$2000 for consumers who buy a new
vehicle in MY 2025. Those consumers
who drive their MY 2025 vehicle for its
entire lifetime will save, on average,
$5200 to $6600 (7 and 3 percent
discount rates, respectively) in fuel
savings, for a net lifetime savings of
$3000 to $4400. For those consumers
who purchase their new MY 2025
vehicle with cash, the discounted fuel
savings will offset the higher vehicle
cost in less than 4 years, and fuel
savings will continue for as long as the
consumer owns the vehicle. Those
consumers that buy a new vehicle with
a typical 5-year loan will benefit from
an average monthly cash flow savings of
about $12 during the loan period, or
about $140 per year, on average. So the
consumer would benefit beginning at
the time of purchase, since the
increased monthly fuel savings would
more than offset the higher monthly
payment due to the higher incremental
vehicle cost.
The agencies have designed the
proposed standards to preserve
consumer choice—that is, the proposed
standards should not affect consumers’
opportunity to purchase the size of
vehicle with the performance, utility
and safety features that meets their
needs. The standards are based on a
vehicle’s size, or footprint—that is,
consistent with their general
performance and utility needs, larger
vehicles have numerically less stringent
fuel economy/GHG emissions targets
and smaller vehicles have more
stringent fuel economy/GHG emissions
targets, although since the standards are
fleet average standards, no specific
vehicle must meet a target. Thus,
consumers will be able to continue to
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74859
choose from the same mix of vehicles
that are currently in the marketplace.
The agencies’ believe there is a wide
range of technologies available for
manufacturers to consider in reducing
GHG emissions and improving fuel
economy. The proposals allow for longterm planning by manufacturers and
suppliers for the continued
development and deployment across
their fleets of fuel saving and emissionsreducing technologies. The agencies
believe that advances in gasoline
engines and transmissions will continue
for the foreseeable future, and that there
will be continual improvement in other
technologies, including vehicle weight
reduction, lower tire rolling resistance,
improvements in vehicle aerodynamics,
diesel engines, and more efficient
vehicle accessories. The agencies also
expect to see increased electrification of
the fleet through the expanded
production of stop/start, hybrid, plug-in
hybrid and electric vehicles. Finally, the
agencies expect that vehicle air
conditioners will continue to improve
by becoming more efficient and by
increasing the use of alternative
refrigerants. Many of these technologies
are already available today, and
manufacturers will be able to meet the
standards through significant efficiency
improvements in these technologies, as
well as a significant penetration of these
and other technologies across the fleet.
Auto manufacturers may also introduce
new technologies that we have not
considered for this rulemaking analysis,
which could make possible alternative,
more cost-effective paths to compliance.
A. Introduction
1. Continuation of the National Program
EPA and NHTSA are each announcing
proposed rules that call for strong and
coordinated Federal greenhouse gas and
fuel economy standards for passenger
cars, light-duty trucks, and mediumduty passenger vehicles (hereafter lightduty vehicles or LDVs). Together, these
vehicle categories, which include
passenger cars, sport utility vehicles,
crossover utility vehicles, minivans, and
pickup trucks, are presently responsible
for approximately 60 percent of all U.S.
transportation-related greenhouse gas
emissions and fuel consumption. The
proposal would extend the National
Program of Federal light-duty vehicle
greenhouse gas (GHG) emissions and
corporate average fuel economy (CAFE)
standards to model years (MYs) 2017–
2025. The coordinated program being
proposed would achieve important
reductions of greenhouse gas (GHG)
emissions and fuel consumption from
the light-duty vehicle part of the
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transportation sector, based on
technologies that either are
commercially available or that the
agencies project will be commercially
available in the rulemaking timeframe
and that can be incorporated at a
reasonable cost.
In working together to develop the
next round of standards for MYs 2017–
2025, NHTSA and EPA are building on
the success of the first phase of the
National Program to regulate fuel
economy and GHG emissions from U.S.
light-duty vehicles, which established
the strong and coordinated standards for
model years (MY) 2012–2016. As for the
MYs 2012–2016 rulemaking,
collaboration with California Air
Resources Board (CARB) and with
industry and other stakeholders has
been a key element in developing the
agencies’ proposed rules. Continuing
the National Program would ensure that
all manufacturers can build a single
fleet of U.S. vehicles that would satisfy
all requirements under both programs as
well as under California’s program,
helping to reduce costs and regulatory
complexity while providing significant
energy security and environmental
benefits.
The agencies have been developing
the basis for these joint proposed
standards almost since the conclusion of
the rulemaking establishing the first
phase of the National Program. After
much research and deliberation by the
agencies, along with CARB and other
stakeholders, President Obama
announced plans for these proposed
rules on July 29, 2011 and NHTSA and
EPA issued a Supplemental Notice of
Intent (NOI) outlining the agencies’
plans for proposing the MY 2017–2025
standards and program.8 This July NOI
built upon the extensive analysis
conducted by the agencies over the past
year, including an initial technical
assessment report and NOI issued in
September 2010, and a supplemental
NOI issued in December 2010
(discussed further below). The State of
California and thirteen auto
manufacturers representing over 90
percent of U.S. vehicle sales provided
letters of support for the program
concurrent with the Supplemental
NOI.9 The United Auto Workers (UAW)
also supported the announcement,10 as
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8 76
FR 48758 (August 9, 2011).
letters are available at https://
www.epa.gov/otaq/climate/regulations.htm and at
https://www.nhtsa.gov/fuel-economy (last accessed
Aug. 24, 2011).
10 The UAW’s support was expressed in a
statement on July 29, 2011, which can be found at
https://www.uaw.org/articles/uaw-supportsadministration-proposal-light-duty-vehicle-cafeand-greenhouse-gas-emissions-r (last accessed
September 19, 2011).
9 Commitment
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well as many consumer and
environmental groups. As envisioned in
the Presidential announcement and
Supplemental NOI, this proposal sets
forth proposed MYs 2017–2025
standards as well as detailed supporting
analysis for those standards and
regulatory alternatives for public review
and comment. The program that the
agencies are proposing will spur the
development of a new generation of
clean cars and trucks through
innovative technologies and
manufacturing that will, in turn, spur
economic growth and create highquality domestic jobs, enhance our
energy security, and improve our
environment. Consistent with Executive
Order 13563, this proposal was
developed with early consultation with
stakeholders, employs flexible
regulatory approaches to reduce
burdens, maintains freedom of choice
for the public, and helps to harmonize
federal and state regulations.
As described below, NHTSA and EPA
are proposing a continuation of the
National Program that the agencies
believe represents the appropriate levels
of fuel economy and GHG emissions
standards for model years 2017–2025,
given the technologies that the agencies
anticipate will be available for use on
these vehicles and the agencies’
understanding of the cost and
manufacturers’ ability to apply these
technologies during that time frame, and
consideration of other relevant factors.
Under this joint rulemaking, EPA is
proposing GHG emissions standards
under the Clean Air Act (CAA), and
NHTSA is proposing CAFE standards
under EPCA, as amended by the Energy
Independence and Security Act of 2007
(EISA). This joint rulemaking proposal
reflects a carefully coordinated and
harmonized approach to implementing
these two statutes, in accordance with
all substantive and procedural
requirements imposed by law.11
The proposed approach allows for
long-term planning by manufacturers
and suppliers for the continued
development and deployment across
their fleets of fuel saving and emissionsreducing technologies. NHTSA’s and
EPA’s technology assessment indicates
there is a wide range of technologies
available for manufacturers to consider
in reducing GHG emissions and
improving fuel economy. The agencies
believe that advances in gasoline
engines and transmissions will continue
for the foreseeable future, which is a
view that is supported in the literature
and amongst the vehicle manufacturers
11 For NHTSA, this includes the requirements of
the National Environmental Policy Act (NEPA).
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and suppliers.12 The agencies also
believe that there will be continual
improvement in other technologies
including reductions in vehicle weight,
lower tire rolling resistance,
improvements in vehicle aerodynamics,
diesel engines, and more efficient
vehicle accessories. The agencies also
expect to see increased electrification of
the fleet through the expanded
production of stop/start, hybrid, plug-in
hybrid and electric vehicles.13 Finally,
the agencies expect that vehicle air
conditioners will continue to improve
by becoming more efficient and by
increasing the use of alternative
refrigerants. Many of these technologies
are already available today, and EPA’s
and NHTSA’s assessments are that
manufacturers will be able to meet the
standards through significant efficiency
improvements in these technologies as
well as a significant penetration of these
and other technologies across the fleet.
We project that these potential
compliance pathways for manufacturers
will result in significant benefits to
consumers and to society, as quantified
below. Manufacturers may also
introduce new technologies that we
have not considered for this rulemaking
analysis, which could make possible
alternative, more cost-effective paths to
compliance.
As discussed further below, as with
the standards for MYs 2012–2016, the
agencies believe that the proposed
standards would continue to preserve
consumer choice, that is, the proposed
standards should not affect consumers’
opportunity to purchase the size of
vehicle that meets their needs. NHTSA
and EPA are proposing to continue
standards based on vehicle footprint,
where smaller vehicles have relatively
more stringent standards, and larger
vehicles have less stringent standards,
so there should not be a significant
effect on the relative availability of
different size vehicles in the fleet.
12 There are a number of competing gasoline
engine technologies, with one in particular that the
agencies project will be common beyond 2016. This
is the gasoline direct injection and downsized
engines equipped with turbochargers and cooled
exhaust gas recirculation, which has performance
characteristics similar to that of larger, less efficient
engines. Paired with these engines, the agencies
project that advanced transmissions (such as
automatic and dual clutch transmissions with eight
forward speeds) and higher efficiency gearboxes
will provide significant improvements.
Transmissions with eight or more speeds can be
found in the fleet today in very limited production,
and while they are expected to penetrate further by
2016, we anticipate that by 2025 these will be the
dominant transmissions in new vehicle sales.
13 For example, while today less than three
percent of annual vehicle sales are strong hybrids,
plug-in hybrids and all electric vehicles, by 2025
we estimate these technologies could represent
nearly 15 percent of new sales.
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Additionally, as with the standards for
MYs 2012–2016, the agencies believe
that the proposed standards should not
have a negative effect on vehicle safety,
as it relates to vehicle footprint and
mass as described in Section II.C and
II.G below, respectively.
We note that as part of this
rulemaking, given the long time frame at
issue in setting standards for MY 2022–
2025 light-duty vehicles, the agencies
are discussing a comprehensive midterm evaluation and agency decisionmaking process. NHTSA has a statutory
obligation to conduct a separate de novo
rulemaking in order to establish final
standards for vehicles for the 2022–2025
model years and would conduct the
mid-term evaluation as part of that
rulemaking, and EPA is proposing
regulations that address the mid-term
evaluation. The mid-term evaluation
will assess the appropriateness of the
MY 2022–2025 standards considered in
this rulemaking, based on an updated
assessment of all the factors considered
in setting the standards and the impacts
of those factors on the manufacturers’
ability to comply. NHTSA and EPA
fully expect to conduct this mid-term
evaluation in coordination with the
California Air Resources Board, given
our interest in a maintaining a National
Program to address GHGs and fuel
economy. Further discussion of the midterm evaluation is found later in this
section, as well as in Sections III and IV.
Based on the agencies’ analysis, the
National Program standards being
proposed are currently projected to
reduce GHGs by approximately 2 billion
metric tons and save 4 billion barrels of
oil over the lifetime of MYs 2017–2025
vehicles relative to the MY 2016
standard curves 14 already in place. The
average cost for a MY 2025 vehicle to
meet the standards is estimated to be
about $2,000 compared to a vehicle that
would meet the level of the MY 2016
standards in MY 2025. However, fuel
savings for consumers are expected to
more than offset the higher vehicle
costs. The typical driver would save a
total of $5,200 to $6,600 (7 percent and
3 percent discount rate, respectively) in
fuel costs over the lifetime of a MY 2025
vehicle and, even after accounting for
the higher vehicle cost, consumers
would save a net $3,000 to $4,400 (7
percent and 3 percent discount rate,
respectively) over the vehicle’s lifetime.
Further, consumers who buy new
vehicles with cash would save enough
in lower fuel costs after less than 4 years
14 The calculation of GHG reductions and oil
savings is relative to a future in which the MY 2016
standards remain in place for MYs 2017–2025 and
manufacturers comply on average at those levels.
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(at either 7 percent or 3 percent
discount rate) of owning a MY 2025
vehicle to offset the higher upfront
vehicle costs, while consumers who buy
with a 5-year loan would save more
each month on fuel than the increased
amount they would spend on the higher
monthly loan payment, beginning in the
first month of ownership.
Continuing the National Program has
both energy security and climate change
benefits. Climate change is widely
viewed as a significant long-term threat
to the global environment. EPA has
found that elevated atmospheric
concentrations of six greenhouse
gases—carbon dioxide, methane, nitrous
oxide, hydrofluorocarbons,
perflurocarbons, and sulfur
hexafluoride—taken in combination
endanger both the public health and the
public welfare of current and future
generations. EPA further found that the
combined emissions of these
greenhouse gases from new motor
vehicles and new motor vehicle engines
contribute to the greenhouse gas air
pollution that endangers public health
and welfare. 74 FR 66496 (Dec. 15,
2009). As summarized in EPA’s
Endangerment and Cause or Contribute
Findings under Section 202(a) of the
Clear Air Act, anthropogenic emissions
of GHGs are very likely (90 to 99 percent
probability) the cause of most of the
observed global warming over the last
50 years.15 Mobile sources emitted 31
percent of all U.S. GHGs in 2007
(transportation sources, which do not
include certain off-highway sources,
account for 28 percent) and have been
the fastest-growing source of U.S. GHGs
since 1990.16 Mobile sources addressed
in the endangerment and contribution
findings under CAA section 202(a)—
light-duty vehicles, heavy-duty trucks,
buses, and motorcycles—accounted for
23 percent of all U.S. GHG in 2007.17
Light-duty vehicles emit CO2, methane,
nitrous oxide, and hydrofluorocarbons
and are responsible for nearly 60
percent of all mobile source GHGs and
over 70 percent of Section 202(a) mobile
15 74 FR 66,496,–66,518, December 18, 2009;
‘‘Technical Support Document for Endangerment
and Cause or Contribute Findings for Greenhouse
Gases Under Section 202(a) of the Clean Air Act’’
Docket: EPA–HQ–OAR–2009–0472–11292, https://
epa.gov/climatechange/endangerment.html.
16 U.S. Environmental Protection Agency. 2009.
Inventory of U.S. Greenhouse Gas Emissions and
Sinks: 1990–2007. EPA 430–R–09–004. Available at
https://epa.gov/climatechange/emissions/
downloads09/GHG2007entire_report-508.pdf.
17 U.S. EPA. 2009 Technical Support Document
for Endangerment and Cause or Contribute Findings
for Greenhouse Gases under Section 202(a) of the
Clean Air Act. Washington, DC. pp. 180–194.
Available at https://epa.gov/climatechange/
endangerment/downloads/
Endangerment%20TSD.pdf.
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source GHGs. For light-duty vehicles in
2007, CO2 emissions represent about 94
percent of all greenhouse emissions
(including HFCs), and the CO2
emissions measured over the EPA tests
used for fuel economy compliance
represent about 90 percent of total lightduty vehicle GHG emissions.18 19
Improving our energy and national
security by reducing our dependence on
foreign oil has been a national objective
since the first oil price shocks in the
1970s. Net petroleum imports accounted
for approximately 51 percent of U.S.
petroleum consumption in 2009.20
World crude oil production is highly
concentrated, exacerbating the risks of
supply disruptions and price shocks as
the recent unrest in North Africa and
the Persian Gulf highlights. Recent tight
global oil markets led to prices over
$100 per barrel, with gasoline reaching
as high as $4 per gallon in many parts
of the U.S., causing financial hardship
for many families and businesses. The
export of U.S. assets for oil imports
continues to be an important component
of the historically unprecedented U.S.
trade deficits. Transportation accounted
for about 71 percent of U.S. petroleum
consumption in 2009.21 Light-duty
vehicles account for about 60 percent of
transportation oil use, which means that
they alone account for about 40 percent
of all U.S. oil consumption.
The automotive market is becoming
increasingly global. The U.S. auto
companies and U.S. suppliers produce
and sell automobiles and automotive
components around the world, and
foreign auto companies produce and sell
in the U.S. As a result, the industry has
become increasingly competitive.
Staying at the cutting edge of
automotive technology while
maintaining profitability and consumer
acceptance has become increasingly
important for the sustainability of auto
companies. The proposed standards
cover model years 2017–2025 for
passenger cars and light-duty trucks
sold in the United States. Many other
countries and regions around the world
have in place fuel economy or CO2
18 U.S. Environmental Protection Agency. 2009.
Inventory of U.S. Greenhouse Gas Emissions and
Sinks: 1990–2007. EPA 430–R–09–004. Available at
https://epa.gov/climatechange/emissions/
downloads09/GHG2007entire_report-508.pdf.
19 U.S. Environmental Protection Agency. RIA,
Chapter 2.
20 Energy Information Administration, ‘‘How
dependent are we on foreign oil?’’ Available at
https://www.eia.gov/energy_in_brief/
foreign_oil_dependence.cfm (last accessed August
28, 2011).
21 Energy Information Administration, Annual
Energy Outlook 2011, ‘‘Oil/Liquids.’’ Available at
https://www.eia.gov/forecasts/aeo/
MT_liquidfuels.cfm (last accessed August 28, 2011).
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emission standards for light-duty
vehicles. In addition, the European
Union is currently discussing more
stringent CO2 standards for 2020, and
the Japanese government has recently
issued a draft proposal for new fuel
efficiency standards for 2020. The
overall trend is clear—globally many of
the major economic countries are
increasing the stringency of their fuel
economy or CO2 emission standards for
light-duty vehicles. When considering
this common trend, the proposed CAFE
and CO2 standards for MY 2017–2025
may offer some advantages for U.S.based automotive companies and
suppliers. In order to comply with the
proposed standards, U.S. firms will
need to invest significant research and
development dollars and capital in
order to develop and produce the
technologies needed to reduce CO2
emissions and improve fuel economy.
Companies have limited budgets for
research and development programs. As
automakers seek greater commonality
across the vehicles they produce for the
domestic and foreign markets,
improving fuel economy and reducing
GHGs in U.S. vehicles should have
spillovers to foreign production, and
vice versa, thus yielding the ability to
amortize investment in research and
production over a broader product and
geographic spectrum. To the extent that
the technologies needed to meet the
standards contained in this proposal can
also be used to comply with the fuel
economy and CO2 standards in other
countries, this can help U.S. firms in the
global automotive market, as the U.S.
firms will be able to focus their
available research and development
funds on a common set of technologies
that can be used both domestically as
well as internationally.
2. Additional Background on the
National Program
Following the successful adoption of
a National Program of federal standards
for greenhouse gas emissions (GHG) and
fuel economy standards for model years
(MY) 2012–2016 light duty vehicles,
President Obama issued a Memorandum
on May 21, 2010 requesting that the
National Highway Traffic Safety
Administration (NHTSA), on behalf of
the Department of Transportation, and
the Environmental Protection Agency
(EPA) work together to develop a
national program for model years 2017–
2025. Specifically, he requested that the
agencies develop ‘‘* * * a coordinated
national program under the CAA [Clean
Air Act] and the EISA [Energy
Independence and Security Act of 2007]
to improve fuel efficiency and to reduce
greenhouse gas emissions of passenger
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cars and light-duty trucks of model
years 2017–2025.’’ 22 The President
recognized that our country could take
a leadership role in addressing the
global challenges of improving energy
security and reducing greenhouse gas
pollution, stating that ‘‘America has the
opportunity to lead the world in the
development of a new generation of
clean cars and trucks through
innovative technologies and
manufacturing that will spur economic
growth and create high-quality domestic
jobs, enhance our energy security, and
improve our environment.’’
The Presidential Memorandum stated
‘‘The program should also seek to
achieve substantial annual progress in
reducing transportation sector
greenhouse gas emissions and fossil fuel
consumption, consistent with my
Administration’s overall energy and
climate security goals, through the
increased domestic production and use
of existing, advanced, and emerging
technologies, and should strengthen the
industry and enhance job creation in the
United States.’’ Among other things, the
agencies were tasked with researching
and then developing standards for MYs
2017 through 2025 that would be
appropriate and consistent with EPA’s
and NHTSA’s respective statutory
authorities, in order to continue to guide
the automotive sector along the road to
reducing its fuel consumption and GHG
emissions, thereby ensuring
corresponding energy security and
environmental benefits. During the
public comment period for the MY
2012–2016 proposed rulemaking, many
stakeholders, including automakers,
encouraged NHTSA and EPA to begin
working toward standards for MY 2017
and beyond in order to maintain a single
nationwide program. Several major
automobile manufacturers and CARB
sent letters to EPA and NHTSA in
support of a MYs 2017 to 2025
rulemaking initiative as outlined in the
President’s May 21, 2010
announcement.23
The President’s memo requested that
the agencies, ‘‘work with the State of
California to develop by September 1,
2010, a technical assessment to inform
the rulemaking process * * *.’’ As a
first step in responding to the
President’s request, the agencies
collaborated with CARB to prepare an
Interim Joint Technical Assessment
Report (TAR) to inform the rulemaking
process and provide an initial technical
assessment for that work. NHTSA, EPA,
and CARB issued the joint Technical
Assessment Report consistent with
Section 2(a) of the Presidential
Memorandum.24 In developing the
technical assessment, EPA, NHTSA, and
CARB held numerous meetings with a
wide variety of stakeholders including
the automobile original equipment
manufacturers (OEMs), automotive
suppliers, non-governmental
organizations, states and local
governments, infrastructure providers,
and labor unions. The Interim Joint TAR
provided an overview of key
stakeholder input, addressed other
topics noted in the Presidential
memorandum, and EPA’s and NHTSA’s
initial assessment of benefits and costs
of a range of stringencies of future
standards.
In accordance with the Presidential
Memorandum, NHTSA and EPA also
issued a joint Notice of Intent to Issue
a Proposed Rulemaking (NOI).25 The
September 2010 NOI highlighted the
results of the analyses contained in the
Interim Joint TAR, provided an
overview of key program design
elements, and announced plans for
initiating the joint rulemaking to
improve the fuel efficiency and reduce
the GHG emissions of passenger cars
and light-duty trucks built in MYs
2017–2025. The agencies requested
comments on the September NOI and
accompanying Interim Joint TAR.
The Interim Joint TAR contained an
initial fleet-wide analysis of
improvements in overall average GHG
emissions and equivalent fuel economy
22 The Presidential Memorandum is found at:
https://www.whitehouse.gov/the-press-office/
presidential-memorandum-regarding-fuelefficiency-standards. For the reader’s reference, the
President also requested the Administrators of EPA
and NHTSA to issue joint rules under the CAA and
EISA to establish fuel efficiency and greenhouse gas
emissions standards for commercial medium-and
heavy-duty on-highway vehicles and work trucks
beginning with the 2014 model year. The agencies
recently promulgated final GHG and fuel efficiency
standards for heavy duty vehicles and engines for
MYs 2014–2018. 76 FR 57106 (September 15, 2011).
23 These letters of support in response to the May
21, 2010 Presidential Memorandum are available at
https://www.epa.gov/otaq/climate/
regulations.htm#prez and https://www.nhtsa.gov/
Laws+&+Regulations/CAFE+-+Fuel+Economy/
Stakeholder+Commitment+Letters (last accessed
August 28, 2011).
24 This Interim Joint Technical Assessment
Report (TAR) is available at https://www.epa.gov/
otaq/climate/regulations/ldv-ghg-tar.pdf and https://
www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/
2017+CAFE–GHG_Interim_TAR2.pdf.Section 2(a) of
the Presidential Memorandum requested that EPA
and NHTSA ‘‘Work with the State of California to
develop by September 1, 2010, a technical
assessment to inform the rulemaking process,
reflecting input from an array of stakeholders on
relevant factors, including viable technologies,
costs, benefits, lead time to develop and deploy
new and emerging technologies, incentives and
other flexibilities to encourage development and
deployment of new and emerging technologies,
impacts on jobs and the automotive manufacturing
base in the United States, and infrastructure for
advanced vehicle technologies.’’
25 75 FR 62739, October 13, 2010.
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levels. For purposes of an initial
assessment, this range was intended to
represent a reasonably broad range of
stringency increases for potential future
GHG emissions standards, and was also
consistent with the increases suggested
by CARB in its letter of commitment in
response to the President’s
memorandum.26 27 The TAR evaluated a
range of potential stringency scenarios
through model year 2025, representing a
3, 4, 5, and 6 percent per year estimated
decrease in GHG levels from a model
year 2016 fleet-wide average of 250
gram/mile (g/mi). Thus, the model year
2025 scenarios analyzed in the Interim
Joint TAR ranged from 190 g/mi on an
estimated fleet-wide average (calculated
to be equivalent to 47 miles per gallon,
mpg, if all improvements were made
with fuel economy-improving
technologies) under the 3 percent per
year reduction scenario, to 143 g/mi on
an estimated fleet-wide average
(calculated to be equivalent to 62 mpg,
if all improvements were made with
fuel economy-improving technologies)
under the 6 percent per year scenario.28
For each of these scenarios, the TAR
also evaluated four pre-defined
‘‘technological pathways’’ by which
these levels could be attained. These
pathways were meant to represent ways
that the industry as a whole could
increase fuel economy and reduce
greenhouse gas emissions, and did not
represent ways that individual
manufacturers would be required to or
necessarily would employ in
responding to future standards. Each
defined technology pathway
emphasized a different mix of advanced
technologies, by assuming various
degrees of penetration of advanced
gasoline technologies, mass reduction,
hybrid electric vehicles (HEVs), plug-in
hybrids (PHEVs), and electric vehicles
(EVs).
Manufacturers and others commented
extensively on the NOI and Interim Joint
TAR on a variety of topics, including
the stringency of the standards, program
design elements, the effect of potential
standards on vehicle safety, and the
26 75
FR at 62744–45.
of the California Air Resources
Board Regarding Future Passenger Vehicle
Greenhouse Gas Emissions Standards, California
Air Resources Board, May 21, 2010. Available at:
https://www.epa.gov/otaq/climate/regulations.htm.
28 These levels correspond to on-road values of 37
to 50 mpg, respectively, recognizing that on-road
fuel economy tends to be about 20 percent worse
than calculated mpg values based on the CAFE test
cycle. We note, however, that because these mpg
values are translated from CO2e values that include
reductions in hydrofluorocarbon (HFC) leakage due
to use of advanced refrigerants and leakage
improvements, therefore these numbers are not as
representative of either CAFE test cycle or realworld mpg.
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TAR’s discussion of technology costs,
effectiveness, and feasibility. In
response, the agencies and CARB spent
the next several months continuing to
gather information from the industry
and others in response to the agencies’
initial analytical efforts. To aid the
public’s understanding of some of the
key issues facing the agencies in
developing the proposed rule, EPA and
NHTSA also issued a follow-on
Supplemental NOI in November 2010.29
The Supplemental NOI highlighted
many of the key comments the agencies
received in response to the September
NOI and Interim Joint TAR, and
summarized some of the key themes
from the comments and the additional
stakeholder meetings. We note, as
highlighted in the November
Supplemental NOI, that there continued
to be widespread stakeholder support
for continuing the National Program for
improved fuel economy and greenhouse
gas standards for model years 2017–
2025. The November Supplemental NOI
also provided an overview of many of
the key technical analyses the agencies
planned in support the proposed rule.
After issuing the November 2010
Supplemental NOI, EPA, NHTSA and
CARB continued studies on technology
cost and effectiveness and more indepth and comprehensive analysis of
the issues. In addition to this work, the
agencies continued meeting with
stakeholders, including with
manufacturers, manufacturer
organizations, automotive suppliers, a
labor union, environmental groups,
consumer interest groups, and
investment organizations. As discussed
above, on July 29, 2011 President
Obama announced plans for these
proposed rules and NHTSA and EPA
issued a Supplemental Notice of Intent
(NOI) outlining the agencies’ plans for
proposing the MY 2017–2025 standards
and program.
3. California’s Greenhouse Gas Program
In 2004, the California Air Resources
Board (CARB) approved standards for
new light-duty vehicles, regulating the
emission of CO2 and other GHGs.
Thirteen states and the District of
Columbia, comprising approximately 40
percent of the light-duty vehicle market,
adopted California’s standards. On June
30, 2009, EPA granted California’s
request for a waiver of preemption
under the CAA with respect to these
standards.30 The granting of the waiver
permits California and the other states
29 75
FR 76337, December 8, 2010.
FR 32744 (July 8, 2009). See also Chamber
of Commerce v. EPA, 642 F.3d 192 (DC Cir. 2011)
(dismissing petitions for review challenging EPA’s
grant of the waiver).
30 74
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to proceed with implementing the
California emission standards for MYs
2009–2016. After EPA and NHTSA
issued their MYs 2012–2016 standards,
CARB revised its program such that
compliance with the EPA greenhouse
gas standards will be deemed to be
compliance with California’s GHG
standards.31 This facilitates the National
Program by allowing manufacturers to
meet all of the standards with a single
national fleet.
As requested by the President and in
the interest of maximizing regulatory
harmonization, NHTSA and EPA have
worked closely with CARB throughout
the development of this proposal to
develop a common technical basis.
CARB is releasing a proposal for MY
2017–2025 GHG emissions standards
which are consistent with the standards
being proposed by EPA and NHTSA.
CARB recognizes the benefit for the
country of continuing the National
Program and plans an approach similar
to the one taken for MYs 2012–2016.
CARB has committed to propose to
revise its GHG emissions standards for
MY 2017 and later such that compliance
with EPA GHG emissions standards
shall be deemed compliance with the
California GHG emissions standards, as
long as EPA’s final GHG standards are
substantially as described in the July
2011 Supplemental NOI.32
4. Stakeholder Engagement
On July 29, 2010, President Obama
announced the support of thirteen major
automakers to pursue the next phase in
the Administration’s national vehicle
program, increasing fuel economy and
reducing GHG emissions for passenger
cars and light trucks built in MYs 2017–
2025.33 The President was joined by
Ford, GM, Chrysler, BMW, Honda,
Hyundai, Jaguar/Land Rover, Kia,
Mazda, Mitsubishi, Nissan, Toyota and
Volvo, which together account for over
90 percent of all vehicles sold in the
United States. The California Air
Resources Board (CARB), the United
Auto Workers (UAW) and a number of
31 See ‘‘California Exhaust Emission Standards
and Test Procedures for 2001 and Subsequent
Model Passenger Cars, Light-Duty Trucks, and
Medium-Duty Vehicles as approved by OAL,’’
March 29, 2010. Available at https://
www.arb.ca.gov/regact/2010/ghgpv10/oaltp.pdf
(last accessed August 28, 2011).
32 See State of California July 28, 2011 letter
available at: https://www.epa.gov/otaq/climate/
regulations.htm.
33 The President’s remarks are available at
https://www.whitehouse.gov/the-press-office/2011/
07/29/remarks-president-fuel-efficiency-standards;
see also https://www.nhtsa.gov/fuel-economy for
more information from the agency about the
announcement.
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environmental and consumer groups,
also announced their support.
On the same day as the President’s
announcement, the agencies released a
second SNOI (published in the Federal
Register on August 9, 2011) generally
describing the joint proposal that the
EPA and NHTSA expected to issue to
establish the National Program for
model years 2017–2025, and which is
set forth in this NPRM. The agencies
explained that the proposal would be
developed based on extensive technical
analyses, an examination of the factors
required under their respective statutes
and discussions with and input from
individual motor vehicle manufacturers
and other stakeholders. The input of
stakeholders, which is encouraged by
Executive Order 13563, has been
invaluable to the agencies in developing
today’s NPRM.
For background, as discussed above,
after publishing the Supplemental NOI
on December 8, 2010 (the December 8
SNOI), NHTSA, EPA and CARB
continued studies and conducted more
in-depth and comprehensive
rulemaking analyses related to
technology cost and effectiveness,
technological feasibility, reasonable
timing for manufacturers to implement
technologies, and economic factors, and
other relevant considerations. In
addition to this ongoing and more indepth work, the agencies continued
meeting with stakeholders and received
additional input and feedback to help
inform the rulemaking. Meetings were
held with and relevant information was
obtained from manufacturers,
manufacturer organizations, suppliers, a
labor union, environmental groups,
consumer interest groups, and
investment organizations.
This section summarizes NHTSA and
EPA stakeholder engagement between
December 2010 and July 29, 2011, the
date on which President Obama
announced the agencies’ plans for
proposing standards for MY2017–2025,
and the support of thirteen major
automakers and other stakeholders for
these plans.34 Information that the
agencies presented to stakeholders is
posted in the docket and referenced in
multiple places in this section.
The agencies’ engagement with the
large and diverse group of stakeholders
described above between December
2010 and July 29, 2011 shared the single
aim of ensuring that the agencies
possessed the most complete and
comprehensive set of information
34 NHTSA has prepared a list of stakeholder
meeting dates and participants, found in a
memorandum to the docket, titled ‘‘2017–2025
CAFE Stakeholders Meetings List,’’ at NHTSA–
2010–0131.
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possible to inform the proposed
rulemaking.
Throughout this period, the
stakeholders repeated many of the broad
concerns and suggestions described in
the TAR, NOI, and December 8 SNOI.
For example, stakeholders uniformly
expressed interest in maintaining a
harmonized and coordinated national
program that would be supported by
CARB and allow auto makers to build
one fleet and preserve consumer choice.
The stakeholders also raised concerns
about potential stringency levels,
consumer acceptance of some advanced
technologies and the potential structure
of compliance flexibilities available
under EPCA (as amended by EISA) and
the CAA. In addition, most of the
stakeholders wanted to discuss issues
concerning technology availability, cost
and effectiveness and economic
practicability. The auto manufacturers,
in particular, sought to provide the
agencies with a better understanding of
their respective strategies (and
associated costs) for improving fuel
economy while satisfying consumer
demand in the coming years.
Additionally, some stakeholders
expressed concern about potential safety
impacts associated with the standards,
consumer costs and consumer
acceptance, and potential disparate
treatment of cars and trucks. Some
stakeholders also stressed the
importance of investing in infrastructure
to support more widespread
deployment of alternative vehicles and
fuels. Many stakeholders also asked the
agencies to acknowledge prevailing
economic uncertainties in developing
proposed standards. In addition, many
stakeholders discussed the number of
years to be covered by the program and
what they considered to be important
features of a mid-term review of any
standards set or proposed for MY 2022–
2025. In all of these meetings, NHTSA
and EPA sought additional data and
information from the stakeholders that
would allow them to refine their initial
analyses and determine proposed
standards that are consistent with the
agencies’ respective statutory and
regulatory requirements. The general
issues raised by those stakeholders are
addressed in the sections of this NPRM
discussing the topics to which the
issues pertain (e.g., the form of the
standards, technology cost and
effectiveness, safety impacts, impact on
U.S. vehicle sales and other economic
considerations, costs and benefits).
The first stage of the meetings
occurred between December 2010 and
June 20, 2011. These meetings covered
topics that were generally similar to the
meetings that were held prior to the
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publication of the December 8
Supplemental NOI and that were
summarized in the Supplemental NOI.
The manufacturers provided the
agencies with additional information
related to their product plans for vehicle
models and fuel efficiency improving
technologies and associated cost
estimates. Detailed product plans
generally extend only five or six model
years into the future. Manufacturers also
provided estimates of the amount of
improvement in CAFE and CO2
emissions they could reasonably
achieve in model MYs 2017–2025;
feedback on the shape of MY 2012–2016
regulatory stringency curves and curve
cut points, regulatory program
flexibilities; recommendations for and
on the structure of one or more midterm reviews of the later model year
standards; estimates of the cost,
effectiveness and availability of some
fuel efficiency improving technologies;
and feedback on some of the cost and
effectiveness assumptions used in the
TAR analysis. In addition,
manufacturers provided input on
manufacturer experience with consumer
acceptance of some advanced
technologies and raised concerns over
consumer acceptance if higher
penetration of these technologies were
needed in the future, consumer’s
willingness to pay for improved fuel
economy, and ideas on enablers and
incentives that would increase
consumer acceptance. Many
manufacturers stated that technology is
available to significantly improve fuel
economy and CO2 emissions; however,
they maintained that the biggest
challenges relate to the cost of the
technologies, consumer willingness to
pay and consumer acceptance.
During this first phase NHTSA and
EPA continued to meet with other
stakeholders, who provided their own
perspectives on issues of importance to
them. They also provided data to the
extent available to them. Information
obtained from stakeholders during this
phase is contained in the docket.
The second stage of meetings
occurred between June 21, 2011 and
July 14, 2011, during which time EPA,
NHTSA, CARB and several White House
Offices kicked-off an intensive series of
meetings, primarily with manufacturers,
to share tentative regulatory concepts
developed by EPA, NHTSA and CARB,
which included concept stringency
curves and program flexibilities based
on the analyses completed by the
agencies as of June 21,35 and requested
35 The agencies consider a range of standards that
may satisfy applicable legal criteria, taking into
account the complete record before them . The
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feedback.36 In particular, the agencies
requested that the manufacturers
provide detailed and reliable
information on how they might comply
with the concepts and, if they projected
they could not comply, information
supporting their belief that they would
be unable to comply. Additionally, EPA
and NHTSA sought detailed input from
the manufacturers regarding potential
changes to the concept stringency levels
and program flexibilities available
under EPA’s and NHTSA’s respective
authority that might facilitate
compliance. In addition, manufacturers
provided input related to consumer
acceptance and adoption of some
advanced technologies and program
costs based on their independent
assessments or information previously
submitted to the agencies.
In these second stage meetings, the
agencies received considerable input
from the manufacturers. The agencies
carefully considered the manufacturer
information along with information
from the agencies’ independent
analyses. The agencies used all available
information to refine their assessment of
the range of program concept
stringencies and provisions that the
agencies determined were consistent
with their statutory mandates.
The third stage of meetings occurred
between July 15, 2011 and July 28, 2011.
During this time period the agencies
continued to refine concept stringencies
and compliance flexibilities based on
further consideration of the information
available to them. They also met with
approximately 13 manufacturers who
expressed ongoing interest in engaging
with the agencies.37
Throughout all three stages, EPA and
NHTSA continued to engage other
stakeholders to ensure that the agencies
were obtaining the most comprehensive
and reliable information possible to
guide the agencies in developing
proposed standards for MY 2017–2025.
Many of these stakeholders reiterated
comments previously presented to the
agencies. For instance, environmental
organizations consistently stated that
stringent standards are technically
achievable and critical to important
national interests, such as improving
energy independence, reducing climate
change, and enabling the domestic
automobile industry to remain
competitive in the global market. Labor
initial concepts shared with stakeholders were
within the range the agencies were considering,
based on the information then available to the
agencies.
36 ‘‘Agency Materials Provided to Manufacturers’’
Memo to docket NHTSA–2010–0131.
37 ‘‘Agency Materials Provided to Manufacturers’’
Memo to docket NHTSA–2010–0131.
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interests stressed the need to carefully
consider economic impacts and the
opportunity to create and support new
jobs, and consumer advocates
emphasized the economic and practical
benefits to consumers of improved fuel
economy and the need to preserve
consumer choice. In addition, a number
of stakeholders stated that the standards
under development should not have an
adverse impact on safety.
On July 29, 2011, EPA and NHTSA
the agencies issued a new SNOI with
concept stringency curves and program
provisions based on refined analyses
and further consideration of the record
before the agencies. The agencies have
received letters of support for the
concepts laid out in the SNOI from
BMW, Chrysler, Ford, General Motors,
Global Automakers, Honda, Hyundai,
Jaguar Land Rover, Kia, Mazda,
Mitsubishi, Nissan, Toyota, Volvo and
CARB. Numerous other stakeholders,
including labor, environmental and
consumer groups, have expressed their
support for the agencies’ plans to move
forward.
The agencies have considered all of
this stakeholder input in developing
this proposal, and look forward to
continuing the productive dialogue
through the comment period following
this proposal.
B. Summary of the Proposed 2017–2025
National Program
1. Joint Analytical Approach
This proposed rulemaking continues
the collaborative analytical effort
between NHTSA and EPA, which began
with the MYs 2012–2016 rulemaking.
NHTSA and EPA have worked together,
and in close coordination with CARB,
on nearly every aspect of the technical
analysis supporting these joint proposed
rules. The results of this collaboration
are reflected in the elements of the
respective NHTSA and EPA proposed
rules, as well as in the analytical work
contained in the Draft Joint NHTSA and
EPA Technical Support Document (Joint
TSD). The agencies have continued to
develop and refine supporting analyses
since issuing the NOI and Interim Joint
TAR last September. The Joint TSD, in
particular, describes important details of
the analytical work that are common, as
well as highlighting any key differences
in approach. The joint analyses include
the build-up of the baseline and
reference fleets, the derivation of the
shape of the footprint-based attribute
curves that define the agencies’
respective standards, a detailed
description of the estimated costs and
effectiveness of the technologies that are
available to vehicle manufacturers, the
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economic inputs used to calculate the
costs and benefits of the proposed rules,
a description of air conditioner and
other off-cycle technologies, and the
agencies’ assessment of the effects of the
proposed standards on vehicle safety.
This comprehensive joint analytical
approach has provided a sound and
consistent technical basis for both
agencies in developing their proposed
standards, which are summarized in the
sections below.
2. Level of the Standards
EPA and NHTSA are each proposing
two separate sets of standards, each
under its respective statutory
authorities. Both the proposed CO2 and
CAFE standards for passenger cars and
light trucks would be footprint-based,
similar to the standards currently in
effect through model year 2016, and
would become more stringent on
average in each model year from 2017
through 2025. The basis for measuring
performance relative to standards would
continue to be based predominantly on
the EPA city and highway test cycles (2cycle test). However, EPA is proposing
optional air conditioning and off-cycle
credits for the GHG program and
adjustments to calculated fuel economy
for the CAFE programs that would be
based on test procedures other than the
2-cycle tests.
EPA is proposing standards that are
projected to require, on an average
industry fleet wide basis, 163 grams/
mile of CO2 in model year 2025. This is
projected to be achieved through
improvements in fuel efficiency with
some additional reductions achieved
through reductions in non-CO2 GHG
emissions from reduced AC system
leakage and the use of lower global
warming potential (GWP) refrigerants.
The level of 163 grams/mile CO2 would
be equivalent on a mpg basis to 54.5
mpg, if this level was achieved solely
through improvements in fuel
efficiency.38
For passenger cars, the CO2
compliance values associated with the
footprint curves would be reduced on
average by 5 percent per year from the
model year 2016 projected passenger car
industry-wide compliance level through
model year 2025. In recognition of
manufacturers’ unique challenges in
improving the fuel economy and GHG
emissions of full-size pickup trucks as
we transition from the MY 2016
38 Real-world CO is typically 25 percent higher
2
and real-world fuel economy is typically 20 percent
lower than the CO2 and CAFE values discussed
here. The reference to CO2 here refers to CO2
equivalent reductions, as this included some degree
of reductions in greenhouse gases other than CO2,
as one part of the AC related reductions.
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standards to MY 2017 and later, while
preserving the utility (e.g., towing and
payload capabilities) of those vehicles,
EPA is proposing a lower annual rate of
improvement for light-duty trucks in the
early years of the program. For lightduty trucks, the proposed average
annual rate of CO2 emissions reduction
in model years 2017 through 2021 is 3.5
percent per year. EPA is also proposing
to change the slopes of the CO2-footprint
curves for light-duty trucks from those
in the 2012–2016 rule, in a manner that
effectively means that the annual rate of
improvement for smaller light-duty
trucks in model years 2017 through
2021 would be higher than 3.5 percent,
and the annual rate of improvement for
larger light-duty trucks over the same
time period would be lower than 3.5
percent. For model years 2022 through
2025, EPA is proposing an average
annual rate of CO2 emissions reduction
for light-duty trucks of 5 percent per
year.
NHTSA is proposing two phases of
passenger car and light truck standards
in this NPRM. The first phase runs from
MYs 2017–2021, with proposed
standards that are projected to require,
on an average industry fleet wide basis,
40.9 mpg in MY 2021. For passenger
cars, the annual increase in the
stringency of the target curves between
model years 2017 to 2021 is expected to
average 4.1 percent. In recognition of
manufacturers’ unique challenges in
improving the fuel economy and GHG
emissions of full-size pickup trucks as
we transition from the MY 2016
standards to MY 2017 and later, while
preserving the utility (e.g., towing and
payload capabilities) of those vehicles,
NHTSA is also proposing a slower
annual rate of improvement for light
trucks in the first phase of the program.
For light trucks, the proposed annual
increase in the stringency of the target
curves in model years 2017 through
2021 would be 2.9 percent per year on
average. NHTSA is proposing to change
the slopes of the fuel economy footprint
curves for light trucks from those in the
MYs 2012–2016 final rule, which would
effectively make the annual rate of
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improvement for smaller light trucks in
MYs 2017–2021 higher than 2.9 percent,
and the annual rate of improvement for
larger light trucks over that time period
lower than 2.9 percent.
The second phase of the CAFE
program runs from MYs 2022–2025 and
represents conditional 39 proposed
standards that are projected to require,
on an average industry fleet wide basis,
49.6 mpg in model year 2025. For
passenger cars, the annual increase in
the stringency of the target curves
between model years 2022 and 2025 is
expected to average 4.3 percent, and for
light trucks, the annual increase during
those model years is expected to average
4.7 percent. For the first time, NHTSA
is proposing to increase the stringency
of standards by the amount (in mpg
terms) that industry is expected to
improve air conditioning system
efficiency, and EPA is proposing, under
EPCA, to allow manufacturers to
include air conditioning system
efficiency improvements in the
calculation of fuel economy for CAFE
compliance. NHTSA notes that the
proposed rates of increase in stringency
for CAFE standards are lower than
EPA’s proposed rates of increase in
stringency for GHG standards. As in the
MYs 2012–2016 rulemaking, this is for
purposes of harmonization and in
reflection of several statutory
constraints in EPCA/EISA. As a primary
example, NHTSA’s proposed standards,
unlike EPA’s, do not reflect the
inclusion of air conditioning system
refrigerant and leakage improvements,
but EPA’s proposed standards would
allow consideration of such A/C
refrigerant improvements which reduce
GHGs but do not affect fuel economy.
As with the MYs 2012–2016
standards, NHTSA and EPA’s proposed
MYs 2017–2025 passenger car and light
truck standards are expressed as
39 By
’’conditional,’’ NHTSA means to say that the
proposed standards for MYs 2022–2025 represent
the agency’s current best estimate of what levels of
stringency would be maximum feasible in those
model years, but in order for the standards for those
model years to be legally reviewable a subsequent
rulemaking must be undertaken by the agency at a
later time. See Section IV for more information.
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mathematical functions depending on
vehicle footprint.40 Footprint is one
measure of vehicle size, and is
determined by multiplying the vehicle’s
wheelbase by the vehicle’s average track
width. The standards that must be met
by each manufacturer’s fleet would be
determined by computing the
production-weighted average of the
targets applicable to each of the
manufacturer’s fleet of passenger cars
and light trucks.41 Under these
footprint-based standards, the average
levels required of individual
manufacturers will depend, as noted
above, on the mix and volume of
vehicles the manufacturer produces.
The values in the tables below reflect
the agencies’ projection of the
corresponding average fleet levels that
will result from these attribute-based
curves given the agencies’ current
assumptions about the mix of vehicles
that will be sold in the model years
covered by the proposed standards.
As shown in Table I–1, NHTSA’s
fleet-wide required CAFE levels for
passenger cars under the proposed
standards are estimated to increase from
40.0 to 56.0 mpg between MY 2017 and
MY 2025. Fleet-wide required CAFE
levels for light trucks, in turn, are
estimated to increase from 29.4 to 40.3
mpg. For the reader’s reference, Table
I–1 also provides the estimated average
fleet-wide required levels for the
combined car and truck fleets,
culminating in an estimated overall fleet
average required CAFE level of 49.6
mpg in MY 2025. Considering these
combined car and truck increases, the
proposed standards together represent
approximately a 4.0 percent annual rate
of increase,42 on average, relative to the
MY 2016 required CAFE levels.
40 NHTSA is required to set attribute-based CAFE
standards for passenger cars and light trucks. 49
U.S.C. 32902(b)(3).
41 For CAFE calculations, a harmonic average is
used.
42 This estimated average percentage increase
includes the effect of changes in standard
stringency and changes in the forecast fleet sales
mix.
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would cause the actual achieved fuel
economy to be lower than the required
levels in the table above. The
flexibilities and credits that NHTSA
cannot consider include the ability of
manufacturers to pay civil penalties
rather than achieving required CAFE
levels, the ability to use FFV credits, the
ability to count electric vehicles for
compliance, the operation of plug-in
hybrid electric vehicles on electricity for
compliance prior to MY 2020, and the
ability to transfer and carry-forward
credits. When accounting for these
flexibilities and credits, NHTSA
estimates that the proposed CAFE
standards would lead to the following
average achieved fuel economy levels,
based on the projections of what each
manufacturer’s fleet will comprise in
each year of the program: 43
43 The proposed CAFE program includes
incentives for full size pick-up trucks that have
mild HEV or strong HEV systems, and for full size
pick-up trucks that have fuel economy performance
that is better than the target curve by more than
proposed levels. To receive these incentives,
manufacturers must produce vehicles with these
technologies or performance levels at volumes that
meet or exceed proposed penetration levels
(percentage of full size pick-up truck volume). This
incentive is described in detail in Section IV.1. The
NHTSA estimates in Table I–2 do not account for
the reduction in estimated average achieved fleetwide CAFE fuel economy that would occur if
manufacturers use this incentive. NHTSA has
conducted a sensitivity study that estimates the
effects for manufacturers’ potential use of this
flexibility in Chapter X of the PRIA.
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The estimated average required mpg
levels for cars and trucks under the
proposed standards shown in Table I–1
above include the use of A/C efficiency
improvements, as discussed above, but
do not reflect a number of proposed
flexibilities and credits that
manufacturers could use for compliance
that NHTSA cannot consider in
establishing standards based on EPCA/
EISA constraints. These flexibilities
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it represents a fleet average requirement,
not a requirement for each individual
vehicle within the fleet).
Based on NHTSA’s current market
forecast, the agency’s estimates of these
proposed minimum standards for
domestic passenger cars for MYs 2017–
2025 are presented below in Table I–3.
EPA is proposing GHG emissions
standards, and Table I–4 provides
estimates of the projected overall fleetwide CO2 emission compliance target
levels. The values reflected in Table I–
4 are those that correspond to the
manufacturers’ projected CO2
compliance target levels from the car
and truck footprint curves, but do not
account for EPA’s projection of how
manufactures will implement two of the
proposed incentive programs (advanced
technology vehicle multipliers, and
hybrid and performance-based
incentives for full-size pickup trucks).
EPA’s projection of fleet-wide emissions
levels that do reflect these incentives is
shown in Table I–5 below.
44 The projected fleet compliance levels for 2016
are different for trucks and the fleet than were
projected in the 2012–2016 rule. Our assessment for
this proposal is based on a predicted 2016 truck
value of 297 and a projected combined car and
truck value of 252 g/mi. That is because the
standards are footprint based and the fleet
projections, hence the footprint distributions,
change slightly with each update of our projections,
as described below. In addition, the actual fleet
compliance levels for any model year will not be
known until the end of that model year based on
actual vehicle sales.
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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 * * *,’’ and applies to
each manufacturer’s fleet of
domestically manufactured passenger
cars (i.e., like the other CAFE standards,
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NHTSA is also required by EISA to set
a minimum fuel economy standard for
domestically manufactured passenger
cars in addition to the attribute-based
passenger car standard. 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
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program credits and incentives, such as
car/truck credit transfers, air
conditioning credits, off-cycle credits,
advanced technology vehicle
multipliers, and hybrid and
performance-based incentives for full
size pick-up trucks. Two of these
flexibility provisions—advanced
technology vehicle multipliers and the
full size pick-up hybrid/performance
incentives—are expected to have an
impact on the fleet-wide emissions
levels that manufacturers will actually
achieve. Therefore, Table I–5 shows
EPA’s projection of the achieved
emission levels of the fleet for MY 2017
through 2025. The differences between
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the emissions levels shown in Tables I–
4 and I–5 reflect the impact on
stringency due to the advanced
technology vehicle multipliers and the
full size pick-up hybrid/performance
incentives, but do not reflect car-truck
trading, air conditioning credits, or offcycle credits, because, while those
credit provisions should help reduce
manufacturers’ costs of the program,
EPA believes that they will result in
real-world emission reductions that will
not affect the achieved level of emission
reductions. These estimates are more
fully discussed in III.B
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As shown in Table I–4, projected
fleet-wide CO2 emission compliance
targets for cars increase in stringency
from 213 to 144 g/mi between MY 2017
and MY 2025. Similarly, projected fleetwide CO2 equivalent emission
compliance targets for trucks increase in
stringency from 295 to 203 g/mi. As
shown, the overall fleet average CO2
level targets are projected to increase in
stringency from 243 g/mi in MY 2017 to
163 g/mi in MY 2025, which is
equivalent to 54.5 mpg if all reductions
were made with fuel economy
improvements.
EPA anticipates that manufacturers
would take advantage of proposed
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A more detailed description of how
the agencies arrived at the year by year
progression of the stringency of the
proposed standards can be found in
Sections III and IV of this preamble.
Both agencies also considered other
alternative standards as part of their
respective Regulatory Impact Analyses
that span a reasonable range of
alternative stringencies both more and
less stringent than the standards being
proposed. EPA’s and NHTSA’s analyses
of these regulatory alternatives (and
explanation of why we are proposing
the standards proposed and not the
regulatory alternatives) are contained in
Sections III and IV of this preamble,
respectively, as well as in EPA’s DRIA
and NHTSA’s PRIA.
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3. Form of the Standards
As noted, NHTSA and EPA are
proposing to continue attribute-based
standards for passenger cars and light
trucks, as required by EISA and as
allowed by the CAA, and continue to
45 Electric vehicles are assumed at 0 gram/mile in
this analysis.
46 The projected fleet compliance levels for 2016
are different for the fleet than were projected in the
2012–2016 rule. Our assessment for this proposal is
based on a predicted 2016 truck value of 297 and
a projected combined car and truck value of 252 g/
mi. That is because the standards are footprint
based and the fleet projections, hence the footprint
distributions, change slightly with each update of
our projections, as described below. In addition, the
actual fleet compliance levels for any model year
will not be known until the end of that model year
based on actual vehicle sales.
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use vehicle footprint as the attribute.
Footprint is defined as a vehicle’s
wheelbase multiplied by its track
width—in other words, the area
enclosed by the points at which the
wheels meet the ground. NHTSA and
EPA adopted an attribute-based
approach based on vehicle footprint for
MYs 2012–2016 light-duty vehicle
standards.47 The agencies continue to
believe that footprint is the most
appropriate attribute on which to base
the proposed standards, as discussed
later in this notice and in Chapter 2 of
the Joint TSD.
Under the footprint-based standards,
the curve defines a GHG or fuel
economy performance target for each
separate car or truck footprint. Using the
curves, each manufacturer thus will
have a GHG and CAFE average standard
that is unique to each of its fleets,
depending on the footprints and
production volumes of the vehicle
models produced by that manufacturer.
A manufacturer will have separate
footprint-based standards for cars and
for trucks. The curves are mostly sloped,
so that generally, larger vehicles (i.e.,
vehicles with larger footprints) will be
subject to less stringent targets (i.e.,
higher CO2 grams/mile targets and lower
CAFE mpg targets) than smaller
vehicles. This is because, generally
47 NHTSA also uses the footprint attribute in its
Reformed CAFE program for light trucks for model
years 2008–2011 and passenger car CAFE standards
for MY 2011.
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speaking, smaller vehicles are more
capable of achieving lower levels of CO2
and higher levels of fuel economy than
larger vehicles. Although a
manufacturer’s fleet average standards
could be estimated throughout the
model year based on projected
production volume of its vehicle fleet,
the standards to which the manufacturer
must comply will be based on its final
model year production figures. A
manufacturer’s calculation of its fleet
average standards as well as its fleets’
average performance at the end of the
model year will thus be based on the
production-weighted average target and
performance of each model in its fleet.48
While the concept is the same, the
proposed curve shapes for MYs 2017–
2025 are somewhat different from the
MYs 2012–2016 footprint curves. The
passenger car curves are similar in
shape to the car curves for MYs 2012–
2016. However, the agencies are
proposing more significant changes to
the light trucks curves for MYs 2017–
2025 compared to the light truck curves
for MYs 2012–2016. The agencies are
proposing changes to the light-truck
curve to increase the slope and to
48 As in the MYs 2012–2016 rule, a manufacturer
may have some models that exceed their target, and
some that are below their target. Compliance with
a fleet average standard is determined by comparing
the fleet average standard (based on the sales
weighted average of the target levels for each
model) with fleet average performance (based on
the sales weighted average of the performance for
each model).
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vehicle category and each year, the
parameters of the curve equation differ
for cars and trucks. Each parameter also
changes on a model year basis, resulting
in the yearly increases in stringency.
Figure I–1 below illustrates the
passenger car CAFE standard curves for
model years 2017 through 2025 while
Figure I–2 below illustrates the light
truck CAFE standard curves for model
years 2017 through 2025.
EPA is proposing the attribute curves
shown in Figure I–3 and Figure I–4
below for assigning a CO2 target level to
an individual vehicle’s footprint value,
for model years 2017 through 2025.
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These CO2 values would be production
weighted to determine each
manufacturer’s fleet average standard
for cars and trucks. As with the CAFE
curves, the general form of the equation
is the same for each vehicle category
and each year, but the parameters of the
equation differ for cars and trucks.
Again, each parameter also changes on
a model year basis, resulting in the
yearly increases in stringency. Figure I–
3 below illustrates the CO2 car standard
curves for model years 2017 through
2025 while Figure I–4 shows the CO2
truck standard curves for model years
2017–2025.
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extend the large-footprint cutpoint over
time to larger footprints, which we
believe represent an appropriate balance
of both technical and policy issues, as
discussed in Section II.C below and
Chapter 2 of the draft Joint TSD.
NHTSA is proposing the attribute
curves below for assigning a fuel
economy target level to an individual
car or truck’s footprint value, for model
years 2017 through 2025. These mpg
values will be production weighted to
determine each manufacturer’s fleet
average standard for cars and trucks.
Although the general model of the target
curve equation is the same for each
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BILLING CODE 4910–59–C
NHTSA and EPA are proposing to use
the same vehicle category definitions for
determining which vehicles are subject
to the car curve standards versus the
truck curve standards as were used for
MYs 2012–2016 standards. As in the
MYs 2012–2016 rulemaking, a vehicle
classified as a car under the NHTSA
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CAFE program will also be classified as
a car under the EPA GHG program, and
likewise for trucks.49 This approach of
using CAFE definitions allows the CO2
standards and the CAFE standards to
49 See 49 CFR 523 for NHTSA’s definitions for
passenger car and light truck under the CAFE
program.
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continue to be harmonized across all
vehicles for the National Program.
As just explained, generally speaking,
a smaller footprint vehicle will tend to
have higher fuel economy and lower
CO2 emissions relative to a larger
footprint vehicle when both have the
same level of fuel efficiency
improvement technology. Since the
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proposed standards apply to a
manufacturer’s overall fleet, not to an
individual vehicle, if a manufacturer’s
fleet is dominated by small footprint
vehicles, then that fleet will have a
higher fuel economy requirement and a
lower CO2 requirement than a
manufacturer whose fleet is dominated
by large footprint vehicles. Compared to
the non-attribute based CAFE standards
in place prior to MY 2011, the proposed
standards more evenly distribute the
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compliance burdens of the standards
among different manufacturers, based
on their respective product offerings.
With this footprint-based standard
approach, EPA and NHTSA continue to
believe that the rules will not create
significant incentives to produce
vehicles of particular sizes, and thus
there should be no significant effect on
the relative availability of different
vehicle sizes in the fleet due to the
proposed standards, which will help to
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74875
maintain consumer choice during the
rulemaking timeframe. Consumers
should still be able to purchase the size
of vehicle that meets their needs. Table
I–6 helps to illustrate the varying CO2
emissions and fuel economy targets
under the proposed standards that
different vehicle sizes will have,
although we emphasize again that these
targets are not actual standards—the
proposed standards are manufacturerspecific, rather than vehicle-specific.
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4. Program Flexibilities for Achieving
Compliance
a. CO2/CAFE Credits Generated Based
on Fleet Average Over-Compliance
The MYs 2012–2016 rules contain
several provisions which provide
flexibility to manufacturers in meeting
standards, many of which the agencies
are not proposing to change for MYs
2017 and later. For example, the
agencies are proposing to continue
allowing manufacturers to generate
credits for over-compliance with the
CO2 and CAFE standards.50 Under the
agencies’ footprint-based approach to
the standards, a manufacturer’s ultimate
compliance obligations are determined
at the end of each model year, when
production of the model year is
complete. Since the fleet average
standards that apply to a manufacturer’s
car and truck fleets are based on the
applicable footprint-based curves, a
production volume-weighted fleet
average requirement will be calculated
for each averaging set (cars and trucks)
based on the mix and volumes of the
models manufactured for sale by the
manufacturer. If a manufacturer’s car
and/or truck fleet achieves a fleet
average CO2/CAFE level better than the
car and/or truck standards, then the
manufacturer generates credits.
Conversely, if the fleet average CO2/
CAFE level does not meet the standard,
the fleet would incur debits (also
referred to as a shortfall). As in the MY
2011 CAFE program under EPCA/EISA,
and also in MYs 2012–2016 for the
light-duty vehicle GHG and CAFE
program, a manufacturer whose fleet
generates credits in a given model year
would have several options for using
those credits, including credit carryback, credit carry-forward, credit
transfers, and credit trading.
Credit ‘‘carry-back’’ means that
manufacturers are able to use credits to
offset a deficit that had accrued in a
prior model year, while credit ‘‘carryforward’’ means that manufacturers can
bank credits and use them toward
compliance in future model years.
EPCA, as amended by EISA, requires
NHTSA to allow manufacturers to carryback credits for up to three model years,
and to carry-forward credits for up to
five model years. EPA’s MYs 2012–2016
light duty vehicle GHG program
includes the same limitations and EPA
is proposing to continue this limitation
in the MY 2017–2025 program. To
facilitate the transition to the
increasingly more stringent standards,
EPA is proposing under its CAA
authority a one-time CO2 carry-forward
beyond 5 years, such that any credits
generated from MY 2010 through 2016
will be able to be used any time through
MY 2021. This provision would not
apply to early credits generated in MY
2009. NHTSA’s program will continue
the 5-year carry-forward and 3-year
carry-back, as required by statute.
Credit ‘‘transfer’’ means the ability of
manufacturers to move credits from
their passenger car fleet to their light
truck fleet, or vice versa. EISA required
NHTSA to establish by regulation a
CAFE credits transferring program, now
codified at 49 CFR part 536, to allow a
manufacturer to transfer credits between
its car and truck fleets to achieve
compliance with the standards. For
example, credits earned by overcompliance with a manufacturer’s car
fleet average standard could be used to
offset debits incurred due to that
manufacturer’s not meeting the truck
fleet average standard in a given year.
However, EISA imposed a cap on the
amount by which a manufacturer could
raise its CAFE through transferred
credits: 1 mpg for MYs 2011–2013; 1.5
mpg for MYs 2014–2017; and 2 mpg for
MYs 2018 and beyond.51 Under section
202(a) of the CAA, in contrast, there is
no statutory limitation on car-truck
credit transfers, and EPA’s GHG
program allows unlimited credit
transfers across a manufacturer’s cartruck fleet to meet the GHG standard.
This is based on the expectation that
this flexibility will facilitate setting
appropriate GHG standards that
manufacturers’ can comply with in the
lead time provided, and will allow the
required GHG emissions reductions to
be achieved in the most cost effective
way. Therefore, EPA did not constrain
the magnitude of allowable car-truck
credit transfers,52 as doing so would
reduce the flexibility for lead time, and
would increase costs with no
corresponding environmental benefit.
EISA also prohibits the use of
transferred credits to meet the minimum
domestic passenger car fleet CAFE
standard.53 These statutory limits will
necessarily continue to apply to the
determination of compliance with the
CAFE standards.
Credit ‘‘trading’’ means the ability of
manufacturers to sell credits to, or
purchase credits from, one another.
EISA allowed NHTSA to establish by
regulation a CAFE credit trading
51 49
U.S.C. 32903(g)(3).
proposed program will continue to
adjust car and truck credits by vehicle miles
traveled (VMT), as in the MY 2012–2016 program.
53 49 U.S.C. 32903(g)(4).
52 EPA’s
50 This credit flexibility is required by EPCA/
EISA, see 49 U.S.C. 32903, and allowed by the
CAA.
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program, also now codified at 49 CFR
Part 536, to allow credits to be traded
between vehicle manufacturers. EPA
also allows credit trading in the lightduty vehicle GHG program. These sorts
of exchanges between averaging sets are
typically allowed under EPA’s current
mobile source emission credit programs
(as well as EPA’s and NHTSA’s recently
promulgated GHG and fuel efficiency
standards for heavy-duty vehicles and
engines). EISA also prohibits
manufacturers from using traded credits
to meet the minimum domestic
passenger car CAFE standard.54
b. Air Conditioning Improvement
Credits/Fuel Economy Value Increases
Air conditioning (A/C) systems
contribute to GHG emissions in two
ways. Hydrofluorocarbon (HFC)
refrigerants, which are powerful GHGs,
can leak from the A/C system
(direct A/C emissions). In addition,
operation of the A/C system places an
additional load on the engine which
increases fuel consumption and thus
results in additional CO2 tailpipe
emissions (indirect A/C related
emissions). In the MYs 2012–2016
program, EPA allows manufacturers to
generate credits by reducing either or
both types of GHG emissions related to
A/C systems. The expected generation
of A/C credits is accounted for in setting
the level of the overall CO2 standard.
For the current proposal, as with the
MYs 2012–2016 program, manufacturers
will be able to generate CO2-equivalent
credits to use in complying with the
CO2 standards for improvements in air
conditioning (A/C) systems, both for
efficiency improvements (reduces
tailpipe CO2 and improves fuel
consumption) and for leakage reduction
or alternative, lower GWP (global
warming potential) refrigerant use
(reduces hydrofluorocarbon (HFC)
emissions). EPA is proposing that the
maximum
A/C credit available for cars is 18.8
grams/mile CO2 and for trucks is 24.4
grams/mile CO2. The proposed test
methods used to calculate these direct
and indirect A/C credits are very similar
to those of the MYs 2012–2016 program,
though EPA is seeking comment on a
revised idle test as well as a new test
procedure.
For the first time in the current
proposal, the agencies are proposing
provisions that would account for
improvements in air conditioner
efficiency in the CAFE program.
Improving A/C efficiency leads to realworld fuel economy benefits, because as
explained above, A/C operation
54 49
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represents an additional load on the
engine, so more efficient A/C operation
imposes less of a load and allows the
vehicle to go farther on a gallon of gas.
Under EPCA, EPA has authority to
adopt procedures to measure fuel
economy and calculate CAFE. Under
this authority EPA is proposing that
manufacturers could generate fuel
consumption improvement values for
purposes of CAFE compliance based on
air conditioning system efficiency
improvements for cars and trucks. This
increase in fuel economy would be
allowed up to a maximum based on
0.000563 gallon/mile for cars and
0.000810 gallon/mile for trucks. This is
equivalent to the A/C efficiency CO2
credit allowed by EPA under the GHG
program. The same methods would be
used in the CAFE program to calculate
the values for air conditioning efficiency
improvements for cars and trucks as are
used in EPA’s GHG program. NHTSA is
including in its proposed passenger car
and light truck CAFE standards an
increase in stringency in each model
year from 2017–2025 by the amount
industry is expected to improve air
conditioning system efficiency in those
years, in a manner consistent with
EPA’s GHG standards. EPA is not
proposing to allow generation of fuel
consumption improvement values for
CAFE purposes, nor is NHTSA
proposing to increase stringency of the
CAFE standard, for the use of A/C
systems that reduce leakage or employ
alternative, lower GWP refrigerant,
because those changes do not improve
fuel economy.
c. Off-cycle Credits/Fuel Economy
Value Increases
For MYs 2012–2016, EPA provided an
option for manufacturers to generate
credits for employing new and
innovative technologies that achieve
CO2 reductions that are not reflected on
current test procedures. EPA noted in
the MYs 2012–2016 rulemaking that
examples of such ‘‘off-cycle’’
technologies might include solar panels
on hybrids, adaptive cruise control, and
active aerodynamics, among other
technologies. See generally 75 FR at
25438–39. EPA’s current program
allows off-cycle credits to be generated
through MY 2016.
EPA is proposing that manufacturers
may continue to use off-cycle credits for
MY 2017 and later for the GHG program.
As with A/C efficiency, improving
efficiency through the use of off-cycle
technologies leads to real-world fuel
economy benefits and allows the vehicle
to go farther on a gallon of gas. Thus,
under its EPCA authority EPA is
proposing to allow manufacturers to
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generate fuel consumption improvement
values for purposes of CAFE compliance
based on the use of off-cycle
technologies. Increases in fuel economy
under the CAFE program based on offcycle technology will be equivalent to
the off-cycle credit allowed by EPA
under the GHG program, and these
amounts will be determined using the
same procedures and test methods as
are used in EPA’s GHG program. For the
reasons discussed in sections III and IV
of this proposal, the ability to generate
off-cycle credits and increases in fuel
economy for use in compliance will not
affect or change the level of the GHG or
CAFE standards proposed by each
agency.
Many automakers indicated that they
had a strong interest in pursuing offcycle technologies, and encouraged the
agencies to refine and simplify the
evaluation process to provide more
certainty as to the types of technologies
the agencies would approve for credit
generation. For 2017 and later, EPA is
proposing to expand and streamline the
MYs 2012–2016 off-cycle credit
provisions, including an approach by
which the agencies would provide
specified amounts of credit and fuel
consumption improvement values for a
subset of off-cycle technologies whose
benefits are readily quantifiable. EPA is
proposing a list of technologies and
credit values, where sufficient data is
available, that manufacturers could use
without going through an advance
approval process that would otherwise
be required to generate credits. EPA
believes that our assessment of off-cycle
technologies and associated credit
values on this proposed list is
conservative, and automakers may
apply for additional off-cycle credits
beyond the minimum credit value if
they have sufficient supporting data.
Further, manufacturers may also apply
for off-cycle technologies beyond those
listed, again, if they have sufficient data.
In addition, EPA is providing
additional detail on the process and
timing for the credit/fuel consumption
improvement values application and
approval process. EPA is proposing a
timeline for the approval process,
including a 60-day EPA decision
process from the time a manufacturer
submits a complete application. EPA is
also proposing a detailed, common,
step-by-step process, including a
specification of the data that
manufacturers must submit. For offcycle technologies that are both not
covered by the pre-approved off-cycle
credit/fuel consumption improvement
values list and that are not quantifiable
based on the 5-cycle test cycle option
provided in the 2012–2016 rulemaking,
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EPA is proposing to retain the public
comment process from the MYs 2012–
2016 rule.
d. Incentives for Electric Vehicles, Plugin Hybrid Electric Vehicles, and Fuel
Cell Vehicles
To facilitate market penetration of the
most advanced vehicle technologies as
rapidly as possible, EPA is proposing an
incentive multiplier for compliance
purposes for all electric vehicles (EVs),
plug-in hybrid electric vehicles
(PHEVs), and fuel cell vehicles (FCVs)
sold in MYs 2017 through 2021. This
multiplier approach means that each
EV/PHEV/FCV would count as more
than one vehicle in the manufacturer’s
compliance calculation. EPA is
proposing that EVs and FCVs start with
a multiplier value of 2.0 in MY 2017,
phasing down to a value of 1.5 in MY
2021. PHEVs would start at a multiplier
value of 1.6 in MY 2017 and phase
down to a value of 1.3 in MY 2021.55
The multiplier would be 1.0 for MYs
2022–2025.
NHTSA currently interprets EPCA
and EISA as precluding the agency from
offering additional incentives for EVs,
FCVs and PHEVs, except as specified by
statute,56 and thus is not proposing
incentive multipliers comparable to the
EPA incentive multipliers described
above.
For EVs, PHEVs and FCVs, EPA is
proposing to set a value of 0 g/mile for
the tailpipe compliance value for EVs,
PHEVs (electricity usage) and FCVs for
MY 2017–2021, with no limit on the
quantity of vehicles eligible for 0 g/mi
tailpipe emissions accounting. For MY
2022–2025, EPA is proposing that 0
g/mi only be allowed up to a percompany cumulative sales cap, tiered as
follows: 1) 600,000 vehicles for
companies that sell 300,000 EV/PHEV/
FCVs in MYs 2019–2021; 2) 200,000
vehicles for all other manufacturers.
EPA believes the industry-wide impact
of such a tiered cap will be
approximately 2 million vehicles. EPA
55 The multipliers for EV/FCV would be: 2017–
2019—2.0, 2020—1.75, 2021—1.5; for PHEV: 2017–
2019—1.6, 2020—1.45, 2021—1.3.
56 Because 49 U.S.C. 32904(a)(2)(B) expressly
requires EPA to calculate the fuel economy of
electric vehicles using the Petroleum Equivalency
Factor developed by DOE, which contains an
incentive for electric operation already, and because
49 U.S.C. 32905(a) expressly requires EPA to
calculate the fuel economy of FCVs using a
specified incentive, NHTSA believes that Congress’
having provided clear incentives for these
technologies in the CAFE program suggests that
additional incentives beyond those would not be
consistent with Congress’ intent. Similarly, because
the fuel economy of PHEVs’ electric operation must
also be calculated using DOE’s PEF, the incentive
for electric operation appears to already be inherent
in the statutory structure.
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proposes to phase-in the change in
compliance value, from 0 grams per
mile to net upstream accounting, for any
manufacturer that exceeds its
cumulative production cap for EV/
PHEV/FCVs. EPA proposes that, starting
with MY 2022, the compliance value for
EVs, FCVs, and the electric portion of
PHEVs in excess of individual
automaker cumulative production caps
would be based on net upstream
accounting.
For EVs and other dedicated
alternative fuel vehicles, EPA is
proposing to calculate fuel economy for
the CAFE program using the same
methodology as in the MYs 2012–2016
rulemaking, which aligns with EPCA/
EISA statutory requirements. For liquid
alternative fuels, this methodology
generally counts 15 percent of the
volume of fuel used in determine the
mpg-equivalent fuel economy. For
gaseous alternative fuels, the
methodology generally determines a
gasoline equivalent mpg based on the
energy content of the gaseous fuel
consumed, and then adjusts the fuel
consumption by effectively only
counting 15 percent of the actual energy
consumed. For electricity, the
methodology generally determines a
gasoline equivalent mpg by measuring
the electrical energy consumed, and
then using a petroleum equivalency
factor (PEF) to convert to an mpgequivalent value. The PEF for electricity
includes an adjustment that effectively
only counts 15 percent of the actual
energy consumed. Counting 15 percent
of the volume or energy provides an
incentive for alternative fuels in the
CAFE program.
The methodology that EPA is
proposing for dual fueled vehicles
under the GHG program and to calculate
fuel economy for the CAFE program is
discussed below in subsection I.B.7.a.
e. Incentives for ‘‘Game Changing’’
Technologies Performance for Full-Size
Pickup Truck Including Hybridization
The agencies recognize that the
standards under consideration for MYs
2017–2025 will be challenging for large
trucks, including full size pickup trucks.
In order to incentivize the penetration
into the marketplace of ‘‘game
changing’’ technologies for these
pickups, including their hybridization,
EPA is proposing a CO2 credit in the
GHG program and an equivalent fuel
consumption improvement value in the
CAFE program for manufacturers that
employ significant quantities of
hybridization on full size pickup trucks,
by including a per-vehicle CO2 credit
and fuel consumption improvement
value available for mild and strong
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hybrid electric vehicles (HEVs). EPA
would provide the incentive for the
GHG program under EPA’s CAA
authority and the incentive for the
CAFE program under EPA’s EPCA
authority. EPA’s GHG and NHTSA’s
CAFE proposed standards are set at
levels that take into account this
flexibility as an incentive for the
introduction of advanced technology.
This provides the opportunity to begin
to transform the most challenging
category of vehicles in terms of the
penetration of advanced technologies,
which, if successful at incentivizing
these ‘‘game changing technologies,’’
should allow additional opportunities to
successfully achieve the higher levels of
truck stringencies in MYs 2022–2025.
EPA is proposing that access to this
credit and fuel consumption
improvement value be conditioned on a
minimum penetration of the technology
in a manufacturer’s full size pickup
truck fleet, and is proposing criteria for
a full size pickup truck (e.g., minimum
bed size and minimum towing or
payload capability). EPA is proposing
that mild HEV pickup trucks would be
eligible for a per vehicle credit of 10
g/mi 57 during MYs 2017–2021 if the
technology is used on a minimum
percentage of a company’s full size
pickups, beginning with at least 30% of
a company’s full size pickup production
in 2017 and ramping up to at least 80%
in MY 2021. Strong HEV pickup trucks
would be eligible for a 20 g/mi per 58
vehicle credit during MYs 2017–2025 if
the technology is used on at least 10%
of the company’s full size pickups.
These volume thresholds are being
proposed in order to encourage rapid
penetration of these technologies in this
vehicle segment. EPA and NHTSA are
proposing specific definitions of mild
and strong HEV pickup trucks.
Because there are other technologies
besides mild and strong hybrids which
can significantly reduce GHG emissions
and fuel consumption in pickup trucks,
EPA is also proposing a performancebased incentive CO2 emissions credit
and equivalent fuel consumption
improvement value for full size pickup
trucks that achieve a significant CO2
reduction below/fuel economy
improvement above the applicable
target. This would be available for
vehicles achieving significant CO2
reductions/fuel economy improvements
through the use of technologies other
than hybrid drive systems. EPA is
proposing that eligible pickup trucks
achieving 15 percent below their
applicable CO2 target would receive a
57 0.001125
58 0.00225
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10 g/mi credit, and those achieving 20
percent below their target would receive
a 20 g/mi credit. The 10 g/mi
performance-based credit would be
available for MYs 2017 to 2021 and a
vehicle meeting the requirements would
receive the credit until MY 2021 unless
its CO2 level increases. The 20 g/mi
performance-based credit would be
available for a maximum of 5 years
within the model years of 2017 to 2025,
provided the CO2 level does not
increase for those vehicles earning the
credit. The credits would begin in the
model year of the eligible vehicle’s
introduction, and could not extend past
MY 2021 for the 10 g/mi credit and MY
2025 for the 20 g/mi credit.
To avoid double-counting, the same
vehicle would not receive credit under
both the HEV and the performance
based approaches.
5. Mid-Term Evaluation
Given the long time frame at issue in
setting standards for MYs 2022–2025,
and given NHTSA’s obligation to
conduct a separate rulemaking in order
to establish final standards for vehicles
for those model years, EPA and NHTSA
are proposing a comprehensive midterm evaluation and agency decisionmaking process. As part of this
undertaking, both NHTSA and EPA will
develop and compile up-to-date
information for the evaluation, through
a collaborative, robust and transparent
process, including public notice and
comment. The evaluation will be based
on (1) a holistic assessment of all of the
factors considered by the agencies in
setting standards, including those set
forth in the rule and other relevant
factors, and (2) the expected impact of
those factors on the manufacturers’
ability to comply, without placing
decisive weight on any particular factor
or projection. The comprehensive
evaluation process will lead to final
agency action by both agencies.
Consistent with the agencies’
commitment to maintaining a single
national framework for regulation of
vehicle emissions and fuel economy, the
agencies fully expect to conduct the
mid-term evaluation in close
coordination with the California Air
Resources Board (CARB). Moreover, the
agencies fully expect that any
adjustments to the GHG standards will
be made with the participation of CARB
and in a manner that ensures continued
harmonization of state and federal
vehicle standards.
Further discussion of the mid-term
evaluation can be found in section III
and IV of the proposal.
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6. Coordinated Compliance
The MYs 2012–2016 final rules
established detailed and comprehensive
regulatory provisions for compliance
and enforcement under the GHG and
CAFE programs. These provisions
remain in place for model years beyond
MY 2016 without additional action by
the agencies and EPA and NHTSA are
not proposing any significant
modifications to them. In the MYs
2012–2016 final rule, NHTSA and EPA
established a program that recognizes,
and replicates as closely as possible, the
compliance protocols associated with
the existing CAA Tier 2 vehicle
emission standards, and with earlier
model year CAFE standards. The
certification, testing, reporting, and
associated compliance activities
established for the GHG program closely
track those in previously existing
programs and are thus familiar to
manufacturers. EPA already oversees
testing, collects and processes test data,
and performs calculations to determine
compliance with both CAFE and CAA
standards. Under this coordinated
approach, the compliance mechanisms
for both programs are consistent and
non-duplicative. EPA also applies the
CAA authorities applicable to its
separate in-use requirements in this
program.
The compliance approach allows
manufacturers to satisfy the GHG
program requirements in the same
general way they comply with
previously existing applicable CAA and
CAFE requirements. Manufacturers will
demonstrate compliance on a fleetaverage basis at the end of each model
year, allowing model-level testing to
continue throughout the year as is the
current practice for CAFE
determinations. The compliance
program design includes a single set of
manufacturer reporting requirements
and relies on a single set of underlying
data. This approach still allows each
agency to assess compliance with its
respective program under its respective
statutory authority. The program also
addresses EPA enforcement in cases of
noncompliance.
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7. Additional Program Elements
a. Treatment of Compressed Natural Gas
(CNG), Plug-in Hybrid Electric Vehicles
(PHEVs), and Flexible Fuel Vehicles
(FFVs)
EPA is proposing that CO2
compliance values for plug-in hybrid
electric vehicles (PHEVs) and bi-fuel
compressed natural gas (CNG) vehicles
will be based on estimated use of the
alternative fuels, recognizing that, once
a consumer has paid several thousand
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dollars to be able to use a fuel that is
considerably cheaper than gasoline, it is
very likely that the consumer will seek
to use the cheaper fuel as much as
possible. Accordingly, for CO2
emissions compliance, EPA is proposing
to use the Society of Automotive
Engineers ‘‘utility factor’’ methodology
(based on vehicle range on the
alternative fuel and typical daily travel
mileage) to determine the assumed
percentage of operation on gasoline and
percentage of operation on the
alternative fuel for both PHEVs and bifuel CNG vehicles, along with the CO2
emissions test values on the alternative
fuel and gasoline.
EPA is proposing to account for E85
use by flexible fueled vehicles (FFVs) as
in the existing MY 2016 and later
program, based on actual usage of E85
which represents a real-world reduction
attributed to alternative fuels. Unlike
PHEV and bi-fuel CNG vehicles, there is
not a significant cost differential
between an FFV and a conventional
gasoline vehicle and historically
consumers have only fueled these
vehicles with E85 a very small
percentage of the time.
In the CAFE program for MYs 2017–
2019, the fuel economy of dual fuel
vehicles will be determined in the same
manner as specified in the MY 2012–
2016 rule, and as defined by EISA.
Beginning in MY 2020, EISA does not
specify how to measure the fuel
economy of dual fuel vehicles, and EPA
is proposing under its EPCA authority to
use the ‘‘utility factor’’ methodology for
PHEV and CNG vehicles described
above to determine how to proportion
the fuel economy when operating on
gasoline or diesel fuel and the fuel
economy when operating on the
alternative fuel. For FFVs, EPA is
proposing to use the same methodology
as it uses for the GHG program to
determine how to proportion the fuel
economy, which would be based on
actual usage of E85. EPA is proposing to
continue to use Petroleum Equivalency
Factors and the 0.15 divisor used in the
MY 2012–2016 rule for the alternative
fuels, however with no cap on the
amount of fuel economy increase
allowed. This issue is discussed further
in Section III.B.10.
b. Exclusion of Emergency and Police
Vehicles
Under EPCA, manufacturers are
allowed to exclude emergency vehicles
from their CAFE fleet 59 and all
manufacturers have historically done so.
In the MYs 2012–2016 program, EPA’s
GHG program applies to these vehicles.
59 49
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c. Small Businesses and Small Volume
Manufacturers
EPA is proposing provisions to
address two categories of smaller
manufacturers. The first category is
small businesses as defined by the
Small Business Administration (SBA).
For vehicle manufacturers, SBA’s
definition of small business is any firm
with less than 1,000 employees. As with
the MYs 2012–2016 program, EPA is
proposing to continue to exempt small
businesses from the GHG standards, for
any company that meets the SBA’s
definition of a small business. EPA
believes this exemption is appropriate
given the unique challenges small
businesses would face in meeting the
GHG standards, and since these
businesses make up less than 0.1% of
total U.S. vehicle sales, and there is no
significant impact on emission
reductions.
EPA’s proposal also addresses small
volume manufacturers, with U.S. annual
sales of less than 5,000 vehicles. Under
the MYs 2012–2016 program, these
small volume manufacturers are eligible
for an exemption from the CO2
standards. EPA is proposing to bring
small volume manufacturers into the
CO2 program for the first time starting
in MY 2017, and allow them to petition
EPA for alternative standards.
EPCA provides NHTSA with the
authority to exempt from the generally
applicable CAFE standards
manufacturers that produce fewer than
10,000 passenger cars worldwide in the
model year each of the two years prior
to the year in which they seek an
exemption.60 If NHTSA exempts a
manufacturer, it must establish an
alternate standard for that manufacturer
for that model year, at the level that the
agency decides is maximum feasible for
that manufacturer. The exemption and
alternative standard apply only if the
exempted manufacturer also produces
fewer than 10,000 passenger cars
60 49 U.S.C. 32902(d). Implementing regulations
may be found in 49 CFR part 525.
U.S.C. 32902(e).
Frm 00028
However, after further consideration of
this issue, EPA is proposing the same
type of exclusion provision for these
vehicles for MY 2012 and later because
of the unique features of vehicles
designed specifically for law
enforcement and emergency purposes,
which have the effect of raising their
GHG emissions and calling into
question the ability of manufacturers to
sufficiently reduce the emissions from
these vehicles without compromising
necessary vehicle features or dropping
vehicles from their fleets.
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worldwide in the year for which the
exemption was granted.
Further, the Temporary Lead-time
Allowance Alternative Standards
(TLAAS) provisions included in EPA’s
MYs 2012–2016 program for
manufacturers with MY 2009 U.S. sales
of less than 400,000 vehicles ends after
MY 2015 for most eligible
manufacturers.61 EPA is not proposing
to extend or otherwise replace the
TLAAS provisions for the proposed
MYs 2017–2025 program. However,
EPA is inviting comment on whether
this or some other form of flexibility is
warranted for lower volume, limited
line manufacturers, as further discussed
in Section III.B.8. With the exception of
the small businesses and small volume
manufacturers discussed above, the
proposed MYs 2017–2025 standards
would apply to all manufacturers.
C. Summary of Costs and Benefits for
the Proposed National Program
This section summarizes the projected
costs and benefits of the proposed CAFE
and GHG emissions standards. These
projections helped inform the agencies’
choices among the alternatives
considered and provide further
confirmation that the proposed
standards are appropriate under their
respective statutory authorities. The
costs and benefits projected by NHTSA
to result from these CAFE standards are
presented first, followed by those from
EPA’s analysis of the GHG emissions
standards. The agencies recognize that
there are uncertainties regarding the
benefit and cost values presented in this
proposal. Some benefits and costs are
not quantified. The value of other
benefits and costs could be too low or
too high.
For several reasons, the estimates for
costs and benefits presented by NHTSA
and EPA, while consistent, are not
directly comparable, and thus should
not be expected to be identical. Most
important, NHTSA and EPA’s standards
would require slightly different fuel
efficiency improvements. EPA’s
proposed GHG standard is more
stringent in part due to its assumptions
about manufacturers’ use of air
conditioning leakage credits, which
result from reductions in air
conditioning-related emissions of HFCs.
NHTSA is proposing standards at levels
of stringency that assume improvements
in the efficiency of air conditioning
systems, but that do not account for
reductions in HFCs, which are not
related to fuel economy or energy
61 TLAAS ends after MY 2016 for manufacturers
with MY 2009 U.S. sales of less than 50,000
vehicles.
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conservation. In addition, the CAFE and
GHG standards offer somewhat different
program flexibilities and provisions,
and the agencies’ analyses differ in their
accounting for these flexibilities
(examples include the treatment of EVs,
dual-fueled vehicles, and civil
penalties), primarily because NHTSA is
statutorily prohibited from considering
some flexibilities when establishing
CAFE standards,62 while EPA is not.
These differences contribute to
differences in the agencies’ respective
estimates of costs and benefits resulting
from the new standards. Nevertheless, it
is important to note that NHTSA and
EPA have harmonized the programs as
much as possible, and this proposal to
continue the National Program would
result in significant cost and other
advantages for the automobile industry
by allowing them to manufacture one
fleet of vehicles across the U.S., rather
than comply with potentially multiple
state standards that may occur in the
absence of the National Program.
In summary, the projected costs and
benefits presented by NHTSA and EPA
are not directly comparable, because the
levels being proposed by EPA include
air conditioning-related improvements
in HFC reductions, and because of the
projection by EPA of complete
compliance with the proposed GHG
standards, whereas NHTSA projects
some manufacturers will pay civil
penalties as part of their compliance
strategy, as allowed by EPCA. It should
also be expected that overall EPA’s
estimates of GHG reductions and fuel
savings achieved by the proposed GHG
standards will be slightly higher than
those projected by NHTSA only for the
CAFE standards because of the same
reasons described above. For the same
reasons, EPA’s estimates of
manufacturers’ costs for complying with
the proposed passenger car and light
truck GHG standards are slightly higher
than NHTSA’s estimates for complying
with the proposed CAFE standards.
1. Summary of Costs and Benefits for
the Proposed NHTSA CAFE Standards
In reading the following section, we
note that tables are identified as
reflecting ‘‘estimated required’’ values
and ‘‘estimated achieved’’ values. When
establishing standards, EPCA allows
NHTSA to only consider the fuel
economy of dual-fuel vehicles (for
example, FFVs and PHEVs) when
operating on gasoline, and prohibits
NHTSA from considering the use of
dedicated alternative fuel vehicle
credits (including for example EVs),
credit carry-forward and carry-back, and
62 See
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credit transfer and trading. NHTSA’s
primary analysis of costs, fuel savings,
and related benefits from imposing
higher CAFE standards does not include
them. However, EPCA does not prohibit
NHTSA from considering the fact that
manufacturers may pay civil penalties
rather than comply with CAFE
standards, and NHTSA’s primary
analysis accounts for some
manufacturers’ tendency to do so. The
primary analysis is generally identified
in tables throughout this document by
the term ‘‘estimated required CAFE
levels.’’
To illustrate the effects of the
flexibilities and technologies that
NHTSA is prohibited from including in
its primary analysis, NHTSA performed
a supplemental analysis of these effects
on benefits and costs of the proposed
CAFE standards that helps to
demonstrate the real-world impacts. As
an example of one of the effects,
including the use of FFV credits reduces
estimated per-vehicle compliance costs
of the program, but does not
significantly change the projected fuel
savings and CO2 reductions, because
FFV credits reduce the fuel economy
levels that manufacturers achieve not
only under the proposed standards, but
also under the baseline MY 2016 CAFE
standards. As another example,
including the operation of PHEV
vehicles on both electricity and
gasoline, and the expected use of EVs
for compliance may raise the fuel
economy levels that manufacturers
achieve under the proposed standards.
The supplemental analysis is generally
identified in tables throughout this
document by the term ‘‘estimated
achieved CAFE levels.’’
Thus, NHTSA’s primary analysis
shows the estimates the agency
considered for purposes of establishing
new CAFE standards, and its
supplemental analysis including
manufacturer use of flexibilities and
advanced technologies currently reflects
the agency’s best estimate of the
potential real-world effects of the
proposed CAFE standards.
Without accounting for the
compliance flexibilities and advanced
technologies that NHTSA is prohibited
from considering when determining the
maximum feasible level of new CAFE
standards, since manufacturers’
decisions to use those flexibilities and
technologies are voluntary, NHTSA
estimates that the required fuel
economy increases would lead to fuel
savings totaling 173 billion gallons
throughout the lives of vehicles sold in
MYs 2017–2025. At a 3 percent discount
rate, the present value of the economic
benefits resulting from those fuel
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the economic benefits from avoiding
those emissions is $49 billion, based on
a global social cost of carbon value of
$22 per metric ton (in 2010, and
growing thereafter).63 It is important to
note that NHTSA’s CAFE standards and
EPA’s GHG standards will both be in
effect, and each will lead to increases in
average fuel economy and CO2
reductions. The two agencies standards
together comprise the National Program,
and this discussion of the costs and
benefits of NHTSA’s CAFE standards
does not change the fact that both the
CAFE and GHG standards, jointly, are
the source of the benefits and costs of
the National Program. All costs are in
2009 dollars.
63 NHTSA also estimated the benefits associated
with three more estimates of a one ton GHG
reduction in 2009 ($5, $36, and $67), which will
likewise grow thereafter. See Section II for a more
detailed discussion of the social cost of carbon.
64 The ‘‘Earlier’’ column shows benefits that
NHTSA forecasts manufacturers will implement in
model years prior to 2017 that are in response to
the proposed MY 2017–2025 standards. The CAFE
model forecasts that manufactures will implement
some technologies, and achieve benefits during
vehicle redesigns that occur prior to MY 2017 in
order to comply with MY 2017 and later standards
in a cost effective manner.
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savings is $451 billion; at a 7 percent
private discount rate, the present value
of the economic benefits resulting from
those fuel savings is $358 billion.
The agency further estimates that
these new CAFE standards would lead
to corresponding reductions in CO2
emissions totaling 1.8 billion metric
tons during the lives of vehicles sold in
MYs 2017–2025. The present value of
Considering manufacturers’ ability to
employ compliance flexibilities and
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advanced technologies for meeting the
standards, NHTSA estimates the
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following for fuel savings and avoided
CO2 emissions, assuming FFV credits
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would be used toward both the baseline
and final standards:
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NHTSA estimates that the fuel economy
increases resulting from the proposed
standards would produce other benefits
both to drivers (e.g., reduced time spent
refueling) and to the U.S. as a whole
(e.g., reductions in the costs of
petroleum imports beyond the direct
savings from reduced oil purchases),65
as well as some disbenefits (e.g.,
increased traffic congestion) caused by
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65 We note, of course, that reducing the amount
of fuel purchased also reduces tax revenue for the
Federal and state/local governments. NHTSA
discusses this issue in more detail in Chapter VIII
of the PRIA.
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drivers’ tendency to travel more when
the cost of driving declines (as it does
when fuel economy increases). NHTSA
has estimated the total monetary value
to society of these benefits and
disbenefits, and estimates that the
proposed standards will produce
significant net benefits to society. Using
a 3 percent discount rate, NHTSA
estimates that the present value of these
benefits would total more than $515
billion over the lives of the vehicles sold
during MYs 2017–2025; using a 7
percent discount rate, more than $419
billion. More discussion regarding
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monetized benefits can be found in
Section IV of this notice and in
NHTSA’s PRIA. Note that the benefit
calculation in the following tables
includes the benefits of reducing CO2
emissions,66 but not the benefits of
reducing other GHG emissions.
66 CO benefits for purposes of these tables are
2
calculated using the $22/ton SCC values. Note that
the net present value of reduced GHG emissions is
calculated differently from other benefits. The same
discount rate used to discount the value of damages
from future emissions (SCC at 5, 3, and 2.5 percent)
is used to calculate net present value of SCC for
internal consistency.
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Considering manufacturers’ ability to
employ compliance flexibilities and
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advanced technologies for meeting the
standards, NHTSA estimates the present
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value of these benefits would be
reduced as follows:
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NHTSA attributes most of these
benefits (about $451 billion at a 3
percent discount rate, or about $358
billion at a 7 percent discount rate,
excluding consideration of compliance
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flexibilities and advanced technologies
for meeting the standards) to reductions
in fuel consumption, valuing fuel (for
societal purposes) at the future pre-tax
prices projected in the Energy
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Information Administration’s (EIA)
reference case forecast from the Annual
Energy Outlook (AEO) 2011. NHTSA’s
PRIA accompanying this proposal
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presents a detailed analysis of specific
benefits of the rule.
and above those required to comply
with the MY 2016 CAFE standards—
will total about $157 billion (i.e., during
MYs 2017–2025).
to meet the standards could
significantly reduce these outlays:
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monetary outlays. The agency estimates
that the incremental costs for achieving
the proposed CAFE standards—that is,
outlays by vehicle manufacturers over
However, NHTSA estimates that
manufacturers employing compliance
flexibilities and advanced technologies
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NHTSA estimates that the increases in
technology application necessary to
achieve the projected improvements in
fuel economy will entail considerable
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over the useful lives of the vehicles sold
during MYs 2017–2025.
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2. Summary of Costs and Benefits for
the Proposed EPA GHG Standards
EPA has analyzed in detail the costs
and benefits of the proposed GHG
standards. Table I–17 shows EPA’s
estimated lifetime discounted cost, fuel
savings, and benefits for all vehicles
projected to be sold in model years
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2017–2025. The benefits include
impacts such as climate-related
economic benefits from reducing
emissions of CO2 (but not other GHGs),
reductions in energy security
externalities caused by U.S. petroleum
consumption and imports, the value of
certain health benefits, the value of
additional driving attributed to the
rebound effect, the value of reduced
refueling time needed to fill up a more
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to meet the standards could
significantly reduce these increases.
NHTSA estimates, therefore, that the
total benefits of these proposed CAFE
standards will be more than 2.5 times
the magnitude of the corresponding
costs. As a consequence, the proposed
CAFE standards would produce net
benefits of $358 billion at a 3 percent
discount rate (with compliance
flexibilities, $355 billion), or $262
billion at a 7 percent discount rate (with
compliance flexibilities, $264 billion),
increase in average new vehicle prices
ranging from $161 per vehicle in MY
2017 to $1876 per vehicle in MY 2025:
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increased outlays (and, to a much less
extent, the civil penalties that some
manufacturers are expected to pay for
non-compliance), the agency estimates
that the standards would lead to
And as before, NHTSA estimates that
manufacturers employing compliance
flexibilities and advanced technologies
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NHTSA projects that manufacturers
will recover most or all of these
additional costs through higher selling
prices for new cars and light trucks. To
allow manufacturers to recover these
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fuel efficient vehicle. The analysis also
includes economic impacts stemming
from additional vehicle use, such as the
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economic damages caused by accidents,
congestion and noise. Note that benefits
depend on estimated values for the
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social cost of carbon (SCC), as described
in Section III.H.
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Table I–18 shows EPA’s estimated
lifetime fuel savings and CO2 equivalent
emission reductions for all vehicles sold
in the model years 2017–2025. The
values in Table I–18 are projected
lifetime totals for each model year and
are not discounted. As documented in
EPA’s draft RIA, the potential credit
transfer between cars and trucks may
change the distribution of the fuel
savings and GHG emission impacts
between cars and trucks. As discussed
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above with respect to NHTSA’s CAFE
standards, it is important to note that
NHTSA’s CAFE standards and EPA’s
GHG standards will both be in effect,
and each will lead to increases in
average fuel economy and reductions in
CO2 emissions. The two agencies’
standards together comprise the
National Program, and this discussion of
costs and benefits of EPA’s proposed
GHG standards does not change the fact
that both the proposed CAFE and GHG
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standards, jointly, are the source of the
benefits and costs of the National
Program. In general though, in addition
to the added GHG benefit of HFC
reductions from the EPA program, the
fuel savings benefit are also somewhat
higher than that from CAFE, primarily
because of the possibility of paying civil
penalties in lieu of applying technology
in NHTSA’s program, which is required
by EPCA.
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Table I–19 shows EPA’s estimated
lifetime discounted benefits for all
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vehicles sold in model years 2017–2025.
Although EPA estimated the benefits
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associated with four different values of
a one ton GHG reduction ($5, $22 $36,
$67 in CY 2010 and in 2009 dollars), for
the purposes of this overview
presentation of estimated benefits EPA
is showing the benefits associated with
one of these marginal values, $22 per
ton of CO2, in 2009 dollars and 2010
emissions. Table I–19 presents benefits
based on the $22 value. Section III.H
presents the four marginal values used
to estimate monetized benefits of GHG
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reductions and Section III.H presents
the program benefits using each of the
four marginal values, which represent
only a partial accounting of total
benefits due to omitted climate change
impacts and other factors that are not
readily monetized. The values in the
table are discounted values for each
model year of vehicles throughout their
projected lifetimes. The benefits include
all benefits considered by EPA such as
GHG reductions, PM benefits, energy
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security and other externalities such as
reduced refueling time and accidents,
congestion and noise. The lifetime
discounted benefits are shown for one of
four different social cost of carbon (SCC)
values considered by EPA. The values
in Table I–19 do not include costs
associated with new technology
required to meet the GHG standard and
they do not include the fuel savings
expected from that technology.
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Table I–20 shows EPA’s estimated
lifetime fuel savings, lifetime CO2
emission reductions, and the monetized
net present values of those fuel savings
and CO2 emission reductions. The fuel
savings and CO2 emission reductions
are projected lifetime values for all
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vehicles sold in the model years 2017–
2025. The estimated fuel savings in
billions of gallons and the GHG
reductions in million metric tons of CO2
shown in Table I–20 are totals for the
nine model years throughout their
projected lifetime and are not
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discounted. The monetized values
shown in Table I–20 are the summed
values of the discounted monetized fuel
savings and monetized CO2 reductions
for the model years 2017–2025 vehicles
throughout their lifetimes. The
monetized values in Table I–20 reflect
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both a 3 percent and a 7 percent
discount rate as noted.
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Table I–21 shows EPA’s estimated
incremental and total technology
outlays for cars and trucks for each of
the model years 2017–2025. The
technology outlays shown in Table I–21
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are for the industry as a whole and do
not account for fuel savings associated
with the program. Table I–22 shows
EPA’s estimated incremental cost
increase of the average new vehicle for
each model year 2017–2025. The values
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shown are incremental to a baseline
vehicle and are not cumulative. In other
words, the estimated increase for 2017
model year cars is $194 relative to a
2017 model year car meeting the MY
2016 standards. The estimated increase
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meeting the MY 2016 standards (not
$194 plus $353).
D. Background and Comparison of
NHTSA and EPA Statutory Authority
which CAFE and GHG standards are
established.
This section provides the agencies’
respective statutory authorities under
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1. NHTSA Statutory Authority
NHTSA establishes CAFE standards
for passenger cars and light trucks for
each model year under EPCA, as
amended by EISA. EPCA mandates a
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for a 2018 model year car is $353
relative to a 2018 model year car
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motor vehicle fuel economy regulatory
program to meet the various facets of the
need to conserve energy, including the
environmental and foreign policy
implications of petroleum use by motor
vehicles. EPCA allocates the
responsibility for implementing the
program between NHTSA and EPA as
follows: NHTSA sets CAFE standards
for passenger cars and light trucks; EPA
establishes the procedures for testing,
tests vehicles, collects and analyzes
manufacturers’ data, and calculates the
individual and average fuel economy of
each manufacturer’s passenger cars and
light trucks; and NHTSA enforces the
standards based on EPA’s calculations.
standards for the industry as a whole.
Prior to this NPRM, some manufacturers
raised with NHTSA the possibility of
NHTSA and EPA setting alternate
standards for part of the industry that
met certain (relatively low) sales volume
criteria—specifically, that separate
standards be set so that ‘‘intermediatesize,’’ limited-line manufacturers do not
have to meet the same levels of
stringency that larger manufacturers
have to meet until several years later.
NHTSA seeks comment on whether or
how EPCA, as amended by EISA, could
be interpreted to allow such alternate
standards for certain parts of the
industry.
a. Standard Setting
We have summarized below the most
important aspects of standard setting
under EPCA, as amended by EISA. For
each future model year, EPCA requires
that NHTSA establish separate
passenger car and light truck standards
at ‘‘the maximum feasible average fuel
economy level that it decides the
manufacturers can achieve in that
model year,’’ based on the agency’s
consideration of four statutory 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
that leads to the maximum feasible
standards given the circumstances in
each CAFE standard rulemaking.67 For
MYs 2011–2020, EPCA further requires
that separate standards for passenger
cars and for light trucks be set at levels
high enough to ensure that the CAFE of
the industry-wide combined fleet of
new passenger cars and light trucks
reaches at least 35 mpg not later than
MY 2020. For model years after 2020,
standards need simply be set at the
maximum feasible level.
Because EPCA states that standards
must be set for ‘‘* * * automobiles
manufactured by manufacturers,’’ and
because Congress provided specific
direction on how small-volume
manufacturers could obtain exemptions
from the passenger car standards,
NHTSA has long interpreted its
authority as pertaining to setting
i. Factors That Must Be Considered in
Deciding the Appropriate Stringency of
CAFE Standards
67 See Center for Biological Diversity v. NHTSA,
538 F.3d. 1172, 1195 (9th Cir. 2008) (‘‘The EPCA
clearly requires the agency to consider these four
factors, but it gives NHTSA discretion to decide
how to balance the statutory factors—as long as
NHTSA’s balancing does not undermine the
fundamental purpose of the EPCA: energy
conservation.’’).
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(1) Technological Feasibility
‘‘Technological feasibility’’ refers to
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. Thus, the agency is
not limited in determining the level of
new standards to technology that is
already being commercially applied at
the time of the rulemaking, a
consideration which is particularly
relevant for a rulemaking with a
timeframe as long as the present one.
For this rulemaking, NHTSA has
considered all types of technologies that
improve real-world fuel economy,
including air-conditioner efficiency, due
to EPA’s proposal to allow generation of
fuel consumption improvement values
for CAFE purposes based on
improvements to air-conditioner
efficiency that improves fuel efficiency.
(2) Economic Practicability
‘‘Economic practicability’’ refers to
whether a standard is one ‘‘within the
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.’’ 68 The agency has explained in
the past that this factor can be especially
important during rulemakings in which
the automobile industry is facing
significantly adverse economic
conditions (with corresponding risks to
jobs). Consumer acceptability is also an
element of economic practicability, one
which is particularly difficult to gauge
during times of uncertain fuel prices.69
68 67
FR 77015, 77021 (Dec. 16, 2002).
e.g., Center for Auto Safety v. NHTSA
(CAS), 793 F.2d 1322 (D.C. Cir. 1986)
(Administrator’s consideration of market demand as
component of economic practicability found to be
69 See,
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In a rulemaking such as the present one,
looking out into the more distant future,
economic practicability is a way to
consider the uncertainty surrounding
future market conditions and consumer
demand for fuel economy in addition to
other vehicle attributes. In an attempt to
ensure the economic practicability of
attribute-based standards, NHTSA
considers a variety of factors, including
the annual rate at which manufacturers
can increase the percentage of their fleet
that employ a particular type of fuelsaving technology, the specific fleet
mixes of different manufacturers, and
assumptions about the cost of the
standards to consumers and consumers’
valuation of fuel economy, among other
things.
It is important to note, however, that
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.’’ 70 Instead, NHTSA is
compelled ‘‘to weigh the benefits to the
nation of a higher fuel economy
standard against the difficulties of
individual automobile
manufacturers.’’ 71 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.
NHTSA has long held that the CAFE
program is not necessarily intended to
maintain the competitive positioning of
each particular company. Rather, it is
intended to enhance the fuel economy
of the vehicle fleet on American roads,
while protecting motor vehicle safety
and being mindful of the risk to the
overall United States economy.
(3) The Effect of Other Motor Vehicle
Standards of the Government on Fuel
Economy
‘‘The effect of other motor vehicle
standards of the Government on fuel
economy,’’ involves an analysis of the
effects of compliance with emission,
reasonable); Public Citizen v. NHTSA, 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).
70 CEI–I, 793 F.2d 1322, 1352 (D.C. Cir. 1986).
71 Id.
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safety, noise, or damageability standards
on fuel economy capability and thus on
average fuel economy. In previous CAFE
rulemakings, the agency has said that
pursuant to this provision, it considers
the adverse effects of other motor
vehicle standards on fuel economy. It
said so because, from the CAFE
program’s earliest years 72 until present,
the effects of such compliance on fuel
economy capability over the history of
the CAFE program have been negative
ones. For example, safety standards that
have the effect of increasing vehicle
weight lower vehicle fuel economy
capability and thus decrease the level of
average fuel economy that the agency
can determine to be feasible.
In the wake of Massachusetts v. EPA
and of EPA’s endangerment finding,
granting of a waiver to California for its
motor vehicle GHG standards, and its
own establishment of GHG standards,
NHTSA is confronted with the issue of
how to treat those standards under
EPCA/EISA, such as in the context of
the ‘‘other motor vehicle standards’’
provision. To the extent the GHG
standards result in increases in fuel
economy, they would do so almost
exclusively as a result of inducing
manufacturers to install the same types
of technologies used by manufacturers
in complying with the CAFE standards.
Comment is requested on whether
and in what way the effects of the
California and EPA standards should be
considered under EPCA/EISA, e.g.,
under the ‘‘other motor vehicle
standards’’ provision, consistent with
NHTSA’s independent obligation under
EPCA/EISA to issue CAFE standards.
The agency has already considered
EPA’s proposal and the harmonization
benefits of the National Program in
developing its own proposal.
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(4) The Need of the United States To
Conserve Energy
‘‘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.’’ 73 Environmental
implications principally include
reductions in emissions of carbon
dioxide and criteria pollutants and air
toxics. Prime examples of foreign policy
implications are energy independence
and security concerns.
72 42
FR 63184, 63188 (Dec. 15, 1977). See also
42 FR 33534, 33537 (Jun. 30, 1977).
73 42 FR 63184, 63188 (1977).
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(5) 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, which is
related to the consumer cost (or rather,
benefit) of our need for large quantities
of petroleum. In this rule, NHTSA relies
on fuel price projections from the U.S.
Energy Information Administration’s
(EIA) most recent Annual Energy
Outlook (AEO) for this analysis. Federal
government agencies generally use EIA’s
projections in their assessments of
future energy-related policies.
(6) Petroleum Consumption and Import
Externalities
U.S. consumption and imports of
petroleum products 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.
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 provide a response
option should a disruption in
commercial oil supplies threaten the
U.S. economy, to allow the United
States to meet part of its International
Energy Agency obligation to maintain
emergency oil stocks, and to provide a
national defense fuel reserve. 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.
(7) Air Pollutant Emissions
While reductions in domestic fuel
refining and distribution that result
from lower fuel consumption will
reduce U.S. emissions of various
pollutants, additional vehicle use
associated with the rebound effect 74
74 The ‘‘rebound effect’’ refers to the tendency of
drivers to drive their vehicles more as the cost of
doing so goes down, as when fuel economy
improves.
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from higher fuel economy will increase
emissions of these pollutants. Thus, the
net effect of stricter CAFE standards on
emissions of each pollutant depends on
the relative magnitudes of its reduced
emissions in fuel refining and
distribution, and increases in its
emissions from vehicle use. Fuel
savings from stricter CAFE standards
also result in lower emissions of CO2,
the main greenhouse gas emitted as a
result of refining, distribution, and use
of transportation fuels. Reducing fuel
consumption reduces carbon dioxide
emissions directly, because the primary
source of transportation-related CO2
emissions is fuel combustion in internal
combustion engines.
NHTSA has considered
environmental issues, both within the
context of EPCA and the National
Environmental Policy Act, in making
decisions about the setting of standards
from the earliest days of the CAFE
program. As courts of appeal have noted
in three decisions stretching over the
last 20 years,75 NHTSA defined the
‘‘need of the Nation to conserve energy’’
in the late 1970s 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.’’ 76 In 1988,
NHTSA included climate change
concepts in its CAFE notices and
prepared its first environmental
assessment addressing that subject.77 It
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.78 Since then,
NHTSA has considered the 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
fuel consumption.
ii. Other Factors Considered by NHTSA
NHTSA considers the potential for
adverse safety consequences when
establishing CAFE standards. This
practice is recognized approvingly in
case law.79 Under the universal or ‘‘flat’’
75 Center for Auto Safety v. NHTSA, 793 F.2d
1322, 1325 n. 12 (D.C. Cir. 1986); Public Citizen v.
NHTSA, 848 F.2d 256, 262–3 n. 27 (D.C. 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, 538 F.3d 1172 (9th
Cir. 2007).
76 42 FR 63184, 63188 (Dec. 15, 1977) (emphasis
added).
77 53 FR 33080, 33096 (Aug. 29, 1988).
78 53 FR 39275, 39302 (Oct. 6, 1988).
79 As the United States Court of Appeals pointed
out in upholding NHTSA’s exercise of judgment in
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CAFE standards that NHTSA was
previously authorized to establish, the
primary risk to safety came from the
possibility that manufacturers would
respond to higher standards by building
smaller, less safe vehicles in order to
‘‘balance out’’ the larger, safer vehicles
that the public generally preferred to
buy. Under the attribute-based
standards being proposed in this action,
that risk is reduced because building
smaller vehicles tends to raise a
manufacturer’s overall CAFE obligation,
rather than only raising its fleet average
CAFE. However, even under attributebased standards, there is still risk that
manufacturers will rely on downweighting to improve their fuel
economy (for a given vehicle at a given
footprint target) in ways that may
reduce safety.80
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iii. Factors That NHTSA Is Statutorily
Prohibited From Considering in Setting
Standards
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. Specifically, in
determining the maximum feasible level
of fuel economy for passenger cars and
light trucks, NHTSA cannot consider
the fuel economy benefits of
‘‘dedicated’’ alternative fuel vehicles
(like battery electric vehicles or natural
gas vehicles), must consider dual-fueled
automobiles to be operated only on
gasoline or diesel fuel, and may not
consider the ability of manufacturers to
use, trade, or transfer credits.81 This
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 (D.C. Cir. 1990).
80 For example, by reducing the mass of the
smallest vehicles rather than the largest, or by
reducing vehicle overhang outside the space
measured as ‘‘footprint,’’ which results in less crush
space.
81 49 U.S.C. 32902(h). We note, as discussed in
greater detail in Section IV, that NHTSA interprets
32902(h) as reflecting Congress’ intent that
statutorily-mandated compliance flexibilities
remain flexibilities. When a compliance flexibility
is not statutorily mandated, therefore, or when it
ceases to be available under the statute, we interpret
32902(h) as no longer binding the agency’s
determination of the maximum feasible levels of
fuel economy. For example, when the
manufacturing incentive for dual-fueled
automobiles under 49 U.S.C. 32905 and 32906
expires in MY 2019, there is no longer a flexibility
left to protect per 32902(h), so NHTSA considers
the calculated fuel economy of plug-in hybrid
electric vehicles for purposes of determining the
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provision limits, to some extent, the fuel
economy levels that NHTSA can find to
be ‘‘maximum feasible’’—if NHTSA
cannot consider the fuel economy of
electric vehicles, for example, NHTSA
cannot set a standards predicated on
manufacturers’ usage of electric vehicles
to meet the standards.
iv. Weighing and Balancing of Factors
NHTSA has broad discretion in
balancing the above factors in
determining the average fuel economy
level that the manufacturers can
achieve. Congress ‘‘specifically
delegated the process of setting * * *
fuel economy standards with broad
guidelines concerning the factors that
the agency must consider.’’ 82 The
breadth of those guidelines, the absence
of any statutorily prescribed formula for
balancing the factors, the fact that the
relative weight to be given to the various
factors may change from rulemaking to
rulemaking as the underlying facts
change, and the fact that the factors may
often be conflicting with respect to
whether they militate toward higher or
lower standards give NHTSA discretion
to decide what weight to give each of
the competing policies and concerns
and then determine how to balance
them—‘‘as long as NHTSA’s balancing
does not undermine the fundamental
purpose of the EPCA: energy
conservation,’’ 83 and as long as that
balancing reasonably accommodates
‘‘conflicting policies that were
committed to the agency’s care by the
statute.’’ 84 Thus, EPCA does not
mandate that any particular number be
adopted when NHTSA determines the
level of CAFE standards.
v. Other Requirements Related to
Standard Setting
The standards for passenger cars and
for light trucks must increase ratably
each year through MY 2020.85 This
statutory requirement is interpreted, in
combination with the requirement to set
the standards for each model year at the
level determined to be the maximum
feasible level that manufacturers can
achieve for that model year, to mean
that the annual increases should not be
disproportionately large or small in
relation to each other.86 Standards after
maximum feasible standards in MYs 2020 and
beyond.
82 Center for Auto Safety v. NHTSA, 793 F.2d
1322, at 1341 (D.C. Cir. 1986).
83 CBD v. NHTSA, 538 F.3d at 1195 (9th Cir.
2008).
84 Id.
85 49 U.S.C. 32902(b)(2)(C).
86 See 74 FR 14196, 14375–76 (Mar. 30, 2009).
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2020 must simply be set at the
maximum feasible level.87
The standards for passenger cars and
light trucks must also be based on one
or more vehicle attributes, like size or
weight, which correlate with fuel
economy and must be expressed in
terms of a mathematical function.88 Fuel
economy targets are set for individual
vehicles and increase as the attribute
decreases and vice versa. For example,
footprint-based standards assign higher
fuel economy targets to smallerfootprint vehicles and lower ones to
larger footprint-vehicles. The fleetwide
average fuel economy that a particular
manufacturer is required to achieve
depends on the footprint mix of its fleet,
i.e., the proportion of the fleet that is
small-, medium-, or large-footprint.
This approach can be used to require
virtually all manufacturers to increase
significantly the fuel economy of a
broad range of both passenger cars and
light trucks, i.e., the manufacturer must
improve the fuel economy of all the
vehicles in its fleet. Further, this
approach can do so without creating an
incentive for manufacturers to make
small vehicles smaller or large vehicles
larger, with attendant implications for
safety.
b. Test Procedures for Measuring Fuel
Economy
EPCA provides EPA with the
responsibility for establishing
procedures to measure fuel economy
and to calculate CAFE. Current test
procedures measure the effects of nearly
all fuel saving technologies. EPA is
considering revising the procedures for
measuring fuel economy and calculating
average fuel economy for the CAFE
program, however, to account for four
impacts on fuel economy not currently
included in these procedures—increases
in fuel economy because of increases in
efficiency of the air conditioning
system; increases in fuel economy
because of technology improvements
that achieve ‘‘off-cycle’’ benefits;
incentives for use of certain hybrid
technologies in a significant percentage
of pickup trucks; and incentives for
achieving fuel economy levels in a
significant percentage pickup trucks
that exceeds the target curve by
specified amounts, in the form of
increased values assigned for fuel
economy. NHTSA has taken these
proposed changes into account in
determining the proposed fuel economy
standards. These changes would be the
same as program elements that are part
of EPA’s greenhouse gas performance
87 49
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standards, discussed in Section III.B.10.
As discussed below, these three
elements would be implemented in the
same manner as in the EPA’s
greenhouse gas program—a vehicle
manufacturer would have the option to
generate these fuel economy values for
vehicle models that meet the criteria for
these elements and to use these values
in calculating their fleet average fuel
economy. This proposed revision to
CAFE calculation is discussed in more
detail in Sections III and IV below.
c. Enforcement and Compliance
Flexibility
NHTSA determines compliance with
the CAFE standards based on
measurements of automobile
manufacturers’ CAFE from EPA. If a
manufacturer’s passenger car or light
truck CAFE level exceeds the applicable
standard for that model year, the
manufacturer earns credits for overcompliance. 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. As
discussed in more detail in Section IV.I,
credits can be carried forward for 5
model years or back for 3, and can also
be transferred between a manufacturer’s
fleets or traded to another manufacturer.
If a manufacturer’s passenger car or
light truck CAFE level does not meet the
applicable standard for that model year,
NHTSA notifies the manufacturer. The
manufacturer may use ‘‘banked’’ credits
to make up the shortfall, but if there are
no (or not enough) credits available,
then the manufacturer has the option to
submit a ‘‘carry back plan’’ to NHTSA.
A carry back plan describes what the
manufacturer plans to do in the
following three model years to earn
enough credits to make up for the
shortfall through future overcompliance. NHTSA must examine and
determine whether to approve the plan.
In the event that a manufacturer does
not comply with a CAFE standard, even
after the consideration of credits, EPCA
provides for the assessing of civil
penalties.89 The Act specifies a precise
formula for determining the amount of
civil penalties for such a
noncompliance. 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
89 EPCA does not provide authority for seeking to
enjoin violations of the CAFE standards.
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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,
which have never been exercised by
NHTSA in the history of the CAFE
program.
Unlike the National Traffic and Motor
Vehicle Safety Act, EPCA does not
provide for recall and remedy in the
event of a noncompliance. The presence
of recall and remedy provisions 90 in the
Safety Act and their absence in EPCA is
believed to arise from the difference in
the application of the safety standards
and CAFE standards. A safety standard
applies to individual vehicles; that is,
each vehicle must possess the requisite
equipment or feature that must provide
the requisite type and level of
performance. If a vehicle does not, it is
noncompliant. Typically, a vehicle does
not entirely lack an item or equipment
or feature. Instead, the equipment or
features fails to perform adequately.
Recalling the vehicle to repair or replace
the noncompliant equipment or feature
can usually be readily accomplished.
In contrast, a CAFE standard applies
to a manufacturer’s entire fleet for a
model year. It does not require that a
particular individual vehicle be
equipped with any particular equipment
or feature or meet a particular level of
fuel economy. It does require that the
manufacturer’s fleet, as a whole,
comply. Further, although under the
attribute-based approach to setting
CAFE standards fuel economy targets
are established for individual vehicles
based on their footprints, the individual
vehicles are not required to meet or
exceed those targets. However, as a
practical matter, if a manufacturer
chooses to design some vehicles that fall
below their target levels of fuel
economy, it will need to design other
vehicles that exceed their targets if the
manufacturer’s overall fleet average is to
meet the applicable standard.
Thus, under EPCA, there is no such
thing as a noncompliant vehicle, only a
noncompliant fleet. No particular
vehicle in a noncompliant fleet is any
more, or less, noncompliant than any
other vehicle in the fleet.
2. EPA Statutory Authority
Title II of the Clean Air Act (CAA)
provides for comprehensive regulation
of mobile sources, authorizing EPA to
regulate emissions of air pollutants from
all mobile source categories. Pursuant to
90 49 U.S.C. 30120, Remedies for defects and
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these sweeping grants of authority, EPA
considers such issues as technology
effectiveness, its cost (both per vehicle,
per manufacturer, and per consumer),
the lead time necessary to implement
the technology, and based on this the
feasibility and practicability of potential
standards; the impacts of potential
standards on emissions reductions of
both GHGs and non-GHGs; the impacts
of standards on oil conservation and
energy security; the impacts of
standards on fuel savings by consumers;
the impacts of standards on the auto
industry; other energy impacts; as well
as other relevant factors such as impacts
on safety
Pursuant to Title II of the Clean Air
Act, EPA has taken a comprehensive,
integrated approach to mobile source
emission control that has produced
benefits well in excess of the costs of
regulation. In developing the Title II
program, the Agency’s historic, initial
focus was on personal vehicles since
that category represented the largest
source of mobile source emissions. Over
time, EPA has established stringent
emissions standards for large truck and
other heavy-duty engines, nonroad
engines, and marine and locomotive
engines, as well. The Agency’s initial
focus on personal vehicles has resulted
in significant control of emissions from
these vehicles, and also led to
technology transfer to the other mobile
source categories that made possible the
stringent standards for these other
categories.
As a result of Title II requirements,
new cars and SUVs sold today have
emissions levels of hydrocarbons,
oxides of nitrogen, and carbon
monoxide that are 98–99% lower than
new vehicles sold in the 1960s, on a per
mile basis. Similarly, standards
established for heavy-duty highway and
nonroad sources require emissions rate
reductions on the order of 90% or more
for particulate matter and oxides of
nitrogen. Overall ambient levels of
automotive-related pollutants are lower
now than in 1970, even as economic
growth and vehicle miles traveled have
nearly tripled. These programs have
resulted in millions of tons of pollution
reduction and major reductions in
pollution-related deaths (estimated in
the tens of thousands per year) and
illnesses. The net societal benefits of the
mobile source programs are large. In its
annual reports on federal regulations,
the Office of Management and Budget
reports that many of EPA’s mobile
source emissions standards typically
have projected benefit-to-cost ratios of
5:1 to 10:1 or more. Follow-up studies
show that long-term compliance costs to
the industry are typically lower than the
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cost projected by EPA at the time of
regulation, which result in even more
favorable real world benefit-to-cost
ratios.91 Pollution reductions
attributable to Title II mobile source
controls are critical components to
attainment of primary National Ambient
Air Quality Standards, significantly
reducing the national inventory and
ambient concentrations of criteria
pollutants, especially PM2.5 and ozone.
See e.g. 69 FR 38958, 38967–68 (June
29, 2004) (controls on non-road diesel
engines expected to reduce entire
national inventory of PM2.5 by 3.3%
(86,000 tons) by 2020). Title II controls
have also made enormous reductions in
air toxics emitted by mobile sources. For
example, as a result of EPA’s 2007
mobile source air toxics standards, the
cancer risk attributable to total mobile
source air toxics will be reduced by
30% in 2030 and the risk from mobile
source benzene (a leukemogen) will be
reduced by 37% in 2030. (reflecting
reductions of over three hundred
thousand tons of mobile source air toxic
emissions) 72 FR 8428, 8430 (Feb. 26,
2007).
Title II emission standards have also
stimulated the development of a much
broader set of advanced automotive
technologies, such as on-board
computers and fuel injection systems,
which are the building blocks of today’s
automotive designs and have yielded
not only lower pollutant emissions, but
improved vehicle performance,
reliability, and durability.
This proposal implements a specific
provision from Title II, section 202(a).92
Section 202(a)(1) of the Clean Air Act
(CAA) states that ‘‘the Administrator
shall by regulation prescribe (and from
time to time revise) * * * standards
applicable to the emission of any air
pollutant from any class or classes of
new motor vehicles * * *, which in his
judgment cause, or contribute to, air
pollution which may reasonably be
anticipated to endanger public health or
welfare.’’ If EPA makes the appropriate
endangerment and cause or contribute
findings, then section 202(a) authorizes
EPA to issue standards applicable to
emissions of those pollutants.
Any standards under CAA section
202(a)(1) ‘‘shall be applicable to such
vehicles * * * for their useful life.’’
Emission standards set by the EPA
under CAA section 202(a)(1) are
technology-based, as the levels chosen
must be premised on a finding of
technological feasibility. Thus,
standards promulgated under CAA
section 202(a) are to take effect only
‘‘after providing such period as the
Administrator finds necessary to permit
the development and application of the
requisite technology, giving appropriate
consideration to the cost of compliance
within such period’’ (section 202 (a)(2);
see also NRDC v. EPA, 655 F. 2d 318,
322 (DC Cir. 1981)). EPA is afforded
considerable discretion under section
202(a) when assessing issues of
technical feasibility and availability of
lead time to implement new technology.
Such determinations are ‘‘subject to the
restraints of reasonableness’’, which
‘‘does not open the door to ‘crystal ball’
inquiry.’’ NRDC, 655 F. 2d at 328,
quoting International Harvester Co. v.
Ruckelshaus, 478 F. 2d 615, 629 (DC
Cir. 1973). However, ‘‘EPA is not
obliged to provide detailed solutions to
every engineering problem posed in the
perfection of the trap-oxidizer. In the
absence of theoretical objections to the
technology, the agency need only
identify the major steps necessary for
development of the device, and give
plausible reasons for its belief that the
industry will be able to solve those
problems in the time remaining. The
EPA is not required to rebut all
speculation that unspecified factors may
hinder ‘real world’ emission control.’’
NRDC, 655 F. 2d at 333–34. In
developing such technology-based
standards, EPA has the discretion to
consider different standards for
appropriate groupings of vehicles
(‘‘class or classes of new motor
vehicles’’), or a single standard for a
larger grouping of motor vehicles
(NRDC, 655 F. 2d at 338).
Although standards under CAA
section 202(a)(1) are technology-based,
they are not based exclusively on
technological capability. EPA has the
discretion to consider and weigh
various factors along with technological
feasibility, such as the cost of
compliance (see section 202(a) (2)), lead
time necessary for compliance (section
202(a)(2)), safety (see NRDC, 655 F. 2d
at 336 n. 31) and other impacts on
consumers,93 and energy impacts
associated with use of the technology.
91 OMB, 2011. 2011 Report to Congress on the
Benefits and Costs of Federal Regulations and
Unfunded Mandates on State, Local, and Tribal
Entities. Office of Information and Regulatory
Affairs. June. https://www.whitehouse.gov/sites/
default/files/omb/inforeg/2011_cb/
2011_cba_report.pdf. Web site accessed on October
11, 2011.
92 42 U.S.C. 7521 (a)
93 Since its earliest Title II regulations, EPA has
considered the safety of pollution control
technologies. See 45 Fed. Reg. 14,496, 14,503
(1980). (‘‘EPA would not require a particulate
control technology that was known to involve
serious safety problems. If during the development
of the trap-oxidizer safety problems are discovered,
EPA would reconsider the control requirements
implemented by this rulemaking’’).
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See George E. Warren Corp. v. EPA, 159
F.3d 616, 623–624 (DC Cir. 1998)
(ordinarily permissible for EPA to
consider factors not specifically
enumerated in the Act).
In addition, EPA has clear authority to
set standards under CAA section 202(a)
that are technology forcing when EPA
considers that to be appropriate, but is
not required to do so (as compared to
standards set under provisions such as
section 202(a)(3) and section 213(a)(3)).
EPA has interpreted a similar statutory
provision, CAA section 231, as follows:
While the statutory language of section 231
is not identical to other provisions in title II
of the CAA that direct EPA to establish
technology-based standards for various types
of engines, EPA interprets its authority under
section 231 to be somewhat similar to those
provisions that require us to identify a
reasonable balance of specified emissions
reduction, cost, safety, noise, and other
factors. See, e.g., Husqvarna AB v. EPA, 254
F.3d 195 (DC Cir. 2001) (upholding EPA’s
promulgation of technology-based standards
for small non-road engines under section
213(a)(3) of the CAA). However, EPA is not
compelled under section 231 to obtain the
‘‘greatest degree of emission reduction
achievable’’ as per sections 213 and 202 of
the CAA, and so EPA does not interpret the
Act as requiring the agency to give
subordinate status to factors such as cost,
safety, and noise in determining what
standards are reasonable for aircraft engines.
Rather, EPA has greater flexibility under
section 231 in determining what standard is
most reasonable for aircraft engines, and is
not required to achieve a ‘‘technology
forcing’’ result.94
This interpretation was upheld as
reasonable in NACAA v. EPA, (489 F.3d
1221, 1230 (DC Cir. 2007)). CAA section
202(a) does not specify the degree of
weight to apply to each factor, and EPA
accordingly has discretion in choosing
an appropriate balance among factors.
See Sierra Club v. EPA, 325 F.3d 374,
378 (DC Cir. 2003) (even where a
provision is technology-forcing, the
provision ‘‘does not resolve how the
Administrator should weigh all [the
statutory] factors in the process of
finding the ‘greatest emission reduction
achievable’ ’’). Also see Husqvarna AB
v. EPA, 254 F. 3d 195, 200 (DC Cir.
2001) (great discretion to balance
statutory factors in considering level of
technology-based standard, and
statutory requirement ‘‘to [give
appropriate] consideration to the cost of
applying * * * technology’’ does not
mandate a specific method of cost
analysis); see also Hercules Inc. v. EPA,
598 F. 2d 91, 106 (DC Cir. 1978) (‘‘In
reviewing a numerical standard we
must ask whether the agency’s numbers
are within a zone of reasonableness, not
94 70
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whether its numbers are precisely
right’’); Permian Basin Area Rate Cases,
390 U.S. 747, 797 (1968) (same); Federal
Power Commission v. Conway Corp.,
426 U.S. 271, 278 (1976) (same); Exxon
Mobil Gas Marketing Co. v. FERC, 297
F. 3d 1071, 1084 (DC Cir. 2002) (same).
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a. EPA’s Testing Authority
Under section 203 of the CAA, sales
of vehicles are prohibited unless the
vehicle is covered by a certificate of
conformity. EPA issues certificates of
conformity pursuant to section 206 of
the Act, based on (necessarily) pre-sale
testing conducted either by EPA or by
the manufacturer. The Federal Test
Procedure (FTP or ‘‘city’’ test) and the
Highway Fuel Economy Test (HFET or
‘‘highway’’ test) are used for this
purpose. Compliance with standards is
required not only at certification but
throughout a vehicle’s useful life, so
that testing requirements may continue
post-certification. Useful life standards
may apply an adjustment factor to
account for vehicle emission control
deterioration or variability in use
(section 206(a)).
Pursuant to EPCA, EPA is required to
measure fuel economy for each model
and to calculate each manufacturer’s
average fuel economy.95 EPA uses the
same tests—the FTP and HFET—for fuel
economy testing. EPA established the
FTP for emissions measurement in the
early 1970s. In 1976, in response to the
Energy Policy and Conservation Act
(EPCA) statute, EPA extended the use of
the FTP to fuel economy measurement
and added the HFET.96 The provisions
in the 1976 regulation, effective with the
1977 model year, established
procedures to calculate fuel economy
values both for labeling and for CAFE
purposes. Under EPCA, EPA is required
to use these procedures (or procedures
which yield comparable results) for
measuring fuel economy for cars for
CAFE purposes, but not for labeling
purposes.97 EPCA does not pose this
restriction on CAFE test procedures for
light trucks, but EPA does use the FTP
and HFET for this purpose. EPA
determines fuel economy by measuring
the amount of CO2 and all other carbon
compounds (e.g. total hydrocarbons
(THC) and carbon monoxide (CO)), and
then, by mass balance, calculating the
amount of fuel consumed. EPA’s
proposed changes to the procedures for
measuring fuel economy and calculating
95 See
49 U.S.C. 32904(c).
41 FR 38674 (Sept. 10, 1976), which is
codified at 40 CFR part 600.
97 See 49 U.S.C. 32904(c).
96 See
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average fuel economy are discussed in
section III.B.10.
b. EPA Enforcement Authority
Section 207 of the CAA grants EPA
broad authority to require
manufacturers to remedy vehicles if
EPA determines there are a substantial
number of noncomplying vehicles. In
addition, section 205 of the CAA
authorizes EPA to assess penalties of up
to $37,500 per vehicle for violations of
various prohibited acts specified in the
CAA. In determining the appropriate
penalty, EPA must consider a variety of
factors such as the gravity of the
violation, the economic impact of the
violation, the violator’s history of
compliance, and ‘‘such other matters as
justice may require.’’ Unlike EPCA, the
CAA does not authorize vehicle
manufacturers to pay fines in lieu of
meeting emission standards.
c. Compliance
EPA oversees testing, collects and
processes test data, and performs
calculations to determine compliance
with both CAA and CAFE standards.
CAA standards apply not only at the
time of certification but also throughout
the vehicle’s useful life, and EPA is
accordingly is proposing in-use
standards as well as standards based on
testing performed at time of production.
See section III.E. Both the CAA and
EPCA provide for penalties should
manufacturers fail to comply with their
fleet average standards, but, unlike
EPCA, there is no option for
manufacturers to pay fines in lieu of
compliance with the standards. Under
the CAA, penalties are typically
determined on a vehicle-specific basis
by determining the number of a
manufacturer’s highest emitting vehicles
that cause the fleet average standard
violation. Penalties under Title II of the
CAA are capped at $25,000 per day of
violation and apply on a per vehicle
basis. CAA section 205 (a).
d. Test Procedures
EPA establishes the test procedures
under which compliance with both the
CAA GHG standards and the EPCA fuel
economy standards are measured. EPA’s
testing authority under the CAA is
flexible, but testing for fuel economy for
passenger cars is by statute is limited to
the Federal Test procedure (FTP) or test
procedures which provide results which
are equivalent to the FTP. 49 USC
section 32904 and section III.B, below.
EPA developed and established the FTP
in the early 1970s and, after enactment
of EPCA in 1976, added the Highway
Fuel Economy Test to be used in
conjunction with the FTP for fuel
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economy testing. EPA has also
developed tests with additional cycles
(the so-called 5-cycle test) which test is
used for purposes of fuel economy
labeling and is also used in the EPA
program for extending off-cycle credits
under both the light-duty and (along
with NHTSA) heavy-duty vehicle GHG
programs. See 75 FR at 25439; 76 FR at
57252. In this rule, EPA is proposing to
retain the FTP and HFET for purposes
of testing the fleetwide average
standards, and is further proposing
modifications to the N2O measurement
test procedures and the A/C CO2
efficiency test procedures EPA initially
adopted in the 2012–2016 rule.
3. Comparing the Agencies’ Authority
As the above discussion makes clear,
there are both important differences
between the statutes under which each
agency is acting as well as several
important areas of similarity. One
important difference is that EPA’s
authority addresses various GHGs,
while NHTSA’s authority addresses fuel
economy as measured under specified
test procedures and calculated by EPA.
This difference is reflected in this
rulemaking in the scope of the two
standards: EPA’s proposal takes into
account reductions of direct air
conditioning emissions, as well as
proposed standards for methane and
N2O, but NHTSA’s does not, because
these things do not relate to fuel
economy. A second important
difference is that EPA is proposing
certain compliance flexibilities, such as
the multiplier for advanced technology
vehicles, and takes those flexibilities
into account in its technical analysis
and modeling supporting its proposal.
EPCA specifies a number of particular
compliance flexibilities for CAFE, and
expressly prohibits NHTSA from
considering the impacts of those
statutory compliance flexibilities in
setting the CAFE standard so that the
manufacturers’ election to avail
themselves of the permitted flexibilities
remains strictly voluntary.98 The Clean
Air Act, on the other hand, contains no
such prohibition. These considerations
result in some differences in the
technical analysis and modeling used to
support EPA’s and NHTSA’s proposed
standards.
Another important area where the two
agencies’ authorities are similar but not
identical involves the transfer of credits
between a single firm’s car and truck
fleets. EISA revised EPCA to allow for
such credit transfers, but placed a cap
on the amount of CAFE credits which
can be transferred between the car and
98 49
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truck fleets. 49 U.S.C. 32903(g)(3).
Under CAA section 202(a), EPA is
proposing to continue to allow CO2
credit transfers between a single
manufacturer’s car and truck fleets, with
no corresponding limits on such
transfers. In general, the EISA limit on
CAFE credit transfers is not expected to
have the practical effect of limiting the
amount of CO2 emission credits
manufacturers may be able to transfer
under the CAA program, recognizing
that manufacturers must comply with
both the proposed CAFE standards and
the proposed EPA standards. However,
it is possible that in some specific
circumstances the EPCA limit on CAFE
credit transfers could constrain the
ability of a manufacturer to achieve cost
savings through unlimited use of GHG
emissions credit transfers under the
CAA program.
These differences, however, do not
change the fact that in many critical
ways the two agencies are charged with
addressing the same basic issue of
reducing GHG emissions and improving
fuel economy. The agencies are looking
at the same set of control technologies
(with the exception of the air
conditioning leakage-related
technologies). The standards set by each
agency will drive the kind and degree of
penetration of this set of technologies
across the vehicle fleet. As a result, each
agency is trying to answer the same
basic question—what kind and degree of
technology penetration is necessary to
achieve the agencies’ objectives in the
rulemaking time frame, given the
agencies’ respective statutory
authorities?
In making the determination of what
standards are appropriate under the
CAA and EPCA, each agency is to
exercise its judgment and balance many
similar factors. NHTSA’s factors are
provided by EPCA: 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. EPA has the discretion
under the CAA to consider many related
factors, such as the availability of
technologies, the appropriate lead time
for introduction of technology, and
based on this the feasibility and
practicability of their standards; the
impacts of their standards on emissions
reductions (of both GHGs and nonGHGs); the impacts of their standards on
oil conservation; the impacts of their
standards on fuel savings by consumers;
the impacts of their standards on the
auto industry; as well as other relevant
factors such as impacts on safety.
Conceptually, therefore, each agency is
considering and balancing many of the
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same concerns, and each agency is
making a decision that at its core is
answering the same basic question of
what kind and degree of technology
penetration is it appropriate to call for
in light of all of the relevant factors in
a given rulemaking, for the model years
concerned. Finally, each agency has the
authority to take into consideration
impacts of the standards of the other
agency. EPCA calls for NHTSA to take
into consideration the effects of EPA’s
emissions standards on fuel economy
capability (see 49 U.S.C. 32902 (f)), and
EPA has the discretion to take into
consideration NHTSA’s CAFE standards
in determining appropriate action under
section 202(a). This is consistent with
the Supreme Court’s statement that
EPA’s mandate to protect public health
and welfare is wholly independent from
NHTSA’s mandate to promote energy
efficiency, but there is no reason to
think the two agencies cannot both
administer their obligations and yet
avoid inconsistency. Massachusetts v.
EPA, 549 U.S. 497, 532 (2007).
In this context, it is in the Nation’s
interest for the two agencies to continue
to work together in developing their
respective proposed standards, and they
have done so. For example, the agencies
have committed considerable effort to
develop a joint Technical Support
Document that provides a technical
basis underlying each agency’s analyses.
The agencies also have worked closely
together in developing and reviewing
their respective modeling, to develop
the best analysis and to promote
technical consistency. The agencies
have developed a common set of
attribute-based curves that each agency
supports as appropriate both technically
and from a policy perspective. The
agencies have also worked closely to
ensure that their respective programs
will work in a coordinated fashion, and
will provide regulatory compatibility
that allows auto manufacturers to build
a single national light-duty fleet that
would comply with both the GHG and
the CAFE standards. The resulting
overall close coordination of the
proposed GHG and CAFE standards
should not be surprising, however, as
each agency is using a jointly developed
technical basis to address the closely
intertwined challenges of energy
security and climate change.
As set out in detail in Sections III and
IV of this notice, both EPA and NHTSA
believe the agencies’ proposals are fully
justified under their respective statutory
criteria. The proposed standards are
feasible in each model year within the
lead time provided, based on the
agencies’ projected increased use of
various technologies which in most
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cases are already in commercial
application in the fleet to varying
degrees. Detailed modeling of the
technologies that could be employed by
each manufacturer supports this initial
conclusion. The agencies also carefully
assessed the costs of the proposed rules,
both for the industry as a whole and per
manufacturer, as well as the costs per
vehicle, and consider these costs to be
reasonable during the rulemaking time
frame and recoverable (from fuel
savings). The agencies recognize the
significant increase in the application of
technology that the proposed standards
would require across a high percentage
of vehicles, which will require the
manufacturers to devote considerable
engineering and development resources
before 2017 laying the critical
foundation for the widespread
deployment of upgraded technology
across a high percentage of the 2017–
2025 fleet. This clearly will be
challenging for automotive
manufacturers and their suppliers,
especially in the current economic
climate, and given the stringency of the
recently-established MYs 2012–2016
standards. However, based on all of the
analyses performed by the agencies, our
judgment is that it is a challenge that
can reasonably be met.
The agencies also evaluated the
impacts of these standards with respect
to the expected reductions in GHGs and
oil consumption and, found them to be
very significant in magnitude. The
agencies considered other factors such
as the impacts on noise, energy, and
vehicular congestion. The impact on
safety was also given careful
consideration. Moreover, the agencies
quantified the various costs and benefits
of the proposed standards, to the extent
practicable. The agencies’ analyses to
date indicate that the overall quantified
benefits of the proposed standards far
outweigh the projected costs. All of
these factors support the reasonableness
of the proposed standards. See section
III (proposed GHG standards) and
section IV (proposed CAFE standards)
for a detailed discussion of each
agency’s basis for its selection of its
proposed standards.
The fact that the benefits are
estimated to considerably exceed their
costs supports the view that the
proposed standards represent an
appropriate balance of the relevant
statutory factors. In drawing this
conclusion, the agencies acknowledge
the uncertainties and limitations of the
analyses. For example, the analysis of
the benefits is highly dependent on the
estimated price of fuel projected out
many years into the future. There is also
significant uncertainty in the potential
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process. The agencies intend to evaluate
all such new information as it becomes
available, and where appropriate to
update their analysis based on such
information for purposes of the final
rule. In addition, the agencies may make
new information and/or analyses
available in the agencies’ respective
public dockets for this rulemaking prior
to the final rule, where that is
appropriate, in order to facilitate public
comment. We encourage all
stakeholders to periodically check the
two agencies’ dockets between the
proposal and final rules for any
potential new docket submissions from
the agencies.
II. Joint Technical Work Completed for
This Proposal
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range of values that could be assigned
to the social cost of carbon. There are a
variety of impacts that the agencies are
unable to quantify, such as non-market
damages, extreme weather, socially
contingent effects, or the potential for
longer-term catastrophic events, or the
impact on consumer choice. The costbenefit analyses are one of the important
things the agencies consider in making
a judgment as to the appropriate
standards to propose under their
respective statutes. Consideration of the
results of the cost-benefit analyses by
the agencies, however, includes careful
consideration of the limitations
discussed above.
B. Developing the Future Fleet for
Assessing Costs, Benefits, and Effects
A. Introduction
In this section, NHTSA and EPA
discuss several aspects of their joint
technical analyses. These analyses are
common to the development of each
agency’s standards. Specifically we
discuss: the development of the vehicle
market forecast used by each agency for
assessing costs, benefits, and effects, the
development of the attribute-based
standard curve shapes, the technologies
the agencies evaluated and their costs
and effectiveness, the economic
assumptions the agencies included in
their analyses, a description of the air
conditioning and off-cycle technology
(credit) programs, as well as the effects
of the proposed standards on vehicle
safety. The Joint Technical Support
Document (TSD) discusses the agencies’
joint technical work in more detail.
The agencies have based today’s
proposal on a very significant body of
data and analysis that we believe is the
best information currently available on
the full range of technical and other
inputs utilized in our respective
analyses. As noted in various places
throughout this preamble, the draft Joint
TSD, the NHTSA preliminary RIA, and
the EPA draft RIA, we expect new
information will become available
between the proposal and final
rulemaking. This new information will
come from a range of sources: some is
based on work the agencies have
underway (e.g., work on technology
costs and effectiveness, potentially
updating our baseline year from model
year 2008 to model year 2010); other
sources are those we expect to be
released by others (e.g., the Energy
Information Agency’s Annual Energy
Outlook, which is published each year,
and the most recent available version of
which we expect to use for the final
rule); and other information that will
likely come from the public comment
1. Why did the agencies establish a
baseline and reference vehicle fleet?
In order to calculate the impacts of
the EPA and NHTSA regulations, it is
necessary to estimate the composition of
the future vehicle fleet absent these
regulations, to provide a reference point
relative to which costs, benefits, and
effects of the regulations are assessed.
As in the 2012–2016 light duty vehicle
rulemaking, EPA and NHTSA have
developed this comparison fleet in two
parts. The first step was to develop a
baseline fleet based on model year 2008
data. This baseline includes vehicle
sales volumes, GHG/fuel economy
performance, and contains a listing of
the base technologies on every 2008
vehicle sold. The second step was to
project that baseline fleet volume into
model years 2017–2025. The vehicle
volumes projected out to MY 2025 is
referred to as the reference fleet
volumes. The third step was to modify
that MY 2017–2025 reference fleet such
that it reflects technology manufacturers
could apply if MY 2016 standards are
extended without change through MY
2025.99 Each agency used its modeling
system to develop a modified or final
reference fleet, or adjusted baseline, for
use in its analysis of regulatory
alternatives, as discussed below and in
Chapter 1 of the EPA draft RIA. All of
the agencies’ estimates of emission
reductions, fuel economy
improvements, costs, and societal
impacts are developed in relation to the
respective reference fleets. This section
2. How Did the Agencies Develop the
Baseline Vehicle Fleet?
NHTSA and EPA developed a
baseline fleet comprised of model year
2008 data gathered from EPA’s emission
and fuel economy database. This
baseline fleet was originally developed
by EPA and NHTSA for the 2012–2016
final rule, and was updated for this
proposal.101 The new fleet has the
model year 2008 vehicle’s volumes and
attributes along with the addition of
projected volumes from 2017 to 2025. It
also has some expanded footprint data
for pickup trucks that was needed for a
more detailed analysis of the truck
curve.
In this proposed rulemaking, the
agencies are again choosing to use
model year 2008 vehicle data to be the
basis of the baseline fleet, but for
different reasons than in the 2012–2016
final rule. Model year 2008 is now the
most recent model year for which the
industry had normal sales. Model year
2009 data is available, but the agencies
believe that model year was disrupted
by the economic downturn and the
bankruptcies of both General Motors
and Chrysler resulting in a significant
reduction in the number of vehicles sold
by both companies and the industry as
a whole. These abnormalities led the
agencies to conclude that 2009 data was
not representative for projecting the
future fleet. Model Year 2010 data was
not complete because not all
manufacturers have yet submitted it to
EPA, and was thus not available in time
for it to be used for this proposal.
Therefore, the agencies chose to use
model year 2008 again as the baseline
since it was the latest complete
representative and transparent data set
available. However, the agencies will
consider using Model Year 2010 for the
final rule, based on availability and an
99 EPA’s MY 2016 GHG standards under the CAA
continue into the future until they are changed.
While NHTSA must actively promulgate standards
in order for CAFE standards to extend past MY
2016, the agency has, as in all recent CAFE
rulemakings, defined a no-action (i.e., baseline)
regulatory alternative as an indefinite extension of
the last-promulgated CAFE standards for purposes
of the main analysis of the standards in this
preamble.
100 EPA’s Omega Model and input sheets are
available at https://www.epa.gov/oms/climate/
models.htm; DOT/NHTSA’s CAFE Compliance and
Effects Modeling System (commonly known as the
‘‘Volpe Model’’) and input and output sheets are
available at https://www.nhtsa.gov/fuel-economy.
101 Further discussion of the development of the
2008 baseline fleet for the MY2012–2016 rule can
be found at 75 Fed. Reg. 25324, 25349 (May 7,
2010).
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discusses the first two steps,
development of the baseline fleet and
the reference fleet.
EPA and NHTSA used a transparent
approach to developing the baseline and
reference fleets, largely working from
publicly available data. Because both
input and output sheets from our
modeling are public, stakeholders can
verify and check EPA’s and NHTSA’s
modeling, and perform their own
analyses with these datasets.100
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analysis of the data representativeness.
To the extent the MY 2010 data becomes
available during the comment period
the agencies will place a copy of this
data in our respective dockets. We
request comments on the relative merits
of using MY 2008 and MY 2010 data,
and whether one provides a better
foundation than the other for purposes
of using such data as the foundation for
a market forecast extending through MY
2025.
The baseline fleet reflects all fuel
economy technologies in use on MY
2008 light duty vehicles. The 2008
emission and fuel economy database
included data on vehicle production
volume, fuel economy, engine size,
number of engine cylinders,
transmission type, fuel type, etc.,
however it did not contain complete
information on technologies. Thus, the
agencies relied on publicly available
data like the more complete technology
descriptions from Ward’s Automotive
Group.102 In a few instances when
required vehicle information (such as
vehicle footprint) was not available from
these two sources, the agencies obtained
this information from publicly
accessible internet sites such as
Motortrend.com and Edmunds.com.103
A description of all of the technologies
used in modeling the 2008 vehicle fleet
and how it was constructed are
available in Chapter 1 of the Joint Draft
TSD.
Footprint data for the baseline fleet
came mainly from internet searches,
though detailed information about the
pickup truck footprints with volumes
was not available online. Where this
information was lacking, the agencies
used manufacturer product plan data for
2008 model year to find out the correct
number footprint and distribution of
footprints. The footprint data for pickup
trucks was expanded from the original
data used in the previous rulemaking.
The agencies obtained this footprint
data from MY 2008 product plans
submitted by the various manufacturers,
which can be made public at this time
because by now all MY 2008 vehicle
models are already in production,
which makes footprint data about them
essentially public information. A
description of exactly how the agencies
obtained all the footprints is available in
Chapter 1 of the TSD.
102 Note that WardsAuto.com is a fee-based
service, but all information is public to subscribers.
103 Motortrend.com and Edmunds.com are free,
no-fee internet sites.
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3. How Did the Agencies Develop the
Projected MY 2017–2025 Vehicle
Reference Fleet?
As in the 2012–2016 light duty
vehicle rulemaking, EPA and NHTSA
have based the projection of total car
and total light truck sales for MYs 2017–
2025 on projections made by the
Department of Energy’s Energy
Information Administration (EIA). See
75 FR at 25349. EIA publishes a midterm projection of national energy use
called the Annual Energy Outlook
(AEO). This projection utilizes a number
of technical and econometric models
which are designed to reflect both
economic and regulatory conditions
expected to exist in the future. In
support of its projection of fuel use by
light-duty vehicles, EIA projects sales of
new cars and light trucks. EIA
published its Early Annual Energy
Outlook for 2011 in December 2010. EIA
released updated data to NHTSA in
February (Interim AEO). The final
release of AEO for 2011 came out in
May 2011, but by that time EPA/NHTSA
had already prepared modeling runs for
potential 2017–2025 standards using the
interim data release to NHTSA. EPA and
NHTSA are using the interim data
release for this proposal, but intend to
use the newest version of AEO available
for the FRM.
The agencies used the Energy
Information Administration’s (EIA’s)
National Energy Modeling System
(NEMS) to estimate the future relative
market shares of passenger cars and
light trucks. However, NEMS
methodology includes shifting vehicle
sales volume, starting after 2007, away
from fleets with lower fuel economy
(the light-truck fleet) towards vehicles
with higher fuel economies (the
passenger car fleet) in order to facilitate
projected compliance with CAFE and
GHG standards. Because we use our
market projection as a baseline relative
to which we measure the effects of new
standards, and we attempt to estimate
the industry’s ability to comply with
new standards without changing
product mix (i.e., we analyze the effects
of the proposed rules assuming
manufacturers will not change fleet
composition as a compliance strategy, as
opposed to changes that might happen
due to market forces), the Interim AEO
2011-projected shift in passenger car
market share as a result of required fuel
economy improvements creates a
circularity. Therefore, for the current
analysis, the agencies developed a new
projection of passenger car and light
truck sales shares by running scenarios
from the Interim AEO 2011 reference
case that first deactivate the above-
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mentioned sales-volume shifting
methodology and then hold post-2017
CAFE standards constant at MY 2016
levels. As discussed in Chapter 1 of the
agencies’ joint Technical Support
Document, incorporating these changes
reduced the NEMS-projected passenger
car share of the light vehicle market by
an average of about 5% during 2017–
2025.
In the AEO 2011 Interim data, EIA
projects that total light-duty vehicle
sales will gradually recover from their
currently depressed levels by around
2013. In 2017, car sales are projected to
be 8.4 million (53 percent) and truck
sales are projected to be 7.3 million (47
percent). Although the total level of
sales of 15.8 million units is similar to
pre-2008 levels, the fraction of car sales
is projected to be higher than that
existing in the 2000–2007 timeframe.
This projection reflects the impact of
assumed higher fuel prices. Sales
projections of cars and trucks for future
model years can be found in Chapter 1
of the joint TSD.
In addition to a shift towards more car
sales, sales of segments within both the
car and truck markets have been
changing and are expected to continue
to change. Manufacturers are
introducing more crossover utility
vehicles (CUVs), which offer much of
the utility of sport utility vehicles
(SUVs) but use more car-like designs.
The AEO 2011 report does not,
however, distinguish such changes
within the car and truck classes. In
order to reflect these changes in fleet
makeup, EPA and NHTSA used CSM
Worldwide (CSM) as they did in the
2012–2016 rulemaking analysis. EPA
and NHTSA believe that CSM is the best
source available for a long range forecast
for 2017–2025, though when EPA and
NHTSA contacted several forecasting
firms none of them offered comparablydetailed forecasting for that time frame.
NHTSA and EPA decided to use the
forecast from CSM for several reasons
presented in the Joint TSD chapter I.
The long range forecast from CSM
Worldwide is a custom forecast covering
the years 2017–2025 which the agencies
purchased from CSM in December of
2009. CSM provides quarterly sales
forecasts for the automotive industry,
and updates their data on the industry
quarter. For the public’s reference, a
copy of CSM’s long range forecast has
been placed in the docket for this
rulemaking.104 EPA and NHTSA hope to
purchase and use an updated forecast,
104 The CSM Sales Forecast Excel file (‘‘CSM
North America Sales Forecasts 2017–2025 for the
Docket’’) is available in the docket (Docket EPA–
HQ–OAR–2010–0799).
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whether from CSM or other appropriate
sources, before the final rulemaking. To
the extent that such a forecast becomes
available during the comment period
the agencies will place a copy in our
respective dockets.
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The next step was to project the CSM
forecasts for relative sales of cars and
trucks by manufacturer and by market
segment onto the total sales estimates of
AEO 2011. Table II–1 and Table II–2
show the resulting projections for the
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reference 2025 model year and compare
these to actual sales that occurred in the
baseline 2008 model year. Both tables
show sales using the traditional
definition of cars and light trucks.
BILLING CODE 4910–59–P
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BILLING CODE 4910–59–C
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table shows the difference in 2008,
2021, and 2025 to give a feel for how the
change in definition changes the car/
truck split.
The CSM forecast provides estimates
of car and truck sales by segment and
by manufacturer separately. The forecast
was broken up into two tables. One
table with manufacturer volumes by
year and the other with vehicle
segments percentages by year. Table II–
4 and Table II–5 are examples of the
data received from CSM. The task of
estimating future sales using these
tables is complex. We used the same
methodology as in the previous
rulemaking. A detailed description of
how the projection process was done is
found in Chapter 1 of the TSD.
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drive SUVs and CUVs to the car
category. Table II–3 shows the different
volumes for car and trucks based on the
new and old NHTSA definition. The
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As mentioned previously, NHTSA has
changed the definition of a truck for
2011 model year and beyond. The new
definition has moved some 2 wheel
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BILLING CODE 4910–59–C
and segment splits of the CSM forecast.
These sales splits are shown in Table II–
6 below.
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2017–2025—the reference fleet—which
matched the total sales projections of
the AEO forecast and the manufacturer
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The overall result was a projection of
car and truck sales for model years
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Given publicly- and commerciallyavailable sources that can be made
equally transparent to all reviewers, the
forecast described above represents the
agencies’ best technical judgment
regarding the likely composition
direction of the fleet. EPA and NHTSA
recognize that it is impossible to predict
with certainty how manufacturers’
product offerings and sales volumes will
evolve through MY 2025 under baseline
conditions—that is, without further
changes in standards after MY 2016.
The agencies have not developed
alternative market forecasts to examine
corresponding sensitivity of analytical
results discussed below, and have not
varied the market forecast when
conducting probabilistic uncertainty
analysis discussed in NHTSA’s
preliminary Regulatory Impact Analysis.
The agencies invite comment regarding
alternative methods or projections to
inform forecasts of the future fleet at the
level of specificity and technical
completeness required by the agencies’
respective modeling systems.
The final step in the construction of
the final reference fleet involves
applying additional technology to
individual vehicle models—that is,
technology beyond that already present
in MY 2008—reflecting alreadypromulgated standards through MY
2016, and reflecting the assumption that
MY 2016 standards would apply
through MY 2025. A description of the
agencies’ modeling work to develop
their respective final reference (or
adjusted baseline) fleets appear below in
Sections III and IV of this preamble.
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C. Development of Attribute-Based
Curve Shapes
1. Why are standards attribute-based
and defined by a mathematical
function?
As in the MYs 2012–2016 CAFE/GHG
rules, and as NHTSA did in the MY
2011 CAFE rule, NHTSA and EPA are
proposing to set attribute-based CAFE
and CO2 standards that are defined by
a mathematical function. EPCA, as
amended by EISA, expressly requires
that CAFE standards for passenger cars
and light trucks be based on one or more
vehicle attributes related to fuel
economy, and be expressed in the form
of a mathematical function.105 The CAA
has no such requirement, although such
an approach is permissible under
section 202 (a) and EPA has used the
attribute-based approach in issuing
standards under analogous provisions of
the CAA (e.g., criteria pollutant
standards for non-road diesel engines
105 49
U.S.C. 32902(a)(3)(A).
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using engine size as the attribute,106 in
the recent GHG standards for heavy
duty pickups and vans using a work
factor attribute,107 and in the MYs
2012–2016 GHG rule itself which used
vehicle footprint as the attribute). Public
comments on the MYs 2012–2016
rulemaking widely supported attributebased standards for both agencies’
standards.
Under an attribute-based standard,
every vehicle model has a performance
target (fuel economy and CO2 emissions
for CAFE and CO2 emissions standards,
respectively), the level of which
depends on the vehicle’s attribute (for
this proposal, footprint, as discussed
below). Each manufacturers’ fleet
average standard is determined by the
production-weighted 108 average (for
CAFE, harmonic average) of those
targets.
The agencies believe that an attributebased standard is preferable to a singleindustry-wide average standard in the
context of CAFE and CO2 standards for
several reasons. First, if the shape is
chosen properly, every manufacturer is
more likely to be required to continue
adding more fuel efficient technology
each year across their fleet, because the
stringency of the compliance obligation
will depend on the particular product
mix of each manufacturer. Therefore a
maximum feasible attribute-based
standard will tend to require greater fuel
savings and CO2 emissions reductions
overall than would a maximum feasible
flat standard (that is, a single mpg or
CO2 level applicable to every
manufacturer).
Second, depending on the attribute,
attribute-based standards reduce the
incentive for manufacturers to respond
to CAFE and CO2 standards in ways
harmful to safety.109 Because each
vehicle model has its own target (based
on the attribute chosen), properly fitted
attribute-based standards provide little,
if any, incentive to build smaller
vehicles simply to meet a fleet-wide
average, because the smaller vehicles
will be subject to more stringent
compliance targets.110
106 69
FR 38958 (June 29, 2004).
FR 57106, 57162–64, (Sept. 15, 2011).
108 Production for sale in the United States.
109 The 2002 NAS Report 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
2002 NAS Report at 5, finding 12. Ensuing analyses,
including by NHTSA, support the fundamental
conclusion that standards structured to minimize
incentives to downsize all but the largest vehicles
will tend to produce better safety outcomes than flat
standards.
110 Assuming that the attribute is related to
vehicle size.
107 76
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Third, attribute-based standards
provide a more equitable regulatory
framework for different vehicle
manufacturers.111 A single industrywide average standard imposes
disproportionate cost burdens and
compliance difficulties on the
manufacturers that need to change their
product plans to meet the standards,
and puts no obligation on those
manufacturers that have no need to
change their plans. As discussed above,
attribute-based standards help to spread
the regulatory cost burden for fuel
economy more broadly across all of the
vehicle manufacturers within the
industry.
Fourth, attribute-based standards
better respect economic conditions and
consumer choice, as compared to singlevalue standards. A flat, or single value
standard, encourages a certain vehicle
size fleet mix by creating incentives for
manufacturers to use vehicle
downsizing as a compliance strategy.
Under a footprint-based standard,
manufacturers are required to invest in
technologies that improve the fuel
economy of the vehicles they sell rather
than shifting the product mix, because
reducing the size of the vehicle is
generally a less viable compliance
strategy given that smaller vehicles have
more stringent regulatory targets.
2. What attribute are the agencies
proposing to use, and why?
As in the MYs 2012–2016 CAFE/GHG
rules, and as NHTSA did in the MY
2011 CAFE rule, NHTSA and EPA are
proposing to set CAFE and CO2
standards that are based on vehicle
footprint, which has an observable
correlation to fuel economy and
emissions. There are several policy and
technical reasons why NHTSA and EPA
believe that footprint is the most
appropriate attribute on which to base
the standards, even though some other
vehicle attributes (notably curb weight)
are better correlated to fuel economy
and emissions.
First, in the agencies’ judgment, from
the standpoint of vehicle safety, it is
important that the CAFE and CO2
standards be set in a way that does not
encourage manufacturers to respond by
selling vehicles that are in any way less
safe. While NHTSA’s research of
historical crash data also indicates that
reductions in vehicle mass that are
accompanied by reductions in vehicle
footprint tend to compromise vehicle
safety, footprint-based standards
provide an incentive to use advanced
lightweight materials and structures that
would be discouraged by weight-based
111 Id.
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standards, because manufacturers can
use them to improve a vehicle’s fuel
economy and CO2 emissions without
their use necessarily resulting in a
change in the vehicle’s fuel economy
and emissions targets.
Further, although we recognize that
weight is better correlated with fuel
economy and CO2 emissions than is
footprint, we continue to believe that
there is less risk of ‘‘gaming’’ (changing
the attribute(s) to achieve a more
favorable target) by increasing footprint
under footprint-based standards than by
increasing vehicle mass under weightbased standards—it is relatively easy for
a manufacturer to add enough weight to
a vehicle to decrease its applicable fuel
economy target a significant amount, as
compared to increasing vehicle
footprint. We also continue to agree
with concerns raised in 2008 by some
commenters on the MY 2011 CAFE
rulemaking that there would be greater
potential for gaming under multiattribute standards, such as those that
also depend on weight, torque, power,
towing capability, and/or off-road
capability. The agencies agree with the
assessment first presented in NHTSA’s
MY 2011 CAFE final rule 112 that the
possibility of gaming is lowest with
footprint-based standards, as opposed to
weight-based or multi-attribute-based
standards. Specifically, standards that
incorporate weight, torque, power,
towing capability, and/or off-road
capability in addition to footprint would
not only be more complex, but by
providing degrees of freedom with
respect to more easily-adjusted
attributes, they could make it less
certain that the future fleet would
actually achieve the average fuel
economy and CO2 reduction levels
projected by the agencies.
The agencies recognize that based on
economic and consumer demand factors
that are external to this rule, the
distribution of footprints in the future
may be different (either smaller or
larger) than what is projected in this
rule. However, the agencies continue to
believe that there will not be significant
shifts in this distribution as a direct
consequence of this proposed rule. The
agencies also recognize that some
international attribute-based standards
use attributes other than footprint and
that there could be benefits for a number
of manufacturers if there was greater
international harmonization of fuel
economy and GHG standards for lightduty vehicles, but this is largely a
question of how stringent standards are
and how they are tested and enforced.
It is entirely possible that footprint112 See
74 FR at 14359 (Mar. 30, 2009).
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based and weight-based systems can
coexist internationally and not present
an undue burden for manufacturers if
they are carefully crafted. Different
countries or regions may find different
attributes appropriate for basing
standards, depending on the particular
challenges they face—from fuel prices,
to family size and land use, to safety
concerns, to fleet composition and
consumer preference, to other
environmental challenges besides
climate change. The agencies anticipate
working more closely with other
countries and regions in the future to
consider how to address these issues in
a way that least burdens manufacturers
while respecting each country’s need to
meet its own particular challenges.
The agencies continue to find that
footprint is the most appropriate
attribute upon which to base the
proposed standards, but recognizing
strong public interest in this issue, we
seek comment on whether the agencies
should consider setting standards for
the final rule based on another attribute
or another combination of attributes. If
commenters suggest that the agencies
should consider another attribute or
another combination of attributes, the
agencies specifically request that the
commenters address the concerns raised
in the paragraphs above regarding the
use of other attributes, and explain how
standards should be developed using
the other attribute(s) in a way that
contributes more to fuel savings and
CO2 reductions than the footprint-based
standards, without compromising
safety.
3. What mathematical functions have
the agencies previously used, and why?
a. NHTSA in MY 2008 and MY 2011
CAFE (constrained logistic)
For the MY 2011 CAFE rule, NHTSA
estimated fuel economy levels after
normalization for differences in
technology, but did not make
adjustments to reflect other vehicle
attributes (e.g., power-to-weight
ratios).113 Starting with the technology
adjusted passenger car and light truck
fleets, NHTSA used minimum absolute
deviation (MAD) regression without
sales weighting to fit a logistic form as
a starting point to develop mathematical
functions defining the standards.
NHTSA then identified footprints at
which to apply minimum and
maximum values (rather than letting the
standards extend without limit) and
transposed these functions vertically
(i.e., on a gpm basis, uniformly
113 See 74 FR 14196, 14363–14370 (Mar. 30, 2009)
for NHTSA discussion of curve fitting in the MY
2011 CAFE final rule.
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downward) to produce the promulgated
standards. In the preceding rule, for
MYs 2008–2011 light truck standards,
NHTSA examined a range of potential
functional forms, and concluded that,
compared to other considered forms, the
constrained logistic form provided the
expected and appropriate trend
(decreasing fuel economy as footprint
increases), but avoided creating ‘‘kinks’’
the agency was concerned would
provide distortionary incentives for
vehicles with neighboring footprints.114
b. MYs 2012–2016 Light Duty GHG/
CAFE (constrained/piecewise linear)
For the MYs 2012–2016 rules, NHTSA
and EPA re-evaluated potential methods
for specifying mathematical functions to
define fuel economy and GHG
standards. The agencies concluded that
the constrained logistic form, if applied
to post-MY 2011 standards, would
likely contain a steep mid-section that
would provide undue incentive to
increase the footprint of midsize
passenger cars.115 The agencies judged
that a range of methods to fit the curves
would be reasonable, and used a
minimum absolute deviation (MAD)
regression without sales weighting on a
technology-adjusted car and light truck
fleet to fit a linear equation. This
equation was used as a starting point to
develop mathematical functions
defining the standards as discussed
above. The agencies then identified
footprints at which to apply minimum
and maximum values (rather than
letting the standards extend without
limit) and transposed these constrained/
piecewise linear functions vertically
(i.e., on a gpm or CO2 basis, uniformly
downward) to produce the fleetwide
fuel economy and CO2 emission levels
for cars and light trucks described in the
final rule.116
4. How have the agencies changed the
mathematical functions for the proposed
MYs 2017–2025 standards, and why?
By requiring NHTSA to set CAFE
standards that are attribute-based and
defined by a mathematical function,
Congress appears to have wanted the
post-EISA standards to be data-driven—
a mathematical function defining the
standards, in order to be ‘‘attributebased,’’ should reflect the observed
relationship in the data between the
114 See 71 FR 17556, 17609–17613 (Apr. 6, 2006)
for NHTSA discussion of ‘‘kinks’’ in the MYs 2008–
2011 light truck CAFE final rule (there described as
‘‘edge effects’’). A ‘‘kink,’’ as used here, is a portion
of the curve where a small change in footprint
results in a disproportionally large change in
stringency.
115 75 FR at 25362.
116 See generally 74 FR at 49491–96; 75 FR at
25357–62.
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attribute chosen and fuel economy.117
EPA is also proposing to set attributebased CO2 standards defined by similar
mathematical functions, for the
reasonable technical and policy grounds
discussed below and in section II of the
preamble to the proposed rule, and
which supports a harmonization with
the CAFE standards.
The relationship between fuel
economy (and GHG emissions) and
footprint, though directionally clear
(i.e., fuel economy tends to decrease and
CO2 emissions tend to increase with
increasing footprint), is theoretically
vague and quantitatively uncertain; in
other words, not so precise as to a priori
yield only a single possible curve.118
There is thus a range of legitimate
options open to the agencies in
developing curve shapes. The agencies
may of course consider statutory
objectives in choosing among the many
reasonable alternatives. For example,
curve shapes that might have some
theoretical basis could lead to perverse
outcomes contrary to the intent of the
statutes to conserve energy and protect
human health and the environment.119
Thus, the decision of how to set the
target curves cannot always be just
about most ‘‘clearly’’ using a
mathematical function to define the
relationship between fuel economy and
the attribute; it often has to have a
normative aspect, where the agencies
adjust the function that would define
the relationship in order to avoid
perverse results, improve equity of
burden across manufacturers, preserve
consumer choice, etc. This is true both
for the decisions that guide the
mathematical function defining the
sloped portion of the target curves, and
for the separate decisions that guide the
agencies’ choice of ‘‘cutpoints’’ (if any)
117 A mathematical function can be defined, of
course, that has nothing to do with the relationship
between fuel economy and the chosen attribute—
the most basic example is an industry-wide
standard defined as the mathematical function
average required fuel economy = X, where X is the
single mpg level set by the agency. Yet a standard
that is simply defined as a mathematical function
that is not tied to the attribute(s) would not meet
the requirement of EISA.
118 In fact, numerous manufacturers have
confidentially shared with the agencies what they
describe as ‘‘physics based’’ curves, with each OEM
showing significantly different shapes, and
footprint relationships. The sheer variety of curves
shown to the agencies further confirm the lack of
an underlying principle of ‘‘fundamental physics’’
driving the relationship between CO2 emission or
fuel consumption and footprint, and the lack of an
underlying principle to dictate any outcome of the
agencies’ establishment of footprint-based
standards.
119 For example, if the agencies set weight-based
standards defined by a steep function, the standards
might encourage manufacturers to keep adding
weight to their vehicles to obtain less stringent
targets.
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that define the fuel economy/CO2 levels
and footprints at each end of the curves
where the curves become flat. Data
informs these decisions, but how the
agencies define and interpret the
relevant data, and then the choice of
methodology for fitting a curve to the
data, must include a consideration of
both technical data and policy goals.
The next sections examine the policy
concerns that the agencies considered in
developing the proposed target curves
that define the proposed MYs 2017–
2025 CAFE and CO2 standards, new
technical work (expanding on similar
analyses performed by NHTSA when
the agency proposed MY 2011–2015
standards, and by both agencies during
consideration of options for MY 2012–
2016 CAFE and GHG standards) that
was completed in the process of
reexamining potential mathematical
functions, how the agencies have
defined the data, and how the agencies
explored statistical curve-fitting
methodologies in order to arrive at
proposed curves.
5. What are the agencies proposing for
the MYs 2017–2025 curves?
The proposed mathematical functions
for the proposed MYs 2017–2025
standards are somewhat changed from
the functions for the MYs 2012–2016
standards, in response to comments
received from stakeholders and in order
to address technical concerns and
policy goals that the agencies judge
more significant in this 9-year
rulemaking than in the prior one, which
only included 5 years. This section
discusses the methodology the agencies
selected as, at this time, best addressing
those technical concerns and policy
goals, given the various technical inputs
to the agencies’ current analyses. Below
the agencies discuss how the agencies
determined the cutpoints and the flat
portions of the MYs 2017–2025 target
curves. We also note that both of these
sections address only how the target
curves were fit to fuel consumption and
CO2 emission values determined using
the city and highway test procedures,
and that in determining respective
regulatory alternatives, the agencies
made further adjustments to the
resultant curves in order to account for
adjustments for improvements to mobile
air conditioners.
Thus, recognizing that there are many
reasonable statistical methods for fitting
curves to data points that define
vehicles in terms of footprint and fuel
economy, the agencies have chosen for
this proposed rule to fit curves using an
ordinary least-squares formulation, on
sales-weighted data, using a fleet that
has had technology applied, and after
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adjusting the data for the effects of
weight-to-footprint, as described below.
This represents a departure from the
statistical approach for fitting the curves
in MYs 2012–2016, as explained in the
next section. The agencies considered a
wide variety of reasonable statistical
methods in order to better understand
the range of uncertainty regarding the
relationship between fuel consumption
(the inverse of fuel economy), CO2
emission rates, and footprint, thereby
providing a range within which
decisions about standards would be
potentially supportable.
a. What concerns were the agencies
looking to address that led them to
change from the approach used for the
MYs 2012–2016 curves?
During the year and a half since the
MYs 2012–2016 final rule was issued,
NHTSA and EPA have received a
number of comments from stakeholders
on how curves should be fitted to the
passenger car and light truck fleets.
Some limited-line manufacturers have
argued that curves should generally be
flatter in order to avoid discouraging
small vehicles, because steeper curves
tend to result in more stringent targets
for smaller vehicles. Most full-line
manufacturers have argued that a
passenger car curve similar in slope to
the MY 2016 passenger car curve would
be appropriate for future model years,
but that the light truck curve should be
revised to be less difficult for
manufacturers selling the largest fullsize pickup trucks. These manufacturers
argued that the MY 2016 light truck
curve was not ‘‘physics-based,’’ and that
in order for future tightening of
standards to be feasible for full-line
manufacturers, the truck curve for later
model years should be steeper and
extended further (i.e., made less
stringent) into the larger footprints. The
agencies do not agree that the MY 2016
light truck curve was somehow deficient
in lacking a ‘‘physics basis,’’ or that it
was somehow overly stringent for
manufacturers selling large pickups—
manufacturers making these arguments
presented no ‘‘physics-based’’ model to
explain how fuel economy should
depend on footprint.120 The same
manufacturers indicated that they
believed that the light truck standard
should be somewhat steeper after MY
2016, primarily because, after more than
ten years of progressive increases in the
stringency of applicable CAFE
standards, large pickups would be less
capable of achieving further
120 See
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improvements without compromising
load carrying and towing capacity.
In developing the curve shapes for
this proposed rule, the agencies were
aware of the current and prior technical
concerns raised by OEMs concerning
the effects of the stringency on
individual manufacturers and their
ability to meet the standards with
available technologies, while producing
vehicles at a cost that allowed them to
recover the additional costs of the
technologies being applied. Although
we continue to believe that the
methodology for fitting curves for the
MY2012–2016 standards was
technically sound, we recognize
manufacturers’ technical concerns
regarding their abilities to comply with
a similarly shallow curve after MY2016
given the anticipated mix of light trucks
in MYs 2017–2025. As in the MYs
2012–2016 rules, the agencies
considered these concerns in the
analysis of potential curve shapes. The
agencies also considered safety concerns
which could be raised by curve shapes
creating an incentive for vehicle
downsizing, as well as the potential loss
to consumer welfare should vehicle
upsizing be unduly disincentivized. In
addition, the agencies sought to improve
the balance of compliance burdens
among manufacturers. Among the
technical concerns and resultant policy
trade-offs the agencies considered were
the following:
• Flatter standards (i.e., curves)
increase the risk that both the weight
and size of vehicles will be reduced,
compromising highway safety.
• Flatter standards potentially impact
the utility of vehicles by providing an
incentive for vehicle downsizing.
• Steeper footprint-based standards
may incentivize vehicle upsizing, thus
increasing the risk that fuel economy
and greenhouse gas reduction benefits
will be less than expected.
• Given the same industry-wide
average required fuel economy or CO2
standard, flatter standards tend to place
greater compliance burdens on full-line
manufacturers.
• Given the same industry-wide
average required fuel economy or CO2
standard, steeper standards tend to
place greater compliance burdens on
limited-line manufacturers (depending
of course, on which vehicles are being
produced).
• If cutpoints are adopted, given the
same industry-wide average required
fuel economy, moving small-vehicle
cutpoints to the left (i.e., up in terms of
fuel economy, down in terms of CO2
emissions) discourages the introduction
of small vehicles, and reduces the
incentive to downsize small vehicles in
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ways that would compromise highway
safety.
• If cutpoints are adopted, given the
same industry-wide average required
fuel economy, moving large-vehicle
cutpoints to the right (i.e., down in
terms of fuel economy, up in terms of
CO2 emissions) better accommodates the
unique design requirements of larger
vehicles—especially large pickups—and
extends the size range over which
downsizing is discouraged.
All of these were policy goals that
required trade-offs, and in determining
the curves they also required balance
against the comments from the OEMs
discussed in the introduction to this
section. Ultimately, the agencies do not
agree that the MY 2017 target curves for
this proposal, on a relative basis, should
be made significantly flatter than the
MY 2016 curve,121 as we believe that
this would undo some of the safetyrelated incentives and balancing of
compliance burdens among
manufacturers—effects that attributebased standards are intended to provide.
Nonetheless, the agencies recognize
full-line OEM concerns and have
tentatively concluded that further
increases in the stringency of the light
truck standards will be more feasible if
the light truck curve is made steeper
than the MY 2016 truck curve and the
right (large footprint) cut-point is
extended over time to larger footprints.
This conclusion is supported by the
agencies’ technical analyses of
regulatory alternatives defined using the
curves developed in the manner
described below.
74915
assumptions are the subject of the
following discussion. This process of
performing many analyses using
combinations of statistical methods
generates many possible outcomes, each
embodying different potentially
reasonable combinations of assumptions
and each thus reflective of the data as
viewed through a particular lens. The
choice of a standard developed by a
given combination of these statistical
methods is consequently a decision
based upon the agencies’ determination
of how, given the policy objectives for
this rulemaking and the agencies’ MY
2008-based forecast of the market
through MY 2025, to appropriately
reflect the current understanding of the
evolution of automotive technology and
costs, the future prospects for the
vehicle market, and thereby establish
curves (i.e., standards) for cars and light
trucks.
c. What information did the agencies
use to estimate a relationship between
fuel economy, CO2 and footprint?
For each fleet, the agencies began
with the MY 2008-based market forecast
developed to support this proposal (i.e.,
the baseline fleet), with vehicles’ fuel
economy levels and technological
characteristics at MY 2008 levels.122
The development, scope, and content of
this market forecast is discussed in
detail in Chapter 1 of the joint Technical
Support Document supporting this
rulemaking.
d. What adjustments did the agencies
evaluate?
In considering how to address the
various policy concerns discussed in the
previous sections, the agencies revisited
the data and performed a number of
analyses using different combinations of
the various statistical methods,
weighting schemes, adjustments to the
data and the addition of technologies to
make the fleets less technologically
heterogeneous. As discussed above, in
the agencies’ judgment, there is no
single ‘‘correct’’ way to estimate the
relationship between CO2 or fuel
consumption and footprint—rather,
each statistical result is based on the
underlying assumptions about the
particular functional form, weightings
and error structures embodied in the
representational approach. These
The agencies believe one possible
approach is to fit curves to the
minimally adjusted data shown above
(the approach still includes sales mix
adjustments, which influence results of
sales-weighted regressions), much as
DOT did when it first began evaluating
potential attribute-based standards in
2003.123 However, the agencies have
found, as in prior rulemakings, that the
data are so widely spread (i.e., when
graphed, they fall in a loose ‘‘cloud’’
rather than tightly around an obvious
line) that they indicate a relationship
between footprint and CO2 and fuel
consumption that is real but not
particularly strong. Therefore, as
discussed below, the agencies also
explored possible adjustments that
could help to explain and/or reduce the
ambiguity of this relationship, or could
help to produce policy outcomes the
agencies judged to be more desirable.
121 While ‘‘significantly’’ flatter is subjective, the
year over year change in curve shapes is discussed
in greater detail in Section 0 and Chapter 2 of the
joint TSD.
122 While the agencies jointly conducted this
analysis, the coefficients ultimately used in the
slope setting analysis are from the CAFE model.
123 68 FR 74920–74926.
b. What methodologies and data did the
agencies consider in developing the
2017–2025 curves?
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i. Adjustment to reflect differences in
technology
As in prior rulemakings, the agencies
consider technology differences
between vehicle models to be a
significant factor producing uncertainty
regarding the relationship between CO2/
fuel consumption and footprint. Noting
that attribute-based standards are
intended to encourage the application of
additional technology to improve fuel
efficiency and reduce CO2 emissions,
the agencies, in addition to considering
approaches based on the unadjusted
engineering characteristics of MY 2008
vehicle models, therefore also
considered approaches in which, as for
previous rulemakings, technology is
added to vehicles for purposes of the
curve fitting analysis in order to
produce fleets that are less varied in
technology content.
The agencies adjusted the baseline
fleet for technology by adding all
technologies considered, except for the
most advanced high-BMEP (brake mean
effective pressure) gasoline engines,
diesel engines, strong HEVs, PHEVs,
EVs, and FCVs. The agencies included
15 percent mass reduction on all
vehicles.
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ii. Adjustments reflecting differences in
performance and ‘‘density’’
For the reasons discussed above
regarding revisiting the shapes of the
curves, the agencies considered
adjustments for other differences
between vehicle models (i.e., inflating
or deflating the fuel economy of each
vehicle model based on the extent to
which one of the vehicle’s attributes,
such as power, is higher or lower than
average). Previously, NHTSA had
rejected such adjustments because they
imply that a multi-attribute standard
may be necessary, and the agencies
judged multi-attribute standard to be
more subject to gaming than a footprintonly standard.124 125 Having considered
this issue again for purposes of this
rulemaking, NHTSA and EPA conclude
the need to accommodate in the target
curves the challenges faced by
manufacturers of large pickups
124 For example, in comments on NHTSA’s 2008
NPRM regarding MY 2011–2015 CAFE standards,
Porsche recommended that standards be defined in
terms of a ‘‘Summed Weighted Attribute’’, wherein
the fuel economy target would calculated as
follows: target = f(SWA), where target is the fuel
economy target applicable to a given vehicle model
and SWA = footprint + torque 1/1.5 + weight 1/2.5.
(NHTSA–2008–0089–0174). While the standards
the agencies are proposing for MY 2017–2025 are
not multi-attributes, that is the target is only a
function of footprint, we are proposing curve
shapes that were developed considering more than
one attribute.
125 74 FR 14359.
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currently outweighs these prior
concerns. Therefore, the agencies also
evaluated curve fitting approaches
through which fuel consumption and
CO2 levels were adjusted with respect to
weight-to-footprint alone, and in
combination with power-to-weight.
While the agencies examined these
adjustments for purposes of fitting
curves, the agencies are not proposing a
multi-attribute standard; the proposed
fuel economy and CO2 targets for each
vehicle are still functions of footprint
alone. No adjustment would be used in
the compliance process.
The agencies also examined some
differences between the technologyadjusted car and truck fleets in order to
better understand the relationship
between footprint and CO2/fuel
consumption in the agencies’ MY 2008
based forecast. The agencies
investigated the relationship between
HP/WT and footprint in the agencies’
MY2008-based market forecast. On a
sales weighted basis, cars tend to
become proportionally more powerful
as they get larger. In contrast, there is a
minimally positive relationship between
HP/WT and footprint for light trucks,
indicating that light trucks become only
slightly more powerful as they get
larger.
This analysis, presented in chapter
2.4.1.2 of the agencies’ joint TSD,
indicated that vehicle performance
(power-to-weight ratio) and ‘‘density’’
(curb weight divided by footprint) are
both correlated to fuel consumption
(and CO2 emission rate), and that these
vehicle attributes are also both related to
vehicle footprint. Based on these
relationships, the agencies explored
adjusting the fuel economy and CO2
emission rates of individual vehicle
models based on deviations from
‘‘expected’’ performance or weight/
footprint at a given footprint; the
agencies inflated fuel economy levels of
vehicle models with higher performance
and/or weight/footprint than the average
of the fleet would indicate at that
footprint, and deflated fuel economy
levels with lower performance and/or
weight. Previously, NHTSA had rejected
such adjustments because they imply
that a multi-attribute standard may be
necessary, and the agency judged multiattribute standard to be more subject to
gaming than a footprint-only
standard.126 127 While the agencies
i. Regression Approach
In the MYs 2012–2016 final rules, the
agencies employed a robust regression
approach (minimum absolute deviation,
or MAD), rather than an ordinary least
squares (OLS) regression.128 MAD is
generally applied to mitigate the effect
of outliers in a dataset, and thus was
employed in that rulemaking as part of
our interest in attempting to best
represent the underlying technology.
NHTSA had used OLS in early
development of attribute-based CAFE
126 For example, in comments on NHTSA’s 2008
NPRM regarding MY 2011–2015 CAFE standards,
Porsche recommended that standards be defined in
terms of a ‘‘Summed Weighted Attribute’’, wherein
the fuel economy target would calculated as
follows: target = f(SWA), where target is the fuel
economy target applicable to a given vehicle model
and SWA = footprint + torque 1/1.5 + weight 1/2.5.
(NHTSA–2008–0089–0174). While the standards
the agencies are proposing for MY 2017–2025 are
not multi-attribute standards, that is the target is
only a function of footprint, we are proposing curve
shapes that were developed considering more than
one attribute.
127 74 FR 14359.
128 See 75 FR at 25359.
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considered this technique for purposes
of fitting curves, the agencies are not
proposing a multi-attribute standard, as
the proposed fuel economy and CO2
targets for each vehicle are still
functions of footprint alone. No
adjustment would be used in the
compliance process.
The agencies seek comment on the
appropriateness of the adjustments as
described in Chapter 2 of the joint TSD,
particularly regarding whether these
adjustments suggest that standards
should be defined in terms of other
attributes in addition to footprint, and
whether they may encourage changes
other than encouraging the application
of technology to improve fuel economy
and reduce CO2 emissions. The agencies
also seek comment regarding whether
these adjustments effectively ‘‘lock in’’
through MY 2025 relationships that
were observed in MY 2008.
e. What statistical methods did the
agencies evaluate?
The above approaches resulted in
three data sets each for (a) vehicles
without added technology and (b)
vehicles with technology added to
reduce technology differences, any of
which may provide a reasonable basis
for fitting mathematical functions upon
which to base the slope of the standard
curves: (1) Vehicles without any further
adjustments; (2) vehicles with
adjustments reflecting differences in
‘‘density’’ (weight/footprint); and (3)
vehicles with adjustments reflecting
differences in ‘‘density,’’ and
adjustments reflecting differences in
performance (power/weight). Using
these data sets, the agencies tested a
range of regression methodologies, each
judged to be possibly reasonable for
application to at least some of these data
sets.
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standards, but NHTSA (and then
NHTSA and EPA) subsequently chose
MAD instead of OLS for both the MY
2011 and the MYs 2012–2016
rulemakings. These decisions on
regression technique were made both
because OLS gives additional emphasis
to outliers 129 and because the MAD
approach helped achieve the agencies’
policy goals with regard to curve slope
in those rulemakings.130 In the interest
of taking a fresh look at appropriate
regression methodologies as promised
in the 2012–2016 light duty rulemaking,
in developing this proposal, the
agencies gave full consideration to both
OLS and MAD. The OLS representation,
as described, uses squared errors, while
MAD employs absolute errors and thus
weights outliers less.
As noted, one of the reasons stated for
choosing MAD over least square
regression in the MYs 2012–2016
rulemaking was that MAD reduced the
weight placed on outliers in the data.
However, the agencies have further
considered whether it is appropriate to
classify these vehicles as outliers.
Unlike in traditional datasets, these
vehicles’ performance is not
mischaracterized due to errors in their
measurement, a common reason for
outlier classification. Being certification
data, the chances of large measurement
errors should be near zero, particularly
towards high CO2 or fuel consumption.
Thus, they can only be outliers in the
sense that the vehicle designs are unlike
those of other vehicles. These outlier
vehicles may include performance
vehicles, vehicles with high ground
clearance, 4WD, or boxy designs. Given
that these are equally legitimate on-road
vehicle designs, the agencies concluded
that it would appropriate to reconsider
the treatment of these vehicles in the
regression techniques.
Based on these considerations as well
as the adjustments discussed above, the
agencies concluded it was not
meaningful to run MAD regressions on
gpm data that had already been adjusted
in the manner described above.
Normalizing already reduced the
variation in the data, and brought
outliers towards average values. This
was the intended effect, so the agencies
deemed it unnecessary to apply an
additional remedy to resolve an issue
that had already been addressed, but we
seek comment on the use of robust
regression techniques under such
circumstances.
129 Id.
130 Id.
at 25362–63.
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ii. Sales Weighting
Likewise, the agencies reconsidered
employing sales-weighting to represent
the data. As explained below, the
decision to sales weight or not is
ultimately based upon a choice about
how to represent the data, and not by an
underlying statistical concern. Sales
weighting is used if the decision is
made to treat each (mass produced) unit
sold as a unique physical observation.
Doing so thereby changes the extent to
which different vehicle model types are
emphasized as compared to a non-sales
weighted regression. For example, while
total General Motors Silverado (332,000)
and Ford F–150 (322,000) sales differ by
less than 10,000 in MY 2021 market
forecast, 62 F–150s models and 38
Silverado models are reported in the
agencies baselines. Without salesweighting, the F–150 models, because
there are more of them, are given 63
percent more weight in the regression
despite comprising a similar portion of
the marketplace and a relatively
homogenous set of vehicle technologies.
The agencies did not use sales
weighting in the 2012–2016 rulemaking
analysis of the curve shapes. A decision
to not perform sales weighting reflects
judgment that each vehicle model
provides an equal amount of
information concerning the underlying
relationship between footprint and fuel
economy. Sales-weighted regression
gives the highest sales vehicle model
types vastly more emphasis than the
lowest-sales vehicle model types thus
driving the regression toward the salesweighted fleet norm. For unweighted
regression, vehicle sales do not matter.
The agencies note that the light truck
market forecast shows MY 2025 sales of
218,000 units for Toyota’s 2WD Sienna,
and shows 66 model configurations
with MY 2025 sales of fewer than 100
units. Similarly, the agencies’ market
forecast shows MY 2025 sales of
267,000 for the Toyota Prius, and shows
40 model configurations with MY2025
sales of fewer than 100 units. Salesweighted analysis would give the
Toyota Sienna and Prius more than a
thousand times the consideration of
many vehicle model configurations.
Sales-weighted analysis would,
therefore, cause a large number of
vehicle model configurations to be
virtually ignored in the regressions.131
However, the agencies did note in the
MYs 2012–2016 final rules that, ‘‘sales
weighted regression would allow the
difference between other vehicle
attributes to be reflected in the analysis,
and also would reflect consumer
131 75
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74917
demand.’’ 132 In reexamining the salesweighting for this analysis, the agencies
note that there are low-volume model
types account for many of the passenger
car model types (50 percent of passenger
car model types account for 3.3 percent
of sales), and it is unclear whether the
engineering characteristics of these
model types should equally determine
the standard for the remainder of the
market.
In the interest of taking a fresh look
at appropriate methodologies as
promised in the last final rule, in
developing this proposal, the agencies
gave full consideration to both salesweighted and unweighted regressions.
iii. Analyses Performed
We performed regressions describing
the relationship between a vehicle’s
CO2/fuel consumption and its footprint,
in terms of various combinations of
factors: initial (raw) fleets with no
technology, versus after technology is
applied; sales-weighted versus non-sales
weighted; and with and without two
sets of normalizing factors applied to
the observations. The agencies excluded
diesels and dedicated AFVs because the
agencies anticipate that advanced
gasoline-fueled vehicles are likely to be
dominant through MY 2025, based both
on our own assessment of potential
standards (see Sections III and IV below)
as well as our discussions with large
number of automotive companies and
suppliers.
Thus, the basic OLS regression on the
initial data (with no technology applied)
and no sales-weighting represents one
perspective on the relation between
footprint and fuel economy. Adding
sales weighting changes the
interpretation to include the influence
of sales volumes, and thus steps away
from representing vehicle technology
alone. Likewise, MAD is an attempt to
reduce the impact of outliers, but
reducing the impact of outliers might
perhaps be less representative of
technical relationships between the
variables, although that relationship
may change over time in reality. Each
combination of methods and data
reflects a perspective, and the regression
results simply reflect that perspective in
a simple quantifiable manner, expressed
as the coefficients determining the line
through the average (for OLS) or the
median (for MAD) of the data. It is left
to policy makers to determine an
appropriate perspective and to interpret
the consequences of the various
alternatives.
We invite comments on the
application of the weights as described
132 75
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above, and the implications for
interpreting the relationship between
fuel efficiency (or CO2) and footprint.
f. What results did the agencies obtain,
which methodology did the agencies
choose for this proposal, and why is it
reasonable?
Both agencies analyzed the same
statistical approaches. For regressions
against data including technology
normalization, NHTSA used the CAFE
modeling system, and EPA used EPA’s
OMEGA model. The agencies obtained
similar regression results, and have
based today’s joint proposal on those
obtained by NHTSA. The draft Joint
TSD Chapter 2 contains a large set of
illustrative of figures which show the
range of curves determined by the
possible combinations of regression
technique, with and without sales
weighting, with and without the
application of technology, and with
various adjustments to the gpm variable
prior to running a regression.
The choice among the alternatives
presented in the draft Joint TSD Chapter
2 was to use the OLS formulation, on
sales-weighted data, using a fleet that
has had technology applied, and after
adjusting the data for the effect of
weight-to-footprint, as described above.
The agencies believe that this represents
a technically reasonable approach for
purposes of developing target curves to
define the proposed standards, and that
it represents a reasonable trade-off
among various considerations balancing
statistical, technical, and policy matters,
which include the statistical
representativeness of the curves
considered and the steepness of the
curve chosen. The agencies judge the
application of technology prior to curve
fitting to provide a reasonable means—
one consistent with the rule’s objective
of encouraging manufacturers to add
technology in order to increase fuel
economy—of reducing variation in the
data and thereby helping to estimate a
relationship between fuel consumption/
CO2 and footprint.
Similarly, for the agencies’ current
MY 2008-based market-forecast and the
agencies’ current estimates of future
technology effectiveness, the inclusion
of the weight-to-footprint data
adjustment prior to running the
regression also helps to improve the fit
of the curves by reducing the variation
in the data, and the agencies believe that
the benefits of this adjustment for this
proposed rule likely outweigh the
potential that resultant curves might
somehow encourage reduced load
carrying capability or vehicle
performance (note that the we are not
suggesting that we believe these
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adjustments will reduce load carrying
capability or vehicle performance). In
addition to reducing the variability, the
truck curve is also steepened, and the
car curve flattened compared to curves
fitted to sales weighted data that do not
include these normalizations. The
agencies agree with manufacturers of
full-size pick-up trucks that in order to
maintain towing and hauling utility, the
engines on pick-up trucks must be more
powerful, than their low ‘‘density’’
nature would statistically suggest based
on the agencies’ current MY2008-based
market forecast and the agencies’
current estimates of the effectiveness of
different fuel-saving technologies.
Therefore, it may be more equitable (i.e.,
in terms of relative compliance
challenges faced by different light truck
manufacturers) to adjust the slope of the
curve defining fuel economy and CO2
targets.
As described above, however, other
approaches are also technically
reasonable, and also represent a way of
expressing the underlying relationships.
The agencies plan to revisit the analysis
for the final rule, after updating the
underlying market forecast and
estimates of technology effectiveness,
and based on relevant public comments
received. In addition, the agencies
intend to update the technology cost
estimates, which could alter the NPRM
analysis results and consequently alter
the balance of the trade-offs being
weighed to determine the final curves.
g. Implications of the proposed slope
compared to MY 2012–2016
The proposed slope has several
implications relative to the MY 2016
curves, with the majority of changes on
the truck curve. With the agencies’
current MY2008-based market forecast
and the agencies’ current estimates of
technology effectiveness, the
combination of sales weighting and WT/
FP normalization produced a car curve
slope similar to that finalized in the MY
2012–2016 final rulemaking (4.7 g/mile
in MY 2016, vs. 4.5 g/mile proposed in
MY 2017). By contrast, the truck curve
is steeper in MY 2017 than in MY 2016
(4.0 g/mile in MY 2016 vs. 4.9 g/mile in
MY 2017). As discussed previously, a
steeper slope relaxes the stringency of
targets for larger vehicles relative to
those for smaller vehicles, thereby
shifting relative compliance burdens
among manufacturers based on their
respective product mix.
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6. Once the agencies determined the
appropriate slope for the sloped part,
how did the agencies determine the rest
of the mathematical function?
The agencies continue to believe that
without a limit at the smallest
footprints, the function—whether
logistic or linear—can reach values that
would be unfairly burdensome for a
manufacturer that elects to focus on the
market for small vehicles; depending on
the underlying data, an unconstrained
form could result in stringency levels
that are technologically infeasible and/
or economically impracticable for those
manufacturers that may elect to focus on
the smallest vehicles. On the other side
of the function, without a limit at the
largest footprints, the function may
provide no floor on required fuel
economy. Also, the safety
considerations that support the
provision of a disincentive for
downsizing as a compliance strategy
apply weakly, if at all, to the very largest
vehicles. Limiting the function’s value
for the largest vehicles thus leads to a
function with an inherent absolute
minimum level of performance, while
remaining consistent with safety
considerations.
Just as for slope, in determining the
appropriate footprint and fuel economy
values for the ‘‘cutpoints,’’ the places
along the curve where the sloped
portion becomes flat, the agencies took
a fresh look for purposes of this
proposal, taking into account the
updated market forecast and new
assumptions about the availability of
technologies. The next two sections
discuss the agencies’ approach to
cutpoints for the passenger car and light
truck curves separately, as the policy
considerations for each vary somewhat.
a. Cutpoints for PC curve
The passenger car fleet upon which
the agencies have based the target
curves for MYs 2017–2025 is derived
from MY 2008 data, as discussed above.
In MY 2008, passenger car footprints
ranged from 36.7 square feet, the Lotus
Exige 5, to 69.3 square feet, the Daimler
Maybach 62. In that fleet, several
manufacturers offer small, sporty
coupes below 41 square feet, such as the
BMW Z4 and Mini, Honda S2000,
Mazda MX–5 Miata, Porsche Carrera
and 911, and Volkswagen New Beetle.
Because such vehicles represent a small
portion (less than 10 percent) of the
passenger car market, yet often have
performance, utility, and/or structural
characteristics that could make it
technologically infeasible and/or
economically impracticable for
manufacturers focusing on such
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vehicles to achieve the very challenging
average requirements that could apply
in the absence of a constraint, EPA and
NHTSA are again proposing to cut off
the sloped portion of the passenger car
function at 41 square feet, consistent
with the MYs 2012–2016 rulemaking.
The agencies recognize that for
manufacturers who make small vehicles
in this size range, putting the cutpoint
at 41 square feet creates some incentive
to downsize (i.e., further reduce the size,
and/or increase the production of
models currently smaller than 41 square
feet) to make it easier to meet the target.
Putting the cutpoint here may also
create the incentive for manufacturers
who do not currently offer such models
to do so in the future. However, at the
same time, the agencies believe that
there is a limit to the market for cars
smaller than 41 square feet—most
consumers likely have some minimum
expectation about interior volume,
among other things. The agencies thus
believe that the number of consumers
who will want vehicles smaller than 41
square feet (regardless of how they are
priced) is small, and that the incentive
to downsize to less than 41 square feet
in response to this proposal, if present,
will be at best minimal. On the other
hand, the agencies note that some
manufacturers are introducing mini cars
not reflected in the agencies MY 2008based market forecast, such as the Fiat
500, to the U.S. market, and that the
footprint at which the curve is limited
may affect the incentive for
manufacturers to do so.
Above 56 square feet, the only
passenger car models present in the MY
2008 fleet were four luxury vehicles
with extremely low sales volumes—the
Bentley Arnage and three versions of the
Rolls Royce Phantom. As in the MYs
2012–2016 rulemaking, NHTSA and
EPA therefore are proposing again to cut
off the sloped portion of the passenger
car function at 56 square feet.
While meeting with manufacturers
prior to issuing the proposal, the
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agencies received comments from some
manufacturers that, combined with
slope and overall stringency, using 41
square feet as the footprint at which to
cap the target for small cars would
result in unduly challenging targets for
small cars. The agencies do not agree.
No specific vehicle need meet its target
(because standards apply to fleet
average performance), and maintaining
a sloped function toward the smaller
end of the passenger car market is
important to discourage unsafe
downsizing, the agencies are thus
proposing to again ‘‘cut off’’ the
passenger car curve at 41 square feet,
notwithstanding these comments.
The agencies seek comment on setting
cutpoints for the MYs 2017–2025
passenger car curves at 41 square feet
and 56 square feet.
b. Cutpoints for LT curve
The light truck fleet upon which the
agencies have based the target curves for
MYs 2017–2025, like the passenger car
fleet, is derived from MY 2008 data, as
discussed in Section 2.4 above. In MY
2008, light truck footprints ranged from
41.0 square feet, the Jeep Wrangler, to
77.5 square feet, the Toyota Tundra. For
consistency with the curve for passenger
cars, the agencies are proposing to cut
off the sloped portion of the light truck
function at the same footprint, 41 square
feet, although we recognize that no light
trucks are currently offered below 41
square feet. With regard to the upper
cutpoint, the agencies heard from a
number of manufacturers during the
discussions leading up to this proposal
that the location of the cutpoint in the
MYs 2012–2016 rules, 66 square feet,
meant that the same standard applied to
all light trucks with footprints of 66
square feet or greater, and that in fact
the targets for the largest light trucks in
the later years of that rulemaking were
extremely challenging. Those
manufacturers requested that the
agencies extend the cutpoint to a larger
footprint, to reduce targets for the
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largest light trucks which represent a
significant percentage of those
manufacturers light truck sales. At the
same time, in re-examining the light
truck fleet data, the agencies concluded
that aggregating pickup truck models in
the MYs 2012–2016 rule had led the
agencies to underestimate the impact of
the different pickup truck model
configurations above 66 square feet on
manufacturers’ fleet average fuel
economy and CO2 levels (as discussed
immediately below). In disaggregating
the pickup truck model data, the impact
of setting the cutpoint at 66 square feet
after model year 2016 became clearer to
the agencies.
In the agencies’ view, there is
legitimate basis for these comments. The
agencies’ market forecast includes about
24 vehicle configurations above 74
square feet with a total volume of about
50,000 vehicles or less during any MY
in the 2017–2025 time frame. While a
relatively small portion of the overall
truck fleet, for some manufacturers,
these vehicles are non-trivial portion of
sales. As noted above, the very largest
light trucks have significant loadcarrying and towing capabilities that
make it particularly challenging for
manufacturers to add fuel economyimproving/CO2-reducing technologies in
a way that maintains the full
functionality of those capabilities.
Considering manufacturer CBI and
our estimates of the impact of the 66
square foot cutpoint for future model
years, the agencies have initially
determined to adopt curves that
transition to a different cut point. While
noting that no specific vehicle need
meet its target (because standards apply
to fleet average performance), we
believe that the information provided to
us by manufacturers and our own
analysis supports the gradual extension
of the cutpoint for large light trucks in
this proposal from 66 square feet in MY
2016 out to a larger footprint square feet
before MY 2025.
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The agencies are proposing to phase
in the higher cutpoint for the truck
curve in order to avoid any backsliding
from the MY 2016 standard. A target
that is feasible in one model year should
never become less feasible in a
subsequent model year—manufacturers
should have no reason to remove fuel
economy-improving/CO2-reducing
technology from a vehicle once it has
been applied. Put another way, the
agencies are proposing to not allow
‘‘curve crossing’’ from one model year to
the next. In proposing MYs 2011–2015
CAFE standards and promulgating MY
2011 standards, NHTSA proposed and
requested comment on avoiding curve
crossing, as an ‘‘anti-backsliding
measure.’’ 133 The MY 2016 2 cycle test
curves are therefore a floor for the MYs
2017–2025 curves. For passenger cars,
which have minimal change in slope
from the MY 2012–2016 rulemakings
and no change in cut points, there are
no curve crossing issues in the proposed
standards.
The minimum stringency
determination was done using the two
133 74
Fed. Reg. at 14370 (Mar. 30, 2009).
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cycle curves. Stringency adjustments for
air conditioning and other credits were
calculated after curves that did not cross
were determined in two cycle space.
The year over year increase in these
adjustments cause neither the GHG nor
CAFE curves (with A/C) to contact the
2016 curves when charted.
7. Once the agencies determined the
complete mathematical function shape,
how did the agencies adjust the curves
to develop the proposed standards and
regulatory alternatives?
The curves discussed above all reflect
the addition of technology to individual
vehicle models to reduce technology
differences between vehicle models
before fitting curves. This application of
technology was conducted not to
directly determine the proposed
standards, but rather for purposes of
technology adjustments, and set aside
considerations regarding potential rates
of application (i.e., phase-in caps), and
considerations regarding economic
implications of applying specific
technologies to specific vehicle models.
The following sections describe further
adjustments to the curves discussed
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above, that affect both the shape of the
curve, and the location of the curve, that
helped the agencies determine curves
that defined the proposed standards.
a. Adjusting for Year over Year
Stringency
As in the MYs 2012–2016 rules, the
agencies developed curves defining
regulatory alternatives for consideration
by ‘‘shifting’’ these curves. For the MYs
2012–2016 rules, the agencies did so on
an absolute basis, offsetting the fitted
curve by the same value (in gpm or g/
mi) at all footprints. In developing this
proposal, the agencies have
reconsidered the use of this approach,
and have concluded that after MY 2016,
curves should be offset on a relative
basis—that is, by adjusting the entire
gpm-based curve (and, equivalently, the
CO2 curve) by the same percentage
rather than the same absolute value. The
agencies’ estimates of the effectiveness
of these technologies are all expressed
in relative terms—that is, each
technology (with the exception of A/C)
is estimated to reduce fuel consumption
(the inverse of fuel economy) and CO2
emissions by a specific percentage of
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fuel consumption without the
technology. It is, therefore, more
consistent with the agencies’ estimates
of technology effectiveness to develop
the proposed standards and regulatory
alternatives by applying a proportional
offset to curves expressing fuel
consumption or emissions as a function
of footprint. In addition, extended
indefinitely (and without other
compensating adjustments), an absolute
offset would eventually (i.e., at very
high average stringencies) produce
negative (gpm or g/mi) targets. Relative
offsets avoid this potential outcome.
Relative offsets do cause curves to
become, on a fuel consumption and CO2
basis, flatter at greater average
stringencies; however, as discussed
above, this outcome remains consistent
with the agencies’ estimates of
technology effectiveness. In other
words, given a relative decrease in
average required fuel consumption or
CO2 emissions, a curve that is flatter by
the same relative amount should be
equally challenging in terms of the
potential to achieve compliance through
the addition of fuel-saving technology.
On this basis, and considering that the
‘‘flattening’’ occurs gradually for the
regulatory alternatives the agencies have
evaluated, the agencies tentatively
conclude that this approach to offsetting
the curves to develop year-by-year
regulatory alternatives neither re-creates
a situation in which manufacturers are
likely to respond to standards in ways
that compromise highway safety, nor
undoes the attribute-based standard’s
more equitable balancing of compliance
burdens among disparate
manufacturers. The agencies invite
comment on these conclusions, and on
any other means that might avoid the
potential outcomes—in particular,
negative fuel consumption and CO2
targets—discussed above.
b. Adjusting for anticipated
improvements to mobile air
conditioning systems
The fuel economy values in the
agencies’ market forecast are based on
the 2-cycle (i.e., city and highway) fuel
economy test and calculation
procedures that do not reflect potential
improvements in air conditioning
system efficiency, refrigerant leakage, or
refrigerant Global Warming Potential
(GWP). Recognizing that there are
significant and cost effective potential
air conditioning system improvements
available in the rulemaking timeframe
(discussed in detail in Chapter 5 of the
draft joint TSD), the agencies are
increasing the stringency of the target
curves based on the agencies’
assessment of the capability of
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manufacturers to implement these
changes. For the proposed CAFE
standards and alternatives, an offset is
included based on air conditioning
system efficiency improvements, as
these improvements are the only
improvements that effect vehicle fuel
economy. For the proposed GHG
standards and alternatives, a stringency
increase is included based on air
conditioning system efficiency, leakage
and refrigerant improvements. As
discussed above in Chapter 5 of the join
TSD, the air conditioning system
improvements affect a vehicle’s fuel
efficiency or CO2 emissions
performance as an additive stringency
increase, as compared to other fuel
efficiency improving technologies
which are multiplicative. Therefore, in
adjusting target curves for
improvements in the air conditioning
system performance, the agencies are
adjusting the target curves by additive
stringency increases (or vertical shifts)
in the curves.
For the GHG target curves, the offset
for air conditioning system performance
is being handled in the same manner as
for the MY 2012–2016 rules. For the
CAFE target curves, NHTSA for the first
time is proposing to account for
potential improvements in air
conditioning system performance. Using
this methodology, the agencies first use
a multiplicative stringency adjustment
for the sloped portion of the curves to
reflect the effectiveness on technologies
other than air conditioning system
technologies, creating a series of curve
shapes that are ‘‘fanned’’ based on twocycle performance. Then the curves are
offset vertically by the air conditioning
improvement by an equal amount at
every point.
D. Joint Vehicle Technology
Assumptions
For the past four to five years, the
agencies have been working together
closely to follow the development of
fuel consumption and GHG reducing
technologies. Two major analyses have
been published jointly by EPA and
NHTSA: The Technical Support
Document to support the MYs 2012–
2016 final rule and the 2010 Technical
Analysis Report (which supported the
2010 Notice of Intent). The latter of
these analyses was also done in
conjunction with CARB. Both of these
analyses have both been published
within the past 18 months. As a result,
much of the work is still relevant and
we continue to rely heavily on these
references. However, some
technologies—and what we know about
them—are changing so rapidly that the
analysis supporting this proposal
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contains a considerable amount of new
work on technologies included in this
rule, some of which were included in
prior rulemakings, and others that were
not.
Notably, we have updated our battery
costing methodology significantly since
the MYs 2012–2016 final rule and even
relative to the 2010 TAR. We are now
using a peer reviewed model developed
by Argonne National Laboratory for the
Department of Energy which provides
us with more rigorous estimates for
battery costs and allows us to estimate
future costs specific to hybrids, plug-in
hybrids and electric vehicles all of
which have different battery design
characteristics.
We also have new cost data from more
recently completed tear down and other
cost studies by FEV which were not
available in either the MYs 2012–2016
final rule or the 2010 TAR. These new
studies analyzed a 8-speed automatic
transmission replacing 6-speed
automatic transmission, a 8-speed dual
clutch transmission replacing 6-speed
dual clutch transmission, a power-split
hybrid powertrain with an I4 engine
replacing a conventional engine
powertrain with V6 engine, a mild
hybrid with stop-start technology and
an I4 engine replacing a conventional I4
engine, and the Fiat Multi-Air engine
technology. We discuss the new tear
down studies in Section II.D.2 of this
preamble. Based on this, we have
updated some of the FEV-developed
costs relative to what we used in the
2012–2016 final rule, although these
costs are consistent with those used in
the 2010 TAR. Furthermore, we have
completely re-worked our estimated
costs associated with mass reduction
relative to both the MYs 2012–2016
final rule and the 2010 TAR.
As would be expected given that some
of our cost estimates were developed
several years ago, we have also updated
all of our base direct manufacturing
costs to put them in terms of more
recent dollars (2009 dollars for this
proposal). We have also updated our
methodology for calculating indirect
costs associated with new technologies
since both the MYs 2012–2016 final rule
and the TAR. We continue to use the
indirect cost multiplier (ICM) approach
used in those analyses, but have made
important changes to the calculation
methodology—changes done in
response to ongoing staff evaluation and
public input.
Lastly, we have updated many of the
technologies’ effectiveness estimates
largely based on new vehicle simulation
work conducted by Ricardo
Engineering. This simulation work
provides the effectiveness estimates for
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a number of the technologies most
heavily relied on in the agencies’
analysis of potential standards for MYs
2017–2025.
The agencies have also reviewed the
findings and recommendations in the
updated NAS report ‘‘Assessment of
Fuel Economy Technologies for LightDuty Vehicles’’ that was completed after
the MYs 2012–2016 final rule was
issued,134 and NHTSA has performed a
sensitivity analysis (contained in its
PRIA) to examine the impact of using
some of the NAS cost and effectiveness
estimates on the proposed standards.
Each of these changes is discussed
briefly in the remainder of this section
and in much greater detail in Chapter 3
of the draft joint TSD. First we provide
a brief summary of the technologies we
have considered in this proposal before
highlighting the above-mentioned items
that are new for this proposal. We
request comment on all aspects of our
analysis as discussed here and detailed
in the draft joint TSD.
1. What technologies did the Agencies
Consider?
For this proposal, the agencies project
that manufacturers can add a variety of
technologies to each of their vehicle
models and or platforms in order to
improve the vehicles’ fuel economy and
GHG performance. In order to analyze a
variety of regulatory alternative
scenarios, it is essential to have a
thorough understanding of the
technologies available to the
manufacturers. This analysis includes
an assessment of the cost, effectiveness,
availability, development time, and
manufacturability of various
technologies within the normal redesign
and refresh periods of a vehicle line (or
in the design of a new vehicle). As we
describe in the draft Joint TSD, when a
technology can be applied can affect the
cost as well as the technology
penetration rates (or phase-in caps) that
are projected in the analysis.
The agencies considered dozens of
vehicle technologies that manufacturers
could use to improve the fuel economy
and reduce CO2 emissions of their
vehicles during the MYs 2017–2025
timeframe. Many of the technologies
considered are available today, are well
known, and could be incorporated into
vehicles once product development
decisions are made. These are ‘‘nearterm’’ technologies and are identical or
very similar to those anticipated in the
agencies’ analyses of compliance
strategies for the MYs 2012–2016 final
134 ‘‘Assessment
of Fuel Economy Technologies
for Light-Duty Vehicles,’’ National Research
Council of the National Academies, June 2010.
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rule. For this rulemaking, given its time
frame, other technologies are also
considered that are not currently in
production, but that are beyond the
initial research phase, and are under
development and expected to be in
production in the next 5–10 years.
Examples of these technologies are
downsized and turbocharged engines
operating at combustion pressures even
higher than today’s turbocharged
engines, and an emerging hybrid
architecture combined with an 8 speed
dual clutch transmission, a combination
that is not available today. These are
technologies which the agencies believe
can, for the most part, be applied both
to cars and trucks, and which are
expected to achieve significant
improvements in fuel economy and
reductions in CO2 emissions at
reasonable costs in the MYs 2017 to
2025 timeframe. The agencies did not
consider technologies that are currently
in an initial stage of research because of
the uncertainty involved in the
availability and feasibility of
implementing these technologies with
significant penetration rates for this
analysis. The agencies recognize that
due to the relatively long time frame
between the date of this proposal and
2025, it is very possible that new and
innovative technologies will make their
way into the fleet, perhaps even in
significant numbers, that we have not
considered in this analysis. We expect
to reconsider such technologies as part
of the mid-term evaluation, as
appropriate, and possibly could be used
to generate credits under a number of
the proposed flexibility and incentive
programs provided in the proposed
rules.
The technologies considered can be
grouped into four broad categories:
Engine technologies; transmission
technologies; vehicle technologies (such
as mass reduction, tires and
aerodynamic treatments); and
electrification technologies (including
hybridization and changing to full
electric drive).135 The specific
technologies within each broad group
are discussed below. The list of
technologies presented below is nearly
identical to that presented in both the
MYs 2012–2016 final rule and the 2010
TAR, with the following new
technologies added to the list since the
last final rule: The P2 hybrid, a newly
emerging hybridization technology that
was also considered in the 2010 TAR;
continued improvements in gasoline
135 NHTSA’s analysis considers these
technologies in five groups rather than four—
hybridization is one category, and ‘‘electrification/
accessories’’ is another.
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engines, with greater efficiencies and
downsizing; continued significant
efficiency improvements in
transmissions; and ongoing levels of
improvement to some of the seemingly
more basic technologies such as lower
rolling resistance tires and aerodynamic
treatments, which are among the most
cost effective technologies available for
reducing fuel consumption and GHGs.
Not included in the list below are
technologies specific to air conditioning
system improvements and off-cycle
controls, which are presented in Section
II.F of this NPRM and in Chapter 5 of
the draft Joint TSD.
a. Types of Engine Technologies
Considered
Low-friction lubricants including low
viscosity and advanced low friction
lubricant oils are now available with
improved performance. If manufacturers
choose to make use of these lubricants,
they may need to make engine changes
and conduct durability testing to
accommodate the lubricants. The costs
in our analysis consider these engine
changes and testing requirements. This
level of low friction lubricants is
expected to exceed 85 percent
penetration by the 2017 MY.
Reduction of engine friction losses can
be achieved through low-tension piston
rings, roller cam followers, improved
material coatings, more optimal thermal
management, piston surface treatments,
and other improvements in the design of
engine components and subsystems that
improve efficient engine operation. This
level of engine friction reduction is
expected to exceed 85 percent
penetration by the 2017 MY.
Advanced Low Friction Lubricant and
Second Level of Engine Friction
Reduction are new for this analysis. As
technologies advance between now and
the rulemaking timeframe, there will be
further development in low friction
lubricants and engine friction
reductions. The agencies grouped the
development in these two areas into a
single technology and applied them for
MY 2017 and beyond.
Cylinder deactivation disables the
intake and exhaust valves and prevents
fuel injection into some cylinders
during light-load operation. The engine
runs temporarily as though it were a
smaller engine which substantially
reduces pumping losses.
Variable valve timing alters the timing
of the intake valves, exhaust valves, or
both, primarily to reduce pumping
losses, increase specific power, and
control residual gases.
Discrete variable valve lift increases
efficiency by optimizing air flow over a
broader range of engine operation which
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reduces pumping losses. This is
accomplished by controlled switching
between two or more cam profile lobe
heights.
Continuous variable valve lift is an
electromechanical or electrohydraulic
system in which valve timing is
changed as lift height is controlled. This
yields a wide range of performance
optimization and volumetric efficiency,
including enabling the engine to be
valve throttled.
Stoichiometric gasoline directinjection technology injects fuel at high
pressure directly into the combustion
chamber to improve cooling of the air/
fuel charge as well as combustion
quality within the cylinder, which
allows for higher compression ratios
and increased thermodynamic
efficiency.
Turbo charging and downsizing
increases the available airflow and
specific power level, allowing a reduced
engine size while maintaining
performance. Engines of this type use
gasoline direct injection (GDI) and dual
cam phasing. This reduces pumping
losses at lighter loads in comparison to
a larger engine. We continue to include
an 18 bar brake mean effective pressure
(BMEP) technology (as in the MYs
2012–2016 final rule) and are also
including both 24 bar BMEP and 27 bar
BMEP technologies. The 24 bar BMEP
technology would use a single-stage,
variable geometry turbocharger which
would provide a higher intake boost
pressure available across a broader
range of engine operation than
conventional 18 bar BMEP engines. The
27 bar BMEP technology requires
additional boost and thus would use a
two-stage turbocharger necessitating use
of cooled exhaust gas recirculation
(EGR) as described below. The 18 bar
BMEP technology is applied with 33
percent engine downsizing, 24 bar
BMEP is applied with 50 percent engine
downsizing, and 27 bar BMEP is applied
with 56 percent engine downsizing.
Cooled exhaust-gas recirculation
(EGR) reduces the incidence of knocking
combustion with additional charge
dilution and obviates the need for fuel
enrichment at high engine power. This
allows for higher boost pressure and/or
compression ratio and further reduction
in engine displacement and both
pumping and friction losses while
maintaining performance. Engines of
this type use GDI and both dual cam
phasing and discrete variable valve lift.
The EGR systems considered in this
assessment would use a dual-loop
system with both high and low pressure
EGR loops and dual EGR coolers. For
this proposal, cooled EGR is considered
to be a technology that can be added to
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a 24 bar BMEP engine and is an
enabling technology for 27 bar BMEP
engines.
Diesel engines have several
characteristics that give superior fuel
efficiency, including reduced pumping
losses due to lack of (or greatly reduced)
throttling, high pressure direct injection
of fuel, a combustion cycle that operates
at a higher compression ratio, and a very
lean air/fuel mixture relative to an
equivalent-performance gasoline engine.
This technology requires additional
enablers, such as a NOx adsorption
catalyst system or a urea/ammonia
selective catalytic reduction system for
control of NOx emissions during lean
(excess air) operation.
b. Types of Transmission Technologies
Considered
Improved automatic transmission
controls optimize the shift schedule to
maximize fuel efficiency under wide
ranging conditions and minimizes
losses associated with torque converter
slip through lock-up or modulation. The
first level of controls is expected to
exceed 85 percent penetration by the
2017 MY.
Shift optimization is a strategy
whereby the engine and/or transmission
controller(s) emulates a CVT by
continuously evaluating all possible
gear options that would provide the
necessary tractive power and select the
best gear ratio that lets the engine run
in the most efficient operating zone.
Six-, seven-, and eight-speed
automatic transmissions are optimized
by changing the gear ratio span to
enable the engine to operate in a more
efficient operating range over a broader
range of vehicle operating conditions.
While a six speed transmission
application was most prevalent for the
MYs 2012–2016 final rule, eight speed
transmissions are expected to be readily
available and applied in the MYs 2017
through 2025 timeframe.
Dual clutch or automated shift
manual transmissions are similar to
manual transmissions, but the vehicle
controls shifting and launch functions.
A dual-clutch automated shift manual
transmission (DCT) uses separate
clutches for even-numbered and oddnumbered gears, so the next expected
gear is pre-selected, which allows for
faster and smoother shifting. The 2012–
2016 final rule limited DCT applications
to a maximum of 6-speeds. For this
proposal we have considered both 6speed and 8-speed DCT transmissions.
Continuously variable transmission
commonly uses V-shaped pulleys
connected by a metal belt rather than
gears to provide ratios for operation.
Unlike manual and automatic
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transmissions with fixed transmission
ratios, continuously variable
transmissions can provide fully variable
and an infinite number of transmission
ratios that enable the engine to operate
in a more efficient operating range over
a broader range of vehicle operating
conditions. The CVT is maintained for
existing baseline vehicles and not
considered for future vehicles in this
proposal due to the availability of more
cost effective transmission technologies.
Manual 6-speed transmission offers
an additional gear ratio, often with a
higher overdrive gear ratio, than a 5speed manual transmission.
High Efficiency Gearbox (automatic,
DCT or manual)—continuous
improvement in seals, bearings and
clutches, super finishing of gearbox
parts, and development in the area of
lubrication, all aimed at reducing
frictional and other parasitic load in the
system for an automatic or DCT type
transmission.
c. Types of Vehicle Technologies
Considered
Lower-rolling-resistance tires have
characteristics that reduce frictional
losses associated with the energy
dissipated mainly in the deformation of
the tires under load, thereby improving
fuel economy and reducing CO2
emissions. New for this proposal (and
also marking an advance over low
rolling resistance tires considered
during the heavy duty greenhouse gas
rulemaking, see 76 FR at 57207, 57229)
is a second level of lower rolling
resistance tires that reduce frictional
losses even further. The first level of
low rolling resistance tires will have 10
percent rolling resistance reduction
while the 2nd level would have 20
percent rolling resistance reduction
compared to 2008 baseline vehicle. The
first level of lower rolling resistance
tires is expected to exceed 85 percent
penetration by the 2017 MY.
Low-drag brakes reduce the sliding
friction of disc brake pads on rotors
when the brakes are not engaged
because the brake pads are pulled away
from the rotors.
Front or secondary axle disconnect for
four-wheel drive systems provides a
torque distribution disconnect between
front and rear axles when torque is not
required for the non-driving axle. This
results in the reduction of associated
parasitic energy losses.
Aerodynamic drag reduction can be
achieved via two approaches, either
reducing the drag coefficients or
reducing vehicle frontal area. To reduce
the drag coefficient, skirts, air dams,
underbody covers, and more
aerodynamic side view mirrors can be
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applied. In addition to the standard
aerodynamic treatments, the agencies
have included a second level of
aerodynamic technologies which could
include active grill shutters, rear visors,
and larger under body panels. The first
level of aero dynamic drag improvement
is estimated to reduce aerodynamic drag
by 10 percent relative to the baseline
2008 vehicle while the second level
would reduce aero dynamic drag by 20
percent relative to 2008 baseline
vehicles. The second level of
aerodynamic technologies was not
considered in the MYs 2012–2016 final
rule.
Mass Reduction can be achieved in
many ways, such as material
substitution, design optimization, part
consolidation, improving manufacturing
process, etc. The agencies applied mass
reduction of up to 20 percent relative to
MY 2008 levels in this NPRM compared
to only 10 percent in 2012–2016 final
rule. The agencies also determined
effectiveness values for hybrid, plug-in
and electric vehicles based on net mass
reduction, or the delta between the
applied mass reduction (capped at 20
percent) and the added mass of
electrification components. In assessing
compliance strategies and in structuring
the standards, the agencies only
considered amounts of vehicle mass
reduction that would result in what we
estimated to be no adverse effect on
overall fleet safety. The agencies have
an extensive discussion of mass
reduction technologies as well as the
cost of mass reduction in chapter 3 of
the draft joint TSD.
d. Types of Electrification/Accessory
and Hybrid Technologies Considered
Electric power steering (EPS)/Electrohydraulic power steering (EHPS) is an
electrically-assisted steering system that
has advantages over traditional
hydraulic power steering because it
replaces a continuously operated
hydraulic pump, thereby reducing
parasitic losses from the accessory
drive. Manufacturers have informed the
agencies that full EPS systems are being
developed for all light-duty vehicles,
including large trucks. However, the
agencies have applied the EHPS
technology to large trucks and the EPS
technology to all other light-duty
vehicles.
Improved accessories (IACC) may
include high efficiency alternators,
electrically driven (i.e., on-demand)
water pumps and cooling fans. This
excludes other electrical accessories
such as electric oil pumps and
electrically driven air conditioner
compressors. New for this proposal is a
second level of IACC (IACC2) which
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consists of the IACC technologies and
the addition of a mild regeneration
strategy and a higher efficiency
alternator. The first level of IACC
improvements is expected to be at more
than 85 percent penetration by the
2017MY.
12-volt Stop-Start, sometimes referred
to as idle-stop or 12-volt micro hybrid
is the most basic hybrid system that
facilitates idle-stop capability. These
systems typically incorporate an
enhanced performance battery and other
features such as electric transmission
and cooling pumps to maintain vehicle
systems during idle-stop.
Higher Voltage Stop-Start/Belt
Integrated Starter Generator (BISG)
sometimes referred to as a mild hybrid,
provides idle-stop capability and uses a
higher voltage battery with increased
energy capacity over typical automotive
batteries. The higher system voltage
allows the use of a smaller, more
powerful electric motor. This system
replaces a standard alternator with an
enhanced power, higher voltage, higher
efficiency starter-alternator, that is belt
driven and that can recover braking
energy while the vehicle slows down
(regenerative braking). This mild hybrid
technology is not included by either
agency as an enabling technology in the
analysis supporting this proposal,
although some automakers have
expressed interest in possibly using the
technology during the rulemaking time
frame. EPA and NHTSA are providing
incentives to encourage this and similar
hybrid technologies on pick-up trucks
in particular, as described in Section
II.F, and the agencies are in the process
of including this technology for the final
rule analysis as we expand our
understanding of the associated costs
and limitations.
Integrated Motor Assist (IMA)/Crank
integrated starter generator (CISG)
provides idle-stop capability and uses a
high voltage battery with increased
energy capacity over typical automotive
batteries. The higher system voltage
allows the use of a smaller, more
powerful electric motor and reduces the
weight of the wiring harness. This
system replaces a standard alternator
with an enhanced power, higher
voltage, higher efficiency starteralternator that is crankshaft mounted
and can recover braking energy while
the vehicle slows down (regenerative
braking). The IMA technology is not
included by either agency as an
enabling technology in the analysis
supporting this proposal, although it is
included as a baseline technology
because it exists in our 2008 baseline
fleet.
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P2 Hybrid is a newly emerging hybrid
technology that uses a transmission
integrated electric motor placed
between the engine and a gearbox or
CVT, much like the IMA system
described above except with a wet or
dry separation clutch which is used to
decouple the motor/transmission from
the engine. In addition, a P2 hybrid
would typically be equipped with a
larger electric machine. Disengaging the
clutch allows all-electric operation and
more efficient brake-energy recovery.
Engaging the clutch allows efficient
coupling of the engine and electric
motor and, when combined with a DCT
transmission, reduces gear-train losses
relative to power-split or 2-mode hybrid
systems.
2–Mode Hybrid is a hybrid electric
drive system that uses an adaptation of
a conventional stepped-ratio automatic
transmission by replacing some of the
transmission clutches with two electric
motors that control the ratio of engine
speed to vehicle speed, while clutches
allow the motors to be bypassed. This
improves both the transmission torque
capacity for heavy-duty applications
and reduces fuel consumption and CO2
emissions at highway speeds relative to
other types of hybrid electric drive
systems. The 2-mode hybrid technology
is not included by either agency as an
enabling technology in the analysis
supporting this proposal, although it is
included as a baseline technology
because it exists in our 2008 baseline
fleet.
Power-split Hybrid is a hybrid electric
drive system that replaces the
traditional transmission with a single
planetary gearset and a motor/generator.
This motor/generator uses the engine to
either charge the battery or supply
additional power to the drive motor. 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 engine power between the first
motor/generator and the drive motor to
either charge the battery or supply
power to the wheels. The power-split
hybrid technology is not included by
either agency as an enabling technology
in the analysis supporting this proposal,
(the agencies evaluate the P2 hybrid
technology discussed above where
power-split hybrids might otherwise
have been appropriate) although it is
included as a baseline technology
because it exists in our 2008 baseline
fleet.
Plug-in hybrid electric vehicles
(PHEV) are hybrid electric vehicles with
the means to charge their battery packs
from an outside source of electricity
(usually the electric grid). These
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vehicles have larger battery packs with
more energy storage and a greater
capability to be discharged than other
hybrid electric vehicles. They also use
a control system that allows the battery
pack to be substantially depleted under
electric-only or blended mechanical/
electric operation and batteries that can
be cycled in charge sustaining operation
at a lower state of charge than is typical
of other hybrid electric vehicles. These
vehicles are sometimes referred to as
Range Extended Electric Vehicles
(REEV). In this MYs 2017–2025
analysis, PHEVs with several all-electric
ranges—both a 20 mile and a 40 mile
all-electric range—have been included
as potential technologies.
Electric vehicles (EV) are equipped
with all-electric drive and with systems
powered by energy-optimized batteries
charged primarily from grid electricity.
EVs with several ranges—75 mile, 100
mile and 150 mile range—have been
included as potential technologies.
e. Technologies Considered but Deemed
‘‘Not Ready’’ in the MYs 2017–2025
Timeframe
Fuel cell electric vehicles (FCEVs)
utilize a full electric drive platform but
consume electricity generated by an onboard fuel cell and hydrogen fuel. Fuel
cells are electro-chemical devices that
directly convert reactants (hydrogen and
oxygen via air) into electricity, with the
potential of achieving more than twice
the efficiency of conventional internal
combustion engines. High pressure
gaseous hydrogen storage tanks are used
by most automakers for FCEVs that are
currently under development. The high
pressure tanks are similar to those used
for compressed gas storage in more than
10 million CNG vehicles worldwide,
except that they are designed to operate
at a higher pressure (350 bar or 700 bar
vs. 250 bar for CNG). While we expect
there will be some limited introduction
of FCEVs into the market place in the
time frame of this rule, we expect this
introduction to be relatively small, and
thus FCEVs are not considered in the
modeling analysis conducted for this
proposal.
There are a number of other
technologies that the agencies have not
considered in their analysis, but may be
considered for the final rule. These
include HCCI, ‘‘multi-air’’, and camless
valve actuation, and other advanced
engines currently under development.
2. How did the agencies determine the
costs of each of these technologies?
As noted in the introduction to this
section, most of the direct cost estimates
for technologies carried over from the
MYs 2012–2016 final rule and
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subsequently used in this proposal are
fundamentally unchanged since the
MYs 2012–2016 final rule analysis and/
or the 2010 TAR. We say
‘‘fundamentally’’ unchanged since the
basis of the direct manufacturing cost
estimates have not changed; however,
the costs have been updated to more
recent dollars, the learning effects have
resulted in further cost reductions for
some technologies, the indirect costs are
calculated using a modified
methodology and the impact of longterm ICMs is now present during the
rulemaking timeframe. Besides these
changes, there are also some other
notable changes to the costs used in
previous analyses. We highlight these
changes in Section II.D.2.a, below. We
highlight the changes to the indirect
cost methodology and adjustments to
more recent dollars in Sections II.D.2.b
and c. Lastly, we present some updated
terminology used for our approach to
estimating learning effects in an effort to
eliminate confusion with our past
terminology. This is discussed in
Section II.D.2.d, below.
The agencies note that the technology
costs included in this proposal take into
account only those associated with the
initial build of the vehicle. Although
comments were received to the MYs
2012–2016 rulemaking that suggested
there could be additional maintenance
required with some new technologies
(e.g., turbocharging, hybrids, etc.), and
that additional maintenance costs could
occur as a result, the agencies believe
that it is equally possible that
maintenance costs could decrease for
some vehicles, especially when
considering full electric vehicles (which
lack routine engine maintenance) or the
replacement of automatic transmissions
with simpler dual-clutch transmissions.
The agencies request comment on the
possible maintenance cost impacts
associated with this proposal,
reminding potential commenters that
increased warranty costs are already
considered as part of the ICMs.
a. Direct Manufacturing Costs (DMC)
For direct manufacturing costs (DMC)
related to turbocharging, downsizing,
gasoline direct injection, transmissions,
as well as non-battery-related costs on
hybrid, plug-in hybrid and electric
vehicles, the agencies have relied on
costs derived from teardown studies.
For battery related DMC for HEVs,
PHEVs and EVs, the agencies have
relied on the BatPaC model developed
by Argonne National Laboratory for the
Department of Energy. For mass
reduction DMC, the agencies have relied
on several studies as described in detail
in the draft Joint TSD. We discuss each
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of these briefly here and in more detail
in the draft joint TSD. For the majority
of the other technologies considered in
this proposal and described above, the
agencies have relied on the 2012–2016
final rule and sources described there
for estimates of DMC.
i. Costs from Tear-down Studies
As a general matter, the agencies
believe that the best method to derive
technology cost estimates is to conduct
studies involving tear-down and
analysis of actual vehicle components.
A ‘‘tear-down’’ involves breaking down
a technology into its fundamental parts
and manufacturing processes by
completely disassembling actual
vehicles and vehicle subsystems and
precisely determining what is required
for its production. The result of the teardown is a ‘‘bill of materials’’ for each
and every part of the relevant vehicle
systems. This tear-down method of
costing technologies is often used by
manufacturers to benchmark their
products against competitive products.
Historically, vehicle and vehicle
component tear-down has not been
done on a large scale by researchers and
regulators due to the expense required
for such studies. While tear-down
studies are highly accurate at costing
technologies for the year in which the
study is intended, their accuracy, like
that of all cost projections, may
diminish over time as costs are
extrapolated further into the future
because of uncertainties in predicting
commodities (and raw material) prices,
labor rates, and manufacturing
practices. The projected costs may be
higher or lower than predicted.
Over the past several years, EPA has
contracted with FEV, Inc. and its
subcontractor Munro & Associates, to
conduct tear-down cost studies for a
number of key technologies evaluated
by the agencies in assessing the
feasibility of future GHG and CAFE
standards. The analysis methodology
included procedures to scale the teardown results to smaller and larger
vehicles, and also to different
technology configurations. FEV’s
methodology was documented in a
report published as part of the MY
2012–2016 rulemaking, detailing the
costing of the first tear-down conducted
in this work (#1 in the below list).136
This report was peer reviewed by
experts in the industry and revised by
FEV in response to the peer review
136 U.S. EPA, ‘‘Light-Duty Technology Cost
Analysis Pilot Study,’’ Contract No. EP–C–07–069,
Work Assignment 1–3, December 2009, EPA–420–
R–09–020, Docket EPA–HQ–OAR–2009–0472–
11282.
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comments.137 Subsequent tear-down
studies (#2–5 in the below list) were
documented in follow-up FEV reports
made available in the public docket for
the MY 2012–2016 rulemaking.138
Since then, FEV’s work under this
contract work assignment has
continued. Additional cost studies have
been completed and are available for
public review.139 The most extensive
study, performed after the MY 2012–
2016 Final Rule, involved whole-vehicle
tear-downs of a 2010 Ford Fusion
powersplit hybrid and a conventional
2010 Ford Fusion. (The latter served as
a baseline vehicle for comparison.) In
addition to providing powersplit HEV
costs, the results for individual
components in these vehicles were
subsequently used by FEV/Munro to
cost another hybrid technology, the P2
hybrid, which employs similar
hardware. This approach to costing P2
hybrids was undertaken because P2
HEVs were not yet in volume
production at the time of hardware
procurement for tear-down. Finally, an
automotive lithium-polymer battery was
torn down and costed to provide
supplemental battery costing
information to that associated with the
NiMH battery in the Fusion. This HEV
cost work, including the extension of
results to P2 HEVs, has been extensively
documented in a new report prepared
by FEV.140 Because of the complexity
and comprehensive scope of this HEV
analysis, EPA commissioned a separate
peer review focused exclusively on it.
Reviewer comments generally
supported FEV’s methodology and
results, while including a number of
suggestions for improvement many of
which were subsequently incorporated
into FEV’s analysis and final report. The
peer review comments and responses
are available in the rulemaking
docket.141 142
Over the course of this work
assignment, teardown-based studies
137 FEV pilot study response to peer review
document November 6, 2009, is at EPA–HQ–OAR–
2009–0472–11285.
138 U.S. EPA, ‘‘Light-duty Technology Cost
Analysis—Report on Additional Case Studies,’’
EPA–HQ–OAR–2009–0472–11604.
139 FEV, Inc., ‘‘Light-Duty Technology Cost
Analysis, Report on Additional Transmission, Mild
Hybrid, and Valvetrain Technology Case Studies’’,
November 2011.
140 FEV, Inc., ‘‘Light-Duty Technology Cost
Analysis, Power-Split and P2 HEV Case Studies’’,
EPA–420–R–11–015, November 2011.
141 ICF, ‘‘Peer Review of FEV Inc. Report Light
Duty Technology Cost Analysis, Power-Split and P2
Hybrid Electric Vehicle Case Studies’’, EPA–420–R–
11–016, November 2011.
142 FEV and EPA, ‘‘FEV Inc. Report ‘Light Duty
Technology Cost Analysis, Power-Split and P2
Hybrid Electric Vehicle Case Studies’, Peer Review
Report—Response to Comments Document’’, EPA–
420–R–11–017, November 2011.
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have been performed thus far on the
technologies listed below. These
completed studies provide a thorough
evaluation of the new technologies’
costs relative to their baseline (or
replaced) technologies.
1. Stoichiometric gasoline direct
injection (SGDI) and turbocharging with
engine downsizing (T–DS) on a DOHC
(dual overhead cam) I4 engine,
replacing a conventional DOHC I4
engine.
2. SGDI and T–DS on a SOHC (single
overhead cam) on a V6 engine, replacing
a conventional 3-valve/cylinder SOHC
V8 engine.
3. SGDI and T–DS on a DOHC I4
engine, replacing a DOHC V6 engine.
4. 6-speed automatic transmission
(AT), replacing a 5-speed AT.
5. 6-speed wet dual clutch
transmission (DCT) replacing a 6-speed
AT.
6. 8-speed AT replacing a 6-speed AT.
7. 8-speed DCT replacing a 6-speed
DCT.
8. Power-split hybrid (Ford Fusion
with I4 engine) compared to a
conventional vehicle (Ford Fusion with
V6). The results from this tear-down
were extended to address P2 hybrids. In
addition, costs from individual
components in this tear-down study
were used by the agencies in developing
cost estimates for PHEVs and EVs.
9. Mild hybrid with stop-start
technology (Saturn Vue with I4 engine),
replacing a conventional I4 engine.
(Although results from this cost study
are included in the rulemaking docket,
they were not used by the agencies in
this rulemaking’s technical analyses.)
10. Fiat Multi-Air engine technology.
(Although results from this cost study
are included in the rulemaking docket,
they were not used by the agencies in
this rulemaking’s technical analyses.)
Items 6 through 10 in the list above
are new since the 2012–2016 final rule.
In addition, FEV and EPA
extrapolated the engine downsizing
costs for the following scenarios that
were based on the above study cases:
1. Downsizing a SOHC 2 valve/
cylinder V8 engine to a DOHC V6.
2. Downsizing a DOHC V8 to a DOHC
V6.
3. Downsizing a SOHC V6 engine to
a DOHC 4 cylinder engine.
4. Downsizing a DOHC 4 cylinder
engine to a DOHC 3 cylinder engine.
The agencies have relied on the
findings of FEV for estimating the cost
of the technologies covered by the teardown studies.
ii. Costs of HEV, EV & PHEV
The agencies have also reevaluated
the costs for HEVs, PHEVs, and EVs
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since both the 2012–2016 final rule and
the 2010 TAR. First, electrified vehicle
technologies are developing rapidly and
the agencies sought to capture results
from the most recent analysis. Second,
the 2012–2016 rule employed a single
$/kWhr estimate and did not consider
the specific vehicle and technology
application for the battery when we
estimated the cost of the battery.
Specifically, batteries used in HEVs
(high power density applications)
versus EVs (high energy density
applications) need to be considered
appropriately to reflect the design
differences, the chemical material usage
differences and differences in $/kWhr as
the power to energy ratio of the battery
changes for different applications.
To address these issues for this
proposal, the agencies have done two
things. First, EPA has developed a
spreadsheet tool that was used to size
the motor and battery based on the
different road load of various vehicle
classes. Second, the agencies have used
a battery cost model developed by
Argonne National Laboratory (ANL) for
the Vehicle Technologies Program of the
U.S. Department of Energy (DOE) Office
of Energy Efficiency and Renewable
Energy.143 The model developed by
ANL allows users to estimate unique
battery pack costs using user
customized input sets for different
hybridization applications, such as
strong hybrid, PHEV and EV. The DOE
has established long term industry goals
and targets for advanced battery systems
as it does for many energy efficient
technologies. ANL was funded by DOE
to provide an independent assessment
of Li-ion battery costs because of ANL’s
expertise in the field as one of the
primary DOE National Laboratories
responsible for basic and applied battery
energy storage technologies for future
HEV, PHEV and EV applications. Since
publication of the 2010 TAR, ANL’s
battery cost model has been peerreviewed and ANL has updated the
model and documentation to
incorporate suggestions from peerreviewers, such as including a battery
management system, a battery
disconnect unit, a thermal management
system, etc.144 In this proposal, NHTSA
and EPA have used the recently revised
version of this updated model.
The agencies are using the ANL
model as the basis for estimating large143 ANL BatPac model Docket number EPA–HQ–
OAR–2010–0799.
144 Nelson, P.A., Santinit, D.J., Barnes, J. ‘‘Factors
Determining the Manufacturing Costs of LithiumIon Batteries for PHEVs,’’ 24th World Battery,
Hybrid and Fuel Cell Electric Vehicle Symposium
and Exposition EVS–24, Stavenger, Norway, May
13–16, 2009 (www.evs24.org).
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format lithium-ion batteries for this
assessment for the following reasons.
The model was developed by scientists
at ANL who have significant experience
in this area. The model uses a bill of
materials methodology for developing
cost estimates. The ANL model
appropriately considers the vehicle
application’s power and energy
requirements, which are two of the
fundamental parameters when
designing a lithium-ion battery for an
HEV, PHEV, or EV. The ANL model can
estimate production costs based on user
defined inputs for a range of production
volumes. The ANL model’s cost
estimates, while generally lower than
the estimates we received from the
OEMs, are consistent with some of the
supplier cost estimates that EPA
received from large-format lithium-ion
battery pack manufacturers. This
includes data which was received from
on-site visits done by the EPA in the
2008–2011 time frame. Finally, the ANL
model has been described and presented
in the public domain and does not rely
upon confidential business information
(which could not be reviewed by the
public).
The potential for future reductions in
battery cost and improvements in
battery performance relative to current
batteries will play a major role in
determining the overall cost and
performance of future PHEVs and EVs.
The U.S. Department of Energy manages
major battery-related R&D programs and
partnerships, and has done so for many
years, including the ANL model utilized
in this report. DOE has reviewed the
battery cost projections underlying this
proposal and supports the use of the
ANL model for the purposes of this
rulemaking.
We have also estimated cost
associated with in-home chargers and
installation of in-home chargers
expected to be necessary for PHEVs and
EVs. Charger costs are covered in more
detail in chapter 3 of the draft Joint
TSD.
iii. Mass Reduction Costs
The agencies have revised the costs
for mass reduction from the MYs 2012–
2016 rule and the 2010 Technical
Assessment Report. For this proposal,
the agencies are relying on a wide
assortment of sources from the literature
as well as data provided from a number
of OEMs. Based on this review, the
agencies have estimated a new cost
curve such that the costs increase as the
levels of mass reduction increase. For
the final rule the agencies will consider
any new studies that become available,
including two studies that the agencies
are sponsoring and expect will be
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completed in time to inform the final
rule. These studies are discussed in TSD
chapter 3.
b. Indirect Costs (IC)
i. Markup Factors to Estimate Indirect
Costs
For this analysis, indirect costs are
estimated by applying indirect cost
multipliers (ICM) to direct cost
estimates. ICMs were derived by EPA as
a basis for estimating the impact on
indirect costs of individual vehicle
technology changes that would result
from regulatory actions. Separate ICMs
were derived for low, medium, and high
complexity technologies, thus enabling
estimates of indirect costs that reflect
the variation in research, overhead, and
other indirect costs that can occur
among different technologies. ICMs
were also applied in the MYs 2012–
2016 rulemaking.
Prior to developing the ICM
methodology,145 EPA and NHTSA both
applied a retail price equivalent (RPE)
factor to estimate indirect costs. RPEs
are estimated by dividing the total
revenue of a manufacturer by the direct
manufacturing costs. As such, it
includes all forms of indirect costs for
a manufacturer and assumes that the
ratio applies equally for all
technologies. ICMs are based on RPE
estimates that are then modified to
reflect only those elements of indirect
costs that would be expected to change
in response to a regulatory-induced
technology change. For example,
warranty costs would be reflected in
both RPE and ICM estimates, while
marketing costs might only be reflected
in an RPE estimate but not an ICM
estimate for a particular technology, if
the new regulatory-induced technology
change is not one expected to be
marketed to consumers. Because ICMs
calculated by EPA are for individual
technologies, many of which are small
in scale, they often reflect a subset of
RPE costs; as a result, for low
complexity technologies, the RPE is
typically higher than the ICM. This is
not always the case, as ICM estimates
for particularly complex technologies,
specifically hybrid technologies (for
near term ICMs), and plug-in hybrid
battery and full electric vehicle
technologies (for near term and long
term ICMs), reflect higher than average
indirect costs, with the resulting ICMs
145 The ICM methodology was developed by RTI
International, under contract to EPA. The results of
the RTI report were published in Alex Rogozhin,
Michael Gallaher, Gloria Helfand, and Walter
McManus, ‘‘Using Indirect Cost Multipliers to
Estimate the Total Cost of Adding New Technology
in the Automobile Industry.’’ International Journal
of Production Economics 124 (2010): 360–368.
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for those technologies equaling or
exceeding the averaged RPE for the
industry.
There is some level of uncertainty
surrounding both the ICM and RPE
markup factors. The ICM estimates used
in this proposed action group all
technologies into four broad categories
and treat them as if individual
technologies within each of the
categories (‘‘low’’, ‘‘medium’’, ‘‘high1’’
and ‘‘high2’’ complexity) will have the
same ratio of indirect costs to direct
costs. This simplification means it is
likely that the direct cost for some
technologies within a category will be
higher and some lower than the estimate
for the category in general. More
importantly, the ICM estimates have not
been validated through a direct
accounting of actual indirect costs for
individual technologies. Rather, the ICM
estimates were developed using
adjustment factors developed in two
separate occasions: the first, a consensus
process, was reported in the RTI report;
the second, a modified Delphi method,
was conducted separately and reported
in an EPA memo.146 Both these panels
were composed of EPA staff members
with previous background in the
automobile industry; the memberships
of the two panels overlapped but were
not identical.147 The panels evaluated
each element of the industry’s RPE
estimates and estimated the degree to
which those elements would be
expected to change in proportion to
changes in direct manufacturing costs.
The method and estimates in the RTI
report were peer reviewed by three
industry experts and subsequently by
reviewers for the International Journal
of Production Economics. RPEs
themselves are inherently difficult to
estimate because the accounting
statements of manufacturers do not
neatly categorize all cost elements as
either direct or indirect costs. Hence,
each researcher developing an RPE
estimate must apply a certain amount of
judgment to the allocation of the costs.
Since empirical estimates of ICMs are
ultimately derived from the same data
used to measure RPEs, this affects both
measures. However, the value of RPE
has not been measured for specific
technologies, or for groups of specific
technologies. Thus applying a single
146 Helfand, Gloria, and Sherwood, Todd.
‘‘Documentation of the Development of Indirect
Cost Multipliers for Three Automotive
Technologies.’’ Memorandum, Assessment and
Standards Division, Office of Transportation and
Air Quality, U.S. Environmental Protection Agency,
August 2009.
147 NHTSA staff participated in the development
of the process for the second, modified Delphi
panel, and reviewed the results as they were
developed, but did not serve on the panel.
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average RPE to any given technology by
definition overstates costs for very
simple technologies, or understates
them for advanced technologies.
In every recent GHG and fuel
economy rulemaking proposal, we have
requested comment on our ICM factors
and whether it is most appropriate to
use ICMs or RPEs. We have generally
received little to no comment on the
issue specifically, other than basic
comments that the ICM values are too
low. In addition, in the June 2010 NAS
report, NAS noted that the under the
initial ICMs, no technology would be
assumed to have indirect costs as high
as the average RPE. NRC found that
‘‘RPE factors certainly do vary
depending on the complexity of the task
of integrating a component into a
vehicle system, the extent of the
required changes to other components,
the novelty of the technology, and other
factors. However, until empirical data
derived by means of rigorous estimation
methods are available, the committee
prefers to use average markup
factors.’’ 148 The committee also stated
that ‘‘The EPA (Rogozhin et al., 2009),
however, has taken the first steps in
attempting to analyze this problem in a
way that could lead to a practical
method of estimating technologyspecific markup factors’’ where ‘‘this
problem’’ spoke to the issue of
estimating technology-specific markup
factors and indirect cost multipliers.149
The agencies note that, since the
committee completed their work, EPA
has published its work in the Journal of
Production Economics 150 and has also
published a memorandum furthering
the development of ICMs,151 neither of
which the committee had at their
disposal. Further, having published two
final rulemakings—the 2012–2016 lightduty rule (see 75 FR 25324) and the
more recent heavy-duty GHG rule (see
76 FR 57106)—as well as the 2010 TAR
where ICMs served as the basis for all
or most of the indirect costs, EPA
believes that ICMs are indeed fully
developed for regulatory purposes. As
thinking has matured, we have adjusted
our ICM factors such that they are
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148 NRC,
Finding 3–2 at page 3–23.
149 NRC at page 3–19.
150 Alex Rogozhin, Michael Gallaher, Gloria
Helfand, and Walter McManus, ‘‘Using Indirect
Cost Multipliers to Estimate the Total Cost of
Adding New Technology in the Automobile
Industry.’’ International Journal of Production
Economics 124 (2010): 360–368.
151 Helfand, Gloria, and Sherwood, Todd.
‘‘Documentation of the Development of Indirect
Cost Multipliers for Three Automotive
Technologies.’’ Memorandum, Assessment and
Standards Division, Office of Transportation and
Air Quality, U.S. Environmental Protection Agency,
August 2009.
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slightly higher and, importantly, we
have changed the way in which the
factors are applied.
The first change—increased ICM
factors—has been done as a result of
further thought among EPA and NHTSA
that the ICM factors presented in the
original RTI report for low and medium
complexity technologies should no
longer be used and that we should rely
solely on the modified-Delphi values for
these complexity levels. For that reason,
we have eliminated the averaging of
original RTI values with modifiedDelphi values and instead are relying
solely on the modified-Delphi values for
low and medium complexity
technologies. The second change—the
way the factors are applied—results in
the warranty portion of the indirect
costs being applied as a multiplicative
factor (thereby decreasing going forward
as direct manufacturing costs decrease
due to learning), and the remainder of
the indirect costs being applied as an
additive factor (thereby remaining
constant year-over-year and not being
reduced due to learning). This second
change has a comparatively large impact
on the resultant technology costs and,
we believe, more appropriately
estimates costs over time. In addition to
these changes, a secondary-level change
was also made as part of this ICM
recalculation to ICMs. That change was
to revise upward the RPE level reported
in the original RTI report from an
original value of 1.46 to 1.5, to reflect
the long term average RPE. The original
RTI study was based on 2008 data.
However, an analysis of historical RPE
data indicates that, although there is
year to year variation, the average RPE
has remained roughly constant at 1.5.
ICMs will be applied to future years’
data and, therefore, NHTSA and EPA
staffs believe that it would be
appropriate to base ICMs on the
historical average rather than a single
year’s result. Therefore, ICMs have been
adjusted to reflect this average level.
These changes to the ICMs and the
methodology are described in greater
detail in Chapter 3 of the draft Joint
TSD.
ii. Stranded Capital
Because the production of automotive
components is capital-intensive, it is
possible for substantial capital
investments in manufacturing
equipment and facilities to become
‘‘stranded’’ (where their value is lost, or
diminished). This would occur when
the capital is rendered useless (or less
useful) by some factor that forces a
major change in vehicle design, plant
operations, or manufacturer’s product
mix, such as a shift in consumer
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demand for certain vehicle types. It can
also be caused by new standards that
phase-in at a rate too rapid to
accommodate planned replacement or
redisposition of existing capital to other
activities. The lost value of capital
equipment is then amortized in some
way over production of the new
technology components.
It is difficult to quantify accurately
any capital stranding associated with
new technology phase-ins under the
proposed standards because of the
iterative dynamic involved—that is, the
new technology phase-in rate strongly
affects the potential for additional cost
due to stranded capital, but that
additional cost in turn affects the degree
and rate of phase-in for other individual
competing technologies. In addition,
such an analysis is very company-,
factory-, and manufacturing processspecific, particularly in regard to finding
alternative uses for equipment and
facilities. Nevertheless, in order to
account for the possibility of stranded
capital costs, the agencies asked FEV to
perform a separate bounding analysis of
potential stranded capital costs
associated with rapid phase-in of
technologies due to new standards,
using data from FEV’s primary
teardown-based cost analyses.152
The assumptions made in FEV’s
stranded capital analysis with potential
for major impacts on results are:
• All manufacturing equipment was
bought brand new when the old
technology started production (no
carryover of equipment used to make
the previous components that the old
technology itself replaced).
• 10-year normal production runs:
Manufacturing equipment used to make
old technology components is straightline depreciated over a 10-year life.
• Factory managers do not optimize
capital equipment phase-outs (that is,
they are assumed to routinely repair and
replace equipment without regard to
whether or not it will soon be scrapped
due to adoption of new vehicle
technology).
• Estimated stranded capital is
amortized over 5 years of annual
production at 450,000 units (of the new
technology components). This annual
production is identical to that assumed
in FEV’s primary teardown-based cost
analyses. The 5-year recovery period is
chosen to help ensure a conservative
analysis; the actual recovery would of
course vary greatly with market
conditions.
152 FEV, Inc., ‘‘Potential Stranded Capital
Analysis on EPA Light-Duty Technology Cost
Analysis’’, Contract No. EP–C–07–069 Work
Assignment 3–3. November 2011.
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NHTSA in applying the results to the
technology costs is described in
NHTSA’s preliminary RIA section V.
d. Cost Effects Due to Learning
For many of the technologies
considered in this rulemaking, the
agencies expect that the industry should
be able to realize reductions in their
costs over time as a result of ‘‘learning
effects,’’ that is, the fact that as
manufacturers gain experience in
production, they are able to reduce the
cost of production in a variety of ways.
The agencies continue to apply learning
effects in the same way as we did in
both the MYs 2012–2016 final rule and
in the 2010 TAR. However, we have
employed some new terminology in an
effort to eliminate some confusion that
existed with our old terminology. This
new terminology was described in the
recent heavy-duty GHG final rule (see
76 FR 57320). Our old terminology
suggested we were accounting for two
completely different learning effects—
one based on volume production and
the other based on time. This was not
the case since, in fact, we were actually
relying on just one learning
phenomenon, that being the learningby-doing phenomenon that results from
cumulative production volumes.
As a result, the agencies have also
considered the impacts of manufacturer
learning on the technology cost
estimates by reflecting the phenomenon
of volume-based learning curve cost
reductions in our modeling using two
algorithms depending on where in the
learning cycle (i.e., on what portion of
the learning curve) we consider a
technology to be—‘‘steep’’ portion of the
curve for newer technologies and ‘‘flat’’
portion of the curve for more mature
technologies. The observed
phenomenon in the economic literature
which supports manufacturer learning
cost reductions are based on reductions
in costs as production volumes increase
with the highest absolute cost reduction
occurring with the first doubling of
production. The agencies use the
terminology ‘‘steep’’ and ‘‘flat’’ portion
of the curve to distinguish among newer
technologies and more mature
technologies, respectively, and how
learning cost reductions are applied in
cost analyses.
Learning impacts have been
considered on most but not all of the
technologies expected to be used
because some of the expected
technologies are already used rather
widely in the industry and, presumably,
quantifiable learning impacts have
already occurred. The agencies have
applied the steep learning algorithm for
only a handful of technologies
considered to be new or emerging
technologies such as PHEV and EV
batteries which are experiencing heavy
development and, presumably, rapid
cost declines in coming years. For most
technologies, the agencies have
considered them to be more established
and, hence, the agencies have applied
the lower flat learning algorithm. For
more discussion of the learning
approach and the technologies to which
each type of learning has been applied
the reader is directed to Chapter 3 of the
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c. Cost Adjustment to 2009 Dollars
This simple change is to update any
costs presented in earlier analyses to
2009 dollars using the GDP price
deflator as reported by the Bureau of
Economic Analysis on January 27, 2011.
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The factors used to update costs from
2007 and 2008 dollars to 2009 dollars
are shown below. For the final rule, we
are considering moving to 2010 dollars
but, for this analysis, given the timing
of conducting modeling runs and
developing inputs to those runs, the
factors for converting to 2010 dollars
were not yet available.
draft Joint TSD. Note that, since the
agencies had to project how learning
will occur with new technologies over
a long period of time, we request
comments on the assumptions of
learning costs and methodology. In
particular, we are interested in input on
the assumptions for advanced 27-bar
BMEP cooled exhaust gas recirculation
(EGR) engines, which are currently still
in the experimental stage and not
expected to be available in volume
production until 2017. For our analysis,
we have based estimates of the costs of
this engine on current (or soon to be
current) production technologies (e.g.,
gasoline direct injection fuel systems,
engine downsizing, cooled EGR, 18-bar
BMEP capable turbochargers), and
assumed that, since learning (and the
associated cost reductions) begins in
2012 for them that it also does for the
similar technologies used in 27-bar
BMEP engines. We seek comment on the
appropriateness of this assumption.153
3. How did the agencies determine the
effectiveness of each of these
technologies?
In 2007 EPA conducted a detailed
vehicle simulation project to quantify
the effectiveness of a multitude of
technologies for the MYs 2012–2016
153 EPA notes that our modeling projections for
the proposed CO2 standards show a technology
penetration rate of 2% in the 2021MY and 5% in
the 2025MY for 27-bar BMEP engines and, thus, our
cost estimates are not heavily reliant on this
technology.
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The stranded capital analysis was
performed for three transmission
technology scenarios, two engine
technology scenarios, and one hybrid
technology scenario. The methodology
used by EPA in applying the results to
the technology costs is described in
Chapter 3.8.7 and Chapter 5.1 of EPA’s
draft RIA. The methodology used by
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rule (as well as the 2010 NOI). This
technical work was conducted by the
global engineering consulting firm,
Ricardo, Inc. and was peer reviewed and
then published in 2008. For this current
rule, EPA has conducted another peer
reviewed study with Ricardo to broaden
the scope of the original project in order
to expand the range of vehicle classes
and technologies considered, consistent
with a longer-term outlook through
model years MYs 2017–2025. The extent
of the project was vast, including
hundreds of thousands of vehicle
simulation runs. The results were, in
turn, employed to calibrate and update
EPA’s lumped parameter model, which
is used to quantify the synergies and
dis-synergies associated with combining
technologies together for the purposes of
generating inputs for the agencies
respective OMEGA and CAFE modeling.
Additionally, there were a number of
technologies that Ricardo did not model
explicitly. For these, the agencies relied
on a variety of sources in the literature.
A few of the values are identical to
those presented in the MYs 2012–2016
final rule, while others were updated
based on the newer version of the
lumped parameter model. More details
on the Ricardo simulation, lumped
parameter model, as well as the
effectiveness for supplemental
technologies are described in Chapter 3
of the draft Joint TSD.
The agencies note that the
effectiveness values estimated for the
technologies considered in the modeling
analyses may represent average values,
and do not reflect the virtually
unlimited spectrum of possible values
that could result from adding the
technology to different vehicles. For
example, while the agencies have
estimated an effectiveness of 0.6 to 0.8
percent, depending on the vehicle
subclass for low friction lubricants, each
vehicle could have a unique
effectiveness estimate depending on the
baseline vehicle’s oil viscosity rating.
Similarly, the reduction in rolling
resistance (and thus the improvement in
fuel economy and the reduction in CO2
emissions) due to the application of low
rolling resistance tires depends not only
on the unique characteristics of the tires
originally on the vehicle, but on the
unique characteristics of the tires being
applied, characteristics which must be
balanced between fuel efficiency, safety,
and performance. Aerodynamic drag
reduction is much the same—it can
improve fuel economy and reduce CO2
emissions, but it is also highly
dependent on vehicle-specific
functional objectives. For purposes of
the proposal, NHTSA and EPA believe
that employing average values for
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technology effectiveness estimates, as
adjusted depending on vehicle subclass,
is an appropriate way of recognizing the
potential variation in the specific
benefits that individual manufacturers
(and individual vehicles) might obtain
from adding a fuel-saving technology.
E. Joint Economic and Other
Assumptions
The agencies’ analysis of CAFE and
GHG standards for the model years
covered by this proposed rulemaking
rely on a range of forecast information,
estimates of economic variables, and
input parameters. This section briefly
describes the agencies’ proposed
estimates of each of these values. These
values play a significant role in
assessing the benefits of both CAFE and
GHG standards.
In reviewing these variables and the
agencies’ estimates of their values for
purposes of this NPRM, NHTSA and
EPA reconsidered comments that the
agencies previously received on both
the Interim Joint TAR and during the
MYs 2012–2016 light duty vehicle
rulemaking and also reviewed newly
available literature. As a consequence,
for today’s proposal, the agencies are
proposing to update some economic
assumptions and parameter estimates,
while retaining a majority of values
consistent with the Interim Joint TAR
and the MYs 2012–2016 final rule. To
review the parameters and assumptions
the agencies used in the 2012–2016 final
rule, please refer to 75 FR 25378 and
Chapter 4 of the Joint Technical Support
Document that accompanied the final
rule.154 The proposed values
summarized below are discussed in
greater detail in Chapter 4 of the joint
TSD that accompanies this proposal and
elsewhere in the preamble and
respective RIAs. The agencies seek
comment on all of the assumptions
discussed below.
• Costs of fuel economy-improving
technologies—These inputs are
discussed in summary form above and
in more detail in the agencies’
respective sections of this preamble, in
Chapter 3 of the draft joint TSD, and in
the agencies’ respective RIAs. The
technology direct manufacturing cost
estimates used in this analysis are
intended to represent manufacturers’
direct costs for high-volume production
of vehicles with these technologies in
the year for which we state the cost is
considered ‘‘valid.’’ Technology direct
manufacturing cost estimates are
fundamentally unchanged from those
employed by the agencies in the 2012–
154 See https://www.epa.gov/otaq/climate/
regulations/420r10901.pdf.
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2016 final rule, the heavy-duty truck
rule (to the extent relevant), and TAR
for most technologies, although revised
costs are used for batteries, mass
reduction, transmissions, and a few
other technologies. Indirect costs are
accounted for by applying near-term
indirect cost multipliers ranging from
1.24 to 1.77 to the estimates of vehicle
manufacturers’ direct costs for
producing or acquiring each technology,
depending on the complexity of the
technology and the time frame over
which costs are estimated. These values
are reduced to 1.19 to 1.50 over the long
run as some aspects of indirect costs
decline. Indirect cost markup factors
have been revised from previous
rulemakings and the Interim Joint TAR
to reflect the agencies current thinking
regarding a number of issues. These
changes are discussed in detail in
Section II.D.2 of this preamble and in
Chapter 3 of the draft joint TSD. Details
of the agencies’ technology cost
assumptions and how they were derived
can be found in Chapter 3 of the draft
joint TSD.
• Potential opportunity costs of
improved fuel economy—This issue
addresses the possibility that achieving
the fuel economy improvements
required by alternative CAFE or GHG
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, and thus of
manufacturers’ compliance with stricter
standards. Currently the agencies
project that these vehicle attributes will
not change as a result of this rule.
Section II.C above and Chapter 2 of the
draft joint TSD describes how the
agency carefully selected an attributebased standard to minimize
manufacturers’ incentive to reduce
vehicle capabilities. While
manufacturers may choose to do this for
other reasons, the agencies continue to
believe that the rule itself will not result
in such changes. Additionally, EPA and
NHTSA have sought to include the cost
of maintaining these attributes as part of
the cost estimates for technologies that
are included in the cost analysis for the
proposal. For example, downsized
engines are assumed to be turbocharged,
so that they provide the same
performance and utility even though
they are smaller.155 Nonetheless, it is
155 The agencies do not believe that adding fuelsaving technology should preclude future
improvements in performance, safety, or other
attributes, though it is possible that the costs of
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possible that in some cases, the
technology cost estimates may not
include adequate allowance for the
necessary efforts by manufacturers to
maintain vehicle acceleration
performance, payload, or utility while
improving fuel economy and reducing
GHG emissions. As described in Section
III.D.3 and Section IV.G, there are two
possible exceptions in cases where some
vehicle types are converted to hybrid or
full electric vehicles (EVs), but, in such
cases, we believe that sufficient options
would exist for consumers concerned
about the possible loss of utility (e.g.,
they would purchase the nonhybridized version of the vehicle or not
buy an EV) that welfare loss should not
necessarily be assumed. Although
consumer vehicle demand models can
measure these effects, past analyses
using such models have not produced
consistent estimates of buyers’
willingness-to-pay for higher fuel
economy, and it is difficult to decide
whether one data source, model
specification, or estimation procedure is
clearly preferred over another. Thus, the
agencies seek comment on how to
estimate explicitly the changes in
vehicle buyers’ choices and welfare
from the combination of higher prices
for new vehicle models, increases in
their fuel economy, and any
accompanying changes in vehicle
attributes such as performance,
passenger- and cargo-carrying capacity,
or other dimensions of utility.
• 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 test
conditions used by EPA to establish
compliance with the proposed CAFE
and GHG standards. The modeling
approach in this proposal follows the
2012–2016 final rule and the Interim
Joint TAR. In calculating benefits of the
program, the agencies estimate that
actual on-road fuel economy attained by
light-duty vehicles that operate on
liquid fuels will be 20 percent lower
than published fuel economy ratings for
vehicles that operate on liquid fuels. For
example, if the measured CAFE fuel
economy value 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).156 Based on manufacturer
confidential business information, as
these additions may be affected by the presence of
fuel-saving technology.
156 U.S. Environmental Protection Agency, Final
Technical Support Document, Fuel Economy
Labeling of Motor Vehicle Revisions to Improve
Calculation of Fuel Economy Estimates, EPA420–R–
06–017, December 2006.
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well as data derived from the 2006 EPA
fuel economy label rule, the agencies
use a 30 percent gap for consumption of
wall electricity for electric vehicles and
plug-in hybrid electric vehicles.157
• Fuel prices and the value of saving
fuel—Projected future fuel prices are a
critical input into the preliminary
economic analysis of alternative
standards, because they determine the
value of fuel savings both to new
vehicle buyers and to society, and fuel
savings account for the majority of the
proposed rule’s estimated benefits. For
this proposed rule, the agencies are
using the most recent fuel price
projections from the U.S. Energy
Information Administration’s (EIA)
Annual Energy Outlook (AEO) 2011
reference case forecast. The forecasts of
fuel prices reported in EIA’s AEO 2011
extend through 2035. Fuel prices
beyond the time frame of AEO’s forecast
were estimated using an average growth
rate for the years 2017–2035 to each
year after 2035. This is the same
methodology used by the agencies in the
2012–2016 rulemaking, in the heavy
duty truck and engine rule (76 FR
57106), and in the Interim Joint TAR.
For example, these forecasts of gasoline
fuel prices in 2009$ include $3.25 per
gallon in 2017, $3.39 in 2021 and $3.71
in 2035. Extrapolating as described
above, retail gasoline prices reach $4.16
per gallon in 2050 (measured in
constant 2009 dollars). As discussed in
Chapter 4 of the draft Joint TSD, while
the agencies believe that EIA’s AEO
reference case generally represents a
reasonable forecast of future fuel prices
for purposes of use in our analysis of the
benefits of this rule, we recognize that
there is a great deal of uncertainty in
any such forecast that could affect our
estimates. The agencies request
comment on how best to account for
uncertainty in future fuel prices.
• Consumer valuation of fuel
economy and payback period—In
estimating the value of fuel economy
improvements to potential vehicle
buyers that would result from
alternative CAFE and GHG standards,
the agencies assume that buyers value
the resulting fuel savings over only part
of the expected lifetimes of the vehicles
they purchase. Specifically, we assume
that buyers value fuel savings over the
157 See 71 FR at 77887, and U.S. Environmental
Protection Agency, Final Technical Support
Document, Fuel Economy Labeling of Motor
Vehicle Revisions to Improve Calculation of Fuel
Economy Estimates, EPA420–R–06–017, December
2006 for general background on the analysis. See
also EPA’s Response to Comments (EPA–420–R–
11–005) to the 2011 labeling rule, page 189, first
paragraph, specifically the discussion of the derived
five cycle equation and the non-linear adjustment
with increasing MPG.
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first five years of a new vehicle’s
lifetime, and that buyers 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.
• Vehicle sales assumptions—The
first step in estimating lifetime fuel
consumption by vehicles produced
during a model year is to calculate the
number that are expected to be
produced and sold. The agencies relied
on the AEO 2011 Reference Case for
forecasts of total vehicle sales, while the
baseline market forecast developed by
the agencies (discussed in Section II.B
and in Chapter 1 of the TSD) divided
total projected sales into sales of cars
and light trucks.
• Vehicle lifetimes and survival
rates—As in the 2012–2016 final rule
and Interim Joint TAR, we apply
updated values of age-specific survival
rates for cars and light trucks to adjusted
forecasts of passenger car and light truck
sales to determine the number of these
vehicles expected to remain in use
during each year of their lifetimes.
These values remain unchanged from
prior analyses.
• Vehicle miles traveled—We
calculated the total number of miles that
cars and light trucks produced in each
model year will be driven during each
year of their lifetimes using estimates of
annual vehicle use by age tabulated
from the Federal Highway
Administration’s 2001 National
Household Travel Survey (NHTS),158
adjusted to account for the effects on
vehicle use of subsequent increases in
fuel prices. In order to insure that the
resulting mileage schedules imply
reasonable estimates of future growth in
total car and light truck use, we
calculated the rate of future growth in
annual mileage at each age that would
be necessary for total car and light truck
travel to increase at the rates forecast in
the AEO 2011 Reference Case. The
growth rate in average annual car and
light truck use produced by this
calculation is approximately 1 percent
per year through 2030 and 0.5 percent
thereafter. We applied these growth
rates applied to the mileage figures
derived from the 2001 NHTS to estimate
annual mileage by vehicle age during
each year of the expected lifetimes of
MY 2017–2025 vehicles. A similar
approach to estimating future vehicle
use was used in the 2012–2016 final
rule and Interim Joint TAR, but the
158 For a description of the Survey, see https://
www.bts.gov/programs/
national_household_travel_survey/ (last accessed
Sept. 9, 2011).
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future growth rates in average vehicle
use have been revised for this proposal.
• Accounting for the rebound effect of
higher fuel economy—The rebound
effect refers to the increase in vehicle
use that results if an increase in fuel
efficiency lowers the cost of driving. For
purposes of this NPRM, the agencies
elected to continue to use a 10 percent
rebound effect in their analyses of fuel
savings and other benefits from higher
standards, consistent with the 2012–
2016 light-duty vehicle rulemaking and
the Interim Joint TAR. That is, we
assume a 10 percent decrease in fuel
cost per mile resulting from our
proposed standards would result in a 1
percent increase in the annual number
of miles driven at each age over a
vehicle’s lifetime. In Chapter 4 of the
joint TSD, we provide a detailed
explanation of the basis for our rebound
estimate, including a summary of new
literature published since the 2012–
2016 rulemaking that lends further
support to the 10 percent rebound
estimate. We also refer the reader to
Chapters X and XII of NHTSA’s PRIA
and Chapter 4 of the EPA DRIA that
accompanies this preamble for
sensitivity and uncertainty analyses of
alternative rebound assumptions.
• Benefits from increased vehicle
use—The increase in vehicle use from
the rebound effect provides additional
benefits to drivers, 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. The analysis estimates the
economic benefits from increased
rebound-effect driving as the sum of the
fuel costs they incur in that additional
travel plus the consumer surplus drivers
receive from the improved accessibility
their travel provides. As in the 2012–
2016 final rule we estimate the
economic value of this consumer
surplus 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.
• Added costs from congestion,
accidents, and noise—Although it
provides benefits to drivers as described
above, 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 where it
takes place, additional vehicle use can
contribute to traffic congestion and
delays by increasing traffic volumes on
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facilities that are already heavily
traveled. These added delays impose
higher costs on drivers and other
vehicle occupants in the form of
increased travel time and operating
expenses. At the same time, this travel
also increases costs associated with
traffic accidents, and increased traffic
noise. The agencies rely on estimates of
congestion, accident, and noise costs
caused by automobiles and light trucks
developed by the Federal Highway
Administration to estimate these
increased external costs caused by
added driving.159 This method is
consistent with the 2012–2016 final
rule.
• Petroleum consumption and import
externalities—U.S. consumption of
imported 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. These costs
include (1) higher prices for petroleum
products resulting from the effect of
increased U.S. demand for imported oil
on the world oil price (‘‘monopsony
costs’’); (2) the expected costs associated
with 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 the U.S.
economy against the effects of oil
supply disruptions.160 Although the
reduction in the global price of
petroleum and refined products due to
decreased demand for fuel in the U.S.
resulting from this rule represents a
benefit to the U.S. economy, it
simultaneously represents an economic
loss to other countries that produce and
sell oil or petroleum products to the
U.S. Recognizing the redistributive
nature of this ‘‘monopsony effect’’ when
viewed from a global perspective (which
is consistent with the agencies’ use of a
global estimate for the social cost of
carbon to value reductions in CO2
emissions, the energy security benefits
159 These estimates were developed by FHWA for
use in its 1997 Federal Highway Cost Allocation
Study; https://www.fhwa.dot.gov/policy/hcas/final/
index.htm (last accessed Sept. 9, 2011).
160 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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estimated to result from this program
exclude the value of this monopsony
effect. In contrast, the macroeconomic
disruption and adjustment costs that
arise from sudden reductions in the
supply of imported oil to the U.S. do not
have offsetting impacts outside of the
U.S., so the estimated reduction in their
expected value stemming from reduced
U.S. petroleum imports is included in
the energy security benefits estimated
for this program. U.S. military costs are
excluded from the analysis because
their attribution to particular missions
or activities is difficult. Also, historical
variation in U.S. military costs have not
been associated with changes in U.S.
petroleum imports, although we
recognize that more broadly, there may
be significant (if unquantifiable) benefits
in improving national security by
reducing oil imports. Similarly, since
the size or other factors affecting the
cost of maintaining the SPR historically
have not varied in response to changes
in U.S. oil import levels, changes in the
costs of the SPR are excluded from the
estimates of the energy security benefits
of the program. To summarize, the
agencies have included only the
macroeconomic disruption and
adjustment costs portion of the energy
security benefits to estimate the
monetary value of the total energy
security benefits of this program. Based
on a recent update of an earlier peerreviewed Oak Ridge National Laboratory
study that was used in support of the
both the 2012–2016 light duty vehicle
and the 2014–2018 medium- and heavyduty vehicle rulemaking, we estimate
that each gallon of fuel saved will
reduce the expected macroeconomic
disruption and adjustment costs of
sudden reductions in the supply of
imported oil to the U.S. economy by
$0.185 (2009$) in 2025. Each gallon of
fuel saved as a consequence of higher
standards is anticipated to reduce total
U.S. imports of crude petroleum or
refined fuel by 0.95 gallons.161 The
energy security analysis conducted for
this proposal also estimates that the
world price of oil will fall modestly in
response to lower U.S. demand for
refined fuel.162 163 The energy security
161 Each gallon of fuel saved is assumed to reduce
imports of refined fuel by 0.5 gallons, and the
volume of fuel refined domestically by 0.5 gallons.
Domestic fuel refining is assumed to utilize 90
percent imported crude petroleum and 10 percent
domestically-produced crude petroleum as
feedstocks. Together, these assumptions imply that
each gallon of fuel saved will reduce imports of
refined fuel and crude petroleum by 0.50 gallons +
0.50 gallons*90 percent = 0.50 gallons + 0.45
gallons = 0.95 gallons.
162 Leiby, Paul. Oak Ridge National Laboratory.
‘‘Approach to Estimating the Oil Import Security
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methodology used in this proposal is
the same as that used by the agencies in
both the 2012–2016 light duty vehicle
and 2014–2018 medium- and heavyduty vehicle rulemakings. In those
rulemakings, the agencies addressed
comments about the magnitude of their
energy security estimates and
methodological issues such as whether
to include the monopsony benefits in
energy security calculations.
• Air pollutant emissions—
Æ Impacts on criteria air pollutant
emissions—Criteria air pollutants
emitted by vehicles and during fuel
production and distribution 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).
Although reductions in domestic fuel
refining and distribution that result
from lower fuel consumption will
reduce U.S. emissions of these
pollutants, additional vehicle use
associated with the rebound effect, and
additional electricity production will
increase emissions. Thus the net effect
of stricter standards on emissions of
each criteria pollutant depends on the
relative magnitudes of reduced
emissions from fuel refining and
distribution, and increases in emissions
resulting from added vehicle use. The
agencies’ analysis assumes that the permile emission rates for cars and light
trucks produced during the model years
affected by the proposed rule will
remain constant at the levels resulting
from EPA’s Tier 2 light duty vehicle
emissions standards. The agencies’
approach to estimating criteria air
pollutant emissions is consistent with
the method used in the 2012–2016 final
rule (where the agencies received no
significant adverse comments), although
the agencies employ a more recent
version of the EPA’s MOVES (Motor
Vehicle Emissions Simulator) model.
Æ Economic value of reductions in
criteria pollutant emissions—For the
purpose of the joint technical analysis,
EPA and NHTSA estimate the economic
value of the human health benefits
associated with reducing population
exposure to PM2.5 using a ‘‘benefit-perton’’ method. These PM2.5-related
benefit-per-ton estimates provide the
total monetized benefits to human
health (the sum of reductions in
premature mortality and premature
morbidity) that result from eliminating
Premium for the MY 2017–2025 Light Duty Vehicle
Proposal’’ 2011.
163 Note that this change in world oil price is not
reflected in the AEO projections described earlier
in this section.
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one ton of directly emitted PM2.5, or one
ton of other pollutants that contribute to
atmospheric levels of PM2.5 (such as
NOX, SOX, and VOCs), from a specified
source. These unit values remain
unchanged from the 2012–2016 final
rule, and the agencies received no
significant adverse comment on the
analysis. Note that the agencies’ analysis
includes no estimates of the direct
health or other benefits associated with
reductions in emissions of criteria
pollutants other than PM2.5.
Æ Impacts on greenhouse gas (GHG)
emissions—NHTSA estimates
reductions in emissions of carbon
dioxide (CO2) from passenger car and
light truck use by multiplying the
estimated reduction in consumption of
fuel (gasoline and diesel) by the
quantity or mass of CO2 emissions
released per gallon of fuel consumed.
EPA directly calculates reductions in
total CO2 emissions from the projected
reductions in CO2 emissions by each
vehicle subject to the proposed rule.164
Both agencies also calculate the impact
on CO2 emissions that occur during fuel
production and distribution resulting
from lower fuel consumption, as well as
the emission impacts due to changes in
electricity production. Although CO2
emissions account for nearly 95 percent
of total GHG emissions that result from
fuel combustion during vehicle use,
emissions of other GHGs are potentially
significant as well because of their
higher ‘‘potency’’ as GHGs than that of
CO2 itself. EPA and NHTSA therefore
also estimate the change in upstream
and downstream emissions of non-CO2
GHGs that occur during the
aforementioned processes due to their
respective standards.165 The agencies
approach to estimating GHG emissions
is consistent with the method used in
the 2012–2016 final rule and the Interim
Joint TAR.
Æ Economic value of reductions in
CO2 emissions—EPA and NHTSA
assigned a dollar value to reductions in
CO2 emissions using recent estimates of
the ‘‘social cost of carbon’’ (SCC)
developed by a federal interagency
group that included the two agencies.
As that group’s report observed, ‘‘The
SCC is an estimate of the monetized
damages associated with an incremental
increase in carbon emissions in a given
164 The weighted average CO content of
2
certification gasoline is estimated to be 8,887 grams
per gallon, while that of diesel fuel is estimated to
be approximately 10,200 grams per gallon.
165 There is, however, an exception. NHTSA does
not and cannot claim benefit from reductions in
downstream emissions of HFCs because they do not
relate to fuel economy, while EPA does because all
GHGs are relevant for purposes of EPA’s Clean Air
Act standards.
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year. It is intended to include (but is not
limited to) changes in net agricultural
productivity, human health, property
damages from increased flood risk, and
the value of ecosystem services due to
climate change.’’ 166 Published estimates
of the SCC vary widely as a result of
uncertainties about future economic
growth, climate sensitivity to GHG
emissions, procedures used to model
the economic impacts of climate change,
and the choice of discount rates.167 The
SCC estimates used in this analysis were
developed through an interagency
process that included EPA, DOT/
NHTSA, and other executive branch
entities, and concluded in February
2010. We first used these SCC estimates
in the benefits analysis for the 2012–
2016 light-duty vehicle rulemaking. We
have continued to use these estimates in
other rulemaking analyses, including
the Greenhouse Gas Emission Standards
and Fuel Efficiency Standards for
Medium- and Heavy-Duty Engines and
Vehicles (76 FR 57106, p. 57332) . The
SCC Technical Support Document (SCC
TSD) provides a complete discussion of
the methods used to develop these SCC
estimates.
• The value of changes in driving
range—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 and reducing GHG emissions
provides additional benefits to their
owners. The primary benefits from the
reduction in the number of required
refueling cycles are the value of time
saved to drivers and other adult vehicle
occupants, as well as the savings to
owners in terms of the cost of the fuel
that would have otherwise been
consumed in transit during those (now
no longer required) refueling trips.
Using recent data on vehicle owners’
refueling patterns gathered from a
survey conducted by the National
Automotive Sampling System (NASS),
NHTSA was able to better estimate
parameters associated with refueling
trips. NASS data provided NHTSA with
166 SCC TSD, see page 2. Docket ID EPA–HQ–
OAR–2009–0472–114577, Technical Support
Document: Social Cost of Carbon for Regulatory
Impact Analysis Under Executive Order 12866,
Interagency Working Group on Social Cost of
Carbon, with participation by Council of Economic
Advisers, Council on Environmental Quality,
Department of Agriculture, Department of
Commerce, Department of Energy, Department of
Transportation, Environmental Protection Agency,
National Economic Council, Office of Energy and
Climate Change, Office of Management and Budget,
Office of Science and Technology Policy, and
Department of Treasury (February 2010). Also
available at https://epa.gov/otaq/climate/
regulations.htm
167 SCC TSD, see pages 6–7.
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the ability to estimate the average time
required for a refueling trip, the average
time and distance drivers typically
travel out of their way to reach fueling
stations, the average number of adult
vehicle occupants, the average quantity
of fuel purchased, and the distribution
of reasons given by drivers for refueling.
From these estimates, NHTSA
constructed an updated set of economic
assumptions to update those used in the
2012–2016 FRM in calculating
refueling-related benefits. The 2012–
2016 FRM discusses NHTSA’s intent to
utilize the NASS data on refueling trip
characteristics in future rulemakings.
While the NASS data improve the
precision of the inputs used in the
analysis of the benefits resulting from
fewer refueling cycles, the framework of
the analysis remains essentially the
same as in the 2012–2016 final rule.
Note that this topic and associated
benefits were not covered in the Interim
Joint TAR. Detailed discussion and
examples of the agencies’ approach are
provided in Chapter VIII of NHTSA’s
PRIA and Chapter 8 of EPA’s DRIA.
• 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.168 The discount rate
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168 Because all costs associated with improving
vehicles’ fuel economy and reducing CO2 emissions
are assumed to be incurred at the time they are
produced, these costs are already expressed in their
present values as of each model year affected by the
proposed rule, and require discounting only for the
purpose of expressing them as present values as of
a common year.
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expresses the percent decline in the
value of these future fuel-savings and
other benefits—as viewed from today’s
perspective—for each year they are
deferred into the future. In evaluating
the non-climate related benefits of the
final standards, the agencies have
employed discount rates of both 3
percent and 7 percent, consistent with
the 2012–2016 final rule and OMB
Circular A–4 guidance.
For the reader’s reference, Table II–8
and Table II–9 below summarize the
values used to calculate the impacts of
each proposed standard. The values
presented in this table are summaries of
the inputs used for the models; specific
values used in the agencies’ respective
analyses may be aggregated, expanded,
or have other relevant adjustments. See
Joint TSD 4 and each agency’s
respective RIA for details. The agencies
seek comment on the economic
assumptions presented in the table.
In addition, the agencies analyzed the
sensitivity of their estimates of the
benefits and costs associated with this
proposed rule to variation in the values
of many of these economic assumptions
and other inputs. The values used in
these sensitivity analyses and their
results are presented their agencies’
respective RIAs. A wide range of
estimates is available for many of the
primary inputs that are used in the
agencies’ CAFE and GHG emissions
models. The agencies recognize that
each of these values has some degree of
uncertainty, which the agencies further
discuss in the draft Joint TSD. The
agencies have tested the sensitivity of
their estimates of costs and benefits to
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a range of assumptions about each of
these inputs, and present these
sensitivity analyses in their respective
RIAs. For example, NHTSA conducted
separate sensitivity analyses for, among
other things, discount rates, fuel prices,
the social cost of carbon, the rebound
effect, consumers’ valuation of fuel
economy benefits, battery costs, mass
reduction costs, the value of a statistical
life, and the indirect cost markup factor.
This list is similar in scope to the list
that was examined in the MY 2012–
2016 final rule, but includes battery
costs and mass reduction costs, while
dropping military security and
monopsony costs. NHTSA’s sensitivity
analyses are contained in Chapter X of
NHTSA’s PRIA. EPA conducted
sensitivity analyses on the rebound
effect, battery costs, mass reduction
costs, the indirect cost markup factor
and on the cost learning curves used in
this analysis. These analyses are found
in Chapters 3 and 4 of the EPA DRIA.
In addition, NHTSA performs a
probabilistic uncertainty analysis
examining simultaneous variation in the
major model inputs including
technology costs, technology benefits,
fuel prices, the rebound effect, and
military security costs. This information
is provided in Chapter XII of NHTSA’s
PRIA. These uncertainty parameters are
consistent with those used in the MY
2012–2016 final rule. The agencies will
consider conducting additional
sensitivity and uncertainty analyses for
the final rule as appropriate.
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F. Air Conditioning Efficiency CO2
Credits and Fuel Consumption
Improvement Values, Off-cycle
Reductions, and Full-size Pickup Trucks
For MYs 2012–2016, EPA provided an
option for manufacturers to generate
credits for complying with GHG
standards by incorporating efficiency
improving vehicle technologies that
would reduce CO2 and fuel
consumption from air conditioning (A/
C) operation or from other vehicle
operation that is not captured by the
Federal Test Procedure (FTP) and
Highway Fuel Economy Test (HFET),
also collectively known as the ‘‘twocycle’’ test procedure. EPA referred to
these credits as ‘‘off-cycle credits.’’
For this proposal, EPA, in
coordination with NHTSA, is proposing
under their EPCA authorities to allow
manufacturers to generate fuel
consumption improvement values for
purposes of CAFE compliance based on
the use of A/C efficiency and off-cycle
technologies. This proposed expansion
is a change from the 2012–16 final rule
where EPA only provided the A/C
efficiency and off-cycle credits for the
GHG program. EPA is not proposing to
allow these increases for compliance
with the CAFE program for MYs 2012–
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2016, nor to allow any compliance with
the CAFE program as a result of
reductions in direct A/C emissions
resulting from leakage of HFCs from air
conditioning systems, which remains a
flexibility unique to the GHG program.
The agencies believe that because of
the significant amount of credits and
fuel consumption improvement values
offered under the A/C program (up to
5.0 g/mi for cars and 7.2 g/mi for trucks
which is equivalent to a fuel
consumption improvement value of
0.000563 gal/mi for cars and 0.000586
gal/mi for trucks) that manufacturers
will maximize the benefits these credits
and fuel consumption improvement
values afford. Consistent with the 2012–
2016 final rule, EPA will continue to
adjust the stringency of the two-cycle
tailpipe CO2 standards in order to
account for this projected widespread
penetration of A/C credits (as described
more fully in Section III.C), and NHTSA
has also accounted for expected A/C
efficiency improvements in determining
the maximum feasible CAFE standards.
The agencies discuss these proposed
CO2 credits/fuel consumption
improvement values below and in more
detail in the Joint TSD (Chapter 5). EPA
discusses additional proposed GHG A/
C leakage credits that are unrelated to
CO2 and fuel consumption (though they
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are part of EPA’s CO2 equivalent
calculation) in Section III.C below.
EPA, in coordination with NHTSA, is
also proposing to add for MYs 2017–
2025 a new incentive for Advanced
Technology for Full Sized Pickup
Trucks. Under its EPCA authority for
CAFE and under its CAA authority for
GHGs, EPA is proposing GHG credits
and fuel economy improvement values
for manufacturers that hybridize a
significant quantity of their full size
pickup trucks, or that use other
technologies that significantly reduce
CO2 emissions and fuel consumption.
Further discussions of the A/C, offcycle, and the advanced technology for
pick-up truck incentive programs are
provided below.
1. Proposed Air Conditioning CO2
Credits and Fuel Consumption
Improvement Values
The credits/fuel consumption
improvement values for higherefficiency air conditioning technologies
are very similar to those EPA included
in the 2012–2016 GHG final rule. The
proposed credits/fuel consumption
improvement values represent an
improved understanding of the
relationships between A/C technologies
and CO2 emissions and fuel
consumption. Much of this
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understanding results from a new
vehicle simulation tool that EPA has
developed and the agencies are using for
this proposal. EPA designed this model
to simulate in an integrated way the
dynamic behavior of the several key
systems that affect vehicle efficiency:
The engine, electrical, transmission, and
vehicle systems. The simulation model
is supported by data from a wide range
of sources; Chapter 2 of the Draft
Regulatory Impact Analysis discusses its
development in more detail.
The agencies have identified several
technologies that are key to the amount
of fuel a vehicle consumes and thus the
amount of CO2 it emits. Most of these
technologies already exist on current
vehicles, but manufacturers can
improve the energy efficiency of the
technology designs and operation. For
example, most of the additional air
conditioning related load on an engine
is due to the compressor which pumps
the refrigerant around the system loop.
The less the compressor operates, the
less load the compressor places on the
engine resulting in less fuel
consumption and CO2 emissions. Thus,
optimizing compressor operation with
cabin demand using more sophisticated
sensors, controls and control strategies,
is one path to improving the overall
efficiency of the A/C system. Additional
components or control strategies are
available to manufacturers to reduce the
air conditioning load on the engine
which are discussed in more detail in
Chapter 5 of the joint TSD. Overall, the
agencies have concluded that these
improved technologies could together
reduce A/C-related CO2 and fuel
consumption of today’s typical air
conditioning systems by 42%. The
agencies propose to use this level of
improvement to represent the maximum
efficiency credit available to a
manufacturer.
Demonstrating the degree of efficiency
improvement that a manufacturer’s air
conditioning systems achieve—thus
quantifying the appropriate amount of
GHG credit and CAFE fuel consumption
improvement value the manufacturer is
eligible for—would ideally involve a
performance test. That is, a test that
would directly measure CO2 (and thus
allow calculation of fuel consumption)
before and after the incorporation of the
improved technologies. Progress toward
such a test continues. As mentioned in
the introduction to this section, the
primary vehicle emissions and fuel
consumption test, the Federal Test
Procedure (FTP) or ‘‘two-cycle’’ testing,
does not require or simulate air
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conditioning usage through the test
cycle. The SC03 test is designed to
identify any effect the air conditioning
system has on other emissions when it
is operating under extreme conditions,
but is not designed to measure the small
differences in CO2 due to different A/C
technologies.
At the time of the final rule for the
2012–2016 GHG program, EPA
concluded that a practical, performancebased test procedure capable of
quantifying efficiency credits was not
yet available. However, EPA introduced
a specialized new procedure that it
believed would be appropriate for the
more limited purpose of demonstrating
that the design improvements for which
a manufacturer was earning credits
produced actual efficiency
improvements. EPA’s test is a fairly
simple test, performed while the vehicle
is at idle. Beginning with the 2014
model year, the A/C Idle Test was to be
used to qualify a manufacturer to be
able to use the technology lookup table
(‘‘menu’’) approach to quantify credits.
That is, a manufacturer would need to
achieve a certain CO2 level on the Idle
Test in order to access the ‘‘menu’’ and
generate GHG efficiency credits.
Since that final rule was published,
several manufacturers have provided
data that raises questions about the
ability of the Idle Test to fulfill its
intended purpose. Especially for small,
lower-powered vehicles, the data also
shows that it is difficult to achieve
reasonable test-to-test repeatability. The
manufacturers have also informed EPA
(in meetings subsequent to the 2012–
2016 final rule) that the Idle Test does
not accurately capture the
improvements from many of the
technologies listed in the menu. EPA
has been aware of all of these issues,
and proposing to modify the Idle Test
such that the threshold would be a
function of engine displacement, in
contrast to the flat threshold from the
previous rule. EPA continues to
consider this Idle Test to be a reasonable
measure of some A/C CO2 emissions as
there is significant real-world driving
activity at idle, and the Idle Test
significantly exercises a number of the
A/C technologies from the menu. Sec
III.C.1.b.i below and Chapter 5 (5.1.3.5)
of the Joint TSD describe further the
adjustments EPA is proposing to the
Idle Test for manufacturers to qualify for
MYs 2014–2016 A/C efficiency credits.
EPA proposes that manufacturers
continue to use the menu for MYs 2014–
2016 to determine credits for the GHG
program. This was also the approach
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that EPA used for efficiency credits in
the MY2012–2016 GHG rule. However
for MYs 2017–2025, EPA is proposing a
new test procedure to demonstrate the
effectiveness of A/C efficiency
technologies and credits as described
below. For MYs 2014–2016, EPA
requests comment on substituting the
Idle Test requirement with a reporting
requirement from this new test
procedure as described in Section
III.C.1.b.i below.
In order to correct the shortcomings of
the available tests, EPA has developed
a four-part performance test, called the
AC17. The test includes the SC03
driving cycle, the fuel economy
highway cycle, in addition to a preconditioning cycle, and a solar soak
period. EPA is proposing that
manufacturers use this test to
demonstrate that new or improved A/C
technologies actually result in efficiency
improvements. Since the
appropriateness of the test is still being
evaluated, EPA proposes that
manufacturers continue to use the menu
to determine credits and fuel
consumption improvement values for
the GHG and CAFE programs. This
design-based approach would assign
CO2 credit to each efficiency-improving
air conditioning technology that the
manufacturer incorporates in a vehicle
model. The sum of these values for all
technologies would be the amount of
CO2 credit generated by that vehicle, up
to a maximum of 5.0 g/mi for car and
7.2 g/mi for trucks. As stated above, this
is equivalent to a fuel consumption
value of 0.000563 gallons/mi for cars
and 0.000586 gallons/mi for trucks. EPA
will consult with NHTSA on the
amount of fuel consumption
improvement value manufacturers may
factor into their CAFE calculations if
there are adjustments that may be
required in the future. Table II–10
presents the proposed CO2 credit and
CAFE fuel consumption improvement
values for each of the efficiencyreducing air conditioning technologies
considered in this rule. More detail is
provided on the calculation of indirect
A/C CAFE fuel consumption
improvement values in chapter 5 of the
TSD. EPA is proposing very specific
definitions of each of the technologies
in the table below which are discussed
in Chapter 5 of the draft joint TSD to
ensure that the air conditioner
technology used by manufacturers
seeking these credits corresponds with
the technology used to derive the credit/
fuel consumption improvement values.
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As mentioned above, EPA, working
with manufacturers and CARB, has
made significant progress in developing
a more robust test that may eventually
be capable of measuring differences in
A/C efficiency. While EPA believes that
more testing and development will be
necessary before the new test could be
used directly to quantify efficiency
credits and fuel consumption
improvement values, EPA is proposing
that the test be used to demonstrate that
new or improved A/C technologies
result in reductions in GHG emissions
and fuel consumption. EPA is proposing
the AC17 test as a reporting-only
alternative to the Idle Test for MYs
2014–2016, and as a prerequisite for
generating Efficiency Credits and fuel
consumption improvement values for
MY 2017 and later. To demonstrate that
a vehicle’s A/C system is delivering the
efficiency benefits of the new
technologies, manufacturers would run
the AC17 test procedure on a vehicle
that incorporates the new technologies,
with the A/C system off and then on,
and then compare that result to the
result from a previous model year or
baseline vehicle with similar vehicle
characteristics, except that the
comparison vehicle would not have the
new technologies. If the test result with
the new technology demonstrated an
emission reduction that is greater than
or equal to the menu-based credit
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potential of those technologies, the
manufacturer would generate the
appropriate credit based on the menu.
However, if the test result did not
demonstrate the full menu-based
potential of the technology, partial
credit could still be earned, in
proportion to how far away the result
was from the expected menu-based
credit amount.
EPA discusses the new test in more
detail in Section III.C.1.b below and in
Chapter 5 (5.1.3.5) of the joint TSD. Due
to the length of time to conduct the test
procedure, EPA is also proposing that
required testing on the new AC17 test
procedure be limited to a subset of
vehicles. The agencies request comment
on this approach to establishing A/C
efficiency credits and fuel consumption
improvement values and the use of the
new A/C test.
For the CAFE program, EPA is
proposing to determine a fleet average
fuel consumption improvement value in
a manner consistent with the way a fleet
average CO2 credits will be determined.
EPA would convert the metric tons of
CO2 credits for air conditioning, offcycle, and full size pick-up to fleet-wide
fuel consumption improvement values,
consistent with the way EPA would
convert the improvements in CO2
performance to metric tons of credits.
See discussion in section III. C. There
would be separate improvement values
for each type of credit, calculated
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separately for cars and for trucks. These
improvement values would be
subtracted from the manufacturer’s twocycle-based fleet fuel consumption
value to yield a final new fleet fuel
consumption value, which would be
inverted to determine a final fleet fuel
CAFE value. EPA considered, but is not
proposing, an approach where the fuel
consumption improvement values
would be accounted for at the
individual vehicle level. In this case a
credit-adjusted MPG value would have
to be calculated for each vehicle that
accrues air conditioning, off-cycle, or
pick-up truck credits, and a creditadjusted CAFE would be calculated by
sales-weighting each vehicle. EPA found
that a significant issue with this
approach is that the credit programs do
not align with the way fuel economy
and GHG emissions are currently
reported to EPA or to NHTSA, i.e., at the
model type level. Model types are
similar in basic engine and transmission
characteristics, but credits are expected
to vary within a model type, possibly
considerably. For example, within a
model type the credits could vary by
body style, trim level, footprint, and the
type of air conditioning systems and
other GHG reduction technologies
installed. Manufacturers would have to
report sales volumes for each unique
combination of all of these factors in
order to enable EPA to perform the
CAFE averaging calculations. This
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would require a dramatic and expensive
overhaul of EPA’s data systems, and the
manufacturers would likely face similar
impacts. The vehicle-specific approach
would also likely introduce more
opportunities for errors resulting from
data entry and rounding, since each
vehicle’s base fuel economy would be
modified by multiple consumption
values reported to at least six decimal
places. The proposed approach would
instead focus on calculating the GHG
credits correctly and summing them for
each of the car and truck fleets, and the
step of transforming to a fuel
consumption improvement value is
relatively straightforward. However,
given that the vehicle-specific and fleetbased approaches yield the same end
result, EPA requests comment on
whether one approach or the other is
preferable, and if so, why a specific
approach is preferable.
2. Off-Cycle CO2 Credits
For MYs 2012–2016, EPA provided an
option for manufacturers to generate
adjustments (credits) for employing new
and innovative technologies that
achieve CO2 reductions which are not
reflected on current 2-cycle test
procedures. For this proposal, EPA, in
coordination with NHTSA, is proposing
to apply the off-cycle credits and
equivalent fuel consumption
improvement values to both the CAFE
and GHG programs. This proposed
expansion is a change from the 2012–16
final rule where only EPA provided the
off-cycle credits for the GHG program.
For MY 2017 and later, EPA is
proposing that manufacturers may
continue to use off-cycle credits for
GHG compliance and begin to use fuel
consumption improvement values for
CAFE compliance. In addition, EPA is
proposing a set of defined (e.g. default)
values for identified off-cycle
technologies that would apply unless
the manufacturer demonstrates to EPA
that a different value for its technology
is appropriate.
Starting with MY2008, EPA started
employing a ‘‘five-cycle’’ test
methodology to measure fuel economy
for the fuel economy label. However, for
GHG and CAFE compliance, EPA
continues to use the established ‘‘twocycle’’ (city and highway test cycles,
also known as the FTP and HFET) test
methodology. As learned through
development of the ‘‘five-cycle’’
methodology and researching this
proposal, EPA and NHTSA recognize
that there are technologies that provide
real-world GHG emissions and fuel
consumption improvements, but those
improvements are not fully reflected on
the ‘‘two-cycle’’ test.
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During meetings with vehicle
manufacturers, EPA received comments
that the approval process for generating
off-cycle credits was complicated and
did not provide sufficient certainty on
the amount of credits that might be
approved. Commenters also maintained
that it is impractical to measure small
incremental improvements on top of a
large tailpipe measurement, similar to
comments received related to
quantifying air conditioner
improvements. These same
manufacturers believed that such a
process could stifle innovation and fuel
efficient technologies from penetrating
into the vehicle fleet.
In response to these concerns, EPA is
proposing a menu with a number of
technologies that the agency believes
will show real-world CO2 and fuel
consumption benefits which can be
reasonably quantified by the agencies at
this time. This list of pre-approved
technologies includes a quantified
default value that would apply unless
the manufacturer demonstrates to EPA
that a different value for a technology is
appropriate. This list is similar to the
menu driven approach described in the
previous section on A/C efficiency
credits. The estimates of these credits
were largely determined from research,
analysis and simulations, rather from
full vehicle testing, which would have
been cost and time prohibitive. These
predefined estimates are somewhat
conservative to avoid the potential for
windfall. If manufactures believe their
specific off-cycle technology achieves
larger improvement, they may apply for
greater credits and fuel consumption
improvement values with supporting
data. For technologies not listed, EPA is
proposing a case-by-case approach for
approval of off-cycle credits and fuel
consumption improvement values,
similar to the approach in the 2012–
2016 rule but with important
modifications to streamline the approval
process. EPA will also consult with
NHTSA during the review process. See
section III.C below; technologies for
which EPA is proposing default offcycle credit values and fuel
consumption improvement values are
shown in Table II—11 below. Fuel
consumption improvement values
under the CAFE program based on offcycle technology would be equivalent to
the off-cycle credit allowed by EPA
under the GHG program, and these
amounts would be determined using the
same procedures and test methods as
are proposed for use in EPA’s GHG
program.
EPA and NHTSA are not proposing to
adjust the stringency of the standards
based on the availability of off-cycle
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credits and fuel consumption
improvement values. There are a
number of reasons for this. First, the
agencies have limited technical
information on the cost, development
time necessary, and manufacturability
of many of these technologies. The
analysis presented below (and in greater
detail in Chapter 5 of the joint TSD) is
limited to quantifying the effectiveness
of the technology (for the purposes of
quantifying credits and fuel
consumption improvement values). It is
based on a combination of data and
engineering analysis for each
technology. Second, for most of these
technologies the agencies have no data
on what the rates of penetration of these
technologies would be during the rule
timeframe. Thus, with the exception of
active aerodynamic improvements and
stop start technology, the agencies do
not have adequate information available
to consider the technologies on the list
when determining the appropriate GHG
emissions or CAFE standards. The
agencies expect to continue to improve
their understanding of these
technologies over time. If further
information is obtained during the
comment period that supports
consideration of these technologies in
setting the standards, EPA and NHTSA
will reevaluate their positions.
However, given the current lack of
detailed information about these
technologies, the agencies do not expect
that it will be able to do more for the
final rule than estimate some general
amount of reasonable projected cost
savings from generation of off-cycle
credits and fuel consumption
improvement values. Therefore,
effectively the off-cycle credits and fuel
consumption improvement values allow
manufacturers additional flexibility in
selecting technologies that may be used
to comply with GHG emission and
CAFE standards.
Two technologies on the list—active
aerodynamic improvements and stop
start—are in a different position than
the other technologies on the list. Both
of these technologies are included in the
agencies’ modeling analysis of
technologies projected to be available
for use in achieving the reductions
needed for the standards. We have
information on their effectiveness, cost,
and availability for purposes of
considering them along with the various
other technologies we consider in
determining the appropriate CO2
emissions standard. These technologies
are among those listed in Chapter 3 of
the joint TSD and have measureable
benefit on the 2-cycle test. However, in
the context of off-cycle credits and fuel
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consumption improvement values, stop
start is any technology which enables a
vehicle to automatically turn off the
engine when the vehicle comes to a rest
and restart the engine when the driver
applies pressure to the accelerator or
releases the brake. This includes HEVs
and PHEVs (but not EVs). In addition,
active grill shutters is just one of various
technologies that can be used as part of
aerodynamic design improvements (as
part of the ‘‘aero2’’ technology). The
modeling and other analysis developed
for determining the appropriate
emissions standard includes these
technologies, using the effectiveness
values on the 2-cycle test. This is
consistent with our consideration of all
of the other technologies included in
these analyses. Including them on the
list for off-cycle credit and fuel
consumption improvement value
generation, for purposes of compliance
with the standards, would recognize
that these technologies have a higher
degree of effectiveness than reflected in
their 2-cycle effectiveness. As discussed
in Sections III.C and Chapter 5 of the
joint TSD, the agencies have taken into
account the generation of off-cycle
credits and fuel consumption
improvement values by these two
technologies in determining the
appropriateness of the proposed
standards, considering the amount of
credit and fuel consumption
improvement value, the projected
degree of penetration of these
technologies, and other factors. The
proposed standards are appropriate
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recognizing that these technologies
would also generate off-cycle credits
and fuel consumption improvement
values. Section III.D has a more detailed
discussion on the feasibility of the
standards within the context of the
flexibilities (such as off-cycle credits
and fuel consumption improvement
values) proposed in this rule.
For these technologies that provide a
benefit on five-cycle testing, but show
less benefit on two cycle testing, in
order to quantify the emissions impacts
of these technologies, EPA will simply
subtract the two-cycle benefit from the
five-cycle benefit for the purposes of
assigning credit and fuel consumption
improvement values for this preapproved list. Other technologies, such
as more efficient lighting show no
benefit over any test cycle. In these
cases, EPA will estimate the average
amount of usage using MOVES 169 data
if possible and use this to calculate a
duty-cycle-weighted benefit (or credit
and fuel consumption improvement
value). In the 2012–2016 rule, EPA
stated a technology must have ‘‘real
world GHG reductions not significantly
captured on the current 2-cycle
tests* * *’’ For this proposal, EPA is
proposing to modify this requirement to
allow technologies as long as the
incremental benefit in the real-world is
significantly better than on the 2-cycle
test. There are environmental benefits to
169 MOVES is EPA’s MOtor Vehicle Emissions
Simulator. This model contains (in its database) a
wide variety of fleet and activity data as well as
national ambient temperature conditions.
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encouraging these kinds of technologies
that might not otherwise be employed,
beyond the level that the 2-cycle
standards already do, thus we are now
allowing credits and fuel consumption
improvement values to be generated
where the technology achieves an
incremental benefit that is significantly
better than on the 2-cycle test, as is the
case for the technologies on the list.
EPA and NHTSA evaluated many
more technologies for off-cycle credits
and fuel consumption improvement
values and decided that the following
technologies should be eligible for offcycle credits and fuel consumption
improvement values. These eleven
technologies eligible for credits and fuel
consumption improvement values are
shown in Table II–11 below. EPA is
proposing that a CAFE improvement
value for off-cycle improvements be
determined at the fleet level by
converting the CO2 credits determined
under the EPA program (in metric tons
of CO2) for each fleet (car and truck) to
a fleet fuel consumption improvement
value. This improvement value would
then be used to adjust the fleet’s CAFE
level upward. See the proposed
regulations at 40 CFR 600.510–12. Note
that while the table below presents fuel
consumption values equivalent to a
given CO2 credit value, these
consumption values are presented for
informational purposes and are not
meant to imply that these values will be
used to determine the fuel economy for
individual vehicles.
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Table II–11 shows the proposed list of
off-cycle technologies and credits and
equivalent fuel consumption
improvement values for cars and trucks.
The credits and fuel consumption
improvement values for engine heat
recovery and solar roof panels are
scalable, depending on the amount of
energy these systems can generate for
the vehicle. The Solar/Thermal control
technologies are varied and are limited
to 3 and 4.3 g/mi (car and truck
respectively) total.
To ensure that the off cycle
technology used by manufacturers
seeking these credits and fuel
consumption improvement values
corresponds with the technology used to
derive the credit and fuel consumption
improvement values, EPA is proposing
very specific definitions of each of the
technologies in the table of the list of
technologies in Chapter 5 of the draft
joint TSD. The agencies are requesting
comment on all aspects of the off-cycle
credit and fuel consumption
improvement value program, and would
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welcome any data to support an
adjustment to this table, whether it is to
adjust the values or to add or remove
technologies.
Vehicle Simulation Tool
Chapter 2 of the RIA provides a
detailed description of the vehicle
simulation tool that EPA has been
developing. This tool is capable of
simulating a wide range of conventional
and advanced engines, transmissions,
and vehicle technologies over various
driving cycles. It evaluates technology
package effectiveness while taking into
account synergy (and dis-synergy)
effects among vehicle components and
estimates GHG emissions for various
combinations of technologies. For the
2017 to 2025 GHG proposal, this
simulation tool was used to assist
estimating the amount of GHG credits
for improved A/C systems and off-cycle
technologies. EPA seeks public
comments on this approach of using the
tool for directly generating and finetuning some of the credits in order to
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capture the amount of GHG reductions
provided by primarily off-cycle
technologies.
There are a number of technologies
that could bring additional GHG
reductions over the 5-cycle drive test (or
in the real world) compared to the
combined FTP/Highway (or two) cycle
test. These are called off-cycle
technologies and are described in
chapter 5 of the Joint TSD in detail.
Among them are technologies related to
reducing vehicle’s electrical loads, such
as High Efficiency Exterior Lights,
Engine Heat Recovery, and Solar Roof
Panels. In an effort to streamline the
process for approving off-cycle credits,
we have set a relatively conservative
estimate of the credit based on our
efficacy analysis. EPA seeks comment
on utilizing the model in order to
quantify the credits more accurately, if
actual data of electrical load reduction
and/or on-board electricity generation
by one or more of these technologies is
available through data submission from
manufacturers. Similarly, there are
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technologies that would provide
additional GHG reduction benefits in
the 5-cycle test by actively reducing the
vehicle’s aerodynamic drag forces.
These are referred to as active
aerodynamic technologies, which
include but are not limited to active grill
shutters and active suspension
lowering. Like the electrical load
reduction technologies, the vehicle
simulation tool can be used to more
accurately estimate the additional GHG
reductions (therefore the credits)
provided by these active aerodynamic
technologies over the 5-cycle drive test.
EPA seeks comment on using the
simulation tool in order to quantify
these credits. In order to do this
properly, manufacturers would be
expected to submit two sets of coastdown coefficients (with and without the
active aerodynamic technologies). Or,
they could submit two sets of
aerodynamic drag coefficient (with and
without the active aerodynamic
technologies) as a function of vehicle
speed.
There are other technologies that
would result in additional GHG
reduction benefits that cannot be fully
captured on the combined FTP/
Highway cycle test. These technologies
typically reduce engine loads by
utilizing advanced engine controls, and
they range from enabling the vehicle to
turn off the engine at idle, to reducing
cabin temperature and thus A/C
compressor loading when the vehicle is
restarted. Examples include Engine
Start-Stop, Electric Heater Circulation
Pump, Active Engine/Transmission
Warm-Up, and Solar Control. For these
types of technologies, the overall GHG
reduction largely depends on the
control and calibration strategies of
individual manufacturers and vehicle
types. Also, the current vehicle
simulation tool does not have the
capability to properly simulate the
vehicle behaviors that depend on
thermal conditions of the vehicle and its
surroundings, such as Active Engine/
Transmission Warm-Up and Solar
Control. Therefore, the vehicle
simulation may not provide full benefits
of the technologies on the GHG
reductions. For this reason, the agency
is not proposing to use the simulation
tool to generate the GHG credits for
these technologies at this time, though
future versions of the model may be
more capable of quantifying the efficacy
of these off-cycle technologies as well.
3. Advanced Technology Incentives for
Full Sized Pickup Trucks
The agencies recognize that the
standards under consideration for MY
2017–2025 will be most challenging to
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large trucks, including full size pickup
trucks that are often used for
commercial purposes and have
generally higher payload and towing
capabilities, and cargo volumes than
other light-duty vehicles. In Section II.C
and Chapter 2 of the joint TSD, EPA and
NHTSA describe the proposal to adjust
the slope of the truck curve compared
to the 2012–2016 rule. In Sections III.B
and IV.F, EPA and NHTSA describe the
progression of the truck standards. In
this section, the agencies describe a
credit and fuel consumption
improvement value for full size pickup
trucks to incentivize advanced
technologies on this class of vehicles.
The agencies’ goal is to incentivize
the penetration into the marketplace of
‘‘game changing’’ technologies for these
pickups, including their hybridization.
For that reason, EPA, in coordination
with NHTSA, is proposing credits and
corresponding equivalent fuel
consumption improvement values for
manufacturers that hybridize a
significant quantity of their full size
pickup trucks, or use other technologies
that significantly reduce CO2 emissions
and fuel consumption. This proposed
credit and corresponding equivalent
fuel consumption improvement value
would be available on a per-vehicle
basis for mild and strong HEVs, as well
as other technologies that significantly
improve the efficiency of the full sized
pickup class.170 The credits and fuel
consumption improvement values
would apply for purposes of compliance
with both the GHG emissions standards
and the CAFE standards. This provides
the incentive to begin transforming this
most challenging category of vehicles
toward use of the most advanced
technologies.
Access to this credit and fuel
consumption improvement value is
conditioned on a minimum penetration
of the technologies in a manufacturer’s
full size pickup truck fleet. To ensure its
use for only full sized pickup trucks,
EPA is proposing a very specific
definition for a full sized pickup truck
based on minimum bed size and
minimum towing capability. The
specifics of this proposed definition can
be found in Chapter 5 of the draft joint
TSD (see Section 5.3.1). This proposed
definition is meant to ensure that
170 Note that EPA’s proposed calculation
methodology in 40 CFR 600.510–12 does not use
vehicle-specific fuel consumption adjustments to
determine the CAFE increase due to the various
incentives allowed under the proposed program.
Instead, EPA would convert the total CO2 credits
due to each incentive program from metric tons of
CO2 to a fleetwide CAFE improvement value. The
fuel consumption values are presented to give the
reader some context and explain the relationship
between CO2 and fuel consumption improvements.
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smaller pickup trucks, which do not
offer the same level of utility (e.g., bed
size, towing capability and/or payload
capability) and thus may not face the
same technical challenges to improving
fuel economy and reducing CO2
emissions as compared to full sized
pickup trucks, do not qualify.171 For
this proposal, a full sized pickup truck
would be defined as meeting
requirements 1 and 2, below, as well as
either requirement 3 or 4, below:
1. The vehicle must have an open
cargo box with a minimum width
between the wheelhouses of 48 inches
measured as the minimum lateral
distance between the limiting
interferences (pass-through) of the
wheelhouses. The measurement would
exclude the transitional arc, local
protrusions, and depressions or pockets,
if present.172 An open cargo box means
a vehicle where the cargo bed does not
have a permanent roof or cover.
Vehicles sold with detachable covers are
considered ‘‘open’’ for the purposes of
these criteria.
2. Minimum open cargo box length of
60 inches defined by the lesser of the
pickup bed length at the top of the body
(defined as the longitudinal distance
from the inside front of the pickup bed
to the inside of the closed endgate; this
would be measured at the height of the
top of the open pickup bed along
vehicle centerline and the pickup bed
length at the floor) and the pickup bed
length at the floor (defined as the
longitudinal distance from the inside
front of the pickup bed to the inside of
the closed endgate; this would be
measured at the cargo floor surface
along vehicle centerline).173
3. Minimum Towing Capability—the
vehicle must have a GCWR (gross
combined weight rating) minus GVWR
(gross vehicle weight rating) value of at
least 5,000 pounds.174
171 As discussed in TSD Section 5.3.1, EPA is
seeking comment on expanding the scope of this
credit to somewhat smaller pickups, provided they
have the towing and/or hauling capabilities of the
larger full-size trucks.
172 This dimension is also known as dimension
W202 as defined in Society of Automotive
Engineers Procedure J1100.
173 The pickup body length at the top of the body
is also known as dimension L506 in Society of
Automotive Engineers Procedure J1100. The pickup
body length at the floor is also known as dimension
L505 in Society of Automotive Engineers Procedure
J1100.
174 Gross combined weight rating means the value
specified by the vehicle manufacturer as the
maximum weight of a loaded vehicle and trailer,
consistent with good engineering judgment. Gross
vehicle weight rating means the value specified by
the vehicle manufacturer as the maximum design
loaded weight of a single vehicle, consistent with
good engineering judgment. Curb weight is defined
in 40 CFR 86.1803, consistent with the provisions
of 40 CFR 1037.140.
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4. Minimum Payload Capability—the
vehicle must have a GVWR (gross
vehicle weight rating) minus curb
weight value of at least 1,700 pounds.
The technical basis for these proposed
definitions is found in Section III.C
below and Chapter 5 of the joint TSD.
EPA is proposing that mild HEV pickup
trucks would be eligible for a per-truck
10 g/mi CO2 credit (equal to a 0.001125
gal/mi fuel consumption improvement
value) during MYs 2017–2021 if the
mild HEV technology is used on a
minimum percentage of a company’s
full sized pickups. That minimum
percentage would be 30 percent of a
company’s full sized pickup production
in MY 2017 with a ramp up to at least
80 percent of production in MY 2021.
EPA is also proposing that strong HEV
pickup trucks would be eligible for a
per-truck 20 g/mi CO2 credit (equal to a
0.002250 gal/mi fuel consumption
improvement value) during MYs 2017–
2025 if the strong HEV technology is
used on a minimum percentage of a
company’s full sized pickups. That
minimum percentage would be 10
percent of a company’s full sized pickup
production in each year over the model
years 2017–2025.
To ensure that the hybridization
technology used by manufacturers
seeking one of these credits and fuel
consumption improvement values meets
the intent behind the incentives, EPA is
proposing very specific definitions of
what qualifies as a mild and a strong
HEV. These definitions are described in
detail in Chapter 5 of the draft joint TSD
(see section 5.3.3).
For similar reasons, EPA is also
proposing a performance-based
incentive credit and equivalent fuel
consumption improvement value for
full size pickup trucks that achieve an
emission level significantly below the
applicable target.175 EPA, in
coordination with NHTSA, proposes
this credit to be either 10 g/mi CO2
(equivalent to 0.001125 gal/mi for the
CAFE program) or 20 g/mi CO2
(equivalent to 0.002250 gal/mi for the
CAFE program) for pickups achieving
15 percent or 20 percent, respectively,
better CO2 than their footprint based
target in a given model year. Because
the footprint target curve has been
adjusted to account for A/C related
credits, the CO2 level to be compared
175 The 15 and 20 percent thresholds would be
based on CO2 performance compared to the
applicable CO2 vehicle target for both CO2 credits
and corresponding CAFE fuel consumption
improvement values. As with A/C and off-cycle
credits, EPA would convert the total CO2 credits
due to the pick-up incentive program from metric
tons of CO2 to a fleetwide equivalent CAFE
improvement value.
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with the target would also include any
A/C related credits generated by the
vehicle. Further details on this
performance-based incentive are in
Section III.C below and in Chapter 5 of
the draft joint TSD (see Section 5.3.4).
The 10 g/mi (equivalent to 0.001125 gal/
mi) performance-based credit and fuel
consumption improvement value would
be available for MYs 2017 to 2021 and
a vehicle meeting the requirements
would receive the credit and fuel
consumption improvement value until
MY 2021 unless its CO2 level increases
or fuel economy decreases. The 20 g/mi
CO2 (equivalent to 0.0023 gal/mi fuel
consumption improvement value)
performance-based credit would be
available for a maximum of 5 years
within the model years of 2017 to 2025,
provided its CO2 level and fuel
consumption does not increase. The
rationale for these limits is because of
the year over year progression of the
stringency of the truck target curves.
The credits and fuel consumption
improvement values would begin in the
model year of introduction, and could
not extend past MY 2021 for the 10
g/mi credit (equivalent to 0.001125 gal/
mi) and MY 2025 for the 20 g/mi credit
(equivalent to 0.002250 gal/mi).
As with the HEV-based credit and fuel
consumption improvement value, the
performance-based credit and fuel
consumption improvement value
requires that the technology be used on
a minimum percentage of a
manufacturer’s full-size pickup trucks.
That minimum percentage for the 10
g/mi GHG credit (equivalent to 0.001125
gal/mi fuel consumption improvement
value) would be 15 percent of a
company’s full sized pickup production
in MY 2017 with a ramp up to at least
40 percent of production in MY 2021.
The minimum percentage for the 20
g/mi credit (equivalent to 0.002250 gal/
mi fuel consumption improvement
value) would be 10 percent of a
company’s full sized pickup production
in each year over the model years 2017–
2025.
Importantly, the same vehicle could
not receive credit and fuel consumption
improvement under both the HEV and
the performance-based approaches. EPA
and NHTSA request comment on all
aspects of this proposed pickup truck
incentive credit and fuel consumption
improvement value, including the
proposed definitions for full sized
pickup truck and mild and strong HEV.
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G. Safety Considerations in Establishing
CAFE/GHG Standards
1. Why do the agencies consider safety?
The primary goals of the proposed
CAFE and GHG standards are to reduce
fuel consumption and GHG emissions
from the on-road light-duty vehicle
fleet, but in addition to these intended
effects, the agencies also consider the
potential of the standards to affect
vehicle safety.176 As a safety agency,
NHTSA has long considered the
potential for adverse safety
consequences when establishing CAFE
standards,177 and under the CAA, EPA
considers factors related to public
health and human welfare, and safety,
in regulating emissions of air pollutants
from mobile sources.178 Safety trade-offs
associated with fuel economy increases
have occurred in the past (particularly
before NHTSA CAFE standards were
attribute-based), and the agencies must
be mindful of the possibility of future
ones. These past safety trade-offs may
have occurred because manufacturers
chose, at the time, to build smaller and
lighter vehicles—partly in response to
CAFE standards—rather than adding
more expensive fuel-saving technologies
(and maintaining vehicle size and
safety), and the smaller and lighter
vehicles did not fare as well in crashes
as larger and heavier vehicles.
Historically, as shown in FARS data
analyzed by NHTSA, the safest cars
generally have been heavy and large,
while the cars with the highest fatalcrash rates have been light and small.
The question, then, is whether past is
necessarily prologue when it comes to
potential changes in vehicle size (both
footprint and ‘‘overhang’’) and mass in
response to these proposed future CAFE
and GHG standards. Manufacturers have
stated that they will reduce vehicle
mass as one of the cost-effective means
of increasing fuel economy and
reducing CO2 emissions in order to meet
the proposed standards, and the
176 In this rulemaking document, ‘‘vehicle safety’’
is defined as societal fatality rates per vehicle miles
traveled (VMT), which include fatalities to
occupants of all the vehicles involved in the
collisions, plus any pedestrians.
177 This practice is recognized approvingly in
case law. As the United States Court of Appeals for
the DC Circuit stated 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).
178 See NRDC v. EPA, 655 F. 2d 318, 332 n. 31
(DC Cir. 1981). (EPA may consider safety in
developing standards under section 202 (a) and did
so appropriately in the given instance).
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agencies have incorporated this
expectation into our modeling analysis
supporting the proposed standards.
Because the agencies discern a historical
relationship between vehicle mass, size,
and safety, it is reasonable to assume
that these relationships will continue in
the future. The question of whether
vehicle design can mitigate the adverse
effects of mass reduction is discussed
below.
Manufacturers are less likely than
they were in the past to reduce vehicle
footprint in order to reduce mass for
increased fuel economy. The primary
mechanism in this rulemaking for
mitigating the potential negative effects
on safety is the application of footprintbased standards, which create a
disincentive for manufacturers to
produce smaller-footprint vehicles. See
section II. C.1, above. This is because, as
footprint decreases, the corresponding
fuel economy/GHG emission target
becomes more stringent. We also believe
that the shape of the footprint curves
themselves is approximately ‘‘footprintneutral,’’ that is, that it should neither
encourage manufacturers to increase the
footprint of their fleets, nor to decrease
it. Upsizing footprint is also discouraged
through the curve ‘‘cut-off’’ at larger
footprints.179 However, the footprintbased standards do not discourage
downsizing the portions of a vehicle in
front of the front axle and to the rear of
the rear axle, or of other areas of the
vehicle outside the wheels. The crush
space provided by those portions of a
vehicle can make important
contributions to managing crash energy.
Additionally, simply because footprintbased standards create no incentive to
downsize vehicles does not mean that
manufacturers will not downsize if
doing so makes it easier to meet the
179 The agencies recognize that at the other end
of the curve, manufacturers who make small cars
and trucks below 41 square feet (the small footprint
cut-off point) have some incentive to downsize their
vehicles to make it easier to meet the constant
target. That cut-off may also create some incentive
for manufacturers who do not currently offer
models that size to do so in the future. However,
at the same time, the agencies believe that there is
a limit to the market for cars and trucks smaller
than 41 square feet: most consumers likely have
some minimum expectation about interior volume,
for example, among other things. Additionally,
vehicles in this segment are the lowest price point
for the light-duty automotive market, with several
models in the $10,000-$15,000 range.
Manufacturers who find themselves incentivized by
the cut-off will also find themselves adding
technology to the lowest price segment vehicles,
which could make it challenging to retain the price
advantage. Because of these two reasons, the
agencies believe that the incentive to increase the
sales of vehicles smaller than 41 square feet due to
this rulemaking, if any, is small. See Section II.C.1
above and Chapter 1 of the draft Joint TSD for more
information on the agencies’ choice of ‘‘cut-off’’
points for the footprint-based target curves.
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overall CAFE/GHG standard, as for
example if the smaller vehicles are so
much lighter that they exceed their
targets by much greater amounts. On
balance, however, we believe the target
curves and the incentives they provide
generally will not encourage downsizing (or up-sizing) in terms of
footprint reductions (or increases).180
Consequently, all of our analyses are
based on the assumption that this
rulemaking, in and of itself, will not
result in any differences in the sales
weighted distribution of vehicle sizes.
Given that we expect manufacturers
to reduce vehicle mass in response to
the proposed standards, and do not
expect manufacturers to reduce vehicle
footprint in response to the proposed
standards, the agencies must attempt to
predict the safety effects, if any, of the
proposed standards based on the best
information currently available. This
section explained why the agencies
consider safety; the following section
discusses how the agencies consider
safety.
2. How do the agencies consider safety?
Assessing the effects of vehicle mass
reduction and size on societal safety is
a complex issue. One part of estimating
potential safety effects involves trying to
understand better the relationship
between mass and vehicle design. The
extent of mass reduction that
manufacturers may be considering to
meet more stringent fuel economy and
GHG standards may raise different
safety concerns from what the industry
has previously faced. The principal
difference between the heavier vehicles,
especially truck-based LTVs, and the
lighter vehicles, especially passenger
cars, is that mass reduction has a
different effect in collisions with
another car or LTV. When two vehicles
of unequal mass collide, the change in
velocity (delta V) is higher in the lighter
vehicle, similar to the mass ratio
proportion. As a result of the higher
change in velocity, the fatality risk may
also increase. Removing more mass from
the heavier vehicle than in the lighter
vehicle by amounts that bring the mass
ratio closer to 1.0 reduces the delta V in
the lighter vehicle, possibly resulting in
a net societal benefit.
Another complexity is that if a vehicle
is made lighter, adjustments must be
made to the vehicle’s structure such that
it will be able to manage the energy in
a crash while limiting intrusion into the
occupant compartment after adopting
materials that may be stiffer. To
180 This statement makes no prediction of how
consumer choices of vehicle size will change in the
future, independent of this proposal.
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maintain an acceptable occupant
compartment deceleration, the effective
front end stiffness has to be managed
such that the crash pulse does not
increase as stiffer yet lighter materials
are utilized. If the energy is not well
managed, the occupants may have to
‘‘ride down’’ a more severe crash pulse,
putting more burdens on the restraint
systems to protect the occupants. There
may be technological and physical
limitations to how much the restraint
system may mitigate these effects.
The agencies must attempt to estimate
now, based on the best information
currently available to us, how the
assumed levels of mass reduction
without additional changes (i.e.
footprint, performance, functionality)
might affect the safety of vehicles, and
how lighter vehicles might affect the
safety of drivers and passengers in the
entire on-road fleet, as we are analyzing
potential future CAFE and GHG
standards. The agencies seek to ensure
that the standards are designed to
encourage manufacturers to pursue a
path toward compliance that is both
cost-effective and safe.
To estimate the possible safety effects
of the MY 2017–2025 standards, then,
the agencies have undertaken research
that approaches this question from
several angles. First, we are using a
statistical approach to study the effect of
vehicle mass reduction on safety
historically, as discussed in greater
detail in section C below. Statistical
analysis is performed using the most
recent historical crash data available,
and is considered as the agencies’ best
estimate of potential mass-safety effects.
The agencies recognize that negative
safety effects estimated based on the
historical relationships could
potentially be tempered with safety
technology advances in the future, and
may not represent the current or future
fleet. Second, we are using an
engineering approach to investigate
what amount of mass reduction is
affordable and feasible while
maintaining vehicle safety and other
major functionalities such as NVH and
acceleration performance. Third, we are
also studying the new challenges these
lighter vehicles might bring to vehicle
safety and potential countermeasures
available to manage those challenges
effectively.
The sections below discuss more
specifically the state of the research on
the mass-safety relationship, and how
the agencies integrate that research into
our assessment of the potential safety
effects of the MY 2017–2025 CAFE and
GHG standards.
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3. What is the current state of the
research on statistical analysis of
historical crash data?
a. Background
Researchers have been using
statistical analysis to examine the
relationship of vehicle mass and safety
in historical crash data for many years,
and continue to refine their techniques
over time. In the MY 2012–2016 final
rule, the agencies stated that we would
conduct further study and research into
the interaction of mass, size and safety
to assist future rulemakings, and start to
work collaboratively by developing an
interagency working group between
NHTSA, EPA, DOE, and CARB to
evaluate all aspects of mass, size and
safety. The team would seek to
coordinate government supported
studies and independent research, to the
greatest extent possible, to help ensure
the work is complementary to previous
and ongoing research and to guide
further research in this area.
The agencies also identified three
specific areas to direct research in
preparation for future CAFE/GHG
rulemaking in regards to statistical
analysis of historical data.
First, NHTSA would contract with an
independent institution to review the
statistical methods that NHTSA and DRI
have used to analyze historical data
related to mass, size and safety, and to
provide recommendation on whether
the existing methods or other methods
should be used for future statistical
analysis of historical data. This study
will include a consideration of potential
near multicollinearity in the historical
data and how best to address it in a
regression analysis. The 2010 NHTSA
report was also peer reviewed by two
other experts in the safety field—
Charles Farmer (Insurance Institute for
Highway Safety) and Anders Lie
(Swedish Transport Administration).181
Second, NHTSA and EPA, in
consultation with DOE, would update
the MYs 1991–1999 database on which
the safety analyses in the NPRM and
final rule are based with newer vehicle
data, and create a common database that
could be made publicly available to
help address concerns that differences
in data were leading to different results
in statistical analyses by different
researchers.
And third, in order to assess if the
design of recent model year vehicles
that incorporate various mass reduction
methods affect the relationships among
181 All three of the peer reviews are in docket,
NHTSA–2010–0152. You can access the docket at
https://www.regulations.gov/#!home by typing
‘NHTSA–2010–0152’ where it says ‘‘enter keyword
or ID’’ and then clicking on ‘‘Search.’’
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vehicle mass, size and safety, the
agencies sought to identify vehicles that
are using material substitution and
smart design, and to try to assess if there
is sufficient crash data involving those
vehicles for statistical analysis. If
sufficient data exists, statistical analysis
would be conducted to compare the
relationship among mass, size and
safety of these smart design vehicles to
vehicles of similar size and mass with
more traditional designs.
Significant progress has been made on
these tasks since the MY 2012–2016
final rule, as follows: The independent
review of recent and updated statistical
analyses of the relationship between
vehicle mass, size, and crash fatality
rates has been completed. NHTSA
contracted with the University of
Michigan Transportation Research
Institute (UMTRI) to conduct this
review, and the UMTRI team led by
Paul Green evaluated over 20 papers,
including studies done by NHTSA’s
Charles Kahane, Tom Wenzel of the US
Department of Energy’s Lawrence
Berkeley National Laboratory, Dynamic
Research, Inc., and others. UMTRI’s
basic findings will be discussed below.
Some commenters in recent CAFE
rulemakings, including some vehicle
manufacturers, suggested that the
designs and materials of more recent
model year vehicles may have
weakened the historical statistical
relationships between mass, size, and
safety. The agencies agree that the
statistical analysis would be improved
by using an updated database that
reflects more recent safety technologies,
vehicle designs and materials, and
reflects changes in the overall vehicle
fleet. The agencies also believe, as
UMTRI also found, that different
statistical analyses may have had
different results because they each used
slightly different datasets for their
analyses. In order to try to mitigate this
problem and to support the current
rulemaking, NHTSA has created a
common, updated database for
statistical analysis that consists of crash
data of model years 2000–2007 vehicles
in calendar years 2002–2008, as
compared to the database used in prior
NHTSA analyses which was based on
model years 1991–1999 vehicles in
calendar years 1995–2000. The new
database is the most up-to-date possible,
given the processing lead time for crash
data and the need for enough crash
cases to permit statistically meaningful
analyses. NHTSA has made the new
databases available to the public,182
182 The new databases are available at https://
www.nhtsa.gov/fuel-economy (look for ‘‘Download
Crash Databases for Statistical Analysis of
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enabling other researchers to analyze
the same data and hopefully minimizing
discrepancies in the results that would
have been due to inconsistencies across
databases.183 The agencies recognize,
however, that the updated database may
not represent the future fleet, because
vehicles have continued and will
continue to change.
The agencies are aware that several
studies have been initiated using
NHTSA’s 2011 newly established safety
database. In addition to a new Kahane
study, which is discussed in section
II.G.4, other on-going studies include
two by Wenzel at Lawrence Berkeley
National Laboratory (LBNL) under
contract with the U.S. DOE, and one by
Dynamic Research, Inc. (DRI) contracted
by the International Council on Clean
Transportation (ICCT). These studies
may take somewhat different
approaches to examine the statistical
relationship between fatality risk,
vehicle mass and size. In addition to a
detailed assessment of the NHTSA 2011
report, Wenzel is expected to consider
the effect of mass and footprint
reduction on casualty risk per crash,
using data from thirteen states. Casualty
risk includes both fatalities and serious
or incapacitating injuries. DRI is
expected to use a two-stage approach to
separate the effect of mass reduction on
two components of fatality risk, crash
avoidance and crashworthiness. The
LBNL assessment of the NHTSA 2011
report is available in the docket for this
NPRM.184 The casualty risk effect study
was not available in time to inform this
NPRM. The completed final peer
reviewed-report on both assessments
will be available prior to the final rule.
DRI has also indicated that it expects its
study to be publicly available prior to
the final rule. The agencies will
consider these studies and any others
that become available, and the results
may influence the safety analysis for the
final rule.
Other researchers are free to
download the database from NHTSA’s
Web site, and we expect to see
additional papers in the coming months
and as comments to the rulemaking that
may also inform our consideration of
these issues for the final rule. Kahane’s
updated study for 2011 is currently
undergoing peer-review, and is available
Relationships Between Vehicles’ Fatality Risk,
Mass, and Footprint.’’
183 75 Fed. Reg. 25324 (May 7, 2010); the
discussion of planned statistical analyses is on pp.
25395–25396.
184 Wenzel, T.P. (2011b). Assessment of NHTSA’s
Report ‘‘Relationships between Fatality Risk, Mass,
and Footprint in Model Year 2000–2007 Passenger
Cars and LTVs’’, available at…
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in the docket for this rulemaking for
review by commenters.
Finally, EPA and NHTSA with DOT’s
Volpe Center, part of the Research and
Innovative Technology Administration
(RITA), attempted to investigate the
implications of ‘‘Smart Design,’’ by
identifying and describing the types of
‘‘Smart Design’’ and methods for using
‘‘Smart Design’’ to result in vehicle mass
reduction, selecting analytical pairs of
vehicles, and using the appropriate
crash database to analyze vehicle crash
data. The analysis identified several
one-vehicle and two-vehicle crash
datasets with the potential to shed light
on the issue, but the available data for
specific crash scenarios was insufficient
to produce consistent results that could
be used to support conclusions
regarding historical performance of
‘‘smart designs.’’
Undertaking these tasks has helped
the agencies come closer to resolving
some of the ongoing debates in
statistical analysis research of historical
crash data. We intend to apply these
conclusions going forward, and we
believe that the public discussion of the
issues will be facilitated by the research
conducted. The following sections
discuss the findings from these studies
and others in greater detail, to present
a more nuanced picture of the current
state of the statistical research.
b. NHTSA Workshop on Vehicle Mass,
Size and Safety
On February 25, 2011, NHTSA hosted
a workshop on mass reduction, vehicle
size, and fleet safety at the Headquarters
of the U.S. Department of
Transportation in Washington, DC.185
The purpose of the workshop was to
provide the agencies with a broad
understanding of current research in the
field and provide stakeholders and the
public with an opportunity to weigh in
on this issue. NHTSA also created a
public docket to receive comments from
interested parties that were unable to
attend.
The speakers included Charles
Kahane of NHTSA, Tom Wenzel of
Lawrence Berkeley National Laboratory,
R. Michael Van Auken of Dynamic
Research Inc. (DRI), Jeya Padmanaban of
JP Research, Inc., Adrian Lund of the
Insurance Institute for Highway Safety,
Paul Green of the University of
Michigan Transportation Research
Institute (UMTRI), Stephen Summers of
NHTSA, Gregg Peterson of Lotus
185 A video recording, transcript, and the
presentations from the NHTSA workshop on mass
reduction, vehicle size and fleet safety is available
at https://www.nhtsa.gov/fuel-economy (look for
‘‘NHTSA Workshop on Vehicle Mass-Size-Safety on
Feb. 25’’)
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Engineering, Koichi Kamiji of Honda,
John German of the International
Council on Clean Transportation (ICCT),
Scott Schmidt of the Alliance of
Automobile Manufacturers, Guy
Nusholtz of Chrysler, and Frank Field of
the Massachusetts Institute of
Technology.
The wide participation in the
workshop allowed the agencies to hear
from a broad range of experts and
stakeholders. The contributions were
particularly relevant to the agencies’
analysis of the effects of weight
reduction for this proposed rule. The
presentations were divided into two
sessions that addressed the two
expansive sets of issues—statistical
evidence of the roles of mass and size
on safety, and engineering realities—
structural crashworthiness, occupant
injury and advanced vehicle design.
The first session focused on previous
and ongoing statistical studies of crash
data that attempt to identify the relative
effects of vehicle mass and size on fleet
safety. There was consensus that there
is a complicated relationship with many
confounding influences in the data.
Wenzel summarized a recent study he
conducted comparing four types of risk
(fatality or casualty risk, per vehicle
registration-years or per crash) using
police-reported crash data from five
states.186 He showed that the trends in
risk for various classes of vehicles (e.g.,
non-sports car passenger cars, vans,
SUVs, crossover SUVs, pickups) were
similar regardless of what risk was being
measured (fatality or casualty) or what
exposure metric was used (e.g.,
registration years, police-reported
crashes, etc.). In general, most trends
showed a lower risk for drivers of larger,
heavier vehicles.
Although Wenzel’s analysis was
focused on differences in the four types
of risk on the relative risk by vehicle
type, he cautioned that, when analyzing
casualty risk per crash, analysts should
control for driver age and gender, crash
location (urban vs. rural), and the state
in which the crash occurred (to account
for crash reporting biases).
Several participants pointed out that
analyses must also control for
individual technologies with significant
safety effects (e.g., Electronic Stability
Control, airbags).It was not always
conclusive whether a specialty vehicle
group (e.g., sports cars, two-door cars,
early crossover SUVs) were outliers that
confound the trend or unique datasets
that isolate specific vehicle
186 Wenzel, T.P. (2011a). Analysis of Casualty
Risk per Police-Reported Crash for Model Year 2000
to 2004 Vehicles, using Crash Data from Five States,
March 2011, LBNL–4897E, available at: https://
eetd.lbl.gov/EA/teepa/pub.html#Vehicle
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characteristics. Unfortunately, specialty
vehicle groups are usually adopted by
specific driver groups, often with
outlying vehicle usage or driver
behavior patterns. Green, who
conducted an independent review of the
previous statistical analyses, suggested
that evaluating residuals will give an
indication of whether or not a data
subset can be legitimately removed
without inappropriately affecting the
analytical results.
It was recognized that the physics of
a two-vehicle crash require that the
lighter vehicle experience a greater
change in velocity, which often leads to
disproportionately more injury risk.
Lund noted persistent historical trends
that, in any time period, occupants of
the smallest and lightest vehicles had,
on average, fatality rates approximately
twice those of occupants of the largest
and heaviest vehicles but predicted ‘‘the
sky will not fall’’ as the fleet downsizes,
we will not see an increase in absolute
injury risk because smaller cars will
become increasingly protective of their
occupants. Padmanaban also noted in
her research of the historical trends that
mass ratio and vehicle stiffness are
significant predictors with mass ratio
consistently the dominant parameter
when correlating harm. Reducing the
mass of any vehicle may have
competing societal effects as it increases
the injury risk in the lightened vehicle
and decreases them in the partner
vehicle
The separation of key parameters was
also discussed as a challenge to the
analyses, as vehicle size has historically
been highly correlated with vehicle
mass. Presenters had varying
approaches for dealing with the
potential multicollinearity between
these two variables. Van Auken of DRI
stated that there was latitude in the
value of Variance Inflation Factor (VIF,
a measure of multicollinearity) that
would call results into question, and
suggested that the large value of VIF for
curb weight might imply ‘‘perhaps the
effect of weight is too small in
comparison to other factors.’’ Green, of
UMTRI, stated that highly correlated
variables may not be appropriate for use
in a predictive model and that
‘‘match[ing] on footprint’’ (i.e.,
conducting multiple analyses for data
subsets with similar footprint values)
may be the most effective way to resolve
the issue.
There was no consensus on the
overall effect of the maneuverability of
smaller, lighter vehicles. German noted
that lighter vehicles should have
improved handling and braking
characteristics and ‘‘may be more likely
to avoid collisions’’. Lund presented
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crash involvement data that implied
that, among vehicles of similar function
and use rates, crash risk does not go
down for more ‘‘nimble’’ vehicles.
Several presenters noted the difficulties
of projecting past data into the future as
new technologies will be used that were
not available when the data were
collected. The advances in technology
through the decades have dramatically
improved safety for all weight and size
classes. A video of IIHS’s 50th
anniversary crash test of a 1959
Chevrolet Bel Air and 2009 Chevrolet
Malibu graphically demonstrated that
stark differences in design and
technology that can possibly mask the
discrete mass effects, while videos of
compatibility crash tests between
smaller, lighter vehicles and
contemporary larger, heavier vehicles
graphically showed the significance of
vehicle mass and size.
Kahane presented results from his
2010 report187 that found that a scenario
which took some mass out of heavier
vehicles but little or no mass out of the
lightest vehicles did not impact safety in
absolute terms. Kahane noted that if the
analyses were able to consider the mass
of both vehicles in a two-vehicle crash,
the results may be more indicative of
future crashes. There is apparent
consistency with other presentations
(e.g., Padmanaban, Nusholtz) that
reducing the overall ranges of masses
and mass ratios seems to reduce overall
societal harm. That is, the effect of mass
reduction exclusively does not appear to
be a ‘‘zero sum game’’ in which any
increase in harm to occupants of the
lightened vehicle is precisely offset by
a decrease in harm to the occupants of
the partner vehicle. If the mass of the
heavier vehicle is reduced by a larger
percentage, the changes in velocity from
the collision are more nearly equal and
the injuries suffered in the lighter
vehicle are likely to be reduced more
than the injuries in the heavier vehicle
are increased. Alternatively, a fixed
mass reduction (say, 100 lbs) in all
vehicles could increase societal harm
whereas a fixed percentage mass
reduction is more likely to be neutral.
Padmanaban described a series of
studies conducted in recent years. She
included numerous vehicle parameters
including bumper height and several
measures of vehicle size and stiffness
187 Kahane, C. J. (2010). ‘‘Relationships Between
Fatality Risk, Mass, and Footprint in Model Year
1991–1999 and Other Passenger Cars and LTVs,’’
Final Regulatory Impact Analysis: Corporate
Average Fuel Economy for MY 2012–MY 2016
Passenger Cars and Light Trucks. Washington, DC:
National Highway Traffic Safety Administration,
pp. 464–542, available at https://www.nhtsa.gov/
staticfiles/rulemaking/pdf/cafe/CAFE_2012–2016_
FRIA_04012010.pdf.
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and also commented on previous
analyses that using weight and
wheelbase together in a logistic model
distorts the estimates, resulting in
inflated variance with wrong signs and
magnitudes in the results. Her results
consistently showed that vehicle mass
ratio was a more important parameter
than those describing vehicle geometry
or stiffness. Her ultimate conclusion
was that removing mass (e.g., 100 lbs.)
from all passenger cars would cause an
overall increase in fatalities in truck-tocar crashes while removing the same
amount from light trucks would cause
an overall decrease in fatalities.
c. Report by Green et al., UMTRI—
‘‘Independent Review: Statistical
Analyses of Relationship Between
Vehicle Curb Weight, Track Width,
Wheelbase and Fatality Rates,’’ April
2011.
As explained above, NHTSA
contracted with the University of
Michigan Transportation Research
Institute (UMTRI) to conduct an
independent review ;188 of a set of
statistical analyses of relationships
between vehicle curb weight, the
footprint variables (track width,
wheelbase) and fatality rates from
vehicle crashes. The purpose of this
review was to examine analysis
methods, data sources, and assumptions
of the statistical studies, with the
objective of identifying the reasons for
any differences in results. Another
objective was to examine the suitability
of the various methods for estimating
the fatality risks of future vehicles.
UMTRI reviewed a set of papers,
reports, and manuscripts provided by
NHTSA (listed in Appendix A of
UMTRI’s report, which is available in
the docket to this rulemaking) that
examined the statistical relationships
between fatality or casualty rates and
vehicle properties such as curb weight,
track width, wheelbase and other
variables.
It is difficult to summarize a study of
that length and complexity for purposes
of this discussion, but fundamentally,
the UMTRI team concluded the
following:
• Differences in data may have
complicated comparisons of earlier
analyses, but if the methodology is
robust, and the methods were applied in
a similar way, small changes in data
should not lead to different conclusions.
The main conclusions and findings
should be reproducible. The data base
created by Kahane appears to be an
188 The review is independent in the sense that
it was conducted by an outside third party without
any interest in the reported outcome.
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impressive collection of files from
appropriate sources and the best ones
available for answering the research
questions considered in this study.
• In statistical analysis simpler
models generally lead to improved
inference, assuming the data and model
assumptions are appropriate. In that
regard, the disaggregate logistic
regression model used by NHTSA in the
2003 report 189 seems to be the most
appropriate model, and valid for the
analysis in the context that it was used:
finding general associations between
fatality risk and mass—and the general
directions of the reported associations
are correct.
• The two-stage logistic regression
model in combination with the two-step
aggregate regression used by DRI seems
to be more complicated than is
necessary based on the data being
analyzed, and summing regression
coefficients from two separate models to
arrive at conclusions about the effects of
reductions in weight or size on fatality
risk seems to add unneeded complexity
to the problem.
• One of the biggest issues regarding
this work is the historical correlation
between curb weight, wheelbase, and
track width. Including three variables
that are highly correlated in the same
model can have adverse effects on the
fit of the model, especially with respect
to the parameter estimates, as discussed
by Kahane. UMTRI makes no
conclusions about multicollinearity,
other than to say that inferences made
in the presence of multicollinearity
should be judged with great caution. At
the NHTSA workshop on size, safety
and mass, Paul Green suggested that a
matched analysis, in which regressions
are run on the relationship between
mass reduction and risk separately for
vehicles of similar footprint, could be
undertaken to investigate the effect of
multicollinearity between vehicle mass
and size. Kahane has combined
wheelbase and track width into one
variable (footprint) to compare with
curb weight. NHTSA believes that the
2011 Kahane analysis has done all it can
to lessen concerns about
multicollinearity, but a concern still
exists. In considering other studies
provided by NHTSA for evaluation by
the UMTRI team:
Æ Papers by Wenzel, and Wenzel and
Ross, addressing associations between
fatality risk per vehicle registration-year,
weight, and size by vehicle model
contribute to understanding some of the
relationships between risk, weight, and
size. However, least squares linear
regression models, without
189
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modification, are not exposure-based
risk models and inference drawn from
these models tends to be weak since
they do not account for additional
differences in vehicles, drivers, or crash
conditions that could explain the
variance in risk by vehicle model.
Æ A 2009 J.P. Research paper focused
on the difficulties associated with
separating out the contributions of
weight and size variables when
analyzing fatality risk properly
recognized the problem arising from
multicollinearity and included a clear
explanation of why fatality risk is
expected to increase with increasing
mass ratio. UMTRI concluded that the
increases in fatality risk associated with
a 100-pound reduction in weight
allowing footprint to vary with weight
as estimated by Kahane and JP Research,
are broadly more convincing than the
6.7 percent reduction in fatality risk
associated with mass reduction while
holding footprint constant, as reported
by DRI.
Æ A paper by Nusholtz et al. focused
on the question of whether vehicle size
can reasonably be the dominant vehicle
factor for fatality risk, and finding that
changing the mean mass of the vehicle
population (leaving variability
unchanged) has a stronger influence on
fatality risk than corresponding
(feasible) changes in mean vehicle
dimensions, concluded unequivocally
that reducing vehicle mass while
maintaining constant vehicle
dimensions will increase fatality risk.
UMTRI concluded that if one accepts
the methodology, this conclusion is
robust against realistic changes that may
be made in the force vs. deflection
characteristics of the impacting
vehicles.
Æ Two papers by Robertson, one a
commentary paper and the other a peerreviewed journal article, were reviewed.
The commentary paper did not fit
separate models according to crash type,
and included passenger cars, vans, and
SUVs in the same model. UMTRI
concluded that some of the claims in the
commentary paper appear to be
overstated, and intermediate results and
more documentation would help the
reader determine if these claims are
valid. The second paper focused largely
on the effects of electronic stability
control (ESC), but generally followed on
from the first paper except that curb
weight is not fit and fuel economy is
used as a surrogate.
The UMTRI study provided a number
of useful suggestions that Kahane
considered in updating his 2011
analysis, and that have been
incorporated into the safety effects
estimates for the current rulemaking.
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d. Report by Dr. Charles Kahane,
NHTSA—‘‘Relationships Between
Fatality Risk, Mass, and Footprint in
Model Year 2000–2007 Passenger Cars
and LTVs,’’ 2011
The relationship between a vehicle’s
mass, size, and fatality risk is complex,
and it varies in different types of
crashes. NHTSA, along with others, has
been examining this relationship for
over a decade. The safety chapter of
NHTSA’s April 2010 final regulatory
impact analysis (FRIA) of CAFE
standards for MY 2012–2016 passenger
cars and light trucks included a
statistical analysis of relationships
between fatality risk, mass, and
footprint in MY 1991–1999 passenger
cars and LTVs (light trucks and vans),
based on calendar year (CY) 1995–2000
crash and vehicle-registration data.190
The 2010 analysis used the same data as
the 2003 analysis, but included vehicle
mass and footprint in the same
regression model.
The principal findings of NHTSA’s
2010 analysis were that mass reduction
in lighter cars, even while holding
footprint constant, would significantly
increase societal fatality risk, whereas
mass reduction in the heavier LTVs
would significantly reduce net societal
fatality risk, because it would reduce the
fatality risk of occupants in lighter
vehicles which collide with the heavier
LTVs. NHTSA concluded that, as a
result, any reasonable combination of
mass reductions while holding footprint
constant in MY 2012–2016 vehicles—
concentrated, at least to some extent, in
the heavier LTVs and limited in the
lighter cars—would likely be
approximately safety-neutral; it would
not significantly increase fatalities and
might well decrease them.
NHTSA’s 2010 report partially agreed
and partially disagreed with analyses
published during 2003–2005 by
Dynamic Research, Inc. (DRI). NHTSA
and DRI both found a significant
protective effect for footprint, and that
reducing mass and footprint together
(downsizing) on smaller vehicles was
harmful. DRI’s analyses estimated a
significant overall reduction in fatalities
from mass reduction in all light-duty
vehicles if wheelbase and track width
were maintained, whereas NHTSA’s
report showed overall fatality
190 Kahane, C. J. (2010). ‘‘Relationships Between
Fatality Risk, Mass, and Footprint in Model Year
1991–1999 and Other Passenger Cars and LTVs,’’
Final Regulatory Impact Analysis: Corporate
Average Fuel Economy for MY 2012–MY 2016
Passenger Cars and Light Trucks. Washington, DC:
National Highway Traffic Safety Administration,
pp. 464–542, available at https://www.nhtsa.gov/
staticfiles/rulemaking/pdf/cafe/CAFE_2012-2016_
FRIA_04012010.pdf.
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reductions only in the heavier LTVs,
and benefits only in some types of
crashes for other vehicle types. Much of
NHTSA’s 2010 report, as well as recent
work by DRI, involved sensitivity tests
on the databases and models, which
generated a range of estimates
somewhere between the initial DRI and
NHTSA results.191
Immediately after issuing the final
rule for MYs 2012–2016 CAFE and GHG
standards in May 2010, NHTSA and
EPA began work on the next joint
rulemaking to develop CAFE and GHG
standards for MY 2017 to 2025 and
beyond. The preamble to the 2012–2016
final rule stated that NHTSA, working
closely with EPA and the Department of
Energy (DOE), would perform a new
statistical analysis of the relationships
between fatality rates, mass and
footprint, updating the crash and
exposure databases to the latest
available model years, refining the
methodology in response to peer
reviews of the 2010 report and taking
into account changes in vehicle
technologies. The previous databases of
MY 1991–1999 vehicles in CY 1995–
2000 crashes has become outdated as
new safety technologies, vehicle designs
and materials were introduced. The new
databases comprising MY 2000–2007
vehicles in CY 2002–2008 crashes with
the most up-to-date possible, given the
processing lead time for crash data and
the need for enough crash cases to
permit statistically meaningful analyses.
NHTSA has made the new databases
available to the public,192 enabling other
researchers to analyze the same data and
hopefully minimizing discrepancies in
the results due to inconsistencies across
the data used.193
One way to estimate these effects is
via statistical analyses of societal fatality
191 Van Auken, R. M., and Zellner, J. W. (2003).
A Further Assessment of the Effects of Vehicle
Weight and Size Parameters on Fatality Risk in
Model Year 1985–98 Passenger Cars and 1986–97
Light Trucks. Report No. DRI–TR–03–01. Torrance,
CA: Dynamic Research, Inc.; Van Auken, R. M., and
Zellner, J. W. (2005a). An Assessment of the Effects
of Vehicle Weight and Size on Fatality Risk in 1985
to 1998 Model Year Passenger Cars and 1985 to
1997 Model Year Light Trucks and Vans. Paper No.
2005–01–1354. Warrendale, PA: Society of
Automotive Engineers; Van Auken, R. M., and
Zellner, J. W. (2005b). Supplemental Results on the
Independent Effects of Curb Weight, Wheelbase,
and Track on Fatality Risk in 1985–1998 Model
Year Passenger Cars and 1986–97 Model Year
LTVs. Report No. DRI–TR–05–01. Torrance, CA:
Dynamic Research, Inc.; Van Auken, R.M., and
Zellner, J. W. (2011). ‘‘Updated Analysis of the
Effects of Passenger Vehicle Size and Weight on
Safety,’’ NHTSA Workshop on Vehicle Mass-SizeSafety, Washington, February 25, 2011, https://
www.nhtsa.gov/staticfiles/rulemaking/pdf/MSS/
MSSworkshop_VanAuken.pdf
192 https://www.nhtsa.gov/fuel-economy.
193 75 FR 25324 (May 7, 2010); the discussion of
planned statistical analyses is on pp. 25395–25396.
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74951
1999 has been the increase in crossover
utility vehicles (CUV), which are SUVs
of unibody construction, often but not
always built upon a platform shared
with passenger cars. CUVs have blurred
the distinction between cars and trucks.
The new analysis treats CUVs and
minivans as a separate vehicle class,
because they differ in some respects
from pickup-truck-based LTVs and in
other respects from passenger cars. In
the 2010 report, the many different
types of LTVs were combined into a
single analysis and NHTSA believes that
this may have made the analyses too
complex and might have contributed to
some of the uncertainty in the results.
The new database has accurate VMT
estimates, derived from a file of
odometer readings by make, model, and
model year recently developed by R.L.
Polk and purchased by NHTSA.195 For
the 2011 report, the relative distribution
of crash types has been changed to
reflect the projected distribution of
crashes during the period from 2017 to
2025, based on the estimated
effectiveness of electronic stability
control (ESC) in reduction the number
of fatalities in rollover crashes and
crashes with a stationary object. The
annual target population of fatalities or
the annual fatality distribution
baseline 196 was not decreased in the
period between 2017 and 2025 for the
safety statistics analysis, but is taken
into account later in the Volpe model
analysis, since all vehicles in the future
will be equipped with ESC.197
For the 2011 report, vehicles are now
grouped into five classes rather than
four: passenger cars (including both 2door and 4-door cars) are split in half by
median weight; CUVs and minivans;
and truck-based LTVs, which are also
split in half by median weight of the
model year 2000–2007 vehicles. Table
II–12 presents the estimated percent
increase in U.S. societal fatality risk per
ten billion VMT for each 100-pound
reduction in vehicle mass, while
holding footprint constant, for each of
the five classes of vehicles.
Only the 1.44 percent risk increase in
the lighter cars is statistically
significant. There are non-significant
increases in the heavier cars and the
lighter truck-based LTVs, and nonsignificant societal benefits for mass
194 Kahane, C. J. (2011). ‘‘Relationships Between
Fatality Risk, Mass, and Footprint in Model Year
2000–2007 Passenger Cars and LTVs,’’ July 2011.
The report is available in the NHTSA docket,
NHTSA–2010–0152. You can access the docket at
https://www.regulations.gov/#!home by typing
‘NHTSA–2010–0152’ where it says ‘‘enter keyword
or ID’’ and then clicking on ‘‘Search.’’
195 In the 1991–1999 data base, VMT was
estimated only by vehicle class, based on NASS
CDS data.
196 MY 2004–2007 vehicles with fatal crashes
occurred in CY 2004–2008 are selected as the
annual fatality distribution baseline in the Kahane
analysis.
197 In the Volpe model, NHTSA assumed that the
safety trend would result in 12.6 percent reduction
between 2007 and 2020 due to the combination of
ESC, new safety standard, and behavior changes
anticipated.
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rates per vehicle miles traveled (VMT),
by vehicles’ mass and footprint, for the
current on-road vehicle fleet. The basic
analytical method used for the 2011
NHTSA report is the same as in
NHTSA’s 2010 report: Cross-sectional
analyses of the effect of mass and
footprint reductions on the societal
fatality rate per billion vehicle miles of
travel (VMT), while controlling for
driver age and gender, vehicle type,
vehicle safety features, crash times and
locations, and other factors. Separate
logistic regression models are run for
three types of vehicles and nine types of
crashes. Societal fatality rates include
occupants of all vehicles in the crash, as
well as non-occupants, such as
pedestrians and cyclists. NHTSA’s 2011
Report 194 analyzes MY 2000–2007 cars
and LTVs in CY 2002–2008 crashes.
Fatality rates were derived from FARS
data, 13 State crash files, and
registration and mileage data from R.L.
Polk.
The most noticeable change in MY
2000–2007 vehicles from MY 1991–
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societal effect of mass reduction while
maintaining footprint, if any, is small.
MY 2000–2007 vehicles of all types
are heavier and larger than their MY
1991–1999 counterparts. The average
mass of passenger cars increased by 5
percent from 2000 to 2007 and the
average mass of pickup trucks increased
by 19 percent. Other types of vehicles
became heavier, on the average, by
intermediate amounts. There are several
reasons for these increases: during this
time frame, some of the lighter makemodels were discontinued; many
models were redesigned to be heavier
and larger; and consumers more often
selected stretched versions such as crew
cabs in their new-vehicle purchases.
It is interesting to compare the new
results to NHTSA’s 2010 analysis of MY
1991–1999 vehicles in CY 1995–2000,
especially the new point estimate to the
‘‘actual regression result scenario’’ in
the 2010 report:
The new results are directionally the
same as in 2010: fatality increase in the
lighter cars, safety benefit in the heavier
LTVs, but the effects may have become
weaker at both ends. (The agencies do
not consider this conclusion to be
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reduction in CUVs, minivans, and the
heavier truck-based LTVs. Based on
these results, potential combinations of
mass reductions that maintain footprint
and are proportionately somewhat
higher for the heavier vehicles may be
safety-neutral or better as point
estimates and, in any case, unlikely to
significantly increase fatalities. The
primarily non-significant results are not
due to a paucity of data, but because the
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definitive because of the relatively wide
confidence bounds of the estimates.)
The fatality increase in the lighter cars
tapered off from 2.21 percent to 1.44
percent while the societal benefit of
mass reduction in the heaviest LTVs
diminished from 1.90 percent to 0.39
percent and is no longer statistically
significant.
The agencies believe that the changes
may be due to a combination of both
changes in the characteristics of newer
vehicles and revisions to the analysis.
NHTSA believes, above all, that several
light, small car models with poor safety
performance were discontinued by 2000
or during 2000–2007. Also, the
tendency of light, small vehicles to be
driven poorly is not as strong as it used
to be—perhaps in part because safety
improvements in lighter and smaller
vehicles have made some good drivers
more willing to buy them. Both agencies
believe that at the other end of the
weight/size spectrum, blocker beams
and other voluntary compatibility
improvements in LTVs, as well as
compatibility-related self-protection
improvements to cars, have made the
heavier LTVs less aggressive in
collisions with lighter vehicles
(although the effect of mass disparity
remains). This report’s analysis of CUVs
and minivans as a separate class of
vehicles may have relieved some
inaccuracies in the 2010 regression
results for LTVs. Interestingly, the new
actual-regression results are quite close
to the previous report’s ‘‘lower-estimate
scenario,’’ which was an attempt to
adjust for supposed inaccuracies in
some regressions and for a seemingly
excessive trend toward higher crash
rates in smaller and lighter cars.
The principal difference between the
heavier vehicles, especially truck-based
LTVs, and the lighter vehicles,
especially passenger cars, is that mass
reduction has a different effect in
collisions with another car or LTV.
When two vehicles of unequal mass
collide, the delta V is higher in the
lighter vehicle, in the same proportion
as the mass ratio. As a result, the fatality
risk is also higher. Removing some mass
from the heavy vehicle reduces delta V
in the lighter vehicle, where fatality risk
is high, resulting in a large benefit,
offset by a small penalty because delta
V increases in the heavy vehicle, where
fatality risk is low—adding up to a net
societal benefit. Removing some mass
from the lighter vehicle results in a large
penalty offset by a small benefit—
adding up to net harm. These
considerations drive the overall result:
fatality increase in the lighter cars,
reduction in the heavier LTVs, and little
effect in the intermediate groups.
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However, in some types of crashes,
especially first event rollovers and
impacts with fixed objects, mass
reduction is usually not harmful and
often beneficial, because the lighter
vehicles respond more quickly to
braking and steering and are often more
stable because their center of gravity is
lower. Offsetting that benefit is the
continuing historical tendency of lighter
and smaller vehicles to be driven less
well—although it continues to be
unknown why that is so, and to what
extent, if any, the lightness or smallness
of the vehicle contributes to people
driving it less safely.
The estimates of the model are
formulated for each 100-pound
reduction in mass; in other words, if
risk increases by 1 percent for 100
pounds reduction in mass, it would
increase by 2 percent for a 200-pound
reduction, and 3 percent for a 300pound reduction (more exactly, 2.01
percent and 3.03 percent, because the
effects work like compound interest).
Confidence bounds around the point
estimates will grow wider by the same
proportions.
The regression results are best suited
to predict the effect of a small change in
mass, leaving all other factors, including
footprint, the same. With each
additional change from the current
environment, the model may become
somewhat less accurate and it is
difficult to assess the sensitivity to
additional mass reduction greater than
100 pounds. The agencies recognize that
the light-duty vehicle fleet in the 2017–
2025 timeframe will be different than
the 2000–2007 fleet analyzed for this
study. Nevertheless, one consideration
provides some basis for confidence.
This is NHTSA’s fourth evaluation of
the effects of mass reduction and/or
downsizing, comprising databases
ranging from MY 1985 to 2007. The
results of the four studies are not
identical, but they have been consistent
up to a point. During this time period,
many makes and models have increased
substantially in mass, sometimes as
much as 30–40 percent.198 If the
statistical analysis has, over the past
years, been able to accommodate mass
increases of this magnitude, perhaps it
will also succeed in modeling the effects
198 For example, one of the most popular models
of small 4-door sedans increased in curb weight
from 1,939 pounds in MY 1985 to 2,766 pounds in
MY 2007, a 43 percent increase. A high-sales midsize sedan grew from 2,385 to 3,354 pounds (41%);
a best-selling pickup truck from 3,390 to 4,742
pounds (40%) in the basic model with 2-door cab
and rear-wheel drive; and a popular minivan from
2,940 to 3,862 pounds (31%).
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74953
of mass reductions on the order of 10–
20 percent, if they occur in the future.
e. Report by Tom Wenzel, LBNL, ‘‘An
Assessment of NHTSA’s Report
‘Relationships Between Fatality Risk,
Mass, and Footprint in Model Year
2000–2007 Passenger Cars and LTVs’’ ’,
2011
DOE contracted with Tom Wenzel of
Lawrence Berkeley National Laboratory
to conduct an assessment of NHTSA’s
updated 2011 study of the effect of mass
and footprint reductions on U.S. fatality
risk per vehicle miles traveled, and to
provide an analysis of the effect of mass
and footprint reduction on casualty risk
per police-reported crash, using
independent data from thirteen states.
The assessment has been completed and
reviewed by NHTSA and EPA staff, and
a draft final version is included in the
docket of today’s rulemaking; the
separate analysis of crash data from
thirteen states will be completed and
included in the docket shortly. Both
reports will be peer reviewed by outside
experts.
The LBNL report replicates Kahane’s
analysis for NHTSA, using the same
data and methods, and in many cases
using the same SAS programs. The
Wenzel report finds that although mass
reduction in lighter (less than 3,106 lbs)
cars leads to a statistically significant
1.44% increase in fatality risk per
vehicle miles travelled (VMT), the
increase is small. He tests this result for
sensitivity to changes in specifications
of the regression models and what data
are used. In addition Wenzel shows that
there is a wide range in fatality rates by
vehicle model for models that have the
same mass, even after accounting for
differences in drivers’ age and gender,
safety features installed, and crash times
and locations. This section summarizes
the results of the Wenzel assessment of
the most recent NHTSA analysis.
The LBNL report highlights the effect
of the other driver, vehicle, and crash
control variables, in addition to the
effect of mass and footprint reduction,
on risk. Some of the other variables
NHTSA included in its regression
models have much larger effects on
fatality risk than mass or footprint
reduction. For example, the models
indicate that a 100-lb increase in the
mass of a lighter car results in a 1.44%
reduction in fatality risk; this is the
largest estimated effect of changes in
vehicle mass, and the only one that is
statistically significant. For comparison
this reduction in fatality risk could also
be achieved by a 13% increase in 4-door
sedans equipped with ESC.
The 1.44% increase in risk from
reducing mass in the lighter cars was
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tested for sensitivity changes in the
specification of, or the data used in, the
regression models. For example, using
the current distribution of crashes,
rather than adjusting the distribution to
that expected after full adoption of ESC,
reduces the effect to 1.18%; excluding
the calendar year variables from the
model, which may be weakening the
modeled benefits of vehicle safety
technologies, reduces the effect to
1.39%; and including vehicle make in
the model increases the effect to 1.81%.
The results also are sensitive to the
selection of data to include in the
analysis: Excluding bad drivers
increases the effect to 2.03%, while
excluding crashes involving alcohol or
drugs increases the effect to 1.66%, and
including sports, police, and all-wheel
drive cars increases the effect to 1.64%.
Finally, changing the definition of risk
also affects the result for lighter cars:
Using the number of fatalities per
induced exposure crash reduces the
effect to ¥0.24% (that is, a 0.24%
reduction in risk), while using the
number of fatal crashes (rather than total
fatalities) per VMT increases the effect
to 1.84%. These sensitivity tests, except
one, changed the estimated coefficient
by less than 1 percentage point, which
is within its statistical confidence
bounds of 0.29 to 2.59 percent and may
be considered compatible with the
baseline result. Using two or more
variables that are strongly correlated in
the same regression model (referred to
as multicollinearity) can lead to
inaccurate results. However, the
correlation between vehicle mass and
footprint may not be strong enough to
cause serious concern. Experts suggest
that a correlation of greater than 0.60 (or
a variance inflation factor of 2.5) raises
concern about multicollinearity.199 The
correlation between vehicle mass and
footprint ranges from over 0.80 for fourdoor sedans, pickups, and SUVs, to
about 0.65 for two-door cars and CUVs,
to 0.26 for minivans; when pickups and
SUVs are considered together, the
correlation between mass and footprint
is 0.65. Wenzel notes that the 2011
NHTSA report recognizes that the
‘‘near’’ multicollinearity between mass
and footprint may not be strong enough
to invalidate the results from a
regression model that includes both
variables. In addition, NHTSA included
several analyses to address possible
effects of the near-multicollinearity
between mass and footprint.
199 Light-Duty Vehicle Greenhouse Gas Emission
Standards and Corporate Average Fuel Economy
Standards; Final Rule, April 1, 2010, Section II.G.3.,
page 139.
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First, NHTSA ran a sensitivity model
specification, where footprint is not
held constant, but rather allowed to vary
as mass varies (i.e. NHTSA ran a
regression model which includes mass
but not footprint). If the
multicollinearity was so great that
including both variables in the same
model gave misleading results,
removing footprint from the model
could give mass coefficients five or
more percentage points different than
keeping it in the model. NHTSA’s
sensitivity test indicates that when
footprint is allowed to vary with mass,
the effect of mass reduction on risk
increases from 1.44% to 2.64% for
lighter cars, and from a non-significant
0.47% to a statistically-significant
1.94% for heavier cars (changes of less
than two percentage points); however,
the effect of mass reduction on light
trucks is unchanged, and is still not
statistically significant for CUVs/
minivans.
Second, NHTSA conducted a
stratification analysis of the effect of
mass reduction on risk by dividing
vehicles into deciles based on their
footprint, and running a separate
regression model for each vehicle and
crash type, for each footprint decile (3
vehicle types times 9 crash types times
10 deciles equals 270 regressions). This
analysis estimates the effect of mass
reduction on risk separately for vehicles
with similar footprint. The analysis
indicates that mass reduction does not
consistently increase risk across all
footprint deciles for any combination of
vehicle type and crash type. Mass
reduction increases risk in a majority of
footprint deciles for 13 of the 27 crash
and vehicle combinations, but few of
these increases are statistically
significant. On the other hand, mass
reduction decreases risk in a majority of
footprint deciles for 9 of the 27 crash
and vehicle combinations; in some cases
these risk reductions are large and
statistically significant.200 If reducing
vehicle mass while maintaining
footprint inherently leads to an increase
in risk, the coefficients on mass
reduction should be more consistently
positive, and with a larger R2, across the
27 vehicle/crash combinations, than
shown in the analysis. These findings
are consistent with the conclusion of the
basic regression analyses, namely, that
the effect of mass reduction while
holding footprint constant, if any, is
small.
One limitation of using logistic
regression to estimate the effect of mass
200 And in 5 of the 27 crash and vehicle
combinations, mass reduction increased risk in
5 deciles and decreased risk in 5 deciles.
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reduction on risk is that a standard
statistic to measure the extent to which
the variables in the model explain the
range in risk, equivalent to the R2≤
statistic in a linear regression model,
does not exist. (SAS does generate a
pseudo-R2 value for logistic regression
models; in almost all of the NHTSA
regression models this value is less than
0.10). For this reason LBNL conducted
an analysis of risk versus mass by
vehicle model. LBNL used the results of
the NHTSA logistic regression model to
predict the number of fatalities expected
after accounting for all vehicle, driver,
and crash variables included in the
NHTSA regression model except for
vehicle weight and footprint. LBNL then
plotted expected fatality risk per VMT
by vehicle model against the mass of
each model, and analyzed the change in
risk as mass increases, as well as how
much of the change in risk was
explained by all of the variables
included in the model.
The analysis indicates that, after
accounting for all the variables, risk
does decrease as mass increases;
however, risk and mass are not strongly
correlated, with the R2 ranging from
0.33 for CUVs to less than 0.15 for all
other vehicle types (as shown in Figure
x). This means that, on average, risk
decreases as mass increases, but the
variation in risk among individual
vehicle models is stronger than the
trend in risk from light to heavy
vehicles. For fullsize (i.e. 3/4- and 1-ton)
pickups, risk increases as mass
increases, with an R2 of 0.43, consistent
with NHTSA’s basic regression results
for the heavier LTVs (societal risk
increases as mass increases). LBNL also
examined the relationship between
residual risk, that is the remaining
unexplained risk after accounting for all
vehicle, driver and crash variables, and
mass, and found similarly poor
correlations. This implies that the
remaining factors not included in the
regression model that account for the
observed range in risk by vehicle model
also are not correlated with mass. (LBNL
found similar results when the analysis
compared risk to vehicle footprint.)
Figure II–2 indicates that some
vehicles on the road today have the
same, or lower, fatality rates than
models that weigh substantially more,
and are substantially larger in terms of
footprint. After accounting for
differences in driver age and gender,
safety features installed, and crash times
and locations, there are numerous
examples of different models with
similar weight and footprint yet widely
varying fatality rates. The variation of
fatality rates among individual models
may reflect differences in vehicle
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limited data for individual models.
Differences in vehicle design can, and
already do, mitigate some safety
penalties from reduced mass; this is
consistent with NHTSA’s opinion that
some of the changes in its regression
results between the 2003 study and the
2011 study are due to the redesign or
removal of certain smaller and lighter
models of poor design.
f. Based on this information, what do
the agencies consider to be the current
state of statistical research on vehicle
mass and safety?
The agencies believe that statistical
analysis of historical crash data
continues to be an informative and
important tool in assessing the potential
safety impacts of the proposed
standards. The effect of mass reduction
while maintaining footprint is a
complicated topic and there are open
questions whether future designs will
reduce the historical correlation
between weight and size. It is important
to note that while the updated database
represents more current vehicles with
technologies more representative of
vehicles on the road today, they still do
not fully represent what vehicles will be
on the road in the 2017–2025 timeframe.
The vehicles manufactured in the 2000–
2007 timeframe were not subject to
footprint-based fuel economy standards.
The agencies expect that the attributebased standards will likely facilitate the
design of vehicles such that
manufacturers may reduce mass while
maintaining footprint. Therefore, it is
possible that the analysis for 2000–2007
vehicles may not be fully representative
of the vehicles that will be on the road
in 2017 and beyond.
While we recognize that statistical
analysis of historical crash data may not
be the only way to think about the
future relationship between vehicle
mass and safety, we also recognize that
other assessment methods are also
subject to uncertainties, which makes
statistical analysis of historical data an
important starting point if employed
mindfully and recognized for how it can
be useful and what its limitations may
be.
NHTSA undertook the independent
review of statistical studies and held the
mass-safety workshop in February 2011
in order to help the agencies sort
through the ongoing debates over what
statistical analysis of historical data is
actually telling us. Previously, the
agencies have assumed that differences
in results were due in part to
inconsistent databases; by creating the
updated common database and making
it publicly available, we are hopeful that
that aspect of the problem has been
resolved, and moreover, the UMTRI
review suggested that differences in data
were probably less significant than the
agencies may have thought. Statistical
analyses of historical crash data should
be examined for potential
multicollinearity issues. The agencies
will continue to monitor issues with
multicollinearity in our analyses, and
hope that outside researchers will do
the same. And finally, based on the
findings of the independent review, the
agencies continue to be confident that
Kahane’s analysis is one of the best for
the purpose of analyzing potential safety
effects of future CAFE and GHG
standards. UMTRI concluded that
Kahane’s approach is valid, and Kahane
has continued and refined that approach
for the current analysis. The NHTSA
2011 statistical fatality report finds
directionally similar but less
statistically significant relationships
between vehicle mass, size, and
footprint, as discussed above. Based on
these findings, the agencies believe that
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design, differences in the drivers who
choose such vehicles (beyond what can
be explained by demographic variables
such as age and gender), and statistical
variation of fatality rates based on
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in the future, fatalities due to mass
reduction will be best reduced if mass
reduction is concentrated in the
heaviest vehicles. NHTSA considers
part of the reason that more recent
historical data shows a dampened effect
in the relationship between mass
reduction and safety is that all vehicles,
including traditionally lighter ones,
grew heavier during that timeframe
(2000s). As lighter vehicles might
become more prevalent in the fleet again
over the next decade, it is possible that
the trend could strengthen again. On the
other hand, extensive use of new
lightweight materials and optimized
vehicle design may weaken the
relationship. Future updated analyses
will be necessary to determine how the
effect of mass reduction on risk changes
over time.
Both agencies agree that there are
several identifiable safety trends already
in place or expected to occur in the
foreseeable future that are not accounted
for in the study, since they were not in
effect at the time that the vehicles in
question were manufactured. For
example, there are two important new
safety standards that have already been
issued and will be phasing in after MY
2008. FMVSS No. 126 (49 CFR
§ 571.126) requires electronic stability
control in all new vehicles by MY 2012,
and the upgrade to FMVSS No. 214
(Side Impact Protection, 49 CFR
§ 571.214) will likely result in all new
vehicles being equipped with headcurtain air bags by MY 2014.
Additionally, we anticipate continued
improvements in driver (and passenger)
behavior, such as higher safety belt use
rates. All of these may tend to reduce
the absolute number of fatalities. On the
other hand, as crash avoidance
technology improves, future statistical
analysis of historical data may be
complicated by a lower number of
crashes. In summary, the agencies have
relied on the coefficients in the Kahane
2011 study for estimating the potential
safety effects of the proposed CAFE and
GHG standards for MYs 2017–2025,
based on our assumptions regarding the
amount of mass reduction that could be
used to meet the standards in a costeffective way without adversely
affecting safety. Section E below
discusses the methodology used by the
agencies in more detail; while the
results of the safety effects analysis are
less significant than the results in the
MY 2012–2016 final rule, the agencies
still believe that any statistically
significant results warrant careful
consideration of the assumptions about
appropriate levels of mass reduction on
which to base future CAFE and GHG
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standards, and have acted accordingly
in developing the proposed standards.
4. How do the agencies think
technological solutions might affect the
safety estimates indicated by the
statistical analysis?
As mass reduction becomes a more
important technology option for
manufacturers in meeting future CAFE
and GHG standards, manufacturers will
invest more and more resources in
developing increasingly lightweight
vehicle designs that meet their needs for
manufacturability and the public’s need
for vehicles that are also safe, useful,
affordable, and enjoyable to drive. There
are many different ways to reduce mass,
as discussed in Chapter 3 of this TSD
and in Sections II, III, and IV of the
preamble, and a considerable amount of
information is available today on
lightweight vehicle designs currently in
production and that may be able to be
put into production in the rulemaking
timeframe. Discussion of lightweight
material designs from NHTSA’s
workshop is presented below.
Besides ‘‘lightweighting’’ technologies
themselves, though, there are a number
of considerations when attempting to
evaluate how future technological
developments might affect the safety
estimates indicated by the statistical
analysis. As discussed in the first part
of this chapter, for example, careful
changes in design and/or materials used
might mitigate some of the potential
decrease in safety from mass
reduction—through improved
distribution of crash pulse energy, etc.—
but these techniques can sometimes
cause other problems, such as increased
crash forces on vehicle occupants that
have to be mitigated, or greater
aggressivity against other vehicles in
crashes. Manufacturers may develop
new and better restraints—air bags, seat
belts, etc.—to protect occupants in
lighter vehicles in crashes, but NHTSA’s
current safety standards for restraint
systems are designed based on the
current fleet, not the yet-unknown
future fleet. The agency will need to
monitor trends in the crash data to see
whether changes to the safety standards
(or new safety standards) become
necessary. Manufacturers are also
increasingly investigating a variety of
crash avoidance technologies—ABS,
electronic stability control (ESC), lane
departure warnings, vehicle-to-vehicle
(V2V) communications—that, as they
become more prevalent in the fleet, are
expected to reduce the number of
overall crashes, and fatal, crashes. Until
these technologies are present in the
fleet in greater numbers, however, it
will be difficult to assess whether they
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can mitigate the observed relationship
between vehicle mass and safety in the
historical data.
Along with the California Air
Resources Board (CARB), the agencies
have initiated several projects to
estimate the maximum potential for
advanced materials and improved
designs to reduce mass in the MY 2017–
2021 timeframe, while continuing to
meeting safety regulations and
maintaining functionality of vehicles.
Another NHTSA-sponsored study will
estimate the effects of these design
changes on overall fleet safety.
A. NHTSA has awarded a contract to
Electricore, with EDAG and George
Washington University (GWU) as
subcontractors, to study the maximum
feasible amount of mass reduction for a
mid-size car—specifically, a Honda
Accord. The study tore down a MY 2011
Honda Accord, studied each component
and sub-system, and then redesigned
each component and sub-system trying
to maximize the amount of mass
reduction with technologies that are
considered feasible for 200,000 units per
year production volume during the time
frame of this rulemaking. Electricore
and its sub-contractors are consulting
industry leaders and experts for each
component and sub-system when
deciding which technologies are
feasible. Electricore and its subcontractors are also building detailed
CAD/CAE/powertrain models to
validate vehicle safety, stiffness, NVH,
durability, drivability and powertrain
performance. For OEM-supplied parts, a
detailed cost model is being built based
on a Technical Cost Modeling (TCM)
approach developed by the
Massachusetts Institute of Technology
(MIT) Materials Systems Laboratory’s
research201 to estimate the costs to
OEMs for manufacturing parts. The cost
will be broken down into each of the
operations involved in the
manufacturing; for example, for a sheet
metal part, production costs will be
estimated from the blanking of the steel
coil to the final operation to fabricate
the component. Total costs are then
categorized into fixed cost, such as
tooling, equipment, and facilities; and
variable costs such as labor, material,
energy, and maintenance. These costs
will be assessed through an interactive
process between the product designer,
manufacturing engineers, and cost
201 Frank Field, Randolph Kirchain and Richard
Roth, Process cost modeling: Strategic engineering
and economic evaluation of materials technologies,
JOM Journal of the Minerals, Metals and Materials
Society, Volume 59, Number 10, 21–32. Available
at https://msl.mit.edu/pubs/docs/Field_
KirchainCM_StratEvalMatls.pdf (last accessed Aug.
22, 2011).
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analysts. For OEM-purchased parts, the
cost will be estimated by consultation
with experienced cost analysts and Tier
1 system suppliers. This study will help
to inform the agencies about the feasible
amount of mass reduction and the cost
associated with it. NHTSA intends to
have this study completed and peer
reviewed before July 2012, in time for it
to play an integral role in informing the
final rule.
B. EPA has awarded a similar contract
to FEV, with EDAG and Monroe &
Associates, Inc. as subcontractors, to
study the maximum feasible amount of
mass reduction for a mid-size CUV
(cross over vehicle) specifically, a
Toyota Venza. The study tears down a
MY 2010 vehicle, studies each
component and sub-system, and then
redesigns each component and subsystem trying to maximize the amount
of mass reduction with technologies that
are considered feasible for high volume
production for a 2017 MY vehicle. FEV
in coordination with EDAG is building
detailed CAD/CAE/powertrain models
to validate vehicle safety, stiffness,
NVH, durability, drivability and
powertrain performance to assess the
safety of this new design. This study
builds upon the low development (20%
mass reduction) design in the 2010
Lotus Engineering study ‘‘An
Assessment of Mass Reduction
Opportunities for a 2017–2020 Model
Year Vehicle Program’’. This study
builds upon the low development (20%
mass reduction) design in the 2010
Lotus Engineering study ‘‘An
Assessment of Mass Reduction
Opportunities for a 2017–2020 Model
Year Vehicle Program’’. This study will
undergo a peer review. EPA intends to
have this study completed and peer
reviewed before July 2012, in time for it
to play an integral role in informing the
final rule.
C. California Air Resources Board
(CARB) has awarded a contract to Lotus
Engineering, to study the maximum
feasible amount of mass reduction for a
mid-size CUV (cross over vehicle)
specifically, a Toyota Venza. The study
will concentrate on the Body-in-White
and closures in the high development
design (40% mass reduction) in the
Lotus Engineering study cited above.
The study will provide an updated
design with crash simulation, detailed
costing and manufacturing feasibility of
these two systems for a MY2020 high
volume production vehicle. This study
will undergo a peer review. EPA intends
to have this study completed and peer
reviewed before July 2012, in time for it
to play an integral role in informing the
final rule.
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D. NHTSA has contracted with George
Washington University (GWU) to build
a fleet simulation model to study the
impact and relationship of light-weight
vehicle design and injuries and
fatalities. This study will also include
an evaluation of potential
countermeasures to reduce any safety
concerns associated with lightweight
vehicles. NHTSA will include three
light-weighted vehicle designs in this
study: the one from Electricore/EDAG/
GWU mentioned above, one from Lotus
Engineering funded by California Air
Resource Board for the second phase of
the study, evaluating mass reduction
levels around 35 percent of total vehicle
mass, and two funded by EPA and the
International Council on Clean
Transportation (ICCT). This study will
help to inform the agencies about the
possible safety implications for lightweight vehicle designs and the
appropriate counter-measures,202 if
applicable, for these designs, as well as
the feasible amounts of mass reduction.
All of these analyses are expected to be
finished and peer-reviewed before July
2012, in time to inform the final rule.
a. NHTSA workshop on vehicle mass,
size and safety
As stated above, in section C.2, on
February 25, 2011, NHTSA hosted a
workshop on mass reduction, vehicle
size, and fleet safety at the Headquarters
of the US Department of Transportation
in Washington, DC. The purpose of the
workshop was to provide the agencies
with a broad understanding of current
research in the field and provide
stakeholders and the public with an
opportunity to weigh in on this issue.
The agencies also created a public
docket to receive comments from
interested parties that were unable to
attend. The presentations were divided
into two sessions that addressed the two
expansive sets of issues. The first
session explored statistical evidence of
the roles of mass and size on safety, and
is summarized in section C.2. The
second session explored the engineering
realities of structural crashworthiness,
occupant injury and advanced vehicle
design, and is summarized here. The
speakers in the second session included
Stephen Summers of NHTSA, Gregg
Peterson of Lotus Engineering, Koichi
Kamiji of Honda, John German of the
International Council on Clean
Transportation (ICCT), Scott Schmidt of
the Alliance of Automobile
Manufacturers, Guy Nusholtz of
202 Countermeasures could potentially involve
improved front end structure, knee bags, seat
ramps, buckle pretensioners, and others.
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Chrysler, and Frank Field of the
Massachusetts Institute of Technology.
The second session explored what
degree of weight reduction and
occupant protection are feasible from
technical, economic, and manufacturing
perspectives. Field emphasized that
technical feasibility alone does not
constitute feasibility in the context of
vehicle mass reduction. Sufficient
material production capacity and viable
manufacturing processes are essential to
economic feasibility. Both Kamiji and
German noted that both good materials
and good designs will be necessary to
reduce fatalities. For example, German
cited the examples of hexagonally
structured aluminum columns, such as
used in the Honda Insight, that can
improve crash absorption at lower mass,
and of high-strength steel components
that can both reduce weight and
improve safety. Kamiji made the point
that widespread mass reduction will
reduce the kinetic energy of all crashes
which should produce some beneficial
effect.
Summers described NHTSA’s plans
for a model to estimate fleetwide safety
effects based on an array of vehicle-tovehicle computational crash simulations
of current and anticipated vehicle
designs. In particular, three
computational models of lightweight
vehicles are under development. They
are based on current vehicles that have
been modified to substantially reduce
mass. The most ambitious was the ‘‘high
development’’ derivative of a Toyota
Venza developed by Lotus Engineering
and discussed by Mr. Peterson. Its
structure currently contains about 75%
aluminum, 12% magnesium, 8% steel,
and 5% advanced composites. Peterson
expressed confidence that the design
had the potential to meet federal safety
standards. Nusholtz emphasized that
computational crash simulations
involving more advanced materials were
less reliable than those involving
traditional metals such as aluminum
and steel.
Nusholtz presented a revised databased fleet safety model in which
important vehicle parameters were
modeled based on trends from current
NCAP crash tests. For example, crash
pulses and potential intrusion for a
particular size vehicle were based on
existing distributions. Average occupant
deceleration was used to estimate injury
risk. Through a range of simulations of
modified vehicle fleets, he was able to
estimate the net effects of various design
strategies for lighter weight vehicles,
such as various scaling approaches for
vehicle stiffness or intrusion. The
approaches were selected based on
engineering requirements for modified
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vehicles. Transition from the current
fleet was considered. He concluded that
protocols resulting in safer transitions
(e.g., removing more mass from heavier
vehicles with appropriate stiffness
scaling according to a 3⁄2 power law)
were not generally consistent with those
that provide the greatest reduction in
GHG production.
German discussed several important
points on the future of mass reduction.
Similar to Kahane’s discussion of the
difficulties of isolating the impact of
weight reduction, German stated that
other important variables, such as
vehicle design and compatibility factors,
must be held constant in order for size
or weight impacts to be quantified in
statistical analyses. He presented results
that, compared to driver, driving
influences, and vehicle design
influences, the safety impacts of size
and weight are small and difficult to
quantify. He noted that several
scenarios, such as rollovers, greatly
favored the occupants of smaller and
lighter cars once a crash occurred. He
pointed out that if size and design are
maintained, lower weight should
translate into a lower total crash force.
He thought that advanced material
designs have the potential to
‘‘decouple’’ the historical correlation
between vehicle size and weight, and
felt that effective design and driver
attributes may start to dominate size and
weight issues in future vehicle models.
Other presenters noted industry’s
perspective of the effect of incentivizing
weight reduction. Field highlighted the
complexity of institutional changes that
may be necessitated by weight
reduction, including redesign of
material and component supply chains
and manufacturing infrastructure.
Schmidt described an industry
perspective on the complicated
decisions that must be made in the face
of regulatory change, such as evaluating
goals, gains, and timing.
Field and Schmidt noted that the
introduction of technical innovations is
generally an innate development
process involving both tactical and
strategic considerations that balance
desired vehicle attributes with
economic and technical risk. In the
absence of challenging regulatory
requirements, a substantial technology
change is often implemented in stages,
starting with lower volume pilot
production before a commitment is
made to the infrastructure and supply
chain modifications necessary for
inclusion on a high-volume production
model. Joining, damage
characterization, durability, repair, and
significant uncertainty in final
component costs are also concerns.
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Thus, for example, the widespread
implementation of high-volume
composite or magnesium structures
might be problematic in the short or
medium term when compared to
relatively transparent aluminum or high
strength steel implementations.
Regulatory changes will affect how
these tradeoffs are made and these risks
are managed.
Koichi Kamiji presented data showing
in increased use of high strength steel in
their Honda product line to reduced
vehicle mass and increase vehicle
safety. He stated that mass reduction is
clearly a benefit in 42% of all fatal
crashes because absolute energy is
reduced. He followed up with slides
showing the application of certain
optimized it designs can improve safety
even when controlling for weight and
size.
A philosophical theme developed that
explored the ethics of consciously
allowing the total societal harm
associated with mass reduction to
approach the anticipated benefits of
enhanced safety technologies. Although
some participants agreed that there may
eventually be specific fatalities that
would not have occurred without
downsizing, many also agreed that
safety strategies will have to be adapted
to the reality created by consumer
choices, and that ‘‘We will be ok if we
let data on what works—not wishful
thinking—guide our strategies.’’
5. How have the agencies estimated
safety effects for the proposed
standards?
a. What was the agencies’ methodology
for estimating safety effects for the
proposed standards?
As explained above, the agencies
consider the 2011 statistical analysis of
historical crash data by NHTSA to
represent the best estimates of the
potential relationship between mass
reduction and fatality increases in the
future fleet. This section discusses how
the agencies used NHTSA’s 2011
analysis to calculate specific estimates
of safety effects of the proposed
standards, based on the analysis of how
much mass reduction manufacturers
might use to meet the proposed
standards.
Neither the proposed CAFE/GHG
standards nor the agencies’ analysis
mandates mass reduction, or mandates
that mass reduction occur in any
specific manner. However, mass
reduction is one of the technology
applications available to the
manufacturers and a degree of mass
reduction is used by both agencies’
models to determine the capabilities of
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manufacturers and to predict both cost
and fuel consumption/emissions
impacts of improved CAFE/GHG
standards. We note that the amount of
mass reduction selected for this
rulemaking is based on our assumptions
about how much is technologically
feasible without compromising safety.
While we are confident that
manufacturers will build safe vehicles,
we cannot predict with certainty that
they will choose to reduce mass in
exactly the ways that the agencies have
analyzed in response to the standards.
In the event that manufacturers
ultimately choose to reduce mass and/
or footprint in ways not analyzed or
anticipated by the agencies, the safety
effects of the rulemaking may likely
differ from the agencies’ estimates.
NHTSA utilized the 2011 Kahane
study relationships between weight and
safety, expressed as percent changes in
fatalities per 100-pound weight
reduction while holding footprint
constant. However, as mentioned
previously, there are several identifiable
safety trends already occurring, or
expected to occur in the foreseeable
future, that are not accounted for in the
study. For example, the two important
new safety standards that were
discussed above for electronic stability
control and head curtain airbags, have
already been issued and began phasing
in after MY 2008. The recent shifts in
market shares from pickups and SUVs
to cars and CUVs may continue, or
accelerate, if gasoline prices remain
high, or rise further. The growth in
vehicle miles travelled may continue to
stagnate if the economy does not
improve, or gasoline prices remain high.
And improvements in driver (and
passenger) behavior, such as higher
safety belt use rates, may continue. All
of these will tend to reduce the absolute
number of fatalities in the future. The
agency estimated the overall change in
fatalities by calendar year after adjusting
for ESC, Side Impact Protection, and
other Federal safety standards and
behavioral changes projected through
this time period. The smaller percent
changes in risk from mass reduction
(from the 2011 NHTSA analysis),
coupled with the reduced number of
baseline fatalities, results in smaller
absolute increases in fatalities than
those predicted in the 2010 rulemaking.
NHTSA examined the impacts of
identifiable safety trends over the
lifetime of the vehicles produced in
each model year. An estimate of these
impacts was contained in a previous
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modeling runs varying the maximum
amount of mass reduction applied to
each subclass in order to identify a
combination that achieved a high level
of overall fleet mass reduction while not
adversely affecting overall fleet safety.
These maximum levels of mass
reduction for each subclass were then
used in the CAFE model for the
rulemaking analysis. The agencies
believe that mass reduction of up to 20
percent is feasible on light trucks, CUVs
and minivans,204 but that less mass
reduction should be implemented on
other vehicle types to avoid increases in
societal fatalities. For this proposal,
NHTSA used the mass reduction levels
shown in Table II–15.
II–16 shows the amount of mass
reduction in pounds for these
percentage mass reduction levels for a
typical vehicle weight in each subclass.
203 Countermeasures could potentially involve
improved front end structure, knee bags, seat
ramps, buckle pretensioners, and others.
Blincoe, L. and Shankar, U., ‘‘The Impact of
Safety Standards and Behavioral Trends on Motor
Vehicle Fatality Rates,’’ DOT HS 810 777, January
2007. See Table 4 comparing 2020 to 2007 (37,906/
43,363 = 12.6% reduction (1¥.126 = .874). Since
2008 was a recession year, it does not seem
appropriate to use that as a baseline. We believe
this same ratio should hold for this analysis which
should compare 2025 to 2008. Thus, we are
inclined to continue to use the same ratio.
204 When applying mass reduction, NHSTA
capped the maximum amount of mass reduction to
20 percent for any individual vehicle class. The 20
percent cap is the maximum amount of mass
reduction the agencies believe to be feasible in MYs
2017–2025 time frame.
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road fleet used for this particular safety
analysis and year 2025.
To estimate the amount of mass
reduction to apply in the rulemaking
analysis, the agencies considered fleet
safety effects for mass reduction. As
previously discussed and shown in
Table II–15, the Kahane 2011 study
shows that applying mass reduction to
CUVs and light duty trucks will
generally decrease societal fatalities,
while applying mass reduction to
passenger cars will increase fatalities.
The CAFE model uses coefficients from
the Kahane study along with the mass
reduction level applied to each vehicle
model to project societal fatality effects
in each model year. NHTSA used the
CAFE model and conducted iterative
For the CAFE model, these
percentages apply to a vehicle’s total
weight, including the powertrain. Table
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agency report.203 The impacts were
estimated on a year-by-year basis, but
could be examined in a combined
fashion. Using this method, we estimate
a 12.6 percent reduction in fatality
levels between 2007 and 2020 for the
combination of safety standards and
behavioral changes anticipated (ESC,
head-curtain air bags, and increased belt
use). Since the same safety standards are
taking effect in the same years, the
estimates derived from applying
NHTSA fatality percentages to a
baseline of 2007 fatalities were thus
multiplied by 0.874 to account for
changes that NHTSA believes will take
place in passenger car and light truck
safety between the 2007 baseline on-
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to take more weight out of the heavy
LTVs, CUVs, and minivans than out of
other vehicles. As the negative
coefficients only appear for LTVs greater
than 4,594 lbs., CUVs, and minivans, a
statistically improvement in safety can
only occur if more weight is taken out
of these vehicles than passenger cars or
smaller light trucks. Combining
passenger car and light truck safety
estimates for the proposed standards
results in an increase in fatalities over
the lifetime of the nine model years of
MY 2017–2025 of 4 fatalities, broken up
into an increase of 61 fatalities in
passenger cars and 56 decrease in
fatalities in light trucks. NHTSA also
analyzed the results for different
regulatory alternatives in Chapter IX of
its PRIA; the difference in the results by
alternative depends upon how much
weight reduction is used in that
alternative and the types and sizes of
vehicles that the weight reduction
applies to.
205 NHTSA has changed the definitions of a
passenger car and light truck for fuel economy
purposes between the time of the Kahane 2003
analysis and this proposed rule. About 1.4 million
2 wheel drive SUVs have been redefined as
passenger cars instead of light trucks. The Kahane
2011 analysis continues with the definitions used
in the Kahane 2003 analysis. Thus, there are
different definitions between Tables IX–1 and IX–
2 (which use the old definitions) and Table IX–3
(which uses the new definitions).
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After applying the mass reduction
levels in the CAFE model, Table II–17
shows the results of NHTSA’s safety
analysis separately for each model
year.205 These are estimated increases or
decreases in fatalities over the lifetime
of the model year fleet. A positive
number means that fatalities are
projected to increase, a negative number
(indicated by parentheses) means that
fatalities are projected to decrease. The
results are significantly affected by the
assumptions put into the Volpe model
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positive number means that fatalities are
projected to increase; a negative number
means that fatalities are projected to
decrease. For details, see the EPA RIA
Chapter 3.
b. Why might the real-world effects be
less than or greater than what the
agencies have calculated?
potentially mitigate the safety effects
estimated for this rulemaking:
lightweight vehicles could be designed
to be both stronger and not more
aggressive; restraint systems could be
improved to deal with higher crash
pulses in lighter vehicles; crash
avoidance technologies could reduce
the number of overall crashes; roofs
could be strengthened to improve safety
As discussed above the ways in which
future technological advances could
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model year assumed in the Omega
model, Table II–18 shows the results of
EPA’s safety analysis separately for each
model year. These are estimated
increases or decreases in fatalities over
the lifetime of the model year fleet. A
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Using the same coefficients from the
2011 Kahane study, EPA used the
OMEGA model to conduct a similar
analysis. After applying these
percentage increases to the estimated
weight reductions per vehicle size by
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in rollovers. As also stated above,
however, while we are confident that
manufacturers will strive to build safe
vehicles, it will be difficult for both the
agencies and the industry to know with
certainty ahead of time how crash
trends will change in the future fleet as
lightweighted vehicles become more
prevalent. Going forward, we will have
to continue to monitor the crash data as
well as changes in vehicle weight
relative to what we expect.
Additionally, we note that the total
amount of mass reduction used in the
agencies’ analysis for this rulemaking
were chosen based on our assumptions
about how much is technologically
feasible without compromising safety.
Again, while we are confident that
manufacturers are motivated to build
safe vehicles, we cannot predict with
certainty that they will choose to reduce
mass in exactly the ways that the
agencies have analyzed in response to
the standards. In the event that
manufacturers ultimately choose to
reduce mass and/or footprint in ways
not analyzed by the agencies, the safety
effects of the rulemaking may likely
differ from the agencies’ estimates.
The agencies acknowledge the
proposal does not prohibit
manufacturers from redesigning
vehicles to change wheelbase and/or
track width (footprint). However, as
NHTSA explained in promulgating
MY2008–2011 light truck CAFE
standards and MY2011 passenger car
and light truck CAFE standards, and as
the agencies jointly explained in
promulgating MY2012–2016 CAFE and
GHG standards, the agencies believes
such engineering changes are significant
enough to be unattractive as a measure
to undertake solely to reduce
compliance burdens. Similarly, the
agencies acknowledge that a
manufacturer could, without actually
reengineering specific vehicles to
increase footprint, shift production
toward those that perform well
compared to their respective footprintbased targets. However, NHTSA and,
more recently NHTSA and EPA have
previously explained, because such
production shifts would run counter to
market demands, they would also be
competitively unattractive. Based on
this regulatory design, the analysis
assumes this proposal will not have
either of the effects described above.
As discussed in Chapter 2 of the Draft
Joint TSD, the agencies note that the
standard is flat for vehicles smaller than
41 square feet and that downsizing in
this category could help achieve overall
compliance, if the vehicles are desirable
to consumers. The agencies note that
less than 10 percent of MY2008
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passenger cars were below 41 square
feet, and due to the overall lower level
of utility of these vehicles, and the
engineering challenges involved in
ensuring that these vehicles meet all
applicable federal motor vehicle safety
standards (FMVSS), we expect a
significant increase in this segment of
the market in the future is unlikely.
Please see Chapter 2 of the Draft Joint
TSD for additional discussion.
We seek comment on the
appropriateness of the overall analytic
assumption that the attribute-based
aspect of the proposed standards will
have no effect on the overall
distribution of vehicle footprints.
Notwithstanding the agencies current
judgment that such deliberate
reengineering or production shift are
unlikely as pure compliance strategies,
both agencies are considering the
potential future application of vehicle
choice models, and anticipate that doing
so could result in estimates that market
shifts induced by changes in vehicle
prices and fuel economy levels could
lead to changes in fleet’s footprint
distribution. However, neither agency is
currently able to include vehicle choice
modeling in our analysis.
As discussed in Chapter 2 of the Draft
Joint TSD, the agencies note that the
standard is flat for vehicles smaller than
41 square feet and that downsizing in
this category could help achieve overall
compliance, if the vehicles are desirable
to consumers. The agencies note that
less than 10 percent of MY2008
passenger cars were below 41 square
feet, and due to the overall lower level
of utility of these vehicles, and the
engineering challenges involved in
ensuring that these vehicles meet all
applicable federal motor vehicle safety
standards (FMVSS), we expect a
significant increase in this segment of
the market in the future is unlikely.
Please see Chapter 2 of the Draft Joint
TSD for additional discussion.
c. Do the agencies plan to make any
changes in these estimates for the final
rule?
As discussed above, the agencies have
based our estimates of safety effects due
to the proposed standards on Kahane’s
2011 report. That report is currently
undergoing peer review and is docketed
for public review;206 the peer review
comments and response to peer review
206 Kahane, C. J. (2011). ‘‘Relationships Between
Fatality Risk, Mass, and Footprint in Model Year
2000–2007 Passenger Cars and LTVs,’’, July 2011.
The report is available in the NHTSA docket,
NHTSA–2010–0152. You can access the docket at
https://www.regulations.gov/#!home by typing
‘NHTSA–2010–0152’ where it says ‘‘enter keyword
or ID’’ and then clicking on ‘‘Search.’’
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comments, along with any revisions to
the report in response to that review,
will also be docketed there. Depending
on the results of the peer review, our
calculation of safety effects for the final
rule will also be revised accordingly.
The agencies will also consider any
comments received on the proposed
rule, and determine at that time whether
and how our estimates should be
changed in response to those comments.
Additional studies published by the
agencies or other independent
researchers as previously discussed will
also be considered, along with any other
relevant information.
III. EPA Proposal for MYs 2017–2025
Greenhouse Gas Vehicle Standards
A. Overview of EPA Rule
1. Introduction
Soon after the completion of the
successful model years (MYs) 2012–
2016 rulemaking in May 2010, the
President, with support from the auto
manufacturers, requested that EPA and
NHTSA work to extend the National
Program to MYs 2017–2025 light duty
vehicles. The agencies were requested to
develop ‘‘a coordinated national
program under the CAA (Clean Air Act)
and the EISA (Energy Independence and
Security Act of 2007) to improve fuel
efficiency and to reduce greenhouse gas
emissions of passenger cars and lightduty trucks of model years 2017–
2025.’’ 207 EPA’s proposal grows directly
out of our work with NHTSA and CARB
in developing such a continuation of the
National Program. This proposal
provides important benefits to society
and consumers in the form of reduced
emissions of greenhouse gases (GHGs),
reduced consumption of oil, and fuel
savings for consumers, all at reasonable
costs. It provides industry with the
important certainty and leadtime
needed to implement the technology
changes that will achieve these benefits,
as part of a harmonized set of federal
requirements. Acting now to address the
standards for MYs 2017–2025 will allow
for the important continuation of the
National Program that started with MYs
2012–2016.
EPA is proposing GHG emissions
standards for light-duty vehicles, lightduty trucks, and medium-duty
passenger vehicles (hereafter light
vehicles) for MYs 2017 through 2025.
These vehicle categories, which include
cars, sport utility vehicles, minivans,
and pickup trucks used for personal
207 The Presidential Memorandum is found at:
https://www.whitehouse.gov/the-press-office/
presidential-memorandum-regarding-fuelefficiency-standards.
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transportation, are responsible for
almost 60% of all U.S. transportation
related GHG emissions.
If finalized, this proposal would be
the second EPA rule to regulate light
vehicle GHG emissions under the Clean
Air Act (CAA), building upon the GHG
emissions standards for MYs 2012–2016
that were established in 2010,208 and
the third rule to regulate GHG emissions
from the transportation sector.209
Combined with the standards already in
effect for MYs 2012–2016, the proposed
standards would result in MY 2025 light
vehicles emitting approximately onehalf of the GHG emissions of MY 2010
vehicles and would represent the most
significant federal action ever taken to
reduce GHG emissions (and improve
fuel economy) in the U.S.
From a societal standpoint, the
proposed GHG emissions standards are
projected to save approximately 2
billion metric tons of GHG emissions
and 4 billion barrels of oil over the
lifetimes of those vehicles sold in MYs
2017–2025. EPA estimates that fuel
savings will far outweigh higher vehicle
costs, and that the net benefits to society
will be in the range of $311 billion (at
7% discount rate) to $421 billion (3%
discount) over the lifetimes of those
vehicles sold in MYs 2017–2025. Just in
calendar year 2040 alone, after the onroad vehicle fleet has largely turned
over to vehicles sold in MY 2025 and
later, EPA projects GHG emissions
savings of 462 million metric tons, oil
savings of 2.63 million barrels per day,
and net benefits of $144 billion using
the $22/ton CO2 social cost of carbon
value.
EPA estimates that these proposed
standards will save consumers money.
Higher costs for new technology, sales
taxes, and insurance will add, on
average in the first year, about $2100 for
consumers who buy a new vehicle in
MY 2025. But those consumers who
drive their MY 2025 vehicle for its
entire lifetime will save, on average,
$5200 (7% discount rate) to $6600 (3%
discount) in fuel savings, for a net
lifetime savings of $3000–$4400. For
those consumers who purchase their
new MY 2025 vehicle with cash, the
discounted fuel savings will offset the
higher vehicle cost in less than 4 years,
and fuel savings will continue for as
long as the consumer owns the vehicle.
Those consumers that buy a new vehicle
with a 5-year loan will benefit from a
monthly cash flow savings of $12 (or
about $140 per year), on average, as the
208 75
FR 25324 (May 7, 2010).
FR 57106 (September 15, 2011) established
GHG emission standards for heavy-duty vehicles
and engines for model years 2014–2018.
209 76
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monthly fuel savings more than offsets
the higher monthly payment due to the
higher incremental vehicle cost.
The proposed standards are designed
to allow full consumer choice, in that
they are footprint-based, i.e., larger
vehicles have higher absolute GHG
emissions targets and smaller vehicles
have lower absolute GHG emissions
targets. While the GHG emissions targets
do become more stringent each year, the
emissions targets have been selected to
allow compliance by vehicles of all
sizes and with current levels of vehicle
attributes such as utility, size, safety,
and performance. Accordingly, these
proposed standards are projected to
allow consumers to choose from the
same mix of vehicles that are currently
in the marketplace.
Section I above provides a
comprehensive overview of the joint
EPA/NHTSA proposal, including the
history and rationale for a National
Program that allows manufacturers to
build a single fleet of light vehicles that
can satisfy all federal and state
requirements for GHG emissions and
fuel economy, the level and structure of
the proposed GHG emissions and
corporate average fuel economy (CAFE)
standards, the compliance flexibilities
proposed to be available to
manufacturers, the mid-term evaluation,
and a summary of the costs and benefits
of the GHG and CAFE standards based
on a ‘‘model year lifetime analysis.’’
In this Section III, EPA provides more
detailed information about EPA’s
proposed GHG emissions standards.
After providing an overview of key
information in this section (III.A), EPA
discusses the proposed standards (III.B);
the vehicles covered by the standards,
various compliance flexibilities
available to manufacturers, and a midterm evaluation (III.C); the feasibility of
the proposed standards (III.D);
provisions for certification, compliance,
and enforcement (III.E); the reductions
in GHG emissions projected for the
proposed standards and the associated
effects of these reductions (III.F); the
impact of the proposal on non-GHG
emissions and their associated effects
(III.G); the estimated cost, economic,
and other impacts of the proposal
(III.H); and various statutory and
executive order issues (III.I).
2. Why is EPA proposing this Rule?
a. Light Duty Vehicle Emissions
Contribute to Greenhouse Gases and the
Threat of Climate Change
Greenhouse gases (GHGs) are gases in
the atmosphere that effectively trap
some of the Earth’s heat that would
otherwise escape to space. GHGs are
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both naturally occurring and
anthropogenic. The primary GHGs of
concern that are directly emitted by
human activities include carbon
dioxide, methane, nitrous oxide,
hydrofluorocarbons, perfluorocarbons,
and sulfur hexafluoride.
These gases, once emitted, remain in
the atmosphere for decades to centuries.
They become well mixed globally in the
atmosphere and their concentrations
accumulate when emissions exceed the
rate at which natural processes remove
GHGs from the atmosphere. The heating
effect caused by the human-induced
buildup of GHGs in the atmosphere is
very likely the cause of most of the
observed global warming over the last
50 years. The key effects of climate
change observed to date and projected
to occur in the future include, but are
not limited to, more frequent and
intense heat waves, more severe
wildfires, degraded air quality, heavier
and more frequent downpours and
flooding, increased drought, greater sea
level rise, more intense storms, harm to
water resources, continued ocean
acidification, harm to agriculture, and
harm to wildlife and ecosystems. A
more in depth explanation of observed
and projected changes in GHGs and
climate change, and the impact of
climate change on health, society, and
the environment is included in Section
III.F below.
Mobile sources represent a large and
growing share of U.S. GHG emissions
and include light-duty vehicles, lightduty trucks, medium duty passenger
vehicles, heavy duty trucks, airplanes,
railroads, marine vessels and a variety
of other sources. In 2007, all mobile
sources emitted 30% of all U.S. GHGs,
and have been the source of the largest
absolute increase in U.S. GHGs since
1990. Transportation sources, which do
not include certain off highway sources
such as farm and construction
equipment, account for 27% of U.S.
GHG emissions, and motor vehicles
(CAA section 202(a)), which include
light-duty vehicles, light-duty trucks,
medium-duty passenger vehicles,
heavy-duty trucks, buses, and
motorcycles account for 23% of total
U.S. GHGs.
Light duty vehicles emit carbon
dioxide, methane, nitrous oxide and
hydrofluorocarbons. Carbon dioxide
(CO2) is the end product of fossil fuel
combustion. During combustion, the
carbon stored in the fuels is oxidized
and emitted as CO2 and smaller
amounts of other carbon compounds.
Methane (CH4) emissions are a function
of the methane content of the motor
fuel, the amount of hydrocarbons
passing uncombusted through the
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engine, and any post-combustion
control of hydrocarbon emissions (such
as catalytic converters). Nitrous oxide
(N2O) (and nitrogen oxide (NOX))
emissions from vehicles and their
engines are closely related to air-fuel
ratios, combustion temperatures, and
the use of pollution control equipment.
For example, some types of catalytic
converters installed to reduce motor
vehicle NOX, carbon monoxide (CO) and
hydrocarbon (HC) emissions can
promote the formation of N2O.
Hydrofluorocarbons (HFC) are
progressively replacing
chlorofluorocarbons (CFC) and
hydrochlorofluorocarbons (HCFC) in
these vehicles’ cooling and refrigeration
systems as CFCs and HCFCs are being
phased out under the Montreal Protocol
and Title VI of the CAA. There are
multiple emissions pathways for HFCs
with emissions occurring during
charging of cooling and refrigeration
systems, during operations, and during
decommissioning and disposal.
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b. Basis for Action Under the Clean Air
Act
Section 202(a)(1) of the Clean Air Act
(CAA) states that ‘‘the Administrator
shall by regulation prescribe (and from
time to time revise) * * * standards
applicable to the emission of any air
pollutant from any class or classes of
new motor vehicles * * *, which in his
judgment cause, or contribute to, air
pollution which may reasonably be
anticipated to endanger public health or
welfare.’’ The Administrator has found
that the elevated concentrations of a
group of six GHGs in the atmosphere
may reasonably be anticipated to
endanger public health and welfare, and
that emissions of GHGs from new motor
vehicles and new motor vehicle engines
contribute to this air pollution.
As a result of these findings, section
202(a) requires EPA to issue standards
applicable to emissions of that air
pollutant, and authorizes EPA to revise
them from time to time. This preamble
describes the proposed revisions to the
current standards to control emissions
of CO2 and HFCs from new light-duty
motor vehicles.210 For further
discussion of EPA’s authority under
section 202(a), see Section I.D. of the
preamble.
210 EPA is not proposing to amend the substantive
standards adopted in the 2012–2016 light-duty
vehicle rule for N2O and CH4, but is proposing
revisions to the options that manufacturers have in
meeting the N2O and CH4 standards, and to the
timeframe for manufacturers to begin measuring
N2O emissions. See Section III.B below.
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c. EPA’s Endangerment and Cause or
Contribute Findings for Greenhouse
Gases Under Section 202(a) of the Clean
Air Act
On December 15, 2009, EPA
published its findings that elevated
atmospheric concentrations of GHGs are
reasonably anticipated to endanger the
public health and welfare of current and
future generations, and that emissions of
GHGs from new motor vehicles
contribute to this air pollution. Further
information on these findings may be
found at 74 FR 66496 (December 15,
2009) and 75 FR 49566 (Aug. 13, 2010).
3. What is EPA proposing?
a. Light-Duty Vehicle, Light-Duty Truck,
and Medium-Duty Passenger Vehicle
Greenhouse Gas Emission Standards
and Projected Emissions Levels
EPA is proposing tailpipe carbon
dioxide (CO2) standards for cars and
light trucks based on the CO2 emissionsfootprint curves for cars and light trucks
that are shown above in Section I.B.3
and below in Section III.B. These curves
establish different CO2 emissions targets
for each unique car and truck footprint
value. Generally, the larger the vehicle
footprint, the higher the corresponding
vehicle CO2 emissions target. Vehicle
CO2 emissions will be measured over
the EPA city and highway tests. Under
this proposal, various incentives and
credits are available for manufacturers
to demonstrate compliance with the
standards. See Section I.B for a
comprehensive overview of both the
EPA CO2 emissions-footprint standard
curves and the various compliance
flexibilities that are proposed to be
available to the manufacturers in
meeting the EPA tailpipe CO2 standards.
EPA projects that the proposed
tailpipe CO2 emissions-footprint curves
would yield a fleetwide average light
vehicle CO2 emissions compliance
target level in MY 2025 of 163 grams per
mile, which would represent an average
reduction of 35 percent relative to the
projected average light vehicle CO2 level
in MY 2016. On average, car CO2
emissions would be reduced by about 5
percent per year, while light truck CO2
emissions would be reduced by about
3.5 percent per year from MY 2017
through 2021, and by about 5 percent
per year from MY 2022 through 2025.
The following three tables, Table III–
1 through Table III–3, summarize EPA’s
projections of what the proposed
standards would mean in terms of
projected CO2 emissions reductions for
passenger cars, light trucks, and the
overall fleet combining passenger cars
and light trucks for MYs 2017–2025. It
is important to emphasize that these
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projections are based on technical
assumptions by EPA about various
matters, including the mix of cars and
trucks, as well as the mix of vehicle
footprint values, in the fleet in varying
years. It is possible that the actual CO2
emissions values will be either higher or
lower than the EPA projections.
In each of these tables, the column
‘‘Projected CO2 Compliance Target’’
represents our projected fleetwide
average CO2 compliance target value
based on the proposed CO2-footprint
curve standards as well as the projected
mixes of cars and trucks and vehicle
footprint levels. This Compliance Target
represents the projected fleetwide
average of the projected standards for
the various manufacturers.
The column(s) under ‘‘Incentives’’
represent the emissions impact of the
proposed multiplier incentive for EV/
PHEV/FCVs and the proposed pickup
truck incentives. These incentives allow
manufacturers to meet their Compliance
Targets with CO2 emissions levels
slightly higher than they would
otherwise have to be, but do not reflect
actual real-world CO2 emissions
reductions. As such they reduce the
emissions reductions that the CO2
standards would be expected to achieve.
The column ‘‘Projected Achieved
CO2’’ is the sum of the CO2 Compliance
Target and the value(s) in the
‘‘Incentive’’ columns. This Achieved
CO2 value is a better reflection of the
CO2 emissions benefits of the standards,
since it accounts for the incentive
programs. One incentive that is not
reflected in these tables is the 0 gram
per mile compliance value for EV/
PHEV/FCVs. The 0 gram per mile value
accurately reflects the tailpipe CO2 gram
per mile achieved by these vehicles;
however, the use of this fuel does
impact the overall GHG reductions
associated with the proposed standards
due to fuel production and distributionrelated upstream GHG emissions which
are projected to be greater than the
upstream GHG emissions associated
with gasoline from oil. The combined
impact of the 0 gram per mile and
multiplier incentive for EV/PHEV/FCVs
on overall program GHG emissions is
discussed in more detail below in
Section III.C.2.
The columns under ‘‘Credits’’
quantify the projected CO2 emissions
credits that we project manufacturers
will achieve through improvements in
air conditioner refrigerants and
efficiency. These credits reflect real
world emissions reductions, so they do
not raise the levels of the Achieved CO2
values, but they do allow manufacturers
to comply with their compliance targets
with 2-cycle test CO2 emissions values
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technologies. The off-cycle credits, like
A/C credits, reflect real world
reductions, so they would not change
the CO2 Achieved values.
The column ‘‘Projected 2-cycle CO2’’
is the projected fleetwide 2-cycle CO2
emissions values that manufacturers
would have to achieve in order to be
able to comply with the proposed
standards. This value is the sum of the
projected fleetwide credit, incentive,
and Compliance Target values.211
211 For MY 2016, the Temporary Leadtime
Allowance Alternative Standards are available to
manufacturers. In the MYs 2012–2016 rule, we
estimated the impact of this credit in MY 2016 to
be 0.1 gram/mile. Due to the small magnitude, we
have not included this in the following tables for
the MY 2016 base year.
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higher than otherwise. One other credit
program that could similarly affect the
2-cycle CO2 values is the off-cycle credit
program, but it is not included in this
table due to the uncertainty inherent in
projecting the future use of these
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Table III–4 shows the projected real
world CO2 emissions and fuel economy
values associated with the proposed
CO2 standards. These real world
estimates, similar to values shown on
new vehicle labels, reflect the fact that
the way cars and trucks are operated in
the real world generally results in
higher CO2 emissions and lower fuel
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economy than laboratory test results
used to determine compliance with the
standards, which are performed under
tightly controlled conditions. There are
many assumptions that must be made
for these projections, and real world
CO2 emissions and fuel economy
performance can vary based on many
factors.
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The real world tailpipe CO2 emissions
projections in Table III–4 are calculated
starting with the projected 2-cycle CO2
emissions values in Table III–1 through
Table III–3, subtracting the air
conditioner efficiency credits, and then
multiplying by a factor of 1.25. The 1.25
factor is an approximation of the ratio
of real world CO2 emissions to 2-cycle
test CO2 emissions for the fleet in the
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associated with future projections of
this factor are discussed in TSD 4. Air
conditioner efficiency credits were
subtracted from the 2-cycle CO2
emissions values as air conditioning
efficiency improvements will increase
real world fuel economy. The real world
fuel economy value is calculated by
dividing 8887 grams of CO2 per gallon
of gasoline by the real world tailpipe
CO2 emissions value.
As discussed both in Section I and
later in this Section III, EPA either
already has adopted or is proposing
provisions for averaging, banking, and
trading of credits, that allow annual
credits for a manufacturer’s overcompliance with its unique fleet-wide
average standard, carry-forward and
carry-backward of credits, the ability to
transfer credits between a
manufacturer’s car and truck fleets, and
credit trading between manufacturers.
EPA is proposing a one-time carryforward of any credits such that any
credits generated in MYs 2010–2016 can
be used through MY 2021. These
provisions are not expected to change
the emissions reductions achieved by
the standards, but should significantly
reduce the cost of achieving those
reductions. The tables above do not
reflect the year to year impact of these
provisions. For example, EPA expects
that many manufacturers may generate
credits by over complying with the
standards for cars, and transfer such
credits to its truck fleet. Table III–1
(cars) and Table III–2 (trucks) do not
reflect such transfers. If on an industry
wide basis more credits are transferred
from cars to trucks than vice versa, you
would expect to achieve greater
reductions from cars than reflected in
Table III–1 (lower CO2 gram/miles
values) and less reductions from trucks
than reflected in Table III–2 (higher CO2
gram/mile values). Credit transfers
between cars and trucks would not be
expected to change the results for the
combined fleet, reflected in Table III–3.
The proposed rule would also exclude
from coverage a limited set of vehicles:
emergency and police vehicles, and
vehicles manufactured by small
businesses. As discussed in Section III.B
below, these exclusions have very
limited impact on the total GHG
emissions reductions from the light-
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recent past. It is not possible to know
the appropriate factor for future vehicle
fleets, as this factor will depend on
many factors such as technology
performance, driver behavior, climate
conditions, fuel composition, etc. Issues
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b. Environmental and Economic
Benefits and Costs of EPA’s Standards
i. Model Year Lifetime Analysis
Section I.C provides a comprehensive
discussion of the projected benefits and
costs associated with the proposed MYs
2017–2025 GHG and CAFE standards
based on a ‘‘model year lifetime’’
analysis, i.e., the benefits and costs
associated with the lifetime operation of
the new vehicles sold in these nine
model years. It is important to note that
while the incremental vehicle costs
associated with MY 2017 vehicles will
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ii. Calendar Year Analysis
In addition to the model year lifetime
analysis projections summarized above,
EPA also performs a ‘‘calendar year’’
analysis that projects the environmental
and economic impacts associated with
the proposed tailpipe CO2 standards
during specific calendar years out to
2050. This calendar year approach
reflects the timeframe when the benefits
would be achieved and the costs
incurred. Because the EPA tailpipe CO2
emissions standards will remain in
effect unless and until they are changed,
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in fact occur in calendar year 2017, the
benefits associated with MY 2017
vehicles will be split among all the
calendar years from 2017 through the
calendar year during which the last MY
2017 vehicle would be retired.
Table III–5 provides a summary of the
GHG emissions and oil savings
associated with the lifetime operation of
all the vehicles sold in each model year.
Cumulatively, for the nine model years
from 2017 through 2025, the proposed
standards are projected to save
approximately 2 billion metric tons of
GHG emissions and 4 billion barrels of
oil.
Table III–6 provides a summary of the
most important projected economic
impacts of the proposed GHG emissions
standards based on this model year
lifetime analytical approach. These
monetized dollar values are all
discounted to the first year of each
model year, then summed up across all
model years. With a 3% discount rate,
cumulative incremental vehicle
technology cost for MYs 2017–2025
vehicles is $140 billion, fuel savings is
$444 billion, other monetized benefits
are $117 billion, and program net
benefits are projected to be $421 billion.
Using a 7% discount rate, the projected
program net benefits are $311 billion.
As discussed previously, EPA
recognizes that some of these same
benefits and costs are also attributable to
the CAFE standard contained in this
joint proposal, although the GHG
program achieves greater reductions of
both GHG emissions and petroleum.
More details associated with this model
year lifetime analysis of the proposed
GHG standards are presented in
Sections III.F and III.H.
the projected impacts in this calendar
year analysis beyond calendar year 2025
reflect vehicles sold in model years after
2025 (e.g., most of the benefits in
calendar year 2040 would be due to
vehicles sold after MY 2025).
Table III–7 provides a summary of the
most important projected benefits and
costs of the proposed EPA GHG
emissions standards based on this
calendar year analysis. In calendar year
2025, EPA projects GHG savings of 151
million metric tons and oil savings of
0.83 million barrels per day. These
would grow to 547 million metric tons
of GHG savings and 3.12 million barrels
of oil per day by calendar year 2050.
Program net benefits are projected to be
$18 billion in calendar year 2025,
growing to $198 billion in calendar year
2050. Program net benefits over the 34year period from 2017 through 2050 are
projected to have a net present value in
2012 of $600 billion (7% discount rate)
to $1.4 trillion (3% discount rate).
More details associated with this
calendar year analysis of the proposed
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duty vehicle fleet. We also do not
anticipate significant impacts on total
GHG emissions reductions from the
proposed provisions allowing small
volume manufacturers to petition EPA
for alternative standards. See Section
III.B.5 below.
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GHG standards are presented in
Sections III.F and III.H.
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iii. Consumer Analysis
The model year lifetime and calendar
year analytical approaches discussed
above aggregate the environmental and
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economic impacts across the nationwide
light vehicle fleet. EPA has also
projected the average impact of the
proposed GHG standards on individual
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consumers who own and drive MY 2025
light vehicles over their lifetimes.
Table III–8 shows, on average, several
key consumer impacts associated with
the proposed tailpipe CO2 standard for
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MY 2025 vehicles. Some of these factors
are dependent on the assumed discount
factors, and this table uses the same 3%
and 7% discount factors used
throughout this preamble. EPA uses
AEO2011 fuel price projections of $3.25
per gallon in calendar year 2017, rising
to $3.54 per gallon in calendar year
2025 and $3.85 per gallon in calendar
year 2040.
EPA projects that the new technology
necessary to meet the proposed MY
2025 standard would add, on average,
an extra $1950 (including markup) to
the sticker price of a new MY 2025
light-duty vehicle. Including higher
vehicle sales taxes and first-year
insurance costs, the projected
incremental first-year cost to the
consumer is about $2100 on average.
The projected incremental lifetime
vehicle cost to the consumer, reflecting
higher insurance premiums over the life
of the vehicle, is, on average, about
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$2200. For all of the consumers who
drive MY 2025 light-duty vehicles, the
proposed standards are projected to
yield a net savings of $3000 (7%
discount rate) to $4400 (3% discount)
over the lifetime of the vehicle, as the
discounted lifetime fuel savings of
$5200–$6600 is 2.4 to 3 times greater
than the $2200 incremental lifetime
vehicle cost to the consumer.
Of course, many vehicles are owned
by more than one consumer. The
payback period and monthly cash flow
approaches are two ways to evaluate the
economic impact of the MY 2025
standard on those new car buyers who
do not own the vehicle for its entire
lifetime. Projected payback periods of
3.7–3.9 years means that, for a consumer
that buys a new vehicle with cash, the
discounted fuel savings for that
consumer would more than offset the
incremental lifetime vehicle cost in 4
years. If the consumer owns the vehicle
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beyond this payback period, the vehicle
will save money for the consumer. For
a consumer that buys a new vehicle
with a 5-year loan, the monthly cash
flow savings of $12 (or about $140 per
year) shows that the consumer would
benefit immediately as the monthly fuel
savings more than offsets the higher
monthly payment due to the higher
incremental first-year vehicle cost.
The final entries in Table III–8 show
the CO2 and oil savings that would be
associated with the MY 2025 vehicles
on average, both on a lifetime basis and
in the first full year of operation. On
average, a consumer who owns a MY
2025 vehicle for its entire lifetime is
projected to emit 20 fewer metric tons
of CO2 and consume 2200 fewer gallons
of gasoline due to the proposed
standards.
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4. Basis for the GHG Standards Under
Section 202(a)
EPA has significant discretion under
section 202(a) of the Act in how to
structure the standards that apply to the
emission of the air pollutant at issue
here, the aggregate group of six GHGs,
as well as to the content of such
standards. See generally 74 FR at
49464–65. EPA statutory authority
under section 202(a)(1) of the Clean Air
Act (CAA) is discussed in more detail in
Section I.D of the preamble. In this
rulemaking, EPA is proposing a CO2
tailpipe emissions standard that
provides for credits based on reductions
of HFCs, as the appropriate way to issue
standards applicable to emissions of the
single air pollutant, the aggregate group
of six GHGs. EPA is not proposing to
change the methane and nitrous oxide
standards already in place (although
EPA is proposing certain changes to the
compliance mechanisms for these
standards as explained in Section III.B
below). EPA is not setting any standards
for perfluorocarbons or sulfur
hexafluoride, as they are not emitted by
motor vehicles. The following is a
summary of the basis for the proposed
GHG standards under section 202(a),
which is discussed in more detail in the
following portions of Section III.
With respect to CO2 and HFCs, EPA
is proposing attribute-based light-duty
car and truck standards that achieve
large and important emissions
reductions of GHGs. EPA has evaluated
the technological feasibility of the
standards, and the information and
analysis performed by EPA indicates
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that these standards are feasible in the
lead time provided. EPA and NHTSA
have carefully evaluated the
effectiveness of individual technologies
as well as the interactions when
technologies are combined. EPA
projects that manufacturers will be able
to meet the standards by employing a
wide variety of technologies that are
already commercially available. EPA’s
analysis also takes into account certain
flexibilities that will facilitate
compliance. These flexibilities include
averaging, banking, and trading of
various types of credits. For a few very
small volume manufacturers, EPA is
proposing to allow manufacturers to
petition for alternative standards.
EPA, as a part of its joint technology
analysis with NHTSA, has performed
what we believe is the most
comprehensive federal vehicle
technology analysis in history. We
carefully considered the cost to
manufacturers of meeting the standards,
estimating piece costs for all candidate
technologies, direct manufacturing
costs, cost markups to account for
manufacturers’ indirect costs, and
manufacturer cost reductions
attributable to learning. In estimating
manufacturer costs, EPA took into
account manufacturers’ own practices
such as making major changes to vehicle
technology packages during a planned
redesign cycle. EPA then projected the
average cost across the industry to
employ this technology, as well as
manufacturer-by-manufacturer costs.
EPA considers the per vehicle costs
estimated by this analysis to be within
a reasonable range in light of the
emissions reductions and benefits
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achieved. EPA projects, for example,
that the fuel savings over the life of the
vehicles will more than offset the
increase in cost associated with the
technology used to meet the standards.
As explained in Section III.D.6 below,
EPA has also investigated potential
standards both more and less stringent
than those being proposed and has
rejected them. Less stringent standards
would forego emission reductions
which are feasible, cost effective, and
cost feasible, with short consumer
payback periods. EPA judges that the
proposed standards are appropriate and
preferable to more stringent alternatives
based largely on consideration of cost—
both to manufacturers and to
consumers—and the potential for overly
aggressive penetration rates for
advanced technologies relative to the
penetration rates seen in the proposed
standards, especially in the face of
unknown degree of consumer
acceptance of both the increased costs
and the technologies themselves.
EPA has also evaluated the impacts of
these standards with respect to
reductions in GHGs and reductions in
oil usage. For the lifetime of the model
year 2017–2025 vehicles we estimate
GHG reductions of approximately
2 billion metric tons and fuel reductions
of about 4 billion barrels of oil. These
are important and significant
reductions. EPA has also analyzed a
variety of other impacts of the
standards, ranging from the standards’
effects on emissions of non-GHG
pollutants, impacts on noise, energy,
safety and congestion. EPA has also
quantified the cost and benefits of the
standards, to the extent practicable. Our
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analysis to date indicates that the
overall quantified benefits of the
standards far outweigh the projected
costs. We estimate the total net social
benefits (lifetime present value
discounted to the first year of the model
year) over the life of MY 2017–2025
vehicles to be $421 billion with a
3% discount rate and $311 billion with
a 7% discount rate.
Under section 202(a), EPA is called
upon to set standards that provide
adequate lead-time for the development
and application of technology to meet
the standards. EPA’s standards satisfy
this requirement given the present
existence of the technologies on which
the proposed rule is predicated and the
substantial lead times afforded under
the proposal (which by MY2025 allow
for multiple vehicle redesign cycles and
so affords opportunities for adding
technologies in the most cost efficient
manner, see 75 FR at 25407). In setting
the standards, EPA is called upon to
weigh and balance various factors, and
to exercise judgment in setting
standards that are a reasonable balance
of the relevant factors. In this case, EPA
has considered many factors, such as
cost, impacts on emissions (both GHG
and non-GHG), impacts on oil
conservation, impacts on noise, energy,
safety, and other factors, and has where
practicable quantified the costs and
benefits of the proposed rule. In
summary, given the technical feasibility
of the standard, the cost per vehicle in
light of the savings in fuel costs over the
lifetime of the vehicle, the very
significant reductions in emissions and
in oil usage, and the significantly greater
quantified benefits compared to
quantified costs, EPA is confident that
the standards are an appropriate and
reasonable balance of the factors to
consider under section 202(a). See
Husqvarna AB v. EPA, 254 F. 3d 195,
200 (DC Cir. 2001) (great discretion to
balance statutory factors in considering
level of technology-based standard, and
statutory requirement ‘‘to [give
appropriate] consideration to the cost of
applying * * * technology’’ does not
mandate a specific method of cost
analysis); see also Hercules Inc. v. EPA,
598 F. 2d 91, 106 (DC Cir. 1978) (‘‘In
reviewing a numerical standard we
must ask whether the agency’s numbers
are within a zone of reasonableness, not
whether its numbers are precisely
right’’); Permian Basin Area Rate Cases,
390 U.S. 747, 797 (1968) (same); Federal
Power Commission v. Conway Corp.,
426 U.S. 271, 278 (1976) (same); Exxon
Mobil Gas Marketing Co. v. FERC, 297
F. 3d 1071, 1084 (DC Cir. 2002) (same).
EPA recognizes that most of the
technologies that we are considering for
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purposes of setting standards under
section 202(a) are commercially
available and already being utilized to a
limited extent across the fleet, or will
soon be commercialized by one or more
major manufacturers. The vast majority
of the emission reductions that would
result from this rule would result from
the increased use of these technologies.
EPA also recognizes that this rule would
enhance the development and
commercialization of more advanced
technologies, such as PHEVs and EVs
and strong hybrids as well. In this
technological context, there is no clear
cut line that indicates that only one
projection of technology penetration
could potentially be considered feasible
for purposes of section 202(a), or only
one standard that could potentially be
considered a reasonable balancing of the
factors relevant under section 202(a).
EPA therefore evaluated several
alternative standards, some more
stringent than the promulgated
standards and some less stringent.
See Section III.D.6 for EPA’s analysis
of alternative GHG emissions standards.
5. Other Related EPA Motor Vehicle
Regulations
a. EPA’s Recent Heavy-Duty GHG
Emissions Rulemaking
EPA and NHTSA recently conducted
a joint rulemaking to establish a
comprehensive Heavy-Duty National
Program that will reduce greenhouse gas
emissions and fuel consumption for onroad heavy-duty vehicles beginning in
MY 2014 (76 FR 57106 (September 15,
2011)). EPA’s final carbon dioxide
(CO2), nitrous oxide (N2O), and methane
(CH4) emissions standards, along with
NHTSA’s final fuel consumption
standards, are tailored to each of three
regulatory categories of heavy-duty
vehicles: (1) Combination Tractors;
(2) Heavy-duty Pickup Trucks and Vans;
and (3) Vocational Vehicles. The rules
include separate standards for the
engines that power combination tractors
and vocational vehicles. EPA also set
hydrofluorocarbon standards to control
leakage from air conditioning systems in
combination tractors and heavy-duty
pickup trucks and vans.
The agencies estimate that the
combined standards will reduce CO2
emissions by approximately 270 million
metric tons and save 530 million barrels
of oil over the life of vehicles sold
during the 2014 through 2018 model
years, providing $49 billion in net
societal benefits when private fuel
savings are considered. See 76 FR at
57125–27.
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b. EPA’s Plans for Further Standards for
Light Vehicle Criteria Pollutants and
Gasoline Fuel Quality
In the May 21, 2010 Presidential
Memorandum, in addition to addressing
GHGs and fuel economy, the President
also requested that EPA examine its
broader motor vehicle air pollution
control program. The President
requested that ‘‘[t]he Administrator of
the EPA review for adequacy the current
nongreenhouse gas emissions
regulations for new motor vehicles, new
motor vehicle engines, and motor
vehicle fuels, including tailpipe
emissions standards for nitrogen oxides
and air toxics, and sulfur standards for
gasoline. If the Administrator of the EPA
finds that new emissions regulations are
required, then I request that the
Administrator of the EPA promulgate
such regulations as part of a
comprehensive approach toward
regulating motor vehicles.’’ 214 EPA is
currently in the process of conducting
an assessment of the potential need for
additional controls on light-duty vehicle
non-GHG emissions and gasoline fuel
quality. EPA has been actively engaging
in technical conversations with the
automobile industry, the oil industry,
nongovernmental organizations, the
states, and other stakeholders on the
potential need for new regulatory
action, including the areas that are
specifically mentioned in the
Presidential Memorandum. EPA will
coordinate all future actions in this area
with the State of California.
Based on this assessment, in the near
future, EPA expects to propose a
separate but related program that would,
in general, affect the same set of new
vehicles on the same timeline as would
the proposed light-duty GHG emissions
standards. It would be designed to
address air quality problems with ozone
and PM, which continue to be serious
problems in many parts of the country,
and light-duty vehicles continue to play
a significant role.
EPA expects that this related program,
called ‘‘Tier 3’’ vehicle and fuel
standards, would among other things
propose tailpipe and evaporative
standards to reduce non-GHG pollutants
from light-duty vehicles, including
volatile organic compounds, nitrogen
oxides, particulate matter, and air
toxics. EPA’s intent, based on extensive
interaction to date with the automobile
manufacturers and other stakeholders, is
to propose a Tier 3 program that would
allow manufacturers to proceed with
214 The Presidential Memorandum is found at:
https://www.whitehouse.gov/the-press-office/
presidential-memorandum-regarding-fuelefficiency-standards.
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coordinated future product
development plans with a full
understanding of the major regulatory
requirements they will be facing over
the long term. This coordinated
regulatory approach would allow
manufacturers to design their future
vehicles so that any technological
challenges associated with meeting both
the GHG and Tier 3 standards could be
efficiently addressed.
It should be noted that under EPA’s
current regulations, GHG emissions and
CAFE compliance testing for gasoline
vehicles is conducted using a defined
fuel that does not include any amount
of ethanol.215 If the certification test fuel
is changed to some ethanol-based fuel
through a future rulemaking, EPA
would be required under EPCA to
address the need for a test procedure
adjustment to preserve the level of
stringency of the CAFE standards.216
EPA is committed to doing so in a
timely manner to ensure that any
change in certification fuel will not
affect the stringency of future GHG
emission standards.
B. Proposed Model Year 2017–2025
GHG Standards for Light-duty Vehicles,
Light-duty Trucks, and Medium duty
Passenger Vehicles
EPA is proposing new emissions
standards to control greenhouse gases
(GHGs) from MY 2017 and later lightduty vehicles. EPA is proposing new
emission standards for carbon dioxide
(CO2) on a gram per mile (g/mile) basis
that will apply to a manufacturer’s fleet
of cars, and a separate standard that will
apply to a manufacturer’s fleet of trucks.
CO2 is the primary greenhouse gas
resulting from the combustion of
vehicular fuels, and the amount of CO2
emitted is directly correlated to the
amount of fuel consumed. EPA is
proposing to conduct a mid-term
evaluation of the GHG standards and
other requirements for MYs 2022–2025,
as further discussed in Section III.B.3
below.
EPA is not proposing changes to the
CH4 and N2O emissions standards, but
is proposing revisions to the options
that manufacturers have in meeting the
CH4 and N2O standards, and to the
timeframe for manufacturers to begin
measuring N2O emissions. These
proposed changes are not intended to
change the stringency of the CH4 and
N2O standards, but are aimed at
addressing implementation concerns
regarding the standards.
215 See
40 CFR 86.113–94(a).
requires that CAFE tests be determined
from the EPA test procedures in place as of 1975,
or procedures that give comparable results. 49 USC
32904(c).
The opportunity to earn credits
toward the fleet-wide average CO2
standards for improvements to air
conditioning systems remains in place
for MY 2017 and later, including
improvements to address both
hydrofluorocarbon (HFC) refrigerant
losses (i.e., system leakage) and indirect
CO2 emissions related to the air
conditioning efficiency and load on the
engine. The CO2 standards proposed for
cars and trucks take into account EPA’s
projection of the average amount of
credits expected to be generated across
the industry. EPA is proposing several
revisions to the air conditioning credits
provisions, as discussed in Section
III.C.1.
The MY 2012–2016 Final Rule
established several program elements
that remain in place, where EPA is not
proposing significant changes. The
proposed standards described below
would apply to passenger cars, lightduty trucks, and medium-duty
passenger vehicles (MDPVs). As an
overall group, they are referred to in this
preamble as light-duty vehicles or
simply as vehicles. In this preamble
section, passenger cars may be referred
to simply as ‘‘cars’’, and light-duty
trucks and MDPVs as ‘‘light trucks’’ or
‘‘trucks.’’ 217
EPA is not proposing changes to the
averaging, banking, and trading program
elements, as discussed in Section III.B.4,
with the exception of our proposal for
a one-time carry-forward of any credits
generated in MY 2010–2016 to be used
anytime through MY2021. The previous
rulemaking also established provisions
for MY 2016 and later FFVs, where the
emissions levels of these vehicles are
based on tailpipe emissions
performance and the amount of
alternative fuel used. These provisions
remain in place without change.
Several provisions are being proposed
that allow manufacturer’s to generate
credits for use in complying with the
standards or that provide additional
incentives for use of advanced
technology. These include credits for
technology that reduces CO2 emissions
during off-cycle operation that is not
reasonably accounted for by the 2-cycle
tests used for compliance purposes. EPA
is proposing various changes to this
program to streamline its use compared
to the MYs 2012–2016 program. These
provisions are discussed in section III.C.
In addition, EPA is proposing the use of
multipliers to provide an incentive for
the use of EVs, PHEVs, and FCVs, as
well as a specified gram/mile credit for
216 EPCA
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217 GHG emissions standards would use the same
vehicle category definitions used for MYs 2012–
2016 and as are used in the CAFE program.
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full size pick-up trucks that meet
various efficiency performance criteria
and/or include hybrid technology at a
minimum level of production volumes.
These provisions are also discussed in
Section III.C. As discussed in those
sections, while these additional credit
provisions do not change the level of the
standards proposed for cars and trucks,
unlike the provisions for AC credits,
they all support the reasonableness of
the standards proposed for MYs 2017–
2025.
1. What Fleet-wide Emissions Levels
Correspond to the CO2 Standards?
EPA is proposing standards that are
projected to require, on an average
industry fleet wide basis, 163 grams/
mile of CO2 in model year 2025. The
level of 163 grams/mile CO2 would be
equivalent on a mpg basis to 54.5 mpg,
if this level was achieved solely through
improvements in fuel efficiency.218 219
For passenger cars, the proposed
footprint curves call for reducing CO2 by
5 percent per year on average from the
model year 2016 passenger car standard
through model year 2025. In recognition
of manufacturers’ unique challenges in
improving the GHG emissions of fullsize pickup trucks as we transition from
the MY 2016 standards to MY 2017 and
later, while preserving the utility (e.g.,
towing and payload capabilities) of
those vehicles, EPA is proposing a lower
annual rate of improvement for lightduty trucks in the early years of the
program. For light-duty trucks, the
footprint curves call for reducing CO2 by
3.5 percent per year on average from the
model year 2016 truck standard through
model year 2021. EPA is also proposing
to change the slopes of the CO2-footprint
curves for light-duty trucks from those
in the 2012–2016 rule, in a manner that
effectively means that the annual rate of
improvement for smaller light-duty
trucks in model years 2017 through
2021 would be higher than 3.5 percent,
and the annual rate of improvement for
larger light-duty trucks over the same
time period would be lower than 3.5
percent to account for the unique
challenges for improving the GHG of
large light trucks while maintaining
cargo hauling and towing utility. For
model years 2022 through 2025, EPA is
proposing a reduction of CO2 for light218 In comparison, the MY 2016 CO standard is
2
projected to achieve a national fleet-wide average,
covering both cars and trucks, of 250 g/mile.
219 Real-world CO is typically 25 percent higher
2
and real-world fuel economy is typically 20 percent
lower than the CO2 and CAFE values discussed
here. The reference to CO2 here refers to CO2
equivalent reductions, as this level includes some
reductions in emissions of greenhouse gases other
than CO2, from refrigerant leakage, as one part of
the AC related reductions.
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duty trucks of 5 percent per year on
average starting from the model year
2021 truck standard.
EPA’s proposed standards include
EPA’s projection of average industry
wide CO2-equivalent emission
reductions from A/C improvements,
where the proposed footprint curve is
made more stringent by an amount
equivalent to this projection of A/C
credits. This projection of A/C credits
builds on the projections from MYs
2012–2016, with the increases in credits
mainly due to the full penetration of
low GWP alternative refrigerant by MY
2021. The proposed car standards
would begin with MY 2017, with a
generally linear increase in stringency
from MY 2017 through MY 2025 for
cars. The truck standards have a more
gradual increase for MYs 2017–2020
then more rapidly in MY 2021. For MYs
2021–2025, the truck standards increase
in stringency generally in a linear
fashion. EPA proposes to continue to
have separate standards for cars and
light trucks, and to have identical
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definitions of cars and trucks as
NHTSA, in order to harmonize with
CAFE standards. The tables in this
section below provide overall fleet
average levels that are projected for both
cars and light trucks over the phase-in
period which is estimated to correspond
with the proposed standards. The actual
fleet-wide average g/mi level that would
be achieved in any year for cars and
trucks will depend on the actual
production for that year, as well as the
use of the various credit and averaging,
banking, and trading provisions. For
example, in any year, manufacturers
would be able to generate credits from
cars and use them for compliance with
the truck standard, or vice versa. Such
transfer of credits between cars and
trucks is not reflected in the table
below. In Section III.F, EPA discusses
the year-by-year estimate of emissions
reductions that are projected to be
achieved by the standards.
In general, the proposed schedule of
standards acts as a phase-in to the MY
2025 standards, and reflects
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consideration of the appropriate leadtime and engineering redesign cycles for
each manufacturer to implement the
requisite emission reductions
technology across its product line. Note
that MY 2025 is the final model year in
which the standards become more
stringent. The MY 2025 CO2 standards
would remain in place for MY 2025 and
later model years, until revised by EPA
in a future rulemaking. EPA estimates
that, on a combined fleet-wide national
basis, the 2025 MY proposed standards
would require a level of 163 g/mile CO2.
The derivation of the 163 g/mile
estimate is described in Section III.B.2.
EPA has estimated the overall fleet-wide
CO2-equivalent emission (target) levels
that correspond with the proposed
attribute-based standards, based on the
projections of the composition of each
manufacturer’s fleet in each year of the
program. Tables Table III–9 and Table
III–10 provide these target estimates for
each manufacturer.
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These estimates were aggregated
based on projected production volumes
into the fleet-wide averages for cars,
trucks, and the entire fleet, shown in
Table III–11.220 The combined fleet
estimates are based on the assumption
of a fleet mix of cars and trucks that
vary over the MY 2017–2025 timeframe.
This fleet mix distribution can be found
in Chapter 1 of the join TSD.
220 Due to rounding during calculations, the
estimated fleet-wide CO2-equivalent levels may
vary by plus or minus 1 gram.
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As shown in Table III–11, fleet-wide
CO2-equivalent emission levels for cars
under the approach are projected to
decrease from 213 to 144 grams per mile
between MY 2017 and MY 2025.
Similarly, fleet-wide CO2-equivalent
emission levels for trucks are projected
to decrease from 295 to 203 grams per
mile. These numbers do not include the
effects of other flexibilities and credits
in the program.221 The estimated
achieved values can be found in Chapter
3 of the Regulatory Impact Analysis
(RIA).
As noted above, EPA is proposing
standards that would result in
increasingly stringent levels of CO2
control from MY 2017 though MY 2025.
Applying the CO2 footprint curves
applicable in each model year to the
vehicles (and their footprint
distributions) expected to be sold in
each model year produces progressively
more stringent estimates of fleet-wide
CO2 emission targets. The standards
achieve important CO2 emissions
reductions through the application of
221 Nor
do they reflect ABT.
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feasible control technology at reasonable
cost, considering the needed lead time
for this program and with proper
consideration of manufacturer product
redesign cycles. EPA has analyzed the
feasibility of achieving the proposed
CO2 standards, based on projections of
the adoption of technology to reduce
emissions of CO2, during the normal
redesign process for cars and trucks,
taking into account the effectiveness
and cost of the technology. The results
of the analysis are discussed in detail in
Section III.D below and in the draft RIA.
EPA also presents the overall estimated
costs and benefits of the car and truck
proposed CO2 standards in Section III.H.
In developing the proposal, EPA has
evaluated the kinds of technologies that
could be utilized by the automobile
industry, as well as the associated costs
for the industry and fuel savings for the
consumer, the magnitude of the GHG
and oil reductions that may be achieved,
and other factors relevant under the
CAA.
With respect to the lead time and cost
of incorporating technology
improvements that reduce GHG
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emissions, EPA places important weight
on the fact that the proposed rule
provides a long planning horizon to
achieve the very challenging emissions
standards being proposed, and provides
manufacturers with certainty when
planning future products. The timeframe and levels for the standards are
expected to provide manufacturers the
time needed to develop and incorporate
technology that will achieve GHG
reductions, and to do this as part of the
normal vehicle redesign process.
Further discussing of lead time,
redesigns and feasibility can be found in
Section III–D and Chapter 3 of the joint
TSD.
In the MY 2012–2016 Final Rule, EPA
established several provisions which
will continue to apply for the proposed
MY2017–2025 standards. Consistent
with the requirement of CAA section
202(a)(1) that standards be applicable to
vehicles ‘‘for their useful life,’’ CO2
vehicle standards would apply for the
useful life of the vehicle. Under section
202(i) of the Act, which authorized the
Tier 2 standards, EPA established a
useful life period of 10 years or 120,000
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miles, whichever first occurs, for all
light-duty vehicles and light-duty
trucks.222 This useful life was applied to
the MY 2012–2016 GHG standards and
EPA is not proposing any changes to the
useful life for MYs 2017–2025. Also, as
with MYs 2012–2016, EPA proposes
that the in-use emission standard would
be 10% higher for a model than the
emission levels used for certification
and compliance with the fleet average
that is based on the footprint curves. As
with the MY2012–2016 standards, this
will address issues of production
variability and test-to-test variability.
The in-use standard is discussed in
Section III.E. Finally, EPA is not
proposing any changes to the test
procedures over which emissions are
measured and weighted to determine
compliance with the standards. These
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222 See
65 FR 6698 (February 10, 2000).
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procedures are the Federal Test
Procedure (FTP or ‘‘city’’ test) and the
Highway Fuel Economy Test (HFET or
‘‘highway’’ test).
2. What Are the Proposed CO2 Attributebased Standards?
As with the MY 2012–2016 standards,
EPA is proposing separate car and truck
standards, that is, vehicles defined as
cars have one set of footprint-based
curves for MY 2017–2025 and vehicles
defined as trucks have a different set for
MY 2017–2025. In general, for a given
footprint the CO2 g/mi target for trucks
would be less stringent than for a car
with the same footprint. EPA’s approach
for establishing the footprint curves for
model years 2017 and later, including
changes from the approach used for the
MY2012–2016 footprint curves, is
discussed in Section II.C and Chapter 2
of the joint TSD. The curves are
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described mathematically by a family of
piecewise linear functions (with respect
to vehicle footprint) that gradually and
continually ramp down from the MY
2016 curve established in the previous
rule. As Section II.C describes, EPA has
modified the curves from 2016,
particularly for trucks. To make this
modification, we wanted to ensure that
starting from the 2016 curve, there is a
gradual transition to the new slopes and
cut point (out to 74 sq ft from 66 sq ft).
The transition is also designed to
prevent the curve from one year from
crossing the previous year’s curve.
Written in mathematic notation, the
form of the proposed function is as
follows: 223
223 See proposed Regulatory text, which are the
official coefficients and equation. The information
proposed here is a summary version.
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The car curves are largely similar to
2016 curve in slope. By contrast, the MY
2017 and later truck curves are steeper
relative to the MY 2016 curve, but
gradually flatten as a result of the
multiplicative increase of the standards.
As a further change from the MYs 2012–
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2016 rule, the truck curve does not
reach the ultimate cutpoint of 74 sq ft
until 2022. The gap between the 2020
curve and the 2021 curve is indicative
of design of the truck standards
described earlier, where a significant
proportion of the increased stringency
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over the first five years occurs between
MY 2020 and MY 2021. Finally, the
gradual flattening of both the car and
the trucks curves is noticeable. For
further discussion of these topics, please
see Section II.C and Chapter 2 of the
joint TSD.
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3. Mid-Term Evaluation
Given the long time frame at issue in
setting standards for MY2022–2025
light-duty vehicles, and given NHTSA’s
obligation to conduct a separate
rulemaking in order to establish final
standards for vehicles for those model
years, EPA and NHTSA will conduct a
comprehensive mid-term evaluation and
agency decision-making as described
below. Up to date information will be
developed and compiled for the
evaluation, through a collaborative,
robust and transparent process,
including public notice and comment.
The evaluation will be based on (1) A
holistic assessment of all of the factors
considered by the agencies in setting
standards, including those set forth in
the rule and other relevant factors, and
(2) the expected impact of those factors
on the manufacturers’ ability to comply,
without placing decisive weight on any
particular factor or projection. The
comprehensive evaluation process will
lead to final agency action by both
agencies.
Consistent with the agencies’
commitment to maintaining a single
national framework for regulation of
vehicle emissions and fuel economy, the
agencies fully expect to conduct the
mid-term evaluation in close
coordination with the California Air
Resources Board (CARB). Moreover, the
agencies fully expect that any
adjustments to the standards will be
made with the participation of CARB
and in a manner that ensures continued
harmonization of state and Federal
vehicle standards.
EPA will conduct a mid-term
evaluation of the later model year lightduty GHG standards (MY2022–2025).
The evaluation will determine whether
those standards are appropriate under
section 202(a) of the Act. Under the
regulations proposed today, EPA would
be legally bound to make a final
decision, by April 1, 2018, on whether
the MY 2022–2025 GHG standards are
appropriate under section 202(a), in
light of the record then before the
agency.
EPA, NHTSA and CARB will jointly
prepare a draft Technical Assessment
Report (TAR) to inform EPA’s
determination on the appropriateness of
the GHG standards and to inform
NHTSA’s rulemaking for the CAFE
standards for MYs 2022–2025. The TAR
will examine the same issues and
underlying analyses and projections
considered in the original rulemaking,
including technical and other analyses
and projections relevant to each
agency’s authority to set standards as
well as any relevant new issues that
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may present themselves. There will be
an opportunity for public comment on
the draft TAR, and appropriate peer
review will be performed of underlying
analyses in the TAR. The assumptions
and modeling underlying the TAR will
be available to the public, to the extent
consistent with law.
EPA will also seek public comment
on whether the standards are
appropriate under section 202(a), e.g.
comments to affirm or change the GHG
standards (either more or less stringent).
The agencies will carefully consider
comments and information received and
respond to comments in their respective
subsequent final actions.
EPA and NHTSA will consult and
coordinate in developing EPA’s
determination on whether the MY
2022–2025 GHG standards are
appropriate under section 202(a) and
NHTSA’s NPRM.
In making its determination, EPA will
evaluate and determine whether the
MY2022–2025 GHG standards are
appropriate under section 202(a) of the
CAA based on a comprehensive,
integrated assessment of all of the
results of the review, as well as any
public comments received during the
evaluation, taken as a whole. The
decision making required of the
Administrator in making that
determination is intended to be as
robust and comprehensive as that in the
original setting of the MY2017–2025
standards.
In making this determination, EPA
will consider information on a range of
relevant factors, including but not
limited to those listed in the proposed
rule and below:
1. Development of powertrain
improvements to gasoline and diesel
powered vehicles.
2. Impacts on employment, including
the auto sector.
3. Availability and implementation of
methods to reduce weight, including
any impacts on safety.
4. Actual and projected availability of
public and private charging
infrastructure for electric vehicles, and
fueling infrastructure for alternative
fueled vehicles.
5. Costs, availability, and consumer
acceptance of technologies to ensure
compliance with the standards, such as
vehicle batteries and power electronics,
mass reduction, and anticipated trends
in these costs.
6. Payback periods for any
incremental vehicle costs associated
with meeting the standards.
7. Costs for gasoline, diesel fuel, and
alternative fuels.
8. Total light-duty vehicle sales and
projected fleet mix.
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9. Market penetration across the fleet
of fuel efficient technologies.
10. Any other factors that may be
deemed relevant to the review.
If, based on the evaluation, EPA
decides that the GHG standards are
appropriate under section 202(a), then
EPA will announce that final decision
and the basis for EPA’s decision. The
decision will be final agency action
which also will be subject to judicial
review on its merits. EPA will develop
an administrative record for that review
that will be no less robust than that
developed for the initial determination
to establish the standards. In the
midterm evaluation, EPA will develop a
robust record for judicial review that is
the same kind of record that would be
developed and before a court for judicial
review of the adoption of standards.
Where EPA decides that the standards
are not appropriate, EPA will initiate a
rulemaking to adopt standards that are
appropriate under section 202(a), which
could result in standards that are either
less or more stringent. In this
rulemaking EPA will evaluate a range of
alternative standards that are potentially
effective and reasonably feasible, and
the Administrator will propose the
alternative that in her judgment is the
best choice for a standard that is
appropriate under section 202(a).224 If
EPA initiates a rulemaking, it will be a
joint rulemaking with NHTSA. Any
final action taken by EPA at the end of
that rulemaking is also judicially
reviewable.
The MY 2022–2025 GHG standards
will remain in effect unless and until
EPA changes them by rulemaking.
NHTSA intends to issue conditional
standards for MYs 2022–2025 in the
LDV rulemaking being initiated this fall
for MY2017 and later model years. The
CAFE standards for MYs 2022–2025
will be determined with finality in a
subsequent, de novo notice and
comment rulemaking conducted in full
compliance with section 32902 of title
49 U.S.C. and other applicable law.
224 The provisions of CAA section 202(b)(1)(C) are
not applicable to any revisions of the greenhouse
standards adopted in a later rulemaking based on
the mid-term evaluation. Section 202(b)(1)(C) refers
to EPA’s authority to revise ‘‘any standard
prescribed or previously revised under this
subsection,’’ and indicates that ‘‘[a]ny revised
standard’’ shall require a reduction of emissions
from the standard that was previously applicable.
These provisions apply to standards that are
adopted under subsection 202(b) of the Act and are
later revised. These provisions are limited by their
terms to such standards, and do not otherwise limit
EPA’s general authority under section 202(a) to
adopt standards and revise them ‘‘from time to
time.’’ Since the greenhouse gas standards are not
adopted under subsection 202(b), section
202(b)(1)(C) does not apply to these standards or
any subsequent revision of these standards.
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Accordingly, NHTSA’s development of
its proposal in that later rulemaking will
include the making of economic and
technology analyses and estimates that
are appropriate for those model years
and based on then-current information.
Any rulemaking conducted jointly by
the agencies or by NHTSA alone will be
timed to provide sufficient lead time for
industry to make whatever changes to
their products that the rulemaking
analysis deems feasible based on the
new information available. At the very
latest, the three agencies will complete
the mid-term evaluation process and
subsequent rulemaking on the standards
that may occur in sufficient time to
promulgate final standards for MYs
2022–2025 with at least 18 months lead
time, but additional lead time may be
provided.
EPA understands that California
intends to propose a mid-term
evaluation in its program that is
coordinated with EPA and NHTSA and
is based on a similar set of factors as
outlined in this Appendix A. The rules
submitted to EPA for a waiver under the
CAA will include such a mid-term
evaluation. EPA understands that
California intends to continue
promoting harmonized state and federal
vehicle standards. EPA further
understands that California’s 2017–2025
standards to be submitted to EPA for a
waiver under the Clean Air Act will
deem compliance with EPA greenhouse
gas emission standards, even if
amended after 2012, as compliant with
California’s. Therefore, if EPA revises it
standards in response to the mid-term
evaluation, California may need to
amend one or more of its 2022–2025 MY
standards and would submit such
amendments to EPA with a request for
a waiver, or for confirmation that said
amendments fall within the scope of an
existing waiver, as appropriate.
4. Averaging, Banking, and Trading
Provisions for CO2 Standards
In the MY 2012–2016 rule, EPA
adopted credit provisions for credit
carry-back, credit carry-forward, credit
transfers, and credit trading. For EPA’s
purposes, these kinds of provisions are
collectively termed Averaging, Banking,
and Trading (ABT), and have been an
important part of many mobile source
programs under CAA Title II, both for
fuels programs as well as for engine and
vehicle programs.225 As in the MY2012–
2016 program, EPA is proposing
basically the same comprehensive
program for averaging, banking, and
trading of credits which together will
help manufacturers in planning and
225 See
75 FR at 25412–413.
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implementing the orderly phase-in of
emissions control technology in their
production, consistent with their typical
redesign schedules. ABT is important
because it can help to address many
issues of technological feasibility and
lead-time, as well as considerations of
cost. ABT is an integral part of the
standard setting itself, and is not just an
add-on to help reduce costs. In many
cases, ABT resolves issues of cost or
technical feasibility, allowing EPA to set
a standard that is numerically more
stringent. The ABT provisions are
integral to the fleet averaging approach
established in the MY 2012–2016 rule.
EPA is proposing to change the credit
carry-forward provisions as described
below, but the program otherwise would
remain in place unchanged for model
years 2017 and later.
As noted above, the ABT provisions
consist primarily of credit carry-back,
credit carry-forward, credit transfers,
and credit trading. A manufacturer may
have a deficit at the end of a model year
after averaging across its fleet using
credit transfers between cars and
trucks—that is, a manufacturer’s fleet
average level may fail to meet the
required fleet average standard. Credit
carry-back refers to using credits to
offset any deficit in meeting the fleet
average standards that had accrued in a
prior model year. A deficit must be
offset within 3 model years using credit
carry-back provisions. After satisfying
any needs to offset pre-existing debits
within a vehicle category, remaining
credits may be banked, or saved for use
in future years. This is referred to as
credit carry-forward. The EPCA/EISA
statutory framework for the CAFE
program includes a 5-year credit carryforward provision and a 3-year credit
carry-back provision. In the MYs 2012–
2016 program, EPA chose to adopt 5year credit carry-forward and 3-year
credit carry-back provisions as a
reasonable approach that maintained
consistency between the agencies’
provisions. EPA is proposing to
continue with this approach in this
rulemaking. (A further discussion of the
ABT provisions can be found at 75 FR
25412–14 May 7, 2010).
Although the credit carry-forward and
carry-back provisions would generally
remain in place for MY 2017 and later,
EPA is proposing to allow all unused
credits generated in MY 2010–2016 to
be carried forward through MY 2021.
This amounts to the normal 5 year
carry-forward for MY 2016 and later
credits but provides additional carryforward years for credits earned in MYs
2010–2015. Extending the life for MY
2010–2015 credits would provide
greater flexibility for manufacturers in
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using the credits they have generated.
These credits would help manufacturers
resolve lead-time issues they might face
in the model years prior to 2021 as they
transition from the 2016 standards to
the progressively more stringent
standards for 2017 and later. It also
provides an additional incentive to
generate credits earlier, for example in
MYs 2014 and 2015, because those
credits may be used through 2021,
thereby encouraging the earlier use of
additional CO2 reducing technology.
While this provision provides greater
flexibility in how manufacturers use
credits they have generated, it would
not change the overall CO2 benefits of
the National Program, as EPA does not
expect that any of the credits would
have expired as they likely would be
used or traded to other manufacturers.
EPA believes the proposed approach
provides important additional flexibility
in the early years of the new MY2017
and later standards. EPA requests
comments on the proposed approach for
carrying over MY 2010–2015 credits
through MY 2021.
EPA is not proposing to allow MY
2009 early credits to be carried forward
beyond the normal 5 years due to
concerns expressed during the 2012–
2016 rulemaking that there may be the
potential for large numbers of credits
that could be generated in MY 2009 for
companies that are over-achieving on
CAFE and that some of these credits
could represent windfall credits.226 In
response to these concerns, EPA placed
restrictions the use of MY 2009 credits
(for example, MY 2009 credits may not
be traded) and does not believe
expanding the use of MY 2009 credits
would be appropriate. Under the MY
2012–2016 early credits program,
manufacturers have until the end of MY
2011 (reports must be submitted by
April 2012), when the early credits
program ends, to submit early credit
reports. Therefore, EPA does not yet
have information on the amount of early
MY2009 credits actually generated by
manufacturers to assess whether or not
they could be viewed as windfall.
Nevertheless, because these concerns
continue, EPA is proposing not to
extend the MY 2009 credit transfers past
the existing 5-years limit.
Transferring credits refers to
exchanging credits between the two
averaging sets, passenger cars and
trucks, within a manufacturer. For
226 75 FR at 25442. Moreover, as pointed out in
the earlier rulemaking, there can be no legitimate
expectation that these 2009 MY credits could be
used as part of a compliance strategy in model years
after 2014, and thus no reason to carry forward the
credits past 5 years due to action in reliance by
manufacturers.
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example, credits accrued by overcompliance with a manufacturer’s car
fleet average standard could be used to
offset debits accrued due to that
manufacturer not meeting the truck fleet
average standard in a given year.
Finally, accumulated credits may be
traded to another manufacturer. In
EPA’s CO2 program, there are no limits
on the amount of credits that may be
transferred or traded.
The averaging, banking, and trading
provisions are generally consistent with
those included in the CAFE program,
with a few notable exceptions. As with
EPA’s approach (except for the proposal
discussed above for a one-time extended
carry-forward of MY2010–2016 credits),
CAFE allows five year carry-forward of
credits and three year carry-back, per
EISA. CAFE transfers of credits across a
manufacturer’s car and truck averaging
sets are also allowed, but with limits
established by EISA on the use of
transferred credits. The amount of
transferred credits that can be used in a
year is limited under CAFE, and
transferred credits may not be used to
meet the CAFE minimum domestic
passenger car standard, also per statute.
CAFE allows credit trading, but again,
traded credits cannot be used to meet
the minimum domestic passenger car
standard.
5. Small Volume Manufacturer
Standards
In adopting the CO2 standards for MY
2012–2016, EPA recognized that for
very small volume manufacturers, the
CO2 standards adopted for MY 2012–
2016 would be extremely challenging
and potentially infeasible absent credits
from other manufacturers. EPA therefore
deferred small volume manufacturers
(SVMs) with annual U.S. sales less than
5,000 vehicles from having to meet CO2
standards until EPA is able to establish
appropriate SVM standards. As part of
establishing eligibility for the
exemption, manufacturers must make a
good faith effort to secure credits from
other manufacturers, if they are
reasonably available, to cover the
emissions reductions they would have
otherwise had to achieve under
applicable standards.
These small volume manufacturers
face a greater challenge in meeting CO2
standards compared to large
manufacturers because they only
produce a few vehicle models, mostly
focusing on high performance sports
cars and luxury vehicles. These
manufacturers have limited product
lines across which to average emissions,
and the few models they produce often
have very high CO2 levels. As SVMs
noted in discussions, SVMs only
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produce one or two vehicle types but
must compete directly with brands that
are part of larger manufacturer groups
that have more resources available to
them. There is often a time lag in the
availability of technologies from
suppliers between when the technology
is supplied to large manufacturers and
when it is available to small volume
manufacturers. Also, incorporating new
technologies into vehicle designs costs
the same or more for small volume
manufacturers, yet the costs are spread
over significantly smaller volumes.
Therefore, SVMs typically have longer
model life cycles in order to recover
their investments. SVMs further noted
that despite constraints facing them,
SVMs need to innovate in order to
differentiate themselves in the market
and often lead in incorporating
technological innovations, particularly
lightweight materials.
In the MY 2012–2016 Final Rule, EPA
noted that it intended to conduct a
follow-on rulemaking to establish
appropriate standards for these
manufacturers. In developing this
proposal, the agencies held detailed
technical discussions with the
manufacturers eligible for the
exemption under the MY 2012–2016
program and reviewed detailed product
plans of each manufacturer. EPA
continues to believe that SVMs would
face great difficulty meeting the primary
CO2 standards and that establishing
challenging but less stringent SVM
standards is appropriate given the
limited products offering of SVMs. EPA
believes it is important to establish
standards that will require SVMs to
continue to innovate to reduce
emissions and do their ‘‘fair share’’
under the GHG program. However,
selecting a single set of standards that
would apply to all SVMs is difficult
because each manufacturer’s product
lines vary significantly. EPA is
concerned that a standard that would be
appropriate for one manufacturer may
not be feasible for another, potentially
driving them from the domestic market.
Alternatively, a less stringent standard
may only cap emissions for some
manufacturers, providing little incentive
to reduce emissions.
Based on this, rather than conducting
a separate rulemaking, as part of this
MY 2017–2025 rulemaking EPA is
proposing to allow SVMs to petition
EPA for an alternative CO2 standard for
these model years. The proposed
approach for SVM standards and
eligibility requirements are described
below. EPA is also requesting comments
on extending eligibility for the proposed
SVM standards to very small
manufacturers that are owned by large
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manufacturers but are able to establish
that they are operationally independent.
EPA considered a variety of
approaches and believes a case-by-case
approach for establishing SVM
standards would be appropriate. EPA is
proposing to allow eligible SVMs the
option to petition EPA for alternative
standards. An SVM utilizing this option
would be required to submit data and
information that the agency would use
in addition to other available
information to establish CO2 standards
for that specific manufacturer. EPA
requests comments on all aspects of the
proposed approach described in detail
below.
a. Overview of Existing Case-by-Case
Approaches
A case-by-case approach for
establishing standards for SVMs has
been adopted by NHTSA for CAFE,
CARB in their 2009–2016 GHG program,
and the European Union (EU) for
European CO2 standards. For the CAFE
program, EPCA allows manufacturers
making less than 10,000 vehicles per
year worldwide to petition the agency to
have an alternative standard set for
them.227 NHTSA has adopted
alternative standards for some small
volume manufacturers under these
CAFE provisions and continually
reviews applications as they are
submitted.228 Under the CAFE program,
petitioners must include projections of
the most fuel efficient production mix of
vehicle configurations for a model year
and a discussion demonstrating that the
projections are reasonable. Petitioners
must include, among other items,
annual production data, efforts to
comply with applicable fuel economy
standards, and detailed information on
vehicle technologies and specifications.
The petitioner must explain why they
have not pursued additional means that
would allow them to achieve higher
average fuel economy. NHTSA
publishes a proposed decision in the
Federal Register and accepts public
comments. Petitions may be granted for
up to three years.
For the California GHG standards for
MYs 2009–2016, CARB established a
process that would start at the beginning
of MY2013, where small volume
manufacturers would identify all MY
227 See 49 U.S.C. 32902(d) and 49 CFR Part 525.
Under the CAFE program, manufacturers who
manufacture less than 10,000 passenger cars
worldwide annually may petition for an exemption
from generally-applicable CAFE standards, in
which case NHTSA will determine what level of
CAFE would be maximum feasible for that
particular manufacturer if the agency determines
that doing so is appropriate.
228 Alternative CAFE standards are provided in 49
CFR 531.5 (e).
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2012 vehicle models certified by large
volume manufacturers that are
comparable to the SVM’s planned MY
2016 vehicle models.229 The
comparison vehicles were to be selected
on the basis of horsepower and power
to weight ratio. The SVM was required
to demonstrate the appropriateness of
the comparison models selected. CARB
would then provide a target CO2 value
based on the emissions performance of
the comparison vehicles to the SVM for
each of their vehicle models to be used
to calculate a fleet average standard for
each test group for MY2016 and later.
Since CARB provides that compliance
with the National Program for MYs
2012–2016 will be deemed compliance
with the CARB program, it has not taken
action to set unique SVM standards, but
its program nevertheless was a useful
model to consider.
The EU process allows small
manufacturers to apply for a derogation
from the primary CO2 emissions
reduction targets.230 Applications for
2012 were required to be submitted by
manufacturers no later than March 31,
2011, and the Commission will assess
the application within 9 months of the
receipt of a complete application.
Applications for derogations for 2012
have been submitted by several
manufacturers and non confidential
versions are currently available to the
public.231 In the EU process, the SVM
proposes an alternative emissions target
supported by detailed information on
the applicant’s economic activities and
technological potential to reduce CO2
emissions. The application also requires
information on individual vehicle
models such as mass and specific CO2
emissions of the vehicles, and
information on the characteristics of the
market for the types of vehicles
manufactured. The proposed alternative
emissions standards may be the same
numeric standard for multiple years or
a declining standard, and the alternative
standards may be established for a
maximum period of five years. Where
the European Commission is satisfied
that the specific emissions target
proposed by the manufacturer is
consistent with its reduction potential,
including the economic and
technological potential to reduce its
specific emissions of CO2, and taking
into account the characteristics of the
market for the type of car manufactured,
229 13
CCR 1961.1(D).
11 of Regulation (EC) No 443/2009 and
EU No 63/2011. See also ‘‘Frequently asked
questions on application for derogation pursuant to
Aticle 11 of Regulation (EC) 443/2009.’’
231 https://ec.europa.eu/clima/documentation/
transport/vehicles/cars_en.htm.
230 Article
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the Commission will grant a derogation
to the manufacturer.
b. EPA’s Proposed Framework for Caseby-Case SVM Standards
EPA proposes that SVMs will become
subject to the GHG program beginning
with MY 2017. Starting in MY 2017, an
SVM would be required to meet the
primary program standards unless EPA
establishes alternative standards for the
manufacturer. EPA proposes that
eligible manufacturers seeking
alternative standards must petition EPA
for alternative standards by July 30,
2013, providing the information
described below. If EPA finds that the
application is incomplete, EPA would
notify the manufacturer and provide an
additional 30 days for the manufacturer
to provide all necessary information.
EPA would then publish a notice in the
Federal Register of the manufacturer’s
petition and recommendations for an
alternative standard, as well as EPA’s
proposed alternative standard. Non
confidential business information
portions of the petition would be
available to the public for review in the
docket. After a period for public
comment, EPA would make a
determination on an alternative
standard for the manufacturer and
publish final notice of the determination
in the Federal Register for the general
public as well as the applicant. EPA
expects the process to establish the
alternative standard to take about 12
months once a complete application is
submitted by the manufacturer.
EPA proposes that manufacturers
would petition for alternative standards
for up to 5 model years (i.e., MYs
2017—2021) as long as sufficient
information is available on which to
base the alternative standards (see
application discussion below). This
initial round of establishing case-bycase standards would be followed by
one or more additional rounds until
standards are established for the SVM
for all model years up to and including
MY 2025. For the later round(s) of
standard setting, EPA proposes that the
SVM must submit their petition 36
months prior to the start of the first
model year for which the standards
would apply in order to provide
sufficient time for EPA to evaluate and
set alternative standards (e.g., January 1,
2018 for MY 2022). The 36 month
requirement would not apply to new
market entrants, discussed in section
III.C.5.e below. The subsequent case-bycase standard setting would follow the
same notice and comment process as
outlined above.
EPA also proposes that if EPA does
not establish SVM standards for a
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manufacturer at least 12 months prior to
the start of the model year in cases
where the manufacturer provided all
required information by the established
deadline, the manufacturer may request
an extension of the alternative standards
currently in place, on a model year by
model year basis. This would provide
assurance to manufacturers that they
would have at least 12 months lead time
to prepare for the upcoming model year.
EPA requests comments on allowing
SVMs to comply early with the MY
2017 SVM standards established for
them. Manufacturers may want to
certify to the MY 2017 standards in
earlier model years (e.g., MY 2015 or
MY 2016). Under the MY 2012–2016
program, SVMs are eligible for an
exemption from the standards as long as
they have made a good faith effort to
purchase credits. By certifying to the
SVM alternative standard early in lieu
of this exemption, manufacturers could
avoid having to seek out credits to
purchase in order to maintain this
exemption. EPA would not allow
certification for vehicles already
produced by the manufacturer, so the
applicability of this provision would be
limited due to the timing of establishing
the SVM standards. Manufacturers
interested in the possibility of early
compliance would be able to apply for
SVM standards earlier than the required
July 30, 2013 deadline proposed above.
An early compliance option also may be
beneficial for new manufacturers
entering the market that qualify as
SVMs.
c. Petition Data and Information
Requirements
As described in detail in section I.D.2,
EPA establishes motor vehicle standards
under section 202(a) that are based on
technological feasibility, and
considering lead time, safety, costs and
other impacts on consumers, and other
factors such as energy impacts
associated with use of the technology.
EPA proposes to require that SVMs
submit the data and information listed
below which EPA would use, in
addition to other relevant information,
in determining an appropriate
alternative standard for the SVM. EPA
would also consider data and
information provided by commenters
during the comment process in
determining the final level of the SVM’s
standards. As noted above, other caseby-case standard setting approaches
have been adopted by NHTSA, the
European Union, and CARB and EPA
has considered the data requirements of
those programs in developing the
proposed data and information
requirements detailed below. EPA
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requests comments on the following
proposed data requirements.
EPA proposes that SVMs would
provide the following information as
part of their petition for SVM standards:
Vehicle Model and Fleet Information
• MYs that the application covers—
up to 5 MYs. Sufficient information
must be provided to establish
alternative standards for each year
• Vehicle models and sales
projections by model for each MY
• Description of models (vehicle type,
mass, power, footprint, expected
pricing)
• Description of powertrain
• Production cycle for each model
including new vehicle model
introductions
• Vehicle footprint based targets and
projected fleet average standard under
primary program by model year
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Technology Evaluation
• CO2 reduction technologies
employed or expected to be on the
vehicle model(s) for the applicable
model years, including effectiveness
and cost information
—Including A/C and potential off-cycle
technologies
• Evaluation of similar vehicles to
those produced by the petitioning SVM
and certified in MYs 2012–2013 (or
latest 2 MYs for later applications) for
each vehicle model including CO2
results and any A/C credits generated by
the models
—Similar vehicles must be selected
based on vehicle type, horsepower,
mass, power-to-weight, vehicle
footprint, vehicle price range and
other relevant factors as explained by
the SVM
• Discussion of CO2 reducing
technologies employed on vehicles
offered by the manufacturer outside of
the U.S. market but not in the U.S.,
including why those vehicles/
technologies are not being introduced in
the U.S. market as a way of reducing
overall fleet CO2 levels
• Evaluation of technologies
projected by EPA as technologies likely
to be used to meet the MYs 2012–2016
and MYs 2017–2025 standards that are
not projected to be fully utilized by the
petitioning SVM and explanation of
reasons for not using the technologies,
including relevant cost information 232
SVM Projected Standards
• The most stringent CO2 level
estimated by the SVM to be feasible and
232 See 75 FR 25444 (Section III.D) for MY 2012–
2016 technologies and Section III.D below for
discussion of projected MY 2017–2025
technologies.
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appropriate by model and MY and the
technological and other basis for the
estimate
• For each MY, projection of the
lowest fleet average CO2 production mix
of vehicle models and discussion
demonstrating that these projections are
reasonable
• A copy of any applications
submitted to NHTSA for MY 2012 and
later alternative standards
Eligibility
• U.S. sales for previous three model
years and projections for production
volumes over the time period covered
by the application
• Complete information on
ownership structure in cases where
SVM has ties to other manufacturers
with U.S. vehicle sales
EPA proposes to weigh several factors
in determining what CO2 standards are
appropriate for a given SVMs fleet.
These factors would include the level of
technology applied to date by the
manufacturer, the manufacturer’s
projections for the application of
additional technology, CO2 reducing
technologies being employed by other
manufacturers including on vehicles
with which the SVM competes directly
and the CO2 levels of those vehicles,
and the technological feasibility and
reasonableness of employing additional
technology not projected by the
manufacturer in the time-frame for
which standards are being established.
EPA would also consider opportunities
to generate A/C and off-cycle credits
that are available to the manufacturer.
Lead time would be a key consideration
both for the initial years of the SVM
standard, where lead time would be
shorter due to the timing of the notice
and comment process to establish the
standards, and for the later years where
manufacturers would have more time to
achieve additional CO2 reductions.
d. SVM Credits Provisions
As discussed in Section III.B.4, EPA’s
program includes a variety of credit
averaging, banking, and trading
provisions. EPA proposes that these
provisions would generally apply to
SVM standards as well, with the
exception that SVMs would not be
allowed to trade credits to other
manufacturers. Because SVMs would be
meeting alternative, less stringent
standards compared to manufacturers in
the primary program, EPA proposes that
SVM would not be allowed to trade (i.e.,
sell or otherwise provide) CO2 credits
that the SVM generates against the SVM
standards to other manufacturers. SVMs
would be able to use credits purchased
from other manufacturers generated in
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the primary program. Although EPA
does not expect significant credits to be
generated by SVMs due to the
manufacturer-specific standard setting
approach being proposed, SVMs would
be able to generate and use credits
internally, under the credit carryforward and carry-back provisions.
Under a case-by-case approach, EPA
would not view such credits as windfall
credits and not allowing internal
banking could stifle potential innovative
approaches for SVMs. SVMs would also
be able to transfer credits between the
car and light trucks categories.
e. SVM Standards Eligibility
i. Current SVMs
The MY 2012–2016 rulemaking
limited eligibility for the SVM
deferment to manufacturers in the U.S.
market in MY 2008 or MY 2009 with
U.S. sales of less than 5,000 vehicles per
year. After initial eligibility has been
established, the SVM remains eligible
for the exemption if the rolling average
of three consecutive model years of
sales remains below 5,000 vehicles.
Manufacturers going over the 5,000
vehicle rolling average limit would have
two additional model years to transition
to having to meet applicable CO2
standards. Based on these eligibility
criteria, there are three companies that
qualify currently as SVMs under the
MY2012–2016 standards: Aston Martin,
Lotus, and McLaren.233 These
manufacturers make up much less than
one percent of total U.S. vehicles sales,
so the environmental impact of these
alternative standards would be very
small. EPA continues to believe that the
5,000 vehicle cut-point and rolling three
year average approach is appropriate
and proposes to retain it as a primary
criterion for SVMs to remain eligible for
SVM standards. The 5,000 vehicle
threshold allows for some sales growth
by SVMs, as the SVMs in the market
today typically have annual sales of
below 2,000 vehicles. However, EPA
wants to ensure that standards for as
few vehicles as possible are included in
the SVM standards to minimize the
environmental impact, and therefore
believes it is appropriate that
manufacturers with U.S. sales growing
to above 5,000 vehicles per year be
required to comply with the primary
standards. Manufacturers with
unusually strong sales in a given year
would still likely remain eligible, based
on the three year rolling average.
However, if a manufacturer expands in
233 Under the MY 2012–2016 program,
manufacturers must also make a good faith effort to
purchase CO2 credits in order to maintain eligibility
for SVM status.
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the U.S. market on a permanent basis
such that they consistently sell more
than 5,000 vehicles per year, they would
likely increase their rolling average to
above 5,000 and no longer be eligible.
EPA believes a manufacturer will be
able to consider these provisions, along
with other factors, in its planning to
significantly expand in the U.S. market.
As discussed below, EPA is not
proposing to continue to tie eligibility to
having been in the market in MY 2008
or MY 2009, or any other year and is
instead proposing eligibility criteria for
new SVMs newly entering the U.S.
market.
ii. New SVMs (New Entrants to the U.S.
Market)
As noted above, the SVM deferment
under the MY 2012–2016 program
included a requirement that a
manufacturer had to have been in the
U.S. vehicle market in MY 2008 or MY
2009. This provision ensured that a
known universe of manufacturers would
be eligible for the exemption in the
short term and manufacturers would not
be driven from the market as EPA
proceeded to develop appropriate SVM
standards. EPA is not proposing to
include such a provision for the SVM
standards eligibility criteria for MY
2017–2025. EPA believes that with SVM
standards in place, tying eligibility to
being in the market in a prior year is no
longer necessary because SVMs will be
required to achieve appropriate levels of
emissions control. Also, it could serve
as a potential market barrier to
competition by hindering new SVMs
from entering the U.S. market.
For new market entrants, EPA
proposes that a manufacturer seeking an
alternative standard for MY2017–2025
must apply and that standards would be
established through the process
described above. The new SVM would
not be able to certify their vehicles until
the standards are established and
therefore EPA would expect the
manufacturer to submit an application
as early as possible but at least 30
months prior to when they expect to
begin producing vehicles in order to
provide enough time for EPA to evaluate
standards and to follow the notice and
comment process to establish the
standards and for certification. In
addition to the information and data
described below, EPA proposes to
require new market entrants to provide
evidence that the company intends to
enter the U.S. market within the time
frame of the MY2017–2025 SVM
standards. Such evidence would
include documentation of work
underway to establish a dealer network,
appropriate financing and marketing
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plans, and evidence the company is
working to meet other federal vehicle
requirements such as other EPA
emissions standards and NHTSA
vehicle safety standards. EPA is
concerned about the administrative
burden that could be created for the
agency by companies with no firm plans
to enter the U.S. market submitting
applications in order to see what
standard might be established for them.
This information, in addition to a
complete application with the
information and data outlined above,
would provide evidence of the
seriousness of the applicant. As part of
this review, EPA reserves the right to
not undertake its SVM standards
development process for companies that
do not exhibit a serious and
documented effort to enter the U.S.
market.
EPA remains concerned about the
potential for gaming by a manufacturer
that sells less than 5,000 vehicles in the
first year, but with plans for
significantly larger sales volumes in the
following years. EPA believes that it
would not be appropriate to establish
SVM standards for a new market entrant
that plans a steep ramp-up in U.S.
vehicle sales. Therefore, EPA proposes
that for new entrants, U.S. vehicle sales
must remain below 5,000 vehicles for
the first three years in the market. After
the initial three years, the manufacturer
must maintain a three year rolling
average below 5,000 vehicles (e.g., the
rolling average of years 2, 3 and 4, must
be below 5,000 vehicles). If a new
market entrant does not comply with
these provisions for the first five years
in the market, vehicles sold above the
5,000 vehicle threshold would be found
not to be covered by the alternative
standards, and EPA expects the fleet
average is therefore not in compliance
with the standards and would be subject
to enforcement action and also, the
manufacturer would lose eligibility for
the SVM standards until it has
reestablished three consecutive years of
sales below 5,000 vehicles.
By not tying the 5,000 vehicle
eligibility criteria to a particular model
year, it would be possible for a
manufacturer already in the market to
drop below the 5,000 vehicle threshold
in a future year and attempt to establish
eligibility. EPA proposes to treat such
manufacturers as new entrants to the
market for purposes of determining
eligibility for SVM standards. However,
the requirements to demonstrate that the
manufacturer intends to enter the U.S.
market obviously would not be relevant
in this case, and therefore would not
apply.
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iii. Aggregation Requirements and an
Operational Independence Concept
In determining eligibility for the MY
2012–2016 exemption, sales volumes
must be aggregated across
manufacturers according to the
provisions of 40 CFR 86.1838–01(b)(3),
which requires the sales of different
firms to be aggregated in various
situations, including where one firm has
a 10% or more equity ownership of
another firm, or where a third party has
a 10% or more equity ownership of two
or more firms. These are the same
aggregation requirements used in other
EPA small volume manufacturer
provisions, such as those for other lightduty emissions standards.234 EPA
proposes to retain these aggregation
provisions as part of the eligibility
criteria for the SVM standards for MYs
2017–2025. Manufacturers also retain,
no matter their size, the option to meet
the full set of GHG requirements on
their own, and do not necessarily need
to demonstrate compliance as part of a
corporate parent company fleet.
However, as discussed below, EPA is
seeking comments on allowing
manufacturers that otherwise would not
be eligible for the SVM standards due to
these aggregation provisions, to
demonstrate to the Administrator that
they are ‘‘operationally independent’’
based on the criteria described below.
Under such a concept, if the
Administrator were to determine that a
manufacturer was operationally
independent, that manufacturer would
be eligible for SVM standards.
During the 2012–2016 rule comment
period, EPA received comments from
Ferrari requesting that EPA allow a
manufacturer to apply to EPA to
establish SVM status based on the
independence of its research,
development, testing, design, and
manufacturing from another firm that
has ownership interest in that
manufacturer. Ferrari is majority owned
by Fiat and would be aggregated with
other Fiat brands, including Chrysler,
Maserati, and Alfa Romeo, for purposes
of determining eligibility for SVM
standards; therefore Ferrari does not
meet the eligibility criteria for SVM
status. However, Ferrari believes that it
would qualify for such an ‘‘operational
independence’’ concept, if such an
option were provided. In the MY 2012–
2016 Final Rule, EPA noted that it
would further consider the issue of
operational independence and seek
public comments on this concept (see
75 FR 25420). In this proposal, EPA is
234 For other programs, the eligibility cut point for
SVM flexibility is 15,000 vehicles rather than 5,000
vehicles.
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requesting comment on the concept of
operational independence. Specifically,
we are seeking comment on expanding
eligibility for the SVM standards to
manufacturers who would have U.S.
annual sales of less than 5,000 vehicles
and based on a demonstration that they
are ‘‘operationally independent’’ of
other companies. Under such an
approach, EPA would be amending the
limitation for SVM corporate
aggregation provisions such that a
manufacturer that is more than 10
percent owned by a large manufacturer
would be allowed to qualify for SVM
standards on the basis of its own sales,
because it operates its research, design,
production, and manufacturing
independently from the parent
company.
In seeking public comment on this
concept of operational independence,
EPA particularly is interested in
comments regarding the degree to which
this concept could unnecessarily open
up the SVM standards to several smaller
manufacturers that are integrated into
large companies—smaller companies
that may be capable of and planning to
meet the CO2 standards as part of the
larger manufacturer’s fleet. EPA also
seeks comment on the concern that
manufacturers could change their
corporate structure to take advantage of
such provisions (that is, gaming). EPA is
therefore requesting comment on
approaches, described below, to
narrowly define the operational
independence criteria to ensure that
qualifying companies are truly
independent and to avoid gaming to
meet the criteria. EPA also requests
comments on the possible implications
of this approach on market competition,
which we believe should be fully
explored through the public comment
process. EPA acknowledges that
regardless of the criteria for operational
independence, a small manufacturer
under the umbrella of a large
manufacturer is fundamentally different
from other SVMs because the large
manufacturer has several options under
the GHG program to bring the smaller
subsidiary into compliance, including
the use of averaging or credit transfer
provisions, purchasing credits from
another manufacturer, or providing
technical and financial assistance to the
smaller subsidiary. Truly independent
SVMs do not have the potential access
to these options, with the exception of
buying credits from another
manufacturer. EPA requests comments
on the need for and appropriateness of
allowing companies to apply for less
stringent SVM standards based on sales
that are not aggregated with other
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companies because of operational
independence.
EPA is considering and requesting
comments on the operational
independence criteria listed below.
These criteria are meant to establish that
a company, though owned by another
manufacturer, does not benefit
operationally or financially from this
relationship, and should therefore be
considered independent for purposes of
calculating the sales volume for the
SVM program. Manufacturers would
need to demonstrate compliance with
all of these criteria in order to be found
to be operationally independent. By
‘‘related manufacturers’’ below, EPA
means all manufacturers that would be
aggregated together under the 10 percent
ownership provisions contained in
EPA’s current small volume
manufacturer definition (i.e., the parent
company and all subsidiaries where
there is 10 percent or greater
ownership).
EPA would need to determine, based
on the information provided by the
manufacturer in its application, that the
manufacturer currently meets the
following criteria and has met them for
at least 24 months preceding the
application submittal:
1. No financial or other support of
economic value was provided by related
manufacturers for purposes of design,
parts procurement, R&D and production
facilities and operation. Any other
transactions with related manufacturers
must be conducted under normal
commercial arrangements like those
conducted with other parties. Any such
transactions shall be at competitive
pricing rates to the manufacturer.
2. Maintains separate and
independent research and development,
testing, and production facilities.
3. Does not use any vehicle
powertrains or platforms developed or
produced by related manufacturers.
4. Patents are not held jointly with
related manufacturers.
5. Maintains separate business
administration, legal, purchasing, sales,
and marketing departments; maintains
autonomous decision making on
commercial matters.
6. Overlap of Board of Directors is
limited to 25 percent with no sharing of
top operational management, including
president, chief executive officer (CEO),
chief financial officer (CFO), and chief
operating officer (COO), and provided
that no individual overlapping director
or combination of overlapping directors
exercises exclusive management control
over either or both companies.
7. Parts or components supply
agreements between related companies
must be established through open
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market process and to the extent that
manufacturer sells parts/components to
non-related auto manufacturers, it does
so through the open market at
competitive pricing.
In addition to the criteria listed above,
EPA also requests comments on the
following programmatic elements and
framework. EPA requests comments on
requiring the manufacturer applying for
operational independence to provide an
attest engagement from an independent
auditor verifying the accuracy of the
information provided in the
application.235 EPA foresees possible
difficulty verifying the information in
the application, especially if the
company is located overseas. The
principal purpose of the attest
engagement would be to provide an
independent review and verification of
the information provided. EPA also
would require that the application be
signed by the company president or
CEO. After EPA approval, the
manufacturer would be required to
report within 60 days any material
changes to the information provided in
the application. A manufacturer would
lose eligibility automatically after the
material change occurs. However, EPA
would confirm that the manufacturer no
longer meets one or more of the criteria
and thus is no longer considered
operationally independent, and would
notify the manufacturer. EPA would
provide two model years lead time for
the manufacturer to transition to the
primary program. For example, if the
manufacturer lost eligibility sometime
in calendar year 2018 (based on when
the material change occurs), the
manufacturer would need to meet
primary program standards in MY 2021.
In addition, EPA requests comments
on whether or not a manufacturer losing
eligibility should be able to re-establish
itself as operationally independent in a
future year and over what period of time
they would need to meet the criteria to
again be eligible. EPA requests
comments on, for example, whether or
not a manufacturer meeting the criteria
for three to five consecutive years
should be allowed to again be
considered operationally independent.
6. Nitrous Oxide, Methane, and CO2equivalent Approaches
a. Standards and Flexibility
For light-duty vehicles, as part of the
MY 2012–2016 rulemaking, EPA
finalized standards for nitrous oxide
(N2O) of 0.010 g/mile and methane
(CH4) of 0.030 g/mile for MY 2012 and
235 EPA has required attest engagements as part of
its Reformulated Fuels program. See 40 CFR
§ 80.1164 and § 80.1464.
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later vehicles. 75 FR at 25421–24. The
light-duty vehicle standards for N2O and
CH4 were established to cap emissions,
where current levels are generally
significantly below the cap. The cap
would prevent future emissions
increases, and were generally not
expected to result in the application of
new technologies or significant costs for
the manufacturers for current vehicle
designs. EPA also finalized an
alternative CO2 equivalent standard
option, which manufacturers may
choose to use in lieu of complying with
the N2O and CH4 cap standards. The
CO2-equivalent standard option allows
manufacturers to fold all 2-cycle
weighted N2O and CH4 emissions, on a
CO2-equivalent basis, along with CO2
into their CO2 emissions fleet average
compliance level.236 The applicable CO2
fleet average standard is not adjusted to
account for the addition of N2O and
CH4. For flexible fueled vehicles, the
N2O and CH4 standards must be met on
both fuels (e.g., both gasoline and E–85).
After the light-duty standards were
finalized, manufacturers raised concerns
that for a few of the vehicle models in
their existing fleet they were having
difficulty meeting the N2O and/or CH4
standards, in the near-term. In such
cases, manufacturers would still have
the option of complying using the CO2
equivalent alternative. On a CO2
equivalent basis, folding in all N2O and
CH4 emissions could add up to 3–4
g/mile to a manufacturer’s overall fleetaverage CO2 emissions level because the
alternative standard must be used for
the entire fleet, not just for the problem
vehicles. The 3–4 g/mile assumes all
emissions are actually at the level of the
cap. See 75 FR at 74211. This could be
especially challenging in the early years
of the program for manufacturers with
little compliance margin because there
is very limited lead time to develop
strategies to address these additional
emissions. Some manufacturers believe
that the current CO2-equivalent fleetwide option ‘‘penalizes’’ them by
requiring them to fold in both CH4 and
N2O emissions for their entire fleet,
even if they have difficulty meeting the
cap on only one vehicle model.
236 The global warming potentials (GWP) used in
this rule are consistent with the 100-year time frame
values in the 2007 Intergovernmental Panel on
Climate Change (IPCC) Fourth Assessment Report
(AR4). At this time, the 100-year GWP values from
the 1996 IPCC Second Assessment Report (SAR) are
used in the official U.S. greenhouse gas inventory
submission to the United Nations Framework
Convention on Climate Change (per the reporting
requirements under that international convention,
which were last updated in 2006) . N2O has a 100year GWP of 298 and CH4 has a 100-year GWP of
25 according to the 2007 IPCC AR4.
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In response to these concerns, as part
of the heavy-duty GHG rulemaking, EPA
requested comment on and finalized
provisions allowing manufacturers to
use CO2 credits, on a CO2-equivalent
basis, to meet the light-duty N2O and
CH4 standards.237 Manufacturers have
the option of using CO2 credits to meet
N2O and CH4 standards on a test group
basis as needed for MYs 2012–2016. In
their public comments to the proposal
in the heavy-duty package,
manufacturers urged EPA to extend this
flexibility indefinitely, as they believed
this option was more advantageous than
the CO2-equivalent fleet wide option
(discussed previously) already provided
in the light-duty program, because it
allowed manufacturers to address N2O
and CH4 separately and on a test group
basis, rather than across their whole
fleet. Further, manufacturers believed
that since this option is allowed under
the heavy-duty standards, allowing it
indefinitely in the light-duty program
would make the light- and heavy-duty
programs more consistent. In the Final
Rule for Heavy-Duty Vehicles, EPA
noted that it would consider this issue
further in the context of new standards
for MYs 2017–2025 in the planned
future light-duty vehicle rulemaking. 76
FR at 57194.
EPA has further considered this issue
and is proposing to allow the additional
option of using CO2 credits to meet the
light-duty vehicle N2O and CH4
standards to extend for all model years
beyond MY 2016. EPA understands
manufacturer concerns that if they use
the CO2-equivalent option for meeting
the GHG standards, they would be
penalized by having to incorporate all
N2O and CH4 emissions across their
entire fleet into their CO2-equivalent
fleet emissions level determination. EPA
continues to believe that allowing CO2
credits to meet CH4 and N2O standards
on a CO2-equivalent basis is a
reasonable approach to provide
additional flexibility without
diminishing overall GHG emissions
reductions.
EPA is also requesting comments on
establishing an adjustment to the CO2equivalent standard for manufacturers
selecting the CO2-equivalent option
established in the MY 2012–2016
rulemaking. Manufacturers would
continue to be required to fold in all of
their CH4 and N2O emissions, along
with CO2, into their CO2-equivalent
levels. They would then apply the
agency-established adjustment factor to
the CO2-equivalent standard. For
example, if the adjustment for CH4 and
N2O combined was 1 to 2 g/mile CO2237 See
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74993
equivalent (taking into account the GWP
of N2O and CH4), manufacturers would
determine their CO2 fleet emissions
standard and add the 1 to 2 g/mile
adjustment factor to it to determine their
CO2-equivalent standard. The
adjustment factor would slightly
increase the amount of allowed fleet
average CO2-equivalent emissions for
the manufacturer’s fleet. The purpose of
this adjustment would be so
manufacturers do not have to offset the
typical N2O and CH4 vehicle emissions,
while holding manufacturers
responsible for higher than average N2O
and CH4 emissions levels.
At this time, EPA is not proposing an
adjustment value due to a current lack
of N2O test data on which to base the
adjustment for N2O. As discussed
below, EPA and manufacturers are
currently evaluating N2O measurement
equipment and insufficient data is
available at this time on which to base
an appropriate adjustment. For CH4,
manufacturers currently provide data
during certification, and based on
current vehicle data a fleet-wide
adjustment for CH4 in the range of 0.14
g/mile appears to be appropriate.238
EPA requests comments on this concept
and requests city and highway cycle
N2O data on current Tier 2 vehicles
which could help serve as the basis for
the adjustment.
EPA continues to believe that it
would not be appropriate to base the
adjustment on the cap standards
because such an approach could have
the effect of undermining the stringency
of the CO2 standards, as many vehicles
would likely have CH4 and N2O levels
much lower than the cap standards.
EPA believes that if an appropriate
adjustment could be developed and
applied, it would help alleviate
manufacturers’ concerns discussed
above and make the CO2-equivalent
approach a more viable option.
b. N2O Measurement
For the N2O standard, EPA finalized
provisions in the MY 2012–2016 rule
allowing manufacturers to support an
application for a certificate by supplying
a compliance statement based on good
engineering judgment, in lieu of N2O
test data, through MY 2014. EPA
required N2O testing starting with MY
2015. See 75 FR at 25423. This
flexibility provided manufacturers with
lead time needed to make necessary
238 Average city/highway cycle CH emissions
4
based on MY2010–2012 gasoline vehicles
certification data is about 0.0056 g/mile; multiplied
by the methane GWP of 25, this level would result
in a 0.14 g/mile adjustment. See memo to the
docket, ‘‘Analysis of Methane (CH4) Certification
Data for Model Year 2010–2012 Vehicles.’’
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facilities changes and install N2O
measurement equipment.
Since the final rule, manufacturers
have raised concerns that the lead-time
provided to begin N2O measurement is
not sufficient, as their research and
evaluation of N2O measurement
instrumentation has involved a greater
level of effort than previously expected.
There are several analyzers available
today for the measurement of N2O. Over
the last year since the MY 2012–2016
standards were finalized, EPA has
continued to evaluate instruments for
N2O measurement and now believes
instruments not evaluated during the
2012–2016 rulemaking have the
potential to provide more precise
emissions measurement and believe it
would be prudent to provide
manufacturers with additional time to
evaluate, procure, and install equipment
in their test cells.239 Therefore, EPA
believes that the manufacturer’s
concerns about the need for additional
lead-time have merit, and is proposing
to extend the ability for manufacturers
to use compliance statements based on
good engineering judgment in lieu of
test data through MY 2016. Beginning in
MY 2017, manufacturers would be
required to measure N2O emissions to
verify compliance with the standard.
This approach, if finalized, will provide
the manufacturers with two additional
years of lead-time to evaluate, procure,
and install N2O measurement systems
throughout their certification
laboratories.
7. Small Entity Exemption
In the MY 2012–2016 rule, EPA
exempted entities from the GHG
emissions standard, if the entity met the
Small Business Administration (SBA)
size criteria of a small business as
described in 13 CFR 121.201.240 This
includes both U.S.-based and foreign
small entities in three distinct categories
of businesses for light-duty vehicles:
small manufacturers, independent
commercial importers (ICIs), and
alternative fuel vehicle converters. EPA
is proposing to continue this exemption
for the MY 2017–2025 standards. EPA
will instead consider appropriate GHG
standards for these entities as part of a
future regulatory action.
EPA has identified about 21 entities
that fit the Small Business
Administration (SBA) size criterion of a
small business. EPA estimates there
currently are approximately four small
manufacturers including three electric
239 ‘‘Data from the evaluation of instruments that
measure Nitrous Oxide (N2O),’’ Memorandum from
Chris Laroo to Docket EPA–HQ–OAR–2010–0799,
October 31, 2011.
240 See final regulations at 40 CFR 86.1801–12(j).
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vehicle small manufacturers that have
recently entered the market, eight ICIs,
and nine alternative fuel vehicle
converters in the light-duty vehicle
market. EPA estimates that these small
entities comprise less than 0.1 percent
of the total light-duty vehicle sales in
the U.S., and therefore the exemption
will have a negligible impact on the
GHG emissions reductions from the
standards. Further detail regarding
EPA’s assessment of small businesses is
provided in Regulatory Flexibility Act
Section III.J.3.
At least one small business
manufacturer, Fisker Automotive, in
discussions with EPA, has suggested
that small businesses should have the
option of voluntarily opting-in to the
GHG standards. This manufacturer sells
electric vehicles, and sees a potential
market for selling credits to other
manufacturers. EPA believes that there
could be several benefits to this
approach, as it would allow small
businesses an opportunity to generate
revenue to offset their technology
investments and encourage
commercialization of the innovative
technology, and it would benefit any
manufacturer seeking those credits to
meet their compliance obligations. EPA
is proposing to allow small businesses
to waive their small entity exemption
and opt-in to the GHG standards. Upon
opting in, the manufacturer would be
subject to all of the requirements that
would otherwise be applicable. This
would allow small entity manufacturers
to earn CO2 credits under the program,
which may be an especially attractive
option for the new electric vehicle
manufacturers entering the market. EPA
proposes to make the opt-in available
starting in MY 2014, as the MY 2012,
and potentially the MY 2013,
certification process will have already
occurred by the time this rulemaking is
finalized. EPA is not proposing to
retroactively certify vehicles that have
already been produced. However, EPA
proposes that manufacturers certifying
to the GHG standards for MY 2014
would be eligible to generate credits for
vehicles sold in MY 2012 and MY 2013
based on the number of vehicles sold
and the manufacturer’s footprint-based
standard under the primary program
that would have otherwise applied to
the manufacturer if it were a large
manufacturer. This approach would be
similar to that used by EPA for early
credits generated in MYs 2009–2011,
where manufacturers did not certify
vehicles to CO2 standards in those years
but were able to generate credits. See 75
FR at 25441. EPA believes it is
appropriate to provide these credits to
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small entities, as the credits would be
available to large manufacturers
producing similar vehicles, and the
credits further encourage manufacturers
of advanced technology vehicles such as
EVs. In addition to benefiting these
small businesses, this option also has
the potential to expand the pool of
credits available to be purchased by
other manufacturers. EPA proposes that
manufacturers waiving their small
entity exemption would be required to
meet all aspects of the GHG standards
and program requirements across their
entire product line. EPA requests
comments on the small business
provisions described above.
8. Additional Leadtime Issues
The 2012–2016 GHG vehicle
standards include Temporary Leadtime
Allowance Alternative Standards
(TLAAS) which provide alternative
standards to certain intermediate sized
manufacturers (those with U.S. sales
between 5,000 and 400,000 during
model year 2009) to accommodate two
situations: manufacturers which
traditionally paid fines instead of
complying with CAFE standards, and
limited line manufacturers facing
special compliance challenges due to
less flexibility afforded by averaging,
banking and trading. See 75 FR at
25414–416. EPA is not proposing to
continue this program for MYs 2017–
2025. First, the allowance was premised
on the need to provide adequate lead
time, given the (at the time the rule was
finalized) rapidly approaching MY 2012
deadline, and given that manufacturers
were transitioning from a CAFE regime
that allows fine-paying, to a Clean Air
Act regime that does not. That concern
is no longer applicable, given that there
is ample lead time before the MY 2017
standards. More important, the
Temporary Lead Time Allowance was
just that—temporary—and EPA
provided it to allow manufacturers to
transition to full compliance in later
model years. See 75 FR at 25416. EPA
is thus not proposing to continue this
provision.
In the context of the increasing
stringency of standards in the latter
phase of the program (e.g., MY 2022–
2025), one manufacturer suggested that
EPA should consider providing limited
line, intermediate volume
manufacturers additional time to phase
into the standards. The concern raised
is that such limited line manufacturers
face unique challenges securing
competitive supplier contracts for new
technologies, and have fewer vehicle
lines to allocate the necessary upfront
investment and risk inherent with new
technology introduction. This
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manufacturer believes that as the
standards become increasingly stringent
in future years requiring the investment
in new or advanced technologies,
intermediate volume limited line
manufacturers may have to pay a
premium to gain access to these
technologies which would put them at
a competitive disadvantage. EPA seeks
comment on this issue, and whether
there is a need to provide some type of
additional leadtime for intermediate
volume limited line manufacturers to
meet the latter year standards.
In the context of the increasing
stringency of standards starting in MY
2017, as discussed, EPA is not
proposing a continuation of the TLAAS.
TLAAS was available to firms with a
wide range of U.S. sales volumes
(between 5,000 and 400,000 in MY
2009). One company with U.S. sales on
the order of 25,000 vehicles per year has
indicated that it believes that the CO2
standards in today’s proposal for MY
2017–2025 would present significant
technical challenges for their company,
due to the relatively small volume of
products it sells in the U.S., limited
ability to average across their limited
line fleet, and the performance-oriented
nature of its vehicles. This firm
indicated that absent access several
years in advance to CO2 credits that it
could purchase from other firms, this
firm would need to significantly change
the types of products they currently
market in the U.S. beginning in model
year 2017, even if it adds substantial
CO2 reducing technology to its vehicles.
EPA requests comment on the potential
need to include additional flexibilities
for companies with U.S. vehicle sales on
the order of 25,000 units per year, and
what types of additional flexibilities
would be appropriate. Potential
flexibilities could include an extension
of the TLAAS program for lower volume
companies, or a one-to-three year delay
in the applicable model year standard
(e.g., the proposed MY 2017 standards
could be delayed to begin in MY 2018,
MY 2019, or MY 2020). Commenters
suggesting that additional flexibilities
may be needed are encouraged to
provide EPA with data supporting their
suggested flexibilities.
9. Police and Emergency Vehicle
Exemption From CO2 Standards
Under EPCA, manufacturers are
allowed to exclude police and other
emergency vehicles from their CAFE
fleet and all manufacturers that produce
emergency vehicles have historically
done so. EPA received comments in the
MY 2012–2016 rulemaking that these
vehicles should be exempt from the
GHG emissions standards and EPA
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committed to further consider the issue
in a future rulemaking.241 After further
consideration of this issue, EPA
proposes to exempt police and other
emergency vehicles from the CO2
standards starting in MY 2012.242 EPA
believes it is appropriate to provide an
exemption for these vehicles because of
the unique features of vehicles designed
specifically for law enforcement and
emergency response purposes, which
have the effect of raising their GHG
emissions, as well as for purposes of
harmonization with the CAFE program.
EPA proposes to exempt vehicles that
are excluded under EPCA and NHTSA
regulations which define emergency
vehicle as ‘‘a motor vehicle
manufactured primarily for use as an
ambulance or combination ambulancehearse or for use by the United States
Government or a State or local
government for law enforcement, or for
other emergency uses as prescribed by
regulation by the Secretary of
Transportation.’’ 243
The unique features of these vehicles
result in significant added weight
including: heavy-duty suspensions,
stabilizer bars, heavy-duty/dual
batteries, heavy-duty engine cooling
systems, heavier glass, bullet-proof side
panels, and high strength sub-frame.
Police pursuit vehicles are often
equipped with specialty steel rims and
increased rolling resistance tires
designed for high speeds, and unique
engine and transmission calibrations to
allow high-power, high-speed chases.
Police and emergency vehicles also have
features that tend to reduce
aerodynamics, such as emergency lights,
increased ground clearance, and heavyduty front suspensions.
EPA is concerned that manufacturers
may not be able to sufficiently reduce
the emissions from these vehicles, and
would be faced with a difficult choice
of compromising necessary vehicle
features or dropping vehicles from their
fleets, as they may not have credits
under the fleet averaging provisions
necessary to cover the excess emissions
from these vehicles as standards become
more stringent. Without the exemption,
there could be situations where a
manufacturer is more challenged in
meeting the GHG standards simply due
to the inclusion of these higher emitting
241 75
FR 25409.
242 Manufacturers
would exclude police and
emergency vehicles from fleet average calculations
(both for determining fleet compliance levels and
fleet standards) starting in MY 2012. Because this
would have the effect of making the fleet standards
easier to meet for manufacturers, EPA does not
believe there would be lead time issues associated
with the exemption, even though it would take
effect well into MY 2012.
243 49 U.S.C. 32902(e).
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74995
emergency vehicles. Technical
feasibility issues go beyond those of
other high-performance vehicles and
there is a clear public need for law
enforcement and emergency vehicles
that meet these performance
characteristics as these vehicles must
continue to be made available in the
market. MY 2012–2016 standards, as
well as MY 2017 and later standards
would be fully harmonized with CAFE
regarding the treatment of these
vehicles. EPA requests comments on its
proposal to exempt emergency vehicles
from the GHG standards.
10. Test Procedures
EPA is considering revising the
procedures for measuring fuel economy
and calculating average fuel economy
for the CAFE program, effective
beginning in MY 2017, to account for
three impacts on fuel economy not
currently included in these
procedures—increases in fuel economy
because of increases in efficiency of the
air conditioner; increases in fuel
economy because of technology
improvements that achieve ‘‘off-cycle’’
benefits; and incentives for use of
certain hybrid technologies in full size
pickup trucks, and for the use of other
technologies that help those vehicles
exceed their targets, in the form of
increased values assigned for fuel
economy. As discussed in section IV of
this proposal, NHTSA would take these
changes into account in determining the
maximum feasible fuel economy
standard, to the extent practicable. In
this section, EPA discusses the legal
framework for considering these
changes, and the mechanisms by which
these changes could be implemented.
EPA invites comment on all aspects of
this concept, and plans to adopt this
approach in the final rule if it
determines the changes are appropriate
after consideration of all comments on
these issues.
These changes would be the same as
program elements that are part of EPA’s
greenhouse gas performance standards,
discussed in section III.B.1 and 2, above.
EPA is considering adopting these
changes for A/C efficiency and off-cycle
technology because they are based on
technology improvements that affect
real world fuel economy, and the
incentives for light-duty trucks will
promote greater use of hybrid
technology to improve fuel economy in
these vehicles. In addition, adoption of
these changes would lead to greater
coordination between the greenhouse
gas program under the CAA and the fuel
economy program under EPCA. As
discussed below, these three elements
would be implemented in the same
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manner as in the EPA’s greenhouse gas
program—a vehicle manufacturer would
have the option to generate these fuel
economy values for vehicle models that
meet the criteria for these ‘‘credits,’’ and
to use these values in calculating their
fleet average fuel economy.
Compliance by a manufacturer with
applicable average fuel economy standards is
to be determined in accordance with test
procedures established by the EPA
Administrator. Test procedures so
established would be the procedures utilized
by the EPA Administrator for model year
1975, or procedures which yield comparable
results. The words ‘‘or procedures which
yield comparable results’’ are intended to
give EPA wide latitude in modifying the 1975
test procedures to achieve procedures that
are more accurate or easier to administer, so
long as the modified procedure does not have
the effect of substantially changing the
average fuel economy standards. H.R. Rep.
No. 94–340, at 91–92 (1975).245
EPA measures fuel economy for the
CAFE program using two different test
procedures—the Federal Test Procedure
(FTP) and the Highway Fuel Economy
Test (HFET). These procedures
originated in the early 1970’s, and were
intended to generally represent city and
highway driving, respectively. These
two tests are commonly referred to as
the ‘‘2-cycle’’ test procedures for CAFE.
The FTP is also used for measuring
compliance with CAA emissions
standards for vehicle exhaust. EPA has
made various changes to the city and
highway fuel economy tests over the
years. These have ranged from changes
to dynamometers and other mechanical
elements of testing, changes in test fuel
properties, changes in testing
conditions, to changes made in the
1990s when EPA adopted additional test
procedures for exhaust emissions
testing, called the Supplemental Federal
Test Procedures (SFTP).
When EPA has made changes to the
FTP or HFET, we have evaluated
whether it is appropriate to provide for
an adjustment to the measured fuel
economy results, to comply with the
EPCA requirement for passenger cars
that the test procedures produce results
comparable to the 1975 test procedures.
These adjustments are typically referred
to as a CAFE or fuel economy test
procedure adjustment or adjustment
factor. In 1985 EPA evaluated various
test procedure changes made since
1975, and applied fuel economy
adjustment factors to account for several
of the test procedure changes that
reduced the measured fuel economy,
producing a significant CAFE impact for
vehicle manufacturers. 50 FR 27172
(July 1, 1985). EPA defined this
significant CAFE impact as any change
or group of changes that has at least a
one tenth of a mile per gallon impact on
CAFE results. Id. at 27173. EPA also
concluded in this proceeding that no
adjustments would be provided for
changes that removed the
manufacturer’s ability to take advantage
of flexibilities in the test procedure and
derive increases in measured fuel
economy values which were not the
244 For purposes of this discussion, EPA need not
determine whether the changes relating to A/C
efficiency, off-cycle, and light-duty trucks involve
changes to procedures that measure fuel economy
or procedures for calculating a manufacturer’s
average fuel economy. The same provisions apply
irrespective of which procedure is at issue. This
discussion generally refers to procedures for
measuring fuel economy for purposes of
convenience, but the same analysis applies whether
a measurement or calculation procedure is
involved.
245 Unlike the House Bill, the Senate bill did not
restrict EPA’s discretion to adopt or revise test
procedures. Senate Bill 1883, section 503(6).
However, the Senate Report noted that:
The fuel economy improvement goals set in
section 504 are based upon the representative
driving cycles used by the Environmental
Protection Agency to determine automobile fuel
economies for model year 1975. In the event that
these driving cycles are changed in the future, it is
the intent of this legislation that the numerical
miles per gallon values of the fuel economy
standards be revised to reflect a stringency (in terms
of percentage-improvement from the baseline) that
is the same as the bill requires in terms of the
present test procedures. S. Rep. No. 94–179, at 19
(1975).
In Conference, the House version of the bill was
adopted, which contained the restriction on EPA’s
authority.
a. Legal Framework
EPCA provides that:
(c) Testing and calculation procedures. The
Administrator [of EPA] shall measure fuel
economy for each model and calculate
average fuel economy for a manufacturer
under testing and calculation procedures
prescribed by the Administrator. However
* * *, the Administrator shall use the same
procedures for passenger automobiles the
Administrator used for model year 1975
* * *, or procedures that give comparable
results. 49 U.S.C. 32904(c)
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Thus, EPA is charged with developing
and adopting the procedures used to
measure fuel economy for vehicle
models and for calculating average fuel
economy across a manufacturer’s fleet.
While this provision provides broad
discretion to EPA, it contains an
important limitation for the
measurement and calculation
procedures applicable to passenger
automobiles. For passenger automobiles,
EPA has to use the same procedures
used for model year 1975 automobiles,
or procedures that give comparable
results.244 This limitation does not
apply to vehicles that are not passenger
automobiles. The legislative history
explains that:
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result of design improvements or
marketing shifts, and which would not
result in any improvement in real world
fuel economy. EPA likewise concluded
that test procedure changes that
provided manufacturers with an
improved ability to achieve increases in
measured fuel economy based on real
world fuel economy improvements also
would not warrant a CAFE adjustment.
Id. at 27172, 27174, 27183. EPA adopted
retroactive adjustments that had the
effect of increasing measured fuel
economy (to offset test procedure
changes that reduced the measured fuel
economy level) but declined to apply
retroactive adjustments that reduced
fuel economy.
The DC Circuit reviewed two of EPA’s
decisions on CAFE test procedure
adjustments. Center for Auto Safety et
al. v. Thomas, 806 F.2d 1071 (1986).
First, the Court rejected EPA’s decision
to apply only positive retroactive
adjustments, as the appropriateness of
an adjustment did not depend on
whether it increased or decreased
measured fuel economy results. Second,
the Court upheld EPA’s decision to not
apply any adjustment for the change in
the test setting for road load power. The
1975 test procedure provided a default
setting for road load power, as well as
an optional, alternative method that
allowed a manufacturer to develop an
alternative road load power setting. The
road load power setting affected the
amount of work that the engine had to
perform during the test, hence it
affected the amount of fuel consumed
during the test and the measured fuel
economy. EPA changed the test
procedure by replacing the alternative
method in the 1975 procedure with a
new alternative coast down procedure.
Both the original and the replacement
alternative procedures were designed to
allow manufacturers to obtain the
benefit of vehicle changes, such as
changes in aerodynamic design, that
improved real world fuel economy by
reducing the amount of work that the
engine needed to perform to move the
vehicle. The Center for Auto Safety
(CAS) argued that EPA was required to
provide a test procedure adjustment for
the new alternative coast down
procedure as it increased measured fuel
economy compared to the values
measured for the 1975 fleet. In 1975,
almost no manufacturers made use of
the then available alternative method,
while in later years many manufacturers
made use of the option once it was
changed to the coast down procedure.
CAS argued this amounted to a change
in test procedure that did not achieve
comparable results, and therefore
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required a test procedure adjustment.
CAS did not contest that the coast down
method and the prior alternative
method achieved comparable results.
The DC Circuit rejected CAS’
arguments, stating that:
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The critical fact is that a procedure that
credited reductions in a vehicle’s road load
power requirements achieved through
improved aerodynamic design was available
for MY1975 testing, and those manufacturers,
however few in number, that found it
advantageous to do so, employed that
procedure. The manifold intake procedure
subsequently became obsolete for other
reasons, but its basic function, to measure
real improvements in fuel economy through
more aerodynamically efficient designs, lived
on in the form of the coast down technique
for measuring those aerodynamic
improvements. We credit the EPA’s finding
that increases in measured fuel economy
because of the lower road load settings
obtainable under the coast down method,
were increases ‘‘likely to be observed on the
road,’’ and were not ‘‘unrepresentative
artifact[s] of the dynamometer test
procedure.’’ Such real improvements are
exactly what Congress meant to measure
when it afforded the EPA flexibility to
change testing and calculating procedures.
We agree with the EPA that no retroactive
adjustment need be made on account of the
coast down technique. Center for Auto Safety
et al v. EPA, 806 F.2d 1071, 1077 (DC Cir.
1986)
Some years later, in 1996, EPA
adopted a variety of test procedure
changes as part of updating the
emissions test procedures to better
reflect real world operation and
conditions. 61 FR 54852 (October 22,
1996). EPA adopted new test procedures
to supplement the FTP, as well as
modifications to the FTP itself. For
example, EPA adopted a new
supplemental test procedure specifically
to address the impact of air conditioner
use on exhaust emissions. Since this
new test directly addressed the impact
of A/C use on emissions, EPA removed
the specified A/C horsepower
adjustment that had been in the FTP
since 1975. Id. at 54864, 54873. Later
EPA determined that there was no need
for CAFE adjustments for the overall set
of test procedures changes to the FTP,
as the net effect of the changes was no
significant change in CAFE results.
As evidenced by this regulatory
history, EPA’s traditional approach is to
consider the impact of potential test
procedure changes on CAFE results for
passenger automobiles and determine if
a CAFE adjustment factor is warranted
to meet the requirement that the test
procedure produce results comparable
to the 1975 test procedure. This
involves evaluating the magnitude of
the impact on measured fuel economy
results. It also involves evaluating
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whether the change in measured fuel
economy reflects real word fuel
economy impacts from changes in
technology or design, or whether it is an
artifact of the test procedure or test
procedure flexibilities such that the
change in measured fuel economy does
not reflect a real world fuel economy
impact.
In this case, allowing credits for
improvements in air conditioner
efficiency and off-cycle efficiency for
passenger cars would lead to an increase
(i.e., improvement) in the fuel economy
results for the vehicle model. The
impact on fuel economy and CAFE
results clearly could be greater than one
tenth of a mile per gallon (the level that
EPA has previously indicated as having
a substantial impact). The increase in
fuel economy results would reflect real
world improvements in fuel economy
and not changes that are just artifacts of
the test procedure or changes that come
from closing a loophole or removing a
flexibility in the current test procedure.
However, these changes in procedure
would not have the ‘‘critical fact’’ that
the CAS Court relied upon—the
existence of a 1975 test provision that
was designed to account for the same
kind of fuel economy improvements
from changes in A/C or off-cycle
efficiency. Under EPA’s traditional
approach, these changes would appear
to have a significant impact on CAFE
results, would reflect real world changes
in fuel economy, but would not have a
comparable precedent in the 1975 test
procedure addressing the impact of
these technology changes on fuel
economy. EPA’s traditional approach
would be expected to lead to a CAFE
adjustment factor for passenger cars to
account for the impact of these changes.
However, EPA is considering whether
a change in approach is appropriate
based on the existence of similar EPA
provisions for the greenhouse gas
emissions procedures and standards. In
the past, EPA has determined whether
a CAFE adjustment factor for passenger
cars would be appropriate in a context
where manufacturers are subject to a
CAFE standard under EPCA and there is
no parallel greenhouse gas standard
under the CAA. That is not the case
here, as MY2017–2025 passenger cars
will be subject to both CAFE and
greenhouse gas standards. As such, EPA
is considering whether it is appropriate
to consider the impact of a CAFE
procedure change in this broader
context standard.
The term ‘‘comparable results’’ is not
defined in section 32904(c), and the
legislative history indicates that it is
intended to address changes in
procedure that result in a substantial
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change in the average fuel economy
standard. As explained above, EPA has
considered a change of one-tenth of a
mile per gallon as having a substantial
impact, based in part on the one tenth
of a mile per gallon rounding
convention in the statute for CAFE
calculations. 48 FR 56526, 56528 fn.14
(December 21, 1983). A change in the
procedure that changes fuel economy
results to this or a larger degree has the
effect of changing the stringency of the
CAFE standard, either making it more or
less stringent. A change in stringency of
the standard changes the burden on the
manufacturers, as well as the fuel
savings and other benefits to society
expected from the standard. A CAFE
adjustment factor is designed to account
for these impacts.
Here, however, there is a companion
EPA standard for greenhouse gas
emissions. In this case, the changes
would have an impact on the fuel
economy results and therefore the
stringency of the CAFE standard, but
would not appear to have a real world
impact on the burden placed on the
manufacturers, as the provisions would
be the same as provisions in EPA’s
greenhouse gas standards. Similarly it
would not appear to have a real world
impact on the fuel savings and other
benefits of the National Program which
would remain identical. If that is the
case, then it would appear reasonable to
interpret section 32904(c) in these
circumstances as not restricting these
changes in procedure for passenger
automobiles. The fuel economy results
would be considered ‘‘comparable
results’’ to the 1975 procedure as there
would not be a substantial impact on
real world CAFE stringency and
benefits, given the changes in procedure
are the same as provisions in EPA’s
companion greenhouse gas procedures
and standards. EPA invites comment on
this approach to interpreting section
32904(c), as well as the view that this
would not have a substantial impact on
either the burden on manufacturers or
the benefits of the National Program.
EPA is also considering an alternative
interpretation. Under this interpretation,
the reference to the 1975 procedures in
section 32904(c) would be viewed as a
historic reference point, and not a
codification of any specific procedures
or fuel economy improvement
technologies. The change in procedure
would be considered within EPA’s
broad discretion to prescribe reasonable
testing and calculation procedures, as
these changes reflect real world
improvements in design and
accompanying real world improvements
in fuel economy. The changes in
procedure would reflect real world fuel
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economy improvements and increase
harmonization with EPA’s greenhouse
gas program. Since the changes in
procedure have an impact on fuel
economy results and could have an
impact on the stringency of the CAFE
standard, EPA could consider two
different approaches to offsetting the
change in stringency.
In one approach EPA could maintain
the stringency of the 2-cycle (FTP and
HFET) CAFE standard by adopting a
corresponding adjustment factor to the
test results, ensuring that the stringency
of the CAFE standard was not
substantially changed by the change in
procedure. This would be the traditional
approach EPA has followed. Another
approach would be for NHTSA to
maintain the stringency of the 2-cycle
CAFE standard by increasing that
standard’s stringency to offset any
reduction in stringency associated with
changes that increase fuel economy
values. The effect of this adjustment to
the standard would be to maintain at
comparable levels the amount of CAFE
to be achieved using technology whose
effects on fuel economy are accounted
for as measured under the 1975 test
procedures. The effect of the adjustment
to the standard would also typically be
an additional amount of CAFE that
would have to be achieved, for example
by technology whose effects on fuel
economy are not accounted for under
the 1975 test procedures. Under this
interpretation, this would maintain the
level of stringency of the 2-cycle CAFE
standard that would be adopted for
passenger cars absent the changes in
procedure. As with the interpretation
discussed above, this alternative
interpretation would be a major change
from EPA’s past interpretation and
practice. In this joint rulemaking the
alternative interpretation would apply
to changes in procedure that are the
same as the companion EPA greenhouse
gas program. However, that would not
be an important element in this
alternative interpretation, which would
apply irrespective of the similarity with
EPA’s greenhouse gas procedures and
standards. EPA invites comment on this
alternative interpretation.
The discussion above focuses on the
procedures for passenger cars, as section
32904(c) only limits changes to the
CAFE test and calculation procedures
for these automobiles. There is no such
limitation on the procedures for lighttrucks. The credit provisions for
improvements in air conditioner
efficiency and off-cycle performance
would apply to light-trucks as well. In
addition, the limitation in section
32904(c) does not apply to the
provisions for credits for use of hybrids
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in light-trucks, if certain criteria are met,
as these provisions apply to light-trucks
and not passenger automobiles.
b. Implementation of This Approach
As discussed in section IV, NHTSA
would take these changes in procedure
into account in setting the applicable
CAFE standards for passenger cars and
light-trucks, to the extent practicable. As
in EPA’s greenhouse gas program, the
allowance of AC credits for cars and
trucks results in a more stringent CAFE
standard than otherwise would apply
(although in the CAFE program the AC
credits would only be for AC efficiency
improvements, since refrigerant
improvements do not impact fuel
economy). The allowance of off-cycle
credits has been considered in setting
the CAFE standards for passenger car
and light-trucks and credits for hybrid
use in light pick-up trucks has not been
expressly considered in setting the
CAFE standards for light-trucks, because
the agencies did not believe that it was
possible to quantify accurately the
extent to which manufacturers would
rely on those credits, but if more
accurate quantification were possible,
NHTSA would consider incorporating
those incentives into its stringency
determination.
EPA further discusses the criteria and
test procedures for determining AC
credits, off-cycle technology credits, and
hybrid/performance-based credits for
full size pickup trucks in Section III.C
below.
C. Additional Manufacturer Compliance
Flexibilities
1. Air Conditioning Related Credits
A/C is virtually standard equipment
in new cars and trucks today. Over 95%
of the new cars and light trucks in the
United States are equipped with A/C
systems. Given the large number of
vehicles with A/C in use in today’s light
duty vehicle fleet, their impact on the
amount of energy consumed and on the
amount of refrigerant leakage that
occurs due to their use is significant.
EPA proposes that manufacturers be
able to comply with their fleetwide
average CO2 standards described above
by generating and using credits for
improved (A/C) systems. Because such
improved A/C technologies tend to be
relatively inexpensive compared to
other GHG-reducing technologies, EPA
expects that most manufacturers would
choose to generate and use such A/C
compliance credits as a part of their
compliance demonstrations. For this
reason, EPA has incorporated the
projected costs of compliance with A/C
related emission reductions into the
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overall cost analysis for the program. As
discussed in section II.F, and III.B.10,
EPA, in coordination with NHTSA, is
also proposing that manufacturers be
able to include fuel consumption
reductions resulting from the use of A/
C efficiency improvements in their
CAFE compliance calculations.
Manufacturers would generate ‘‘fuel
consumption improvement values’’
essentially equivalent to EPA CO2
credits, for use in the CAFE program.
The proposed changes to the CAFE
program to incorporate A/C efficiency
improvements are discussed below in
section III.C.1.b.
As in the 2012–2016 final rule, EPA
is structuring the A/C provisions as
optional credits for achieving
compliance, not as separate standards.
That is, unlike standards for N2O and
CH4, there are no separate GHG
standards related to AC related
emissions. Instead, EPA provides
manufacturers the option to generate A/
C GHG emission reductions that could
be used as part of their CO2 fleet average
compliance demonstrations. As in the
2012–2016 final rule, EPA also included
projections of A/C credit generation in
determining the appropriate level of the
proposed standards.246
In the time since the analyses
supporting the 2012–2016 FRM were
completed, EPA has re-assessed its
estimates of overall A/C emissions and
the fraction of those emissions that
might be controlled by technologies that
are or will be available to
manufacturers.247 As discussed in more
detail in Chapter 5 of the Joint TSD (see
Section 5.1.3.2), the revised estimates
remain very similar to those of the
earlier rule. This includes the leakage of
refrigerant during the vehicle’s useful
life, as well as the subsequent leakage
associated with maintenance and
servicing, and with disposal at the end
of the vehicle’s life (also called ‘‘direct
emissions’’). The refrigerant universally
used today is HFC–134a with a global
warming potential (GWP) of 1,430.248
Together these leakage emissions are
equivalent to CO2 emissions of 13.8 g/
246 See Section II.F above and Section IV below
for more information on the use of such credits in
the CAFE program.
247 The A/C-related emission inventories
presented in this paragraph are discussed in
Chapter 4 of the Draft RIA.
248 The global warming potentials (GWP) used in
this rule are consistent with the 100-year time frame
values in the 2007 Intergovernmental Panel on
Climate Change (IPCC) Fourth Assessment Report
(AR4). At this time, the 1996 IPCC Second
Assessment Report (SAR) 100-year GWP values are
used in the official U.S. greenhouse gas inventory
submission to the United Nations Framework
Convention on Climate Change (per the reporting
requirements under that international convention,
which were last updated in 2006).
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mi for cars and 17.2 g/mi for trucks.
(Due to the high GWP of HFC–134a, a
small amount of leakage of the
refrigerant has a much greater global
warming impact than a similar amount
of emissions of CO2 or other mobile
source GHGs.) EPA also estimates that
A/C efficiency-related emissions (also
called ‘‘indirect’’ A/C emissions),
account for CO2–equivalent emissions of
11.9 g/mi for cars and 17.1 g/mi for
trucks.249 Chapter 5 of the Joint TSD
(see Section 5.1.3.2) discusses the
derivation of these estimates.
Achieving GHG reductions in the
most cost-effective ways is a primary
goal of the program, and EPA believes
that allowing manufacturers to comply
with the proposed standards by using
credits generated from incorporating A/
C GHG-reducing technologies is a key
factor in meeting that goal.250 EPA
accounts for projected reductions from
A/C related credits in developing the
standards (curve targets), and includes
these emission reductions in estimating
the achieved benefits of the program.
See Section II.D above.
Manufacturers can make very feasible
improvements to their A/C systems to
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247 The A/C-related emission inventories
presented in this paragraph are discussed in
Chapter 4 of the Draft RIA.
248 The global warming potentials (GWP) used in
this rule are consistent with the 100-year time frame
values in the 2007 Intergovernmental Panel on
Climate Change (IPCC) Fourth Assessment Report
(AR4). At this time, the 1996 IPCC Second
Assessment Report (SAR) 100-year GWP values are
used in the official U.S. greenhouse gas inventory
submission to the United Nations Framework
Convention on Climate Change (per the reporting
requirements under that international convention,
which were last updated in 2006).
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reduce leakage and increase efficiency.
Manufacturers can reduce A/C leakage
emissions by using components that
tend to limit or eliminate refrigerant
leakage. Also, manufacturers can
significantly reduce the global warming
impact of leakage emissions by adopting
systems that use an alternative, lowGWP refrigerant, acceptable under
EPA’s SNAP program, as discussed
below, especially if systems are also
designed to minimize leakage.251
Manufacturers can also increase the
overall efficiency of the A/C system and
thus reduce A/C-related CO2 emissions.
This is because the A/C system
contributes to increased CO2 emissions
through the additional work required to
operate the compressor, fans, and
blowers. This additional work typically
is provided through the engine’s
crankshaft, and delivered via belt drive
to the alternator (which provides
electric energy for powering the fans
and blowers) and the A/C compressor
(which pressurizes the refrigerant
during A/C operation). The additional
fuel used to supply the power through
the crankshaft necessary to operate the
A/C system is converted into CO2 by the
engine during combustion. This
incremental CO2 produced from A/C
operation can thus be reduced by
increasing the overall efficiency of the
vehicle’s A/C system, which in turn will
reduce the additional load on the engine
from A/C operation.
As with the earlier GHG rule, EPA is
proposing two separate credit
249 Indirect emissions are additional CO emitted
2
due to the load of the A/C system on the engine.
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approaches to address leakage
reductions and efficiency improvements
independently. A leakage reduction
credit would take into account the
various technologies that could be used
to reduce the GHG impact of refrigerant
leakage, including the use of an
alternative refrigerant with a lower
GWP. An efficiency improvement credit
would account for the various types of
hardware and control of that hardware
available to increase the A/C system
efficiency. To generate credits toward
compliance with the fleet average CO2
standard, manufacturers would be
required to attest to the durability of the
leakage reduction and the efficiency
improvement technologies over the full
useful life of the vehicle.
EPA believes that both reducing A/C
system leakage and increasing A/C
efficiency would be highly cost-effective
and technologically feasible for lightduty vehicles in the 2017–2025
timeframe. EPA proposes to maintain
much of the existing framework for
quantifying, generating, and using A/C
Leakage Credits and Efficiency Credits.
EPA expects that most manufacturers
would choose to use these A/C credit
provisions, although some may choose
not to do so. Consistent with the 2012–
2016 final rule, the proposed standard
reflects this projected widespread
penetration of A/C control technology.
The following table summarizes the
maximum credits the EPA proposes to
make available in the overall A/C
program.
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The next table shows the credits on a
model year basis that EPA projects that
manufacturers will generate on average
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(starting with the ending values from
the 2012–2016 final rule). In the 2012–
2016 rule, the total average car and total
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average truck credits accounted for the
difference between the GHG and CAFE
standards.
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The year-on-year progression of
credits was determined as follows. The
credits are assumed to increase starting
from their MY 2016 value at a rate
approximately commensurate with the
increasing stringency of the 2017–2025
GHG standards, but not exceeding a
20% penetration rate increase in any
given year, until the maximum credits
are achieved by 2021. EPA expects that
manufacturers would be changing over
to alternative refrigerants at the time of
complete vehicle redesign, which
occurs about every 5 years, though in
confidential meetings, some
manufacturers/suppliers have informed
EPA that a modification of the hardware
for some alternative refrigerant systems
may be able to be done between
redesign periods. Given the significant
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number of credits for using low GWP
refrigerants, as well as the variety of
alternative refrigerants that appear to be
available, EPA believes that a total
phase-in of alternative refrigerants is
likely to begin in the near future and be
completed by no later than 2021 (as
shown in Table III–13 above). EPA
requests comment on our assumptions
for the phase-in rate for alternative
refrigerants.
The progression of the average credits
(relative to the maximum) also defines
the relative year-on-year costs as
described in Chapter 3 of the Joint TSD.
The costs are proportioned by the ratio
of the average credit in any given year
to the maximum credit. This is nearly
equivalent to proportioning costs to
technology penetration rates as is done
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for all the other technologies. However
because the maximum efficiency credits
for cars and trucks have changed since
the 2012–2016 rule, proportioning to the
credits provides a more realistic and
smoother year-on-year sequencing of
costs.252
EPA seeks comment on all aspects of
the A/C credit program, including
changes from the current A/C credit
program and the details in the Joint
TSD.
252 In contrast, the technology penetration rates
could have anomalous (and unrealistic)
discontinuities that would be reflected in the cost
progressions. This issue is only specific to A/C
credits and costs and not to any other technology
analysis in this proposal.
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a. Air Conditioning Leakage (‘‘Direct’’)
Emissions and Credits
i. Quantifying A/C Leakage Credits for
Today’s Refrigerant
As previously discussed, EPA
proposes to continue the existing
leakage credit program, with minor
modifications. Although in general EPA
continues to prefer performance-based
standards whenever possible, A/C
leakage is very difficult to accurately
measure in a laboratory test, due to the
typical slowness of such leaks and the
tendency of leakage to develop
unexpectedly as vehicles age. At this
time, no appropriate performance test
for refrigerant leakage is available. Thus,
as in the existing MYs 2012–2016
program, EPA would associate each
available leakage-reduction technology
with associated leakage credit value,
which would be added together to
quantify the overall system credit, up to
the maximum available credit. EPA’s
Leakage Credit method is drawn from
the SAE J2727 method (HFC–134a
Mobile Air Conditioning System
Refrigerant Emission Chart, August 2008
version), which in turn was based on
results from the cooperative ‘‘IMAC’’
study.253 EPA is proposing to
incorporate several minor modifications
that SAE is making to the J2727 method,
but these do not affect the proposed
credit values for the technologies.
Chapter 5 of the joint TSD includes a
full discussion of why EPA is proposing
to continue the design-based ‘‘menu’’
approach to quantifying Leakage
Credits, including definitions of each of
the technologies associated with the
values in the menu.
In addition to the above ‘‘menu’’ for
vehicles using the current high-GWP
refrigerant (HFC–134a), EPA also
proposes to continue to provide the
leakage credit calculation for vehicles
using an alternative, lower-GWP
refrigerant. This provision was also a
part of the MYs 2012–2016 rule. As with
the earlier rule, the agency is including
this provision because shifting to lowerGWP alternative refrigerants would
significantly reduce the climate-change
concern about HFC–134a refrigerant
leakage by reducing the direct climate
impacts. Thus, the credit a manufacturer
could generate is a function of the
degree to which the GWP of an
alternative refrigerant is less than that of
the current refrigerant (HFC–134a).
In recent years, the global industry
has given serious attention primarily to
three of the alternative refrigerants:
253 Society of Automotive Engineers, ‘‘IMAC
Team 1—Refrigerant Leakage Reduction, Final
Report to Sponsors,’’ 2006. This document is
available in Docket EPA–HQ–OAR–2010–0799.
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HFO–1234yf, HFC–152a, and carbon
dioxide (R–744). Work on additional
low GWP alternatives continues.
HFO1234yf, has a GWP of 4, HFC–152a
has a GWP of 124 and CO2 has a GWP
of 1.254 Both HFC–152a and CO2 are
produced commercially in large
amounts and thus, supply of refrigerant
is not a significant factor preventing
adoption.255 HFC–152a has been shown
to be comparable to HFC–134a with
respect to cooling performance and fuel
use in A/C systems.256
In the MYs 2012–2016 GHG rule, a
manufacturer using an alternative
refrigerant would receive no credit for
leakage-reduction technologies. At that
time, EPA believed that from the
perspective of primary climate effect,
leakage of a very low GWP refrigerant is
largely irrelevant. However, there is
now reason to believe that the need for
repeated recharging (top-off) of A/C
systems with another, potentially costly
refrigerant could lead some consumers
and/or repair facilities to recharge a
system designed for use with an
alternative, low GWP refrigerant with
either HFC–134a or another high GWP
refrigerant. Depending on the
refrigerant, it may still be feasible,
although not ideal, for systems designed
for a low GWP refrigerant to operate on
HFC–134a; in particular, the A/C system
operating pressures for HFO–1234yf and
HFC–152a might allow their use. Thus,
the need for repeated recharging in use
could slow the transition away from the
high-GWP refrigerant even though
recharging with a refrigerant different
from that already in the A/C system is
not authorized under current
regulations.257
For alternative refrigerant systems,
EPA is proposing to add to the existing
credit calculation approach for
254 IPCC
4th Assessment Report.
U.S. has one of the largest industrial
quality CO2 production facilities in the world (Gale
Group, 2011). HFC–152a is used widely as an
aerosol propellant in many commercial products
and thus potentially available for refrigerant use in
motor vehicle A/C. Production volume for nonconfidential chemicals reported under the 2006
Inventory Update Rule. Chemical: Ethane, 1,1difluoro-. Aggregated National Production Volume:
50 to <100 million pounds. [US EPA; NonConfidential 2006 Inventory Update Reporting.
National Chemical Information. Ethane, 1,1difluoro- (75–37–6). Available from, as of
September 21, 2009: https://cfpub.epa.gov/
iursearch/index.cfm?s=chem&err=t.
256 United Nations Environment Program,
Technology and Economic Assessment Panel,
‘‘Assessment of HCFCs and Environmentally Sound
Alternatives,’’ TEAP 2010 Progress Report, Volume
1, May 2010. https://www.unep.ch/ozone/
Assessment_Panels/TEAP/Reports/TEAP_Reports/
teap-2010-progress-report-volume1-May2010.pdf.
This document is available in Docket EPA–HQ–
OAR–2010–0799.
257 See appendix D to 40 CFR part 82, subpart G.
255 The
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alternative-refrigerant systems a
provision that would provide a
disincentive for manufacturers if
systems designed to operate with HFO–
1234yf, HFC–152a, R744, or some other
low GWP refrigerant incorporated fewer
leakage-reduction technologies. A
system with higher annual leakage
could then be recharged with HFC–134a
or another refrigerant with a GWP
higher than that with which the vehicle
was originally equipped (e.g., HFO–
1234yf, CO2, or HFC–152a). Some
stakeholders have suggested that EPA
take precautions to address the potential
for HFC–134a to replace HFO–1234yf,
for example, in vehicles designed for
use with the new refrigerant (see
comment and response section of EPA’s
SNAP rule on HFO–1234yf, 76 FR
17509; March 29, 2011).258 In EPA’s
proposed disincentive provision,
manufacturers would avoid some or all
of a deduction in their Leakage Credit of
about 2 g/mi by maintaining the use of
low-leak components after a transition
to an alternative refrigerant.
ii. Issues Raised by a Potential Broad
Transition to Alternative Refrigerants
As described previously, use of
alternative, lower-GWP refrigerants for
mobile use reduces the climate effects of
leakage or release of refrigerant through
the entire life-cycle of the A/C system.
Because the impact of direct emissions
of such refrigerants on climate is
significantly less than that for the
current refrigerant HFC–134a, release of
these refrigerants into the atmosphere
through direct leakage, as well as release
due to maintenance or vehicle
scrappage, is predictably less of a
concern than with the current
refrigerant. As discussed above, there
remains a concern, even with a lowGWP refrigerant, that some repairs may
repeatedly result in the replacement of
the lower-GWP refrigerant from a leaky
A/C system with a readily-available,
inexpensive, high-GWP refrigerant.
For a number of years, the automotive
industry has explored lower-GWP
refrigerants and the systems required for
them to operate effectively and
efficiently, taking into account
refrigerant costs, toxicity, flammability,
environmental impacts, and A/C system
costs, weight, complexity, and
efficiency. European Union regulations
require a transition to alternative
refrigerants with a GWP of 150 or less
for motor vehicle air conditioning. The
European Union’s Directive on mobile
258 Regulations in Appendix D to Subpart G of 40
CFR part 82 prohibit topping off the refrigerant in
a motor vehicle A/C system with a different
refrigerant.
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air-conditioning systems (MAC
Directive 259) aims at reducing emissions
of specific fluorinated greenhouse gases
in the air-conditioning systems fitted to
passenger cars (vehicles under EU
category M1) and light commercial
vehicles (EU category N1, class 1).
The main objectives of the EU MAC
Directive are: to control leakage of
fluorinated greenhouse gases with a
global warming potential (GWP) higher
than 150 used in this sector; and to
prohibit by a specified date the use of
higher GWP refrigerants in MACs. The
MAC Directive is part of the European
Union’s overall objectives to meet
commitments made under the
UNFCCC’s Kyoto Protocol. This
transition starts with new car models in
2011 and continues with a complete
transition to manufacturing all new cars
with low GWP refrigerant by January 1,
2017.
One alternative refrigerant has
generated significant interest in the
automobile manufacturing industry and
it appears likely to be used broadly in
the near future for this application. This
refrigerant, called HFO–1234yf, has a
GWP of 4. The physical and
thermodynamic properties of this
refrigerant are similar enough to HFC–
134a that auto manufacturers would
need to make relatively minor
technological changes to their vehicle
A/C systems in order to manufacture
and market vehicles capable of using
HFO–1234yf. Although HFO–1234yf is
flammable, it requires a high amount of
energy to ignite, and is expected to have
flammability risks that are not
significantly different from those of
HFC–134a or other refrigerants found
acceptable subject to use conditions (76
FR 17494–17496, 17507; March 29,
2011).
There are some drawbacks to the use
of HFO–1234yf. Some technological
changes, such as the addition of an
internal heat exchanger in the A/C
system, may be necessary to use HFO–
1234yf. In addition, the anticipated cost
of HFO–1234yf is several times that of
HFC–134a. At the time that EPA’s
Significant New Alternatives Policy
(SNAP) program issued its
determination allowing the use of HFO–
1234yf in motor vehicle A/C systems,
the agency cited estimated costs of $40
to $60 per pound, and stated that this
range was confirmed by an automobile
manufacturer (76 FR 17491; March 29,
2011) and a component supplier.260 By
comparison, HFC–134a currently costs
about $2 to $4 per pound.261 The higher
259 2006/40/EC.
260 Automotive
News, April 18, 2011.21.
261 Ibid.
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cost of HFO–1234yf is largely because of
limited global production capability at
this time. However, because it is more
complicated to produce the molecule for
HFO–1234yf, it is unlikely that it will
ever be as inexpensive as HFC–134a is
currently. In Chapter 5 of the TSD (see
Section 5.1.4), the EPA has accounted
for this additional cost of both the
refrigerant as well as the hardware
upgrades.
Manufacturers have seriously
considered other alternative refrigerants
in recent years. One of these, HFC–152a,
has a GWP of 124.262 HFC–152a is
produced commercially in large
amounts.263 HFC–152a has been shown
to be comparable to HFC–134a with
respect to cooling performance and fuel
use in A/C systems.264 HFC–152a is
flammable, listed as A2 by ASHRAE.265
Air conditioning systems using this
refrigerant would require engineering
strategies or devices in order to reduce
flammability risks to acceptable levels
(e.g., use of release valves or secondaryloop systems). In addition, CO2 can be
used as a refrigerant. It has a GWP of 1,
and is widely available
commercially.266 Air conditioning
systems using CO2 would require
different designs than other refrigerants,
primarily due to the higher operating
pressures that are required. Reesearch
continues exploring the potential for
these alternative refrigerants for
automotive applications. Finally, EPA is
aware that the chemical and automobile
manufacturing industries continue to
consider additional refrigerants with
GWPs less than 150. For example, SAE
International is currently running a
cooperative research program looking at
two low GWP refrigerant blends, with
the program to complete in 2012.267 The
262 IPCC
4th Assessment Report.
is used widely as an aerosol
propellant in many commercial products and may
potentially be available for refrigerant use in motor
vehicle A/C systems. Aggregated national
production volume is estimated to be between 50
and 100 million pounds. [US EPA; NonConfidential 2006 Inventory Update Reporting.
National Chemical Information.]
264 May 2010 TEAP XXI/9 Task Force Report,
https://www.unep.ch/ozone/Assessment_Panels/
TEAP/Reports/TEAP_Reports/teap-2010-progressreport-volume1–May2010.pdf.
265 A wide range of concentrations has been
reported for HFC–152a flammability where the gas
poses a risk of ignition and fire (3.7%–20% by
volume in air) (Wilson, 2002). EPA finalized a rule
in 2008 listing HFC–152a as acceptable subject to
use conditions in motor vehicle air-conditioning,
one of these restricting refrigerant concentrations in
the passenger compartment resulting from leaks
above the lower flammability limit of 3.7% (see 71
FR 33304; June 12, 2008).
266 The U.S. has one of the largest industrial
quality CO2 production facilities in the world (Gale
Group, 2011).
267 ‘‘Recent Experiences in MAC System
Development: ‘New Alternative Refrigerant
263 HFC–152a
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producers of these blends have not to
date applied for SNAP approval.
However, we expect that there may well
be additional alternative refrigerants
available to vehicle manufacturers in
the next few years.
(1) Related EPA Actions to Date and
Potential Actions Concerning
Alternative Refrigerants
EPA is addressing potential
environmental and human health
concerns of low-GWP alternative
refrigerants through a number of
actions. The SNAP program has issued
final rules regulating the use of HFC–
152a and HFO–1234yf in order to
reduce their potential risks (June 12,
2008, 73 FR 33304; March 29, 2010, 76
FR 17488). The SNAP rule for HFC–
152a allows its use in new motor
vehicle A/C systems where proper
engineering strategies and/or safety
devices are incorporated into the
system. The SNAP rules for both HFC–
152a and HFO–1234yf require meeting
safety requirements of the industry
standard SAE J639. With both
refrigerants, EPA expects that
manufacturers conduct and keep on file
failure mode and effect analysis for the
motor vehicle A/C system, as stated in
SAE J1739. EPA has also proposed a
rule that would allow use of carbon
dioxide as a refrigerant subject to use
conditions for motor vehicle A/C
systems (September 21, 2006; 71 FR
55140). EPA expects to finalize a rule
for use of carbon dioxide in motor
vehicle A/C systems in 2012.
Under Section 612(d) of the Clean Air
Act, any person may petition EPA to
add alternatives to or remove them from
the list of acceptable substitutes for
ozone depleting substances. The
National Resource Defense Council
(NRDC) submitted a petition on behalf
of NRDC, the Institute for Governance &
Sustainable Development (IGSD), and
the Environmental Investigation
Agency-US (EIA–US) to EPA under
Clean Air Act Section 612(d), requesting
that the Agency remove HFC–134a from
the list of acceptable substitutes and add
it to the list of unacceptable (prohibited)
substitutes for motor vehicle A/C,
among other uses.268 EPA has found this
Assessment’ Technical Update. Enrique PeralAntunez, Renault. Presentation at SAE Alternative
Refrigerant and System Efficiency Symposium.
September, 2011. Available online at https://
www.sae.org/events/aars/presentations/2011/
Enrique%20Peral%20Renault%20Recent
%20Experiences%20in%
20MAC%20System%20Dev.pdf .
268 NRDC et al. Re: Petition to Remove HFC–134a
from the List of Acceptable Substitutes under the
Significant New Alternatives Policy Program
(November 16, 2010).
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petition complete specifically for use of
HFC–134a in new motor vehicle A/C
systems for use in passenger cars and
light duty vehicles. EPA intends to
initiate a separate notice and comment
rulemaking in response to this petition
in the future.
EPA expects to address potential
toxicity issues with the use of CO2 as a
refrigerant in automotive A/C systems in
the upcoming final SNAP rule
mentioned above. CO2 has a workplace
exposure limit of 5000 pm on a 8-hour
time-weighted average.269 EPA has also
addressed potential toxicity issues with
HFO–1234yf through a significant new
use rule (SNUR) under the Toxic
Substances Control Act (TSCA) (October
27, 2010; 75 FR 65987). The SNUR for
HFO–1234yf allows its use as an A/C
refrigerant for light-duty vehicles and
light-duty trucks, and found no
significant toxicity issues with that use.
As mentioned in the NPRM for a VOC
exemption for HFO–1234yf, ‘‘The EPA
considered the results of developmental
testing available at the time of the final
SNUR action to be of some concern, but
not a sufficient basis to find HFO–
1234yf unacceptable under the SNUR
determination. As a result, the EPA
requested additional toxicity testing and
issued the SNUR for HFO–1234yf. The
EPA has received and is presently
reviewing the results of the additional
toxicity testing. The EPA continues to
believe that HFO–1234yf, when used in
new automobile air conditioning
systems in accordance with the use
conditions under the SNAP rule, does
not result in significantly greater risks to
human health than the use of other
available substitutes.’’ (76 FR 64063,
October 17, 2011). HFC–152a is
considered relatively low in toxicity and
comparable to HFC–134a, both of which
have a workplace environmental
exposure limit from the American
Industrial Hygiene Association of 1000
ppm on an 8-hour time-weighted
average (73 FR 33304; June 12, 2008).
EPA has issued a proposed rule,
proposing to exempt HFO–1234yf from
the definition of ‘‘volatile organic
compound’’ (VOC) for purposes of
preparing State implementation Plans
(SIPs) to attain the national ambient air
quality standards for ozone under Title
I of the Clean Air Act (October 17, 2011;
76 FR 64059). VOCs are a class of
compounds that can contribute to
ground level ozone, or smog, in the
presence of sunlight. Some organic
compounds do not react enough with
269 The 8-hour time-weighted average worker
exposure limit for CO2 is consistent with OSHA’s
PEL–TWA, and ACGIH’S TLV–TWA of 5,000 ppm
(0.5%).
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sunlight to create significant amounts of
smog. EPA has already determined that
a number of compounds, including the
current automotive refrigerant, HFC–
134a as well as HFC–152a, are low
enough in photochemical reactivity that
they do not need to be regulated under
SIPs. CO2 is not considered a volatile
organic compound (VOC) for purposes
of preparing SIPs.
(2) Vehicle Technology Requirements
for Alternative Refrigerants
As discussed above, significant
hardware changes could be needed to
allow use of HFC–152a or CO2, because
of the flammability of HFC–152a and
because of the high operating pressure
required for CO2. In the case of HFO–
1234yf, manufacturers have said that
A/C systems for use with HFO–1234yf
would need a limited amount of
additional hardware to maintain cooling
efficiency compared to HFC–134a. In
particular, A/C systems may require an
internal heat exchanger to use HFO–
1234yf, because HFO–1234yf would be
less effective in A/C systems not
designed for its use. Because EPA’s
SNAP ruling allows only for its use in
new vehicles, we expect that
manufacturers would introduce cars
using HFO–1234yf only during
complete vehicle redesigns or when
introducing new models.270 EPA
expects that the same would be true for
other alternative refrigerants that are
potential candidates (e.g., HFC–152a
and CO2). This need for complete
vehicle redesign limits the potential
pace of a transition from HFC–134a to
alternative refrigerants. In meetings with
EPA, manufacturers have informed EPA
that, in the case of HFO–1234yf, for
example, they would need to upgrade
their refrigerant storage facilities and
charging stations on their assembly
lines. During the transition period
between the refrigerants, some of these
assembly lines might need to have the
infrastructure for both refrigerants
simultaneously since many lines
produce multiple vehicle models.
Moreover, many of these plants might
not immediately have the facilities or
space for two refrigerant infrastructures,
thus likely further increasing necessary
lead time. EPA took these kinds of
factors into account in estimating the
penetration of alternative refrigerants,
270 Some suppliers and manufacturers have
informed us that some vehicles may be able to
upgrade A/C systems during a refresh of an existing
model (between redesign years). However, this is
highly dependent on the vehicle, space constraints
behind the dashboard, and the manufacturing plant,
so an upgrade may be feasible for only a select few
models.
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and the resulting estimated average
credits over time shown in Table III–13.
Switching to alternative refrigerants
in the U.S. market continues to be an
attractive option for automobile
manufacturers because vehicles with
low GWP refrigerant could qualify for a
significantly larger leakage credit.
Manufacturers have expressed to EPA
that they would plan to place a
significant reliance on, or in some cases
believe that they would need,
alternative refrigerant credits for
compliance with GHG fleet emission
standards starting in MY 2017.
(3) Alternative Refrigerant Supply
EPA is aware that another practical
factor affecting the rate of transition to
alternative refrigerants is their supply.
As mentioned above, both HFC–152a
and CO2 are being produced
commercially in large quantities and
thus, although their supply chain does
not at this time include auto
manufacturers, it may be easier to
increase production to meet additional
demand that would occur if
manufacturers adopt either as a
refrigerant. However, for the newest
refrigerant listed under the SNAP
program, HFO–1234yf, supply is
currently limited. There are currently
two major producers of HFO–1234yf,
DuPont and Honeywell, that are
licensed to produce this chemical for
the U.S. market. Both companies will
likely provide most of their production
for the next few years from a single
overseas facility, as well as some
production from small pilot plants. The
initial emphasis for these companies is
to provide HFO–1234yf to the European
market, where regulatory requirements
for low GWP refrigerants are already in
effect. These same companies have
indicated that they plan to construct a
new facility in the 2014 timeframe and
intend to issue a formal announcement
about that facility close to the end of
this calendar year. This facility should
be designed to provide sufficient
production volume for a worldwide
market in coming years. EPA expects
that the speed of the transition to
alternative refrigerants in the U.S. may
depend on how rapidly chemical
manufacturers are able to provide
supply to automobile manufacturers
sufficient to allow most or all vehicles
sold in the U.S. to be built using the
alternative refrigerant.
One manufacturer (GM) has
announced its intention to begin
introducing vehicle models using HFO–
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1234yf as early as MY 2013.271 EPA is
not aware of other companies that have
made a public commitment to early
adoption of HFO–1234yf or other
alternative refrigerants. As described
above, we expect that in most cases a
change-over to systems designed for
alternative refrigerants would be limited
to vehicle product redesign cycles,
typically about every 5 years. Because of
this, the pace of introduction is likely to
be limited to about 20% of a
manufacturer’s fleet per year. In
addition, the current uncertainty about
the availability of supply of the new
refrigerant in the early years of
introduction into vehicles in the U.S.
vehicles, also discussed above, means
that the change-over may not occur at
every vehicle redesign point. Thus, even
with the announced intention of this
one manufacturer to begin early
introduction of an alternative
refrigerant, EPA’s analysis of the overall
industry trend will assume minimal
penetration of the U.S. vehicle market
before MY 2017.
Table III–13 shows that, starting from
MY 2017, virtually all of the expected
increase in generated credits would be
due to a gradual increase in penetration
of alternative refrigerants. In earlier
model years, EPA attributes the
expected increase in Leakage Credits to
improvements in low-leak technologies.
(4) Projected Potential Scenarios for
Auto Industry Changeover to
Alternative Refrigerants
As discussed above, EPA is planning
on issuing a proposed SNAP rulemaking
in the future requesting comment on
whether to move HFC–134a from the list
of acceptable substitutes to the list of
unacceptable (prohibited) substitutes.
However, the agency has not
determined the specific content of that
proposal, and the results of any final
action are unknowable at this time. EPA
recognizes that a major element of that
proposal will be the evaluation of the
time needed for a transition for
automobile manufacturers away from
HFC–134a. Thus, there could be
multiple scenarios for the timing of a
transition considered in that future
proposed rulemaking. Should EPA
finalize a rule under the SNAP program
that prohibits the use of HFC–134a in
new vehicles, the agency plans to
evaluate the impacts of such a SNAP
rule to determine whether it would be
necessary to consider revisions to the
availability and use of the compliance
credit for MY 2017–2025.
271 General Motors Press Release, July 23, 2010.
‘‘GM First to Market Greenhouse Gas-Friendly Air
Conditioning Refrigerant in U.S’’.
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For purposes of this proposed GHG
rule, EPA is assuming the current status,
where there are no U.S. regulatory
requirements for manufacturers to
eliminate the use of HFC–134a for
newly manufactured vehicles. Thus, the
agency would expect that the market
penetration of alternatives will proceed
based on supply and demand and the
strong incentives in this proposal. Given
the combination of clear interest from
automobile manufacturers in switching
to an alternative refrigerant, the interest
from HFO–1234yf alternative refrigerant
manufacturers to expand their capacity
to produce and market the refrigerant,
and current commercial availability of
HFC–152a and CO2, EPA believes it is
reasonable to project that supply would
be adequate to support the orderly rate
of transition to an alternative refrigerant
described above. As mentioned earlier,
at least one U.S. manufacturer already
has plans to introduce models using the
alternative refrigerant HFO–1234yf
beginning in MY 2013. However, it is
not certain how widespread the
transition to a alternative refrigerants
will be in the U.S., nor how quickly that
transition will occur in the absence of
requirements or strong incentives.
There are other situations that could
lead to an overall fleet changeover from
HFC–134a to alternative refrigerants.
For example, the governments of the
U.S., Canada, and Mexico have
proposed to the Parties to the Montreal
Protocol on Substances that Deplete the
Ozone Layer that production of HFCs be
reduced over time. The North American
Proposal to amend the Montreal
Protocol allows the global community to
make near-term progress on climate
change by addressing this group of
potent greenhouse gases. The proposal
would result in lower emissions in
developed and developing countries
through the phase-down of the
production and consumption of HFCs. If
an amendment were adopted by the
Parties, then switching from HFC–134a
to alternative refrigerants would likely
become an attractive option for
decreasing the overall use and
emissions of high-GWP HFCs, and the
Parties would likely initiate or expand
policies to incentivize suppliers to ramp
up the supply of alternative refrigerants.
Options for reductions would include
transition from HFCs, moving from high
to lower GWP HFCs, and reducing
charge sizes.
EPA requests comment on the
implications for the program of the
refrigerant transition scenario assumed
for the analyses supporting this NPRM;
that is, where there are no U.S.
regulatory requirements for
manufacturers to eliminate the use of
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HFC–134a for newly manufactured
vehicles. EPA requests comment on
factors that may affect the industry
demand for refrigerant and its U.S. and
international supply.
b. Air Conditioning Efficiency
(‘‘Indirect’’) Emissions and Credits
In addition to the A/C leakage credits
discussed above, EPA is proposing
credits for improving the efficiency of—
and thus reducing the CO2 emissions
from—A/C systems. Manufacturers have
available a number of very cost-effective
technology options that can reduce
these A/C-related CO2 emissions, which
EPA estimates are currently on average
11.9 g/mi for cars and 17.1 for trucks
nationally.272 When manufacturers
incorporate these technologies into
vehicles that clearly result in reduced
CO2 emissions, EPA believes that A/C
Efficiency Credits are warranted. Based
on extensive industry testing and EPA
analysis, the agency proposes that
eligible efficiency-improving
technologies be limited to up to a
maximum 42% improvement,273 which
translates into a maximum credit value
of 5.0 g/mi for cars and 7.2 g/mi for
trucks.
As discussed further in Section
III.C.1.b.iii below, under its EPCA
authority, EPA is proposing, in
coordination with NHTSA, to allow
manufacturers to generate fuel
consumption improvement values for
purposes of CAFE compliance based on
the use of A/C efficiency technologies.
EPA is proposing that both the A/C
efficiency credits under EPA’s GHG
program and the A/C efficiency fuel
consumption improvement values
under the CAFE program would be
based on the same methodologies and
test procedures, as further described
below.
i. Quantifying A/C Efficiency Credits
In the 2012–2016 rule, EPA proposed
that A/C Efficiency Credits be calculated
based on the efficiency-improving
272 EPA derived these estimates using a
sophisticated new vehicle simulation tool that EPA
has developed since the completion of the MYs
2012–2016 final rule. Although results are very
similar to those in the earlier rule, EPA believes
they represent more accurate estimates. Chapter 5
of the Joint TSD presents a detailed discussion of
the development of the simulation tool and the
resulting emissions estimates.
273 The cooperative IMAC study mentioned above
concluded that these emissions can be reduced by
as much as 40% through the use of these
technologies. In addition, EPA has concluded that
improvements in the control software for the A/C
system, including more precise control of such
components as the radiator fan and compressor, can
add another 2% to the emission reductions. In total,
EPA believes that a total maximum improvement of
42% is available for A/C systems.
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technologies included in the vehicle.
The design-based approach, associating
each technology with a specific credit
value, was a surrogate for a using a
performance test to determine credit
values. Although EPA generally prefers
measuring actual emissions
performance to a design-based
approach, measuring small differences
in A/C CO2 emissions is very difficult,
and an accurate test procedure capable
of determining such differences was not
available.
In conjunction with the (menu or)
design-based calculation, EPA continues
to believe it is important to verify that
the technologies installed to generate
credits are improving the efficiency of
the A/C system. In the 2012–2016 rule,
EPA required that manufacturers submit
data from an A/C CO2 Idle Test as a
prerequisite to accessing the designbased credit calculation method.
Beginning in MY 2014, manufacturers
wishing to generate the A/C Efficiency
Credits need to meet a CO2 emissions
threshold on the Idle Test.
As manufacturers have begun to
evaluate the Idle Test requirements,
they have made EPA aware of an issue
with the test’s original design. In the
MYs 2012–2016 rule, EPA received
comments that the Idle Test did not
properly capture the efficiency impact
of some of the technologies on the
Efficiency Credit menu list. EPA also
received comments that idle operation
is not typical of real-world driving. EPA
acknowledges that both of these
comments have merit. At the time of the
MY 2012–2016 rule, we expected that
many manufacturers would be able to
demonstrate improved efficiency with
technologies like forced cabin air
recirculation or electronicallycontrolled, and variable-displacement
compressors., But under idle conditions,
testing by manufacturers has shown that
the benefits from these technologies can
be difficult to quantify. Also, recent data
provided by the industry shows that
some vehicles that incorporate higherefficiency A/C technologies are not able
to consistently reach the CO2 threshold
on the current Idle Test. The available
data also indicates that meeting the
threshold tends to be more difficult for
vehicles with smaller-displacement
engines.274 EPA continues to believe
that there are some technologies that do
have their effectiveness demonstrated
during idle and that idle is a significant
fraction of real-world operation.275
274 Chapter 5 of the Joint TDS provides details
about the manufacturers’ testing of these vehicles.
275 More discussion of real world idle operation
can be found below and in chapter 5 of the joint
TSD in the description of stop-start off cycle credits.
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Although EPA believes some
adjustments in the Idle Test are
warranted and is proposing such
adjustments, the agency also believes
that a reasonable degree of verification
is still needed, to demonstrate that that
A/C efficiency-improving technologies
for which manufacturers are basing
credits are indeed implemented
properly and are reducing A/C-related
fuel consumption. EPA continues to
believe that the Idle Test is a reasonable
measure of some A/C-related CO2
emissions as there is significant realworld driving activity at idle, and it
significantly exercises a number of the
A/C technologies from the menu.
Therefore, EPA proposes to maintain the
use of Idle Test as a prerequisite for
generating Efficiency Credits for MYs
2014–2016. However, in order to
provide reasonable verification while
encouraging the development and use of
efficiency-improving technologies, EPA
proposes to revise the CO2 threshold.
Specifically, the agency proposes to
scale the magnitude of the threshold to
the displacement of the vehicle’s
engine, with smaller-displacement
engines having a higher ‘‘grams per
minute’’ threshold than largerdisplacement engines. Thus, for
vehicles with smaller-displacement
engines, the threshold would be less
stringent. The revised threshold would
apply for MYs 2014–2016, and can be
used (optionally) instead of the flat gram
per minute threshold that applies for
MYs 2014, through 2016.276 In addition
to revising the threshold, EPA proposes
to relax the average ambient
temperature and humidity
requirements, due to the difficulty in
controlling the year-round humidity in
test cells designed for FTP testing. EPA
requests comment on the proposed
continued use of the Idle Test as a tool
to validate the function of a vehicle’s A/
C efficiency-improving technologies,
and on the revised CO2 threshold and
ambient requirements.
As stated above, EPA still considers
the Idle Test to be a reasonable measure
of some A/C-related CO2 emissions.
However, there are A/C efficiencyimproving technologies that cannot be
fully evaluated with the Idle Test. In
addition to proposing the revised Idle
Test, EPA proposes that manufacturers
have the option of reporting results from
a new transient A/C test in place of the
Idle Test, for MYs 2014–2016. In the
year since the previous GHG rule was
finalized, EPA, CARB, and a consortium
276 Chapter 5 of the Joint TSD describes the
available data relevant to testing on the Idle Test
and to the design of the displacement-weighted
revised threshold in more detail.
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of auto manufacturers (USCAR) have
developed a new transient test
procedure that can measure the effect of
the operation of the overall A/C system
on CO2 emissions and fuel economy.
The new test, known as ‘‘AC17’’ (for Air
Conditioning, 2017), and described in
detail in Chapter 5 of the Joint TSD, is
essentially a combination of the existing
SC03 and HWFET test procedures,
which, with the proposed
modifications, would exercise the A/C
system (and new technologies) under
conditions representing typical U.S.
driving and climate.
Some aspects of the AC17 test are still
being developed and improved, but the
basic procedure is sufficiently complete
for EPA to propose it as a reporting
option alternative to the Idle Test
threshold in 2014, and a replacement for
the Idle Test in 2017, as a prerequisite
for generating Efficiency Credits. In
model years 2014 to 2016, the AC17 test
would be used to demonstrate that a
vehicle’s A/C system is delivering the
efficiency benefits of the new
technologies, and the menu will still be
utilized. Manufacturers would run the
AC17 test procedure on each vehicle
platform that incorporates the new
technologies, with the A/C system off
and then on, and then report these test
results to the EPA. This reporting option
would replace the need for the Idle Test.
In addition to reporting the test results,
EPA will require that manufactures
provide detailed vehicle and A/C
system information for each vehicle
tested (e.g. vehicle class, model type,
curb weight, engine size, transmission
type, interior volume, climate control
type, refrigerant type, compressor type,
and evaporator/condenser
characteristics).
For model years 2017 and beyond, the
A/C Idle Test menu and threshold
requirement would be eliminated and
be replaced with the AC17 test, as a
prerequisite for access to the credit
menu. For vehicle models which
manufacturers are applying for A/C
efficiency credits, the AC17 test would
be run to validate that the performance
and efficiency of a vehicle’s A/C
technology is commensurate to the level
of credit for which the manufacturer is
applying. To determine whether the
efficiency improvements of these
technologies are being realized on the
vehicle, the results of an AC17 test
performed on a new vehicle model
would be compared to a ‘‘baseline’’
vehicle which does not incorporate the
efficiency-improving technologies. If the
difference between the new vehicle’s
AC17 test result and the baseline
vehicle test result is greater than or
equal to the amount of menu credit for
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which the manufacturer is applying,
then the menu credit amount would be
generated. However, if the difference in
test results did not demonstrate the full
menu-based potential of the technology,
a partial credit could still be generated.
This partial credit would be
proportional to how far the difference in
results was from the expected menubased credit (i.e., the sum of the
individual technology credits). The
baseline vehicle is defined as one with
characteristics which are similar to the
new vehicle, except that it is not
equipped with the efficiency-improving
technologies (or they are de-activated).
EPA is seeking comment on this
approach to qualifying for A/C
efficiency credits.
The AC17 test requires a significant
amount of time for each test (nearly 4
hours) and must be run in expensive
SC03-capable facilities. EPA believes
that the purpose of the test—to validate
that A/C CO2 reductions are indeed
occurring and hence that the
manufacturer is eligible for efficiency
credits—would be met if the
manufacturer performs the new test on
a limited subset of test vehicles. EPA
proposes that manufacturers wishing to
use the AC17 test to validate a vehicle’s
A/C technology be required to test one
vehicle from each platform. For this
purpose, ‘‘platform’’ would be defined
as a group of vehicles with common
body floorplan, chassis, engine, and
transmission.277 EPA requests comment
on the new test and its proposed use.
EPA also requests comment on using the
AC17 test to quantify efficiency credits,
instead of the menu. EPA is also seeking
comment on an option starting in MY
2017, to have the AC17 test be used in
a similar fashion as the Idle Test, such
that if the CO2 measurements are below
a certain threshold value, then credit
would be quantified based on the menu.
EPA also seeks comment on eliminating
the idle test in favor of reporting only
the AC17 test for A/C efficiency credits
starting as early as MY 2014.
ii. Potential Future Use of the New
A/C Test for Credit Quantification
As described above, EPA is proposing
to use the AC17 test as a prerequisite to
generating A/C Efficiency Credits. The
test is well-suited for this purpose since
it can accurately measure the difference
in the increased CO2 emissions that
occur when the A/C system is turned on
277 A single platform may encompass a larger
group of fuel economy label classes or car lines (40
CFR § 600.002–93), such as passenger cars, compact
utility vehicles, and station wagons The specific
vehicle selection requirements for manufacturers
using this testing are laid out in the regulations
associated with this NPRM.
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vs. when it is turned off. This difference
in the ‘‘off-on’’ CO2 emissions, along
with details about the vehicle and its A/
C system design, will help inform EPA
as to how these efficiency-improving
technologies perform on a wide variety
of vehicle types.
However, the test is limited in its
ability to accurately quantify the
amount of credit that would be
warranted by an improved A/C system
on a particular vehicle. This is because
to determine an absolute—rather than a
relative—difference in CO2 effect for an
individual vehicle design would require
knowledge of the A/C system CO2
performance for that exact vehicle, but
without those specific A/C efficiency
improvements installed. This would be
difficult and costly, since two test
vehicles (or a single vehicle with the
components removed and replaced)
would be necessary to quantify this
precisely. Even then, the inherent
variability between such tests on such a
small sample in such an approach might
not be statistically robust enough to
confidently determine a small absolute
CO2 emissions impact between the two
vehicles.
As an alternative to comparing new
vehicle AC17 test with a ‘‘baseline’’
(described above), in Chapter 5 of the
Joint TSD, EPA discusses a potential
method of more accurately quantifying
the credit. This involves comparing the
efficiencies of individual components
outside the vehicles, through ‘‘bench’’
testing of components supplemented by
vehicle simulation modeling to relate
that component’s performance to the
complete vehicle. EPA believes that
such approaches may eventually allow
the AC17 test to be used as part of a
more complicated series of test
procedures and simulations, to
accurately quantify the A/C CO2 effect
of an individual vehicle’s A/C
technology package. However, EPA
believes that this issue is beyond the
scope of this proposed rule since there
are many challenges associated with
measuring small incremental decreases
in fuel consumption and CO2 emissions
compared to the relatively large overall
fuel consumption rate and CO2
emissions. The agency does encourage
comment, including test data, on how
the AC17 test could be enhanced in
order to measure the individual and
collective impact of different A/C
efficiency-improving technologies on
individual vehicle designs and thus to
quantify Efficiency Credits. EPA
especially seeks comment on a more
complex procedure, also discussed in
Chapter 5 of the Joint TSD, that uses a
combination of bench testing of
components, vehicle simulation models,
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and dynamometer testing to quantify
Efficiency Credits. Specifically, the
agencies request comment on how to
define the baseline configuration for
bench testing. The agencies also request
comment on the use of the Lifecycle
Climate Performance Model (LCCP), or
alternatively, the use of an EPA
simulation tool to convert the test bench
results to a change in fuel consumption
and CO2 emissions.
iii. A/C Efficiency Fuel Consumption
Improvement Values in the CAFE
Program
As described in section II.F and
above, EPA is proposing to use the
AC17 test as a prerequisite to generating
A/C Efficiency Credits starting in MY
2017. EPA is proposing, in coordination
with NHTSA, for the first time under its
EPCA authority to allow manufacturers
to use this same test procedure to
generate fuel consumption improvement
values for purposes of CAFE compliance
based on the use of A/C efficiency
technologies. As described above, the
CO2 credits would be determined from
a comparison of the new vehicle
compared to an older ‘‘baseline
vehicle.’’ For CAFE, EPA proposes to
convert the total CO2 credits due to
A/C efficiency improvements from
metric tons of CO2 to a fleetwide CAFE
improvement value. The fuel
consumption improvement values are
presented to give the reader some
context and explain the relationship
between CO2 and fuel consumption
improvements. The fuel consumption
improvement values would be the
amount of fuel consumption reduction
achieved by that vehicle, up to a
maximum of 0.000563 gallons/mi fuel
consumption improvement value for
cars and a 0.000586 gallons/mi fuel
consumption improvement value for
trucks.278 If the difference between the
new vehicle and baseline results does
not demonstrate the full menu-based
potential of the technology, a partial
credit could still be generated. This
partial credit would be proportional to
how far the difference in results was
from the expected menu-based credit
(i.e., the sum of the individual
technology credits). The table below
presents the proposed CAFE fuel
consumption improvement values for
278 Note that EPA’s proposed calculation
methodology in 40 CFR 600.510–12 does not use
vehicle-specific fuel consumption adjustments to
determine the CAFE increase due to the various
incentives allowed under the proposed program.
Instead, EPA would convert the total CO2 credits
due to each incentive program from metric tons of
CO2 to a fleetwide CAFE improvement value. The
fuel consumption values are presented to give the
reader some context and explain the relationship
between CO2 and fuel consumption improvements.
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each of the efficiency-reducing air
conditioning technologies considered in
this proposal. More detail is provided
on the calculation of indirect A/C CAFE
fuel consumption improvement values
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in chapter 5 of the joint TSD. EPA is
proposing definitions of each of the
technologies in the table below which
are discussed in Chapter 5 of the draft
joint TSD to ensure that the air
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conditioner technology used by
manufacturers seeking these values
corresponds with the technology used to
derive the fuel consumption
improvement values.
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2. Incentive for Electric Vehicles, Plugin Hybrid Electric Vehicles, and Fuel
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a. Rationale for Temporary Regulatory
Incentives for Electric Vehicles, Plug-in
Hybrid Electric Vehicles, and Fuel Cell
Vehicles
EPA has identified two vehicle
powertrain-fuel combinations that have
the future potential to transform the
light-duty vehicle sector by achieving
near-zero greenhouse gas (GHG)
emissions and oil consumption in the
longer term, but which face major nearterm market barriers such as vehicle
cost, fuel cost (in the case of fuel cell
vehicles), the development of low-GHG
fuel production and distribution
infrastructure, and/or consumer
acceptance.
• Electric vehicles (EVs) and plug-in
hybrid electric vehicles (PHEVs) which
would operate exclusively or frequently
on grid electricity that could be
produced from very low GHG emission
feedstocks or processes.
• Fuel cell vehicles (FCVs) which
would operate on hydrogen that could
be produced from very low GHG
emissions feedstocks or processes.
As in the 2012–2016 rule, EPA is
proposing temporary regulatory
incentives for the commercialization of
EVs, PHEVs, and FCVs. EPA believes
that these advanced technologies
represent potential game-changers with
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respect to control of transportation GHG
emissions as they can combine an
efficient vehicle propulsion system with
the potential to use motor fuels
produced from low-GHG emissions
feedstocks or from fossil feedstocks with
carbon capture and sequestration. EPA
recognizes that the use of EVs, PHEVs,
and FCVs in the 2017–2025 timeframe,
in conjunction with the incentives, will
decrease the overall GHG emissions
reductions associated with the program
as the upstream emissions associated
with the generation and distribution of
electricity are higher than the upstream
emissions associated with production
and distribution of gasoline. EPA
accounts for this difference in
projections of the overall program’s
impacts and benefits (see Section
III.F).279
The tailpipe GHG emissions from
EVs, PHEVs operated on grid electricity,
and hydrogen-fueled FCVs are zero, and
traditionally the emissions of the
vehicle itself are all that EPA takes into
account for purposes of compliance
with standards set under Clean Air Act
section 202(a). Focusing on vehicle
tailpipe emissions has not raised any
issues for criteria pollutants, as
upstream emissions associated with
production and distribution of the fuel
are addressed by comprehensive
regulatory programs focused on the
279 Also
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upstream sources of those emissions. At
this time, however, there is no such
comprehensive program addressing
upstream emissions of GHGs, and the
upstream GHG emissions associated
with production and distribution of
electricity are higher, on a national
average basis, than the corresponding
upstream GHG emissions of gasoline or
other petroleum based fuels.280 In the
future, if there were a program to
comprehensively control upstream GHG
emissions, then the zero tailpipe levels
from these vehicles have the potential to
contribute to very large GHG reductions,
and to transform the transportation
sector’s contribution to nationwide GHG
emissions (as well as oil consumption).
For a discussion of this issue in the
2012–2016 rule, see 75 FR at 25434–
438.
EVs and FCVs also represent some of
the most significant changes in
automotive technology in the industry’s
history.281 For example, EVs face major
consumer barriers such as significantly
280 There is significant regional variation with
upstream GHG emissions associated with electricity
production and distribution. Based on EPA’s
eGRID2010 database, comprised of 26 regions, the
average powerplant GHG emissions rates per
kilowatt-hour for those regions with the highest
GHG emissions rates are about 3 times higher than
those with the lowest GHG emissions rates. See
https://www.epa.gov/cleanenergy/energy-resources/
egrid/.
281 A PHEV is not such a big change since, if the
owner so chooses, it can operate on gasoline.
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higher vehicle cost and lower range.
However, EVs also have attributes that
could be attractive to some consumers:
Lower and more predictable fuel price,
no need for oil changes or spark plugs,
and reducing one’s personal
contribution to local air pollution,
climate change, and oil dependence.282
Original equipment manufacturers
currently offer two EVs and one PHEV
in the U.S. market.283 Deliveries of the
Nissan Leaf EV, which has a list price
of about $33,000 (before tax credits) and
an EPA label range of 73 miles, began
in December 2010 in selected areas, and
total sales through October 2011 are
about 8000. The luxury Tesla Roadster
EV, with a list price of $109,000, has
been on sale since March 2008 with
cumulative sales of approximately 1500.
The Chevrolet Volt PHEV, with a list
price of about $41,000 and an EPA label
all-electric range of 35 miles, has sold
over 5000 vehicles since it entered the
market in December 2010 in selected
markets. At this time, no original
equipment manufacturer offers FCVs to
the general public except for some
limited demonstration programs.284
Currently, combined EV, PHEV, and
FCV sales represent about 0.1% of
overall light-duty vehicle sales.
Additional models, such as the Ford
Focus EV, the Mitsubishi i EV, and the
Toyota Prius PHEV, are expected to
enter the U.S. market in the next few
months.
The agency remains optimistic about
consumer acceptance of EVs, PHEVs,
and FCVs in the long run, but we
believe that near-term market
acceptance is less certain. One of the
most successful new automotive
powertrain technologies—conventional
hybrid electric vehicles like the Toyota
Prius—illustrates the challenges
involved with consumer acceptance of
new technologies, even those that do
not involve vehicle attribute tradeoffs.
Even though conventional hybrids have
now been on the U.S. market for over a
decade, their market share hovers
around 2 to 3 percent or so 285 even
though they offer higher vehicle range
than their traditional gasoline vehicle
counterparts, involve no significant
consumer tradeoffs (other than cost),
282 PHEVs and FCVs share many of these same
challenges and opportunities.
283 Smart has also leased approximately 100
Smart ED vehicles in the U.S.
284 For example, Honda has leased up to 200
Clarity fuel cell vehicles in southern California (see
Honda.com) and Toyota has announced plans for a
limited fuel cell vehicle introduction in 2015 (see
Toyota.com).
285 Light-Duty Automotive Technology, Carbon
Dioxide Emissions, and Fuel Economy Trends: 1975
Through 2010, EPA–420–R–10–023, November
2010, www.epa.gov/otaq/fetrends.htm.
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and have reduced their incremental cost
to a few thousand dollars. The cost and
consumer tradeoffs associated with EVs,
PHEVs, and FCVs are more significant
than those associated with conventional
hybrids. Given the long leadtimes
associated with major transportation
technology shifts, there is value in
promoting these potential gamechanging technologies today if we want
to retain the possibility of achieving
major environmental and energy
benefits in the future.
In terms of the relative relationship
between tailpipe and upstream fuel
production and distribution GHG
emissions, EVs, PHEVs, and FCVs are
very different than conventional
gasoline vehicles. Combining vehicle
tailpipe and fuel production/
distribution sources, gasoline vehicles
emit about 80 percent of these GHG
emissions at the vehicle tailpipe with
the remaining 20 percent associated
with ‘‘upstream’’ fuel production and
distribution GHG emissions.286 On the
other hand, vehicles using electricity
and hydrogen emit no GHG (or other
emissions) at the vehicle tailpipe, and
therefore all GHG emissions associated
with powering the vehicle are due to
fuel production and distribution.287
Depending on how the electricity and
hydrogen fuels are produced, these fuels
can have very high fuel production/
distribution GHG emissions (for
example, if coal is used with no GHG
emissions control) or very low GHG
emissions (for example, if renewable
processes with minimal fossil energy
inputs are used, or if carbon capture and
sequestration is used). For example, as
shown in the Regulatory Impact
286 Fuel production and distribution GHG
emissions have received much attention because
there is the potential for more widespread
commercialization of transportation fuels that have
very different GHG emissions characteristics in
terms of the relative contribution of GHG emissions
from the vehicle tailpipe and those associated with
fuel production and distribution. Other GHG
emissions source categories include vehicle
production, including the raw materials used to
manufacture vehicle components, and vehicle
disposal. These categories have not been included
in EPA motor vehicle emissions regulations for
several reasons: These categories are less important
from an emissions inventory perspective, they raise
complex accounting questions that go well beyond
vehicle testing and fuel-cycle analysis, and in
general there are fewer differences across
technologies.
287 The Agency notes that many other fuels
currently used in light-duty vehicles, such as diesel
from conventional oil, ethanol from corn, and
compressed natural gas from conventional natural
gas, have tailpipe GHG and fuel production/
distribution GHG emissions characteristics fairly
similar to that of gasoline from conventional oil.
See 75 FR at 25437. The Agency recognizes that
future transportation fuels may be produced from
renewable feedstocks with lower fuel production/
distribution GHG emissions than gasoline from oil.
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Analysis, today’s Nissan Leaf EV would
have an upstream GHG emissions value
of 161 grams per mile based on national
average electricity, and a value of 89
grams per mile based on the average
electricity in California, one of the
initial markets for the Leaf.
Because these upstream GHG
emissions values are generally higher
than the upstream GHG emissions
values associated with gasoline
vehicles, and because there is currently
no national program in place to reduce
GHG emissions from electric
powerplants, EPA believes it is
appropriate to consider the incremental
upstream GHG emissions associated
with electricity production and
distribution. But, we also think it is
appropriate to encourage the initial
commercialization of EV/PHEV/FCVs as
well, in order to retain the potential for
game-changing GHG emissions and oil
savings in the long term.
Accordingly, EPA proposes to provide
temporary regulatory incentives for EVs,
PHEVs (when operated on electricity)
and FCVs that will be discussed in
detail below. EPA recognizes that the
use of EVs, PHEVs, and FCVs in the
2017–2025 timeframe, in conjunction
with the incentives, will decrease the
overall GHG emissions reductions
associated with the program as the
upstream emissions associated with the
generation and distribution of electricity
are higher than the upstream emissions
associated with production and
distribution of gasoline. EPA accounts
for this difference in projections of the
overall program’s impacts and benefits
(see Section III.F). EPA believes that the
relatively minor impact on GHG
emissions reductions in the near term is
justified by promoting technologies that
have significant transportation GHG
emissions and oil consumption gamechanging potential in the longer run,
and that also face major market barriers
in entering a market that has been
dominated by gasoline vehicle
technology and infrastructure for over
100 years.
EPA will review all of the issues
associated with upstream GHG
emissions, including the status of EV/
PHEV/FCV commercialization, the
status of upstream GHG emissions
control programs, and other relevant
factors.
b. MYs 2012–2016 Light-Duty Vehicle
Greenhouse Gas Emissions Standards
The light-duty vehicle greenhouse gas
emissions standards for model years
2012–2016 provide a regulatory
incentive for electric vehicles (EVs), fuel
cell vehicles (FCVs), and for the electric
portion of operation of plug-in hybrid
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electric vehicles (PHEVs). See generally
75 FR at 25434–438. This is designed to
promote advanced technologies that
have the potential to provide ‘‘game
changing’’ GHG emissions reductions in
the future. This incentive is a 0 grams
per mile compliance value (i.e., a
compliance value based on measured
vehicle tailpipe GHG emissions) up to a
cumulative EV/PHEV/FCV production
cap threshold for individual
manufacturers. There is a two-tier
cumulative EV/PHEV/FCV production
cap for MYs 2012–2016: The cap is
300,000 vehicles for those
manufacturers that sell at least 25,000
EVs/PHEVs/FCVs in MY 2012, and the
cap is 200,000 vehicles for all other
manufacturers. For manufacturers that
exceed the cumulative production cap
over MYs 2012–2016, compliance
values for those vehicles in excess of the
cap will be based on a full accounting
of the net fuel production and
distribution GHG emissions associated
with those vehicles relative to the fuel
production and distribution GHG
emissions associated with comparable
gasoline vehicles. For an electric
vehicle, this accounting is based on the
vehicle electricity consumption over the
EPA compliance tests, eGRID2007
national average powerplant GHG
emissions factors, and multiplicative
factors to account for electricity grid
transmission losses and pre-powerplant
feedstock GHG related emissions.288
The accounting for a hydrogen fuel cell
vehicle would be done in a comparable
manner.
Although EPA also proposed a vehicle
incentive multiplier for MYs 2012–
2016, the agency did not finalize a
multiplier. At that time, the Agency
believed that combining the 0 gram per
mile and multiplier incentives would be
excessive.
The 0 grams per mile compliance
value decreases the GHG emissions
reductions associated with the 2012–
2016 standards compared to the same
standards and no 0 grams per mile
compliance value. It is impossible to
know the precise number of vehicles
that will take advantage of this incentive
in MYs 2012–2016. In the preamble to
the final rule, EPA projected the
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40 CFR 600.113–12(m).
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decrease in GHG emissions reductions
that would be associated with a scenario
of 500,000 EVs certified with a
compliance value of 0 grams per mile.
This scenario would result in a
projected decrease of 25 million metric
tons of GHG emissions reductions, or
less than 3 percent of the total projected
GHG benefits of the program of 962
million metric tons. This GHG
emissions impact could be smaller or
larger, of course, based on the actual
number of EVs that would certify at 0
grams per mile.
In the preamble to the final rule, EPA
stated that it would reassess this issue
for rulemakings beginning in MY 2017
based on the status of advanced vehicle
technology commercialization, the
status of upstream GHG control
programs, and other relevant factors.
c. Supplemental Notice of Intent
In our most recent Supplemental
Notice of Intent,289 EPA stated that:
‘‘EPA intends to propose an incentive
multiplier for all electric vehicles (EVs),
plug-in hybrid electric vehicles
(PHEVs), and fuel cell vehicles (FCVs)
sold in MYs 2017 through 2021. This
multiplier approach means that each
EV/PHEV/FCV would count as more
than one vehicle in the manufacturer’s
compliance calculation. EPA intends to
propose that EVs and FCVs start with a
multiplier value of 2.0 in MY 2017,
phasing down to a value of 1.5 in MY
2021. PHEVs would start at a multiplier
value of 1.6 in MY 2017 and phase
down to a value of 1.3 in MY 2021.
These multipliers would be proposed
for incorporation in EPA’s GHG program
* * *. As an additional incentive for
EVs, PHEVs and FCVs, EPA intends to
propose allowing a value of 0 g/mile for
the tailpipe compliance value for EVs,
PHEVs (electricity usage) and FCVs for
MYs 2017–2021, with no limit on the
quantity of vehicles eligible for 0 g/mi
tailpipe emissions accounting. For MYs
2022–2025, 0 g/mi will only be allowed
up to a per-company cumulative sales
cap based on significant penetration of
these advanced vehicles in the
marketplace. EPA intends to propose an
appropriate cap in the NPRM.’’
289 76
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d. Proposal for MYs 2017–2025
EPA is proposing the following
temporary regulatory incentives for EVs,
PHEVs, and FCVs consistent with the
discussion in the August 2011
Supplemental Notice of Intent.
For MYs 2017 through 2021, EPA is
proposing two incentives. The first
proposed incentive is to allow all EVs,
PHEVs (electric operation), and FCVs to
use a GHG emissions compliance value
of 0 grams per mile. There would be no
cap on the number of vehicles eligible
for the 0 grams per mile compliance
value for MYs 2017 through 2021.
The second proposed incentive for
MYs 2017 through 2021 is a multiplier
for all EVs, PHEVs, and FCVs, which
would allow each of these vehicles to
‘‘count’’ as more than one vehicle in the
manufacturer’s compliance
calculation.290 While the Agency
rejected a multiplier incentive in the
MYs 2012–2016 final rule, we are
proposing a multiplier for MYs 2017–
2021 because, while advanced
technologies were not necessary for
compliance in MYs 2012–2016, they are
necessary, for some manufacturers, to
comply with the GHG standards in the
MYs 2022–2025 timeframe. A multiplier
for MYs 2017–2021 can also promote
the initial commercialization of these
advanced technologies. In order for a
PHEV to be eligible for the multiplier
incentive, EPA proposes that PHEVs be
required to be able to complete a full
EPA highway test (10.2 miles), without
using any conventional fuel, or
alternatively, have a minimum
equivalent all-electric range of 10.2
miles as measured on the EPA highway
cycle. EPA seeks comment on whether
this minimum range (all-electric or
equivalent all-electric) should be lower
or higher, or whether the multiplier
should vary based on range or on
another PHEV metric such as battery
capacity or ratio of electric motor power
to engine or total vehicle power. The
specific proposed multipliers are shown
in Table III–15.
290 In the unlikely case where a PHEV with a low
electric range might have an overall GHG emissions
compliance value that is higher than its compliance
target, EPA proposes that the automaker can choose
not to use the multiplier.
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EPA also requests comments on the
merits of providing similar multiplier
incentives to dedicated and/or dual fuel
compressed natural gas vehicles.
For MYs 2022 through 2025, EPA is
proposing one incentive—the 0 grams
per mile GHG emissions compliance
incentive for EVs, PHEVs (electric
operation), and FCVs up to a percompany cumulative production cap
threshold for those model years. EPA is
proposing a two-tier, per-company cap
based on cumulative production in prior
years, consistent with the general
approach that was adopted in the
rulemaking for MYs 2012–2016. For
manufacturers that sell 300,000 or more
EV/PHEV/FCVs combined in MYs
2019–2021, the proposed cumulative
production cap would be 600,000 EV/
PHEV/FCVs for MYs 2022–2025. Other
automakers would have a proposed
cumulative production cap of 200,000
EV/PHEV/FCVs in MYs 2022–2025.
This proposed cap design is
appropriate as a way to encourage
automaker investment in potential GHG
emissions game-changing technologies
that face very significant cost and
consumer barriers. In addition, as with
the rulemaking for MYs 2012–2016,
EPA believes it is important to both
recognize the benefit of early leadership
in commercialization of these
technologies, and encourage additional
manufacturers to invest over time.
Manufacturers are unlikely to do so if
vehicles with these technologies are
treated for compliance purposes to be
no more advantageous than the best
conventional hybrid vehicles. Finally,
we believe that the proposed cap design
provides a reasonable limit to the
overall decrease in program GHG
emissions reductions associated with
the incentives, and EPA is being
transparent about these GHG emissions
impacts (see later in this section and
also Section III.F).
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EPA recognizes that a central tension
in the design of a proposed cap relates
to certainty and uncertainty with
respect to both individual automaker
caps and the overall number of vehicles
that may fall under the cap, which
determines the overall decrease in GHG
emissions reductions. A per-company
cap as described above would provide
clear certainty for individual
manufacturers at the time of the final
rule, but would yield uncertainty about
how many vehicles industry-wide
would take advantage of the 0 grams per
mile incentive and therefore the overall
impact on GHG emissions. An
alternative approach would be an
industry-wide cap where EPA would
establish a finite limit on the total
number of vehicles eligible for the 0
grams per mile incentive, with a method
for allocating this industry-wide cap to
individual automakers. An industrywide cap would provide certainty with
respect to the maximum number of
vehicles and GHG emissions impact and
would reward those automakers who
show early leadership. If EPA were to
make a specific numerical allocation at
the time of the final rule, automakers
would have certainty, but EPA is
concerned that we may not have
sufficient information to make an
equitable allocation for a timeframe that
is over a decade away. If EPA were to
adopt an allocation formula in the final
rule that was dependent on future sales
(as we are proposing above for the percompany cap), automakers would have
much less certainty in compliance
planning as they would not know their
individual caps until some point in the
future.
To further assess the merits of an
industry-wide cap approach, EPA also
seeks comment on the following
alternative for an industry-wide cap.
EPA would place an industry-wide
cumulative production cap of 2 million
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EV/PHEV/FCVs eligible for the 0 grams
per mile incentive in MYs 2022–2025.
EPA has chosen 2 million vehicles
because, as shown below, we project
that this limits the maximum decrease
in GHG emissions reductions to about 5
percent of total program GHG savings.
EPA would allocate this 2 million
vehicle cap to individual automakers in
calendar year 2022 based on cumulative
EV/PHEV/FCV sales in MYs 2019–2021,
i.e., if an automaker sold X percent of
industry-wide EV/PHEV/FCV sales in
MYs 2019–2021, that automaker would
get X percent of the 2 million industrywide cumulative production cap in MYs
2022–2025 (or possibly somewhat less
than X percent, if EPA were to reserve
some small volumes for those
automakers that sold zero EV/PHEV/
FCVs in MYs 2019–2021).
For both the proposed per-company
cap and the alternative industry-wide
cap, EPA proposes that, for production
beyond the cumulative vehicle
production cap for a given manufacturer
in MY 2022 and later, compliance
values would be calculated according to
a methodology that accounts for the full
net increase in upstream GHG emissions
relative to that of a comparable gasoline
vehicle. EPA also asks for comment on
various approaches for phasing in from
a 0 gram per mile value to a full net
increase value, e.g., an interim period
when the compliance value might be
one-half of the net increase.
EPA also seeks comments on whether
any changes should be made for MYs
2012–2016, i.e., whether the compliance
value for production beyond the cap
should be one-half of the net increase in
upstream GHG emissions, or whether
the current cap for MYs 2012–2016
should be removed.
EPA is not proposing any multiplier
incentives for MYs 2022 through 2025.
EPA believes that the 0 gram per mile
compliance value, with cumulative
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vehicle production cap, is a sufficient
incentive for MYs 2022–2025.
One key issue here is the appropriate
electricity upstream GHG emissions
factor or rate to use in future projections
of EV/PHEV emissions based on the net
upstream approach. In the following
example, we use a 2025 nationwide
average electricity upstream GHG
emissions rate (powerplant plus
feedstock extraction, transportation, and
processing) of 0.574 grams GHG/watthour, based on simulations with the
EPA Office of Atmospheric Program’s
Integrated Planning Model (IPM).291 For
the example below, EPA is using a
projected national average value from
the IPM model, but EPA recognizes that
values appropriate for future vehicle use
may be higher or lower than this value.
EPA is considering running the IPM
model with a more robust set of vehicle
and vehicle charging-specific
assumptions to generate a better
electricity upstream GHG emissions
factor for EVs and PHEVs for our final
rulemaking, and, at minimum, intends
to account for the likely regional sales
variation for initial EV/PHEV/FCVs, and
different scenarios for the relative
frequency of daytime and nighttime
charging. EPA seeks comment on
whether there are additional factors that
we should try to include in the IPM
modeling for the final rulemaking.
EPA proposes a 4-step methodology
for calculating the GHG emissions
compliance value for vehicle production
in excess of the cumulative production
cap for an individual automaker. For
example, for an EV in MY 2025, this
methodology would include the
following steps and calculations:
• Measuring the vehicle electricity
consumption in watt-hours/mile over
the EPA city and highway tests (for
example, a midsize EV in 2025 might
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have a 2-cycle test electricity
consumption of 230 watt-hours/mile)
• Adjusting this watt-hours/mile
value upward to account for electricity
losses during electricity transmission
(dividing 230 watt-hours/mile by 0.93 to
account for grid/transmission losses
yields a value of 247 watt-hours/mile)
• Multiplying the adjusted watthours/mile value by a 2025 nationwide
average electricity upstream GHG
emissions rate of 0.574 grams/watt-hour
at the powerplant (247 watt-hours/mile
multiplied by 0.574 grams GHG/watthour yields 142 grams/mile)
• Subtracting the upstream GHG
emissions of a comparable midsize
gasoline vehicle of 39 grams/mile 292 to
reflect a full net increase in upstream
GHG emissions (142 grams/mile for the
EV minus 39 grams/mile for the gasoline
vehicle yields a net increase and EV
compliance value of 103 grams/mile).293
The full accounting methodology for
FCVs and the portion of PHEV operation
on grid electricity would use this same
approach. The proposed regulations
contain EPA’s proposed method to
determine the compliance value for
PHEVs, and EPA proposes to develop a
similar methodology for FCVs if and
when the need arises.294 Given the
uncertainty about how hydrogen would
292 A midsize gasoline vehicle with a footprint of
46 square feet would have a MY 2025 GHG target
of about 140 grams/mile; dividing 8887 grams CO2/
gallon of gasoline by 140 grams/mile yields an
equivalent fuel economy level of 63.5 mpg; and
dividing 2478 grams upstream GHG/gallon of
gasoline by 63.5 mpg yields a midsize gasoline
vehicle upstream GHG value of 39 grams/mile. The
2478 grams upstream GHG/gallon of gasoline is
calculated from 21,546 grams upstream GHG/
million Btu (EPA value for future gasoline based on
DOE’s GREET model modified by EPA standards
and data; see docket memo to MY 2012–2016
rulemaking titled ‘‘Calculation of Upstream
Emissions for the GHG Vehicle Rule’’) and
multiplying by 0.115 million Btu/gallon of gasoline.
293 Manufacturers can utilize alternate calculation
methodologies if shown to yield equivalent or
superior results and if approved in advance by the
Administrator.
294 40 CFR 600.113–12(m).
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be produced, if and when it were used
as a transportation fuel, EPA seeks
comment on projections for the fuel
production and distribution GHG
emissions associated with hydrogen
production for various feedstocks and
processes.
EPA is fully accounting for the
upstream GHG emissions associated
with all electricity used by EVs and
PHEVs (and any hydrogen used by
FCVs), both in our regulatory
projections of the impacts and benefits
of the program, and in all GHG
emissions inventory accounting.
EPA seeks public comment on the
proposed incentives for EVs, PHEVs,
and FCVs described above.
e. Projection of Impact on GHG
Emissions Reductions Due to Incentives
EPA believes it is important to project
the impact on GHG emissions that will
be associated with the proposed
incentives (both 0 grams per mile and
the multiplier) for EV/PHEV/FCVs over
the MYs 2017–2025 timeframe. Since it
is impossible to know precisely how
many EV/PHEV/FCVs will be sold in
the MYs 2017–2025 timeframe that will
utilize the proposed incentives, EPA
presents projections for two scenarios:
(1) The number of EV/PHEV/FCVs that
EPA’s OMEGA technology and cost
model predicts based exclusively on its
projections for the most cost-effective
way for the industry to meet the
proposed standards, and (2) a scenario
with a greater number of EV/PHEV/
FCVs, based not only on compliance
with the proposed GHG and CAFE
standards, but other factors such as the
proposed cumulative production caps
and manufacturer investments. For this
analysis, EPA assumes that EVs and
PHEVs each account for 50 percent of
all EV/PHEV/FCVs. EPA seeks comment
on whether there are other scenarios
which should be evaluated for this
purpose in the final rule.
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295 The number of metric tons represents the
number of additional tons that would be reduced
if the standards stayed the same and there was no
0 gram per mile compliance value.
296 The percentage change represents the ratio of
the cumulative decrease in GHG emissions
reductions from the prior column to the total
cumulative GHG emissions reductions associated
with the proposed standards and the proposed 0
gram per mile compliance value.
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not allowing a 0 gram per mile
compliance value would change the
technology mix and cost projected for
the proposed standard.
It is also important to note that the
projected impact on GHG emissions
reductions in the above table are based
on the 2025 nationwide average
electricity upstream GHG emissions rate
(powerplant plus feedstock) of 0.574
grams GHG/watt-hour discussed above
(based on simulations with the EPA’s
Integrated Planning Model (IPM) for
powerplants in 2025, and a 1.06 factor
to account for feedstock-related GHG
emissions).
EPA recognizes two factors which
could significantly reduce the electricity
upstream GHG emissions factor by
calendar year 2025. First, there is a
likelihood that early EV/PHEV/FCV
sales will be much more concentrated in
parts of the country with lower
electricity GHG emissions rates and
much less concentrated in regions with
higher electricity GHG emissions rates.
This has been the case with sales of
hybrid vehicles, and is likely to be more
so with EVs in particular. Second, there
is the possibility of a future
comprehensive program addressing
upstream emissions of GHGs from the
generation of electricity. Other factors
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which could also help in this regard
include technology innovation and
lower prices for some powerplant fuels
such as natural gas.
On the other hand, EPA also
recognizes factors which could increase
the appropriate electricity upstream
GHG emissions factor in the future, such
as a consideration of marginal electricity
demand rather than average demand
and use of high-power charging. The
possibility that EVs won’t displace
gasoline vehicle use on a 1:1 basis (i.e.,
multi-vehicle households may use EVs
for more shorter trips and fewer longer
trips, which could lead to lower overall
travel for typical EVs and higher overall
travel for gasoline vehicles) could also
reduce the overall GHG emissions
benefits of EVs.
EPA seeks comment on information
relevant to these and other factors
which could both decrease or increase
the proper electricity upstream GHG
emissions factor for calendar year 2025
modeling.
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EPA projects that the cumulative GHG
emissions savings of the proposed MYs
2017–2025 standards, on a model year
lifetime basis, is approximately 2 billion
metric tons. Table III–16 projects that
the likely decrease in cumulative GHG
emissions reductions due to the EV/
PHEV/FCV incentives for MYs 2017–
2025 vehicles is in the range of 80 to
110 million metric tons, or about 4 to 5
percent.
It is important to note that the above
projection of the impact of the EV/
PHEV/FCV incentives on the overall
program GHG emissions reductions
assumes that there would be no change
to the standard even if the EV 0 gram
per mile incentive were not in effect,
i.e., that EPA would propose exactly the
same standard if the 0 gram per mile
compliance value were not allowed for
any EV/PHEV/FCVs. While EPA has not
analyzed such a scenario, it is clear that
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3. Incentives for ‘‘Game-Changing’’
Technologies Including Use of
Hybridization and Other Advanced
Technologies for Full-Size Pickup
Trucks
As explained in section II. C above,
the agencies recognize that the
standards under consideration for MY
2017–2025 will be challenging for large
trucks, including full size pickup trucks
that are often used for commercial
purposes and have generally higher
payload and towing capabilities, and
cargo volumes than other light-duty
vehicles. In Section II.C and Chapter 2
of the joint TSD, EPA and NHTSA
describe how the slope of the truck
curve has been adjusted compared to
the 2012–2016 rule to reflect these
disproportionate challenges. In Section
III.B, EPA describes the progression of
the truck standards. In this section, EPA
describes a proposed incentive for full
size pickup trucks, proposed by EPA
under both section 202 (a) of the CAA
and section 32904 (c) of EPCA, to
incentivize advanced technologies on
this class of vehicles. This incentive
would be in the form of credits under
the EPA GHG program, and fuel
consumption improvement values
(equivalent to EPA’s credits) under the
CAFE program.
The agencies’ goal is to incentivize
the penetration into the marketplace of
‘‘game changing’’ technologies for these
pickups, including their hybridization.
For that reason, EPA is proposing
credits for manufacturers that hybridize
a significant quantity of their full size
pickup trucks, or use other technologies
that significantly reduce CO2 emissions
and fuel consumption. This proposed
credit would be available on a pervehicle basis for mild and strong HEVs,
as well as for use of other technologies
that significantly improve the efficiency
of the full sized pickup class. As
described in section II.F. and III.B.10,
EPA, in coordination with NHTSA, is
also proposing that manufacturers be
able to include ‘‘fuel consumption
improvement values’’ equivalent to EPA
CO2 credits in the CAFE program. The
gallon per mile values equivalent to
EPA proposed CO2 credits are also
provided below, in addition to the
proposed CO2 credits.297 These credits
297 Note that EPA’s proposed calculation
methodology in 40 CFR 600.510–12 does not use
vehicle-specific fuel consumption adjustments to
determine the CAFE increase due to the various
incentives allowed under the proposed program.
Instead, EPA would convert the total CO2 credits
due to each incentive program from metric tons of
CO2 to a fleetwide CAFE improvement value. The
fuel consumption values are presented to give the
reader some context and explain the relationship
between CO2 and fuel consumption improvements.
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and fuel consumption improvement
values provide the incentive to begin
transforming this challenged category of
vehicles toward use of the most
advanced technologies.
Access to this credit is conditioned on
a minimum penetration of the
technologies in a manufacturer’s full
size pickup truck fleet. The proposed
penetration rates can be found in Table
5–26 in the TSD. EPA is seeking
comment on these penetration rates and
how they should be applied to a
manufacturer’s truck fleet.
To ensure its use for only full sized
pickup trucks, EPA is proposing a
specific definition for a full sized
pickup truck based on minimum bed
size and minimum towing capability.
The specifics of this proposed definition
can be found in Chapter 5 of the draft
joint TSD (see Section 5.3.1) and in the
draft regulations at 86.1866–12(e). This
proposed definition is meant to ensure
that the larger pickup trucks which
provide significant utility with respect
to payload and towing capacity as well
as open beds with large cargo capacity
are captured by the definition, while
smaller pickup trucks which have more
limited hauling, payload and/or towing
are not covered by the proposed
definition. For this proposal, a full sized
pickup truck would be defined as
meeting requirements 1 and 2, below, as
well as either requirement 3 or 4, below:
1. The vehicle must have an open
cargo box with a minimum width
between the wheelhouses of 48 inches
measured as the minimum lateral
distance between the limiting
interferences (pass-through) of the
wheelhouses. The measurement would
exclude the transitional arc, local
protrusions, and depressions or pockets,
if present.298 An open cargo box means
a vehicle where the cargo bed does not
have a permanent roof or cover.
Vehicles sold with detachable covers are
considered ‘‘open’’ for the purposes of
these criteria.
2. Minimum open cargo box length of
60 inches defined by the lesser of the
pickup bed length at the top of the body
(defined as the longitudinal distance
from the inside front of the pickup bed
to the inside of the closed endgate; this
would be measured at the height of the
top of the open pickup bed along
vehicle centerline and the pickup bed
length at the floor) and the pickup bed
length at the floor (defined as the
longitudinal distance from the inside
front of the pickup bed to the inside of
the closed endgate; this would be
298 This dimension is also known as dimension
W202 as defined in Society of Automotive
Engineers Procedure J1100.
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measured at the cargo floor surface
along vehicle centerline).299
3. Minimum Towing Capability—the
vehicle must have a GCWR (gross
combined weight rating) minus GVWR
(gross vehicle weight rating) value of at
least 5,000 pounds.300
4. Minimum Payload Capability—the
vehicle must have a GVWR (gross
vehicle weight rating) minus curb
weight value of at least 1,700 pounds.
As discussed above, this proposed
definition is intend to cover the larger
pickup trucks sold in the U.S. today
(and for 2017 and later) which have the
unique attributes of an open bed, and
larger towing and/or payload capacity.
This proposed incentive will encourage
the penetration of advanced, low CO2
technologies into this market segment.
The proposed definition would exclude
a number of smaller-size pickup trucks
sold in the U.S. today (examples are the
Dodge Dakota, Nissan Frontier,
Chevrolet Colorado, Toyota Tacoma and
Ford Ranger). These vehicles generally
have smaller boxes (and thus smaller
cargo capacity), and lower payload and
towing ratings. EPA is aware that some
configurations of these smaller pickups
trucks can offer towing capacity similar
to the larger pickups. As discussed in
the draft Joint TSD Section 5.3.1, EPA
is seeking comment on expanding the
scope of this credit to somewhat smaller
pickups (with a minimum distance
between the wheel wells of 42 inches,
but still with a minimum box length of
60 inches), provided they have the
towing capabilities of the larger full-size
trucks (for example a minimum towing
capacity of 6,000 pounds). EPA believes
this could incentivize advanced
technologies (such as HEVs) on pickups
which offer some of the utility of the
larger vehicles, but overall have lower
CO2 emissions due to the much lighter
mass of the vehicle. Providing an
advanced technology incentive credit
for a vehicle which offers consumers
much of the utility of a larger pickup
truck but with overall lower CO2
performance would promote the overall
objective of the proposed standards.
299 The pickup body length at the top of the body
is also known as dimension L506 in Society of
Automotive Engineers Procedure J1100. The pickup
body length at the floor is also known as dimension
L505 in Society of Automotive Engineers Procedure
J1100.
300 Gross combined weight rating means the value
specified by the vehicle manufacturer as the
maximum weight of a loaded vehicle and trailer,
consistent with good engineering judgment. Gross
vehicle weight rating means the value specified by
the vehicle manufacturer as the maximum design
loaded weight of a single vehicle, consistent with
good engineering judgment. Curb weight is defined
in 40 CFR 86.1803, consistent with the provisions
of 40 CFR 1037.140.
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EPA proposes that mild HEV pickup
trucks would be eligible for a per-truck
10 g/mi CO2 credit (equal to 0.0011 gal/
mi for a 25 mpg truck) during MYs
2017–2021 if the mild HEV technology
is used on a minimum percentage of a
company’s full sized pickups. That
minimum percentage would be 30
percent of a company’s full sized pickup
production in MY 2017 with a ramp up
to at least 80 percent of production in
MY 2021.
EPA is also proposing that strong HEV
pickup trucks would be eligible for a
per-truck 20 g/mi CO2 credit (equal to
0.0023 gal/mi for a 25 mpg truck) during
MYs 2017–2025 if the strong HEV
technology is used on a minimum
percentage of a company’s full sized
pickups. That minimum percentage
would be 10 percent of a company’s full
sized pickup production in each year
over the model years 2017–2025.
To ensure that the hybridization
technology used by manufacturers
seeking one of these credits meets the
intent behind the incentives, EPA is
proposing very specific definitions of
what qualifies as a mild and a strong
HEV for these purposes. These
definitions are described in detail in
Chapter 5 of the draft joint TSD (see
section 5.3.3).
Because there are other technologies
besides mild and strong hybrids which
can significantly reduce GHG emissions
and fuel consumption in pickup trucks,
EPA is also proposing performancebased incentive credits, and equivalent
fuel consumption improvement values
for CAFE, for full size pickup trucks that
achieve an emission level significantly
below the applicable CO2 target.301 EPA
proposes that this credit be either 10 g/
mi CO2 (equivalent to 0.0011 gal/mi for
the CAFE program) or 20 g/mi CO2
(equivalent to 0.0023 gal/mi for the
CAFE program) for pickups achieving
15 percent or 20 percent, respectively,
better CO2 than their footprint based
target in a given model year. Because
the footprint target curve has been
adjusted to account for A/C related
credits, the CO2 level to be compared
with the target would also include any
A/C related credits generated by the
vehicles. EPA provides further details
on this performance-based incentive in
Chapter 5 of the draft joint TSD (see
Section 5.3). The 10 g/mi (equivalent to
301 The 15 and 20 percent thresholds would be
based on CO2 performance compared to the
applicable CO2 vehicle footprint target for both CO2
credits and corresponding CAFE fuel consumption
improvement values. As with A/C and off-cycle
credits, EPA would convert the total CO2 credits
due to the pick-up incentive program from metric
tons of CO2 to a fleetwide equivalent CAFE
improvement value.
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0.0011 gal/mi) performance-based credit
would be available for MYs 2017 to
2021 and a vehicle meeting the
requirements would receive the credit
until MY 2021 unless its CO2 level or
fuel consumption increases. The 10 g/
mi credit is not available after 2021
because the post-2021 standards quickly
overtake a 15% overcompliance. Earlier
in the program, an overcompliance lasts
for more years, making the credit/value
appropriate for a longer period. The 20
g/mi CO2 (equivalent to 0.0023 gal/mi)
performance-based credit would be
available for a maximum of 5
consecutive years within the model
years of 2017 to 2025 after it is first
eligible, provided its CO2 level and fuel
consumption does not increase.
Subsequent redesigns can qualify for the
credit again. The credits would begin in
the model year of introduction, and (as
noted) could not extend past MY 2021
for the 10 g/mi credit (equivalent to
0.0011 gal/mi) and MY 2025 for the 20
g/mi credit (equivalent to 0.0023 gal/
mi).
As with the HEV-based credit, the
performance-based credit/value requires
that the technology be used on a
minimum percentage of a
manufacturer’s full-size pickup trucks.
That minimum percentage for the 10 g/
mi GHG credit (equivalent to 0.0011 gal/
mi fuel consumption improvement
value) would be 15 percent of a
company’s full sized pickup production
in MY 2017 with a ramp up to at least
40 percent of production in MY 2021.
The minimum percentage for the 20 g/
mi credit (equivalent to 0.0011 gal/mi
fuel consumption improvement value)
would be 10 percent of a company’s full
sized pickup production in each year
over the model years 2017–2025. These
minimum percentages are set to
encourage significant penetration of
these technologies, leading to long-term
market acceptance.
Importantly, the same vehicle could
not receive credits (or equivalent fuel
consumption improvement values)
under both the HEV and the
performance-based approaches. EPA
requests comment on all aspects of this
proposed pickup truck incentive credit,
including the proposed definitions for
full sized pickup truck and mild and
strong HEV.
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4. Treatment of Plug-in Hybrid Electric
Vehicles, Dual Fuel Compressed Natural
Gas Vehicles, and Ethanol Flexible Fuel
Vehicles for GHG Emissions
Compliance
a. Greenhouse Gas Emissions
i. Introduction
This section addresses proposed
approaches for determining the
compliance values for greenhouse gas
(GHG) emissions for those vehicles that
can use two different fuels, typically
referred to as dual fuel vehicles under
the CAFE program. Three specific
technologies are addressed: Plug-in
hybrid electric vehicles (PHEVs), dual
fuel compressed natural gas (CNG)
vehicles, and ethanol flexible fuel
vehicles (FFVs).302 EPA’s underlying
principle is to base compliance values
on demonstrated vehicle tailpipe CO2
emissions performance. The key issue
with vehicles that can use more than
one fuel is how to weight the operation
(and therefore GHG emissions
performance) on the two different fuels.
EPA proposes to do this on a
technology-by-technology basis, and the
sections below will explain the rationale
for choosing a particular approach for
each vehicle technology.
EPA is proposing no changes to the
tailpipe GHG emissions compliance
approach for dedicated vehicles, i.e.,
those vehicles that can use only one
fuel. As finalized for MY 2016 and later
vehicles in the 2012–2016 rule, tailpipe
CO2 emissions compliance levels are
those values measured over the EPA 2cycle city/highway tests.303 EPA is
proposing provisions for how and when
to also account for the upstream fuel
production and distribution related
GHG emissions associated with electric
vehicles, fuel cell vehicles, and the
electric portion of plug-in hybrid
electric vehicles, and these provisions
are discussed in Section III.C.2 above.
ii. Plug-In Hybrid Electric Vehicles
PHEVs can operate both on an onboard battery that can be charged by
wall electricity from the grid, and on a
conventional liquid fuel such as
gasoline. Depending on how these
vehicles are fueled and operated, PHEVs
302 EPA recognizes that other vehicle technologies
may be introduced in the future that can use two
(or more) fuels. For example, the original FFVs were
designed for up to 85% methanol/15% gasoline,
rather than the 85% ethanol/15% gasoline for
which current FFVs are designed. EPA has
regulations that address methanol vehicles (both
FFVs and dedicated vehicles), and, for GHG
emissions compliance in MYs 2017–2025, EPA is
proposing to treat methanol vehicles in the same
way as ethanol vehicles.
303 For dedicated alternative fuel vehicles. See 75
at FR 25434.
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could operate exclusively on grid
electricity, exclusively on the
conventional fuel, or any combination
of both fuels. EPA can determine the
CO2 emissions performance when
operated on the battery and on the
conventional fuel. But, in order to
generate a single CO2 emissions
compliance value, EPA must adopt an
approach for determining the
appropriate weighting of the CO2
emissions performance on grid
electricity and the CO2 emissions
performance on gasoline.
EPA is proposing no changes to the
Society of Automotive Engineers (SAE)
cycle-specific utility factor approach for
PHEV compliance and label emissions
calculations first adopted by EPA in the
joint EPA/DOT final rulemaking
establishing new fuel economy and
environment label requirements for MY
2013 and later vehicles.304 This utility
factor approach is based on several key
assumptions. One, PHEVs are designed
such that the first mode of operation is
all-electric drive or electric assist. Every
PHEV design with which EPA is
familiar is consistent with this
assumption. Two, PHEVs will be
charged once per day. While this critical
assumption is unlikely to be met by
every PHEV driver every day, EPA
believes that a large majority of PHEV
owners will be highly motivated to recharge as frequently as possible, both
because the owner has paid a
considerably higher initial vehicle cost
to be able to operate on grid electricity,
and because electricity is considerably
cheaper, on a per mile basis, than
gasoline. Three, it is reasonable to
assume that future PHEV drivers will
retain driving profiles similar to those of
past drivers on which the utility factors
were based. More detailed information
on the development of this utility factor
approach can be obtained from the
Society of Automotive Engineers.305
EPA will continue to reevaluate the
appropriateness of these assumptions
over time.
Based on this approach, and PHEVspecific specifications such as allelectric drive or equivalent all-electric
range, the cycle-specific utility factor
methodology yields PHEV-specific
values for projected average percent of
operation on grid electricity and average
percent of operation on gasoline over
both the city and highway test cycles.
For example, the Chevrolet Volt PHEV,
the only original equipment
304 76 FR 39504–39505 (July 6, 2011) and 40 CFR
600.116–12(b).
305 https://www.SAE.org, specifically SAE J2841
‘‘Utility Factor Definitions for Plug-In Hybrid
Electric Vehicles Using Travel Survey Data,’’
September 2010.
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manufacturer (OEM) PHEV in the U.S.
market today, which has an all-electric
range of 35 miles on EPA’s fuel
economy label, has city and highway
cycle utility factors of about 0.65,
meaning that the average Volt driver is
projected to drive about 65 percent of
the miles on grid electricity and about
35 percent of the miles on gasoline.
Each PHEV will have its own utility
factor.
Based on this utility factor approach,
EPA calculates the GHG emissions
compliance value for an individual
PHEV as the sum of (1) the GHG
emissions value for electric operation
(either 0 grams per mile or a non-zero
value reflecting the net upstream GHG
emissions accounting depending on
whether automaker EV/PHEV/FCV
production is below or above its
cumulative production cap as discussed
in Section III.C.2 above) multiplied by
the utility factor, and (2) the tailpipe
CO2 emissions value on gasoline
multiplied by (1 minus the utility
factor).
iii. Dual Fuel Compressed Natural Gas
Vehicles
Dual fuel CNG vehicles operate on
either compressed natural gas or
gasoline, but not both at the same time,
and have separate tanks for the two
fuels.306 There are no OEM dual fuel
CNG vehicles in the U.S. market today,
but some manufacturers have expressed
interest in bringing them to market
during the rulemaking time frame.
Under current EPA regulations through
MY 2015, GHG emissions compliance
values for dual fuel CNG vehicles are
based on a methodology that provides
significant GHG emissions incentives
equivalent to the ‘‘CAFE credit’’
approach for dual and flexible fuel
vehicles. For MY 2016, current EPA
regulations utilize a methodology based
on demonstrated vehicle emissions
performance and real world fuels usage,
similar to that for ethanol flexible fuel
vehicles discussed below.
EPA proposes to develop a new
approach for dual fuel CNG vehicle
GHG emissions compliance that is very
similar to the utility factor approach
developed and described above for
PHEVs, and for this new approach to
take effect with MY 2016. As with
PHEVs, EPA believes that owners of
dual fuel CNG vehicles will
preferentially seek to refuel and operate
on CNG fuel as much as possible, both
because the owner paid a much higher
306 EPA considers ‘‘bi-fuel’’ CNG vehicles to be
those vehicles that can operate on a mixture of CNG
and gasoline. Bi-fuel vehicles would not be eligible
for this treatment, since they are not designed to
allow the use of CNG only.
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price for the dual fuel capability, and
because CNG fuel is considerably
cheaper than gasoline on a per mile
basis. EPA notes that there are some
relevant differences between dual fuel
CNG vehicles and PHEVs, and some of
these differences might weaken the case
for using utility factors for dual fuel
CNG vehicles. For example, a dual fuel
CNG vehicle might be able to run on
gasoline when both fuels are available
on board (depending on how the vehicle
is designed), it may be much more
inconvenient for some private dual fuel
CNG vehicle owners to fuel every day
relative to PHEVs, and there are many
fewer CNG refueling stations than
electrical charging facilities.307 On the
other hand, there are differences that
could strengthen the case as well, e.g.,
many dual fuel CNG vehicles will likely
have smaller gasoline tanks given the
expectation that gasoline will be used
only as an ‘‘emergency’’ fuel, and it may
be easier for a dual fuel CNG vehicle to
be refueled during the day than a PHEV
(which is most conveniently refueled at
night with a home charging unit).
Taking all these considerations into
account, EPA believes that the merit of
using a utility factor-based approach for
dual fuel CNG vehicles is similar to that
of doing so for PHEVs, and we propose
to develop a similar methodology for
dual fuel CNG vehicles. For example,
applying the current SAE fleet utility
factor approach developed for PHEVs to
a dual fuel CNG vehicle with a 150-mile
CNG range would result in a compliance
assumption of about 95 percent
operation on CNG and about 5 percent
operation on gasoline.308 EPA is
proposing to directly extend the PHEV
utility factor methodology to dual fuel
CNG vehicles, using the same
assumptions about daily refueling. EPA
invites comment on this proposal,
including the appropriateness of the
assumptions described above for dual
fuel CNG vehicles.
Further, for MYs 2012–2015, EPA is
also proposing to allow the option, at
the manufacturer’s discretion, to use the
proposed utility factor-based
methodology for MYs 2016–2025
discussed above. The rationale for
providing this option is that some
manufacturers are likely to reach the
maximum allowable GHG emissions
credits (based on the statutory CAFE
credits) through their production of
307 EPA assumes that most PHEV owners will
charge at home with electrical charging equipment
that they purchase and install for their own use.
308 See SAE J2841 ‘‘Utility Factor Definitions for
Plug-In Hybrid Electric Vehicles Using Travel
Survey Data,’’ September 2010, available at https://
www.SAE.org, which we are proposing to use for
dual fuel CNG vehicles as well.
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ethanol FFVs, and therefore would not
be able to gain any GHG emissions
compliance benefit even if they
produced dual fuel CNG vehicles that
demonstrated superior GHG emissions
performance.
In determining eligibility for the
utility factor approach, EPA may
consider placing additional constraints
on the designs of dual fuel CNG vehicles
to maximize the likelihood that
consumers will routinely seek to use
CNG fuel. Options include, but are not
limited to, placing a minimum value on
CNG tank size or CNG range, a
maximum value on gasoline tank size or
gasoline range, a minimum ratio of
CNG-to-gasoline range, and requiring an
onboard control system so that a dual
fuel CNG vehicle is only able to access
the gasoline fuel tank if the CNG tank
is empty. EPA seeks comments on the
merits of these additional eligibility
constraints for dual fuel CNG vehicles.
iv. Ethanol Flexible Fuel Vehicles
Ethanol FFVs can operate on E85 (a
blend of 15 percent gasoline and 85
percent ethanol, by volume), gasoline,
or any blend of the two. There are many
ethanol FFVs in the market today.
In the final rulemaking for MY 2012–
2016, EPA promulgated regulations for
MYs 2012–2015 ethanol FFVs that
provided significant GHG emissions
incentives equivalent to the longstanding ‘‘CAFE credits’’ for ethanol
FFVs under EPCA, since many
manufacturers had relied on the
availability of these credits in
developing their compliance
strategies.309 Beginning in MY 2016,
EPA ended the GHG emissions
compliance incentives and adopted a
methodology based on demonstrated
vehicle emissions performance. This
methodology established a default value
assumption where ethanol FFVs are
operated 100 percent of the time on
gasoline, but allows manufacturers to
use a relative E85 and gasoline vehicle
emissions performance weighting based
either on national average E85 and
gasoline sales data, or manufacturerspecific data showing the percentage of
`
miles that are driven on E85 vis-a-vis
gasoline for that manufacturer’s ethanol
FFVs.310 EPA is not proposing any
changes to this methodology for MYs
2017–2025.
EPA believes there is a compelling
rationale for not adopting a utility
factor-based approach, as discussed
above for PHEVs and dual fuel CNG
vehicles, for ethanol FFVs. Unlike with
PHEVs and dual fuel CNG vehicles,
309 75
310 75
FR at 25432–433.
FR at 25433–434.
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owners of ethanol FFVs do not pay any
more for the E85 fueling capability.
Unlike with PHEVs and dual fuel CNG
vehicles, operation on E85 is not
cheaper than gasoline on a per mile
basis, it is typically the same or
somewhat more expensive to operate on
E85. Accordingly, there is no direct
economic motivation for the owner of
ethanol FFVs to seek E85 refueling, and
in some cases there is an economic
disincentive. Because E85 has a lower
energy content per gallon than gasoline,
an ethanol FFV will have a lower range
on E85 than on gasoline, which
provides an additional disincentive. The
data confirm that, on a national average
basis in 2008, less than one percent of
ethanol FFVs used E85 fuel.311
If, in the future, this situation were to
change (e.g., if E85 were less expensive,
on a per mile basis), then EPA could
reconsider its approach to this issue.
b. Procedures for CAFE Calculations for
MY 2020 and Later
49 U.S.C. 32905 specifies how the fuel
economy of dual fuel vehicles is to be
calculated for the purposes of CAFE
through the 2019 model year. The basic
calculation is a 50/50 harmonic average
of the fuel economy for the alternative
fuel and the conventional fuel,
irrespective of the actual usage of each
fuel. In addition, the fuel economy
value for the alternative fuel is
significantly increased by dividing by
0.15 in the case of CNG and ethanol and
by using a petroleum equivalency factor
methodology that yields a similar
overall increase in the CAFE mpg value
for electricity.312 In a related provision,
49 U.S.C. 32906, the amount by which
a manufacturer’s CAFE value (for
domestic passenger cars, import
passenger cars, or light-duty trucks) can
be improved by the statutory incentive
for dual fuel vehicles is limited by
EPCA to 1.2 mpg through 2014, and
then gradually reduced until it is
phased out entirely starting in model
year 2020.313 With the expiration of the
special calculation procedures in 49
U.S.C. 32905 for dual fueled vehicles,
the CAFE calculation procedures for
model years 2020 and later vehicles
need to be set under the general
provisions authorizing EPA to establish
testing and calculation procedures.314
With the expiration of the specific
procedures for dual fueled vehicles,
there is less need to base the procedures
on whether a vehicle meets the specific
311 75
FR 14762 (March 26, 2010).
U.S.C. 32905.
313 49 U.S.C. 32906. NHTSA interprets section
32906(a) as not limiting the impact of duel fueled
vehicles on CAFE calculations after MY2019.
314 49 U.S.C. 32904(a), (c).
312 49
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definition of a dual fueled vehicle in
EPCA. Instead, EPA’s focus is on
establishing appropriate procedures for
the broad range of vehicles that can use
both alternative and conventional fuels.
For convenience, this discussion uses
the term dual fuel to refer to vehicles
that can operate on an alternative fuel
and on a conventional fuel.
EPA sees two potential approaches for
dual fuel vehicle CAFE calculations for
model years 2020 and later. EPA
requests comment on the two options
discussed here, and we welcome
comments on other potential options as
well.
Determining the fuel economy of the
vehicle for purposes of CAFE requires a
determination on how to weight the fuel
economy performance on the alternative
fuel and the fuel economy performance
on the conventional fuel. For PHEVs,
dual-fuel CNG vehicles, and FFVs, EPA
proposes to apply the same weighting
for CAFE purposes as for purposes of
GHG emissions compliance values. EPA
proposes that, for PHEVs and dual-fuel
CNG vehicles, the fuel economy
weightings will be determined using the
SAE utility factor methodology, while
for ethanol FFVs, manufacturers can
choose to use a default based on 100%
gasoline operation, or can choose to
base the fuel economy weightings on
national average E85 and gasoline use,
or on manufacturer-specific data
showing the percentage of miles that are
`
driven on E85 vis-a-vis gasoline for that
manufacturer’s ethanol FFVs. Where the
two options differ is whether the 0.15
divisor or similar adjustment factor is
retained or not. EPA believes that there
are legitimate arguments both for and
against retaining the adjustment factors.
EPA proposes to continue to use the
0.15 divisor for CNG and ethanol, and
the petroleum equivalency factor for
electricity, both of which the statute
requires to be used through 2019, for
model years 2020 and later. EPA
believes there are two primary
arguments for retaining the 0.15 divisor
and petroleum equivalency factor. One,
this approach is directionally consistent
with the overall petroleum reduction
goals of EPCA and the CAFE program,
because it continues to encourage
manufacturers to build vehicles capable
of operating on fuels other than
petroleum. Two, the 0.15 divisor and
petroleum equivalency factor are used
under EPCA to calculate CAFE
compliance values for dedicated
alternative fuel vehicles, and retaining
this approach for dual fuel vehicles
would maintain consistency, for MY
2020 and later, between the approaches
for dedicated alternative fuel vehicles
and for the alternative fuel portion of
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dual fuel vehicle operation. Opting not
to provide the 0.15 divisor or PEF for
the alternative fuel portion of these
vehicles’ operation may discourage
manufacturers from building vehicles
capable of operating on both gasoline/
diesel and alternative fuels, and thus
potentially discourage important
‘‘bridge’’ technologies that may help
consumers overcome current concerns
about advanced technology vehicles.
EPA recognizes that this proposed
calculation procedure would continue
to provide, directionally, an increase in
fuel economy values for the vehicles
previously covered by the special
calculation procedures in 49 U.S.C.
32905, and that Congress chose both to
end the specific calculation procedures
in that section and over time to reduce
the benefit for CAFE purposes of the
increase in fuel economy mandated by
those special calculation procedures.
However, the proposed provisions differ
significantly in important ways from the
special calculation provisions mandated
by EPCA. Most importantly, they are
changed to reflect actual usage rates of
the alternative fuel and do not use the
artificial 50/50 weighting previously
mandated by 49 U.S.C. 32905. In
practice this means the primary vehicles
to benefit from the proposed provision
will be PHEVs and dual-fuel CNG
vehicles, and not FFVs, while the
primary source of benefit to
manufacturers under the statutory
provisions came from FFVs. Changing
the weighting to better reflect real world
usage is a major change from that
mandated by 49 U.S.C. 32905, and it
orients the calculation procedure more
to the real world impact on petroleum
usage, consistent with the statute’s
overarching purpose of energy
conservation. In addition, as noted
above, Congress clearly continued the
calculation procedures for dedicated
alternative fuel vehicles that result in
increased fuel economy values. This
proposed approach is consistent with
this, as it uses the same approach for
calculating fuel economy on the
alternative fuel when there is real world
usage of the alternative fuel. Since the
proposed provisions are quite different
in effect from the specified provisions in
49 U.S.C. 32905, and are consistent with
the calculation procures for dedicated
vehicles that use the same alternative
fuel, EPA believes this proposal would
be an appropriate exercise of discretion
under the general authority provided in
49 U.S.C. 32904.
An alternative option to the above
proposal, and about which EPA seeks
comment, is to not adopt the 0.15
divisor and petroleum equivalency
factor for model years 2020 and later.
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The fuel economy for the CNG portion
of a dual fuel CNG vehicle, E85 portion
of FFVs, and the electric portion of a
PHEV would be determined strictly on
an energy-equivalent basis, without any
adjustment based on the 0.15 divisor or
petroleum equivalency factor. For E85
FFVs, the manufacturer would almost
certainly use the gasoline fuel economy
value only because gasoline has higher
energy content and fuel economy than
E85.315 This approach would place less
emphasis on conservation of petroleum
and more on conservation of energy for
dual fuel vehicles. It would also place
more emphasis on Congress’ decision to
reduce over time the impact on CAFE
from the increased fuel economy values
derived from the specified calculation
procedures in 49 U.S.C. 32905, and less
emphasis on aligning the incentives for
dual fuel alternative fuel vehicles with
the incentives for dedicated alternative
fuel vehicles.316 EPA invites comment
on both approaches.
5. Off-Cycle Technology Credits
For MYs 2012–2016, EPA provided an
option for manufacturers to generate
credits for employing new and
innovative technologies that achieve
CO2 reductions which are not reflected
on current 2-cycle test procedures. For
this proposal, EPA, in coordination with
NHTSA, is proposing to apply the offcycle credits and equivalent fuel
consumption improvement values to
both the GHG and CAFE programs. This
proposed expansion is a change from
the 2012–16 final rule where EPA only
provided the off-cycle credits for the
GHG program. For MY 2017 and later,
EPA is proposing that manufacturers
may continue to use off-cycle credits for
GHG compliance and begin to use fuel
consumption improvement values
(essentially equivalent to EPA credits)
for CAFE compliance. In addition, EPA
is proposing a set of defined (e.g.
default) values for identified off-cycle
technologies that would apply unless
the manufacturer demonstrates to EPA
that a different value for its technologies
is appropriate. The proposed changes to
incorporate off-cycle technologies for
the GHG program are described in
315 Manufacturers can also choose to base the fuel
economy weightings on national average E85 and
gasoline use, or on manufacturer-specific data
showing the percentage of miles that are driven on
`
E85 vis-a-vis gasoline for that manufacturer’s
ethanol FFVs, but since E85 fuel economy ratings
are based on miles per gallon of E85, not adjusted
for energy equivalency with gasoline, E85 mpg
values are lower than gasoline mpg values, which
makes this a non-option.
316 Incentives for dedicated alternative fuel
vehicles would not be affected by changes to
incentives for dual fueled vehicles. Dedicated
alternative fuel vehicles would continue to use the
0.15 divisor or petroleum equivalency factor.
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Section III.C.5.a–b below, and for the
CAFE program are described in Section
III.C.5.c below.
a. Off-Cycle Credit Program Adopted in
MY 2012–2016 Rule
In the MY 2012–2016 Final Rule, EPA
adopted an optional credit opportunity
for new and innovative technologies
that reduce vehicle CO2 emissions, but
for which the CO2 reduction benefits are
not significantly captured over the 2cycle test procedure used to determine
compliance with the fleet average
standards (i.e., ‘‘off-cycle’’).317 EPA
indicated that eligible innovative
technologies are those that may be
relatively newly introduced in one or
more vehicle models, but that are not
yet implemented in widespread use in
the light-duty fleet, and which provide
novel approaches to reducing
greenhouse gas emissions. The
technologies must have verifiable and
demonstrable real-world GHG
reductions.318 EPA adopted the off-cycle
credit option to provide an incentive to
encourage the introduction of these
types of technologies, believing that
bona fide reductions from these
technologies should be considered in
determining a manufacturer’s fleet
average, and that a credit mechanism is
an effective way to do this. This
optional credit opportunity is currently
available through the 2016 model year.
EPA finalized a two-tiered process for
OEMs to demonstrate that CO2
reductions of an innovative and novel
technology are verifiable and
measureable but are not captured by the
2-cycle test procedures. First, a
manufacturer must determine whether
the benefit of the technology could be
captured using the 5-cycle methodology
currently used to determine fuel
economy label values. EPA established
the 5-cycle test methods to better
represent real-world factors impacting
fuel economy, including higher speeds
and more aggressive driving, colder
temperature operation, and the use of
air conditioning. If this determination is
affirmative, the manufacture must
follow the 5-cycle procedures.
If the manufacturer finds that the
technology is such that the benefit is not
adequately captured using the 5-cycle
approach, then the manufacturer would
have to develop a robust methodology,
subject to EPA approval, to demonstrate
the benefit and determine the
appropriate CO2 gram per mile credit.
This case-by-case, non-5-cycle credits
approach includes an opportunity for
public comment as part of the approval
317 75
FR 25438–440,
40 CFR 1866.12 (d); 75 FR at 25438.
318 See
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process. The demonstration program
must be robust, verifiable, and capable
of demonstrating the real-world
emissions benefit of the technology with
strong statistical significance. Whether
the approach involves on-road testing,
modeling, or some other analytical
approach, the manufacturer is required
to present a proposed methodology to
EPA. EPA will approve the methodology
and credits only if certain criteria are
met. Baseline emissions and control
emissions must be clearly demonstrated
over a wide range of real world driving
conditions and over a sufficient number
of vehicles to address issues of
uncertainty with the data. Data must be
on a vehicle model-specific basis unless
a manufacturer demonstrated model
specific data was not necessary. See
generally 75 FR at 25438–40.
b. Proposed Changes to the Off-cycle
Credits Program
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EPA has been encouraged by
automakers’ interest in off-cycle credits
since the program was finalized.
Though it is early in the program,
several manufacturers have shown
interest in introducing off-cycle
technologies which are in various stages
of development and testing. EPA
believes that continuing the option for
off-cycle credits would further
encourage innovative strategies for
reducing CO2 emissions beyond those
measured by the 2-cycle test procedures.
Continuing the program provides
manufacturers with additional
flexibility in reducing CO2 to meet
increasingly stringent CO2 standards
and to encourage early penetration of
off-cycle technologies into the light duty
fleet. Furthermore, extending the
program may encourage automakers to
invest in off-cycle technologies that
could have the benefit of realizing
additional reductions in the light-duty
fleet over the longer-term. Therefore,
EPA is proposing to extend the off-cycle
credits program to 2017 and later model
years.
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In implementing the program, some
manufacturers have expressed concern
that a drawback to using the program is
uncertainty over which technologies
may be eligible for off-cycle credits plus
uncertainties resulting from a case-bycase approval process. Current EPA
eligibility criteria require technologies
to be new, innovative, and not in
widespread use in order to qualify for
credits. Also, the MY 2012–2016 Final
Rule specified that technologies must
not be significantly measurable on the 2cycle test procedures. As discussed
below, EPA proposes to significantly
modify the eligibility criteria, as the
current criteria are not well defined and
have been a source of uncertainty for
manufacturers, thereby interfering with
the goal of providing an incentive for
the development and use of additional
technologies to achieve real world
reductions in CO2 emissions. The focus
will be on whether or not add-on
technologies can be demonstrated to
provide off-cycle CO2 emissions
reductions that are not sufficiently
reflected on the 2-cycle tests.
In addition, as described below in
section III.C.5.b.i, EPA is proposing that
manufacturers would be able to generate
credits by applying technologies listed
on an EPA pre-defined and preapproved technology list starting with
MY 2017. These credits would be
verified and approved as part of
certification with no prior approval
process needed. We believe this new
option would significantly streamline
and simplify the program for
manufacturers choosing to use it and
would provide manufacturers with
certainty that credits may be generated
through the use of pre-approved
technologies. For credits not based on
the pre-defined list, EPA is proposing to
streamline and better define a step-bystep process for demonstrating
emissions reductions and applying for
credits. EPA is proposing that these
procedural changes to the case-by-case
approach would be effective for new
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credit applications for both the
remaining years of the MY 2012–2016
program as well as for MY 2017 and
later credits that are not based on the
pre-defined list.
As discussed in section II.F and
III.B.10, EPA, in coordination with
NHTSA, is also proposing that
manufacturers be able to include fuel
consumption reductions resulting from
the use of off-cycle technologies in their
CAFE compliance calculations.
Manufacturers would generate ‘‘fuel
consumption improvement values’’
essentially equivalent to EPA credits, for
use in the CAFE program. The proposed
changes to the CAFE program to
incorporate off-cycle technologies are
discussed below in section III.5.c.
i. Pre-Defined Credit List for MY 2017
and Later
As noted above, EPA proposes to
establish a list of off-cycle technologies
from which manufacturers could select
to earn a pre-defined level of CO2
credits in MY 2017 and later. Both
technologies and credit values based on
the list would be pre-approved. The
manufacturer would demonstrate in the
certification process that their
technology meets the definition of the
technology in the list. Table III–17
provides an initial proposed list of the
technologies and per vehicle credit
levels for cars and light trucks. EPA has
used a combination of available activity
data from the MOVES model, vehicle
and test data, and EPA’s vehicle
simulation tool to estimate a proposed
credit value EPA believes to be
appropriate. In particular, this vehicle
simulation tool was used to determine
the credit amount for electrical load
reduction technologies (e.g. high
efficiency exterior lighting, engine heat
reconvery, and solar roof panels) and
active aerodynamic improvements.
Chapter 5 of the joint TSD provides a
detailed description of how these
technologies are defined and how the
proposed credits levels were derived.
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Two technologies on the list—active
aerodynamic improvements and stop
start—are in a different category than
the other technologies on the list. Both
of these technologies are included in the
agencies’ modeling analysis of
technologies projected to be available
for use in achieving the reductions
needed for the standards. We have
information on their effectiveness, cost,
and availability for purposes of
considering them along with the various
other technologies we consider in
determining the appropriate CO2
emissions standard. These technologies
are among those listed in Chapter 3 of
the joint TSD and have measureable
benefit on the 2-cycle test. However in
the context of off-cycle credits, stop start
is any technology which enables a
vehicle to automatically turn off the
engine when the vehicle comes to a rest
and restart the engine when the driver
applies pressure to the accelerator or
releases the brake. This includes HEVs
and PHEVs (but not EVs). In addition,
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active grill shutters is just one of various
technologies that can be used as part of
aerodynamic design improvements (as
part of the ‘‘aero2’’ technology). The
modeling and other analysis developed
for determining the appropriate
emissions standard includes these
technologies, using the effectiveness
values on the 2-cycle test. This is
consistent with our consideration of all
of the other technologies included in
these analyses. Including them on the
list for off-cycle credit generation, for
purposes of compliance with the
standard, would recognize that these
technologies have a higher degree of
effectiveness in reducing real-world CO2
emissions than is reflected in their 2cycle effectiveness. EPA has taken into
account the generation of off-cycle
credits by these two technologies in
determining the appropriateness of the
proposed GHG standards, considering
the amount of credit, the projected
degree of penetration of these
technologies, and other factors. Section
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III.D has a more detailed discussion on
the feasibility of the standards within
the context of the flexibilities (such as
off-cycle credits) proposed in this rule.
As discussed in section III.D, EPA plans
to incorporate the off-cycle credits for
these two technologies in the cost
analysis for the final rule (which EPA
anticipates would slightly reduce costs
with no change to benefits). EPA
requests comments on this approach for
stop start and active aerodynamic
improvements.
Although EPA believes that there is
sufficient information to estimate
performance of other listed technologies
for purposes of a credit program, EPA
does not believe it appropriate to reflect
these technologies in setting the level of
standards at this point. There remains
significant uncertainty as to the extent
listed technologies other than stop start
and active aerodynamic improvements
may be used across the light duty fleet
and (in some instances) costs of the
technologies. Including them in the
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standard setting, as is done with A/C
control technology, calls for a
reasonable projection of the penetration
of these technologies across the fleet
and over time, along with reasonable
estimates of their cost. EPA does not
have adequate data at this point in time
to make such fleet wide projections for
other technologies on the list, or for
other technologies addressed by the
case-by-case approach. As in the 2012–
2016 rule, the use of these technologies
continues to be not nearly so well
developed and understood for purposes
of consideration in setting the
standards. See 75 FR at 25438.
Technologies that are considered by
EPA in setting the standard, as
discussed in section III.D and in Chapter
3 of the TSD, may not generate off-cycle
credits under this approach, except for
active aerodynamic improvements and
stop start.319 This would amount to the
double counting discussed at 75 FR
25438, as EPA has already considered
these technologies and assigned them an
emission reduction effectiveness for
purposes of standard setting, and has
enough information on effectiveness,
cost, and applicability to project their
use for purposes of standard setting.
EPA will reassess the list above for the
Final Rule, based on additional
information that becomes available
during the comment period. It may also
be appropriate to reconsider this
approach as part of the mid-term
evaluation as information on these
technologies’ applicability, costs, and
performance becomes more robust.
EPA proposes to cap the amount of
credits a manufacturer could generate
using the above list to 10 g/mile per year
on a combined car and truck fleet-wide
average basis. The cap would not apply
on a vehicle model basis, allowing
manufacturers the flexibility to focus
off-cycle technologies on certain vehicle
models and generate credits for that
vehicle model in excess of 10 g/mile.
EPA is proposing a fleet-wide cap
because the proposed credits are based
on limited data, and also EPA
recognizes that some uncertainty is
introduced when credits are provided
based on a general assessment of offcycle performance as opposed to testing
on the individual vehicle models. Also,
as discussed in Chapter 5 of the draft
TSD, EPA believes the credits proposed
are based on conservative estimates,
providing additional assurance that the
list would not result in an overall loss
319 Section III.D provides EPA projected
technology penetration rates. Technologies
projected to be used to meet the standards would
not be eligible for off-cycle credits, with the
exception of stop start and active aerodynamic
improvements.
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of CO2 benefits. EPA proposes that
manufacturers wanting to generate
credits in excess of the 10 g/mile limit
for these listed technologies could do so
by generating necessary data and going
through the credit approval process
described below in Section III.C.5.b.iii
and iv.
As noted above, EPA proposes to
make the list available for credit
generation starting in MY 2017. Prior to
MY 2017, manufacturers would need to
demonstrate off-cycle emissions
reductions in order to generate credits
for off-cycle technologies, including
those on the list. Requirements for
demonstrating off-cycle credits not
based on the list are described below.
Manufacturers may also opt to generate
data for listed technologies in MY 2017
and later where they are able to
demonstrate a credit value greater than
that provided on the list.
Prior to MY 2017, EPA would
continue to evaluate off-cycle
technologies. Based on data provided by
manufacturers for non-listed
technologies, and other available data,
EPA would consider adding
technologies to the list through
rulemaking. EPA could also issue
guidance in the future for additional offcycle technologies, indicating the level
of credits that EPA expects could be
approved for any manufacturer through
the case-by-case approach, helping to
streamline the case-by-case approach
until a rulemaking was conducted to
update the list. If the CO2 reduction
benefits of a technology have been
established through manufacturer data
and testing, EPA believes that it would
be appropriate to list the technology and
a conservative associated credit value.
Since one purpose of the off-cycle
credits is to encourage market
penetration of the technologies (see 75
FR at 25438), EPA also proposes to
require minimum penetration rates for
several of the listed technologies as a
condition for generating credit from the
list as a way to further encourage their
widespread adoption by MY 2017 and
later. The proposed minimum
penetration rates for the various
technologies are provided in Table III–
17. At the end of the model year for
which the off-cycle credit is claimed,
manufacturers would need to
demonstrate that production of vehicles
equipped with the technologies for that
model year exceeded the percentage
thresholds in order to receive the listed
credit. EPA proposes to set the
threshold at 10 percent of a
manufacturer’s overall combined car
and light truck production except for
technologies specific to HEVs/PHEVs/
EVs and exhaust heat recovery. EPA
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believes 10 percent is an appropriate
threshold as it would encourage
manufacturers to develop technologies
for use on larger volume models and
bring the technologies into the
mainstream. On the other hand, EPA is
not proposing a larger value because
EPA does not want to discourage the use
of technologies. For solar roof panels
(solar control) and electric heater
circulation pumps, which are HEV/
PHEV/EV-specific, EPA is not proposing
a minimum penetration rate threshold
for credit generation. Hybrids and EVs
may be a small subset of a
manufacturer’s fleet, less than 10
percent in some cases, and EPA does
not believe establishing a threshold for
hybrid-based technologies would be
useful and could unnecessarily impede
the introduction of these technologies.
EPA is also not proposing to apply a
minimum penetration threshold to
exhaust heat recovery because the
threshold could impede rather than
encourage the development of the
technology due to its relatively early
stage of development and potentially
high cost. EPA requests comments on
applying this type of threshold, the
appropriateness of 10 percent as the
threshold for several of the listed
technologies, and the proposed
treatment of HEV/PHEV/EV specific
technologies and exhaust heat recovery.
ii. Proposed Technology Eligibility
Criteria
EPA proposes to remove the criteria
in the 2012–2016 rule that off-cycle
technologies must be ‘new, innovative,
and not widespread’ because these
terms are imprecise and have created
implementation issues and uncertainty
in the program. For example, it is
unclear if technologies developed in the
past but not used extensively would be
considered new, if only the first one or
two manufacturers using the technology
would be eligible or if all manufacturers
could use a technology to generate
credits, or if credits for a technology
would sunset after a period of time. It
has also been unclear if a technology
such as active aerodynamics would be
eligible since it provides a small
measurable reduction on the 2-cycle test
but provides additional reductions offcycle, especially during high speed
driving. These criteria have interfered
with the goal of providing an incentive
for the development and use of off-cycle
technology that reduces CO2 emissions.
EPA proposes this approach for new MY
2012–2016 credits as well as for MY
2017–2025.
EPA believes it is appropriate to
provide credit opportunities for
technologies that achieve real world
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reductions beyond those measured
under the two-cycle test without further
making (somewhat subjective)
judgments regarding the newness and
innovativeness of the technology.
Instead, EPA proposes to provide offcycle credits for any technologies that
are added to a vehicle model that are
demonstrated to provide significant
incremental off-cycle CO2 reductions,
like those on the list. The proposed
technology demonstration and step-bystep application process is described in
detail below in section III.C.5.b.ii. EPA
is proposing to clarify that technologies
providing small reductions on the 2cycle tests but additional significant
reductions off-cycle could be eligible to
generate off-cycle credits. EPA thus
proposes to remove the ‘‘not
significantly measurable over the 2cycle test’’ criteria. EPA proposes that,
instead, manufacturers must be able to
make a demonstration through testing
with and without the off-cycle
technology.
As noted above, EPA proposes that
technologies included in EPA’s
assessment in this rulemaking of
technology for purposes of developing
the standard would not be allowed to
generate off-cycle credits, as their cost
and effectiveness and expected use are
already included in the assessment of
the standard. (As explained above, the
agencies have done so with respect to
stop start and active aerodynamic
improvements by including the
projected level of credits in determining
the appropriateness of the proposed
standards.) EPA proposes that
technologies integral or inherent to the
basic vehicle design including engine,
transmission, mass reduction, passive
aerodynamic design, and base tires
would not be eligible for credits. For
example, manufacturers would not be
able to generate off-cycle credits by
moving to an eight-speed transmission.
EPA believes that it would be difficult
to clearly establish an appropriate A/B
test (with and without technologies) for
technologies so integral to the basic
vehicle design. EPA proposes to limit
the off-cycle program to technologies
that can be clearly identified as add-on
technologies conducive to A/B testing.
Further, EPA would not provide credits
for a technology required to be used by
Federal law, such as tire pressure
monitoring systems, as EPA would
consider such credits to be windfall
credits (i.e. not generated as a result of
the rule). The base versions of such
technologies would be considered part
of the base vehicle. However, if a
manufacturer demonstrates that an
improvement to such technologies
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provides additional off-cycle benefits
above and beyond a system meeting
minimum Federal requirements, those
incremental improvements could be
eligible for off-cycle credits, assuming
an appropriate quantification of credits
is demonstrated.
By proposing to remove the ‘‘new,
innovative, not widespread use’’ criteria
in the present rule, EPA is also making
clear that once approved, EPA does not
intend to sunset a technology’s credit
eligibility or deny credits to other
vehicle applications using the
technology, as may have been implied
by those criteria under the MY 2012–
2016 program. EPA believes, at this
time, that it should encourage the wider
use of technologies with legitimate offcycle emissions benefits. Manufacturers
demonstrating through the EPA
approval process that the technology is
effective on additional vehicle models
would be eligible for credits. Limiting
the application of a technology or
sunsetting the availability of credits
during the 2017–2025 time frame would
be counterproductive because it would
remove part of the incentive for
manufacturers to invest in developing
and deploying off-cycle technologies,
some of which may be promising but
have considerable development costs
associated with them. Also, approving a
technology only to later disallow it
could lead to a manufacturer
discontinuing the use of the technology
even if it remained a cost effective way
to reduce emissions. EPA also believes
that this approach provides an incentive
for manufacturers to continue to
improve technologies without concern
that they will become ineligible for
credits at some future time. EPA
requests comments on all aspects of the
above approach for the off-cycle credits
program criteria.
iii. Demonstrating Off-Cycle Emissions
Reductions
5-Cycle Testing
EPA is retaining a two-tiered process
for demonstrating the CO2 reductions of
off-cycle technologies (in those
instances when a manufacturer is not
using the default value provided by the
rule), but is clarifying several of the
requirements. The process described
below would be used for all credits not
based on the pre-defined list described
in Section III.C.5.i, above. As noted
above, the proposed approach would
replace the requirement in the 2012–
2016 rule that technology must not be
‘‘significantly measurable’’ over the 2cycle test. See section 86. 1866–12 (d)
(ii). This criterion has been problematic
because several technologies provide
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some benefit on the 2-cycle test but
much greater benefits off-cycle. Under
today’s proposal, technologies would
need to be demonstrated to provide
significant incremental off-cycle
benefits above and beyond those
provided over the 2-cycle test (examples
are shown below). EPA proposes this
approach for new MY 2012–2016 credits
as well as for MY 2017–2025.
The 5-cycle test procedures would
remain the starting point for
demonstrating off-cycle emissions
reductions. The MY 2012–2016
rulemaking established general 5-cycle
testing requirements and EPA is
proposing several provisions to
delineate what EPA would expect as
part of a 5-cycle based demonstration.
Manufacturers requested clarification on
the amount of 5-cycle testing that would
be needed to demonstrate off-cycle
credits, and EPA is proposing the
following as part of the step-by-step
methodology manufacturers would
follow to generate credits. In addition to
the general 5-cycle demonstration
requirements of the MY 2012–2016
program, EPA proposes to specifically
require model-based verification of 5cycle results where off-cycle reductions
are small and could be a product of
testing variability. EPA is also proposing
to specifically require that all
applications include an engineering
analysis for why the technology
provides off-cycle emissions reductions.
EPA proposes to specify that
manufacturers would run an initial set
of three 5-cycle tests with and without
the technology providing the off-cycle
CO2 reduction. Testing must be
conducted on a representative vehicle,
selected using good engineering
judgment, for each vehicle model. EPA
proposes that manufacturers could
bundle off-cycle technologies together
for testing in order to reduce testing
costs and improve their ability to
demonstrate consistently measurable
reductions over the tests. If these A/B 5cycle tests demonstrate an off-cycle
benefit of 3 percent or greater,
comparing average test results with and
without the off-cycle technology, the
manufacturer would be able to use the
data as the basis for credits. EPA has
long used 3 percent as a threshold in
fuel economy confirmatory testing for
determining if a manufacturer’s fuel
economy test results are comparable to
those run by EPA.320
If the initial three sets of 5-cycle
results demonstrate a reduction of less
than a 3 percent difference in the 5cycle results with and without the offcycle technology, the manufacturer
320 40
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would have to run two additional 5cycle tests with and without the offcycle technologies and verify the
emission reduction using the EPA Lightduty Simulation Tool described below.
If the simulation tool supports credits
that are less than 3 percent of the
baseline 2-cycle emissions, then EPA
would approve the credits based on the
test results. As outlined below, credits
based on this methodology would be
subject to a 60 day EPA review period
starting when EPA receives a complete
application, which would not include a
public review.
EPA believes that small off-cycle
credit claims (i.e., less than 3 percent of
the vehicle model 2-cycle CO2 level)
should be supported with modeling and
engineering analysis. EPA is proposing
the approach above for a number of
reasons. Emissions reductions of only a
few grams may not be statistically
significant and could be the product of
gaming. Also, manufacturers have raised
test-to-test variability as an issue for
demonstrating technologies through 5cycle testing. Modeling and engineering
analyses can help resolve these
questions. EPA also requests comments
on allowing manufacturers to use the
EPA simulation tool and engineering
analysis in lieu of additional 5-cycle
testing. For some technologies providing
very small incremental benefits, it may
not be possible to accurately measure
their benefit with vehicle testing.
Demonstrations Not Based on 5-Cycle
Testing
In cases where the benefit of a
technological approach to reducing CO2
emissions cannot be adequately
represented using 5-cycle testing,
manufacturers will need to develop test
procedures and analytical approaches to
estimate the effectiveness of the
technology for the purpose of generating
credits. See 75 FR at 25440. EPA is not
proposing to make significant changes
to this aspect of the program. If the 5cycle process is inadequate for the
specific technology being considered by
the manufacturer (i.e., the 5-cycle test
does not demonstrate any emissions
reductions), then an alternative
approach may be developed by the
manufacturer and submitted to EPA for
approval. The demonstration program
must be robust, verifiable, and capable
of demonstrating the real-world
emissions benefit of the technology with
strong statistical significance. The
methodology developed and submitted
to EPA would be subject to public
review as explained at 75 FR 25440 and
in 86.1866(d)(2)(ii).
EPA has identified two general
situations where manufacturers would
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need to develop their own
demonstration methodology. The first is
a situation where the technology is
active only during certain operating
conditions that are not represented by
any of the 5-cycle tests. To determine
the overall emissions reductions,
manufacturers must determine not only
the emissions impacts during operation
but also real-world activity data to
determine how often the technology is
utilized during actual, in-use driving on
average across the fleet. EPA has
identified some of these types of
technologies and has calculated a
default credit for them, including items
such as high efficiency (e.g., LED) lights
and solar panels on hybrids. See Table
III–17 above. In their demonstrations,
manufacturers may be able to apply the
same type of methodologies used by
EPA as a basis for these default values
(see TSD Chapter 5).
The second type of situation where
manufacturers would need to develop
their own demonstration data would be
for technologies that involve action by
the driver to make the technology
effective in reducing CO2 emissions.
EPA believes that driver interactive
technologies face the highest
demonstration hurdle because
manufacturers would need to provide
actual real-world usage data on driver
response rates. Such technologies would
include ‘‘eco buttons’’ where the driver
has the option of selecting more fuel
efficient operating modes, traffic
avoidance systems, and more advanced
tire pressure monitor systems (i.e.,
technologies that go beyond the
minimum Federal requirements)
notifying the driver to fill their tires
more often.321 EPA proposes that data
would need to be from instrumented
vehicle studies and not through driver
surveys where results may be
influenced by drivers failure to
accurately recall their response
behavior. Systems such as On-star could
be one promising way to collect driver
response data if they are designed to do
so. Manufacturers might have to design
extensive on-road test programs. Any
such on-road testing programs would
need to be statistically robust and based
on average U.S. driving conditions,
factoring in differences in geography,
climate, and driving behavior across the
U.S. EPA proposes this approach for
321 A tire pressure monitor system that also
automatically fills the tire without driver
interaction would obviously not involve driver
response data for the automatic system, but the
demonstration may involve the driver response
rates for the baseline system to determine an
incremental credit.
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new MY 2012–2016 credits as well as
for MY 2017–2025.
EPA Light-Duty Vehicle Simulation
Tool
As explained above and, EPA has
developed full vehicle simulation
capabilities in order to support
regulations and vehicle compliance by
quantifying the effectiveness of different
technologies over a wide range of engine
and vehicle operating conditions. This
in-house simulation tool has been
developed for modeling a wide variety
of light, medium, and heavy duty
vehicle applications over various
driving cycles. In order to ensure
transparency of the models and free
public access, EPA has developed the
tool in MATLAB/Simulink environment
with a completely open source code.
EPA’s first application of the vehicle
simulation tool was for purposes of
heavy-duty vehicle compliance and
certification. For the model years 2014
to 2017 final rule for medium and heavy
duty trucks, EPA created the
‘‘Greenhouse gas Emissions Model’’
(GEM), which is used both to assess
Class 2b–8 vocational vehicle and Class
7⁄8 combination tractor GHG emissions
and fuel efficiency and to demonstrate
compliance with the vocational vehicle
and combination tractor standards. See
76 FR at 57146–147.322 EPA will submit
the simulation tool for peer review for
the final rule. Chapter 2 of the Draft RIA
has more details of this simulation tool.
As mentioned previously, the tool is
based on MATLAB/Simulink and is a
forward-looking full vehicle model that
uses the same physical principles as
other commercially available vehicle
simulation tools (e.g. Autonomie, AVL–
CRUISE, GT–Drive, etc.) to derive the
governing equations. These governing
equations describe steady-state and
transient behaviors of each of electrical,
engine, transmission, driveline, and
vehicle systems, and they are integrated
together to provide overall system
behavior during transient conditions as
well as steady-state operations. In the
light-duty vehicle simulation tool, there
are four key system elements that
describe the overall vehicle dynamics
behavior and the corresponding fuel
efficiency: Electrical, engine,
transmission, and vehicle. The electrical
system model consists of parasitic
electrical load and A/C blower fan, both
of which were assumed to be constant.
The engine system model is comprised
322 See also US EPA, ‘‘Final Rule Making to
Establish Greenhouse Gas Emissions Standards and
Fuel Efficiency Standards for Medium- and HeavyDuty Engines and Vehicles,’’ Heavy-Duty
Regulatory Impact Analysis.give cite to where GEM
is written up in the heavy duty RIA.
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of engine torque and fueling maps. For
the vehicle system, four vehicles were
modeled: Small, mid, large size
passenger vehicles, and a light-duty
pick-up truck. The engine maps,
transmission gear ratios and shifting
schedules were appropriately sized and
adjusted according to the vehicle type
represented by the simulation. This tool
is capable of simulating a wide range of
conventional and advanced engines,
transmissions, and vehicle technologies
over various driving cycles. It evaluates
technology package effectiveness while
taking into account synergy (and dissynergy) effects among vehicle
components and estimates GHG
emissions for various combinations of
technologies. Chapter 2 of the Draft
Regulatory Impact Analysis provides
more details on this light-duty vehicle
simulation tool.
As discussed in section III.C.1, EPA
has used the light-duty vehicle
simulation tool to estimate indirect A/
C CO2 emissions from conventional
(non-hybrid) vehicles, helping to
quantify the indirect A/C credit. In
addition to A/C related CO2 reductions,
EPA believes this same simulation tool
may be useful in estimating CO2
reductions from off-cycle technologies.
Currently, the model provides A/B
relative comparisons with and without
technologies that can help inform
credits estimates. EPA has used it to
estimate credits for some of the
technologies in the proposed predefined list, including active
aerodynamic improvements. As
discussed above, EPA is proposing to
require this simulation tool be used as
an additional way to estimate emissions
reductions in cases where the 5-cycle
test results indicate the potential
reductions to be small, and EPA is also
requesting comments on using the
simulation tool as a basis for estimating
off-cycle credits in lieu of 5-cycle
testing.
There are a number of technologies
that could bring additional GHG
reductions over the 5-cycle drive test (or
in the real world) compared to the
combined FTP/Highway (or two) cycle
test. These are called off-cycle
technologies and are described in
chapter 5 of the Joint TSD in detail.
Among them are technologies related to
reducing vehicle’s electrical loads, such
as High Efficiency Exterior Lights,
Engine Heat Recovery, and Solar Roof
Panels. In an effort to streamline the
process for approving off-cycle credits,
we have set a relatively conservative
estimate of the credit based on our
efficacy analysis. EPA seeks comment
on utilizing the model in order to
quantify the credits more accurately, for
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example, if actual data of electrical load
reduction and/or on-board electricity
generation by one or more of these
technologies is available through data
submission from manufacturers.
Similarly, there are technologies that
would provide additional GHG
reduction benefits in the 5-cycle test by
actively reducing the vehicle’s
aerodynamic drag forces. These are
referred to as active aerodynamic
technologies, which include but are not
limited to Active Grill Shutters and
Active Suspension Lowering. Like the
electrical load reduction technologies,
the vehicle simulation tool can be used
to more accurately estimate the
additional GHG reductions (therefore
the credits) provided by these active
aerodynamic technologies over the 5cycle drive test. EPA seeks comment on
using the simulation tool in order to
quantify these credits. In order to do
this properly, manufacturers would be
expected to submit two sets of coastdown coefficients (with and without the
active aerodynamic technologies).
There are other technologies that
would result in additional GHG
reduction benefits that cannot be fully
captured on the combined FTP/
Highway cycle test. These technologies
typically reduce engine loads by
utilizing advanced engine controls, and
they range from enabling the vehicle to
turn off the engine at idle, to reducing
cabin temperature and thus A/C
compressor loading when the vehicle is
restarted. Examples include Engine
Start-Stop, Electric Heater Circulation
Pump, Active Engine/Transmission
Warm-Up, and Solar Control. For these
types of technologies, the overall GHG
reduction largely depends on the
control and calibration strategies of
individual manufacturers and vehicle
types. Also, the current vehicle
simulation tool does not yet have the
capability to properly simulate the
vehicle behaviors that depend on
thermal conditions of the vehicle and its
surroundings, such as Active Engine/
Transmission Warm-Up and Solar
Control. Therefore, the vehicle
simulation may not provide full benefits
of the technologies on the GHG
reductions. For this reason, the agency
is not proposing to use the simulation
tool to generate the GHG credits for
these technologies at this time, though
future versions of the model may be
more capable of quantifying the efficacy
of these off-cycle technologies as well.
iv. In-Use Emissions Requirements
EPA requires off-cycle components to
be durable in-use and continues to
believe that this is an important aspect
of the program. See 86.1866–12
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(d)(1)(iii). The technologies upon which
the credits are based are subject to full
useful life compliance provisions, as
with other emissions controls. Unless
the manufacturer can demonstrate that
the technology would not be subject to
in-use deterioration over the useful life
of the vehicle, the manufacturer must
account for deterioration in the
estimation of the credits in order to
ensure that the credits are based on real
in-use emissions reductions over the life
of the vehicle. In-use requirements
would apply to technologies generating
credits based on the pre-defined list as
well as to those based on a
manufacturer’s demonstration.
Manufacturers have requested
clarification of these provisions and
guidance on how to demonstrate in-use
performance. EPA is proposing to clarify
that off-cycle technologies are
considered emissions related
components and all in-use requirements
apply including defect reporting,
warranty, and recall. OBD requirements
do not apply under the MY 2012–2016
program and EPA is not proposing any
OBD requirements at this time for offcycle technologies. Manufacturers may
establish maintenance intervals for
these components in the same way they
would for other emissions related
components. The performance of these
components would be considered in
determining compliance with the
applicable in-use CO2 standards.
Manufacturers may demonstrate in-use
emissions durability at time of
certification by submitting an
engineering analysis describing why the
technology is durable and expected to
last for the full useful life of the vehicle.
This demonstration may also include
component durability testing or through
whole vehicle aging if the manufacturer
has such data. The demonstration
would be subject to EPA approval prior
to credits being awarded.323 EPA
believes these provisions are important
to ensure that promised emissions
reductions and fuel economy benefit to
the consumer are delivered in-use. EPA
requests comments on the above
approach for in-use emissions
durability.
v. Step-by-Step EPA Review Process
EPA proposes to provide a step-bystep process and timeline for reviewing
credit applications and providing a
decision to manufacturers. EPA requests
comments on the process described
below including comments on how to
further improve or streamline it while
maintaining its effectiveness. EPA
323 Listed technologies are pre-approved
assuming the manufacturer demonstrates durability.
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proposes these clarifications and further
detailed step-by-step instructions for
new MY 2012–2016 credits as well as
for MY 2017–2025. EPA believes these
additional details are consistent with
the general off-cycle requirements
adopted in the MY 2012–2016 rule.
Starting in MY 2017, EPA is proposing
that manufacturers may generate credits
using technologies on a pre-defined list,
and these technologies would not be
required to go through the approval
process described below.
Step 1: Manufacturer Conducts Testing
and Prepares Application
• 5-cycle—Manufacturers would
conduct the testing and/or
simulation described above
• Non 5-cycle—Manufacturers would
develop a methodology for non 5cycle based demonstration and
carry-out necessary testing and
analysis
Æ Manufacturers may opt to meet
with EPA to discuss their plans for
demonstrating technologies and
seek EPA input prior to conducting
testing or analysis
• Manufacturers conduct engineering
analysis and/or testing to
demonstrate in-use durability
Step 2: Manufacturer Submits
Application
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The manufacturer application must
contain the following:
• Description of the off-cycle
technologies and how they function
to reduce off-cycle emissions
• The vehicle models on which the
technology will be applied
• Test vehicles selection and supporting
engineering analysis for their
selection
• 5-cycle test data, and/or including
simulation results using EPA Lightduty Simulation Tool, as applicable
• For credits not based on 5-cycle
testing, a complete description of
methodology used to estimate
credits and supporting data (vehicle
test data and activity data)
Æ Manufacturer may seek EPA input
on methodology prior to conducting
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testing or analysis
• An estimate of off-cycle credits by
vehicle model, and fleetwide based
on projected vehicle sales
• Engineering analysis and/or
component durability testing or
whole vehicle test data (as
necessary) demonstrating in-use
durability of components
Step 3: EPA Review
Once EPA receives an application,
EPA would do the following:
• EPA will review the application for
completeness and within 30 days
will notify the manufacturer if
additional information is needed
• EPA will review the data and
information provided to determine
if the application supports the level
of credits estimated by
manufacturers
• EPA will consult with NHTSA on the
application and the data received in
cases where the manufacturer
intends to generate fuel
consumption improvement values
for CAFE in MY 2017 and later
• For applications where the rule
specifies public participation in the
review process, EPA will make the
applications available to the public
within 60 days of receiving a
complete application
Æ The public review period will be 30
day review of the methodology used
by the manufacturer to estimate
credits, during which time the
public may submit comments.
Æ Manufacturers may submit a
written rebuttal of comments for
EPA consideration or may revise
their application in response to
comments following the end of the
public review period.
Step 4: EPA Decision
• For applications where the rule
does not specify public participation
and review, EPA, after consultation with
NHTSA in cases where the
manufacturer intends to generate fuel
consumption improvement values for
CAFE in MY 2017 and later, will notify
the manufacturer of its decision within
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60 days of receiving a complete
application.
• For applications where the rule
does specify public participation and
review, EPA will notify the
manufacturer of its decision on the
application after reviewing public
comments.
• EPA will notify manufacturers in
writing of its decision to approve or
deny the credits application, and
provide a written explanation for its
action (supported by the administrative
record for the application proceeding).
c. Off-Cycle Technology Fuel
Consumption Improvement Values in
the CAFE Program
EPA proposes, in coordination with
NHTSA, that manufacturers would be
able to generate fuel consumption
improvement values equivalent to CO2
off-cycle credits for use in the CAFE
program. EPA is proposing that a CAFE
improvement value for off-cycle
improvements be determined at the fleet
level by converting the CO2 credits
determined under the EPA program (in
metric tons of CO2) for each fleet (car
and truck) to a fleet fuel consumption
improvement value. This improvement
value would then be used to adjust the
fleet’s CAFE level upward. See the
proposed regulations at 40 CFR
600.510–12. Note that while the
following table presents fuel
consumption values equivalent to a
given CO2 credit value, these
consumption values are presented for
informational purposes and are not
meant to imply that these values will be
used to determine the fuel economy for
individual vehicles. For off-cycle CO2
credits not based on the list,
manufacturers would go though the
steps described above in Section
III.C.5.b. Again, all off-cycle CO2 credits
would be converted to a gallons per
mile fuel consumption improvement
value at a fleet level for purposes of the
CAFE program. EPA would approve
credit generation, and corresponding
equivalent fuel consumption
improvement values, in consultation
with NHTSA.
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D. Technical Assessment of the
Proposed CO2 Standards
This proposed rule is based on the
need to obtain significant GHG
emissions reductions from the
transportation sector, and the
recognition that there are cost-effective
technologies available in this timeframe
to achieve such reductions for MY
2017–2025 light duty vehicles. As in
many prior mobile source rulemakings,
the decision on what standard to set is
largely based on the effectiveness of the
emissions control technology, the cost
and other impacts of implementing the
technology, and the lead time needed
for manufacturers to employ the control
technology. The standards derived from
assessing these factors are also
evaluated in terms of the need for
reductions of greenhouse gases, the
degree of reductions achieved by the
standards, and the impacts of the
standards in terms of costs, quantified
benefits, and other impacts of the
standards. The availability of
technology to achieve reductions and
the cost and other aspects of this
technology are therefore a central focus
of this rulemaking.
EPA is taking the same basic approach
in this rulemaking as that taken in the
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MYs 2012–2016 rulemaking. EPA is
evaluating emissions control
technologies which reduce CO2 and
other greenhouse gases. CO2 emissions
from automobiles are largely the
product of fuel combustion. Vehicles
combust fuel to perform two basic
functions: (1) to transport the vehicle,
its passengers and its contents (and any
towed loads), and (2) to operate various
accessories during the operation of the
vehicle such as the air conditioner.
Technology can reduce CO2 emissions
by either making more efficient use of
the energy that is produced through
combustion of the fuel or reducing the
energy needed to perform either of these
functions.
This focus on efficiency calls for
looking at the vehicle as an entire
system, and as in the MYs 2012–2016
rule, the proposed standards reflect this
basic paradigm. In addition to fuel
delivery, combustion, and
aftertreatment technology, any aspect of
the vehicle that affects the need to
produce energy must also be
considered. For example, the efficiency
of the transmission system, which takes
the energy produced by the engine and
transmits it to the wheels, and the
resistance of the tires to rolling both
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have major impacts on the amount of
fuel that is combusted while operating
the vehicle. The braking system, the
aerodynamics of the vehicle, and the
efficiency of accessories, such as the air
conditioner, all affect how much fuel is
combusted as well.
In evaluating vehicle efficiency, we
have excluded fundamental changes in
vehicles’ utility.324 For example, we did
not evaluate converting minivans and
SUVs to station wagons, converting
vehicles with four wheel drive to two
wheel drive, or reducing headroom in
order to lower the roofline and reduce
aerodynamic drag. We have limited our
assessment of technical feasibility and
resultant vehicle cost to technologies
which maintain vehicle utility as much
as possible (and, in our assessment of
the costs of the rule, included the costs
to manufacturers of preserving vehicle
utility). Manufacturers may decide to
alter the utility of the vehicles which
they sell, but this would not be a
324 EPA recognizes that electric vehicles, a
technology considered in this analysis, have unique
attributes and discusses these considerations in
Section III.H.1.b. There is also a fuller discussion
of the utility of Atkinson engine hybrid vehicles in
EPA DRIA Chapter 1.
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necessary consequence of the rule but
rather a matter of automaker choice.
This need to focus on the efficient use
of energy by the vehicle as a system
leads to a broad focus on a wide variety
of technologies that affect vehicle
design. As discussed below, there are
many technologies that are currently
available which can reduce vehicle
energy consumption. Several of these
are ‘‘game-changing’’ technologies and
are already being commercially utilized
to a limited degree in the current lightduty fleet. Examples include hybrid
technologies that use high efficiency
batteries and electric motors as the
power source in combination with or
instead of internal combustion engines,
plug-in hybrid electric vehicles, and
battery-electric vehicles. While already
commercialized, these technologies
continue to be developed and offer the
potential for even more significant
efficiency improvements. There are also
other advanced technologies under
development and not yet on production
vehicles, such as high BMEP engines
with cooled EGR, which offer the
potential of improved energy generation
taking the gasoline combustion process
nearly to its thermodynamic limit. In
addition, the available technologies are
not limited to powertrain improvements
but also include a number of
technologies that are expected to
continually improve incrementally,
such as engine friction reduction,
rolling resistance reduction, mass
reduction, electrical system efficiencies,
and aerodynamic improvements.
The large number of possible
technologies to consider and the breadth
of vehicle systems that are affected
mean that consideration of the
manufacturer’s design, product
development and manufacturing
process plays a major role in developing
the proposed standards. Vehicle
manufacturers typically develop many
different models by basing them on a
limited number of vehicle platforms.
The platform typically consists of a
common set of vehicle architecture and
structural components.325 This allows
for efficient use of design and
manufacturing resources. Given the very
large investment put into designing and
producing each vehicle model,
manufacturers typically plan on a major
redesign for the models approximately
every 5 years.326 At the redesign stage,
the manufacturer will upgrade or add all
of the technology and make most other
changes supporting the manufacturer’s
325 Examples of shared vehicle platforms include
the Ford Taurus and Ford Explorer or the Chrysler
Sebring and Dodge Journey.
326 See TSD Chapter 3.
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plans for the next several years,
including plans to comply with
emissions, fuel economy, and safety
regulations.327 This redesign often
involves significant engineering,
development, manufacturing, and
marketing resources to create a new
product with multiple new features. In
order to leverage this significant upfront
investment, manufacturers plan vehicle
redesigns with several model years’ of
production in mind. Vehicle models are
not completely static between redesigns
as limited changes are often
incorporated for each model year. This
interim process is called a refresh of the
vehicle and generally does not allow for
major technology changes although
more minor ones can be done (e.g.,
small aerodynamic improvements, valve
timing improvements, etc). More major
technology upgrades that affect multiple
systems of the vehicle thus occur at the
vehicle redesign stage and not in the
time period between redesigns.
This proposal affects nine years of
vehicle production, model years 2017–
2025. Given the now-typical five year
redesign cycle, many vehicles will be
redesigned three times between MY
2012 and MY 2025 and are expected to
be redesigned twice during the 2017–
2025 timeframe. Due to the relatively
long lead time before 2017, there are
fewer lead time concerns with regard to
product redesign in this proposal than
with the MYs 2012–2016 rule (or the
MY 2014–2018 rule for heavy duty
vehicles and engines). However, there
are still some technologies that require
significant lead time, and are not
projected to be heavily utilized in the
first years of this proposal. An example
is the advanced high BMEP, cooled EGR
engines. As these engines are not yet in
vehicles today, a research and
development period is required, even if
there are a number of demonstration
projects complete (as discussed in
Chapter 3 of the joint TSD).
In developing the proposed MY 2021
and 2025 car and truck curves
(discussed in Section III.B), EPA used
the OMEGA model to evaluate
technologies that manufacturers could
use to comply with the targets which
those curves would establish. These
curves correspond to sales-weighted
fleetwide CO2 average targets of 200 g/
mile in MY 2021 and 163 g/mile in MY
2025. As discussed later in this section,
we believe that this level of technology
application to the light-duty vehicle
fleet can be achieved in this time frame,
the standards will produce significant
reductions in GHG emissions, and the
327 TSD 3 discusses redesign schedules in greater
detail.
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costs for both the industry and the costs
to the consumer are reasonable and that
consumer savings due to improved fuel
economy will more than pay for the
increased vehicle cost over the life of
the vehicles. EPA also estimated costs
for the intermediate model years 2017
through 2020 based on the OMEGA
analyses in MYs 2016 and 2021 as well
as the intermediate model years 2022–
2024 based on the OMEGA analyses in
MYs 2021 and 2025.
EPA’s technical assessment of the
proposed MY2017–2025 standards is
described below. EPA has also
evaluated a set of alternative standards
for these model years, two of which are
more stringent and two of which are less
stringent than the standards proposed.
The technical assessment of these
alternative standards in relation to the
ones proposed is discussed at the end of
this section.
Evaluating the appropriateness of
these standards includes a core focus on
identifying available technologies and
assessing their effectiveness, cost, and
impact on relevant aspects of vehicle
performance and utility. The wide
number of technologies which are
available and likely to be used in
combination requires a sophisticated
assessment of their combined cost and
effectiveness. An important factor is
also the degree that these technologies
are already being used in the current
vehicle fleet and thus, unavailable for
use to improve energy efficiency beyond
current levels. Finally, the challenge for
manufacturers to design the technology
into their products within the
constraints of the redesign cycles, and
the appropriate lead time needed to
employ the technology over the product
line of the industry must be considered.
Applying these technologies
efficiently to the wide range of vehicles
produced by various manufacturers is a
challenging task involving dozens of
technologies and hundreds of vehicle
platforms. In order to assist in this task,
EPA is again using a computerized
program called the Optimization Model
for reducing Emissions of Greenhouse
gases from Automobiles (OMEGA).
Broadly, OMEGA starts with a
description of the future vehicle fleet
(i.e. the ‘reference fleet’; see section II.B
above), including manufacturer, sales,
base CO2 emissions, footprint and the
extent to which emission control
technologies are already employed. For
the purpose of this analysis, EPA uses
OMEGA to analyze over 200 vehicle
platforms comprising approximately
1300 vehicle models in order o capture
the important differences in vehicle and
engine design and utility of future
vehicle sales of roughly 16–18 million
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units annually in the 2017–2025
timeframe. The model is then provided
with a list of technologies which are
applicable to various types of vehicles,
along with the technologies’ cost and
effectiveness and the percentage of
vehicle sales which can receive each
technology during the redesign cycle of
interest. The model combines this
information with economic parameters,
such as fuel prices and a discount rate,
to project how various manufacturers
would apply the available technology in
order to meet increasing levels of
emission control. The result is a
description of which technologies are
added to each vehicle platform, along
with the resulting cost. While OMEGA
can apply technologies which reduce
CO2 efficiency related emissions and
refrigerant leakage emissions associated
with air conditioner use, this task is
currently handled outside of the
OMEGA model. A/C improvements are
relatively cost-effective, and would
always be added to vehicles by the
model, thus they are simply added into
the results at the projected penetration
levels. The model can also be set to
account for the various proposed
compliance flexibilities (and to
accommodate compliance flexibilities in
general.
The remainder of this section
describes the technical feasibility
analysis in greater detail. Section III.D.1
describes the development of our
reference and control case projections of
the MY 2017–2025 fleet. Section III.D.2
describes our estimates of the
effectiveness and cost of the control
technologies available for application in
the 2017–2025 timeframe. Section
III.D.3 describes how these technologies
are combined into packages likely to be
applied at the same time by a
manufacturer. In this section, the overall
effectiveness of the technology packages
`
vis-a-vis their effectiveness when
adopted individually is described.
Section III.D.4 describes EPA’s OMEGA
model and its approach to estimating
how manufacturers will add technology
to their vehicles in order to comply with
potential CO2 emission standards.
Section III.D.5 presents the results of the
OMEGA modeling, namely the level of
technology added to manufacturers’
vehicles and the cost of adding that
technology. Section III.D.6 discusses the
appropriateness (or lack of
appropriateness) of the alternative
standards in relation to those proposed.
Further technical detail on all of these
issues can be found in the Draft Joint
Technical Support Document as well as
EPA’s Regulatory Impact Analysis.
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1. How did EPA develop a reference and
control fleet for evaluating standards?
In order to calculate the impacts of
this proposal, it is necessary to project
the GHG emissions characteristics of the
future vehicle fleet absent the proposed
regulation. EPA and NHTSA develop
this projection using a three step
process. (1) Develop a set of detailed
vehicle characteristics and sales for a
specific model year (in this case,
2008).328 This is called the baseline
fleet. (2) Adjust the sales of this baseline
fleet using projections made by the
Energy Information Administration
(EIA) and CSM to account for projected
sales volumes in future MYs absent
future regulation.329 (3) Apply fuel
saving and emission control technology
to these vehicles to the extent necessary
for manufacturers to comply with the
existing 2016 standards and the
proposed standards.
Thus, the analyzed fleet differs from
the MY 2008 baseline fleet in both the
level of technology utilized and in terms
of the sales of any particular vehicle. A
similar method is used to analyze both
reference and control cases, with the
major distinction being the stringency of
the standards.
EPA and NHTSA perform steps one
and two above in an identical manner.
The development of the characteristics
of the baseline 2008 fleet and the sales
adjustment to match AEO and CSM
forecasts is described in Section II.B
above and in greater detail in Chapter 1
of the joint TSD. The two agencies
perform step three in a conceptually
identical manner, but each agency
utilizes its own vehicle technology and
emission model to project the
technology needed to comply with the
reference and proposed standards.
Further, each agency evaluates its own
proposed and MY 2016 standards;
neither NHTSA nor EPA evaluated the
other agency’s standard in this
proposal.330
The use of MY 2008 vehicles in our
fleet projections includes vehicle
models which already have or will be
discontinued by the time this rule takes
effect and will be replaced by more
advanced vehicle models. However, we
believe that the use of MY 2008 vehicle
designs is still the most appropriate
328 As discussed in TSD Chapter 1, and in Section
II.B.2, the agencies will consider using Model Year
2010 for the final rule, based on availability and an
analysis of the data representativeness.
329 See generally Chapter 1 of the Joint TSD for
details on development of the baseline fleet, and
Section III.H.1 for a discussion of the potential sales
impacts of this proposal.
330 While the MY 2012–2016 standards are largely
similar, some important differences remain. See 75
FR at 25342.
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approach available for this proposal.331
First, as discussed in Section II.B above,
the designs of these MYs 2017–2025
vehicles at the level of detail required
for emission and cost modeling are not
publically available, and in many cases,
do not yet exist. Even manufacturers’
confidential descriptions of these
vehicle designs are usually not of
sufficient detail to facilitate the level of
technology and emission modeling
performed by both agencies. Second,
steps two and three of the process used
to create the reference case fleet adjust
both the sales and technology of the
2008 vehicles. Thus, our reference fleet
reflects the extent that completely new
vehicles are expected to shift the light
vehicle market in terms of both segment
and manufacturer. Also, by adding
technology to facilitate compliance with
the MY 2016 standards, we account for
the vast majority of ways in which these
new vehicles will differ from their older
counterparts.
a. Reference Fleet Scenario Modeled
EPA projects that in the absence of the
proposed GHG and CAFE standards, the
reference case fleet in MY 2017–2025
would have fleetwide GHG emissions
performance no better than that
projected to be necessary to meet the
MY 2016 standards. While it is not
possible to know with certainty the
future fleetwide GHG emissions
performance in the absence of more
stringent standards, EPA believes that
this approach is the most reasonable
projection for developing the reference
case fleet for MYs 2017–2025. One
important element supporting the
proposed approach is that AEO2011
projects relatively stable gasoline prices
over the next 15 years. The average
actual price in the U.S. for the first nine
months of 2011 for gasoline was $3.57
per gallon ($3.38 in 2009 dollars).332
However, the AEO2011 reference case
projects a price of $2.80 per gallon (in
2009 dollars) AEO2011 projects prices
to be $3.25 in 2017, rising slightly to
$3.54 per gallon in 2025 (which is less
than a 4 cent per year increase on
average). Based on these fuel price
projections, the reference fleet for MYs
2017–2025 should correspond to a time
period where there is a stable,
unchanging GHG standard, and
essentially stable gasoline prices.
EPA reviewed the historical record for
similar periods when we had stable fuel
economy standards and stable gasoline
331 See section II.B.2 concerning the selection of
MY 2008 as the appropriate baseline.
332 The Energy Information Administration
estimated the average regular unleaded gasoline
price in the U.S. for the first nine months of 2011
was $3.57.
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prices. EPA maintains, and publishes
every year, the seminal reference on
new light-duty vehicle CO2 emissions
and fuel economy.333 This report
contains very detailed data from MYs
1975–2010. There was an extended 18year period from 1986 through 2003
during which CAFE standards were
essentially unchanged,334 and gasoline
prices were relatively stable and
remained below $1.50 per gallon for
almost the entire period. The 1975–1985
and 2004–2010 timeframes are not
relevant in this regard due to either
rising gasoline prices, rising CAFE
standards, or both. Thus, the 1986–2003
time frame is an excellent analogue to
the period out to MY 2025 during which
AEO projects relatively stable gasoline
prices. EPA staff have analyzed the fuel
economy trends data from the 1986–
2003 timeframe (during which CAFE
standards did not vary by footprint) and
have drawn three conclusions: (1) there
was a small, industry-wide, average
over-compliance with CAFE on the
order of 1–2 mpg or 3–4%, (2) almost all
of this industry-wide over-compliance
was from 3 companies (Toyota, Honda,
and Nissan) that routinely overcomplied with the universal CAFE
standards simply because they
produced smaller and lighter vehicles
relative to the industry average, and (3)
full line car and truck manufacturers,
such as General Motors, Ford, and
Chrysler, which produced larger and
heavier vehicles relative to the industry
average and which were constrained by
the universal CAFE standards, rarely
over-complied during the entire 18-year
period.335
Since the MY 2012–2016 standards
are footprint-based, every major
manufacturer is expected to be
constrained by the new standards in
2016 and manufacturers of small
vehicles will not routinely over-comply
as they had with the past universal
standards.336 Thus, the historical
evidence and the footprint-based design
of the 2016 GHG emissions and CAFE
standards strongly support the use of a
reference case fleet where there are no
further fuel economy improvements
beyond those required by the MY 2016
standards. There are additional factors
that reinforce the historical evidence.
While it is possible that one or two
333 Light-Duty Automotive Technology, Carbon
Dioxide Emissions, and Fuel Economy Trends: 1975
through 2010, November 2010, available at https://
www.epa.gov/otaq/fetrends.htm.
334 There are no EPA LD GHG emissions
regulations prior to MY 2012.
335 See Regulatory Impact Analysis, Chapter 3.
336 With the notable exception of manufacturers
who only market electric vehicles or other limited
product lines.
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companies may over-comply, any
voluntary over-compliance by one
company would generate credits that
could be sold to other companies to
substitute for their more expensive
compliance technologies; this ability to
buy and sell credits could eliminate any
over-compliance for the overall fleet.337
NHTSA also evaluated EIA assumptions
and inputs employed in the version of
NEMS used to support AEO 2011 and
found, based on this analysis, that when
fuel economy standards were held
constant after MY 2016, EIA appears to
forecast market-driven levels of overand under-compliance generally
consistent with a CAFE model analysis
using a flat, 2016-based reference case
fleet. From a consumer market driven
perspective, while there is considerable
evidence that many consumers now care
more about fuel economy than in past
decades, the 2016 compliance level is
projected to be several mpg higher than
that being demanded in the market
today.338 On the other hand, some
manufacturers have already announced
plans to introduce technology well
beyond that required by the 2016 MY
GHG standards.339 However, it is
difficult, if not impossible, to separate
future fuel economy improvements
made for marketing purposes from those
designed to efficiently plan for
compliance with anticipated future
CAFE or CO2 emission standards, i.e.,
some manufacturers may have made
public statements about higher mpg
levels in the future in part because of
the expectation of higher future
standards.
All estimates of actual GHG emissions
and fuel economy performance in 2016
or other future years are projections, and
it is plausible that actual GHG emissions
and fuel economy performance in 2016
and later years, absent more stringent
standards, could be worse than
projected if there are shifts from car
market share to truck market share, or
to higher footprint levels. For example,
average fuel economy performance
levels decreased over the period from
1986–2003 even as car CAFE standards
were stable and truck CAFE levels rose
337 Oates, Wallace E., Paul R. Portney, and Albert
M. McGartland. ‘‘The Net Benefits of IncentiveBased Regulation: A Case Study of Environmental
Standard Setting.’’ American Economic Review
79(5) (December 1989): 1233–1242.
338 The average, fleetwide ‘‘laboratory’’ or
‘‘unadjusted’’ fuel economy value for MY 2010 is
28.3 mpg (see Light-Duty Automotive Technology,
Carbon Dioxide Emissions, and Fuel Economy
Trends: 1975 Through 2010, November 2010,
available at https://www.epa.gov/otaq/fetrends.htm),
6–7 mpg less than the 34–35 mpg levels necessary
to meet the EPA GHG and NHTSA CAFE levels in
MY 2016.
339 For example, Hyundai has made a public
commitment to achieve 50 mpg by 2025.
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slightly.340 On the other hand, it is also
possible that future GHG emissions and
fuel economy performance could be
better than MY2016 levels if there are
shifts from trucks to cars, or to lower
footprint levels. While EPA has not
performed a quantified sensitivity
assessment for this proposal, EPA
believes that a reasonable range for a
sensitivity analysis would evaluate over
or under compliance on the order of a
few percent which EPA projects would
have, at most, a small impact on
projected program costs and benefits.
Based on this assessment, the EPA
reference case fleet is estimated through
the target curves defined in the MY
2016 rulemaking applied to the
projected MYs 2017–2025 fleet.341 As in
the previous rulemaking, EPA assumes
that manufacturers make use of 10.2
grams of air conditioning credits on cars
and 11.5 on light trucks, or an average
of approximately 11 grams on the U.S.
fleet and the technology for doing so is
included in the reference case (Section
III.C).
b. Control Scenarios Modeled
For the control scenario, EPA
modeled the proposed standard curves
discussed in Section III.B, as well as the
alternative scenarios discussed in
III.D.6. Other flexibilities are accounted
for in the analysis. The air conditioning
credits modeled are discussed in III.D.2.
Air conditioning credits (both leakage
and efficiency) are included in the cost
and technology analysis described
below. The compliance value of 0 g/mi
for PHEVs and EVs are also included.
However, off-cycle credits, PH/EV
multipliers through MY 2021, pickup
truck credits, flexible fuel, and carry
forward/back credits are not included
explicitly in the cost analysis. These
flexibilities will offer the manufacturers
more compliance options. Moreover, the
overall cost analysis includes small
volume manufacturers in the fleet,
which would have company specific
standards assuming this part of the
proposal is finalized (see section III.C).
As we expect all of these flexibilities
together to only have a small impact on
the fleet compliance costs on average,
we will re-evaluate including them in
the final rule analysis.
c. Vehicle Groupings Used
In order to create future technology
projections and enable compliance with
the modeled standards, EPA aggregates
vehicle sales by a combination of
manufacturer, vehicle platform, and
engine design for the OMEGA model. As
340 See
341 75
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discussed above, manufacturers
implement major design changes at
vehicle redesign and tend to implement
these changes across a vehicle platform
(such as large SUV, mid-size SUV, large
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automobile, etc) at a given
manufacturing plant. Because the cost of
modifying the engine depends on the
valve train design (such as SOHC,
DOHC, etc.), the number of cylinders
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and in some cases head design, the
vehicle sales are broken down beyond
the platform level to reflect relevant
engine differences. The vehicle
groupings are shown in Table III–19.
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2. What are the Effectiveness and Costs
of CO2-Reducing Technologies?
EPA and NHTSA worked together to
develop information on the
effectiveness and cost of most CO2reducing and fuel economy-improving
technologies. This joint work is
reflected in Chapter 3 of the draft Joint
TSD and in Section II.D of this
preamble. The work on technology cost
and effectiveness also includes
maximum penetration rates, or ‘‘caps’’
for the OMEGA model. These caps are
an important input to OMEGA that
capture the agencies’ analysis
concerning the rate at which
mile) as more vehicles in the fleet
convert to use of the new alternative
refrigerant.342 By 2021, we project that
100% of the MY 2021 fleet will be using
alternative refrigerants, and that credits
will remain constant on a car and truck
basis until 2025. Note from the table
below that costs then decrease from
2021 to 2025 due to manufacturer
learning as discussed in Section II of
this preamble and in Chapter 3 of the
draft joint TSD. A more in-depth
discussion of feasibility and availability
of low GWP alternative refrigerants, can
be found in Section III.C of the
Preamble.
table in III.B.
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342 See
technologies can be added to the fleet
(see Chapter 3.5 of the draft joint TSD
for more detail). This preamble section,
rather than repeating those details,
focuses upon EPA-only technology
assumptions, specifically, those relating
to air conditioning refrigerant.
EPA expects all manufacturers will
choose to use AC improvement credit
opportunities as a strategy for
complying with the CO2 standards, and
has set the stringency of the proposed
standards accordingly (see section II.F
above). EPA estimates that the level of
the credits earned will increase from
2017 (13 grams/mile) to 2021 (21 grams/
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3. How were technologies combined
into ‘‘Packages’’ and what is the cost
and effectiveness of packages?
Individual technologies can be used
by manufacturers to achieve
incremental CO2 reductions. However,
as discussed extensively in the MYs
2012–2016 Rule, EPA believes that
manufacturers are more likely to bundle
technologies into ‘‘packages’’ to capture
synergistic aspects and reflect
progressively larger CO2 reductions with
additions or changes to any given
package. In this manner, and consistent
with the concept of a redesign cycle,
manufacturers can optimize their
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available resources, including
engineering, development,
manufacturing and marketing activities
to create a product with multiple new
features. Therefore, the approach taken
here is to group technologies into
packages of increasing cost and
effectiveness.
EPA built unique technology packages
for each of 19 ‘‘vehicle types,’’ which,
as in the MYs 2012–2016 rule and the
Interim Joint TAR, provides sufficient
resolution to represent the technology of
the entire fleet. This was the result of
analyzing the existing light duty fleet
with respect to vehicle size and
powertrain configurations. All vehicles,
including cars and trucks, were first
distributed based on their relative size,
starting from compact cars and working
upward to large trucks. Next, each
vehicle was evaluated for powertrain,
specifically the engine size (I4, V6, and
V8) then by valvetrain configuration
(DOHC, SOHC, OHV), and finally by the
number of valves per cylinder. For
purposes of calculating some technology
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costs and effectiveness values, each of
these 19 vehicle types is mapped into
one of seven classes of vehicles:
Subcompact, Small car, Large car,
Minivan, Minivan with towing, Small
truck, and Large truck.343 We believe
that these seven vehicle classes, along
with engine cylinder count, provide
adequate representation for the cost
basis associated with most technology
application. Note also that these 19
vehicle types span the range of vehicle
footprints—smaller footprints for
smaller vehicles and larger footprints for
larger vehicles—which served as the
basis for the 2012–2016 GHG standards
and the standards in this proposal. A
detailed table showing the 19 vehicle
types, their baseline engines and their
343 Note that, for the current assessment and
representing an update since the 2010 TAR, EPA
has created a new vehicle class called ‘‘minivan
with towing’’ which allows for greater
differentiation of costs for this popular class of
vehicles (such as the Ford Edge, Honda Odyssey,
Jeep Grand Cherokee).
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Additionally, by MY 2019, EPA
estimates that 100% of the A/C
efficiency improvements will by fully
phased-in. However 85% of these costs
are already in the reference fleet, as this
is the level of penetration assumed in
the 2012–2016 final rule. The
penetration of A/C costs for this
proposal can be found in Chapter 5 of
the draft joint TSD.
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descriptions is contained in Table III–19
and in Chapter 1 of EPA’s draft RIA.
Within each of the 19 vehicle types,
multiple technology packages were
created in increasing technology content
resulting in increasing effectiveness. As
stated earlier, with few exceptions, each
package is meant to provide equivalent
driver-perceived performance to the
baseline package. Note that we refer
throughout this discussion of package
building to a ‘‘baseline’’ vehicle or a
‘‘baseline’’ package. This should not be
confused with the baseline fleet, which
is the fleet of roughly 16 million
2008MY individual vehicles comprised
of over 1,100 vehicle models. In this
discussion, when we refer to ‘‘baseline’’
vehicle we refer to the ‘‘baseline’’
configuration of the given vehicle type.
So, we have 19 baseline vehicles in the
context of building packages. Each of
those 19 baseline vehicles is equipped
with a port fuel injected engine and a 4
speed automatic transmission. The
valvetrain configuration and the number
of cylinders changes for each vehicle
type in an effort to encompass the
diversity in the 2008 baseline fleet as
discussed above. In short, while the
baseline vehicle that defines the vehicle
type is relevant when discussing the
package building process, the baseline
and reference case fleets of real vehicles
are not relevant to the discussion here.
We describe this in more detail in
Chapter 1 of EPA’s draft RIA.
To develop a set of packages as
OMEGA inputs, EPA builds packages
consisting of every legitimate
permutation of technology available,
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subject to constraints.344 This
‘‘preliminary-set’’ of packages consists
of roughly 2,000 possible packages of
technologies for each of 19 vehicle
types, or nearly 40,000 packages in all.
The cost of each package is determined
by adding the cost of each individual
technology contained in the package for
the given year of interest. The
effectiveness of each package is
determined in a more deliberate
manner; one cannot simply add the
effectiveness of individual technologies
to arrive at a package-level effectiveness
because of the synergistic effects of
technologies when grouped with other
technologies that seek to improve the
same or similar efficiency loss
mechanism. As an example, the benefits
of the engine and transmission
technologies can usually be combined
multiplicatively,345 but in some cases,
the benefit of the transmission-related
technologies overlaps with the engine
technologies. This occurs because the
transmission technologies shift
operation of the engine to more efficient
locations on the engine map by
incorporating more ratio selections and
344 Example constraints include the requirement
for stoichiometric gasoline direct injection on every
turbocharged and downsized engine and/or any 27
bar BMEP turbocharged and downsized engine
must also include cooled EGR. Some constraints are
the result of engineering judgment while others are
the result of effectiveness value estimates which are
tied to specific combinations of technologies.
345 For example, if an engine technology reduces
CO2 emissions by five percent and a transmission
technology reduces CO2 emissions by four percent,
the benefit of applying both technologies is 8.8
percent (100% ¥ (100% ¥ 4%) * (100% ¥ 5%)).
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a wider ratio span into the
transmissions. Some of the engine
technologies have the same goal, such as
cylinder deactivation, advanced
valvetrains, and turbocharging. In order
to account for this overlap and avoid
over-estimating emissions reduction
effectiveness, EPA uses an engineering
approach known as the lumpedparameter technique. The results from
this approach were then applied
directly to the vehicle packages. The
lumped-parameter technique is well
documented in the literature, and the
specific approach developed by EPA is
detailed in Chapter 3 (Section 3.3.2) of
the draft joint TSD as well as Chapter 1
of EPA’s draft RIA.
Table III–21 presents technology costs
for a subset of the more prominent
technologies in our analysis (note that
all technology costs are presented in
Chapter 3 of the draft Joint TSD and in
Chapter 1.2 of EPA’s draft RIA). Table
III–21 includes technology costs for a V6
dual overhead cam midsize or large car
and a V8 overhead valve large pickup
truck. This table is meant to illustrate
how technology costs are similar and/or
different for these two large selling
vehicle classes and how the technology
costs change over time due to learning
and indirect cost changes as described
in section II.D of this preamble and at
length in Chapter 3.2 of the draft Joint
TSD. Note that these costs are not
package costs but, rather, individual
technology costs. We present package
costs for the V6 midsize or large car in
Table III–22, below.
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result of this TARF ranking process is a
‘‘ranked-set’’ of roughly 500 packages
for use as OMEGA inputs, or roughly 25
per vehicle type. EPA prepares a ranked
set of packages for any MY in which
OMEGA is run,347 the initial packages
represent what we believe a
manufacturer will most likely
implement on all vehicles, including
lower rolling resistance tires, low
friction lubricants, engine friction
reduction, aggressive shift logic, early
torque converter lock-up, improved
electrical accessories, and low drag
brakes (to the extent not reflected in the
baseline vehicle).348 Subsequent
packages include gasoline direct
injection, turbocharging and
downsizing, and more advanced
transmission technologies such as six
and eight speed dual-clutch
transmissions and 6 and 8 speed
automatic transmissions. The most
technologically advanced packages
within a vehicle type include the
hybrids, plug-in hybrids and electric
vehicles. Note that plug-in hybrid and
electric vehicle packages are only
modeled for the non-towing vehicle
types, in order to better maintain utility.
We request comment on this decision
and whether or not we should perhaps
consider plug-in hybrids for towing
vehicle types.
346 The Technology Application Ranking Factor
(TARF) is discussed further in III.D.5.
347 Note that a ranked-set of package is generated
for any year for which OMEGA is run due to the
changes in costs and maximum penetration rates.
EPA’s draft RIA chapter 3 contains more details on
the OMEGA modeling and draft Joint TSD Chapter
3 has more detail on both costs changes over time
and the maximum penetration limits of certain
technologies.
348 When making reference to low friction
lubricants, the technology being referred to is the
engine changes and possible durability testing that
would be done to accommodate the low friction
lubricants, not the lubricants themselves.
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Table III–22 presents the cost and
effectiveness values from a 2025MY
master-set of packages used in the
OMEGA model for EPA’s vehicle type 5,
a midsize or large car class equipped
with a V6 engine. Similar packages were
generated for each of the 19 vehicle
types and the costs and effectiveness
estimates for each of those packages are
discussed in detail in Chapter 1 of
EPA’s draft RIA.
As detailed in Chapter 1 of EPA’s
draft RIA, this preliminary-set of
packages is then ranked according to
technology application ranking factors
(TARFs) to eliminate packages that are
not as cost-effective as others.346 The
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4. How does EPA project how a
manufacturer would decide between
options to improve CO2 performance to
meet a fleet average standard?
As discussed, there are many ways for
a manufacturer to reduce CO2-emissions
from its vehicles. A manufacturer can
choose from a myriad of CO2 reducing
technologies and can apply one or more
of these technologies to some or all of
its vehicles. Thus, for a variety of levels
of CO2 emission control, there are an
almost infinite number of technology
combinations which produce a desired
CO2 reduction. As noted earlier, EPA
used the same model used in the MYs
2012–2016 Rule, the OMEGA model, in
order to make a reasonable estimate of
how manufacturers will add
technologies to vehicles in order to meet
a fleet-wide CO2 emissions level. EPA
has described OMEGA’s specific
methodologies and algorithms
previously in the model
documentation,349 makes the model
publically available on its Web site,350
and has recently peer reviewed the
model.351
The OMEGA model utilizes four basic
sets of input data. The first is a
description of the vehicle fleet. The key
pieces of data required for each vehicle
are its manufacturer, CO2 emission
level, fuel type, projected sales and
footprint. The model also requires that
each vehicle be assigned to one of the
19 vehicle types, which tells the model
which set of technologies can be applied
to that vehicle. (For a description of
how the 19 vehicle types were created,
see Section III.D.3 above.) In addition,
the degree to which each baseline
vehicle already reflects the effectiveness
and cost of each available technology
must also be input. This avoids the
situation, for example, where the model
might try to add a basic engine
improvement to a current hybrid
vehicle. Except for this type of
information, the development of the
required data regarding the reference
fleet was described in Section III.D.1
above and in Chapter 1 of the Joint TSD.
The second type of input data used by
the model is a description of the
technologies available to manufacturers,
primarily their cost and effectiveness.
This information was described above
as well as in Chapter 3 of the draft Joint
TSD and Chapter 1 of EPA’s draft RIA.
In all cases, the order of the
technologies or technology packages for
a particular vehicle type is determined
349 Previous OMEGA documentation for versions
used in MYs 2012–2016 Final Rule (EPA–420–B–
09–035), Interim Joint TAR (EPA–420–B–10–042).
350 https://www.epa.gov/oms/climate/models.htm.
351 EPA–420–R–09–016, September 2009.
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by the model user prior to running the
model. The third type of input data
describes vehicle operational data, such
as annual vehicle scrappage rates and
mileage accumulation rates, and
economic data, such as fuel prices and
discount rates. These estimates are
described in Section II.E above, Section
III.H below and Chapter 4 of the Joint
TSD.
The fourth type of data describes the
CO2 emission standards being modeled.
These include the MY 2016 standards,
proposed MY 2021 and proposed MY
2025 standards. As described in more
detail below, the application of A/C
technology is evaluated in a separate
analysis from those technologies which
impact CO2 emissions over the 2-cycle
test procedure. Thus, for the percent of
vehicles that are projected to achieve A/
C related reductions, the CO2 credit
associated with the projected use of
improved A/C systems is used to adjust
the final CO2 standard which will be
applicable to each manufacturer to
develop a target for CO2 emissions over
the 2-cycle test which is assessed in our
OMEGA modeling. As an example, on
an industry wide basis, EPA projects
that manufacturers will generate 11 g/mi
of A/C credit in 2016. Thus, the 2016
CO2 target in OMEGA was
approximately eleven grams less
stringent for each manufacturer than
predicted by the curves. Similar
adjustments were made for the control
cases (i.e., the A/C credits allowed by
the rule are accounted for in the
standards), but for a larger amount of A/
C credit (approximately 25 grams).
As mentioned above for the market
data input file utilized by OMEGA,
which characterizes the vehicle fleet,
our modeling accounts for the fact that
many 2008 MY vehicles are already
equipped with one or more of the
technologies discussed in Section III.D.2
above. Because of the choice to apply
technologies in packages, and because
2008 vehicles are equipped with
individual technologies in a wide
variety of combinations, accounting for
the presence of specific technologies in
terms of their proportion of package cost
and CO2 effectiveness requires careful,
detailed analysis.
Thus, EPA developed a method to
account for the presence of the
combinations of applied technologies in
terms of their proportion of the
technology packages. This analysis can
be broken down into four steps
The first step in the updated process
is to break down the available GHG
control technologies into five groups: (1)
Engine-related, (2) transmission-related,
(3) hybridization, (4) weight reduction
and (5) other. Within each group, each
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individual technology was given a
ranking which generally followed the
degree of complexity, cost and
effectiveness of the technologies within
each group. More specifically, the
ranking is based on the premise that a
technology on a 2008 baseline vehicle
with a lower ranking would be replaced
by one with a higher ranking which was
contained in one of the technology
packages which we included in our
OMEGA modeling. The corollary of this
premise is that a technology on a 2008
baseline vehicle with a higher ranking
would be not be replaced by one with
an equal or lower ranking which was
contained in one of the technology
packages which we chose to include in
our OMEGA modeling. This ranking
scheme can be seen in an OMEGA preprocessor (the TEB/CEB calculation
macro), available in the docket.
In the second step of the process,
these rankings were used to estimate the
complete list of technologies which
would be present on each baseline
vehicle after the application of a
technology package. In other words, this
step indicates the specific technology on
each baseline vehicle after a package has
been applied to it. EPA then used the
lumped parameter model to estimate the
total percentage CO2 emission reduction
associated with the technology present
on the baseline vehicle (termed package
0), as well as the total percentage
reduction after application of each
package. A similar approach was used
to determine the total cost of all of the
technology present on the baseline
vehicle and after the application of each
applicable technology package.
The third step in this process is to
account for the degree of each
technology package’s incremental
effectiveness and incremental cost is
affected by the technology already
present on the baseline vehicle. In this
step, we calculate the degree to which
a technology package’s effectiveness is
already present on the baseline vehicle,
and produce a value for each package
termed the technology effectiveness
basis, or TEB. The degree to which a
technology package’s incremental cost is
reduced by technology already present
on the baseline vehicle is termed the
cost effectiveness basis, or CEB, in the
OMEGA model. The equations for
calculating these values can be seen in
RIA chapter 3.
As described in Section III.D.3 above,
technology packages are applied to
groups of vehicles which generally
represent a single vehicle platform and
which are equipped with a single engine
size (e.g., compact cars with four
cylinder engine produced by Ford).
These groupings are described in Table
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accrued over the period of time which
they will own the vehicle, which is
estimated to be roughly five years. It is
also assumed that consumers discount
these savings at the same rate as that
used in the rest of the analysis (3 or 7
percent).353 Any residual value of the
additional technology which might
remain when the vehicle is sold is not
considered. The CO2 emission reduction
is the change in CO2 emissions
multiplied by the percentage of vehicles
surviving after each year of use
multiplied by the annual miles travelled
by age.
Given this definition, the higher
priority technologies are those with the
lowest manufacturer-based net costeffectiveness value (relatively low
technology cost or high fuel savings
leads to lower values). Because the
order of technology application is set for
each vehicle, the model uses the
manufacturer-based net costeffectiveness primarily to decide which
vehicle receives the next technology
addition. Initially, technology package
#1 is the only one available to any
particular vehicle. However, as soon as
a vehicle receives technology package
#1, the model considers the
manufacturer-based net costeffectiveness of technology package #2
for that vehicle and so on. In general
terms, the equation describing the
calculation of manufacturer-based cost
effectiveness is as follows:
VMTregulatory = the statutorily defined VMT
EPA describes the technology ranking
methodology and manufacturer-based
cost effectiveness metric in greater
detail in the OMEGA documentation.354
When calculating the fuel savings in
the TARF equation, the full retail price
of fuel, including taxes is used. While
taxes are not generally included when
calculating the cost or benefits of a
regulation, the net cost component of
the manufacturer-based net costeffectiveness equation is not a measure
of the social cost of this proposed rule,
but a measure of the private cost, (i.e.,
a measure of the vehicle purchaser’s
willingness to pay more for a vehicle
with higher fuel efficiency). Since
vehicle operators pay the full price of
fuel, including taxes, they value fuel
costs or savings at this level, and the
manufacturers will consider this when
choosing among the technology
options.355
The values of manufacturer-based net
cost-effectiveness for specific
352 The analysis for the control cases in this
proposal was run with slightly different lifetime
VMT estimates than those proposed in the
regulation. The impact on the cost estimates is
small and varies by manufacturer.
353 While our costs and benefits are discounted at
3% or 7%, the decision algorithm (TARF) used in
OMEGA was run at a discount rate of 3%. Given
that manufacturers must comply with the standard
regardless of the discount rate used in the TARF,
this has little impact on the technology projections
shown here.
354 OMEGA model documentation. EPA–420–B–
10–042.
355 This definition of manufacturer-based net
cost-effectiveness ignores any change in the
residual value of the vehicle due to the additional
technology when the vehicle is five years old. Based
on historic used car pricing, applicable sales taxes,
and insurance, vehicles are worth roughly 23% of
their original cost after five years, discounted to
year of vehicle purchase at 7% per annum. It is
reasonable to estimate that the added technology to
improve CO2 level and fuel economy will retain this
same percentage of value when the vehicle is five
years old. However, it is less clear whether first
purchasers, and thus, manufacturers consider this
residual value when ranking technologies and
making vehicle purchases, respectively. For this
proposal, this factor was not included in our
determination of manufacturer-based net costeffectiveness in the analyses.
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considers the difference in lifetime VMT
of cars and trucks, as indicated in the
proposed regulations which govern
credit trading between these two vehicle
classes (which reflect the final 2012–
2016 rules on this point).352
As noted above, EPA estimated
separately the cost of the improved A/
C systems required to generate the
credit. In the reference case fleet that
complies with the MY 2016 standards,
85% of vehicles are modeled with
improved A/C efficiency and leakage
prevention technology.
The model then works with one
manufacturer at a time to add
technologies until that manufacturer
meets its applicable proposed standard.
The OMEGA model can utilize several
approaches to determining the order in
which vehicles receive technologies. For
this analysis, EPA used a
‘‘manufacturer-based net costeffectiveness factor’’ to rank the
technology packages in the order in
which a manufacturer is likely to apply
them. Conceptually, this approach
estimates the cost of adding the
technology from the manufacturer’s
perspective and divides it by the mass
of CO2 the technology will reduce. One
component of the cost of adding a
technology is its production cost, as
discussed above. However, it is
expected that new vehicle purchasers
value improved fuel economy since it
reduces the cost of operating the
vehicle. Typical vehicle purchasers are
assumed to value the fuel savings
Where:
CostEffManuft = Manufacturer-Based Cost
Effectiveness (in dollars per kilogram
CO2),
TechCost = Marked up cost of the technology
(dollars),
FS = Difference in fuel consumption due to
the addition of technology times fuel
price and discounted over the payback
period, or the number of years of vehicle
use over which consumers value fuel
savings when evaluating the value of a
new vehicle at time of purchase
dCO2 = Difference in CO2 emissions (g/mile)
due to the addition of technology
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III–19. Thus, the fourth step is to
combine the fractions of the CEB and
TEB of each technology package already
present on the individual MY 2008
vehicle models for each vehicle
grouping. For cost, percentages of each
package already present are combined
using a simple sales-weighting
procedure, since the cost of each
package is the same for each vehicle in
a grouping. For effectiveness, the
individual percentages are combined by
weighting them by both sales and base
CO2 emission level. This appropriately
weights vehicle models with either
higher sales or CO2 emissions within a
grouping. Once again, this process
prevents the model from adding
technology which is already present on
vehicles, and thus ensures that the
model does not double count
technology effectiveness and cost
associated with complying with the
modeled standards.
Conceptually, the OMEGA model
begins by determining the specific CO2
emission standard applicable for each
manufacturer and its vehicle class (i.e.,
car or truck). Since the proposal allows
for averaging across a manufacturer’s
cars and trucks, the model determines
the CO2 emission standard applicable to
each manufacturer’s car and truck sales
from the two sets of coefficients
describing the piecewise linear standard
functions for cars and trucks (i.e., the
respective car and truck curves) in the
inputs, and creates a combined car-truck
standard. This combined standard
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technologies will vary from vehicle to
vehicle, often substantially. This occurs
for three reasons. First, both the cost
and fuel-saving component cost,
ownership fuel-savings, and lifetime
CO2 effectiveness of a specific
technology all vary by the type of
vehicle or engine to which it is being
applied (e.g., small car versus large
truck, or 4-cylinder versus 8-cylinder
engine). Second, the effectiveness of a
specific technology often depends on
the presence of other technologies
already being used on the vehicle (i.e.,
the dis-synergies). Third, the absolute
fuel savings and CO2 reduction of a
percentage an incremental reduction in
fuel consumption depends on the CO2
level of the vehicle prior to adding the
technology. Chapter 1 of EPA’s draft
RIA contains further detail on the values
of manufacturer-based net cost-
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effectiveness for the various technology
packages.
5. Projected Compliance Costs and
Technology Penetrations
The following tables present the
projected incremental costs and
technology penetrations for the
proposed program. Overall projected
cost increases are $734 in MY 2021 and
$1946 in MY 2025. Relative to the
reference fleet complying with of MY
2016 standards, we see significant
increases in advanced transmission
technologies such as the high efficiency
gear box and 8 speed transmissions, as
well as more moderate increase in turbo
downsized, cooled EGR 24 bar BMEP
engines. In the control case, 15 percent
of the MY 2025 fleet is projected to be
a strong P2 hybrid as compared to 5%
in the 2016 reference case. Similarly, 3
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percent of the MY 2025 fleet are
projected to be electric vehicles while
less than 1 percent are projected to be
electric vehicles in the reference case.
EPA notes that we have projected one
potential compliance path for each
company and the industry as a whole—
this does not mean other potential
technology penetrations are not
possible, in fact, it is likely that each
firm will of course plot their own future
course on how to comply. For example,
while we show relatively low levels of
EV and PHEV technologies may be used
to meet the proposed standards, several
firms have announced plans to
aggressively pursue EV and PHEV
technologies and thus the actual
penetration of those technologies may
turn out to be much higher than the
prediction we present here.
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6. How does the technical assessment
support the proposed CO2 standards as
compared to the alternatives has EPA
considered?
a. What are the targets and achieved
levels for the fleet in this proposal?
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In this section EPA analyzes the
proposed standards alongside several
potential alternative GHG standards.
Table III–28 includes a summary of
the proposed standards and the four
alternatives considered by EPA for this
notice. In this table and for the majority
of the data presented in this section,
EPA focuses on two specific model
years in the 2017–2025 time frame
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addressed by this proposal. For the
purposes of considering alternatives,
EPA assessed these two specific years as
being reasonably separated in time in
order to evaluate a range of
meaningfully different standards, rather
than analyzing alternatives for each
individual model year. After discussing
the reasons for selecting the proposed
standards rather than any of the
alternatives, EPA will describe the
specific standard phase-in schedule for
the proposal. Table III–28 presents the
projected reference case targets for the
fleet in 2021 and 2025, that is the
estimated industry wide targets that
would be required for the projected fleet
in those years by the MY 2016
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standards.357 The alternatives, like the
proposed standards, account for
projected use of A/C related credits.
They represent the average targets for
cars and trucks projected for the
proposed standards and four alternative
standards. They do not represent the
manner in which manufacturers are
projected to achieve compliance with
these targets, which includes the ability
to transfer credits to and from the car
and truck fleets. That is discussed later.
357 The reference case targets for 2021 and 2025
may be different even though the footprint based
standards are identical (the 2016 curves). This is
because the fleet distribution of cars and trucks may
change in the intervening years thus changing the
targets in 2021 and 2025.
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Alternative 1 and 2 are focused on
changes in the level of stringency for
just light-duty trucks: Alternative 1 is 20
grams/mile CO2 less stringent (higher)
in 2021 and 2025, and Alternative 2 is
20 grams/mile CO2 more stringent
(lower) in 2021 and 2025. Alternative 3
and 4 are focused on changes in the
level of stringency for just passenger
cars: Alternative 3 is 20 grams/mile CO2
less stringent (higher) in 2021 and 2025,
and Alternative 4 is 20 grams/mile CO2
more stringent (lower) in 2021 and
2025. When combined with the sales
projections for 2021 and 2025, these
alternatives span fleet wide targets with
a range of 187–213 g/mi CO2 in 2021
(equivalent to a range of 42–48 mpge if
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all improvements were made with fuel
economy technologies) and a range of
150–177 g/mi CO2 in 2025 in 2025
(equivalent to a range of 50–59 mpg if
all improvements were made with fuel
economy technologies).
Using the OMEGA model, EPA
evaluated the proposed standards and
each of the alternatives in 2021 and in
2025. It is worth noting that although
Alternatives 1 and 2 consider different
truck footprint curves compared to the
proposal and Alternatives 3 and 4
evaluate different car footprint curves
compared to the proposal, in all cases
EPA evaluated the alternatives by
modeling both the car and truck
footprint curves together (which achieve
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the fleet targets shown in Table III–28)
as this is how manufacturers would
view the future standards given the
opportunity to transfer credits between
cars and trucks under the GHG
program.358 A manufacturer’s ability to
transfer GHG credits between its car and
truck fleets without limit does have the
effect of muting the ‘‘truck’’ focused and
‘‘car’’ focused nature of the alternatives
EPA is evaluating. For example, while
Alternative 1 has truck standards
358 The curves for the alternatives were developed
using the same methods as the proposed curves,
however with different targets. Thus, just as in the
proposed curves, the car and truck curves described
in TSD 2 were ‘‘fanned’’ up or down to determine
the curves of the alternatives.
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projected in 2021 and 2025 to be 20
grams/mile less stringent than the
proposed truck standards and the same
car standards as the proposed car
standards, individual firms may over
comply on trucks and under-comply on
cars (or vice versa) in order to meet
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Alternative 1 in a cost effective manner
from each company’s perspective. EPA’s
modeling of single manufacturer fleets
reflects this flexibility, and
appropriately so given that it reflects
manufacturers’ expected response.
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Table III–29 shows the projected
target and projected achieved levels in
2025 for the proposed standards. This
accounts for a manufacturer’s ability to
transfer credits to and from cars and
trucks to meet a manufacturer’s car and
truck targets.
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Similar tables for each of the
alternatives for 2025 and for the
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alternatives and the proposal for 2021
are contained in Chapter 3 of EPA’s
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draft RIA. With the proposed standards
and for Alternatives 1 and 2, all
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companies are projected to be able to
comply both in 2021 and 2025, with the
with the exception of Ferrari, which in
each case falls 9 g/mi short of its
projected fleet wide obligation in
2025.359 In Alternatives 3 and 4, where
the car stringency varies, all companies
are again projected to comply with the
exception of Ferrari, which complies
under Alternative 3, but has a 30 gram
shortfall under Alternative 4. This level
of compliance was not the case for the
2016 standards from the previous rule.
The primary reason for this result is the
penetration of more efficient
technologies beyond 2016. As described
earlier, many technologies projected as
not to be available by MY 2016 or whose
penetration was limited due to lead time
issues are projected to be available or
available at greater penetration rates in
the 2017–2025 timeframe, especially
given two more redesign cycles for the
industry on average.
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b. Why is the Relative Rate of Car Truck
Stringency Appropriate?
Table III–29 illustrates the importance
of car-truck credit transfer for individual
firms. For example, the OMEGA model
projects for the proposed standards that
in 2025, Daimler would under comply
for trucks by 22 g/mile but over comply
in their car fleet by 8 g/mi in order to
meet their overall compliance
obligation, while for Kia the OMEGA
model projects that under the proposed
standards Kia’s truck fleet would over
comply by 10 g/mi and under comply in
their car fleet by 3 g/mi in order to meet
their compliance obligations. However,
for the fleet as a whole, we project only
a relatively small degree of net credit
transfers from the truck fleet to the car
fleet.
Table III–23 shows that the average
costs for cars and trucks are also nearly
equivalent for 2021 and 2025. For MY
2021, the average cost to comply with
the car standards is $718, while it is
$764 for trucks. For MY 2025, the
average cost to comply with the car
standards is $1,942, while it is $1,954
for trucks. These results are highly
consistent with the small degree of net
projected credit transfer between cars
and trucks.
The average cost for complying with
the truck and car standards are similar,
even though the level of stringency for
359 Note that Ferrari is shown as a separate entity
in the table above but could be combined with other
Fiat-owned companies for purposes of GHG
compliance at the manufacturer’s discretion. Also,
in Section III.B., EPA is requesting comment on the
concept of allowing companies that are able to
demonstrate ‘‘operational independence’’ to be
eligible for SVM alternative standards. However,
the costs shown above are based on Ferrari meeting
the primary program standards.
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trucks is increasing at a slower rate than
for cars. As described in Section I.B.2 of
the preamble, the proposed car
standards are decreasing (in CO2) at a
rate of 5% per year from MYs 2017–
2025, while the proposed truck
standards are decreasing at a rate of
3.5% per year on average from MYs
2017–2021, then 5% per year thereafter
till 2025. Given this difference in
percentage rates, the close similarity in
average cost stems from the fact that it
is more costly to add the technologies to
trucks (in general) than to cars as
described in Chapter 1 of the draft RIA.
Moreover, some technologies are not
even available for towing trucks. These
include EVs, PHEVs, Atkinson Cycle
engines (matched with HEVs), and
DCTs—the latter two are relatively cost
effective. Together these result in a
decrease in effectiveness potential for
the heavier towing trucks compared to
non-towing trucks and cars. In
addition,, there is more mass reduction
projected for these vehicles, but this
comes at higher cost as well, as the cost
per pound for mass reduction goes up
with higher levels of mass reduction
(that is, the cost increase curves upward
rather than being linear). As described
in greater detail in Chapter 2 of the joint
TSD, these factors help explain the
reason EPA and NHTSA are proposing
to make the truck curve steeper relative
to the 2016 curve, thus resulting in a
truck curve that is ‘‘more parallel’’ to
cars than the 2016 truck curve.
Taken together, our analysis shows
that under the proposed standards, there
is relatively little net trading between
car and trucks; average costs for
compliance with cars is similar to that
of trucks in MY 2021 as well as MY
2025; and it is more costly to add
technologies to trucks than to cars.
These facts corroborate the
reasonableness for increasing the slope
of the truck curve. These observations
also lead us to the conclusion that (at a
fleet level) starting from MYs 2017–
2021, the slower rate of increase for
trucks compared to cars (3.5%
compared to 5% per year), and the same
rate of increase (5% per year) for both
cars and trucks for MY 2022–2025
results in car and truck standards that
reflect increases in stringency over time
that are comparable and consistent.
There are no indications that either the
truck or car standards are leading
manufacturers to choose technology
paths that lead to significant over or
under compliance for cars or trucks, on
an industry wide level. E.g., there is no
indication that on average the proposed
car standards would lead manufacturers
to consistently under or over comply
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with the car standard in light of the
truck standard, or vice versa. A
consistent pattern across the industry of
manufacturers choosing to under or over
comply with a car or trucks standard
could indicate that the car or truck
standard should be evaluated further to
determine if one was more or less
stringent than might be appropriate in
light of the technology choices available
to manufacturers and their costs. As
shown above, that is not the case for the
proposed car and truck standards.
However, EPA did evaluate a set of
alternative standards that reflect
separately increasing or decreasing the
stringency of the car and truck
standards, as discussed below.
c. What are the costs and advanced
technology penetration rates for the
alternative standards in relation to the
proposed standards?
Below we discuss results for the
proposed car and truck standards
compared to the truck alternatives
evaluated (Alternatives 1 and 2), and
then discuss the proposed car and truck
standards compared to the car
alternatives (Alternatives 3 and 4).
Table III–30 presents our projected
per-vehicle cost for the average car,
truck and for the fleet in model year
2021 and 2025 for the proposal and for
Alternatives 1 and 2. All costs are
relative to the reference case (i.e. the
fleet with technology added to meet the
2016 MY standards). As can be seen,
even though only the truck standards
vary among these three scenarios, in
each case the projected average car and
truck costs vary as a result of car-truck
credit transfer by individual companies.
Table III–30 shows that compared to the
proposal, Alternative 1 (with a 2021 and
2025 truck target 20 g/mile less
stringent, or 20 g/mile greater, than the
proposal) is $281 per vehicle less than
the proposal in 2021 and $430 per
vehicle less than the proposal in 2025.
Alternative 2 (with a 2021 and 2025
truck target 20g/mile more stringent, or
20 g/mile less, than the proposal) is
$343 per vehicle more than the proposal
in 2021 and $516 per vehicle more than
the proposal in 2025.
Note that while the car and truck
costs are nearly equivalent for
Alternative 2 in 2021 and 2025, cars are
over complying on average by 7 g/mi,
while trucks are under complying by 11
g/mi, thus indicating significant flow of
credits from cars to trucks.360 The
situation is reversed in Alternative 1,
where cars are under complying on
average by 9 g/mi and trucks are over
360 These detailed tables are in Chapter 3 of EPA’s
draft RIA.
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significant flow of credits from truck to
cars.
Alternative 2. In general, for most of the
companies our projected results show
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the same trends as for the industry as a
whole.
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Table III–31 presents the per-vehicle
cost estimates in MY 2021 by company
for the proposal, Alternative 1 and
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complying by 16 g/mi, implying
significant flow of credits from truck to
cars.
Table III–32 presents the per-vehicle
cost estimates in MY 2025 by company
for the proposal, Alternative 1 and
Alternative 2. In general, for most of the
companies our projected results show
the same trends as for the industry as a
whole, with Alternative 1 on the order
of $200 to $600 per vehicle less
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expensive then the proposal, and
Alternative 2 on the order of $200 to
$800 per vehicle more expensive. For
the fleet as a whole, the average cost for
Alternative 1 is $430 less costly, while
Alternative 2 is $516 more costly. Thus
the incremental average cost is higher
for the more stringent alternative than
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for an equally less stringent alternative
standard. This is not a surprise as more
technologies must be added to vehicles
to meet tighter standards, and these
technologies increase in cost in a nonlinear fashion.
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The previous tables present the costs
for the proposal and alternatives 1 and
2 at both the industry and company
level. In addition to costs, another key
is the technology required to meet
potential future standards. The EPA
assessment of the proposal, as well as
Alternatives 1 and 2 predict the
penetration into the fleet of a large
number of technologies at various rates
of penetration. A subset of these
technologies are discussed below, while
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EPA’s draft RIA Chapter 3 includes the
details on this much longer list for the
passenger car fleet, light-duty truck
fleet, and the overall fleet at both the
industry and individual company level.
Table III–33 and Table III–34 present
only a sub-set of the technologies EPA
estimates could be used to meet the
proposed standards as well as
alternative 1 and 2 in MY 2021. Table
III–35 and Table III–36 show the same
for 2025. The technologies listed in
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these tables are those for which there is
a large difference in penetration rates
between the proposal and the
alternatives. We have not included here,
for example, the penetration rates for
improved high efficiency gear boxes
because in 2021 our modeling estimates
a 58% penetration of this technology
across the total fleet for the proposal as
well as for alternatives 1 and 2, or 8
speed automatic transmissions which in
2021 we estimate at a 28% penetration
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rate for the proposed standards as well
as for alternatives 1 and 2. There are
several other technologies (shown in the
Chapter 3 of the DRIA) where there is
little differentiation between the
proposal and alternatives 1 and 2.
Table III–33 shows that in 2021, for
several technologies the proposal
requires higher levels of penetration for
trucks than alternative 1. For example,
for trucks, compared to the proposal,
alternative 1 leads to an 8% decrease in
the 24 bar turbo-charged/downsized
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engines, a 10% decrease in the
penetration of cooled EGR, and a 12%
decrease in the penetration of gasoline
direct injection fuel systems. We also
see that due to credit transfer between
cars and trucks, the lower level of
stringency considered for trucks in
alternative 1 also impacts the
penetration of technology to the car
fleet—with alternative 1 leading to a
14% decrease in penetration of 18 bar
turbo-downsized engines, 5% decrease
in penetration of 24 bar turbo-downsize
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engines, 8% decrease in penetration of
8 speed dual clutch transmissions, and
a 19% decrease in penetration of
gasoline direct injection fuel systems in
the car fleet. For the more stringent
alternative 2, we see increases in the
penetration of many of these
technologies projected for 2021, for the
truck fleet as well as for the car fleet.
Table III–34 shows these same overall
trends but at the sales weighted fleet
level in 2021.
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Table III–35 shows that in 2025, there
is only a small change in many of these
technology penetration rates when
comparing the proposal to alternative 1
for trucks, and most of the change
shows up in the car fleet. One important
exception is hybrid electric vehicles,
where the less stringent alternative 1 is
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projected to be met with a 4% decrease
in penetration of HEVs compared to the
proposal. As in 2021, we see that due to
credit transfer between cars and trucks,
the lower level of stringency considered
for trucks in alternative 1 also impacts
the car fleet penetration—with
alternative 1 leading to a 8% decrease
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in penetration of 24 bar turbodownsized engines, 12% decrease in
penetration of cooled EGR, 6% decrease
in penetration of HEVs, and a 2%
decrease in penetration of electric
vehicles. For the more stringent
alternative 2, we see only small
increases in the penetration of many of
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penetration of HEVs for trucks
compared to the proposal, a 6% increase
in the penetration of HEVs for cars
compared to the proposal, and a 3%
increase in the penetration of EVs for
cars compared to the proposal.
The results are similar for
Alternatives 3 and 4, where the truck
standard stays at the proposal level and
the car stringency varies, +20 g/mi and
-20 g/mi respectively. Table III–37
presents our projected per-vehicle cost
for the average car, truck and for the
fleet in model year 2021 and 2025 for
the proposal and for Alternatives 3 and
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these technologies projected for 2025,
with a major exception being a
significant 14% increase in the
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complying by 5 g/mi, while trucks are
under complying by 7 g/mi, thus
indicating significant flow of credits
from cars to trucks. The situation is
reversed in Alternative 4, where cars are
under complying by 6 g/mi and trucks
are over complying by 12 g/mi implying
significant flow of credits from truck to
cars.
whole, with Alternative 3 being a
several hundred dollars per vehicle less
expensive then the proposal, and
Alternative 4 being several hundred
dollars per vehicle more expensive
(with larger increment for more
stringent than less stringent
alternatives). In some case the
differences exceed $1,000 (e.g. BMW,
Daimler, Geely/Volvo, Mazda, Spyker/
Saab, and Tata).
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the proposal in 2025. These differences
are even more pronounced than
Alternatives 1 and 2. As in the analysis
above, the costs increases are greater for
more stringent alternatives than the
reduced costs from the less stringent
alternatives.
Note that although the car and truck
costs are not too dissimilar for cars and
trucks for Alternative 3 in 2025, what is
not shown is that cars are over
Table III–38 presents the per-vehicle
cost estimates in MY 2021 by company
for the proposal, Alternative 3 and
Alternative 4. In general, for most of the
companies our projected results show
the same trends as for the industry as a
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4. Compared to the proposal,
Alternative 3 (with a 2021 and 2025 car
target 20 g/mile less stringent then the
proposal) is $442 per vehicle less on
average than the proposal in 2021 and
$708 per vehicle less than the proposal
in 2025. Alternative 4 (with a 2021 and
2025 car target 20g/mile more stringent
then the proposal) is $635 per vehicle
more on average than the proposal in
2021 and $923 per vehicle more than
Table III–39 presents the per-vehicle
cost estimates in MY 2025 by company
for the proposal, Alternative 3 and
Alternative 4. In general, for most of the
companies our projected results show
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the same trends as for the industry as a
whole, with Alternative 3 on the order
of $500 to $1,400 per vehicle less
expensive then the proposal, and
Alternative 4 on the order of $700 to
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$1,600 per vehicle more expensive.
Again these differences are more
pronounced for the car alternatives than
the truck alternatives.
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Table III–40 shows that in 2021, for
several technologies Alternative 3 leads
to lower levels of penetration for cars as
well as trucks compared to the proposal.
For example (on cars) there is an 13%
decrease in the 18 bar turbo-charged/
downsized engines, a 5% decrease in
the penetration of cooled EGR, and a
22% decrease in the penetration of
gasoline direct injection fuel systems.
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We also see that due to credit transfer
between cars and trucks, the lower level
of stringency considered for cars in
alternative 3 also impacts the
penetration of technology to the truck
fleet—with alternative 3 leading to 12%
decrease in penetration of 24 bar turbodownsized engines, 13% decrease in
penetration of cooled EGR, and a 17%
decrease in penetration of gasoline
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direct injection fuel systems in the car
fleet. For the more stringent alternative
4, we see increases in the penetration of
many of these technologies projected for
2021, for the truck fleet as well as for
the car fleet. Table III–41 shows these
same overall trends but at the sales
weighted fleet level in 2021.
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Table III–42 shows that in 2025, there
is only a small change in many of these
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technology penetration rates when
comparing the proposal to alternative 3
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for cars, and most of the change shows
up in the car fleet. There are a few
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exceptions: There is a 15% decrease in
the penetrate rate of 24 bar bmep
engines (made up somewhat by a 4%
increase in 18 bar engines); there is 20%
less EGR boost and GDI, and 9% less
hybrid electric vehicles compared to the
proposal. As in 2021, we see that due to
credit transfer between cars and trucks
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at the lower level of stringency
considered for cars in alternative 3 also
impacts the truck fleet penetration—
with alternative 3 leading to 7%
decrease in penetration of HEVs. For the
more stringent alternative 4, we see only
small increases in the penetration of
many of these technologies projected for
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2025, with a major exception being a
significant 9% increase in the
penetration of HEVs for cars compared
to the proposal (along with a drop in
advanced engines), and a 20% increase
in the penetration of HEVs for trucks
compared to the proposal.
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$1,946 in 2025. We have also shown
that the relative rate of increase in the
stringencies of cars and trucks are at an
appropriate level such that there is
greater balance amongst the
manufacturers where the distribution of
the burden is relatively evenly spread.
In Section I.C of the Preamble, we also
showed that the benefits of the program
are significant, and that this cost can be
recovered within the first four years of
vehicle ownership.
EPA’s analysis of the four alternatives
indicates that under all of the
alternatives the projected response of
the manufacturers is to change both
their car and truck fleets. Whether the
car or truck standard is being changed,
and whether it is being made more or
less stringent, the response of the
manufacturers is to make changes across
their fleet, in light of their ability to
transfer credits between cars and trucks.
For example, Alternatives 1 and 3 make
either the car or trucks standard less
stringent, and keep the other standard as
is. For both alternatives, manufacturers
increase their projected CO2 g/mile level
achieved by their car fleet, and to a
lesser extent their truck fleet. For
alternatives 2 and 4, where either the
truck or car fleet is made more stringent,
and the other standard is kept as is,
manufacturers reduce the projected CO2
g/mile level achieved by both their car
and trucks fleets, in a generally
comparable fashion. This is summarized
in Table III–44 for MY 2025.
This demonstrates that the four
alternatives are indicative of what
would happen if EPA increased the
stringency of both the car and truck fleet
at the same time, or decreased the
stringency of the car and truck fleet at
the same time. E.g., Alternative 4 would
be comparable to an alternative where
EPA made the car standard more
stringent by 14 gm/mi and the truck
standard by 10 gm/mile. Under such an
alternative, there would logically be
little if any net transfer of credits
between cars and trucks. In that context,
the results from alternatives 1 and 3 can
be considered as indicative of what
would be expected if EPA decreased the
stringency of both the car and truck
standards, and alternatives 2 and 4 as
indicative of what would happen if EPA
increased the stringency of both the car
and truck standards. In general, it
appears that decreasing the stringency
of the standards would lead the
manufacturers to focus more on
increasing the CO2 gm/mile of cars than
trucks (alternatives 1 and 3). Increasing
the stringency of the car and truck
standards would generally lead to
comparable increases in gm/mi for both
cars and trucks.
Alternatives 1 and 3 would achieve
significantly lower reductions, and
would therefore forego important
benefits that the proposed standards
would achieve at reasonable costs and
361 Except
Ferrari.
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The trend for Alternatives 3 and 4
have thus far been that the impacts have
been more extreme than Alternatives 1
and 2 compared to the proposal. Thus
we will focus the discussion of
feasibility on Alternatives 1 and 2 (as
the same will also then apply to 3 and
4 respectively).
As stated above, EPA’s OMEGA
analysis indicates that there is a
technology pathway for all
manufacturers to build vehicles that
would meet the proposed standards as
well as the alternative standards.361 The
differences lie in the per-vehicle costs
and the associated technology
penetrations. With the proposed
standards, we estimate that the average
per-vehicle cost is $734 in 2021 and
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penetrations of technology. EPA judges
that there is not a good reason to forego
such benefits, and is not proposing less
stringent standards such as alternatives
1 and 3.
Alternatives 2 and 4 increase the per
vehicle estimates to $1,077 and $1,369
respectively in 2021 and $2,462 and
$2,869 respectively in 2025. This
increase in cost from the proposal
originates from the dramatic increases
in the costlier electrification
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technologies, such as HEVs and EVs.
The following tables and charts show
the technology penetrations by
manufacturer in greater detail.
Table III–45 and later tables describe
the projected penetration rates for the
OEMs of some key technologies in MY
2021 and MY2025 under the proposed
standards. TDS27, HEV, and PHEV+EV
technologies represent the most costly
technologies added in the package
generation process, and the OMEGA
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model generally adds them as one of the
last technology choices for compliance.
They are therefore an indicator of the
extent to which the stringency of the
standard is pushing the manufacturers
to the most costly technology. Cost (as
shown above) is a similar indicator.
Table III–45 describes technology
penetration for MY2021 under the
proposal.
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It can be seen from this table that the
larger volume manufacturers have levels
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of advanced technologies that are below
the phase in caps (described in the next
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table). On the other hand, smaller
‘‘luxury’’ volume manufacturers tend to
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that rates below that cap are practical or
reasonable, and is intended to be more
of a physical limit of technical
capability in light of conditions such as
supplier capacity, up-front investment
capital requirements, manufacturability,
and other factors. For example, in MY
2010, there are presently 3% HEVs in
the new vehicle fleet. In MYs 2015,
2021 and 2025 we project that this cap
on technology penetration rate increases
to 15%, 30% and 50% respectively. For
PH/EVs in MY 2010, there is practically
none of these technologies. In MYs
2015, 2021 and 2025 we project that this
cap on technology penetration rate
increases to approximately 5%, 10%
and 15% respectively for EVs and
PHEVs separately. These highly
complex technologies also have the
slowest penetration phase-in rates to
reflect the relatively long lead time
required to implement into substantial
fractions of the fleet subject to the
manufacturers’ product redesign
schedules. In contrast, an advanced
technology still under development
based on an improved engine design,
TDS27, has a cap on penetration phase
in rate in MYs 2015, 2021, and 2025 of
0%, 15%, and 50% indicative of a
longer lead time to develop the
technology, but a relatively faster phase
in rate once the technology is ‘‘ready’’
(consistent with other ‘‘conventional’’
evolutionary improvements). Table III–
46 summarizes the caps on the phase in
rates of some of the key technologies. A
penetration rate result from the analysis
that approaches the caps for these
technologies for a given manufacturer is
an indication of how much that
manufacturer is being ‘‘pushed’’ to
technical limits by the standards. This
will be in direct correlation to the cost
of compliance for that same
manufacturer.
Table III–47 shows the technology
penetrations for Alternative 2.
Immediately striking is the penetration
rates of truck HEVs in the fleet: Even in
2021, it nearly doubles in comparison to
the proposal. The Ford truck fleet (to
take one of the largest volume
manufacturers as an example) increases
from 2% HEVs in the proposal trucks to
16% in Alternative 2, an eightfold
increase.
There are other significant increases
in the larger manufacturers and even
more dramatic increases in the HEV
penetration in smaller manufacturers’
fleets. For example, Suzuki cars now
reach the maximum technology
penetration cap of 30% for HEVs and
Mitsubishi now has 20% HEVs. Also,
there are now four manufacturers with
total fleet PH/EV penetration rates equal
to 10% or greater.
The larger volume manufacturers
have an estimated per vehicle cost of
compliance with 2021 alternative
standards of $1,044, which is $555
higher than the proposed standards. The
seven ‘‘luxury’’ vehicle manufacturers
now have estimated costs of $2,733,
which is $300 higher than the proposed
standards (See Table III–12 above).
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require higher levels of these
technologies. BMW, Daimler, Volvo,
Porsche, Saab, Jaguar/LandRover, and
VW all reach the maximum penetration
cap for HEVs (30%) in 2021. Suzuki is
the only other company with greater
than 20% penetration of HEVs and only
two manufacturers have greater than
10% penetration of PH/EVs: Porsche
and Saab. Together these seven
‘‘luxury’’ vehicle manufacturers
represent 12% of vehicle sales and their
estimated cost of compliance with 2021
proposed standards is $2,178 compared
to $744 for the others.
It is important to review some of the
caps or limits on the technology phase
in rates described in Chapter 3.5.2.3 of
the joint TSD as it relates to the
remainder of this discussion. These are
upper limits on the penetration rates
allowed under our modeling, and reflect
an estimate of the physical limits for
such penetration. It is not a judgment
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Table III–48 shows the technology
penetrations for Alternative 4 for MY
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2021. The large volume manufacturer,
Ford now has a 25% penetration rate of
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truck HEVs (a 23% increase compared
to the proposed standards) and the fleet
penetration has gone up 11 fold for this
company in comparison to the proposed
standards.
Mitsubishi, and Suzuki cars now
reach the maximum technology
penetration cap of 30% for HEVs, and
Mazda, Subaru cars as well as Ford
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trucks now have greater than 20%
HEVs. Also, there are now six
manufacturers with PH/EV penetration
rates greater than 10%.
The larger volume manufacturers now
have an estimated per vehicle cost of
compliance with 2021 alternative
standards of $1,428, which is $683
higher than the proposed standards. The
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seven ‘‘luxury’’ vehicle manufacturers
now have estimated costs of $3,499,
which is $1,320 higher than the
proposed standard (See Table III–32
above). For the seven luxury
manufacturers, this per vehicle cost
exceeds the costs under the proposal for
complying with the considerably more
stringent 2025 standards.
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Table III–49 shows the technology
penetrations for the proposed standards
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in 2025. The larger volume
manufacturers have levels of advanced
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technologies that are below the phase in
caps (described in the next table),
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though there are some notably high
penetration rates for truck HEVs for
Ford and Nissan.362 For the fleet in
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362 EPA has not conducted an analysis of pickup
truck HEV penetration rates compared to the
remainder of the truck fleet. This may be conducted
for the final rule.
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general, we note a 3% penetration rate
of PHEV+EVs—it is interesting to note
that this is the penetration rate of HEVs
today. EPA believes that there is
sufficient lead time to have this level of
penetration of these vehicles by 2025.
Case in point, it has taken
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approximately 10 years for HEV
penetration to get to the levels that we
see today, and that was without an
increase in the stringency of passenger
car CAFE standards.
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Six of the seven luxury vehicle
manufacturers reach the maximum
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penetration cap on their truck portion of
their fleet; however, no company
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reaches 50% for their combined fleet.
The seven do have over 30%
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penetration rate of HEVs, while Suzuki
is the only company to have between 20
and 30% HEVs. Six of the 7 luxury
vehicle manufacturers also have greater
than 10% penetration of PH/EVs (which
has a total cap of 29%). The only
company to have large penetration rates
(>15%) of TDS27 is Jaguar/LandRover at
29%.
The estimated per vehicle cost of
compliance with 2025 proposed
standards is $1,943 for the larger
volume manufacturers and $3,133 for
the seven ‘‘luxury’’ vehicle
manufacturers.
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Table III–50 shows the technology
penetrations for Alternative 2 in 2025.
In this alternative Chrysler trucks nearly
double their penetration rate of HEVs
along with dramatic increases in car and
truck PH/EVs. GM has a very large
increase in truck HEVs as well: From
3% in the proposed to 39% in the
alternative standards along with a
doubling of PH/EVs. Toyota also has
double the number of HEVs. In this
alternative there are many more
companies with 20–30% HEVs:
Chrysler, Ford, GM, Mitsubishi, Nissan,
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Subaru, Suzuki, and Toyota. Suzuki (in
addition to the seven) now also has 10%
or greater penetration of PH/EVs. Ford,
GM, Chrysler, and Nissan now have
more than 20% penetration of HEVs in
trucks.
The estimated per vehicle cost of
compliance with 2025 alternative 2
standards is $2,354, which is $410
higher than the proposed standards. The
seven luxury vehicle manufacturers
now have costs of $3,616, which is $483
higher than the proposed standards. See
Table III–32 above.
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Table III–51 shows the technology
penetrations for Alternative 4 in 2025.
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In this alternative every company except
Honda, Hyundai, Kia have greater than
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20% HEVs. Many of the large volume
manufacturers have even more dramatic
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increases in the volumes of P/H/EVs
than in Alternative 2. Ford, GM, Nissan,
and Toyota have greater than 20 or 30%
penetration rates of HEVs on trucks.
Mazda, Mitsubishi, Subaru, Suzuki (in
addition to the seven) now also have
10% or greater penetration of PH/EVs,
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while Daimler, Volvo, Porsche, Saab,
and VW have over 20%.
The estimated per vehicle cost of
compliance with 2025 alternative
standards is $2,853, which is $910
higher than the proposed standards. The
seven luxury vehicle manufacturers
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now have costs of $4,481, which is
$1,348 higher than the proposed
standards. Much of this non-linear
increase in cost is due to increased
penetration of PHEVs and EVs (more so
than HEVs).
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d. Summary of the Technology
Penetration Rates and Costs From the
Alternative Scenarios in Relation to the
Proposed Standards
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As described above, alternatives 2 and
4 would lead to significant increases in
the penetration of advanced
technologies into the fleet during the
time frame of these standards. In
general, both alternatives would lead to
an increase in the average penetration
rate for advanced technologies in 2021,
in effect accelerating some of the
technology penetration that would
otherwise occur in the 2022–2025
timeframe. For the fleet as a whole, in
2021 alternative 2 would lead to a
significant increase in cooled EGR use
and a limited increase in HEV use,
while alternative 4 would lead to an
even larger increase in cooled EGR as
well as a significant increase in HEV
use. In 2025 these alternatives would
dramatically affect penetration rates of
HEVs, EVs, and PHEVs, in each case
leading to very significant increases on
average for the fleet. Again, Alternative
4 would lead to greater penetration rates
than Alternative 2. When one considers
the technology penetration rates for
individual manufacturers, in 2021 the
alternatives lead to much higher
increases than average for some
individual large volume manufacturers.
Smaller volume manufacturers start out
with higher penetration rates and are
pushed to even higher levels. This result
is even more pronounced in 2025.
This increase in technology
penetration rates raises serious concerns
about the ability and likelihood
manufacturers can smoothly implement
the increased technology penetration in
a fleet that has so far seen limited usage
of these technologies, especially for
trucks—and for towing trucks in
particular. While this is more
pronounced for 2025, there are still
concerns for the 2021 technology
penetration rates. Although EPA
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believes that these penetration rates are,
in the narrow sense, technically
achievable, it is more a question of
judgment whether we are confident at
this time that these increased rates of
advanced technology usage can be
practically and smoothly implemented
into the fleet—a reason the agencies are
attempting to encourage more
utilization of this technology with the
proposed HEV pickup truck credits but
being reasonably prudent in proposing
standards that could de facto force high
degrees of penetration of this technology
on towing trucks.363
EPA notes that the same concerns
support the proposed decision to
steepen the slope of the truck curve in
acknowledgement of the special
challenges these larger footprint trucks
(which in many instances are towing
vehicles) would face. Without the
steepening, the penetration rates of
these challenging technologies would
have been even greater.
From a cost point of view, the impacts
on cost track fairly closely with the
technology penetration rates discussed
above. The average cost increases under
Alternatives 2 and 4 are significant for
2021 (approximately $300 and $600),
and for some manufacturers they result
in very large cost increases. For 2025 the
cost increases are even higher
(approximately $500 and $900).
Alternative 4, as expected, is
significantly more costly than
363 See 76 FR at 57220 discussing a similar issue
in the context of the standards for heavy duty
pickups and vans: ‘‘Hybrid electric technology
likewise could be applied to heavy-duty vehicles,
and in fact has already been so applied on a limited
basis. However, the development, design, and
tooling effort needed to apply this technology to a
vehicle model is quite large, and seems less likely
to prove cost-effective in this time frame, due to the
small sales volumes relative to the light-duty sector.
Here again, potential customer acceptance would
need to be better understood because the smaller
engines that facilitate much of a hybrid’s benefit are
typically at odds with the importance pickup truck
buyers place on engine horsepower and torque,
whatever the vehicle’s real performance’’.
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alternative 2. From another perspective,
the average cost of compliance to the
industry on average is $23 and $44
billion for the 2021 and 2025 proposed
standards respectively. Alternative 2
will cost the industry on average $7 and
$9 billion in excess, while Alternative 4
will cost the industry on average $10
and $16 billion in excess of the costs for
the proposed standards. These are large
increases in percentage terms, ranging
from approximately 25% to 45% in
2021, and from approximately 20% to
35% in 2025.
Per vehicle costs will also increase
dramatically including for some of the
largest, full-line manufacturers. Under
Alternative 2, per vehicle costs for
Chrysler, Ford, GM, Honda and Nissan
increase by an estimated one-third to
nearly double (200%) to meet 2021
standards and from roughly 25% to 45%
to meet 2025 standards (see Table III–31
and Table III–32 above). The per-vehicle
costs to meet Alternative 4 for these
manufacturers is significantly greater
and in the same proportions, see Table
III–38 and Table III–39.
As noted, these cost increases are
associated especially with increased
utilization of advanced technologies. As
shown in Figure below, HEV+PHEV+EV
penetration are projected to increase in
2025 from 17% in the proposed
standards to 28% and to nearly 35%
under Alternatives 2 and 4 respectively
for manufacturers with annual sales
above 500,000 vehicles (including
Chrysler, Ford, GM, Honda, Hyundai,
Nissan, Toyota and VW). The
differences are less pronounced for
2021, but still (in alternative 4) over
double the penetration level of the
proposal. EPA regards these differences
as significant, given the factors of
expense, consumer cost, consumer
acceptance, and potentially (for 2021)
lead time.
BILLING CODE 491–59–P
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Porsche, Subaru, Suzuki, and Jaguar/
LandRover while excluding Aston
Martin, Ferrari, Lotus, Saab, and Tesla).
While the penetration rates of these
advanced technologies also increase, the
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distribution within these are shifting to
the higher cost EVs and PHEVs as noted
above.
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The Figure below shows the
HEV+PHEV+EV penetration for
manufacturers with sales below 500,000
but exceeding 30,000 (including BMW,
Daimler, Volvo, Kia, Mazda, Mitsubishi,
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EPA did not model a number of
flexibilities when conducting the
analysis for the NPRM. For example,
PHEV, EV and fuel cell vehicle
incentive multipliers for 2017–2021, full
size pickup truck HEV incentive credits,
full size pickup truck performance
based incentive credits, and off-cycle
credits, were not explicitly captured.
We plan on modeling these flexibilities
for the final rule. For this proposal,
while we have not been able to
explicitly model the impacts on the
program costs, the impact will only be
to reduce the estimated costs of the
program for most manufacturers. From
an industry wide perspective, EPA
expects that their overall impact on
costs, technology penetration, and
emissions reductions and other benefits
will be limited. They will provide some
additional, important flexibility in
achieving the proposed levels and
promoting more advanced technology,
on a case by case basis, but their impact
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is not expected to be of enough
significance to warrant a change to the
standards proposed. Instead they are
expected to support the reasonableness
of the proposed standards.
Overall, EPA believes that the
characteristics and impacts of these and
other alternative standards generally
reflect a continuum in terms of
technical feasibility, cost, lead time,
consumer impacts, emissions reductions
and oil savings, and other factors
evaluated under section 202 (a). In
determining the appropriate standard to
propose in this context, EPA judges that
the proposed standards are appropriate
and preferable to more stringent
alternatives based largely on
consideration of cost—both to
manufacturers and to consumers—and
the potential for overly aggressive
penetration rates for advanced
technologies relative to the penetration
rates seen in the proposed standards,
especially in the face of unknown
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degree of consumer acceptance of both
the increased costs and the technologies
themselves. At the same time, the
proposal helps to address these issues
by providing incentives to promote
early and broader deployment of
advanced technologies, and so provides
a means of encouraging their further
penetration while leaving manufacturers
alternative technology choices. EPA
thus judges that the increase in
technology penetration rates and the
increase in costs under the increased
stringency for the car and truck fleets
reflected in alternatives 2 and 4 are such
that it would not be appropriate to
propose standards that would increase
the stringency of the car and truck fleets
in this manner.
The two tables below shows the year
on year costs as described in greater
detail in Chapter 5 of the RIA. These
projections show a steady increase in
costs from 2017 thru 2025 (as
interpolated).
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is also reasonable. Though there are
undoubtedly a range of minor
modifications that could be made to the
progression of standards, EPA believes
that the progression proposed is
reasonable and appropriate. Also, EPA
believes that any progression of
standards that significantly deviates
from the proposed standards (such as
those in Alternatives 1 through 4) are
much less appropriate for the reasons
provided in the discussion above.
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trucks seems to result in a slower rate
of increase in costs for both cars and
trucks. This initial slower rate of
stringency for trucks is appropriate due
primarily concerns over technology
penetration rates and disproportionately
higher costs for adding technologies to
trucks than cars, as described in Section
III.D.6.b above. The figure below
corroborates these conclusions and
further demonstrates that based on the
smooth progression of average costs
(from 2017–2025), the year on year
increase in stringency of the standards
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Figure 7 below shows graphically the
year on year average costs presented in
Table III–53 with the per vehicle costs
on the left axis and the projected CO2
target standards on the right axis. It is
quite evident and intuitive that as the
stringency of the standard gets tighter,
the average per vehicle costs increase. It
is also clear that the costs for cars
exceed that of trucks for the early years
of the program, but then progress
upwards together starting in MY 2021.
It is interesting to note that the slower
rate of progression of the standards for
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7. To what extent do any of today’s
vehicles meet or surpass the proposed
MY 2017–2025 CO2 footprint-based
targets with current powertrain designs?
In addition to the analysis discussed
above regarding what technologies
could be added to vehicles in order to
achieve the projected CO2 obligation for
each automotive company under the
proposed MY 2017 to 2025 standards,
EPA performed an assessment of the
light-duty vehicles available in the
market today to see how such vehicles
compare to the proposed MY 2017–2025
footprint-based standard curves. This
analysis supports EPA’s overall
assessment that there are a broad range
of effective and available technologies
that could be used to achieve the
proposed standards, as well as
illustrating the need for the lead-time
between today and MY 2017 to MY
2025 in order for continued refinement
of today’s technologies and their
broader penetration across the fleet for
the industry as a whole as well as
individual companies. In addition, this
assessment supports EPA’s view that the
proposed standards would not interfere
with consumer utility—footprintattribute standards provide
manufacturers with the ability to offer
consumers a full range of vehicles with
the utility customers want, and does not
require or encourage companies to just
produce small passenger cars with very
low CO2 emissions.
Using publicly available data, EPA
compiled a list of available vehicles and
their 2-cycle CO2 emissions
performance (that is, the performance
over the city and highway test cycles
required by this proposal). Data is
currently available for all MY 2011
vehicles and some MY 2012 vehicles.
EPA gathered vehicle footprint data
from EPA reports, manufacturer
submitted CAFE reports, and
manufacturer Web sites.
EPA evaluated these vehicles against
the proposed CO2 footprint-based
standard curves to determine which
vehicles would meet or exceed the
proposed MY 2017–MY 2025 footprintbased CO2 targets assuming air
conditioning credit generation
consistent with today’s proposal. Under
the proposed 2017–2025 greenhouse gas
emissions standards, each vehicle will
have a unique CO2 target based on the
vehicle’s footprint. However, it is
important to note that the proposed CO2
standard is a company-specific sales
weighted fleet-wide standard for each
company’s passenger cars and truck
fleets calculated using the proposed
footprint-based standard curves. No
individual vehicle is required to achieve
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a specific CO2 target. In this analysis,
EPA assumed usage of air conditioner
credits because air conditioner
improvements are considered to be
among the cheapest and easiest
technologies to reduce greenhouse gas
emissions, manufacturers are already
investing in air conditioner
improvements, and air conditioner
changes do not impact engine,
transmission, or aerodynamic designs so
assuming such credits does not affect
consideration of cost and leadtime for
use of these other technologies. In this
analysis, EPA assumed increasing air
conditioner credits over time with a
phase-in of alternative refrigerant for the
generation of HFC leakage reduction
credits consistent with the assumed
phase-in schedule discussed in Section
III.C.I. of this preamble. No adjustments
were made to vehicle CO2 performance
other then this assumption of air
conditioning credit generation. Under
this analysis, a wide range of existing
vehicles would meet the MY 2017
proposed CO2 targets, and a few meet
even the proposed MY 2025 CO2 targets.
The details regarding this assessment
are in Chapter 3 of the EPA Draft RIA.
This assessment shows that a
significant number of vehicles models
sold today (nearly 40 models) would
meet or be lower than the proposed MY
2017 footprint-based CO2 targets with
current powertrain designs, assuming
air conditioning credit generation
consistent with our proposal. The list of
vehicles includes a full suite of vehicle
sizes and classes, including midsize
cars, minivans, sport utility vehicles,
compact cars, small pickup trucks and
full size pickup trucks—all of which
meet the proposed MY 2017 target
values with no technology
improvements other than air
conditioning system upgrades. These
vehicles utilize a wide variety of
powertrain technologies and operate on
a variety of different fuels including
gasoline, diesel, electricity, and
compressed natural gas. Nearly every
major manufacturer currently produces
vehicles that would meet or exceed the
proposed MY 2017 footprint CO2 target
with only improvements in air
conditioning systems. For all of these
vehicle classes the MY 2017 targets are
achieved with conventional gasoline
powertrains, with the exception of the
full size (or ‘‘standard’’) pickup trucks.
In the case of full size pickups trucks,
only HEV versions of the Chevrolet
Silverado and the GMC Sierra fall into
this category (though the HEV Silverado
and Sierra meet not just the MY 2017
footprint-based CO2 targets with A/C
improvements, but their respective
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targets through MY 2022). As the CO2
targets become more stringent each
model year, fewer MY 2011 and MY
2012 vehicles achieve or surpass the
proposed CO2 targets, in particular for
gasoline powertrains. While
approximately 15 unique gasoline
vehicle models achieve or surpass the
MY 2017 targets, this number falls to
approximately 11 for the MY 2018
targets, 9 for the model year 2019
targets, and only 2 unique gasoline
vehicle models can achieve the MY
2020 proposed CO2 targets with A/C
improvements.
EPA also assessed the subset of these
vehicles that have emissions within 5%,
of the proposed CO2 targets. As detailed
in Chapter 3 of the EPA Draft RIA, the
analysis shows that there are more than
twenty additional vehicle models
(primarily with gasoline and diesel
powertrains) that are within 5% of the
proposed MY 2017 CO2 targets,
including compact cars, midsize cars,
large cars, SUVs, station wagons,
minivans, small and standard pickup
trucks. EPA also receives projected sales
data prior to each model year from each
manufacturer. Based on this data,
approximately 7% of MY 2011 sales
will be vehicles that would meet or be
better than the proposed MY 2017
targets for those vehicles, requiring only
improvements in air conditioning
systems. In addition, nearly 15% of
projected MY 2011 sales would be
within 5% of the proposed MY 2017
footprint CO2 target with only simple
improvements to air conditioning
systems, a full six model years before
the proposed standard takes effect. With
improvements to air conditioning
systems, the most efficient gasoline
internal combustion engines would
meet the MY 2020 proposed footprint
targets. After MY 2020, the only current
vehicles that continue to meet the
proposed footprint-based CO2 targets
(assuming improvements in air
conditioning) are hybrid-electric, plugin hybrid-electric, and fully electric
vehicles. However, the proposed MY
2021 standards, if finalized, would not
need to be met for another 9 years.
Today’s Toyota Prius, Ford Fusion
Hybrid, Chevrolet Volt, Nissan Leaf,
Honda Civic Hybrid, and Hyundai
Sonata Hybrid all meet or surpass the
proposed footprint-based CO2 targets
through MY 2025. In fact, the current
Prius, Volt, and Leaf meet the proposed
2025 CO2 targets without air
conditioning credits.
This assessment of MY 2011 and MY
2012 vehicles makes it clear that HEV
technology (and of course EVs and
PHEVs) is capable of achieving the MY
2025 standards. However, as discussed
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earlier in this section, EPA’s modeling
projects that the MY 2017–2025
standards can primarily be achieved by
advanced gasoline vehicles—for
example, in MY 2025, we project more
than 80 percent of the new vehicles
could be advanced gasoline
powertrains. The assessment of MY
2011 and MY 2012 vehicles available in
the market today indicates advanced
gasoline vehicles (as well as diesels) can
achieve the targets for the early model
years of the proposed standards (i.e.,
model years 2017–2020) with only
improvements in air conditioning
systems. However, significant
improvements in technologies are
needed and penetrations of those
technologies must increase substantially
in order for individual manufacturers
(and the fleet overall) to achieve the
proposed standards for the early years of
the program, and certainly for the later
years (i.e., model years 2021–2025).
These technology improvements are the
very technologies EPA and NHTSA
describe in detail in Chapter 3 of the
draft Joint Technical Support Document
and which we forecasted penetration
rates earlier in this section III.D, and
they include for example: gasoline
direct injection fuel systems; downsized
and turbocharged gasoline engines
(including in some cases with the
application of cooled exhaust gas
recirculation); continued improvements
in engine friction reduction and low
friction lubricants; transmissions with
an increased number of forward gears
(e.g., 8 speeds); improvements in
transmission shifting logic;
improvements in transmission gear box
efficiency; vehicle mass reduction;
lower rolling resistance tires, and
improved vehicle aerodynamics. In
many (though not all) cases these
technologies are beginning to penetrate
the U.S. light-duty vehicle market.
In general, these technologies must go
through the automotive product
development cycle in order to be
introduced into a vehicle. In some cases
additional research is needed before the
technologies’ CO2 benefits can be fully
realized and large-scale manufacturing
can be achieved. The subject of
technology penetration phase-in rates is
discussed in more detail in Chapter 3.5
of the draft Joint Technical Support
Document. In that Chapter, we explain
that why many CO2 reducing
technologies should be able to penetrate
the new vehicle market at high levels
between now and MY 2016. There are
also many of the key technologies we
project as being needed to achieve the
proposed 2017–2025 standards which
will only be able to penetrate the market
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at relatively low levels (e.g., a maximum
level of 30% or less) by MY 2016, and
even by MY 2021. These include
important powertrain technologies such
as 8-speed transmissions and second or
third generation downsized engines
with turbocharging,
The majority of these technologies
must be integrated into vehicles during
the product redesign schedule, which is
typically on a 5-year cycle. EPA
discussed in the MY 2012–2016 rule the
significant costs and potential risks
associated with requiring major
technologies to be added in-between the
typical 5-year vehicle redesign schedule
(see 75 FR at 25467–68, May 7, 2010).
In addition, engines and transmissions
generally have longer lifetimes then 5
years, typically on the order of 10 years.
Thus major powertrain technologies
generally take longer to penetrate the
new vehicle fleet then can be done in a
5-year redesign cycle. As detailed in
Chapter 3.5 of the draft Joint TSD, EPA
projects that 8-speed transmissions
could increase their maximum
penetration in the fleet from 30% in MY
2016 to 80% in 2021 and to 100% in
MY 2025. Similarly, we project that
second generation downsized and
turbocharged engines (represented in
our assessment as engines with a brakemean effective pressure of 24 bars)
could penetrate the new vehicle fleet at
a maximum level of 15% in MY 2016,
30% in MY 2021, and 75% in MY 2025.
When coupled with the typical 5-year
vehicle redesign schedule, EPA projects
that it is not possible for all of the
advanced gasoline vehicle technologies
we have assessed to penetrate the fleet
in a single 5-year vehicle redesign
schedule.
Given the status of the technologies
we project to be used to achieve the
proposed MY2017–2025 standards and
the product development and
introduction process which is fairly
standard in the automotive industry
today, our assessment of the MY2011
and MY2012 vehicles in comparison to
the proposed standards supports our
overall feasibility assessment, and
reinforces our assessment of the lead
time needed for the industry to achieve
the proposed standards.
E. Certification, Compliance, and
Enforcement
1. Compliance Program Overview
This section summarizes EPA’s
comprehensive program to ensure
compliance with emission standards for
carbon dioxide (CO2), nitrous oxide
(N2O), and methane (CH4), as described
in Section III.B. An effective compliance
program is essential to achieving the
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environmental and public health
benefits promised by these mobile
source GHG standards. EPA’s GHG
compliance program is designed around
two overarching priorities: (1) to address
Clean Air Act (CAA) requirements and
policy objectives; and (2) to streamline
the compliance process for both
manufacturers and EPA by building on
existing practice wherever possible, and
by structuring the program such that
manufacturers can use a single data set
to satisfy both GHG and Corporate
Average Fuel Economy (CAFE) testing
and reporting requirements. The EPA
and NHTSA programs replicate the
compliance protocols established in the
MY 2012–2016 rule.364 The
certification, testing, reporting, and
associated compliance activities track
current practices and are thus familiar
to manufacturers. As is the case under
the 2012–2016 program, EPA and
NHTSA have designed a coordinated
compliance approach for 2017–2025
such that the compliance mechanisms
for both GHG and CAFE standards are
consistent and non-duplicative. Readers
are encouraged to review the MY 2012–
2016 final rule for background and a
detailed description of these
certification, compliance, and
enforcement requirements.
Vehicle emission standards
established under the CAA apply
throughout a vehicle’s full useful life.
Today’s rule establishes fleet average
greenhouse gas standards where
compliance with the fleet average is
determined based on the testing
performed at time of production, as with
the current CAFE fleet average. EPA is
also establishing in-use standards that
apply throughout a vehicle’s useful life,
with the in-use standard determined by
adding an adjustment factor to the
emission results used to calculate the
fleet average. EPA’s program will thus
not only assess compliance with the
fleet average standards described in
Section III.B, but will also assess
compliance with the in-use standards.
As it does now, EPA will use a variety
of compliance mechanisms to conduct
these assessments, including preproduction certification and postproduction, in-use monitoring once
vehicles enter customer service. Under
this compliance program manufacturers
will also be afforded numerous
flexibilities to help achieve compliance,
both stemming from the program design
itself in the form of a manufacturerspecific CO2 fleet average standard, as
well as in various credit banking and
trading opportunities, as described in
364 75
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Section III.C. The compliance program
is summarized in further detail below.
2. Compliance With Fleet-Average CO2
Standards
Fleet average emission levels can only
be determined when a complete fleet
profile becomes available at the close of
the model year. Therefore, EPA will
determine compliance with the fleet
average CO2 standards when the model
year closes out, based on actual
production figures for each model and
on model-level emissions data collected
through testing over the course of the
model year. Manufacturers will submit
this information to EPA in an end-ofyear report which is discussed in detail
in Section III.E.5.h of the MY 2012–2016
final rule preamble (see 75 FR 25481).
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a. Compliance Determinations
As described in Section III.B above,
the fleet average standards will be
determined on a manufacturer by
manufacturer basis, separately for cars
and trucks, using the footprint attribute
curves. EPA will calculate the fleet
average emission level using actual
production figures and, for each model
type, CO2 emission test values generated
at the time of a manufacturer’s CAFE
testing. EPA will then compare the
actual fleet average to the
manufacturer’s footprint standard to
determine compliance, taking into
consideration use of averaging and
credits.
Final determination of compliance
with fleet average CO2 standards may
not occur until several years after the
close of the model year due to the
flexibilities of carry-forward and carryback credits and the remediation of
deficits (see Section III.B). A failure to
meet the fleet average standard after
credit opportunities have been
exhausted could ultimately result in
penalties and injunctive orders under
the CAA as described in Section III.E.6
below.
b. Required Minimum Testing For Fleet
Average CO2
EPA will require and use the same
test data to determine a manufacturer’s
compliance with both the CAFE
standard and the fleet average CO2
emissions standard. Please see Section
III.E.2.b of the MY 2012–2016 final rule
preamble (75 FR 25469) for details.
3. Vehicle Certification
CAA section 203(a)(1) prohibits
manufacturers from introducing a new
motor vehicle into commerce unless the
vehicle is covered by an EPA-issued
certificate of conformity. Section
206(a)(1) of the CAA describes the
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requirements for EPA issuance of a
certificate of conformity, based on a
demonstration of compliance with the
emission standards established by EPA
under section 202 of the Act. The
certification demonstration requires
emission testing, and must be done for
each model year.365
Since compliance with a fleet average
standard depends on actual production
volumes, it is not possible to determine
compliance with the fleet average at the
time the manufacturer applies for and
receives a certificate of conformity for a
test group. Instead, EPA will continue to
condition each certificate of conformity
for the GHG program upon a
manufacturer’s demonstration of
compliance with the manufacturer’s
fleet-wide average CO2 standard. Please
see Section III.E.3 of the MY 2012–2016
final rule preamble (75 FR 25470) for a
discussion of how EPA will certify
vehicles under the GHG standards.
4. Useful Life Compliance
Section 202(a)(1) of the CAA requires
emission standards to apply to vehicles
throughout their statutory useful life, as
further described in Section III.A. The
in-use CO2 standard under the
greenhouse gas program would apply to
individual vehicles and is separate from
the fleet-average standard. The in-use
CO2 standard for each model would be
the model specific CO2 level used in
calculating the fleet average, adjusted to
be 10% higher to account for test-to-test
and production variability that might
affect in-use test results. Please see
Section III.E.4 of the MY 2012–2016
final rule preamble (75 FR 25473 for a
detailed discussion of the in-use
standard, in-use testing requirements,
and deterioration factors for CO2, N2O,
and CH4.
5. Credit Program Implementation
As described in Section III.C, several
credit programs are available under this
rulemaking. Please see Section III.E.5 of
the MY 2012–2016 final rule preamble
(75 FR 25477) for a detailed explanation
of credit program implementation,
sample credit and deficit calculations,
and end-of-year reporting requirements.
6. Enforcement
The enforcement structure EPA
promulgated under the MY 2012–2016
rulemaking remains in place. Please see
Section III.E.6 of the MY 2012–2016
final rule preamble (75 FR 25482) for a
discussion of these provisions.
365 CAA
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Prohibited Acts in the CAA
Section 203 of the Clean Air Act
describes acts that are prohibited by
law. This section and associated
regulations apply equally to the
greenhouse gas standards as to any other
regulated emission. Acts that are
prohibited by section 203 of the Clean
Air Act include the introduction into
commerce or the sale of a vehicle
without a certificate of conformity,
removing or otherwise defeating
emission control equipment, the sale or
installation of devices designed to
defeat emission controls, and other
actions. This proposal includes a
section that details these prohibited
acts, as did the 2012 greenhouse gas
regulations.
7. Other Certification Issues
a. Carryover/Carry Across Certification
Test Data
EPA’s certification program for
vehicles allows manufacturers to carry
certification test data over and across
certification testing from one model year
to the next, when no significant changes
to models are made. EPA would
continue to apply this policy to CO2,
N2O and CH4 certification test data and
would allow manufacturers to use
carryover and carry across data to
demonstrate CO2 fleet average
compliance if they have done so for
CAFE purposes.
b. Compliance Fees
The CAA allows EPA to collect fees
to cover the costs of issuing certificates
of conformity for the classes of vehicles
covered by this rule.
At this time the extent of any added
costs to EPA as a result of this rule is
not known. EPA will assess its
compliance testing and other activities
associated with the rule and may amend
its fees regulations in the future to
include any warranted new costs.
c. Small Entity Exemption
EPA would exempt small entities, and
these entities (necessarily) would not be
subject to the certification requirements
of this rule.
As discussed in Section III.B.7,
businesses meeting the Small Business
Administration (SBA) criterion of a
small business as described in 13 CFR
121.201 would not be subject to the
GHG requirements, pending future
regulatory action. Small entities are
currently covered by a number of EPA
motor vehicle emission regulations, and
they routinely submit information and
data on an annual basis as part of their
compliance responsibilities.
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As discussed in detail in Section
III.B.5, small volume manufacturers
with annual sales volumes of less than
5,000 vehicles would be required to
meet primary GHG standards or to
petition the Agency for alternative
standards.
d. Onboard Diagnostics (OBD) and CO2
Regulations
As under the current program, EPA
would not require CO2, N2O, and CH4
emissions as one of the applicable
standards required for the OBD
monitoring threshold.
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e. Applicability of Current High
Altitude Provisions to Greenhouse
Gases
As under the current program,
vehicles covered by this rule would be
required to meet the CO2, N2O and CH4
standard at altitude but would not
normally be required to submit vehicle
CO2 test data for high altitude. Instead,
they would submit an engineering
evaluation indicating that common
calibration approaches will be utilized
at high altitude.
f. Applicability of Standards to
Aftermarket Conversions
With the exception of the small entity
and small business exemptions, EPA’s
emission standards, including
greenhouse gas standards, will continue
to apply as stated in the applicability
sections of the relevant regulations. EPA
expects that some aftermarket
conversion companies will qualify for
and seek the small entity and/or small
business exemption, but those that do
not qualify will be required to meet the
applicable emission standards,
including the greenhouse gas standards
to qualify for a tampering exemption
under 40 CFR subpart F. Fleet average
standards are not generally appropriate
for fuel conversion manufacturers
because the ‘‘fleet’’ of vehicles to which
a conversion system may be applied has
already been accounted for under the
OEM’s fleet average standard. Therefore,
EPA is proposing to retain the process
promulgated in 40 CFR subpart F antitampering regulations whereby
conversion manufacturers demonstrate
compliance at the vehicle rather than
the fleet level. Fuel converters will
continue to show compliance with
greenhouse gas standards by submitting
data to demonstrate that the conversion
EDV N2O, CH4 and CREE results are less
than or equal to the OEM’s in-use
standard for that subconfiguration.. EPA
is also proposing to continue to allow
conversion manufacturers, on a test
group basis, to convert CO2
overcompliance into CO2 equivalents of
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N2O and/or CH4 that can be subtracted
from the CH4 and N2O measured values
to demonstrate compliance with CH4
and/or N2O standards.
g. Geographical Location of Greenhouse
Gas Fleet Vehicles
EPA emission certification regulations
require emission compliance 366 in the
50 states, the District of Columbia, the
Puerto Rico, the Virgin Islands, Guam,
American Samoa and the
Commonwealth of the Northern Mariana
Islands.
8. Warranty, Defect Reporting, and
Other Emission-Related Components
Provisions
This rulemaking would retain
warranty, defect reporting, and other
emission-related component provisions
promulgated in the MY 2012–2016
rulemaking. Please see Section III.E.10
of the MY 2012–2016 final rule
preamble (75 FR 25486) for a discussion
of these provisions.
9. Miscellaneous Technical
Amendments and Corrections
EPA is proposing a number of
noncontroversial amendments and
corrections to the existing regulations.
Because the regulatory provisions for
the EPA greenhouse gas program,
NHTSA’s CAFE program, and the joint
fuel economy and environment labeling
program are all intertwined in 40 CFR
Part 600, this proposed rule presents an
opportunity to make corrections and
clarifications to all or any of these
programs. Consequently, a number of
minor and non-substantive corrections
are being proposed to the regulations
that implement these programs.
Amendments include the following:
• In section 86.135–12, we have
removed references to the model year
applicability of N2O measurement. This
applicability is covered elsewhere in the
regulations, and we believe that—where
possible—testing regulations should be
limited to the specifics of testing and
measurement.
• The definition of ‘‘Footprint’’ in
86.1803–01 is revised to clarify
366 Section 216 of the Clean Air Act defines the
term commerce to mean ‘‘(A) commerce between
any place in any State and any place outside
thereof; and (B) commerce wholly within the
District of Columbia.’’
Section 302(d) of the Clean Air Act reads ‘‘The
term ‘‘State’’ means a State, the District of
Columbia, the Commonwealth of Puerto Rico, the
Virgin Islands, Guam, and American Samoa and
includes the Commonwealth of the Northern
Mariana Islands.’’ In addition, 40 CFR 85.1502 (14)
regarding the importation of motor vehicles and
motor vehicle engines defines the United States to
include ‘‘the States, the District of Columbia, the
Commonwealth of Puerto Rico, the Commonwealth
of the Northern Mariana Islands, Guam, American
Samoa, and the U.S. Virgin Islands.’’
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measurement and rounding. The
previous definition stated that track
width is ‘‘measured in inches,’’ which
may inadvertently imply measuring and
recording to the nearest inch. The
revised definition clarifies that
measurements should be to the nearest
one tenth of an inch, and average track
width should be rounded to the nearest
tenth of an inch.
We are also proposing a solution to a
situation in which a manufacturer of a
clean alternative fuel conversion is
attempting to comply with the fuel
conversion regulations (see 40 CFR part
85 subpart F) at a point in time before
which certain data is available from the
original manufacturer of the vehicle.
Clean alternative fuel conversions are
subject to greenhouse gas standards if
the vehicle as originally manufactured
was subject to greenhouse gas standards,
unless the conversion manufacturer
qualifies for exemption as a small
business. Compliance with light-duty
vehicle greenhouse gas emission
standards is demonstrated by complying
with the N2O and CH4 standards and the
in-use CO2 exhaust emission standard
set forth in 40 CFR 86.1818–12(d) as
determined by the original manufacturer
for the subconfiguration that is identical
to the fuel conversion emission data
vehicle (EDV). However, the
subconfiguration data may not be
available to the fuel conversion
manufacturer at the time they are
seeking EPA certification. Several
compliance options are currently
provided to fuel conversion
manufacturers that are consistent with
the compliance options for the original
equipment manufacturers. EPA is
proposing to add another option that
would be applicable starting with the
2012 model year. The new option would
allow clean alternative fuel conversion
manufacturers to satisfy the greenhouse
gas standards if the sum of CH4 plus
N2O plus CREE emissions from the
vehicle pre-conversion is less than the
sum post-conversion, adjusting for the
global warming potential of the
constituents.
10. Base Tire Definition
One of the factors in a manufacturer’s
calculation of vehicle footprint is the
base tire. Footprint is based on a
vehicle’s wheel base and track width,
and track width in turn is ‘‘the lateral
distance between the centerlines of the
base tires at ground, including the
camber angle.’’ 367 EPA’s current
definition of base tire is the ‘‘tire
specified as standard equipment by the
367 See
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manufacturer.’’ 368 EPA understands
that some manufacturers may be
applying this base tire definition in
different ways, which could lead to
differences across manufacturers in how
they are ultimately calculating
footprints. EPA invites public comment
on whether the base tire definition
should be clarified to ensure a more
uniform application across
manufacturers. For example, NHTSA is
proposing a specific change to the base
tire definition for the CAFE program
(see Section IV.I.5.g, and proposed 49
CFR 523.2). Because the calculation of
footprint is a fundamental aspect of both
the greenhouse gas standards and the
CAFE standards, EPA welcomes
comments on whether the existing base
tire definition should be clarified, and
specific changes to the definition that
would address this issue.
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11. Treatment of Driver-Selectable
Modes and Conditions
EPA is requesting comments on
whether there is a need to clarify in the
regulations how EPA treats driverselectable modes (such as multi-mode
transmissions and other user-selectable
buttons or switches) that may impact
fuel economy and GHG emissions. New
technologies continue to arrive on the
market, with increasing complexity and
an increasing array of ways a driver can
make choices that affect the fuel
economy and greenhouse gas emissions.
For example, some start-stop systems
may offer the driver the option of
choosing whether or not the system is
enabled. Similarly, vehicles with ride
height adjustment or grill shutters may
allow drivers to override those features.
Under the current regulations, EPA
draws a distinction between vehicles
tested for purposes of CO2 emissions
performance and fuel economy and
vehicles tested for non-CO2 emissions
performance. When testing emission
data vehicles for certification under Part
86 for non-CO2 emissions standards, a
vehicle that has multiple operating
modes must meet the applicable
emission standards in all modes, and on
all fuels. Sometimes testing may occur
in all modes, but more frequently the
worst-case mode is selected for testing
to represent the emission test group. For
example, a vehicle that allows the user
to disengage the start-stop capability
must meet the standards with and
without the start-stop system operating
(in some cases EPA has determined that
the operation of start-stop is the worst
368 See 40 CFR 86.1803–01, and 40 CFR 600.002.
Standard equipment means those features or
equipment which are marketed on a vehicle over
which the purchaser can exercise no choice.
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case for emissions controlled by the
catalyst because of the spike in
emissions associated with each start).
Similarly, a plug-in hybrid electric
vehicle is tested in charge-sustaining
(i.e., gasoline-only) operation. Current
regulations require the reporting of CO2
emissions from certification tests
conducted under Part 86, but EPA
regulations also recognize that these
values, from emission data vehicles that
represent a test group, are ultimately not
the values that are used to establish inuse CO2 standards (which are
established on much more detailed subconfiguration-specific level) or the
model type CO2 and fuel economy
values used for fleet averaging under
Part 600.
When EPA tests vehicles for fuel
economy and CO2 emissions
performance, user-selectable modes are
treated somewhat differently, where the
goals are different and where worst-case
operation may not be the appropriate
method. For example, EPA does not
believe that the fuel economy and CO2
emissions value for a PHEV should
ignore the use of grid electricity, or that
other dual fuel vehicles should ignore
the real-world use of alternative fuels
that reduce GHG emissions. The
regulations address the use of utility
factors to properly weight the CO2
performance on the conventional fuel
and the alternative fuel. Similarly, nonCO2 emission certification testing may
be done in a transmission mode that is
not likely to be the predominant mode
used by consumers. Testing under Part
600 must determine a single fuel
economy value for each model type for
the CAFE program and a single CO2
value for each model type for EPA’s
program. With respect to transmissions,
Part 600 refers to 86.128, which states
the following:
All test conditions, except as noted, shall
be run according to the manufacturer’s
recommendations to the ultimate purchaser,
Provided, That: Such recommendations are
representative of what may reasonably be
expected to be followed by the ultimate
purchaser under in-use conditions.
For multi-mode transmissions EPA
relies on guidance letter CISD–09–19
(December 3, 2009) to guide the
determination of what is ‘‘representative
of what may reasonably be expected to
be followed by the ultimate purchaser
under in-use conditions.’’ If EPA can
make a determination that one mode is
the ‘‘predominant’’ mode (meaning
nearly total usage), then testing may be
done in that mode. However, if EPA
cannot be convinced that a single mode
is predominant, then fuel economy and
GHG results from each mode are
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75089
typically averaged with equal weighting.
There are also detailed provisions that
explain how a manufacturer may
conduct surveys to support a statement
that a given mode is predominant.
However, CISD–09–19 only addresses
transmissions, and states the following
regarding other technologies:
‘‘Please contact EPA in advance to request
guidance for vehicles equipped with future
technologies not covered by this document,
unusual default strategies or driver selectable
features, e.g., hybrid electric vehicles where
the multimode button or switch disables or
modifies any fuel saving features of the
vehicle (such as the stop-start feature, air
conditioning compressor operation, electriconly operation, etc.).’’
The unique operating characteristics
of these technologies essentially often
requires that EPA determine fuel
economy and CO2 testing and
calculations on a case-by-case basis.
Because the CAFE and CO2 programs
require a single value to represent a
model type, EPA must make a decision
regarding how to account for multiple
modes of operation. When a
manufacturer brings such a technology
to us for consideration, we will evaluate
the technology (including possibly
requiring that the manufacturer give us
a vehicle to test) and provide the
manufacturer with instructions on how
to determine fuel economy and CO2
emissions. In general we will evaluate
these technologies in the same way and
following the same principles we use to
evaluate transmissions under CISD–09–
19, making a determination as to
whether a given operating mode is
predominant or not (using the criteria
for predominance described in CISD–
09–19). These instructions are provided
to the manufacturer under the authority
for special test procedures described in
40 CFR 600.111–08. EPA would apply
the same approach to testing for
compliance with the in-use CO2
standard, so testing for the CO2 fleet
average and testing for compliance with
the in-use CO2 standard would be
consistent. EPA requests comment on
whether the current approach and
regulatory provisions are sufficient, or
whether additional regulations or
guidance should be developed to
describe EPA’s process. EPA recognizes
that ultimately no regulation can
anticipate all options, devices, and
operator controls that may arrive in the
future, and adequate flexibility to
address future situations is an important
attribute for fuel economy and CO2
emissions testing.
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F. How would this proposal reduce GHG
emissions and their associated effects?
This action is an important step
towards curbing growth of GHG
emissions from cars and light trucks. In
the absence of control, GHG emissions
worldwide and in the U.S. are projected
to continue steady growth. Table III–54
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This rule will result in significant
reductions as newer, cleaner vehicles
come into the fleet. As discussed in
Section I, this GHG rule is part of a joint
National Program such that a large part
of the projected benefits, but by no
means all, would be achieved jointly
with NHTSA’s CAFE standards, which
are described in detail in Section IV.
EPA estimates the reductions
attributable to the GHG program over
time assuming the model year 2025
standards continue indefinitely post2025, compared to a reference scenario
in which the 2016 model year GHG
369 ADAGE and GCAM model projections of
worldwide and U.S. GHG emissions are provided
for context only. The baseline data in these models
differ in certain assumptions from the baseline used
in this proposal. For example, the ADAGE baseline
is calibrated to AEO 2010, which includes the EISA
35 MPG by 2020 provision, but does not explicitly
include the MYs 2012–2016 rule. All emissions
data were rounded to two significant digits.
aGCAM model.
370 Based on the Representative Concentration
Pathway scenario in GCAM available at https://
www.globalchange.umd.edu/gcamrcp. See section
III.F.3 and DRIA Chapter 6.4 for additional
information on GCAM.
b ADAGE model.
371 Based on the ADAGE reference case used in
U.S. EPA (2010). ‘‘EPA Analysis of the American
Power Act of 2010’’ U.S. Environmental Protection
Agency, Washington, DC, USA (http:www.epagov/
climatechange/economics/economicanalyses.html).
c OMEGA model, Tailpipe CO and HFC134a only
2
(includes impacts of MYs 2012–2016 rule).
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shows emissions of CO2, methane (CH4),
nitrous oxide (N2O) and air conditioning
refrigerant (HFC–134a) on a CO2equivalent basis for calendar years 2010,
2020, 2030, 2040 and 2050. As shown
below, U.S. GHGs are estimated to make
up roughly 15 percent of total
worldwide emissions in 2010. Further,
the contribution of direct emissions
from cars and light-trucks to this U.S.
share reaches an estimated 17 percent of
U.S. emissions by 2030 in the absence
of control. As discussed later in this
section, this steady rise in GHG
emissions is associated with numerous
adverse impacts on human health, food
and agriculture, air quality, and water
and forestry resources.
standards continue indefinitely beyond
2016.
EPA estimated greenhouse impacts
from several sources including: (a) The
impact of the standards on tailpipe CO2
emissions, (b) projected improvements
in the efficiency of vehicle air
conditioning systems, 372 (c) reductions
in direct emissions of the refrigerant and
potent greenhouse gas HFC–134a from
air conditioning systems, (d)
‘‘upstream’’ emission reductions from
gasoline extraction, production and
distribution processes as a result of
reduced gasoline demand associated
with this rule, and (e) ‘‘upstream’’
emission increases from power plants as
electric powertrain vehicles increase in
prevalence as a result of this rule. EPA
additionally accounted for the
greenhouse gas impacts of additional
vehicle miles travelled (VMT) due to the
‘‘rebound’’ effect discussed in Section
III.H.
Using this approach EPA estimates
the proposed standards would cut
annual fleetwide car and light truck
tailpipe CO2 emissions by
approximately 230 MMT or 18 percent
by 2030, when 85 percent of car and
light truck miles will be travelled by
vehicles meeting the MY 2017 or later
standards. An additional 65 MMTCO2eq
of reduced emissions are attributable to
reductions in gasoline production,
distribution and transport. 15
MMTCO2eq of additional emissions will
be attributable to increased electricity
production. In total, EPA estimates that
compared to a baseline of indefinite
2016 model year standards, net GHG
emission reductions from the program
would be approximately 300 million
metric tons CO2-equivalent
(MMTCO2eq) annually by 2030, which
represents a reduction of 4% of total
U.S. GHG emissions and 0.5% of total
worldwide GHG emissions projected in
that year. These GHG savings would
result in savings of approximately 26
billion gallons of petroleum-based
gasoline.373
EPA projects the total reduction of the
program over the full life of model year
2017–2025 vehicles to be about 1,970
MMTCO2eq, with fuel savings of 170
billion gallons (3.9 billion barrels) of
gasoline over the life of these vehicles.
The impacts on atmospheric CO2
concentrations, global mean surface
temperature, sea level rise, and ocean
pH resulting from these emission
reductions are discussed in Section
III.F.3.
372 While EPA anticipates that the majority of
mobile air conditioning systems will be improved
in response to the MY 2012–2016 rulemaking, the
agency expects that the remainder will be improved
as a result of this action.
373 All estimates of fuel savings presented here
assume that manufacturers use air conditioning
leakage credits as part of their compliance strategy.
If these credits were not used, the fuel savings
would be larger.
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1. Impact on GHG Emissions
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The modeling of fuel savings and
greenhouse gas emissions is
substantially similar to that which was
conducted in the 2012–2016 Final
Rulemaking and the MY 2017–2025
Interim Joint Technical Assessment
Report (TAR). As detailed in Draft RIA
chapter 4, EPA estimated calendar year
tailpipe CO2 reductions based on preand post-control CO2 gram per mile
levels from EPA’s OMEGA model,
coupled with VMT projections derived
from AEO 2011 Final Release. These
estimates reflect the real-world CO2
emissions reductions projected for the
entire U.S. vehicle fleet in a specified
calendar year. EPA also estimated full
lifetime reductions for model years
2017–2025 using pre- and post-control
CO2 levels projected by the OMEGA
model, coupled with projected vehicle
sales and lifetime mileage estimates.
These estimates reflect the real-world
CO2 emissions reductions projected for
model years 2017 through 2025 vehicles
over their entire life. Upstream impacts
from power plant emissions came from
OMEGA estimates of EV/penetration
into the fleet (approximately 3%). For
both calendar year and model year
assessments, EPA estimated the
environmental impact of the advanced
technology multiplier, pickup truck
hybrid electric vehicle (HEV) and
performance based incentives and air
conditioning credits. The impact of the
off-cycle credits were not explicitly
estimated, as these credits are assumed
to be inherently environmentally
neutral (Section III.B). EPA also did not
assess the impact of the credit banking
carry-forward programs.
As in the MY 2012–2016 rulemaking,
this proposal allows manufacturers to
earn credits for improvements to
controls for both direct and indirect AC
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emissions. Since these improvements
are relatively low cost, EPA again
projects that manufacturers will take
advantage of this flexibility, leading to
reductions from emissions associated
with vehicle air conditioning systems.
As explained above, these reductions
will come from both direct emissions of
air conditioning refrigerant over the life
of the vehicle and tailpipe CO2
emissions produced by the increased
load of the A/C system on the engine.
In particular, EPA estimates that direct
emissions of HFC–134a, one of the most
potent greenhouse gases, would be fully
removed from light-duty vehicles
through the phase-in of alternative
refrigerants. More efficient air
conditioning systems would also lead to
fuel savings and additional reductions
in upstream emissions from fuel
production and distribution. Our
estimated reductions from the A/C
credit program assume that
manufacturers will fully utilize the
program by MY 2021.
Upstream greenhouse gas emission
reductions associated with the
production and distribution of fuel were
estimated using emission factors from
DOE’s GREET1.8 model, with
modifications as detailed in Chapter 5 of
the DRIA. These estimates include both
international and domestic emission
reductions, since reductions in foreign
exports of finished gasoline and/or
crude would make up a significant share
of the fuel savings resulting from the
GHG standards. Thus, significant
portions of the upstream GHG emission
reductions will occur outside of the
U.S.; a breakdown of projected
international versus domestic
reductions is included in the DRIA.
Electricity emission factors were
derived from EPA’s Integrated Planning
Model (IPM). EPA uses IPM to analyze
the projected impact of environmental
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policies on the electric power sector in
the 48 contiguous states and the District
of Columbia. IPM is a multi-regional,
dynamic, deterministic linear
programming model of the U.S. electric
power sector. It provides forecasts of
least-cost capacity expansion, electricity
dispatch, and emission control
strategies for meeting energy demand
and environmental, transmission,
dispatch, and reliability constraints.
EPA derived average national CO2
emission factors from the IPM version
4.10 base case run for the ‘‘Proposed
Transport Rule.’’ 374 As discussed in
Draft TSD Chapter 4, for the Final
Rulemaking, EPA may consider
emission factors other than national
power generation, such as marginal
power emission factors, or regional
emission factors.
a. Calendar Year Reductions for Future
Years
Table III–55 shows reductions
estimated from these GHG standards
assuming a pre-control case of 2016 MY
standards continuing indefinitely
beyond 2016, and a post-control case in
which 2025 MY GHG standards
continue indefinitely beyond 2025.
These reductions are broken down by
upstream and downstream components,
including air conditioning
improvements, and also account for the
offset from a 10 percent VMT ‘‘rebound’’
effect as discussed in Section III.H.
Including the reductions from upstream
emissions, total reductions are
estimated to reach 297 MMTCO2eq
annually by 2030, and grow to over 540
MMTCO2eq in 2050 as cleaner vehicles
continue to come into the fleet.
374 EPA. IPM. https://www.epa.gov/airmarkt/
progsregs/epa-ipm/BaseCasev410.html. ‘‘Proposed
Transport Rule/NODA version’’ of IPM.
TR_SB_Limited Trading v.4.10.
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national total emissions.
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The total program emission
reductions yield significant emission
Federal Register / Vol. 76, No. 231 / Thursday, December 1, 2011 / Proposed Rules
75093
contributions, are presented in Table
III–57, showing lifetime reductions of
about 2,065 MMTCO2eq.
c. Impacts of VMT Rebound Effect
As noted above and discussed more
fully in Section III.H., the effect of a
decrease in fuel cost per mile on vehicle
use (VMT ‘‘rebound’’) was accounted for
in our assessment of economic and
environmental impacts of this proposed
rule. A 10 percent rebound case was
used for this analysis, meaning that
VMT for affected model years is
modeled as increasing by 10 percent as
much as the decrease in fuel cost per
mile; i.e., a 10 percent decrease in fuel
cost per mile from our proposed
standards would result in a 1 percent
increase in VMT. Results are shown in
Table III–58. This increase is accounted
for in the reductions presented in Table
III–55 and Table III–56). The table below
compares the reductions under two
different scenarios; one in which the
VMT estimate is entirely insensitive to
the cost of travel, and one in which both
control and reference scenario VMT are
affected by the rebound effect. This
topic is further discussed in DRIA
chapter 4.
375 As detailed in DRIA Chapter 4 and TSD
Chapter 4, for this analysis the full life of the
vehicle is represented by average lifetime mileages
for cars (197,000 miles [MY 2017] and 211,000
miles [MY 2025]) and trucks (235,000 miles [MY
2017] and 249,000 miles [MY 2025]). These
estimates are a function of how far vehicles are
driven per year and scrappage rates.
376 This assessment assumes that owners of gridelectric powered vehicles react similarly to changes
int eh cost of driving s owners of conventional
gasoline vehicles. We seek comment on this
approach in Section III.H.4c.
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EPA also analyzed the emission
reductions over the full life of the 2017–
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2025 model year cars and light trucks
that would be affected by this
program.375 These results, including
both upstream and downstream GHG
b. Lifetime Reductions for 2017–2025
Model Years
Federal Register / Vol. 76, No. 231 / Thursday, December 1, 2011 / Proposed Rules
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d. Analysis of Alternatives
EPA analyzed four alternative
scenarios for this proposal (Table III–
59). EPA assumed that manufacturers
would use air conditioning
improvements and the HEV and
performance based pickup incentives in
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identical penetrations as in the primary
scenario. EPA re-estimated the impact of
the electric vehicle multiplier under
each alternative. Under these
assumptions, EPA expects achieved
fleetwide average emission levels of 150
g/mile CO2 to 177 g/mile CO2eq (6%) in
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2025. As in the primary scenario, EPA
assumed that the fleet complied with
the standards. For full details on
modeling assumptions, please refer to
DRIA Chapter 4. EPA’s assessment of
these alternative standards is discussed
in Section III.D.6
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2. Climate Change Impacts From GHG
Emissions
The impact of GHG emissions on the
climate has been reviewed in the 2012–
2016 light-duty rulemaking and recent
heavy-duty GHG rulemaking. See 75 FR
at 25491; 76 FR at 57294. This section
briefly discusses again some of the
climate impact context for
transportation emissions. These
previous discussions noted that once
emitted, GHGs that are the subject of
this regulation can remain in the
atmosphere for decades to millennia,
meaning that 1) their concentrations
become well-mixed throughout the
global atmosphere regardless of
emission origin, and 2) their effects on
climate are long lasting. GHG emissions
come mainly from the combustion of
fossil fuels (coal, oil, and gas), with
additional contributions from the
clearing of forests, agricultural
activities, cement production, and some
industrial activities. Transportation
activities, in aggregate, were the second
largest contributor to total U.S. GHG
emissions in 2009 (27 percent of total
emissions).377
The Administrator relied on thorough
and peer-reviewed assessments of
climate change science prepared by the
Intergovernmental Panel on Climate
Change (‘‘IPCC’’), the United States
Global Change Research Program
(‘‘USGCRP’’), and the National Research
Council of the National Academies
377 U.S.
EPA (2011) Inventory of U.S. Greenhouse
Gas Emissions and Sinks: 1990–2009. EPA 430–R–
11–005. (Docket EPA–HQ–OAR–2010–0799).
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(‘‘NRC’’) 378 as the primary scientific
and technical basis for the
Endangerment and Cause or Contribute
Findings for Greenhouse Gases Under
Section 202(a) of the Clean Air Act (74
FR 66496, December 15, 2009). These
assessments comprehensively address
the scientific issues the Administrator
had to examine, providing her both data
and information on a wide range of
issues pertinent to the Endangerment
Finding. These assessments have been
rigorously reviewed by the expert
community, and also by United States
government agencies and scientists,
including by EPA itself.
Based on these assessments, the
Administrator determined, in essence,
that greenhouse gases cause warming;
that levels of greenhouse gases are
increasing in the atmosphere due to
human activity; the climate is warming;
recent warming has been attributed to
the increase in greenhouse gases; and
that warming of the climate threatens
human health and welfare. The
Administrator further found that
emissions of well-mixed greenhouse
gases from new motor vehicles and
engines contribute to the air pollution
for which the endangerment finding was
made. Specifically, the Administrator
found under section 202(a) of the Act
that six greenhouse gases (carbon
dioxide, methane, nitrous oxide,
hydrofluorocarbons, perfluorocarbons,
378 For a complete list of core references from
IPCC, USGCRP/CCSP, NRC and others relied upon
for development of the TSD for EPA’s
Endangerment and Cause or Contribute Findings
see section 1(b), specifically, Table 1.1 of the TSD.
(Docket EPA–HQ–OAR–2010–0799).
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and sulfur hexafluoride) taken in
combination endanger both the public
health and the public welfare of current
and future generations, and further
found that the combined emissions of
these greenhouse gases from new motor
vehicles and engines contribute to the
greenhouse gas air pollution that
endangers public health and welfare.
More recent assessments have
produced similar conclusions to those
of the assessments upon which the
Administrator relied. In May 2010, the
NRC published its comprehensive
assessment, ‘‘Advancing the Science of
Climate Change.’’ 379 It concluded that
‘‘climate change is occurring, is caused
largely by human activities, and poses
significant risks for—and in many cases
is already affecting—a broad range of
human and natural systems.’’
Furthermore, the NRC stated that this
conclusion is based on findings that are
‘‘consistent with the conclusions of
recent assessments by the U.S. Global
Change Research Program, the
Intergovernmental Panel on Climate
Change’s Fourth Assessment Report,
and other assessments of the state of
scientific knowledge on climate
change.’’ These are the same
assessments that served as the primary
scientific references underlying the
Administrator’s Endangerment Finding.
Another NRC assessment, ‘‘Climate
Stabilization Targets: Emissions,
Concentrations, and Impacts over
Decades to Millennia,’’ was published
379 National Research Council (NRC) (2010).
Advancing the Science of Climate Change. National
Academy Press. Washington, DC. (Docket EPA–HQ–
OAR–2010–0799).
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Federal Register / Vol. 76, No. 231 / Thursday, December 1, 2011 / Proposed Rules
in 2011. This report found that climate
change due to carbon dioxide emissions
will persist for many centuries. The
report also estimates a number of
specific climate change impacts, finding
that every degree Celsius (C) of warming
could lead to increases in the heaviest
15% of daily rainfalls of 3 to 10%,
decreases of 5 to 15% in yields for a
number of crops (absent adaptation
measures that do not presently exist),
decreases of Arctic sea ice extent of 25%
in September and 15% annually
averaged, along with changes in
precipitation and streamflow of 5 to
10% in many regions and river basins
(increases in some regions, decreases in
others). The assessment also found that
for an increase of 4 degrees C nearly all
land areas would experience summers
warmer than all but 5% of summers in
the 20th century, that for an increase of
1 to 2 degrees C the area burnt by
wildfires in western North America will
likely more than double, that coral
bleaching and erosion will increase due
both to warming and ocean
acidification, and that sea level will rise
1.6 to 3.3 feet by 2100 in a 3 degree C
scenario. The assessment notes that
many important aspects of climate
change are difficult to quantify but that
the risk of adverse impacts is likely to
increase with increasing temperature,
and that the risk of abrupt climate
changes can be expected to increase
with the duration and magnitude of the
warming.
In the 2010 report cited above, the
NRC stated that some of the largest
potential risks associated with future
climate change may come not from
relatively smooth changes that are
reasonably well understood, but from
extreme events, abrupt changes, and
surprises that might occur when climate
or environmental system thresholds are
crossed. Examples cited as warranting
more research include the release of
large quantities of GHGs stored in
permafrost (frozen soils) across the
Arctic, rapid disintegration of the major
ice sheets, irreversible drying and
desertification in the subtropics,
changes in ocean circulation, and the
rapid release of destabilized methane
hydrates in the oceans.
On ocean acidification, the same
report noted the potential for broad,
‘‘catastrophic’’ impacts on marine
ecosystems. Ocean acidity has increased
25 percent since pre-industrial times,
and is projected to continue increasing.
By the time atmospheric CO2 content
doubles over its preindustrial value,
there would be virtually no place left in
the ocean that can sustain coral reef
growth. Ocean acidification could have
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dramatic consequences for polar food
webs including salmon, the report said.
Importantly, these recent NRC
assessments represent another
independent and critical inquiry of the
state of climate change science, separate
and apart from the previous IPCC and
USGCRP assessments.
3. Changes in Global Climate Indicators
Associated With the Proposal’s GHG
Emissions Reductions
EPA examined 380 the reductions in
CO2 and other GHGs associated with
this rulemaking and analyzed the
projected effects on atmospheric CO2
concentrations, global mean surface
temperature, sea level rise, and ocean
pH which are common variables used as
indicators of climate change.381 The
analysis projects that the proposed rule,
if adopted, will reduce atmospheric
concentrations of CO2, global climate
warming, ocean acidification, and sea
level rise relative to the reference case.
Although the projected reductions and
improvements are small in comparison
to the total projected climate change,
they are quantifiable, directionally
consistent, and will contribute to
reducing the risks associated with
climate change. Climate change is a
global phenomenon and EPA recognizes
that this one national action alone will
not prevent it: EPA notes this would be
true for any given GHG mitigation
action when taken alone or when
considered in isolation. EPA also notes
that a substantial portion of CO2 emitted
into the atmosphere is not removed by
natural processes for millennia, and
therefore each unit of CO2 not emitted
into the atmosphere due to this rule
avoids essentially permanent climate
change on centennial time scales.
EPA determines that the projected
reductions in atmospheric CO2, global
mean temperature and sea level rise are
meaningful in the context of this
proposed action. In addition, EPA has
conducted an analysis to evaluate the
projected changes in ocean pH in the
context of the changes in emissions
from this rulemaking. The results of the
analysis demonstrate that relative to the
reference case, projected atmospheric
CO2 concentrations are estimated by
2100 to be reduced by 3.29 to 3.68 part
380 Using the Model for the Assessment of
Greenhouse Gas Induced Climate Change (MAGICC)
5.3v2, https://www.cgd.ucar.edu/cas/wigley/
magicc/), EPA estimated the effects of this
rulemaking’s greenhouse gas emissions reductions
on global mean temperature and sea level. Please
refer to Chapter 6.4 of the DRIA for additional
information.
381 Due to timing constraints, this analysis was
conducted with preliminary estimates of the
emissions reductions projected from this proposal,
which were similar to the final estimates.
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per million by volume (ppmv), global
mean temperature is estimated to be
reduced by 0.0076 to 0.0184 °C, and sealevel rise is projected to be reduced by
approximately 0.074–0.166 cm, based
on a range of climate sensitivities. The
analysis also demonstrates that ocean
pH will increase by 0.0018 pH units by
2100 relative to the reference case.
a. Estimated Reductions in Atmospheric
CO2 Concentration, Global Mean
Surface Temperatures, Sea Level Rise,
and Ocean pH
EPA estimated changes in the
atmospheric CO2 concentration, global
mean temperature, and sea level rise out
to 2100 resulting from the emissions
reductions in this rulemaking using the
Global Change Assessment Model
(GCAM, formerly MiniCAM), integrated
assessment model 382 coupled with the
Model for the Assessment of
Greenhouse Gas Induced Climate
Change (MAGICC, version 5.3v2).383
GCAM was used to create the globally
and temporally consistent set of climate
relevant variables required for running
MAGICC. MAGICC was then used to
estimate the projected change in these
variables over time. Given the
magnitude of the estimated emissions
reductions associated with this action, a
simple climate model such as MAGICC
is reasonable for estimating the
atmospheric and climate response. This
widely used, peer reviewed modeling
tool was also used to project
temperature and sea level rise under
different emissions scenarios in the
Third and Fourth Assessments of the
IPCC.
The integrated impact of the following
pollutant and greenhouse gas emissions
changes are considered: CO2, CH4, N2O,
HFC–134a, NOX, CO, SO2, and volatile
organic compounds (VOC). For these
pollutants an annual time-series of
(upstream + downstream) emissions
382 GCAM is a long-term, global integrated
assessment model of energy, economy, agriculture
and land use, that considers the sources of
emissions of a suite of GHGs, emitted in 14 globally
disaggregated regions, the fate of emissions to the
atmosphere, and the consequences of changing
concentrations of greenhouse related gases for
climate change. GCAM begins with a representation
of demographic and economic developments in
each region and combines these with assumptions
about technology development to describe an
internally consistent representation of energy,
agriculture, land-use, and economic developments
that in turn shape global emissions. Brenkert A, S.
Smith, S. Kim, and H. Pitcher, 2003: Model
Documentation for the MiniCAM. PNNL–14337,
Pacific Northwest National Laboratory, Richland,
Washington. (Docket EPA–HQ–OAR–2010–0799).
383 Wigley, T.M.L. 2008. MAGICC 5.3.v2 User
Manual. UCAR—Climate and Global Dynamics
Division, Boulder, Colorado. https://
www.cgd.ucar.edu/cas/wigley/magicc/ (Docket
EPA–HQ–OAR–2010–0799).
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reductions estimated from the
rulemaking were applied as net
reductions to a global reference case (or
baseline) emissions scenario in GCAM
to generate an emissions scenario
specific to this proposed rule.384 The
emissions reductions past 2050 for all
gases were scaled with total U.S. road
transportation fuel consumption from
the GCAM reference scenario. Road
transport fuel consumption past 2050
does not change significantly and thus
emissions reductions remain relatively
constant from 2050 through 2100.
Specific details about the GCAM
reference case scenario can be found in
Chapter 6.4 of the DRIA that
accompanies this proposal.
MAGICC calculates the forcing
response at the global scale from
changes in atmospheric concentrations
of CO2, CH4, N2O, HFCs, and
tropospheric ozone (O3). It also includes
the effects of temperature changes on
stratospheric ozone and the effects of
CH4 emissions on stratospheric water
vapor. Changes in CH4, NOX, VOC, and
CO emissions affect both O3
concentrations and CH4 concentrations.
MAGICC includes the relative climate
forcing effects of changes in sulfate
concentrations due to changing SO2
emissions, including both the direct
effect of sulfate particles and the
indirect effects related to cloud
interactions. However, MAGICC does
not calculate the effect of changes in
concentrations of other aerosols such as
nitrates, black carbon, or organic carbon,
making the assumption that the sulfate
cooling effect is a proxy for the sum of
all the aerosol effects. Therefore, the
climate effects of changes in PM2.5
emissions and precursors (besides SO2)
which are presented in the DRIA
Chapter 6 were not included in the
calculations in this chapter. MAGICC
also calculates all climate effects at the
global scale. This global scale captures
the climate effects of the long-lived,
well-mixed greenhouse gases, but does
not address the fact that short-lived
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384 Due to timing constraints, this analysis was
conducted with preliminary estimates of the
emissions reductions projected from this proposal,
which were similar to the final estimates.
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climate forcers such as aerosols and
ozone can have effects that vary with
location and timing of emissions. Black
carbon in particular is known to cause
a positive forcing or warming effect by
absorbing incoming solar radiation, but
there are uncertainties about the
magnitude of that warming effect and
the interaction of black carbon (and
other co-emitted aerosol species) with
clouds. While black carbon is likely to
be an important contributor to climate
change, it would be premature to
include quantification of black carbon
climate impacts in an analysis of these
proposed standards. See generally, EPA,
Response to Comments to the
Endangerment Finding Vol. 9 section
9.1.6.1 and the discussion of black
carbon in the endangerment finding at
74 FR at 66520. Additionally, the
magnitude of PM2.5 emissions changes
(and therefore, black carbon emission
changes) related to these proposed
standards are small in comparison to the
changes in the pollutants which have
been included in the MAGICC model
simulations.
Changes in atmospheric CO2
concentration, global mean temperature,
and sea level rise for both the reference
case and the emissions scenarios
associated with this action were
computed using MAGICC. To calculate
the reductions in the atmospheric CO2
concentrations as well as in temperature
and sea level resulting from this
proposal, the output from the policy
scenario associated with EPA’s
proposed standards was subtracted from
an existing Global Change Assessment
Model (GCAM, formerly MiniCAM)
reference emission scenario. To capture
some key uncertainties in the climate
system with the MAGICC model,
changes in atmospheric CO2, global
mean temperature and sea level rise
were projected across the most current
IPCC range of climate sensitivities, from
1.5 °C to 6.0 °C.385 This range reflects
385 In IPCC reports, equilibrium climate
sensitivity refers to the equilibrium change in the
annual mean global surface temperature following
a doubling of the atmospheric equivalent carbon
dioxide concentration. The IPCC states that climate
sensitivity is ‘‘likely’’ to be in the range of 2 °C to
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the uncertainty for equilibrium climate
sensitivity for how much global mean
temperature would rise if the
concentration of carbon dioxide in the
atmosphere were to double. The
information for this range come from
constraints from past climate change on
various time scales, and the spread of
results for climate sensitivity from
ensembles of models.386 Details about
this modeling analysis can be found in
the DRIA Chapter 6.4.
The results of this modeling,
summarized in Table III–62, show
small, but quantifiable, reductions in
atmospheric CO2 concentrations,
projected global mean temperature and
sea level resulting from this action,
across all climate sensitivities. As a
result of the emission reductions from
the proposed standards, relative to the
reference case the atmospheric CO2
concentration is projected to be reduced
by 3.29–3.68 ppmv by 2100, the global
mean temperature is projected to be
reduced by approximately 0.0076–
0.0184 °C by 2100, and global mean sea
level rise is projected to be reduced by
approximately 0.074–0.166 cm by 2100.
The range of reductions in global mean
temperature and sea level rise is larger
than that for CO2 concentrations
because CO2 concentrations are only
weakly coupled to climate sensitivity
through the dependence on temperature
of the rate of ocean absorption of CO2,
whereas the magnitude of temperature
change response to CO2 changes (and
therefore sea level rise) is more tightly
coupled to climate sensitivity in the
MAGICC model.
4.5 °C, ‘‘very unlikely’’ to be less than 1.5 °C, and
‘‘values substantially higher than 4.5 °C cannot be
excluded.’’ IPCC WGI, 2007, Climate Change
2007—The Physical Science Basis, Contribution of
Working Group I to the Fourth Assessment Report
of the IPCC, https://www.ipcc.ch/ (Docket EPA–HQ–
OAR–2010–0799).
386 Meehl, G.A. et al. (2007) Global Climate
Projections. In: Climate Change 2007: The Physical
Science Basis. Contribution of Working Group I to
the Fourth Assessment Report of the
Intergovernmental Panel on Climate Change
[Solomon, S., D. Qin, M. Manning, Z. Chen, M.
Marquis, K.B. Averyt, M. Tignor and H.L. Miller
(eds.)]. Cambridge University Press, Cambridge,
United Kingdom and New York, NY, USA. (Docket
EPA–HQ–OAR–2010–0799).
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387 National Research Council (NRC), 2011.
Climate Stabilization Targets: Emissions,
Concentrations, and Impacts over Decades to
Millennia. Washington, DC: National Academies
Press. (Docket EPA–HQ–OAR–2010–0799).
388 Lewis, E., and D. W. R. Wallace. 1998.
Program Developed for CO2 System Calculations.
ORNL/CDIAC–105. Carbon Dioxide Information
Analysis Center, Oak Ridge National Laboratory,
U.S. Department of Energy, Oak Ridge, Tennessee.
(Docket EPA–HQ–OAR–2010–0799).
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atmospheric CO2 concentrations, among
other specified input conditions. Based
on the projected atmospheric CO2
concentration reductions resulting from
this proposal, the program calculates an
increase in ocean pH of 0.0018 pH units
in 2100 relative to the reference case
(compared to a decrease of 0.3 pH units
from 1990 to 2100 in the reference case).
Thus, this analysis indicates the
projected decrease in atmospheric CO2
concentrations from the program will
result in an increase in ocean pH. For
additional validation, results were
generated using different known
constants from the literature. A
comprehensive discussion of the
modeling analysis associated with ocean
pH is provided in the DRIA, Chapter 6.
As discussed in III.F.2, the 2011 NRC
assessment on ‘‘Climate Stabilization
Targets: Emissions, Concentrations, and
Impacts over Decades to Millennia’’
determined how a number of climate
impacts—such as heaviest daily
rainfalls, crop yields, and Arctic sea ice
extent—would change with a
temperature change of 1 degree Celsius
(C) of warming. These relationships of
impacts with temperature change could
be combined with the calculated
reductions in warming in Table III–56 to
estimate changes in these impacts
associated with this rulemaking.
b. Program’s Effect on Climate
As a substantial portion of CO2
emitted into the atmosphere is not
removed by natural processes for
millennia, each unit of CO2 not emitted
into the atmosphere avoids essentially
permanent climate change on centennial
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time scales. Reductions in emissions in
the near-term are important in
determining long-term climate
stabilization and associated impacts
experienced not just over the next
decades but in the coming centuries and
millennia.389 Though the magnitude of
the avoided climate change projected
here is small in comparison to the total
projected changes, these reductions
represent a reduction in the adverse
risks associated with climate change
(though these risks were not formally
estimated for this action) across a range
of equilibrium climate sensitivities.
EPA’s analysis of the program’s
impact on global climate conditions is
intended to quantify these potential
reductions using the best available
science. EPA’s modeling results show
repeatable, consistent reductions
relative to the reference case in changes
of CO2 concentration, temperature, sealevel rise, and ocean pH over the next
century.
G. How would the proposal impact nonGHG emissions and their associated
effects?
Although this rule focuses on GHGs,
it will also have an impact on non-GHG
pollutants. Sections G.1 of this preamble
details the criteria pollutant and air
toxic inventory changes of this proposed
rule. The following sections, G.2 and
G.3, discuss the health and
environmental effects associated with
389 National Research Council (NRC) (2011).
Climate Stabilization Targets: Emissions,
Concentrations, and Impacts over Decades to
Millennia. National Academy Press. Washington,
DC. (Docket EPA–HQ–OAR–2010–0799).
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The projected reductions are small
relative to the change in temperature
(1.8–4.8 °C), sea level rise (23–55 cm),
and ocean acidity (¥0.30 pH units)
from 1990 to 2100 from the MAGICC
simulations for the GCAM reference
case. However, this is to be expected
given the magnitude of emissions
reductions expected from the program
in the context of global emissions. This
uncertainty range does not include the
effects of uncertainty in future
emissions. It should also be noted that
the calculations in MAGICC do not
include the possible effects of
accelerated ice flow in Greenland and/
or Antarctica: the recent NRC report
estimated a likely sea level increase for
a business-as-usual scenario of 0.5 to 1.0
meters.387 Further discussion of EPA’s
modeling analysis is found in the DRIA,
Chapter 6.
EPA used the computer program
CO2SYS,388 version 1.05, to estimate
projected changes in ocean pH for
tropical waters based on the
atmospheric CO2 concentration change
(reduction) resulting from this proposal.
The program performs calculations
relating parameters of the CO2 system in
seawater. EPA used the program to
calculate ocean pH as a function of
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the criteria and toxic air pollutants that
are being impacted by this proposed
rule. In Section G.4 we discuss the
potential impact of this proposal on
concentrations of criteria and air toxic
pollutants in the ambient air. The tools
and methodologies used in this analysis
are substantially similar to those used in
the MYs 2012–2016 light duty
rulemaking.
1. Inventory
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a. Impacts
In addition to reducing the emissions
of greenhouse gases, this rule would
influence ‘‘non-GHG’’ pollutants, i.e.,
‘‘criteria’’ air pollutants and their
precursors, and air toxics. The proposal
would affect emissions of carbon
monoxide (CO), fine particulate matter
(PM2.5), sulfur dioxide (SOX), volatile
organic compounds (VOC), nitrogen
oxides (NOX), benzene, 1,3-butadiene,
formaldehyde, acetaldehyde, and
acrolein. Our estimates of these nonGHG emission impacts from the GHG
program are shown by pollutant in
Table III.G–1 and Table III.G–2 both in
total and broken down by the three
drivers of these changes: a)
‘‘downstream’’ emission changes,
reflecting the estimated effects of VMT
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rebound (discussed in Sections III.F and
III.H) and decreased consumption of
fuel; b) ‘‘upstream’’ emission reductions
due to decreased extraction, production
and distribution of motor vehicle
gasoline; c) ‘‘upstream’’ emission
increases from power plants as electric
powertrain vehicles increase in
prevalence as a result of this rule.
Program impacts on criteria and toxics
emissions are discussed below, followed
by individual discussions of the
methodology used to calculate each of
these three sources of impacts.
As shown in Table III–63, EPA
estimates that the proposed light duty
vehicle program would result in
reductions of NOX, VOC, PM2.5 and
SOX, but would increase CO
emissions.390 For NOX, VOC, and PM2.5,
we estimate net reductions because the
net emissions reductions from reduced
fuel refining, distribution and transport
is larger than the emission increases due
to increased VMT and increased
electricity production. In the case of CO,
we estimate slight emission increases,
because there are relatively small
reductions in upstream emissions, and
390 While estimates for CY 2020 and 2030 are
shown here, estimates through 2050 are shown in
RIA Ch. 4.
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thus the projected emission increases
due to VMT rebound and electricity
production are greater than the
projected emission decreases due to
reduced fuel production. For SOX,
downstream emissions are roughly
proportional to fuel consumption,
therefore a decrease is seen in both
downstream and fuel refining sources.
For all criteria pollutants the overall
impact of the proposed program would
be small compared to total U.S.
inventories across all sectors. In 2030,
EPA estimates that the program would
reduce total NOX, PM and SOX
inventories by 0.1 to 0.8 percent and
reduce the VOC inventory by 1.1
percent, while increasing the total
national CO inventory by 0.5 percent.
As shown in Table III–64, EPA
estimates that the proposed program
would result in similarly small changes
for air toxic emissions compared to total
U.S. inventories across all sectors. In
2030, EPA estimates the proposed
program would increase total 1,3
butadiene and acetaldehyde emissions
by 0.1 to 0.4 percent. Total acrolein,
benzene and formaldehyde emissions
would decrease by similarly small
amounts.
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b. Methodology
As in the MYs 2012–2016 rulemaking,
for the downstream analysis, the current
version of the EPA motor vehicle
emission simulator (MOVES2010a) was
used to estimate base VOC, CO, NOX,
PM and air toxics emission rates.
Additional emissions from light duty
cars and trucks attributable to the
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rebound effect were then calculated
using the OMEGA model postprocessor. A more complete discussion
of the inputs, methodology, and results
is contained in RIA Chapter 4.
This proposal assumes that MY 2017
and later vehicles are compliant with
the agency’s Tier 2 emission standards.
This proposal does not model any future
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Tier 3 emission standards, because these
standards have not yet been proposed
(see Section III.A). We intend for the
analysis assessing the impacts of both
the final Tier 3 emission standards and
the final 2017–2025 LD GHG to be
included in the final Tier 3 rule. For the
proposals, we are taking care to
coordinate the modeling of each rule to
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properly assess the air quality impact of
each action independently without
double counting.
As in the MYs 2012–2016 GHG
rulemaking, for this analysis we
attribute decreased fuel consumption
from this program to petroleum-based
fuels only, while assuming no effect on
volumes of ethanol and other renewable
fuels because they are mandated under
the Renewable Fuel Standard (RFS2).
For the purposes of this emission
analysis, we assume that all gasoline in
the timeframe of the analysis is blended
with 10 percent ethanol (E10). However,
as a consequence of the fixed volume of
renewable fuels mandated in the RFS2
rulemaking and the decreasing
petroleum consumption predicted here,
we anticipate that this proposal would
in fact increase the fraction of the U.S.
fuel supply that is made up by
renewable fuels. Although we are not
modeling this effect in our analysis of
this proposal, the Tier 3 rulemaking will
make more refined assumptions about
future fuel properties, including (in a
final Tier 3 rule) accounting for the
impacts of the LD GHG rule. In this
rulemaking EPA modeled the three
impacts on criteria pollutant emissions
(rebound driving, changes in fuel
production, and changes in electricity
production) discussed above.
While electric vehicles have zero
tailpipe emissions, EPA assumes that
manufacturers will plan for these
vehicles in their regulatory compliance
strategy for non-GHG emissions
standards, and will not over-comply
with those standards. Since the Tier 2
emissions standards are fleet-average
standards, we assume that if a
manufacturer introduces EVs into its
fleet, that it would correspondingly
compensate through changes to vehicles
elsewhere in its fleet, rather than meet
an overall lower fleet-average emissions
level.391 Consequently, EPA assumes
neither tailpipe pollutant benefit (other
than CO2) nor an evaporative emission
benefit from the introduction of electric
vehicles into the fleet. Other factors
which may impact downstream nonGHG emissions, but are not estimated in
this analysis, include: The potential for
decreased criteria pollutant emissions
due to increased air conditioner
efficiency; reduced refueling emissions
due to less frequent refueling events and
reduced annual refueling volumes
resulting from the GHG standards; and
increased hot soak evaporative
emissions due to the likely increase in
number of trips associated with VMT
rebound modeled in this proposal. In
all, these additional analyses would
likely result in small changes relative to
the national inventory.
To determine the upstream fuel
production impacts, EPA estimated the
impact of reduced petroleum volumes
on the extraction and transportation of
crude oil as well as the production and
distribution of finished gasoline. For the
purpose of assessing domestic-only
emission reductions it was necessary to
estimate the fraction of fuel savings
attributable to domestic finished
gasoline, and of this gasoline what
fraction is produced from domestic
crude. For this analysis EPA estimated
that 50 percent of fuel savings is
attributable to domestic finished
gasoline and that 90 percent of this
gasoline originated from imported
crude. Emission factors for most
upstream emission sources are based on
the GREET1.8 model, developed by
DOE’s Argonne National Laboratory,392
but in some cases the GREET values
were modified or updated by EPA to be
consistent with the National Emission
Inventory (NEI).393 The primary updates
for this analysis were to incorporate
newer information on gasoline
distribution emissions for VOC from the
NEI, which were significantly higher
than GREET estimates; and the
incorporation of upstream emission
factors for the air toxics estimated in
this analysis: benzene, 1,3-butadiene,
acetaldehyde, acrolein, and
formaldehyde. The development of
these emission factors is detailed in a
memo to the docket. These emission
factors were incorporated into the
OMEGA post-processor.
As with the GHG emission analysis
discussed in section III.F, electricity
emission factors were derived from
EPA’s Integrated Planning Model (IPM).
EPA uses IPM to analyze the projected
impact of environmental policies on the
electric power sector in the 48
contiguous states and the District of
Columbia. IPM is a multi-regional,
dynamic, deterministic linear
programming model of the U.S. electric
power sector. It provides forecasts of
least-cost capacity expansion, electricity
dispatch, and emission control
strategies for meeting energy demand
and environmental, transmission,
dispatch, and reliability constraints.
EPA derived average national CO2
emission factors from the IPM version
4.10 run for the ‘‘Proposed Transport
Rule.’’ 394 As discussed in Draft TSD
Chapter 4, for the Final Rulemaking,
EPA may consider emission factors
other than national power generation,
such as marginal power emission
factors, or regional emission factors.
391 Historically, manufacturers have reduced
precious metal loading in catalysts in order to
reduce costs. See https://
www.platinum.matthey.com/media-room/our-viewon-.-.-./thrifting-of-precious-metals-inautocatalysts/ Accessed 11/08/2011. Alternatively,
manufacturers could also modify vehicle
calibration.
392 Greenhouse Gas, Regulated Emissions, and
Energy Use in Transportation model (GREET), U.S.
Department of Energy, Argonne National
Laboratory, https://www.transportation.anl.gov/
modeling_simulation/GREET/.
393 U.S. EPA. 2002 National Emissions Inventory
(NEI) Data and Documentation, https://www.epa.gov/
ttn/chief/net/2002inventory.html.
394 EPA. IPM. https://www.epa.gov/airmarkt/
progsregs/epa-ipm/BaseCasev410.html. ‘‘Proposed
Transport Rule/NODA version’’ of IPM.
TR_SB_Limited Trading v.4.10.
395 Regulatory definitions of PM size fractions,
and information on reference and equivalent
methods for measuring PM in ambient air, are
provided in 40 CFR parts 50, 53, and 58.
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2. Health Effects of Non-GHG Pollutants
In this section we discuss health
effects associated with exposure to some
of the criteria and air toxic pollutants
impacted by the proposed vehicle
standards.
a. Particulate Matter
i. Background
Particulate matter is a generic term for
a broad class of chemically and
physically diverse substances. It can be
principally characterized as discrete
particles that exist in the condensed
(liquid or solid) phase spanning several
orders of magnitude in size. Since 1987,
EPA has delineated that subset of
inhalable particles small enough to
penetrate to the thoracic region
(including the tracheobronchial and
alveolar regions) of the respiratory tract
(referred to as thoracic particles).395
Current National Ambient Air Quality
Standards (NAAQS) use PM2.5 as the
indicator for fine particles (with PM2.5
generally referring to particles with a
nominal mean aerodynamic diameter
less than or equal to 2.5 micrometers
(mm), and use PM10 as the indicator for
purposes of regulating the coarse
fraction of PM10 (referred to as thoracic
coarse particles or coarse-fraction
particles; generally including particles
with a nominal mean aerodynamic
diameter greater than 2.5 mm and less
than or equal to 10 mm, or PM10–2.5).
Ultrafine particles are a subset of fine
particles, generally less than 100
nanometers (0.1 mm) in diameter.
Fine particles are produced primarily
by combustion processes and by
transformations of gaseous emissions
(e.g., sulfur oxides (SOX), nitrogen
oxides (NOX), and volatile organic
compounds (VOC)) in the atmosphere.
The chemical and physical properties of
PM2.5 may vary greatly with time,
region, meteorology, and source
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category. Thus, PM2.5 may include a
complex mixture of different
components including sulfates, nitrates,
organic compounds, elemental carbon
and metal compounds. These particles
can remain in the atmosphere for days
to weeks and travel hundreds to
thousands of kilometers.
ii. Health Effects of Particulate Matter
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Scientific studies show ambient PM is
associated with a series of adverse
health effects. These health effects are
discussed in detail in EPA’s Integrated
Science Assessment (ISA) for Particulate
Matter.396 Further discussion of health
effects associated with PM can also be
found in the draft RIA. The ISA
summarizes health effects evidence
associated with both short-term and
long-term exposures to PM2.5, PM10–2.5,
and ultrafine particles.
The ISA concludes that health effects
associated with short-term exposures
(hours to days) to ambient PM2.5 include
mortality, cardiovascular effects, such as
altered vasomotor function and hospital
admissions and emergency department
visits for ischemic heart disease and
congestive heart failure, and respiratory
effects, such as exacerbation of asthma
symptoms in children and hospital
admissions and emergency department
visits for chronic obstructive pulmonary
disease and respiratory infections.397
The ISA notes that long-term exposure
(months to years) to PM2.5 is associated
with the development/progression of
cardiovascular disease, premature
mortality, and respiratory effects,
including reduced lung function
growth, increased respiratory
symptoms, and asthma development.398
The ISA concludes that the currently
available scientific evidence from
epidemiologic, controlled human
exposure, and toxicological studies
supports a causal association between
short- and long-term exposures to PM2.5
and cardiovascular effects and
mortality. Furthermore, the ISA
concludes that the collective evidence
supports likely causal associations
between short- and long-term PM2.5
exposures and respiratory effects. The
ISA also concludes that the scientific
evidence is suggestive of a causal
association for reproductive and
developmental effects and cancer,
396 U.S.
EPA (2009) Integrated Science
Assessment for Particulate Matter (Final Report).
U.S. Environmental Protection Agency,
Washington, DC, EPA/600/R–08/139F, Docket EPA–
HQ–OAR–2010–0799.
397 See U.S. EPA, 2009 Final PM ISA, Note 396,
at Section 2.3.1.1.
398 See U.S. EPA 2009 Final PM ISA, Note 396,
at page 2–12, Sections 7.3.1.1 and 7.3.2.1.
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mutagenicity, and genotoxicity and
long-term exposure to PM2.5.399
For PM10–2.5, the ISA concludes that
the current evidence is suggestive of a
causal relationship between short-term
exposures and cardiovascular effects.
There is also suggestive evidence of a
causal relationship between short-term
PM10–2.5 exposure and mortality and
respiratory effects. Data are inadequate
to draw conclusions regarding the
health effects associated with long-term
exposure to PM10–2.5.400
For ultrafine particles, the ISA
concludes that there is suggestive
evidence of a causal relationship
between short-term exposures and
cardiovascular effects, such as changes
in heart rhythm and blood vessel
function. It also concludes that there is
suggestive evidence of association
between short-term exposure to
ultrafine particles and respiratory
effects. Data are inadequate to draw
conclusions regarding the health effects
associated with long-term exposure to
ultrafine particles.401
b. Ozone
i. Background
Ground-level ozone pollution is
typically formed by the reaction of VOC
and NOX in the lower atmosphere in the
presence of sunlight. These pollutants,
often referred to as ozone precursors, are
emitted by many types of pollution
sources, such as highway and nonroad
motor vehicles and engines, power
plants, chemical plants, refineries,
makers of consumer and commercial
products, industrial facilities, and
smaller area sources.
The science of ozone formation,
transport, and accumulation is complex.
Ground-level ozone is produced and
destroyed in a cyclical set of chemical
reactions, many of which are sensitive
to temperature and sunlight. When
ambient temperatures and sunlight
levels remain high for several days and
the air is relatively stagnant, ozone and
its precursors can build up and result in
more ozone than typically occurs on a
single high-temperature day. Ozone can
be transported hundreds of miles
downwind from precursor emissions,
resulting in elevated ozone levels even
in areas with low local VOC or NOX
emissions.
ii. Health Effects of Ozone
The health and welfare effects of
ozone are well documented and are
399 See U.S. EPA 2009 Final PM ISA, Note 396,
at Section 2.3.2.
400 See U.S. EPA 2009 Final PM ISA, Note 396,
at Section 2.3.4, Table 2–6.
401 See U.S. EPA 2009 Final PM ISA, Note 396,
at Section 2.3.5, Table 2–6.
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assessed in EPA’s 2006 Air Quality
Criteria Document and 2007 Staff
Paper.402 403 People who are more
susceptible to effects associated with
exposure to ozone can include children,
the elderly, and individuals with
respiratory disease such as asthma.
Those with greater exposures to ozone,
for instance due to time spent outdoors
(e.g., children and outdoor workers), are
of particular concern. Ozone can irritate
the respiratory system, causing
coughing, throat irritation, and
breathing discomfort. Ozone can reduce
lung function and cause pulmonary
inflammation in healthy individuals.
Ozone can also aggravate asthma,
leading to more asthma attacks that
require medical attention and/or the use
of additional medication. Thus, ambient
ozone may cause both healthy and
asthmatic individuals to limit their
outdoor activities. In addition, there is
suggestive evidence of a contribution of
ozone to cardiovascular-related
morbidity and highly suggestive
evidence that short-term ozone exposure
directly or indirectly contributes to nonaccidental and cardiopulmonary-related
mortality, but additional research is
needed to clarify the underlying
mechanisms causing these effects. In a
report on the estimation of ozonerelated premature mortality published
by NRC, a panel of experts and
reviewers concluded that short-term
exposure to ambient ozone is likely to
contribute to premature deaths and that
ozone-related mortality should be
included in estimates of the health
benefits of reducing ozone exposure.404
Animal toxicological evidence indicates
that with repeated exposure, ozone can
inflame and damage the lining of the
lungs, which may lead to permanent
changes in lung tissue and irreversible
reductions in lung function. The
respiratory effects observed in
controlled human exposure studies and
animal studies are coherent with the
evidence from epidemiologic studies
supporting a causal relationship
between acute ambient ozone exposures
and increased respiratory-related
emergency room visits and
402 U.S. EPA. (2006). Air Quality Criteria for
Ozone and Related Photochemical Oxidants (Final).
EPA/600/R–05/004aF–cF. Washington, DC: U.S.
EPA. Docket EPA–HQ–OAR–2010–0799.
403 U.S. EPA. (2007). Review of the National
Ambient Air Quality Standards for Ozone: Policy
Assessment of Scientific and Technical
Information, OAQPS Staff Paper. EPA–452/R–07–
003. Washington, DC, U.S. EPA. Docket EPA–HQ–
OAR–2010–0799.
404 National Research Council (NRC), 2008.
Estimating Mortality Risk Reduction and Economic
Benefits from Controlling Ozone Air Pollution. The
National Academies Press: Washington, DC Docket
EPA–HQ–OAR–2010–0799.
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hospitalizations in the warm season. In
addition, there is suggestive evidence of
a contribution of ozone to
cardiovascular-related morbidity and
non-accidental and cardiopulmonary
mortality.
c. Nitrogen Oxides and Sulfur Oxides
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i. Background
Nitrogen dioxide (NO2) is a member of
the NOX family of gases. Most NO2 is
formed in the air through the oxidation
of nitric oxide (NO) emitted when fuel
is burned at a high temperature. Sulfur
Dioxide (SO2) a member of the sulfur
oxide (SOX) family of gases, is formed
from burning fuels containing sulfur
(e.g., coal or oil derived), extracting
gasoline from oil, or extracting metals
from ore.
SO2 and NO2 can dissolve in water
droplets and further oxidize to form
sulfuric and nitric acid which react with
ammonia to form sulfates and nitrates,
both of which are important
components of ambient PM. The health
effects of ambient PM are discussed in
Section III.G.3.a.ii of this preamble. NOX
and NMHC are the two major precursors
of ozone. The health effects of ozone are
covered in Section III.G.3.b.ii.
ii. Health Effects of NO2
Information on the health effects of
NO2 can be found in the EPA Integrated
Science Assessment (ISA) for Nitrogen
Oxides.405 The EPA has concluded that
the findings of epidemiologic,
controlled human exposure, and animal
toxicological studies provide evidence
that is sufficient to infer a likely causal
relationship between respiratory effects
and short-term NO2 exposure. The ISA
concludes that the strongest evidence
for such a relationship comes from
epidemiologic studies of respiratory
effects including symptoms, emergency
department visits, and hospital
admissions. The ISA also draws two
broad conclusions regarding airway
responsiveness following NO2 exposure.
First, the ISA concludes that NO2
exposure may enhance the sensitivity to
allergen-induced decrements in lung
function and increase the allergeninduced airway inflammatory response
following 30-minute exposures of
asthmatics to NO2 concentrations as low
as 0.26 ppm. Second, exposure to NO2
has been found to enhance the inherent
responsiveness of the airway to
subsequent nonspecific challenges in
controlled human exposure studies of
asthmatic subjects. Small but significant
405 U.S. EPA (2008). Integrated Science
Assessment for Oxides of Nitrogen—Health Criteria
(Final Report). EPA/600/R–08/071. Washington,
DC: U.S. EPA. Docket EPA–HQ–OAR–2010–0799.
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increases in non-specific airway
hyperresponsiveness were reported
following 1-hour exposures of
asthmatics to 0.1 ppm NO2. Enhanced
airway responsiveness could have
important clinical implications for
asthmatics since transient increases in
airway responsiveness following NO2
exposure have the potential to increase
symptoms and worsen asthma control.
Together, the epidemiologic and
experimental data sets form a plausible,
consistent, and coherent description of
a relationship between NO2 exposures
and an array of adverse health effects
that range from the onset of respiratory
symptoms to hospital admission.
Although the weight of evidence
supporting a causal relationship is
somewhat less certain than that
associated with respiratory morbidity,
NO2 has also been linked to other health
endpoints. These include all-cause
(nonaccidental) mortality, hospital
admissions or emergency department
visits for cardiovascular disease, and
decrements in lung function growth
associated with chronic exposure.
iii. Health Effects of SO2
Information on the health effects of
SO2 can be found in the EPA Integrated
Science Assessment for Sulfur
Oxides.406 SO2 has long been known to
cause adverse respiratory health effects,
particularly among individuals with
asthma. Other potentially sensitive
groups include children and the elderly.
During periods of elevated ventilation,
asthmatics may experience symptomatic
bronchoconstriction within minutes of
exposure. Following an extensive
evaluation of health evidence from
epidemiologic and laboratory studies,
the EPA has concluded that there is a
causal relationship between respiratory
health effects and short-term exposure
to SO2. Separately, based on an
evaluation of the epidemiologic
evidence of associations between shortterm exposure to SO2 and mortality, the
EPA has concluded that the overall
evidence is suggestive of a causal
relationship between short-term
exposure to SO2 and mortality.
d. Carbon Monoxide
Information on the health effects of
CO can be found in the EPA Integrated
Science Assessment (ISA) for Carbon
Monoxide.407 The ISA concludes that
406 U.S. EPA. (2008). Integrated Science
Assessment (ISA) for Sulfur Oxides—Health
Criteria (Final Report). EPA/600/R–08/047F.
Washington, DC: U.S. Environmental Protection
Agency. Docket EPA–HQ–OAR–2010–0799.
407 U.S. EPA, 2010. Integrated Science
Assessment for Carbon Monoxide (Final Report).
U.S. Environmental Protection Agency,
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ambient concentrations of CO are
associated with a number of adverse
health effects.408 This section provides
a summary of the health effects
associated with exposure to ambient
concentrations of CO.409
Human clinical studies of subjects
with coronary artery disease show a
decrease in the time to onset of exerciseinduced angina (chest pain) and
electrocardiogram changes following CO
exposure. In addition, epidemiologic
studies show associations between
short-term CO exposure and
cardiovascular morbidity, particularly
increased emergency room visits and
hospital admissions for coronary heart
disease (including ischemic heart
disease, myocardial infarction, and
angina). Some epidemiologic evidence
is also available for increased hospital
admissions and emergency room visits
for congestive heart failure and
cardiovascular disease as a whole. The
ISA concludes that a causal relationship
is likely to exist between short-term
exposures to CO and cardiovascular
morbidity. It also concludes that
available data are inadequate to
conclude that a causal relationship
exists between long-term exposures to
CO and cardiovascular morbidity.
Animal studies show various
neurological effects with in-utero CO
exposure. Controlled human exposure
studies report inconsistent neural and
behavioral effects following low-level
CO exposures. The ISA concludes the
evidence is suggestive of a causal
relationship with both short- and longterm exposure to CO and central
nervous system effects.
A number of epidemiologic and
animal toxicological studies cited in the
ISA have evaluated associations
between CO exposure and birth
outcomes such as preterm birth or
cardiac birth defects. The epidemiologic
studies provide limited evidence of a
CO-induced effect on preterm births and
birth defects, with weak evidence for a
decrease in birth weight. Animal
Washington, DC, EPA/600/R–09/019F, 2010.
Available at https://cfpub.epa.gov/ncea/cfm/
recordisplay.cfm?deid=218686. Docket EPA–HQ–
OAR–2010–0799.
408 The ISA evaluates the health evidence
associated with different health effects, assigning
one of five ‘‘weight of evidence’’ determinations:
causal relationship, likely to be a causal
relationship, suggestive of a causal relationship,
inadequate to infer a causal relationship, and not
likely to be a causal relationship. For definitions of
these levels of evidence, please refer to Section 1.6
of the ISA.
409 Personal exposure includes contributions from
many sources, and in many different environments.
Total personal exposure to CO includes both
ambient and nonambient components; and both
components may contribute to adverse health
effects.
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toxicological studies have found
associations between perinatal CO
exposure and decrements in birth
weight, as well as other developmental
outcomes. The ISA concludes these
studies are suggestive of a causal
relationship between long-term
exposures to CO and developmental
effects and birth outcomes.
Epidemiologic studies provide
evidence of effects on respiratory
morbidity such as changes in
pulmonary function, respiratory
symptoms, and hospital admissions
associated with ambient CO
concentrations. A limited number of
epidemiologic studies considered
copollutants such as ozone, SO2, and
PM in two-pollutant models and found
that CO risk estimates were generally
robust, although this limited evidence
makes it difficult to disentangle effects
attributed to CO itself from those of the
larger complex air pollution mixture.
Controlled human exposure studies
have not extensively evaluated the effect
of CO on respiratory morbidity. Animal
studies at levels of 50–100 ppm CO
show preliminary evidence of altered
pulmonary vascular remodeling and
oxidative injury. The ISA concludes that
the evidence is suggestive of a causal
relationship between short-term CO
exposure and respiratory morbidity, and
inadequate to conclude that a causal
relationship exists between long-term
exposure and respiratory morbidity.
Finally, the ISA concludes that the
epidemiologic evidence is suggestive of
a causal relationship between short-term
exposures to CO and mortality.
Epidemiologic studies provide evidence
of an association between short-term
exposure to CO and mortality, but
limited evidence is available to evaluate
cause-specific mortality outcomes
associated with CO exposure. In
addition, the attenuation of CO risk
estimates which was often observed in
copollutant models contributes to the
uncertainty as to whether CO is acting
alone or as an indicator for other
combustion-related pollutants. The ISA
also concludes that there is not likely to
be a causal relationship between
relevant long-term exposures to CO and
mortality.
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e. Air Toxics
Light-duty vehicle emissions
contribute to ambient levels of air toxics
known or suspected as human or animal
carcinogens, or that have noncancer
health effects. The population
experiences an elevated risk of cancer
and other noncancer health effects from
exposure to the class of pollutants
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known collectively as ‘‘air toxics.’’ 410
These compounds include, but are not
limited to, benzene, 1,3-butadiene,
formaldehyde, acetaldehyde, acrolein,
polycyclic organic matter, and
naphthalene. These compounds were
identified as national or regional risk
drivers or contributors in the 2005
National-Scale Air Toxics Assessment
and have significant inventory
contributions from mobile sources.411
i. Benzene
The EPA’s Integrated Risk Information
System (IRIS) database lists benzene as
a known human carcinogen (causing
leukemia) by all routes of exposure, and
concludes that exposure is associated
with additional health effects, including
genetic changes in both humans and
animals and increased proliferation of
bone marrow cells in mice.412 413 414 EPA
states in its IRIS database that data
indicate a causal relationship between
benzene exposure and acute
lymphocytic leukemia and suggest a
relationship between benzene exposure
and chronic non-lymphocytic leukemia
and chronic lymphocytic leukemia. The
International Agency for Research on
Carcinogens (IARC) has determined that
benzene is a human carcinogen and the
U.S. Department of Health and Human
Services (DHHS) has characterized
benzene as a known human
carcinogen.415 416
A number of adverse noncancer
health effects including blood disorders,
such as preleukemia and aplastic
anemia, have also been associated with
long-term exposure to benzene.417 418
410 U.S. EPA. (2011) Summary of Results for the
2005 National-Scale Assessment. https://
www.epa.gov/ttn/atw/nata2005/05pdf/
sum_results.pdf. Docket EPA–HQ–OAR–2010–
0799.
411 U.S. EPA (2011) 2005 National-Scale Air
Toxics Assessment. https://www.epa.gov/ttn/atw/
nata2005. Docket EPA–HQ–OAR–2010–0799.
412 U.S. EPA. 2000. Integrated Risk Information
System File for Benzene. This material is available
electronically at https://www.epa.gov/iris/subst/
0276.htm. Docket EPA–HQ–OAR–2010–0799.
413 International Agency for Research on Cancer.
1982. Monographs on the evaluation of
carcinogenic risk of chemicals to humans, Volume
29. Some industrial chemicals and dyestuffs, World
Health Organization, Lyon, France, p. 345–389.
Docket EPA–HQ–OAR–2010–0799.
414 Irons, R.D.; Stillman, W.S.; Colagiovanni, D.B.;
Henry, V.A. 1992. Synergistic action of the benzene
metabolite hydroquinone on myelopoietic
stimulating activity of granulocyte/macrophage
colony-stimulating factor in vitro, Proc. Natl. Acad.
Sci. 89:3691–3695. Docket EPA–HQ–OAR–2010–
0799.
415 See IARC, Note 413, above.
416 U.S. Department of Health and Human
Services National Toxicology Program 11th Report
on Carcinogens available at: https://
ntp.niehs.nih.gov/go/16183. Docket EPA–HQ–
OAR–2010–0799.
417 Aksoy, M. (1989). Hematotoxicity and
carcinogenicity of benzene. Environ. Health
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The most sensitive noncancer effect
observed in humans, based on current
data, is the depression of the absolute
lymphocyte count in blood.419 420 In
addition, published work, including
studies sponsored by the Health Effects
Institute (HEI), provides evidence that
biochemical responses are occurring at
lower levels of benzene exposure than
previously known.421 422 423 424 EPA’s
IRIS program has not yet evaluated
these new data.
ii. 1,3-Butadiene
EPA has characterized 1,3-butadiene
as carcinogenic to humans by
inhalation.425 426 The IARC has
determined that 1,3-butadiene is a
human carcinogen and the U.S. DHHS
has characterized 1,3-butadiene as a
known human carcinogen.427 428 There
Perspect. 82: 193–197. Docket EPA–HQ–OAR–
2010–0799.
418 Goldstein, B.D. (1988). Benzene toxicity.
Occupational medicine. State of the Art Reviews. 3:
541–554. Docket EPA–HQ–OAR–2010–0799.
419 Rothman, N., G.L. Li, M. Dosemeci, W.E.
Bechtold, G.E. Marti, Y.Z. Wang, M. Linet, L.Q. Xi,
W. Lu, M.T. Smith, N. Titenko-Holland, L.P. Zhang,
W. Blot, S.N. Yin, and R.B. Hayes (1996)
Hematotoxicity among Chinese workers heavily
exposed to benzene. Am. J. Ind. Med. 29: 236–246.
Docket EPA–HQ–OAR–2010–0799.
420 U.S. EPA (2002) Toxicological Review of
Benzene (Noncancer Effects). Environmental
Protection Agency, Integrated Risk Information
System, Research and Development, National
Center for Environmental Assessment, Washington
DC. This material is available electronically at
https://www.epa.gov/iris/subst/0276.htm. Docket
EPA–HQ–OAR–2010–0799.
421 Qu, O.; Shore, R.; Li, G.; Jin, X.; Chen, C.L.;
Cohen, B.; Melikian, A.; Eastmond, D.; Rappaport,
S.; Li, H.; Rupa, D.; Suramaya, R.; Songnian, W.;
Huifant, Y.; Meng, M.; Winnik, M.; Kwok, E.; Li, Y.;
Mu, R.; Xu, B.; Zhang, X.; Li, K. (2003) HEI Report
115, Validation & Evaluation of Biomarkers in
Workers Exposed to Benzene in China. Docket
EPA–HQ–OAR–2010–0799.
422 Qu, Q., R. Shore, G. Li, X. Jin, L.C. Chen, B.
Cohen, et al. (2002) Hematological changes among
Chinese workers with a broad range of benzene
exposures. Am. J. Industr. Med. 42: 275–285.
Docket EPA–HQ–OAR–2010–0799.
423 Lan, Qing, Zhang, L., Li, G., Vermeulen, R., et
al. (2004) Hematotoxically in Workers Exposed to
Low Levels of Benzene. Science 306: 1774–1776.
Docket EPA–HQ–OAR–2010–0799.
424 Turtletaub, K.W. and Mani, C. (2003) Benzene
metabolism in rodents at doses relevant to human
exposure from Urban Air. Research Reports Health
Effect Inst. Report No. 113. Docket EPA–HQ–OAR–
2010–0799.
425 U.S. EPA (2002) Health Assessment of 1,3Butadiene. Office of Research and Development,
National Center for Environmental Assessment,
Washington Office, Washington, DC. Report No.
EPA600–P–98–001F. This document is available
electronically at https://www.epa.gov/iris/supdocs/
buta-sup.pdf. Docket EPA–HQ–OAR–2010–0799.
426 U.S. EPA (2002) Full IRIS Summary for 1,3butadiene (CASRN 106–99–0). Environmental
Protection Agency, Integrated Risk Information
System (IRIS), Research and Development, National
Center for Environmental Assessment, Washington,
DC https://www.epa.gov/iris/subst/0139.htm. Docket
EPA–HQ–OAR–2010–0799.
427 International Agency for Research on Cancer
(1999) Monographs on the evaluation of
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are numerous studies consistently
demonstrating that 1,3-butadiene is
metabolized into genotoxic metabolites
by experimental animals and humans.
The specific mechanisms of 1,3butadiene-induced carcinogenesis are
unknown; however, the scientific
evidence strongly suggests that the
carcinogenic effects are mediated by
genotoxic metabolites. Animal data
suggest that females may be more
sensitive than males for cancer effects
associated with 1,3-butadiene exposure;
there are insufficient data in humans
from which to draw conclusions about
sensitive subpopulations. 1,3-butadiene
also causes a variety of reproductive and
developmental effects in mice; no
human data on these effects are
available. The most sensitive effect was
ovarian atrophy observed in a lifetime
bioassay of female mice.429
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iii. Formaldehyde
Since 1987, EPA has classified
formaldehyde as a probable human
carcinogen based on evidence in
humans and in rats, mice, hamsters, and
monkeys.430 EPA is currently reviewing
epidemiological data published since
that time. For instance, research
conducted by the National Cancer
Institute found an increased risk of
nasopharyngeal cancer and
lymphohematopoietic malignancies
such as leukemia among workers
exposed to formaldehyde.431, 432 In an
analysis of the lymphohematopoietic
cancer mortality from an extended
follow-up of these workers, the National
Cancer Institute confirmed an
association between
carcinogenic risk of chemicals to humans, Volume
71, Re-evaluation of some organic chemicals,
hydrazine and hydrogen peroxide and Volume 97
(in preparation), World Health Organization, Lyon,
France. Docket EPA–HQ–OAR–2010–0799.
428 U.S. Department of Health and Human
Services (2005) National Toxicology Program 11th
Report on Carcinogens available at:
ntp.niehs.nih.gov/index.cfm?objectid=32BA9724–
F1F6–975E–7FCE50709CB4C932. Docket EPA–HQ–
OAR–2010–0799.
429 Bevan, C.; Stadler, J.C.; Elliot, G.S.; et al.
(1996) Subchronic toxicity of 4-vinylcyclohexene in
rats and mice by inhalation. Fundam. Appl.
Toxicol. 32:1–10. Docket EPA–HQ–OAR–2010–
0799.
430 U.S. EPA (1987) Assessment of Health Risks
to Garment Workers and Certain Home Residents
from Exposure to Formaldehyde, Office of
Pesticides and Toxic Substances, April 1987.
Docket EPA–HQ–OAR–2010–0799.
431 Hauptmann, M..; Lubin, J. H.; Stewart, P. A.;
Hayes, R. B.; Blair, A. 2003. Mortality from
lymphohematopoetic malignancies among workers
in formaldehyde industries. Journal of the National
Cancer Institute 95: 1615–1623. Docket EPA–HQ–
OAR–2010–0799.
432 Hauptmann, M..; Lubin, J. H.; Stewart, P. A.;
Hayes, R. B.; Blair, A. 2004. Mortality from solid
cancers among workers in formaldehyde industries.
American Journal of Epidemiology 159: 1117–1130.
Docket EPA–HQ–OAR–2010–0799.
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lymphohematopoietic cancer risk and
peak exposures.433 A National Institute
of Occupational Safety and Health study
of garment workers also found increased
risk of death due to leukemia among
workers exposed to formaldehyde.434
Extended follow-up of a cohort of
British chemical workers did not find
evidence of an increase in
nasopharyngeal or
lymphohematopoietic cancers, but a
continuing statistically significant
excess in lung cancers was reported.435
In 2006, the IARC re-classified
formaldehyde as a human carcinogen
(Group 1).436
Formaldehyde exposure also causes a
range of noncancer health effects,
including irritation of the eyes (burning
and watering of the eyes), nose and
throat. Effects from repeated exposure in
humans include respiratory tract
irritation, chronic bronchitis and nasal
epithelial lesions such as metaplasia
and loss of cilia. Animal studies suggest
that formaldehyde may also cause
airway inflammation—including
eosinophil infiltration into the airways.
There are several studies that suggest
that formaldehyde may increase the risk
of asthma—particularly in the
young.437 438
iv. Acetaldehyde
Acetaldehyde is classified in EPA’s
IRIS database as a probable human
carcinogen, based on nasal tumors in
rats, and is considered toxic by the
433 Beane Freeman, L. E.; Blair, A.; Lubin, J. H.;
Stewart, P. A.; Hayes, R. B.; Hoover, R. N.;
Hauptmann, M. 2009. Mortality from
lymphohematopoietic malignancies among workers
in formaldehyde industries: The National Cancer
Institute cohort. J. National Cancer Inst. 101: 751–
761. Docket EPA–HQ–OAR–2010–0799.
434 Pinkerton, L. E. 2004. Mortality among a
cohort of garment workers exposed to
formaldehyde: an update. Occup. Environ. Med. 61:
193–200. Docket EPA–HQ–OAR–2010–0799.
435 Coggon, D, EC Harris, J Poole, KT Palmer.
2003. Extended follow-up of a cohort of British
chemical workers exposed to formaldehyde. J
National Cancer Inst. 95:1608–1615. Docket EPA–
HQ–OAR–2010–0799.
436 International Agency for Research on Cancer.
2006. Formaldehyde, 2–Butoxyethanol and 1-tertButoxypropan-2-ol. Volume 88. (in preparation),
World Health Organization, Lyon, France. Docket
EPA–HQ–OAR–2010–0799;
437 Agency for Toxic Substances and Disease
Registry (ATSDR). 1999. Toxicological profile for
Formaldehyde. Atlanta, GA: U.S. Department of
Health and Human Services, Public Health Service.
https://www.atsdr.cdc.gov/toxprofiles/tp111.html
Docket EPA–HQ–OAR–2010–0799.
438 WHO (2002) Concise International Chemical
Assessment Document 40: Formaldehyde.
Published under the joint sponsorship of the United
Nations Environment Programme, the International
Labour Organization, and the World Health
Organization, and produced within the framework
of the Inter-Organization Programme for the Sound
Management of Chemicals. Geneva. Docket EPA–
HQ–OAR–2010–0799.
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inhalation, oral, and intravenous
routes.439 Acetaldehyde is reasonably
anticipated to be a human carcinogen by
the U.S. DHHS in the 11th Report on
Carcinogens and is classified as possibly
carcinogenic to humans (Group 2B) by
the IARC.440 441 EPA is currently
conducting a reassessment of cancer risk
from inhalation exposure to
acetaldehyde.
The primary noncancer effects of
exposure to acetaldehyde vapors
include irritation of the eyes, skin, and
respiratory tract.442 In short-term (4
week) rat studies, degeneration of
olfactory epithelium was observed at
various concentration levels of
acetaldehyde exposure.443 444 Data from
these studies were used by EPA to
develop an inhalation reference
concentration. Some asthmatics have
been shown to be a sensitive
subpopulation to decrements in
functional expiratory volume (FEV1
test) and bronchoconstriction upon
acetaldehyde inhalation.445 The agency
is currently conducting a reassessment
of the health hazards from inhalation
exposure to acetaldehyde.
v. Acrolein
Acrolein is extremely acrid and
irritating to humans when inhaled, with
acute exposure resulting in upper
respiratory tract irritation, mucus
hypersecretion and congestion. The
intense irritancy of this carbonyl has
been demonstrated during controlled
tests in human subjects, who suffer
intolerable eye and nasal mucosal
439 U.S. EPA. 1991. Integrated Risk Information
System File of Acetaldehyde. Research and
Development, National Center for Environmental
Assessment, Washington, DC. Available at https://
www.epa.gov/iris/subst/0290.htm. Docket EPA–
HQ–OAR–2010–0799.
440 U.S. Department of Health and Human
Services National Toxicology Program 11th Report
on Carcinogens available at: https://
ntp.niehs.nih.gov/index.cfm?objectid=32BA9724–
F1F6–975E–7FCE50709CB4C932. Docket EPA–HQ–
OAR–2010–0799.
441 International Agency for Research on Cancer.
1999. Re-evaluation of some organic chemicals,
hydrazine, and hydrogen peroxide. IARC
Monographs on the Evaluation of Carcinogenic Risk
of Chemical to Humans, Vol 71. Lyon, France.
Docket EPA–HQ–OAR–2010–0799.
442 See Integrated Risk Information System File of
Acetaldehyde, Note 439, above.
443 Appleman, L. M., R. A. Woutersen, V. J. Feron,
R. N. Hooftman, and W. R. F. Notten. 1986. Effects
of the variable versus fixed exposure levels on the
toxicity of acetaldehyde in rats. J. Appl. Toxicol. 6:
331–336. Docket EPA–HQ–OAR–2010–0799.
444 Appleman, L.M., R.A. Woutersen, and V.J.
Feron. 1982. Inhalation toxicity of acetaldehyde in
rats. I. Acute and subacute studies. Toxicology. 23:
293–297. Docket EPA–HQ–OAR–2010–0799.
445 Myou, S.; Fujimura, M.; Nishi K.; Ohka, T.;
and Matsuda, T. 1993. Aerosolized acetaldehyde
induces histamine-mediated bronchoconstriction in
asthmatics. Am. Rev. Respir.Dis.148(4 Pt 1): 940–3.
Docket EPA–HQ–OAR–2010–0799.
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sensory reactions within minutes of
exposure.446 These data and additional
studies regarding acute effects of human
exposure to acrolein are summarized in
EPA’s 2003 IRIS Human Health
Assessment for acrolein.447 Evidence
available from studies in humans
indicate that levels as low as 0.09 ppm
(0.21 mg/m3) for five minutes may elicit
subjective complaints of eye irritation
with increasing concentrations leading
to more extensive eye, nose and
respiratory symptoms.448 Lesions to the
lungs and upper respiratory tract of rats,
rabbits, and hamsters have been
observed after subchronic exposure to
acrolein.449 Acute exposure effects in
animal studies report bronchial hyperresponsiveness.450 In one study, the
acute respiratory irritant effects of
exposure to 1.1 ppm acrolein were more
pronounced in mice with allergic
airway disease by comparison to nondiseased mice which also showed
decreases in respiratory rate.451 Based
on these animal data and demonstration
of similar effects in humans (e.g.,
reduction in respiratory rate),
individuals with compromised
respiratory function (e.g., emphysema,
asthma) are expected to be at increased
risk of developing adverse responses to
strong respiratory irritants such as
acrolein.
EPA determined in 2003 that the
human carcinogenic potential of
acrolein could not be determined
because the available data were
inadequate. No information was
available on the carcinogenic effects of
acrolein in humans and the animal data
provided inadequate evidence of
carcinogenicity.452 The IARC
vi. Polycyclic Organic Matter
The term polycyclic organic matter
(POM) defines a broad class of
compounds that includes the polycyclic
aromatic hydrocarbon compounds
(PAHs). One of these compounds,
naphthalene, is discussed separately
below. POM compounds are formed
primarily from combustion and are
present in the atmosphere in gas and
particulate form. Cancer is the major
concern from exposure to POM.
Epidemiologic studies have reported an
increase in lung cancer in humans
exposed to diesel exhaust, coke oven
emissions, roofing tar emissions, and
cigarette smoke; all of these mixtures
contain POM compounds.454 455 Animal
studies have reported respiratory tract
tumors from inhalation exposure to
benzo[a]pyrene and alimentary tract and
liver tumors from oral exposure to
benzo[a]pyrene. In 1997 EPA classified
seven PAHs (benzo[a]pyrene,
benz[a]anthracene, chrysene,
benzo[b]fluoranthene,
benzo[k]fluoranthene,
dibenz[a,h]anthracene, and
indeno[1,2,3-cd]pyrene) as Group B2,
probable human carcinogens.456 Since
that time, studies have found that
maternal exposures to PAHs in a
population of pregnant women were
associated with several adverse birth
outcomes, including low birth weight
and reduced length at birth, as well as
impaired cognitive development in
preschool children (3 years of age).457 458
EPA has not yet evaluated these studies.
446 U.S. EPA (U.S. Environmental Protection
Agency). (2003) Toxicological review of acrolein in
support of summary information on Integrated Risk
Information System (IRIS) National Center for
Environmental Assessment, Washington, DC. EPA/
635/R–03/003. p. 10. Available online at: https://
www.epa.gov/ncea/iris/toxreviews/0364tr.pdf.
Docket EPA–HQ–OAR–2010–0799.
447 See U.S. EPA 2003 Toxicological review of
acrolein, Note 446, above.
448 See U.S. EPA 2003 Toxicological review of
acrolein, Note 446, at p. 11.
449 Integrated Risk Information System File of
Acrolein. Office of Research and Development,
National Center for Environmental Assessment,
Washington, DC. This material is available at https://
www.epa.gov/iris/subst/0364.htm Docket EPA–HQ–
OAR–2010–0799.
450 See U.S. 2003 Toxicological review of
acrolein, Note 446, at p. 15.
451 Morris JB, Symanowicz PT, Olsen JE, et al.
2003. Immediate sensory nerve-mediated
respiratory responses to irritants in healthy and
allergic airway-diseased mice. J Appl Physiol
94(4):1563–1571. Docket EPA–HQ–OAR–2010–
0799.
452 U.S. EPA. 2003. Integrated Risk Information
System File of Acrolein. Research and
Development, National Center for Environmental
Assessment, Washington, DC. This material is
available at https://www.epa.gov/iris/subst/0364.htm
Docket EPA–HQ–OAR–2010–0799.
453 International Agency for Research on Cancer.
1995. Monographs on the evaluation of
carcinogenic risk of chemicals to humans, Volume
63. Dry cleaning, some chlorinated solvents and
other industrial chemicals, World Health
Organization, Lyon, France. Docket EPA–HQ–OAR–
2010–0799.
454 Agency for Toxic Substances and Disease
Registry (ATSDR). 1995. Toxicological profile for
Polycyclic Aromatic Hydrocarbons (PAHs). Atlanta,
GA: U.S. Department of Health and Human
Services, Public Health Service. Available
electronically at https://www.atsdr.cdc.gov/
ToxProfiles/TP.asp?id=122&tid=25.
455 U.S. EPA (2002). Health Assessment Document
for Diesel Engine Exhaust. EPA/600/8–90/057F
Office of Research and Development, Washington,
DC. https://cfpub.epa.gov/ncea/cfm/
recordisplay.cfm?deid=29060. Docket EPA–HQ–
OAR–2010–0799
456 U.S. EPA (1997). Integrated Risk Information
System File of indeno(1,2,3-cd)pyrene. Research
and Development, National Center for
Environmental Assessment, Washington, DC. This
material is available electronically at https://
www.epa.gov/ncea/iris/subst/0457.htm.
457 Perera, F.P.; Rauh, V.; Tsai, W–Y.; et al. (2002)
Effect of transplacental exposure to environmental
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determined in 1995 that acrolein was
not classifiable as to its carcinogenicity
in humans.453
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vii. Naphthalene
Naphthalene is found in small
quantities in gasoline and diesel fuels.
Naphthalene emissions have been
measured in larger quantities in both
gasoline and diesel exhaust compared
with evaporative emissions from mobile
sources, indicating it is primarily a
product of combustion. EPA released an
external review draft of a reassessment
of the inhalation carcinogenicity of
naphthalene based on a number of
recent animal carcinogenicity
studies.459 The draft reassessment
completed external peer review.460
Based on external peer review
comments received, additional analyses
are being undertaken. This external
review draft does not represent official
agency opinion and was released solely
for the purposes of external peer review
and public comment. The National
Toxicology Program listed naphthalene
as ‘‘reasonably anticipated to be a
human carcinogen’’ in 2004 on the basis
of bioassays reporting clear evidence of
carcinogenicity in rats and some
evidence of carcinogenicity in mice.461
California EPA has released a new risk
assessment for naphthalene, and the
IARC has reevaluated naphthalene and
re-classified it as Group 2B: possibly
carcinogenic to humans.462 Naphthalene
also causes a number of chronic noncancer effects in animals, including
abnormal cell changes and growth in
respiratory and nasal tissues.463
pollutants on birth outcomes in a multiethnic
population. Environ Health Perspect. 111: 201–205.
458 Perera, F.P.; Rauh, V.; Whyatt, R.M.; Tsai,
W.Y.; Tang, D.; Diaz, D.; Hoepner, L.; Barr, D.; Tu,
Y.H.; Camann, D.; Kinney, P. (2006) Effect of
prenatal exposure to airborne polycyclic aromatic
hydrocarbons on neurodevelopment in the first 3
years of life among inner-city children. Environ
Health Perspect 114: 1287–1292.
459 U.S. EPA. 2004. Toxicological Review of
Naphthalene (Reassessment of the Inhalation
Cancer Risk), Environmental Protection Agency,
Integrated Risk Information System, Research and
Development, National Center for Environmental
Assessment, Washington, DC. This material is
available electronically at https://www.epa.gov/iris/
subst/0436.htm. Docket EPA–HQ–OAR–2010–0799.
460 Oak Ridge Institute for Science and Education.
(2004). External Peer Review for the IRIS
Reassessment of the Inhalation Carcinogenicity of
Naphthalene. August 2004. https://cfpub.epa.gov/
ncea/cfm/recordisplay.cfm?deid=84403 Docket
EPA–HQ–OAR–2010–0799.
461 National Toxicology Program (NTP). (2004).
11th Report on Carcinogens. Public Health Service,
U.S. Department of Health and Human Services,
Research Triangle Park, NC. Available from: https://
ntp-server.niehs.nih.gov. Docket EPA–HQ–OAR–
2010–0799.
462 International Agency for Research on Cancer.
(2002). Monographs on the Evaluation of the
Carcinogenic Risk of Chemicals for Humans. Vol.
82. Lyon, France. Docket EPA–HQ–OAR–2010–
0799.
463 U. S. EPA. 1998. Toxicological Review of
Naphthalene, Environmental Protection Agency,
Integrated Risk Information System, Research and
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viii. Other Air Toxics
In addition to the compounds
described above, other compounds in
gaseous hydrocarbon and PM emissions
from light-duty vehicles will be affected
by this proposal. Mobile source air toxic
compounds that would potentially be
impacted include ethylbenzene,
propionaldehyde, toluene, and xylene.
Information regarding the health effects
of these compounds can be found in
EPA’s IRIS database.464
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f. Exposure and Health Effects
Associated With Traffic-Related Air
Pollution
Populations who live, work, or attend
school near major roads experience
elevated exposure to a wide range of air
pollutants, as well as higher risks for a
number of adverse health effects. While
the previous sections of this preamble
have focused on the health effects
associated with individual criteria
pollutants or air toxics, this section
discusses the mixture of different
exposures near major roadways, rather
than the effects of any single pollutant.
As such, this section emphasizes trafficrelated air pollution, in general, as the
relevant indicator of exposure rather
than any particular pollutant.
Concentrations of many trafficgenerated air pollutants are elevated for
up to 300–500 meters downwind of
roads with high traffic volumes.465
Numerous sources on roads contribute
to elevated roadside concentrations,
including exhaust and evaporative
emissions, and resuspension of road
dust and tire and brake wear.
Concentrations of several criteria and
hazardous air pollutants are elevated
near major roads. Furthermore, different
semi-volatile organic compounds and
chemical components of particulate
matter, including elemental carbon,
organic material, and trace metals, have
been reported at higher concentrations
near major roads.
Populations near major roads
experience greater risk of certain
adverse health effects. The Health
Effects Institute published a report on
the health effects of traffic-related air
pollution.466 It concluded that evidence
Development, National Center for Environmental
Assessment, Washington, DC. This material is
available electronically at https://www.epa.gov/iris/
subst/0436.htm Docket EPA–HQ–OAR–2010–0799.
464 U.S. EPA Integrated Risk Information System
(IRIS) database is available at: https://www.epa.gov/
iris.
465 Zhou, Y.; Levy, J.I. (2007) Factors influencing
the spatial extent of mobile source air pollution
impacts: a meta-analysis. BMC Public Health 7: 89.
doi:10.1186/1471–2458–7–89 Docket EPA–HQ–
OAR–2010–0799.
466 HEI Panel on the Health Effects of Air
Pollution. (2010) Traffic-related air pollution: a
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is ‘‘sufficient to infer the presence of a
causal association’’ between traffic
exposure and exacerbation of childhood
asthma symptoms. The HEI report also
concludes that the evidence is either
‘‘sufficient’’ or ‘‘suggestive but not
sufficient’’ for a causal association
between traffic exposure and new
childhood asthma cases. A review of
asthma studies by Salam et al. (2008)
reaches similar conclusions.467 The HEI
report also concludes that there is
‘‘suggestive’’ evidence for pulmonary
function deficits associated with traffic
exposure, but concluded that there is
‘‘inadequate and insufficient’’ evidence
for causal associations with respiratory
health care utilization, adult-onset
asthma, chronic obstructive pulmonary
disease symptoms, and allergy. A
review by Holguin (2008) notes that the
effects of traffic on asthma may be
modified by nutrition status, medication
use, and genetic factors.468
The HEI report also concludes that
evidence is ‘‘suggestive’’ of a causal
association between traffic exposure and
all-cause and cardiovascular mortality.
There is also evidence of an association
between traffic-related air pollutants
and cardiovascular effects such as
changes in heart rhythm, heart attack,
and cardiovascular disease. The HEI
report characterizes this evidence as
‘‘suggestive’’ of a causal association, and
an independent epidemiological
literature review by Adar and Kaufman
(2007) concludes that there is
‘‘consistent evidence’’ linking trafficrelated pollution and adverse
cardiovascular health outcomes.469
Some studies have reported
associations between traffic exposure
and other health effects, such as birth
outcomes (e.g., low birth weight) and
childhood cancer. The HEI report
concludes that there is currently
‘‘inadequate and insufficient’’ evidence
for a causal association between these
effects and traffic exposure. A review by
Raaschou-Nielsen and Reynolds (2006)
concluded that evidence of an
association between childhood cancer
critical review of the literature on emissions,
exposure, and health effects. [Online at https://
www.healtheffects.org] Docket EPA–HQ–OAR–
2010–0799.
467 Salam, M.T.; Islam, T.; Gilliland, F.D. (2008)
Recent evidence for adverse effects of residential
proximity to traffic sources on asthma. Current
Opin Pulm Med 14: 3–8. Docket EPA–HQ–OAR–
2010–0799.
468 Holguin, F. (2008) Traffic, outdoor air
pollution, and asthma. Immunol Allergy Clinics
North Am 28: 577–588. Docket EPA–HQ–OAR–
2010–0799.
469 Adar, S.D.; Kaufman, J.D. (2007)
Cardiovascular disease and air pollutants:
evaluating and improving epidemiological data
implicating traffic exposure. Inhal Toxicol 19: 135–
149. Docket EPA–HQ–OAR–2010–0799.
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and traffic-related air pollutants is weak,
but noted the inability to draw firm
conclusions based on limited
evidence.470
There is a large population in the
United States living in close proximity
of major roads. According to the Census
Bureau’s American Housing Survey for
2007, approximately 20 million
residences in the United States, 15.6%
of all homes, are located within 300 feet
(91 m) of a highway with 4+ lanes, a
railroad, or an airport.471 Therefore, at
current population of approximately
309 million, assuming that population
and housing are similarly distributed,
there are over 48 million people in the
United States living near such sources.
The HEI report also notes that in two
North American cities, Los Angeles and
Toronto, over 40% of each city’s
population live within 500 meters of a
highway or 100 meters of a major road.
It also notes that about 33% of each
city’s population resides within 50
meters of major roads. Together, the
evidence suggests that a large U.S.
population lives in areas with elevated
traffic-related air pollution.
People living near roads are often
socioeconomically disadvantaged.
According to the 2007 American
Housing Survey, a renter-occupied
property is over twice as likely as an
owner-occupied property to be located
near a highway with 4+ lanes, railroad
or airport. In the same survey, the
median household income of rental
housing occupants was less than half
that of owner-occupants ($28,921/
$59,886). Numerous studies in
individual urban areas report higher
levels of traffic-related air pollutants in
areas with high minority or poor
populations.472 473 474
Students may also be exposed in
situations where schools are located
470 Raaschou-Nielsen, O.; Reynolds, P. (2006) Air
pollution and childhood cancer: a review of the
epidemiological literature. Int J Cancer 118: 2920–
2929. Docket EPA–HQ–OAR–2010–0799.
471 U.S. Census Bureau (2008) American Housing
Survey for the United States in 2007. Series H–150
(National Data), Table 1A–7. [Accessed at https://
www.census.gov/hhes/www/housing/ahs/ahs07/
ahs07.html on January 22, 2009] Docket EPA–HQ–
OAR–2010–0799.
472 Lena, T.S.; Ochieng, V.; Carter, M.; Holguın´
Veras, J.; Kinney, Public Law (2002) Elemental
carbon and PM2.5 levels in an urban community
heavily impacted by truck traffic. Environ Health
Perspect 110: 1009–1015. Docket EPA–HQ–OAR–
2010–0799.
473 Wier, M.; Sciammas, C.; Seto, E.; Bhatia, R.;
Rivard, T. (2009) Health, traffic, and environmental
justice: collaborative research and community
action in San Francisco, California. Am J Public
Health 99: S499–S504. Docket EPA–HQ–OAR–
2010–0799.
474 Forkenbrock, D.J. and L.A. Schweitzer,
Environmental Justice and Transportation
Investment Policy. Iowa City: University of Iowa,
1997. Docket EPA–HQ–OAR–2010–0799.
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near major roads. In a study of nine
metropolitan areas across the United
States, Appatova et al. (2008) found that
on average greater than 33% of schools
were located within 400 m of an
Interstate, U.S., or state highway, while
12% were located within 100 m.475 The
study also found that among the
metropolitan areas studied, schools in
the Eastern United States were more
often sited near major roadways than
schools in the Western United States.
Demographic studies of students in
schools near major roadways suggest
that this population is more likely than
the general student population to be of
non-white race or Hispanic ethnicity,
and more often live in low
socioeconomic status
locations.476, 477, 478 There is some
inconsistency in the evidence, which
may be due to different local
development patterns and measures of
traffic and geographic scale used in the
studies.
3. Environmental Effects of Non-GHG
Pollutants
In this section we discuss some of the
environmental effects of PM and its
precursors such as visibility
impairment, atmospheric deposition,
and materials damage and soiling, as
well as environmental effects associated
with the presence of ozone in the
ambient air, such as impacts on plants,
including trees, agronomic crops and
urban ornamentals, and environmental
effects associated with air toxics.
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a. Visibility
Visibility can be defined as the degree
to which the atmosphere is transparent
to visible light.479 Visibility impairment
is caused by light scattering and
absorption by suspended particles and
gases. Visibility is important because it
475 Appatova, A.S.; Ryan, P.H.; LeMasters, G.K.;
Grinshpun, S.A. (2008) Proximal exposure of public
schools and students to major roadways: a
nationwide U.S. survey. J Environ Plan Mgmt
Docket EPA–HQ–OAR–2010–0799.
476 Green, R.S.; Smorodinsky, S.; Kim, J.J.;
McLaughlin, R.; Ostro, B. (2004) Proximity of
California public schools to busy roads. Environ
Health Perspect 112: 61–66. Docket EPA–HQ–OAR–
2010–0799.
477 Houston, D.; Ong, P.; Wu, J.; Winer, A. (2006)
Proximity of licensed child care facilities to nearroadway vehicle pollution. Am J Public Health 96:
1611–1617. Docket EPA–HQ–OAR–2010–0799.
478 Wu, Y.; Batterman, S. (2006) Proximity of
schools in Detroit, Michigan to automobile and
truck traffic. J Exposure Sci Environ Epidemiol 16:
457–470. Docket EPA–HQ–OAR–2010–0799.
479 National Research Council, 1993. Protecting
Visibility in National Parks and Wilderness Areas.
National Academy of Sciences Committee on Haze
in National Parks and Wilderness Areas. National
Academy Press, Washington, DC. Docket EPA–HQ–
OAR–2010–0799. This book can be viewed on the
National Academy Press Web site at https://
www.nap.edu/books/0309048443/html/.
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has direct significance to people’s
enjoyment of daily activities in all parts
of the country. Individuals value good
visibility for the well-being it provides
them directly, where they live and
work, and in places where they enjoy
recreational opportunities. Visibility is
also highly valued in significant natural
areas, such as national parks and
wilderness areas, and special emphasis
is given to protecting visibility in these
areas. For more information on visibility
see the final 2009 p.m. ISA.480
EPA is pursuing a two-part strategy to
address visibility impairment. First,
EPA developed the regional haze
program (64 FR 35714) which was put
in place in July 1999 to protect the
visibility in Mandatory Class I Federal
areas. There are 156 national parks,
forests and wilderness areas categorized
as Mandatory Class I Federal areas (62
FR 38680–38681, July 18, 1997). These
areas are defined in CAA section 162 as
those national parks exceeding 6,000
acres, wilderness areas and memorial
parks exceeding 5,000 acres, and all
international parks which were in
existence on August 7, 1977. Second,
EPA has concluded that PM2.5 causes
adverse effects on visibility in other
areas that are not protected by the
Regional Haze Rule, depending on PM2.5
concentrations and other factors that
control their visibility impact
effectiveness such as dry chemical
composition and relative humidity (i.e.,
an indicator of the water composition of
the particles), and has set secondary
PM2.5 standards to address these areas.
The existing annual primary and
secondary PM2.5 standards have been
remanded and are being addressed in
the currently ongoing PM NAAQS
review.
b. Plant and Ecosystem Effects of Ozone
Elevated ozone levels contribute to
environmental effects, with impacts to
plants and ecosystems being of most
concern. Ozone can produce both acute
and chronic injury in sensitive species
depending on the concentration level
and the duration of the exposure. Ozone
effects also tend to accumulate over the
growing season of the plant, so that even
low concentrations experienced for a
longer duration have the potential to
create chronic stress on vegetation.
Ozone damage to plants includes visible
injury to leaves and impaired
photosynthesis, both of which can lead
to reduced plant growth and
reproduction, resulting in reduced crop
yields, forestry production, and use of
sensitive ornamentals in landscaping. In
addition, the impairment of
480 See
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photosynthesis, the process by which
the plant makes carbohydrates (its
source of energy and food), can lead to
a subsequent reduction in root growth
and carbohydrate storage below ground,
resulting in other, more subtle plant and
ecosystems impacts.
These latter impacts include
increased susceptibility of plants to
insect attack, disease, harsh weather,
interspecies competition and overall
decreased plant vigor. The adverse
effects of ozone on forest and other
natural vegetation can potentially lead
to species shifts and loss from the
affected ecosystems, resulting in a loss
or reduction in associated ecosystem
goods and services. Lastly, visible ozone
injury to leaves can result in a loss of
aesthetic value in areas of special scenic
significance like national parks and
wilderness areas. The final 2006 Ozone
Air Quality Criteria Document presents
more detailed information on ozone
effects on vegetation and ecosystems.
c. Atmospheric Deposition
Wet and dry deposition of ambient
particulate matter delivers a complex
mixture of metals (e.g., mercury, zinc,
lead, nickel, aluminum, cadmium),
organic compounds (e.g., polycyclic
organic matter, dioxins, furans) and
inorganic compounds (e.g., nitrate,
sulfate) to terrestrial and aquatic
ecosystems. The chemical form of the
compounds deposited depends on a
variety of factors including ambient
conditions (e.g., temperature, humidity,
oxidant levels) and the sources of the
material. Chemical and physical
transformations of the compounds occur
in the atmosphere as well as the media
onto which they deposit. These
transformations in turn influence the
fate, bioavailability and potential
toxicity of these compounds.
Atmospheric deposition has been
identified as a key component of the
environmental and human health
hazard posed by several pollutants
including mercury, dioxin and PCBs.481
Adverse impacts on water quality can
occur when atmospheric contaminants
deposit to the water surface or when
material deposited on the land enters a
waterbody through runoff. Potential
impacts of atmospheric deposition to
waterbodies include those related to
both nutrient and toxic inputs. Adverse
effects to human health and welfare can
occur from the addition of excess
nitrogen via atmospheric deposition.
The nitrogen-nutrient enrichment
481 U.S. EPA (2000) Deposition of Air Pollutants
to the Great Waters: Third Report to Congress.
Office of Air Quality Planning and Standards. EPA–
453/R–00–0005. Docket EPA–HQ–OAR–2010–0799.
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contributes to toxic algae blooms and
zones of depleted oxygen, which can
lead to fish kills, frequently in coastal
waters. Deposition of heavy metals or
other toxics may lead to the human
ingestion of contaminated fish,
impairment of drinking water, damage
to freshwater and marine ecosystem
components, and limits to recreational
uses. Several studies have been
conducted in U.S. coastal waters and in
the Great Lakes Region in which the role
of ambient PM deposition and runoff is
investigated.482, 483, 484, 485, 486
Atmospheric deposition of nitrogen
and sulfur contributes to acidification,
altering biogeochemistry and affecting
animal and plant life in terrestrial and
aquatic ecosystems across the United
States. The sensitivity of terrestrial and
aquatic ecosystems to acidification from
nitrogen and sulfur deposition is
predominantly governed by geology.
Prolonged exposure to excess nitrogen
and sulfur deposition in sensitive areas
acidifies lakes, rivers and soils.
Increased acidity in surface waters
creates inhospitable conditions for biota
and affects the abundance and
nutritional value of preferred prey
species, threatening biodiversity and
ecosystem function. Over time,
acidifying deposition also removes
essential nutrients from forest soils,
depleting the capacity of soils to
neutralize future acid loadings and
negatively affecting forest sustainability.
Major effects include a decline in
sensitive forest tree species, such as red
spruce (Picea rubens) and sugar maple
(Acer saccharum), and a loss of
biodiversity of fishes, zooplankton, and
macro invertebrates.
In addition to the role nitrogen
deposition plays in acidification,
nitrogen deposition also leads to
nutrient enrichment and altered
biogeochemical cycling. In aquatic
482 U.S. EPA (2004) National Coastal Condition
Report II. Office of Research and Development/
Office of Water. EPA–620/R–03/002. Docket EPA–
HQ–OAR–2010–0799.
483 Gao, Y., E.D. Nelson, M.P. Field, et al. 2002.
Characterization of atmospheric trace elements on
PM2.5 particulate matter over the New York-New
Jersey harbor estuary. Atmos. Environ. 36: 1077–
1086. Docket EPA–HQ–OAR–2010–0799.
484 Kim, G., N. Hussain, J.R. Scudlark, and T.M.
Church. 2000. Factors influencing the atmospheric
depositional fluxes of stable Pb, 210Pb, and 7Be
into Chesapeake Bay. J. Atmos. Chem. 36: 65–79.
Docket EPA–HQ–OAR–2010–0799.
485 Lu, R., R.P. Turco, K. Stolzenbach, et al. 2003.
Dry deposition of airborne trace metals on the Los
Angeles Basin and adjacent coastal waters. J.
Geophys. Res. 108(D2, 4074): AAC 11–1 to 11–24.
Docket EPA–HQ–OAR–2010–0799.
486 Marvin, C.H., M.N. Charlton, E.J. Reiner, et al.
2002. Surficial sediment contamination in Lakes
Erie and Ontario: A comparative analysis. J. Great
Lakes Res. 28(3): 437–450. Docket EPA–HQ–OAR–
2010–0799.
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systems increased nitrogen can alter
species assemblages and cause
eutrophication. In terrestrial systems
nitrogen loading can lead to loss of
nitrogen sensitive lichen species,
decreased biodiversity of grasslands,
meadows and other sensitive habitats,
and increased potential for invasive
species. For a broader explanation of the
topics treated here, refer to the
description in Section 6.1.2.2 of the
RIA.
Adverse impacts on soil chemistry
and plant life have been observed for
areas heavily influenced by atmospheric
deposition of nutrients, metals and acid
species, resulting in species shifts, loss
of biodiversity, forest decline, damage to
forest productivity and reductions in
ecosystem services. Potential impacts
also include adverse effects to human
health through ingestion of
contaminated vegetation or livestock (as
in the case for dioxin deposition),
reduction in crop yield, and limited use
of land due to contamination.
Atmospheric deposition of pollutants
can reduce the aesthetic appeal of
buildings and culturally important
articles through soiling, and can
contribute directly (or in conjunction
with other pollutants) to structural
damage by means of corrosion or
erosion. Atmospheric deposition may
affect materials principally by
promoting and accelerating the
corrosion of metals, by degrading paints,
and by deteriorating building materials
such as concrete and limestone.
Particles contribute to these effects
because of their electrolytic,
hygroscopic, and acidic properties, and
their ability to adsorb corrosive gases
(principally sulfur dioxide).
d. Environmental Effects of Air Toxics
Emissions from producing,
transporting and combusting fuel
contribute to ambient levels of
pollutants that contribute to adverse
effects on vegetation. Volatile organic
compounds, some of which are
considered air toxics, have long been
suspected to play a role in vegetation
damage.487 In laboratory experiments, a
wide range of tolerance to VOCs has
been observed.488 Decreases in
harvested seed pod weight have been
reported for the more sensitive plants,
and some studies have reported effects
487 U.S. EPA. 1991. Effects of organic chemicals
in the atmosphere on terrestrial plants. EPA/600/3–
91/001. Docket EPA–HQ–OAR–2010–0799.
488 Cape JN, ID Leith, J Binnie, J Content, M
Donkin, M Skewes, DN Price AR Brown, AD
Sharpe. 2003. Effects of VOCs on herbaceous plants
in an open-top chamber experiment. Environ.
Pollut. 124:341–343. Docket EPA–HQ–OAR–2010–
0799.
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on seed germination, flowering and fruit
ripening. Effects of individual VOCs or
their role in conjunction with other
stressors (e.g., acidification, drought,
temperature extremes) have not been
well studied. In a recent study of a
mixture of VOCs including ethanol and
toluene on herbaceous plants,
significant effects on seed production,
leaf water content and photosynthetic
efficiency were reported for some plant
species.489
Research suggests an adverse impact
of vehicle exhaust on plants, which has
in some cases been attributed to
aromatic compounds and in other cases
to nitrogen oxides.490 491 492 The impacts
of VOCs on plant reproduction may
have long-term implications for
biodiversity and survival of native
species near major roadways. Most of
the studies of the impacts of VOCs on
vegetation have focused on short-term
exposure and few studies have focused
on long-term effects of VOCs on
vegetation and the potential for
metabolites of these compounds to
affect herbivores or insects.
4. Air Quality Impacts of Non-GHG
Pollutants
a. Current Levels of Non-GHG Pollutants
This proposal may have impacts on
ambient concentrations of criteria and
air toxic pollutants. Nationally, levels of
PM2.5, ozone, NOX, SOX, CO and air
toxics are declining.493 However,
approximately 127 million people lived
in counties that exceeded any NAAQS
in 2008.494 These numbers do not
include the people living in areas where
there is a future risk of failing to
maintain or attain the NAAQS. It is
important to note that these numbers do
not account for potential ozone, PM2.5,
CO, SO2, NO2 or lead nonattainment
489 Cape JN, ID Leith, J Binnie, J Content, M
Donkin, M Skewes, DN Price AR Brown, AD
Sharpe. 2003. Effects of VOCs on herbaceous plants
in an open-top chamber experiment. Environ.
Pollut. 124:341–343. Docket EPA–HQ–OAR–2010–
0799.
490 Viskari E–L. 2000. Epicuticular wax of Norway
spruce needles as indicator of traffic pollutant
deposition. Water, Air, and Soil Pollut. 121:327–
337. Docket EPA–HQ–OAR–2010–0799.
491 Ugrekhelidze D, F Korte, G Kvesitadze. 1997.
Uptake and transformation of benzene and toluene
by plant leaves. Ecotox. Environ. Safety 37:24–29.
Docket EPA–HQ–OAR–2010–0799.
492 Kammerbauer H, H Selinger, R Rommelt, A
Ziegler-Jons, D Knoppik, B Hock. 1987. Toxic
components of motor vehicle emissions for the
spruce Picea abies. Environ. Pollut. 48:235–243.
Docket EPA–HQ–OAR–2010–0799.
493 U.S. EPA (2010) Our Nation’s Air: Status and
Trends through 2008. Office of Air Quality Planning
and Standards, Research Triangle Park, NC.
Publication No. EPA 454/R–09–002. https://
www.epa.gov/airtrends/2010/. Docket EPA–HQ–
OAR–2010–0799.
494 See U.S. EPA Trends, Note 493.
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areas which have not yet been
designated. Further, the majority of
Americans continue to be exposed to
ambient concentrations of air toxics at
levels which have the potential to cause
adverse health effects.495 The levels of
air toxics to which people are exposed
vary depending on where people live
and work and the kinds of activities in
which they engage, as discussed in
detail in U.S. EPA’s recent mobile
source air toxics rule.496
b. Impacts of Proposed Standards on
Future Ambient Concentrations of
PM2.5, Ozone and Air Toxics
Full-scale photochemical air quality
modeling is necessary to accurately
project levels of criteria pollutants and
air toxics. For the final rulemaking, a
national-scale air quality modeling
analysis will be performed to analyze
the impacts of the standards on PM2.5,
ozone, and selected air toxics (i.e.,
benzene, formaldehyde, acetaldehyde,
acrolein and 1,3-butadiene). The length
of time needed to prepare the necessary
emissions inventories, in addition to the
processing time associated with the
modeling itself, has precluded us from
performing air quality modeling for this
proposal.
Sections III.G.1 and III.G.2 of the
preamble present projections of the
changes in criteria pollutant and air
toxics emissions due to the proposed
vehicle standards; the basis for those
estimates is set out in Chapter 4 of the
draft RIA. The atmospheric chemistry
related to ambient concentrations of
PM2.5, ozone and air toxics is very
complex, and making predictions based
solely on emissions changes is
extremely difficult. However, based on
the magnitude of the emissions changes
predicted to result from the proposed
standards, EPA expects that there will
be an improvement in ambient air
quality, pending a more comprehensive
analysis for the final rulemaking.
For the final rulemaking, EPA intends
to use a Community Multi-scale Air
Quality (CMAQ) modeling platform as
the tool for the air quality modeling.
The CMAQ modeling system is a
comprehensive three-dimensional gridbased Eulerian air quality model
designed to estimate the formation and
fate of oxidant precursors, primary and
secondary PM concentrations and
deposition, and air toxics, over regional
and urban spatial scales (e.g., over the
contiguous United States).497 498 499 500
495 U.S. Environmental Protection Agency (2007).
Control of Hazardous Air Pollutants from Mobile
Sources; Final Rule. 72 FR 8434, February 26, 2007.
496 See U.S. EPA 2007, Note 495.
497 U.S. Environmental Protection Agency, Byun,
D.W., and Ching, J.K.S., Eds, 1999. Science
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The CMAQ model is a well-known and
well-established tool and is commonly
used by EPA for regulatory analyses and
by States in developing attainment
demonstrations for their State
Implementation Plans. The CMAQ
model version 4.7 was most recently
peer-reviewed in February of 2009 for
the U.S. EPA.501
CMAQ includes many science
modules that simulate the emission,
production, decay, deposition and
transport of organic and inorganic gasphase and particle-phase pollutants in
the atmosphere. EPA intends to use the
most recent version of CMAQ, which
reflects updates to version 4.7 to
improve the underlying science. These
include aqueous chemistry mass
conservation improvements, improved
vertical convective mixing and lowered
CB05 mechanism unit yields for
acrolein from 1,3-butadiene tracer
reactions which were updated to be
consistent with laboratory
measurements.
comment on any studies or research in
this area that should be considered in
the future to assess a fuller range of
health and environmental impacts from
the light-duty vehicle fleet moving to
advanced GHG-reducing technologies.
EPA is aware of some studies
examining the lifecycle GHG emissions,
including vehicle production-related
emissions, for advanced technology
vehicles.502 The American Iron and
Steel Institute (AISI) has recommended
that EPA consider basing future
standards on lifecycle assessments that
include vehicle production, use, and
end-of-life impacts; AISI is working on
related research with the University of
California, Davis.503 At this point, EPA
believes there is insufficient information
about the lifecycle impacts of future
advanced technologies to conduct the
type of detailed assessments that would
be needed in a regulatory context, but
EPA seeks comment on any current or
future studies and research underway
on this topic.
5. Other Unquantified Health and
Environmental Effects
In addition, EPA seeks comment on
whether there are any other health and
environmental impacts associated with
advancements in vehicle GHG reduction
technologies that should be considered.
For example, the use of technologies
and other strategies to reduce GHG
emissions could have effects on a
vehicle’s life-cycle impacts (e.g.,
materials usage, manufacturing, end of
life disposal), beyond the issues
regarding fuel production and
distribution (upstream) GHG emissions
discussed in Section III.C.2. EPA seeks
H. What are the estimated cost,
economic, and other impacts of the
proposal?
In this section, EPA presents the costs
and impacts of the proposed GHG
standards. It is important to note that
NHTSA’s CAFE standards and EPA’s
GHG standards will both be in effect,
and each will lead to average fuel
economy increases and CO2 emissions
reductions. The two agencies’ standards
comprise the National Program, and this
discussion of costs and benefits of EPA’s
GHG standard does not change the fact
that both the CAFE and GHG standards,
jointly, will be the source of the benefits
and costs of the National Program.
These costs and benefits are
appropriately analyzed separately by
each agency and should not be added
together.
This section outlines the basis for
assessing the benefits and costs of the
GHG standards and provides estimates
of these costs and benefits. Some of
these effects are private, meaning that
they affect consumers and producers
directly in their sales, purchases, and
use of vehicles. These private effects
include the increase in vehicle prices
due to costs of the technology, fuel
savings, and the benefits of additional
driving and reduced refueling. Other
algorithms of EPA Models-3 Community Multiscale
Air Quality (CMAQ modeling system, EPA/600/R–
99/030, Office of Research and Development).
Docket EPA–HQ–OAR–2010–0799.
498 Byun, D.W., and Schere, K.L., 2006. Review of
the Governing Equations, Computational
Algorithms, and Other Components of the Models3 Community Multiscale Air Quality (CMAQ)
Modeling System, J. Applied Mechanics Reviews,
59 (2), 51–77. Docket EPA–HQ–OAR–2010–0799.
499 Dennis, R.L., Byun, D.W., Novak, J.H.,
Galluppi, K.J., Coats, C.J., and Vouk, M.A., 1996.
The next generation of integrated air quality
modeling: EPA’s Models-3, Atmospheric
Environment, 30, 1925–1938. Docket EPA–HQ–
OAR–2010–0799.
500 Carlton, A., Bhave, P., Napelnok, S., Edney, E.,
Sarwar, G., Pinder, R., Pouliot, G., and Houyoux, M.
Model Representation of Secondary Organic
Aerosol in CMAQv4.7. Ahead of Print in
Environmental Science and Technology. Accessed
at: https://pubs.acs.org/doi/abs/10.1021/
es100636q?prevSearch=CMAQ&searchHistoryKey
Docket EPA–HQ–OAR–2010–0799.
501 Allen, D. et al (2009). Report on the Peer
Review of the Atmospheric Modeling and Analysis
Division, National Exposure Research Laboratory,
Office of Research and Development, U.S. EPA.
https://www.epa.gov/asmdnerl/peer/
reviewdocs.html Docket EPA–HQ–OAR–2010–0799.
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502 For examples, see Chapter 6 of NHTSA’s Draft
Environmental Impact Statement for this proposed
rulemaking, ‘‘Literature Synthesis of Life-cycle
Environmental Impacts of Certain Vehicle Materials
and Technologies,’’ Docket NHTSA–2011–0056.
503 See AISI comments on the 2012–2016
rulemaking and NOI/Interim Joint TAR: Document
ID # EPA–HQ–OAR–2009–0472–7088 and EPA–
HQ–OAR–2010–0799–0313, respectively.
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Federal Register / Vol. 76, No. 231 / Thursday, December 1, 2011 / Proposed Rules
costs and benefits affect people outside
the markets for vehicles and their use;
these effects are termed external,
because they affect people in ways other
than the effect on the market for and use
of new vehicles and are generally not
taken into account by the purchaser of
the vehicle. The external effects include
the climate impacts, the effects on nonGHG pollutants, energy security
impacts, and the effects on traffic,
accidents, and noise due to additional
driving. The sum of the private and
external benefits and costs is the net
social benefits of the standards.
There is some debate about the
behavior of private markets in the
context of these standards: If consumers
optimize their purchases of fuel
economy, with full information and
perfect foresight, in perfectly efficient
markets, they should have already
considered these benefits in their
vehicle purchase decisions. If so, then
no net private benefits would result
from the program, because consumers
would already buy vehicles with the
amount of fuel economy that is optimal
for them; requiring additional fuel
economy would alter both the purchase
prices of new cars and their lifetime
streams of operating costs in ways that
will inevitably reduce consumers’ wellbeing. Section III.H.1 discusses this
issue more fully.
The net benefits of EPA’s proposal
consist of the effects of the proposed
standards on:
• The vehicle costs;
• Fuel savings associated with
reduced fuel usage resulting from the
proposed program
• Greenhouse gas emissions;
• Other air pollutants;
• Other impacts, including noise,
congestion, accidents;
• Energy security impacts;
• Changes in refueling events;
• Increased driving due to the
‘‘rebound’’ effect.
EPA also presents the cost per ton of
GHG reductions associated with the
proposed GHG standards on a CO2eq
basis, in Section III.H.3 below.
The total present value of monetized
benefits (excluding fuel savings) under
the proposed standards are projected to
be between $275 to $764 billion, using
a 3 percent discount rate and depending
on the value used for the social cost of
carbon. With a 7 percent discount rate,
the total present value of monetized
benefits (excluding fuel savings) under
the proposed standards are projected to
be between $124 to $614 billion,
depending on the value used for the
social cost of carbon. These benefits are
summarized below in Table III–80. The
present value of costs of the proposed
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standards are estimated to be between
$243 to $551 billion for new vehicle
technology (assuming a 7 and 3 percent
discount rate, respectively), less $579 to
$1,510 billion in savings realized by
consumers through fewer fuel
expenditures (calculated using pre-tax
fuel prices and using a 7 and 3 percent
discount rate, respectively). These costs
are summarized below in Table III–78
and the fuel savings are summarized in
Table III–79. The total net present value
of net benefits under the proposed
standards are projected to be between
$1.2 and $1.7 trillion, using a 3 percent
discount rate and depending on the
value used for the social cost of carbon.
With a 7 percent discount rate, the total
net present value of net benefits under
the proposed standards are projected to
be between $460 billion to $950 billion,
depending on the value used for the
social cost of carbon. The estimates
developed here use as a baseline for
comparison the greenhouse gas
performance and fuel economy
associated with MY 2016 standards. To
the extent that greater fuel economy
improvements than those assumed to
occur under the baseline may have
occurred due to market forces alone
(absent these proposed standards), the
analysis overestimates private and
social net benefits.
While NHTSA and EPA each modeled
their respective regulatory programs, the
analyses were generally consistent and
featured similar parameters. For this
proposal, EPA has not conducted an
overall uncertainty analysis of the
impacts associated with its regulatory
program, though it did conduct
sensitivity analyses of individual
components of the analysis (e.g.,
alternative SCC estimates, rebound
effect, battery costs, mass reduction
costs, the indirect cost markup factor,
and cost learning curves); these analyses
are found in Chapters 3, 4, and 7 of the
EPA DRIA. NHTSA, however,
conducted a Monte Carlo simulation of
the uncertainty associated with its
regulatory program. The focus of the
simulation model was variation around
the chosen uncertainty parameters and
their resulting impact on the key output
parameters, fuel savings, and net
benefits. Because of the similarities
between the two analyses, EPA
references NHTSA RIA Chapters X and
XII as indicative of the relative
magnitude, uncertainty and sensitivities
of parameters of the cost/benefit
analysis. For the final rule, EPA plans
to perform sensitivity analyses for a
wider variety of parameters. EPA has
also analyzed the potential impact of
this proposed rule on vehicle sales and
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75113
employment. These impacts are not
included in the analysis of overall costs
and benefits of the proposed standards.
Further information on these and other
aspects of the economic impacts of
EPA’s proposed rule are summarized in
the following sections and are presented
in more detail in the DRIA for this
rulemaking.
EPA requests comment on all aspects
of the cost, savings, and benefits
analysis presented here and in the
DRIA. EPA also requests comment on
the inputs used in these analyses as
described in the Draft Joint TSD.
1. Conceptual Framework for Evaluating
Consumer Impacts
For this proposed rule, EPA projects
significant private gains to consumers in
three major areas: (1) Reductions in
spending on fuel, (2) for gasoline-fueled
vehicles, time saved due to less
refueling, and (3) additional driving that
results from the rebound effect. In
combination, these private benefits,
mostly from fuel savings, appear to
outweigh the costs of the standards,
even without accounting for
externalities.
Admittedly, these findings pose an
economic conundrum. On the one hand,
consumers are expected to gain
significantly from the rules, as the
increased cost of fuel efficient cars is
smaller than the fuel savings. Yet many
of these technologies are readily
available; financially savvy consumers
could have sought vehicles with
improved fuel efficiency, and auto
makers seeking those customers could
have offered them. Assuming full
information, perfect foresight, perfect
competition, and financially rational
consumers and producers, standard
economic theory suggests that normal
market operations would have provided
the private net gains to consumers, and
the only benefits of the rule would be
due to external benefits. If our analysis
projects net private benefits that
consumers have not realized in this
perfectly functioning market, then, with
the above assumptions, there must be
additional costs of these private net
benefits that are not accounted for. This
calculation assumes that consumers
accurately predict and act on all the
fuel-saving benefits they will get from a
new vehicle, and that producers market
products providing those benefits. The
estimate of large private net benefits
from this rule, then, suggests either that
the assumptions noted above do not
hold, or that EPA’s analysis has missed
some factor(s) tied to improved fuel
economy that reduce(s) consumer
welfare.
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This subsection discusses the
economic principles underlying the
assessment of impacts on consumer
well-being due to the proposed changes
in the vehicles. Because conventional
gasoline- and diesel-fueled vehicles
have quite different characteristics from
advanced technology vehicles
(especially electric vehicles), the
principles for these different kinds
vehicles are discussed separately below.
a. Conventional Vehicles
For conventional vehicles, the
estimates of technology costs developed
for this proposed rule take into account
the cost needed to ensure that vehicle
utility (including performance,
reliability, and size) stay constant,
except for fuel economy and vehicle
price, with some minor exceptions (e.g.,
see the discussion of the ‘‘Atkinsoncycle’’ engine and towing capacity in
III.D.3). For example, using a 4-cylinder
engine instead of a 6-cylinder engine
reduces fuel economy, but also reduces
performance; turbocharging the 4cylinder engine, though, produces fuel
savings while maintaining performance.
The cost estimates assume
turbocharging accompanies engine
downsizing. As a result, if the market
for fuel economy is efficient and these
cost estimates are correct, then the
existence of large private net benefits
implies that there would need to be
some other changed qualities, missed in
the cost estimates, that would reduce
the benefits consumers receive from
their vehicles.504 We seek comments
that identify any such changed qualities
omitted from the analysis. Such
comments should describe how changed
qualities affect consumer benefits from
vehicles, and provide cost estimates for
eliminating the effects of the changes.
The central conundrum observed in
this market, that consumers appear not
to purchase products featuring levels of
energy efficiency that are in their
economic self-interest, has been referred
to as the Energy Paradox in this setting
(and in several others).505 There are
many possible reasons discussed in
academic research why this might
occur: 506
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504 It
should be noted that adding fuel-saving
technology does not preclude future improvements
in performance, safety, or other attributes, though
it is possible that the costs of these additions may
be affected by the presence of fuel-saving
technology.
505 Jaffe, A. B., and Stavins, R. N. (1994). ‘‘The
Energy Paradox and the Diffusion of Conservation
Technology.’’ Resource and Energy Economics
16(2), 91–122. Docket EPA–HQ–OAR–2010–0799.
506 For an overview, see Helfand, Gloria and Ann
Wolverton, ‘‘Evaluating the Consumer Response to
Fuel Economy: A Review of the Literature.’’
International Review of Environmental and
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• Consumers might be ‘‘myopic’’ and
hence undervalue future fuel savings in
their purchasing decisions.
• Consumers might lack the
information necessary to estimate the
value of future fuel savings, or not have
a full understanding of this information
even when it is presented.
• Consumer may be accounting for
uncertainty in future fuel savings when
comparing upfront cost to future
returns.
• Consumers may consider fuel
economy after other vehicle attributes
and, as such, not optimize the level of
this attribute (instead ‘‘satisficing’’ or
selecting vehicles that have some
sufficient amount of fuel economy).
• Consumers might be especially
averse to the short-term losses
associated with the higher prices of
energy efficient products relative to the
future fuel savings (the behavioral
phenomenon of ‘‘loss aversion’’).
• Consumers might associate higher
fuel economy with inexpensive, less
well designed vehicles.
• Even if consumers have relevant
knowledge, selecting a vehicle is a
highly complex undertaking, involving
many vehicle characteristics. In the face
of such a complicated choice,
consumers may use simplified decision
rules.
• In the case of vehicle fuel
efficiency, and perhaps as a result of
one or more of the foregoing factors,
consumers may have relatively few
choices to purchase vehicles with
greater fuel economy once other
characteristics, such as vehicle class, are
chosen.507
A great deal of work in behavioral
economics identifies and elaborates
factors of this sort, which help account
for the Energy Paradox.508 This point
holds in the context of fuel savings (the
main focus here), but it applies equally
to the other private benefits, including
reductions in refueling frequency and
additional driving. For example, it
might well be questioned whether
significant reductions in refueling
frequency, and corresponding private
savings, are fully internalized when
Resource Economics 5 (2011): 103–146. Docket
EPA–HQ–OAR–2010–0799.
507 For instance, in MY 2010, the range of fuel
economy (combined city and highway) available
among all listed 6-cylinder minivans was 18 to 20
miles per gallon. With a manual-transmission 4cylinder minivan, it is possible to get 24 mpg. See
https://www.fueleconomy.gov, which is jointly
maintained by the U.S. Department of Energy and
the EPA.
508 Jaffe, A. B., and Stavins, R. N. (1994). ‘‘The
Energy Paradox and the Diffusion of Conservation
Technology.’’ Resource and Energy Economics
16(2), 91–122. Docket EPA–HQ–OAR–2010–0799.
See also Allcott and Wozny, supra note.
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consumers are making purchasing
decisions.
EPA discussed this issue at length in
the 2012–2016 light duty rulemaking
and in the medium- and heavy-duty
greenhouse gas rulemaking. See 75 FR at
25510–13; 76 FR 57315–19.
Considerable research indicates that the
Energy Paradox may be a real and
significant phenomenon, although the
literature has not reached a consensus
about the reasons for its existence.
Several researchers have found evidence
suggesting that consumers do not give
full or appropriate weight to fuel
economy in purchasing decisions. For
example, Sanstad and Howarth 509 argue
that consumers make decisions without
the benefit of full information by
resorting to imprecise but convenient
rules of thumb. Some studies find that
a substantial portion of this
undervaluation can be explained by
inaccurate assessments of energy
savings, or by uncertainty and
irreversibility of energy investments due
to fluctuations in energy prices.510 For
a number of reasons, consumers may
undervalue future energy savings due to
routine mistakes in how they evaluate
these trade-offs. For instance, the
calculation of fuel savings is complex,
and consumers may not make it
correctly.511 The attribute of fuel
economy may be insufficiently salient,
leading to a situation in which
509 Sanstad, A., and R. Howarth (1994). ‘‘ ‘Normal’
Markets, Market Imperfections, and Energy
Efficiency.’’ Energy Policy 22(10): 811–818 (Docket
EPA–HQ–OAR–2010–0799).
510 Greene, D., J. German, and M. Delucchi (2009).
‘‘Fuel Economy: The Case for Market Failure’’ in
Reducing Climate Impacts in the Transportation
Sector, Sperling, D., and J. Cannon, eds. Springer
Science (Docket EPA–HQ–OAR–2010–0799);
Dasgupta, S., S. Siddarth, and J. Silva-Risso (2007).
‘‘To Lease or to Buy? A Structural Model of a
Consumer’s Vehicle and Contract Choice
Decisions.’’ Journal of Marketing Research 44: 490–
502 (Docket EPA–HQ–OAR–2010–0799); Metcalf,
G., and D. Rosenthal (1995). ‘‘The ‘New’ View of
Investment Decisions and Public Policy Analysis:
An Application to Green Lights and Cold
Refrigerators,’’ Journal of Policy Analysis and
Management 14: 517–531 (Docket EPA–HQ–OAR–
2010–0799); Hassett, K., and G. Metcalf (1995),
‘‘Energy Tax Credits and Residential Conservation
Investment: Evidence from Panel Data,’’ Journal of
Public Economics 57: 201–217 (Docket EPA–HQ–
OAR–2010–0799); Metcalf, G., and K. Hassett
(1999), ‘‘Measuring the Energy Savings from Home
Improvement Investments: Evidence from Monthly
Billing Data,’’ The Review of Economics and
Statistics 81(3): 516–528 (Docket EPA–HQ–OAR–
2010–0799); van Soest D., and E. Bulte (2001),
‘‘Does the Energy-Efficiency Paradox Exist?
Technological Progress and Uncertainty.’’
Environmental and Resource Economics 18: 101–12
(Docket EPA–HQ–OAR–2010–0799).
511 Turrentine, T. and K. Kurani (2007). ‘‘Car
Buyers and Fuel Economy?’’ Energy Policy 35:
1213–1223 (Docket EPA–HQ–OAR–2009–0472);
Larrick, R. P., and J.B. Soll (2008). ‘‘The MPG
illusion.’’ Science 320: 1593–1594 (Docket EPA–
HQ–OAR–2010–0799).
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consumers are not willing to pay $1 for
an expected $1 present value of reduced
gasoline costs.512 Larrick and Soll
(2008) find that consumers do not
understand how to translate changes in
miles-per-gallon into fuel savings.513 In
addition, future fuel price (a major
component of fuel savings) is highly
uncertain. Consumer fuel savings also
vary across individuals, who travel
different amounts and have different
driving styles. Cost calculations based
on the average do not distinguish
between those that may gain or lose as
a result of the policy.514 In addition, it
is possible that factors that might help
explain why consumers don’t purchase
more fuel efficiency, such as transaction
costs and differences in quality, may not
be adequately measured.515 Studies
regularly show that fuel economy plays
a role in consumers’ vehicle purchases,
but modeling that role is still in
development, and there is no consensus
that most consumers make fully
informed tradeoffs.516 A review
commissioned by EPA finds great
variability in estimates of the role of fuel
economy in consumers’ vehicle
512 Allcott, Hunt, and Nathan Wozny, ‘‘Gasoline
Prices, Fuel Economy, and the Energy Paradox’’
(2010), available at https://web.mit.edu/allcott/www/
Allcott%20and%20Wozny%202010%20%20Gasoline%20Prices,%20Fuel%20Economy,%
(Docket EPA–HQ–OAR–2010–0799). U.S.
Department of Energy, 2011. ‘‘Transportation and
the Economy,’’ Chapter 10 in ‘‘Transportation
Energy Data Book,’’ https://cta.ornl.gov/data/tedb30/
Edition30_Chapter10.pdf, Table 10.13, estimates
that gas and oil costs were 15.4% of vehicle costs
per mile in 2010.
513 Sanstad, A., and R. Howarth (1994). ‘‘ ‘Normal’
Markets, Market Imperfections, and Energy
Efficiency.’’Energy Policy 22(10): 811–818 (Docket
EPA–HQ–OAR–2010–0799); Larrick, R. P., and J.B.
Soll (2008). ‘‘The MPG illusion.’’ Science 320:
1593–1594 (Docket EPA–HQ–OAR–2010–0799).
514 Hausman J., Joskow P. (1982). ‘‘Evaluating the
Costs and Benefits of Appliance Efficiency
Standards.’’ American Economic Review 72: 220–25
(Docket EPA–HQ–OAR–2010–0799).
515 Jaccard, Mark. ‘‘Paradigms of Energy
´ `
Efficiency’s Cost and their Policy Implications: Deja
Vu All Over Again.’’ Modeling the Economics of
Greenhouse Gas Mitigation: Summary of a
Workshop, K. John Holmes, Rapporteur. National
Academies Press, 2010. https://www.nap.edu/
openbook.php?record_id=13023&page=42 (Docket
EPA–HQ–OAR–2010–0799).
516 E.g., Goldberg, Pinelopi Koujianou, ‘‘Product
Differentiation and Oligopoly in International
Markets: The Case of the U.S. Automobile
Industry,’’ Econometrica 63(4) (July 1995): 891–951
(Docket EPA–HQ–OAR–2010–0799); Goldberg,
Pinelopi Koujianou, ‘‘The Effects of the Corporate
Average Fuel Efficiency Standards in the U.S.,’’
Journal of Industrial Economics 46(1) (March 1998):
1–33 (Docket EPA–HQ–OAR–2010–0799); Busse,
Meghan R., Christopher R. Knittel, and Florian
Zettelmeyer (2009). ‘‘Pain at the Pump: How
Gasoline Prices Affect Automobile Purchasing in
New and Used Markets,’’ Working paper (accessed
11/1/11), available at https://web.mit.edu/knittel/
www/papers/gaspaper_latest.pdf (Docket EPA–HQ–
OAR–2010–0799).
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purchase decisions.517 Of 27 studies,
significant numbers of them find that
consumers undervalue, overvalue, or
value approximately correctly the fuel
savings that they will receive from
improved fuel economy. The variation
in the value of fuel economy in these
studies is so high that it appears to be
inappropriate to identify one central
estimate of value from the literature.
Thus, estimating consumer response to
higher vehicle fuel economy is still
unsettled science.
EPA and NHTSA recently revised the
fuel economy label on new vehicles in
ways intended to improve information
for consumers.518 For instance, it
presents fuel consumption data in
addition to miles per gallon, in response
to the concern over the difficulties of
translating mpg into fuel savings; it also
reports expected fuel savings or
additional costs relative to an average
vehicle. Whether the new label will
help consumers to overcome the
‘‘energy paradox’’ is not known at this
point. A literature review that
contributed to the fuel economy labeling
rule points out that consumers
increasingly do a great deal of research
on the internet before going to an auto
dealer.519 To the extent that the label
improves consumers’ understanding of
the value of fuel economy, purchase
decisions could change. Until the newly
revised labels enter the marketplace
with MY 2013 vehicles (or optionally
sooner), the agencies may not be able to
determine how vehicle purchase
decisions are likely to change as a result
of the new labels.
If there is a difference between
expected fuel savings and consumers’
willingness to pay for those fuel savings,
the next question is, which is the
appropriate measure of consumer
benefit? Fuel savings measure the actual
monetary value that consumers will
receive after purchasing a vehicle; the
willingness to pay for fuel economy
measures the value that, before a
purchase, consumers place on
additional fuel economy. As noted,
there are a number of reasons that
consumers may incorrectly estimate the
benefits that they get from improved
517 Greene, David L. ‘‘How Consumers Value Fuel
Economy: A Literature Review.’’ EPA Report EPA–
420–R–10–008, March 2010 (Docket EPA–HQ–
OAR–2010–0799).
518 Environmental Protection Agency and
Department of Transportation, ‘‘Revisions and
Additions to Motor Vehicle Fuel Economy Label,’’
Federal Register 76(129) (July 6, 2011): 39478–
39587.
519 PRR, Inc., ‘‘Environmental Protection Agency
Fuel Economy Label: Literature Review.’’ EPA–420–
R–10–906, August 2010, available at https://
www.epa.gov/fueleconomy/label/420r10906.pdf
2010 (Docket EPA–HQ–OAR–2010–0799).
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fuel economy, including risk or loss
aversion, and poor ability to calculate
savings. Also as noted, fuel economy
may not be as salient as other vehicle
characteristics when a consumer is
considering vehicles. If these arguments
are valid, then there will be significant
gains to consumers of the government
mandating additional fuel economy.
While acknowledging the conundrum,
EPA continues to value fuel savings
from the proposed standards using the
projected market value over the
vehicles’ entire lifetimes, and to report
that value among private benefits of the
proposed rule. Improved fuel economy
will significantly reduce consumer
expenditures on fuel, thus benefiting
consumers. Real money is being saved
and accrued by the initial buyer and
subsequent owners. In addition, using a
measure based on consumer
consideration at the time of vehicle
purchase would involve a very wide
range of uncertainty, due to the lack of
consensus on the value of additional
fuel economy in vehicle choice models.
Due partly to this factor, it is true that
limitations in modeling affect our ability
to estimate how much of these savings
would have occurred in the absence of
the rule. For example, some of the
technologies predicted to be adopted in
response to the rule may already be in
the deployment process due to shifts in
consumer demand for fuel economy, or
due to expectations by auto makers of
future GHG/fuel economy standards. It
is not impossible that some of these
savings would have occurred in the
absence of the proposed standards.520
To the extent that greater fuel economy
improvements than those assumed to
occur under the baseline may have
occurred due to market forces alone
(absent the proposed standards), the
analysis overestimates private and
social benefits and costs. As discussed
below, limitations in modeling also
affect our ability to estimate the effects
of the rule on net benefits in the market
for vehicles.
Consumer vehicle choice models
estimate what vehicles consumers buy
based on vehicle and consumer
characteristics. In principle, such
models could provide a means of
understanding both the role of fuel
economy in consumers’ purchase
decisions and the effects of this rule on
the benefits that consumers will get
from vehicles. Helfand and Wolverton
discuss the wide variation in the
520 However, as discussed at section III.D above,
the assumption of a flat baseline absent this rule
rests on strong historic evidence of lack of increase
in fuel economy absent either regulatory control or
sharply rising fuel prices.
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structure and results of these models.521
Models or model results have not
frequently been systematically
compared to each other. When they
have, the results show large variation
over, for instance, the value that
consumers place on additional fuel
economy.
In order to develop greater
understanding of these models, EPA is
in the process of developing a vehicle
choice model. It uses a ‘‘nested logit’’
structure common in the vehicle choice
modeling literature. ‘‘Nesting’’ refers to
the decision-tree structure of buyers’
choices among vehicles the model
employs, and ‘‘logit’’ refers to the
specific pattern by which buyers’
choices respond to differences in the
overall utility that individual vehicle
models and their attributes provide.522
The nesting structure in EPA’s model
involves a hierarchy of choices. In its
current form, at the initial decision
node, consumers choose between
buying a new vehicle or not.
Conditional on choosing a new vehicle,
consumers then choose among
passenger vehicles, cargo vehicles, and
ultra-luxury vehicles. The next set of
choices subdivides each of these
categories into vehicle type (e.g.,
standard car, minivan, SUV, etc.). Next,
the vehicle types are divided into
classes (small, medium, and large SUVs,
for instance), and then, at the bottom,
are the individual models. At this
bottom level, vehicles that are similar to
each other (such as standard
subcompacts, or prestige large vehicles)
end up in the same ‘‘nest.’’ Substitution
within a nest is considered much more
likely than substitution across nests,
because the vehicles within a nest are
more similar to each other than vehicles
in different nests. For instance, a person
is more likely to substitute between a
Chevrolet Aveo and a Toyota Yaris (both
subcompacts) than between an Aveo
and a pickup truck. In addition,
substitution is greater at low decision
nodes (such as individual vehicles) than
at higher decision nodes (such as the
buy/no buy decision), because there are
more choices at lower levels than at
higher levels. Parameters for the model
(including demand elasticities and the
value of fuel economy in purchase
decisions) are being selected based on a
521 Helfand, Gloria and Ann Wolverton,
‘‘Evaluating the Consumer Response to Fuel
Economy: A Review of the Literature.’’
International Review of Environmental and
Resource Economics 5 (2011): 103–146 (Docket
EPA–HQ–OAR–2010–0799).
522 Logit refers to a statistical analysis method
used for analyzing the factors that affect discrete
choices (i.e., yes/no decisions or the choice among
a countable number of options).
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review of values found in the literature
on vehicle choice modeling. Additional
discussion of this model can be found
in Chapter 8.1.2.8 of the DRIA. The
model is still undergoing development;
the agency will seek peer review on it
before it is utilized. In addition,
concerns remain over the ability of any
vehicle choice model to make
reasonable predictions of the response
of the total number and composition of
new vehicle sales to changes in the
prices and characteristics of specific
vehicle models. EPA seeks comments on
the use of vehicle choice modeling for
predicting changes in sales mix due to
policies, and on methods to test the
ability of a vehicle choice model to
produce reasonable estimates of changes
in fleet mix.
The next issue is the potential for loss
in consumer welfare due to the rule. As
mentioned above (and discussed more
thoroughly in Section III.D.3 of this
preamble), the technology cost estimates
developed here for conventional
vehicles take into account the costs to
hold other vehicle attributes, such as
size and performance, constant.523 In
addition, the analysis assumes that the
full technology costs are passed along to
consumers. With these assumptions,
because welfare losses are monetary
estimates of how much consumers
would have to be compensated to be
made as well off as in the absence of the
change,524 the price increase measures
the loss to the buyer.525 Assuming that
the full technology cost gets passed
along to the buyer as an increase in
523 If the reference-case vehicles include different
vehicle characteristics, such as improved
acceleration or towing capacity, then the costs for
the proposed standards would be, as here, the costs
of adding compliance technologies to those
reference-case vehicles. These costs may differ from
those estimated here, due to our lack of information
on how those vehicle characteristics might change
between now and 2025.
524 This approach describes the economic concept
of compensating variation, a payment of money
after a change that would make a consumer as well
off after the change as before it. A related concept,
equivalent variation, estimates the income change
that would be an alternative to the change taking
place. The difference between them is whether the
consumer’s point of reference is her welfare before
the change (compensating variation) or after the
change (equivalent variation). In practice, these two
measures are typically very close together for
marketed goods.
525 Indeed, it is likely to be an overestimate of the
loss to the consumer, because the consumer has
choices other than buying the same vehicle with a
higher price; she could choose a different vehicle,
or decide not to buy a new vehicle. The consumer
would choose one of those options only if the
alternative involves less loss than paying the higher
price. Thus, the increase in price that the consumer
faces would be the upper bound of loss of consumer
welfare, unless there are other changes to the
vehicle due to the fuel economy improvements,
unaccounted for in the costs, that make the vehicle
less desirable to consumers.
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price, the technology cost thus measures
the welfare loss to the consumer.
Increasing fuel economy would have to
lead to other changes in the vehicles
that consumers find undesirable for
there to be additional losses not
bounded by the technology costs.
b. Electric Vehicles and Other Advanced
Technology Vehicles
This proposal finds that electric
vehicles (EVs) may form a part (albeit
limited) of some manufacturers’
compliance strategy. The following
discussion will focus on EVs, because
they are expected to play more of a role
in compliance than vehicles with other
alternative fuels, but related issues may
arise for other alternatively fueled
vehicles. It should be noted that EPA’s
projection of the penetration of EVs in
the MY 2025 fleet is very small (under
3%).
Electric vehicles (EVs), at the time of
this rulemaking, have very different
refueling infrastructures than
conventional gasoline- or diesel-fueled
vehicles: Refueling EVs requires either
access to electric charging facilities or
battery replacement. In addition,
because of the expense of increased
battery capacity, EVs commonly have a
smaller driving range than conventional
vehicles. Because of these differences,
the vehicles cannot be considered
conventional vehicles unmodified
except for cost and fuel economy. As a
result, the consumer welfare arguments
presented above need to be modified to
account for these differences.
A first important point to observe is
that, although auto makers are required
to comply with the proposed standards,
producing EVs as a compliance strategy
is not specifically required. Auto makers
will choose to provide EVs either if they
have few alternative ways to comply, or
if EVs are, for some range of production,
likely to be more profitable (or less
unprofitable) than other ways of
complying.
From the consumer perspective, it is
important to observe that there is no
mandate for any consumer to choose
any particular kind of vehicle. An
individual consumer will buy an EV
only if the price and characteristics of
the vehicle make it more attractive to
her than other vehicles. If the range of
vehicles in the conventional fleet does
not shrink, the availability of EVs
should not reduce consumer welfare
compared to a fleet with no EVs:
Increasing options should not reduce
consumer well-being, because other
existing options still are available. On
the other hand, if the variety of vehicles
in the conventional market does change,
there may be consumers who are forced
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to substitute to alternative vehicles. The
use of the footprint-based standard is
intended in part to help maintain the
diversity of vehicle sizes. Because the
agencies do not expect any vehicle
classes to become unavailable,
consumers who buy EVs therefore are
expected to choose them voluntarily, in
preference to the other vehicles
available to them.
From a practical perspective, the key
issue is whether the consumer demand
for EVs is large enough to absorb all the
EVs that automakers will produce in
order to comply with these standards, or
whether automakers will need to
increase consumer purchases by
providing subsidies to consumers. If
enough consumers find EVs more
attractive than other vehicles, and
automakers therefore do not need to
subsidize their purchase, then both
consumers and producers will benefit
from the introduction of EVs. On the
other hand, it is possible that
automakers will find EVs to be part of
a cost-effective compliance technology
but nevertheless need to price them
below cost them to sell sufficient
numbers. If so, then there is a welfare
loss associated with the sale of EVs
beyond those that would be sold in the
free market. The deadweight loss can be
approximated as one-half of the size of
the subsidy needed for the marginal
purchaser, times the number of sales
that would need the subsidy. Estimating
this value would require knowing the
number of sales necessary beyond the
expected sales level in an unregulated
market, and the amount of the subsidy
that would be necessary to induce the
desired number of sales. Given the
fledgling state of the market for EVs,
neither of these values is easily
knowable for the 2017 to 2025 time
frame.
A number of factors will affect the
likelihood of consumer acceptance of
EVs. People with short commutes may
find little obstacle in the relatively short
driving range, but others who regularly
drive long distances may find EVs’
ranges limiting. The reduced tailpipe
emissions and reduced noise may be
attractive features to some
consumers.526 Recharging at home
could be a convenient, desirable feature
for people who have garages with
electric charging capability, but not for
526 For instance, Hidrue et al. (Hidrue, Michael
K., George R. Parsons, Willett Kempton, and Meryl
P. Gardner. ‘‘Willingness to Pay for Electric
Vehicles and their Attributes.’’ Resource and Energy
Economics 33(3) (2011): 686–705 (Docket EPA–HQ–
OAR–2010–0799)) find that some consumers are
willing to pay $5100 for vehicles with 95% lower
emissions than the vehicles they otherwise aim to
purchase.
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people who park on the street. If an
infrastructure develops for recharging
vehicles with the convenience
approaching that of buying gasoline,
range or home recharging may become
less of a barrier to purchase. Of course,
other attributes of the marketed EVs,
such as their performance and their
passenger and storage capacity, will also
affect the share of consumers who will
consider them. As infrastructure, EV
technology, and costs evolve over time,
consumer interest in EVs will adjust as
well. Thus, modeling consumer
response to advanced technology
vehicles in the 2017–2025 time frame
poses even more challenges than those
associated with modeling consumer
response for conventional vehicles.
Because range is a major factor in EV
acceptability, it is starting to draw
attention in the research community.
For instance, several studies have
examined consumers’ willingness to pay
for increased vehicle range. Results
vary, depending on when the survey
was conducted (studies from the early
1990s have much higher values than
more recent studies) and on household
income and other demographic factors;
some find range to be statistically
indistinguishable from zero, while
others find the value of increasing range
from 150 to 300 miles to be as much as
$59,000 (2009$) (see RIA Chapter 8 for
more discussion).
Other research has examined how the
range limitation may affect driving
patterns. Pearre et al. observed daily
driving patterns for 484 vehicles in the
Atlanta area over a year.527 In their
sample, 9 percent of vehicles never
exceeded 100 miles in one day, and 21
percent never exceeded 150 miles in
one day. Lin and Greene compared the
cost of reduced range to the cost of
additional battery capacity for EVs.528
They find that an ‘‘optimized’’ range of
about 75 miles would be sufficient for
98% of days for ‘‘modest’’ drivers (those
who average about 25 miles per day);
the optimized EV range for ‘‘average’’
drivers (who average about 43 miles per
day), close to 120 miles, would meet
their needs on 97 percent of days.
Turrentine et al. studied drivers who
leased MINI E EVs (a conversion of the
527 Pearre, Nathaniel S., Willett Kempton, Randall
L. Guensler, and Vetri V. Elango. ‘‘Electric vehicles:
How much range is required for a day’s driving?’’
Transportation Research Part C 19(6) (2011): 1171–
1184 (Docket EPA–HQ–OAR–2010–0799).
528 Lin, Zhenhong, and David Greene.
‘‘Rethinking FCV/BEV Vehicle Range: A Consumer
Value Trade-off Perspective.’’ The 25th World
Battery, Hybrid and Fuel Cell Electric Vehicle
Symposium and Exhibition, Shenzhen, China, Nov.
5–9, 2010 (Docket EPA–HQ–OAR–2010–0799).
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MINI Cooper) for a year.529 They found
that drivers adapted their driving
patterns in response to EV ownership:
For instance, they modified where they
shopped and increased their use of
regenerative braking in order to reduce
range as a constraint. These finding
suggest that, for some consumers, range
may be a limiting factor only
occasionally. If those consumers are
willing to consider alternative ways of
driving long distances, such as renting
a gasoline vehicle or exchanging
vehicles within the household, then
limited range may not be a barrier to
adoption for them. These studies also
raise the question whether analysis of
EV use should be based on the driving
patterns from conventional vehicles,
because consumers may use EVs
differently than conventional vehicles.
EVs themselves are expected to
change over time, as battery
technologies and costs develop. In
addition, consumer interest in EVs is
likely to change over time, as early
adopters share their experiences. The
initial research in the area suggests that
consumers put a high value on
increased range, though this value
appears to be changing over time. The
research also suggests that some
segments of the driving public may
experience little, if any, restriction on
their driving due to range limitations if
they were to purchase EVs. At this time
it is not possible to estimate whether the
number of people who will choose to
purchase EVs at private-market prices
will be more or less than the number
that auto makers are expected to
produce to comply with the standards.
We note that our projections of
technology penetrations indicate that a
very small portion (fewer than 3
percent) of new vehicles produced in
2025 will need to be EVs. For the
purposes of the analysis presented here
for this proposal, we assume that the
consumer market will be sufficient to
absorb the number of EVs expected to be
used for compliance under this rule. We
seek comment and further research that
might provide evidence on the
consumer market for EVs in the 2017–
2025 period.
c. Summary
The Energy Paradox, also known as
the efficiency gap, raises the question,
why do private markets not provide
energy savings that engineering,
technology cost analyses find are cost529 Turrentine, Tom, Dahlia Garas, Andy Lentz,
and Justin Woodjack. ‘‘The UC Davis MINI E
Consumer Study.’’ UC Davis Institute of
Transportation Research Report UCD–ITS–RR–11–
05, May 4, 2011 (Docket EPA–HQ–OAR–2010–
0799).
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effective? Though a number of
hypotheses have been raised to explain
the paradox, studies have not been able
at this time to identify the relative
importance of different explanations. As
a result, it is not possible at this point
to state with any degree of certainty
whether the market for fuel efficiency is
operating efficiently, or whether the
market has failings.
For conventional vehicles, the key
implication is that the there may be two
different estimates of the value of fuel
savings. One value comes from the
engineering estimates, based on
consumers’ expected driving patterns
over the vehicle’s lifetime; the other
value is what the consumer factors into
the purchase decision when buying a
vehicle. Although economic theory
suggests that these two values should be
the same in a well functioning market,
if engineering estimates accurately
measure fuel savings that consumers
will experience, the available evidence
does not provide support for that theory.
The fuel savings estimates presented
here are based on expected consumers’
in-use fuel consumption rather than the
value they estimate at the time that they
consider purchasing a vehicle. Though
the cost estimates may not have taken
into account some changes that
consumers may not find desirable, those
omitted costs would have to be of very
considerable magnitude to have a
significant effect on the net benefits of
this rule. The costs imposed on the
consumer are measured by the costs of
the technologies needed to comply with
the standards. Because the cost
estimates have built into them the costs
required to hold other vehicle attributes
constant, then, in principle,
compensating consumers for the
increased costs would hold them
harmless, even if they paid no attention
to the fuel efficiency of vehicles when
making their purchase decisions.
For electric vehicles, and perhaps for
other advanced-technology vehicles,
other vehicle attributes are not expected
to be held constant. In particular, their
ranges and modes of refueling will be
different from those of conventional
vehicles. From a social welfare
perspective, the key question is whether
the number of consumers who will want
to buy EVs at their private-market prices
will exceed the number that auto
makers are expected to produce to
comply with the standards. If too few
consumers are willing to buy them at
their private-market prices, then auto
makers will have to subsidize their
prices. Though current research finds
that consumers typically have a high
value for increasing the range of EVs
(and thus would consider a shorter
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range a cost of an EV), current research
also suggests that consumers may find
ways to adapt to the shorter range so
that it is less constraining. The
technologies, prices, infrastructure, and
consumer experiences associated with
EVs are all expected to evolve between
the present and the period when this
rule becomes effective. The analysis in
this proposal assumes that the consumer
market is sufficient to absorb the
expected number of EVs without
subsidies.
We seek comment and further
research on the efficiency of the market
for fuel economy for conventional
vehicles and on the likely size of the
consumer market for EVs in 2017–2025.
2. Costs Associated With the Vehicle
Standards
In this section, EPA presents our
estimate of the costs associated with the
proposed vehicle program. The
presentation here summarizes the
vehicle level costs associated with the
new technologies expected to be added
to meet the proposed GHG standards,
including hardware costs to comply
with the proposed A/C credit program.
The analysis summarized here provides
our estimate of incremental costs on a
per vehicle basis and on an annual total
basis.
The presentation here summarizes the
outputs of the OMEGA model that was
discussed in some detail in Section III.D
of this preamble. For details behind the
analysis such as the OMEGA model
inputs and the estimates of costs
associated with individual technologies,
the reader is directed to Chapter 1 of the
EPA’s draft RIA and Chapter 3 of the
draft Joint TSD. For more detail on the
outputs of the OMEGA model and the
overall vehicle program costs
summarized here, the reader is directed
to Chapters 3 and 5 of EPA’s draft RIA.
With respect to the aggregate cost
estimations presented here, EPA notes
that there are a number of areas where
the results of our analysis may be
conservative and, in general, EPA
believes we have directionally
overestimated the costs of compliance
with these new standards, especially in
not accounting for the full range of
credit opportunities available to
manufacturers. For example, some cost
saving programs are considered in our
analysis, such as full car/truck trading,
while others are not, such as advanced
vehicle technology credits.
a. Costs per Vehicle
To develop costs per vehicle, EPA has
used the same methodology as that used
in the recent 2012–2016 final rule and
the 2010 TAR. Individual technology
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direct manufacturing costs have been
estimated in a variety of ways—vehicle
and technology tear down, models
developed by outside organizations, and
literature review—and indirect costs
have been estimated using the updated
and revised indirect cost multiplier
(ICM) approach that was first developed
for the 2012–2016 final rule. All of these
individual technology costs are
described in detail in Chapter 3 of the
draft joint TSD. Also described there are
the ICMs used in this proposal and the
ways the ICMs have been updated and
revised since the 2012–2016 final rule
which results in considerably higher
indirect costs in this proposal than
estimated in the 2012–2016 final rule.
Further, we describe in detail the
adjustments to technology costs to
account for manufacturing learning and
the cost reductions that result from that
learning. We note here that learning
impacts are applied only to direct
manufacturing costs which differs from
the 2012–2016 final rule which applied
learning to both direct and indirect
costs. Lastly, we have included costs
associated with stranded capital (i.e.,
capital investments that are not fully
recaptured by auto makers because they
would be forced to update vehicles on
a more rapid schedule than they may
have intended absent this proposal).
Again, this is detailed in Chapter 3 of
the draft joint TSD.
EPA then used the technology costs to
build GHG and fuel consumption
reducing packages of technologies for
each of 19 different vehicle types meant
to fully represent the range of baseline
vehicle technologies in the marketplace
(i.e., number of cylinders, valve train
configuration, vehicle class). This
package building process as well as the
process we use to determine the most
cost effective packages for each of the 19
vehicle types is detailed in Chapter 1 of
EPA’s draft RIA. These packages are
then used as inputs to the OMEGA
model to estimate the most cost effective
means of compliance with the proposed
standards giving due consideration to
the timing required for manufacturers to
implement the needed technologies.
That is, we assume that manufacturers
cannot add the full suite of needed
technologies in the first year of
implementation. Instead, we expect
them to add technologies to vehicles
during the typical 4 to 5 year redesign
cycle. As such, we expect that every
vehicle can be redesigned to add
significant levels of new technology
every 4 to 5 years. Further, we do not
expect manufacturers to redesign or
refresh vehicles at a pace more rapid
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The results, including costs associated
with the air conditioning program and
estimates of stranded capital as
described in Chapter 3 of the draft joint
TSD, are shown in Table III–65.
b. Annual Costs of the Proposed
National Program
above result in the total annual costs
presented in Table III–66 below. Note
that the costs presented in Table III–66
do not include the fuel savings that
consumers would experience as a result
of driving a vehicle with improved fuel
economy. Those impacts are presented
in Section III.H.4. Note also that the
costs presented here represent costs
estimated to occur presuming that the
proposed MY 2025 standards would
continue in perpetuity. Any changes to
the proposed standards would be
considered as part of a future
rulemaking. In other words, the
proposed standards would not apply
only to 2017–2025 model year
vehicles—they would, in fact, apply to
all 2025 and later model year vehicles.
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The costs presented here represent the
incremental costs for newly added
technology to comply with the proposed
program. Together with the projected
increases in car and truck sales, the
increases in per-car and per-truck
average costs shown in Table III–65,
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than the industry standard four to five
year cycle.
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EPA has calculated the cost per ton of
GHG reductions associated with the
proposed GHG standards on a CO2eq
basis using the costs and the emissions
reductions described in Section III.F.
These values are presented in Table III–
67 for cars, trucks and the combined
fleet. The cost per metric ton of GHG
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emissions reductions has been
calculated in the years 2020, 2030, 2040,
and 2050 using the annual vehicle
compliance costs and emission
reductions for each of those years. The
value in 2050 represents the long-term
cost per ton of the emissions reduced.
EPA has also calculated the cost per
metric ton of GHG emission reductions
including the savings associated with
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reduced fuel consumption (presented
below in Section III.H.4). This latter
calculation does not include the other
benefits associated with this program
such as those associated with energy
security benefits as discussed later in
Section III. By including the fuel
savings, the cost per ton is generally less
than $0 since the estimated value of fuel
savings outweighs the program costs.
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4. Reduction in Fuel Consumption and
Its Impacts
a. What are the projected changes in fuel
consumption?
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The proposed CO2 standards will
result in significant improvements in
the fuel efficiency of affected vehicles.
Drivers of those vehicles will see
corresponding savings associated with
reduced fuel expenditures. EPA has
estimated the impacts on fuel
consumption for both the tailpipe CO2
standards and the A/C credit program.
While gasoline consumption would
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decrease under the proposed GHG
standards, electricity consumption
would increase slightly due to the small
penetration of EVs and PHEVs (1–3%
for the 2021 and 2025 MYs). The fuel
savings includes both the gasoline
consumption reductions and the
electricity consumption increases. Note
that the total number of miles that
vehicles are driven each year is different
under the control case than in the
reference case due to the ‘‘rebound
effect,’’ which is discussed in Section
III.H.4.c and in Chapter 4 of the draft
joint TSD. EPA also notes that
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consumers who drive more than our
average estimates for vehicle miles
traveled (VMT) will experience more
fuel savings; consumers who drive less
than our average VMT estimates will
experience less fuel savings.
The expected impacts on fuel
consumption are shown in Table III–68.
The gallons reduced and kilowatt hours
increased (kWh) as shown in the tables
reflect impacts from the proposed CO2
standards, including the A/C credit
program, and include increased
consumption resulting from the rebound
effect.
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b. What are the fuel savings to the
consumer?
Using the fuel consumption estimates
presented in Section III.H.4.a, EPA can
calculate the monetized fuel savings
associated with the proposed standards.
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To do this, we multiply reduced fuel
consumption in each year by the
corresponding estimated average fuel
price in that year, using the reference
case taken from the AEO 2011 Final
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Release.530 These estimates do not
530 In the Preface to AEO 2011, the Energy
Information Administration describes the reference
case. They state that, ‘‘Projections by EIA are not
Continued
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account for the significant uncertainty
in future fuel prices; the monetized fuel
savings would be understated if actual
future fuel prices are higher (or
overstated if fuel prices are lower) than
estimated. AEO is a standard reference
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statements of what will happen but of what might
happen, given the assumptions and methodologies
used for any particular scenario. The Reference case
projection is a business-as-usual trend estimate,
given known technology and technological and
demographic trends.
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used by NHTSA and EPA and many
other government agencies to estimate
the projected price of fuel. This has
been done using both the pre-tax and
post-tax gasoline prices. Since the posttax gasoline prices are the prices paid at
fuel pumps, the fuel savings calculated
using these prices represent the savings
consumers would see. The pre-tax fuel
savings are those savings that society
would see. Assuming no change in
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gasoline tax rates, the difference
between these two columns represents
the reduction in fuel tax revenues that
will be received by state and federal
governments—about $82 million in
2017 and $17 billion by 2050. These
results are shown in Table III–69. Note
that in Section III.H.9, the overall
benefits and costs of the proposal are
presented and, for that reason, only the
pre-tax fuel savings are presented there.
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As shown in Table III–69, the
agencies are projecting that consumers
would realize very large fuel savings as
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a result of the proposed standards. As
discussed further in the introductory
paragraphs of Section III.H.1, it is a
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conundrum from an economic
perspective that these large fuel savings
have not been provided by automakers
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and purchased by consumers. A number
of behavioral and market phenomena
may lead to this disparity between the
fuel economy that makes financial sense
to consumers and the fuel economy they
purchase. Regardless how consumers
make their decisions on how much fuel
economy to purchase, EPA expects that,
in the aggregate, they will gain these
fuel savings, which will provide actual
money in consumers’ pockets.
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c. VMT Rebound Effect
The rebound effect refers to the
increase in vehicle use that results if an
increase in fuel efficiency lowers the
cost per mile of driving. For this
proposal, EPA is using an estimate of 10
percent for the rebound effect (i.e., we
assume a 10 percent decrease in fuel
cost per mile from our proposed
standards would result in a 1 percent
increase in VMT).
As we discussed in the 2012–2016
rulemaking and in Chapter 4 of the Joint
TSD, this value was not derived from a
single point estimate from a particular
study, but instead represents a
reasonable compromise between the
historical estimates and the projected
future estimates. This value is
consistent with the rebound estimate for
the most recent time period analyzed in
the Small and Van Dender 2007
paper,531 and falls within the range of
the larger body of historical work on the
rebound effect.532 Recent work by David
Greene on the rebound effect for lightduty vehicles in the U.S. supports the
hypothesis that the rebound effect is
decreasing over time,533 which could
mean that rebound estimates based on
recent time period data may be more
reliable than historical estimates that are
based on older time period data. New
work by Hymel, Small, and Van Dender
also supports the theory that the
rebound effect is declining over time,
although the Hymel et al. estimates are
higher than the 2007 Small and Van
Dender estimates.534 Furthermore, by
531 Small, K. and K. Van Dender, 2007. ‘‘Fuel
Efficiency and Motor Vehicle Travel: The Declining
Rebound Effect’’, The Energy Journal, vol. 28, no.
1, pp. 25–51 (Docket EPA–HQ–OAR–2010–0799).
532 Sorrell, S. and J. Dimitropoulos, 2007.
‘‘UKERC Review of Evidence for the Rebound
Effect, Technical Report 2: Econometric Studies’’,
UKERC/WP/TPA/2007/010, UK Energy Research
Centre, London, October (Docket EPA–HQ–OAR–
2010–0799).
533 Greene, David, ‘‘Rebound 2007: Analysis of
National Light-Duty Vehicle Travel Statistics,’’
February 9, 2010 (Docket EPA–HQ–OAR–2010–
0799). This paper has been accepted for an
upcoming special issue of Energy Policy, although
the publication date has not yet been determined.
534 Hymel, Kent M., Kenneth A. Small, and Kurt
Van Dender, ‘‘Induced demand and rebound effects
in road transport,’’ Transportation Research Part B:
Methodological, Volume 44, Issue 10, December
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using an estimate of the future rebound
effect, analysis by Small and Greene
show that the rebound effect could be in
the range of 5% or lower.535
Most studies that estimate the
rebound effect use the fuel cost per mile
of driving or gasoline prices as a
surrogate for fuel efficiency. Recent
work conducted by Kenneth
Gillingham, however, provides
suggestive evidence that consumers may
be less responsive to changes in fuel
efficiency than to changes in fuel
prices.536 While this research pertains
specifically to California, this finding
suggests that the common assumption
that consumers respond similarly to
changes in gasoline prices and changes
in fuel efficiency may overstate the
potential rebound effect. Additional
research is needed in this area, and EPA
requests comments and data on this
topic.
Another factor discussed by
Gillingham is whether consumers
actually respond the same way to an
increase in the cost of driving compared
to a decrease in the cost of driving.
There is some evidence in the literature
that consumers are more responsive to
an increase in prices than to a decrease
in prices.537 538 539 Furthermore, it is
also possible that consumers respond
more to a large shock than a small,
gradual change in prices. Since these
proposed standards would decrease the
cost of driving gradually over time, it is
possible that the rebound effect would
be much smaller than some of the
estimates included in the historical
literature. More research in this area is
also important, and EPA invites
comment and data on this aspect of the
rebound effect.
Finally, for purposes of analyzing the
proposed standards, EPA assumes the
2010, Pages 1220–1241, ISSN 0191–2615, DOI:
10.1016/j.trb.2010.02.007. (Docket EPA–HQ–OAR–
2010–0799).
535 Report by Kenneth A. Small of University of
California at Irvine to EPA, ‘‘The Rebound Effect
from Fuel Efficiency Standards: Measurement and
Projection to 2030’’, June 12, 2009 (Docket EPA–
HQ–OAR–2010–0799). See also Greene, 2010.
536 Gillingham, Kenneth. ‘‘The Consumer
Response to Gasoline Price Changes: Empirical
Evidence and Policy Implications.’’ Ph.D. diss.,
Stanford University, 2011. (Docket EPA–HQ–OAR–
2010–0799).
537 Dargay, J.M., Gately, D., 1997. ‘‘The demand
for transportation fuels: imperfect pricereversibility?’’ Transportation Research Part B 31(1).
(Docket EPA–HQ–OAR–2010–0799).
538 Dermot Gately, 1993. ‘‘The Imperfect PriceReversibility of World Oil Demand,’’ The Energy
Journal, International Association for Energy
Economics, vol. 14(4), pages 163–182. (Docket
EPA–HQ–OAR–2010–0799).
539 Sentenac-Chemin, E. (2010) Is the price effect
on fuel consumption symmetric? Some evidence
from an empirical study, Energy Policy (2010),
doi:10.1016/j.enpol.2010.07.016 (Docket EPA–HQ–
OAR–2010–0799).
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rebound effect will be the same whether
a consumer is driving a conventional
gasoline vehicle or a vehicle powered by
grid electricity. We are not aware of any
research that has examined consumer
responses to changes in the cost per
mile of driving that result from driving
an electric-powered vehicle instead of a
conventional gasoline vehicle. EPA
requests comment and data on this
topic.
Chapter 4.2.5 of the Joint TSD reviews
the relevant literature and discusses in
more depth the reasoning for the
rebound value used here. The rebound
effect is also discussed in Section II.E of
the preamble. While EPA has used a
weight of evidence approach for
determining that 10 percent is a
reasonable value to use for the rebound
effect, EPA requests comments on this
and alternative methodologies for
estimating the rebound effect over the
period that our proposed standards
would go into effect. EPA also invites
the submission of new data regarding
estimates of the rebound effect. We also
discuss two approaches for modeling
the rebound effect in Chapter 4 of the
DRIA; we request comment on these
modeling approaches.
5. CO2 Emission Reduction Benefits
EPA has assigned a dollar value to
reductions in CO2 emissions using
global estimates of the social cost of
carbon (SCC). The SCC is an estimate of
the monetized damages associated with
an incremental increase in carbon
emissions in a given year. It is intended
to include (but is not limited to) changes
in net agricultural productivity, human
health, property damages from
increased flood risk, and the value of
ecosystem services due to climate
change. The SCC estimates used in this
analysis were developed through an
interagency process that included EPA,
DOT/NHTSA, and other executive
branch entities, and concluded in
February 2010. We first used these SCC
estimates in the benefits analysis for the
2012–2016 light-duty GHG rulemaking;
see 75 FR at 25520. We have continued
to use these estimates in other
rulemaking analyses, including the
heavy-duty GHG rulemaking; see 76 FR
at 57332. The SCC Technical Support
Document (SCC TSD) provides a
complete discussion of the methods
used to develop these SCC estimates.540
540 Docket ID EPA–HQ–OAR–2010–0799,
Technical Support Document: Social Cost of
Carbon for Regulatory Impact Analysis Under
Executive Order 12866, Interagency Working Group
on Social Cost of Carbon, with participation by
Council of Economic Advisers, Council on
Environmental Quality, Department of Agriculture,
Department of Commerce, Department of Energy,
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The interagency group selected four
SCC values for use in regulatory
analyses, which we have applied in this
analysis: $5, $22, $36, and $67 per
metric ton of CO2 emissions in 2010, in
2009 dollars.541 542 The first three values
are based on the average SCC from three
integrated assessment models, at
discount rates of 5, 3, and 2.5 percent,
respectively. SCCs at several discount
rates are included because the literature
shows that the SCC is quite sensitive to
assumptions about the discount rate,
and because no consensus exists on the
appropriate rate to use in an
intergenerational context. The fourth
value is the 95th percentile of the SCC
from all three models at a 3 percent
discount rate. It is included to represent
higher-than-expected impacts from
temperature change further out in the
tails of the SCC distribution. Low
probability, high impact events are
incorporated into all of the SCC values
through explicit consideration of their
effects in two of the three models as
well as the use of a probability density
function for equilibrium climate
sensitivity. Treating climate sensitivity
probabilistically results in more high
temperature outcomes, which in turn
lead to higher projections of damages.
The SCC increases over time because
future emissions are expected to
produce larger incremental damages as
physical and economic systems become
more stressed in response to greater
climatic change. Note that the
interagency group estimated the growth
rate of the SCC directly using the three
integrated assessment models rather
than assuming a constant annual growth
rate. This helps to ensure that the
estimates are internally consistent with
other modeling assumptions. Table III–
70 presents the SCC estimates used in
this analysis.
When attempting to assess the
incremental economic impacts of carbon
dioxide emissions, the analyst faces a
number of serious challenges. A recent
report from the National Academies of
Science points out that any assessment
will suffer from uncertainty,
speculation, and lack of information
about (1) Future emissions of
greenhouse gases, (2) the effects of past
and future emissions on the climate
system, (3) the impact of changes in
climate on the physical and biological
environment, and (4) the translation of
these environmental impacts into
economic damages.543 As a result, any
effort to quantify and monetize the
harms associated with climate change
will raise serious questions of science,
economics, and ethics and should be
viewed as provisional.
The interagency group noted a
number of limitations to the SCC
analysis, including the incomplete way
in which the integrated assessment
models capture catastrophic and noncatastrophic impacts, their incomplete
treatment of adaptation and
technological change, uncertainty in the
extrapolation of damages to high
temperatures, and assumptions
regarding risk aversion. The limited
amount of research linking climate
impacts to economic damages makes the
interagency modeling exercise even
more difficult. The interagency group
hopes that over time researchers and
modelers will work to fill these gaps
and that the SCC estimates used for
regulatory analysis by the Federal
government will continue to evolve
with improvements in modeling.
Another limitation of the GHG
benefits analysis in this proposed rule is
that it does not monetize the impacts
associated with the non-CO2 GHG
reductions expected under the proposed
standards (in this case, nitrous oxides,
methane, and hydorfluorocarbons). The
interagency group did not estimate the
social costs of non-CO2 GHG emissions
when it developed the current social
cost of CO2 values. EPA recently
requested comment on a methodology to
estimate the benefits associated with
non-CO2 GHG reductions under the
proposed New Source Performance
Standards (NSPS) for oil and gas
exploration (76 FR at 52792). Referred to
as the ‘‘global warming potential (GWP)
approach,’’ the calculation uses the
GWP of the non-CO2 gas to estimate CO2
equivalents and then multiplies these
CO2 equivalent emission reductions by
the social cost of CO2.
EPA presented and requested
comment on the GWP approach in the
NSPS proposal as an interim method to
produce estimates of the social cost of
methane until the Administration
develops such values. Similarly, we
request comments in this proposed
rulemaking on using the GWPs as an
interim approach and more broadly
about appropriate methods to monetize
the climate benefits of non-CO2 GHG
reductions.
In addition, the U.S. government
intends to revise the SCC estimates,
taking into account new research
findings that were not included in the
first round, and has set a preliminary
goal of revisiting the SCC values in the
next few years or at such time as
substantially updated models become
available, and to continue to support
research in this area. In particular, DOE
and EPA hosted a series of workshops
to help motivate and inform this
process.544 The first workshop focused
on conceptual and methodological
issues related to integrated assessment
modeling and valuing climate change
impacts, along with methods of
incorporating these estimates into
policy analysis.
Applying the global SCC estimates,
shown in Table III–70, to the estimated
reductions in CO2 emissions under the
proposed standards, we estimate the
dollar value of the GHG related benefits
for each analysis year. For internal
consistency, the annual benefits are
discounted back to net present value
terms using the same discount rate as
each SCC estimate (i.e., 5%, 3%, and
2.5%) rather than 3% and 7%.545 These
estimates are provided in Table III–71.
Department of Transportation, Environmental
Protection Agency, National Economic Council,
Office of Energy and Climate Change, Office of
Management and Budget, Office of Science and
Technology Policy, and Department of Treasury
(February 2010). Also available at https://epa.gov/
otaq/climate/regulations.htm.
541 The interagency group decided that these
estimates apply only to CO2 emissions. Given that
warming profiles and impacts other than
temperature change (e.g., ocean acidification) vary
across GHGs, the group concluded ‘‘transforming
gases into CO2-equivalents using GWP, and then
multiplying the carbon-equivalents by the SCC,
would not result in accurate estimates of the social
costs of non-CO2 gases’’ (SCC TSD, pg 13).
542 The SCC estimates were converted from 2007
dollars to 2008 dollars using a GDP price deflator
(1.021) and again to 2009 dollars using a GDP price
deflator (1.009) obtained from the Bureau of
Economic Analysis, National Income and Product
Accounts Table 1.1.4, Prices Indexes for Gross
Domestic Product.
543 National Research Council (2009). Hidden
Costs of Energy: Unpriced Consequences of Energy
Production and Use. National Academies Press. See
docket ID EPA–HQ–OAR–2010–0799.
544 Improving the Assessment and Valuation of
Climate Change Impacts for Policy and Regulatory
Analysis, held November 18–19, 2010 and January
27–28, 2011. Materials available at: https://
yosemite.epa.gov/ee/epa/eerm.nsf/
vwRepNumLookup/EE–0564?OpenDocument and
https://yosemite.epa.gov/ee/epa/eerm.nsf/
vwRepNumLookup/EE–0566?OpenDocument. See
also Docket ID EPA–HQ–OAR–2010–0799.
545 It is possible that other benefits or costs of
final regulations unrelated to CO2 emissions will be
discounted at rates that differ from those used to
develop the SCC estimates.
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6. Non-Greenhouse Gas Health and
Environmental Impacts
This section presents EPA’s analysis
of the non-GHG health and
environmental impacts that can be
expected to occur as a result of the
proposed 2017–2025 light-duty vehicle
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GHG standards. CO2 emissions are
predominantly the byproduct of fossil
fuel combustion processes that also
produce criteria and hazardous air
pollutants. The vehicles that are subject
to the proposed standards are also
significant sources of mobile source air
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pollution such as direct PM, NOX, VOCs
and air toxics. The proposed standards
would affect exhaust emissions of these
pollutants from vehicles. They would
also affect emissions from upstream
sources related to changes in fuel
consumption. Changes in ambient
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ozone, PM2.5, and air toxics that would
result from the proposed standards are
expected to affect human health in the
form of premature deaths and other
serious human health effects, as well as
other important public health and
welfare effects.
It is important to quantify the health
and environmental impacts associated
with the proposed standard because a
failure to adequately consider these
ancillary co-pollutant impacts could
lead to an incorrect assessment of their
net costs and benefits. Moreover, copollutant impacts tend to accrue in the
near term, while any effects from
reduced climate change mostly accrue
over a time frame of several decades or
longer.
EPA typically quantifies and
monetizes the health and environmental
impacts related to both PM and ozone
in its regulatory impact analyses (RIAs)
when possible. However, EPA was
unable to do so in time for this proposal.
EPA attempts to make emissions and air
quality modeling decisions early in the
analytical process so that we can
complete the photochemical air quality
modeling and use that data to inform
the health and environmental impacts
analysis. Resource and time constraints
precluded the Agency from completing
this work in time for the proposal.
Instead, EPA is using PM-related
benefits-per-ton values as an interim
approach to estimating the PM-related
benefits of the proposal. EPA also
provides a characterization of the health
and environmental impacts that will be
quantified and monetized for the final
rulemaking.
This section is split into two subsections: The first presents the PMrelated benefits-per-ton values used to
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monetize the PM-related co-benefits
associated with the proposal; the second
explains what PM- and ozone-related
health and environmental impacts EPA
will quantify and monetize in the
analysis for the final rule. EPA bases its
analyses on peer-reviewed studies of air
quality and health and welfare effects
and peer-reviewed studies of the
monetary values of public health and
welfare improvements, and is generally
consistent with benefits analyses
performed for the analysis of the final
Cross-State Air Pollution Rule,546 the
final 2014–2018 MY Heavy-Duty
Vehicle Greenhouse Gas Rule,547 and
the final Portland Cement National
Emissions Standards for Hazardous Air
Pollutants (NESHAP) RIA.548
Though EPA is characterizing the
changes in emissions associated with
toxic pollutants, we will not be able to
quantify or monetize the human health
effects associated with air toxic
pollutants for either the proposal or the
final rule analyses. Please refer to
Section III.G for more information about
546 Final Cross-State Air Pollution Rule. (76 FR
48208, August 8, 2011).
547 U.S. Environmental Protection Agency. (2011).
Final Rulemaking to Establish Heavy-Duty Vehicle
Greenhouse Gas Emission Standards and Corporate
Average Fuel Economy Standards: Regulatory
Impact Analysis, Assessment and Standards
Division, Office of Transportation and Air Quality,
EPA–420–R–10–009, July 2011. Available on the
internet: https://www.epa.gov/otaq/climate/
regulations/420r10009.pdf.
548 U.S. Environmental Protection Agency (U.S.
EPA). 2010. Regulatory Impact Analysis: National
Emission Standards for Hazardous Air Pollutants
from the Portland Cement Manufacturing Industry.
Office of Air Quality Planning and Standards,
Research Triangle Park, NC. Augues. Available on
the Internet at < https://www.epa.gov/ttn/ecas/
regdata/RIAs/portlandcementfinalria.pdf >. EPA–
HQ–OAR–2009–0472–0241.
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the air toxics emissions impacts
associated with the proposed standards.
a. Economic Value of Reductions in
Criteria Pollutants
As described in Section III.G, the
proposed standards would reduce
emissions of several criteria and toxic
pollutants and precursors. In this
analysis, EPA estimates the economic
value of the human health benefits
associated with reducing PM2.5
exposure. Due to analytical limitations,
this analysis does not estimate benefits
related to other criteria pollutants (such
as ozone, NO2 or SO2) or toxic
pollutants, nor does it monetize all of
the potential health and welfare effects
associated with PM2.5.
This analysis uses a ‘‘benefit-per-ton’’
method to estimate a selected suite of
PM2.5-related health benefits described
below. These PM2.5 benefit-per-ton
estimates provide the total monetized
human health benefits (the sum of
premature mortality and premature
morbidity) of reducing one ton of
directly emitted PM2.5, or its precursors
(such as NOX, SOX, and VOCs), from a
specified source. Ideally, the human
health benefits would be estimated
based on changes in ambient PM2.5 as
determined by full-scale air quality
modeling. However, this modeling was
not possible in the timeframe for this
proposal.
The dollar-per-ton estimates used in
this analysis are provided in Table III–
72. In the summary of costs and
benefits, Section III.H.9 of this
preamble, EPA presents the monetized
value of PM-related improvements
associated with the proposal.
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a The benefit-per-ton estimates presented in this
table are based on an estimate of premature
mortality derived from the ACS study (Pope et al.,
2002). If the benefit-per-ton estimates were based on
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the Six-Cities study (Laden et al., 2006), the values
would be approximately two-and-a-half times
larger. See below for a description of these studies.
b The benefit-per-ton estimates presented in this
table assume either a 3 percent or 7 percent
discount rate in the valuation of premature
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mortality to account for a twenty-year segmented
cessation lag.
c Benefit-per-ton values were estimated for the
years 2015, 2020, and 2030. For intermediate years,
such as 2017 (the year the standards begin), we
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related co-benefits captured in those
benefit-per-ton estimates.
applies a value of a statistical life (VSL)
derived from the mortality valuation
literature. For certain health impacts,
such as chronic bronchitis and a
number of respiratory-related ailments,
EPA applies willingness-to-pay
estimates derived from the valuation
literature. For the remaining health
impacts, EPA applies values derived
from current cost-of-illness and/or wage
estimates.
A more detailed description of the
benefit-per-ton estimates is provided in
Chapter 4 of the Draft Joint TSD that
accompanies this rulemaking. Readers
interested in reviewing the complete
methodology for creating the benefitper-ton estimates used in this analysis
can consult the Technical Support
interpolated exponentially. For years beyond 2030
(including 2040), EPA and NHTSA extrapolated
exponentially based on the growth between 2020
and 2030.
d Note that the benefit-per-ton value for SOx is
based on the value for Stationary (Non-EGU)
sources; no SOx value was estimated for mobile
sources. The benefit-per-ton value for VOCs was
estimated across all sources.
e Non-EGU denotes stationary sources of
emissions other than electric generating units.
549 U.S. Environmental Protection Agency (U.S.
EPA), 2010. Regulatory Impact Analysis, Final
Rulemaking to Establish Light-Duty Vehicle
Greenhouse Gas Emission Standards and Corporate
Average Fuel Economy Standards. Office of
Transportation and Air Quality. April. Available at
https://www.epa.gov/otaq/climate/regulations/
420r10009.pdf. EPA-420-R-10-009.
550 U.S. Environmental Protection Agency (U.S.
EPA). 2008. Regulatory Impact Analysis, 2008
National Ambient Air Quality Standards for
Ground-level Ozone, Chapter 6. Office of Air
Quality Planning and Standards, Research Triangle
Park, NC. March. Available at https://www.epa.gov/
ttn/ecas/regdata/RIAs/6-ozoneriachapter6.pdf.
551 U.S. Environmental Protection Agency (U.S.
EPA). 2010. Regulatory Impact Analysis: National
Emission Standards for Hazardous Air Pollutants
from the Portland Cement Manufacturing Industry.
Office of Air Quality Planning and Standards,
Research Triangle Park, NC. Augues. Available on
the Internet at < https://www.epa.gov/ttn/ecas/
regdata/RIAs/portlandcementfinalria.pdf. EPA-HQOAR-2009-0472-0241
552 Although we summarize the main issues in
this chapter, we encourage interested readers to see
benefits chapter of the RIA that accompanied the
NO2 NAAQS for a more detailed description of
recent changes to the PM benefits presentation and
preference for the no-threshold model. Note that the
cost-benefit analysis was prepared solely for
purposes of fulfilling analysis requirements under
Executive Order 12866 and was not considered, or
otherwise played any part, in the decision to revise
the NO2 NAAQS.
553 U.S. Environmental Protection Agency (U.S.
EPA). 2010. Final NO2 NAAQS Regulatory Impact
Analysis (RIA). Office of Air Quality Planning and
Standards, Research Triangle Park, NC. April.
Available on the Internet at https://www.epa.gov/ttn/
ecas/regdata/RIAs/FinalNO2RIAfulldocument.pdf.
Accessed March 15, 2010. EPA–HQ–OAR–2009–
0472–0237 U.S. Environmental Protection Agency
(U.S. EPA). 2009.
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the Portland Cement National Emissions
Standards for Hazardous Air Pollutants
(NESHAP) RIA.551 Table III–73 shows
the quantified and unquantified PM2.5-
Consistent with the cost-benefit
analysis that accompanied the NO2
NAAQS,552 553 the benefits estimates
utilize the concentration-response
functions as reported in the
epidemiology literature. To calculate the
total monetized impacts associated with
quantified health impacts, EPA applies
values derived from a number of
sources. For premature mortality, EPA
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The benefit per-ton technique has
been used in previous analyses,
including EPA’s 2012–2016 Light-Duty
Vehicle Greenhouse Gas Rule,549 550 and
Federal Register / Vol. 76, No. 231 / Thursday, December 1, 2011 / Proposed Rules
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Document (TSD) 554 accompanying the
recent final ozone NAAQS RIA (U.S.
EPA, 2008).555 Readers can also refer to
Fann et al. (2009) 556 for a detailed
description of the benefit-per-ton
methodology.557
As described in the documentation for
the benefit per-ton estimates cited
above, national per-ton estimates were
developed for selected pollutant/source
category combinations. The per-ton
values calculated therefore apply only
to tons reduced from those specific
pollutant/source combinations (e.g.,
NO2 emitted from mobile sources; direct
PM emitted from stationary sources).
Our estimate of PM2.5 benefits is
therefore based on the total direct PM2.5
and PM-related precursor emissions
controlled by sector and multiplied by
each per-ton value.
As Table III–72 indicates, EPA
projects that the per-ton values for
reducing emissions of non-GHG
pollutants from both vehicle use and
stationary sources such as fuel refineries
and storage facilities will increase over
time.558 These projected increases
reflect rising income levels, which are
assumed to increase affected
individuals’ willingness to pay for
reduced exposure to health threats from
554 U.S. Environmental Protection Agency (U.S.
EPA). 2008. Technical Support Document:
Calculating Benefit Per-Ton Estimates, Ozone
NAAQS Docket #EPA–HQ–OAR–2007–0225–0284.
Office of Air Quality Planning and Standards,
Research Triangle Park, NC. March. Available on
the Internet at <https://www.regulations.gov>.
555 U.S. Environmental Protection Agency (U.S.
EPA). 2008. Regulatory Impact Analysis, 2008
National Ambient Air Quality Standards for
Ground-level Ozone, Chapter 6. Office of Air
Quality Planning and Standards, Research Triangle
Park, NC. March. Available at <https://www.epa.gov/
ttn/ecas/regdata/RIAs/6-ozoneriachapter6.pdf>.
Note that the cost-benefit analysis was prepared
solely for purposes of fulfilling analysis
requirements under Executive Order 12866 and was
not considered, or otherwise played any part, in the
decision to revise the Ozone NAAQS.
556 Fann, N. et al. (2009). The influence of
location, source, and emission type in estimates of
the human health benefits of reducing a ton of air
pollution. Air Qual Atmos Health. Published
online: 09 June, 2009.
557 The values included in this report are different
from those presented in the article cited above.
Benefits methods change to reflect new information
and evaluation of the science. Since publication of
the June 2009 article, EPA has made two significant
changes to its benefits methods: (1) We no longer
assume that a threshold exists in PM-related models
of health impacts; and (2) We have revised the
Value of a Statistical Life to equal $6.3 million (year
2000$), up from an estimate of $5.5 million (year
2000$) used in the June 2009 report. Please refer to
the following Web site for updates to the dollar-perton estimates: https://www.epa.gov/air/benmap/
bpt.html.
558 As we discuss in the emissions chapter of
EPA’s DRIA (Chapter 4), the rule would yield
emission reductions from upstream refining and
fuel distribution due to decreased petroleum
consumption.
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air pollution.559 They also reflect future
population growth and increased life
expectancy, which expands the size of
the population exposed to air pollution
in both urban and rural areas, especially
in older age groups with the highest
mortality risk.560
The benefit-per-ton estimates are
subject to a number of assumptions and
uncertainties:
• They do not reflect local variability
in population density, meteorology,
exposure, baseline health incidence
rates, or other local factors that might
lead to an overestimate or underestimate
of the actual benefits of controlling fine
particulates. EPA will conduct full-scale
air quality modeling for the final
rulemaking in an effort to capture this
variability.
• This analysis assumes that all fine
particles, regardless of their chemical
composition, are equally potent in
causing premature mortality. This is an
important assumption, because PM2.5
produced via transported precursors
emitted from stationary sources may
differ significantly from direct PM2.5
released from diesel engines and other
industrial sources, but no clear
scientific grounds exist for supporting
differential effects estimates by particle
type.
• This analysis assumes that the
health impact function for fine particles
is linear within the range of ambient
concentrations under consideration.
Thus, the estimates include health
benefits from reducing fine particles in
areas with varied concentrations of
PM2.5, including both regions that are in
attainment with fine particle standard
and those that do not meet the standard
down to the lowest modeled
concentrations.
• There are several health benefits
categories that EPA was unable to
quantify due to limitations associated
with using benefits-per-ton estimates,
several of which could be substantial.
Because the NOX and VOC emission
reductions associated with this proposal
are also precursors to ozone, reductions
in NOX and VOC would also reduce
ozone formation and the health effects
associated with ozone exposure.
Unfortunately, ozone-related benefits559 The issue is discussed in more detail in the
PM NAAQS RIA from 2006. See U.S.
Environmental Protection Agency. 2006. Final
Regulatory Impact Analysis (RIA) for the Proposed
National Ambient Air Quality Standards for
Particulate Matter. Prepared by: Office of Air and
Radiation. October 2006. Available at https://
www.epa.gov/ttn/ecas/ria.html.
560 For more information about EPA’s population
projections, please refer to the following: https://
www.epa.gov/air/benmap/models/
BenMAPManualAppendicesAugust2010.pdf (See
Appendix K).
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75133
per-ton estimates do not exist due to
issues associated with the complexity of
the atmospheric air chemistry and
nonlinearities associated with ozone
formation. The PM-related benefits-perton estimates also do not include any
human welfare or ecological benefits.
Please refer to Chapter 6.3 of the DRIA
that accompanies this proposal for a
description of the agecy’s plan to
quantify and monetize the PM- and
ozone-related health impacts for the
FRM and a description of the
unquantified co-pollutant benefits
associated with this rulemaking.
• There are many uncertainties
associated with the health impact
functions used in this modeling effort.
These include: Within-study variability
(the precision with which a given study
estimates the relationship between air
quality changes and health effects);
across-study variation (different
published studies of the same pollutant/
health effect relationship typically do
not report identical findings and in
some instances the differences are
substantial); the application of
concentration-response functions
nationwide (does not account for any
relationship between region and health
effect, to the extent that such a
relationship exists); extrapolation of
impact functions across population (we
assumed that certain health impact
functions applied to age ranges broader
than that considered in the original
epidemiological study); and various
uncertainties in the concentrationresponse function, including causality
and thresholds. These uncertainties may
under- or over-estimate benefits.
• EPA has investigated methods to
characterize uncertainty in the
relationship between PM2.5 exposure
and premature mortality. EPA’s final
PM2.5 NAAQS analysis provides a more
complete picture about the overall
uncertainty in PM2.5 benefits estimates.
For more information, please consult
the PM2.5 NAAQS RIA (Table 5.5).561
• The benefit-per-ton estimates used
in this analysis incorporate projections
of key variables, including atmospheric
conditions, source level emissions,
population, health baselines and
incomes, technology. These projections
introduce some uncertainties to the
benefit per ton estimates.
• As described above, using the
benefit-per-ton value derived from the
ACS study (Pope et al., 2002) alone
provides an incomplete characterization
of PM2.5 benefits. When placed in the
561 U.S. Environmental Protection Agency.
October 2006. Final Regulatory Impact Analysis
(RIA) for the Final National Ambient Air Quality
Standards for Particulate Matter. Prepared by:
Office of Air and Radiation.
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context of the Expert Elicitation results,
this estimate falls toward the lower end
of the distribution. By contrast, the
estimated PM2.5 benefits using the
coefficient reported by Laden in that
author’s reanalysis of the Harvard Six
Cities cohort fall toward the upper end
of the Expert Elicitation distribution
results.
As mentioned above, emissions
changes and benefits-per-ton estimates
alone are not a good indication of local
or regional air quality and health
impacts, as there may be localized
impacts associated with the proposed
rulemaking. Additionally, the
atmospheric chemistry related to
ambient concentrations of PM2.5, ozone
and air toxics is very complex. Fullscale photochemical modeling is
therefore necessary to provide the
needed spatial and temporal detail to
more completely and accurately
estimate the changes in ambient levels
of these pollutants and their associated
health and welfare impacts. As
discussed above, timing and resource
constraints precluded EPA from
conducting a full-scale photochemical
air quality modeling analysis in time for
the NPRM. For the final rule, however,
a national-scale air quality modeling
analysis will be performed to analyze
the impacts of the standards on PM2.5,
ozone, and selected air toxics. The
benefits analysis plan for the final
rulemaking is discussed in the next
section.
bjneal on DSK3VPTVN1PROD with PROPOSALS
b. Human Health and Environmental
Benefits for the Final Rule
i. Human Health and Environmental
Impacts
To model the ozone and PM air
quality benefits of the final rule, EPA
will use the Community Multiscale Air
Quality (CMAQ) model (see Section
III.G.5. for a description of the CMAQ
model). The modeled ambient air
quality data will serve as an input to the
Environmental Benefits Mapping and
Analysis Program (BenMAP).562
BenMAP is a computer program
developed by EPA that integrates a
number of the modeling elements used
in previous RIAs (e.g., interpolation
functions, population projections,
health impact functions, valuation
functions, analysis and pooling
methods) to translate modeled air
concentration estimates into health
effects incidence estimates and
monetized benefits estimates.
Chapter 6.3 in the DRIA that
accompanies this proposal lists the co562 Information on BenMAP, including
downloads of the software, can be found at
https://www.epa.gov/ttn/ecas/benmodels.html.
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pollutant health effect concentrationresponse functions EPA will use to
quantify the non-GHG incidence
impacts associated with the final lightduty vehicles standard. These include
PM- and ozone-related premature
mortality, chronic bronchitis, nonfatal
heart attacks, hospital admissions
(respiratory and cardiovascular),
emergency room visits, acute bronchitis,
minor restricted activity days, and days
of work and school lost.
ii. Monetized Impacts
To calculate the total monetized
impacts associated with quantified
health impacts, EPA applies values
derived from a number of sources. For
premature mortality, EPA applies a
value of a statistical life (VSL) derived
from the mortality valuation literature.
For certain health impacts, such as
chronic bronchitis and a number of
respiratory-related ailments, EPA
applies willingness-to-pay estimates
derived from the valuation literature.
For the remaining health impacts, EPA
applies values derived from current
cost-of-illness and/or wage estimates.
Chapter 6.3 in the DRIA that
accompanies this proposal presents the
monetary values EPA will apply to
changes in the incidence of health and
welfare effects associated with
reductions in non-GHG pollutants that
will occur when these GHG control
strategies are finalized.
iii. Other Unquantified Health and
Environmental Impacts
In addition to the co-pollutant health
and environmental impacts EPA will
quantify for the analysis of the final
standard, there are a number of other
health and human welfare endpoints
that EPA will not be able to quantify or
monetize because of current limitations
in the methods or available data. These
impacts are associated with emissions of
air toxics (including benzene, 1,3butadiene, formaldehyde, acetaldehyde,
acrolein, and ethanol), ambient ozone,
and ambient PM2.5 exposures. Chapter
6.3 of the DRIA lists these unquantified
health and environmental impacts.
While there will be impacts
associated with air toxic pollutant
emission changes that result from the
final standard, EPA will not attempt to
monetize those impacts. This is
primarily because currently available
tools and methods to assess air toxics
risk from mobile sources at the national
scale are not adequate for extrapolation
to incidence estimations or benefits
assessment. The best suite of tools and
methods currently available for
assessment at the national scale are
those used in the National-Scale Air
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Toxics Assessment (NATA). The EPA
Science Advisory Board specifically
commented in their review of the 1996
NATA that these tools were not yet
ready for use in a national-scale benefits
analysis, because they did not consider
the full distribution of exposure and
risk, or address sub-chronic health
effects.563 While EPA has since
improved the tools, there remain critical
limitations for estimating incidence and
assessing benefits of reducing mobile
source air toxics. EPA continues to work
to address these limitations; however,
EPA does not anticipate having methods
and tools available for national-scale
application in time for the analysis of
the final rules.564
7. Energy Security Impacts
The proposed GHG standards require
improvements in light-duty vehicle fuel
efficiency which, in turn, will reduce
overall fuel consumption and help to
reduce U.S. petroleum imports.
Reducing U.S. petroleum imports
lowers both the financial and strategic
risks caused by potential sudden
disruptions in the supply of imported
petroleum to the U.S. The economic
value of reductions in these risks
provides a measure of improved U.S.
energy security. This section
summarizes EPA’s estimates of U.S. oil
import reductions and energy security
benefits from this proposal. Additional
discussion of this issue can be found in
Chapter 4.2.8 of the Joint TSD.
a. Implications of Reduced Petroleum
Use on U.S. Imports
In 2010, U.S. petroleum import
expenditures represented 14 percent of
total U.S. imports of all goods and
services.565 These expenditures rose to
18 percent by April of 2011.566 In 2010,
the United States imported 49 percent of
the petroleum it consumed,567 and the
563 Science Advisory Board. 2001. NATA—
Evaluating the National-Scale Air Toxics
Assessment for 1996—an SAB Advisory. https://
www.epa.gov/ttn/atw/sab/sabrev.html.
564 In April, 2009, EPA hosted a workshop on
estimating the benefits of reducing hazardous air
pollutants. This workshop built upon the work
accomplished in the June 2000 Science Advisory
Board/EPA Workshop on the Benefits of Reductions
in Exposure to Hazardous Air Pollutants, which
generated thoughtful discussion on approaches to
estimating human health benefits from reductions
in air toxics exposure, but no consensus was
reached on methods that could be implemented in
the near term for a broad selection of air toxics.
Please visit https://epa.gov/air/toxicair/
2009workshop.html for more information about the
workshop and its associated materials.
565 https://www.eia.gov/dnav/pet/hist/
LeafHandler.ashx?n=PET&s=WTTIMUS2&f=W.
566 https://www.eia.gov/dnav/pet/pet_move_
impcus_a2_nus_ep00_im0_mbblpd_a.htm.
567 https://www.eia.gov/dnav/pet/pet_pri_rac2_
dcu_nus_m.htm.
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75135
The agencies conducted a detailed
analysis of future changes in U.S.
transportation fuel consumption,
petroleum imports, and domestic fuel
refining projected to occur under
alternative economic growth and oil
price scenarios reported by the EIA in
its Annual Energy Outlook 2011.570 On
the basis of this analysis, we estimate
that approximately 50 percent of the
reduction in fuel consumption resulting
from adopting improved GHG emission
and fuel efficiency standards is likely to
be reflected in reduced U.S. imports of
refined fuel, while the remaining 50
percent is expected to be reflected in
reduced domestic fuel refining. Of this
latter figure, 90 percent is anticipated to
reduce U.S. imports of crude petroleum
for use as a refinery feedstock, while the
remaining 10 percent is expected to
reduce U.S. domestic production of
crude petroleum. Thus, on balance, each
gallon of fuel saved as a consequence of
the GHG and fuel efficiency standards is
anticipated to reduce total U.S. imports
of petroleum by 0.95 gallon.571 Table
III–74 below compares EPA’s estimates
of the reduction in imports of U.S. crude
oil and petroleum-based products from
this program to projected total U.S.
imports for selected years.
b. Energy Security Implications
which has developed approaches for
evaluating the economic costs and
energy security implications of oil use.
The energy security estimates provided
below are based upon a methodology
developed in a peer-reviewed study
entitled, The Energy Security Benefits of
Reduced Oil Use, 2006–2015, completed
in March 2008. This study is included
as part of the docket for this
proposal.572 573
quantities of gasoline consumption avoided.
Relative to the preliminary gasoline consumption
reductions, the reductions presented in this
proposal are roughly 3% lower in total from 2017
through 2050.
570 Energy Information Administration, Annual
Energy Outlook 2011, Reference Case and other
scenarios, available at https://www.eia.gov/oiaf/aeo/
tablebrowser/ (last accessed October 12, 2011).
571 This figure is calculated as 0.50 + 0.50*0.9 =
0.50 + 0.45 = 0.95.
572 Leiby, Paul N., Estimating the Energy Security
Benefits of Reduced U.S. Oil Imports, Oak Ridge
National Laboratory, ORNL/TM–2007/028, Final
Report, 2008. (Docket EPA–HQ–OAR–2010–0162)
573 The ORNL study The Energy Security Benefits
of Reduced Oil Use, 2006–2015, completed in
March 2008, is an updated version of the approach
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In order to understand the energy
security implications of reducing U.S.
petroleum imports, EPA worked with
Oak Ridge National Laboratory (ORNL),
568 Source: U.S. Department of Energy, Annual
Energy Review 2008, Report No. DOE/EIA–
0384(2008), Tables 5.1 and 5.13c, June 26, 2009.
569 Due to timing constraints, the energy security
premiums ($/gallon) were derived using
preliminary estimates of the gasoline consumption
reductions projected from this proposal. The energy
security benefits totals shown here were calculated
with those $/gallon values along with the final
Continued
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transportation sector accounted for 71
percent of total U.S. petroleum
consumption. This compares to
approximately 37 percent of total U.S.
petroleum supplied by imports and 55
percent of U.S. petroleum consumption
in the transportation sector in 1975.568
Requiring vehicle technology that
reduces GHGs and fuel consumption in
light-duty vehicles is expected to lower
U.S. oil imports. EPA’s estimates of
reductions in fuel consumption
resulting from the proposed standards
are discussed in Section III.H.3 above,
and in EPA’s draft RIA.569
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When conducting its analysis, ORNL
considered the full economic cost of
importing petroleum into the United
States. The economic cost of importing
petroleum into the U.S. is defined to
include two components in addition to
the purchase price of petroleum itself.
These are: (1) the higher costs for oil
imports resulting from the effect of
increasing U.S. import demand on the
world oil price and on the market power
of the Organization of the Petroleum
Exporting Countries (i.e., the ‘‘demand’’
or ‘‘monopsony’’ costs); and (2) the risk
of reductions in U.S. economic output
and disruption of the U.S. economy
caused by sudden disruptions in the
supply of imported petroleum to the
U.S. (i.e., ‘‘macroeconomic disruption/
adjustment costs’’). In its analysis of
energy security benefits from reducing
U.S. petroleum imports, however, the
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used for estimating the energy security benefits of
U.S. oil import reductions developed in an ORNL
1997 Report by Leiby, Paul N., Donald W. Jones, T.
Randall Curlee, and Russell Lee, entitled Oil
Imports: An Assessment of Benefits and Costs.
(Docket EPA–HQ–OAR–2010–0162).
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agencies included only the latter
component (discussed below).
ORNL’s analysis of energy security
benefits from reducing U.S. oil imports
did not include an estimate of potential
reductions in costs for maintaining a
U.S. military presence to help secure
stable oil supply from potentially
vulnerable regions of the world because
attributing military spending to
particular missions or activities is
difficult. Attempts to attribute some
share of U.S. military costs to oil
imports are further complicated by the
need to estimate how those costs vary
with incremental variations in U.S. oil
imports. Several commenters for the
2012–2016 light-duty vehicle proposal
recommended that the agencies attempt
to estimate the avoided U.S. military
costs associated with reductions in U.S.
oil imports. The agencies request
comment on this issue, including
whether there are new studies that
credibly estimate the military cost of
securing stable oil supplies and, if so,
how should these new estimates be
factored into this proposal’s energy
security analysis. See Section 4.2.8 of
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the TSD for a more detailed discussion
of the national security implications of
this proposed rule.
For this action, ORNL estimated
energy security premiums by
incorporating the most recently
available AEO 2011 Reference Case oil
price forecasts and market trends.
Energy security premiums for the years
2020, 2030, 2035, 2040 and 2050 are
presented in Table III–75 as well as a
breakdown of the components of the
energy security premiums for each of
these years.574 The components of the
energy security premium and their
values are discussed in detail in the
Joint TSD Chapter 4.2.8. The oil security
premium rises over the future as a result
of changing factors such as the world oil
price, global supply/demand balances,
U.S. oil imports and consumption, and
U.S. GDP (the size of economy at risk to
oil shocks). The principal factor is
steadily rising oil prices.
574 AEO 2011 forecasts energy market trends and
values only to 2035. The energy security premium
estimates post-2035 were assumed to be the 2035
estimate.
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The literature on energy security for
the last two decades has routinely
combined the monopsony and the
macroeconomic disruption components
when calculating the total value of the
energy security premium. However, in
the context of using a global social cost
of carbon (SCC) value, the question
arises: How should the energy security
premium be determined when a global
perspective is taken? Monopsony
benefits represent avoided payments by
the United States to oil producers in
foreign countries that result from a
decrease in the world oil price as the
U.S. decreases its consumption of
imported oil.
Although there is clearly a benefit to
the U.S. when considered from a
domestic perspective, the decrease in
price due to decreased demand in the
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U.S. also represents a loss to other
countries. Given the redistributive
nature of this monopsony effect from a
global perspective, it is excluded in the
energy security benefits calculations for
this proposal. In contrast, the other
portion of the energy security premium,
the U.S. macroeconomic disruption and
adjustment cost that arises from U.S.
petroleum imports, does not have
offsetting impacts outside of the U.S.,
and, thus, is included in the energy
security benefits estimated for this
proposal. To summarize, EPA has
included only the macroeconomic
disruption portion of the energy security
benefits to estimate the monetary value
of the total energy security benefits of
this program.
For this proposal, using EPA’s fuel
consumption analysis in conjunction
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with ORNL’s energy security premium
estimates,575 576 the agencies developed
estimates of the total energy security
benefits for the years 2017 through 2050
as shown in Table III–76.577
575 AEO 2011 forecasts energy market trends and
values only to 2035. The energy security premium
estimates post-2035 were assumed to be the 2035
estimate.
576 Due to timing constraints, the energy security
premiums ($/gallon) were derived using
preliminary estimates of the gasoline consumption
reductions projected from this proposal. The energy
security benefits totals shown here were calculated
with those $/gallon values along with the final
quantities of gasoline consumption avoided.
Relative to the preliminary gasoline consumption
reductions, the reductions presented in this
proposal are roughly 3% lower in total from 2017
through 2050.
577 Estimated reductions in U.S. imports of
finished petroleum products and crude oil are 95%
of 54.2 million barrels (MMB) in 2020, 609 MMB
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The energy security analysis
conducted for this proposal estimates
that the world price of oil will fall
modestly in response to lower U.S.
demand for refined fuel. One potential
result of this decline in the world price
of oil would be an increase in the
consumption of petroleum products,
particularly outside the U.S. In addition,
other fuels could be displaced from the
increasing use of oil worldwide. For
example, if a decline in the world oil
price causes an increase in oil use in
China, India, or another country’s
industrial sector, this increase in oil
consumption may displace natural gas
usage. Alternatively, the increased oil
use could result in a decrease in coal
used to produce electricity. An increase
in the consumption of petroleum
products, particularly outside the U.S.,
could lead to a modest increase in
emissions of greenhouse gases, criteria
air pollutants, and airborne toxics from
their refining and use. However, lower
usage of, for example, displaced coal
would result in a decrease in
greenhouse gas emissions. Therefore,
any assessment of the impacts on GHG
emissions from a potential increase in
world oil demand would need to take
into account the impacts on all portions
of the global energy sector. The
agencies’ analyses have not attempted to
estimate these effects.
in 2030, 962 MMB in 2040, and 1,140 MMB in
2050.
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Since EPA anticipates that more
electric vehicles (EVs) and plug-in
hybrid electric vehicles (PHEVs) will
penetrate the U.S. automobile market
over time as a result of this proposal, the
Agency is considering analyzing the
energy security implications of these
vehicles and the fuels that they
consume. These vehicles run on
electricity either in whole (EVs), or in
part (PHEVs), which displaces
conventional transportation fuel such as
gasoline and diesel. EPA does not have
sufficient information for this proposal
to conduct an analysis of the energy
security implications of increased use of
EVs/PHEVs, but is considering how to
conduct this type of analysis in the
future. The Agency recognizes that the
fleet penetration of EV/PHEV’s will be
relatively small in the time period of
these standards (fewer than 3% of new
vehicles in 2025), but views establishing
a framework for examining the energy
security implications of these vehicles
as important for longer-term analysis.
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Key questions that arise with
increased use of electricity in vehicles
in the U.S. include whether there is the
potential for disruptions in electricity
supply in general, or more specifically,
from increased electrification of the U.S.
vehicle fleet. Also, if there is the
potential for supply disruptions in
electricity markets, how likely would
the disruptions be associated with
disruptions in the supply of oil? In
addition, what is the overall expected
impact, if any, of additional EV/PHEV
use on the stability and flexibility of
fuel and electricity markets? Finally,
such analysis may also need to consider
the source of electricity used to power
EVs/PHEVs. EPA solicits comments on
how to best conduct this type of
analysis, including any studies or
research that have been published on
these issues.
8. Additional Impacts
There are other impacts associated
with the CO2 emissions standards and
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associated reduced fuel consumption
that vary with miles driven. Lower fuel
consumption would, presumably, result
in fewer trips to the filling station to
refuel and, thus, time saved. The
rebound effect, discussed in detail in
Section III.H.4.c, produces additional
benefits to vehicle owners in the form
of consumer surplus from the increase
in vehicle-miles driven, but may also
increase the societal costs associated
with traffic congestion, motor vehicle
crashes, and noise. These effects are
likely to be relatively small in
comparison to the value of fuel saved as
a result of the standards, but they are
nevertheless important to include. Table
III–77 summarizes the other economic
impacts. Please refer to Preamble
Section II.E and the Joint TSD that
accompanies this rule for more
information about these impacts and
how EPA and NHTSA use them in their
analyses.
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9. Summary of Costs and Benefits
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In this section, the agencies present a
summary of costs, benefits, and net
benefits of the proposed program. Table
III–78 shows the estimated annual
monetized costs of the proposed
program for the indicated calendar
years. The table also shows the net
present values of those costs for the
calendar years 2012–2050 using both 3
percent and 7 percent discount rates.578
Table III–79 shows the undiscounted
annual monetized fuel savings of the
proposed program. The table also shows
the net present values of those fuel
savings for the same calendar years
using both 3 percent and 7 percent
discount rates. In this table, the
aggregate value of fuel savings is
578 For the estimation of the stream of costs and
benefits, we assume that after implementation of
calculated using pre-tax fuel prices
since savings in fuel taxes do not
represent a reduction in the value of
economic resources utilized in
producing and consuming fuel. Note
that the fuel savings shown here result
from reductions in fleet-wide fuel use.
Thus, fuel savings grow over time as an
increasing fraction of the fleet meets the
proposed standards.
the proposed MY 2017–2025 standards, the 2025
standards apply to each year thereafter.
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Table III–80 presents estimated
annual monetized benefits for the
indicated calendar years. The table also
shows the net present values of those
benefits for the calendar years 2012–
2050 using both 3 percent and 7 percent
discount rates. The table shows the
benefits of reduced CO2 emissions—and
consequently the annual quantified
benefits (i.e., total benefits)—for each of
the four social cost of carbon (SCC)
values estimated by the interagency
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working group. As discussed in the RIA
Chapter 7.2, there are some limitations
to the SCC analysis, including the
incomplete way in which the integrated
assessment models capture catastrophic
and non-catastrophic impacts, their
incomplete treatment of adaptation and
technological change, uncertainty in the
extrapolation of damages to high
temperatures, and assumptions
regarding risk aversion.
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In addition, these monetized GHG
benefits exclude the value of net
reductions in non-CO2 GHG emissions
(CH4, N2O, HFC) expected under this
action. Although EPA has not
monetized the benefits of reductions in
non-CO2 GHGs, the value of these
reductions should not be interpreted as
zero. Rather, the net reductions in nonCO2 GHGs will contribute to this
program’s climate benefits, as explained
in Section III.H.5.
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Table III–81 presents estimated
annual net benefits for the indicated
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calendar years. The table also shows the
net present values of those net benefits
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for the calendar years 2012–2050 using
both 3 percent and 7 percent discount
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for each of the four SCC values
considered by EPA.
EPA also conducted a separate
analysis of the total benefits over the
model year lifetimes of the 2017 through
2025 model year vehicles. In contrast to
the calendar year analysis presented
above in Table III–78 through Table III–
81, the model year lifetime analysis
below shows the impacts of the
proposed program on vehicles produced
during each of the model years 2017
through 2025 over the course of their
expected lifetimes. The net societal
benefits over the full lifetimes of
vehicles produced during each of the
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nine model years from 2017 through
2025 are shown in Table III–82 and
Table III–83 at both 3 percent and 7
percent discount rates, respectively.
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rates. The table includes the benefits of
reduced CO2 emissions (and
consequently the annual net benefits)
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10. U.S. Vehicle Sales Impacts and
Payback Period
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a. Vehicle Sales Impacts and Payback
Period
Predicting the effects of this rule on
vehicles entails comparing two effects.
On the one hand, the vehicles designed
to meet the proposed standards will
become more expensive, which would,
by itself, be expected to discourage
sales. On the other hand, the vehicles
will have improved fuel economy and
thus lower operating costs, producing
lower total costs over the life of
vehicles, which makes them more
attractive to consumers. Which of these
effects dominates for potential vehicle
buyers when they are considering a
purchase will determine the effect on
sales. However, assessing the net effect
of these two competing effects is
complex and uncertain, as it rests on
how consumers value fuel savings at the
time of purchase and the extent to
which manufacturers and dealers reflect
them in the purchase price. The
empirical literature does not provide
clear evidence on whether consumers
fully consider the value of fuel savings
at the time of purchase. It also generally
does not speak to the efficiency of
manufacturing and dealer pricing
decisions. Thus, for the proposal we do
not provide quantified estimates of
potential sales impacts. Rather, we
solicit comment on the issues raised
here and on methods for estimating the
effect of this rule on vehicle sales.
For years, consumers have been
gaining experience with the benefits
that accrue to them from owning and
operating vehicles with greater fuel
efficiency. Many households already
own vehicles with a fairly wide range of
fuel economy, and thus already have an
opportunity to learn about the value of
fuel economy on their own. Among twovehicle households, for example, the
least fuel-efficient vehicle averages just
over 22 mpg (EPA test rating), and the
range between this and the fuel
economy of their other vehicle averages
nearly 7 mpg. Among households that
own 3 or more vehicles, the typical
range of the fuel economy they offer is
much wider. Consumer demand may
have shifted towards such vehicles, not
only because of higher fuel prices but
also if many consumers are learning
about the value of purchases based not
only on initial costs but also on the total
cost of owning and operating a vehicle
over its lifetime. This type of learning
should continue before and during the
model years affected by this rule,
particularly given the new fuel economy
labels that clarify potential economic
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effects and should therefore reinforce
that learning.
Today’s proposed rule, combined
with the new and easier-to-understand
fuel economy label required to be on all
new vehicles beginning in 2012, may
increase sales above baseline levels by
hastening this very type of consumer
learning. As more consumers
experience, as a result of the rule, the
savings in time and expense from
owning more fuel efficient vehicles,
demand may shift yet further in the
direction of the vehicles mandated
under the rule. This social learning can
take place both within and across
households, as consumers learn from
one another.
First and most directly, the time and
fuel savings associated with operating
more fuel efficient vehicles may be more
salient to individuals who own them,
which might cause their subsequent
purchase decisions to shift closer to
minimizing the total cost of ownership
over the lifetime of the vehicle.
Second, this appreciation may spread
across households through word of
mouth and other forms of
communications.
Third, as more motorists experience
the time and fuel savings associated
with greater fuel efficiency, the price of
used cars will better reflect such
efficiency, further reducing the cost of
owning more efficient vehicles for the
buyers of new vehicles (since the resale
price will increase).
If these induced learning effects are
strong, the rule could potentially
increase total vehicle sales over time. It
is not possible to quantify these learning
effects years in advance and that effect
may be speeded or slowed by other
factors that enter into a consumer’s
valuation of fuel efficiency in selecting
vehicles.
The possibility that the rule will (after
a lag for consumer learning) increase
sales need not rest on the assumption
that automobile manufacturers are
failing to pursue profitable
opportunities to supply the vehicles that
consumers demand. In the absence of
the rule, no individual automobile
manufacturer would find it profitable to
move toward the more efficient vehicles
mandated under the rule. In particular,
no individual company can fully
internalize the future boost to demand
resulting from the rule. If one company
were to make more efficient vehicles,
counting on consumer learning to
enhance demand in the future, that
company would capture only a fraction
of the extra sales so generated, because
the learning at issue is not specific to
any one company’s fleet. Many of the
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extra sales would accrue to that
company’s competitors.
In other words, consumer learning
about the benefits of fuel efficient
vehicles involves positive externalities
(spillovers) from one company to the
others.579 These positive externalities
may lead to benefits for manufacturers
as a whole. We emphasize that this
discussion has been tentative and
qualified. To be sure, social learning of
related kinds has been identified in a
number of contexts.580 Comments are
invited on the discussion offered here,
with particular reference to any relevant
empirical findings.
In previous rulemakings, EPA and
NHTSA conducted vehicle sales
analyses by comparing the up-front
costs of the vehicles with the present
value of five years’ worth of fuel
savings. We assumed that the costs for
the fuel-saving technologies would be
passed along fully to vehicle buyers in
the vehicle prices. The up-front vehicle
costs were adjusted to take into account
several factors that would affect
consumer costs: The increased sales tax
that consumers would pay, the increase
in insurance premiums, the increase in
loan payments that buyers would face,
and a higher resale value, with all of
these factors due to the higher up-front
cost of the vehicle. Those calculations
resulted in an adjusted increase in costs
to consumers. We then assumed that
consumers considered the present value
of five years of fuel savings in their
vehicle purchase, which is consistent
with the length of a typical new lightduty vehicle loan, and is similar to the
average time that a new vehicle
purchaser holds onto the vehicle.581 The
present value of fuel savings was
subtracted from technology costs to get
a net effect on vehicle cost of
ownership. We then used a short-run
demand elasticity of ¥1 to convert a
change in price into a change in
579 Industrywide positive spillovers of this type
are hardly unique to this situation. In many
industries, companies form trade associations to
promote industry-wide public goods. For example,
merchants in a given locale may band together to
promote tourism in that locale. Antitrust law
recognizes that this type of coordination can
increase output.
580 See Hunt Allcott, Social Norms and Energy
Conservation, Journal of Public Economics
(forthcoming 2011), available at https://web.mit.edu/
allcott/www/Allcott%202011%20JPubEc%20-%20
Social%20Norms%20and%20Energy%20
Conservation.pdf; Christophe Chamley, Rational
Herds: Economic Models of Social Learning
(Cambridge, 2003).
581 In this proposal, the 5-year payback
assumption corresponds to an assumption that
vehicle buyers take into account between 30 and 50
percent of the present value of lifetime vehicle fuel
savings (with the variation depending on discount
rate, model year, and car vs. truck).
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cost of a new vehicle. For example, a
new 2025 MY vehicle is estimated to
cost $1,946 more (on average, and
relative to the reference case vehicle)
due to the addition of new GHG
reducing/fuel economy improving
technology (see Section III.D.6 for
details on this cost estimate). This new
technology will result in lower fuel
consumption and, therefore, savings in
fuel expenditures (see Section III.H.10
for details on fuel savings). But how
many months or years would pass
before the fuel savings exceed the
upfront costs?
The payback analysis uses annual
miles driven (vehicle miles traveled, or
VMT) and survival rates consistent with
the emission and benefits analyses
presented in Chapter 4 of the Joint TSD.
The control case includes fuel savings
associated with A/C controls. Not
included here are the likely A/C-related
maintenance savings as discussed in
Chapter 2 of EPA’s RIA. Further, this
analysis does not include other private
impacts, such as reduced refueling
events, or other societal impacts, such
as the potential rebound miles driven or
the value of driving those rebound
miles, or noise, congestion and
accidents, since the focus is meant to be
on those factors consumers think about
most while in the showroom
considering a new car purchase. Car/
truck fleet weighting is handled as
described in Chapter 1 of the Joint TSD.
The costs take into account the effects
of the increased costs on sales tax,
insurance, resale value, and finance
costs. More detail on this analysis can
be found in Chapter 5 of EPA’s draft
RIA.
Table III–84 presents results for MY
2021 because it is the last year before
the mid-term review impacts, if any,
will take place, and MY 2025 because it
is the last year of the program. The
payback period in 2021 is shorter than
that in 2025, because the technologies
required to meet the proposed MY 2021
standards are more cost-effective than
those for MY 2025. In all cases, the
payback periods are less than 4 years.
Most people purchase a new vehicle
using credit rather than paying cash up
front. A common car loan today is a five
year, 60 month loan. As of July, 2011,
the national average interest rate for a 5
year new car loan was 5.52 percent.583
If the increased vehicle cost is spread
out over 5 years at 5.52 percent, the
analysis for a MY 2025 vehicle would
582 For a durable good such as an auto, the
elasticity may be smaller in the long run: Though
people may be able to change the timing of their
purchase when price changes in the short run, they
must eventually make the investment. We request
comment on whether or when a long-run elasticity
should be used for a rule that phases in over time,
as well as how to find good estimates for the longrun elasticity.
583 ‘‘National Auto Loan Rates for July 21, 2011,’’
https://www.bankrate.com/finance/auto/nationalauto-loan-rates-for-july-21–2011.aspx, accessed 7/
26/11 (Docket EPA–HQ–OAR–2010–0799).
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quantity demanded of vehicles.582 An
elasticity of ¥1 means that a 1%
increase in price leads to a 1%
reduction in quantity sold. In the
vehicle sales analyses, if five years of
fuel savings outweighed the adjusted
technology costs, then vehicle sales
were predicted to increase; if the fuel
savings were smaller than the adjusted
technology costs, sales would decrease,
compared to a world without the
standards.
We do not here present a vehicle sales
analysis using this approach. This rule
takes effect for MY 2017–2025. In the
intervening years, it is possible that the
assumptions underlying this analysis, as
well as market conditions, might
change. Instead, we present a payback
period analysis to estimate the number
of years of fuel savings needed to
recover the up-front costs of the new
technologies. In other words, the
payback period identifies the break-even
point for new vehicle buyers.
A payback period analysis examines
how long it would take for the expected
fuel savings to outweigh the increased
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payments. This amounts to a savings on
the order of $12 per month throughout
the duration of the 5 year loan. Note that
in year six when the car loan is paid off,
the net savings equal the fuel savings
less the increased insurance premiums
(as would be the case for the remaining
years of ownership).
the vehicle owner who retains the
vehicle for its entire life and drives the
vehicle each year at the rate equal to the
national projected average. The results
are shown in Table III–86. In either case,
the present value of the lifetime net
savings is greater than $4,200 at a 3%
discount rate, or $2,900 at a 7%
discount rate.
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somewhat due to reduced VMT as the
average vehicle ages. Results are similar
using a 7% discount rate. This means
that for every month that the average
owner is making a payment for the
financing of the average new vehicle
their monthly fuel savings would be
greater than the increase in the loan
The lifetime fuel savings and net
savings can also be calculated for those
who purchase the vehicle using cash
and for those who purchase the vehicle
with credit. This calculation applies to
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look like that shown in Table III–85. As
can be seen in this table, the fuel
savings immediately outweigh the
increased payments on the car loan,
amounting to $145 in discounted net
savings (3% discount rate) in the first
year and similar savings for the next
four years although savings decline
Note that throughout this consumer
payback discussion, the analysis reflects
the average number of vehicle miles
traveled per year. Drivers who drive
more miles than the average would
incur fuel-related savings more quickly
and, therefore, the payback would come
sooner. Drivers who drive fewer miles
than the average would incur fuel
related savings more slowly and,
therefore, the payback would come
later.
Another method to estimate effects on
vehicle sales is to model the market for
vehicles. Consumer vehicle choice
models estimate what vehicles
consumers buy based on vehicle and
consumer characteristics. In principle,
such models could provide a means of
understanding both the role of fuel
economy in consumers’ purchase
decisions and the effects of this rule on
the benefits that consumers will get
from vehicles. Helfand and Wolverton
discuss the wide variation in the
structure and results of these models.584
Models or model results have not
frequently been systematically
compared to each other. When they
have, the results show large variation
over, for instance, the value that
584 Helfand,
Gloria, and Ann Wolverton.
‘‘Evaluating the Consumer Response to Fuel
Economy: A Review of the Literature.’’
International Review of Environmental and
Resource Economics 5 (2011): 103–146 (Docket
EPA–HQ–OAR–2010–0799).
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consumers place on additional fuel
economy. As discussed in Section
III.H.1 and in Chapter 8.1.2.8 of the
DRIA, EPA is exploring development of
a consumer vehicle choice model, but
the model is not sufficiently developed
for use in this NPRM.
The effect of this rule on the use and
scrappage of older vehicles will be
related to its effects on new vehicle
prices, the fuel efficiency of new vehicle
models, the fuel efficiency of used
vehicles, and the total sales of new
vehicles. If the value of fuel savings
resulting from improved fuel efficiency
to the typical potential buyer of a new
vehicle outweighs the average increase
in new models’ prices, sales of new
vehicles could rise, while scrappage
rates of used vehicles will increase
slightly. This will cause the turnover of
the vehicle fleet (i.e., the retirement of
used vehicles and their replacement by
new models) to accelerate slightly, thus
accentuating the anticipated effect of the
rule on fleet-wide fuel consumption and
CO2 emissions. However, if potential
buyers value future fuel savings
resulting from the increased fuel
efficiency of new models at less than the
increase in their average selling price,
sales of new vehicles will decline, as
will the rate at which used vehicles are
retired from service. This effect will
slow the replacement of used vehicles
by new models, and thus partly reduce
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the anticipated effects of this rule on
fuel use and emissions.
Because of the uncertainty regarding
how the value of projected fuel savings
from this rule to potential buyers will
compare to their estimates of increases
in new vehicle prices, we have not
attempted to estimate explicitly the
effects of the rule on scrappage of older
vehicles and the turnover of the vehicle
fleet.
Chapter 5 of EPA’s DRIA provides
more information on the payback period
analysis, and Chapter 8 of EPA’s DRIA
has further discussion of methods for
examining the effects of this rule on
vehicle sales. We welcome comments
on all aspects of this discussion,
including the full range of
considerations and assumptions which
influence market behavior and
outcomes and associated uncertainties.
We also welcome comments on all the
parameters described here, as well as
other quantitative estimates of the
effects of this proposal on sales,
accompanied by detailed descriptions of
the methodologies used.
11. Employment Impacts
a. Introduction
Although analysis of employment
impacts is not part of a cost-benefit
analysis (except to the extent that labor
costs contribute to costs), employment
impacts of federal rules are of particular
concern in the current economic climate
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of sizeable unemployment. When
President Obama requested that the
agencies develop this program, he
sought a program that would
‘‘strengthen the [auto] industry and
enhance job creation in the United
States.’’ 585 The recently issued
Executive Order 13563, ‘‘Improving
Regulation and Regulatory Review’’
(January 18, 2011), states, ‘‘Our
regulatory system must protect public
health, welfare, safety, and our
environment while promoting economic
growth, innovation, competitiveness,
and job creation’’ (emphasis added).
EPA is accordingly providing partial
estimates of the effects of this proposal
on domestic employment in the auto
manufacturing and parts sectors, while
qualitatively discussing how it may
affect employment in other sectors more
generally.
This proposal is expected to affect
employment in the United States
through the regulated sector—the auto
manufacturing industry—and through
several related sectors, specifically,
industries that supply the auto
manufacturing industry (e.g., vehicle
parts), auto dealers, the fuel refining and
supply sectors, and the general retail
sector. According to the U.S. Bureau of
Labor Statistics, in 2010, about 677,000
people in the U.S. were employed in the
Motor Vehicle and Parts Manufacturing
Sector (NAICS 3361, 3362, and 3363).
About 129,000 people in the U.S. were
employed specifically in the
Automobile and Light Truck
Manufacturing Sector (NAICS 33611),
the directly regulated sector, since it
encompasses the auto manufacturers
that are responsible for complying with
the proposed standards.586 The
employment effects of this rule are
expected to expand beyond the
regulated sector. Though some of the
parts used to achieve the proposed
standards are likely to be built by auto
manufacturers themselves, the auto
parts manufacturing sector also plays a
significant role in providing those parts,
and will also be affected by changes in
vehicle sales. Changes in light duty
vehicle sales, discussed in Section
III.H.10, could affect employment for
auto dealers. As discussed in Chapter
5.4 of the DRIA, this proposal is
expected to reduce the amount of fuel
these vehicles use, and thus affect the
585 President Barack Obama. ‘‘Presidential
Memorandum Regarding Fuel Efficiency Standards.
The White House, Office of the Press Secretary, May
21, 2010. https://www.whitehouse.gov/the-pressoffice/presidential-memorandum-regarding-fuelefficiency-standards.
586 U.S. Bureau of Labor Statistics, Quarterly
Census of Employment and Wages, as accessed on
August 9, 2011.
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petroleum refinery and supply
industries. Finally, since the net
reduction in cost associated with this
proposal is expected to lead to lower
household expenditures on fuel net of
vehicle costs, consumers then will have
additional discretionary income that can
be spent on other goods and services.
When the economy is at full
employment, an environmental
regulation is unlikely to have much
impact on net overall U.S. employment;
instead, labor would primarily be
shifted from one sector to another.
These shifts in employment impose an
opportunity cost on society,
approximated by the wages of the
employees, as regulation diverts
workers from other activities in the
economy. In this situation, any effects
on net employment are likely to be
transitory as workers change jobs (e.g.,
some workers may need to be retrained
or require time to search for new jobs,
while shortages in some sectors or
regions could bid up wages to attract
workers).
On the other hand, if a regulation
comes into effect during a period of high
unemployment, a change in labor
demand due to regulation may affect net
overall U.S. employment because the
labor market is not in equilibrium. In
such a period, both positive and
negative employment effects are
possible.587 Schmalansee and Stavins
point out that net positive employment
effects are possible in the near term
when the economy is at less than full
employment due to the potential hiring
of idle labor resources by the regulated
sector to meet new requirements (e.g., to
install new equipment) and new
economic activity in sectors related to
the regulated sector.588 In the longer
run, the net effect on employment is
more difficult to predict and will
depend on the way in which the related
industries respond to the regulatory
requirements. As Schmalansee and
Stavins note, it is possible that the
magnitude of the effect on employment
could vary over time, region, and sector,
and positive effects on employment in
some regions or sectors could be offset
by negative effects in other regions or
sectors. For this reason, they urge
caution in reporting partial employment
effects since it can ‘‘paint an inaccurate
picture of net employment impacts if
587 Masur and Posner, https://papers.ssrn.com/
sol3/papers.cfm?abstract_id=1920441.
588 Schmalensee, Richard, and Robert N. Stavins.
‘‘A Guide to Economic and Policy Analysis of EPA’s
Transport Rule.’’ White paper commissioned by
Excelon Corporation, March 2011 (Docket EPA–
HQ–OAR–2010–0799).
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not placed in the broader economic
context.’’
It is assumed that the official
unemployment rate will have declined
to 5.3 percent by the time this rule takes
effect and so the effect of the regulation
on labor will be to shift workers from
one sector to another.589 Those shifts in
employment impose an opportunity cost
on society, approximated by the wages
of the employees, as regulation diverts
workers from other activities in the
economy. In this situation, any effects
on net employment are likely to be
transitory as workers change jobs (e.g.,
some workers may need to be retrained
or require time to search for new jobs,
while shortages in some sectors or
regions could bid up wages to attract
workers). It is also possible that the state
of the economy will be such that
positive or negative employment effects
will occur.
A number of different approaches
have been used in published literature
to conduct employment analysis. All
potential methods of estimating
employment impacts of a rule have
advantages and limitations. We seek
comment on the analytical approach
presented here, other appropriate
methods for analyzing employment
impacts for this rulemaking, and the
inputs used here for employment
analysis.
b. Approaches to Quantitative
Employment Analysis
Measuring the employment impacts of
a policy depend on a number of inputs
and assumptions. For instance, as
discussed, assumptions about the
overall state of unemployment in the
economy play a major role in measured
job impacts. The inputs to the models
commonly are the changes in quantities
or expenditures in the affected sectors;
model results may vary in different
studies depending on the assumptions
about the levels of those inputs, and
which sectors receive those changes.
Which sectors are included in the study
can also affect the results. For instance,
a study of this program that looks only
at employment impacts in the refinery
sector may find negative effects, because
consumers will purchase less gasoline;
a study that looks only at the auto parts
sector, on the other hand, may find
positive impacts, because the program
will require redesigned or additional
parts for vehicles. In both instances,
these would only be partial perspectives
589 Office of Management and Budget, ‘‘Fiscal
Year 2012 Mid-Session Review: Budget of the U.S.
Government.’’ https://www.whitehouse.gov/sites/
default/files/omb/budget/fy2012/assets/12msr.pdf,
p. 10.
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i. Conceptual Framework for
Employment Impacts in the Regulated
Sector
One study by Morgenstern, Pizer, and
Shih 590 provides a retrospective look at
the impacts of regulation in
employment in the regulated sectors by
estimating the effects on employment of
spending on pollution abatement for
four highly polluting/regulated U.S.
industries (pulp and paper, plastics,
steel, and petroleum refining) using data
for six years between 1979 and 1991.
The paper provides a theoretical
framework that can be useful for
examining the impacts of a regulatory
change on the regulated sector in the
medium to longer term. In particular, it
identifies three separate ways that
employment levels may change in the
regulated industry in response to a new
(or more stringent) regulation.
• Demand effect: higher production
costs due to the regulation will lead to
higher market prices; higher prices in
turn reduce demand for the good,
reducing the demand for labor to make
that good. In the authors’ words, the
‘‘extent of this effect depends on the
cost increase passed on to consumers as
well as the demand elasticity of
industry output.’’
• Cost effect: as costs go up, plants
add more capital and labor (holding
other factors constant), with potentially
positive effects on employment. In the
authors’ words, as ‘‘production costs
rise, more inputs, including labor, are
used to produce the same amount of
output.’’
• Factor-shift effect: post-regulation
production technologies may be more or
less labor-intensive (i.e., more/less labor
is required per dollar of output). In the
authors’ words, ‘‘environmental
activities may be more labor intensive
than conventional production,’’
meaning that ‘‘the amount of labor per
dollar of output will rise,’’ though it is
also possible that ‘‘cleaner operations
could involve automation and less
employment, for example.’’
According to the authors, the ‘‘demand
effect’’ is expected to have a negative
effect on employment,591 the ‘‘cost
590 Morgenstern, Richard D., William A. Pizer,
and Jhih-Shyang Shih. ‘‘Jobs Versus the
Environment: An Industry-Level Perspective.’’
Journal of Environmental Economics and
Management 43 (2002): 412–436 (Docket EPA–HQ–
OAR–2010–0799).
591 As will be discussed below, the demand effect
in this proposal is potentially an exception to this
rule. While the vehicles become more expensive,
they also produce reduced fuel expenditures; the
reduced fuel costs provide a countervailing impact
on vehicle sales. As discussed in Preamble Section
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effect’’ to have a positive effect on
employment, and the ‘‘factor-shift
effect’’ to have an ambiguous effect on
employment. Without more information
with respect to the magnitude of these
competing effects, it is not possible to
predict the total effect environmental
regulation will have on employment
levels in a regulated sector.
The authors conclude that increased
abatement expenditures generally have
not caused a significant change in
employment in those sectors. More
specifically, their results show that, on
average across the industries studied,
each additional $1 million spent on
pollution abatement results in a
(statistically insignificant) net increase
of 1.5 jobs.
This approach to employment
analysis has the advantage of carefully
controlling for many possibly
confounding effects in order to separate
the effect of changes in regulatory costs
on employment. It was, however,
conducted for only four sectors. It could
also be very difficult to update the study
for other sectors, because one of the
databases on which it relies, the
Pollution Abatement Cost and
Expenditure survey, has been conducted
infrequently since 1994, with the last
survey conducted in 2005. The
empirical estimates provided by
Morgenstern et al. are not relevant to the
case of fuel economy standards, which
are very different from the pollution
control standards on industrial facilities
that were considered in that study. In
addition, it does not examine the effects
of regulation on employment in sectors
related to but outside of the regulated
sector. Nevertheless, the theory that
Morgenstern et al. developed continues
to be useful in this context.
The following discussion of
additional methodologies draws from
Berck and Hoffmann’s review of
employment models.592
ii. Computable General Equilibrium
(CGE) Models
Computable general equilibrium
(CGE) models are often used to assess
the impacts of policy. These models
include a stylized representation of
supply and demand curves for all major
markets in the economy. The labor
market is commonly included. CGE
III.H.1, this possibility that vehicles may become
more attractive to consumers after the program
poses a conundrum: Why have interactions between
vehicle buyers and producers not provided these
benefits without government intervention?
592 Berck, Peter, and Sandra Hoffmann.
‘‘Assessing the Employment Impacts of
Environmental and Natural Resource Policy.’’
Environmental and Resource Economics 22 (2002):
133–156 (Docket EPA–HQ–OAR–2010–0799)
(Docket EPA–HQ–OAR–2010–0799).
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models are very useful for looking at
interaction effects of markets: ‘‘They
allow for substitution among inputs in
production and goods in consumption.’’
Thus, if one market experiences a
change, such as a new regulation, then
the effects can be observed in all other
markets. As a result, they can measure
the employment changes in the
economy due to a regulation. Because
they usually assume equilibrium in all
markets, though, they typically lack
involuntary unemployment. If the total
amount of labor changes, it is due to
people voluntarily entering or leaving
the workforce. As a result, these models
may not be appropriate for measuring
effects of a policy on unemployment,
because of the assumption that there is
no involuntary unemployment. In
addition, because of the assumptions of
equilibrium in all markets and forwardlooking consumers and firms, they are
designed for examining the long-run
effects of a policy but may offer little
insight into its short-run effects.
iii. Input-Output (IO) Models
Input-output models represent the
economy through a matrix of
coefficients that describe the
connections between supplying and
consuming sectors. In that sense, like
CGE models, they describe the
interconnections of the economy. These
interconnections look at how changes in
one sector ripple through the rest of the
economy. For instance, a requirement
for additional technology for vehicles
requires additional steel, which requires
more workers in both the auto and steel
sectors; the additional workers in those
sectors then have more money to spend,
which leads to more employment in
retail sectors. These are known as
‘‘multiplier’’ effects, because an initial
impact in one sector gets multiplied
through the economy. Unlike CGE
models, input-output models have
fixed, linear relationships among the
sectors (e.g., substitution among inputs
or goods is not allowed), and quantity
supplied need not equal quantity
demanded. In particular, these models
do not allow for price changes—an
increase in the demand for labor or
capital does not result in a change in its
price to help reallocate it to its best use.
As a result, these models cannot capture
opportunity costs from using resources
in one area of the economy over
another. The multipliers take an initial
impact and can increase it substantially.
IO models are commonly used for
regional analysis of projects. In a
regional analysis, the markets are
commonly considered small enough
that wages and prices are determined
outside the region, and any excess
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supply or demand is due to exports and
imports (or, in the case of labor,
emigration or immigration). For
national-level employment analysis, the
use of input-output models requires the
assumption that workers flow into or
out of the labor market perfectly freely.
Wages do not adjust; instead, people
join into or depart from the labor pool
as production requires them. For other
markets as well, there is no substitution
of less expensive inputs for more
expensive ones. As a result, IO models
provide an upper bound on employment
impacts. As Berck and Hoffmann note,
‘‘For the same reason, they can be
thought of as simulating very short-run
adjustment,’’ in contrast to the CGE’s
implicit assumption of long-run
adjustment. Changes in production
processes, introducing new
technologies, or learning over time due
to new regulatory requirements are also
generally not captured by IO models, as
they are calibrated to already
established relationships between
inputs and outputs.
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iv. Hybrid Models
As Berck and Hoffmann note, inputoutput models and CGE models
‘‘represent a continuum of closely
related models.’’ Though not separately
discussed by Berck and Hoffmann, some
hybrid models combine some of the
features of CGE models (e.g., prices that
can change) with input-output
relationships. For instance, a hybrid
model may include the ability to
examine disequilibrium phenomena,
such as labor being at less than full
employment. Hybrid models depend on
assumptions about how adjustments in
the economy occur. CGE models
characterize equilibria but say little
about the pathway between them, while
IO models assume that adjustments are
largely constrained by previously
defined relationships; the effectiveness
of hybrid models depends on their
success in overcoming the limitations of
each of these approaches. Hybrid
models could potentially be used to
model labor market impacts of various
vehicle policy options, although a
number of judgments need to be made
about the appropriate assumptions
underlying the model as well as the
empirical basis for the modeling results.
v. Single Sectors
It is possible to conduct a bottom-up
analysis of the partial effect of
regulation on employment in a single
sector by estimating the change in
output or expenditures in a sector and
multiplying it by an estimate of the
number of workers per unit of output or
expenditures, under the assumption that
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labor demand is proportional to output
or expenditures. As Berck and
Hoffmann note, though, ‘‘Compliance
with regulations may create additional
jobs that are not accounted for.’’ While
such an analysis can approximate the
effects in that one sector in a simple
way, it also may miss important
connections to related sectors.
being reviewed. We seek comment on
the analytical approaches presented
here, the inputs used below for
employment analysis, and other
appropriate methods for analyzing
employment impacts for this
rulemaking.
vi. Ex-Post Econometric Studies
A number of ex-post econometric
analyses examine the net effect of
regulation on employment in regulated
sectors. Morgenstern, Pizer, and Shih
(2002), discussed above, and Berman
and Bui (2001) are two notable
examples that rely on highly
disaggregated establishment-level time
series data to estimate longer-run
employment effects.593 While often a
sophisticated treatment of the issues
analyzed, these studies commonly
analyze specific scenarios or sectors in
the past; care needs to be taken in
extrapolating their results to other
scenarios and to the future. For
instance, neither of these two studies
examines the auto industry and are
therefore of limited applicability in this
context.
As mentioned above, this program is
expected to affect employment in the
regulated sector (auto manufacturing)
and other sectors directly affected by the
proposal: auto parts suppliers, auto
dealers, the fuel supply market (which
will face reduced petroleum production
due to reduced fuel demand but which
may see additional demand for
electricity or other fuels), and
consumers (who will face higher vehicle
costs and lower fuel expenditures). In
addition, as the discussion above
suggests, each of these sectors could
potentially have ripple effects in the rest
of the economy. These ripple effects
depend much more heavily on the state
of the macroeconomy than do the direct
effects. At the national level,
employment may increase in one
industry or region and decrease in
another, with the net effect being
smaller than either individual-sector
effect. EPA does not attempt to quantify
the net effects of the regulation on
overall national employment.
The discussion that follows provides
a partial, bottom-up quantitative
estimate of the effects of this proposal
on the regulated sector (the auto
industry; for reasons discussed below,
we include some quantitative
assessment of effects on suppliers to the
industry, although they are not
regulated directly). It also includes
qualitative discussion of the effects of
the proposal on other sectors. Focusing
quantification of employment impacts
on the regulated sector has some
advantages over quantifying all impacts.
First, the analysis relies on data
generated as part of the rulemaking
process, which focuses on the regulated
sector; as a result, what is presented
here is based on internally consistent
assumptions and estimates made in this
proposal. Secondly, as discussed above,
net effects on employment in the
economy as a whole depend heavily on
the overall state of the economy when
this rule has its effects. Focusing on the
regulated sector provides insight into
employment effects in that sector
without having to make assumptions
about the state of the economy when
this rule has its impacts. We include a
qualitative discussion of employment
effects other sectors to provide a broader
perspective on the impacts of this rule.
vii. Summary
All methods of estimating
employment impacts of a regulation
have advantages and limitations. CGE
models may be most appropriate for
long-term impacts, but the usual
assumption of equilibrium in the
employment market means that it is not
useful for looking at changes in overall
employment: overall levels are likely to
be premised on full employment. IO
models, on the other hand, may be most
appropriate for small-scale, short-term
effects, because they assume fixed
relationships across sectors and do not
require market equilibria. Hybrid
models, which combine some features
of CGEs with IO models, depend upon
key assumptions and economic
relationships that are built into them.
Single-sector models are simple and
straightforward, but they are often based
on the assumptions that labor demand
is proportional to output, and that other
sectors are not affected. Finally,
econometric models have been
developed to evaluate the longer-run net
effects of regulation on sector
employment, though these are ex-post
analyses commonly of specific sectors
or situations, and the results may not
have direct bearing for the regulation
593 Berman, Eli, and Linda T. Bui, (2001)
‘‘Environmental Regulation and Labor Demand:
Evidence from the South Coast Air Basin,’’ Journal
of Public Economics, 79, 265—295 (Docket EPA–
HQ–OAR–2010–0799).
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c. Employment analysis of this proposal
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As noted above, in a full-employment
economy, any changes in employment
will result from people changing jobs or
voluntarily entering or exiting the
workforce. In a full-employment
economy, employment impacts of this
proposal will change employment in
specific sectors, but it will have small,
if any, effect on aggregate employment.
This rule would take effect in 2017
through 2025; by then, the current high
unemployment may be moderated or
ended. For that reason, this analysis
does not include multiplier effects, but
instead focuses on employment impacts
in the most directly affected industries.
Those sectors are likely to face the most
concentrated employment impacts. The
agencies seek comment on other sectors
that are likely to be significantly
affected and thus warrant further
analysis in the final rulemaking
analysis.
The demand effect depends on the
effects of this proposal on vehicle sales.
If vehicle sales increase, then more
people will be required to assemble
vehicles and their components. If
vehicle sales decrease, employment
associated with these activities will
unambiguously decrease. Unlike in
Morgenstern et al.’s study, where the
demand effect unambiguously
decreased employment, there are
countervailing effects in the vehicle
market due to the fuel savings resulting
from this program. On one hand, this
proposal will increase vehicle costs; by
itself, this effect would reduce vehicle
sales. On the other hand, this proposal
will reduce the fuel costs of operating
the vehicle; by itself, this effect would
increase vehicle sales, especially if
potential buyers have an expectation of
higher fuel prices. The sign of demand
(2) The Cost Effect
The demand effect, discussed above,
measures employment changes due to
new vehicle sales only. The cost effect
measures employment impacts due to
the new or additional technologies
needed for vehicles to comply with the
proposed standards. As DRIA Chapter
8.2.3.1.3 explains, we estimate the cost
effect by multiplying the costs of rule
compliance by ratios of workers to each
$1 million of expenditures in that
sector. The magnitude and relative size
of these ratios depends on the sectors’
labor intensity of the production
process.
The use of these ratios has both
advantages and limitations. It is often
possible to estimate these ratios for
quite specific sectors of the economy; as
a result, it is not necessary to
extrapolate employment ratios from
possibly unrelated sectors. On the other
hand, these estimates are averages for
the sectors, covering all the activities in
those sectors; they may not be
representative of the labor required
when expenditures are required on
specific activities, as the factor shift
effect (discussed below) indicates. In
addition, these estimates do not include
changes in sectors that supply these
sectors, such as steel or electronics
producers. They thus may best be
viewed as the effects on employment in
the auto sector due to the changes in
expenditures in that sector, rather than
as an assessment of all employment
changes due to these changes in
expenditures.
Some of the costs of this proposal will
be spent directly in the auto
manufacturing sector, but some of the
costs will be spent in the auto parts
manufacturing sector. Because we do
not have information on the proportion
of expenditures in each sector, we
separately present the ratios for both the
auto manufacturing sector and the auto
parts manufacturing sector. These are
not additive, but should instead be
considered as a range of estimates for
the cost effect, depending on which
sector adds technologies to the vehicles
to comply with the regulation.
We use several public sources for
estimates of employment per $1 million
594 https://www.bls.gov/emp/
ep_data_emp_requirements.htm.
expenditures: The U.S. Bureau of Labor
Statistics’ (BLS) Employment
Requirements Matrix (ERM); 594 the
Census Bureau’s Annual Survey of
Manufactures 595 (ASM); and the Census
Bureau’s Economic Census. DRIA
Chapter 8.2.3.1.2 provides details on all
these sources. The ASM and the
Economic Census have more sectoral
detail than the ERM; we provide
estimates for both Motor Vehicle
Manufacturing and Light Duty Vehicle
Manufacturing sectors for comparison
purposes. For all of these, we adjust for
the ratio of domestic production to
domestic sales. The maximum value for
employment impacts per $1 million
expenditures (after accounting for the
share of domestic production) in 2009
was estimated to be 2.049 if all the
additional costs are in the parts sector;
the minimum value is 0.407, if all the
additional costs are in the light-duty
vehicle manufacturing sector: That is,
the range of employment impacts is
between 0.4 and 2 additional jobs per $1
million expenditures in the sector. The
different data sources provide similar
magnitudes for the estimates for the
sectors. Parts manufacturing appears to
be more labor-intensive than vehicle
manufacturing; light-duty vehicle
manufacturing appears to be slightly
less labor-intensive than motor vehicle
manufacturing as a whole. As discussed
in the DRIA, trends in the BLS ERM are
used to estimate productivity
improvements over time that are used to
adjust these ratios over time. Table III–
87 shows the cost estimates developed
for this rule, discussed in Section
III.H.2. Multiplying those cost estimates
by the maximum and minimum values
for the cost effect (maximum using the
ASM ratio if all additional costs are in
the parts sector, and minimum using the
Economic Census ratio for the light-duty
sector if all additional costs are borne by
auto manufacturers) provides the cost
effect employment estimates. This is a
simple way to examine the relationship
between labor required and
expenditure, and we seek comment on
refining this method.
While we estimate employment
impacts beginning with the first year of
the standard (2017), some of these job
gains may occur earlier as auto
manufacturers and parts suppliers hire
staff in anticipation of compliance with
the standard.
595 https://www.census.gov/manufacturing/asm/
index.html.
i. Employment Impacts in the Auto
Industry
Following the Morgenstern et al.
conceptual framework for the impacts of
regulation on employment in the
regulated sector, we consider three
effects for the auto sector: the demand
effect, the cost effect, and the factor shift
effect. However, we are only able to
offer quantitative estimates for the cost
effect. We note that these estimates,
based on extrapolations from current
data, become more uncertain as time
goes on.
(1) The Demand Effect
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effect will depend on which of these
effects dominates. Because, as described
in Chapter 8.1, we have not quantified
the impact on sales for this proposal, we
do not quantify the demand effect.
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(3) The Factor Shift Effect
The factor shift effect looks at the
effects on employment due to changes
in labor intensity associated with a
regulation. As noted above, the
estimates of the cost effect assume
constant labor per $1 million in
expenditures, though the new
technologies may be either more or less
labor-intensive than the existing ones.
An estimate of the factor shift effect
would either increase or decrease the
estimate used for the cost effect.
We are not quantifying the factor shift
effect here, for lack of data on the labor
intensity of all the possible technologies
that manufacturers could use to comply
with the proposed standards. As
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discussed in DRIA Chapter 8.2.3.1.3,
though, for a subset of the technologies,
EPA-sponsored research (discussed in
Chapter 3.2.1.1 of the Joint TSD), which
compared new technologies to existing
ones at the level of individual
components, found that labor use for the
new technologies increased: The new
fuel-saving technologies use more labor
than the baseline technologies. For
instance, switching from a conventional
mid-size vehicle to a hybrid version of
that vehicle involves an additional
$395.85 in labor costs, which we
estimate to require an additional 8.6
hours per vehicle.596 For a subset of the
technologies likely to be used to meet
the standards in this proposal, then, the
factor shift effect increases labor
demand, at least in the short run; in the
long run, as with all technologies, the
cost structure is likely to change due to
learning, economies of scale, etc. The
technologies examined in this research
are, however, only a subset of the
technologies that auto makers may use
to comply with the standards proposed
here. As a result, these results cannot be
considered definitive evidence that the
factor-shift effect increases employment
for this rule. We therefore do not
quantify the factor shift effect.
596 FEV, Inc. ‘‘Light Duty Technology Cost
Analysis, Power-Split and P2 HEV Case Studies.’’
EPA Report EPA–420–R–11_015, November 2011
(Docket EPA–HQ–OAR–2010–0799).
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(4) Summary of Employment Effects in
the Auto Sector
While we are not able to quantify the
demand or factor shift effects, the cost
effect results show that the employment
effects of the increased spending in the
regulated sector (and, possibly, the parts
sector) are expected to be positive and
on the order of a few thousand in the
initial years of the program. As noted
above, the motor vehicle and parts
manufacturing sectors employed about
677,000 people in 2010, with
automobile and light truck
manufacturing accounting for about
129,000 of that total.
ii. Effects on Employment for Auto
Dealers
The effects of the proposed standards
on employment for auto dealers depend
principally on the effects of the
standards on light duty vehicle sales. In
addition, auto dealers may be affected
by changes in maintenance and service
costs. Increases in those costs are likely
to increase labor demand in dealerships.
Although this proposal predicts very
small penetration of advanced
technology vehicles, the uncertainty on
consumer acceptance of such
technology vehicles is even greater. As
discussed in Section III.H.1.b,
consumers may find some
characteristics of electric vehicles and
plug-in hybrid electric vehicles, such as
the ability to fuel with electricity rather
than gasoline, attractive; they may find
other characteristics, such as the limited
range for electric vehicles, undesirable.
As a result, some consumers will find
that EVs will meet their needs, but other
buyers will choose more conventional
vehicles. Auto dealers may play a major
role in explaining the merits and
disadvantages of these new technologies
to vehicle buyers. There may be a
temporary need for increased
employment to train sales staff in the
new technologies as the new
technologies become available.
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iii. Effects on Employment in the Auto
Parts Sector
As discussed in the context of
employment in the auto industry, some
vehicle parts are made in-house by auto
manufacturers; others are made by
independent suppliers who are not
directly regulated, but who will be
affected by the proposed standards as
well. The additional expenditures on
technologies are expected to have a
positive effect on employment in the
parts sector as well as the
manufacturing sector; the breakdown in
employment between the two sectors is
difficult to predict. The effects on the
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parts sector also depend on the effects
of the proposed standards on vehicle
sales and on the labor intensity of the
new technologies, qualitatively in the
same ways as for the auto
manufacturing sector.
iv. Effects on Employment for Fuel
Suppliers
In addition to the effects on the auto
manufacturing and parts sectors, these
rules will result in changes in fuel use
that lower GHG emissions. Fuel saving,
principally reductions in liquid fuels
such as gasoline and diesel, will affect
employment in the fuel suppliers
industry sectors throughout the supply
chain, from refineries to gasoline
stations. To the extent that the proposed
standards result in increased use of
electricity, natural gas, or other fuels,
employment effects will result from
providing these fuels and developing
the infrastructure to supply them to
consumers.
Expected petroleum fuel consumption
reductions can be found in Section
III.H.3. While those figures represent
fuel savings for purchasers of fuel, it
represents a loss in value of output for
the petroleum refinery industry, fuel
distribution, and gasoline stations. The
loss of expenditures to petroleum fuel
suppliers throughout the petroleum fuel
supply chain, from the petroleum
refiners to the gasoline stations, is likely
to result in reduced employment in
these sectors.
This rule is also expected to lead to
increases in electricity consumption by
vehicles, as discussed in Section III.H.4.
This new fuel may require additional
infrastructure, such as electricity
charging locations. Providing this
infrastructure will require some
increased employment. In addition, the
generation of electricity will also require
some additional labor. We have
insufficient information at this time to
predict whether the increases in labor
associated with increased infrastructure
provision and fuel generation for these
newer fuels will be greater or less than
the employment reductions associated
with reduced demand for petroleum
fuels.
v. Effects on Employment Due to
Impacts on Consumer Expenditures
As a result of these proposed
standards, consumers will pay a higher
up-front cost for the vehicles, but they
will recover those costs in a fairly short
payback period (see Section III.H.10.b);
indeed, people who finance their
vehicles are expected to find that their
fuel savings per month exceed the
increase in the loan cost (though this
depends on the particular loan rate a
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consumer receives). As a result,
consumers will have additional money
to spend on other goods and services,
though, for those who do not finance
their vehicles, it will occur after the
initial payback period. These increased
expenditures will support employment
in those sectors where consumers spend
their savings.
These increased expenditures will
occur in 2017 and beyond. If the
economy returns to full employment by
that time, any change in consumer
expenditures would primarily represent
a shift in employment among sectors. If,
on the other hand, the economy still has
substantial unemployment, these
expenditures would contribute to
employment through increased
consumer demand.
d. Summary
The primary employment effects of
this proposal are expected to be found
throughout several key sectors: auto
manufacturers, auto dealers, auto parts
manufacturing, fuel production and
supply, and consumers. This rule
initially takes effect in model year 2017,
a time period sufficiently far in the
future that the current sustained high
unemployment at the national level may
be moderated or ended. In an economy
with full employment, the primary
employment effect of a rulemaking is
likely to be to move employment from
one sector to another, rather than to
increase or decrease employment. For
that reason, we focus our partial
quantitative analysis on employment in
the regulated sector, to examine the
impacts on that sector directly. We
discuss the likely direction of other
impacts in the regulated sector as well
as in other directly related sectors, but
we do not quantify those impacts,
because they are more difficult to
quantify with reasonable accuracy,
particularly so far into the future.
For the regulated sector, we have not
quantified the demand effect. The cost
effect is expected to increase
employment by 600–3,600 workers in
2017 depending on the share of that
employment that is in the auto
manufacturing sector compared to the
auto parts manufacturing sector. As
mentioned above, some of these job
gains may occur earlier as auto
manufacturers and parts suppliers hire
staff to prepare to comply with the
standard. The demand effect is
ambiguous and depends on changes in
vehicle sales, which are not quantified
for this proposal. Though we do not
have estimates of the factor shift effect
for all potential compliance
technologies, the evidence which we do
have for some technologies suggests that
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many of the technologies will have
increased labor needs.
Effects in other sectors that are
predicated on vehicle sales are also
ambiguous. Changes in vehicle sales are
expected to affect labor needs in auto
dealerships and in parts manufacturing.
Increased expenditures for auto parts
are expected to require increased labor
to build parts, though this effect also
depends on any changes in the labor
intensity of production; as noted, the
subset of potential compliance
technologies for which data are
available show increased labor
requirements. Reduced fuel production
implies less employment in the
petroleum sectors. Finally, consumer
spending is expected to affect
employment through changes in
expenditures in general retail sectors;
net fuel savings by consumers are
expected to increase demand (and
therefore employment) in other sectors.
I. Statutory and Executive Order
Reviews
a. Executive Order 12866: ‘‘Regulatory
Planning and Review and Executive
Order 13563: Improving Regulation and
Regulatory Review’’
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Under section 3(f)(1) of Executive
Order 12866 (58 FR 51735, October 4,
1993), this action is an ‘‘economically
significant regulatory action’’ because it
An agency may not conduct or
sponsor, and a person is not required to
respond to a collection of information
unless it displays a currently valid OMB
control number. The OMB control
numbers for EPA’s regulations in 40
CFR are listed in 40 CFR part 9.
To comment on the Agency’s need for
this information, the accuracy of the
provided burden estimates, and any
suggested methods for minimizing
respondent burden, including the use of
automated collection techniques, EPA
has established a public docket for this
rule, which includes this ICR, under
Docket ID number EPA–HQ–OAR–
2010–0799. Submit any comments
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is likely to have an annual effect on the
economy of $100 million or more.
Accordingly, EPA submitted this action
to the Office of Management and Budget
(OMB) for review under Executive
Orders 12866 and 13563 (76 FR 3821,
January 21, 2011) and any changes made
in response to OMB recommendations
have been documented in the docket for
this action as required by CAA section
307(d)(4)(B)(ii).
In addition, EPA prepared an analysis
of the potential costs and benefits
associated with this action. This
analysis is contained in the Draft
Regulatory Impact Analysis, which is
available in the docket for this
rulemaking and at the docket internet
address listed under ADDRESSES above.
b. Paperwork Reduction Act
The information collection
requirements in this proposed rule have
been submitted for approval to the
Office of Management and Budget
(OMB) under the Paperwork Reduction
Act, 44 U.S.C. 3501 et seq. The
Information Collection Request (ICR)
document prepared by EPA has been
assigned EPA ICR number 0783.61.
The Agency proposes to collect
information to ensure compliance with
the provisions in this rule. This
includes a variety of requirements for
vehicle manufacturers. Section 208(a) of
the Clean Air Act requires that vehicle
related to the ICR for this proposed rule
to EPA and OMB. See ‘Addresses’
section at the beginning of this notice
for where to submit comments to EPA.
Send comments to OMB at the Office of
Information and Regulatory Affairs,
Office of Management and Budget, 725
17th Street NW., Washington, DC 20503,
Attention: Desk Office for EPA. Since
OMB is required to make a decision
concerning the ICR between 30 and 60
days after December 1, 2011, a comment
to OMB is best assured of having its full
effect if OMB receives it by January 3,
2012. The final rule will respond to any
OMB or public comments on the
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manufacturers provide information the
Administrator may reasonably require to
determine compliance with the
regulations; submission of the
information is therefore mandatory. We
will consider confidential all
information meeting the requirements of
section 208(c) of the Clean Air Act.
As shown in Table III–88, the total
annual reporting burden associated with
this proposal is about 5,100 hours and
$1.36 million, based on a projection of
33 respondents. The estimated burden
for vehicle manufacturers is a total
estimate for new reporting
requirements. Burden means the total
time, effort, or financial resources
expended by persons to generate,
maintain, retain, or disclose or provide
information to or for a Federal agency.
This includes the time needed to review
instructions; develop, acquire, install,
and utilize technology and systems for
the purposes of collecting, validating,
and verifying information, processing
and maintaining information, and
disclosing and providing information;
adjust the existing ways to comply with
any previously applicable instructions
and requirements; train personnel to be
able to respond to a collection of
information; search data sources;
complete and review the collection of
information; and transmit or otherwise
disclose the information.
information collection requirements
contained in this proposal.
c. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA)
generally requires an agency to prepare
a regulatory flexibility analysis of any
rule subject to notice and comment
rulemaking requirements under the
Administrative Procedure Act or any
other statute unless the agency certifies
that the rule will not have a significant
economic impact on a substantial
number of small entities. Small entities
include small businesses, small
organizations, and small governmental
jurisdictions.
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small governmental jurisdiction that is a
government of a city, county, town,
school district or special district with a
population of less than 50,000; and
(3) a small organization that is any notfor-profit enterprise which is
independently owned and operated and
is not dominant in its field.
Table III–89 provides an overview of
the primary SBA small business
categories included in the light-duty
vehicle sector:
After considering the economic
impacts of today’s proposal on small
entities, EPA certifies that this action
will not have a significant economic
impact on a substantial number of small
entities. As with the MY 2012–2016
GHG standards, EPA is proposing to
exempt manufacturers meeting SBA’s
definition of small business as described
in 13 CFR 121.201 due to unique issues
involved with establishing appropriate
GHG standards for these small
businesses and the potential need to
develop a program that would be
structured differently for them (which
would require more time), and the
extremely small emissions contribution
of these entities. EPA would instead
consider appropriate GHG standards for
these entities as part of a future
regulatory action.
Potentially affected small entities fall
into three distinct categories of
businesses for light-duty vehicles: Small
volume manufacturers (SVMs),
independent commercial importers
(ICIs), and alternative fuel vehicle
converters. Based on our preliminary
assessment, EPA has identified a total of
about 21 entities that fit the Small
Business Administration (SBA) criterion
of a small business. There are about 4
small manufacturers, including three
electric vehicle manufacturers, 8 ICIs,
and 9 alternative fuel vehicle converters
in the light-duty vehicle market which
are small businesses (no major vehicle
manufacturers meet the small-entity
criteria as defined by SBA). EPA
estimates that these small entities
comprise less than 0.1 percent of the
total light-duty vehicle sales in the U.S.,
and therefore the proposed exemption
will have a negligible impact on the
GHG emissions reductions from the
proposed standards.
As discussed in Section III.B.7, EPA is
proposing to allow small businesses to
waive their small entity exemption and
optionally certify to the GHG standards.
This would allow small entity
manufacturers to earn CO2 credits under
the GHG program, if their actual
fleetwide CO2 performance was better
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For purposes of assessing the impacts
of this rule on small entities, small
entity is defined as: (1) A small business
as defined by the Small Business
Administration’s (SBA) regulations at 13
CFR 121.201 (see table below); (2) a
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than their fleetwide CO2 target standard.
EPA proposes to make the GHG program
opt-in available starting in MY 2014, as
the MY 2012, and potentially the MY
2013, certification process will have
already occurred by the time this
rulemaking is finalized. EPA is also
proposing that manufacturers certifying
to the GHG standards for MY 2014
would be eligible to generate early
credits for vehicles sold in MY 2012 and
MY 2013. Manufacturers waiving their
small entity exemption would be
required to meet all aspects of the GHG
standards and program requirements
across their entire product line.
However, the exemption waiver would
be optional for small entities and
presumably manufacturers would only
opt into the GHG program if it is
economically advantageous for them to
do so, for example through the
generation and sale of CO2 credits.
Therefore, EPA believes adding this
voluntary option does not affect EPA’s
determination that the proposed
standards would impose no significant
adverse impact on small entities.
Some commenters to the 2012–2016
light duty vehicle GHG rulemaking
argued that EPA is obligated under the
RFA to consider indirect impacts of the
rules in assessing impacts on small
businesses, in particular potential
impacts on stationary sources that
would not be directly regulated by the
rule. EPA disagrees. When considering
whether a rule should be certified, the
RFA requires an agency to look only at
the small entities to which the proposed
rule will apply and which will be
subject to the requirement of the
specific rule in question. 5 U.S.C. 603,
605 (b); Mid-Tex Elec. Coop. v. FERC,
773 F.3d 327, 342 (DC Cir. 1985).
Reading section 605 in light of section
603, we conclude that an agency may
properly certify that no regulatory
flexibility analysis is necessary when it
determines that the rule will not have a
significant economic impact on a
substantial number of small entities that
are subject to the requirements of the
rule; see also Cement Kiln Recycling
Coalition, v. EPA, 255 F.3d 855, 869 (DC
Cir. 2001). DC Circuit has consistently
rejected the contention that the RFA
applies to small businesses indirectly
affected by the regulation of other
entities.597
Since the proposal would regulate
exclusively large motor vehicle
manufacturers and small vehicle
597 In any case, any impacts on stationary sources
arise because of express statutory requirements in
the CAA, not as a result of vehicle GHG regulation.
Moreover, GHGs have become subject to regulation
under the CAA by virtue of other regulatory actions
taken by EPA before this proposal.
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manufacturers are exempted from the
standards, EPA is properly certifying
that the 2017–2025 standards would not
have a significant economic impact on
a substantial number of small entities
directly subject to the rule or otherwise
would have a positive economic effect
on all of the small entities opting in to
the rule.
We continue to be interested in the
potential impacts of the proposed rule
on small entities and welcome
comments on issues related to such
impacts.
d. Unfunded Mandates Reform Act
Title II of the Unfunded Mandates
Reform Act of 1995 (UMRA), Public
Law 104–4, establishes requirements for
Federal agencies to assess the effects of
their regulatory actions on State, local,
and tribal governments and the private
sector.
This proposal contains no Federal
mandates (under the regulatory
provisions of Title II of the UMRA) for
State, local, or tribal governments. The
rule imposes no enforceable duty on any
State, local or tribal governments. This
action is also not subject to the
requirements of section 203 of UMRA
because EPA has determined that this
rule contains no regulatory
requirements that might significantly or
uniquely affect small governments. EPA
has determined that this proposal
contains a Federal mandate that may
result in expenditures of $100 million or
more for the private sector in any one
year. EPA believes that the proposal
represents the least costly, most costeffective approach to revise the light
duty vehicle standards as authorized by
section 202(a)(1). See Section III.A.2.a
above. The costs and benefits associated
with the proposal are discussed above
and in the Draft Regulatory Impact
Analysis, as required by the UMRA.
e. Executive Order 13132: ‘‘Federalism’’
This proposed action would not have
federalism implications. It will not have
substantial direct effects on the States,
on the relationship between the national
government and the States, or on the
distribution of power and
responsibilities among the various
levels of government, as specified in
Executive Order 13132. This rulemaking
would apply to manufacturers of motor
vehicles and not to state or local
governments; state and local
governments that purchase new model
year 2017 and later vehicles will enjoy
substantial fuel savings from these more
fuel efficient vehicles. Thus, Executive
Order 13132 does not apply to this
action. Although section 6 of Executive
Order 13132 does not apply to this
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action, EPA did consult with
representatives of state and local
governments in developing this action.
In the spirit of Executive Order 13132,
and consistent with EPA policy to
promote communications between EPA
and State and local governments, EPA
specifically solicits comment on this
proposed action from State and local
officials.
f. Executive Order 13175: ‘‘Consultation
and Coordination with Indian Tribal
Governments’’
This proposed rule does not have
tribal implications, as specified in
Executive Order 13175 (65 FR 67249,
November 9, 2000). This rule will be
implemented at the Federal level and
impose compliance costs only on
vehicle manufacturers. Tribal
governments would be affected only to
the extent they purchase and use
regulated vehicles; tribal governments
that purchase new model year 2017 and
later vehicles will enjoy substantial fuel
savings from these more fuel efficient
vehicles. Thus, Executive Order 13175
does not apply to this rule. EPA
specifically solicits additional comment
on this proposed rule from tribal
officials.
g. Executive Order 13045: ‘‘Protection of
Children from Environmental Health
Risks and Safety Risks’’
This action is subject to EO 13045 (62
FR 19885, April 23, 1997) because it is
an economically significant regulatory
action as defined by EO 12866, and EPA
believes that the environmental health
or safety risk addressed by this action
may have a disproportionate effect on
children. Climate change impacts, and
in particular the determinations of the
Administrator in the Endangerment and
Cause or Contribute Findings for
Greenhouse Gases Under Section 202(a)
of the Clean Air Act (74 FR 66496,
December 15, 2009), are summarized in
Section III.F.2. In making those
Findings, the Administrator placed
weight on the fact that certain groups,
including children, are particularly
vulnerable to climate-related health
effects. In those Findings, the
Administrator determined that the
health effects of climate change linked
to observed and projected elevated
concentrations of GHGs include the
increased likelihood of more frequent
and intense heat waves, increases in
ozone concentrations over broad areas
of the country, an increase of the
severity of extreme weather events such
as hurricanes and floods, and increasing
severity of coastal storms due to rising
sea levels. These effects can all increase
mortality and morbidity, especially in
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vulnerable populations such as
children, the elderly, and the poor. In
addition, the occurrence of wildfires in
North America have increased and are
likely to intensify in a warmer future.
PM emissions from these wildfires can
contribute to acute and chronic illnesses
of the respiratory system, including
pneumonia, upper respiratory diseases,
asthma, and chronic obstructive
pulmonary disease, especially in
children.
EPA has estimated reductions in
projected global mean surface
temperature and sea level rise as a result
of reductions in GHG emissions
associated with the standards proposed
in this action (Section III.F.3). Due to
their vulnerability, children may receive
disproportionate benefits from these
reductions in temperature and the
subsequent reduction of increased
ozone and severity of weather events.
The public is invited to submit
comments or identify peer-reviewed
studies and data that assess effects of
early life exposure to the pollutants
addressed by this proposed rule.
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h. Executive Order 13211: ‘‘Energy
Effects’’
Executive Order 13211; 598 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 would
significantly reduce the consumption of
petroleum, would achieve energy
security benefits, and would not have
any adverse energy effects (Section
III.H.7). In fact, this rule has a positive
effect on energy supply and use.
Because the GHG emission standards
finalized today result in significant fuel
savings, this rule encourages more
efficient use of fuels. Accordingly, this
proposed rulemaking action is not
designated as a significant energy action
as defined by E.O. 13211.
598 66
FR 28355 (May 18, 2001).
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i. National Technology Transfer and
Advancement Act
Section 12(d) of the National
Technology Transfer and Advancement
Act of 1995 (‘‘NTTAA’’), Public Law
104–113, 12(d) (15 U.S.C. 272 note)
directs EPA to use voluntary consensus
standards in its regulatory activities
unless to do so would be inconsistent
with applicable law or otherwise
impractical. Voluntary consensus
standards are technical standards (e.g.,
materials, specifications, test methods,
sampling procedures, and business
practices) that are developed or adopted
by voluntary consensus standards
bodies. NTTAA directs EPA to provide
Congress, through OMB, explanations
when the Agency decides not to use
available and applicable voluntary
consensus standards.
For CO2 emissions, EPA is proposing
to collect data over the same tests that
are used for the MY 2012–2016 CO2
standards and for the CAFE program.
This will minimize the amount of
testing done by manufacturers, since
manufacturers are already required to
run these tests. For A/C credits, EPA is
proposing to use a consensus
methodology developed by the Society
of Automotive Engineers (SAE) and also
a new A/C test. EPA knows of no
consensus standard available for the A/
C test.
j. Executive Order 12898: ‘‘Federal
Actions To Address Environmental
Justice in Minority Populations and
Low-Income Populations’’
Executive Order (E.O.) 12898 (59 FR
7629 (Feb. 16, 1994)) establishes federal
executive policy on environmental
justice. Its main provision directs
federal agencies, to the greatest extent
practicable and permitted by law, to
make environmental justice part of their
mission by identifying and addressing,
as appropriate, disproportionately high
and adverse human health or
environmental effects of their programs,
policies, and activities on minority
populations and low-income
populations in the United States.
With respect to GHG emissions, EPA
has determined that this proposed rule
will not have disproportionately high
and adverse human health or
environmental effects on minority or
low-income populations because it
increases the level of environmental
protection for all affected populations
without having any disproportionately
high and adverse human health or
environmental effects on any
population, including any minority or
low-income population. The reductions
in CO2 and other GHGs associated with
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the proposed standards will affect
climate change projections, and EPA has
estimated reductions in projected global
mean surface temperatures and sea-level
rise (Section III.F.3). Within settlements
experiencing climate change, certain
parts of the population may be
especially vulnerable; these include the
poor, the elderly, those already in poor
health, the disabled, those living alone,
and/or indigenous populations
dependent on one or a few resources.599
Therefore, these populations may
receive disproportionate benefits from
reductions in GHGs.
For non-GHG co-pollutants such as
ozone, PM2.5, and toxics, EPA has
concluded that it is not practicable to
determine whether there would be
disproportionately high and adverse
human health or environmental effects
on minority and/or low income
populations from this proposed rule.
J. Statutory Provisions and Legal
Authority
Statutory authority for the vehicle
controls proposed today is found in
section 202(a) (which authorizes
standards for emissions of pollutants
from new motor vehicles which
emissions cause or contribute to air
pollution which may reasonably be
anticipated to endanger public health or
welfare), 202(d), 203–209, 216, and 301
of the Clean Air Act, 42 U.S.C. 7521(a),
7521(d), 7522, 7523, 7524, 7525, 7541,
7542, 7543, 7550, and 7601. Statutory
authority for EPA to establish CAFE test
procedures is found in section 32904(c)
of the Energy Policy and Conservation
Act, 49 U.S.C. section 32904(c).
IV. NHTSA Proposed Rule for
Passenger Car and Light Truck CAFE
Standards for Model Years 2017–2025
A. Executive Overview of NHTSA
Proposed Rule
1. Introduction
The National Highway Traffic Safety
Administration (NHTSA) is proposing
Corporate Average Fuel Economy
(CAFE) standards for passenger
automobiles (passenger cars) and
nonpassenger automobiles (light trucks)
for model years (MY) 2017–2025.
NHTSA’s proposed CAFE standards
would require passenger cars and light
trucks to meet an estimated combined
average of 49.6 mpg in MY 2025. This
represents an average annual increase of
599 U.S. EPA. (2009). Technical Support
Document for Endangerment or Cause or Contribute
Findings for Greenhouse Gases under Section
202(a) of the Clean Air Act. Washington, DC: U.S.
EPA. Retrieved on April 21, 2009 from https://
epa.gov/climatechange/endangerment/downloads/
TSD_Endangerment.pdf.
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4 percent from the estimated 34.4 mpg
combined fuel economy level expected
in MY 2016. Due to these proposed
standards, we project total fuel savings
of approximately 173 billion gallons
over the lifetimes of the vehicles sold in
model years 2017–2025, with
corresponding net societal benefits of
over $358 billion using a 3 percent
discount rate,600 or $262 billion using a
7 percent discount rate.
While NHTSA has been setting fuel
economy standards since the 1970s, as
discussed in Section I, NHTSA’s
proposed MYs 2017–2025 CAFE
standards are part of a National Program
made up of complementary regulations
by NHTSA and the Environmental
Protection Agency. Today’s proposed
standards build upon the success of the
first phase of the National Program,
finalized on May 7, 2010, in which
NHTSA and EPA set coordinated CAFE
and greenhouse gas (GHG) standards for
MYs 2012–2016 passenger cars and light
trucks. Because of the very close
relationship between improving fuel
economy and reducing carbon dioxide
(CO2) tailpipe emissions, a large
majority of the projected benefits are
achieved jointly with EPA’s GHG rule,
described in detail above in Section III
of this preamble. These proposed CAFE
standards are consistent with the
President’s National Fuel Efficiency
Policy announcement of May 19, 2009,
which called for harmonized rules for
all automakers, instead of three
overlapping and potentially inconsistent
requirements from DOT, EPA, and the
California Air Resources Board. And
finally, the proposed CAFE standards
and the analysis supporting them also
respond to President’s Obama’s May
2010 memorandum requesting the
agencies to develop, through notice and
comment rulemaking, a coordinated
National Program for passenger cars and
light trucks for MYs 2017 to 2025.
2. Why does NHTSA set CAFE
standards for passenger cars and light
trucks?
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Improving vehicle fuel economy has
been long and widely recognized as one
of the key ways of achieving energy
600 This value is based on what NHTSA refers to
as ‘‘Reference Case’’ inputs, which are based on the
assumptions that NHTSA has employed for its main
analysis (as opposed to sensitivity analyses to
examine the effect of variations in the assumptions
on costs and benefits). The Reference Case inputs
include fuel prices based on the AEO 2011
Reference Case, a 3 percent and a 7 percent
discount rate, a 10 percent rebound effect, a value
for the social cost of carbon (SCC) of $22/metric ton
CO2 (in 2010, rising to $45/metric ton in 2050, at
a 3 percent discount rate), etc. For a full listing of
the Reference Case input assumptions, see Section
IV.C.3 below.
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independence, energy security, and a
low carbon economy.601 The
significance accorded to improving fuel
economy reflects several factors.
Conserving energy, especially reducing
the nation’s dependence on petroleum,
benefits the U.S. in several ways.
Improving energy efficiency has benefits
for economic growth and the
environment, as well as other benefits,
such as reducing pollution and
improving security of energy supply.
More specifically, reducing total
petroleum use decreases our economy’s
vulnerability to oil price shocks.
Reducing dependence on oil imports
from regions with uncertain conditions
enhances our energy security.
Additionally, the emission of CO2 from
the tailpipes of cars and light trucks due
to the combustion of petroleum is one
of the largest sources of U.S. CO2
emissions.602 Using vehicle technology
to improve fuel economy, and thereby
reducing tailpipe emissions of CO2, is
one of the three main measures for
reducing those tailpipe emissions of
601 Among the reports and studies noting this
point are the following:
John Podesta, Todd Stern and Kim Batten,
‘‘Capturing the Energy Opportunity; Creating a
Low-Carbon Economy,’’ Center for American
Progress (November 2007), pp. 2, 6, 8, and 24–29,
available at: https://www.americanprogress.org/
issues/2007/11/pdf/energy_chapter.pdf (last
accessed Sept. 24, 2011).
Sarah Ladislaw, Kathryn Zyla, Jonathan Pershing,
Frank Verrastro, Jenna Goodward, David Pumphrey,
and Britt Staley, ‘‘A Roadmap for a Secure, LowCarbon Energy Economy; Balancing Energy Security
and Climate Change,’’ World Resources Institute
and Center for Strategic and International Studies
(January 2009), pp. 21–22; available at: https://pdf.
wri.org/secure_low_carbon_energy_economy_
roadmap.pdf (last accessed Sept. 24, 2011).
Alliance to Save Energy et al., ‘‘Reducing the Cost
of Addressing Climate Change Through Energy
Efficiency’’ (2009), available at: https://www.aceee.
org/files/pdf/white-paper/ReducingtheCostof
AddressingClimateChange_synopsis.pdf (last
accessed Sept. 24, 2011).
John DeCicco and Freda Fung, ‘‘Global Warming
on the Road; The Climate Impact of America’s
Automobiles,’’ Environmental Defense (2006) pp.
iv–vii; available at: https://www.edf.org/sites/
default/files/5301_Globalwarmingontheroad_0.pdf
(last accessed Sept. 24, 2011).
‘‘Why is Fuel Economy Important?,’’ a Web page
maintained by the Department of Energy and
Environmental Protection Agency, available at
https://www.fueleconomy.gov/feg/why.shtml (last
accessed Sept. 24, 2011);
Robert Socolow, Roberta Hotinski, Jeffery B.
Greenblatt, and Stephen Pacala, ‘‘Solving The
Climate Problem: Technologies Available to Curb
CO2 Emissions,’’ Environment, volume 46, no. 10,
2004, pages 8–19, available at: https://www.
princeton.edu/mae/people/faculty/socolow/
ENVIRONMENTDec2004issue.pdf (last accessed
Sept. 24, 2011).
602 EPA Inventory of U.S. Greenhouse Gas
Emissions and Sinks: 1990–2008 (April 2010), pp.
ES–5, ES–8, and 2–17. Available at https://www.epa.
gov/climatechange/emissions/usgginv_archive.html
(last accessed Sept. 25, 2011).
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CO2.603 The two other measures for
reducing the tailpipe emissions of CO2
are switching to vehicle fuels with
lower carbon content and changing
driver behavior, i.e., inducing people to
drive less.
Reducing Petroleum Consumption To
Improve Energy Security and Save the
U.S. Money
In 1975, Congress enacted the Energy
Policy and Conservation Act (EPCA),
mandating that NHTSA establish and
implement a regulatory program for
motor vehicle fuel economy to meet the
various facets of the need to conserve
energy, including ones having energy
independence and security,
environmental, and foreign policy
implications. The need to reduce energy
consumption is even more crucial today
than it was when EPCA was enacted.
U.S. energy consumption has been
outstripping U.S. energy production at
an increasing rate. Improving our energy
and national security by reducing our
dependence on foreign oil has been a
national objective since the first oil
price shocks in the 1970s. Net
petroleum imports accounted for
approximately 51 percent of U.S.
petroleum consumption in 2009.604
World crude oil production is highly
concentrated, exacerbating the risks of
supply disruptions and price shocks as
the recent unrest in North Africa and
the Persian Gulf highlights. The export
of U.S. assets for oil imports continues
to be an important component of U.S.
trade deficits. Transportation accounted
for about 71 percent of U.S. petroleum
consumption in 2009.605 Light-duty
vehicles account for about 60 percent of
transportation oil use, which means that
they alone account for about 40 percent
of all U.S. oil consumption.
Gasoline consumption in the U.S. has
historically been relatively insensitive
to fluctuations in both price and
consumer income, and people in most
parts of the country tend to view
gasoline consumption as a nondiscretionary expense. Thus, when
gasoline’s share in consumer
expenditures rises, the public
experiences fiscal distress. Recent tight
603 Podesta et al., p. 25; Ladislaw et al. p. 21;
DeCicco et al. p. vii; ‘‘Reduce Climate Change, a
Web page maintained by the Department of Energy
and Environmental Protection Agency at https://
www.fueleconomy.gov/feg/climate.shtml (last
accessed Sept. 24, 2011).
604 Energy Information Administration, ‘‘How
dependent are we on foreign oil?’’ Available at
https://www.eia.gov/energy_in_brief/foreign_oil_
dependence.cfm (last accessed August 28, 2011).
605 Energy Information Administration, Annual
Energy Outlook 2011, ‘‘Oil/Liquids.’’ Available at
https://www.eia.gov/forecasts/aeo/MT_liquid
fuels.cfm (last accessed August 28, 2011).
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global oil markets led to prices over
$100 per barrel, with gasoline reaching
as high as $4 per gallon in many parts
of the U.S., causing financial hardship
for many families and businesses. This
fiscal distress can, in some cases, have
macroeconomic consequences for the
economy at large.
Additionally, since U.S. oil
production is only affected by
fluctuations in prices over a period of
years, any changes in petroleum
consumption (as through increased fuel
economy levels for the on-road fleet)
largely flow into changes in the quantity
of imports. Since petroleum imports
account for about 2 percent of GDP,
increases in oil imports can create a
discernible fiscal drag. As a
consequence, measures that reduce
petroleum consumption, like fuel
economy standards, will directly benefit
the balance-of-payments account, and
strengthen the U.S. economy to some
degree. And finally, U.S. foreign policy
has been affected by decades by rising
U.S. and world dependency on crude oil
as the basis for modern transportation
systems, although fuel economy
standards have at best an indirect
impact on U.S. foreign policy.
global climate change. These risks are
well documented in Section III of this
notice, and in NHTSA’s draft
Environmental Impact Statement (DEIS)
accompanying these proposed
standards.
Fuel economy gains since 1975, due
both to the standards and to market
factors, have resulted in saving billions
of barrels of oil and avoiding billions of
metric tons of CO2 emissions. In
December 2007, Congress enacted the
Energy Independence and Security Act
(EISA), amending EPCA to require
substantial, continuing increases in fuel
economy. NHTSA thus sets CAFE
standards today under EPCA, as
amended by EISA, in order to help the
U.S. passenger car and light truck fleet
save fuel to promote energy
independence, energy security, and a
low carbon economy.
3. Why is NHTSA proposing CAFE
standards for MYs 2017–2025 now?
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Reducing Petroleum Consumption To
Reduce Climate Change Impacts
CO2 is the natural by-product of the
combustion of fuel to power motor
vehicles. The more fuel-efficient a
vehicle is, the less fuel it needs to burn
to travel a given distance. The less fuel
it burns, the less CO2 it emits in
traveling that distance.606 Since the
amount of CO2 emissions is essentially
constant per gallon combusted of a
given type of fuel, the amount of fuel
consumption per mile is closely related
to the amount of CO2 emissions per
mile. Motor vehicles are the second
largest GHG-emitting sector in the U.S.
after electricity generation, and
accounted for 27 percent of total U.S.
GHG emissions in 2008.607
Concentrations of greenhouse gases are
at unprecedented levels compared to the
recent and distant past, which means
that fuel economy improvements to
reduce those emissions are a crucial
step toward addressing the risks of
a. President’s Memorandum
During the public comment period for
the MY 2012–2016 proposed
rulemaking, many stakeholders
encouraged NHTSA and EPA to begin
working toward standards for MY 2017
and beyond in order to maintain a single
nationwide program. After the
publication of the final rule establishing
MYs 2012–2016 CAFE and GHG
standards, President Obama issued a
Memorandum on May 21, 2010
requesting that NHTSA, on behalf of the
Department of Transportation, and EPA
work together to develop a national
program for model years 2017–2025.608
Specifically, he requested that the
agencies develop ‘‘* * * a coordinated
national program under the CAA [Clean
Air Act] and the EISA [Energy
Independence and Security Act of 2007]
to improve fuel efficiency and to reduce
greenhouse gas emissions of passenger
cars and light-duty trucks of model
years 2017–2025.’’ The President
recognized that our country could take
a leadership role in addressing the
global challenges of improving energy
security and reducing greenhouse gas
pollution, stating that ‘‘America has the
opportunity to lead the world in the
development of a new generation of
606 Panel on Policy Implications of Greenhouse
Warming, National Academy of Sciences, National
Academy of Engineering, Institute of Medicine,
‘‘Policy Implications of Greenhouse Warming:
Mitigation, Adaptation, and the Science Base,’’
National Academies Press, 1992, at 287. Available
at https://www.nap.edu/catalog.php?record_id=1605
(last accessed Sept. 25, 2011).
607 EPA Inventory of U.S. Greenhouse Gas
Emissions and Sinks: 1990–2008 (April 2010), p. 2–
17. Available at https://www.epa.gov/climatechange/
emissions/usgginv_archive.html (last accessed Sept.
25, 2011).
608 The Presidential Memorandum is found at:
https://www.whitehouse.gov/the-press-office/
presidential-memorandum-regarding-fuelefficiency-standards. For the reader’s reference, the
President also requested the Administrators of EPA
and NHTSA to issue joint rules under the CAA and
EISA to establish fuel efficiency and greenhouse gas
emissions standards for commercial medium-and
heavy-duty on-highway vehicles and work trucks
beginning with the 2014 model year. The agencies
recently promulgated final GHG and fuel efficiency
standards for heavy duty vehicles and engines for
MYs 2014–2018. 76 FR 57106 (September 15, 2011).
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clean cars and trucks through
innovative technologies and
manufacturing that will spur economic
growth and create high-quality domestic
jobs, enhance our energy security, and
improve our environment.’’
The Presidential Memorandum stated
‘‘The program should also seek to
achieve substantial annual progress in
reducing transportation sector
greenhouse gas emissions and fossil fuel
consumption, consistent with my
Administration’s overall energy and
climate security goals, through the
increased domestic production and use
of existing, advanced, and emerging
technologies, and should strengthen the
industry and enhance job creation in the
United States.’’ Among other things, the
agencies were tasked with researching
and then developing standards for MYs
2017 through 2025 that would be
appropriate and consistent with EPA’s
and NHTSA’s respective statutory
authorities, in order to continue to guide
the automotive sector along the road to
reducing its fuel consumption and GHG
emissions, thereby ensuring
corresponding energy security and
environmental benefits. Several major
automobile manufacturers and CARB
sent letters to EPA and NHTSA in
support of a MYs 2017 to 2025
rulemaking initiative as outlined in the
President’s May 21, 2010
announcement.609 The agencies began
working immediately on the next phase
of the National Program, work which
has culminated in the standards
proposed in this notice for MYs 2017–
2025.
b. Benefits of Continuing the National
Program
The National Program is both needed
and possible because the relationship
between improving fuel economy and
reducing CO2 tailpipe emissions is a
very close one. In the real world, there
is a single pool of technologies for
reducing fuel consumption and CO2
emissions. Using these technologies in
the way that minimizes fuel
consumption also minimizes CO2
emissions. While there are emission
control technologies that can capture or
destroy the pollutants that are produced
by imperfect combustion of fuel (e.g.,
carbon monoxide), there are at present
no such technologies for CO2. In fact,
the only way at present to reduce
tailpipe emissions of CO2 is by reducing
609 These commitment letters in response to the
May 21, 2010 Presidential Memorandum are
available at https://www.epa.gov/otaq/climate/
proposedregs.htm#cl; and https://www.nhtsa.gov/
Laws+&+Regulations/CAFE+-+Fuel+Economy/
Stakeholder+Commitment+Letters (last accessed
August 28, 2011).
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fuel consumption. The National
Program thus has dual benefits: it
conserves energy by improving fuel
economy, as required of NHTSA by
EPCA and EISA; in the process, it
necessarily reduces tailpipe CO2
emissions consonant with EPA’s
purposes and responsibilities under the
Clean Air Act.
Additionally, by setting harmonized
Federal standards to regulate both fuel
economy and greenhouse gas emissions,
the agencies are able to provide a
predictable regulatory framework for the
automotive industry while preserving
the legal authorities of NHTSA, EPA,
and the State of California. Consistent,
harmonized, and streamlined
requirements under the National
Program, both for MYs 2012–2016 and
for MYs 2017–2025, hold out the
promise of continuing to deliver energy
and environmental benefits, cost
savings, and administrative efficiencies
on a nationwide basis that might not be
available under a less coordinated
approach. The National Program makes
it possible for the standards of two
different Federal agencies and the
standards of California and other
‘‘Section 177’’ states to act in a unified
fashion in providing these benefits. A
harmonized approach to regulating
passenger car and light truck fuel
economy and GHG emissions is
critically important given the
interdependent goals of addressing
climate change and ensuring energy
independence and security.
Additionally, a harmonized approach
would help to mitigate the cost to
manufacturers of having to comply with
multiple sets of Federal and State
standards.
One aspect of this phase of the
National Program that is unique for
NHTSA, however, is that the passenger
car and light truck CAFE standards for
MYs 2022–2025 must be conditional,
while EPA’s standards for those model
years will be legally binding when
adopted in this round. EISA requires
NHTSA to issue CAFE standards for ‘‘at
least 1, but not more than 5, model
years.’’ 610 To maintain the
harmonization benefits of the National
Program, NHTSA will therefore propose
and adopt standards for all 9 model
years from 2017–2025, but the last 4
years of standards will not be legally
binding as part of this rulemaking. The
passenger car and light truck CAFE
standards for MYs 2022–2025 will be
determined with finality in a
subsequent, de novo notice and
comment rulemaking conducted in full
compliance with EPCA/EISA and other
610 49
U.S.C. 32902(b)(3)(B).
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applicable law—beyond simply
reviewing the analysis and findings in
the present rulemaking to see whether
they are still accurate and applicable,
and taking a fresh look at all relevant
factors based on the best and most
current information available at that
future time.
To facilitate that future effort, NHTSA
and EPA will conduct a comprehensive
mid-term evaluation. Up to date
information will be developed and
compiled for the evaluation, through a
collaborative, robust, and transparent
process, including notice and comment.
The agencies fully expect to conduct the
mid-term evaluation in close
coordination with the California Air
Resources Board (CARB), consistent
with the agencies’ commitment to
maintaining a single national framework
for regulation of fuel economy and GHG
emissions.611 Prior to beginning
NHTSA’s rulemaking process and EPA’s
mid-term evaluation, the agencies will
jointly prepare a draft Technical
Assessment Report (TAR) to examine
afresh the issues and, in doing so,
conduct similar analyses and
projections as those considered in the
current rulemaking, including technical
and other analyses and projections
relevant to each agency’s authority to set
standards as well as any relevant new
issues that may present themselves. The
agencies will provide an opportunity for
public comment on the draft TAR, and
appropriate peer review will be
performed of underlying analyses in the
TAR. The assumptions and modeling
underlying the TAR will be available to
the public, to the extent consistent with
law. The draft TAR is expected to be
issued no later than November 15, 2017.
After the draft TAR and public
comment, the agencies will consult and
coordinate as NHTSA develops its
NPRM. NHTSA will ensure that the
subsequent final rule will be timed to
provide sufficient lead time for industry
to make whatever changes to their
products that the rulemaking analysis
deems maximum feasible based on the
new information available. At the very
latest, NHTSA will complete its
subsequent rulemaking on the standards
with at least 18 months lead time as
required by EPCA,612 but additional
lead time may be provided.
611 The agencies also fully expect that any
adjustments to the standards as a result of the midterm evaluation process from the levels enumerated
in the current rulemaking will be made with the
participation of CARB and in a manner that
continues the harmonization of state and Federal
vehicle standards.
612 49 U.S.C. 32902(a).
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B. Background
1. Chronology of Events Since the MY
2012–2016 Final Rule Was Issued
Section I above covers the chronology
of events in considerable detail, and we
refer the reader there.
2. How has NHTSA developed the
proposed CAFE standards since the
President’s announcement?
The CAFE standards proposed in this
NPRM are based on much more analysis
conducted by the agencies since July 29,
including in-depth modeling analysis by
DOT/NHTSA to support the proposed
CAFE standards, and further refinement
of a number of our baseline, technology,
and economic assumptions used to
evaluate the proposed standards and
their impacts. This NPRM, the draft
joint TSD, and NHTSA’s PRIA and
EPA’s DRIA contain much more
information about the analysis
underlying these proposed standards.
The following sections provide the basis
for NHTSA’s proposed passenger car
and light truck CAFE standards for MYs
2017–2025, the standards themselves,
the estimated impacts of the proposed
standards, and much more information
about the CAFE program relevant to the
2017–2025 timeframe.
C. Development and Feasibility of the
Proposed Standards
1. How was the baseline vehicle fleet
developed?
a. Why do the agencies establish a
baseline and reference vehicle fleet?
As also discussed in Section II.B
above, in order to determine what levels
of stringency are feasible in future
model years, the agencies must project
what vehicles will exist in those model
years, and then evaluate what
technologies can feasibly be applied to
those vehicles in order to raise their fuel
economy and lower their CO2
emissions. The agencies therefore
established a ‘‘baseline’’ vehicle fleet
representing those vehicles, based on
the best available transparent
information. The agencies then
developed a ‘‘reference’’ fleet, projecting
the baseline fleet sales into MYs 2017–
2025 and accounting for the effect that
the MY 2012–2016 CAFE standards
have on the baseline fleet.613 This
613 In order to calculate the impacts of the
proposed future GHG and CAFE standards, it is
necessary to estimate the composition of the future
vehicle fleet absent those proposed standards in
order to conduct comparisons. The first step in this
process was to develop a fleet based on model year
2008 data. This 2008-based fleet includes vehicle
sales volumes, GHG/fuel economy performance,
and contains a listing of the base technologies on
every 2008 vehicle sold. The second step was to
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reference fleet is then used for
comparisons of technologies’
incremental cost and effectiveness, as
well as for other relevant comparisons
in the rule.
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b. What data did the agencies use to
construct the baseline, and how did
they do so?
As explained in the draft joint TSD,
both agencies used a baseline vehicle
fleet constructed beginning with EPA
fuel economy certification data for the
2008 model year, the most recent model
year for which final data is currently
available from manufacturers. These
data were used as the source for MY
2008 production volumes and some
vehicle engineering characteristics, such
as fuel economy compliance ratings,
engine sizes, numbers of cylinders, and
transmission types.
For this NPRM, NHTSA and EPA
chose again to use MY 2008 vehicle data
as the basis of the baseline fleet. MY
2008 is now the most recent model year
for which the industry had what the
agencies would consider to be ‘‘normal’’
sales. Complete MY 2009 data is now
available for the industry, but the
agencies believe that the model year was
disrupted by the economic downturn
and the bankruptcies of both General
Motors and Chrysler. CAFE compliance
data shows that there was a significant
reduction in the number of vehicles sold
by both companies and by the industry
as a whole. These abnormalities led the
agencies to conclude that MY 2009 data
was likely not representative for
projecting the future fleet for purposes
of this analysis. While MY 2010 data is
likely more representative for projecting
the future fleet, it was not complete and
available in time for it to be used for the
NPRM analysis. Therefore, for purposes
of the NPRM analysis, NHTSA and EPA
chose to use MY 2008 CAFE compliance
data for the baseline since it was the
project that 2008-based fleet volume into MYs
2017–2025. This is called the reference fleet, and
it represents the fleet volumes (but, until later steps,
not levels of technology) that the NHTSA and EPA
expect would exist in MYs 2017–2025 absent any
change due to regulation in 2017–2025.
After determining the reference fleet, a third step
is needed to account for technologies (and
corresponding increases in cost and reductions in
fuel consumption and CO2 emissions) that could be
added to MY 2008-technology vehicles in the
future, taking into previously-promulgated
standards, and assuming MY 2016 standards are
extended through MY2025. NHTSA accomplished
this by using the CAFE model to add technologies
to that MY 2008-based market forecast such that
each manufacturer’s car and truck CAFE and
average CO2 levels reflect baseline standards. The
model’s output, the reference case (or adjusted
baseline, or no-action alternative), is the light-duty
fleet estimated to exist in MYs 2017–2025 without
new GHG/CAFE standards covering MYs 2017–
2025.
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latest, most representative transparent
data set that we had available. However,
the agencies plan to use the MY 2010
data, if available, to develop an updated
market forecast for use in the final rule.
If and when the MY 2010 data becomes
available, NHTSA will place a copy of
this data into its rulemaking docket.
Some information important for
analyzing new CAFE standards is not
contained in the EPA fuel economy
certification data. EPA staff estimated
vehicle wheelbase and track widths
using data from Motortrend.com and
Edmunds.com. This information is
necessary for estimating vehicle
footprint, which is required for the
analysis of footprint-based standards.
Considerable additional information
regarding vehicle engineering
characteristics is also important for
estimating the potential to add new
technologies in response to new CAFE
standards. In general, such information
helps to avoid ‘‘adding’’ technologies to
vehicles that already have the same or
a more advanced technology. Examples
include valvetrain configuration (e.g.,
OHV, SOHC, DOHC), presence of
cylinder deactivation, and fuel delivery
(e.g., MPFI, SIDI). To the extent that
such engineering characteristics were
not available in certification data, EPA
staff relied on data published by Ward’s
Automotive, supplementing this with
information from Internet sites such as
Motortrend.com and Edmunds.com.
NHTSA staff also added some more
detailed engineering characteristics
(e.g., type of variable valve timing) using
data available from ALLDATA® Online.
Combined with the certification data, all
of this information yielded the MY 2008
baseline vehicle fleet. NHTSA also
reviewed information from
manufacturers’ confidential product
plans submitted to the agency, but did
not rely on that information for
developing the baseline or reference
fleets.
After the baseline was created the
next step was to project the sales
volumes for 2017–2025 model years.
EPA used projected car and truck
volumes for this period from Energy
Information Administration’s (EIA’s)
2011 Interim Annual Energy Outlook
(AEO).614 However, AEO projects sales
614 Department of Energy, Energy Information
Administration, Annual Energy Outlook (AEO)
2011, Early Release. Available at https://
www.eia.gov/forecasts/aeo/. Both agencies regard
AEO a credible source not only of such forecasts,
but also of many underlying forecasts, including
forecasts of the size of the future light vehicle
market. The agencies used the early release version
of AEO 2011 and confirmed later that changes
reflected in the final version were insignificant with
respect to the relative volumes of passenger cars
and light trucks.
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only at the car and truck level, not at the
manufacturer and model-specific level,
which are needed in order to estimate
the effects new standards will have on
individual manufacturers. Therefore,
EPA purchased data from CSM–
Worldwide and used their projections of
the number of vehicles of each type
predicted to be sold by manufacturers in
2017–2025.615 This provided the yearby-year percentages of cars and trucks
sold by each manufacturer as well as the
percentages of each vehicle segment.
Using these percentages normalized to
the AEO projected volumes then
provided the manufacturer-specific
market share and model-specific sales
for model years 2011–2016.
The processes for constructing the MY
2008 baseline vehicle fleet and
subsequently adjusting sales volumes to
construct the MY 2017–2025 baseline
vehicle fleet are presented in detail in
Chapter 1 of the Joint Technical Support
Document accompanying today’s
proposed rule.
The agencies assume that without
adoption of the proposed rule, that
during the 2017–2025 period,
manufacturers will not improve fuel
economy levels beyond the levels
required in the MY 2016 standards.
However, it is possible that
manufacturers may be driven by market
forces to raise the fuel economy of their
fleets. The recently-adopted fuel
economy and environment labels
(‘‘window stickers’’), for example, may
make consumers more aware of the
benefits of higher fuel economy, and
may cause them to demand more fuelefficient vehicles during that timeframe.
Moreover, the agencies’ analysis
indicates that some fuel-saving
technologies may save money for
manufacturers. In Chapter X of the
PRIA, NHTSA examines the impact of
an alternative ‘‘market-driven’’ baseline,
which allows for some increases in fuel
economy due to ‘‘voluntary
overcompliance’’ beyond the MY 2016
levels. NHTSA seeks comment on what
assumptions about fuel economy
increases are most likely to accurately
predict what would happen in the
absence of the proposed rule.
NHTSA invites comment on the
process used to develop the market
forecast, and on whether the agencies
should consider alternative approaches
to producing a forecast at the level of
detail we need for modeling. If
commenters wish to offer alternatives,
we ask that they address how
manufacturers’ future fleets would be
615 The agencies explain in Chapter I of the draft
Joint TSD why data from CSM was chosen for
creating the baseline for this rulemaking.
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defined in terms of specific products,
and the sales volumes and technical
characteristics (e.g., fuel economy,
technology content, vehicle weight, and
other engineering characteristics) of
those products. The agency also invites
comment regarding what sensitivity
analyses—if any—we should do related
to the market forecast. For example,
should the agency evaluate the extent to
which its analysis is sensitive to
projections of the size of the market,
manufacturers’ respective market
shares, the relative growth of different
market segments, and or the relative
growth of the passenger car and light
truck markets? If so, how would
commenters suggest that we do that?
c. How is the development of the
baseline fleet for this rule different from
the baseline fleet that NHTSA used for
the MY 2012–2016 (May 2010) final
rule?
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The development of the baseline fleet
for this rulemaking utilizes the same
procedures used in the development of
the baseline fleet for the MY 2012–2016
rulemaking. Compared to that
rulemaking, the change in the baseline
is much less dramatic—the MY 2012–
2016 rulemaking was the first
rulemaking in which NHTSA did not
use manufacturer product plan data to
develop the baseline fleet,616 so
evaluating the difference between the
baseline fleet used in the MY 2011 final
rule and in the MY 2012–2016
rulemaking was informative at that time
regarding some of the major impacts of
that switch. In this proposal, we are
using basically the same MY 2008 based
file as the starting point in the MY
2012–2016 analysis, and simply using
an updated AEO forecast and an
updated CSM forecast. Of those, most
differences are in input assumptions
rather than the basic approach and
methodology. These include changes in
various macroeconomic assumptions
underlying the AEO and CSM forecasts
and the use of results obtained by using
DOE’s National Energy Modeling
System (NEMS) to repeat the AEO 2011
analysis without forcing increased
passenger car volumes, and without
616 The agencies’ reasons for not relying on
product plan data for the development of the
baseline fleet were discussed in the Regulatory
Impact Analysis for the MYs 2012–2016 rulemaking
and at 74 FR 49487–89. While a baseline developed
using publicly and commercially available sources
has both advantages and disadvantages relative to
a baseline developed using manufacturers’ product
plans, NHTSA currently concludes, as it did in the
course of that prior rulemaking, that the advantages
outweigh the disadvantages. Commenters generally
supported the more transparent approach employed
in the MYs 2012–2016 rulemaking.
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assuming post-MY 2016 increases in the
stringency of CAFE standards.617
Another change in the baseline fleet
from the last rulemaking involved our
redefinition of the list of manufacturers
to account for realignment and
ownership changes taking place within
the industry. The reported results
supporting this rulemaking recognize
that Volvo vehicles are no longer a part
of Ford, but are reported as a separate
company, Geely; that Saab vehicles are
no longer part of GM, but are reported
as part of Spyker which purchased Saab
from GM in 2010; and that Chrysler,
along with Ferrari and Maserati, are
reported as Fiat.
In addition, low volume specialty
manufacturers omitted from the analysis
supporting the MY 2012–2016
rulemaking have been included in the
analysis supporting this rulemaking.
These include Aston Martin, Lotus, and
Tesla.
d. How is this baseline different
quantitatively from the baseline that
NHTSA used for the MY 2012–2016
(May 2010) final rule?
As discussed above, the current
baseline was developed from adjusted
MY 2008 compliance data and covers
MY 2017–2025. This section describes,
for the reader’s comparison, some of the
differences between the current baseline
and the MY 2012–2016 CAFE rule
baseline. This comparison provides a
basis for understanding general
characteristics and measures of the
difference between the two baselines.
The current baseline, while developed
using the same methods as the baseline
used for MY 2012–2016 rulemaking,
617 Similar to the analyses supporting the MYs
2012–2016 rulemaking, the agencies have used the
Energy Information Administration’s (EIA’s)
National Energy Modeling System (NEMS) to
estimate the future relative market shares of
passenger cars and light trucks. However, NEMS
methodology includes shifting vehicle sales
volume, starting after 2007, away from fleets with
lower fuel economy (the light-truck fleet) towards
vehicles with higher fuel economies (the passenger
car fleet) in order to facilitate compliance with
CAFE and GHG MYs 2012–2016 standards. Because
we use our market projection as a baseline relative
to which we measure the effects of new standards,
and we attempt to estimate the industry’s ability to
comply with new standards without changing
product mix, the Interim AEO 2011-projected shift
in passenger car market share as a result of required
fuel economy improvements creates a circularity.
Therefore, for the current analysis, the agencies
developed a new projection of passenger car and
light truck sales shares by running scenarios from
the Interim AEO 2011 reference case that first
deactivate the above-mentioned sales-volume
shifting methodology and then hold post-2017
CAFE standards constant at MY 2016 levels.
Incorporating these changes reduced the projected
passenger car share of the light vehicle market by
an average of about 5 percent during 2017–2025.
NHTSA and EPA refer to this as the ‘‘Unforced
Reference Case.’’
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reflects updates to the underlying
commercially-available forecast of
manufacturer and market segment
shares of the future passenger car and
light truck market. Again, the
differences are in input assumptions
rather than the basic approach and
methodology. It also includes changes
in various macroeconomic assumptions
underlying the AEO forecasts and the
use of the AEO Unforced Reference
Case. Another change in the market
input data from the last rulemaking
involved our redefinition of the list of
manufacturers to account for
realignment taking place within the
industry.
Estimated vehicle sales:
The sales forecasts, based on the
Energy Information Administration’s
(EIA’s) Early Annual Energy Outlook for
2011 (Interim AEO 2011), used in the
current baseline indicate that the total
number of light vehicles expected to be
sold during MYs 2012–2016 is 79
million, or about 15.8 million vehicles
annually. NHTSA’s MY 2012–2016 final
rule forecast, based on AEO 2010, of the
total number of light vehicles likely to
be sold during MY 2012 through MY
2016 was 80 million, or about 16
million vehicles annually. Light trucks
are expected to make up 37 percent of
the MY 2016 baseline market forecast in
the current baseline, compared to 34
percent of the baseline market forecast
in the MY 2012–2016 final rule. These
changes in both the overall size of the
light vehicle market and the relative
market shares of passenger cars and
light trucks reflect changes in the
economic forecast underlying AEO,
changes in AEO’s forecast of future fuel
prices, and use of the Unforced
Reference Case.
Estimated manufacturer market
shares:
These changes are reflected below in
Table IV–1, which shows the agency’s
sales forecasts for passenger cars and
light trucks under the current baseline
and the MY 2012–2016 final rule. There
has been a general decrease in MY 2016
forecast overall sales (from AEO) and for
all manufacturers (reflecting CSM’s
forecast of manufacturers’ market
shares), with the exception of Chrysler,
when the current baseline is compared
to that used in the MY 2012–2016
rulemaking. There were no significant
shifts in manufacturers’ market shares
between the two baselines. The effect of
including the low volume specialty
manufacturers and accounting for
known corporate realignments in the
current baseline appear to be negligible.
For individual manufacturers, there
have been shifts in the shares of
passenger car and light trucks, as would
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be expected given that the agency is
relying on different underlying
assumptions as discussed above and in
Chapter 1 of the joint TSD.
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618 Again, Aston Martin, Alfa Romeo, Ferrari,
Maserati, Lotus and Tesla were not included in the
baseline of the MY 2012–2016 rulemaking; Volvo
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vehicles were reported under Ford and Saab
vehicles were reported under GM; and Chrysler was
reported as a separate company whereas now it is
reported as part of Fiat and includes Alfa Romeo,
Ferrari, and Maserati.
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Estimated achieved fuel economy
levels:
The current baseline market forecast
shows industry-wide average fuel
economy levels somewhat lower in MY
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2016 than shown in the baseline market
forecast for the MY 2012–2016
rulemaking. Under the current baseline,
average fuel economy for MY 2016 is
27.0 mpg, versus 27.3 mpg under the
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baseline in the MY 2012–2016
rulemaking. The 0.3 mpg change
relative to the MY 2012–2016
rulemaking’s baseline is the result of
changes in the shares of passenger car
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and light trucks in the MY 2016 market
as noted above—more light trucks
generally equals lower average fuel
economy—and not the result of changes
in the capabilities of the car and truck
fleets.
These differences are shown in greater
detail below in Table IV–2, which
shows manufacturer-specific CAFE
levels (not counting FFV credits that
some manufacturers expect to earn)
from the current baseline versus the MY
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2012–2016 rulemaking baseline for
passenger cars and light trucks. Table
IV–3 shows the combined averages of
these planned CAFE levels in the
respective baseline fleets. These tables
demonstrate that there are no significant
differences in CAFE for either passenger
cars or light trucks at the manufacturer
level between the current baseline and
the MY 2012–2016 rulemaking baseline.
The differences become more significant
at the manufacturer level when
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combined CAFE levels are considered.
Here we see a general decline in CAFE
at the manufacturer level due to the
increased share of light trucks. Because
the agencies have, as for the MY 2012–
2016 rulemaking, based this market
forecast on vehicles in the MY 2008
fleet, these changes in CAFE levels
reflect changes in vehicle mix, not
changes in the fuel economy achieved
by individual vehicle models.
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619 Again, Aston Martin, Alfa Romeo, Ferrari,
Maserati, Lotus and Tesla were not included in the
baseline of the MY 2012–2016 rulemaking; Volvo
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vehicles were reported under Ford and Saab
vehicles were reported under GM; and Chrysler was
reported as a separate company whereas now it is
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reported as part of Fiat and includes Alfa Romeo,
Ferrari, and Maserati.
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e. How does manufacturer product plan
data factor into the baseline used in this
rule?
In December 2010, NHTSA requested
that manufacturers provide information
regarding future product plans, as well
620 Again, Aston Martin, Alfa Romeo, Ferrari,
Maserati, Lotus and Tesla were not included in the
baseline of the MY 2012–2016 rulemaking; Volvo
vehicles were reported under Ford and Saab
vehicles were reported under GM; and Chrysler was
reported as a separate company whereas now it is
reported as part of Fiat and includes Alfa Romeo,
Ferrari, and Maserati.
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as information regarding the context for
those plans (e.g., estimates of future fuel
prices), and estimates of the future
availability, cost, and efficacy of fuelsaving technologies.621 The purpose of
this request was to acquire updated
information regarding vehicle
manufacturers’ future product plans to
assist the agency in assessing what
corporate CAFE standards should be
established for passenger cars and light
trucks manufactured in model years
2017 and beyond. The request was being
621 75
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issued in preparation for today’s joint
NPRM.
NHTSA indicated that it requested
information for MYs 2010–2025
primarily as a basis for subsequent
discussions with individual
manufacturers regarding their
capabilities for the MYs 2017–2025 time
frame as it worked to develop today’s
NPRM. NHTSA indicated that the
information received would supplement
other information to be used by NHTSA
to develop a realistic forecast of the
vehicle market in MY 2017 and beyond,
and to evaluate what technologies may
feasibly be applied by manufacturers to
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achieve compliance with potential
future standards. NHTSA further
indicated that information regarding
later model years could help the agency
gain a better understanding of how
manufacturers’ plans through MY 2025
relate to their longer-term expectations
regarding foreseeable regulatory
requirements, market trends, and
prospects for more advanced
technologies.
NHTSA also indicated that it would
consider information regarding the
model years requested when
considering manufacturers’ planned
schedules for redesigning and
freshening their products, in order to
examine how manufacturers anticipate
tying technology introduction to
product design schedules. In addition,
the agency requested information
regarding manufacturers’ estimates of
the future vehicle population, and fuel
economy improvements and
incremental costs attributed to
technologies reflected in those plans.
Given the importance that responses
to this request for comment may have in
informing NHTSA’s proposed CAFE
rulemaking, whether as part of the basis
for the standards or as an independent
check on them, NHTSA requested that
commenters fully respond to each
question, particularly by providing
information regarding the basis for
technology costs and effectiveness
estimates.
We have already noted that in past
CAFE rulemakings, NHTSA used
manufacturers’ product plans—and
other information—to build market
forecasts providing the foundation for
the agency’s rulemaking analysis. This
issue has been the subject of much
debate over the past several rulemakings
since NHTSA began actively working on
CAFE again following the lifting of the
appropriations riders in 2001. The
agency continues to believe that these
market forecasts reflected the most
technically sound forecasts the agency
could have then developed for this
purpose. Because the agency could not
disclose confidential business
information in manufacturers’ product
plans, NHTSA provided summarized
information, such as planned CAFE
levels and technology application rates,
rather than the fuel economy levels and
technology content of specific vehicle
model types.
In preparing the MY 2012–2016 rule
jointly with EPA, however, NHTSA
revisited this practice, and concluded
that for that rulemaking, it was
important that all reviewers have equal
access to all details of NHTSA’s
analysis. NHTSA provided this level of
transparency by releasing not only the
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agency’s CAFE modeling system, but
also by releasing all model inputs and
outputs for the agency’s analysis, all of
which are available on NHTSA’s Web
site at https://www.nhtsa.gov/fueleconomy. Therefore, NHTSA worked
with EPA, as it did in preparing for
analysis supporting today’s proposal, to
build a market forecast based on
publicly- and commercially-available
sources. NHTSA continues to believe
that the potential technical benefits of
relying on manufacturers’ plans for
future products are outweighed by the
transparency gained in building a
market forecast that does not rely on
confidential business information, but
also continues to find product plan
information to be an important point of
reference for meetings with individual
manufacturers. We seek comment on
what value manufacturer product plan
might have in the future, and whether
it continues to be useful to request
manufacturer product plans to inform
rulemaking analyses, specifically the
baseline forecast used in rulemaking
analyses.
f. What sensitivity analyses is NHTSA
conducting on the baseline?
As discussed below in Section IV.G,
when evaluating the potential impacts
of new CAFE standards, NHTSA
considered the potential that, depending
on how the cost and effectiveness of
available technologies compare to the
price of fuel, manufacturers would add
more fuel-saving technology than might
be required solely for purposes of
complying with CAFE standards. This
reflects that agency’s consideration that
there could, in the future, be at least
some market for fuel economy
improvements beyond the required MY
2016 CAFE levels. In this sensitivity
analysis, this causes some additional
technology to be applied, more so under
baseline standards than under the more
stringent standards proposed today by
the agency. Results of this sensitivity
analysis are summarized in Section IV.G
and in NHTSA’s PRIA accompanying
today’s notice.
g. How else is NHTSA considering
looking at the baseline for the final rule?
Beyond the sensitivity analysis
discussed above, NHTSA is also
considering developing and using a
vehicle choice model to estimate the
extent to which sales volumes would
shift in response to changes in vehicle
prices and fuel economy levels. As
discussed IV.C.4, the agency is currently
sponsoring research directed toward
developing such a model. If that effort
is successful, the agency will consider
integrating the model into the CAFE
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modeling system and using the
integrated system for future analysis of
potential CAFE standards. If the agency
does so, we expect that the vehicle
choice model would impact estimated
fleet composition not just under new
CAFE standards, but also under baseline
CAFE standards.
2. How were the technology inputs
developed?
As discussed above in Section II.E, for
developing the technology inputs for
these proposed MYs 2017–2025 CAFE
and GHG standards, the agencies
primarily began with the technology
inputs used in the MYs 2012–2016
CAFE final rule and in the 2010 TAR.
The agencies have also updated
information based on newly completed
FEV tear down studies and new vehicle
simulation work conducted by Ricardo
Engineering, both of which were
contracted by EPA. Additionally, the
agencies relied on a model developed by
Argonne National Laboratory to estimate
hybrid, plug-in hybrid and electric
vehicle battery costs. More detail is
available regarding how the agencies
developed the technology inputs for this
proposal above in Section II.E, in
Chapter 3 of the Joint TSD, and in
Section V of NHTSA’s PRIA.
a. What technologies does NHTSA
consider?
Section II.E.1 above describes the
fuel-saving technologies considered by
the agencies that manufacturers could
use to improve the fuel economy of their
vehicles during MYs 2017–2025. Many
of the technologies described in this
section are readily available, well
known, and could be incorporated into
vehicles once production decisions are
made. Other technologies, added for this
rulemaking analysis, are considered that
are not currently in production, but are
beyond the initial research phase, under
development and are expected to be in
production in the next 5–10 years. As
discussed, the technologies considered
fall into five broad categories: engine
technologies, transmission technologies,
vehicle technologies, electrification/
accessory technologies, and hybrid
technologies. Table IV–4 below lists all
the technologies considered and
provides the abbreviations used for
them in the CAFE model,622 as well as
their year of availability, which for
purposes of NHTSA’s analysis means
the first model year in the rulemaking
622 The abbreviations are used in this section both
for brevity and for the reader’s reference if they
wish to refer to the expanded decision trees and the
model input and output sheets, which are available
in Docket No. NHTSA–2010–0131 and on NHTSA’s
Web site.
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period that the CAFE model is allowed
to apply a technology to a
manufacturer’s fleet.623 ‘‘Year of
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622 The abbreviations are used in this section both
for brevity and for the reader’s reference if they
wish to refer to the expanded decision trees and the
model input and output sheets, which are available
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availability’’ recognizes that
technologies must achieve a level of
technical viability before they can be
implemented in the CAFE model, and
are thus a means of constraining
in Docket No. NHTSA–2010–0131 and on NHTSA’s
Web site.
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technology use until such time as it is
considered to be technologically
feasible. For a more detailed description
of each technology and their costs and
effectiveness, we refer the reader to
Chapter 3 of the Joint TSD and Section
V of NHTSA’s PRIA.
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For purposes of this proposal and as
discussed in greater detail in the Joint
TSD, NHTSA and EPA built upon the
list of technologies used by agencies for
the MYs 2017–2025 CAFE and GHG
standards. NHTSA and EPA had
additional technologies to the list that
that the agencies expect to be in
production during the MYs 2017–2025
timeframe. These new technologies
included higher BMEP turbocharged
and downsized engines, advanced
diesel engines, higher efficiency
transmissions, additional mass
reduction levels, PHEVs, EVs, etc.
b. How did NHTSA determine the
costs and effectiveness of each of these
technologies for use in its modeling
analysis?
Building on cost estimates developed
for the MYs 2012–2016 CAFE and GHG
final rule and the 2010 TAR, the
agencies incorporated new cost and
effectiveness estimates for the new
technologies being considered and some
of the technologies carried over from the
MYs 2012–2016 final rule and 2010
TAR. This joint work is reflected in
Chapter 3 of the Joint TSD and in
Section II of this preamble, as
summarized below. For more detailed
information on the effectiveness and
cost of fuel-saving technologies, please
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refer to Chapter 3 of the Joint TSD and
Section V of NHTSA’s PRIA.
For this proposal the FEV tear down
work was expanded to include an 8speed DCT, a power-split hybrid, which
was used to determine a P2 hybrid cost,
and a mild hybrid with stop-start
technology. Additionally, battery costs
have been revised using Argonne
National Laboratory’s battery cost
model. The model developed by ANL
allows users to estimate unique battery
pack cost using user customized input
sets for different hybridization
applications, such as strong hybrid,
PHEV and EV. Based on staff input and
public feedback EPA and NHTSA have
modified how the indirect costs, using
ICMs, were derived and applied. The
updates are discussed at length in
Chapter 3 of the Joint TSD and in
Chapter 5 of NHTSA’s PRIA.
Some of the effectiveness estimates
for technologies applied in MYs 2012–
2016 and 2010 TAR have remained the
same. However, nearly all of the
effectiveness estimates for carryover
technologies have been updated based
on a newer version of EPA’s lumped
parameter model, which was calibrated
by the vehicle simulation work
performed by Ricardo Engineering. The
Ricardo simulation study was also used
to estimate the effectiveness for the
technologies newly considered for this
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proposal like higher BMEP turbocharged
and downsized engine, advanced
transmission technologies and P2
Hybrids. While NHTSA and EPA apply
technologies differently, the agencies
have sought to ensure that the resultant
effectiveness of applying technologies is
consistent between the two agencies.
NHTSA notes that, in developing
technology cost and effectiveness
estimates, the agencies have made every
effort to hold constant aspects of vehicle
performance and utility typically valued
by consumers, such as horsepower,
carrying capacity, drivability, durability,
noise, vibration and harshness (NVH)
and towing and hauling capacity. For
example, NHTSA includes in its
analysis technology cost and
effectiveness estimates that are specific
to performance passenger cars (i.e.,
sports cars), as compared to
nonperformance passenger cars. NHTSA
seeks comment on the extent to which
commenters believe that the agencies
have been successful in holding
constant these elements of vehicle
performance and utility in developing
the technology cost and effectiveness
estimates.
The agency notes that the technology
costs included in this proposal take into
account only those associated with the
initial build of the vehicle. Although
comments were received to the MYs
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2012–2016 rulemaking that suggested
there could be additional maintenance
required with some new technologies
(e.g., turbocharging, hybrids, etc.), and
that additional maintenance costs could
occur as a result, the agencies have not
explicitly incorporated maintenance
costs (or potential savings) as a separate
element in this analysis. The agency
requests comments on this topic and
will undertake a more detailed review of
these potential costs for the final rule.
For some of the technologies,
NHTSA’s inputs, which are designed to
be as consistent as practicable with
EPA’s, indicate negative incremental
costs. In other words, the agency is
estimating that some technologies, if
applied in a manner that holds
performance and utility constant, will,
following initial investment (for, e.g.,
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R&D and tooling) by the manufacturer
and its suppliers, incrementally
improve fuel savings and reduce vehicle
costs. Nonetheless, in the agency’s
central analysis, these and other
technologies are applied only insofar as
is necessary to achieve compliance with
standards defining any given regulatory
alternative (where the baseline no action
alternative assumes CAFE standards are
held constant after MY 2016). The
agency has also performed a sensitivity
analysis involving market-based
application of technology—that is, the
application of technology beyond the
point needed to achieve compliance, if
the cost of the technology is estimated
to be sufficiently attractive relative to
the accompanying fuel savings. NHTSA
has invited comment on all of its
technology estimates, and specifically
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requests comment on the likelihood that
each technology will, if applied in a
manner that holds vehicle performance
and utility constant, be able to both
deliver the estimated fuel savings and
reduce vehicle cost. The agency also
invites comment on whether, for the
final rule, its central analysis should be
revised to include estimated marketdriven application of technology.
The tables below provide examples of
the incremental cost and effectiveness
estimates employed by the agency in
developing this proposal, according to
the decision trees used in the CAFE
modeling analysis. Thus, the
effectiveness and cost estimates are not
absolute to a single reference vehicle,
but are incremental to the technology or
technologies that precede it.
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c. How does NHTSA use these
assumptions in its modeling analysis?
NHTSA relies on several inputs and
data files to conduct the compliance
analysis using the CAFE model, as
discussed further below and in Chapter
5 of the PRIA. For the purposes of
applying technologies, the CAFE model
primarily uses three data files, one that
contains data on the vehicles expected
to be manufactured in the model years
covered by the rulemaking and
identifies the appropriate stage within
the vehicle’s life-cycle for the
technology to be applied, one that
contains data/parameters regarding the
available technologies the model can
apply, and one that contains economic
assumption inputs for calculating the
costs and benefits of the standards. The
inputs for the first two data files are
discussed below.
As discussed above, the CAFE 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 standards. The
vehicle market is defined on a year-byyear, model-by-model, engine-byengine, and transmission-bytransmission basis, such that each
defined vehicle model refers to a
separately defined engine and a
separately defined transmission.
Comparatively, EPA’s OMEGA model
defines the vehicle market using
representative vehicles at the vehicle
platform level, which are binned into 5
year timeframes instead of year-by-year.
For the current standards, which
cover MYs 2017–2025, the light-duty
vehicle (passenger car and light truck)
market forecast was developed jointly
by NHTSA and EPA staff using MY
2008 CAFE compliance data. The MY
2008 compliance data includes about
1,100 vehicle models, about 400 specific
engines, and about 200 specific
transmissions, which is a somewhat
lower level of detail in the
representation of the vehicle market
than that used by NHTSA in prior CAFE
analyses—previous analyses would
count a vehicle as ‘‘new’’ in any year
when significant technology differences
are made, such as at a redesign.624
However, within the limitations of
information that can be made available
to the public, it provides the foundation
639 See, e.g., Kleit A.N., 1990. ‘‘The Effect of
Annual Changes in Automobile Fuel Economy
Standards.’’ Journal of Regulatory Economics 2:
151–172 (Docket EPA–HQ–OAR–2009–0472–0015);
Berry, Steven, James Levinsohn, and Ariel Pakes,
1995. ‘‘Automobile Prices in Market Equilibrium,’’
Econometrica 63(4): 841–940 (Docket NHTSA–
2009–0059–0031); McCarthy, Patrick S., 1996.
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for a reasonable analysis of
manufacturer-specific costs and the
analysis of attribute-based CAFE
standards, and is much greater than the
level of detail used by many other
models and analyses relevant to lightduty vehicle fuel economy.625
In addition to containing data about
each vehicle, engine, and transmission,
this file contains information for each
technology under consideration as it
pertains to the specific vehicle (whether
the vehicle is equipped with it or not),
the estimated model year the vehicle is
undergoing a refresh or redesign, and
information about the vehicle’s subclass
for purposes of technology application.
In essence, the model considers whether
it is appropriate to apply a technology
to a vehicle.
Is a vehicle already equipped, or can it
not be equipped, with a particular
technology?
The market forecast file provides
NHTSA the ability to identify, on a
technology-by-technology basis, which
technologies may already be present
(manufactured) on a particular vehicle,
engine, or transmission, or which
technologies are not applicable (due to
technical considerations or engineering
constraints) to a particular vehicle,
engine, or transmission. These
identifications are made on a model-bymodel, engine-by-engine, and
transmission-by-transmission basis. For
example, if the market forecast file
indicates that Manufacturer X’s Vehicle
Y is manufactured with Technology Z,
then for this vehicle Technology Z will
be shown as used. Additionally, NHTSA
has determined that some technologies
are only suitable or unsuitable when
certain vehicle, engine, or transmission
conditions exist. For example,
secondary axle disconnect is only
suitable for 4WD vehicles and cylinder
deactivation is unsuitable for any engine
with fewer than 6 cylinders. Similarly,
comments received to the 2008 NPRM
indicated that cylinder deactivation
could not likely be applied to vehicles
equipped with manual transmissions
during the rulemaking timeframe, due
primarily to the cylinder deactivation
system not being able to anticipate gear
shifts. The CAFE model employs
‘‘engineering constraints’’ to address
issues like these, which are a
programmatic method of controlling
technology application that is
independent of other constraints. Thus,
the market forecast file would indicate
that the technology in question should
not be applied to the particular vehicle/
engine/transmission (i.e., is
unavailable). Since multiple vehicle
models may be equipped with an engine
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or transmission, this may affect multiple
models. In using this aspect of the
market forecast file, NHTSA ensures the
CAFE model only applies technologies
in an appropriate manner, since before
any application of a technology can
occur, the model checks the market
forecast to see if it is either already
present or unavailable. NHTSA seeks
comment on the continued
appropriateness of the engineering
constraints used by the model, and
specifically whether many of the
technical constraints will be resolved
(and therefore the engineering
constraints should be changed) given
the increased focus of engineering
resources that will be working to solve
these technical challenges.
Whether a vehicle can be equipped
with a particular technology could also
theoretically depend on certain
technical considerations related to
incorporating the technology into
particular vehicles. For example, GM
commented on the MY 2012–2016
NPRM that there are certain issues in
implementing turbocharging and
downsizing technologies on full-size
trucks, like concerns related to engine
knock, drivability, control of boost
pressure, packaging complexity,
enhanced cooling for vehicles that are
designed for towing or hauling, and
noise, vibration and harshness. NHTSA
stated in response that we believed that
such technical considerations are well
recognized within the industry and it is
standard industry practice to address
each during the design and
development phases of applying
turbocharging and downsizing
technologies. The cost and effectiveness
estimates used in the final rule for MYs
2012–2016, as well as the cost and
effectiveness estimates employed in this
NPRM, are based on analysis that
assumes each of these factors is
addressed prior to production
implementation of the technologies.
NHTSA continues to believe that these
issues are accounted for by industry, but
we seek comment on whether the
engineering constraints should be used
to address concerns like these (and if so,
how), or alternatively, whether some of
the things that the agency currently
treats as engineering constraints should
be (or actually are) accounted for in the
cost and effectiveness estimates through
assumptions like those described above,
and whether the agency might be
double-constraining the application of
technology.
Is a vehicle being redesigned or
refreshed?
Manufacturers typically plan vehicle
changes to coincide with certain stages
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of a vehicle’s life cycle that are
appropriate for the change, or in this
case the technology being applied. In
the automobile industry there are two
terms that describe when technology
changes to vehicles occur: Redesign and
refresh (i.e., freshening). Vehicle
redesign usually refers to significant
changes to a vehicle’s appearance,
shape, dimensions, and powertrain.
Redesign is traditionally associated with
the introduction of ‘‘new’’ vehicles into
the market, often characterized as the
‘‘next generation’’ of a vehicle, or a new
platform. Vehicle refresh usually refers
to less extensive vehicle modifications,
such as minor changes to a vehicle’s
appearance, a moderate upgrade to a
powertrain system, or small changes to
the vehicle’s feature or safety equipment
content. Refresh is traditionally
associated with mid-cycle cosmetic
changes to a vehicle, within its current
generation, to make it appear ‘‘fresh.’’
Vehicle refresh generally occurs no
earlier than two years after a vehicle
redesign, or at least two years before a
scheduled redesign. To be clear, this is
a general description of how
manufacturers manage their product
lines and refresh and redesign cycles
but in some cases the timeframes could
be shorter and others longer depending
on market factors, regulations, etc. For
the majority of technologies discussed
today, manufacturers will only be able
to apply them at a refresh or redesign,
because their application would be
significant enough to involve some level
of engineering, testing, and calibration
work.626
Some technologies (e.g., those that
require significant revision) are nearly
always applied only when the vehicle is
expected to be redesigned, like
turbocharging and engine downsizing,
or conversion to diesel or hybridization.
Other technologies, like cylinder
deactivation, electric power steering,
and low rolling resistance tires can be
applied either when the vehicle is
expected to be refreshed or when it is
expected to be redesigned, while low
friction lubricants, can be applied at any
time, regardless of whether a refresh or
redesign event is conducted.
Accordingly, the model will only apply
a technology at the particular point
deemed suitable. These constraints are
626 For example, applying material substitution
through weight reduction, or even something as
simple as low rolling-resistance tires, to a vehicle
will likely require some level of validation and
testing to ensure that the vehicle may continue to
be certified as compliant with NHTSA’s Federal
Motor Vehicle Safety Standards (FMVSS). Weight
reduction might affect a vehicle’s crashworthiness;
low rolling-resistance tires might change a vehicle’s
braking characteristics or how it performs in crash
avoidance tests.
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intended to produce results consistent
with how we assume manufacturers will
apply technologies in the future based
on how they have historically
implemented new technologies. For
each technology under consideration,
NHTSA specifies whether it can be
applied any time, at refresh/redesign, or
only at redesign. The data forms another
input to the CAFE model. NHTSA
develops redesign and refresh schedules
for each of a manufacturer’s vehicles
included in the analysis, essentially
based on the last known redesign year
for each vehicle and projected forward
using a 5 to 8-year redesign and a 2–3
year refresh cycle, and this data is also
stored in the market forecast file. While
most vehicles are projected to follow a
5-year redesign a few of the niche
market or small-volume manufacturer
vehicles (i.e. luxury and performance
vehicles) and large trucks are assumed
to have 6- to 8-year redesigns based on
historic redesign schedules and the
agency’s understanding of
manufacturers’ intentions moving
forward. This approach is used because
of the nature of the current baseline,
which as a single year of data does not
contain its own refresh and redesign
cycle cues for future model years, and
to ensure the complete transparency of
the agency’s analysis. We note that this
approach is different from what NHTSA
has employed previously for
determining redesign and refresh
schedules, where NHTSA included the
redesign and refresh dates in the market
forecast file as provided by
manufacturers in confidential product
plans. Vehicle redesign/refresh
assumptions are discussed in more
detail in Chapter 5 of the PRIA and in
Chapter 3 of the TSD.
NHTSA has previously received
comments stating that manufacturers do
not necessarily adhere to strict five-year
redesign cycles, and may add significant
technologies by redesigning vehicles at
more frequent intervals, albeit at higher
costs. Conversely, other comments
received stated that as compared to fullline manufacturers, small-volume
manufacturers in fact may have 7 to 8year redesign cycles.627 The agency
627 In the MY 2011 final rule, NHTSA noted that
the CAR report submitted by the Alliance, prepared
by the Center for Automotive Research and EDF,
stated that ‘‘For a given vehicle line, the time from
conception to first production may span two and
one-half to five years,’’ but that ‘‘The time from first
production (‘‘Job#1’’) to the last vehicle off the line
(‘‘Balance Out’’) may span from four to five years
to eight to ten years or more, depending on the
dynamics of the market segment.’’ The CAR report
then stated that ‘‘At the point of final production
of the current vehicle line, a new model with the
same badge and similar characteristics may be
ready to take its place, continuing the cycle, or the
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believes that manufacturers can and will
accomplish much improvement in fuel
economy and GHG reductions while
applying technology consistent with
their redesign schedules.
Once the model indicates that a
technology should be applied to a
vehicle, the model must evaluate which
technology should be applied. This will
depend on the vehicle subclass to which
the vehicle is assigned; what
technologies have already been applied
to the vehicle (i.e., where in the
‘‘decision tree’’ the vehicle is); when the
technology is first available (i.e., year of
availability); whether the technology is
still available (i.e., ‘‘phase-in caps’’); and
the costs and effectiveness of the
technologies being considered.
Technology costs may be reduced, in
turn, by learning effects and short- vs.
long-term ICMs, while technology
effectiveness may be increased or
reduced by synergistic effects between
technologies. In the technology input
file, NHTSA has developed a separate
set of technology data variables for each
of the twelve vehicle subclasses. Each
set of variables is referred to as an
‘‘input sheet,’’ so for example, the
subcompact passenger car input sheet
holds the technology data that is
appropriate for the subcompact
subclass. Each input sheet contains a
list of technologies available for
members of the particular vehicle
subclass. The following items are
provided for each technology: The name
of the technology, its abbreviation, the
decision tree with which it is
associated, the (first) year in which it is
available, the year-by-year cost
estimates and effectiveness (fuel
consumption reduction) estimates, its
applicability and the consumer value
old model may be dropped in favor of a different
product.’’ See NHTSA–2008–0089–0170.1,
Attachment 16, at 8 (393 of pdf). NHTSA explained
that this description, which states that a vehicle
model will be redesigned or dropped after 4–10
years, was consistent with other characterizations of
the redesign and freshening process, and supported
the 5-year redesign and 2–3 year refresh cycle
assumptions used in the MY 2011 final rule. See
id., at 9 (394 of pdf). Given that the situation faced
by the auto industry today is not so wholly different
from that in March 2009, when the MY 2011 final
rule was published, and given that the commenters
did not present information to suggest that these
assumptions are unreasonable (but rather simply
that different manufacturers may redesign their
vehicles more or less frequently, as the range of
cycles above indicates), NHTSA believes that the
assumptions remain reasonable for purposes of this
NPRM analysis. See also ‘‘Car Wars 2009–2012, The
U.S. automotive product pipeline,’’ John Murphy,
Research Analyst, Merrill Lynch research paper,
May 14, 2008 and ‘‘Car Wars 2010–2013, The U.S.
automotive product pipeline,’’ John Murphy,
Research Analyst, Bank of America/Merrill Lynch
research paper, July 15, 2009. Available at https://
www.autonews.com/assets/PDF/CA66116716.PDF
(last accessed October 11, 2011).
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loss. The phase-in values and the
potential stranded capital costs are
common for all vehicle subclasses and
are thus listed in a separate input sheet
that is referenced for all vehicle
subclasses.
To which vehicle subclass is the vehicle
assigned?
As part of its consideration of
technological feasibility, the agency
evaluates whether each technology
could be implemented on all types and
sizes of vehicles, and whether some
differentiation is necessary in applying
certain technologies to certain types and
sizes of vehicles, and with respect to the
cost incurred and fuel consumption and
CO2 emissions reduction achieved when
doing so. The 2010 NAS Report
differentiated technology application
using eight vehicle ‘‘classes’’ (4 car
classes and 4 truck classes).628 NAS’s
purpose in separating vehicles into
these classes was to create groups of
‘‘like’’ vehicles, i.e., vehicles similar in
size, powertrain configuration, weight,
and consumer use, and for which
similar technologies are applicable.
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628 The NAS classes included two-seater
convertibles and coupes; small cars; intermediate
and large cars; high-performance sedans; unit-body
standard trucks; unit-body high-performance trucks;
body-on-frame small and midsize trucks; and body.
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NAS also used these vehicle classes
along with powertrain configurations
(e.g..4 cylinder, 6 cylinder or 8 cylinder
engines) to determine unique cost and
effectiveness estimates for each class of
vehicles.
NHTSA similarly differentiates
vehicles by ‘‘subclass’’ for the purpose
of applying technologies to ‘‘like’’
vehicles and assessing their incremental
costs and effectiveness. NHTSA assigns
each vehicle manufactured in the
rulemaking period to one of 12
subclasses: For passenger cars,
Subcompact, Subcompact Performance,
Compact, Compact Performance,
Midsize, Midsize Performance, Large,
and Large Performance; and for light
trucks, Small SUV/Pickup/Van, Midsize
SUV/Pickup/Van, Large SUV/Pickup/
Van, and Minivan. The agency seeks
comment on the appropriateness of
these 12 subclasses for the MYs 2017–
2025 timeframe. The agency is also
seeking comment on the continued
appropriateness of maintaining separate
‘‘performance’’ vehicle classes or if as
fuel economy stringency increases the
market for performance vehicles will
decrease.
For this NPRM, NHTSA divides the
vehicle fleet into subclasses based on
model inputs, and applies subclassspecific estimates, also from model
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inputs, of the applicability, cost, and
effectiveness of each fuel-saving
technology. The model’s estimates of
the cost to improve the fuel economy of
each vehicle model thus depend upon
the subclass to which the vehicle model
is assigned. Each vehicle’s subclass is
stored in the market forecast file. When
conducting a compliance analysis, if the
CAFE model seeks to apply technology
to a particular vehicle, it checks the
market forecast to see if the technology
is available and if the refresh/redesign
criteria are met. If these conditions are
satisfied, the model determines the
vehicle’s subclass from the market data
file, which it then uses to reference
another input called the technology
input file. NHTSA reviewed its
methodology for dividing vehicles into
subclasses for purposes of technology
application that it used in the MY 2011
final rule and for the MYs 2012–2016
rulemaking, and concluded that the
same methodology would be
appropriate for this NPRM for MYs
2017–2025. Vehicle subclasses are
discussed in more detail in Chapter 5 of
the PRIA and in Chapter 3 of the TSD.
For the reader’s reference, the
subclasses and example vehicles from
the market forecast file are provided in
the tables below.
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NHTSA’s methodology for technology
analysis evaluates the application of
individual technologies and their
incremental costs and effectiveness.
Individual technologies are assessed
relative to the prior technology state,
which means that it is crucial to
understand what technologies are
already present on a vehicle in order to
determine correct incremental cost and
effectiveness values. The benefit of the
incremental approach is transparency in
accounting, insofar as when individual
technologies are added incrementally to
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individual vehicles, it is clear and easy
to determine how costs and
effectiveness add up as technology
levels increase and explicitly
accounting for any synergies that exist
between technologies which are already
present on the vehicle and new
technologies being applied.
To keep track of incremental costs
and effectiveness and to know which
technology to apply and in which order,
the CAFE model’s architecture uses a
logical sequence, which NHTSA refers
to as ‘‘decision trees,’’ for applying fuel
economy-improving technologies to
individual vehicles. For purposes of this
proposal, NHTSA reviewed the MYs
2012–2016 final rule’s technology
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sequencing architecture, which was
based on the MY 2011 final rule’s
decision trees that were jointly
developed by NHTSA and Ricardo, and,
as appropriate, updated the decision
trees to include new technologies that
have been defined for the MYs 2017–
2025 timeframe.
In general, and as described in great
detail in Chapter 5 of the current
PRIA,629 each technology is assigned to
one of the five following categories
based on the system it affects or
impacts: Engine, transmission,
electrification/accessory, hybrid or
629 Additional details about technologies are
categorized can be found in the MY 2011 final rule.
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What technologies have already been
applied to the vehicle (i.e., where in the
‘‘decision trees’’ is it)?
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vehicle. Each of these categories has its
own decision tree that the CAFE model
uses to apply technologies sequentially
during the compliance analysis. The
decision trees were designed and
configured to allow the CAFE model to
apply technologies in a cost-effective,
logical order that also considers ease of
implementation. For example, software
or control logic changes are
implemented before replacing a
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component or system with a completely
redesigned one, which is typically a
much more expensive and integration
intensive option. In some cases, and as
appropriate, the model may combine the
sequential technologies shown on a
decision tree and apply them
simultaneously, effectively developing
dynamic technology packages on an asneeded basis. For example, if
compliance demands indicate, the
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model may elect to apply LUB, EFR, and
ICP on a dual overhead cam engine, if
they are not already present, in one
single step. An example simplified
decision tree for engine technologies is
provided below; the other simplified
decision trees may be found in Chapter
5 of the PRIA. Expanded decision trees
are available in the docket for this
NPRM.
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Each technology within the decision
trees has an incremental cost and an
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incremental effectiveness estimate
associated with it, and estimates are
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specific to a particular vehicle subclass
(see the tables in Chapter 5 of the PRIA).
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Each technology’s incremental estimate
takes into account its position in the
decision tree path. If a technology is
located further down the decision tree,
the estimates for the costs and
effectiveness values attributed to that
technology are influenced by the
incremental estimates of costs and
effectiveness values for prior technology
applications. In essence, this approach
accounts for ‘‘in-path’’ effectiveness
synergies, as well as cost effects that
occur between the technologies in the
same path. When comparing cost and
effectiveness estimates from various
sources and those provided by
commenters in this and the previous
CAFE rulemakings, it is important that
the estimates evaluated are analyzed in
the proper context, especially as
concerns their likely position in the
decision trees and other technologies
that may be present or missing. Not all
estimates available in the public domain
or that have been (or will be) offered for
the agencies’ consideration can be
evaluated in an ‘‘apples-to-apples’’
comparison with those used by the
CAFE model, since in some cases the
order of application, or included
technology content, is inconsistent with
that assumed in the decision tree.
The MY 2011 final rule discussed in
detail the revisions and improvements
made to the CAFE model and decision
trees during that rulemaking process,
including the improved handling and
accuracy of valve train technology
application and the development and
implementation of a method for
accounting path-dependent correction
factors in order to ensure that
technologies are evaluated within the
proper context. The reader should
consult the MY 2011 final rule
documents for further information on
these modeling techniques, all of which
continued to be utilized in developing
this proposal.630 To the extent that the
decision trees have changed for
purposes of the MYs 2012–2016 final
rule and this NPRM, it was due not to
revisions in the order of technology
application, but rather to redefinitions
of technologies or addition or
subtraction of technologies.
Is the next technology available in this
model year?
Some of technologies considered are
available on vehicles today, and thus
will be available for application (albeit
in varying degrees) in the model starting
in MY 2017. Other technologies,
630 See, e.g., 74 FR 14238–46 (Mar. 30, 2009) for
a full discussion of the decision trees in NHTSA’s
MY 2011 final rule, and Docket No. NHTSA–2009–
0062–0003.1 for an expanded decision tree used in
that rulemaking.
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however, will not become available for
purposes of NHTSA’s analysis until
later in the rulemaking time frame.
When the model is considering whether
to add a technology to a vehicle, it
checks its year of availability—if the
technology is available, it may be added;
if it is not available, the model will
consider whether to switch to a different
decision tree to look for another
technology, or will skip to the next
vehicle in a manufacturer’s fleet. The
year of availability for each technology
is provided above in Table IV–4.
The agency has received comments
previously stating that if a technology is
currently available or available prior to
the rulemaking timeframe that it should
be immediately made available in the
model. In response, as discussed above,
technology ‘‘availability’’ is not
determined based simply on whether
the technology exists, but depends also
on whether the technology has achieved
a level of technical viability that makes
it appropriate for widespread
application. This depends in turn on
component supplier constraints, capital
investment and engineering constraints,
and manufacturer product cycles,
among other things. Moreover, even if a
technology is available for application,
it may not be available for every vehicle.
Some technologies may have
considerable fuel economy benefits, but
cannot be applied to some vehicles due
to technological constraints—for
example, cylinder deactivation cannot
be applied to vehicles with current 4cylinder engines (because not enough
cylinders are present to deactivate some
and continue moving the vehicle) or on
vehicles with manual transmissions
within the rulemaking timeframe. The
agencies have provided for increases
over time to reach the mpg level of the
MY 2025 standards precisely because of
these types of constraints, because they
have a real effect on how quickly
manufacturers can apply technology to
vehicles in their fleets. NHTSA seeks
comment on the appropriateness of the
assumed years of availability.
Has the technology reached the phasein cap for this model year?
Besides the refresh/redesign cycles
used in the CAFE model, which
constrain the rate of technology
application at the vehicle level so as to
ensure a period of stability following
any modeled technology applications,
the other constraint on technology
application employed in NHTSA’s
analysis is ‘‘phase-in caps.’’ Unlike
vehicle-level cycle settings, phase-in
caps constrain technology application at
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the vehicle manufacturer level.631 They
are intended to reflect a manufacturer’s
overall resource capacity available for
implementing new technologies (such
as engineering and development
personnel and financial resources),
thereby ensuring that resource capacity
is accounted for in the modeling
process. At a high level, phase-in caps
and refresh/redesign cycles work in
conjunction with one another to avoid
the modeling process out-pacing an
OEM’s limited pool of available
resources during the rulemaking time
frame and the years leading up to the
rulemaking time frame, especially in
years where many models may be
scheduled for refresh or redesign. Even
though this rulemaking is being
proposed 5 years before it takes effect,
OEM’s will still be utilizing their
limited resources to meet the MYs
2012–2016 CAFE standards. This helps
to ensure technological feasibility and
economic practicability in determining
the stringency of the standards.
NHTSA has been developing the
concept of phase-in caps for purposes of
the agency’s modeling analysis over the
course of the last several CAFE
rulemakings, as discussed in greater
detail in the MY 2011 final rule,632 in
the MY 2012–2016 final rule and in
Chapter 5 of the PRIA and Chapter 3 of
the Joint TSD. The MYs 2012–2016 final
rule like the MY 2011 final rule
employed non-linear phase-in caps (that
is, caps that varied from year to year)
that were designed to respond to
previously received comments on
technology deployment.
For purposes of this NPRM for MYs
2017–2025, as in the MY 2011 and MYs
2012–2016 final rules, NHTSA
combines phase-in caps for some groups
of similar technologies, such as valve
phasing technologies that are applicable
to different forms of engine design
(SOHC, DOHC, OHV), since they are
very similar from an engineering and
implementation standpoint. When the
phase-in caps for two technologies are
combined, the maximum total
631 While phase-in caps are expressed as specific
percentages of a manufacturer’s fleet to which a
technology may be applied in a given model year,
phase-in caps cannot always be applied as precise
limits, and the CAFE model in fact allows
‘‘override’’ of a cap in certain circumstances. When
only a small portion of a phase-in cap limit
remains, or when the cap is set to a very low value,
or when a manufacturer has a very limited product
line, the cap might prevent the technology from
being applied at all since any application would
cause the cap to be exceeded. Therefore, the CAFE
model evaluates and enforces each phase-in cap
constraint after it has been exceeded by the
application of the technology (as opposed to
evaluating it before application), which can result
in the described overriding of the cap.
632 NEED A FOOTNOTE HERE
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application of either or both to any
manufacturer’s fleet is limited to the
value of the cap.633
In developing phase-in cap values for
purposes of this NPRM, NHTSA
reviewed the MYs 2012–2016 final
rule’s phase-in caps, which for the
majority of technologies were set to
reach 85 or 100 percent by MY 2016,
although more advanced technologies
like diesels and strong hybrids reach
only 15 percent by MY 2016. The phasein caps used in the MYs 2012–2016
final were developed to harmonize with
EPA’s proposal and consider the fact
that manufacturers, as part of the
information shared during the
discussions that occurred during
summer 2011, appeared to be
anticipating higher technology
application rates than assumed in prior
rules. NHTSA determined that these
phase-in caps for MY 2016 were still
reasonable and thus used those caps as
the starting point for the MYs 2017–
2025 phase-in caps. For many of the
carryover technologies this means that
for MYs 2017–2025 the phase-in caps
are assumed to be 100 percent. NHTSA
along with EPA used confidential OEM
submissions, trade press articles,
company publications and press
releases to estimate the phase-in caps
for the newly defined technologies that
will be entering the market just before
or during the MYs 2017–2025 time
frame. For example, advanced cooled
EGR engines have a phase-in cap of 3
percent per year through MY 2021 and
then 10 percent per year through 2025.
The agency seeks comment on the
appropriateness of both the carryover
phase-in caps and the newly defined
ones proposed in this NPRM.
Is the technology less expensive due to
learning effects?
In the past two rulemakings NHTSA
has explicitly accounted for the cost
reductions a manufacturer might realize
through learning achieved from
experience in actually applying a
technology. These cost reductions, due
to learning effects, were taken into
account through two kinds of mutually
exclusive learning, ‘‘volume-based’’ and
‘‘time-based.’’ NHTSA and EPA
included a detailed description of the
learning effect in the MYs 2012–2016
final rule and the more recent heavyduty rule.634
Most studies of the effect of
experience or learning on production
costs appear to assume that cost
reductions begin only after some initial
633 See 74 FR at 14270 (Mar. 30, 2009) for further
discussion and examples.
634 76 FR 57106, 57320 (Sept. 15, 2011).
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volume threshold has been reached, but
not all of these studies specify this
threshold volume. 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
experience curves do not specify a
cumulative production volume beyond
which cost reductions would no longer
occur, instead depending on the
asymptotic behavior of the effect for
learning rates below 100 percent to
establish a floor on costs.
In past rulemaking analyses, as noted
above, both agencies have used a
learning curve algorithm that applied a
learning factor of 20 percent for each
doubling of production volume. NHTSA
has used this approach in analyses
supporting recent CAFE rules. In its
analyses, EPA has simplified the
approach by using an ‘‘every two years’’
based learning progression rather than a
pure production volume progression
(i.e., after two years of production it was
assumed that production volumes
would have doubled and, therefore,
costs would be reduced by 20
percent).635
In the MYs 2012–2016 light-duty rule,
the agencies employed an additional
learning algorithm to reflect the volumebased learning cost reductions that
occur further along on the learning
curve. This additional learning
algorithm was termed ‘‘time-based’’
learning simply as a means of
distinguishing this algorithm from the
volume-based algorithm mentioned
above, although both of the algorithms
reflect the volume-based learning curve
635 To clarify, EPA has simplified the steep
portion of the volume learning curve by assuming
that production volumes of a given technology will
have doubled within two years time. This has been
done largely to allow for a presentation of estimated
costs during the years of implementation, without
the need to conduct a feedback loop that ensures
that production volumes have indeed doubled. If
EPA was to attempt such a feedback loop, it would
need to estimate first year costs, feed those into
OMEGA, review the resultant technology
penetration rate and volume increase, calculate the
learned costs, feed those into OMEGA (since lower
costs would result in higher penetration rates,
review the resultant technology penetration rate
and volume increase, etc., until an equilibrium was
reached. To do this for the dozens of technologies
considered in the analysis for this rulemaking was
deemed not feasible. Instead, EPA estimated the
effects of learning on costs, fed those costs into
OMEGA, and reviewed the resultant penetration
rates. The assumption that volumes have doubled
after two years is based solely on the assumption
that year two sales are of equal or greater number
than year one sales and, therefore, have resulted in
a doubling of production. This could be done on
a daily basis, a monthly basis, or a yearly basis as
was done for this analysis.
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supported in the literature. To avoid
confusion, we are now referring to this
learning algorithm as the ‘‘flat portion’’
of the learning curve. This way, we
maintain the clarity that all learning is,
in fact, volume-based learning, and that
the level of cost reductions depend only
on where on the learning curve a
technology’s learning progression is. We
distinguish the flat portion of the curve
from the ‘‘steep portion’’ of the curve to
indicate the level of learning taking
place in the years following
implementation of the technology. The
agencies have applied the steep portion
learning algorithm for those
technologies considered to be newer
technologies likely to experience rapid
cost reductions through manufacturer
learning, and the flat portion learning
algorithm for those technologies
considered to be mature technologies
likely to experience only minor cost
reductions through manufacturer
learning. As noted above, the steep
portion learning algorithm results in 20
percent lower costs after two full years
of implementation (i.e., the MY 2016
costs are 20 percent lower than the MYs
2014 and 2015 costs). Once two steep
portion learning steps have occurred
(for technologies having the steep
portion learning algorithm applied
while flat portion learning would begin
in year 2 for technologies having the flat
portion learning algorithm applied), flat
portion learning at 3 percent per year
becomes effective for 5 years. Beyond 5
years of learning at 3 percent per year,
5 years of learning at 2 percent per year,
then 5 at 1 percent per year become
effective.
Technologies assumed to be on the
steep portion of the learning curve are
hybrids and electric vehicles, while no
learning is applied to technologies
likely to be affected by commodity costs
(LUB, ROLL) or that have looselydefined BOMs (EFR, LDB), as was the
case in the MY 2012–2016 final rule.
Chapter 3 of the Joint TSD and the PRIA
shows the specific learning factors that
NHTSA has applied in this analysis for
each technology, and discusses learning
factors and each agency’s use of them
further. EPA and NHTSA included
discussion of learning cost assumptions
in the RIAs and TSD Chapter 3. Since
the agencies had to project how learning
will occur with new technologies over
a long period of time, we request
comments on the assumptions of
learning costs and methodology. In
particular, we are interested in input on
the assumptions for advanced 27-bar
BMEP cooled EGR engines, which are
currently still in the experimental stage
and not expected to be available in
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volume production until 2017. For our
analysis, we have based estimates of the
costs of high-BMEP engines on current
(or soon to be current) production
engines, and assumed that learning (and
the associated cost reductions) begins as
early as 2012. We seek comment on the
appropriateness of these pre-production
applications of learning.
Is the technology more or less effective
due to synergistic effects?
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When two or more technologies are
added to a particular vehicle model to
improve its fuel efficiency and reduce
CO2 emissions, the resultant fuel
consumption reduction may sometimes
be higher or lower than the product of
the individual effectiveness values for
those items.636 This may occur because
one or more technologies applied to the
same vehicle partially address the same
source (or sources) of engine, drivetrain
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 referred to for purposes of this
rulemaking 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). An example of a positive
synergy might be a vehicle technology
that reduces road loads at highway
speeds (e.g., lower aerodynamic drag or
low rolling resistance tires), that could
extend the vehicle operating range over
which cylinder deactivation may be
employed. An example of a negative
synergy might be a variable valvetrain
system technology, which reduces
pumping losses by altering the profile of
the engine speed/load map, and a sixspeed automatic transmission, which
shifts the engine operating points to a
portion of the engine speed/load map
636 More specifically, the products of the
differences between one and the technologyspecific levels of effectiveness in reducing fuel
consumption. For example, not accounting for
interactions, if technologies A and B are estimated
to reduce fuel consumption by 10 percent (i.e., 0.1)
and 20 percent (i.e., 0.2) respectively, the ‘‘product
of the individual effectiveness values’’ would be 1–
0.1 times 1–0.2, or 0.9 times 0.8, which equals 0.72,
corresponding to a combined effectiveness of 28
percent rather than the 30 percent obtained by
adding 10 percent to 20 percent. The ‘‘synergy
factors’’ discussed in this section further adjust
these multiplicatively combined effectiveness
values.
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where pumping losses are less
significant.
As the complexity of the technology
combinations is increased, and the
number of interacting technologies
grows accordingly, it becomes
increasingly important to account for
these synergies. NHTSA and EPA
determined synergistic impacts for this
proposed rule using EPA’s ‘‘lumped
parameter’’ analysis tool, which EPA
describes at length in Chapter 3 of the
TSD. The lumped parameter tool is a
spreadsheet model that represents
energy consumption in terms 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,
drivetrain and vehicle characteristics
that are averaged over the 2-cycle CAFE
drive cycle. Results of this analysis were
generally consistent with those of fullscale vehicle simulation modeling
performed in 2010–2011 for EPA by
Ricardo, Inc.
For the current rulemaking, NHTSA is
using an updated version of lumped
parameter tool that incorporates results
from simulation modeling performed in
2010–2011 by Ricardo, Inc. NHTSA and
EPA incorporate synergistic impacts in
their analyses in slightly different
manners. Because NHTSA applies
technologies individually in its
modeling analysis, NHTSA incorporates
synergistic effects between pairings of
individual technologies. The use of
discrete technology pair incremental
synergies is similar to that in DOE’s
National Energy Modeling System
(NEMS).637 Inputs to the CAFE model
incorporate NEMS-identified pairs, as
well as additional pairs from the set of
technologies considered in the CAFE
model.
NHTSA notes that synergies that
occur within a decision tree are already
addressed within the incremental values
assigned and therefore do not require a
synergy pair to address. For example, all
engine technologies take into account
incremental synergy factors of preceding
engine technologies, and all
transmission technologies take into
account incremental synergy factors of
637 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/EIAM070(2007), at 29–30.
Available at https://tonto.eia.doe.gov/ftproot/
modeldoc/m070(2007).pdf (last accessed Sept. 25,
2011).
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preceding transmission technologies.
These factors are expressed in the fuel
consumption improvement factors in
the input files used by the CAFE model.
For applying incremental synergy
factors in separate path technologies,
the CAFE model uses an input table (see
the tables in Chapter 3 of the TSD and
in the PRIA) that lists technology
pairings and incremental synergy factors
associated with those pairings, most of
which are between engine technologies
and transmission/electrification/hybrid
technologies. When a technology is
applied to a vehicle by the CAFE model,
all instances of that technology in the
incremental synergy table which match
technologies already applied to the
vehicle (either pre-existing or
previously applied by the CAFE model)
are summed and applied to the fuel
consumption improvement factor of the
technology being applied. Many of the
synergies for the strong hybrid
technology fuel consumption reductions
are included in the incremental value
for the specific hybrid technology block
since the model applies all available
electrification, engine and transmission
technologies before applying strong
hybrid technologies.
The U.S. DOT Volpe Center has
entered into a contract with Argonne
National Laboratory (ANL) to provide
full vehicle simulation modeling
support for this MYs 2017–2025
rulemaking. While this modeling was
not completed in time for use in this
NPRM, NHTSA intends to use this
modeling to validate/update technology
effectiveness estimates and synergy
factors for the final rulemaking analysis.
This simulation modeling will be
accomplished using ANL’s full vehicle
simulation tool called ‘‘Autonomie,’’
which is the successor to ANL’s
Powertrain System Analysis Toolkit
(PSAT) simulation tool, and ANL’s
expertise with advanced vehicle
technologies.
d. Where can readers find more detailed
information about NHTSA’s technology
analysis?
Much more detailed information is
provided in Chapter 5 of the PRIA, and
a discussion of how NHTSA and EPA
jointly reviewed and updated
technology assumptions for purposes of
this NPRM is available in Chapter 3 of
the TSD. Additionally, all of NHTSA’s
model input and output files are now
public and available for the reader’s
review and consideration. The
technology input files can be found in
the docket for this NPRM, Docket No.
NHTSA–2010–0131, and on NHTSA’s
Web site. And finally, because much of
NHTSA’s technology analysis for
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purposes of this proposal builds on the
work that was done for the MY 2011
and MYs 2012–2016 final rules, we refer
readers to those documents as well for
background information concerning
how NHTSA’s methodology for
technology application analysis has
evolved over the past several
rulemakings, both in response to
comments and as a result of the agency’s
growing experience with this type of
analysis.638
3. How did NHTSA develop its
economic assumptions?
NHTSA’s analysis of alternative CAFE
standards for the model years covered
by this rulemaking relies on a range of
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638 74
FR 14233–308 (Mar. 30, 2009).
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forecast variables, economic
assumptions, and parameter values.
This section describes the sources of
these forecasts, the rationale underlying
each assumption, and the agency’s
choices of specific parameter values.
These economic values play a
significant role in determining the
benefits of alternative CAFE standards,
as they have for the last several CAFE
rulemakings. Under those alternatives
where standards would be established
by reference to their costs and benefits,
these economic values also affect the
levels of the CAFE standards
themselves. Some of these variables
have more important effects on the level
of CAFE standards and the benefits from
requiring alternative increases in fuel
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economy than do others, and the
following discussion places more
emphasis on these inputs.
In reviewing these variables and the
agency’s estimates of their values for
purposes of this proposed rule, NHTSA
reconsidered comments it had
previously received on the NPRM for
MYs 2012–16 CAFE standards and to
the NOI/Interim Joint TAR, and also
reviewed newly available literature. The
agency elected to revise some of its
economic assumptions and parameter
estimates for this rulemaking, while
retaining others. For the reader’s
reference, Table IV–7 below summarizes
the values used to calculate the
economic benefits from each alternative.
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a. Costs of Fuel Economy-Improving
Technologies
Building on cost estimates developed
for the MYs 2012–2016 CAFE and GHG
final rule and the 2010 TAR, the
agencies incorporated new cost
estimates for the new technologies being
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considered and some of the technologies
carried over from the MYs 2012–2016
final rule and 2010 TAR. This joint
work is reflected in Chapter 3 of the
Joint TSD and in Section II of this
preamble, as summarized below. For
more detailed information on cost of
fuel-saving technologies, please refer to
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Chapter 3 of the Joint TSD and Chapter
V of NHTSA’s PRIA.
The technology cost estimates used in
this analysis are intended to represent
manufacturers’ direct costs for highvolume production of vehicles with
these technologies. NHTSA explicitly
accounts for the cost reductions a
manufacturer might realize through
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learning achieved from experience in
actually applying a technology, which
means that technologies become
cheaper over the rulemaking time frame;
learning effects are described above and
in Chapter 3 of the draft joint TSD and
Chapters V and VII of NHTSA’s PRIA.
NHTSA notes that, in developing
technology cost estimates, the agencies
have made every effort to hold constant
aspects of vehicle performance and
utility typically valued by consumers,
such as horsepower, carrying capacity,
drivability, durability, noise, vibration
and harshness (NVH) and towing and
hauling capacity. For example, NHTSA
includes in its analysis technology cost
estimates that are specific to
performance passenger cars (i.e., sports
cars), as compared to nonperformance
passenger cars. NHTSA seeks comment
on the extent to which commenters
believe that the agencies have been
successful in holding constant these
elements of vehicle performance and
utility in developing the technology cost
estimates. Additionally, the agency
notes that the technology costs included
in this proposal take into account only
those associated with the initial build of
the vehicle. Although comments were
received to the MYs 2012–2016
rulemaking that suggested there could
be additional maintenance required
with some new technologies (e.g.,
turbocharging, hybrids, etc.), and that
additional maintenance costs could
occur as a result. The agency requests
comments on this topic and will
undertake a more detailed review of
these potential costs for the final rule.
Additionally, NHTSA recognizes that
manufacturers’ actual costs for
employing these technologies include
additional outlays for accompanying
design or engineering changes to models
that use them, development and testing
of prototype versions, recalibrating
engine operating parameters, and
integrating the technology with other
attributes of the vehicle. Manufacturers’
indirect costs for employing these
technologies also include expenses for
product development and integration,
modifying assembly processes and
training assembly workers to install
them, increased expenses for operation
and maintaining assembly lines, higher
initial warranty costs for new
technologies, any added expenses for
selling and distributing vehicles that use
these technologies, and manufacturer
and dealer profit. These indirect costs
have been accounted for in this
rulemaking through use of ICMs, which
have been revised for this rulemaking as
discussed above, in Chapter 3 of the
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draft joint TSD, and in Chapters V and
VII of NHTSA’s PRIA.
b. Potential Opportunity Costs of
Improved Fuel Economy
An important concern is whether
achieving the fuel economy
improvements required by the proposed
CAFE standards will require
manufacturers to modify the
performance, carrying capacity, safety,
or comfort of some vehicle models. To
the extent that it does so, the resulting
sacrifice in the value of those models
represents an additional cost of
achieving the required improvements in
fuel economy. (This possibility is
addressed in detail in Section IV.G.6.)
Although exact dollar values that
potential buyers attach to specific
vehicle attributes are difficult to infer,
differences in vehicle purchase prices
and buyers’ choices among competing
models that feature varying
combinations of these characteristics
clearly demonstrate that changes in
these attributes affect the utility and
economic value they offer to potential
buyers.639
NHTSA and EPA have approached
this potential problem by developing
cost estimates for fuel economyimproving technologies that include any
additional manufacturing costs that
would be necessary to maintain the
originally planned levels of
performance, comfort, carrying capacity,
and safety of any light-duty vehicle
model to which those technologies are
applied. In doing so, the agencies
followed the precedent established by
the 2002 NAS Report, which estimated
‘‘constant performance and utility’’
costs for fuel economy technologies.
NHTSA has followed this precedent in
its efforts to refine the technology costs
it uses to analyze alternative passenger
car and light truck CAFE standards for
MYs 2017–2025. Although the agency
has reduced its estimates of
manufacturers’ costs for most
technologies for use in this rulemaking,
these revised estimates are still intended
to represent costs that would allow
manufacturers to maintain the
performance, carrying capacity, and
utility of vehicle models while
improving their fuel economy.
While we believe that our cost
estimates for fuel economy-improving
technologies include adequate
639 See, e.g., Kleit A.N., 1990. ‘‘The Effect of
Annual Changes in Automobile Fuel Economy
Standards.’’ Journal of Regulatory Economics 2:
151–172 (Docket EPA–HQ–OAR–2009–0472–0015);
Berry, Steven, James Levinsohn, and Ariel Pakes,
1995. ‘‘Automobile Prices in Market Equilibrium,’’
Econometrica 63(4): 841–940 (Docket NHTSA–
2009–0059–0031); McCarthy, Patrick S., 1996.
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provisions for accompanying costs that
are necessary to prevent any
degradation in other vehicle attributes,
it is possible that they do not include
adequate allowance to prevent sacrifices
in these attributes on all vehicle models.
If this is the case, the true economic
costs of achieving higher fuel economy
should include the opportunity costs to
vehicle owners of any accompanying
reductions vehicles’ performance,
carrying capacity, and utility, and
omitting these will cause the agency’s
estimated technology costs to
underestimate the true economic costs
of improving fuel economy.
It would be desirable to estimate
explicitly the changes in vehicle buyers’
welfare from the combination of higher
prices for new vehicle models, increases
in their fuel economy, and any
accompanying changes in other vehicle
attributes. The net change in buyer’s
welfare that results from the
combination of these changes would
provide a more accurate estimate of the
true economic costs for improving fuel
economy. The agency is in the process
of developing a model of potential
vehicle buyers’ decisions about whether
to purchase a new car or light truck and
their choices from among the available
models, which will allow it to conduct
such an analysis. This process is
expected to be completed for use in
analyzing final CAFE standards for MY
2017–25; in the meantime, Section
IV.G.6 below includes a detailed
analysis and discussion of how omitting
possible changes in vehicle attributes
other than their prices and fuel
economy might affect its estimates of
benefits and costs resulting from the
standards proposed in this NPRM.
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
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.640
In its Final Rule, however, EPA
estimated that actual on-road fuel
640 71
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economy for light-duty vehicles
averages approximately 20 percent
lower than published fuel economy
levels, somewhat larger than the 15
percent shortfall it had previously
assumed. For example, if the overall
EPA fuel economy rating of a light truck
is 20 mpg, EPA estimated that the onroad fuel economy actually achieved by
a typical driver of that vehicle is
expected to be only 80 percent of that
figure, or 16 mpg (20*.80). NHTSA
employed EPA’s revised estimate of this
on-road fuel economy gap in its analysis
of the fuel savings resulting from
alternative CAFE standards evaluated in
the MY 2011 final rule.
In the course of developing its CAFE
standards for MY 2012–16, NHTSA
conducted additional analysis of this
issue. The agency used data on the
number of passenger cars and light
trucks of each model year that were
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registered for use during calendar years
2000 through 2006, average rated fuel
economy for passenger cars and light
trucks produced during each model
year, and estimates of average miles
driven per year by cars and light trucks
of different ages. These data were
combined to develop estimates of the
average fuel economy that the U.S.
passenger vehicle fleet would have
achieved from 2000 through 2006 if cars
and light trucks of each model year
achieved the same fuel economy levels
in actual on-road driving as they did
under test conditions when new.
Table IV–8 compares NHTSA’s
estimates of fleet-wide average fuel
economy under test conditions for 2000
through 2006 to the Federal Highway
Administration’s (FHWA) published
estimates of actual on-road fuel
economy achieved by passenger cars
and light trucks during each of those
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years.641 As it shows, FHWA’s estimates
of actual fuel economy for passenger
cars ranged from 21–23 percent lower
than NHTSA’s estimates of its fleet-wide
average value under test conditions over
this period, and FHWA’s estimates of
actual fuel economy for light trucks
ranged from 16–18 percent lower than
NHTSA’s estimates of its fleet-wide
average value under test conditions.
Thus, these results appear to confirm
that the 20 percent on-road fuel
economy gap represents a reasonable
estimate for use in evaluating the fuel
savings likely to result from more
stringent fuel economy and CO2
standards in MYs 2017–2025.
641 Federal Highway Administration, Highway
Statistics, 2000 through 2006 editions, Table VM–
1; See https://www.fhwa.dot.gov/policy/ohpi/hss/
hsspubs.cfm (last accessed March 1, 2010).
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The comparisons reported in this
table must be interpreted with some
caution, however, because the estimates
of annual car and truck use used to
develop these estimates are submitted to
FHWA by individual states, which use
differing definitions of passenger cars
and light trucks. (For example, some
states classify minivans as cars, while
others define them as light trucks.) At
the same time, while total gasoline
consumption can be reasonably
estimated from excise tax receipts,
separate estimates of gasoline
consumption by cars and trucks are not
available. For these reasons, NHTSA has
chosen not to rely on its separate
estimates of the on-road fuel economy
gap for cars and light trucks. However,
the agency does believe that these
results confirm that the 20 percent on-
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road fuel economy discount represents
a reasonable estimate for use in
evaluating the fuel savings likely to
result from CAFE standards for both
cars and light trucks. NHTSA employs
this value for vehicles operating on
liquid fuels (gasoline, diesel, and
gasoline/alcohol blends), and uses it to
analyze the impacts of proposed CAFE
standards for model years 2017–25 on
the use of these fuels.
In the recent TAR, EPA and NHTSA
assumed that the overall energy shortfall
for the vehicles employing electric
drivetrains, including plug-in hybrid
and battery-powered electric vehicles, is
30 percent. This value was derived from
the agencies’ engineering judgment
based on the limited available
information. During the stakeholder
meetings conducted prior to the
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technical assessment, confidential
business information (CBI) was supplied
by several manufacturers which
indicated that electrically powered
vehicles had greater variability in their
on-road energy consumption than
vehicles powered by internal
combustion engines, although other
manufacturers suggested that the onroad/laboratory differential attributable
to electric operation should approach
that of liquid fuel operation in the
future. Second, data from EPA’s 2006
analysis of the ‘‘five cycle’’ fuel
economy label as part of the rulemaking
discussed above supported a larger onroad shortfall for vehicles with hybridelectric drivetrains, partly because realworld driving tends to have higher
acceleration/deceleration rates than are
employed on the 2-cycle test. This
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diminishes the fuel economy benefits of
regenerative braking, which can result
in a higher test fuel economy for hybrids
than is achieved under normal on-road
conditions.642 Finally, heavy accessory
load, extremely high or low
temperatures, and aggressive driving
have deleterious impacts of unknown
magnitudes on battery performance.
Consequently, the agencies judged that
30 percent was a reasonable estimate for
use in the TAR, and NHTSA believes
that it continues to represent the most
reliable estimate for use in the current
analysis.
One of the most significant factors
responsible for the difference between
test and on-road fuel economy is the use
of air conditioning. While the air
conditioner is turned off during the FTP
and HFET tests, drivers often use air
conditioning under warm, humid
conditions. The air conditioning
compressor can also be engaged during
‘‘defrost’’ operation of the heating
system.643 In the MYs 2012–2016
rulemaking, EPA estimated the impact
of an air conditioning system at
approximately 14.3 grams CO2/mile for
an average vehicle without any of the
improved air conditioning technologies
discussed in that rulemaking. For a 27
mpg (330 g CO2/mile) vehicle, this
would account for is approximately 20
percent of the total estimated on-road
gap (or about 4 percent of total fuel
consumption).
In the MY 2012–2016 rule, EPA
estimated that 85 percent of MY 2016
vehicles would reduce their tailpipe
CO2 emissions attributable to air
conditioner efficiency by 40 percent
through the use of advanced air
conditioning technologies, and that
incorporating this change would reduce
the average on-road gap by about 2
percent.644 However, air conditioningrelated fuel consumption does not
decrease proportionally as engine
efficiency improves, because the engine
load due attributable to air conditioner
operation is approximately constant
across engine efficiency and technology.
As a consequence, air conditioning
operation represents an increasing
642 EPA, Fuel Economy Labeling of Motor
Vehicles: Revisions To Improve Calculation of Fuel
Economy Estimates; Final Rule, 40 CFR parts 86
and 600, 71 FR 77872, 77879 (Dec. 27, 2006).
Available at https://www.epa.gov/fedrgstr/EPA-AIR/
2006/December/Day-27/a9749.pdf.
643 EPA, Final Technical Support Document: Fuel
Economy Labeling of Motor Vehicle Revisions to
Improve Calculation of Fuel Economy Estimates, at
70. Office of Transportation and Air Quality
EPA420–R–06–017 December 2006, Chapter II,
https://www.epa.gov/fueleconomy/420r06017.pdf.
644 4% of the on-road gap x 40% reduction in air
conditioning fuel consumption x 85% of the fleet
= ∼2%.
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percentage of vehicular fuel
consumption as engine efficiency
increases.645 Because these two effects
are expected approximately to
counterbalance each other, NHTSA has
elected not to adjust its estimate of the
on-road gap for use in this proposal.
d. Fuel Prices and the Value of Saving
Fuel
Future fuel prices are the single most
important input into the economic
analysis of the benefits of alternative
CAFE standards because they determine
the value of future fuel savings, which
account for approximately 90% of total
economic benefits from requiring higher
fuel economy. NHTSA relies on the
most recent fuel price projections from
the U.S. Energy Information
Administration’s (EIA) Annual Energy
Outlook (AEO) 2011 Reference Case to
estimate the economic value of fuel
savings projected to result from
alternative CAFE standards for MY
2017–25. The AEO 2011 Reference Case
forecasts of gasoline and diesel fuel
prices represents EIA’s most up-to-date
estimate of the most likely course of
future prices for petroleum products.
EIA is widely recognized as an impartial
and authoritative source of analysis and
forecasts of U.S. energy production,
consumption, and prices, and its
forecasts are widely relied upon by
federal agencies for use in regulatory
analysis and for other purposes. Its
forecasts are derived using EIA’s
National Energy Modeling System
(NEMS), which includes detailed
representations of supply pathways,
sources of demand, and their interaction
to determine prices for different forms
of energy.
As compared to the gasoline prices
used in NHTSA’s Final Rule
establishing CAFE standards for MY
2012–2016 (which relied on forecasts
from AEO 2010), the AEO 2011
Reference Case fuel prices are slightly
higher through the year 2020, but
slightly lower for most years thereafter.
Expressed in constant 2009 dollars, the
AEO 2011 Reference Case forecast of
retail gasoline prices (which include
federal, state, and local taxes) during
2017 is $3.25 per gallon, rising
gradually to $3.71 by the year 2035.
However, valuing fuel savings over the
full lifetimes of passenger cars and light
trucks affected by the standards
proposed for MYs 2017–25 requires fuel
price forecasts that extend through
2060, approximately the last year during
which a significant number of MY 2025
645 As an example, the air conditioning load of
14.3 g/mile of CO2 is a smaller percentage (4.3%)
of 330 g/mile than 260 (5.4%).
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vehicles will remain in service.646 To
obtain fuel price forecasts for the years
2036 through 2060, the agency assumes
that retail fuel prices will continue to
increase after 2035 at the average annual
rate (0.7%) projected for 2017–2035 in
the AEO 2011 Reference Case. This
assumption results in a projected retail
price of gasoline that reaches $4.16 in
2050. Over the entire period from 2017–
2050, retail gasoline prices are projected
to average $3.67, as Table IV–7 reported
previously.
The value of fuel savings resulting
from improved fuel economy 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. 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,
NHTSA deducts their value from retail
fuel prices to determine the value of fuel
savings resulting from more stringent
CAFE standards to the U.S. economy.
NHTSA follows the assumptions used
by EIA in AEO 2011 that State and local
gasoline taxes will keep pace with
inflation in nominal terms, and thus
remain constant when expressed in
constant dollars. In contrast, EIA
assumes that Federal gasoline taxes will
remain unchanged in nominal terms,
and thus decline throughout the forecast
period when expressed in constant
dollars. These differing assumptions
about the likely future behavior of
Federal and State/local fuel taxes are
consistent with recent historical
experience, which reflects the fact that
Federal as well as most State motor fuel
taxes are specified on a cents-per-gallon
rather than an ad valorem basis, and
typically require legislation to change.
Subtracting fuel taxes from the retail
prices forecast in AEO 2011 results in
projected values for saving gasoline of
$3.29 per gallon during 2017, rising to
$3.48 per gallon by the year 2035, and
to $3.65 by the year 2050. Over this
entire period, pre-tax gasoline prices are
projected to average $3.32 per gallon.
EIA also includes forecasts reflecting
high and low global oil prices in each
year’s complete AEO, which reflect
uncertainties regarding OPEC behavior
as well as future levels of oil production
and demand. These alternative
scenarios project retail gasoline prices
that range from a low of $2.30 to a high
646 The agency defines the maximum lifetime of
vehicles as the highest age at which more than 2
percent of those originally produced during a model
year remain in service. In the case of light trucks,
for example, this age has typically been 36 years for
recent model years.
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of $4.85 per gallon during 2020, and
from $2.12 to $5.36 per gallon during
2035 (all figures in 2009 dollars). In
conjunction with our assumption that
fuel taxes will remain constant in real
or inflation-adjusted terms over this
period, these forecasts imply pre-tax
values of saving fuel ranging from $1.91
to $4.46 per gallon during 2020, and
from $1.77 to $5.01 per gallon in 2035
(again, all figures are in constant 2009
dollars). In conducting the analysis of
uncertainty in benefits and costs from
alternative CAFE standards required by
OMB, NHTSA evaluated the sensitivity
of its benefits estimates to these
alternative forecasts of future fuel
prices; detailed results and discussion
of this sensitivity analysis can be found
in the agency’s PRIA. Generally, this
analysis confirms that the primary
economic benefit resulting from the
rule—the value of fuel savings—is
extremely sensitive to alternative
forecasts of future fuel prices.
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e. Consumer Valuation of Fuel Economy
and Payback Period
The agency uses slightly different
assumptions about the length of time
over which potential vehicle buyers
consider fuel savings from higher fuel
economy, and about how they discount
those future fuel savings, in different
aspects of its analysis. For most
purposes, the agency assumes that
buyers value fuel savings over the first
five years of a new vehicle’s lifetime;
the five-year figure represents
approximately the current average term
of consumer loans to finance the
purchase of new vehicles.
To simulate manufacturers’
assessment of the net change in the
value of an individual vehicle model to
prospective buyers from improving its
fuel economy, NHTSA discounts fuel
savings over the first five years of its
lifetime using a 7 percent rate. The
resulting value is deducted from the
technology costs that would be incurred
by its manufacturer to improve that
model’s fuel economy, in order to
determine the change in its value to
potential buyers. Since this is also the
additional amount its manufacturer
could expect to receive when selling the
vehicle after improving its fuel
economy, this can also be viewed as the
‘‘effective cost’’ of the improvement
from its manufacturers’ perspective. The
CAFE model uses these estimates of
effective costs to identify the sequence
in which manufacturers are likely to
select individual models for
improvements in fuel economy, as well
as to identify the most cost-effective
technologies for doing so.
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The average of effective cost to its
manufacturer for increasing the fuel
economy of a model also represents the
change in its value from the perspective
of potential buyers. Under the
assumption that manufacturers change
the selling price of each model by this
amount, its average value also
represents the average change in its net
or effective price to would-be buyers. As
part of our sensitivity case analyzing the
potential for manufacturers to overcomply with CAFE standards—that is,
to produce a lineup of vehicle models
whose sales-weighted average fuel
economy exceeds that required by
prevailing standards—NHTSA used the
extreme assumption that potential
buyers value fuel savings only during
the first year they expect to own a new
vehicle.
The agency notes that these varying
assumptions about future time horizons
and discount rates for valuing fuel
savings are used only to analyze
manufacturers’ responses to requiring
higher fuel economy and buyers’
behavior in response to manufacturers’
compliance strategies. When estimating
the aggregate value to the U.S. economy
of fuel savings resulting from alternative
increases in CAFE standards—or the
‘‘social’’ value of fuel savings—the
agency includes fuel savings over the
entire expected lifetimes of vehicles that
would be subject to higher standards,
rather than over the shorter periods we
assume manufacturers employ to
represent the preferences of vehicle
buyers, or that buyers use to assess
changes in the net price or new
vehicles.
Valuing fuel savings over vehicles’
entire lifetimes recognizes the savings in
fuel costs that subsequent owners of
vehicles will experience from higher
fuel economy, even if their initial
purchasers do not expect to recover the
remaining value of fuel savings when
they re-sell those vehicles, or for other
reasons do not value fuel savings
beyond the assumed five-year time
horizon. The agency acknowledges that
it has not accounted for any effects of
increased costs for financing, insuring,
or maintaining vehicles with higher fuel
economy, over either this limited
payback period or the full lifetimes of
vehicles.
The procedure the agency uses for
calculating lifetime fuel savings is
discussed in detail in the following
section, while discussion about the time
horizon over which potential buyers
may consider fuel savings in their
vehicle purchasing decisions is
provided in more detail in Section
IV.G.6 below.
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f. Vehicle Survival and Use
Assumptions
NHTSA’s analysis of fuel savings and
related benefits from adopting more
stringent fuel economy standards for
MYs 2017–2025 passenger cars and light
trucks begins by estimating the resulting
changes in fuel use over the entire
lifetimes of the affected vehicles. The
change in total fuel consumption by
vehicles produced during each model
year is calculated as the difference
between their total fuel use over their
lifetimes with a higher CAFE standard
in effect, and their total lifetime fuel
consumption under a baseline in which
CAFE standards remained at their 2016
levels. The first step in estimating
lifetime fuel consumption by vehicles
produced during a model year is to
calculate the number expected to
remain in service during each year
following their production and sale.647
This is calculated by multiplying the
number of vehicles originally produced
during a model year by the proportion
typically expected to remain in service
at their age during each later year, often
referred to as a ‘‘survival rate.’’
As discussed in more detail in Section
II.B.3 above and in Chapter 1 of the
TSD, to estimate production volumes of
passenger cars and light trucks for
individual manufacturers, NHTSA
relied on a baseline market forecast
constructed by EPA staff beginning with
MY 2008 CAFE certification data. After
constructing a MY 2008 baseline, EPA
and NHTSA used projected car and
truck volumes for this period from
Energy Information Administration’s
(EIA’s) Annual Energy Outlook (AEO)
2011 in the NPRM analysis.648 However,
647 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 2 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 percent 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/Pubs/809952.pdf
(last accessed Sept. 26, 2011).
648 Available at https://www.eia.gov/forecasts/aeo/
index.cfm (last accessed Sept. 26, 2011). NHTSA
and EPA made the simplifying assumption that
projected sales of cars and light trucks during each
calendar year from 2012 through 2016 represented
the likely production volumes for the
corresponding model year. The agency did not
attempt to establish the exact correspondence
between projected sales during individual calendar
years and production volumes for specific model
years.
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Annual Energy Outlook forecasts only
total car and light truck sales, rather
than sales at the manufacturer and
model-specific level, which the agencies
require in order to estimate the effects
new standards will have on individual
manufacturers.649
To estimate sales of individual car
and light truck models produced by
each manufacturer, EPA purchased data
from CSM Worldwide and used its
projections of the number of vehicles of
each type (car or truck) that will be
produced and sold by manufacturers in
model years 2011 through 2015.650 This
provided year-by-year estimates of the
percentage of cars and trucks sold by
each manufacturer, as well as the sales
percentages accounted for by each
vehicle market segment. (The
distributions of car and truck sales by
manufacturer and by market segment for
the 2016 model year and beyond were
assumed to be the same as CSM’s
forecast for the 2015 calendar year.)
Normalizing these percentages to the
total car and light truck sales volumes
projected for 2017 through 2025 in AEO
2011 provided manufacturer-specific
market share and model-specific sales
estimates for those model years. The
volumes were then scaled to AEO 2011
total volume for each year.
To estimate the number of passenger
cars and light trucks originally
produced during model years 2017
through 2025 that will remain in use
during subsequent years, the agency
applied age-specific survival rates for
cars and light trucks to its forecasts of
passenger car and light truck sales for
each of those model years. In 2008,
NHTSA updated its previous estimates
of car and light truck survival rates
using the most current registration data
for vehicles produced during recent
model years, in order to ensure that they
reflected recent increases in the
durability and expected life spans of
cars and light trucks.651 However, the
agency does not attempt to forecast
649 Because AEO 2011’s ‘‘car’’ and ‘‘truck’’ classes
did not reflect NHTSA’s recent reclassification (in
March 2009 for enforcement beginning MY 2011) of
many two wheel drive SUVs from the nonpassenger (i.e., light truck) fleet to the passenger car
fleet, EPA staff made adjustments to account for
such vehicles in the baseline.
650 EPA also considered other sources of similar
information, such as J.D. Powers, and concluded
that CSM was better able to provide forecasts at the
requisite level of detail for most of the model years
of interest.
651 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/Pubs/809952.pdf (last accessed
Sept. 26, 2011). 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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changes in those survival rates over the
future.
The next step in estimating fuel use
is to calculate the total number of miles
that cars and light trucks remaining in
use will be driven each year. To
estimate the total number of miles
driven by cars or light trucks produced
in a model year during each subsequent
year, the number projected to remain in
use during that year is multiplied by the
average number of miles those vehicles
are expected to be driven at the age they
will have reached in that year. The
agency estimated annual usage of cars
and light trucks of each age using data
from the Federal Highway
Administration’s 2001 National
Household Travel Survey (NHTS).652
Because these estimates reflect the
historically low gasoline prices that
prevailed at the time the 2001 NHTS
was conducted, however, NHTSA
adjusted them to account for the effect
on vehicle use of the higher fuel prices
projected over the lifetimes of model
year 2017–25 cars and light trucks.
Details of this adjustment are provided
in Chapter VIII of the PRIA and Chapter
4 of the draft Joint TSD.
The estimates of annual miles driven
at different vehicle ages derived from
the 2001 NHTS were also adjusted to
reflect projected future growth in
average use for vehicles at every age
over their lifetimes. Increases in average
annual use of cars and light trucks,
which have averaged approximately 1
percent annually over the past two
decades, have been an important source
of historical growth in the total number
of miles they are driven each year. To
estimate future growth in their average
annual use for purposes of this
rulemaking, NHTSA calculated the rate
of growth in the adjusted mileage
schedules derived from the 2001 NHTS
that would be necessary for total car and
light truck travel to increase at the rate
forecast in the AEO 2011 Reference
Case.653 This rate was calculated to be
consistent with future changes in the
overall size and age distributions of the
U.S. passenger car and light truck fleets
that result from the agency’s forecasts of
total car and light truck sales and
updated survival rates. The resulting
growth rate in average annual car and
light truck use is approximately 1.1
652 For a description of the Survey, see https://
nhts.ornl.gov/introduction.shtml#2001 (last
accessed September 26, 2011).
653 This approach differs from that used in the
MY 2011 final rule, where it was assumed that
future growth in the total number of cars and light
trucks in use resulting from projected sales of new
vehicles was adequate by itself to account for
growth in total vehicle use, without assuming
continuing growth in average vehicle use.
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percent from 2017 through 2030, and
declines to 0.5 percent per year
thereafter. 654 While the adjustment for
future fuel prices reduces average
annual mileage at each age from the
values derived using the 2001 NHTS,
the adjustment for expected future
growth in average vehicle use increases
it. The net effect of these two
adjustments is to increase expected
lifetime mileage for MY 2017–25
passenger cars and light trucks by about
22 percent from the estimates originally
derived from the 2001 NHTS.
Finally, the agency estimated total
fuel consumption by passenger cars and
light trucks remaining in use each year
by dividing the total number of miles
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 over its life span. In
turn, the savings in lifetime fuel use by
cars or light trucks produced during
each model year affected by this
proposed rule 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.655
g. Accounting for the Fuel Economy
Rebound Effect
The fuel economy rebound effect
refers to the fact that some of the fuel
654 While the adjustment for future fuel prices
reduces average mileage at each age from the values
derived from the 2001 NHTS, the adjustment for
expected future growth in average vehicle use
increases it. The net effect of these two adjustments
is to increase expected lifetime mileage by about 18
percent significantly for both passenger cars and
about 16 percent for light trucks.
655 To illustrate these calculations, the agency’s
adjustment of the AEO 2009 Revised Reference Case
forecast indicates that 9.26 million passenger cars
will be produced during 2012, and the agency’s
updated survival rates show that 83 percent of these
vehicles, or 7.64 million, are projected to remain in
service during the year 2022, when they will have
reached an age of 10 years. At that age, passenger
achieving the fuel economy level they are projected
to achieve under the Baseline alternative are driven
an average of about 800 miles, so surviving model
year 2012 passenger cars will be driven a total of
82.5 billion miles (= 7.64 million surviving vehicles
× 10,800 miles per vehicle) during 2022. Summing
the results of similar calculations for each year of
their 26-year maximum lifetime, model year 2012
passenger cars will be driven a total of 1,395 billion
miles under the Baseline alternative. Under that
alternative, they are projected to achieve a test fuel
economy level of 32.4 mpg, which corresponds to
actual on-road fuel economy of 25.9 mpg (= 32.4
mpg × 80 percent). Thus their lifetime fuel use
under the Baseline alternative is projected to be
53.9 billion gallons (= 1,395 billion miles divided
by 25.9 miles per gallon).
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savings expected to result from higher
fuel economy, such as an increase in
fuel economy required by the adoption
of higher CAFE standards, may be offset
by additional vehicle use. The increase
in vehicle use occurs because higher
fuel economy reduces the fuel cost of
driving, which is typically the largest
single component of the monetary cost
of operating a vehicle, and vehicle
owners respond to this reduction in
operating costs by driving more. Even
with their higher fuel economy, this
additional driving consumes some fuel,
so this effect reduces the fuel savings
that result when raising CAFE standards
requires manufacturers to improve fuel
economy. The rebound effect refers to
the fraction of fuel savings expected to
result from increased fuel economy that
is offset by additional driving.656
The magnitude of the rebound effect
is an important determinant of the
actual fuel savings that are likely to
result from adopting stricter CAFE
standards. Research on the magnitude of
the rebound effect in light-duty vehicle
use dates to the early 1980s, and
generally concludes that a significant
rebound effect occurs when vehicle fuel
efficiency improves.657 The most
common approach to estimating its
magnitude has been to analyze survey
data on household vehicle use, fuel
consumption, fuel prices, and other
factors affecting household travel
behavior to estimate the response of
vehicle use to differences in the fuel
efficiency of individual vehicles.
Because this approach most closely
matches the definition of the rebound
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656 Formally, the rebound effect is often expressed
as the elasticity of vehicle use with respect to the
cost per mile driven. Additionally, it is consistently
expressed as a positive percentage (rather than as
a negative decimal fraction, as this elasticity is
normally expressed).
657 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
magnitude vary, this long-run effect is probably
more appropriate for evaluating the fuel savings and
emissions reductions resulting from stricter
standards that would apply to future model years.
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effect, which is the response of vehicle
use to differences in fuel economy, the
agency regards these studies as likely to
produce the most reliable estimates of
the rebound effect. Other studies have
relied on econometric analysis of annual
U.S. data on vehicle use, fuel efficiency,
fuel prices, and other variables to
estimate the response of total or average
vehicle use to changes in fleet-wide
average fuel economy and its effect on
fuel cost per mile driven. More recent
studies have analyzed yearly variation
in vehicle ownership and use, fuel
prices, and fuel economy among states
over an extended time period in order
to measure the response of vehicle use
to changing fuel costs per mile.658
Another important distinction among
studies of the rebound effect is whether
they assume that the effect is constant,
or allow it to vary in response to
changes in fuel costs, personal income,
or 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 varies as changes in
retail fuel prices or average fuel
efficiency alter fuel cost per mile driven.
Studies using household survey data
estimate significantly different rebound
effects for households owning varying
numbers of vehicles, with most
concluding that the rebound effect is
larger among households that own more
vehicles. Finally, recent studies using
state-level data conclude that the
rebound effect varies directly in
response to changes in personal income,
the degree of urbanization of U.S. cities,
and differences in traffic congestion
levels, as well as fuel costs. Some
studies conclude that the long-run
rebound effect is significantly larger
than the immediate response of vehicle
use to increased fuel efficiency.
Although their estimates of the time
required for the rebound effect to reach
658 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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its long-run magnitude vary, this longrun effect is probably more appropriate
for evaluating the fuel savings likely to
result from adopting stricter CAFE
standards for future model years.
In order to provide a more
comprehensive overview of previous
estimates of the rebound effect, NHTSA
has updated its previous review of
published studies of the rebound effect
to include those conducted as recently
as 2010. The agency performed a
detailed analysis of several dozen
separate estimates of the long-run
rebound effect reported in these studies,
which is summarized in Table IV–9
below.659 As the table indicates, these
estimates range from as low as 7 percent
to as high as 75 percent, with a mean
value of 23 percent. Both 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 mean
estimate of 18 percent for the long-run
rebound effect, while the mean of 23
estimates based on household survey
data is considerably larger (31 percent),
and the mean of 15 estimates based on
pooled state data (23 percent) is close to
that for the entire sample. The 37
estimates assuming a constant rebound
effect produce a mean of 23 percent,
identical to the mean of the 29 estimates
reported in studies that allowed the
rebound effect to vary in response to
fuel prices and fuel economy levels,
vehicle ownership, or household
income. Updated to reflect the most
recent available information on these
variables, the mean of these estimates is
19 percent, as Table IV–9 reports.
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659 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, the agency
computed a weighted average of the reported values
using the distribution of households among vehicle
ownership categories.
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Some recent studies provide evidence
that the rebound effect has been
declining over time. This result appears
plausible for two reasons: First, the
responsiveness of vehicle use to
variation in fuel costs would be
expected to decline as they account for
a smaller proportion of the total
monetary cost of driving, which has
been the case until recently. Second,
rising personal incomes would be
expected to reduce the sensitivity of
vehicle use to fuel costs as the time
component of driving costs—which is
likely to be related to income levels—
accounts for a larger fraction the total
cost of automobile travel. At the same
time, however, rising incomes are
strongly associated with higher auto
ownership levels, which increase
households’ opportunities to substitute
among vehicles in response to varying
fuel prices and differences in their fuel
economy levels. This is likely to
increase the sensitivity of households’
overall vehicle use to differences in the
fuel economy levels of individual
vehicles.
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Small and Van Dender combined time
series data for states to estimate the
rebound effect, allowing its magnitude
to vary in response to fuel prices, fleetwide average fuel economy, the degree
of urbanization of U.S. cities, and
personal income levels.660 The authors
employ a model that allows the effect of
fuel cost per mile on vehicle use to vary
in response to changes in personal
income levels and increasing
urbanization of U.S. cities. For the time
period 1966–2001, their analysis
implied a long-run rebound effect of 22
percent, which is consistent with
previously published studies.
Continued growth in personal incomes
over this period reduces their estimate
of the long-run rebound effect during its
last five years (1997–2001) to 11
percent, and an unpublished update
through 2004 prepared by the authors
reduced their estimate of the long-run
660 Small, K. and K. Van Dender, 2007a. ‘‘Fuel
Efficiency and Motor Vehicle Travel: The Declining
Rebound Effect’’, The Energy Journal, vol. 28, no.
1, pp. 25–51.
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rebound effect for the period 2000–2004
to 6 percent.661
More recently, Hymel, Small and Van
Dender extended the previous analysis
to include traffic congestion levels in
urbanized areas.662 Although
controlling for the effect of congestion
on vehicle use increased their estimates
of the rebound effect, these authors also
found that the rebound effect appeared
to be declining over time. For the time
period 1966–2004, their estimate of the
long-run rebound effect was 24 percent,
while for the last year of that period
their estimate was 13 percent,
significantly above the previous Small
and Van Dender estimate of a 6 percent
661 Small, K. and K. Van Dender, 2007b. ‘‘Long
Run Trends in Transport Demand, Fuel Price
Elasticities and Implications of the Oil Outlook for
Transport Policy,’’ OECD/ITF Joint Transport
Research Centre Discussion Papers 2007/16, OECD,
International Transport Forum.
662 Hymel, Kent M., Kenneth A. Small, and Kurt
Van Dender, ‘‘Induced demand and rebound effects
in road transport,’’ Transportation Research Part B:
Methodological, Volume 44, Issue 10, December
2010, Pages 1220–1241, ISSN 0191–2615, DOI:
10.1016/j.trb.2010.02.007.
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rebound effect for the period 2000–
2004.
Recent research by Greene (under
contract to EPA) using U.S. national
time-series data for the period 1966–
2007 lends further support to the
hypothesis that the rebound effect is
declining over time.663 Greene found
that fuel prices had a statistically
significant impact on VMT, yet fuel
efficiency did not, and statistical testing
rejected the hypothesis of equal
elasticities of vehicle use with respect to
gasoline prices and fuel efficiency.
Greene also tested model formulations
that allowed the effect of fuel cost per
mile on vehicle use to decline with
rising per capita income; his preferred
form of this model produced estimates
of the rebound effect that declined to 12
percent in 2007.
In light of findings from recent
research, the agency’s judgment is that
the apparent decline over time in the
magnitude of the rebound effect justifies
using a value for future analysis that is
lower than many historical estimates,
which average 15–25 percent. Because
the lifetimes of vehicles affected by the
alternative CAFE standards considered
in this rulemaking will extend from
2017 until 2060, a value that is at the
low end of historical estimates appears
to be appropriate. Thus as it elected to
do in its previous analysis of the effects
of raising CAFE standards for MY 2012–
16 cars and light trucks, NHTSA uses a
10 percent rebound effect in its analysis
of fuel savings and other benefits from
higher CAFE standards for MY 2017–25
vehicles. Recognizing the wide range of
uncertainty surrounding its correct
value, however, the agency also
employs estimates of the rebound effect
ranging from 5 to 20 percent in its
sensitivity testing. The 10 percent figure
is at the low end of those reported in
almost all previous research, and it is
also below most estimates of the
historical and current magnitude of the
rebound effect developed by NHTSA.
However, other recent research—
particularly that conducted by Small
and Van Dender and by Greene—
suggests that the magnitude of the
rebound effect has declined over time,
and is likely to continue to do so. As a
consequence, NHTSA concluded that a
value at the low end of the historical
estimates reported here is likely to
provide a more reliable estimate of its
magnitude during the future period
spanned by NHTSA’s analysis of the
663 Greene, David, ‘‘Rebound 2007: Analysis of
National Light-Duty Vehicle Travel Statistics,’’
February 9, 2010. This paper has been accepted for
an upcoming special issue of Energy Policy,
although the publication date has not yet been
determined.
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impacts of this rule. The 10 percent
estimate lies between the 10–30 percent
range of estimates for the historical
rebound effect reported in most
previous research, and is at the upper
end of the 5–10 percent range of
estimates for the future rebound effect
reported in recent studies. In summary,
the 10 percent value was not derived
from a single estimate or particular
study, but instead represents a
compromise between historical
estimates and projected future
estimates. Chapter 4.2.5 of the Joint TSD
reviews the relevant literature and
discusses in more depth the reasoning
for the rebound value used here.
h. Benefits From Increased Vehicle Use
The increase in vehicle use from the
rebound effect provides additional
benefits to their users, who 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
traveling these additional distances.
The agency’s analysis estimates the
economic benefits from increased
rebound-effect driving as the sum of fuel
costs drivers incur plus the consumer
surplus they receive from the additional
accessibility it provides.664 NHTSA
estimates the value of the consumer
surplus provided by added travel as
one-half of the product of the decline in
fuel cost per mile and the resulting
increase in the annual number of miles
driven, a standard approximation for
changes in consumer surplus resulting
from small changes in prices. Because
the increase in travel depends on the
extent of improvement in fuel economy,
the value of benefits it provides differs
among model years and alternative
CAFE standards.
i. The Value of Increased Driving Range
Improving vehicles’ fuel economy
may also increase their driving range
before they require refueling. By
extending the upper limit of the range
vehicles can travel before refueling is
needed, the per-vehicle average number
of refueling trips per year is expected to
decline. This reduction in refueling
664 The
consumer surplus provided by added
travel is estimated as one-half of the product of the
decline in fuel cost per mile and the resulting
increase in the annual number of miles driven.
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frequency provides a time savings
benefit to owners.665
NHTSA estimated a number of
parameters regarding consumers’
refueling habits using newly-available
observational and interview data from a
2010–2011 NASS study conducted at
fueling stations throughout the nation.
A (non-exhaustive) list of key
parameters derived from this study is as
follows: Average number of gallons of
fuel purchased, length of time to refuel
and pay, length of time to drive to the
fueling station, primary reason for
refueling, and number of adult vehicle
occupants.
Using these and other parameters
(detailed explanation of parameters and
methodology provided in Chapter VIII
of NHTSA’s PRIA), NHTSA estimated
the decrease in number of refueling
cycles for each model year’s fleet
attributable to improvements in actual
on-road MPG resulting from the
proposed CAFE standards. NHTSA
acknowledges—and adjusts for—the fact
that many refueling trips occur for
reasons other than a low reading on the
gas gauge (for example, many
consumers refuel on a fixed schedule).
NHTSA separately estimated the value
of vehicle-hour refueling time and
applied this to the projected decrease in
number of refueling cycles to estimate
the aggregate fleet-wide value of
refueling time savings for each year that
a given model year’s vehicles are
expected to remain in service.
As noted in the PRIA, NHTSA
assumed a constant fuel tank size in
estimating the impact of higher CAFE
requirements on the frequency of
refueling. NHTSA seeks comment
regarding this assumption. Specifically,
NHTSA seeks comment from
manufacturers regarding their intention
to retain fuel tank size or driving range
in their redesigned vehicles. Will fuel
economy improvements translate into
increased driving range, or will fuel
tanks be reduced in size to maintain
current driving range?
j. Added Costs From Congestion,
Crashes and Noise
Increased vehicle use associated with
the rebound effect also contributes to
increased traffic congestion, motor
vehicle accidents, and highway noise.
To estimate the economic costs
associated with these consequences of
added driving, NHTSA applies
estimates of per-mile congestion,
accident, and noise costs caused by
665 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.
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increased use of automobiles and light
trucks developed previously by the
Federal Highway Administration.666
These values are intended to measure
the increased costs resulting from added
congestion and the delays it causes to
other drivers and passengers, property
damages and injuries in traffic
accidents, and noise levels contributed
by automobiles and light trucks. NHTSA
previously employed these estimates in
its analysis accompanying the MY 2011
final CAFE rule, as well as in its
analysis of the effects of higher CAFE
standards for MY 2012–16. After
reviewing the procedures used by
FHWA to develop them and considering
other available estimates of these values,
the agency continues to find them
appropriate for use in this proposal. The
agency multiplies FHWA’s estimates of
per-mile costs 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.
k. Petroleum Consumption and Import
Externalities
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i. Changes in Petroleum Imports
Based on a detailed analysis of
differences in fuel consumption,
petroleum imports, and imports of
refined petroleum products among
alternative scenarios presented in AEO
2011, NHTSA estimates that
approximately 50 percent of the
reduction in fuel consumption resulting
from adopting higher CAFE standards is
likely to be reflected in reduced U.S.
imports of refined fuel, while the
remaining 50 percent would reduce
domestic fuel refining.667 Of this latter
figure, 90 percent is anticipated to
reduce U.S. imports of crude petroleum
for use as a refinery feedstock, while the
remaining 10 percent is expected to
reduce U.S. domestic production of
crude petroleum.668 Thus on balance,
each 100 gallons of fuel saved as a
666 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 March 1, 2010).
667 Differences in forecast annual U.S. imports of
crude petroleum and refined products among the
Reference, High Oil Price, and Low Oil Price
scenarios analyzed in EIA’s Annual Energy Outlook
2011 range from 35–74 percent of differences in
projected annual gasoline and diesel fuel
consumption in the U.S. These differences average
53 percent over the forecast period spanned by AEO
2011.
668 Differences in forecast annual U.S. imports of
crude petroleum among the Reference, High Oil
Price, and Low Oil Price scenarios analyzed in
EIA’s Annual Energy Outlook 2011 range from 67–
104 percent of differences in total U.S. refining of
crude petroleum, and average 90 percent over the
forecast period spanned by AEO 2011.
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consequence of higher CAFE standards
is anticipated to reduce total U.S.
imports of crude petroleum or refined
fuel by 95 gallons.669
ii. Benefits From Reducing U.S.
Petroleum Imports
U.S. consumption and imports of
petroleum products 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.
These costs include (1) Higher prices for
petroleum products resulting from the
effect of U.S. petroleum 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.670 Reducing
these costs by lowering U.S. petroleum
imports represents another source of
benefits from stricter CAFE standards
and the savings in consumption of
petroleum-based fuels that would result
from higher fuel economy. 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 their market prices. Conversely,
lowering U.S. imports of crude
petroleum or refined fuels by reducing
domestic fuel consumption can reduce
these external costs, and any reduction
in their total value that results from
improved fuel economy represents an
economic benefit of more stringent
CAFE standards, in addition to the
value of saving fuel itself.
The first component of the external
costs imposed by U.S. petroleum
consumption and imports (often termed
the ‘‘monopsony cost’’ of U.S. oil
imports), measures the increase in
payments from domestic oil consumers
to foreign oil suppliers beyond the
increased purchase price of petroleum
669 This figure is calculated as 50 gallons + 50
gallons * 90% = 50 gallons + 45 gallons = 95
gallons.
670 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 (Docket NHTSA–2009–0062–24); and Toman,
M.A. (1993). ‘‘The Economics of Energy Security:
Theory, Evidence, Policy,’’ in A.V. Kneese and J.L.
Sweeney, eds. (1993) (Docket NHTSA–2009–0062–
23). Handbook of Natural Resource and Energy
Economics, Vol. III. Amsterdam: North-Holland, pp.
1167–1218.
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itself that results when increased U.S.
import demand raises the world price of
petroleum.671 However, this monopsony
cost or premium represents a financial
transfer from consumers of petroleum
products to oil producers, and does not
entail the consumption of real economic
resources. Thus the decline in its value
that occurs when reduced U.S. demand
for petroleum products causes a decline
in global petroleum prices produces no
savings in economic resources globally
or domestically, although it does reduce
the value of the financial transfer from
U.S. consumers of petroleum products
to foreign suppliers of petroleum.
Accordingly, NHTSA’s analysis of the
benefits from adopting proposed CAFE
standards for MY 2017–2025 cars and
light trucks excludes the reduced value
of monopsony payments by U.S. oil
consumers that would result from lower
fuel consumption.
The second component of external
costs imposed by U.S. petroleum
consumption and imports reflects the
potential costs to the U.S. economy from
disruptions in the supply of imported
petroleum. These costs arise because
interruptions in the supply of petroleum
products reduces U.S. economic output,
as well as because firms are unable to
adjust prices, output levels, and their
use of energy, labor and other inputs
smoothly and rapidly in response to the
sudden changes in prices for petroleum
products that are caused by
interruptions in their supply. Reducing
U.S. petroleum consumption and
imports lowers these potential costs,
and the amount by which it does so
represents an economic benefit in
addition to the savings in fuel costs that
result from higher fuel economy.
NHTSA estimates and includes this
value in its analysis of the economic
benefits from adopting higher CAFE
standards for MY 2017–2025 cars and
light trucks.
The third component of external costs
imposed by U.S. petroleum
consumption and imports includes
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. NHTSA
recognizes that potential national and
energy security risks exist due to the
possibility of tension over oil supplies.
Much of the world’s oil and gas supplies
are located in countries facing social,
economic, and demographic challenges,
671 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.
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thus making them even more vulnerable
to potential local instability. Because of
U.S. dependence on oil, the military
could be called on to protect energy
resources through such measures as
securing shipping lanes from foreign oil
fields. Thus, to the degree to which the
proposed rules reduce reliance upon
imported energy supplies or promote
the development of technologies that
can be deployed by either consumers or
the nation’s defense forces, the United
States could expect benefits related to
national security, reduced energy costs,
and increased energy supply. Although
NHTSA recognizes that there clearly is
a benefit to the United States from
reducing dependence on foreign oil, we
have been unable to calculate the
monetary benefit that the United States
will receive from the improvements in
national security expected to result from
this program. We have therefore
included only the macroeconomic
disruption portion of the energy security
benefits to estimate the monetary value
of the total energy security benefits of
this program. We have calculated energy
security in very specific terms, as the
reduction of both financial and strategic
risks caused by potential sudden
disruptions in the supply of imported
petroleum to the U.S. Reducing the
amount of oil imported reduces those
risks, and thus increases the nation’s
energy security.
Similarly, while the costs for building
and maintaining the SPR are more
clearly attributable to U.S. petroleum
consumption and imports, these costs
have not varied historically in response
to changes in U.S. oil import levels.
Thus the agency has not attempted to
estimate the potential reduction in the
cost for maintaining the SPR that might
result from lower U.S. petroleum
imports, or to include an estimate of this
value among the benefits of reducing
petroleum consumption through higher
CAFE standards.
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.672 More
recently, ORNL updated its estimates of
the value of these externalities, using
the analytic framework developed in its
original 1997 study in conjunction with
672 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.
Available at https://www.esd.ornl.gov/eess/energy_
analysis/files/ORNL6851.pdf (last accessed October
11, 2011).
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recent estimates of the variables and
parameters that determine their
value.673 The updated ORNL study was
subjected to a detailed peer review
commissioned by EPA, and ORNL’s
estimates of the value of oil import
externalities were subsequently revised
to reflect their comments and
recommendations of the peer
reviewers.674 Finally, at the request of
EPA, ORNL has repeatedly revised its
estimates of external costs from U.S. oil
imports to reflect changes in the outlook
for world petroleum prices, as well as
continuing changes in the structure and
characteristics of global petroleum
supply and demand.
As the preceding discussion indicates,
NHTSA’s analysis of benefits from
adopting higher CAFE standards
includes only the reduction in economic
disruption costs that is anticipated to
result from reduced consumption of
petroleum-based fuels and the
associated decline in U.S. petroleum
imports. ORNL’s updated analysis
reports that this benefit, which is in
addition to the savings in costs for
producing fuel itself, is most likely to
amount to $0.185 per gallon of fuel
saved by requiring MY 2017–25 cars
and light trucks to achieve higher fuel
economy. However, considerable
uncertainty surrounds this estimate, and
ORNL’s updated analysis also indicates
that a range of values extending from a
low of $0.091 per gallon to a high of
$0.293 per gallon should be used to
reflect this uncertainty.
We note that the calculation of energy
security benefits does not include
energy security costs associated with
reliance on foreign sources of lithium
and rare earth metals for HEVs and EVs.
The agencies intend to attempt to
quantify this impact for the final rule
stage, and seek public input on
information that would enable agencies
to develop this analysis. NHTSA also
seeks public input on the projections
that energy security benefits will grow
rapidly through 2025.
673 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://www.esd.
ornl.gov/eess/energy_analysis/files/Leiby2007%20
Estimating%20the%20Energy%20Security%20
Benefits%20of%20Reduced%20U.S.%20Oil%20
Imports%20ornl-tm-2007–028%20rev2007Jul25.pdf
(last accessed October 11, 2011).
674 Peer Review Report Summary: Estimating the
Energy Security Benefits of Reduced U.S. Oil
Imports, ICF, Inc., September 2007. Available at
Docket No. NHTSA–2009–0059–0160.
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l. Air Pollutant Emissions
i. Changes in Criteria Air Pollutant
Emissions
Criteria air pollutants 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).
These pollutants are emitted during
vehicle storage and use, as well as
throughout the fuel production and
distribution system. While reductions in
domestic fuel refining, storage, and
distribution that result from lower fuel
consumption will reduce emissions of
these pollutants, additional vehicle use
associated with the fuel economy
rebound effect will increase their
emissions. The net effect of stricter
CAFE standards on total emissions of
each criteria pollutant depends on the
relative magnitude of reductions in its
emissions during fuel refining and
distribution, and increases in its
emissions resulting from additional
vehicle use. Because the relationship
between emissions 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.
With the exception of SO2, NHTSA
calculated annual emissions of each
criteria pollutant resulting from vehicle
use by multiplying its estimates of car
and light truck use during each year
over their expected lifetimes by per-mile
emission rates for each vehicle class,
fuel type, model year, and age. These
emission rates were developed by U.S.
EPA using its Motor Vehicle Emission
Simulator (MOVES 2010a).675 Emission
rates for SO2 were calculated by NHTSA
using average fuel sulfur content
estimates supplied by EPA, together
with the assumption that the entire
sulfur content of fuel is emitted in the
form of SO2.676 Total SO2 emissions
under each alternative CAFE standard
were calculated by applying the
resulting emission rates directly to
estimated annual gasoline and diesel
fuel use by cars and light trucks.
Changes in emissions of criteria air
pollutants resulting from alternative
increases in CAFE standards for MY
675 The MOVES model assumes that the per-mile
rates at which these pollutants are emitted are
determined by EPA regulations and the
effectiveness of catalytic after-treatment of engine
exhaust emissions, and are thus unaffected by
changes in car and light truck fuel economy.
676 These are 30 and 15 parts per million (ppm,
measured on a mass basis) for gasoline and diesel
respectively, which produces emission rates of 0.17
grams of SO2 per gallon of gasoline and 0.10 grams
per gallon of diesel.
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2017–2025 cars and light trucks are
calculated from the differences between
emissions under each alternative
increase in CAFE standards, and
emissions under the baseline
alternative.
Emissions of criteria air pollutants
also occur during each phase of fuel
production and distribution, including
crude oil extraction and transportation,
fuel refining, and fuel storage and
transportation. NHTSA estimates the
reductions in criteria pollutant
emissions from producing and
distributing fuel that would occur under
alternative CAFE standards using
emission rates obtained by EPA from
Argonne National Laboratories’
Greenhouse Gases and Regulated
Emissions in Transportation (GREET)
model, which provides estimates of air
pollutant emissions that occur in
different phases of fuel production and
distribution.677 678 EPA modified the
GREET model to change certain
assumptions about emissions during
crude petroleum extraction and
transportation, as well as to update its
emission rates to reflect adopted and
pending EPA emission standards.
The resulting emission rates were
applied to the agency’s estimates of fuel
consumption under alternative CAFE
standards to develop estimates of total
emissions of each criteria pollutant
during fuel production and distribution.
The agency then employed the estimates
of the effects of changes in fuel
consumption on domestic and imported
sources of fuel supply discussed
previously to calculate the effects of
reductions in fuel use on changes in
imports of refined fuel and domestic
refining. NHTSA’s analysis assumes 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 assumed to
reduce emissions during fuel refining,
storage, and distribution. Finally,
reduced domestic fuel refining using
domestically produced crude oil is
677 Argonne National Laboratories, The
Greenhouse Gas and Regulated Emissions in
Transportation (GREET) Model, Version 1.8, June
2007, available at https://www.transportation.anl.
gov/modeling_simulation/GREET/ (last
accessed October 11, 2011).
678 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.
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assumed to reduce emissions during all
four phases of fuel production and
distribution.679
Finally, NHTSA calculated the net
changes in domestic emissions of each
criteria pollutant by summing the
increases in emissions projected to
result from increased vehicle use, and
the reductions anticipated to result from
lower domestic fuel refining and
distribution.680 As indicated previously,
the effect of adopting higher CAFE
standards on total emissions of each
criteria pollutant depends on the
relative magnitude of the resulting
reduction in emissions from fuel
refining and distribution, and the
increase in emissions from additional
vehicle use. Although these net changes
vary significantly among individual
criteria pollutants, the agency projects
that on balance, adopting higher CAFE
standards for MY 2017–25 cars and light
trucks would reduce emissions of all
criteria air pollutants except carbon
monoxide (CO).
The net changes in direct emissions of
fine particulates (PM2.5) and other
criteria pollutants that contribute to the
formation of ‘‘secondary’’ fine
particulates in the atmosphere (such as
NOX, SOX, and VOCs) are converted to
economic values using estimates of the
reductions in health damage costs per
ton of emissions of each pollutant that
is avoided, which were developed by
EPA. These savings represent the
estimated reductions in the value of
damages to human health resulting from
lower atmospheric concentrations and
population exposure to air pollution
that occur when emissions of each
pollutant that contributes to
atmospheric PM2.5 concentrations are
reduced. The value of reductions in the
risk of premature death due to exposure
to fine particulate pollution (PM2.5)
accounts for a majority of EPA’s
estimated values of reducing criteria
pollutant emissions, although the value
of avoiding other health impacts is also
included in these estimates.
These values do not include a number
of unquantified benefits, such as
reduction in the welfare and
679 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. We note that while
assuming that all changes in upstream emissions
result from a decrease in petroleum production and
transport, our analysis of downstream criteria
pollutant impacts assumes no change in the
composition of the gasoline fuel supply.
680 All emissions from increased vehicle use are
assumed to occur within the U.S., since CAFE
standards would apply only to vehicles produced
for sale in the U.S.
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environmental impacts of PM2.5
pollution, or reductions in health and
welfare impacts related to other criteria
air pollutants (ozone, NO2, and SO2) and
air toxics. EPA estimates different perton values for reducing emissions of PM
and other criteria pollutants from
vehicle use than for reductions in
emissions of those same pollutants
during fuel production and
distribution.681 NHTSA applies these
separate values to its estimates of
changes in emissions from vehicle use
and from fuel production and
distribution to determine the net change
in total economic damages from
emissions of these pollutants.
EPA projects that the per-ton values
for reducing emissions of criteria
pollutants from both mobile sources
(including motor vehicles) and
stationary sources such as fuel refineries
and storage facilities will increase over
time. These projected increases reflect
rising income levels, which are assumed
to increase affected individuals’
willingness to pay for reduced exposure
to health threats from air pollution, as
well as future population growth, which
increases population exposure to future
levels of air pollution.
ii. Reductions in CO2 Emissions
Emissions of carbon dioxide and other
greenhouse gases (GHGs) occur
throughout the process of producing
and distributing transportation fuels, as
well as from fuel combustion itself.
Emissions of GHGs also occur in
generating electricity, which NHTSA’s
analysis anticipates will account for an
increasing share of energy consumption
by cars and light trucks produced in the
model years that would be subject to
their proposed rules. By reducing the
volume of fuel consumed by passenger
cars and light trucks, higher CAFE
standards will reduce GHG emissions
generated by fuel use, as well as
throughout the fuel supply system.
Lowering these emissions is likely to
slow the projected pace and reduce the
ultimate extent of future changes in the
global climate, thus reducing future
economic damages that changes in the
global climate are expected to cause. By
reducing the probability that climate
changes with potentially catastrophic
economic or environmental impacts will
occur, lowering GHG emissions may
also result in economic benefits that
exceed the resulting reduction in the
expected future economic costs caused
681 These reflect differences in the typical
geographic distributions of emissions of each
pollutant, their contributions to ambient PM2.5
concentrations, pollution levels (predominantly
those of PM2.5), and resulting changes in population
exposure.
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by more gradual changes in the earth’s
climatic systems.
Quantifying and monetizing benefits
from reducing GHG emissions is thus an
important step in estimating the total
economic benefits likely to result from
establishing higher CAFE standards.
Because carbon dioxide emissions
account for nearly 95 percent of total
GHG emissions that result from fuel
combustion during vehicle use,
NHTSA’s analysis of the effect of higher
CAFE standards on GHG emissions
focuses mainly on estimating changes in
emissions of CO2. The agency estimates
emissions of CO2 from passenger car
and light truck use by multiplying the
number of gallons of each type of fuel
(gasoline and diesel) they are projected
to consume under alternative CAFE
standards by the quantity or mass of
CO2 emissions released per gallon of
fuel consumed. This calculation
assumes that the entire carbon content
of each fuel is converted to CO2
emissions during the combustion
process.
NHTSA estimates emissions of CO2
that occur during fuel production and
distribution using emission rates for
each stage of this process (feedstock
production and transportation, fuel
refining and fuel storage and
distribution) derived from Argonne
National Laboratories’ Greenhouse
Gases and Regulated Emissions in
Transportation (GREET) model. For
liquid fuels, NHTSA converts these
rates to a per-gallon basis using the
energy content of each fuel, and
multiplies them by the number of
gallons of each type of fuel produced
and consumed under alternative
standards to estimate total CO2
emissions from fuel production and
distribution. GREET supplies emission
rates for electricity generation that are
expressed as grams of CO2 per unit of
energy, so these rates are simply
multiplied by the estimates of electrical
energy used to charge the on-board
storage batteries of plug-in hybrid and
battery electric vehicles. As with all
other effects of alternative CAFE
standards, the reduction in CO2
emissions resulting from each
alternative increase in standards is
measured by the difference in total
emissions from producing and
consuming fuel energy used by MY
2017–25 cars and light trucks with those
higher CAFE standards in effect, and
total CO2 emissions from supplying and
using fuel energy consumed under the
baseline alternative. Unlike criteria
pollutants, the agency’s estimates of CO2
emissions include those occurring in
domestic fuel production and
consumption, as well as in overseas
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production of petroleum and refined
fuel for export to the U.S. Overseas
emissions are included because GHG
emissions throughout the world
contribute equally to the potential for
changes in the global climate.
iii. Economic Value of Reductions in
CO2 Emissions
NHTSA takes the economic benefits
from reducing CO2 emissions into
account in developing and analyzing the
alternative CAFE standards it has
considered for MY 2017–25. Because
research on the impacts of climate
change does not produce direct
estimates of the economic benefits from
reducing CO2 or other GHG emissions,
these benefits are assumed to be the
‘‘mirror image’’ of the estimated
incremental costs resulting from
increases in emissions. Thus the
benefits from reducing CO2 emissions
are usually measured by the savings in
estimated economic damages that an
equivalent increase in emissions would
otherwise have caused. The agency does
not include estimates of the economic
benefits from reducing GHGs other than
CO2 in its analysis of alternative CAFE
standards.
NHTSA estimates the value of the
reductions in emissions of CO2 resulting
from adopting alternative CAFE
standards using a measure referred to as
the ‘‘social cost of carbon,’’ abbreviated
SCC. The SCC is intended to provide a
monetary measure of the additional
economic impacts likely to result from
changes in the global climate that would
result from an incremental increase in
CO2 emissions. These potential effects
include changes in agricultural
productivity, the economic damages
caused by adverse effects on human
health, property losses and damages
resulting from rising sea levels, and the
value of ecosystem services. The SCC is
expressed in constant dollars per
additional metric ton of CO2 emissions
occurring during a specific year, and is
higher for more distant future years
because the damages caused by an
additional ton of emissions increase
with larger concentrations of CO2 in the
earth’s atmosphere.
Reductions in CO2 emissions that are
projected to result from lower fuel
production and consumption during
each year over the lifetimes of MY
2017–25 cars and light trucks are
multiplied by the estimated SCC
appropriate for that year to determine
the economic benefit from reducing
emissions during that year. The net
present value of these annual benefits is
calculated using a discount rate that is
consistent with that used to develop the
estimate of each SCC estimate. This
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calculation is repeated for the
reductions in CO2 emissions projected
to result from each alternative increase
in CAFE standards.
NHTSA evaluates the economic
benefits from reducing CO2 emissions
using estimates of the SCC developed by
an interagency working group convened
for the specific purpose of developing
new estimates for use by U.S. Federal
agencies in regulatory evaluations. The
group’s purpose in developing new
estimates of the SCC was to allow
Federal agencies to incorporate the
social benefits of reducing CO2
emissions into cost-benefit analyses of
regulatory actions that have relatively
modest impacts on cumulative global
emissions, as most Federal regulatory
actions can be expected to have. NHTSA
previously relied on the SCC estimates
developed by this interagency group to
analyze the alternative CAFE standards
it considered for MY 2012–16 cars and
light trucks, as well as the fuel
efficiency standards it adopted for MY
014–18 heavy-duty vehicles.
The interagency group convened on a
regular basis over the period from June
2009 through February 2010, to explore
technical literature in relevant fields
and develop key inputs and
assumptions necessary to generate
estimates of the SCC. Agencies
participating in the interagency process
included the Environmental Protection
Agency and the Departments of
Agriculture, Commerce, Energy,
Transportation, and Treasury. This
process was convened by the Council of
Economic Advisers and the Office of
Management and Budget, with active
participation and regular input from the
Council on Environmental Quality,
National Economic Council, Office of
Energy and Climate Change, and Office
of Science and Technology Policy.
The interagency group’s main
objective was to develop a range of SCC
values using clearly articulated input
assumptions grounded in the existing
scientific and economic literatures, in
conjunction with a range of models that
employ different representations of
climate change and its economic
impacts. The group clearly
acknowledged the many uncertainties
that its process identified, and
recommended that its estimates of the
SCC should be updated periodically to
incorporate developing knowledge of
the science and economics of climate
impacts. Specifically, it set a
preliminary goal to revisit the SCC
values within two years, or as
substantial improvements in
understanding of the science and
economics of climate impacts and
updated models for estimating and
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percentile SCC estimate from the
combined distribution of values
generated by the three models at a 3
percent discount rate, represents the
possibility of possibility of higher-thanexpected impacts from the
accumulation of GHGs in the earth’s
atmosphere, and the consequently larger
economic damages.
Table IV–10 summarizes the
interagency group’s estimates of the SCC
during various future years, which the
agency has updated to 2009 dollars to
correspond to the other values it uses to
estimate economic benefits from the
alternative CAFE standards considered
in this NPRM.682
682 The SCC estimates reported in the table
assume that the damages resulting from increased
emissions are constant for small departures from
the baseline emissions forecast incorporated in each
estimate, an approximation that is reasonable for
policies with projected effects on CO2 emissions
that are small relative to cumulative global
emissions.
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valuing these impacts become available.
The group ultimately selected four SCC
values for use in federal regulatory
analyses. Three values were based on
the average of SCC estimates developed
using three different climate economic
models (referred to as integrated
assessment models), using discount
rates of 2.5, 3, and 5 percent. The fourth
value, which represents the 95th
As Table IV–10 shows, the four SCC
estimates selected by the interagency
group for use in regulatory analyses are
$5, $23, $38, and $70 per metric ton (in
2009 dollars) for emissions occurring in
the year 2012. The value that the
interagency group centered its attention
on is the average SCC estimate
developed using different models and a
3 percent discount rate, or $23 per
metric ton in 2012. To capture the
uncertainties involved in regulatory
impact analysis, however, the group
emphasized the importance of
considering the full range of estimated
SCC values. As the table also shows, the
SCC estimates also rise over time; for
example, the average SCC at the 3
percent discount rate increases to $27
per metric ton of CO2 by 2020 and
reaches $46 per metric ton of CO2 in
2050.
Details of the process used by the
interagency group to develop its SCC
estimates, complete results including
year-by-year estimates of each of the
four values, and a thorough discussion
of their intended use and limitations is
provided in the document Social Cost of
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Carbon for Regulatory Impact Analysis
Under Executive Order 12866,
Interagency Working Group on Social
Cost of Carbon, United States
Government, February 2010.683
m. Discounting Future Benefits and
Costs
Discounting future fuel savings and
other benefits accounts for the reduction
in their value when they are deferred
until some future date, rather than
received immediately. The value of
benefits that are not expected to occur
until the future is lower partly because
people value current consumption more
highly than equivalent consumption at
some future date—stated simply, they
are impatient—and partly because they
expect their living standards to be
higher in the future, so additional
consumption will improve their wellbeing by more today than it will in the
future. The discount rate expresses the
percent decline in the value of these
benefits—as viewed from today’s
perspective—for each year they are
683 This document is available in the docket for
the 2012–2016 rulemaking (NHTSA–2009–0059).
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deferred into the future. In evaluating
the benefits from alternative increases in
CAFE standards for MY 2017–2025
passenger cars and light trucks, NHTSA
primarily employs a discount rate of 3
percent per year, but in accordance with
OMB guidance, also presents these
benefit and cost estimates using a 7
percent discount rate.
While it presents results that reflect
both discount rates, NHTSA believes
that the 3 percent rate is more
appropriate for discounting future
benefits from increased CAFE standards,
because the agency expects that most or
all of vehicle manufacturers’ costs for
complying with higher CAFE standards
will ultimately be reflected in higher
selling prices for their new vehicle
models. By increasing sales prices for
new cars and light trucks, CAFE
regulations will thus primarily affect
vehicle purchases and other private
consumption decisions. Both economic
theory and OMB guidance on
discounting indicate that the future
benefits and costs of regulations that
mainly affect private consumption
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should be discounted at consumers’ rate
of time preference.684
Current OMB guidance also indicates
that savers appear to discount future
consumption at an average real (that is,
adjusted to remove the effect of
inflation) rate of about 3 percent when
they face little risk about the future.
Since the real interest rate that savers
require to persuade them to defer
consumption into the future represents
a reasonable estimate of consumers’ rate
of time preference, NHTSA believes that
the 3 percent rate is appropriate for
discounting projected future benefits
and costs resulting from higher CAFE
standards.
Because there is some uncertainty
about whether vehicle manufacturers
will completely recover their costs for
complying with higher CAFE standards
by increasing vehicle sales prices,
however, NHTSA also presents benefit
and cost estimates discounted using a
higher rate. To the extent that
manufacturers are unable to recover
their costs for meeting higher CAFE
standards by increasing new vehicle
prices, these costs are likely to displace
other investment opportunities available
to them. OMB guidance indicates that
the real economy-wide opportunity cost
of capital is the appropriate discount
rate to apply to future benefits and costs
when the primary effect of a regulation
is ‘‘* * * to displace or alter the use of
capital in the private sector,’’ and OMB
estimates that this rate currently
averages about 7 percent.685 Thus the
agency’s analysis of alternative
increases in CAFE standards for MY
2017–25 cars and light trucks also
reports benefits and costs discounted at
a 7 percent rate.
One important exception to the
agency’s use of 3 percent and 7 percent
discount rates is arises in discounting
benefits from reducing CO2 emissions
over the lifetimes of MY 2017–2025 cars
and light trucks to their present values.
In order to ensure consistency in the
derivation and use of the interagency
group’s estimates of the unit values of
reducing CO2 emissions (or SCC), the
benefits from reducing CO2 emissions
during each future year are discounted
using the same ‘‘intergenerational’’
discount rates that were used to derive
each of the alternative values. As
indicated in Table IV–10 above, these
rates are 2.5 percent, 3 percent, and 5
684 Id.
685 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 Sept. 26,
2011).
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percent depending on which estimate of
the SCC is being employed.686
n. Accounting for Uncertainty in
Benefits and Costs
In analyzing the uncertainty
surrounding its estimates of benefits and
costs from alternative CAFE standards,
NHTSA considers 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 anticipated effectiveness in
reducing 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, and the discount rate
applied to future benefits and costs. The
range for each of these variables
employed in the uncertainty analysis
was previously identified in the sections
of this notice discussing each variable.
The uncertainty analysis was
conducted by assuming either
independent normal or beta probability
distributions for each of these variables,
using the low and high estimates for
each variable as the values between
which 90 percent of observed values are
expected to fall. Each trial of the
uncertainty analysis employed a set of
values randomly drawn from these
probability distributions, under the
assumption that the value of each
variable is independent from those of
the others. In cases where the data on
the possible distribution of parameters
was relatively sparse, making a choice
of distributions difficult, a beta
distribution is commonly employed to
give more weight to both tails than
would be the case had a normal
distribution been employed. Benefits
and costs of each alternative standard
were estimated using each combination
of variables, and a total of nearly 40,000
trials were used to estimate the likely
range of estimated benefits and costs for
each alternative standard.
o. Where can readers find more
information about the economic
assumptions?
Much more detailed information is
provided in Chapter VIII of the PRIA,
and a discussion of how NHTSA and
EPA jointly reviewed and updated
economic assumptions for purposes of
this proposal is available in Chapter 4
686 The fact that the 3 percent discount rate used
by the interagency group to derive its central
estimate of the SCC is identical to the 3 percent
short-term or ‘‘intra-generational’’ discount rate
used by NHTSA to discount future benefits other
than reductions in CO2 emissions is coincidental,
and should not be interpreted as a required
condition that must be satisfied in future
rulemakings.
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of the draft Joint TSD. In addition, all of
NHTSA’s model input and output files
are now public and available for the
reader’s review and consideration. The
economic input files can be found in the
docket for this proposed rule, NHTSA–
2010–0131, and on NHTSA’s Web
site.687
Finally, because much of NHTSA’s
economic analysis for purposes of this
proposal builds on the work that was
done for the final rule establishing
CAFE standards for MYs 2012–16, we
refer readers to that document as well.
It contains valuable background
information concerning how NHTSA’s
assumptions regarding economic inputs
for CAFE analysis have evolved over the
past several rulemakings, both in
response to comments and as a result of
the agency’s growing experience with
this type of analysis.688
4. How does NHTSA use the
assumptions in its modeling analysis?
In developing today’s proposed CAFE
standards, NHTSA has made significant
use of results produced by the CAFE
Compliance and Effects Model
(commonly referred to as ‘‘the CAFE
Model’’ or ‘‘the Volpe model’’), which
DOT’s Volpe National Transportation
Systems Center developed specifically
to support NHTSA’s CAFE rulemakings.
The model, which has been constructed
specifically for the purpose of analyzing
potential CAFE standards, integrates the
following core capabilities:
(1) Estimating how manufacturers
could apply technologies in response to
new fuel economy standards,
(2) Estimating the costs that would be
incurred in applying these technologies,
(3) Estimating the physical effects
resulting from the application of these
technologies, such as changes in travel
demand, fuel consumption, and
emissions of carbon dioxide and criteria
pollutants, and
(4) Estimating the monetized societal
benefits of these physical effects.
An overview of the model follows
below. Separate model documentation
provides a detailed explanation of the
functions the model performs, the
calculations it performs in doing so, and
how to install the model, construct
inputs to the model, and interpret the
model’s outputs. Documentation of the
model, along with model installation
files, source code, and sample inputs are
available at NHTSA’s Web site. The
model documentation is also available
in the docket for today’s proposed rule,
as are inputs for and outputs from
687 See
688 74
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analysis of today’s proposed CAFE
standards.
a. How does the model operate?
As discussed above, the agency uses
the CAFE model to estimate how
manufacturers could attempt to comply
with a given CAFE standard by adding
technology to fleets that the agency
anticipates they will produce in future
model years. This exercise constitutes a
simulation of manufacturers’ decisions
regarding compliance with CAFE
standards.
This compliance simulation begins
with the following inputs: (a) The
baseline and reference market forecast
discussed above in Section IV.C.1 and
Chapter 1 of the TSD, (b) technologyrelated estimates discussed above in
Section IV.C.2 and Chapter 3 of the
TSD, (c) economic inputs discussed
above in Section IV.C.3 and Chapter 4
of the TSD, and (d) inputs defining
baseline and potential new CAFE
standards. For each manufacturer, the
model applies technologies in a
sequence that follows a defined
engineering logic (‘‘decision trees’’
discussed in the MY 2011 final rule and
in the model documentation) and a costminimizing strategy in order to identify
a set of technologies the manufacturer
could apply in response to new CAFE
standards.689 The model applies
technologies to each of the projected
individual vehicles in a manufacturer’s
fleet, considering the combined effect of
regulatory and market incentives.
Depending on how the model is
exercised, it will apply technology until
one of the following occurs:
(1) The manufacturer’s fleet achieves
compliance 690 with the applicable
standard, and continuing to add
technology in the current model year
would be attractive neither in terms of
stand-alone (i.e., absent regulatory need)
cost effectiveness nor in terms of
facilitating compliance in future model
years; 691
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689 NHTSA
does its best to remain scrupulously
neutral in the application of technologies through
the modeling analysis, to avoid picking technology
‘‘winners.’’ The technology application
methodology has been reviewed by the agency over
the course of several rulemakings, and commenters
have been generally supportive of the agency’s
approach. See, e.g., 74 FR 14238–14246 (Mar. 30,
2009).
690 The model has been modified to provide the
ability—as an option—to account for credit
mechanisms (i.e., carry-forward, carry-back,
transfers, and trades) when determining whether
compliance has been achieved. For purposes of
determining maximum feasible CAFE standards,
NHTSA cannot consider these mechanisms, and
exercises the CAFE model without enabling these
options.
691 In preparation for the MY 2012–2016
rulemaking, the model was modified in order to
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(2) The manufacturer ‘‘exhausts’’ 692
available technologies; or
(3) For manufacturers estimated to be
willing to pay civil penalties, the
manufacturer reaches the point at which
doing so would be more cost-effective
(from the manufacturer’s perspective)
than adding further technology.693
As discussed below, the model has
also been modified in order to—as an
option—apply more technology than
may be necessary to achieve compliance
in a given model year, or to facilitate
compliance in later model years. This
ability to simulate ‘‘voluntary
overcompliance’’ reflects the potential
that manufacturers will apply some
technologies to some vehicles if doing
so would be sufficiently inexpensive
compared to the expected reduction in
owners’ outlays for fuel.
The model accounts explicitly for
each model year, applying most
technologies when vehicles are
scheduled to be redesigned or
freshened, and carrying forward
technologies between model years. The
apply additional technology in early model years if
doing so will facilitate compliance in later model
years. This is designed to simulate a manufacturer’s
decision to plan for CAFE obligations several years
in advance, which NHTSA believes better replicates
manufacturers’ actual behavior as compared to the
year-by-year evaluation which EPCA would
otherwise require.
692 In a given model year, the model makes
additional technologies available to each vehicle
model within several constraints, including (a)
Whether or not the technology is applicable to the
vehicle model’s technology class, (b) whether the
vehicle is undergoing a redesign or freshening in
the given model year, (c) whether engineering
aspects of the vehicle make the technology
unavailable (e.g., secondary axle disconnect cannot
be applied to two-wheel drive vehicles), and (d)
whether technology application remains within
‘‘phase in caps’’ constraining the overall share of a
manufacturer’s fleet to which the technology can be
added in a given model year. Once enough
technology is added to a given manufacturer’s fleet
in a given model year that these constraints make
further technology application unavailable,
technologies are ‘‘exhausted’’ for that manufacturer
in that model year.
693 This possibility was added to the model to
account for the fact that under EPCA/EISA,
manufacturers must pay fines if they do not achieve
compliance with applicable CAFE standards. 49
U.S.C. 32912(b). NHTSA recognizes that some
manufacturers will find it more cost-effective to pay
fines than to achieve compliance, and believes that
to assume these manufacturers would exhaust
available technologies before paying fines would
cause unrealistically high estimates of market
penetration of expensive technologies such as
diesel engines and strong hybrid electric vehicles,
as well as correspondingly inflated estimates of
both the costs and benefits of any potential CAFE
standards. NHTSA thus includes the possibility of
manufacturers choosing to pay fines in its modeling
analysis in order to achieve what the agency
believes is a more realistic simulation of
manufacturer decision-making. Unlike flex-fuel and
other credits, NHTSA is not barred by statute from
considering fine-payment in determining maximum
feasible standards under EPCA/EISA. 49 U.S.C.
32902(h).
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CAFE model accounts explicitly for
each model year because EPCA requires
that NHTSA make a year-by-year
determination of the appropriate level of
stringency and then set the standard at
that level, while ensuring ratable
increases in average fuel economy.694
The multiyear planning capability and
(optional) simulation of ‘‘voluntary
overcompliance’’ and EPCA credit
mechanisms increase the model’s ability
to simulate manufacturers’ real-world
behavior, accounting for the fact that
manufacturers will seek out compliance
paths for several model years at a time,
while accommodating the year-by-year
requirement.
The model also calculates the costs,
effects, and benefits of technologies that
it estimates could be added in response
to a given CAFE standard.695 It
calculates costs by applying the cost
estimation techniques discussed above
in Section IV.C.2, and by accounting for
the number of affected vehicles. It
accounts for effects such as changes in
vehicle travel, changes in fuel
consumption, and changes in
greenhouse gas and criteria pollutant
emissions. It does so by applying the
fuel consumption estimation techniques
also discussed in Section IV.C.2, and the
vehicle survival and mileage
accumulation forecasts, the rebound
effect estimate and the fuel properties
and emission factors discussed in
Section IV.C.3. Considering changes in
travel demand and fuel consumption,
the model estimates the monetized
value of accompanying benefits to
society, as discussed in Section IV.C.3.
The model calculates both the
undiscounted and discounted value of
benefits that accrue over time in the
future.
The CAFE model has other
capabilities that facilitate the
development of a CAFE standard. The
integration of (a) Compliance simulation
and (b) the calculation of costs, effects,
694 49 U.S.C. 32902(a) states that at least 18
months before the beginning of each model year,
the Secretary of Transportation shall prescribe by
regulation average fuel economy standards for
automobiles manufactured by a manufacturer in
that model year, and that each standard shall be the
maximum feasible average fuel economy level that
the Secretary decides the manufacturers can
achieve in that year. NHTSA has long interpreted
this statutory language to require year-by-year
assessment of manufacturer capabilities. 49 U.S.C.
32902(b)(2)(C) also requires that standards increase
ratably between MY 2011 and MY 2020.
695 As for all of its other rulemakings, NHTSA is
required by Executive Order 12866 (as amended by
Executive Order 13563) and DOT regulations to
analyze the costs and benefits of CAFE standards.
Executive Order 12866, 58 FR 51735 (Oct. 4, 1993);
DOT Order 2100.5, ‘‘Regulatory Policies and
Procedures,’’ 1979, available at https://regs.dot.gov/
rulemakingrequirements.htm (last accessed
February 21, 2010).
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and benefits facilitates analysis of
sensitivity of results to model inputs.
The model can also be used to evaluate
many (e.g., 200 per model year)
potential levels of stringency
sequentially, and identify the stringency
at which specific criteria are met. For
example, it can identify the stringency
at which net benefits to society are
maximized, the stringency at which a
specified total cost is reached, or the
stringency at which a given average
required fuel economy level is attained.
This allows the agency to compare more
easily the impacts in terms of fuel
savings, emissions reductions, and costs
and benefits of achieving different levels
of stringency according to different
criteria. The model can also be used to
perform uncertainty analysis (i.e.,
Monte Carlo simulation), in which input
estimates are varied randomly according
to specified probability distributions,
such that the uncertainty of key
measures (e.g., fuel consumption, costs,
benefits) can be evaluated.
b. Has NHTSA considered other
models?
As discussed in the most recent CAFE
rulemaking, while nothing in EPCA
requires NHTSA to use the CAFE
model, and in principle, NHTSA could
perform all of these tasks through other
means, the model’s capabilities have
greatly increased the agency’s ability to
rapidly, systematically, and
reproducibly conduct key analyses
relevant to the formulation and
evaluation of new CAFE standards.696
NHTSA notes that the CAFE model
not only has been formally peerreviewed and tested and reviewed
through three rulemakings, but also has
some features especially important for
the analysis of CAFE standards under
EPCA/EISA. Among these are the ability
to perform year-by-year analysis, and
the ability to account for engineering
differences between specific vehicle
models.
EPCA requires that NHTSA set CAFE
standards for each model year at the
level that would be ‘‘maximum feasible’’
for that year. Doing so requires the
ability to analyze each model year and,
when developing regulations covering
multiple model years, to account for the
interdependency of model years in
terms of the appropriate levels of
stringency for each one. Also, as part of
the evaluation of the economic
practicability of the standards, as
required by EPCA, NHTSA has
traditionally assessed the annual costs
and benefits of the standards. In
response to comments regarding an
696 75
FR 25598–25599.
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early version of the CAFE model, DOT
modified the CAFE model in order to
account for dependencies between
model years and to better represent
manufacturers’ planning cycles, in a
way that still allowed NHTSA to
comply with the statutory requirement
to determine the appropriate level of the
standards for each model year.
The CAFE model is also able to
account for important engineering
differences between specific vehicle
models, and to thereby reduce the risk
of applying technologies that may be
incompatible with or already present on
a given vehicle model. By combining
technologies incrementally and on a
model-by-model basis, the CAFE model
is able to account for important
engineering differences between vehicle
models and avoid unlikely technology
combinations
The CAFE model also produces a
single vehicle-level output file that, for
each vehicle model, shows which
technologies were present at the outset
of modeling, which technologies were
superseded by other technologies, and
which technologies were ultimately
present at the conclusion of modeling.
For each vehicle, the same file shows
resultant changes in vehicle weight, fuel
economy, and cost. This provides for
efficient identification, analysis, and
correction of errors, a task with which
the public can now assist the agency,
since all inputs and outputs are public.
Such considerations, as well as those
related to the efficiency with which the
CAFE model is able to analyze attributebased CAFE standards and changes in
vehicle classification, and to perform
higher-level analysis such as stringency
estimation (to meet predetermined
criteria), sensitivity analysis, and
uncertainty analysis, lead the agency to
conclude that the model remains the
best available to the agency for the
purposes of analyzing potential new
CAFE standards.
c. What changes has DOT made to the
model?
Between promulgation of the MY
2012–2016 CAFE standards and today’s
proposal regarding MY 2017–2025
standards, the CAFE model has been
revised to make some minor
improvements, and to add some
significant new capabilities: (1)
Accounting for electricity used to charge
electric vehicles (EVs) and plug-in
hybrid electric vehicles (PHEVs), (2)
accounting for use of ethanol blends in
flexible-fuel vehicles (FFVs), (3)
accounting for costs (i.e., ‘‘stranded
capital’’) related to early replacement of
technologies, (4) accounting for
previously-applied technology when
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determining the extent to which a
manufacturer could expand use of the
technology, (5) applying technologyspecific estimates of changes in
consumer value, (6) simulating the
extent to which manufacturers might
utilize EPCA’s provisions regarding
generation and use of CAFE credits, (7)
applying estimates of fuel economy
adjustments (and accompanying costs)
reflecting increases in air conditioner
efficiency, (8) reporting privately-valued
benefits, (9) simulating the extent to
which manufacturers might voluntarily
apply technology beyond levels needed
for compliance with CAFE standards,
and (10) estimating changes in highway
fatalities attributable to any applied
reductions in vehicle mass. These
capabilities are described below, and in
greater detail in the CAFE model
documentation.697
To support evaluation of the effects
electric vehicles (EVs) and plug-in
hybrid vehicles (PHEVs) could have on
energy consumption and associated
costs and environmental effects, DOT
has expanded the CAFE model to
estimate the amount of electricity that
would be required to charge these
vehicles (accounting for the potential
that PHEVs can also run on gasoline).
The model calculates the cost of this
electricity, as well as the accompanying
upstream criteria pollutant and
greenhouse gas emissions.
Similar to this expansion to account
for the potential the PHEVs can be
refueled with gasoline or recharged with
electricity, DOT has expanded the CAFE
model to account for the potential that
other flexible-fuel vehicles can be
operated on multiple fuels. In
particular, the model can account for
ethanol FFVs consuming E85 or
gasoline, and to report consumption of
both fuels, as well as corresponding
costs and upstream emissions.
Among the concerns raised in the past
regarding how technology costs are
estimated has been one that stranded
capital costs be considered. Capital
becomes ‘‘stranded’’ when capital
equipment is retired or its use is
discontinued before the equipment has
been fully depreciated and the
equipment still retains some value or
usefulness. DOT has modified the CAFE
model to, if specified for a given
technology, when that technology is
replaced by a newly applied technology,
apply a stream of costs representing the
stranded capital cost of the replaced
technology. This cost is in addition to
the cost for producing the newly
697 Model documentation is available on
NHTSA’s Web site.
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applied technology in the first year of
production.
As documented in prior CAFE
rulemakings, the CAFE model applies
‘‘phase-in caps’’ to constrain technology
application at the vehicle manufacturer
level. They are intended to reflect a
manufacturer’s overall resource capacity
available for implementing new
technologies (such as engineering and
development personnel and financial
resources), thereby ensuring that
resource capacity is accounted for in the
modeling process. This helps to ensure
technological feasibility and economic
practicability in determining the
stringency of the standards. When the
MY 2012–2016 rulemaking analysis was
completed, the model performed the
relevant test by comparing a given
phase-in cap to the amount (i.e., the
share of the manufacturer’s fleet) to
which the technology had been added
by the model. DOT has since modified
the CAFE model to take into account the
extent to which a given manufacturer
has already applied the technology (i.e.,
as reflected in the market forecast
specified as a model inputs), and to
apply the relevant test based on the total
application of the technology.
The CAFE model requires inputs
defining the technology-specific cost
and efficacy (i.e., percentage reduction
of fuel consumption), and has, to date,
effectively assumed that these input
values reflect application of the
technology in a manner that holds
vehicle performance and utility
constant. Considering that some
technologies may, nonetheless, offer
owners greater or lesser value (beyond
that related to fuel outlays, which the
model calculates internally based on
vehicle fuel type and fuel economy),
DOT has modified the CAFE model to
accept and apply technology-specific
estimates of any value gain realized or
loss incurred by vehicle purchasers.698
For the MY 2012–2016 CAFE
rulemaking analysis, DOT modified the
CAFE model to accommodate
specification and accounting for credits
a manufacturer is assumed to earn by
producing flexible fuel vehicles (FFVs).
Although NHTSA cannot consider such
credits when determining maximum
feasible CAFE standards, the agency
presented an analysis that included FFV
credits, in order to communicate the
extent to which use of such credits
might cause actual costs, effects, and
benefits to be lower than estimated in
NHTSA’s formal analysis. As DOT
698 For example, a value gain could be specified
for a technology expected to improve ride quality,
and a value loss could be specified for a technology
expected to reduce vehicle range.
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explained at the time, it was unable to
account for other EPCA credit
mechanisms, because attempts to do so
had been limited by complex
interactions between those mechanisms
and the multiyear planning aspects of
the CAFE model. DOT has since
modified the CAFE model to provide
the ability to account for any or all of
the following flexibilities provided by
EPCA: FFV credits, credit carry-forward
and carry-back (between model years),
credit transfers (between passenger car
and light truck fleets), and credit trades
(between manufacturers). The model
accounts for EPCA-specified limitations
applicable to these flexibilities (e.g.,
limits on the amount of credit that can
be transferred between passenger car
and light truck fleets). These capabilities
in the model provide a basis for more
accurately estimating costs, effects, and
benefits that may actually result from
new CAFE standards. Insofar as some
manufacturers actually do earn and use
CAFE credits, this provides NHTSA
with the ability to examine outcomes
more realistically than EPCA allows for
purposes of setting new CAFE
standards.
NHTSA is today proposing CAFE
standards reflecting EPA’s proposal to
change fuel economy calculation
procedures such that a vehicle’s fuel
consumption improvement will be
accounted for if the vehicle has
technologies that reduce the amount of
energy needed to power the air
conditioner. To facilitate analysis of
these standards, DOT has modified the
CAFE model to account for these
adjustments, based on inputs specifying
the average amount of improvement
anticipated, and the estimated average
cost to apply the underlying technology.
Considering that past CAFE
rulemakings indicate that most of the
benefits of CAFE standards are realized
by vehicle owners, DOT has modified
the CAFE model to estimate not just
social benefits, but also private benefits.
The model accommodates separate
discount rates for these two valuation
methods (e.g., a 3% rate for social
benefits with a 7% rate for private
benefits). When calculating private
benefits, the model includes changes in
outlays for fuel taxes (which, as
economic transfers, are excluded from
social benefits) and excludes changes in
economic externalities (e.g., monetized
criteria pollutant and greenhouse gas
emissions).
Since 2003, the CAFE model (and its
predecessors) have provided the ability
to estimate the extent to which a
manufacturer with a history of paying
civil penalties allowed under EPCA
might decide to add some fuel-saving
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technology, but not enough to comply
with CAFE standards. In simulating this
decision-making, the model considers
the cost to add the technology, the
calculated reduction in civil penalties,
and the calculated present value (at the
time of vehicle purchase) of the change
in fuel outlays over a specified
‘‘payback period’’ (e.g., 5 years). For a
manufacturer assumed to be willing to
pay civil penalties, the model stops
adding technology once paying fines
becomes more attractive than
continuing to add technology,
considering these three factors. As an
extension of this simulation approach,
DOT has modified the CAFE model to,
if specified, simulate the potential that
a manufacturer would add more
technology than required for purposes
of compliance with CAFE standards.
When set to operate in this manner, the
model will continue to apply
technology to a manufacturer’s CAFEcompliant fleet until applying further
technology will incur more in cost than
it will yield in calculated fuel savings
over a specified ‘‘payback period’’ that
is set separately from the payback
period applicable until compliance is
achieved. In its analysis supporting MY
2012–2016 standards adopted in 2010,
NHTSA estimated the extent to which
reductions in vehicle mass might lead to
changes in the number of highway
fatalities occurring over the useful life of
the MY 2012–2016 fleet. NHTSA
performed these calculations outside the
CAFE model (using vehicle-specific
mass reduction calculations from the
model), based on agency analysis of
relevant highway safety data. DOT has
since modified the CAFE model to
perform these calculations, using an
analytical structure indicated by an
update to the underlying safety analysis.
The model also applies an input value
indicating the economic value of a
statistical life, and includes resultant
benefits (or disbenefits) in the
calculation of total social benefits.
In comments on recent NHTSA
rulemakings, some reviewers have
suggested that the CAFE model should
be modified to estimate the extent to
which new CAFE standards would
induce changes in the mix of vehicles in
the new vehicle fleet. NHTSA agrees
that a ‘‘market shift’’ model, also called
a consumer vehicle choice model, could
provide useful information regarding
the possible effects of potential new
CAFE standards. NHTSA has contracted
with the Brookings Institution (which
has subcontracted with researchers at
U.C. Davis, U.C. Irvine) to develop a
vehicle choice model estimated at the
vehicle configuration level that can be
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implemented as part of DOT’s CAFE
model. As discussed further in Section
V of the PRIA, past efforts by DOT staff
demonstrated that a vehicle could be
added to the CAFE model, but did not
yield credible coefficients specifying
such a model. If a suitable and credibly
calibrated vehicle choice model
becomes available in time—whether
through the Brookings-led research or
from other sources, DOT may integrate
a vehicle choice model into the CAFE
model for the final rule.
NHTSA anticipates this integration of
a vehicle choice model would be
structurally and operationally similar to
the integration we implemented
previously. As under the version
applied in support of today’s
announcement, the CAFE model would
begin with an agency-estimated market
forecast, estimate to what extent
manufacturers might apply additional
fuel-saving technology to each vehicle
model in consideration of future fuel
prices and baseline or alternative CAFE
standards and fuel prices, and calculate
resultant changes in the fuel economy
(and possibly fuel type) and price of
individual vehicle models. With an
integrated market share model, the
CAFE model would then estimate how
the sales volumes of individual vehicle
models would change in response to
changes in fuel economy levels and
prices throughout the light vehicle
market, possibly taking into account
interactions with the used vehicle
market. Having done so, the model
would replace the sales estimates in the
original market forecast with those
reflecting these model-estimated shifts,
repeating the entire modeling cycle
until converging on a stable solution.
Based on past experience, we
anticipate that this recursive simulation
will be necessary to ensure consistency
between sales volumes and modeled
fuel economy standards, because
achieved CAFE levels depend on sales
mix and, under attribute-based CAFE
standards, required CAFE levels also
depend on sales mix. NHTSA
anticipates, therefore, that application of
a market share model would impact
estimates of all of the following for a
given schedule of CAFE standards:
overall market volume, manufacturer
market shares and product mix,
required and achieved CAFE levels,
technology application rates and
corresponding incurred costs, fuel
consumption, greenhouse gas and
criteria pollutant emissions, changes in
highway fatalities, and economic
benefits.
Past testing by DOT/NHTSA staff did
not indicate major shifts in broad
measures (e.g., in total costs or total
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benefits), but that testing emphasized
shorter modeling periods (e.g., 1–5
model years) and less stringent
standards than reflected in today’s
proposal. Especially without knowing
the characteristics of a future vehicle
choice model, it is difficult to anticipate
the potential degree to which its
inclusion would impact analytical
outcomes.
NHTSA invites comment on the above
changes to the CAFE model. The
agency’s consideration of any
alternative approaches will be
facilitated by specific recommendations
regarding implementation within the
model’s overall structure. NHTSA also
invites comment regarding abovementioned prospects for inclusion of a
vehicle choice model. The agency’s
consideration will be facilitated by
specific information demonstrating that
inclusion of such a model would lead to
more realistic estimates of costs, effects,
and benefits, or that inclusion of such
a model would lead to less realistic
estimates.
d. Does the model set the standards?
Since NHTSA began using the CAFE
model in CAFE analysis, some
commenters have interpreted the
agency’s use of the model as the way by
which the agency chooses the maximum
feasible fuel economy standards. As the
agency explained in its most recent
CAFE rulemaking, this is incorrect.699
Although NHTSA currently uses the
CAFE model as a tool to inform its
consideration of potential CAFE
standards, the CAFE model does not
determine the CAFE standards that
NHTSA proposes or promulgates as
final regulations. The results it produces
are completely dependent on inputs
selected by NHTSA, based on the best
available information and data available
in the agency’s estimation at the time
standards are set. Ultimately, NHTSA’s
selection of appropriate CAFE standards
is governed and guided by the statutory
requirements of EPCA, as amended by
EISA: NHTSA sets the standard at the
maximum feasible average fuel economy
level that it determines is achievable
during a particular model year,
considering technological feasibility,
economic practicability, the effect of
other standards of the Government on
fuel economy, and the need of the
nation to conserve energy.
e. How does NHTSA make the model
available and transparent?
Model documentation, which is
publicly available in the rulemaking
docket and on NHTSA’s Web site,
699 75
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explains how the model is installed,
how the model inputs (all of which are
available to the public) 700 and outputs
are structured, and how the model is
used. The model can be used on any
Windows-based personal computer with
Microsoft Office 2003 or 2007 and the
Microsoft .NET framework installed (the
latter available without charge from
Microsoft). The executable version of
the model and the underlying source
code are also available at NHTSA’s Web
site. The input files used to conduct the
core analysis documented in this
proposal are available in the public
docket. With the model and these input
files, anyone is capable of
independently running the model to
repeat, evaluate, and/or modify the
agency’s analysis.
Because the model is available on
NHTSA’s web site, the agency has no
way of knowing how widely the model
has been used. The agency is, however,
aware that the model has been used by
other federal agencies, vehicle
manufacturers, private consultants,
academic researchers, and foreign
governments. Some of these individuals
have found the model complex and
challenging to use. Insofar as the
model’s sole purpose is to help DOT
staff efficiently analyze potential CAFE
standards, DOT has not expended
significant resources trying to make the
model as ‘‘user friendly’’ as commercial
software intended for wide use.
However, DOT wishes to facilitate
informed comment on the proposed
standards, and encourages reviewers to
contact the agency promptly if any
difficulties using the model are
encountered.
NHTSA arranged for a formal peer
review of an older version of the model,
has responded to reviewers’ comments,
and has considered and responded to
model-related comments received over
the course of four CAFE rulemakings. In
the agency’s view, this steady and
expanding outside review over the
course of nearly a decade of model
development has helped DOT to
significantly strengthen the model’s
capabilities and technical quality, and
has greatly increased transparency, such
that all model code is publicly available,
and all model inputs and outputs are
publicly available in a form that should
allow reviewers to reproduce the
agency’s analysis. NHTSA is currently
preparing arrangements for a formal
peer review of the current CAFE model.
Depending on the schedule for that
700 We note, however, that files from any
supplemental analysis conducted that relied in part
on confidential manufacturer product plans cannot
be made public, as prohibited under 49 CFR part
512.
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review, DOT will consider possible
model revisions and, as feasible, attempt
to make any appropriate revisions
before performing analysis supporting
final CAFE standards for MY 2017 and
beyond.
D. Statutory Requirements
1. EPCA, as Amended by EISA
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a. Standard Setting
EPCA, as amended by EISA, contains
a number of provisions regarding how
NHTSA must set CAFE standards.
NHTSA must establish separate CAFE
standards for passenger cars and light
trucks 701 for each model year,702 and
each standard must be the maximum
feasible that NHTSA believes the
manufacturers can achieve in that
model year.703 When determining the
maximum feasible level achievable by
the manufacturers, EPCA requires that
the agency consider the four statutory
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.704 In addition, the agency has
the authority to and traditionally does
consider other relevant factors, such as
the effect of the CAFE standards on
motor vehicle safety. The ultimate
determination of what standards can be
considered maximum feasible involves
a weighing and balancing of these
factors, and the balance may shift
depending on the information before the
agency about the expected
circumstances in the model years
covered by the rulemaking. Always in
conducting that balancing, however, the
implication of the ‘‘maximum feasible’’
requirement is that it calls for setting a
standard that exceeds what might be the
minimum requirement if the agency
determines that the manufacturers can
achieve a higher level, and that the
agency’s decision support the
overarching purpose of EPCA, energy
conservation.705
Besides the requirement that
standards be maximum feasible for the
fleet in question, EPCA/EISA also
contains several other requirements.
The standards must be attribute-based
and expressed in the form of a
mathematical function—NHTSA has
thus far based standards on vehicle
701 49
702 49
U.S.C. 32902(b)(1).
U.S.C. 32902(a).
703 Id.
704 49
U.S.C. 32902(f).
for Biological Diversity v. NHTSA, 538
F.3d 1172, 1197 (9th Cir. 2008) (‘‘Whatever method
it uses, NHTSA cannot set fuel economy standards
that are contrary to Congress’ purpose in enacting
the EPCA—energy conservation.’’).
705 Center
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footprint, and for this rulemaking has
expressed them in the form of a
constrained linear function that
generally sets higher (more stringent)
mpg targets for smaller-footprint
vehicles and lower (less stringent) mpg
targets for larger-footprint vehicles.
Second, the standards are subject to a
minimum requirement regarding
stringency: they must be set at levels
high enough to ensure that the
combined U.S. passenger car and light
truck fleet achieves an average fuel
economy level of not less than 35 mpg
not later than MY 2020.706 Third,
between MY 2011 and MY 2020, the
standards must ‘‘increase ratably’’ in
each model year.707 This requirement
does not have a precise mathematical
meaning, particularly because it must be
interpreted in conjunction with the
requirement to set the standards for
each model year at the level determined
to be the maximum feasible level for
that model year. Generally speaking, the
requirement for ratable increases means
that the annual increases should not be
disproportionately large or small in
relation to each other. The second and
third requirements no longer apply after
MY 2020, at which point standards
must simply be maximum feasible. And
fourth, EISA requires NHTSA to issue
CAFE standards for ‘‘at least 1, but not
more than 5, model years.’’708 This issue
is discussed in section IV.B above.
The following sections discuss the
statutory factors behind ‘‘maximum
feasible’’ in more detail.
i. Statutory Factors Considered in
Determining the Achievable Level of
Average Fuel Economy
As none of the four factors is defined
in EPCA and each remains interpreted
only to a limited degree by case law,
NHTSA has considerable latitude in
interpreting them. NHTSA interprets the
four statutory factors as set forth below.
(1) Technological Feasibility
‘‘Technological feasibility’’ refers to
whether a particular technology for
improving fuel economy is available or
can become available for commercial
application in the model year for which
a standard is being established. Thus,
the agency is not limited in determining
the level of new standards to technology
that is already being commercially
applied at the time of the rulemaking. It
can, instead, set technology-forcing
standards, i.e., ones that make it
necessary for manufacturers to engage in
research and development in order to
706 49
U.S.C. 32902(b)(2)(A).
U.S.C. 32902(b)(2)(C).
708 49 U.S.C. 32902(b)(3)(B).
707 49
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bring a new technology to market. There
are certain technologies that the agency
has considered for this rulemaking, for
example, that we know to be in the
research phase now but which we are
fairly confident can be commercially
applied by the rulemaking timeframe,
and very confident by the end of the
rulemaking timeframe. It is important to
remember, however, that while the
technological feasibility factor may
encourage the agency to look toward
more technology-forcing standards, and
while this could certainly be
appropriate given EPCA’s overarching
purpose of energy conservation
depending on the rulemaking, that
factor must also be balanced with the
other of the four statutory factors. Thus,
while ‘‘technological feasibility’’ can
drive standards higher by assuming the
use of technologies that are not yet
commercial, ‘‘maximum feasible’’ is still
also defined in terms of economic
practicability, for example, which might
caution the agency against basing
standards (even fairly distant future
standards) entirely on such
technologies. By setting standards at
levels consistent with an analysis that
assumes the use of these nascent
technologies at levels that seem
reasonable, the agency believes a more
reasonable balance is ensured.
Nevertheless, as the ‘‘maximum
feasible’’ balancing may vary depending
on the circumstances at hand for the
model years in which the standards are
set, the extent to which technological
feasibility is simply met or plays a more
dynamic role may also shift.
(2) Economic Practicability
‘‘Economic practicability’’ refers to
whether a standard is one ‘‘within the
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.’’ 709 The agency has explained in
the past that this factor can be especially
important during rulemakings in which
the automobile industry is facing
significantly adverse economic
conditions (with corresponding risks to
jobs). Consumer acceptability is also an
element of economic practicability, one
which is particularly difficult to gauge
during times of uncertain fuel prices.710
709 67
FR 77015, 77021 (Dec. 16, 2002).
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 v. NHTSA, 848 F.2d 256
(Congress established broad guidelines in the fuel
economy statute; agency’s decision to set lower
710 See,
Continued
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In a rulemaking such as the present one,
looking out into the more distant future,
economic practicability is a way to
consider the uncertainty surrounding
future market conditions and consumer
demand for fuel economy in addition to
other vehicle attributes. In an attempt to
ensure the economic practicability of
attribute-based standards, NHTSA
considers a variety of factors, including
the annual rate at which manufacturers
can increase the percentage of their fleet
that employ a particular type of fuelsaving technology, the specific fleet
mixes of different manufacturers, and
assumptions about the cost of the
standards to consumers and consumers’
valuation of fuel economy, among other
things.
At the same time, however, 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.’’ 711 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.’’ 712 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.
NHTSA has long held that the CAFE
program is not necessarily intended to
maintain the competitive positioning of
each particular company. Rather, it is
intended to enhance the fuel economy
of the vehicle fleet on American roads,
while protecting motor vehicle safety
and being mindful of the risk to the
overall United States economy.
Consequently, ‘‘economic
practicability’’ must be considered in
the context of the competing concerns
associated with different levels of
standards. Prior to the MY 2005–2007
rulemaking, the agency generally sought
to ensure the economic practicability of
standards in part by setting them at or
near the capability of the ‘‘least capable
manufacturer’’ with a significant share
of the market, i.e., typically the
standard was a reasonable accommodation of
conflicting policies).
711 CEI–I, 793 F.2d 1322, 1352 (DC Cir. 1986).
712 Id.
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manufacturer whose vehicles are, on
average, the heaviest and largest. In the
first several rulemakings establishing
attribute-based standards, the agency
applied marginal cost benefit analysis.
This ensured that the agency’s
application of technologies was limited
to those that would pay for themselves
and thus should have significant appeal
to consumers. We note that for this
rulemaking, the agency can and has
limited its application of technologies to
those that are projected to be costeffective within the rulemaking time
frame, with or without the use of such
analysis.
Whether the standards maximize net
benefits has thus been a touchstone in
the past for NHTSA’s consideration of
economic practicability. Executive
Order 12866, as amended by Executive
Order 13563, states that agencies should
‘‘select, in choosing among alternative
regulatory approaches, those approaches
that maximize net benefits * * *’’ In
practice, however, agencies, including
NHTSA, must consider situations in
which the modeling of net benefits does
not capture all of the relevant
considerations of feasibility. In this
case, the NHTSA balancing of the
statutory factors suggests that the
maximum feasible stringency for this
rulemaking points to another level
besides the modeled net benefits
maximum, and such a situation is well
within the guidance provided by EO’s
12866 and 13563.713
The agency’s consideration of
economic practicability depends on a
number of factors. Expected availability
of capital to make investments in new
technologies matters; manufacturers’
expected ability to sell vehicles with
new technologies matters; likely
consumer choices matter; and so forth.
NHTSA’s analysis of the impacts of this
rulemaking does incorporate
assumptions to capture aspects of
consumer preferences, vehicle
attributes, safety, and other factors
relevant to an impact estimate; however,
it is difficult to capture every such
constraint. Therefore, it is well within
the agency’s discretion to deviate from
a modeled net benefits maximum in the
face of evidence of economic
impracticability, and if the agency
concludes that the modeled net benefits
maximum would not represent the
maximum feasible level for future CAFE
standards. Economic practicability is a
complex factor, and like the other
factors must also be considered in the
context of the overall balancing and
EPCA’s overarching purpose of energy
713 See 70 FR at 51435 (Aug. 30, 2005); CBD v.
NHTSA, 538 F.3d at 1197 (9th Cir. 2008).
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conservation. Depending on the
conditions of the industry and the
assumptions used in the agency’s
analysis of alternative stringencies,
NHTSA could well find that standards
that maximize net benefits, or that are
higher or lower, could be economically
practicable, and thus maximum feasible.
(3) The Effect of Other Motor Vehicle
Standards of the Government on Fuel
Economy
‘‘The effect of other motor vehicle
standards of the Government on fuel
economy,’’ involves an analysis of the
effects of compliance with emission,
safety, noise, or damageability standards
on fuel economy capability and thus on
average fuel economy. In previous CAFE
rulemakings, the agency has said that
pursuant to this provision, it considers
the adverse effects of other motor
vehicle standards on fuel economy. It
said so because, from the CAFE
program’s earliest years 714 until
present, the effects of such compliance
on fuel economy capability over the
history of the CAFE program have been
negative ones. In those instances in
which the effects are negative, NHTSA
has said that it is called upon to ‘‘mak[e]
a straightforward adjustment to the fuel
economy improvement projections to
account for the impacts of other Federal
standards, principally those in the areas
of emission control, occupant safety,
vehicle damageability, and vehicle
noise. However, only the unavoidable
consequences should be accounted for.
The automobile manufacturers must be
expected to adopt those feasible
methods of achieving compliance with
other Federal standards which minimize
any adverse fuel economy effects of
those standards.’’ 715 For example, safety
standards that have the effect of
increasing vehicle weight lower vehicle
fuel economy capability and thus
decrease the level of average fuel
economy that the agency can determine
to be feasible.
The ‘‘other motor vehicle standards’’
consideration has thus in practice
functioned in a fashion similar to the
provision in EPCA, as originally
enacted, for adjusting the statutorilyspecified CAFE standards for MY 1978–
1980 passengers cars.716 EPCA did not
permit NHTSA to amend those
standards based on a finding that the
maximum feasible level of average fuel
economy for any of those three years
was greater or less than the standard
714 42 FR 63184, 63188 (Dec. 15, 1977). See also
42 FR 33534, 33537 (Jun. 30, 1977).
715 42 FR 33534, 33537 (Jun. 30, 1977).
716 That provision was deleted as obsolete when
EPCA was codified in 1994.
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specified for that year. Instead, it
provided that the agency could only
reduce the standards and only on one
basis: if the agency found that there had
been a Federal standards fuel economy
reduction, i.e., a reduction in fuel
economy due to changes in the Federal
vehicle standards, e.g., emissions and
safety, relative to the year of enactment,
1975.
The ‘‘other motor vehicle standards’’
provision is broader than the Federal
standards fuel economy reduction
provision. Although the effects analyzed
to date under the ‘‘other motor vehicle
standards’’ provision have been
negative, there could be circumstances
in which the effects are positive. In the
event that the agency encountered such
circumstances, it would be required to
consider those positive effects. For
example, if changes in vehicle safety
technology led to NHTSA’s amending a
safety standard in a way that permits
manufacturers to reduce the weight
added in complying with that standard,
that weight reduction would increase
vehicle fuel economy capability and
thus increase the level of average fuel
economy that could be determined to be
feasible.
In the wake of Massachusetts v. EPA
and of EPA’s endangerment finding,
granting of a waiver to California for its
motor vehicle GHG standards, and its
own establishment of GHG standards,
NHTSA is confronted with the issue of
how to treat those standards under
EPCA/EISA, such as in the context of
the ‘‘other motor vehicle standards’’
provision. To the extent the GHG
standards result in increases in fuel
economy, they would do so almost
exclusively as a result of inducing
manufacturers to install the same types
of technologies used by manufacturers
in complying with the CAFE standards.
Comment is requested on whether
and in what way the effects of the
California and EPA standards should be
considered under EPCA/EISA, e.g.,
under the ‘‘other motor vehicle
standards’’ provision, consistent with
NHTSA’s independent obligation under
EPCA/EISA to issue CAFE standards.
The agency has already considered
EPA’s proposal and the harmonization
benefits of the National Program in
developing its own proposal.
(4) The Need of the United States To
Conserve Energy
‘‘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
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imported petroleum.’’ 717 Environmental
implications principally include those
associated with reductions in emissions
of criteria pollutants and CO2. A prime
example of foreign policy implications
are energy independence and energy
security concerns.
(a) 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, which is
related to the consumer cost (or rather,
benefit) of our need for large quantities
of petroleum. In this rule, NHTSA relies
on fuel price projections from the U.S.
Energy Information Administration’s
(EIA) most recent Annual Energy
Outlook (AEO) for this analysis. Federal
government agencies generally use EIA’s
projections in their assessments of
future energy-related policies.
(b) Petroleum Consumption and Import
Externalities
U.S. consumption and imports of
petroleum products 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.
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 provide a response
option should a disruption in
commercial oil supplies threaten the
U.S. economy, to allow the United
States to meet part of its International
Energy Agency obligation to maintain
emergency oil stocks, and to provide a
national defense fuel reserve. 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.
717 42
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(c) Air Pollutant Emissions
While reductions in domestic fuel
refining and distribution that result
from lower fuel consumption will
reduce U.S. emissions of various
pollutants, additional vehicle use
associated with the rebound effect 718
from higher fuel economy will increase
emissions of these pollutants. Thus, the
net effect of stricter CAFE standards on
emissions of each pollutant depends on
the relative magnitudes of its reduced
emissions in fuel refining and
distribution, and increases in its
emissions from vehicle use.719 Fuel
savings from stricter CAFE standards
also result in lower emissions of CO2,
the main greenhouse gas emitted as a
result of refining, distribution, and use
of transportation fuels. Reducing fuel
consumption reduces carbon dioxide
emissions directly, because the primary
source of transportation-related CO2
emissions is fuel combustion in internal
combustion engines.
NHTSA has considered
environmental issues, both within the
context of EPCA and the National
Environmental Policy Act, in making
decisions about the setting of standards
from the earliest days of the CAFE
program. As courts of appeal have noted
in three decisions stretching over the
last 20 years,720 NHTSA defined the
‘‘need of the Nation to conserve energy’’
in the late 1970s 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.’’ 721 In 1988,
NHTSA included climate change
concepts in its CAFE notices and
prepared its first environmental
assessment addressing that subject.722 It
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.723 Since then,
NHTSA has considered the benefits of
reducing tailpipe carbon dioxide
emissions in its fuel economy
718 The ‘‘rebound effect’’ refers to the tendency of
drivers to drive their vehicles more as the cost of
doing so goes down, as when fuel economy
improves.
719 See Section IV.G below for NHTSA’s
evaluation of this effect.
720 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, 538 F.3d 1172 (9th
Cir. 2007).
721 42 FR 63184, 63188 (Dec. 15, 1977) (emphasis
added).
722 53 FR 33080, 33096 (Aug. 29, 1988).
723 53 FR 39275, 39302 (Oct. 6, 1988).
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rulemakings pursuant to the statutory
requirement to consider the nation’s
need to conserve energy by reducing
fuel consumption.
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ii. Other Factors Considered by NHTSA
The agency historically has
considered the potential for adverse
safety consequences in setting CAFE
standards. This practice is recognized
approvingly in case law. As the courts
have recognized, ‘‘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, 901 F.2d 107, 120
n. 11 (DC Cir. 1990) (‘‘CEI I’’) (citing 42
FR 33534, 33551 (June 30, 1977)). The
courts have consistently upheld
NHTSA’s implementation of EPCA in
this manner. See, e.g., Competitive
Enterprise Institute v. NHTSA, 956 F.2d
321, 322 (DC Cir. 1992) (‘‘CEI II’’) (in
determining the maximum feasible fuel
economy standard, ‘‘NHTSA has always
taken passenger safety into account.’’)
(citing CEI I, 901 F.2d at 120 n. 11);
Competitive Enterprise Institute v.
NHTSA, 45 F.3d 481, 482–83 (DC Cir.
1995) (‘‘CEI III’’) (same); Center for
Biological Diversity v. NHTSA, 538 F.3d
1172, 1203–04 (9th Cir. 2008)
(upholding NHTSA’s analysis of vehicle
safety issues associated with weight in
connection with the MY 2008–11 light
truck CAFE rule). Thus, in evaluating
what levels of stringency would result
in maximum feasible standards, NHTSA
assesses the potential safety impacts and
considers them in balancing the
statutory considerations and to
determine the maximum feasible level
of the standards.
Under the universal or ‘‘flat’’ CAFE
standards that NHTSA was previously
authorized to establish, manufacturers
were encouraged to respond to higher
standards by building smaller, less safe
vehicles in order to ‘‘balance out’’ the
larger, safer vehicles that the public
generally preferred to buy, which
resulted in a higher mass differential
between the smallest and the largest
vehicles, with a correspondingly greater
risk to safety. Under the attribute-based
standards being proposed today, that
risk is reduced because building smaller
vehicles would tend to raise a
manufacturer’s overall CAFE obligation,
rather than only raising its fleet average
CAFE, and because all vehicles are
required to continue improving their
fuel economy. In prior rulemakings,
NHTSA limited the application of mass
reduction in our modeling analysis to
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vehicles over 5,000 lbs GVWR,724 but
for purposes of today’s proposed
standards, NHTSA has revised its
modeling analysis to allow some
application of mass reduction for most
types of vehicles, although it is
concentrated in the largest and heaviest
vehicles, because we believe that this is
more consistent with how
manufacturers will actually respond to
the standards. However, as discussed
above, NHTSA does not mandate the
use of any particular technology by
manufacturers in meeting the standards.
More information on the approach to
modeling manufacturer use of mass
reduction is available in Chapter 3 of
the draft Joint TSD and in Section V of
the PRIA; and the estimated safety
impacts that may be due to the proposed
MY 2017–2025 CAFE standards are
described in section IV.G below.
iii. Factors That NHTSA Is Prohibited
From Considering
EPCA also 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.725 As discussed
further below, manufacturers can earn
compliance credits by exceeding the
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.
The effect of the prohibitions against
considering these statutory flexibilities
in setting the CAFE standards is that the
flexibilities remain voluntarilyemployed measures. If the agency were
instead to assume manufacturer use of
those flexibilities in setting new
standards, that assumption would result
in higher standards and thus tend to
require manufacturers to use those
flexibilities. By keeping NHTSA from
including them in our stringency
determination, the provision ensures
that the statutory credits remain
described above remain true compliance
flexibilities.
724 See
725 49
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U.S.C. 32902(h).
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On the other hand, NHTSA does not
believe that flexibilities other than those
expressly identified in EPCA are
similarly prohibited from being
included in the agency’s determination
of what standards would be maximum
feasible. In order to better meet EPCA’s
overarching purpose of energy
conservation, the agency is therefore
considering manufacturers’ ability to
increase the calculated fuel economy
levels of their vehicles through A/C
efficiency improvements, as proposed
by EPA, in the proposed CAFE
stringency levels for passenger cars and
light trucks for MYs 2017–2025. NHTSA
would similarly consider
manufacturers’ ability to raise their fuel
economy using off-cycle technologies as
potentially relevant to our
determination of maximum feasible
CAFE standards, but because we and
EPA do not believe that we can yet
reasonably predict an average amount
by which manufacturers will take
advantage of this opportunity, it did not
seem reasonable for the proposed
standards to include it in our stringency
determination at this time. We expect to
re-evaluate whether and how to include
off-cycle credits in determining
maximum feasible standards as the offcycle technologies and how
manufacturers may be expected to
employ them become better defined in
the future.
Additionally, because we interpret the
prohibition against including the
defined statutory credits in our
determination of maximum feasible
standards as applying only to the
flexibilities expressly identified in 49
U.S.C. 32902(h), NHTSA must, for the
first time in this rulemaking, determine
how to consider the fuel economy of
dual-fueled automobiles after the
statutory credit sunsets in MY 2019.
Once there is no statutory credit to
protect as a compliance flexibility, it
does not seem reasonable to NHTSA to
continue to interpret the statute as
prohibiting the agency from setting
maximum feasible levels at a higher
standard, if possible, by considering the
fuel economy of dual-fueled
automobiles as measured by EPA. The
overarching purpose of EPCA is better
served by interpreting 32902(h)(2) as
moot once the statutory credits provided
for in 49 U.S.C. 32905 and 32906 have
expired.
49 U.S.C. 32905(b) and (d) states that
the special fuel economy measurement
prescribed by Congress for dual-fueled
automobiles applies only ‘‘in model
years 1993 through 2019.’’ 49 U.S.C.
32906(a) also provides that the section
32905 calculation will sunset in 2019,
as evidenced by the phase-out of the
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allowable increase due to that credit; it
is clear that the phase-out of the
allowable increase in a manufacturer’s
CAFE levels due to use of dual-fueled
automobiles relates only to the special
statutory calculation (and not to other
ways of incorporating the fuel economy
of dual-fueled automobiles into the
manufacturer’s fleet calculation) by
virtue of language in section 32906(b),
which states that ‘‘in applying
subsection (a) [i.e., the phasing out
maximum increase], the Administrator
of the Environmental Protection Agency
shall determine the increase in a
manufacturer’s average fuel economy
attributable to dual fueled automobiles
by subtracting from the manufacturer’s
average fuel economy calculated under
section 32905(e) the number equal to
what the manufacturer’s average fuel
economy would be if it were calculated
by the formula under section
32904(a)(1). * * * ’’ By referring back to
the special statutory calculation,
Congress makes clear that the phase-out
applies only to increases in fuel
economy attributable to dual-fueled
automobiles due to the special statutory
calculation in sections 32905(b) and (d).
Similarly, we interpret Congress’
statement in section 32906(a)(7) that the
maximum increase in fuel economy
attributable to dual-fueled automobiles
is ‘‘0 miles per gallon for model years
after 2019’’ within the context of the
introductory language of section
32906(a) and the language of section
32906(b), which, again, refers clearly to
the statutory credit, and not to dualfueled automobiles generally. It would
be an absurd result if the phase-out of
the credit meant that manufacturers
would be effectively penalized, in CAFE
compliance, for building dual-fueled
automobiles like plug-in hybrid electric
vehicles, which may be important
‘‘bridge’’ vehicles in helping consumers
move toward full electric vehicles.
NHTSA has therefore considered the
fuel economy of plug-in hybrid electric
vehicles (the only dual-fueled
automobiles that we predict in
significant numbers in MY 2020 and
beyond; E85-capable FFVs are not
predicted in great numbers after the
statutory credit sunsets, and we do not
have sufficient information about
potential dual-fueled CNG/gasoline
vehicles to make reasonable estimates
now of their numbers in that time frame
in determining the maximum feasible
level of the MY 2020–2025 CAFE
standards for passenger cars and light
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iv. Determining the Level of the
Standards by Balancing the Factors
NHTSA has broad discretion in
balancing the above factors in
determining the appropriate levels of
average fuel economy at which to set the
CAFE standards for each model year.
Congress ‘‘specifically delegated the
process of setting * * * fuel economy
standards with broad guidelines
concerning the factors that the agency
must consider.’’ 726 The breadth of those
guidelines, the absence of any
statutorily prescribed formula for
balancing the factors and other
considerations, the fact that the relative
weight to be given to the various factors
may change from rulemaking to
rulemaking as the underlying facts
change, and the fact that the factors may
often be conflicting with respect to
whether they militate toward higher or
lower standards give NHTSA broad
discretion to decide what weight to give
each of the competing policies and
concerns and then determine how to
balance them. The exercise of that
discretion is subject to the necessity of
ensuring that NHTSA’s balancing does
not undermine the fundamental purpose
of EPCA, energy conservation,727 and as
long as that balancing reasonably
accommodates ‘‘conflicting policies that
were committed to the agency’s care by
the statute.’’ 728 The balancing of the
factors in any given rulemaking is
highly dependent on the factual and
policy context of that rulemaking and
the agency’s assumptions about the
factual and policy context during the
time frame covered by the standards at
issue. Given the changes over time in
facts bearing on assessment of the
various factors, such as those relating to
economic conditions, fuel prices, and
the state of climate change science, the
agency recognizes that what was a
reasonable balancing of competing
statutory priorities in one rulemaking
may or may not be a reasonable
balancing of those priorities in another
rulemaking.729 Nevertheless, the agency
retains substantial discretion under
EPCA to choose among reasonable
alternatives.
EPCA neither requires nor precludes
the use of any type of cost-benefit
analysis as a tool to help inform the
balancing process. As discussed above,
while NHTSA used marginal cost726 Center for Auto Safety v. NHTSA, 793 F.2d
1322, 1341 (C.A.D.C. 1986).
727 Center for Biological Diversity v. NHTSA, 538
F.3d 1172, 1195 (9th Cir. 2008).
728 CAS, 1338 (quoting Chevron U.S.A., Inc. v.
Natural Resources Defense Council, Inc., 467 U.S.
837, 845).
729 CBD v. NHTSA, 538 F.3d 1172, 1198 (9th Cir.
2008).
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75227
benefit analysis in the first two
rulemakings to establish attribute-based
CAFE standards, it was not required to
do so and is not required to continue to
do so. Regardless of what type of
analysis is or is not used, considerations
relating to costs and benefits remain an
important part of CAFE standard setting.
Because the relevant considerations
and factors can reasonably be balanced
in a variety of ways under EPCA, and
because of uncertainties associated with
the many technological and cost inputs,
NHTSA considers a wide variety of
alternative sets of standards, each
reflecting different balancing of those
policies and concerns, to aid it in
discerning reasonable outcomes. Among
the alternatives providing for an
increase in the standards in this
rulemaking, the alternatives range in
stringency from a set of standards that
increase, on average, 2 percent annually
to a set of standards that increase, on
average, 7 percent annually.
v. Other Standards
(1) Minimum Domestic Passenger Car
Standard
The minimum domestic passenger car
standard was added to the CAFE
program through EISA, when Congress
gave NHTSA explicit authority to set
universal standards for domesticallymanufactured passenger cars at the level
of 27.5 mpg or 92 percent of the average
fuel economy of the combined domestic
and import passenger car fleets in that
model year, whichever was greater.730
This minimum standard was intended
to act as a ‘‘backstop,’’ ensuring that
domestically-manufactured passenger
cars reached a given mpg level even if
the market shifted in ways likely to
reduce overall fleet mpg. Congress was
silent as to whether the agency could or
should develop similar backstop
standards for imported passenger cars
and light trucks. NHTSA has struggled
with this question since EISA was
enacted.
NHTSA has proposed minimum
standards for domesticallymanufactured passenger cars in Section
IV.E below, but we also seek comment
on whether to consider, for the final
rule, the possibility of minimum
standards for imported passenger cars
and light trucks. Although we are not
proposing such standards, we believe it
may be prudent to explore this concept
again given the considerable amount of
time between now and 2017–2025
(particularly the later years), and the
accompanying uncertainty in our
market forecast and other assumptions,
730 49
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that might make such minimum
standards relevant to help ensure that
currently-expected fuel economy
improvements occur during that time
frame. To help commenters’
consideration of this question, Section
IV.E presents illustrative levels of
minimum standards for those other
fleets.
The minimum domestic passenger car
standard was added to the CAFE
program through EISA, when Congress
gave NHTSA explicit authority to set
universal standards for domesticallymanufactured passenger cars at the level
explained above. This minimum
standard was intended to act as a
‘‘backstop,’’ ensuring that domesticallymanufactured passenger cars reached a
given mpg level even if the market
shifted in ways likely to reduce overall
fleet mpg. Congress was silent as to
whether the agency could or should
develop similar backstop standards for
imported passenger cars and light
trucks. NHTSA has struggled with this
question since EISA was enacted.
In the MY 2011 final rule, facing
comments split fairly evenly between
support and opposition to additional
backstop standards, NHTSA noted
Congress’ silence with respect to
minimum standards for imported
passenger cars and light trucks and
‘‘accept[ed] at least the possibility that
* * * [it] could be reasonably
interpreted as permissive rather than
restrictive,’’ but concluded based on the
record for that rulemaking as a whole
that additional minimum standards
were not necessary for MY 2011, given
the lack of leadtime for manufacturers to
change their MY 2011 vehicles, the
apparently-growing public preference
for smaller vehicles, and the antibacksliding characteristics of the
footprint-based curves.731
In the MYs 2012–2016 final rule
where NHTSA declined to set minimum
standards for imported passenger cars
and light trucks, the agency did so not
because we believed that we did not
have authority to do so, but because we
believed that our assumptions about the
future fleet mix were reliable within the
rulemaking time frame, and that
backsliding was very unlikely and
would not be sufficient to warrant the
regulatory burden of additional
minimum standards for those fleets.732
NHTSA also expressed concern about
the possibility of additional minimum
standards imposing inequitable
regulatory burdens of the kind that
731 74
732 75
FR at 14412 (Mar. 30, 2009).
FR 25324, at 25368–70 (May 7, 2010).
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attribute-based standards sought to
avoid, stating that:
Unless the backstop was at a very weak
level, above the high end of this range, then
some percentage of manufacturers would be
above the backstop even if the performance
of the entire industry remains fully
consistent with the emissions and fuel
economy levels projected for the final
standards. For these manufacturers and any
other manufacturers who were above the
backstop, the objectives of an attribute-based
standard would be compromised and
unnecessary costs would be imposed. This
could directionally impose increased costs
for some manufacturers. It would be difficult
if not impossible to establish the level of a
backstop standard such that costs are likely
to be imposed on manufacturers only when
there is a failure to achieve the projected
reductions across the industry as a whole. An
example of this kind of industry-wide
situation could be when there is a significant
shift to larger vehicles across the industry as
a whole, or if there is a general market shift
from cars to trucks. The problem the agencies
are concerned about in those circumstances
is not with respect to any single
manufacturer, but rather is based on concerns
over shifts across the fleet as a whole, as
compared to shifts in one manufacturer’s
fleet that may be more than offset by shifts
the other way in another manufacturer’s fleet.
However, in this respect, a traditional
backstop acts as a manufacturer-specific
standard.733
NHTSA continues to believe that the
risk of additional minimum standards
imposing inequitable regulatory burdens
on certain manufacturers is real, but at
the same time, we recognize that given
the time frame of the current
rulemaking, the agency cannot be as
certain about the unlikelihood of future
market changes. Depending on the price
of fuel and consumer preferences, the
‘‘kind of industry-wide situation’’
described in the MYs 2012–2016 rule is
possible in the 2017–2025 time frame,
particularly in the later years.
Because the agency does not have
sufficient information at this time
regarding what tradeoffs might be
associated with additional minimum
standards, specifically, whether the risk
of backsliding during MYs 2017–2025
sufficiently outweighs the possibility of
imposing inequitable regulatory burdens
on certain manufacturers, we are
seeking comment in this NPRM on these
issues but not proposing additional
minimum standards at this time. We
also seek comment on how to structure
additional minimum standards (e.g.,
whether they should be flat or attributebased, and if the latter, how that would
work), and at what level additional
minimum standards should potentially
be set. The tables in Section IV.E
733 Id.
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provide an illustration of what levels
the additional minimum standards
would require if the agency followed the
same 92 percent guideline required by
EISA for domestically-manufactured
passenger cars.
(2) Alternative Standards for Certain
Manufacturers
Because EPCA states that standards
must be set for ‘‘ * * * automobiles
manufactured by manufacturers,’’ and
because Congress provided specific
direction on how small-volume
manufacturers could obtain exemptions
from the passenger car standards,
NHTSA has long interpreted its
authority as pertaining to setting
standards for the industry as a whole.
Prior to this NPRM, some manufacturers
raised with NHTSA the possibility of
NHTSA and EPA setting alternate
standards for part of the industry that
met certain (relatively low) sales volume
criteria—specifically, that separate
standards be set so that ‘‘intermediatesize,’’ limited-line manufacturers do not
have to meet the same levels of
stringency that larger manufacturers
have to meet until several years later.
These manufacturers argued that the
same level of standards would not be
technologically feasible or economically
practicable in the same time frame for
them, due to their inability to spread
compliance burden across a larger
product lineup, and difficulty in
obtaining fuel economy-improving
technologies quickly from suppliers.
NHTSA seeks comment on whether or
how EPCA, as amended by EISA, could
be interpreted to allow such alternate
standards for certain parts of the
industry.
2. Administrative Procedure Act
To be upheld under the ‘‘arbitrary and
capricious’’ standard of judicial review
in the APA, an agency rule must be
rational, based on consideration of the
relevant factors, and within the scope of
the authority delegated to the agency by
the statute. The agency must examine
the relevant data and articulate a
satisfactory explanation for its action
including a ‘‘rational connection
between the facts found and the choice
made.’’ Burlington Truck Lines, Inc. v.
United States, 371 U.S. 156, 168 (1962).
Statutory interpretations included in
an agency’s rule are subjected to the
two-step analysis of Chevron, U.S.A.,
Inc. v. Natural Resources Defense
Council, 467 U.S. 837, 104 S.Ct. 2778,
81 L.Ed.2d 694 (1984). Under step one,
where a statute ‘‘has directly spoken to
the precise question at issue,’’ id. at 842,
104 S.Ct. 2778, the court and the agency
‘‘must give effect to the unambiguously
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Here, TARGET is the fuel economy
target (in mpg) applicable to vehicles of
a given footprint (FOOTPRINT, in
square feet), b and a are the function’s
lower and upper asymptotes (also in
mpg), respectively, c is the slope (in
gallons per mile per square foot) of the
sloped portion of the function, and d is
the intercept (in gallons per mile) of the
sloped portion of the function (that is,
the value the sloped portion would take
if extended to a footprint of 0 square
734 Ibid.,
1181.
U.S.C. 553.
736 Required CAFE levels shown here are
estimated required levels based on NHTSA’s
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feet). The MIN and MAX functions take
the minimum and maximum,
respectively of the included values.
NHTSA is proposing, consistent with
the standards for MYs 2011–2016, that
the CAFE level required of any given
manufacturer be determined by
calculating the production-weighted
harmonic average of the fuel economy
targets applicable to each vehicle model:
current projection of manufacturers’ vehicle fleets
in MYs 2017–2025. Actual required levels are not
determined until the end of each model year, when
all of the vehicles produced by a manufacturer in
that model year are known and their compliance
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Methow Valley Citizens Council, 490
U.S. 332, 350, 109 S.Ct. 1835, 104
L.Ed.2d 351 (1989).
The agency must identify the
‘‘environmentally preferable’’
alternative, but need not adopt it.
‘‘Congress in enacting NEPA * * * did
not require agencies to elevate
environmental concerns over other
appropriate considerations.’’ Baltimore
Gas and Elec. Co. v. Natural Resources
Defense Council, Inc., 462 U.S. 87, 97
(1983). Instead, NEPA requires an
agency to develop alternatives to the
proposed action in preparing an EIS. 42
U.S.C. 4332(2)(C)(iii). The statute does
not command the agency to favor an
environmentally preferable course of
action, only that it make its decision to
proceed with the action after taking a
hard look at environmental
consequences.
E. What are the proposed CAFE
standards?
1. Form of the Standards
Each of the CAFE standards that
NHTSA is proposing today for
passenger cars and light trucks is
expressed as a mathematical function
that defines a fuel economy target
applicable to each vehicle model and,
for each fleet, establishes a required
CAFE level determined by computing
the sales-weighted harmonic average of
those targets.736
As discussed above in Section II.C,
NHTSA has determined passenger car
fuel economy targets using a
constrained linear function defined
according to the following formula:
PRODUCTIONi is the number of units
produced for sale in the United States
of each ith unique footprint within each
model type, produced for sale in the
United States, and TARGETi is the
corresponding fuel economy target
(according to the equation shown above
and based on the corresponding
obligation can be determined with certainty. The
target curves, as defined by the constrained linear
function, and as embedded in the function for the
sales-weighted harmonic average, are the real
‘‘standards’’ being proposed today.
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3. National Environmental Policy Act
As discussed above, EPCA requires
the agency to determine what level at
which to set the CAFE standards for
each model year by considering 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. NEPA directs that
environmental considerations be
integrated into that process. To
accomplish that purpose, NEPA requires
an agency to compare the potential
environmental impacts of its proposed
action to those of a reasonable range of
alternatives.
To explore the environmental
consequences in depth, NHTSA has
prepared a draft environmental impact
statement (‘‘EIS’’). The purpose of an
EIS is to ‘‘provide full and fair
discussion of significant environmental
impacts and [to] inform decisionmakers
and the public of the reasonable
alternatives which would avoid or
minimize adverse impacts or enhance
the quality of the human environment.’’
40 CFR 1502.1.
NEPA is ‘‘a procedural statute that
mandates a process rather than a
particular result.’’ Stewart Park &
Reserve Coal., Inc. v. Slater, 352 F.3d at
557. The agency’s overall EIS-related
obligation is to ‘‘take a ‘hard look’ at the
environmental consequences before
taking a major action.’’ Baltimore Gas &
Elec. Co. v. Natural Res. Def. Council,
Inc., 462 U.S. 87, 97, 103 S.Ct. 2246, 76
L.Ed.2d 437 (1983). Significantly, ‘‘[i]f
the adverse environmental effects of the
proposed action are adequately
identified and evaluated, the agency is
not constrained by NEPA from deciding
that other values outweigh the
environmental costs.’’ Robertson v.
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expressed intent of Congress,’’ id. at
843, 104 S.Ct. 2778. If the statute is
silent or ambiguous regarding the
specific question, the court proceeds to
step two and asks ‘‘whether the agency’s
answer is based on a permissible
construction of the statute.’’ Id.
If an agency’s interpretation differs
from the one that it has previously
adopted, the agency need not
demonstrate that the prior position was
wrong or even less desirable. Rather, the
agency would need only to demonstrate
that its new position is consistent with
the statute and supported by the record,
and acknowledge that this is a departure
from past positions. The Supreme Court
emphasized this recently in FCC v. Fox
Television, 129 S.Ct. 1800 (2009). When
an agency changes course from earlier
regulations, ‘‘the requirement that an
agency provide reasoned explanation for
its action would ordinarily demand that
it display awareness that it is changing
position,’’ but ‘‘need not demonstrate to
a court’s satisfaction that the reasons for
the new policy are better than the
reasons for the old one; it suffices that
the new policy is permissible under the
statute, that there are good reasons for
it, and that the agency believes it to be
better, which the conscious change of
course adequately indicates.’’ 734 The
APA also requires that agencies provide
notice and comment to the public when
proposing regulations,735 as we are
doing here today.
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footprint), and the summations in the
numerator and denominator are both
performed over all unique footprint and
model type combinations in the fleet in
question.
The proposed standards for passenger
cars are, therefore, specified by the four
coefficients defining fuel economy
targets:
a = upper limit (mpg)
b = lower limit (mpg)
c = slope (gallon per mile per square
foot)
d = intercept (gallon per mile)
The proposed standards for light
trucks are, therefore, specified by the
eight coefficients defining fuel economy
targets:
c = slope (gallon per mile per square
foot)
d = intercept (gallon per mile)
e = upper limit (mpg) of ‘‘floor’’
f = lower limit (mpg) of ‘‘floor’’
g = slope (gallon per mile per square
foot) of ‘‘floor’’
h = intercept (gallon per mile) of ‘‘floor’’
a = upper limit (mpg)
b = lower limit (mpg)
For light trucks, NHTSA is proposing
to define fuel economy targets in terms
of a mathematical function under which
the target is the maximum of values
determined under each of two
constrained linear functions. The
second of these establishes a ‘‘floor’’
reflecting the MY 2016 standard, after
accounting for estimated adjustments
reflecting increased air conditioner
efficiency. This prevents the target at
any footprint from declining between
model years. The resultant
mathematical function is as follows:
2. Passenger Car Standards for MYs
2017–2025
For passenger cars, NHTSA is
proposing CAFE standards defined by
the following coefficients during MYs
2017–2025:
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For reference, the coefficients
defining the MYs 2012–2016 passenger
car standards are also provided below:
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75231
to the MYs 2012–2016 coefficients
presented above. We emphasize, again,
that the coefficients in Table IV–11
define the proposed standards.
Section II.C above and Chapter 2 of
the draft Joint TSD discusses how the
coefficients in Table IV–11 were
developed for this proposed rule. The
proposed coefficients result in the
footprint-dependent targets shown
graphically below for MYs 2017–2025.
The MY 2012–2016 final standards are
also shown for comparison.
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Also for reference, the following table
presents the coefficients based on 2cycle CAFE only for easier comparison
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As discussed, the CAFE levels
ultimately required of individual
manufacturers will depend on the mix
of vehicles they produce for sale in the
United States. Based on the market
forecast of future sales that NHTSA has
used to examine today’s proposed CAFE
standards, the agency currently
estimates that the target curves shown
above will result in the following
average required fuel economy levels for
individual manufacturers during MYs
2017–2025 (an updated estimate of the
average required fuel economy level
under the final MY 2016 standard is
also shown for comparison): 737
737 In the May 2010 final rule establishing MY
2016 standards for passenger cars and light trucks,
NHTSA estimated that the required fuel economy
levels for passenger cars would average 37.8 mpg
under the MY 2016 passenger car standard. Based
on the agency’s current forecast of the MY 2016
passenger car market, NHTSA again estimates that
the average required fuel economy level for
passenger cars will be 37.8 mpg in MY 2016.
738 For purposes of CAFE compliance, ‘‘Chrysler/
Fiat’’ is assumed to include Ferrari and Maserati in
addition to the larger-volume Chrysler and Fiat
brands.
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Because a manufacturer’s required
average fuel economy level for a model
year under the final standards will be
based on its actual production numbers
in that model year, its official required
fuel economy level will not be known
until the end of that model year.
However, because the targets for each
vehicle footprint will be established in
advance of the model year, a
manufacturer should be able to estimate
its required level accurately. Readers
should remember that the mpg levels
describing the ‘‘estimated required
standards’’ shown throughout this
section are not necessarily the ultimate
mpg level with which manufacturers
will have to comply, for the reasons
739 For purposes of CAFE compliance, VW is
assumed to include Audi-Bentley, Bugatti, and
Lamborghini, along with the larger-volume VW
brand.
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explained above, and that the mpg level
designated as ‘‘estimated required’’ is
exactly that, an estimate.
Additionally, again for reference, the
following table presents estimated mpg
levels based on 2-cycle CAFE for easier
comparison to the MYs 2012–2016
standards.
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75234
3. Minimum Domestic Passenger Car
Standards
economy standard for domestically
manufactured passenger cars in addition
to meeting the standards set by NHTSA.
According to the statute (49 U.S.C.
EISA expressly requires each
manufacturer to meet a minimum fuel
740 For purposes of CAFE compliance, ‘‘Chrysler/
Fiat’’ is assumed to include Ferrari and Maserati in
addition to the larger-volume Chrysler and Fiat
brands.
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741 For purposes of CAFE compliance, VW is
assumed to include Audi-Bentley, Bugatti, and
Lamborghini, along with the larger-volume VW
brand.
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75235
32902(b)(4)), 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
nondomestic passenger automobile
fleets manufactured for sale in the
United States by all manufacturers in
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whether to consider, for the final rule,
the possibility of minimum standards
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for imported passenger cars and light
trucks. Although we are not proposing
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2-cycle CAFE for easier comparison to
the MYs 2012–2016 standards.
As discussed in Section IV.D above,
NHTSA is also seeking comment on
of each model year to finalize the 92
percent mpg value.
We note also that in the MYs 2012–
2016 final rule, we interpreted EISA as
indicating that the 92 percent minimum
standard should be based on the
estimated required CAFE level rather
than, as suggested by the Alliance, the
estimated achieved CAFE level (which
would likely be lower than the
estimated required level if it reflected
manufacturers’ use of dual-fuel vehicle
credits under 49 U.S.C. 32905, at least
in the context of the MYs 2012–2016
standards). NHTSA continues to believe
that this interpretation is appropriate.
Based on NHTSA’s current market
forecast, the agency’s estimates of these
minimum standards under the proposed
MYs 2017–2025 CAFE standards (and,
for comparison, the final MY 2016
minimum domestic passenger car
standard) are summarized below in
Table IV–16.
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passenger car standard for that year is
promulgated.
However, we note that we do not read
this language to preclude any change,
ever, in the minimum standard after it
is first promulgated for a model year. As
long as the 18-month lead-time
requirement of 49 U.S.C. 32902(a) is
respected, NHTSA believes that the
language of the statute suggests that the
92 percent should be determined anew
any time the passenger car standards are
revised. This issue will be particularly
relevant for the current rulemaking,
given the considerable leadtime
involved and the necessity of a midterm review for the MYs 2022–2025
standards. We seek comment on this
interpretation, and on whether or not
the agency should consider instead for
MYs 2017–2025 designating the
minimum domestic passenger car
standards proposed here as ‘‘estimated,’’
just as the passenger car standards are
‘‘estimated,’’ and waiting until the end
Again, for the reader’s reference, the
following table the following table
presents estimated mpg levels based on
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the model year. 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.
As a practical matter, as standards for
both cars and trucks continue to rise
over time, 49 U.S.C. 32902(b)(4)(A) will
likely eventually cease to be relevant.
As discussed in the final rule
establishing the MYs 2012–2016 CAFE
standards, because 49 U.S.C.
32902(b)(4)(B) states that the minimum
domestic passenger car standard shall
be 92 percent of the projected average
fuel economy for the passenger car fleet,
‘‘which projection shall be published in
the Federal Register when the standard
for that model year is promulgated in
accordance with this section,’’ NHTSA
interprets EISA as indicating that the
minimum domestic passenger car
standard should be based on the
agency’s fleet assumptions when the
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75237
market forecast and other assumptions,
that might make such minimum
standards relevant to help ensure that
currently-expected fuel economy
improvements occur during that time
frame. To help commenters’
consideration of this question,
illustrative levels of minimum standards
for those other fleets are presented
below.
NHTSA emphasizes again that we are
not proposing additional minimum
standards for imported passenger cars
and light trucks at this time, but we may
consider including them in the final
rule if it seems reasonable and
appropriate to do so based on the
information provided by commenters
and the agency’s analysis. NHTSA also
may wait until we are able to observe
potential market changes during the
implementation of the MYs 2012–2016
standards and consider additional
minimum standards in a future
rulemaking action. Any additional
minimum standards for MYs 2022–2025
that may be set in the future would, like
the primary standards, be subject to the
mid-term review discussed in Section
IV.B above, and potentially revised at
that time.
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4. Light Truck Standards
For light trucks, NHTSA is proposing
CAFE standards defined by the
following coefficients during MYs
2017–2025:
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such standards, we believe it may be
prudent to explore this concept again
given the considerable amount of time
between now and 2017–2025
(particularly the later years), and the
accompanying uncertainty in our
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‘‘floor’’ term defined by coefficients e, f,
g, and h) are also provided below:
The proposed coefficients result in
the footprint-dependent targets shown
graphically below for MYs 2017–2025.
MYs 2012–2016 final standards are
shown for comparison.
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For reference, the coefficients
defining the MYs 2012–2016 light truck
standards (which did not include a
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Also for reference, the following table
presents the coefficients based on2-
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cycle CAFE only for easier comparison
to the MYs 2012–2016 coefficients
presented above. We emphasize, again,
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that the coefficients in Table IV–20
define the proposed standards.
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Again, given these targets, the CAFE
levels required of individual
manufacturers will depend on the mix
of vehicles they produce for sale in the
United States. Based on the market
forecast NHTSA has used to examine
today’s proposed CAFE standards, the
agency currently estimates that the
targets shown above will result in the
following average required fuel
economy levels for individual
manufacturers during MYs 2017–2025
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(an updated estimate of the average
required fuel economy level under the
final MY 2016 standard is shown for
comparison): 742
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742 In the May 2010 final rule establishing MYs
2012–2016 standards for passenger cars and light
trucks, NHTSA estimated that the required fuel
economy levels for light trucks would average 28.8
mpg under the MY 2016 light truck standard. Based
on the agency’s current forecast of the MY 2016
light truck market, NHTSA again estimates that the
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required fuel economy levels will average 28.8 mpg
in MY 2016. However, the agency’s market forecast
reflects less of a future market shift away from light
trucks than reflected in the agency’s prior market
forecast; as a result, NHTSA currently estimates that
the combined (i.e., passenger car and light truck)
average required fuel economy in MY 2016 will be
33.8 mpg, 0.3 mpg lower than the agency’s earlier
estimate of 34.1 mpg. The agency has made no
changes to MY 2016 standards and projects no
changes in fleet-specific average requirements
(although within-fleet market shifts could, under an
attribute-based standard, produce such changes).
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As discussed above with respect to
the proposed passenger cars standards,
we note that a manufacturer’s required
light truck fuel economy level for a
model year under the ultimate final
standards will be based on its actual
production numbers in that model year.
Additionally, again for reference, the
following table presents estimated mpg
743 For purposes of CAFE compliance, ‘‘Chrysler/
Fiat’’ is assumed to include Ferrari and Maserati in
addition to the larger-volume Chrysler and Fiat
brands.
744 For purposes of CAFE compliance, VW is
assumed to include Audi-Bentley, Bugatti, and
Lamborghini, along with the larger-volume VW
brand.
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levels based on 2-cycle CAFE for easier
comparison to the MYs 2012–2016
standards.
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F. How do the proposed standards fulfill
NHTSA’s statutory obligations?
The discussion that follows is
necessarily complex, but the central
points are straightforward. NHTSA has
tentatively concluded that the standards
presented above in Section IV.E are the
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maximum feasible standards for
passenger cars and light trucks in MYs
2017–2025. EPCA/EISA requires
NHTSA to consider four statutory
factors in determining the maximum
feasible CAFE standards in a
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rulemaking: Specifically, technological
745 For purposes of CAFE compliance, ‘‘Chrysler/
Fiat’’ is assumed to include Ferrari and Maserati in
addition to the larger-volume Chrysler and Fiat
brands.
746 for purposes of CAFE compliance, VW is
assumed to include Audi-Bentley, Bugatti, and
Lamborghini, along with the larger-volume VW
brand.
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feasibility, economic practicability, the
effect of other motor vehicle standards
of the Government on fuel economy,
and the need of the nation to conserve
energy. The agency considered a
number of regulatory alternatives in its
analysis of potential CAFE standards for
those model years, including several
that increase stringency on average at
set percentages each year, one that
approximates the point at which the
modeled net benefits are maximized in
each model year, and one that
approximates the point at which the
modeled total costs equal total benefits
in each model year. Some of those
alternatives represent standards that
would be more stringent than the
proposed standards,747 and some are
less stringent.748 As the discussion
below explains, we tentatively conclude
that the correct balancing of the relevant
factors that the agency must consider in
determining the maximum feasible
standards recognizes economic
practicability concerns as discussed
below, and sets standards accordingly.
We expect that the proposed standards
will enable further research and
development into the more advanced
fuel economy-improving technologies,
and enable significant fuel savings and
environmental benefits throughout the
program, with particularly substantial
benefits in the later years of the program
and beyond. Additionally, consistent
with Executive Order 13563, the agency
believes that the benefits of the
preferred alternative amply justify the
costs; indeed, the monetized benefits
exceed the monetized costs by $358
billion over the lifetime of the vehicles
covered by the proposed standards. In
full consideration of all of the
747 We recognize that higher standards would
help the need of the nation to conserve more energy
and might potentially be technologically feasible (in
the narrowest sense) during those model years, but
based on our analysis and the evidence presented
by the industry, we tentatively conclude that higher
standards would not represent the proper balancing
for MYs 2017–2025 cars and trucks, because they
would raise serious questions about economic
practicability. As explained above, NHTSA’s
modeled estimates necessarily do not perfectly
capture all of the factors of economic practicability,
and this conclusion regarding net benefits versus
economic practicability is similar to the conclusion
reached in the 2012–2016 analysis.
748 We also recognize that lower standards might
be less burdensome on the industry, but
considering the environmental impacts of the
different regulatory alternatives as required under
NEPA and the need of the nation to conserve
energy, we do not believe they would have
represented the appropriate balancing of the
relevant factors, because they would have left
technology, fuel savings, and emissions reductions
on the table unnecessarily, and not contributed as
much as possible to reducing our nation’s energy
security and climate change concerns. They would
also have lower net benefits than the Preferred
Alternative.
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information currently before the agency,
we have weighed the statutory factors
carefully and selected proposed
passenger car and light truck standards
that we believe are the maximum
feasible for MYs 2017–2025.
1. What are NHTSA’s statutory
obligations?
As discussed above in Section IV.D,
NHTSA sets CAFE standards under
EPCA, as amended by EISA, and is also
subject to the APA and NEPA in
developing and promulgating CAFE
standards.
NEPA requires the agency to develop
and consider the findings of an
Environmental Impact Statement (EIS)
for ‘‘major Federal actions significantly
affecting the quality of the human
environment.’’ NHTSA has determined
that this action is such an action and
therefore that an EIS is necessary, and
has accordingly prepared a Draft EIS to
inform its development and
consideration of the proposed
standards. The agency has evaluated the
environmental impacts of a range of
regulatory alternatives in our proposal,
and integrated the results of that
consideration into our balancing of the
EPCA/EISA factors, as discussed below.
The APA and relevant case law
requires our rulemaking decision to be
rational, based on consideration of the
relevant factors, and within the scope of
the authority delegated to the agency by
EPCA/EISA. The relevant factors are
those required by EPCA/EISA and the
additional factors approved in case law
as ones historically considered by the
agency in determining the maximum
feasible CAFE standards, such as safety.
The statute requires us to set standards
at the maximum feasible level for
passenger cars and light trucks for each
model year, and the agency tentatively
concludes that the standards, if adopted
as proposed, would satisfy this
requirement. NHTSA has carefully
examined the relevant data and other
considerations, as discussed below in
our explanation of our tentative
conclusion that the proposed standards
are the maximum feasible levels for
those model years based on our
evaluation of the information before us
for this NPRM.
As discussed in Section IV.D, EPCA/
EISA requires that NHTSA establish
separate passenger car and light truck
standards at ‘‘the maximum feasible
average fuel economy level that it
decides the manufacturers can achieve
in that model year,’’ based on the
agency’s consideration of four statutory
factors: Technological feasibility,
economic practicability, the effect of
other standards of the Government on
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75243
fuel economy, and the need of the
nation to conserve energy.749 NHTSA
has developed definitions for these
terms over the course of multiple CAFE
rulemakings750 and determines the
appropriate weight and balancing of the
terms given the circumstances in each
CAFE rulemaking. For MYs 2011–2020,
EPCA further requires that separate
standards for passenger cars and for
light trucks be set at levels high enough
to ensure that the CAFE of the industrywide combined fleet of new passenger
cars and light trucks reaches at least 35
mpg not later than MY 2020. For model
years after 2020, standards need simply
be set at the maximum feasible level.
The agency thus balances the relevant
factors to determine the maximum
feasible level of the CAFE standards for
each fleet, in each model year. The next
section discusses how the agency
balanced the factors for this proposal,
and why we believe the proposed
standards are the maximum feasible.
2. How did the agency balance the
factors for this NPRM?
There are numerous ways that the
relevant factors can be balanced (and
thus weight given to each factor)
depending on the agency’s policy
priorities and on the information before
the agency regarding any given model
year, and the agency therefore
considered a range of alternatives that
represent different regulatory options
that we thought were potentially
reasonable for purposes of this
rulemaking. For this proposal, the
regulatory alternatives considered in the
agency’s analysis include several
alternatives for fuel economy levels that
increase annually, on average, at set
rates—specifically, 2%/year, 3%/year,
4%/year, 5%/year, 6%/year, and 7%/
749 As explained in Section IV.D, EPCA also
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 statutory
provisions that facilitate compliance with the CAFE
standards and thereby reduce the costs of
compliance. Specifically, in determining the
maximum feasible level of fuel economy for
passenger cars and light trucks, NHTSA cannot
consider the fuel economy benefits of ‘‘dedicated’’
alternative fuel vehicles (like battery electric
vehicles or natural gas vehicles), must consider
dual-fueled automobiles to be operated only on
gasoline or diesel fuel (at least through MY 2019),
and may not consider the ability of manufacturers
to use, trade, or transfer credits. This provision
limits, to some extent, the fuel economy levels that
NHTSA can find to be ‘‘maximum feasible’’—if
NHTSA cannot consider the fuel economy of
electric vehicles, for example, NHTSA cannot set
standards predicated on manufacturers’ usage of
electric vehicles to meet the standards.
750 These factors are defined in Section IV.D; for
brevity, we do not repeat those definitions here.
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year.751 Analysis of these various rates
of increase effectively encompasses the
entire range of fuel economy
improvements that, based on
information currently available to the
agency, could conceivably fall within
the statutory boundary of ‘‘maximum
feasible’’ standards. The regulatory
alternatives also include two
alternatives based on benefit-cost
criteria, one in which standards would
be set at the point where the modeled
net benefits would be maximized for
each fleet in each year (MNB), and
another in which standards would be
set at the point at which total costs
would be most nearly equal to total
benefits for each fleet in each year
(TC=TB),752 as well as the preferred
alternative, which is within the range of
the other alternatives. These alternatives
are discussed in more detail in Chapter
III of the PRIA accompanying this
NPRM, which also contains an
extensive analysis of the relative
impacts of the alternatives in terms of
fuel savings, costs (both per-vehicle and
aggregate), carbon dioxide emissions
avoided, and many other metrics.
Because the agency could conceivably
select any of the regulatory alternatives
above, all of which fall between 2%/
year and 7%/year, inclusive, the Draft
EIS that accompanies this proposal
analyzes these lower and upper bounds
as well as the preferred alternative.
Additionally, the Draft EIS analyzes a
‘‘No Action Alternative,’’ which
assumes that, for MYs 2017 and beyond,
NHTSA would set standards at the same
level as MY 2016. The No Action
Alternative provides a baseline for
751 This is an approach similar to that used by the
agency in the MY 2012–2016 rulemaking, in which
we also considered several alternatives that
increased annually, on average, at 3%, 4%, 5%, 6%
and 7%/year. The ‘‘percent-per-year’’ alternatives in
this proposal are somewhat different from those
considered in the MY 2012–2016 rulemaking,
however, in terms of how the annual rate of
increase is applied. For this proposal, the
stringency curves are themselves advanced directly
by the annual increase amount, without reference
to any yearly changes in the fleet mix. In the 2012–
2016 rule, the annual increases for the stringency
alternatives reflected the estimated required fuel
economy of the fleet which accounted for both the
changes in the target curves and changes in the fleet
mix.
752 We included the MNB and TC=TB alternatives
in part for the reference of commenters familiar
with NHTSA’s past several CAFE rulemakings—
these alternatives represent balancings carefully
considered by the agency in past rulemaking
actions as potentially maximum feasible—and
because Executive Orders 12866 and 13563 focus
attention on an approach that maximizes net
benefits. The assessment of maximum net benefits
is challenging in the context of setting CAFE
standards, in part because standards which
maximize net benefits for each fleet, for each model
year, would not necessarily be the standards that
lead to the greatest net benefits over the entire
rulemaking period.
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comparing the environmental impacts of
the other alternatives.
NHTSA believes that this approach
clearly communicates the level of
stringency of each alternative and
allows us to identify alternatives that
represent different ways to balance
NHTSA’s statutory factors under EPCA/
EISA. Each of the listed alternatives
represents, in part, a different way in
which NHTSA could conceivably
balance different policies and
considerations in setting the standards
that achieve the maximum feasible
levels. For example, the 2% Alternative,
the least stringent alternative, would
represent a balancing in which
economic practicability—which include
concerns about availability of
technology, capital, and consumer
preferences for vehicles built to meet
the future standards—weighs more
heavily in the agency’s consideration,
and the need of the nation to conserve
energy would weigh less heavily. In
contrast, under the 7% Alternative, one
of the most stringent, the need of the
nation to conserve energy—which
includes energy conservation and
climate change considerations—would
weigh more heavily in the agency’s
consideration, and other factors would
weigh less heavily. Balancing and
assessing the feasibility of different
alternative can also be influenced by
differences and uncertainties in the way
in which key economic factors (e.g., the
price of fuel and the social cost of
carbon) and technological inputs could
be assessed and estimated or valued.
While NHTSA believes that our analysis
conducted in support of this NPRM uses
the best and most transparent
technology-related inputs and economic
assumption inputs that the agencies
could derive for MYs 2017–2025, we
recognize that there is uncertainty in
these inputs, and the balancing could be
different if, for example, the inputs are
adjusted in response to new
information.
This is the first CAFE rulemaking in
which the agency has looked this far
into the future, which makes our
traditional approach to balancing more
challenging than in past (even recent
past) rulemakings. NHTSA does not
presently believe, for example, that
technological feasibility as the agency
defines it is as constraining in this
rulemaking as it has been in the past in
light of the time frame of this
rulemaking. ‘‘Technological feasibility’’
refers to 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. In previous CAFE
rulemakings, it has been more difficult
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for the agency to say that the most
advanced technologies would be
available for commercial application in
the model years for which standards
were being established. For this
rulemaking, which is longer term,
NHTSA has considered all types of
technologies that improve real-world
fuel economy, including air-conditioner
efficiency and other off-cycle
technology, PHEVs, EVs, and highlyadvanced internal combustion engines
not yet in production, but all of which
the agencies’ expect to be commercially
applicable by the rulemaking time
frame. On the one hand, we recognize
that some technologies that currently
have limited commercial use cannot be
deployed on every vehicle model in MY
2017, but require a realistic schedule for
widespread commercialization to be
feasible. On the other hand, however,
the agency expects, based on our
analysis, that all of the alternatives
could narrowly be considered as
technologically feasible, in that they
could be achieved based on the
existence or projected future existence
of technologies that could be
incorporated on future vehicles, and
enable any of the alternatives to be
achieved on a technical basis alone if
the level of resources that might be
required to implement the technologies
is not considered. If all alternatives are
at least theoretically technologically
feasible in the MY 2017–2025
timeframe, and the need of the nation is
best served by pushing standards as
stringent as possible, then the agency
might be inclined to select the
alternative that results in the very most
stringent standards considered.
However, the agency must also
consider what is required to practically
implement technologies, which is part
of economic practicability, and to which
the most stringent alternatives give little
weight. ‘‘Economic practicability’’ refers
to whether a standard is one ‘‘within the
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.’’ Consumer acceptability is also
an element of economic practicability,
one that is particularly difficult to gauge
during times of uncertain fuel prices.753
In a rulemaking such as the present one,
753 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 v. NHTSA, 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).
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determining economic practicability
requires consideration of the
uncertainty surrounding relatively
distant future market conditions and
consumer demand for fuel economy in
addition to other vehicle attributes. In
an attempt to evaluate the economic
practicability of attribute-based
standards, NHTSA includes a variety of
factors in its analysis, including the
annual rate at which manufacturers can
increase the percentage of their fleet that
employ a particular type of fuel-saving
technology, the specific fleet mixes of
different manufacturers, and
assumptions about the cost of the
standards to consumers and consumers’
valuation of fuel economy, among other
things. Ensuring that a reasonable
amount of lead time exists to make
capital investments and to devote the
resources and time to design and
prepare for commercial production of a
more fuel efficient fleet is also relevant
to the agency’s consideration of
economic practicability. Yet there are
some aspects of economic practicability
that the agency’s analysis is not able to
capture at this time—for example, the
computer model that we use to analyze
alternative standards does not account
for all aspects of uncertainty, in part
because the agency cannot know what
we cannot know. The agency must thus
account for uncertainty in the context of
economic practicability as best as we
can based on the entire record before us.
Both technological feasibility and
economic practicability enter into the
agency’s determination of the maximum
feasible levels of stringency, and
economic practicability concerns may
cause the agency to decide that
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standards that might be technologically
feasible are, in fact, beyond maximum
feasible. Standards that require
aggressive application of and
widespread deployment of advanced
technologies could raise serious issues
with the adequacy of time to coordinate
such significant changes with
manufacturers’ redesign cycles, as well
as with the availability of engineering
resources to develop and integrate the
technologies into products, and the pace
at which capital costs can be incurred
to acquire and integrate the
manufacturing and production
equipment necessary to increase the
production volume of the technologies.
Moreover, the agency must consider
whether consumers would be likely to
accept a specific technological change
under consideration, and how the cost
to the consumer of making that change
might affect their acceptance of it. The
agency maintains, as it has in prior
CAFE rulemakings, that there is an
important distinction between
considerations of technological
feasibility and economic practicability.
As explained above, a given level of
performance may be technologically
feasible (i.e., setting aside economic
constraints) for a given vehicle model.
However, it would not be economically
practicable to require a level of fleet
average performance that assumes every
vehicle will in the first year of the
standards perform at the highest
technologically feasible level, because
manufacturers do not have unlimited
access to the financial resources or may
not practically be able to hire enough
engineers, build enough facilities, and
install enough tooling.
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NHTSA therefore believes, based on
the information currently before us, that
economic practicability concerns render
certain standards that might otherwise
be technologically feasible to be beyond
maximum feasible within the meaning
of the statute for the 2017–2025
standards. Our analysis indicated that
technologies seem to exist to meet the
stringency levels required by future
standards under nearly all of the
regulatory alternatives; but it also
indicated that manufacturers would not
be able to apply those technologies
quickly enough, given their redesign
cycles, and the level of the resources
that would be required to implement
those technologies widely across their
products, to meet all applicable
standards in every model year under
some of the alternatives.
Another consideration for economic
practicability is incremental per-vehicle
increases in technology cost. In looking
at the incremental technology cost
results from our modeling analysis, the
agency saw that in progressing from
alternatives with lower stringencies to
alternatives with higher stringencies,
technology cost increases (perhaps
predictably) at a progressively higher
rate, until the model projects that
manufacturers are unable to comply
with the increasing standards and enter
(or deepen) non-compliance. Table IV–
25 and Table IV–26 show estimated
cumulative lifetime fuel savings and
estimated average vehicle cost increase
for passenger cars and light trucks. The
results show that there is a significant
increase in technology cost between the
4% alternatives and the 5% alternatives.
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Thus, if technological feasibility and
the need of the nation are not
particularly limiting in a given
rulemaking, then maximum feasible
standards would be represented by the
mpg levels that we could require of the
industry to improve fuel economy
before we reach a tipping point that
presents risk of significantly adverse
economic consequences. Standards that
are lower than that point would likely
not be maximum feasible, because such
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standards would leave fuel-saving
technologies on the table unnecessarily;
standards that are higher than that point
would likely be beyond what the agency
would consider economically
practicable, and therefore beyond what
we would consider maximum feasible,
even if they might be technologically
feasible or better meet the need of the
nation to conserve energy. The agency
does not believe that standards are
balanced if they weight one or two
factors so heavily as to ignore another.
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We explained above that part of the
way that we try to evaluate economic
practicability is through a variety of
model inputs, such as phase-in caps (the
annual rate at which manufacturers can
increase the percentage of their fleet that
employ a particular type of fuel-saving
technology) and redesign schedules to
account for needed lead time. These
inputs limit how much technology can
be applied to a manufacturer’s fleet in
the agency’s analysis attempting to
simulate a way for the manufacturer to
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increases in incremental technology
costs, do not entirely define economic
practicability, but we believe they are
symptomatic of it. In looking at the
projected compliance shortfall results
from our modeling analysis, the agency
preliminarily concluded, based on the
information before us at the time, that
for both passenger car and for light
trucks, the MNB and TC=TB
alternatives, and the 5%, 6% and 7%
alternatives did not appear to be
economically practicable, and were thus
likely beyond maximum feasible levels
for MYs 2017–2025. In other words,
despite the theoretical technological
feasibility of achieving these levels,
various manufacturers would likely lack
the financial and engineering resources
and sufficient lead time to do so.
The analysis showed that for the
passenger car 5% alternative, there were
significant compliance shortfalls for
Chrysler in MY 2025, Ford in MYs 2021
and 2023–2025, GM in MYs 2022 and
2024–2025, Mazda in MYs 2021 and
2024–2025, and Nissan in MY 2025. For
light trucks, the analysis showed the 5%
alternative had significant compliance
shortfalls for Chrysler in MYs 2022–
2025, Ford in MY 2025, GM in MYs
2023–2025, Kia in MY 2025, Mazda in
MYs 2022 and 2025, and Nissan in MYs
2023–2025. However, the 4%, 3% and
2% alternatives did not appear, based
on shortfalls, to be beyond the level of
economic practicability, and thus
appeared potentially to be within the
range of alternatives that might yet be
maximum feasible.
754 The agency’s modeling estimates how the
application of technologies could increase vehicle
costs, reduce fuel consumption, and reduce CO2
emissions, and affect other factors. As CAFE
standards are performance-based, NHTSA does not
mandate that specific technologies be used for
compliance. CAFE modeling, therefore projects one
way that manufacturers could comply.
Manufacturers may choose a different mix of
technologies based on their unique circumstances
and products.
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comply with standards set under
different regulatory alternatives. If the
limits (and technology costeffectiveness) prevent enough
manufacturers from meeting the
required levels of stringency, the agency
may decide that the standards under
consideration may not be economically
practicable. The difference between the
required fuel economy level that applies
to a manufacturer’s fleet and the level of
fuel economy that the agency projects
the manufacturer would achieve in that
year, based on our analysis, is called a
‘‘compliance shortfall.’’ 754
We underscore again that the
modeling analysis does not dictate the
‘‘answer,’’ it is merely one source of
information among others that aids the
agency’s balancing of the standards.
These considerations, shortfalls and
The preliminary analysis referred to
above, in which the agency tentatively
concluded that the 5%, 6%, 7%, MNB,
and TC=TB alternatives were likely
beyond the level of economic
practicability based on the information
available to the agency at the time, was
conducted following the first SNOI and
prior to the second SNOI—thus,
between the end of 2010 and July 2011.
The agencies stated in the first SNOI
that we had not conducted sufficient
analysis at the time to narrow the range
of potential stringencies that had been
discussed in the initial NOI and in the
Interim Joint TAR, and that we would
be conducting more analyses and
continuing extensive dialogue with
stakeholders in the coming months to
refine our proposal. Based on our initial
consideration of how the factors might
be balanced to determine the maximum
feasible standards to propose for MYs
2017–2025 (i.e., where technological
feasibility did not appear to be
particularly limiting and the need of the
nation would counsel for choosing more
stringent alternatives, but economic
practicability posed significant
limitations), NHTSA’s preliminary
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analysis indicated that the alternatives
including up to 4% per year for cars and
4% per year for trucks should
reasonably remain under consideration.
With that preliminary estimate of 4%/
year for cars and trucks as the upper end
of the range of alternatives that should
reasonably remain under consideration
for MYs 2017–2025, the agencies began
meeting again intensely with
stakeholders, including many
individual manufacturers, between June
21, 2011 and July 27, 2011 to determine
whether additional information would
aid NHTSA in further consideration.
Beginning in the June 21, 2011 meeting,
NHTSA and EPA presented the 4%
alternative target curves as a potential
concept along with preliminary program
flexibilities and provisions, in order to
get feedback from the manufacturer
stakeholders. Manufacturer stakeholders
provided comments, much of which
was confidential business information,
which included projections of how they
might comply with concept standards,
the challenges that they expected, and
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their recommendations on program
stringency and provisions.755
Regarding passenger cars, several
manufacturers shared projections that
they would be capable of meeting
stringency levels similar to NHTSA’s
preliminary CAFE modeling projections
for the 4% alternative in MY 2020 or in
2021, with some of those arguing that
they faced challenges in the earlier years
of that period with meeting a constant
4% rate throughout the entire period.
Some manufacturers shared projections
that they could comply with
stringencies that ramped up, increasing
more slowly in MY 2017 and then
progressively increasing through MY
2021. Most manufacturers provided
limited projections beyond MY 2021,
although some stated that they could
meet the agency’s concept stringency
targets in MY 2025. Manufacturers
generally suggested that the most
significant challenges to meeting a
constant 4% (or faster) year-over-year
increase in the passenger car standards
related to their ability to implement the
755 Feedback from these stakeholder meetings is
summarized in section IV.B and documents that are
referenced in that section.
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new technologies quickly enough to
achieve the required levels, given their
need to implement fuel economy
improvements in both the passenger car
and light truck fleets concurrently;
challenges related to the cadence of
redesign and refresh schedules; the pace
at which new technology can be
implemented considering economic
factors such as availability of
engineering resources to develop and
integrate the technologies into products;
and the pace at which capital costs can
be incurred to acquire and integrate the
manufacturing and production
equipment necessary to increase the
production volume of the technologies.
Manufacturers often expressed concern
that the 4% levels could require greater
numbers of advanced technology
vehicles than they thought they would
be able to sell in that time frame, given
their belief that the cost of some
technologies was much higher than the
agencies had estimated and their
observations of current consumer
acceptance of and willingness to pay for
advanced technology vehicles that are
available now in the marketplace. A
number of manufacturers argued that
they did not believe that they could
create a sustainable business case under
passenger car standards that increased
at the rate required by the 4%
alternative.
Regarding light trucks, most
manufacturers expressed significantly
greater concerns over the 4% alternative
for light trucks than for passenger cars.
Many manufacturers argued that
increases in light truck standard
stringency should be slower than
increases in passenger car standard
stringency, based on, among other
things, the greater payload, cargo
capacity and towing utility
requirements of light trucks, and what
they perceived to be lower consumer
acceptance of certain (albeit not all)
advanced technologies on light trucks.
Many manufacturers also commented
that redesign cycles are longer on trucks
than they are on passenger cars, which
reduces the frequency at which
significant changes can be made costeffectively to comply with increasing
standards, and that the significant
increases in stringency in the MY 2012–
2016 program 756 in combination with
redesign schedules would not make it
possible to comply with the 4%
alternative in the earliest years of the
MY 2017–2025 program, such that only
756 Some manufacturers indicated that their light
truck fleet fuel economy would be below what they
anticipated their required fuel economy level would
be in MY 2016, and that they currently expect that
they will need to employ available flexibilities to
comply with that standard.
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significantly lower stringencies in those
years would be feasible in their
estimation. As for cars, most
manufacturers provided limited
projections beyond MY 2021.
Manufacturers generally stated that the
most significant challenges to meeting a
constant 4% (or faster) year-over-year
increase in the light truck standards
were similar to what they had described
for passenger cars as enumerated in the
paragraph above, but were compounded
by concerns that applying technologies
to meet the 4% alternative standards
would result in trucks that were more
expensive and provided less utility to
consumers. As was the case for cars,
manufacturers argued that their
technology cost estimates were higher
than the agencies’ and consumers are
less willing to accept/pay for some
advanced technologies in trucks, but
manufacturers argued that these
concerns were more significant for
trucks than for cars, and that they were
not optimistic that they could recoup
the costs through higher prices for
vehicles with the technologies that
would be needed to comply with the
4% alternative. Given their concerns
about having to reduce utility and raise
truck prices, and about their ability to
apply technologies quickly enough
given the longer redesign periods for
trucks, a number of manufacturers
argued that they did not believe that
they could create a sustainable business
case under light truck standards that
increased at the rate required by the 4%
alternative.
Other stakeholders, such as
environmental and consumer groups,
consistently stated that stringent
standards are technically achievable and
critical to important national interests,
such as improving energy
independence, reducing climate change,
and enabling the domestic automobile
industry to remain competitive in the
global market. Labor interests stressed
the need to carefully consider economic
impacts and the opportunity to create
and support new jobs, and consumer
advocates emphasized the economic
and practical benefits to consumers of
improved fuel economy and the need to
preserve consumer choice. In addition,
a number of stakeholders stated that the
standards under development should
not have an adverse impact on safety.
NHTSA, in collaboration with EPA
and in coordination with CARB,
carefully considered the inputs received
from all stakeholders, conducted
additional independent analyses, and
deliberated over the feedback received
on the agencies’ analyses. NHTSA
considered individual manufacturers’
redesign cycles and, where available,
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the level of technologies planned for
their future products that improve fuel
economy, as well as some estimation of
the resources that would likely be
needed to support those plans and the
potential future standards. The agency
also considered whether we agreed that
there could conceivably be
compromises to vehicle utility
depending on the technologies chosen
to meet the potential new standards,
and whether a change in the cadence of
the rate at which standards increase
could provide additional opportunity
for industry to develop and implement
technologies that would not adversely
affect utility. NHTSA considered
feedback on consumer acceptance of
some advanced technologies and
consumers’ willingness to pay for
improved fuel economy. In addition, the
agency carefully considered whether
manufacturer assertions about potential
uncertainties in the agency’s technical,
economic, and consumer acceptance
assumptions and estimates were
potentially valid, and if so, what the
potential effects of these uncertainties
might be on economic practicability.
Regarding passenger cars, after
considering this feedback from
stakeholders, the agency considered
further how it thought the factors
should be balanced to determine the
maximum feasible passenger car
standards for MYs 2017–2025. Based on
that reconsideration of the information
before the agency and how it informs
our balancing of the factors, NHTSA
tentatively concludes that the points
raised may indicate that the agency’s
preliminary analysis supporting
consideration of standards that
increased up to 4%/year may not have
captured fully the level of uncertainty
that surrounds economic practicability
in these future model years.
Nevertheless, while we believe there
may be some uncertainty, we do not
agree that it is nearly as significant as a
number of manufacturers maintained,
especially for passenger cars. The most
persuasive information received from
stakeholders for passenger cars
concerned practicability issues in the
first phase of the MY 2017–2025
standards. We therefore tentatively
conclude that the maximum feasible
stringency levels for passenger cars are
only slightly different from the 4%/year
levels suggested as the high end
preliminarily considered by the agency;
increasing on average 3.7%/year in MYs
2017–2021, and on average 4.5%/year in
MYs 2022–2025. For the overall MY
2017–2025 period, the maximum
feasible stringency curves increase on
average at 4.1%/year, and our analysis
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indicates that the costs and benefits
attributable to the 4% alternative and
the preferred alternative for passenger
cars are very similar: The preferred
alternative is 8.8 percent less expensive
for manufacturers than the 4%
alternative (estimated total costs are
$113 billion for the preferred alternative
and $124 billion for the 4% alternative),
and achieves only $20 billion less in
total benefits than the 4% alternative
(estimated total benefits are $310 billion
for the preferred alternative and $330
billion for the 4% alternative), a very
small difference given that benefits are
spread across the entire lifetimes of all
vehicles subject to the standards. The
analysis also shows that the lifetime
cumulative fuel savings is only 5
percent higher for the 4% alternative
than the preferred alternative (the
estimated fuel savings is 104 billion
gallons for the preferred alternative, and
110 billion gallons for the 4%
alternative).
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At the same time, the increase in
average vehicle cost in MY 2025 is 9.4
percent higher for the 4% alternative
(the estimated cost increase for the
average vehicle is $2,023 for the
preferred alternative, and $2,213 for the
4% alternative). The rates of increase in
stringency for each model year are
summarized in Table IV–29. NHTSA
emphasizes that under 49 U.S.C.
32902(b), the standards must be
maximum feasible in each model year
without reference to other model years,
but we believe that the small amount of
progressiveness in the proposed
standards for MYs 2017–2021, which
has very little effect on total benefits
attributable to the proposed passenger
car standards, will help to enable the
continuation of, or increases in, research
and development into the more
advanced technologies that will enable
greater stringency increases in MYs
2022–2025, and help to capture the
considerable fuel savings and
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environmental benefits similar to the
4% alternative beginning in MY 2025.
We are concerned that requiring
manufacturers to invest that capital to
meet higher standards in MYs 2017–
2021, rather than allowing them to
increase fuel economy in those years
slightly more slowly, would reduce the
levels that would be feasible in the
second phase of the program by
diverting research and development
resources to those earlier model years.
Thus, after considerable deliberation
with EPA and consultation with CARB,
NHTSA selected the preferred
alternative as the maximum feasible
alternative for MYs 2017–2025
passenger cars based on consideration of
inputs from manufacturers and the
agency’s independent analysis, which
reaches the stringency levels of the 4%
alternative in MY 2025, but has a
slightly slower ramp up rate in the
earlier years.
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Regarding light trucks, while NHTSA
does not agree with the manufacturer’s
overall cost assessments and believe
that our technology cost and
effectiveness assumptions should allow
the most capable manufacturers to
preserve all necessary vehicle utility,
the agencies do believe there is merit to
some of the concerns raised in
stakeholder feedback. Specifically,
concerns about longer redesign
schedules for trucks, compounded by
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the need to invest simultaneously in
raising passenger car fuel economy, may
not have been fully captured in our
preliminary analysis. This could lead
manufacturers to implement
technologies that do not maintain
vehicle utility, based on the cadence of
the standards under the 4% alternative.
A number of manufacturers repeatedly
stated, in providing feedback, that the
MYs 2012–2016 standards for trucks,
while feasible, required significant
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investment to reach the required levels,
and that given the redesign schedule for
trucks, that level of investment
throughout the entire MYs 2012–2025
time period was not sustainable. Based
on the confidential business information
that manufacturers provided to us, we
believe that this point may be valid. If
the agency pushes CAFE increases that
require considerable sustained
investment at a faster rate than industry
redesign cycles, adverse economic
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consequences could ensue. The best
information that the agency has at this
time, therefore, indicates that requiring
light truck fuel economy improvements
at the 4% annual rate could create
potentially severe economic
consequences.
Thus, evaluating the inputs from
stakeholders and the agency’s
independent analysis, the agency also
considered further how it thought the
factors should be balanced to determine
the maximum feasible light truck
standards for MYs 2017–2025. Based on
that consideration of the information
before the agency and how it informs
our balancing of the factors, NHTSA
tentatively concludes that 4%/year
CAFE stringency increases for light
trucks in MYs 2017–2021 are likely
beyond maximum feasible, and in fact,
in the earliest model years of the MY
2017–2021 period, that the 3%/year and
2%/year alternatives for trucks are also
likely beyond maximum feasible.
NHTSA therefore tentatively concludes
that the preferred alternative, which
would in MYs 2017–2021 increase on
average 2.6%/year, and in MYs 2022–
2025 would increase on average 4.6%/
year, is the maximum feasible level that
the industry can reach in those model
years. For the overall MY 2017–2025
period, the maximum feasible
stringency curves would increase on
average 3.5%/year. The rates of increase
in stringency for each model year are
summarized in Table IV–29 and Table
IV–30.
Our analysis indicates that the
preferred alternative has 48 percent
lower cost than the 4% alternative
(estimated total costs are $44 billion for
the preferred alternative and $83 billion
for the 4% alternative), and the total
benefits of the preferred alternative are
30 percent lower ($87 billion lower)
than the 4% alternative (estimated total
benefits are $206 billion for the
preferred alternative and $293 billion
for the 4% alternative), spread across
the entire lifetimes of all vehicles
subject to the standards. The analysis
also shows that the lifetime cumulative
fuel savings is 42 percent higher for the
4% alternative than the preferred
alternative (the estimated fuel savings is
69 billion gallons for the preferred
alternative, and 98 billion gallons for
the 4% alternative). At the same time,
the increase in average vehicle cost in
MY 2025 is 54 percent higher for the 4%
alternative (the estimated cost increase
for the average vehicle is $1,578 for the
preferred alternative, and $2,423 for the
4% alternative).
While these differences are larger than
for passenger cars, NHTSA believes that
standards set at these levels for these
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model years will help address concerns
raised by manufacturer stakeholders and
reduce the risk for adverse economic
consequences, while at the same time
ensuring most of the substantial
improvements in fuel efficiency initially
envisioned over the entire period and
supported by other stakeholders.
NHTSA believes that these stringency
levels, along with the provisions for
incentives for advanced technologies to
encourage their development and
implementation, and the agencies’
expectation that some of the
uncertainties surrounding consumer
acceptance of new technologies in light
trucks should have resolved themselves
by that time frame based on consumers’
experience with the advanced
technologies, will enable these increases
in stringency over the entire MY 2017–
2025 period. Although, as stated above,
the light truck standards must be
maximum feasible in each model year
without reference to other model years,
we believe that standards set at the
stated levels for MYs 2017–2021 and the
incentives for advanced technologies for
pickup trucks will create the best
opportunity to ensure that the MY
2022–2025 standards are economically
practicable, and avoid adverse
consequences. The first phase of light
truck standards, in that respect, acts as
a kind of bridge to the second phase, in
which industry should be able to realize
considerable additional improvements
in fuel economy.
The proposed standards also account
for the effect of EPA’s standards, in light
of the agencies’ close coordination and
the fact that both sets of standards were
developed together to harmonize as part
of the National Program. Given the close
relationship between fuel economy and
CO2 emissions, and the efforts NHTSA
and EPA have made to conduct joint
analysis and jointly deliberate on
information and tentative
conclusions,757 the agencies have
sought to harmonize and align their
proposed standards to the greatest
extent possible, consistent with their
respective statutory authorities. In
comparing the proposed standards, the
agencies’ stringency curves are
equivalent, except for the fact that the
stringency of EPA’s proposed passenger
car standards reflect the ability to
improve GHG emissions through
reductions in A/C system refrigerant
757 NHTSA and EPA conducted joint analysis and
jointly deliberated on information and tentative
conclusions related to technology cost,
effectiveness, manufacturers’ capability to
implement technologies, the cadence at which
manufacturers might support the implementation of
technologies, economic factors, and the assessment
of comments from manufacturers.
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leakage and the use of lower GWP
refrigerants (direct A/C
improvements),758 and that EPA
provides incentives for PHEV, EV and
FCV vehicles, which NHTSA does not
provide because statutory incentives
have already been defined for these
technologies. The stringency of
NHTSA’s proposed standards for
passenger cars for MYs 2017–2025 align
with the stringency of EPA’s equivalent
standards when these differences are
considered.759 NHTSA is proposing the
preferred alternative based on the
tentative determination of maximum
feasibility as described earlier in the
section, but, based on efforts NHTSA
and EPA have made to conduct joint
analysis and jointly deliberate on
information and tentative conclusions,
NHTSA has also aligned the proposed
CAFE standards with EPA’s proposed
standards.
Thus, consistent with President
Obama’s announcement on July 29,
2011, and with the August 9, 2011
SNOI, NHTSA has tentatively
concluded that the standards
represented by the preferred alternative
are the maximum feasible standards for
passenger cars and light trucks in MYs
2017–2025. We recognize that higher
standards would help the need of the
nation to conserve more energy and
might potentially be technologically
feasible (in the narrowest sense) during
those model years, but based on our
analysis and the evidence presented by
the industry, we tentatively conclude
that higher standards would not
represent the proper balancing for MYs
2017–2025 cars and trucks.760 We
758 As these A/C system improvements do not
influence fuel economy, the stringency of NHTSA’s
preferred alternatives do not reflect the availability
of these technologies.
759 We note, however, that the alignment is based
on the assumption that manufacturers implement
the same level of direct A/C system improvements
as EPA currently forecasts for those model years,
and on the assumption of PHEV, EV, and FCV
penetration at specific levels. If a manufacturer
implements a higher level of direct A/C
improvement technology and/or a higher
penetration of PHEVs, EVs and FCVs, then
NHTSA’s proposed standards would effectively be
more stringent than EPA’s. Conversely, if a
manufacturer implements a lower level of direct A/
C improvement technology and/or a lower
penetration of PHEVs, EVs and FCVs, then EPA’s
proposed standards would effectively be more
stringent than NHTSA’s.
760 We note, for example, that while Executive
Orders 12866 and 13563 focus attention on an
approach that maximizes net benefits, both
Executive Orders recognize that this focus is subject
to the requirements of the governing statute. In this
rulemaking, the standards represented by the
‘‘MNB’’ alternative are more stringent than what
NHTSA has tentatively concluded would be
maximum feasible for MYs 2017–2025, and thus
setting standards at that level would be inconsistent
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tentatively conclude that the correct
balancing recognizes economic
practicability concerns as discussed
above, and sets standards at the levels
that the agency is proposing in this
NPRM.761 In the same vein, lower
standards might be less burdensome on
the industry, but considering the
environmental impacts of the different
regulatory alternatives as required under
NEPA and the need of the nation to
conserve energy, we do not believe they
would have represented the appropriate
balancing of the relevant factors,
because they would have left
technology, fuel savings, and emissions
reductions on the table unnecessarily,
and not contributed as much as possible
to reducing our nation’s energy security
and climate change concerns. Standards
set at the proposed levels for MYs 2017–
2021 will provide the additional benefit
of helping to promote further research
and development into the more
advanced fuel economy-improving
technologies to provide a bridge to more
stringent standards in MYs 2022–2025,
and enable significant fuel savings and
environmental benefits throughout the
program, and particularly substantial
benefits in the later years of the program
and beyond. Additionally, consistent
with Executive Order 13563, the agency
believes that the benefits of the
preferred alternative amply justify the
costs; indeed, the monetized benefits
exceed the monetized costs by $358
billion over the lifetime of the vehicles
covered by the proposed standards. In
full consideration of all of the
information currently before the agency,
we have weighed the statutory factors
carefully and selected proposed
passenger car and light truck standards
that we believe are the maximum
feasible for MYs 2017–2025.
with the requirements of EPCA/EISA to set
maximum feasible standards.
761 We underscore that the agency’s tentative
decision regarding what standards would be
maximum feasible for MYs 2017–2025 is made with
reference to the rulemaking time frame and
circumstances of this proposal. Each CAFE
rulemaking (indeed, each stage of any given CAFE
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G. Impacts of the Proposed CAFE
Standards
1. How will these standards improve
fuel economy and reduce GHG
emissions for MY 2017–2025 vehicles?
As discussed above, the CAFE level
required under an attribute-based
standard depends on the mix of vehicles
produced for sale in the U.S. Based on
the market forecast that NHTSA and
EPA have used to develop and analyze
the proposed CAFE and CO2 emissions
standards, NHTSA estimates that the
proposed new CAFE standards would
lead average required fuel consumption
(fuel consumption is the inverse of fuel
economy) levels to increase by an
average of 4.0 percent annually through
MY 2025, reaching a combined average
fuel economy requirement of 49.6 mpg
in that model year:
rulemaking) presents the agency with new
information that may affect how we balance the
relevant actors.
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following required average levels under
real-world operating conditions:
average achieved fuel economy levels
would correspondingly increase through
MY 2025, but that manufacturers would,
on average, under-comply 763 in some
model years and over-comply 764 in
others, reaching a combined average
fuel economy of 47.4 mpg (taking into
account estimated adjustments
reflecting improved air conditioner
efficiency) in MY 2025:
762 49 U.S.C. 32902(h) states that NHTSA may not
consider the fuel economy of dedicated alternative
fuel vehicles, the alternative-fuel portion of dualfueled automobile fuel economy, or the ability of
manufacturers to earn and use credits for overcompliance, in determining the maximum feasible
stringency of CAFE standards.
763 ‘‘Under-compliance’’ with CAFE standards
can be mitigated either through use of FFV credits,
use of existing or ‘‘banked’’ credits, or through fine
payment. Although, as mentioned above, NHTSA
cannot consider availability of statutorily-provided
credits in setting standards, NHTSA is not
prohibited from considering fine payment.
Therefore, the estimated achieved CAFE levels
presented here include the assumption that Aston
Martin, BMW, Daimler (i.e., Mercedes), Geely (i.e.,
Volvo), Lotus, Porsche, Spyker (i.e., Saab), and, Tata
(i.e., Jaguar and Rover), and Volkswagen will only
apply technology up to the point that it would be
less expensive to pay civil penalties.
764 In NHTSA’s analysis, ‘‘over-compliance’’
occurs through multi-year planning: manufacturers
apply some ‘‘extra’’ technology in early model years
(e.g., MY 2014) in order to carry that technology
forward and thereby facilitate compliance in later
model years (e.g., MY 2016).
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conditions, NHTSA estimates that these
requirements would translate into the
If manufacturers apply technology
only as far as necessary to comply with
CAFE standards, NHTSA estimates that,
setting aside factors the agency cannot
consider for purposes of determining
maximum feasible CAFE standards,762
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Accounting for differences between
fuel economy levels under laboratory
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Accounting for differences between
fuel economy levels under laboratory
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conditions, NHTSA estimates that these
requirements would translate into the
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following required average levels under
real-world operating conditions:
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Federal Register / Vol. 76, No. 231 / Thursday, December 1, 2011 / Proposed Rules
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redesigns leading into model years
covered by today’s new standards.765 As
shown below, these ‘‘early’’ fuel
economy increases yield corresponding
reductions in fuel consumption and
greenhouse gas emissions, and incur
corresponding increases in technology
outlays.
Within the context EPCA requires
NHTSA to apply for purposes of
determining maximum feasible
stringency of CAFE standards (i.e.,
setting aside EVs, pre-MY 2020 PHEVs,
and all statutory CAFE credit
provisions), NHTSA estimates that these
fuel economy increases would lead to
fuel savings totaling 173 billion gallons
during the useful lives of vehicles
manufactured in MYs 2017–2025 and
the few MYs preceding MY 2017:
765 This outcome is a direct result of revisions,
made to DOT’s CAFE model in preparation for the
MY 2012–2016 rule, to simulate ‘‘multiyear
planning’’ effects—that is, the potential that
manufacturers will apply ‘‘extra’’ technology in one
model year if doing so will be sufficiently
advantageous with respect to the ability to comply
with CAFE standards in later model years. For
example, for today’s rulemaking analysis, NHTSA
has estimated that Ford will redesign the F–150
pickup truck in MY 2015, and again in MY 2021.
As explained in Chapter V of the PRIA, NHTSA
expects that many technologies would be applied
as part of a vehicle redesign. Therefore, in NHTSA’s
analysis, if Ford does not anticipate ensuing
standards when redesigning the MY 2015 F–150,
Ford may find it more difficult to comply with light
truck standard during MY 2016–2020. Through
simulation of multiyear planning effects, NHTSA’s
analysis indicates that Ford could apply more
technology to the MY 2015 F–150 if standards
continue to increase after MY 2016 than Ford need
apply if standards remain unchanged after MY
2016, and that this additional technology would
yield further fuel economy improvements of up to
1.3 mpg, depending on pickup configuration.
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Setting aside the potential to produce
additional EVs (or, prior to MY 2020,
PHEVs) or take advantage of EPCA’s
provisions regarding CAFE credits,
NHTSA estimates that today’s proposed
standards could increase achieved fuel
economy levels by average amounts of
up to 0.5 mpg during the few model
years leading into MY 2017, as
manufacturers apply technology during
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The agency also estimates that these
new CAFE standards would lead to
corresponding reductions of CO2
emissions totaling 1,834 million metric
tons (mmt) during the useful lives of
vehicles sold in MYs 2017–2025 and the
few MYs preceding MY 2017:
2. How will these standards improve
fleet-wide fuel economy and reduce
GHG emissions beyond MY 2025?
because over time, a growing fraction of
the U.S. light-duty vehicle fleet will be
comprised of cars and light trucks that
meet at least the MY 2025 standard. The
impact of the new standards on fuel use
and GHG emissions would therefore
continue to grow through approximately
2060, when virtually all cars and light
trucks in service will have met
standards as stringent as those
established for MY 2025.
As Table IV–41 shows, NHTSA
estimates that the fuel economy
increases resulting from the proposed
standards will lead to reductions in total
fuel consumption by cars and light
trucks of 3 billion gallons during 2020,
increasing to 40 billion gallons by 2060.
Over the period from 2017, when the
proposed standards would begin to take
effect, through 2050, cumulative fuel
savings would total 1,232 billion
gallons, as Table IV–41 also indicates.
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Under the assumption that CAFE
standards at least as stringent as those
being proposed today for MY 2025
would be established for subsequent
model years, the effects of the proposed
standards on fuel consumption and
GHG emissions will continue to
increase for many years. This will occur
Federal Register / Vol. 76, No. 231 / Thursday, December 1, 2011 / Proposed Rules
75259
duty vehicle fleet. Specifically, NHTSA
estimates that total annual CO2
emissions associated with passenger car
and light truck use in the U.S. use
would decline by 32 million metric tons
(mmt) in 2020 as a consequence of the
new CAFE standards, as Table IV–42
reports. The table also shows that this
annual reduction is estimated to grow to
nearly 488 million metric tons by the
year 2060, and will total over 13 billion
metric tons over the period from 2017,
when the proposed standards would
take effect, through 2060.
These reductions in fleet-wide CO2
emissions, together with corresponding
reductions in other GHG emissions from
fuel production and use, would lead to
small but significant reductions in
projected changes in the future global
climate. These changes, based on
analysis documented in the draft
Environmental Impact Statement (EIS)
that informed the agency’s decisions
regarding this proposal, are summarized
in Table IV–43 below.
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‘‘leakage effect’’ in detail, NHTSA
provides a sample estimate of its
potential magnitude in its Draft EIS.
This analysis indicates that the leakage
effect is likely to offset only a very small
fraction of the reductions in fuel use
and emissions projected to result from
the rule.
As a consequence of these reductions
in fleet-wide fuel consumption, the
agency also estimates that the new
CAFE standards for MYs 2017–2025
would lead to corresponding reductions
in CO2 emissions from the U.S. light-
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The energy security analysis
conducted for this rule estimates that
the world price of oil will fall modestly
in response to lower U.S. demand for
refined fuel. One potential result of this
decline in the world price of oil would
be an increase in the consumption of
petroleum products outside the U.S.,
which would in turn lead to a modest
increase in emissions of greenhouse
gases, criteria air pollutants, and
airborne toxics from their refining and
use. While additional information
would be needed to analyze this
Federal Register / Vol. 76, No. 231 / Thursday, December 1, 2011 / Proposed Rules
3. How will these proposed standards
impact non-GHG emissions and their
associated effects?
Under the assumption that CAFE
standards at least as stringent as those
proposed for MY 2025 would be
established for subsequent model years,
the effects of the new standards on air
quality and its associated health effects
will continue to be felt over the
foreseeable future. This will occur
because over time a growing fraction of
the U.S. light-duty vehicle fleet will be
comprised of cars and light trucks that
meet the MY 2025 standard, and this
growth will continue until
approximately 2060.
Increases in the fuel economy of lightduty vehicles required by the new CAFE
standards will cause a slight increase in
the number of miles they are driven,
through the fuel economy ‘‘rebound
effect.’’ In turn, this increase in vehicle
use will lead to increases in emissions
of criteria air pollutants and some
airborne toxics, since these are products
of the number of miles vehicles are
driven.
At the same time, however, the
projected reductions in fuel production
and use reported in Table IV–40 and IV–
41 above will lead to corresponding
reductions in emissions of these
pollutants that occur during fuel
production and distribution
(‘‘upstream’’ emissions). For most of
these pollutants, the reduction in
upstream emissions resulting from
lower fuel production and distribution
will outweigh the increase in emissions
from vehicle use, resulting in a net
decline in their total emissions.766
Tables IV–44 and IV–45 report
estimated reductions in emissions of
selected criteria air pollutants (or their
chemical precursors) and airborne
toxics expected to result from the
proposed standards during calendar
year 2040. By that date, cars and light
trucks meeting the MY 2025 CAFE
standards will account for the majority
of light-duty vehicle use, so these
reductions provide a useful index of the
long-term impact of the final standards
on air pollution and its consequences
for human health. In the tables below,
positive values indicate increases in
emissions, while negative values
indicate reductions.
766 As stated elsewhere, while the agency’s
analysis assumes that all changes in upstream
emissions result from a decrease in petroleum
production and transport, the analysis of non-GHG
emissions in future calendar years also assumes that
retail gasoline composition is unaffected by this
rule; as a result, the impacts of this rule on
downstream non-GHG emissions (more specifically,
on air toxics) may be underestimated. See also
Section III.G above for more information.
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In turn, the reductions in emissions
reported in Tables IV–44 and IV–45 are
projected to result in significant
declines in the adverse health effects
that result from population exposure to
these pollutants. Table IV–46 reports the
estimated reductions in selected PM2.5related human health impacts that are
expected to result from reduced
population exposure to unhealthful
atmospheric concentrations of PM2.5.
The estimates reported in Table IV–46,
based on analysis documented in the
draft Environmental Impact Statement
(EIS) that informed the agency’s
decisions regarding this proposed rule,
are derived from PM2.5-related dollar-
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per-ton estimates that reflect the
quantifiable reductions in health
impacts likely to result from reduced
population exposure to particular matter
(PM2.5). They do not include all health
impacts related to reduced exposure to
PM, nor do they include any reductions
in health impacts resulting from lower
population exposure to other criteria air
pollutants (particularly ozone) and air
toxics.
There may be localized air quality and
health impacts associated with this
rulemaking that are not reflected in the
estimates of aggregate air quality
changes and health impacts reported in
this analysis. Emissions changes and
dollar-per-ton estimates alone are not
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necessarily a good indication of local or
regional air quality and health impacts,
because the atmospheric chemistry
governing formation and accumulation
of ambient concentrations of PM2.5,
ozone, and air toxics is very complex.
Full-scale photochemical modeling
would provide the necessary spatial and
temporal detail to more completely and
accurately estimate the changes in
ambient levels of these pollutants and
their associated health and welfare
impacts. NHTSA intends to conduct
such modeling for purposes of the final
rule, but it was not available in time to
inform these proposed standards or to
be included in the Draft EIS.
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well as fuel savings to vehicle buyers.
Also, as discussed above, NHTSA
estimates that today’s proposed
standards could induce manufacturers
to apply technology during redesigns
leading into model years covered by
today’s new standards, and to incur
corresponding increases in technology
outlays.
Technology costs are assumed to
change over time due to the influence of
cost learning and the conversion from
short- to long-term ICMs. Table I–47
represents the CAFE model inputs for
MY 2012, MY 2017, MY 2021 and MY
2025 approximate net (accumulated)
technology costs for some of the key
enabling technologies as applied to
Midsize passenger cars.768 Additional
details on technology cost estimates can
be found in Chapter V of NHTSA’s PRIA
and Chapter 3 of the Joint Draft TSD.
768 The net (accumulated) technology costs
represent the costs from a baseline vehicle (i.e. the
top of the decision tree) to each of the technologies
listed in the table. The baseline vehicle is assumed
to utilize a fixed-valve naturally aspirated inline 4
cylinder engine, 5-speed transmission and no
electrification/hybridization improvements.
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4. What are the estimated costs and
benefits of these proposed standards?
NHTSA estimates that the proposed
standards could entail significant
additional technology beyond the levels
that could be applied under baseline
CAFE standards (i.e., the application of
MY 2016 CAFE standards to MYs 2017–
2025). This additional technology will
lead to increases in costs to
manufacturers and vehicle buyers, as
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In order to pay for this additional
technology (and, for some
manufacturers, civil penalties), NHTSA
estimates that the cost of an average
passenger car and light truck will
increase relative to levels resulting from
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compliance with baseline (MY 2016)
standards by $228–$2,023 and $44–
$1,578, respectively, during MYs 2017–
2025. The following tables summarize
the agency’s estimates of average cost
increases for each manufacturer’s
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passenger car, light truck, and overall
fleets (with corresponding averages for
the industry):
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These cost estimates reflect the
potential that a given manufacturer’s
efforts to minimize overall regulatory
costs could focus technology where the
most fuel can be saved at the least cost,
and not necessarily, for example, where
the cost to add technology would be
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smallest relative to baseline production
costs. Therefore, if average incremental
vehicle cost increases (including any
civil penalties) are measured as
increases relative to baseline prices
(estimated by adding baseline costs to
MY 2008 prices), the agency’s analysis
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shows relative cost increases declining
as baseline vehicle price increases.
Figure IV–3 shows the trend for MY
2025, for vehicles with estimated
baseline prices up to $100,000:
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is worth monitoring in the market going
forward. NHTSA seeks comment on
potential market effects related to this
issue.
As mentioned above, these estimated
costs derive primarily from the
additional application of technology
under the proposed standards. The
following three tables summarize the
incremental extent to which the agency
estimates technologies could be added
to the passenger car, light truck, and
overall fleets in each model year in
response to the proposed standards.
Percentages reflect the technology’s
additional application in the market,
relative to the estimated application
under baseline standards (i.e.,
application of MY 2016 standards
through MY 2025), and are negative in
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cases where one technology is
superseded (i.e., displaced) by another.
For example, the agency estimates that
manufacturers could apply many
improvements to transmissions (e.g.,
dual clutch transmissions, denoted
below by ‘‘DCT’’) through MY 2025
under baseline standards. However, the
agency also estimates that
manufacturers could apply even more
advanced high efficiency transmissions
(denoted below by ‘‘HETRANS’’) under
the proposed standards, and that these
transmissions would supersede DCTs
and other transmission advances.
Therefore, as shown in the following
three tables, the incremental application
of DCTs under the proposed standards
is negative.
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If manufacturers pass along these
costs rather than reducing profits, and
pass these costs along where they are
incurred rather than ‘‘cross-subsidizing’’
among products, the quantity of
vehicles produced at different price
levels would change. Shifts in
production may potentially occur,
which could create marketing
challenges for manufacturers that are
active in certain segments. We
recognize, however, that many
manufacturers do in fact cross-subsidize
to some extent, and take losses on some
vehicles while continuing to make
profits from others. NHTSA has no
evidence to indicate that manufacturers
will inevitably shift production plans in
response to these proposed standards,
but nevertheless believes that this issue
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increases associated with this additional
application of technology will lead to a
total of nearly $157 billion in
incremental outlays during MYs 2017–
2025 (and model years leading up to MY
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2017) for additional technology
attributable to the proposed standards:
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Based on the agencies’ estimates of
manufacturers’ future sales volumes,
and taking into account early outlays
attributable to multiyear planning
effects (discussed above), the cost
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Finally, while NHTSA is confident
that the cost estimates are the best
available and appropriate for purposes
of this proposed rule, it is possible that
the agency may have underestimated or
overestimated manufacturers’ direct
costs for applying some fuel economy
technologies, or the increases in
manufacturer’s indirect costs associated
with higher vehicle manufacturing
costs. In either case, the technology
outlays reported here will not correctly
represent the costs of meeting higher
CAFE standards. Similarly, NHTSA’s
estimates of increased costs of
congestion, accidents, and noise
associated with added vehicle use are
drawn from a 1997 study, and the
correct magnitude of these values may
have changed since they were
developed. If this is the case, the costs
of increased vehicle use associated with
the fuel economy rebound effect will
differ from the agency’s estimates in this
analysis. Thus, like the agency’s
estimates of economic benefits,
estimates of total compliance costs
reported here may underestimate or
overestimate the true economic costs of
the proposed standards.
However, offsetting these costs, the
achieved increases in fuel economy will
also produce significant benefits to
society. Most of these benefits are
attributable to reductions in fuel
consumption; fuel savings are valued
using forecasts of pretax prices in EIA’s
reference case forecast from AEO 2011.
The total benefits also include other
benefits and dis-benefits, examples of
which include the social values of
reductions in CO2 and criteria pollutant
emissions, the value of additional travel
(induced by the rebound effect), and the
social costs of additional congestion,
accidents, and noise attributable to that
additional travel. The PRIA
accompanying today’s proposed rule
presents a detailed analysis of the rule’s
specific benefits.
As Tables IV–59 and 60 show,
NHTSA estimates that at the discount
rates of 3 percent prescribed in OMB
guidance for regulatory analysis, the
present value of total benefits from the
proposed CAFE standards over the
lifetimes of MY 2017–2025 (and,
accounting for multiyear planning
effects discussed above, model years
leading up to MY 2017) passenger cars
and light trucks will be $515 billion.
769 For example, the agencies have assumed no
cost changes due to our assumption that HEV
towing capability is not maintained; due to
potential drivability issues with the P2 HEV; and
due to potential drivability and NVH issues with
the shift optimizer.
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NHTSA notes that these estimates of
the economic costs for meeting higher
CAFE standards omit certain potentially
important categories of costs, and may
also reflect underestimation (or possibly
overestimation) of some costs that are
included. For example, although the
agency’s analysis is intended—with
very limited exceptions769—to hold
vehicle performance, capacity, and
utility constant when applying fuelsaving technologies to vehicles, the
analysis imputes no cost to any actual
reductions in vehicle performance,
capacity, and utility that may result
from manufacturers’ efforts to comply
with the proposed CAFE standards.
Although these costs are difficult to
estimate accurately, they nonetheless
represent a notable category of omitted
costs if they have not been adequately
accounted for in the cost estimates.
Similarly, the agency’s estimates of net
benefits for meeting higher CAFE
standards includes estimates of the
economic value of potential changes in
motor vehicle fatalities that could result
from reductions in the size or weight of
vehicles, but not of changes in non-fatal
injuries that could result from
reductions in vehicle size and/or
weight.
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billion when discounted at the 7 percent
rate also required by OMB guidance.
Thus the present value of fuel savings
and other benefits over the lifetimes of
the vehicles covered by the proposed
standards is $96 billion—or about 19
percent—lower when discounted at a 7
percent annual rate than when
discounted using the 3 percent annual
rate.771
770 Unless otherwise indicated, all tables in
Section IV report benefits calculated using the
Reference Case input assumptions, with future
benefits resulting from reductions in carbon dioxide
emissions discounted at the 3 percent rate
prescribed in the interagency guidance on the social
cost of carbon.
771 For tables that report total or net benefits using
a 7 percent discount rate, future benefits from
reducing carbon dioxide emissions are discounted
at 3 percent in order to maintain consistency with
the discount rate used to develop the reference case
estimate of the social cost of carbon. All other
future benefits reported in these tables are
discounted using the 7 percent rate.
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Tables IV–61 and 62 report that the
present value of total benefits from
requiring cars and light trucks to
achieve the fuel economy levels
specified in the proposed CAFE
standards for MYs 2017–25 will be $419
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For both the passenger car and light
truck fleets, NHTSA estimates that the
benefits of today’s proposed standards
will exceed the corresponding costs in
every model year, so that the net social
benefits from requiring higher fuel
economy—the difference between the
total benefits that result from higher fuel
economy and the technology outlays
required to achieve it—will be
substantial. Because the technology
outlays required to achieve the fuel
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economy levels required by the
proposed standards are incurred during
the model years when the vehicles are
produced and sold, however, they are
not subject to discounting, so that their
present value does not depend on the
discount rate used. Thus the net benefits
of the proposed standards differ
depending on whether the 3 percent or
7 percent discount rate is used, but only
because the choice of discount rates
affects the present value of total
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benefits, and not that of technology
costs.
As Tables IV–63 and 64 show, over
the lifetimes of the affected (MY 2017–
2025, and MYs leading up to MY 2017)
vehicles, the agency estimates that when
the benefits of the proposed standards
are discounted at a 3 percent rate, they
will exceed the costs of the proposed
standards by $358 billion:
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to discounting, using the higher 7
percent discount rate reduces net
benefits by exactly this same amount.
Nevertheless, Tables IV–65 and 66 show
that the net benefits from requiring
passenger cars and light trucks to
achieve higher fuel economy are still
substantial even when future benefits
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are discounted at the higher rate,
totaling $262 billion over MYs 2017–25.
Net benefits are thus about 27 percent
lower when future benefits are
discounted at a 7 percent annual rate
than at a 3 percent rate.
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As indicated previously, when fuel
savings and other future benefits
resulting from the proposed standards
are discounted at the 7 percent rate
prescribed in OMB guidance, they are
$96 billion lower than when the 3
percent discount rate is applied.
Because technology costs are not subject
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NHTSA’s estimates of economic
benefits from establishing higher CAFE
standards are subject to considerable
uncertainty. Most important, the
agency’s estimates of the fuel savings
likely to result from adopting higher
CAFE standards depend critically on the
accuracy of the estimated fuel economy
levels that will be achieved under both
the baseline scenario, which assumes
that manufacturers will continue to
comply with the MY 2016 CAFE
standards, and under alternative
increases in the standards that apply to
MYs 2017–25 passenger cars and light
trucks. Specifically, if the agency has
underestimated the fuel economy levels
that manufacturers would have
achieved under the baseline scenario—
or is too optimistic about the fuel
economy levels that manufacturers will
actually achieve under the proposed
standards—its estimates of fuel savings
and the resulting economic benefits
attributable to this rule will be too large.
Another major source of potential
overestimation in the agency’s estimates
of benefits from requiring higher fuel
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economy stems from its reliance on the
Reference Case fuel price forecasts
reported in AEO 2011. Although
NHTSA believes that these forecasts are
the most reliable that are available, they
are nevertheless significantly higher
than the fuel price projections reported
in most previous editions of EIA’s
Annual Energy Outlook, and reflect
projections of world oil prices that are
well above forecasts issued by other
firms and government agencies. If the
future fuel prices projected in AEO 2011
prove to be too high, the agency’s
estimates of the value of future fuel
savings—the major component of
benefits from this rule—will also be too
high.
However, it is also possible that
NHTSA’s estimates of economic benefits
from establishing higher CAFE
standards underestimate the true
economic benefits of the fuel savings
those standards would produce. If the
AEO 2011 forecast of fuel prices proves
to be too low, for example, NHTSA will
have underestimated the value of fuel
savings that will result from adopting
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higher CAFE standards for MY 2017–25.
As another example, the agency’s
estimate of benefits from reducing the
threat of economic damages from
disruptions in the supply of imported
petroleum to the U.S. applies to
calendar year 2020. If the magnitude of
this estimate would be expected to grow
after 2015 in response to increases in
U.S. petroleum imports, growth in the
level of U.S. economic activity, or
increases in the likelihood of
disruptions in the supply of imported
petroleum, the agency may have
underestimated the benefits from the
reduction in petroleum imports
expected to result from adopting higher
CAFE standards.
NHTSA’s benefit estimates could also
be too low because they exclude or
understate the economic value of certain
potentially significant categories of
benefits from reducing fuel
consumption. As one example, EPA’s
estimates of the economic value of
reduced damages to human health
resulting from lower exposure to criteria
air pollutants includes only the effects
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of reducing population exposure to
PM2.5 emissions. Although this is likely
to be the most significant component of
health benefits from reduced emissions
of criteria air pollutants, it excludes the
value of reduced damages to human
health and other impacts resulting from
lower emissions and reduced
population exposure to other criteria air
pollutants, including ozone and nitrous
oxide (N2O), as well as to airborne
toxics. EPA’s estimates exclude these
benefits because no reliable dollar-perton estimates of the health impacts of
criteria pollutants other than PM2.5 or of
the health impacts of airborne toxics
were available to use in developing
estimates of these benefits.
Similarly, the agency’s estimate of the
value of reduced climate-related
economic damages from lower
emissions of GHGs excludes many
sources of potential benefits from
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reducing the pace and extent of global
climate change.772 For example, none of
the three models used to value climaterelated economic damages includes
those resulting from ocean acidification
or loss of species and wildlife. The
models also may not adequately capture
certain other impacts, including
potentially abrupt changes in climate
associated with thresholds that govern
climate system responses, interregional
interactions such as global security
impacts of extreme warming, or limited
near-term substitutability between
damage to natural systems and
increased consumption. Including
monetized estimates of benefits from
772 Social Cost of Carbon for Regulatory Impact
Analysis Under Executive Order 12866, Interagency
Working Group on Social Cost of Carbon, United
States Government, February 2010. Available in
Docket No. NHTSA–2009–0059.
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reducing the extent of climate change
and these associated impacts would
increase the agency’s estimates of
benefits from adopting higher CAFE
standards.
The following tables present itemized
costs and benefits for the combined
passenger car and light truck fleets for
each model year affected by the
proposed standards and for all model
years combined, using both discount
rates prescribed by OMB regulatory
guidance. Tables IV–67 and 68 report
technology outlays, each separate
component of benefits (including costs
associated with additional driving due
to the rebound effect, labeled ‘‘disbenefits’’), the total value of benefits,
and net benefits using the 3 percent
discount rate. (Numbers in parentheses
represent negative values.)
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Similarly, Tables IV–69 and 70 below
report technology outlays, the
individual components of benefits
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(including ‘‘dis-benefits’’ resulting from
additional driving) and their total and
net benefits using the 7 percent discount
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rate. (Again, numbers in parentheses
represent negative values.)
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774 Using the central value of $22 per metric ton
for the SCC, and discounting future benefits from
reduced CO2 emissions at a 3 percent annual rate.
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Additionally, we note that the $22 per metric ton
value for the SCC applies to calendar year 2010, and
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increases over time. See the interagency guidance
on SCC for more information.
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These benefit and cost estimates do
not reflect the availability and use of
certain flexibility mechanisms, such as
compliance credits and credit trading,
because EPCA prohibits NHTSA from
considering the effects of those
mechanisms in setting CAFE standards.
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However, the agency notes that, in
reality, manufacturers are likely to rely
to some extent on flexibility
mechanisms and would thereby reduce
the cost of complying with the proposed
standards to a meaningful extent.
As discussed in the PRIA, NHTSA has
performed an analysis to estimate costs
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and benefits taking into account EPCA’s
provisions regarding EVs, PHEVs
produced before MY 2020, FFV credits,
and other CAFE credit provisions.
Accounting for these provisions
indicates that achieved fuel economies
would be 0.5–1.6 mpg lower than when
these provisions are not considered:
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As a result, NHTSA estimates that,
when EPCA AFV and credit provisions
are taken into account, fuel savings will
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total 163 billion gallons—5.8 percent
less than the 173 billion gallons
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estimated when these flexibilities are
not considered:
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million metric tons (mmt), 5.0 percent
less than the 1,834 mmt estimated when
these EPCA provisions are not
considered: 775
775 Differences in the application of diesel engines
and plug-in hybrid electric vehicles lead to
differences in the percentage changes in fuel
consumption and carbon dioxide emissions
between the with- and without-credit cases.
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The agency similarly estimates CO2
emissions reductions will total 1,742
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This analysis further indicates that
significant reductions in outlays for
additional technology will result when
EPCA’s AFV and credit provisions are
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taken into account. Tables IV–77 and 78
below show that, total technology costs
are estimated to decline to $133 billion
as a result of manufacturers’ use of these
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provisions, or about 15 percent less than
the $157 billion estimated when
excluding these flexibilities:
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the present value of total benefits will
be $488 billion when discounted at a 3
percent annual rate, as Tables IV–79 and
80 below report. This estimate of total
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benefits is $27 billion, or 5.2 percent,
lower than the $515 billion reported
previously for the analysis that
excluded these provisions:
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Because NHTSA’s analysis indicated
that these EPCA provisions will
modestly reduce fuel savings and
related benefits, the agency’s estimate of
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Similarly, NHTSA estimates that the
present value of total benefits will
decline modestly from its previous
estimate when future fuel savings and
other benefits are discounted at the
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higher 7 percent rate. Tables IV–81 and
82 report that the present value of
benefits from requiring higher fuel
economy for MY 2017–25 cars and light
trucks will total $397 billion when
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discounted using a 7 percent rate, about
$22 billion (5.3 percent) below the
previous $419.2 billion estimate of total
benefits when FFV credits were not
permitted:
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will reduce net benefits by a smaller
proportion. As Tables IV–83 and 84
show, the agency estimates that these
will reduce net benefits from the
proposed CAFE standards to $355
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billion from the previously-reported
estimate of $358 billion without those
credits, or by only about 1 percent.
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Although the discounted present
value of total benefits will be modestly
lower when EPCA AFV and credit
provisions are taken into account, the
agency estimates that these provisions
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Similarly, Tables IV–85 and 86
immediately below show that NHTSA
estimates manufacturers’ use of EPCA
AFV and credit provisions will increase
net benefits from requiring higher fuel
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economy for MY 2017–25 cars and light
trucks, but very slightly—to $264
billion—if a 7 percent discount rate is
applied to future benefits. This estimate
is $2 billion—or 0.8 percent—higher
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than the previously-reported $262
billion estimate of net benefits without
the availability of EPCA AFV and credit
provisions using that same discount
rate.
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The agency has performed several
sensitivity analyses to examine
important assumptions. All sensitivity
analyses were based on the ‘‘standard
setting’’ output of the CAFE model. We
examine sensitivity with respect to the
following economic parameters:
(1) The price of gasoline: The main
analysis (i.e., the Reference Case) uses
the AEO 2011 Reference Case estimate
for the price of gasoline. In this
sensitivity analysis we examine the
effect of using the AEO 2011 High Price
Case or Low Price Case forecast
estimates instead.
(2) The rebound effect: The main
analysis uses a rebound effect of 10
percent to project increased miles
traveled as the cost per mile driven
decreases. In the sensitivity analysis, we
examine the effect of using a 5, 15, or
20 percent rebound effect instead.
(3) The value of CO2 benefits: The
main analysis uses $22 per ton
discounted at a 3 percent discount rate
to quantify the benefits of reducing CO2
emissions and $0.174 per gallon to
quantify the benefits of reducing fuel
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consumption. In the sensitivity analysis,
we examine the following values and
discount rates applied only to the social
cost of carbon to value carbon benefits,
considering low, high, and very high
valuations of approximately $5, $36,
and $67 per ton, respectively with
regard to the benefits of reducing CO2
emissions.776 These are the 2010 values,
which increase over time. These values
can be translated into cents per gallon
by multiplying by 0.0089,777 giving the
following values:
776 The low, high, and very high valuations of $5,
$36, and $67 are rounded for brevity; the exact
values are $4.86, $36.13, and $66.88, respectively.
While the model uses the unrounded values, the
use of unrounded values is not intended to imply
that the chosen values are precisely accurate to the
nearest cent; rather, they are average levels resulting
from the many published studies on the topic.
777 The molecular weight of Carbon (C) is 12, the
molecular weight of Oxygen (O) is 16, thus the
molecular weight of CO2 is 44. 1 gallon of gas
weighs 2,819 grams, of that 2,433 grams are carbon.
One ton of CO2/One ton of C (44/12)* 2433grams
C/gallon *1 ton/1000kg * 1 kg/1000g = (44 *
2433*1*1)/(12*1*1000 * 1000) = 0.0089. Thus, one
ton of CO2*0.0089 = 1 gallon of gasoline.
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• ($4.86 per ton CO2) × 0.0089 =
$0.043 per gallon discounted at 5%
• ($22.00 per ton CO2) × 0.0089 =
$0.196 per gallon discounted at 3%
(used in the main analysis)
• ($36.13 per ton CO2) ×0.0089 =
$0.322 per gallon discounted at 2.5%
• And a 95th percentile estimate of
• ($66.88 per ton CO2) × 0.0089 =
$0.595 per gallon discounted at 3%
(4) Military security: The main
analysis does not assign a value to the
military security benefits of reducing
fuel consumption. In the sensitivity
analysis, we examine the impact of
using a value of 12 cents per gallon
instead.
(5) Consumer Benefit: The main
analysis assumes there is no loss in
value to consumers resulting from
vehicles that have an increase in price
and higher fuel economy. This
sensitivity analysis assumes that there is
a 25, or 50 percent loss in value to
consumers—equivalent to the
assumption that consumers will only
value the calculated benefits they will
achieve at 75, or 50 percent,
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performed examining the impact of the
cost of vehicle mass reduction to the
total technology cost. The direct
manufacturing cost (DMC) for mass
reduction is represented as a linear
function between the unit DMC versus
percent of mass reduction, as shown in
the figure below:
The slope of the line used in the central
analysis for this NPRM is $4.32 per
pound per percent of mass reduction.
The slope of the line is varied + 40% as
the upper and lower bound for this
sensitivity study. The resultant values
778 Section 3.4.3.9 in Chapter 3 of the draft Joint
TSD has a detailed description of the history of the
BatPac model and how the agencies used it in this
NPRM analysis.
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developed by ANL and funded by
DOE.778 The values for these ranges are
shown in the table below and are
calculated with 95 percent confidence
intervals after analyzing the confidence
bound using the BatPac model.
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recommendations from technical
experts in the field of battery energy
storage technologies at the Department
of Energy (DOE) and at Argonne
National Laboratories (ANL), and were
developed using the Battery
Performance and Cost (BatPac) model
(7) Mass reduction cost: Due to the
wide range of mass reduction costs as
discussed in Chapter 3 of the draft joint
TSD, a sensitivity analysis was
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respectively, of the main analysis
estimates.
(6) Battery cost: The agency
conducted a sensitivity analysis of
technology cost in relation to battery
costs for HEV, PHEV, and EV batteries.
The ranges are based on
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75305
for the range of mass reduction cost are
shown in the table below:
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assumed that manufacturers that were
above their MY 2016 CAFE level would
compare the cost to consumers to the
fuel savings in the first year of operation
and decide to voluntarily apply those
technologies to their vehicles when
benefits for the first year exceeded costs
for the consumer. For a manufacturer’s
fleet that has not yet achieved
compliance with CAFE standards, the
agency continued to apply a five-year
payback period. In other words, for this
sensitivity analysis the agency assumed
that manufacturers that have not yet met
CAFE standards for future model years
will apply technology as if buyers were
willing to pay for the technologies as
long as the fuel savings throughout the
first five years of vehicle ownership
exceeded their costs. Once having
complied with those standards,
however, manufacturers are assumed to
consider making further improvements
in fuel economy as if buyers were only
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willing to pay for fuel savings to be
realized during the first year of vehicle
ownership. The ‘market-driven
response’ assumes that manufacturers
will overcomply if additional
technology is sufficiently cost-effective.
Because this assumption has a greater
impact under the baseline standards, its
application reduces the incremental
costs, effects, and benefits attributable to
the new standards. This does not mean
that costs, effects, and benefits would
actually be smaller with a market-driven
response; rather, it means that costs,
effects, and benefits would be at least as
great, but would be partially attributable
not to the new standards, but instead to
the market.
Varying each of these eight
parameters in isolation results in a
variety of economic scenarios, in
addition to the Reference case. These
are listed in Table IV–87 below.
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(8) Market-driven response: The
baseline for the central analysis is based
on the MY 2016 CAFE standards and
assumes that manufacturers will make
no changes in the fuel economy from
that level through MY 2025. A
sensitivity analysis was performed to
simulate potential increases in fuel
economy over the compliance level
required if MY 2016 standards were to
remain in place. The assumption is that
the market would drive manufacturers
to put technologies into their vehicles
that they believe consumers would
value and be willing to pay for. Using
parameter values consistent with the
central analysis, the agency simulated a
market-driven response by applying a
payback period of one year for purposes
of calculating the value of future fuel
savings when simulating whether
manufacturers would apply additional
technology to an already CAFEcompliant fleet. In other words we
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The basic results of this sensitivity
analysis are contained in Chapter X of
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the PRIA, but several selected findings
are as follows:
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(1) Varying the economic assumptions
has almost no impact on achieved mpg.
The mass reduction cost sensitivities,
battery cost reduction sensitivities, and
the market-based baseline are the only
cases in which achieved mpg differs
from the Reference Case of the Preferred
Alternative. None of these alter the
outcome by more than 0.2 mpg for
either fleet.
(2) Varying the economic assumptions
has, at most, a small impact on pervehicle costs, fuel saved, and CO2
emissions reductions, with none of the
variations impacting the outcomes by
more than 10 percent from their central
analysis levels, save for several
exceptions including alternate fuel price
sensitivities and the sensitivity
involving a 20 percent rebound effect.
(3) The category most affected by
variations in the economic parameters
considered in these sensitivity analyses
is net benefits. The sensitivity analyses
examining the AEO Low and High fuel
price scenarios demonstrate the
potential to negatively impact net
benefits by up to 40.3 percent or to
increase net benefits by 29.5 percent
relative to those of the Preferred
Alternative. Other large impacts on net
benefits occurred with the 20 percent
rebound effect (-38.4%), valuing
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benefits at 50 and 75 percent (¥63.0%
and ¥31.5%, respectively), and valuing
the reduction in CO2 emissions at $67/
ton (+28.1%).
(4) Even if consumers value the
benefits achieved at 50% of the main
analysis assumptions, total benefits still
exceed costs.
Regarding the lower fuel savings and
CO2 emissions reductions predicted by
the sensitivity analysis as fuel price
increases, which initially may seem
counterintuitive, we note that there are
some counterbalancing factors
occurring. As fuel price increases,
people will drive less and so fuel
savings and CO2 emissions reductions
may decrease.
The agency performed two additional
sensitivity analyses presented in Tables
IV–88 and IV–89. First, the agency
analyzed the impact that having a retail
price equivalent (RPE) factor of 1.5 for
all technologies would have on the
various alternatives instead of using the
indirect cost methodology (ICM). The
ICM methodology in an overall markup
factor of 1.2 to 1.25 compared to the
RPE markup factor from variable cost of
1.5. Next, the agency conducted a
separate sensitivity analysis using
values that were derived from the 2011
NAS Report. This analysis used an RPE
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75307
markup factor of 1.5 for nonelectrification technologies, which is
consistent with the NAS estimation for
technologies manufactured by suppliers,
and an RPE markup factor of 1.33 for
electrification technologies (HEV,
PHEV, and EV); three types of learning
which include no learning for mature
technologies, 1.25 percent annual
learning for evolutionary technologies,
and 2.5 percent annual learning for
revolutionary technologies; technology
cost estimates for 52 percent (33 out of
63) technologies; and technology
effectiveness estimates for 56 percent
(35 out of 63) technologies. Cost
learning was applied to technology costs
in a manner similar to how cost learning
is applied in the central analysis for
many technologies which have base
costs that are applicable to recent or
near-term future model years. As noted
above, the cost learning factors used for
the sensitivity case are different from
the values used in the central analysis.
For the other inputs in the sensitivity
case, where the NAS study has
inconsistent information or lacks
projections, NHTSA used the same
input values that were used in the
central analysis.
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For today’s rulemaking analysis, the
agency has also performed a sensitivity
analysis where manufacturers are
allowed to voluntarily apply more
technology than would be required to
comply with CAFE standards for each
model year. Manufacturers are assumed
to do so as long as applying each
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additional technology would increase
vehicle production costs (including
markup) by less than it would reduce
buyers’ fuel costs during the first year
they own the vehicle. This analysis
makes use of the ‘‘voluntary
overcompliance’’ simulation capability
DOT has recently added to its CAFE
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model. This capability, which is
discussed further above in section
IV.C.4.c and in the CAFE model
documentation, is a logical extension of
the model’s simulation of some
manufacturers’ decisions to respond to
EPCA by paying civil penalties once
additional technology becomes
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economically unattractive. It attempts to
simulate manufacturers’ responses to
buyers’ demands for higher fuel
economy levels than prevailing CAFE
standards would require when fuel costs
are sufficiently high, and technologies
that manufacturers have not yet fully
utilized are available to improve fuel
economy at relatively low costs.
NHTSA performed this analysis
because some stakeholders commenting
on the recently-promulgated standards
for medium- and heavy-duty vehicles
indicated that it would be unrealistic for
the agency to assume that in the absence
of new regulations, technology and fuel
economy would not improve at all in
the future. In other words, these
stakeholders argued that market forces
are likely to result in some fuel
economy improvements over time, as
potential vehicle buyers and
manufacturers respond to changes in
fuel prices and in the availability and
costs of technologies to increase fuel
economy. NHTSA agrees that, in
principle, its analysis should estimate a
potential that manufacturers will apply
technology as if buyers place some
value on fuel economy improvements.
Considering current uncertainties
discussed below regarding the degree to
which manufacturers will do so, the
agency currently judges it appropriate to
conduct its central rulemaking analysis
without attempting to simulate these
effects. Nonetheless, the agency believes
that voluntary overcompliance is
sufficiently plausible that corresponding
sensitivity analysis is warranted.
NHTSA performed this analysis by
simulating potential overcompliance
under the no-action alternative, the
preferred alternative, and other
regulatory alternatives. In doing so, the
agency used all the same parameter
values as in the agency’s central
analysis, but applied a payback period
of one year for purposes of calculating
the value of future fuel savings when
simulating whether a manufacturer
would apply additional technology to
an already CAFE-compliant fleet. For
technologies applied to a manufacturer’s
fleet that has not yet achieved
compliance with CAFE standards, the
agency continued to apply a five-year
payback period.
In other words, for this sensitivity
analysis the agency assumed that
manufacturers that have not yet met
CAFE standards for future model years
will apply technology as if buyers were
willing to pay for fuel savings
throughout the first five years of vehicle
ownership. Once having complied with
those standards, however,
manufacturers are assumed to consider
making further improvements in fuel
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economy as if buyers were only willing
to pay for fuel savings to be realized
during the first year of vehicle
ownership. This reflects the agency’s
assumptions for this sensitivity analysis,
that (1) civil penalties, though legally
available, carry a stigma that
manufacturers will strive to avoid, and
that (2) having achieved compliance
with CAFE standards, manufacturers
will avoid competitive risks entailed in
charging higher prices for vehicles that
offer additional fuel economy, rather
than offering additional performance or
utility.
Since CAFE standards were first
introduced, some manufacturers have
consistently exceeded those standards,
and the industry as a whole has
consistently overcomplied with both the
passenger car and light truck standards.
Although the combined average fuel
economy of cars and light trucks
declined in some years, this resulted
from buyers shifting their purchases
from passenger cars to light trucks, not
from undercompliance with either
standard. Even with those declines, the
industry still overcomplied with both
passenger car and light truck standards.
In recent years, between MYs 1999 and
2009, fuel economy overcompliance has
been increasing on average for both the
passenger car and the light truck fleets.
NHTSA considers it impossible to say
with certainty why past fuel economy
levels have followed their observed
path. If the agency could say with
certainty how fuel economy would have
changed in the absence of CAFE
standards, it might be able to answer
this question; however, NHTSA regards
this ‘‘counterfactual’’ case as simply
unknowable.
NHTSA has, however, considered
other relevant indications regarding
manufacturers’ potential future
decisions. Published research regarding
how vehicle buyers have previously
viewed fuel economy suggests that they
have only a weak quantitative
understanding of the relationship
between fuel economy and future fuel
outlays, and that potential buyers value
fuel economy improvements by less
than theoretical present-value
calculations of lifetime fuel savings
would suggest. These findings are
generally consistent with
manufacturers’ confidential and, in
some cases, public statements.
Manufacturers have tended to
communicate not that buyers absolutely
‘‘don’t care’’ about fuel economy, but
that buyers have, in the past, not been
willing to pay the full cost of most fuel
economy improvements. Manufacturers
have also tended to indicate that
sustained high fuel prices would
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provide a powerful incentive for
increased fuel economy; this implies
that manufacturers believe buyers are
willing to pay for some fuel economy
increases, but that buyers’ willingness to
do so depends on their expectations for
future fuel prices. In their confidential
statements to the agency, manufacturers
have also tended to indicate that in their
past product planning processes, they
have assumed buyers would only be
willing to pay for technologies that
‘‘break even’’ within a relatively short
time—generally the first two to four
years of vehicle ownership.
NHTSA considers it not only feasible
but appropriate to simulate such effects
by calculating the present value of fuel
savings over some ‘‘payback period.’’
The agency also believes it is
appropriate to assume that specific
improvements in fuel economy will be
implemented voluntarily if
manufacturers’ costs for adding the
technology necessary to implement
them to specific models would be lower
than potential buyers’ willingness to
pay for the resulting fuel savings. This
approach takes fuel costs directly into
account, and is therefore responsive to
manufacturers’ statements regarding the
role that fuel prices play in influencing
buyers’ demands and manufacturers’
planning processes. Under this
approach, a short payback period can be
employed if manufacturers are expected
to act as if buyers place little value on
fuel economy. Conversely, a longer
payback period can be used if
manufacturers are expected to act as if
buyers will place comparatively greater
value on fuel economy.
NHTSA cannot be certain to what
extent vehicle buyers will, in the future,
be willing to pay for fuel economy
improvements, or to what extent
manufacturers would, in the future,
voluntarily apply more technology than
needed to comply with fuel economy
standards. The agency is similarly
hopeful that future vehicle buyers will
be more willing to pay for fuel economy
improvements than has historically
been the case. In meetings preceding
today’s proposed standards, two
manufacturers stated they expected fuel
economy to increase two percent to
three percent per year after MY 2016,
absent more stringent regulations. And
in August 2010, one manufacturer stated
its combined fleet would achieve 50
mpg by MY 2025, supporting that at a
minimum some manufacturers believe
that exceeding fuel economy standards
will provide them a competitive
advantage. The agency is hopeful that
future vehicle buyers will be betterinformed than has historically been the
case, in part because recently-
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conduct its central rulemaking analysis
in a manner that ignores the possibility
that in the future, manufacturers will
voluntarily apply more technology than
the minimum necessary to comply with
CAFE standards. Also, in conducting its
sensitivity analysis to simulate
voluntary overcompliance with the
proposed standards, the agency has
applied the extremely conservative
assumption that when considering
whether to employ ‘‘extra’’ technology,
manufacturers will act as if buyers’
value the resulting savings in fuel costs
only during their first year of ownership
(i.e., as if a 1-year payback period
applies).
Results of the agency’s analysis
simulating this potential for voluntary
overcompliance are summarized below.
Compared to results from the agencies’
central analysis presented above,
differences are greatest for the baseline
scenario (i.e., the No-Action
Alternative), under which CAFE
standards remain unchanged after MY
2016. These results also suggest, as the
agency would expect, that because
increasingly stringent standards require
progressively more technology than the
market will demand, the likelihood of
voluntary overcompliance will decline
with increasing stringency. Achieved
fuel economy levels under baseline
standards are as follows:
With no change in standards after MY
2016, while combined average fuel
economy is the same in MY 2017 both
with and without simulated voluntary
overcompliance, differences grow over
time, reaching 0.8 mpg in MY 2025. In
other words, without simulating
voluntary overcompliance, the agency
estimated that combined average
achieved fuel economy would reach
35.2 mpg in MY 2025, whereas the
agency estimates that it would reach
36.0 mpg in that year if voluntary
overcompliance occurred.
In contrast, the effect on achieved fuel
economy levels of allowing voluntary
overcompliance with the proposed
standards was minimal. Allowing
manufacturers to overcomply with the
proposed standards for MY 2025 led to
combined average achieved fuel
economy levels approximately equal to
levels of values obtained without
simulating voluntary overcompliance:
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promulgated requirements regarding
vehicle labels will provide clearer
information regarding fuel economy and
the dollar value of resulting fuel
savings. The agency is similarly hopeful
that future vehicle buyers will be more
willing to pay for fuel economy
improvements than past buyers. In
meetings preceding today’s proposed
standards, many manufacturers
indicated significant shifts in their
product plans—shifts consistent with
expectations that compared to past
buyers, future buyers will ‘‘care more’’
about fuel economy.
Nevertheless, considering the
uncertainties mentioned above, NHTSA
continues to consider it appropriate to
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As a result, NHTSA estimates that,
when the potential for voluntary
overcompliance is taken into account,
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fuel savings attributable to more
stringent standards will total 162 billion
gallons—6.4 percent less than the 173
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billion gallons estimated when potential
voluntary overcompliance is not taken
into account:
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reduce the agency’s estimate of future
fuel savings over the baseline scenario.
Rather it changes the attribution of those
fuel savings to the proposed standards,
because voluntary overcompliance
attributes some of the fuel savings to the
market. The same holds for the
attribution of costs, other effects, and
monetized benefits—inclusion of
voluntary overcompliance does not
necessarily change their amounts, but it
does attribute some of each cost, effect,
779 Differences in the application of diesel engines
and plug-in hybrid electric vehicles lead to
or benefit to the workings of the market,
rather than to the proposed standards.
The agency similarly estimates CO2
emissions reductions attributable to
today’s proposed standards will total
1,726 million metric tons (mmt), 5.8
percent less than the 1,834 mmt
estimated when potential voluntary
overcompliance is not taken into
account: 779
differences in the incremental percentage changes
in fuel consumption and carbon dioxide emissions.
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The agency is not projecting,
however, that fuel consumption will be
greater when voluntary overcompliance
is taken into account. Rather, under
today’s proposed standards, the
agency’s analysis shows virtually
identical fuel consumption (0.2 percent
less over the useful lives of MY 2017–
2025 vehicles) when potential voluntary
overcompliance is taken into account.
Simulation of voluntary
overcompliance, therefore, does not
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Conversely, this analysis indicates
slightly greater outlays for additional
technology under the proposed
standards when potential voluntary
overcompliance is taken into account.
This increase is attributable to slight
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increases in technology application
when potential voluntary
overcompliance is taken into account.
Tables IV–99 and 100 below show that
total technology costs attributable to
today’s proposed standards are
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estimated to increase to $159 billion, or
1.3 percent more than the $157 billion
estimated when potential voluntary
overcompliance was not taken into
account:
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of the present value of total benefits will
be $484 billion when discounted at a 3
percent annual rate, as Tables IV–101
and 102 following report. This estimate
of total benefits is $31 billion, or about
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6 percent, lower than the $515 billion
reported previously for the analysis in
which potential voluntary
overcompliance was not taken into
account:
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Because NHTSA’s analysis indicated
that voluntary overcompliance with
baseline standards will slightly reduce
the share of fuel savings attributable to
today’s standards, the agency’s estimate
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Similarly, when accounting for
potential voluntary overcompliance,
NHTSA estimates that the present value
of total benefits will decline from its
previous estimate when future fuel
savings and other benefits are
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discounted at the higher 7 percent rate.
Tables IV–103 and 104 report that the
present value of benefits from requiring
higher fuel economy for MY 2017–25
cars and light trucks will total $394
billion when discounted using a 7
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percent rate, about $25 billion (or 6
percent) below the previous $419 billion
estimate of total benefits when potential
voluntary overcompliance is not taken
into account:
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the agency estimates, as shown in
Tables IV–105 and 106, that net benefits
from the proposed CAFE standards will
be $325 billion—or 9.2 percent—less
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than the previously-reported estimate of
$358 billion, which did not incorporate
the potential for voluntary
overcompliance.
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Based primarily on the reduction of
benefits attributable to the proposed
standards when voluntary
overcompliance is taken into account,
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Similarly, Tables IV–107 and 108
immediately below show that NHTSA
estimates voluntary overcompliance
could reduce net benefits attributable to
today’s proposed standards to $235
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billion if a 7 percent discount rate is
applied to future benefits. This estimate
is $24 billion—or 10.3 percent—lower
than the previously-reported $262
billion estimate of net benefits when
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potential voluntary overcompliance is
not taken into account, using that same
discount rate.
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As discussed above, these reductions
in fuel savings and avoided CO2
emissions (and correspondingly, in total
and net benefits) attributable to today’s
proposed standards, do not indicate that
fuel consumption and CO2 emissions
will be higher when potential voluntary
overcompliance with standards is taken
into account than when it is set aside.
Rather, these reductions reflect
differences in attribution; when
potential voluntary overcompliance is
taken into account, portions of the
avoided fuel consumption and CO2
emissions (and, correspondingly, in
total and net benefits) are effectively
attributed to the actions of the market,
rather than to the proposed CAFE
standards.
NHTSA invites comment on this
sensitivity analysis, in particular
regarding the following questions:
• Is it reasonable to assume that,
having achieved compliance with CAFE
standards, a manufacturer might
consider further fuel economy
improvements, depending on
technology costs and fuel prices?
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• If so, does the agency’s approach—
comparing technology costs to the
present value of fuel savings over some
payback period—provide a reasonable
means to simulate manufacturers’
decisions? DOT’s consideration of any
alternative methods will be facilitated
by specific suggestions regarding their
integration into DOT’s CAFE model.
• Is it appropriate to assume different
effective payback periods before and
after compliance has been achieved?
Why, or why not?
• What payback period is (or, if more
than one, are) most likely to reflect
manufacturers’ decisions regarding
technology application through MY
2025?
For more detailed information
regarding NHTSA’s sensitivity analyses
for this proposed rule, please see
Chapter X of NHTSA’s PRIA.
Additionally, due to the uncertainty
and difficulty in projecting technology
cost and efficacy through 2025, and
consistent with Circular A–4, NHTSA
conducted a full probabilistic
uncertainty analysis, which is included
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in Chapter XII of the PRIA. Results of
the uncertainty analysis are summarized
below for model years 2017–2025
passenger car and light truck fleets
combined:
• Total Benefits at 7% discount rate:
Societal benefits will total $46 billion to
$725 billion, with a mean estimate of
$373 billion.
• Total Benefits at 3% discount rate:
Societal benefits will total $53 billion to
$877 billion, with a mean estimate of
$453 billion.
• Total Costs at 7% discount rate:
Costs will total between $125 billion
and $247 billion, with a mean estimate
of $175 billion.
• Total Costs at 3% discount rate:
Costs will total between $109 billion
and $294 billion, with a mean estimate
of $175 billion
5. How would these proposed standards
impact vehicle sales?
In past fuel economy analyses, the
agency has made estimates of sales
impacts comparing increases in vehicle
price to the savings in fuel over a 5 year
period. We chose 5 years because this is
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the average length of time of a financing
agreement.780 As discussed below, for
this analysis we have conducted a fresh
search of the literature for additional
estimates of consumer valuation of fuel
savings, in order to determine whether
the 5 year assumption was accurate or
whether it should be revised. That
search has led us to the conclusion for
this proposed rule that consumer
valuation of future fuel savings is highly
uncertain. A negative impact on sales is
certainly possible, because the proposed
rule will lead to an increase in the
initial price of vehicles. A positive
impact is also possible, because the
proposed rule will lead to a significant
decrease in the lifetime cost of vehicles,
and with consumer learning over time,
this effect may produce an increase in
sales. In light of the relevant
uncertainties, the agency therefore
decided not to include a quantitative
sales estimate and requests comments
on all of the discussion here, including
the question whether a quantitative
estimate (or range) is possible.
The effect of this rule on sales of new
vehicles depends largely on how
potential buyers evaluate and respond
to its effects on vehicle prices and fuel
economy. The rule will make new cars
and light trucks more expensive, as
manufacturers attempt to recover their
costs for complying with the rule by
raising vehicle prices. At the same time,
the rule will require manufacturers to
improve the fuel economy of many of
their models, which will lower their
operating costs. The initial cost of
vehicles will increase but the overall
cost will decrease. The net effect on
sales will depend on the extent to which
consumers are willing to pay for fuel
economy.
The earlier discussion of consumer
welfare suggests that by itself, a net
decrease in overall cost may not
produce a net increase in sales, because
many consumers are more affected by
upfront cost than by overall cost, and
will not be willing to purchase vehicles
with greater fuel economy even when it
appears to be in their economic interest
to do so (assuming standard discount
rates). But there is considerable
uncertainty in the economics literature
about the extent to which consumers
value fuel savings from increased fuel
economy, and there is still more
uncertainty about possible changes in
consumer behavior over time (especially
with the likelihood of consumer
learning). The effect of this proposed
regulation on vehicle sales will depend
upon whether the overall value that
potential buyers place on the increased
fuel economy is greater or less than the
increase in vehicle prices and how
automakers factor that into price setting
for the various models.
Two economic concepts bear on how
consumers might value fuel savings.
The first relates to the length of time
that consumers consider when valuing
fuel savings and the second relates to
the discount rate that consumers apply
to future savings. These two concepts
are used together to determine
consumer valuation of future fuel
savings. The length of time that
consumers consider when valuing
future fuel savings can significantly
affect their decision when they compare
their estimates of fuel savings with the
increased cost of purchasing higher fuel
economy. There is a significant
difference in fuel savings if you
consider the savings over 1 year, 3
years, 5 years, 10 years, or the lifetime
of the vehicle. The discount rate that
consumers use to discount future fuel
savings to present value can also have
a significant impact. If consumers value
fuel savings over a short period, such as
1 to 2 years, then the discount rate is
less important. If consumers value fuel
savings over a long period, then the
discount rate is important.
The Length of Time Consumers
Consider When Valuing Fuel Savings
Information regarding the number of
years that consumers value fuel savings
(or undervalue fuel savings) come from
several sources. In past analyses NHTSA
has used five years as representing the
average new vehicle loan. A recent
paper by David Greene 781 examined
studies from the past 20 years of
consumers’ willingness to pay for fuel
economy and found that ‘‘the available
literature does not provide a reasonable
consensus.’’ In his paper Greene states
that ‘‘manufacturers have repeatedly
stated that consumers will pay, in
increased vehicle price, for only 2–4
years in fuel savings.’’ These estimates
were derived from manufacturer’s own
market research. And the National
Research Council 782 used a 3 year
781 ‘‘Why
780 National average financing terms for
automobile loans are available from the Board of
Governors of the Federal Reserve System G.19
‘‘Consumer Finance’’ release. See https://
www.federalreserve.gov/releases/g19/ (last accessed
August 25, 2011). The average new car loan at an
auto finance company in the first quarter of 2011
is for 62 months at 4.73%.
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the Market for New Passenger Cars
Generally Undervalues Fuel Economy’’, David
Greene, Oak Ridge National Laboratory, 2010, Pg.
17, https://www.internationaltransportforum.org/
jtrc/DiscussionPapers/DP201006.pdf
782 National Research Council (2002)
‘‘Effectiveness and Impact of Corporate Average
Fuel Economy (CAFE) Standards’’, National
Academies Press, Washington DC.
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payback period as one of its ways to
compare benefits to a full lifetime
discounting. A survey conducted for the
Department of Energy in 2004,783 which
asked 1,000 households how much they
would pay for a vehicle that saved them
$400 or $1,200 per year in fuel costs,
found implied payback periods of 1.5 to
2.5 years In reviewing this survey,
Greene concluded: ‘‘The striking
similarity of the implied payback
periods from the two subsamples would
seem to suggest that consumers
understand the questions and are giving
consistent and reliable responses: They
require payback in 1.5 to 2.5 years.’’
However, Turrentine and Kurani’s 784
in-depth interviews of 57 households
found almost no evidence that
consumers think about fuel economy in
terms of payback periods. When asked
such questions, some consumers
became confused while others offered
time periods that were meaningful to
them for other reasons, such as the
length of their car loan or lease.
The Discount Rate That Consumers
Apply to Future Fuel Savings
The effective discount rate that
consumers have used in the past to
value future fuel economy savings has
been studied in many different ways
and by many different economists.
Greene 785 examined and compiled
many of these analyses and found:
‘‘Implicit consumer discount rates were
estimated by Greene (1983) based on
eight early mutinomial logit choice
models. * * * The estimates range from
0 to 73% * * * Most fall between 4 and
40%.’’ Greene added: ‘‘The more recent
studies exhibit as least a wide a range
as the earlier studies.’’
With such uncertainty about how
consumers value future fuel savings and
the discount rates they might use to
determine the present value of future
fuel savings, NHTSA would utilize the
standard 3 and 7 percent discount rates.
It is true that some consumers appear to
show higher discount rates, which
would affect the analysis of likely sales
consequences; NHTSA invites
comments on the nature and extent of
that effect.
In past analyses, NHTSA assumed
that consumers would consider the fuel
savings they would obtain over the first
783 Opinion Research Corporation (2004),
‘‘CARAVAN’’ ORC study #7132218, for the National
Renewable Energy Laboratory Princeton, New
Jersey, May 20, 2004.
784 Turrentine, T.S. and K.S. Kurani, 2007. ‘‘Car
Buyers and Fuel Economy,’’ Energy Policy, vol. 35,
pp. 1213–1223.
785 ‘‘Why the Market for New Passenger Cars
Generally Undervalues Fuel Economy’’, David
Greene, Oak Ridge National Laboratory, 2010.
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five years of vehicle ownership, which
is consistent with the average loan rates
and the average length of first vehicle
ownership. The five-year span is
somewhat longer than the period found
to be used by consumers in some
studies, but use of a shorter period may
also reflect a lack of salience or related
factors, and as noted, use of the fiveyear span has the advantage of tracking
the average length of first vehicle
ownership. NHTSA continues to use the
five-year period here. As with discount
rates, NHTSA invites comments on this
issue and in particular on the possible
use of a shorter period.
It is true that the payback period and
discount rate are conceptual proxies for
consumer decisions that may often be
made without any corresponding
explicit quantitative analysis. For
example, some buyers choosing among
some set of vehicles may know what
they have been paying recently for
gasoline, may know what they are likely
to pay to buy each of the vehicles
consider, and may know some of the
attributes—including labeled fuel
economies—of those vehicles. Such
buyers may then make a choice without
actually trying to estimate how much
they would pay to fuel each of the
vehicles they are considering buying. In
other words, for such buyers, the idea of
a payback period and discount rate may
have no explicit meaning. This does not,
however, limit the utility of these
concepts for the agency’s analysis. If, as
a group, buyers behave as if they value
fuel consumption considering a payback
period and discount rate, these concepts
remain useful as a basis for estimating
the market response to increases in fuel
economy accompanied by increases in
price.
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NHTSA’s Previous Analytical Approach
Updated
There is a broad consensus in the
economic literature that the price
elasticity for demand for automobiles is
approximately –1.0.786 787 788 Thus, every
one percent increase in the price of the
vehicle would reduce sales by one
percent. Elasticity estimates assume no
perceived change in the quality of the
product. However, in this case, vehicle
786 Kleit, A.N. (1990). ‘‘The Effect of Annual
Changes in Automobile Fuel Economy Standards,’’
Journal of Regulatory Economics, vol. 2, pp 151–
172. Docket EPA–HQ–OAR–2009–0472–0015.
787 Bordley, R. (1994). ‘‘An Overlapping Choice
Set Model of Automotive Price Elasticities,’’
Transportation Research B, vol 28B, no 6, pp 401–
408. Docket NHTSA–2009–0059–0153.
788 McCarthy, P.S. (1996). ‘‘Market Price and
Income Elasticities of New Vehicle Demands,’’ The
Review of Economics and Statistics, vol. LXXVII,
no. 3, pp. 543–547. Docket NHTSA–2009–0059–
0039
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price increases result from adding
technologies that improve fuel
economy. This elasticity is generally
considered to be a short-run elasticity,
reflecting the immediate impacts of a
price change on vehicle sales.
For a durable good such as an auto,
the elasticity may be smaller in the long
run: though people may be able to
change the timing of their purchase
when price changes in the short run,
they must eventually make the
investment. Using a smaller elasticity
would reduce the magnitude of the
estimates presented here for vehicle
sales, but it would not change the
direction. A short-run elasticity is more
valid for initial responses to changes in
price, but, over time, a long-run
elasticity may better reflect behavior;
thus, the results presented for the initial
years of the program may be more
appropriate for modeling with the shortrun elasticity than the later years of the
program. A search of the literature has
not found studies more recent than the
1970s that specifically investigate longrun elasticities.789
One approach to determine the
breakeven point between vehicle prices
and fuel savings is to look at the
payback periods shown earlier in this
analysis. For example at a 3 percent
discount rate, the payback period for
MY 2025 vehicles is 2 years for light
trucks and 4 years for passenger cars.
In determining the payback period we
make several assumptions. For example,
we follow along with the calculations
that are used for a 5 year payback
period, as we have used in previous
analyses. For the fuel savings part of the
equation, we assumed as a starting point
that the average purchaser considers the
fuel savings they would receive over a
5 year timeframe. The present values of
these savings were calculated using a 3
and 7 percent discount rate. We used a
fuel price forecast (see Table VIII–3) that
included taxes, because this is what
consumers must pay. Fuel savings were
calculated over the first 5 years and
discounted back to a present value.
The agency believes that consumers
may consider several other factors over
the 5 year horizon when contemplating
the purchase of a new vehicle. The
agency added these factors into the
calculation to represent how an increase
789 E.g., Hymans, Saul H. ‘‘Consumer Durable
Spending: Explanation and Prediction.’’ Brookings
Papers on Economic Activity 1 (1970): 173–206.
https://www.brookings.edu/∼/media/Files/
Programs/ES/BPEA/1970_2_bpea_papers/1970b_
bpea_hymans_ackley_juster.pdf finds a short-run
elasticity of auto expenditures (not sales) with
respect to price of 0.78 to 1.17, and a long-run
elasticity of 0.3 to 0.46.
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in technology costs might affect
consumers’ buying considerations.
First, consumers might consider the
sales taxes they have to pay at the time
of purchasing the vehicle. We took sales
taxes in 2010 by state and weighted
them by population by state to
determine a national weighted-average
sales tax of 5.5 percent.790
Second, we considered insurance
costs over the 5 year period. More
expensive vehicles will require more
expensive collision and comprehensive
(e.g., theft) car insurance. The increase
in insurance costs is estimated from the
average value of collision plus
comprehensive insurance as a
proportion of average new vehicle price.
Collision plus comprehensive insurance
is the portion of insurance costs that
depend on vehicle value. The Insurance
Information Institute 791 provides the
average value of collision plus
comprehensive insurance in 2006 as
$448, which is $480 in 2009$. The
average consumer expenditure for a new
passenger car in 2010, according to the
Bureau of Economic Analysis was
$24,092 and the average price of a new
light truck $30,641 in $2009.792 Using
sales volumes from the Bureau, we
determined an average passenger car
and an average light truck price was
$27,394 in $2009 dollars. Average prices
and estimated sales volumes are needed
because price elasticity is an estimate of
how a percent increase in price affects
the percent decrease in sales.
Dividing the insurance cost by the
average price of a new vehicle gives the
proportion of comprehensive plus
collision insurance as 1.75% of the
price of a vehicle. If we assume that this
premium is proportional to the new
vehicle price, it represents about 1.75
percent of the new vehicle price and
insurance is paid each year for the five
year period we are considering for
payback. Discounting that stream of
insurance costs back to present value
indicates that the present value of the
component of insurance costs that vary
with vehicle price is equal to 8.0
percent of the vehicle’s price at a 3
percent discount rate.
Third, we considered that 70 percent
of new vehicle purchasers take out loans
790 Based on data found in https://www.api.org/
statistics/fueltaxes/
791 Insurance Information Institute, 2008,
‘‘Average Expenditures for Auto Insurance By State,
2005–2006,’’ available at https://www.iii.org/media/
facts/statsbyissue/auto/ (last accessed March 4,
2010).
792 U.S. Department of Commerce, Bureau of
Economic Analysis, Table 7.2.5S. Auto and Truck
Unit Sales, Production, Inventories, Expenditures,
and Price, available at https://www.bea.gov/national/
nipaweb/nipa_underlying/TableView.asp?Selected
Table=55&ViewSeries=NO&Java=.
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to finance their purchase. The average
new vehicle loan in the first quarter of
2011 is 5.3 percent.793 At these terms
the average person taking a loan will
pay 14 percent more for their vehicle
over the 5 years than a consumer paying
cash for the vehicle at the time of
purchase.794 Discounting the additional
2.8 percent (14 percent/5 years) per year
over the 5 years using a 3 percent midyear discount rate 795 results in a
discounted present value of 12.73
percent higher for those taking a loan.
Multiplying that by the 70 percent that
take a loan, means that the average
consumer would pay 8.9 percent more
than the retail price for loans the
consumer discounted at a 3 percent
discount rate.
Fourth, we considered the residual
value (or resale value) of the vehicle
after 5 years and expressed this as a
percentage of the new vehicle price. If
the price of the vehicle increases due to
fuel economy technologies, the resale
value of the vehicle will go up
proportionately. The average resale
price of a vehicle after 5 years is about
35% 796 of the original purchase price.
Discounting the residual value back 5
years using a 3 percent discount rate (35
percent * .8755) gives an effective
residual value of 30.6 percent. Note that
added CAFE technology could also
result in more expensive or more
frequent repairs. However, we do not
have data to verify the extent to which
this would be a factor during the first 5
years of vehicle life.
We add these four factors together. At
a 3 percent discount rate, the consumer
considers he could get 30.6 percent back
upon resale in 5 years, but will pay 5.5
percent more for taxes, 8.1 percent more
in insurance, and 8.9 percent more for
loans, results in a 8.1 percent return on
the increase in price for fuel economy
technology (30.6 percent ¥ 5.5 percent
¥ 8.1 percent ¥ 8.9 percent). Thus, the
increase in price per vehicle would be
multiplied by 0.919 (1 ¥ 0.081) before
subtracting the fuel savings to determine
the overall net consumer valuation of
the increase of costs on this purchase
793 New car loan rates in the first quarter of 2011
averaged 5.86 percent at commercial banks and 4.73
percent at auto finance companies, so their average
is close to 5.3 percent.
794 Based on www.bankrate.com auto loan
calculator for a 5 year loan at 5.3 percent.
795 For a 3 percent discount rate, the summation
of 2.8 percent × 0.9853 in year one, 2.8 × 0.9566
in year two, 2.8 × 0.9288 in year three, 2.8 × 0.9017
in year 4, and 2.8 × 0.8755 in year five.
796 Consumer Reports, August 2008,’’What That
Car Really Costs to Own,’’ available at https://www.
consumerreports.org/cro/cars/pricing/what-thatcar-really-costs-to-own-4–08/overview/what-thatcar-really-costs-to-own-ov.htm (last accessed March
4, 2010).
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decision. This process results in
estimates of the payback period for MY
2025 vehicles of 2 years for light trucks
and 4 years for passenger cars at a 3
percent discount rate.
A General Discussion of Consumer
Considerations
If consumers do not value improved
fuel economy at all, and consider
nothing but the increase in price in their
purchase decisions, then the estimated
impact on sales from price elasticity
could be applied directly. However, the
agency anticipates that consumers will
place some value improved fuel
economy, because they reduce the
operating cost of the vehicles, and
because, based on recently-promulgated
EPA and DOT regulations, vehicles sold
during through 2025 will display labels
that more clearly communicate to
buyers the fuel savings, economic, and
environmental benefits of more efficient
vehicles. The magnitude of this effect
remains unclear, and how much
consumers value fuel economy is an
ongoing debate. We know that different
consumers value different aspects of
their vehicle purchase,797 but we do not
have reliable evidence of consumer
behavior on this issue. Several past
consumer surveys lead to different
conclusions (and surveys themselves, as
opposed to actual behavior, may not be
entirely informative). We also expect
that consumers will consider other
factors that affect their costs, and have
included these in the analysis.
One issue that significantly affects
this sales analysis is: How much of the
retail price increase needed to cover the
fuel economy technology investments
will manufacturers be able to pass on to
consumers? NHTSA typically assumes
that manufacturers will be able to pass
all of their costs to improve fuel
economy on to consumers. Consumer
valuation of fuel economy
improvements often depends upon the
price of gasoline, which has recently
been very volatile.
Sales losses would occur only if
consumers fail to value fuel economy
improvements at least as much as they
pay in higher prices. If manufacturers
are unable to raise prices beyond the
level of consumer’s valuation of fuel
savings, then manufacturer’s profit
levels would fall but there would be no
impact on sales. Likewise, if fuel prices
rise beyond levels used in this analysis,
consumer’s valuation of improved fuel
797 For some consumers there will be a cash-flow
problem in that the vehicle is purchased at a higher
price on day 1 and fuel savings occur over the
lifetime of the vehicle. Increases in prices have
sometimes led to longer loan periods, which would
lead to higher overall costs of the loan.
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economy could increase to match or
exceed their initial investment, resulting
in no impact or even an increase in sales
levels.
The agency has been exploring the
question why there is not more
consumer demand for higher fuel
economy today when linked with our
methodology that results in projecting
increasing sales for the future when
consumers are faced with rising vehicle
prices and rising fuel economy. Some of
the discussion of salience, focus on the
short-term, loss aversion, and related
factors (see above) bears directly on that
question. It is possible, in that light, that
consumers will not demand increased
fuel economy even when such increases
would produce net benefits for them.
Nonetheless, some current vehicle
owners, including those who currently
drive gas guzzlers, will undoubtedly
realize the net benefits to be gained by
purchasing a more efficient vehicle.
Some vehicle owners may also react to
persistently higher vehicle costs by
owning fewer vehicles, and keeping
existing vehicles in service for
somewhat longer. For these consumers,
the possibility exists that there may be
permanent sales losses, compared with
a situation in which vehicle prices are
lower.
There is a wide variety in the number
of miles that owners drive per year.
Some drivers only drive 5,000 miles per
year and others drive 25,000 miles or
more. Rationally those that drive many
miles have more incentive to buy
vehicles with high fuel economy levels
In summary, there are a variety of
types of consumers that are in different
financial situations and drive different
mileages per year. Since consumers are
different and use different reasoning in
purchasing vehicles, and we do not yet
have an account of the distribution of
their preferences or how that may
change over time as a result of this
rulemaking — in other words, the
answer is quite ambiguous. Some may
be induced by better fuel economy to
purchase vehicles more often to keep up
with technology, some may purchase no
new vehicles because of the increase in
vehicle price, and some may purchase
fewer vehicles and hold onto their
vehicles longer. There is great
uncertainty about how consumers value
fuel economy, and for this reason, the
impact of this fuel economy proposal on
sales is uncertain.
For years, consumers have been
learning about the benefits that accrue
to them from owning and operating
vehicles with greater fuel efficiency.
Consumer demand has thus shifted
towards such vehicles, not only because
of higher fuel prices but also because
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many consumers are learning about the
value of purchases based not only on
initial costs but also on the total cost of
owning and operating a vehicle over its
lifetime. This type of learning is
expected to continue before and during
the model years affected by this rule,
particularly given the new fuel economy
labels that clarify potential economic
effects and should therefore reinforce
that learning. Therefore, some increase
in the demand for, and production of,
more fuel efficient vehicles is
incorporated in the alternative baseline
(i.e., without these rules) developed by
NHTSA. The agency requests comment
on the appropriateness of using a flat or
rising baseline after 2016.
Today’s proposed rule, combined
with the new and easier-to-understand
fuel economy label required to be on all
new vehicles beginning in 2012, may
increase sales above baseline levels by
hastening this very type of consumer
learning. As more consumers
experience, as a result of the rule, the
savings in time and expense from
owning more fuel efficient vehicles,
demand may shift yet further in the
direction of the vehicles mandated
under the rule. This social learning can
take place both within and across
households, as consumers learn from
one another.
First and most directly, the time and
fuel savings associated with operating
more fuel efficient vehicles will be more
salient to individuals who own them,
causing their subsequent purchase
decisions to shift closer to minimizing
the total cost of ownership over the
lifetime of the vehicle. Second, this
appreciation may spread across
households through word of mouth and
other forms of communications. Third,
as more motorists experience the time
and fuel savings associated with greater
fuel efficiency, the price of used cars
will better reflect such efficiency,
further reducing the cost of owning
more efficient vehicles for the buyers of
new vehicles (since the resale price will
increase).
If these induced learning effects are
strong, the rule could potentially
increase total vehicle sales over time.
These increased sales would not occur
in the model years first affected by the
rule, but they could occur once the
induced learning takes place. It is not
possible to quantify these learning
effects years in advance and that effect
may be speeded or slowed by other
factors that enter into a consumer’s
valuation of fuel efficiency in selecting
vehicles.
The possibility that the rule will (after
a lag for consumer learning) increase
sales need not rest on the assumption
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that automobile manufacturers are
failing to pursue profitable
opportunities to supply the vehicles that
consumers demand. In the absence of
the rule, no individual automobile
manufacturer would find it profitable to
move toward the more efficient vehicles
mandated under the rule. In particular,
no individual company can fully
internalize the future boost to demand
resulting from the rule. If one company
were to make more efficient vehicles,
counting on consumer learning to
enhance demand in the future, that
company would capture only a fraction
of the extra sales so generated, because
the learning at issue is not specific to
any one company’s fleet. Many of the
extra sales would accrue to that
company’s competitors.
In the language of economics,
consumer learning about the benefits of
fuel efficient vehicles involves positive
externalities (spillovers) from one
company to the others.798 These
positive externalities may lead to
benefits for manufacturers as a whole.
We emphasize that this discussion
has been tentative and qualified. To be
sure, social learning of related kinds has
been identified in a number of
contexts.799 Comments are invited on
the discussion offered here, with
particular reference to any relevant
empirical findings.
How does NHTSA plan to address this
issue for the final rule?
NHTSA seeks comment on how to
attempt to quantify sales impacts of the
proposed MYs 2017–2025 CAFE
standards in light of the uncertainty
discussed above. The agency is
currently sponsoring work to develop a
vehicle choice model for potential use
in the agency’s future rulemaking
analysis—this work may help to better
estimate the market’s effective valuation
of future fuel economy improvements.
The agency hopes to evaluate those
potential impacts through use of a
‘‘market shift’’ or ‘‘consumer vehicle
choice’’ model, discussed in Section IV
of the NPRM preamble. With an
integrated market share model, the
798 Industry-wide positive spillovers of this type
are hardly unique to this situation. In many
industries, companies form trade associations to
promote industry-wide public goods. For example,
merchants in a given locale may band together to
promote tourism in that locale. Antitrust law
recognizes that this type of coordination can
increase output.
799 See Hunt Alcott, Social Norms and Energy
Conservation, Journal of Public Economics
(forthcoming 2011), available at https://web.mit.edu/
allcott/www/Allcott%202011%20JPubEc%20-%20
Social%20Norms%20and%20Energy%20
Conservation.pdf; Christophe Chamley, Rational
Herds: Economic Models of Social Learning
(Cambridge, 2003).
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CAFE model would then estimate how
the sales volumes of individual vehicle
models would change in response to
changes in fuel economy levels and
prices throughout the light vehicle
market, possibly taking into account
interactions with the used vehicle
market. Having done so, the model
would replace the sales estimates in the
original market forecast with those
reflecting these model-estimated shifts,
repeating the entire modeling cycle
until converging on a stable solution.
We seek comment on the potential for
this approach to help the agency
estimate sales effects for the final rule.
Others Studies of the Sales Effect of
This CAFE Proposal
We outline here other relevant studies
and seek comment on their assumptions
and projections.
A recent study on the effects on sales,
attributed to regulatory programs,
including the fuel economy program
was undertaken by the Center for
Automotive Research (CAR).800 CAR
examined the impacts of alternative fuel
economy increases of 3%, 4%, 5%, and
6% per year on the general outlook for
the U.S. motor vehicle market, the likely
increase in costs for fuel economy
(based on the NAS report, which
estimates higher costs than NHTSA’s
current estimates) and required safety
features, the technologies used and how
they would affect the market,
production, and automotive
manufacturing employment in the year
2025. The required safety mandates
were assumed to cost $1,500 per vehicle
in 2025, but CAR did not value the
safety benefits from those standards.
NHTSA does not believe that the
assumed safety mandates should be a
part of this analysis without estimating
the benefits achieved by the safety
mandates.
There are many factors that go into
the CAR analysis of sales. CAR assumes
a 22.0 mpg baseline, two gasoline price
scenarios of $3.50 and $6.00 per gallon,
VMT schedules by age, and a rebound
rate of 10 percent (although it appears
that the CAR report assumes a rebound
effect even for the baseline and thus
negates the impact of the rebound
effect). Fuel savings are assumed to be
valued by consumers over a 5 year
period at a 10 percent discount rate. The
impact on sales varies by scenario, the
estimates of the cost of technology, the
price of gasoline, etc. At $3.50 per
gallon, the net change in consumer
savings (costs minus the fuel savings
800 ‘‘The U.S. Automotive Market and Industry in
2025’’, Center for Automotive Research, June 2011.
https://www.cargroup.org/pdfs/ami.pdf.
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4% scenario, a net savings of $258 for
the 5% scenario, and a net consumer
cost of $3,051 for the 6% scenario.
Thus, the price of gasoline can be a
significant factor in affecting how
consumers view whether they are
getting value for their expenditures on
technology.
Table 14 on page 42 of the CAR report
presents the results of their estimates of
the 4 alternative mpg scenarios and the
2 prices of gasoline on light vehicle
sales and automotive employment. The
table below shows these estimates. The
baseline for the CAR report is 17.9
million sales and 877,075 employees.
The price of gasoline at $6.00 per gallon,
rather than $3.50 per gallon results in
about 2.1 million additional sales per
year and 100,000 more employees in
year 2025.
Figure 13 on page 44 of the CAR
report shows a graph of historical
automotive labor productivity,
indicating that there has been a long
term 0.4 percent productivity growth
rate from 1960–2008, to indicate that
there will be 12.26 vehicles produced in
the U.S. per worker in 2025 (which is
higher than NHTSA’s estimate—see
below). In addition, the CAR report
discusses the jobs multiplier. For every
one automotive manufacturing job, they
estimate the economic contribution to
the U.S. economy of 7.96 jobs 801 stating
‘‘In 2010, about 1 million direct U.S.
jobs were located at an auto and auto
parts manufacturers; these jobs
generated an additional 1.966 million
supplier jobs, largely in nonmanufacturing sectors of the economy.
The combined total of 2.966 million jobs
generated a further spin-off of 3.466
million jobs that depend on the
consumer spending of direct and
supplier employees, for a total jobs
contribution from U.S. auto
manufacturing of 6.432 million jobs in
2010. The figure actually rises to 7.96
million when direct jobs located at new
vehicle dealerships (connected to the
sale and service of new vehicles) are
considered.’’
CAR uses econometric estimates of
the sensitivity of new vehicle purchases
to prices and consumer incomes and
forecasts of income growth through
2025 to translate these estimated
changes in net vehicle prices to
estimates of changes in sales of MY
2025 vehicles; higher net prices—which
occur when increases in vehicle prices
exceeds the value of fuel savings—
reduce vehicle sales, while lower net
prices increase new vehicle sales in
2025. We do not have access to the
statistical models that CAR develops to
estimate the effects of price and income
changes on vehicle sales. CAR’s analysis
assumes continued increases in labor
productivity over time and then
translates the estimated impacts of
higher CAFE standards on net vehicle
prices into estimated impacts on sales
and employment in the automobile
production and related industries. The
agency disagrees with the cost estimates
in the CAR report for new technologies,
the addition of safety mandates into the
costs, and various other assumptions.
An analysis conducted by Ceres and
Citigroup Global Markets Inc.802
examined the impact on automotive
sales in 2020, with a baseline
assumption of an industry fuel economy
standard of 42 mpg, a $4.00 price of
801 Kim Hill, Debbie Menk, and Adam Cooper,
‘‘Contribution of the Automotive Industry to the
Economies of All Fifty States and the United
States’’, The Center for Automotive Research, Ann
Arbor MI, April 2010.
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802 ‘‘U.S. Autos, CAFE and GHG Emissions’’,
March 2011, Citi Ceres, UMTRI, Baum and
Associates, Meszler Engineering Services, and the
Natural Resources Defense Council. https://www.
ceres.org/resources/reports/fuel-economy-focus.
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valued by consumers) is a net cost to
consumers of $359 for the 3% scenario,
a net cost of $1,644 for the 4% scenario,
a net cost of $2,858 for the 5% scenario,
and a net consumer cost of $6,525 for
the 6% scenario. At $6.00 per gallon,
the net change in consumer savings
(costs minus the fuel savings valued by
consumers) is a net savings to
consumers of $2,107 for the 3%
scenario, a net savings of $1,131 for the
Federal Register / Vol. 76, No. 231 / Thursday, December 1, 2011 / Proposed Rules
gasoline, a 12.2 percent discount rate
and an assumption that buyers value
48% of fuel savings over seven years in
purchasing vehicles. The main finding
on sales was that light vehicle sales
were predicted to increase by 6% from
16.3 million to 17.3 million in 2020.
Elasticity is not provided in the report
but it states that they use a complex
model of price elasticity and cross
elasticities developed by GM. A fuel
price risk factor 803 was utilized. Little
rationale was provided for the baseline
assumptions, but sensitivity analyses
were examined around the price of fuel
($2, $4, and $7 per gallon), the discount
rate (5.2%, 12.2%, 17.2%), purchasers
consider fuel savings over (3, 7, or 15
years), fuel price risk factor of (30%,
70%, or 140%), and VMT of (10,000,
15,000, and 20,000 in the first year and
declining thereafter).
6. Social Benefits, Private Benefits, and
Potential Unquantified Consumer
Welfare Impacts of the Proposed
Standards
There are two viewpoints for
evaluating the costs and benefits of the
increase in CAFE standards: the private
perspective of vehicle buyers
themselves on the higher fuel economy
levels that the rule would require, and
the economy-wide or ‘‘social’’
perspective on the costs and benefits of
requiring higher fuel economy. In order
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802 ‘‘U.S. Autos, CAFE and GHG Emissions’’,
March 2011, Citi Ceres, UMTRI, Baum and
Associates, Meszler Engineering Services, and the
Natural Resources Defense Council. https://www.
ceres.org/resources/reports/fuel-economy-focus.
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to appreciate how these viewpoints may
diverge, it is important to distinguish
between costs and benefits that are
‘‘private’’ and costs and benefits that are
‘‘social,’’ The agency’s analysis of
benefits and costs from requiring higher
fuel efficiency, presented above,
includes several categories of benefits
(identified as ‘‘social benefits’’) that are
not limited to automobile purchasers,
and that extend throughout the U.S.
economy. Examples of these benefits
include reductions in the energy
security costs associated with U.S.
petroleum imports, and in the economic
damages expected to result from air
pollution (including, but not limited to,
climate change). In contrast, other
categories of benefits—principally
future fuel savings projected to result
from higher fuel economy, but also, for
example, time savings—will be
experienced exclusively by the initial
purchasers and subsequent owners of
vehicle models whose fuel economy
manufacturers elect to improve
(‘‘private benefits’’).
The economy-wide or ‘‘social’’
benefits from requiring higher fuel
economy represent an important share
of the total economic benefits from
raising CAFE standards. At the same
time, NHTSA estimates that benefits to
vehicle buyers themselves will
significantly exceed vehicle
manufacturers’ costs for complying with
the stricter fuel economy standards this
rule establishes. In short, consumers
will benefit on net. Since the agency
also assumes that the costs of new
technologies manufacturers will employ
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to improve fuel economy will ultimately
be borne by vehicle buyers in the form
of higher purchase prices, NHTSA
concludes that the benefits to potential
vehicle buyers from requiring higher
fuel efficiency will far outweigh the
costs they will be required to pay to
obtain it. NHTSA also recognizes that
this conclusion raises certain issues,
addressed directly below; NHTSA also
seeks public comment on its discussion
here.
As an illustration, Tables IV–110 and
111 report the agency’s estimates of the
average lifetime values of fuel savings
for MY 2017–2025 passenger cars and
light trucks calculated using projected
future retail fuel prices. The table
compares NHTSA’s estimates of the
average lifetime value of fuel savings for
cars and light trucks to the price
increases it expects to occur as
manufacturers attempt to recover their
costs for complying with increased
CAFE standards. As the table shows, the
agency’s estimates of the present value
of lifetime fuel savings (discounted
using the OMB-recommended 3% rate)
substantially outweigh projected vehicle
price increases for both cars and light
trucks in every model year, even under
the assumption that all of
manufacturers’ technology outlays are
passed on to buyers in the form of
higher selling prices for new cars and
light trucks. By model year 2025,
NHTSA projects that average lifetime
fuel savings will exceed the average
price increase by more than $2,900 for
cars, and by more than $5,200 for light
trucks.
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The comparisons above immediately
raise the question of why current
vehicle purchasing patterns do not
already result in average fuel economy
levels approaching those that this rule
would require, and why raising CAFE
standards should be necessary to
increase the fuel economy of new cars
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and light trucks. They also raise the
question of whether it is appropriate to
assume that manufacturers would not
elect to provide higher fuel economy
even in the absence of increases in
CAFE standards, since the comparisons
in Tables IV–109 and 110 suggest that
doing so would increase the market
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value (and thus the selling prices) of
many new vehicle models by far more
than it would raise the cost of producing
them. Thus, increasing fuel economy
would be expected to increase sales of
new vehicles and manufacturers’
profits. More specifically, why would
potential buyers of new vehicles
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hesitate to purchase models offering
higher fuel economy, when doing so
would produce the substantial
economic returns illustrated by the
comparisons presented in Tables IV–109
and 110? And why would
manufacturers voluntarily forego
opportunities to increase the
attractiveness, value, and competitive
positioning of their car and light truck
models—and thus their own profits—by
improving their fuel economy?
One explanation for why this
situation might persist is that the market
for vehicle fuel economy does not
appear to work perfectly, in which case
properly designed CAFE standards
would be expected to increase consumer
welfare. Some of these imperfections
might stem from standard market
failures, such as limited availability of
information to consumers about the
value of higher fuel economy. It is true,
of course, that such information is
technically available and that new fuel
economy and environment vehicle
labels, emphasizing economic effects,
will provide a wide range of relevant
information. Other explanations would
point to phenomena observed elsewhere
in the field of behavioral economics,
including loss aversion, inadequate
consumer attention to long-term
savings, or a lack of salience of relevant
benefits (such as fuel savings, or time
savings associated with refueling) to
consumers at the time they make
purchasing decisions. Both theoretical
and empirical research suggests that
many consumers are unwilling to make
energy-efficient investments even when
those investments appear to pay off in
the relatively short-term.804 This
research is in line with related findings
that consumers may undervalue benefits
or costs that are less salient, or that they
will realize only in the future.805
Previous research provides some
support for the agency’s conclusion that
the benefits buyers will receive from
requiring manufacturers to increase fuel
803 Fuel price risk factor measures the rate at
which consumers are willing to trade reductions in
fuel costs for increases in purchase price. For
example, a fuel price risk factor of 1.0 would
indicate the consumers would be willing to pay $1
for an improvement in fuel economy that resulted
in reducing by $1 the present value of the savings
in fuel costs.
804 Jaffe, A. B., and Stavins, R. N. (1994). The
Energy Paradox and the Diffusion of Conservation
Technology. Resource and Energy Economics, 16(2);
see Hunt Alcott and Nathan Wozny, Gasoline
Prices, Fuel Economy, and the Energy Paradox
(2009), available at https://web.mit.edu/allcott/www/
Allcott%20and%20Wozny%202010%20-%20
Gasoline%20Prices,%20Fuel%20Economy,%20and
%20the%20Energy%20Paradox.pdf (last accessed
Sept. 26, 2011). For relevant background, with an
emphasis on the importance of salience and
attention, see Kahneman, D. Thinking, Fast and
Slow (2011).
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economy outweigh the costs they will
pay to acquire those benefits, even if
private markets have not provided that
amount of fuel economy. This research
identifies aspects of normal behavior
that may explain the market not
providing vehicles whose higher fuel
economy appears to offer an attractive
economic return. For example,
consumers’ aversion to the prospect of
losses (‘‘loss aversion’’) and especially
immediate, certain losses, may affect
their decisions when they also have a
sense of uncertainty about the value of
future fuel savings. Loss aversion,
accompanied with a sense of
uncertainty about gains, may make
purchasing a more fuel-efficient vehicle
seem unattractive to some potential
buyers, even when doing so is likely to
be a sound economic decision. As an
illustration, Greene et al. (2009)
calculate that the expected net present
value of increasing the fuel economy of
a passenger car from 28 to 35 miles per
gallon falls from $405 when calculated
using standard net present value
calculations, to nearly zero when
uncertainty regarding future cost
savings and buyers’ reluctance to accept
the risk of losses are taken into
account.806
The well-known finding that as gas
prices rise, consumers show more
willingness to pay for fuel-efficient
vehicles is not necessarily inconsistent
with the possibility that many
consumers undervalue potential savings
in gasoline costs and fuel economy
when purchasing new vehicles. In
ordinary circumstances, such costs may
be a relatively ‘‘shrouded’’ attribute in
consumers’ decisions, in part because
the savings from purchasing a more fuel
efficient vehicle are cumulative and
extend over a significant period of time.
At the same time, it may be difficult for
potential buyers to disentangle the cost
of purchasing a more fuel-efficient
vehicle from its overall purchase price,
or to isolate the value of higher fuel
economy form accompanying
differences in other vehicle attributes.
This possibility is consistent with recent
evidence to the effect that many
consumers are willing to pay less than
805 Mutulinggan, S., C. Corbett, S. Benzarti, and
B. Oppenheim. ‘‘Investment in Energy Efficiency by
Small and Medium-Size Firms: An Empirical
Analysis of the Adoption of Process Improvement
Recommendations’’ (2011), available at https://
papers.ssrn.com/sol3/papers/cfm?abstract_
id=1947330. Hossain, Janjim, and John Morgan
(2009). ’’ * * * Plus Shipping and Handling:
Revenue (Non)Equivalence in Field Experiments on
eBay,’’ Advances in Economic Analysis and Policy
vol. 6; Barber, Brad, Terrence Odean, and Lu Zheng
(2005). ‘‘Out of Sight, Out of Mind: The Effects of
Expenses on Mutual Fund Flows,’’ Journal of
Business vol. 78, no. 6, pp. 2095–2020.
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75327
$1 upfront to obtain a $1 reduction in
the discounted present value of future
gasoline costs.807
Some research suggests that the
market’s apparent unwillingness to
provide more fuel efficient vehicles
stems from consumers’ inability to value
future fuel savings correctly. For
example, Larrick and Soll (2008) find
evidence that consumers do not
understand how to translate changes in
fuel economy, which is denominated in
miles per gallon (MPG), into resulting
changes in fuel consumption, measured
for example in gallons 100 miles
traveled or per month or year.808 It is
true that the recently redesigned fuel
economy and environment label should
help overcome this difficulty, because it
draws attention to purely economic
effects of fuel economy, but MPG
remains a prominent measure. Sanstad
and Howarth (1994) argue that
consumers often resort to imprecise but
convenient rules of thumb to compare
vehicles that offer different fuel
economy ratings, and that this can cause
many buyers to underestimate the value
of fuel savings, particularly from
significant increases in fuel economy.809
If the behavior identified in these
studies is widespread, then the agency’s
estimates suggesting that the benefits to
vehicle owners from requiring higher
fuel economy significantly exceed the
costs of providing it may be consistent
with private markets not providing that
fuel economy level.
The agency projects that the typical
vehicle buyer will experience net
savings from the proposed standards,
yet it is not simple to reconcile this
projection with the fact that the average
fuel economy of new vehicles sold
currently falls well short of the level
those standards would require. The
foregoing discussion offers several
possible explanations. One possible
explanation for this apparent
inconsistency is that many of the
technologies projected by the agency to
be available through MY 2025 offer
significantly improved efficiency per
unit of cost, but were not available for
application to new vehicles sold
currently. Another is that the perceived
and real values of future savings
resulting from the proposed standards
will vary widely among potential
807 See, e.g., Alcott and Wozny. On shrouded
attributes and their importance, see Gabaix, Xavier,
and David Laibson, 2006. ‘‘Shrouded Attributes,
Consumer Myopia, and Information Suppression in
Competitive Markets.’’ Quarterly Journal of
Economics 121(2): 505–540.
808 Larrick, R. P., and J. B. Soll (2008). ‘‘The MPG
illusion’’ Science 320: 1593–1594.
809 Sanstad, A., and R. Howarth (1994). ‘‘ ‘Normal’
Markets, Market Imperfections, and Energy
Efficiency.’’ Energy Policy 22(10): 811–818.
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vehicle buyers. When they purchase a
new vehicle, some buyers value fuel
economy very highly, and others value
fuel economy very little, if at all. These
differences undoubtedly reflect
variation in the amount they drive,
differences in their driving styles affect
the fuel economy they expect to
achieve, and varying expectations about
future fuel prices, but they may also
partly reflect differences in buyers’
understanding of what increased fuel
economy is likely to mean to them
financially, or in buyers’ preferences for
paying lower prices today versus
anticipated savings over the future.
Unless the agency has overestimated
their average value, however, the fact
that the value of fuel savings varies
among potential buyers cannot explain
why typical buyers do not currently
purchase what appear to be cost-saving
increases in fuel economy. A possible
explanation for this situation is that the
effects of differing fuel economy levels
are relatively modest when compared to
those provided by other, more
prominent features of new vehicles,
such as passenger and cargo-carrying
capacity, performance, or safety. In this
situation, it may simply not be in many
shoppers’ interest to spend the time and
effort necessary to determine the
economic value of higher fuel economy,
to isolate the component of a new
vehicle’s selling price that is related to
its fuel economy, and compare these
two. (This possibility is consistent with
the view that fuel economy is a
relatively ‘‘shrouded’’ attribute.) In this
case, the agency’s estimates of the
average value of fuel savings that will
result from requiring cars and light
trucks to achieve higher fuel economy
may be correct, yet those savings may
not be large enough to lead a sufficient
number of buyers to purchase vehicles
with higher fuel economy to raise
average fuel economy above its current
levels.
Defects in the market for cars and
light trucks could also lead
manufacturers to undersupply fuel
economy, even in cases where many
buyers were willing to pay the increased
prices necessary to compensate
manufacturers for providing it. To be
sure, the market for new automobiles as
a whole exhibits a great deal of
competition. But this apparently
vigorous competition among
manufacturers may not extend to the
provision of some individual vehicle
attributes. Incomplete or ‘‘asymmetric’’
access to information about vehicle
attributes such as fuel economy—
whereby manufacturers of new cars and
light trucks or sellers of used models
have more complete knowledge about
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vehicles’ actual fuel economy
performance than is available to their
potential buyers—may also prevent
sellers of new or used vehicles from
being able to capture its full value. In
this situation, the level of fuel efficiency
provided in the markets for new or used
vehicles might remain persistently
lower than that demanded by wellinformed potential buyers.
Constraints on the combinations of
fuel economy, carrying capacity, and
performance that manufacturers can
offer in individual vehicle models using
current technologies undoubtedly limit
the range of fuel economy available
within certain vehicle classes,
particularly those including larger
vehicles. However, it is also possible
that deliberate decisions by
manufacturers of cars and light trucks
further limit the range of fuel economy
available to buyers within individual
vehicle market segments, such as large
automobiles, SUVs, or minivans.
Manufacturers may deliberately limit
the range of fuel economy levels they
offer in those market segments (by
choosing not to invest in fuel economy
and investing instead in providing a
range of other vehicle attributes)
because they underestimate the
premiums that prospective buyers of
those models are willing to pay for
improved fuel economy, and thus
mistakenly believe it will be
unprofitable for them to offer more fuelefficient models within those segments.
Of course, this possibility is most
realistic if it is also assumed that buyers
are imperfectly informed, or if fuel
economy savings are not sufficiently
salient to shoppers in those particular
market segments. As an illustration,
once a potential buyer has decided to
purchase a minivan, the range of
highway fuel economy ratings among
current models extends from 22 to 28
mpg, while their combined city and
highway ratings extend only from 18 to
20 mpg.810 If this phenomenon is
widespread, the average fuel efficiency
of their entire new vehicle fleet could
remain below the levels that potential
buyers demand and are willing to pay
for.
Another possible explanation for the
paradox posed by buyers’ apparent
unwillingness to invest in higher fuel
economy when it appears to offer such
large financial returns is that NHTSA’s
estimates of benefits and costs from
requiring manufacturers to improve fuel
810 This is the range of combined city and
highway fuel economy levels from lowest (Toyota
Sienna AWD) to highest (Honda Odyssey) available
for model year 2010; https://www.fueleconomy.gov/
feg/bestworstEPAtrucks.htm (last accessed
September 26, 2011).
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efficiency do not match potential
buyers’ assessment of the likely benefits
and costs from purchasing models with
higher fuel economy ratings. This could
occur because the agency’s underlying
assumptions about some of the factors
that affect the value of fuel savings
differ from those made by potential
buyers, because NHTSA has used
different estimates for some components
of the benefits from saving fuel from
those of buyers, or simply because the
agency has failed to account for some
potential costs of achieving higher fuel
economy.
For example, buyers may not value
increased fuel economy as highly as the
agency’s calculations suggest, because
they have shorter time horizons than the
full vehicle lifetimes NHTSA uses in
these calculations, or because they
discount future fuel savings using
higher rates than those prescribed by
OMB for evaluating Federal regulations.
Potential buyers may also anticipate
lower fuel prices in the future than
those forecast by the Energy Information
Administration, or may expect larger
differences between vehicles’ MPG
ratings and their own actual on-road
fuel economy than the 20 percent gap
(30 percent for HEVs) the agency
estimates.
To illustrate the first of these
possibilities, Table IV–111 shows the
effect of differing assumptions about
vehicle buyers’ time horizons on their
assessment of the value of future fuel
savings. Specifically, the table reports
the value of fuel savings consumers
might consider when purchasing a MY
2025 car or light truck that features the
higher fuel economy levels required by
the proposed rule, when those fuel
savings are evaluated over different time
horizons. The table then compares these
values to the agency’s estimates of the
increases in these vehicles’ prices that
are likely to result from the standards
proposed for MY 2025. This table shows
that when fuel savings are evaluated
over the average lifetime of a MY 2025
car (approximately 14 years) or light
truck (about 16 years), their present
value (discounted at 3 percent) exceeds
the estimated average price increase by
more than $2,500 for cars and by over
$4,500 for light trucks.
If buyers are instead assumed to
consider fuel savings over only a 10year time horizon, Table IV–112 shows
that this reduces the difference between
the present value of fuel savings and the
projected price increase for a MY 2025
car to about $1,800, and to about $3,350
for a MY 2025 light truck. Finally, Table
IV–112 shows that if buyers consider
fuel savings only over the length of time
for which they typically finance new car
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75329
price of a MY 2025 car by only about
$200, while the corresponding
difference is reduced to slightly more
than $1,200 for a MY 2025 light truck.
Potential vehicle buyers may also
discount future fuel savings using
higher rates than those typically used to
evaluate Federal regulations. OMB
guidance prescribes that future benefits
and costs of regulations that mainly
affect private consumption decisions, as
will be the case if manufacturers’ costs
for complying with higher fuel economy
standards are passed on to vehicle
buyers, should be discounted using a
consumption rate of time preference.811
OMB estimates that savers currently
discount future consumption at an
average real or inflation-adjusted rate of
about 3 percent when they face little
risk about its likely level, which makes
it a reasonable estimate of the
consumption rate of time preference.
However, vehicle buyers may view
the value of future fuel savings that
results from purchasing a vehicle with
higher fuel economy as risky or
uncertain, or they may instead discount
future consumption at rates reflecting
their costs for financing the higher
capital outlays required to purchase
more fuel-efficient models. In either
case, buyers comparing models with
different fuel economy ratings are likely
to discount the future fuel savings from
purchasing one that offers higher fuel
economy at rates well above the 3%
assumed in NHTSA’s evaluation.
Table IV–113 shows the effects of
higher discount rates on vehicle buyers’
evaluation of the fuel savings projected
to result from the CAFE standards
proposed in this NPRM, again using MY
2025 passenger cars and light trucks as
an example. As Table IV–112 showed
previously, average future fuel savings
discounted at the OMB 3 percent
consumer rate exceed the agency’s
estimated price increases by more than
$2,500 for MY 2025 passenger cars and
by about $4,500 for MY 2025 light
trucks. If vehicle buyers instead
discount future fuel savings at the
typical new-car loan rate prevailing
during 2010 (approximately 5.2
percent), however, these differences
decline to slightly more than $2,000 for
cars and $3,900 for light trucks, as Table
IV–113 illustrates. This is a plausible
alternative assumption, because buyers
are likely to finance the increases in
purchase prices resulting from
compliance with higher CAFE standards
as part of the process of financing the
vehicle purchase itself.
Finally, as the table also shows,
discounting future fuel savings using a
consumer credit card rate (which
averaged almost 14 percent during 2010)
reduces these differences to less than
$900 for a MY 2025 passenger car and
about $2,250 for the typical MY 2025
light truck. Even at these significantly
higher discount rates, however, the table
shows that the private net benefits from
purchasing new vehicles with the levels
of fuel economy this rule would
811 Office of Management and Budget, Circular A–
4, ‘‘Regulatory Analysis,’’ September 17, 2003, 33.
Available at https://www.whitehouse.gov/omb/
assets/regulatory_matters_pdf/a-4.pdf (last accessed
Sept. 26, 2010).
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purchases (slightly more than 5 years
during 2011), the value of fuel savings
exceeds the estimated increase in the
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time horizon and a higher discount rate
could further reduce—or potentially
even eliminate—the difference between
the value of fuel savings and the
agency’s estimates of increases in
vehicle prices. One plausible
combination would be for buyers to
discount fuel savings over the term of a
new car loan, using the interest rate on
that loan as a discount rate. Doing so
would reduce the amount by which
future fuel savings exceed the estimated
increase in the prices of MY 2025
vehicles considerably further, to about
$117 for passenger cars and $1,250 for
light trucks.
812 Interest rates on 48-month new vehicle loans
made by commercial banks during 2010 averaged
6.21%, while new car loan rates at auto finance
companies averaged 4.26%; See Board of Governors
of the Federal Reserve System, Federal Reserve
Statistical Release G.19, Consumer Credit. Available
at https://www.federalreserve.gov/releases/g19/
Current (last accessed September 27, 2011).
813 The average rate on consumer credit card
accounts at commercial banks during 2010 was
13.78%; See Board of Governors of the Federal
Reserve System, Federal Reserve Statistical Release
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G.19, Consumer Credit. Available at https://
www.federalreserve.gov/releases/g19/Current (last
accessed September 27, 2011).
814 Kubik, M. (2006). Consumer Views on
Transportation and Energy. Second Edition.
Technical Report: National Renewable Energy
Laboratory. Available at Docket No. NHTSA–2009–
0059–0038.
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As these comparisons illustrate,
reasonable alternative assumptions
about how consumers might evaluate
future fuel savings, the major private
benefit from requiring higher fuel
economy, can significantly affect the
benefits they consider when deciding
whether to purchase more fuel-efficient
vehicles. Readily imaginable
combinations of shorter time horizons,
higher discount rates, and lower
expectations about future fuel prices or
annual vehicle use and fuel savings
could make potential buyers hesitant—
or perhaps even unwilling—to purchase
vehicles offering the increased fuel
economy levels this proposed rule
would require manufacturers to provide
in future model years. Thus, vehicle
buyers’ assessment of the benefits and
costs of this proposal in their purchase
decisions may differ markedly from
NHTSA’s estimates.
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2016 CAFE standards to apply to future
model years—remain large.
Some evidence also suggests that
vehicle buyers may employ
combinations of high discount rates and
short time horizons in their purchase
decisions. For example, consumers
surveyed by Kubik (2006) reported that
fuel savings would have to be adequate
to pay back the additional purchase
price of a more fuel-efficient vehicle in
less than 3 years to persuade them to
purchase it, and that even over this
short time horizon they were likely to
discount fuel savings using credit cardlike rates.814 Combinations of a shorter
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require—rather than those that would
result from simply extending the MY
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If consumers’ views about critical
variables such as future fuel prices or
the appropriate discount rate differ
sufficiently from the assumptions used
by the agency, some or perhaps many
potential vehicle buyers might conclude
that the value of fuel savings and other
benefits from higher fuel economy they
are considering are not sufficient to
justify the increase in purchase prices
they expect to pay. In conjunction with
the possibility that manufacturers
misinterpret potential buyers’
willingness to pay for improved fuel
economy, this might explain why the
current choices among available models
do not result in average fuel economy
levels approaching those this rule
would require.
Another possibility is that achieving
the fuel economy improvements
required by stricter fuel economy
standards might lead manufacturers to
forego planned future improvements in
performance, carrying capacity, safety,
or other features of their vehicle models
that provide important sources of utility
to their owners, even if it is
technologically feasible to have both
improvements in those other features
and improved fuel economy. Although
the specific economic values that
vehicle buyers attach to individual
vehicle attributes such as fuel economy,
performance, passenger- and cargocarrying capacity, or other features are
difficult to infer from vehicle prices or
buyers’ choices among competing
models, changes in vehicle attributes
can significantly affect the overall utility
that vehicles offer to potential buyers.
Thus if requiring manufacturers to
provide higher fuel economy leads them
to sacrifice improvements in these or
other highly-valued attributes, potential
buyers are likely to view these sacrifices
as an additional cost of improving fuel
economy. If those attributes are of
sufficient value, or if the range of
vehicles offered ensures that vehicles
with those attributes will continue to be
offered, then vehicle buyers will still
have the opportunity to choose those
attributes, though at increased cost
compared to models without the fuel
economy improvements.
As indicated in its previous
discussion of technology costs, NHTSA
has approached this potential problem
by attempting to develop cost estimates
for fuel economy-improving
technologies that include allowances for
any additional costs that would be
necessary to maintain the reference fleet
(or baseline) levels of performance,
comfort, capacity, or safety of light-duty
vehicle models to which those
technologies are applied. In doing so,
the agency followed the precedent
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established by the 2002 NAS Report on
improving fuel economy, which
estimated ‘‘constant performance and
utility’’ costs for technologies that
manufacturers could employ to increase
the fuel efficiency of cars or light trucks.
Although NHTSA has revised its
estimates of manufacturers’ costs for
some technologies significantly for use
in this rulemaking, these revised
estimates are still intended to represent
costs that would allow manufacturers to
maintain the performance, safety,
carrying capacity, and utility of vehicle
models while improving their fuel
economy, in the majority of cases. The
agency’s continued specification of
footprint-based CAFE standards also
addresses this concern, by establishing
less demanding fuel economy targets for
larger cars and light trucks.
Finally, vehicle buyers may simply
prefer the choices of vehicle models
they now have available to the
combinations of price, fuel economy,
and other attributes that manufacturers
are likely to offer when required to
achieve the higher overall fuel economy
levels proposed in this NPRM. This
explanation assumes that auto makers
decide to change vehicle attributes other
than price and fuel economy in
response to this rule. If this is the case,
their choices among models—and even
some buyers’ decisions about whether to
purchase a new vehicle—will respond
accordingly, and their responses to
these new choices will reduce their
overall welfare. Some may buy models
with combinations of price, fuel
efficiency, and other attributes that they
consider less desirable than those they
would otherwise have purchased, while
others may simply postpone buying a
new vehicle. It leaves open the question,
though, why auto makers would change
those other vehicle characteristics if
consumers liked them as they were; as
noted, the assumption of ‘‘constant
performance and utility’’ built into the
cost estimates means that these changes
are not necessary.
As the foregoing discussion makes
clear, the agency cannot offer a
complete answer to the question of why
the apparently large differences between
its estimates of private benefits from
requiring higher fuel economy and the
costs of supplying it would not result in
higher fuel economy for new cars and
light trucks in the absence of this rule.
One explanation is that these estimates
are reasonable, but that for the reasons
outlined above, the market for fuel
economy is not operating efficiently.
NHTSA believes the existing literature
offers some support for the view that
various failures in the market for fuel
economy prevent it from providing an
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75331
economically desirable outcome, which
implies that on balance there are likely
to be substantial private gains from the
proposed rule. The agency will continue
to investigate new empirical literature
addressing this question as it becomes
available, and seeks comment on all of
the relevant questions.
NHTSA acknowledges the possibility
that it has incorrectly characterized the
impact on the market of the CAFE
standards this rule proposes, and that
this could cause its estimates of benefits
and costs to misrepresent the effects of
the proposed rule. To recognize this
possibility, this section presents an
alternative accounting of the benefits
and costs of CAFE standards for MYs
2017–2025 passenger cars and light
trucks and discusses its implications.
Table IV–114 displays the economic
impacts of the rule as viewed from the
perspective of potential buyers.
As the table shows, the proposed
rule’s total benefits to vehicle buyers
(line 4) consist of the value of fuel
savings over vehicles’ full lifetimes at
retail fuel prices (line 1), the economic
value of vehicle occupants’ savings in
refueling time (line 2), and the
economic benefits from added reboundeffect driving (line 3). As the zero
entries in line 5 of the table suggest, no
losses in consumer welfare from
changes in vehicle attributes (other than
those from increases in vehicle prices)
are assumed to occur. Thus there is no
reduction in the total private benefits to
vehicle owners, so that net private
benefits to vehicle buyers (line 6) are
equal to total private benefits (reported
previously in line 4).
As Table IV–114 also shows, the
decline in fuel tax revenues (line 7) that
results from reduced fuel purchases is a
transfer of funds between consumers
and government and is thus not a social
cost.815 (Thus the sum of lines 1 and 7
equals the savings in fuel production
costs that were reported previously as
the value of fuel savings at pre-tax
prices in the agency’s previous
accounting of benefits and costs.) Lines
8 and 9 of Table IV–114 report the value
of reductions in air pollution and
climate-related externalities resulting
from lower emissions of criteria air
815 Strictly speaking, fuel taxes represent a
transfer of resources from consumers of fuel to
government agencies and not a use of economic
resources. Reducing the volume of fuel purchases
simply reduces the value of this transfer, and thus
cannot produce a real economic cost or benefit.
Representing the change in fuel tax revenues in
effect as an economy-wide cost is necessary to offset
the portion of fuel savings included in line 1 that
represents savings in fuel tax payments by
consumers. This prevents the savings in tax
revenues from being counted as a benefit from the
economy-wide perspective.
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pollutants and GHGs during fuel
production and consumption, while line
10 reports the savings in energy security
externalities to the U.S. economy from
reduced consumption and imports of
petroleum and refined fuel. Line 12
reports the costs of increased congestion
delays, accidents, and noise that result
from additional driving due to the fuel
economy rebound effect. Net external
benefits from the proposed CAFE
standards (line 13) are thus the sum of
the change in fuel tax revenues, the
reduction in environmental and energy
security externalities, and increased
external costs from added driving.
Line 14 of Table IV–114 shows
manufacturers’ technology outlays for
meeting higher CAFE standards for
passenger cars and light trucks, which
represent the principal private and
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social cost of requiring higher fuel
economy. The net social benefits (line
15 of the table) resulting from the
proposed rule consist of the sum of
private (line 6) and external (line 13)
benefits, minus technology costs (line
14). As expected, the figures reported in
line 15 of the table are identical to those
reported previously in Table IV–63.
Table IV–114 highlights several
important features of this rule’s
economic impacts. First, comparing the
rule’s net private (line 6) and external
(line 13) benefits makes it clear that a
very large proportion of the proposed
rule’s benefits would be experienced by
vehicle buyers, while the small
remaining fraction would be
experienced throughout the remainder
of the U.S. economy. In turn, the vast
majority of private benefits resulting
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from the higher fuel economy levels the
proposed rule would require stem from
fuel savings to vehicle buyers. Net
external benefits from the proposed rule
are expected to be small, because the
value of reductions in environmental
and energy security externalities is
likely almost exactly offset by the
increased costs associated with added
vehicle use. As a consequence, the net
social benefits of the rule mirror almost
exactly its net private benefits to vehicle
buyers, under the assumption that
manufacturers will recover their
technology outlays for achieving higher
fuel economy by raising new car and
light truck prices. Once again, this result
highlights the extreme importance of
accounting for any other effects of the
rule on the economic welfare of vehicle
buyers.
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As discussed in detail previously,
NHTSA believes that the aggregate
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benefits from this proposed rule amply
justify its total costs, but it remains
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possible that the agency has
overestimated the role of fuel savings to
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buyers and subsequent owners of the
cars and light trucks to which the higher
CAFE standards it proposes would
apply. It is also possible that the agency
has failed to develop cost estimates that
do not require manufacturers to make
changes in vehicle attributes as part of
their efforts to achieve higher fuel
economy. To acknowledge these
possibilities, NHTSA has examined
their potential impact on its estimates of
the proposed rule’s benefits and costs.
This analysis, which appears in Chapter
VIII of the Preliminary RIA
accompanying this proposed rule,
shows the rule’s economic impacts
under alternative assumptions about the
private benefits from higher fuel
economy, and the value of potential
changes in other vehicle attributes. One
conclusion is that even if the private
savings are significantly overstated, the
benefits of the proposed standards
continue to exceed the costs. We seek
comment on that analysis and the
discussion above.
7. What other impacts (quantitative and
unquantifiable) will these proposed
standards have?
In addition to the quantified benefits
and costs of fuel economy standards, the
final standards will have other impacts
that we have not quantified in monetary
terms. The decision on whether or not
to quantify a particular impact depends
on several considerations:
• How likely is it to occur, and can
the magnitude of the impact reasonably
be attributed to the outcome of this
rulemaking?
• Would quantification of its physical
magnitude or economic value help
NHTSA and the public evaluate the
CAFE standards that may be set in
rulemaking?
• Is the impact readily quantifiable in
physical terms?
• If so, can it readily be translated
into an economic value?
• Is this economic value likely to be
material?
• Can the impact be quantified with
a sufficiently narrow range of
uncertainty so that the estimate is
useful?
NHTSA expects that this rulemaking
will have a number of genuine, material
impacts that have not been quantified
due to one or more of these
considerations. In some cases, further
research may yield estimates that are
useful for future rulemakings.
Technology Forcing
The proposed rule will improve the
fuel economy of the U.S. new vehicle
fleet, but it will also increase the cost
(and presumably, the price) of new
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passenger cars and light trucks built
during MYs 2017–2025. We anticipate
that the cost, scope, and duration of this
rule, as well as the steadily rising
standards it requires, will cause
automakers and suppliers to devote
increased attention to methods of
improving vehicle fuel economy.
This increased attention will
stimulate additional research and
engineering, and we anticipate that,
over time, innovative approaches to
reducing the fuel consumption of light
duty vehicles will emerge. These
innovative approaches may reduce the
cost of the proposed rule in its later
years, and also increase the set of
feasible technologies in future years. We
have attempted to estimate the effect of
learning effects on the costs of
producing known technologies within
the period of the rulemaking, which is
one way that technologies become
cheaper over time, and may reflect
innovations in application and use of
existing technologies to meet the
proposed future. However, we have not
attempted to estimate the extent to
which not-yet-invented technologies
will appear, either within the time
period of the current rulemaking or that
might be available after MY 2016, or
whether technologies considered but
not applied in the current rulemaking,
due to concern about the likelihood of
their commercialization in the
rulemaking timeframe, will in fact be
helped towards commercialization as a
result of the proposed standards.
NHTSA seeks comment on whether
there are quantifiable costs and benefits
associated with the potential technology
forcing effects of the proposed
standards, and if so, how the agency
should consider attempting to account
for them in the final rule analysis.
Effects on Vehicle Costs
Actions that increases the cost of new
vehicles could subsequently make such
vehicles more costly to maintain, repair,
and insure. In general, NHTSA expects
that this effect to be a positive linear
function of vehicle costs. In its central
analysis, NHTSA estimates that the
proposed rule could raise average
vehicle technology costs by over $1,800
by 2025, and for some manufacturers,
average costs will increase by more than
$3,000 (for some specific vehicle
models, we estimate that the proposed
rule could increase technology costs by
more than $10,000). Depending on the
retail price of the vehicle, this could
represent a significant increase in the
overall vehicle cost and subsequently
increase insurance rates, operation
costs, and maintenance costs.
Comprehensive and collision insurance
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costs are likely to be directly related to
price increases, but liability premiums
will go up by a smaller proportion
because the bulk of liability coverage
reflects the cost of personal injury. Also,
although they represent economic
transfers, sales and excise taxes would
also increase with increases in vehicle
prices (unless rates are reduced). The
impact on operation and maintenance
costs is less clear, because the
maintenance burden and useful life of
each technology are not known.
However, one of the common
consequences of using more complex or
innovative technologies is a decline in
vehicle reliability and an increase in
maintenance costs. These costs are
borne in part by vehicle manufacturers
(through warranty costs, which are
included in the indirect costs of
production), and in part by vehicle
owners. NHTSA believes that this effect
is difficult to quantify for purposes of
this proposed rule, but we seek
comment on how we might attempt to
do so for the final rule.
Related, to the extent that the
proposed standards require
manufacturers to build and sell more
PHEVs and EVs, vehicle manufacturers
and owners may face additional costs
for charging infrastructure and battery
disposal. While Chapter 3 of the draft
Joint TSD discusses the costs of
charging infrastructure, neither of these
costs have been incorporated into the
rulemaking analysis due to time
constraints. We intend to attempt to
quantify these additional costs for the
final rule stage, but we believe that
doing so will be difficult and we seek
comment on how we might go about it.
We also seek comment on other costs or
cost savings that are not accounted for
in this analysis and how we might go
about quantifying them for the final
rule.
And finally on the subject of vehicle
operation, NHTSA has received
comments in the past that premium
(higher octane) fuel may be necessary if
certain advanced fuel economyimproving technologies are required by
stringent CAFE standards. The agencies
have not assumed in our development
of technology costs that premium fuel
would be required. We seek comment
on this assumption.
Effects on Vehicle Miles Traveled
(VMT)
While NHTSA has estimated the
impact of the rebound effect on the use
of MY 2017–25 vehicles, we have not
estimated how a change in new vehicle
sales would impact aggregate vehicle
use. Changes in new vehicle sales may
be accompanied by complex but
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difficult-to-quantify effects on overall
vehicle use and its composition by
vehicle type and age, because the same
factors affecting sales of new vehicles
are also likely to influence their use, as
well as how intensively older vehicles
are used and when they are retired from
service. These changes may have
important consequences for total fleetwide fuel consumption. NHTSA
believes that this effect is difficult to
quantify for purposes of this proposed
rule, but we seek comment on how we
might attempt to do so for the final rule,
if commenters agree that attempting
quantification of this effect could be
informative.
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Effect on Composition of Passenger Car
and Light Truck Sales
To the extent that manufacturers pass
on costs to buyers by raising prices for
new vehicle models, they may distribute
these price increases across their model
lineups in ways that affect the
composition of their total sales. To the
extent that changes in the composition
of sales occur, this could affect fuel
savings to some degree. However,
NHTSA’s view is that the scope for such
effects is relatively small, since most
vehicles will to some extent be
impacted by the standards.
Compositional effects might be
important with respect to compliance
costs for individual manufacturers, but
are unlikely to be material for the rule
as a whole.
NHTSA is continuing to develop
methods of estimating the effects of
these proposed standards on the sales of
individual vehicle models, and plans to
apply these methods in analyzing the
impacts of its final CAFE standards for
MY 2017–25. In the meantime, the
agency seeks comment on the
possibility that significant shifts in the
composition of new vehicle sales by
type or model could occur, the potential
effects of such shifts on fuel
consumption and fuel savings from the
proposed standards, and methods for
analyzing the potential extent and
patterns of shifts in sales.
Effects on the Used Vehicle Market
The effect of this rule on the lifetimes,
use, and retirement dates (‘‘scrappage’’)
of older vehicles will be related to its
effects on new vehicle prices, the fuel
efficiency of new vehicle models, and
total sales of new vehicles. If the value
of fuel savings resulting from improved
fuel efficiency to the typical potential
buyer of a new vehicle outweighs the
average increase in new models’ prices,
sales of new vehicles will rise, while
scrappage rates of used vehicles will
increase slightly. This will cause the
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‘‘turnover’’ of the vehicle fleet—that is,
the retirement of used vehicles and their
replacement by new models—to
accelerate slightly, thus accentuating the
anticipated effect of the rule on fleetwide fuel consumption and CO2
emissions. However, if potential buyers
value future fuel savings resulting from
the increased fuel efficiency of new
models at less than the increase in their
average selling price, sales of new
vehicles will decline, as will the rate at
which used vehicles are retired from
service. This effect will slow the
replacement of used vehicles by new
models, and thus partly offset the
anticipated effects of the final rules on
fuel use and emissions.
Because the agencies are uncertain
about how the value of projected fuel
savings from the final rules to potential
buyers will compare to their estimates
of increases in new vehicle prices, we
have not attempted to estimate
explicitly the effects of the rule on
scrappage of older vehicles and the
turnover of the vehicle fleet.
Impacts of Changing Fuel Composition
on Costs, Benefits, and Emissions
EPAct, as amended by EISA, creates a
Renewable Fuels Standard that sets
targets for greatly increased usage of
renewable fuels over the next decade.
The law requires fixed volumes of
renewable fuels to be used—volumes
that are not linked to actual usage of
transportation fuels.
Ethanol and biodiesel (in the required
volumes) may increase or decrease the
cost of blended gasoline and diesel,
depending on crude oil prices and tax
subsidies offered for renewable fuels.
The potential extra cost of renewable
fuels would be borne through a crosssubsidy: the price of every gallon of
blended gasoline could rise sufficiently
to pay for any extra cost of using
renewable fuels in these blends.
However, if the price of gasoline or
diesel increases enough, the consumer
could actually realize a savings through
the increased usage of renewable fuels.
By reducing total fuel consumption, the
CAFE standards proposed in this rule
could tend to increase any necessary
cross-subsidy per gallon of fuel, and
hence raise the market price of
transportation fuels, while there would
be no change in the volume or cost of
renewable fuels used.
These effects are indirectly
incorporated in NHTSA’s analysis of the
proposed CAFE rule because they are
reflected in EIA’s projections of future
gasoline and diesel prices in the Annual
Energy Outlook, which incorporates in
its baseline both a Renewable Fuel
Standard and an CAFE standards.
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The net effect of incorporating an RFS
then might be to slightly reduce the
benefits of the rule because affected
vehicles might be driven slightly less if
the RFS makes blended gasoline
relatively more expensive, and because
fuels blended with more ethanol emit
slightly fewer greenhouse gas emissions
per gallon. In addition, there might be
corresponding benefit losses from the
induced reduction in VMT. All of these
effects are difficult to estimate, because
of uncertainty in future crude oil prices,
uncertainty in future tax policy, and
uncertainty about how petroleum
marketers will actually comply with the
RFS, but they are likely to be small,
because the cumulative deviation from
baseline fuel consumption induced by
the final rule will itself be small.
Distributional Effects
The agency’s analysis of the proposed
rule reports impacts only as nationwide
aggregate or per-vehicle average values.
NHTSA also shows the effects of the
EIA high and low fuel price forecasts on
the aggregate benefits in its sensitivity
analysis. Generally, this proposed rule
would have its largest effects on
individuals who purchase new vehicles
produced during the model years it
would affect (2017–25). New vehicle
buyers who drive more than the
agency’s estimates of average vehicle
use will experience larger fuel savings
and economic benefits than the average
values reported in this NPRM, while
those who drive less than our average
estimates will experience smaller fuel
savings and benefits. NHTSA believes
that this effect is difficult to quantify for
purposes of this proposed rule, but we
seek comment on how we might attempt
to do so for the final rule, if commenters
agree that attempting quantification of
this effect could be informative.
H. Vehicle Classification
Vehicle classification, for purposes of
the CAFE program, refers to whether
NHTSA considers a vehicle to be a
passenger car or a light truck, and thus
subject to either the passenger car or the
light truck standards.816 As NHTSA
explained in the MY 2011 rulemaking
and in the MYs 2012–2016 rulemaking,
vehicle classification is based in part on
EPCA/EISA, and in part on NHTSA’s
regulations. EPCA categorizes some
light 4-wheeled vehicles as ‘‘passenger
automobiles’’ (cars) and the balance as
‘‘non-passenger automobiles’’ (light
trucks). EPCA defines passenger
816 For the purpose of the MYs 2012–2016
standards and this NPRM for the MYs 2017–2025
standards, EPA has agreed to use NHTSA’s
regulatory definitions for determining which
vehicles would be subject to which CO2 standards.
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automobiles as any automobile (other
than an automobile capable of offhighway operation) which NHTSA
decides by rule is manufactured
primarily for use in the transportation of
not more than 10 individuals.817
NHTSA created regulatory definitions
for passenger automobiles and light
trucks, found at 49 CFR Part 523, to
guide the agency and manufacturers in
classifying vehicles.
Under EPCA, there are two general
groups of automobiles that qualify as
non-passenger automobiles or light
trucks: (1) Those defined by NHTSA in
its regulations as other than passenger
automobiles due to their having design
features that indicate they were not
manufactured ‘‘primarily’’ for
transporting up to ten individuals; and
(2) those expressly excluded from the
passenger category by statute due to
their capability for off-highway
operation, regardless of whether they
might have been manufactured
primarily for passenger
transportation.818 49 CFR 523 directly
tracks those two broad groups of nonpassenger automobiles in subsections (a)
and (b), respectively. We note that
NHTSA tightened the definition of light
truck in the MY 2011 rulemaking to
ensure that only vehicles that actually
have 4WD will be classified as offhighway vehicles by reason of having
4WD (to prevent 2WD SUVs that also
come in a 4WD ‘‘version’’ from
qualifying automatically as ‘‘off-road
capable’’ simply by reason of the
existence of the 4WD version), which
resulted in the reclassification of over 1
million vehicles from the truck fleet to
the car fleet.
Since the original passage of EPCA,
and consistently through the passage of
EISA, Congress has expressed its intent
that different vehicles with different
characteristics and capabilities should
be subject to different CAFE standards
in two ways: first, through whether a
vehicle is classified as a passenger car
817 EPCA 501(2), 89 Stat. 901, codified at 49
U.S.C. 32901(a).
818 49 U.S.C. 32901(a)(18). The statute refers both
to vehicles that are 4WD and to vehicles over 6,000
lbs GVWR as potential candidates for off-road
capability, if they also meet the ‘‘significant feature
* * * designed for off-highway operation’’ as
defined by the Secretary. We note that we consider
‘‘AWD’’ vehicles as 4WD for purposes of this
determination—they send power to all wheels of
the vehicle all the time, while 4WD vehicles may
only do so part of the time, which appears to make
them equal candidates for off-road capability given
other necessary characteristics. We also underscore,
as we have in the past, that despite comments in
prior rulemakings suggesting that any vehicle that
appears to be manufactured ‘‘primarily’’ for
transporting passengers must be classified as a
passenger car, the statute as currently written
clearly provides that vehicles that are off-highway
capable are not passenger cars.
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or as a light truck, and second, by
requiring NHTSA to set separate
standards for passenger cars and for
light trucks.819 Creating two categories
of vehicles and requiring separate
standards for each, however, can lead to
two issues which may either detract
from the fuel savings that the program
is able to achieve, or increase regulatory
burden for manufacturers simply
because they are trying to meet market
demand. Specifically,
(1) If the stringency of the standards
that NHTSA establishes seems to favor
either cars or trucks, manufacturers may
have incentive to change their vehicles’
characteristics in order to reclassify
them and average them into the ‘‘easier’’
fleet; and
(2) ‘‘Like’’ vehicles, such as the 2WD
and 4WD versions of the same CUV,
may have generally similar fuel
economy-achieving capabilities, but
different targets due to differences in the
car and truck curves.
NHTSA recognizes that manufacturers
may have an incentive to classify
vehicles as light trucks if the fuel
economy target for light trucks with a
given footprint is less stringent than the
target for passenger cars with the same
footprint. This is often the case given
the current fleet. Because of
characteristics like 4WD and towing and
hauling capacity (and correspondingly,
although not necessarily, heavier
weight), the vehicles in the current light
truck fleet are generally less capable of
achieving higher fuel economy levels as
compared to the vehicles in the
passenger car fleet. 2WD SUVs are the
vehicles that could be most readily
redesigned so that they can be ‘‘moved’’
from the passenger car to the light truck
fleet. A manufacturer could do this by
adding a third row of seats, for example,
or boosting GVWR over 6,000 lbs for a
2WD SUV that already meets the ground
clearance requirements for ‘‘off-road
capability.’’ A change like this may only
be possible during a vehicle redesign,
but since vehicles are redesigned, on
average, every 5 years, at least some
manufacturers could possibly choose to
make such changes before or during the
model years covered by this rulemaking,
either because of market demands or
because of interest in changing the
vehicle’s classification.
NHTSA continues to believe that the
definitions as they currently exist are
consistent with the text of EISA and
with Congress’ original intent. However,
the time frame of this rulemaking is
longer than any CAFE rulemaking that
NHTSA has previously undertaken, and
819 See, e.g., discussion of legislative history in 42
FR 38362, 38365–66 (Jul. 28, 1977).
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no one can predict with certainty how
the market will change between now
and 2025. The agency therefore has less
assurance than in prior rulemakings that
manufacturers will not have greater
incentives and opportunities during that
time frame to make more deliberate
redesign efforts to move vehicles out of
the car fleet and into the truck fleet in
order to obtain the lower target, and
potentially reducing overall fuel
savings. Recognizing this possibility, we
seek comment on how best to avoid it
while still classifying vehicles
appropriately based on their
characteristics and capabilities.
One of the potential options that we
explored in the MYs 2012–2016
rulemaking for MYs 2017 and beyond
was changing the definition of light
truck to remove paragraph (5) of 49 CFR
523.5(a), which allows vehicles to be
classified as light trucks if they have
three or more rows of seats that can
either be removed or folded flat to allow
greater cargo-carrying capacity. NHTSA
has received comments in the past
arguing that vehicles with three or more
rows of seats, unless they are capable of
transporting more than 10 individuals,
should be classified as passenger cars
rather than as light trucks because they
would not need to have so many seats
if they were not intended primarily to
carry passengers.
NHTSA recognizes that there are
arguments both for and against
maintaining the definition as currently
written for MYs 2017 and beyond. The
agency continues to believe that three or
more rows of seats that can be removed
or folded flat is a reasonable proxy for
a vehicle’s ability to provide expanded
cargo space, consistent with the
agency’s original intent in developing
the light truck definitions that expanded
cargo space is a fundamentally ‘‘trucklike’’ characteristic. Much of the public
reaction to this definition, which is
mixed, tends to be visceral and
anecdotal—for example, for parents
with minivans and multiple children,
the ability of seats to fold flat to provide
more room for child-related cargo may
have been a paramount consideration in
purchasing the vehicle, while for CUV
owners with cramped and largely
unused third rows, those extra seats
may seem to have sprung up entirely in
response to the regulation, rather than
in response to the consumer’s need for
utility. If we believe, for the sake of
argument, that the agency’s decision
might be reasonable from both a policy
and a legal perspective whether we
decided to change the definition or to
leave it alone, the most important
questions in making the decision
become (1) whether removing
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523.5(a)(5), and thus causing vehicles
with three or more rows to be classified
as passenger cars in the future, will save
more fuel, and (2) if more fuel will be
saved, at what cost.
In considering these questions in the
MYs 2012–2016 rulemaking, NHTSA
conducted an analysis in the final rule
to attempt to consider the impact of
moving these vehicles. We identified all
of the 3-row vehicles in the baseline
(MY 2008) fleet,820 and then considered
whether any could be properly
classified as a light truck under a
different provision of 49 CFR 523.5—
about 40 vehicles were classifiable
under § 523.5(b) as off-highway capable.
We then transferred those remaining 3row vehicles from the light truck to the
passenger car input sheets for the CAFE
model, re-estimated the relative
stringency of the passenger car and light
truck standards, shifted the curves to
obtain the same overall average required
fuel economy as under the final
standards, and ran the model to evaluate
potential impacts (in terms of costs, fuel
savings, etc.) of moving these vehicles.
The agency’s hypothesis had been that
moving 3-row vehicles from the truck to
the car fleet would tend to bring the
achieved fuel economy levels down in
both fleets—the car fleet achieved levels
could theoretically fall due to the
introduction of many more vehicles that
are relatively heavy for their footprint
and thus comparatively less fuel
economy-capable, while the truck fleet
achieved levels could theoretically fall
due to the characteristics of the vehicles
remaining in the fleet (4WDs and
pickups, mainly) that are often
comparatively less fuel economycapable than 3-row vehicles, although
more vehicles would be subject to the
relatively more stringent passenger car
standards, assuming the curves were not
refit to the data.
As the agency found, however,
moving the vehicles reduced the
stringency of the passenger car
standards by approximately 0.8 mpg on
average for the five years of the rule, and
reduced the stringency of the light truck
standards by approximately 0.2 mpg on
average for the five years of the rule, but
it also resulted in approximately 676
million fewer gallons of fuel consumed
(equivalent to about 1 percent of the
reduction in fuel consumption under
the final standards) and 7.1 mmt fewer
CO2 emissions (equivalent to about 1
percent of the reduction in CO2
emissions under the final standards)
over the lifetime of the MYs 2012–2016
vehicles. This result was attributable to
820 Of the 430 light truck models in the fleet, 175
of these had 3 rows.
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slight differences (due to rounding
precision) in the overall average
required fuel economy levels in MYs
2012–2014, and to the retention of the
relatively high lifetime mileage
accumulation (compared to
‘‘traditional’’ passenger cars) of the
vehicles moved from the light truck fleet
to the passenger car fleet. The net effect
on technology costs was approximately
$200 million additional spending on
technology each year (equivalent to
about 2 percent of the average increase
in annual technology outlays under the
final standards). Assuming
manufacturers would pass that cost
forward to consumers by increasing
vehicle costs, NHTSA estimated that
vehicle prices would increase by an
average of approximately $13 during
MYs 2012–2016. With less fuel savings
and higher costs, and a substantial
disruption to the industry, removing
523.5(a)(5) did not seem advisable in the
context of the MYs 2012–2016
rulemaking.
Looking forward, however, and given
the considerable uncertainty regarding
the incentive to reclassify vehicles in
the MYs 2017 and beyond timeframe,
the agency considered whether a fresh
attempt at this analysis would be
warranted, but did not believe that it
would be informative given the
uncertainty. One important point to
note in the comparative analysis in the
MYs 2012–2016 rulemaking is that, due
to time constraints, the agency did not
attempt to refit the respective fleet target
curves or to change the intended
required stringency in MY 2016 of 34.1
mpg for the combined fleets. If we had
refitted curves, considering the vehicles
in question, we might have obtained a
somewhat steeper passenger car curve,
and a somewhat flatter light truck curve,
which could have affected the agency’s
findings. The same is true today.
Without refitting the curves and
changing the required levels of
stringency for cars and trucks, simply
moving vehicles from one fleet to
another will not inform the agency in
any substantive way as to the impacts of
a change in classification. Moreover,
even if we did attempt to make those
changes, the results would be somewhat
speculative; for example, the agencies
continue to use the same MY 2008
baseline used in the MYs 2012–2016
rulemaking, which may have limited
utility for predicting relatively small
changes (moving only 40 vehicles, as
noted above) in the fleet makeup during
the rulemaking timeframe. As a result,
NHTSA did not attempt to quantify the
impact of such a reclassification of 3row vehicles, but we seek comment on
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whether and how we should do so for
the final rule. If commenters believe that
we should attempt to quantify the
impact, we specifically seek comment
on how to refit the footprint curves and
how the agency should consider
stringency levels under such a scenario.
Another potential option that we
explored in the MYs 2012–2016
rulemaking for MYs 2017 and beyond
was classifying ‘‘like’’ vehicles together.
Many commenters objected in the
rulemaking for the MY 2011 standards
to NHTSA’s regulatory separation of
‘‘like’’ vehicles. Industry commenters
argued that it was technologically
inappropriate for NHTSA to place 4WD
and 2WD versions of the same SUV in
separate classes. They argued that the
vehicles are the same, except for their
drivetrain features, thus giving them
similar fuel economy improvement
potential. They further argued that all
SUVs should be classified as light
trucks. Environmental and consumer
group commenters, on the other hand,
argued that 4WD SUVs and 2WD SUVs
that are ‘‘off-highway capable’’ by virtue
of a GVWR above 6,000 pounds should
be classified as passenger cars, since
they are primarily used to transport
passengers. In the MY 2011 rulemaking,
NHTSA rejected both of these sets of
arguments. NHTSA concluded that 2WD
SUVs that were neither ‘‘off-highway
capable’’ nor possessed ‘‘truck-like’’
functional characteristics were
appropriately classified as passenger
cars. At the same time, NHTSA also
concluded that because Congress
explicitly designated vehicles with
GVWRs over 6,000 pounds as ‘‘offhighway capable’’ (if they meet the
ground clearance requirements
established by the agency), NHTSA did
not have authority to move these
vehicles to the passenger car fleet.
NHTSA continues to believe that this
would not be an appropriate solution for
addressing either the risk of gaming or
perceived regulatory inequity going
forward. As explained in the MYs 2012–
2016 final rule, with regard to the first
argument, that ‘‘like’’ vehicles should be
classified similarly (i.e., that 2WD SUVs
should be classified as light trucks
because, besides their drivetrain, they
are ‘‘like’’ the 4WD version that
qualifies as a light truck), NHTSA
continues to believe that 2WD SUVs
that do not meet any part of the existing
regulatory definition for light trucks
should be classified as passenger cars.
However, NHTSA recognizes the
additional point raised by industry
commenters in the MY 2011 rulemaking
that manufacturers may respond to this
tighter classification by ceasing to build
2WD versions of SUVs, which could
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reduce fuel savings. In response to that
point, NHTSA stated in the MY 2011
final rule that it expects that
manufacturer decisions about whether
to continue building 2WD SUVs will be
driven in much greater measure by
consumer demand than by NHTSA’s
regulatory definitions. If it appears, in
the course of the next several model
years, that manufacturers are indeed
responding to the CAFE regulatory
definitions in a way that reduces overall
fuel savings from expected levels, it may
be appropriate for NHTSA to review this
question again. At this time, however,
since so little time has passed since our
last rulemaking action, we do not
believe that we have enough
information about changes in the fleet to
ascertain whether this is yet ripe for
consideration. We seek comment on
how the agency might go about
reviewing this question as more
information about manufacturer
behavior is accumulated over time.
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I. Compliance and Enforcement
1. Overview
NHTSA’s CAFE enforcement program
is largely established by statute—unlike
the CAA, EPCA, as amended by EISA,
is very prescriptive with regard to
enforcement. EPCA and EISA also
clearly specify a number of flexibilities
that are available to manufacturers to
help them comply with the CAFE
standards. Some of those flexibilities are
constrained by statute—for example,
while Congress required that NHTSA
allow manufacturers to transfer credits
earned for over-compliance from their
car fleet to their truck fleet and vice
versa, Congress also limited the amount
by which manufacturers could increase
their CAFE levels using those
transfers.821 NHTSA believes Congress
balanced the energy-saving purposes of
the statute against the benefits of certain
flexibilities and incentives and
intentionally placed some limits on
certain statutory flexibilities and
incentives. With that goal in mind, of
maximizing compliance flexibility
while also implementing EPCA/EISA’s
overarching purpose of energy
conservation as fully as possible,
NHTSA has done its best in crafting the
credit transfer and trading regulations
authorized by EISA to ensure that total
fuel savings are preserved when
manufacturers exercise their statutorilyprovided compliance flexibilities.
Furthermore, to achieve the level of
standards described in this proposal for
the 2017–2025 program, NHTSA
expects automakers to continue
increasing the use of innovative and
advanced technologies as they evolve.
Additional incentive programs may
encourage early adoption of these
innovative and advanced technologies
and help to maximize both compliance
flexibility and energy conservation.
These incentive programs for CAFE
compliance would not be under
NHTSA’s EPCA/EISA authority, but
under EPA’s EPCA authority—as
discussed in more detail below and in
Section III of this preamble, EPA
measures and calculates manufacturer
compliance with the CAFE standards,
and it would be in the calculation of
fuel economy levels that additional
incentives would most appropriately be
applied, as a practical matter.
Specifically, to be included in the CAFE
program, EPA is proposing: (1) Fuel
economy performance adjustments due
to improvements in air conditioning
system efficiency; (2) utilization of
‘‘game changing’’ technologies installed
on full size pick-up trucks including
hybridization; and (3) installation of
‘‘off-cycle’’ technologies. In addition, for
model years 2020 and later, EPA is
proposing calculation methods for dualfueled vehicles, to fill the gap left in
EPCA/EISA by the expiration of the
dual-fuel incentive. A more thorough
description of the basis for the new
incentive programs can be found in
Section III.
The following sections explain how
NHTSA determines whether
manufacturers are in compliance with
the CAFE standards for each model
year, and how manufacturers may
address potential non-compliance
situations through the use of
compliance flexibilities or fine payment.
The following sections also explain, for
the reader’s reference, the proposed new
incentives and calculations, but we also
refer readers to Section III.C for EPA’s
explanation of its authority and more
specific detail regarding these proposed
changes to the CAFE program.
2. How does NHTSA determine
compliance?
a. Manufacturer Submission of Data and
CAFE Testing by EPA
NHTSA begins to determine CAFE
compliance by reviewing projected
estimates in pre- and mid-model year
reports submitted by manufacturers
pursuant to 49 CFR part 537,
Automotive Fuel Economy Reports.822
Those reports for each compliance
model year are submitted to NHTSA by
December of the calendar year prior to
the corresponding subsequent model
822 49
821 See
32907.
49 U.S.C. 32903(g).
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year (for the pre-model year report) and
in July of the given model year (for the
mid-model year report). NHTSA has
already received pre-and mid-model
year reports from manufacturers for MY
2011. NHTSA uses these reports for
reference to help the agency, and the
manufacturers who prepare them,
anticipate potential compliance issues
as early as possible, and help
manufacturers plan compliance
strategies. NHTSA also uses the reports
for auditing and testing purposes, which
helps manufacturers correct errors prior
to the end of the model year and
facilitates acceptance of their final
CAFE report by EPA. In addition,
NHTSA issues reports to the public
twice a year that provide a summary of
manufacturers’ fleet fuel economy
projected performances using pre- and
mid model year data. Currently, NHTSA
receives manufacturers’ CAFE reports in
paper form. In order to facilitate
submission by manufacturers, NHTSA
amended part 537 to allow for electronic
submission of the pre- and mid-model
year CAFE reports in 2010 (see 75 FR
25324). Electronic reports are optional
and must be submitted in a pdf format.
NHTSA proposes to modify these
provisions in this NPRM, as described
below, in order to eliminate hardcopy
submissions and help the agency more
readily process and utilize the
electronically-submitted data.
Throughout the model year, NHTSA
audits manufacturers’ reports and
conducts vehicle testing to confirm the
accuracy of track width and wheelbase
measurements as a part of its footprint
validation program,823 which helps the
agency understand better how
manufacturers may adjust vehicle
characteristics to change a vehicle’s
footprint measurement, and thus its fuel
economy target. NHTSA resolve
discrepancies with the manufacturer
prior to the end of the calendar year
corresponding to the respective model
year with the primary goal of
manufacturers submitting accurate final
reports to EPA. NHTSA makes its
ultimate determination of a
manufacturer’s CAFE compliance
obligation based on official reported and
verified CAFE data received from EPA.
Pursuant to 49 U.S.C. 32904(e), EPA is
responsible for calculating
manufacturers’ CAFE values so that
NHTSA can determine compliance with
its CAFE standards. The EPA-verified
data is based on any considerations
from NHTSA testing, its own vehicle
testing, and final model year data
823 See https://www.nhtsa.gov/DOT/NHTSA/
Vehicle%20Safety/Test%20Procedures/
Associated%20Files/TP–537–01.pdf
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submitted by manufacturers to EPA
pursuant to 40 CFR 600.512. A
manufacturer’s final model year report
must be submitted to EPA no later than
90 days after December 31st of the
model year. EPA test procedures
including those used to establish the
new incentive fuel economy
performance values for model year 2017
to 2025 vehicles are contained in
sections 40 CFR Part 600 and 40 CFR
Part 86.
b. NHTSA Then Analyzes EPA–
Certified CAFE Values for Compliance
NHTSA’s determination of CAFE
compliance is fairly straightforward:
after testing, EPA verifies the data
submitted by manufacturers and issues
final CAFE reports sent to
manufacturers and to NHTSA in a pdf
format between April and October of
each year (for the previous model year),
and NHTSA then identifies the
manufacturers’ compliance categories
(fleets) that do not meet the applicable
CAFE fleet standards. NHTSA plans to
construct a new, more automated
database system in the near future to
store manufacturer data and the EPA
data. The new database is expected to
simplify data submissions to NHTSA,
improve the quality of the agency’s data,
expedite public reporting, improve
audit verifications and testing, and
enable more efficient tracking of
manufacturers’ CAFE credits with
greater transparency.
NHTSA uses the verified data from
EPA to compare fleet average standards
with performance. A manufacturer
complies with NHTSA’s fuel economy
standard if its fleet average performance
is greater than or equal to its required
standard, or if it is able to use available
compliance flexibilities to resolve its
non-compliance difference. NHTSA
calculates a cumulative credit status for
each of a manufacturer’s vehicle
compliance categories according to 49
U.S.C. 32903. If a manufacturer’s
compliance category exceeds the
applicable fuel economy standard,
NHTSA adds credits to the account for
that compliance category. The amount
of credits earned in a given year are
determined by multiplying the number
of tenths of an 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 that model year.
Credits may be used to offset shortfalls
in other model years, subject to the
three year ‘‘carry-back’’ and five-year
‘‘carry-forward’’ limitations specified in
49 U.S.C. 32903(a); NHTSA does not
have authority to allow credits to be
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carried forward or back for periods
longer than that specified in the statute.
A manufacturer may also transfer
credits to another compliance category,
subject to the limitations specified in 49
U.S.C. 32903(g)(3), or trade them to
another manufacturer. The value of each
credit received via trade or transfer,
when used for compliance, is adjusted
using the adjustment factor described in
49 CFR 536.4, pursuant to 49 U.S.C.
32903(f)(1). As part of this rulemaking,
NHTSA is proposing to set the VMT
values that are part of the adjustment
factor for credits earned in MYs 2017–
2025 at a single level that does not
change from model year to model year,
as discussed further below.
If a manufacturer’s vehicles in a
particular compliance category fall
below the standard fuel economy value,
NHTSA will provide written
notification to the manufacturer that it
has not met a particular fleet standard.
The manufacturer will be required to
confirm the shortfall and must either
submit a plan indicating it will allocate
existing credits, or if it does not have
sufficient credits available in that fleet,
how it will earn, transfer and/or acquire
credits, or pay the appropriate civil
penalty. The manufacturer must submit
a plan or payment within 60 days of
receiving agency notification. Credit
allocation plans received from the
manufacturer will be reviewed and
approved by NHTSA. NHTSA will
approve a credit allocation plan unless
it finds the proposed credits are
unavailable or that it is unlikely that the
plan will result in the manufacturer
earning sufficient credits to offset the
subject credit shortfall. If a plan is
approved, NHTSA will revise the
manufacturer’s credit account
accordingly. If a plan is rejected,
NHTSA will notify the manufacturer
and request a revised plan or payment
of the appropriate fine.
In the event that a manufacturer does
not comply with a CAFE standard even
after the consideration of credits, EPCA
provides for the assessment of civil
penalties. The Act specifies a precise
formula for determining the amount of
civil penalties for noncompliance.824
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
824 See
PO 00000
825 49 U.S.C. 30120, Remedies for defects and
noncompliance.
49 U.S.C. 32912.
Frm 00488
Fmt 4701
circumstances specified in the statute.
All penalties are paid to the U.S.
Treasury and not to NHTSA itself.
Unlike the National Traffic and Motor
Vehicle Safety Act, EPCA does not
provide for recall and remedy in the
event of a noncompliance. The presence
of recall and remedy provisions 825 in
the Safety Act and their absence in
EPCA is believed to arise from the
difference in the application of the
safety standards and CAFE standards. A
safety standard applies to individual
vehicles; that is, each vehicle must
possess the requisite equipment or
feature that must provide the requisite
type and level of performance. If a
vehicle does not, it is noncompliant.
Typically, a vehicle does not entirely
lack an item or equipment or feature.
Instead, the equipment or features fails
to perform adequately. Recalling the
vehicle to repair or replace the
noncompliant equipment or feature can
usually be readily accomplished.
In contrast, a CAFE standard applies
to a manufacturer’s entire fleet for a
model year. It does not require that a
particular individual vehicle be
equipped with any particular equipment
or feature or meet a particular level of
fuel economy. It does require that the
manufacturer’s fleet, as a whole,
comply. Further, although under the
attribute-based approach to setting
CAFE standards fuel economy targets
are established for individual vehicles
based on their footprints, the vehicles
are not required to comply with those
targets on a model-by-model or vehicleby-vehicle basis. However, as a practical
matter, if a manufacturer chooses to
design some vehicles so they fall below
their target levels of fuel economy, it
will need to design other vehicles so
they exceed their targets if the
manufacturer’s overall fleet average is to
meet the applicable standard.
Thus, under EPCA, there is no such
thing as a noncompliant vehicle, only a
noncompliant fleet. No particular
vehicle in a noncompliant fleet is any
more, or less, noncompliant than any
other vehicle in the fleet.
After enforcement letters are sent,
NHTSA continues to monitor receipt of
credit allocation plans or 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 responding. If NHTSA
receives and approves a manufacturer’s
carryback plan to earn future credits
within the following three years in order
to comply with current regulatory
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obligations, NHTSA will defer levying
fines for non-compliance until the
date(s) when the manufacturer’s
approved plan indicates that credits will
be earned or acquired to achieve
compliance, and upon receiving
confirmed CAFE data from EPA. If the
manufacturer fails to acquire or earn
sufficient credits by the plan dates,
NHTSA will initiate compliance
proceedings. 49 CFR part 536 contains
the detailed regulations governing the
use and application of CAFE credits
authorized by 49 U.S.C. 32903.
3. What compliance flexibilities are
available under the CAFE program and
how do manufacturers use them?
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There are three basic flexibilities
outlined by EPCA/EISA that
manufacturers can currently use to
achieve compliance with CAFE
standards beyond applying fuel
economy-improving technologies: (1)
Building dual- and alternative-fueled
vehicles; (2) banking (carry-forward and
carry-back), trading, and transferring
credits earned for exceeding fuel
economy standards; and (3) paying civil
penalties. We note that while these
flexibility mechanisms will reduce
compliance costs to some degree for
most manufacturers, 49 U.S.C. 32902(h)
expressly prohibits NHTSA from
considering the availability of
statutorily-established credits (either for
building dual- or alternative-fueled
vehicles or from accumulated transfers
or trades) in determining the level of the
standards. Thus, NHTSA may not raise
CAFE standards because manufacturers
have enough of those credits to meet
higher standards. This is an important
difference from EPA’s authority under
the CAA, which does not contain such
a restriction, and which allows EPA to
set higher standards as a result.
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a. Dual- and Alternative-Fueled
Vehicles
As discussed at length in prior
rulemakings, EPCA encourages
manufacturers to build alternativefueled and dual- (or flexible-) fueled
vehicles by providing special fuel
economy calculations for ‘‘dedicated’’
(that is, 100 percent) alternative fueled
vehicles and ‘‘dual-fueled’’ (that is,
capable of running on either the
alternative fuel or gasoline/diesel)
vehicles. Consistent with the
overarching purpose of EPCA/EISA,
these statutory incentives help to reduce
petroleum usage and thus improve our
nation’s energy security. Per EPCA, the
fuel economy of a dedicated alternative
fuel vehicle is determined by dividing
its fuel economy in equivalent miles per
gallon of gasoline or diesel fuel by
0.15.826 Thus, a 15 mpg dedicated
alternative fuel vehicle would be rated
as 100 mpg.
For dual-fueled vehicles, EPA
measures the vehicle’s fuel economy
rating by determining the average of the
fuel economy on gasoline or diesel and
the fuel economy on the alternative fuel
vehicle divided by 0.15.827 This
calculation procedure, provided in
EPCA, turns a dual-fueled vehicle that
averages 25 mpg on gasoline or diesel
into a 40 mpg vehicle for CAFE
purposes. This assumes that (1) the
vehicle operates on gasoline or diesel 50
percent of the time and on alternative
fuel 50 percent of the time; (2) fuel
economy while operating on alternative
fuel is 15 mpg (15/.15 = 100 mpg); and
(3) fuel economy while operating on gas
or diesel is 25 mpg. Thus:
CAFE FE = 1/{0.5/(mpg gas) + 0.5/(mpg
alt fuel)} = 1/{0.5/25 + 0.5/100} =
40 mpg
826 49
827 49
PO 00000
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U.S.C. 32905(b).
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In the case of natural gas, EPA’s
calculation is performed in a similar
manner. The fuel economy is the
weighted average while operating on
natural gas and operating on gas or
diesel. The statute specifies that 100
cubic feet (ft3) of natural gas is
equivalent to 0.823 gallons of gasoline.
The CAFE fuel economy while
operating on the natural gas is
determined by dividing its fuel
economy in equivalent miles per gallon
of gasoline by 0.15.828 Thus, if a vehicle
averages 25 miles per 100 ft3 of natural
gas, then:
CAFE FE = (25/100) * (100/.823)*(1/
0.15) = 203 mpg
Congress extended the dual-fueled
vehicle incentive in EISA for dualfueled automobiles through MY 2019,
but provided for its phase-out between
MYs 2015 and 2019.829 The maximum
fleet fuel economy increase attributable
to this statutory incentive is thus as
follows:
828 49
U.S.C. 32905(c).
U.S.C. 32906(a). NHTSA notes that the
incentive for dedicated alternative-fuel
automobiles, automobiles that run exclusively on
an alternative fuel, at 49 U.S.C. 32905(a), was not
phased-out by EISA.
We note additionally and for the reader’s
reference that EPA will be treating dual- and
alternative-fueled vehicles under its GHG program
similarly to the way EPCA/EISA provides for CAFE
through MY 2015, but for MY 2016, EPA
established CO2 emission levels for alternative fuel
vehicles based on measurement of actual CO2
emissions during testing, plus a manufacturer
demonstration that the vehicles are actually being
run on the alternative fuel. The manufacturer would
then be allowed to weight the gasoline and
alternative fuel test results based on the proportion
of actual usage of both fuels. Because EPCA/EISA
provides the explicit CAFE measurement
methodology for EPA to use for dedicated vehicles
and dual-fueled vehicles through MY 2019, we
explained in the MYs 2012–2016 final rule that the
CAFE program would not require that vehicles
manufactured for the purpose of obtaining the
credit actually be run on the alternative fuel.
829 49
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49 CFR part 538 codifies in regulation
the statutory alternative-fueled and
dual-fueled automobile manufacturing
incentive.
Given that the statutory incentive for
dual-fueled vehicles in 49 U.S.C. 32906
and the measurement methodology
specified in 49 U.S.C. 32905(b) and (d)
expire in MY 2019, the question
becomes, how should the fuel economy
of dual-fueled vehicles be determined
for CAFE compliance in MYs 2020 and
beyond? NHTSA and EPA believe that
the expiration of the dual-fueled vehicle
measurement methodology in the
statute leaves a gap to be filled, to avoid
the absurd result of dual-fueled
vehicles’ fuel economy being measured
like that of conventional gasoline
vehicles. If the overarching purpose of
the statute is energy conservation and
reducing petroleum usage, the agencies
believe that that goal is best met by
continuing to reflect through CAFE
calculations the reduced petroleum
usage that dual-fueled vehicles achieve.
As discussed in more detail in Section
III.B.10, for MYs 2020 and beyond, to
fill the gap left by the expiration of the
statutory CAFE measurement
methodology for dual-fueled vehicles,
EPA is proposing to harmonize with the
approach it uses under the GHG
program to measure the emissions of
dual-fueled vehicles, to reflect the realworld percentage of usage of alternative
fuels by dual-fueled vehicles, but also to
continue to incentivize the use of
certain alternative fuels in dual-fueled
vehicles as appropriate under EPCA/
EISA to reduce petroleum usage.
Specifically, for MYs 2020 and beyond,
EPA will calculate the fuel economy test
values for a plug-in hybrid electric
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vehicle (PHEV, that runs on both
gasoline and electricity) and for CNGgasoline vehicles on both the alternative
fuel and on gasoline, but rather than
assuming that the dual-fueled vehicle
runs on the alternative fuel 50 percent
of the time as the current statutory
measurement methodology requires,
EPA will instead use the Society of
Automotive Engineers (SAE) ‘‘utility
factor’’ methodology (based on vehicle
range on the alternative fuel and typical
daily travel mileage) to determine the
assumed percentage of operation on
gasoline/diesel and percentage of
operation on the alternative fuel for
those vehicles. Using the utility factor,
rather than making an a priori
assumption about the amount of
alternative fuel used by dual-fueled
vehicles, recognizes that once a
consumer has paid several thousand
dollars to be able to use a fuel that is
considerably cheaper than gasoline or
diesel, it is very likely that the
consumer will seek to use the cheaper
fuel as much as possible. Consistent
with this approach, however, EPA is not
proposing to extend the utility factor
method to flexible fueled vehicles
(FFVs) that use E–85 and gasoline, since
there is not a significant cost differential
between an FFV and conventional
gasoline vehicle and historically
consumers have only fueled these
vehicles with E85 a very small
percentage of the time. Therefore, EPA
is proposing for CAFE compliance in
MYs 2020 and beyond to continue
treatment of E85 and other FFVs as
finalized in the MY 2016 GHG program,
based on actual usage of the alternative
fuel which represents a real-world
reduction attributed to alternative fuels.
PO 00000
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For clarification in our regulations,
NHTSA is proposing to add Part
536.10(d) which states that for model
years 2020 and beyond a manufacturer
must calculate the fuel economy of dual
fueled vehicles in accordance with 40
CFR 600.500–12(c), (2)(v) and (vii), the
sections of EPA’s calculation regulations
where EPA is proposing to incorporate
these changes.
Additionally, to avoid manufacturers
building only dedicated alternative fuel
vehicles (which may be harder to refuel
in some instances) because of the
continued statutory 0.15 CAFE divisor
under 49 U.S.C. 32905(a) and the
calculation for EV fuel economy under
49 U.S.C. 32904, and declining to build
dual-fueled vehicles which might not
get a similar bonus, EPA is proposing to
use the Petroleum Equivalency Factor
(PEF) and a 0.15 divisor for calculating
the fuel economy of PHEVs’ electrical
operation and for natural gas operation
of CNG-gasoline vehicles.830 This is
consistent with the statutory approach
for dedicated alternative fuel vehicles,
and continues to incentivize the usage
of alternative fuels and reduction of
petroleum usage, but when combined
with the utility factor approach
described above, does not needlessly
over-incentivize their usage—it gives
credit for what is used, and does not
give credit for what is not used. Because
it does not give credit for what is not
used, EPA would propose that
manufacturers may increase their
calculated fleet fuel economy for dual830 EPA is also seeking comment on an approach
that would not use the PEF and 0.15 multiplier, as
discussed above in Section III.
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fueled vehicles by an unlimited amount
using these flexibilities.
As an example, for MYs 2020 and
beyond, the calculation procedure for a
dual-fueled vehicle that uses both
gasoline and CNG could result in a
combined fuel economy value of 150
mpg for CAFE purposes. This assumes
that (1) the ‘‘utility factor’’ for the
alternative fuel is found to be 95
percent, and so the vehicle operates on
gasoline for the remaining 5 percent of
the time; (2) fuel economy while
operating on natural gas is 203 mpg
[(25/100) * (100/.823) * (1/0.15)] as
shown above utilizing the PEF and the
.15 incentive factor; and (3) fuel
economy while operating on gasoline is
25 mpg. Thus:
CAFE FE = 1/{0.05/(mpg gas) + 0.95/
(mpg CNG)} = 1/{0.05/25 + 0.95/
203} = 150 mpg
The agencies seek comment on this
approach.
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b. Credit Trading and Transfer
As part of the MY 2011 final rule,
NHTSA created 49 CFR part 536 for
credit trading and transfer. Part 536
implements 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.831 Since its
enactment, EPCA has permitted
manufacturers to earn credits for
exceeding the standards and to carry
those credits backward or forward. EISA
extended the ‘‘carry-forward’’ period
from three to five model years, and left
the ‘‘carry-back’’ period at three model
years. Under part 536, credit holders
(including, but not limited to,
manufacturers) will have credit
accounts with NHTSA, and will be able
to hold credits, use them to achieve
compliance with CAFE standards,
transfer them between compliance
categories, or trade them. A credit may
also be cancelled before its expiration
date, if the credit holder so chooses.
Traded and transferred credits are
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. As
831 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
with 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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discussed above, EISA establishes a
‘‘cap’’ for the maximum increase in any
compliance category attributable to
transferred credits: for MYs 2011–2013,
transferred credits can only be used to
increase a manufacturer’s CAFE level in
a given compliance category by 1.0 mpg;
for MYs 2014–2017, by 1.5 mpg; and for
MYs 2018 and beyond, by 2.0 mpg.
As part of this rulemaking, NHTSA is
proposing to set the VMT estimates used
in the credit adjustment factor at
195,264 miles for passenger car credits
and 225,865 miles for light truck credits
for credits earned in MYs 2017–2025.
The VMT estimates for MYs 2012–2016
would not change. NHTSA is proposing
these values in the interest of
harmonizing with EPA’s GHG program,
and seeks comment on this approach as
compared to the prior approach of
adjustment factors with VMT estimates
that vary by year. Additionally, NHTSA
is proposing to include VMT estimates
for MY 2011 which the agency
neglected to include in Part 536 as part
of the MYs 2012–2016 rulemaking. The
proposed MY 2011 VMT estimate for
passenger cars is 152,922 miles, and for
light trucks is 172,552 miles.
c. Payment of Civil Penalties
If a manufacturer’s average miles per
gallon for a given compliance category
(domestic passenger car, imported
passenger car, light truck) falls below
the applicable standard, and the
manufacturer cannot make up the
difference by using credits earned or
acquired, the manufacturer is subject to
penalties. The penalty, as mentioned, 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, manufactured for that model year.
NHTSA has collected $794,921,139.50
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 2009
fleets, six manufacturers paid CAFE
fines for not meeting an applicable
standard—Fiat, which included Ferrari,
Maserati, and Alfa Romeo; Daimler
(Mercedes-Benz); Porsche; and Tata
(Jaguar Land Rover)—for a total of
$9,148,425.00. As mentioned above,
civil penalties paid for CAFE noncompliance go to the U.S. Treasury, and
not to DOT or NHTSA.
NHTSA recognizes that some
manufacturers may use the option to
pay civil penalties as a CAFE
compliance flexibility—presumably,
when paying civil penalties is deemed
more cost-effective than applying
additional fuel economy-improving
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technology, or when adding fuel
economy-improving technology would
fundamentally change the
characteristics of the vehicle in ways
that the manufacturer believes its target
consumers would not accept. NHTSA
has no authority under EPCA/EISA to
prevent manufacturers from turning to
payment of civil penalties if they choose
to do so. This is another important
difference from EPA’s authority under
the CAA, which allows EPA to revoke
a manufacturer’s certificate of
conformity that permits it to sell
vehicles if EPA determines that the
manufacturer is in non-compliance, and
does not permit manufacturers to pay
fines in lieu of compliance with
applicable standards.
NHTSA has grappled repeatedly with
the issue of whether civil penalties are
motivational for manufacturers, and
whether raising them would increase
manufacturers’ compliance with the
standards. EPCA authorizes increasing
the civil penalty very slightly up to
$10.00, exclusive of inflationary
adjustments, if NHTSA decides that the
increase in the penalty ‘‘will result in,
or substantially further, substantial
energy conservation for automobiles in
the model years in which the increased
penalty may be imposed; and will not
have a substantial deleterious impact on
the economy of the United States, a
State, or a region of a State.’’ 49 U.S.C.
32912(c).
To support a decision that increasing
the penalty would result in ‘‘substantial
energy conservation’’ without having ‘‘a
substantial deleterious impact on the
economy,’’ NHTSA would likely need to
provide some reasonably certain
quantitative estimates of the fuel that
would be saved, and the impact on the
economy, if the penalty were raised.
Comments received on this issue in the
past have not explained in clear
quantitative terms what the benefits and
drawbacks to raising the penalty might
be. Additionally, it may be that the
range of possible increase that the
statute provides, i.e., up to $10 per tenth
of a mpg, is insufficient to result in
substantial energy conservation,
although changing this would require an
amendment to the statute by Congress.
NHTSA continues to seek to gain
information on this issue and requests
that commenters wishing to address this
issue please provide, as specifically as
possible, estimates of how raising or not
raising the penalty amount will or will
not substantially raise energy
conservation and impact the economy.
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4. What new incentives are being added
to the CAFE program for MYs 2017–
2025?
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All of the CAFE compliance
incentives discussed below are being
proposed by EPA under its EPCA
authority to calculate fuel economy
levels for individual vehicles and for
fleets. Because they are EPA proposals,
we refer the reader to Section III for
more details, as well as Chapter 5 of the
draft Joint TSD for more information on
the precise mechanics of the incentives,
but we present them here in summary
form so that the reader may understand
more comprehensively what compliance
options are proposed to be available for
manufacturers for meeting the MYs
2017–2025 CAFE standards.
As mentioned above with regard to
EPA’s proposed changes for the
calculation of dual-fueled automobile
fuel economy for MYs 2020 and beyond,
NHTSA is proposing to modify its own
regulations to reflect the fact that these
incentives may be used as part of the
determination of a manufacturer’s CAFE
level. The requirements for determining
the vehicle and fleet average
performance for passenger cars and light
trucks inclusive of the proposed
incentives are defined in 49 CFR part
531 and 49 CFR part 533, respectively.
Part 531.6(a) specifies that the average
fuel economy of all passenger
automobiles that are manufactured by a
manufacturer in a model year shall be
determined in accordance with
procedures established by the
Administrator of the Environmental
Protection Agency under 49 U.S.C.
32904 of the Act and set forth in 40 CFR
part 600. Part 533.6 (b) specifies that the
average fuel economy of all nonpassenger automobiles is required to be
determined in accordance with the
procedures established by the
Administrator of the Environmental
Protection Agency under 49 U.S.C.
32904 and set forth in 40 CFR part 600.
Proposed changes to these sections
would simply clarify that in model
years 2017 to 2025, manufacturers may
adjust their vehicle fuel economy
performance values in accordance with
40 CFR Part 600 for improvements due
to the new incentives. We seek
comment on this proposed change.
a. ‘‘Game Changing’’ Technologies For
Full Size Pick-Up Trucks
EPA is proposing to adopt two new
types of incentives for improving the
fuel economy performance of full size
pickup trucks. The first incentive would
provide a credit to manufacturers that
employ significant quantities of
hybridization on full size pickup trucks.
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The second incentive would provide a
performance-based incentive for full
size pickup trucks that achieve a
significant reduction in fuel
consumption as compared to the
applicable fuel economy target for the
vehicle in question. These incentives
are proposed due to the significant
difficulty of large trucks, including full
size pickup trucks, in meeting CAFE
standards while still maintaining the
levels of utility to which consumers
have become accustomed, which require
higher payload and towing capabilities
and greater cargo volumes than other
light-duty vehicles. Technologies that
provide substantial fuel economy
benefits are often not attractive to
manufacturers of large trucks due to
these tradeoffs in utility purposes, and
therefore have not been taken advantage
of to the same extent as they have in
other vehicle classes. The goal of these
incentives is to facilitate the application
of these ‘‘game changing’’ technologies
for large pickups, both to save more fuel
and to help provide a bridge for
industry to more stringent light truck
standards in MYs 2022–2025—as
manufacturers gain experience with
applying more fuel-saving technology
for these vehicles and consumers
become more accustomed to certain
advanced technologies in pickup trucks,
the agencies anticipate that higher CAFE
levels will be more feasible for the fleet
as a whole.832 In the context of the
CAFE program, these incentives would
be used as an adjustment to a full size
pickup truck’s fuel economy
performance. The same vehicle would
not be allowed to receive an adjustment
to its calculated fuel economy for both
the hybridization incentive and the
performance-based incentive, to avoid
double-counting.
To accommodate the proposed
changes to the CAFE program, NHTSA
is proposing to adopt new definitions
into regulation, 49 CFR part 523,
‘‘Vehicle Classification.’’ Part 523 was
established by NHTSA to include its
regulatory definitions for passenger
automobiles and trucks and to guide the
agency and manufacturers in classifying
vehicles. NHTSA proposes to add a
definition in Part 523.2 defining the
characteristics that identify full size
pickup trucks. NHTSA believes that the
definition is needed to help explain to
readers which characteristics of full size
pickup truck make them eligible to gain
fuel economy improvement values
832 NHTSA is not prohibited from considering
this availability of this incentive in determining the
maximum feasible levels of stringency for the light
truck standards, because it is not one of the
statutory flexibilities enumerated in 49 U.S.C.
32902(h).
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allowed after a manufacturer meets
either a minimum penetration of
hybridized technologies or has other
technologies that significantly reduce
fuel consumption. The proposed
improvement would be available on a
per-vehicle basis for mild and strong
HEVs, as well as for other technologies
that significantly improve the efficiency
of full sized pickup trucks. The
proposed definition would specify that
trucks meeting an overall bed width and
length as well as a minimum towing or
payload capacity could be qualified as
full size pickup trucks. NHTSA is also
proposing to modify Part 523 to include
definitions for mild and strong hybrid
electric full size pickup trucks, and to
include the references in Part 533
mentioned above.
i. Pickup Truck Hybridization
One proposed incentive would
provide an adjustment to the fuel
economy of a manufacturer’s full size
pickup trucks if the manufacturer
employs certain defined hybrid
technologies on defined significant
quantities of its full size pickup trucks.
After meeting the minimum production
percentages, manufacturers would gain
an adjustment to the fuel economy
performance for each ‘‘mild’’ or
‘‘strong’’ hybrid full size pickup truck it
produces. Manufacturers producing
mild hybrid pickup trucks, as defined in
Chapter 5 of the draft Joint TSD, would
gain the incentive by applying mild
hybrid technology to at least 30 percent
of the company’s full sized pickups
produced in MY 2017, which would
increase each year up to at least 80
percent of the company’s full size
pickups produced in MY 2021, after
which point the adjustment is no longer
applicable. For strong hybrids, also
defined in Chapter 5 of the draft Joint
TSD, the strong hybrid technology must
be applied to at least 10 percent of a
company’s full sized pickup production
in each year for model years 2017–2025.
The fuel economy adjustment for each
mild hybrid full size pickup would be
a decrease in measured fuel
consumption of 0.0011gal/mi; for each
strong hybrid full size pickup, the
decrease in measured fuel consumption
would be 0.0023 gal/mi. These
adjustments are consistent with the
GHG credits under EPA’s program of 10
g/mi CO2 for mild hybrid pickups and
20 g/mi CO2 for strong hybrid pickups.
A manufacturer would then be allowed
to adjust the fuel economy performance
of its light truck fleet by converting the
benefit gained from those improvements
in accordance with the procedures
specified in 40 CFR part 600.
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ii. Performance-Based Incentive for FullSize Pickups
Another proposed incentive for full
size pickup trucks would provide an
adjustment to the fuel economy of a
manufacturer’s full sized pickup truck if
it achieves a fuel economy performance
level significantly above the CAFE target
for that footprint. This incentive
recognizes that not all manufacturers
may wish to pursue hybridization for
their pickup trucks, but still rewards
them for applying fuel-saving
technologies above and beyond what
they might otherwise do. The fuel
economy adjustment for each full size
pickup that exceeds its applicable
footprint curve target by 15 percent
would be a decrease in measured fuel
consumption of 0.0011gal/mi; for each
full size pickup that exceeds its
applicable footprint curve target by 20
percent, the decrease in measured fuel
consumption would be 0.0023 gal/mi.
These adjustments are consistent with
the GHG credits under EPA’s program of
10 g/mi CO2 and 20 g/mi CO2,
respectively, for beating the applicable
CO2 targets by 15 and 20 percent,
respectively.
The 0.0011 gal/mi performance-based
adjustment would be available for MYs
2017 to 2021, and a vehicle meeting the
requirement in a given model year
would continue to receive the credit
until MY 2021—that is, the credit
remains applicable to that vehicle
model if the target is exceeded in only
one model year—unless its fuel
consumption increases. The 0.0023 gal/
mi adjustment would be available for a
maximum of 5 years within model years
2017–2025, provided the vehicle
model’s fuel consumption does not
increase. As explained above for the
hybrid incentive, a manufacturer would
then be allowed to adjust the fuel
economy performance of its light truck
fleet by converting the benefit gained
from those improvements in accordance
with the procedures specified in 40 CFR
Part 600.
We note that in today’s analyses, the
agencies have projected that PHEV
technology is not available to large
pickups. While it is technically possible
to electrify such vehicles, there are
tradeoffs in terms of cost, electric range,
and utility that may reduce the appeal
of the vehicle to a narrower market. Due
to this consideration, the agencies have
not considered giving credit to PHEVs
for large pickup truck. However, the
agencies seek comments on this and
will give further consideration during
the final rule. Also, the agencies note
that under today’s proposal, a PHEV
that captures a sufficient proportion of
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braking energy could quality for the
HEV adjustment; alternatively, a PHEV
pickup achieving sufficiently high fuel
economy and low CO2 emission could
qualify for a performance-based
adjustment.
b. A/C Efficiency-Improving
Technologies
Air conditioning (A/C) use places
excess load on an engine, which results
in additional fuel consumption. A
number of methods related to the A/C
system components and their controls
can be used to improve A/C system
efficiencies. Starting in MY 2017, EPA
is proposing to allow manufacturers to
include fuel consumption reductions
resulting from the use of improved A/
C systems in their CAFE calculations.
This will more accurately account for
achieved real-world fuel economy
improvements due to improved A/C
technologies, and better fulfill EPCA’s
overarching purpose of energy
conservation. Manufacturers would not
be allowed to claim CAFE-related
benefits for reducing A/C leakage or
switching to an A/C refrigerant with a
lower global warming potential, because
while these improvements reduce GHGs
consistent with the purpose of the CAA,
they do not improve fuel economy and
thus are not relevant to the CAFE
program.
The improvements that manufacturers
would likely use to increase A/C
efficiency would focus primarily, but
not exclusively, on the compressor,
electric motor controls, and system
controls which reduce load on the A/C
system (such as reduced ‘‘reheat’’ of the
cooled air and increased use of recirculated cabin air).
Fuel consumption improvement
values for CAFE resulting from A/C
efficiency improvements would be
quantified using a two-step process, the
same as for the related CO2 credits for
EPA’s GHG program. First, the vehicle
with the improved A/C system would be
tested in accordance with EPA testing
guidelines, and compared with the
baseline fuel consumption value for that
vehicle. Second, the difference between
the baseline fuel consumption value and
the value for the vehicle with improved
A/C technologies would be calculated,
which would determine the fuel
consumption improvement value.
In the GHG program for MYs 2012 to
2016, EPA finalized the idle test method
for measuring CO2reductions from
improved AC systems. The idle test
method measures CO2 in grams per
minute (g/min) while the vehicle is
stationary and idling. For MYs 2017–
2025, EPA is proposing that a new test
called ‘‘A/C 17’’ replace the idle test to
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measure A/C related CO2emissions
reductions. Some aspects of the AC17
test are still being developed and
improved, but the basic procedure is
sufficiently complete for EPA to propose
it as a reporting option alternative to the
Idle Test threshold in 2014, and a
replacement for the Idle Test in 2017, as
a prerequisite for generating Efficiency
Credits. Manufacturers will use this test
to measure A/C-related CO2 emissions
from vehicles with improved A/C
systems, which would be translated to
fuel consumption to establish the ratio
between the baseline vehicle and the
improved-A/C vehicle to determine the
value of the fuel consumption
improvement. The A/C 17 test
procedure is described briefly below.
i. What is the proposed testing
approach?
The A/C 17 test is a more extensive
test than the idle test and has four
elements, including two drive cycles,
US03 and the highway fuel economy
cycle, which capture steady state and
transient operating conditions. It also
includes a solar soak period to measure
the energy required to cool down a car
that has been sitting in the sun, as well
as a pre-conditioning cycle. The A/C 17
test cycle will be able to capture
improvements in all areas related to
efficient operation of a vehicle’s A/C
system. The A/C 17 test cycle measures
CO2 emissions in grams per mile (g/mi),
and requires that baseline emissions be
measured in addition to emissions from
vehicles with improved A/C systems.
EPA is taking comment on whether the
A/C 17 test is appropriate for estimating
the effectiveness of new efficiencyimproving A/C technologies.
ii. How are fuel consumption
improvement values then estimated?
Manufacturers would run the A/C 17
test procedure on each vehicle platform
that incorporates the new technologies,
with the A/C system off and then on,
and then report these test results to the
EPA. In addition to reporting the test
results, EPA will require that
manufacturers provide detailed vehicle
and A/C system information for each
vehicle tested (e.g. vehicle class, model
type, curb weight, engine size,
transmission type, interior volume,
climate control type, refrigerant type,
compressor type, and evaporator/
condenser characteristics). For vehicle
models which manufacturers are
seeking to earn A/C related fuel
consumption improvement values, the
A/C 17 test would be run to validate
that the performance and efficiency of a
vehicle’s A/C technology is
commensurate to the level of
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improvement value that is being earned.
To determine whether the efficiency
improvements of these technologies are
being realized, the results of an A/C 17
test performed on a new vehicle model
will be compared to a ‘‘baseline’’
vehicle which does not incorporate the
efficiency-improving technologies. The
baseline vehicle is defined as one with
characteristics which are similar to the
new vehicle, only it is not equipped
with efficiency-improving technologies
(or they are de-activated).
Manufacturers then take the results of
the A/C 17 test and access a credit menu
(shown in the table below) to determine
A/C related fuel consumption
improvement values. The maximum
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value possible is limited to 0.000563
gal/mi for cars and 0.000810 gal/mi for
trucks. As an example, a manufacturer
uses two technologies listed in the table,
for which the combined improvement
value equals 0.000282 gal/mi. If the
results of the A/C 17 tests for the
baseline and vehicle with improved
A/C system demonstrates a 0.000282
gal/mi improvement, then the full fuel
consumption improvement value for
those two technologies can be taken. If
the A/C 17 test result falls short of the
improvement value for the two
technologies, then a fraction of the
improvement value may be counted in
CAFE calculations. The improvement
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value fraction is calculated in the
following way: The A/C 17 test result
for both the baseline vehicle and the
vehicle with an improved A/C system
are measured. The difference in the test
result of the baseline and the improved
vehicle is divided by the test result of
the baseline vehicle. This fraction is
multiplied by the fuel consumption
improvement value for the specific
technologies. Thus, if the A/C 17 test
yielded an improvement equal to 2⁄3 of
the summed values listed in the table,
then 2⁄3 of the summed fuel
consumption improvement values can
be counted.
BILLING CODE 4910–59–P
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As stated above, if more than one
technology is utilized by a manufacturer
for a given vehicle model, the A/C fuel
consumption improvement values can
be added, but the maximum value
possible is limited to 0.000563 gal/mi
for cars and 0.000810 gal/mi for trucks.
More A/C related fuel consumption
improvement values are discussed in
the off-cycle credits section of this
chapter. The approach for determining
the manufacturers’ adjusted fleet fuel
economy performance due to
improvements in A/C efficiency is
described in 40 CFR Part 600.
The agencies seek comment on the
proposal to allow manufacturers to
estimate fuel consumption reductions
from the use of A/C efficiencyimproving technologies and to apply
these reductions to their CAFE
calculations.
c. Off-Cycle Technologies and
Adjustments
For MYs 2012–2016, EPA provided an
optional credit for new and innovative
‘‘off-cycle’’ technologies that reduce
vehicle CO2 emissions, but for which
the CO2 reduction benefits are not
recognized under the 2-cycle test
procedure used to determine
compliance with the fleet average
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standards. The off-cycle credit option
was intended to encourage the
introduction of off-cycle technologies
that achieve real-world benefits. The offcycle credits were to be determined
using the 5-cycle methodology currently
used to determine fuel economy label
values, which EPA established to better
represent real-world factors impacting
fuel economy, including higher speeds
and more aggressive driving, colder
temperature operation, and the use of
air conditioning. A manufacturer must
determine whether the benefit of the
technology could be captured using the
5-cycle test; if this determination is
affirmative, the manufacture must
follow the 5-cycle procedures to
determine the CO2 reductions. If the
manufacturer finds that the technology
is such that the benefit is not adequately
captured using the 5-cycle approach,
then the manufacturer would have to
develop a robust methodology, subject
to EPA approval, to demonstrate the
benefit and determine the appropriate
CO2 gram per mile credit. The
demonstration program must be robust,
verifiable, and capable of demonstrating
the real-world emissions benefit of the
technology with strong statistical
significance. The non-5-cycle approach
includes an opportunity for public
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comment as part of the approval
process.
EPA has been encouraged by
automakers’ interest in off-cycle credits
since the program was finalized and
believes that extending the program to
MY 2017 and beyond may continue to
encourage automakers to invest in offcycle technologies that could have the
benefit of realizing additional
reductions in the light-duty fleet over
the longer-term. Therefore, EPA is
proposing to extend the off-cycle credits
program to 2017 and later model years.
EPA is also proposing, under its EPCA
authority, to make available a
comparable off-cycle technology
incentive under the CAFE program
beginning in MY 2017. However,
instead of manufacturers gaining credits
as done under the GHG program, a
direct adjustment would be made to the
manufacturer’s fuel economy
performance value.
Starting with MY 2017, manufacturers
may generate fuel economy
improvements by applying technologies
listed on the pre-defined and preapproved technology list provided in
Table IV–117. These credits would be
verified and approved as part of
certification, with no prior approval
process needed. This new option should
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approved technologies. For
improvements from technologies not on
the pre-defined list, EPA is proposing to
clarify the step-by-step application
process for demonstration of fuel
consumption reductions and approval.
An example of technologies that
could be used to generate off-cycle
improvements are those that reduce
electrical load and as a result, fuel
consumption. The 2-cycle test does not
require that all electrical components be
turned on during testing. Headlights, for
example, are always turned off during
testing. Turning the headlights on
during normal driving will add an
additional load on the vehicle’s
electrical system and will affect fuel
economy. More efficient electrical
systems or technologies that offset
electrical loads will have a real-world
impact on fuel economy but are not
captured in the 2-cycle test. Therefore,
technologies that reduce or offset
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significantly simplify the program for
manufacturers and provide certainty
that improvement values may be
generated through the use of pre-
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electrical loads related to the operation
or safety of the vehicle should merit
consideration for off-cycle
improvements. Reducing the electrical
load on a vehicle by 100W will result
in an average of 0.000337 gallons/mile
reduction in fuel consumption over the
course of a 2-cycle test, or 0.00042
gallons/mile over a 5-cycle test. To
determine the off-cycle benefit of certain
100W electrical load reduction
technologies, the benefit of the
technology on the 2-cycle test is
subtracted from the benefit of the
technology on the 5-cycle test. This
determines the actual benefit of the
technology not realized in the 2-cycle
test methodology, which in this case is
0.000416 gal/mi minus 0.000337 gal/mi,
or 0.000078 gal/mi. This method will
avoid double-counting the benefit of the
electrical load reduction, which is
already counted on the 2-cycle test.
Regardless of whether the off-cycle
technology fuel consumption benefit is
obtained from the table (columns 2 or 3)
above or is based on an approved testing
protocol as indicated in the preceding
example, under the CAFE program the
benefit or credit is treated as an
adjustment and subtracted from the
subject vehicle’s fuel consumption
performance value determined from the
required CAFE program 2-cycle test
results. A manufacturer would then be
allowed to adjust the fuel economy
performance of its fleets by converting
the benefit gained from those
improvements in accordance with the
procedures specified in 40 CFR Part
600.
Since one purpose of the off-cycle
improvement incentive is to encourage
market penetration of the technologies
(see 75 FR at 25438), EPA is proposing
to require minimum penetration rates
for non-hybrid based listed technologies
as a condition for generating
improvements from the list as a way to
further encourage their widespread
adoption by MY 2017 and later. At the
end of the model year for which the offcycle improvement is claimed,
manufacturers would need to
demonstrate that production of vehicles
equipped with the technologies for that
model year exceeded the percentage
thresholds in order to receive the listed
improvement. EPA proposes to set the
threshold at 10 percent of a
manufacturer’s overall combined car
and light truck production for all
technologies not specific to HEVs. 10
percent would seem to be an
appropriate threshold as it would
encourage manufacturers to develop
technologies for use on larger volume
models and bring the technologies into
the mainstream. For solar roof panels
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and electric heat circulation pumps,
which are HEV-specific, EPA is not
proposing a minimum penetration rate
threshold for credit generation. Hybrids
may be a small subset of a
manufacturer’s fleet, less than 10
percent in some cases, and EPA does
not believe that establishing a threshold
for hybrid-based technologies would be
useful and could unnecessarily
complicate the introduction of these
technologies. The agencies request
comments on applying this type of
threshold, the appropriateness of 10
percent as the threshold for listed
technologies that are not HEV-specific,
and the proposed treatment of hybridbased technologies.
Because the proposed improvements
are based on limited data, however, and
because some uncertainty is introduced
when credits are provided based on a
general assessment of off-cycle
performance as opposed to testing on
the individual vehicle models, as part of
the incentive EPA is proposing to cap
the amount of improvement a
manufacturer could generate using the
above list to 0.001125 gal/mile per year
on a combined car and truck fleet-wide
average basis. The cap would not apply
on a vehicle model basis, allowing
manufacturers the flexibility to focus
off-cycle technologies on certain vehicle
models and generate improvements for
that vehicle model in excess of 0.001125
gal/mile. If manufacturers wish to
generate improvements in excess of the
0.001125 gal/mile limit using listed
technologies, they could do so by
generating necessary data and going
through the approval process.
For more details on the testing
protocols used for determining off-cycle
technology benefits and the step-by-step
EPA review and approval process, refer
to Section III.C.5.b.iii and v. The
approach for determining a
manufacturer’s adjusted fuel economy
performance for off-cycle technologies is
described in 40 CFR Part 600. NHTSA
also proposes to incorporate references
in Part 531.6 and 533.6 to allow
manufacturers to adjust their fleet
performance for off-cycle technologies
as described above.
5. Other CAFE Enforcement Issues
a. Electronic Reporting
Pursuant to 49 CFR part 537,
manufacturers submit pre-model year
fuel economy reports to NHTSA by
December 31st prior to the model year,
and mid-model year reports by July 31st
of the model year. Manufacturers may
also provide supplemental reports
whenever changes are needed to a
previously submitted CAFE report.
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NHTSA receives both non-confidential
and confidential versions of reports, the
basic difference being the inclusion of
projected upcoming production sales
volumes in reports seeking
confidentiality. Manufacturers must
include a request for confidentiality, in
accordance with 49 CFR part 512, along
with the report for which confidential
treatment is sought.833 Manufacturers
may submit reports either in paper form
or electronically to a secure email
address, cafe@dot.gov, that allows for
the safe handling of confidential
materials. All electronic submissions
submitted to the CAFE email must be
provided in a pdf format. NHTSA added
electronic reporting to the 2012–2016
CAFE rule as an approach to simplify
reporting for manufacturers and NHTSA
alike. Currently, most manufacturers
submit both electronic and paper
reports.834
NHTSA is proposing to modify its
reporting requirements to receive all
CAFE reports in electronic format,
thereby eliminating the requirement for
paper submissions. In the revised
requirements, a manufacturer could
either submit its reports on a CD–ROM
or through the existing email
procedures. Under the proposal, the
contents of the CD must include the
manufacturer’s request for
confidentiality, the cover letter, and any
other supporting documents in a pdf
format. Any data included in the report
must be provided in a Microsoft Excel
spreadsheet format. The same approach
is also proposed for submitting
information by email. NHTSA
emphasizes that submitting reports to
the CAFE email address is completely
voluntary, but if the option is selected,
the manufacturer must follow the
normal deadline dates as specified in 49
CFR 537.5. NHTSA believes that
receiving CAFE data through electronic
reports would be a significant
improvement, improving the quality of
its CAFE data, simplifying enforcement
activities (e.g., auditing the data), and
helping to expedite the tracking and
reporting of CAFE credits. The agency
also plans to eventually develop an
XML schema for submitting CAFE
reports electronically that will available
through its Web site. Ultimately, the
XML schema would be used as part of
the new database system NHTSA plans
to construct in the future to store its
833 Pursuant to § 537.12, NHTSA’s Office of Chief
Counsel normally grants confidentiality to reports
with projected production sales volumes until after
the model year ends.
834 For model year 2011, NHTSA received
electronic mid-model year reports from 12
manufacturers. Each of the manufacturers also
provided hardcopy reports.
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CAFE data. NHTSA seeks comments on
the appropriateness of ending paper
submissions, as well as information on
any other electronic formats that should
be considered for submissions.
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b. Reporting of How a Vehicle Is
Classified as a Light Truck
As part of the reporting provisions in
49 CFR part 537, NHTSA requires
manufacturers to provide information
on some, but not all, of the functions
and features that a manufacturer uses to
classify an automobile as a light truck.
The required data is distributed
throughout the report, making it
difficult for the agency to clearly and
easily determine exactly what functions
or features a manufacturer is actually
using to make this determination. For
example, related to the functions
specified in 49 CFR 523.5(a) and
discussed in Section IV.H above,
manufacturers must provide the
vehicles’ passenger and cargo carrying
volumes,835 and identify whether their
vehicles are equipped with three rows
of seats that can be removed or folded
flat for expanded cargo carrying
purposes or if the vehicle includes
temporary living quarters.836
Manufacturers are not required to
identify whether the vehicles can
transport more than 10 persons or if the
vehicles are equipped with an open
cargo bed. Related to the functions
specified in Section 523.5(b), for each
model type classified as an automobile
capable of off-highway operation,
manufacturers are required to provide
the five suspension parameter
measurements and indicate the
existence of 4-wheel drive,837 but they
are not required to identify a vehicle’s
GVWR, which is necessary for off-road
determination when the vehicle is not
equipped with 4-wheel drive. NHTSA
proposes to eliminate the language
requesting vehicle attribute information
in Sections 537.7(c)(4)(xvi)(A)(3) to (6)
and (B)(3) to (6) and to relocate that
language into a revised Section
537.7(c)(5) to include identification of
all the functions and features that can be
used by a manufacturer for making a
light truck classification determination.
By incorporating all the requirements
into one section, the agency believes the
classification process will become
significantly more accurate and
efficient. NHTSA seeks comment on this
proposed change.
835 49
CFR 537.7(c)(4)(xvi)(B).
CFR 537.7(c)(4)(xvii) and (xviii).
837 49 CFR 537.7(c)(5).
836 49
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c. Base Tire Definition
Beginning in model year 2011,
manufacturers of light trucks and
passenger cars are required to use
vehicle footprint to determine the CAFE
standards applicable to each of their
vehicle fleets. To determine the
appropriate footprint-based standards, a
manufacturer must calculate each
vehicle’s footprint value, which is the
product of the vehicle track width and
wheelbase dimensions. Vehicle track
width dimensions are determined with
a vehicle equipped with ‘‘base tires,’’ 838
which NHTSA defines as the tire
specified as standard equipment by a
manufacturer on each vehicle
configuration of a model type.
NHTSA is concerned that the
definition for ‘‘base tire’’ is
insufficiently descriptive, and may lead
to inconsistencies among
manufacturers’ base tire selections. In
meetings relating to CAFE enforcement,
manufacturers have stated that various
approaches in selecting base tires exist
due to differences in the tires
considered as standard equipment.839
Standard equipment is defined by EPA
regulation as those features or
equipment which are marketed on a
vehicle over which the purchaser can
exercise no choice,840 but NHTSA
regulations have no comparable
definition. NHTSA considered whether
adding a definition for ‘‘standard
equipment’’ would clarify and
strengthen the NHTSA regulations, but
some manufacturers indicated that the
definition of standard equipment
provided by EPA does not effectively
prevent differences in their
interpretations. Some manufacturers, for
example, view the base tire as the tire
equipped as standard equipment for
each trim level of a model type, as each
trim level has standard equipment over
which the purchaser cannot exercise a
choice. This view can allow multiple
base tires and footprint values within
each model type: A manufacturer may
have two vehicle configurations for a
particular model type, with each
configuration having three trim levels
with different standard tires sizes. In
that scenario, the model type could have
6 different trim level vehicle
configurations, each having three or
more unique footprint values with
slightly different targets. The additional
target fuel economy values could allow
838 See
49 CFR 523.2.
has confirmed these differences in
approach for the designating base tire exist through
review of manufacturer-submitted CAFE reports.
840 In the EPA regulation 40 CFR 600.002–08,
standard equipment means those features or
equipment which are marketed on a vehicle over
which the purchaser can exercise no choice.
839 NHTSA
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the manufacturer to reduce its required
fleet standard despite a vehicle model
type not having any inherent differences
in physical feature between vehicle
configurations other than the tire sizes.
Other manufacturers, in contrast, avoid
designating multiple base tires and
choose the standard tire equipped on
the most basic vehicle configuration of
a model type, even if the most basic
vehicle is rarely actually sold. In this
scenario, the tires being used to derive
a manufacturer fleet standard are not the
same size tire equipped on the
representative number of vehicles being
sold. Yet others designate the base tire
as the tire most commonly installed on
a model type having the highest
production volume. This approach most
realistically reflects the manufacturer’s
sales production fleet.
To attempt to reconcile the varied
approaches for designating base tires,
NHTSA is proposing to modify its
definition for base tire in 49 CFR 523.2.
The proposed modification changes the
definition of the base tire by dropping
the reference to ‘‘standard equipment’’
and adding a reference to the ‘‘the tire
installed by the vehicle manufacturer
that is used on the highest production
sales volume of vehicles within the
configuration.’’ This modification
should ensure that the tires installed on
the vehicle most commonly sold within
a vehicle configuration become the basis
for setting a manufacturer’s fuel
economy standards. It is NHTSA’s goal
that a change to the definition of base
tire for purposes of CAFE will help to
reduce inconsistencies and confusion
for both the agency and the
manufacturers. NHTSA seeks comments
on this approach, as well as other
approaches that could be used for
selecting the base tire(s).
d. Confirming Target and Fleet
Standards
NHTSA requires manufacturers to
provide reports containing fleet and
model type CAFE standards and
projections of expected performance
results for each model year.841 The
footprint, track width and wheelbase
values are provided for each vehicle
configuration within the model types
making up the manufacturer’s fleets,
along with other model type-specific
information. Because this information is
organized by vehicle configuration,
instead of by each vehicle with a unique
model type and footprint combination,
it is not in the format needed to
calculate performance standards. EPA,
in contrast, requires manufacturers to
provide all of the information necessary
841 49
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to calculate footprint values and CAFE
standards. EPA provides an additional
calculator (in the form of an Excel
spreadsheet), which all manufacturers
use and submit as part of their end-ofthe-year reports, which includes the
appropriate breakdown of footprint
values for calculating standards.
Since NHTSA only requires a
breakdown of footprint values by
vehicle configurations, instead of by
each unique model type and footprint
combination, NHTSA is currently
unable to verify manufacturers’ reported
target standards. By standardizing with
EPA’s requirements for reported data,
NHTSA would both simplify
manufacturer reporting efforts and gain
the necessary information for
calculating attribute-based CAFE
standards. Therefore, NHTSA is
proposing to eliminate the language
requesting information in
§ 537.7(c)(4)((xvi)(A)(3) through (6) and
(B)(3) through (6), and to relocate that
language into a revised § 537.7(b)(3).
NHTSA requests comment on this
proposed change.
J. Regulatory Notices and Analyses
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1. Executive Order 12866, Executive
Order 13563, and DOT Regulatory
Policies and Procedures
Executive Order 12866, ‘‘Regulatory
Planning and Review’’ (58 FR 51735,
Oct. 4, 1993), as amended by Executive
Order 13563, ‘‘Improving Regulation
and Regulatory Review’’ (76 FR 3821,
Jan. 21, 2011), 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.
The rulemaking proposed in this
NPRM will be economically significant
if adopted. Accordingly, OMB reviewed
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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
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.
2. National Environmental Policy Act
Concurrently with this NPRM,
NHTSA is releasing a Draft
Environmental Impact Statement (Draft
EIS), pursuant to the National
Environmental Policy Act, 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. NHTSA prepared the Draft EIS to
analyze and disclose the potential
environmental impacts of the proposed
CAFE standards and a range of
alternatives. The Draft EIS analyzes
direct, indirect, and cumulative impacts
and analyzes impacts in proportion to
their significance.
Because of the link between the
transportation sector and GHG
emissions, the Draft EIS considers the
possible impacts on climate and global
climate change in the analysis of the
effects of these proposed CAFE
standards. The Draft EIS also describes
potential environmental impacts to a
variety of resources. Resources that may
be affected by the proposed action and
alternatives include water resources,
biological resources, land use and
development, safety, hazardous
materials and regulated wastes, noise,
socioeconomics, fuel and energy use, air
quality, and environmental justice.
These resource areas are assessed
qualitatively in the Draft EIS.
For additional information on
NHTSA’s NEPA analysis, please see the
Draft EIS.
3. Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility
Act (5 U.S.C. 601 et seq., as amended by
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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 of 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 nineteen large single stage
motor vehicle manufacturers.842 Based
on our preliminary assessment, the
proposal would also affect a total of
about 21 entities that fit the Small
Business Administration’s criteria for a
small business. 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. There are about 4 small
manufacturers, including 3 electric
vehicle manufacturers, 8 independent
commercial importers, and 9 alternative
fuel vehicle converters in the passenger
car and light truck market which are
small businesses. We believe that the
rulemaking would not have a significant
economic impact on these small vehicle
manufacturers because under 49 CFR
part 525, passenger car manufacturers
making fewer than 10,000 vehicles per
year can petition NHTSA to have
alternative standards set for those
manufacturers. Manufacturers that
produce only electric vehicles, or that
modify vehicles to make them electric
or some other kind of dedicated
alternative fuel vehicle, will have
average fuel economy values far beyond
842 BMW, Daimler (Mercedes), Fiat/Chrysler
(which also includes Ferrari and Maserati for CAFE
compliance purposes), Ford, Geely (Volvo), General
Motors, Honda, Hyundai, Kia, Lotus, Mazda,
Mitsubishi, Nissan, Porsche, Subaru, Suzuki, Tata
(Jaguar Land Rover), Toyota, and Volkswagen/Audi.
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those proposed today, so we would not
expect them to need a petition for relief.
A number of other small vehicle
manufacturers already petition the
agency for relief under Part 525. If the
standard is raised, it has no meaningful
impact on those manufacturers, because
they are expected to still go through the
same process to petition for relief. Given
that there is already a mechanism for
handling small businesses, which is the
purpose of the Regulatory Flexibility
Act, a regulatory flexibility analysis was
not prepared, but we welcome
comments on this issue for the final
rule.
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4. 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.’’ 843 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.
NHTSA solicits comment on this
proposed action from State and local
officials. The agency believes that it is
unnecessary to address the question of
preemption further at this time because
of the consistent and coordinated
Federal standards that would apply
nationally under the proposed National
Program.
5. Executive Order 12988 (Civil Justice
Reform)
Pursuant to Executive Order 12988,
‘‘Civil Justice Reform,’’ 844 NHTSA has
considered whether this rulemaking
would have any retroactive effect. This
proposed rule does not have any
retroactive effect.
6. Unfunded Mandates Reform Act
Section 202 of the Unfunded
Mandates Reform Act of 1995 (UMRA)
843 64
844 61
FR 43255 (Aug. 10, 1999).
FR 4729 (Feb. 7, 1996).
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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
(adjusted for inflation with base year of
1995). Adjusting this amount by the
implicit gross domestic product price
deflator for 2009 results in $134 million
(109.729/81.606 = 1.34). 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 of 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 $134 million annually, but it will
result in the expenditure of that
magnitude by vehicle manufacturers
and/or their suppliers. In developing
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 based on its
consideration and balancing of relevant
factors, and has tentatively concluded
that the proposed fuel economy
standards are the maximum feasible
standards for the passenger car and light
truck fleets for MYs 2017–2025 in light
of the statutory considerations.
7. Regulation Identifier Number
The Department of Transportation
assigns a regulation identifier number
(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.
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8. Executive Order 13045
Executive Order 13045 845 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 foreseeable alternatives
considered by us.
Chapter 5 of NHTSA’s DEIS notes that
breathing PM can cause respiratory
ailments, heart attack, and arrhythmias
(Dockery et al. 1993, Samet et al. 2000,
Pope et al. 1995, 2002, 2004, Pope and
Dockery 2006, Dominici et al. 2006,
Laden et al. 2006, all in Ebi et al. 2008).
Populations at greatest risk could
include children, the elderly, and those
with heart and lung disease, diabetes
(Ebi et al. 2008), and high blood
¨
pressure (Kunzli et al. 2005, in Ebi et al.
2008). Chronic exposure to PM could
decrease lifespan by 1 to 3 years (Pope
2000, in American Lung Association
2008). Increasing PM concentrations are
expected to have a measurable adverse
impact on human health (Confalonieri
et al. 2007).
Additionally, the DEIS notes that
substantial morbidity and childhood
mortality has been linked to water- and
food-borne diseases. Climate change is
projected to alter temperature and the
hydrologic cycle through changes in
precipitation, evaporation,
transpiration, and water storage. These
changes, in turn, potentially affect
water-borne and food-borne diseases,
such as salmonellosis, campylobacter,
leptospirosis, and pathogenic species of
vibrio. They also have a direct impact
on surface water availability and water
quality. It has been estimated that more
than 1 billion people in 2002 did not
have access to adequate clean water
(McMichael et al. 2003, in Epstein et al.
2006). Increased temperatures, greater
evaporation, and heavy rain events have
been associated with adverse impacts on
drinking water through increased
waterborne diseases, algal blooms, and
toxins (Chorus and Bartram 1999, Levin
et al. 2002, Johnson and Murphy 2004,
all in Epstein et al. 2006). A seasonal
signature has been associated with
water-borne disease outbreaks (EPA
2009b). In the United States, 68 percent
of all water-borne diseases between
1948 and 1994 were observed after
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heavy rainfall events (Curriero et al.
2001a, in Epstein et al. 2006).
Climate change could further impact
a pathogen by directly affecting its
lifecycle (Ebi et al. 2008). The global
increase in the frequency, intensity, and
duration of red tides could be linked to
local impacts already associated with
climate change (Harvell et al. 1999, in
Epstein et al. 2006); toxins associated
with red tide directly affect the nervous
system (Epstein et al. 2006).
Many people do not report or seek
medical attention for their ailments of
water-borne or food-borne diseases;
hence, the number of actual cases with
these diseases is greater than clinical
records demonstrate (Mead et al. 1999,
in Ebi et al. 2008). Many of the
gastrointestinal diseases associated with
water-borne and food-borne diseases
can be self-limiting; however,
vulnerable populations include young
children, those with a compromised
immune system, and the elderly.
Thus, as detailed in the DEIS, NHTSA
has evaluated the environmental,
health, and safety effects of the
proposed rule on children. The DEIS
also explains why the proposed
regulation is preferable to other
potentially effective and reasonably
foreseeable alternatives considered by
the agency.
9. 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.846
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
consensus standards, we are required by
the Act to provide Congress, through
OMB, an explanation of the reasons for
not using such standards.
There are currently no voluntary
consensus standards relevant to today’s
proposed CAFE standards.
10. Executive Order 13211
Executive Order 13211 847 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
(OIRA) as a significant regulatory 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 foreseeable 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.
11. 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.
12. 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?
• Are the requirements in the rule
clearly stated?
• Does the rule contain technical
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.
13. 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 (65 FR
19477–78, April 11, 2000) or you may
visit https://www.dot.gov/privacy.html.
List of Subjects
40 CFR Part 85
Confidential business information,
Imports, Labeling, Motor vehicle
pollution, Reporting and recordkeeping
requirements, Research, Warranties.
40 CFR Part 86
Administrative practice and
procedure, Confidential business
information, Incorporation by reference,
Labeling, Motor vehicle pollution,
Reporting and recordkeeping
requirements.
40 CFR Part 600
Administrative practice and
procedure, Electric power, Fuel
economy, Incorporation by reference,
Labeling, Reporting and recordkeeping
requirements.
49 CFR Parts 523, 531, and 533
Fuel Economy.
49 CFR Parts 536 and 537
Fuel economy, Reporting and
recordkeeping requirements.
Environmental Protection Agency
40 CFR Chapter I
For the reasons set forth in the
preamble, the Environmental Protection
Agency proposes to amend parts 85, 86,
and 600 of title 40, Chapter I of the Code
of Federal Regulations as follows:
PART 85—CONTROL OF AIR
POLLUTION FROM MOBILE SOURCES
1. The authority citation for part 86
continues to read as follows:
Authority: 42 U.S.C. 7401–7671q.
Subpart F—[Amended]
2. Section 85.525 is amended by
adding paragraph (a)(2)(i)(D) to read as
follows:
§ 85.525
*
846 15
U.S.C. 272.
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Applicable standards.
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(a) * * *
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(2) * * *
(i) * * *
(D) Optionally, compliance with
greenhouse gas emission requirements
may be demonstrated by comparing the
sum of CH4 plus N2O plus CO2
emissions from the before fuel
conversion FTP results to the after fuel
conversion FTP results. This
comparison is based on test results from
the emission data vehicle (EDV) from
the conversion test group at issue. The
summation of the post fuel conversion
test results must be lower than the
summation of the before conversion
greenhouse gas emission results. CO2
emissions are calculated as specified in
40 CFR 600.113–12. CH4 and N2O
emissions, before and after fuel
conversion, are adjusted by applying
multiplicative factors of 25 and 298,
respectively, to account for their
increased global warming potential. If
statements of compliance are applicable
and accepted in lieu of measuring N2O,
as permitted by EPA regulation, the
comparison of the greenhouse gas
results also need not measure or include
N2O in the before and after emission
comparisons.
*
*
*
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PART 86—CONTROL OF EMISSIONS
FROM NEW AND IN–USE HIGHWAY
VEHICLES AND ENGINES
3. The authority citation for part 86
continues to read as follows:
Authority: 42 U.S.C. 7401–7671q.
4. Section 86.1 is revised to read as
follows:
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§ 86.1
Reference materials.
(a) Certain material is incorporated by
reference into this part with the
approval of the Director of the Federal
Register under 5 U.S.C. 552(a) and 1
CFR part 51. To enforce any edition
other than that specified in this section,
the Environmental Protection Agency
must publish a notice of the change in
the Federal Register and the material
must be available to the public. All
approved material is available for
inspection at U.S. EPA, Air and
Radiation Docket and Information
Center, 1301 Constitution Ave. NW.,
Room B102, EPA West Building,
Washington, DC 20460, (202) 202–1744,
and is available from the sources listed
below. It is also available for inspection
at the National Archives and Records
Administration (NARA). For
information on the availability of this
material at NARA, call (202) 741–6030,
or go to: https://www.archives.gov/
federal_register/
code_of_federal_regulations/
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ibr_locations.html and is available from
the sources listed below:
(b) American Society for Testing and
Materials, 100 Barr Harbor Drive, P.O.
Box C700, West Conshohocken, PA,
19428–2959, (610) 832–9585, https://
www.astm.org/.
(1) ASTM D 975–04c, Standard
Specification for Diesel Fuel Oils, IBR
approved for §§ 86.1910, 86.213–11.
(2) ASTM D1945–91, Standard Test
Method for Analysis of Natural Gas by
Gas Chromatography, IBR approved for
§§ 86.113–94, 86.513–94, 86.1213–94,
86.1313–94.
(3) ASTM D2163–91, Standard Test
Method for Analysis of Liquefied
Petroleum (LP) Gases and Propane
Concentrates by Gas Chromatography,
IBR approved for §§ 86.113–94,
86.1213–94, 86.1313–94.
(4) ASTM D2986–95a, Reapproved
1999, Standard Practice for Evaluation
of Air Assay Media by the
Monodisperse DOP (Dioctyl Phthalate)
Smoke Test, IBR approved for
§§ 86.1310–2007.
(5) ASTM D5186–91, Standard Test
Method for Determination of Aromatic
Content of Diesel Fuels by Supercritical
Fluid Chromatography, IBR approved
for §§ 86.113–07, 86.1313–91, 86.1313–
94, 86.1313–98, 1313–2007.
(6) ASTM E29–67, Reapproved 1980,
Standard Recommended Practice for
Indicating Which Places of Figures Are
To Be Considered Significant in
Specified Limiting Values, IBR
approved for § 86.1105–87.
(7) ASTM E29–90, Standard Practice
for Using Significant Digits in Test Data
to Determine Conformance with
Specifications, IBR approved for
§§ 86.609–84, 86.609–96, 86.609–97,
86.609–98, 86.1009–84, 86.1009–96,
86.1442, 86.1708–99, 86.1709–99,
86.1710–99, 86.1728–99.
(8) ASTM E29–93a, Standard Practice
for Using Significant Digits in Test Data
to Determine Conformance with
Specifications, IBR approved for
§§ 86.098–15, 86.004–15, 86.007–11,
86.007–15, 86.1803–01, 86.1823–01,
86.1824–01, 86.1825–01, 86.1837–01.
(9) ASTM F1471–93, Standard Test
Method for Air Cleaning Performance of
a High-Efficiency Particulate Air-Filter
System, IBR approved § 86.1310–2007.
(10) ASTM E903–96, Standard Test
Method for Solar Absorptance,
Reflectance, and Transmittance of
Materials Using Integrating Spheres
(Withdrawn 2005), IBR approved for
§ 86.1866–12.
(11) ASTM E1918–06, Standard Test
Method for Measuring Solar Reflectance
of Horizontal and Low-Sloped Surfaces
in the Field, IBR approved for
§ 86.1866–12.
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(12) ASTM C1549–09, Standard Test
Method for Determination of Solar
Reflectance Near Ambient Temperature
Using a Portable Solar Reflectometer
(2009) IBR approved for § 86.1866–12.
(c) Society of Automotive Engineers,
400 Commonwealth Dr., Warrendale,
PA 15096–0001, (877) 606–7323 (U.S.
and Canada) or (724) 776–4970 (outside
the U.S. and Canada), https://
www.sae.org.
(1) SAE J1151, December 1991,
Methane Measurement Using Gas
Chromatography, 1994 SAE
Handbook—SAE International
Cooperative Engineering Program,
Volume 1: Materials, Fuels, Emissions,
and Noise; Section 13 and page 170
(13.170), IBR approved for §§ 86.111–94;
86.1311–94.
(2) SAE J1349, June 1990, Engine
Power Test Code—Spark Ignition and
Compression Ignition, IBR approved for
§§ 86.094–8, 86.096–8.
(3) SAE J1850, July 1995, Class B Data
Communication Network Interface, IBR
approved for §§ 86.099–17, 86.1806–01.
(4) SAE J1850, Revised May 2001,
Class B Data Communication Network
Interface, IBR approved for §§ 86.005–
17, 86.007–17, 86.1806–04, 86.1806–05.
(5) SAE J1877, July 1994,
Recommended Practice for Bar-Coded
Vehicle Identification Number Label,
IBR approved for §§ 86.095–35,
86.1806–01.
(6) SAE J1892, October 1993,
Recommended Practice for Bar-Coded
Vehicle Emission Configuration Label,
IBR approved for §§ 86.095–35,
86.1806–01.
(7) SAE J1930, Revised May 1998,
Electrical/Electronic Systems Diagnostic
Terms, Definitions, Abbreviations, and
Acronyms, IBR approved for §§ 86.096–
38, 86.004–38, 86.007–38, 86.010–38,
86.1808–01, 86.1808–07.
(8) SAE J1930, Revised April 2002,
Electrical/Electronic Systems Diagnostic
Terms, Definitions, Abbreviations, and
Acronyms—Equivalent to ISO/TR
15031–2: April 30, 2002, IBR approved
for §§ 86.005–17, 86.007–17, 86.010–18,
86.1806–04, 86.1806–05.
(9) SAE J1937, November 1989,
Engine Testing with Low Temperature
Charge Air Cooler Systems in a
Dynamometer Test Cell, IBR approved
for §§ 86.1330–84, 86.1330–90.
(10) SAE J1939, Revised October
2007, Recommended Practice for a
Serial Control and Communications
Vehicle Network, IBR approved for
§§ 86.010–18.
(11) SAE J1939–11, December 1994,
Physical Layer—250K bits/s, Shielded
Twisted Pair, IBR approved for
§§ 86.005–17, 86.1806–05.
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(12) SAE J1939–11, Revised October
1999, Physical Layer—250K bits/s,
Shielded Twisted Pair, IBR approved for
§§ 86.005–17, 86.007–17, 86.1806–04,
86.1806–05.
(13) SAE J1939–13, July 1999, OffBoard Diagnostic Connector, IBR
approved for §§ 86.005–17, 86.007–17,
86.1806–04, 86.1806–05.
(14) SAE J1939–13, Revised March
2004, Off-Board Diagnostic Connector,
IBR approved for § 86.010–18.
(15) SAE J1939–21, July 1994, Data
Link Layer, IBR approved for §§ 86.005–
17, 86.1806–05.
(16) SAE J1939–21, Revised April
2001, Data Link Layer, IBR approved for
§§ 86.005–17, 86.007–17, 86.1806–04,
86.1806–05.
(17) SAE J1939–31, Revised December
1997, Network Layer, IBR approved for
§§ 86.005–17, 86.007–17, 86.1806–04,
86.1806–05.
(18) SAE J1939–71, May 1996, Vehicle
Application Layer, IBR approved for
§§ 86.005–17, 86.1806–05.
(19) SAE J1939–71, Revised August
2002, Vehicle Application Layer—
J1939–71 (through 1999), IBR approved
for §§ 86.005–17, 86.007–17, 86.1806–
04, 86.1806–05.
(20) SAE J1939–71, Revised January
2008, Vehicle Application Layer
(Through February 2007), IBR approved
for § 86.010–38.
(21) SAE J1939–73, February 1996,
Application Layer—Diagnostics, IBR
approved for §§ 86.005–17, 86.1806–05.
(22) SAE J1939–73, Revised June
2001, Application Layer—Diagnostics,
IBR approved for §§ 86.005–17, 86.007–
17, 86.1806–04, 86.1806–05.
(23) SAE J1939–73, Revised
September 2006, Application Layer—
Diagnostics, IBR approved for
§§ 86.010–18, 86.010–38.
(24) SAE J1939–81, July 1997,
Recommended Practice for Serial
Control and Communications Vehicle
Network Part 81—Network
Management, IBR approved for
§§ 86.005–17, 86.007–17, 86.1806–04,
86.1806–05.
(25) SAE J1939–81, Revised May
2003, Network Management, IBR
approved for § 86.010–38.
(26) SAE J1962, January 1995,
Diagnostic Connector, IBR approved for
§§ 86.099–17, 86.1806–01.
(27) SAE J1962, Revised April 2002,
Diagnostic Connector Equivalent to ISO/
DIS 15031–3; December 14, 2001, IBR
approved for §§ 86.005–17, 86.007–17,
86.010–18, 86.1806–04, 86.1806–05.
(28) SAE J1978, Revised April 2002,
OBD II Scan Tool—Equivalent to ISO/
DIS 15031–4; December 14, 2001, IBR
approved for §§ 86.005–17, 86.007–17,
86.010–18, 86.1806–04, 86.1806–05.
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(29) SAE J1979, July 1996, E/E
Diagnostic Test Modes, IBR approved
for §§ 86.099–17, 86.1806–01.
(30) SAE J1979, Revised September
1997, E/E Diagnostic Test Modes, IBR
approved for §§ 86.096–38, 86.004–38,
86.007–38, 86.010–38, 86.1808–01,
86.1808–07.
(31) SAE J1979, Revised April 2002,
E/E Diagnostic Test Modes—Equivalent
to ISO/DIS 15031–5; April 30, 2002, IBR
approved for §§ 86.099–17, 86.005–17,
86.007–17, 86.1806–01, 86.1806–04,
86.1806–05.
(32) SAE J1979, Revised May 2007,
(R) E/E Diagnostic Test Modes, IBR
approved for § 86.010–18, 86.010–38.
(33) SAE J2012, July 1996,
Recommended Practice for Diagnostic
Trouble Code Definitions, IBR approved
for §§ 86.099–17, 86.1806–01.
(34) SAE J2012, Revised April 2002,
(R) Diagnostic Trouble Code Definitions
Equivalent to ISO/DIS 15031–6: April
30, 2002, IBR approved for §§ 86.005–
17, 86.007–17, 86.010–18, 86.1806–04,
86.1806–05.
(35) SAE J2284–3, May 2001, High
Speed CAN (HSC) for Vehicle
Applications at 500 KBPS, IBR
approved for §§ 86.096–38, 86.004–38,
86.007–38, 86.010–38, 86.1808–01,
86.1808–07.
(36) SAE J2403, Revised August 2007,
Medium/Heavy-Duty E/E Systems
Diagnosis Nomenclature—Truck and
Bus, IBR approved for §§ 86.007–17,
86.010–18, 86.010–38, 86.1806–05.
(37) SAE J2534, February 2002,
Recommended Practice for Pass-Thru
Vehicle Programming, IBR approved for
§§ 86.096–38, 86.004–38, 86.007–38,
86.010–38, 86.1808–01, 86.1808–07.
(38) SAE J2534–1, Revised December
2004, (R) Recommended Practice for
Pass-Thru Vehicle Programming, IBR
approved for § 86.010–38.
(39) SAE J2064, Revised December
2005, R134a Refrigerant Automotive
Air-Conditioned Hose, IBR approved for
§ 86.166–12.
(40) SAE J2765, October, 2008,
Procedure for Measuring System COP
[Coefficient of Performance] of a Mobile
Air Conditioning System on a Test
Bench, IBR approved for § 86.1866–12.
(41) SAE J1711, Recommended
Practice for Measuring the Exhaust
Emissions and Fuel Economy of HybridElectric Vehicles, Including Plug-In
Hybrid Vehicles, June 2010, IBR
approved for § 86.1811–04(n).
(42) SAE J1634, Electric Vehicle
Energy Consumption and Range Test
Procedure, Cancelled October 2002, IBR
approved for § 86.1811–04(n).
(43) SAE J1100, November, 2009,
Motor Vehicle Dimensions, IBR
approved for § 86.1866–12(d).
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(44) SAE J2064, Revised December
2005, R134a Refrigerant Automotive
Air-Conditioned Hose, IBR approved for
§ 86.166–12(d).
(d) American National Standards
Institute, 25 W 43rd Street, 4th Floor,
New York, NY 10036, (212) 642–4900,
https://www.ansi.org.
(1) ANSI/AGA NGV1–1994, Standard
for Compressed Natural Gas Vehicle
(NGV) Fueling Connection Devices, IBR
approved for §§ 86.001–9, 86.004–9,
86.098–8, 86.099–8, 86.099–9, 86.1810–
01.
(2) [Reserved]
(e) California Air Resources Board,
(916) 322–2884, https://www.arb.ca.gov.
(1) California Regulatory
Requirements Applicable to the ‘‘LEV
II’’ Program, including:
(i) [Reserved]
(ii) California Non-Methane Organic
Gas Test Procedures, August 5, 1999,
IBR approved for §§ 86.1803–01,
86.1810–01, 86.1811–04.
(2) California Regulatory
Requirements Applicable to the
National Low Emission Vehicle
Program, October 1996, IBR approved
for §§ 86.113–04, 86.612–97, 86.1012–
97, 86.1702–99, 86.1708–99, 86.1709–
99, 86.1717–99, 86.1735–99, 86.1771–
99, 86.1775–99, 86.1776–99, 86.1777–
99, Appendix XVI, Appendix XVII.
(3) California Regulatory
Requirements known as On-board
Diagnostics II (OBD–II), Approved on
April 21, 2003, Title 13, California Code
Regulations, Section 1968.2,
Malfunction and Diagnostic System
Requirements for 2004 and Subsequent
Model-Year Passenger Cars, Light-Duty
Trucks, and Medium-Duty Vehicles and
Engines (OBD–II), IBR approved for
§ 86.1806–05.
(4) California Regulatory
Requirements known as On-board
Diagnostics II (OBD–II), Approved on
November 9, 2007, Title 13, California
Code Regulations, Section 1968.2,
Malfunction and Diagnostic System
Requirements for 2004 and Subsequent
Model-Year Passenger Cars, Light-Duty
Trucks, and Medium-Duty Vehicles and
Engines (OBD–II), IBR approved for
§§ 86.007–17, 86.1806–05.
(f) International Organization for
Standardization, Case Postale 56, CH–
1211 Geneva 20, Switzerland, 41–22–
749–01–11, https://www.iso.org.
(1) ISO 9141–2, February 1, 1994,
Road vehicles—Diagnostic systems—
Part 2: CARB requirements for
interchange of digital information, IBR
approved for §§ 86.099–17, 86.005–17,
86.007–17, 86.1806–01, 86.1806–04,
86.1806–05.
(2) ISO 14230–4:2000(E), June 1, 2000,
Road vehicles—Diagnostic systems—
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KWP 2000 requirements for Emissionrelated systems, IBR approved for
§§ 86.099–17, 86.005–17, 86.007–17,
86.1806–01, 86.1806–04, 86.1806–05.
(3) ISO 15765–4.3:2001, December 14,
2001, Road Vehicles—Diagnostics on
Controller Area Networks (CAN)—Part
4: Requirements for emissions-related
systems, IBR approved for §§ 86.005–17,
86.007–17, 86.1806–04, 86.1806–05.
(4) ISO 15765–4:2005(E), January 15,
2005, Road Vehicles—Diagnostics on
Controller Area Networks (CAN)—Part
4: Requirements for emissions-related
systems, IBR approved for §§ 86.007–17,
86.010–18, 86.1806–05.
(5) ISO 13837:2008, May 30, 2008,
Road Vehicles—Safety glazing
materials. Method for the determination
of solar transmittance, IBR approved for
§ 86.1866–12.
(g) Government Printing Office,
Washington, DC 20402, (202) 512–1800
https://www.nist.gov.
(1) NIST Special Publication 811,
1995 Edition, Guide for the Use of the
International System of Units (SI), IBR
approved for § 86.1901.
(2) [Reserved]
(h) Truck and Maintenance Council,
950 North Glebe Road, Suite 210,
Arlington, VA 22203–4181, (703) 838–
1754.
(1) TMC RP 1210B, Revised June
2007,
WINDOWSTMCOMMUNICATION API,
IBR approved for § 86.010–38.
(2) [Reserved]
(i) U.S. EPA, Office of Air and
Radiation, 2565 Plymouth Road, Ann
Arbor, MI 48105, https://www.epa.gov:
(1) EPA Vehicle Simulation Tool,
Version x.x, November 2011; IBR
approved for § 86.1866–12. The
computer code for this model is
available as noted in paragraph (a) of
this section. A working version of this
software is also available for download
at https://www.epa.gov/otaq/climate/
ldst.htm.
(2) [Reserved]
Subpart B—[Amended]
5. Section 86.111–94 is amended by
revising paragraph (b) introductory text
to read as follows:
§ 86.111–94
system.
Exhaust gas analytical
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(b) Major component description. The
exhaust gas analytical system, Figure
B94–7, consists of a flame ionization
detector (FID) (heated, 235 °±15 °F
(113 °±8 °C) for methanol-fueled
vehicles) for the determination of THC,
a methane analyzer (consisting of a gas
chromatograph combined with a FID)
for the determination of CH4,non-
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dispersive infrared analyzers (NDIR) for
the determination of CO and CO2, a
chemiluminescence analyzer (CL) for
the determination of NOX, and an
analyzer meeting the requirements
specified in 40 CFR 1065.275 for the
determination of N2O. A heated flame
ionization detector (HFID) is used for
the continuous determination of THC
from petroleum-fueled diesel-cycle
vehicles (may also be used with
methanol-fueled diesel-cycle vehicles),
Figure B94–5 (or B94–6). The analytical
system for methanol consists of a gas
chromatograph (GC) equipped with a
flame ionization detector. The analysis
for formaldehyde is performed using
high-pressure liquid chromatography
(HPLC) of 2,4-dinitrophenylhydrazine
(DNPH) derivatives using ultraviolet
(UV) detection. The exhaust gas
analytical system shall conform to the
following requirements:
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6. Section 86.135–12 is amended by
revising paragraph (a) to read as follows:
§ 86.135–12
Dynamometer procedure.
(a) Overview. The dynamometer run
consists of two tests, a ‘‘cold’’ start test,
after a minimum 12-hour and a
maximum 36-hour soak according to the
provisions of §§ 86.132 and 86.133, and
a ‘‘hot’’ start test following the ‘‘cold’’
start by 10 minutes. Engine startup
(with all accessories turned off),
operation over the UDDS, and engine
shutdown make a complete cold start
test. Engine startup and operation over
the first 505 seconds of the driving
schedule complete the hot start test. The
exhaust emissions are diluted with
ambient air in the dilution tunnel as
shown in Figure B94–5 and Figure B94–
6. A dilution tunnel is not required for
testing vehicles waived from the
requirement to measure particulates. Six
particulate samples are collected on
filters for weighing; the first sample plus
backup is collected during the first 505
seconds of the cold start test; the second
sample plus backup is collected during
the remainder of the cold start test
(including shutdown); the third sample
plus backup is collected during the hot
start test. Continuous proportional
samples of gaseous emissions are
collected for analysis during each test
phase. For gasoline-fueled, natural gasfueled and liquefied petroleum gasfueled Otto-cycle vehicles, the
composite samples collected in bags are
analyzed for THC, CO, CO2, CH4, NOX,
and N2O. For petroleum-fueled dieselcycle vehicles (optional for natural gasfueled, liquefied petroleum gas-fueled
and methanol-fueled diesel-cycle
vehicles), THC is sampled and analyzed
continuously according to the
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provisions of § 86.110–94. Parallel
samples of the dilution air are similarly
analyzed for THC, CO, CO2, CH4, NOX,
and N2O. For natural gas-fueled,
liquefied petroleum gas-fueled and
methanol-fueled vehicles, bag samples
are collected and analyzed for THC (if
not sampled continuously), CO, CO2,
CH4, NOX, and N2O. For methanolfueled vehicles, methanol and
formaldehyde samples are taken for
both exhaust emissions and dilution air
(a single dilution air formaldehyde
sample, covering the total test period
may be collected). For ethanol-fueled
vehicles, methanol, ethanol,
acetaldehyde, and formaldehyde
samples are taken for both exhaust
emissions and dilution air (a single
dilution air formaldehyde sample,
covering the total test period may be
collected). Parallel bag samples of
dilution air are analyzed for THC, CO,
CO2, CH4, NOX, and N2O.
*
*
*
*
*
7. Section 86.165–12 is amended by
revising paragraphs (c)(1) and (2) to read
as follows:
§ 86.165–12
procedure.
Air conditioning idle test
*
*
*
*
*
(c) * * *
(1) Ambient humidity within the test
cell during all phases of the test
sequence shall be controlled to an
average of 40–60 grains of water/pound
of dry air.
(2) Ambient air temperature within
the test cell during all phases of the test
sequence shall be controlled to 73–80 °F
on average and 75 ± 5 °F as an
instantaneous measurement. Air
temperature shall be recorded
continuously at a minimum of 30
second intervals.
*
*
*
*
*
8. Section 86.166–12 is amended as
follows:
a. By revising paragraph (b)
introductory text.
b. By revising paragraph (b).
c. By revising paragraph (d).
§ 86.166–12 Method for calculating
emissions due to air conditioning leakage.
*
*
*
*
*
(b) Rigid pipe connections. For 2017
and later model years, manufacturers
may test the leakage of system
connections by pressurizing the system
with Helium and using a mass
spectrometer to measure the leakage of
the connections within the system.
Connections that are demonstrated to be
free of leaks using Helium mass
spectrometry are considered to have a
relative emission factor of 10 and are
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accounted for separately in the equation
in paragraph (b)(2) of this section.
(1) The following equation shall be
used for the 2012 through 2016 model
years, and for 2017 and later model
years in cases where the connections are
not demonstrated to be leak-free using
Helium mass spectrometry:
Grams/YRRP = 0.00522 × [(125 × SO) +
(75 × SCO) + (50 × MO) + (10 × SW)
+ (5 × SWO) + (MG)]
spectrometer to measure the leakage of
the connections within the system.
Connections that are demonstrated to be
free of leaks using Helium mass
spectrometry are considered to have a
relative emission factor of 10 and are
accounted for separately in the
following equation:
Grams/YRRP = 0.00522 × [(125 × SO) +
(75 × SCO) + (50 × MO) + (10 × SW)
+ (10 × LTO) + (5 × SWO) + (MG)]
Where:
Grams/YRRP = Total emission rate for rigid
pipe connections in grams per year.
SO = The number of single O-ring
connections.
SCO = The number of single captured O-ring
connections.
MO = The number of multiple O-ring
connections.
SW = The number of seal washer
connections.
SWO = The number of seal washer with Oring connections.
MG = The number of metal gasket
connections.
Where:
Grams/YRRP = Total emission rate for rigid
pipe connections in grams per year.
SO = The number of single O-ring
connections.
SCO = The number of single captured O-ring
connections.
MO = The number of multiple O-ring
connections.
SW = The number of seal washer
connections.
LTO = The total number of O-ring
connections (single, single captured, and
multiple) that have demonstrated no
leakage using Helium mass spectrometry.
Connections included here should not be
counted elsewhere in the equation, and
all connections counted here must be
tested using Helium mass spectrometry
and demonstrated as free of leaks.
(2) For 2017 and later model years,
manufacturers may test the leakage of
system connections by pressurizing the
system with Helium and using a mass
*
*
*
*
*
9. Section 86.167–17 is added to read
as follows:
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§ 86.167–17 AC17 Air Conditioning
Efficiency Test Procedure.
(a) Overview. The dynamometer
operation consists of four elements: a
pre-conditioning cycle, a 30-minute
soak period under simulated solar heat,
an SC03 drive cycle, and a Highway
Fuel Economy Test (HFET) drive cycle.
The vehicle is preconditioned with the
UDDS to bring the vehicle to a warmedup stabilized condition. This
preconditioning is followed by a 30
minute vehicle soak (engine off) that
proceeds directly into the SC03 driving
schedule, during which continuous
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proportional samples of gaseous
emissions are collected for analysis. The
SC03 driving schedule is followed
immediately by the HFET cycle, during
which continuous proportional samples
of gaseous emissions are collected for
analysis. The entire test, including the
preconditioning driving, vehicle soak,
and SC03 and HFET official test cycles,
is conducted in an environmental test
facility. The environmental test facility
must be capable of providing the
following nominal ambient test
conditions of: 77 °F air temperature, 50
percent relative humidity, a solar heat
load intensity of 850 W/m2, and vehicle
cooling air flow proportional to vehicle
speed. Section 86.161–00 discusses the
minimum facility requirements and
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SWO = The number of seal washer with Oring connections.
MG = The number of metal gasket
connections.
*
*
*
*
*
(d) Flexible hoses. Determine the
permeation emission rate in grams per
year for each segment of flexible hose
using the following equation, and then
sum the values for all hoses in the
system to calculate a total flexible hose
emission rate for the system. Hose end
connections shall be included in the
calculations in paragraph (b) of this
section.
Grams/YRFH = 0.00522 × (3.14159 × ID
× L × ER)
Where:
Grams/YRFH = Emission rate for a segment of
flexible hose in grams per year.
ID = Inner diameter of hose, in millimeters.
L = Length of hose, in millimeters.
ER = Emission rate per unit internal surface
area of the hose, in g/mm2, selected from
the following table, or, for 2017 and later
model years, calculated according to
SAE J2064 ‘‘R134a Refrigerant
Automotive Air-Conditioned Hose’’
(incorporated by reference; see 86.1):
corresponding control tolerances for air
conditioning ambient test conditions.
The entire test sequence is run twice;
with and without the vehicle’s air
conditioner operating during the SC03
and HFET test cycles. For gasolinefueled Otto-cycle vehicles, the
composite samples collected in bags are
analyzed for THC, CO, CO2, and CH4.
For petroleum-fueled diesel-cycle
vehicles, THC is sampled and analyzed
continuously according to the
provisions of § 86.110. Parallel bag
samples of dilution air are analyzed for
THC, CO, CO2, and CH4. The following
figure shows the basic sequence of the
test procedure.
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(b) Dynamometer requirements. (1)
Tests shall be run on a large single roll
electric dynamometer or an equivalent
dynamometer configuration that
satisfies the requirements of § 86.108–
00.
(2) Position (vehicle can be driven)
the test vehicle on the dynamometer
and restrain.
(3) Required dynamometer inertia
weight class selections are determined
by the test vehicle’s test weight basis
and corresponding equivalent weight as
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listed in the tabular information of
§ 86.129–00(a) and discussed in
§ 86.129–00(e) and (f).
(4) Set the dynamometer test inertia
weight and roadload horsepower
requirements for the test vehicle (see
§ 86.129–00 (e) and (f)). The
dynamometer’s horsepower adjustment
settings shall be set such that the force
imposed during dynamometer operation
matches actual road load force at all
speeds.
(5) The vehicle speed as measured
from the dynamometer rolls shall be
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used. A speed vs. time recording, as
evidence of dynamometer test validity,
shall be supplied at request of the
Administrator.
(6) The drive wheel tires may be
inflated up to a gauge pressure of 45 psi
(310 kPa), or the manufacturer’s
recommended pressure if higher than 45
psi, in order to prevent tire damage. The
drive wheel tire pressure shall be
reported with the test results.
(7) The driving distance, as measured
by counting the number of
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dynamometer roll or shaft revolutions,
shall be determined for the test.
(8) Four-wheel drive and all-wheel
drive vehicles may be tested either in a
four-wheel drive or a two-wheel drive
mode of operation. In order to test in the
two-wheel drive mode, four-wheel drive
and all-wheel drive vehicles may have
one set of drive wheels disengaged;
four-wheel and all-wheel drive vehicles
which can be shifted to a two-wheel
mode by the driver may be tested in a
two-wheel drive mode of operation.
(c) Test cell ambient conditions. (1)
Ambient air temperature. (i) Ambient
air temperature is controlled, within the
test cell, during all phases of the test
sequence to 77 ±2 °F on average and 77
±5 °F as an instantaneous measurement.
(ii) Air temperature is recorded
continuously at a minimum of 30
second intervals. Records of cell air
temperatures and values of average test
temperatures are maintained by the
manufacturer for all certification related
programs.
(2) Ambient humidity. (i) Ambient
humidity is controlled, within the test
cell, during all phases of the test
sequence to an average of 69 ±5 grains
of water/pound of dry air.
(ii) Humidity is recorded
continuously at a minimum of 30
second intervals. Records of cell
humidity and values of average test
humidity are maintained by the
manufacturer for all certification related
programs.
(3) Solar heat loading. The
requirements of 86.161–00(d) regarding
solar heat loading specifications shall
apply. The solar load of 850 W/m2 is
applied only during specified portions
of the test sequence.
(d) Interior temperature measurement.
The interior temperature of the vehicle
shall be measured during the emission
sampling phases of the test(s).
(1) Interior temperatures shall be
measured by placement of
thermocouples at the following
locations:
(i) The outlet of the center duct on the
dash.
(ii) Behind the driver and passenger
seat headrests. The location of the
temperature measuring devices shall be
30 mm behind each headrest and 330
mm below the roof.
(2) The temperature at each location
shall be recorded a minimum of every
5 seconds.
(e) Air conditioning system settings.
For the portion of the test where the air
conditioner is required to be operating
the settings shall be as follows:
(1) Automatic systems shall be set to
automatic and the temperature control
set to 72 deg F.
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(2) Manual systems shall be set at the
start of the SC03 drive cycle to full cool
with the fan on the highest setting and
the airflow setting to ‘‘recirculation.’’
Within the first idle period of the SC03
drive cycle (186 to 204 seconds) the fan
speed shall be reduced to the setting
closest to 6 volts at the motor, the
temperature setting shall be adjusted to
provide 55 deg F at the center dash air
outlet, and the airflow setting changed
to ‘‘outside air.’’
(f) Vehicle and test activities. The
AC17 air conditioning test in an
environmental test cell is composed of
the following sequence of activities.
(1) Drain and fill the vehicle’s fuel
tank to 40 percent capacity with test
fuel. If a vehicle has gone through the
drain and fuel sequence less than 72
hours previously and has remained
under laboratory ambient temperature
conditions, this drain and fill operation
can be omitted (see § 86.132–
00(c)(2)(ii)).
(2)(i) Position the variable speed
cooling fan in front of the test vehicle
with the vehicle’s hood down. This air
flow should provide representative
cooling at the front of the test vehicle
(air conditioning condenser and engine)
during the driving cycles. See § 86.161–
00(e) for a discussion of cooling fan
specifications.
(ii) In the case of vehicles with rear
engine compartments (or if this front
location provides inadequate engine
cooling), an additional cooling fan shall
be placed in a position to provide
sufficient air to maintain vehicle
cooling. The fan capacity shall normally
not exceed 5300 cfm (2.50 m3/s). If,
however, it can be demonstrated that
during road operation the vehicle
receives additional cooling, and that
such additional cooling is needed to
provide a representative test, the fan
capacity may be increased or additional
fans used if approved in advance by the
Administrator.
(3) Open all vehicle windows.
(4) Connect the emission test
sampling system to the vehicle’s
exhaust tail pipe(s).
(5) Set the environmental test cell
ambient test conditions to the
conditions defined in paragraph (c) of
this section, except that the solar heat
shall be off.
(6) Set the air conditioning system
controls to off.
(7) Start the vehicle (with air
conditioning system off) and conduct a
preconditioning EPA urban
dynamometer driving cycle (§ 86.115).
(i) If engine stalling should occur
during any air conditioning test cycle
operation, follow the provisions of
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§ 86.136–90 (Engine starting and
restarting).
(ii) For manual transmission vehicles,
the vehicle shall be shifted according
the provisions of § 86.128–00.
(8) Following the preconditioning
cycle, the test vehicle and cooling fan(s)
are turned off, all windows are rolled
up, and the vehicle is allowed to soak
in the ambient conditions of paragraph
(c)(1) of this section for 30 ±1 minutes.
The solar heat system must be turned on
and generating 850 W/m 2 within 1
minute of turning the engine off.
(9) Air conditioning on test. (i) Start
engine (with air conditioning system
also running). Fifteen seconds after the
engine starts, place vehicle in gear.
(ii) Eighteen seconds after the engine
starts, begin the initial vehicle
acceleration of the SC03 driving
schedule.
(iii) Operate the vehicle according to
the SC03 driving schedule, as described
in appendix I, paragraph (h), of this
part, while sampling the exhaust gas.
(iv) At the end of the deceleration
which is scheduled to occur at 594
seconds, simultaneously switch the
sample flows from the SC03 bags and
samples to the ‘‘HFET’’ bags and
samples, switch off gas flow measuring
device No. 1, switch off the No. 1
petroleum-fueled diesel hydrocarbon
integrator, mark the petroleum-fueled
diesel hydrocarbon recorder chart, and
start gas flow measuring device No. 2,
and start the petroleum-fueled diesel
hydrocarbon integrator No. 2.
(v) Allow the vehicle to idle for 14–
16 seconds. Before the end of this idle
period, record the measured roll or shaft
revolutions and reset the counter or
switch to a second counter. As soon as
possible transfer the SC03 exhaust and
dilution air samples to the analytical
system and process the samples
according to § 86.140 obtaining a
stabilized reading of the bag exhaust
sample on all analyzers within 20
minutes of the end of the sample
collection phase of the test. Obtain
methanol and formaldehyde sample
analyses, if applicable, within 24 hours
of the end of the sample collection
phase of the test.
(vi) Operate the vehicle according to
the HFET driving schedule, as described
in 40 CFR 600.109–08, while sampling
the exhaust gas.
(vii) Turn the engine off 2 seconds
after the end of the last deceleration.
(viii) Five seconds after the engine
stops running, simultaneously turn off
gas flow measuring device No. 2 and if
applicable, turn off the petroleumfueled diesel hydrocarbon integrator No.
2, mark the hydrocarbon recorder chart,
and position the sample selector valves
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based businesses. The following
categories of businesses (with their
associated NAICS codes) may be eligible
for exemption based on the Small
Business Administration size standards
in 13 CFR 121.201.
(i) Vehicle manufacturers (NAICS
code 336111).
(ii) Independent commercial
importers (NAICS codes 811111,
811112, 811198, 423110, 424990, and
441120).
(iii) Alternate fuel vehicle converters
(NAICS codes 335312, 336312, 336322,
336399, 454312, 485310, and 811198).
(2) Effective for the 2014 and later
model years, a manufacturer that would
otherwise be exempt under the
provisions of paragraph (j)(1) of this
section may optionally comply with the
greenhouse gas emission standards
specified in § 86.1818. A manufacturer
making this choice is required to
comply with all the applicable
standards and provisions in § 86.1818
and in associated provisions in this part
and in part 600 of this chapter.
Manufacturers may optionally earn
early credits in the 2012 and/or 2013
model years by demonstrating CO2
emission levels below the fleet average
CO2 standard that would have been
applicable in those model years if the
manufacturer had not been exempt.
Manufacturers electing to earn these
early credits must comply with the
model year reporting requirements in
§ 600.512–12 for each model year.
(k) Conditional exemption from
greenhouse gas emission standards.
Manufacturers meeting the eligibility
requirements described in paragraphs
(k)(1) and (2) of this section may request
Subpart S—[Amended]
a conditional exemption from
10. Section 86.1801–12 is amended by compliance with the emission standards
described in § 86.1818–12(c) through (e)
revising paragraphs (b), (j), and (k)
and associated provisions in this part
introductory text to read as follows:
and in part 600 of this chapter. A
§ 86.1801–12 Applicability.
conditional exemption under this
*
*
*
*
*
paragraph (k) may be requested for the
(b) Clean alternative fuel conversions. 2012 through 2016 model years. The
The provisions of this subpart apply to
terms ‘‘sales’’ and ‘‘sold’’ as used in this
clean alternative fuel conversions as
paragraph (k) shall mean vehicles
defined in 40 CFR 85.502, of all model
produced and delivered for sale (or
year light-duty vehicles, light-duty
sold) in the states and territories of the
trucks, medium duty passenger
United States. For the purpose of
vehicles, and complete Otto-cycle
determining eligibility the sales of
heavy-duty vehicles.
related companies shall be aggregated
(j) Exemption from greenhouse gas
according to the provisions of
emission standards for small businesses. § 86.1838–01(b)(3).
(1) Manufacturers that qualify as a small *
*
*
*
*
business under the Small Business
11. Section 86.1803–01 is amended as
Administration regulations in 13 CFR
follows:
part 121 are exempt from the
a. By revising the definition for
greenhouse gas emission standards
‘‘footprint.’’
specified in § 86.1818–12 and in
b. By adding a definition for ‘‘good
associated provisions in this part and in engineering judgment.’’
c. By adding a definition for ‘‘gross
part 600 of this chapter. This exemption
applies to both U.S.-based and non-U.S.- combination weight rating.’’
bjneal on DSK3VPTVN1PROD with PROPOSALS
to the ‘‘standby’’ position. Record the
measured roll or shaft revolutions (both
gas meter or flow measurement
instrumentation readings), and re-set the
counter. As soon as possible, transfer
the ‘‘HFET’’ exhaust and dilution air
samples to the analytical system and
process the samples according to
§ 86.140, obtaining a stabilized reading
of the exhaust bag sample on all
analyzers within 20 minutes of the end
of the sample collection phase of the
test. Obtain methanol and formaldehyde
sample analyses, if applicable, within
24 hours of the end of the sample
period.
(10) Air conditioning off test. The air
conditioning off test is identical to the
steps identified in paragraphs (d)(1)
through (9) of this section, except that
the air conditioning system and fan
speeds are set to complete off or the
lowest. It is preferred that the air
conditioning off test be conducted
sequentially after the air conditioning
on test, following a 10–15 minute soak.
(g) Records required and reporting
requirements. For each test the
manufacturer shall record the
information specified in 86.142–90.
Emission results must be reported for
each phase of the test. The manufacturer
must also report the following
information for each vehicle tested:
vehicle class, model type, carline, curb
weight engine displacement,
transmission class and configuration,
interior volume, climate control system
type and characteristics, refrigerant
used, compressor type, and evaporator/
condenser characteristics.
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d. By revising the definition for ‘‘gross
vehicle weight rating.’’
e. By adding a definition for
‘‘platform.’’
The revisions and additions read as
follows:
§ 86.1803–01
*
Definitions.
*
*
*
*
Footprint is the product of average
track width (rounded to the nearest
tenth of an inch) and wheelbase
(measured in inches and rounded to the
nearest tenth of an inch), divided by 144
and then rounded to the nearest tenth of
a square foot, where the average track
width is the average of the front and rear
track widths, where each is measured in
inches and rounded to the nearest tenth
of an inch.
*
*
*
*
*
Good engineering judgment has the
meaning given in 40 CFR 1068.30. See
40 CFR 1068.5 for the administrative
process we use to evaluate good
engineering judgment.
Gross combination weight rating
(GCWR) means the value specified by
the vehicle manufacturer as the
maximum weight of a loaded vehicle
and trailer, consistent with good
engineering judgment.
*
*
*
*
*
Gross vehicle weight rating (GVWR)
means the value specified by the
manufacturer as the maximum design
loaded weight of a single vehicle,
consistent with good engineering
judgment.
*
*
*
*
*
Platform means a group of vehicles
with common body floor plan and
construction, chassis construction and
components, basic engine, and
transmission class. Platform does not
´
consider any level of decor or opulence,
or characteristics such as roof line,
number of doors, seats, or windows. A
single platform may include multiple
fuel economy label classes or car lines,
and may include both cars and trucks.
*
*
*
*
*
12. Section 86.1818–12 is amended as
follows:
a. By adding paragraph (b)(4).
b. By revising paragraphs (c)(2)(i)(A)
through (C).
c. By revising paragraphs (c)(3)(i)(A)
through (C).
d. By adding paragraph (c)(3)(i)(D).
e. By adding paragraph (c)(4).
f. By revising paragraph (f)
introductory text.
g. By revising paragraph (f)(3).
h. By adding paragraph (g).
i. By adding paragraph (h).
The additions and revisions read as
follows:
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§ 86.1818–12 Greenhouse gas emission
standards for light-duty vehicles, light-duty
trucks, and medium-duty passenger
vehicles.
*
*
*
*
(b) * * *
(4) Emergency vehicle means a motor
vehicle manufactured primarily for use
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*
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as an ambulance or combination
ambulance-hearse or for use by the
United States Government or a State or
local government for law enforcement.
(c) * * *
(2) * * *
(i) * * *
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(A) For passenger automobiles with a
footprint of less than or equal to 41
square feet, the gram/mile CO2 target
value shall be selected for the
appropriate model year from the
following table:
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selected for the appropriate model year
from the following table:
BILLING CODE 4910–59–C
shall be calculated using the following
equation and rounded to the nearest 0.1
grams/mile:
(C) For passenger automobiles with a
footprint that is greater than 41 square
feet and less than or equal to 56 square
feet, the gram/mile CO2 target value
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Target CO2 = [a × f ] + b
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Where:
f is the vehicle footprint, as defined in
§ 86.1803; and
a and b are selected from the following table
for the appropriate model year:
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(B) For passenger automobiles with a
footprint of greater than 56 square feet,
the gram/mile CO2 target value shall be
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*
*
*
*
(3) * * *
(i) * * *
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*
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(A) For light trucks with a footprint of
less than or equal to 41 square feet, the
gram/mile CO2 target value shall be
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selected for the appropriate model year
from the following table:
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(B) For light trucks with a footprint
that is greater than 41 square feet and
less than or equal to the maximum
footprint value specified in the table
below for each model year, the gram/
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mile CO2 target value shall be calculated
using the following equation and
rounded to the nearest 0.1 grams/mile:
Target CO2 = (a × f) + b
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Where:
f is the footprint, as defined in § 86.1803; and
a and b are selected from the following table
for the appropriate model year:
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(C) For light trucks with a footprint
that is greater than the minimum
footprint value specified in the table
below and less than or equal to the
maximum footprint value specified in
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the table below for each model year, the
gram/mile CO2 target value shall be
calculated using the following equation
and rounded to the nearest 0.1 grams/
mile:
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Target CO2 = (a × f) + b
Where:
f is the footprint, as defined in § 86.1803; and
a and b are selected from the following table
for the appropriate model year:
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model year, the gram/mile CO2 target
value shall be selected for the
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appropriate model year from the
following table:
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(D) For light trucks with a footprint
greater than the minimum value
specified in the table below for each
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(4) Emergency vehicles. Emergency
vehicles may be excluded from the fleet
average CO2 exhaust emission standards
described in paragraph (c) of this
section. The manufacturer should notify
the Administrator that they are making
such an election in the model year
reports required under § 600.512 of this
chapter. Such vehicles should be
excluded from both the calculation of
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the fleet average standard for a
manufacturer under this paragraph (c)
and from the calculation of the fleet
average carbon-related exhaust
emissions in 86.510–12.
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*
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(f) Nitrous oxide (N2O) and methane
(CH4) exhaust emission standards for
passenger automobiles and light trucks.
Each manufacturer’s fleet of combined
passenger automobile and light trucks
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must comply with N2O and CH4
standards using either the provisions of
paragraph (f)(1), (2), or (3) of this
section. Except with prior EPA
approval, a manufacturer may not use
the provisions of both paragraphs (f)(1)
and (2) of this section in a model year.
For example, a manufacturer may not
use the provisions of paragraph (f)(1) of
this section for their passenger
automobile fleet and the provisions of
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paragraph (f)(2) for their light truck fleet
in the same model year. The
manufacturer may use the provisions of
both paragraphs (f)(1) and (3) of this
section in a model year. For example, a
manufacturer may meet the N2O
standard in paragraph (f)(1)(i) of this
section and an alternative CH4 standard
determined under paragraph (f)(3) of
this section.
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(3) Optional use of alternative N2O
and/or CH4 standards. Manufacturers
may select an alternative standard
applicable to a test group, for either N2O
or CH4, or both. For example, a
manufacturer may choose to meet the
N2O standard in paragraph (f)(1)(i) of
this section and an alternative CH4
standard in lieu of the standard in
paragraph (f)(1)(ii) of this section. The
alternative standard for each pollutant
must be greater than the applicable
exhaust emission standard specified in
paragraph (f)(1) of this section.
Alternative N2O and CH4 standards
apply to emissions measured according
to the Federal Test Procedure (FTP)
described in Subpart B of this part for
the full useful life, and become the
applicable certification and in-use
emission standard(s) for the test group.
Manufacturers using an alternative
standard for N2O and/or CH4 must
calculate emission debits according to
the provisions of paragraph (f)(4) of this
section for each test group/alternative
standard combination. Debits must be
included in the calculation of total
credits or debits generated in a model
year as required under § 86.1865–
12(k)(5). For flexible fuel vehicles (or
other vehicles certified for multiple
fuels) you must meet these alternative
standards when tested on any
applicable test fuel type.
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*
(g) Alternative fleet average standards
for manufacturers with limited U.S.
sales. Manufacturers meeting the
criteria in this paragraph (g) may request
that the Administrator establish
alternative fleet average CO2 standards
that would apply instead of the
standards in paragraph (c) of this
section. The provisions of this
paragraph (g) are applicable only to the
2017 and later model years.
(1) Eligibility for alternative
standards. Eligibility as determined in
this paragraph (g) shall be based on the
total sales of combined passenger
automobiles and light trucks. The terms
‘‘sales’’ and ‘‘sold’’ as used in this
paragraph (g) shall mean vehicles
produced and delivered for sale (or
sold) in the states and territories of the
United States. For the purpose of
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determining eligibility the sales of
related companies shall be aggregated
according to the provisions of
§ 86.1838–01(b)(3). To be eligible for
alternative standards established under
this paragraph (g), the manufacturer’s
average sales for the three most recent
consecutive model years must remain
below 5,000. If a manufacturer’s average
sales for the three most recent
consecutive model years exceeds 4,999,
the manufacturer will no longer be
eligible for exemption and must meet
applicable emission standards starting
with the model year according to the
provisions in this paragraph (g)(1).
(i) If a manufacturer’s average sales for
three consecutive model years exceeds
4,999, and if the increase in sales is the
result of corporate acquisitions, mergers,
or purchase by another manufacturer,
the manufacturer shall comply with the
emission standards described in
§ 86.1818–12(c) and (d), as applicable,
beginning with the first model year after
the last year of the three consecutive
model years.
(ii) If a manufacturer’s average sales
for three consecutive model years
exceeds 4,999 and is less than 50,000,
and if the increase in sales is solely the
result of the manufacturer’s expansion
in vehicle production (not the result of
corporate acquisitions, mergers, or
purchase by another manufacturer), the
manufacturer shall comply with the
emission standards described in
§ 86.1818–12(c) through (e), as
applicable, beginning with the second
model year after the last year of the
three consecutive model years.
(2) Requirements for new entrants into
the U.S. market. New entrants are those
manufacturers without a prior record of
automobile sales in the United States
and without prior certification to (or
exemption from, under § 86.1801–12(k))
greenhouse gas emission standards in
§ 86.1818–12. In addition to the
eligibility requirements stated in
paragraph (g)(1) of this section, new
entrants must meet the following
requirements:
(i) In addition to the information
required under paragraph (g)(4) of this
section, new entrants must provide
documentation that shows a clear intent
by the company to actually enter the
U.S. market in the years for which
alternative standards are requested.
Demonstrating such intent could
include providing documentation that
shows the establishment of a U.S. dealer
network, documentation of work
underway to meet other U.S.
requirements (e.g., safety standards), or
other information that reasonably
establishes intent to the satisfaction of
the Administrator.
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(ii) Sales of vehicles in the U.S. by
new entrants must remain below 5,000
vehicles for the first two model years in
the U.S. market and the average sales for
any three consecutive years within the
first five years of entering the U.S.
market must remain below 5,000
vehicles. Vehicles sold in violation of
these limits will be considered not
covered by the certificate of conformity
and the manufacturer will be subject to
penalties on an individual-vehicle basis
for sale of vehicles not covered by a
certificate. In addition, violation of
these limits will result in loss of
eligibility for alternative standards until
such point as the manufacturer
demonstrates two consecutive model
years of sales below 5,000 automobiles.
(iii) A manufacturer with sales in the
most recent model year of less than
5,000 automobiles, but where prior
model year sales were not less than
5,000 automobiles, is eligible to request
alternative standards under this
paragraph (g). However, such a
manufacturer will be considered a new
entrant and subject to the provisions
regarding new entrants in this paragraph
(g), except that the requirement to
demonstrate an intent to enter the U.S.
market it paragraph (g)(2)(i) of this
section shall not apply.
(3) How to request alternative fleet
average standards. Eligible
manufacturers may petition for
alternative standards for up to five
consecutive model years if sufficient
information is available on which to
base such standards.
(i) To request alternative standards
starting with the 2017 model year,
eligible manufacturers must submit a
completed application no later than July
30, 2013.
(ii) To request alternative standards
starting with a model after 2017, eligible
manufacturers must submit a completed
request no later than 36 months prior to
the start of the first model year to which
the alternative standards would apply.
(iii) The request must contain all the
information required in paragraph (g)(4)
of this section, and must be signed by
a chief officer of the company. If the
Administrator determines that the
content of the request is incomplete or
insufficient, the manufacturer will be
notified and given an additional 30 days
to amend the request.
(4) Data and information submittal
requirements. Eligible manufacturers
requesting alternative standards under
this paragraph (g) must submit the
following information to the
Environmental Protection Agency. The
Administrator may request additional
information as she deems appropriate.
The completed request must be sent to
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the Environmental Protection Agency at
the following address: Director,
Compliance and Innovative Strategies
Division, U.S. Environmental Protection
Agency, 2000 Traverwood Drive, Ann
Arbor, Michigan 48105.
(i) Vehicle model and fleet
information. (A) The model years to
which the requested alternative
standards would apply, limited to five
consecutive model years.
(B) Vehicle models and projections of
production volumes for each model
year.
(C) Detailed description of each
model, including the vehicle type,
vehicle mass, power, footprint, and
expected pricing.
(D) The expected production cycle for
each model, including new model
introductions and redesign or refresh
cycles.
(ii) Technology evaluation
information. (A) The CO2 reduction
technologies employed by the
manufacturer on each vehicle model,
including information regarding the cost
and CO2-reducing effectiveness. Include
technologies that improve air
conditioning efficiency and reduce air
conditioning system leakage, and any
‘‘off-cycle’’ technologies that potentially
provide benefits outside the operation
represented by the Federal Test
Procedure and the Highway Fuel
Economy Test.
(B) An evaluation of comparable
models from other manufacturers,
including CO2 results and air
conditioning credits generated by the
models. Comparable vehicles should be
similar, but not necessarily identical, in
the following respects: vehicle type,
horsepower, mass, power-to-weight
ratio, footprint, retail price, and any
other relevant factors. For
manufacturers requesting alternative
standards starting with the 2017 model
year, the analysis of comparable
vehicles should include vehicles from
the 2012 and 2013 model years,
otherwise the analysis should at a
minimum include vehicles from the
most recent two model years.
(C) A discussion of the CO2-reducing
technologies employed on vehicles
offered outside of the U.S. market but
not available in the U.S., including a
discussion as to why those vehicles
and/or technologies are not being used
to achieve CO2 reductions for vehicles
in the U.S. market.
(D) An evaluation, at a minimum, of
the technologies projected by the
Environmental Protection Agency in a
final rulemaking as those technologies
likely to be used to meet greenhouse gas
emission standards and the extent to
which those technologies are employed
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or projected to be employed by the
manufacturer. For any technology that is
not projected to be fully employed,
explain why this is the case.
(iii) Alternative fleet average CO2
standards. (A) The most stringent CO2
level estimated to be feasible for each
model, in each model year, and the
technological basis for this estimate.
(B) For each model year, a projection
of the lowest feasible sales-weighted
fleet average CO2 value, separately for
passenger automobiles and light trucks,
and an explanation demonstrating that
these projections are reasonable.
(C) A copy of any application, data,
and related information submitted to
NHTSA in support of a request for
alternative Corporate Average Fuel
Economy standards filed under 49 CFR
Part 525.
(iv) Information supporting eligibility.
(A) U.S. sales for the three previous
model years and projected sales for the
model years for which the manufacturer
is seeking alternative standards.
(B) Information regarding ownership
relationships with other manufacturers,
including details regarding the
application of the provisions of
§ 86.1838–01(b)(3) regarding the
aggregation of sales of related
companies,
(5) Alternative standards. Upon
receiving a complete application, the
Administrator will review the
application and determine whether an
alternative standard is warranted. If the
Administrator judges that an alternative
standard is warranted, the
Administrator will publish a proposed
determination in the Federal Register to
establish alternative standards for the
manufacturer that the Administrator
judges are appropriate. Following a 30
day public comment period, the
Administrator will issue a final
determination establishing alternative
standards for the manufacturer. If the
Administrator does not establish
alternative standards for an eligible
manufacturer prior to 12 months before
the first model year to which the
alternative standards would apply, the
manufacturer may request an extension
of the exemption under 86.1801–12(k)
or an extension of previously approved
alternative standards, whichever may
apply.
(6) Restrictions on credit trading.
Manufacturers subject to alternative
standards approved by the
Administrator under this paragraph (g)
may not trade credits to another
manufacturer. Transfers between car
and truck fleets within the manufacturer
are allowed.
(h) Mid-term evaluation of standards.
No later than April 1, 2018, the
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Administrator shall determine whether
the standards established in paragraph
(c) of this section for the 2022 through
2025 model years are appropriate under
section 202(a) of the Clean Air Act, in
light of the record then before the
Administrator. An opportunity for
public comment shall be provided
before making such determination. If the
Administrator determines they are not
appropriate, the Administrator shall
initiate a rulemaking to revise the
standards, to be either more or less
stringent as appropriate.
(1) In making the determination
required by this paragragh (h), the
Administrator shall consider the
information available on the factors
relevant to setting greenhouse gas
emission standards under section 202(a)
of the Clean Air Act for model years
2022 through 2025, including but not
limited to:
(i) The availability and effectiveness
of technology, and the appropriate lead
time for introduction of technology;
(ii) The cost on the producers or
purchasers of new motor vehicles or
new motor vehicle engines;
(iii) The feasibility and practicability
of the standards;
(iv) The impact of the standards on
reduction of emissions, oil conservation,
energy security, and fuel savings by
consumers;
(v) The impact of the standards on the
automobile industry;
(vi) The impacts of the standards on
automobile safety;
(vii) The impact of the greenhouse gas
emission standards on the Corporate
Average Fuel Economy standards and a
national harmonized program; and
(viii) The impact of the standards on
other relevant factors.
(2) The Administrator shall make the
determination required by this
paragraph (h) based upon a record that
includes the following:
(i) A draft Technical Assessment
Report addressing issues relevant to the
standard for the 2022 through 2025
model years;
(ii) Public comment on the draft
Technical Assessment Report;
(iii) Public comment on whether the
standards established for the 2022
through 2025 model years are
appropriate under section 202(a) of the
Clean Air Act; and
(iv) Such other materials the
Administrator deems appropriate.
(3) No later than November 15, 2017,
the Administrator shall issue a draft
Technical Assessment Report
addressing issues relevant to the
standards for the 2022 through 2025
model years.
(4) The Administrator will set forth in
detail the bases for the determination
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required by this paragraph (h),
including the Administrator’s
assessment of each of the factors listed
in paragraph (h)(1) of this section.
13. Section 86.1823–08 is amended by
revising paragraph (m)(2)(iii) to read as
follows:
§ 86.1823–08 Durability demonstration
procedures for exhaust emissions.
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(m) * * *
(2) * * *
(iii) For the 2012 through 2016 model
years only, manufacturers may use
alternative deterioration factors. For
N2O, the alternative deterioration factor
to be used to adjust FTP and HFET
emissions is the deterioration factor
determined for (or derived from, using
good engineering judgment) NOX
emissions according to the provisions of
this section. For CH4, the alternative
deterioration factor to be used to adjust
FTP and HFET emissions is the
deterioration factor determined for (or
derived from, using good engineering
judgment) NMOG or NMHC emissions
according to the provisions of this
section.
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14. Section 86.1829–01 is amended by
revising paragraph (b)(1)(iii) to read as
follows:
§ 86.1829–01 Durability and emission
testing requirements; waivers.
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(b) * * *
(1) * * *
(iii) Data submittal waivers. (A) In
lieu of testing a methanol-fueled dieselcycle light truck for particulate
emissions a manufacturer may provide
a statement in its application for
certification that such light trucks
comply with the applicable standards.
Such a statement shall be based on
previous emission tests, development
tests, or other appropriate information
and good engineering judgment.
(B) In lieu of testing an Otto-cycle
light-duty vehicle, light-duty truck, or
heavy-duty vehicle for particulate
emissions for certification, a
manufacturer may provide a statement
in its application for certification that
such vehicles comply with the
applicable standards. Such a statement
must be based on previous emission
tests, development tests, or other
appropriate information and good
engineering judgment.
(C) A manufacturer may petition the
Administrator for a waiver of the
requirement to submit total hydrocarbon
emission data. If the waiver is granted,
then in lieu of testing a certification
light-duty vehicle or light-duty truck for
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total hydrocarbon emissions the
manufacturer may provide a statement
in its application for certification that
such vehicles comply with the
applicable standards. Such a statement
shall be based on previous emission
tests, development tests, or other
appropriate information and good
engineering judgment.
(D) A manufacturer may petition the
Administrator to waive the requirement
to measure particulate emissions when
conducting Selective Enforcement Audit
testing of Otto-cycle vehicles.
(E) In lieu of testing a gasoline, diesel,
natural gas, liquefied petroleum gas, or
hydrogen fueled Tier 2 or interim nonTier 2 vehicle for formaldehyde
emissions when such vehicles are
certified based upon NMHC emissions,
a manufacturer may provide a statement
in its application for certification that
such vehicles comply with the
applicable standards. Such a statement
must be based on previous emission
tests, development tests, or other
appropriate information and good
engineering judgment.
(F) In lieu of testing a petroleum-,
natural gas-, liquefied petroleum gas-, or
hydrogen-fueled heavy-duty vehicle for
formaldehyde emissions for
certification, a manufacturer may
provide a statement in its application
for certification that such vehicles
comply with the applicable standards.
Such a statement must be based on
previous emission tests, development
tests, or other appropriate information
and good engineering judgment.
(G) For the 2012 through 2016 model
years only, in lieu of testing a vehicle
for N2O emissions, a manufacturer may
provide a statement in its application
for certification that such vehicles
comply with the applicable standards.
Such a statement must be based on
previous emission tests, development
tests, or other appropriate information
and good engineering judgment.
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15. Section 86.1865–12 is amended as
follows:
a. By revising paragraph (k)(5)
introductory text.
b. By redesignating paragraph
(k)(5)(iv) as paragraph (k)(5)(v).
c. By adding new paragraph (k)(5)(iv).
d. By revising paragraph (k)(6).
e. By revising paragraph (k)(7)(i).
f. By revising paragraph (k)(8)(iv)(A).
g. By revising paragraph (l)(1)(ii)
introductory text.
h. By revising paragraph (l)(1)(ii)(F).
The revisions read as follows:
§ 86.1865–12 How to comply with the fleet
average CO2 standards.
*
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(k) * * *
(5) Total credits or debits generated in
a model year, maintained and reported
separately for passenger automobiles
and light trucks, shall be the sum of the
credits or debits calculated in paragraph
(k)(4) of this section and any of the
following credits, if applicable, minus
any N2O and/or CH4 CO2-equivalent
debits calculated according to the
provisions of § 86.1818–12(f)(4):
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(iv) Full size pickup truck credits
earned according to the provisions of
§ 86.1866–12(e).
(6) The expiration date of unused CO2
credits is based on the model year in
which the credits are earned, as follows:
(i) Unused CO2 credits from the 2009
model year shall retain their full value
through the 2014 model year. Credits
remaining at the end of the 2014 model
year shall expire.
(ii) Unused CO2 credits from the 2010
through 2015 model years shall retain
their full value through the 2021 model
year. Credits remaining at the end of the
2021 model year shall expire.
(iii) Unused CO2 credits from the 2016
and later model years shall retain their
full value through the five subsequent
model years after the model year in
which they were generated. Credits
remaining at the end of the fifth model
year after the model year in which they
were generated shall expire.
(7) * * *
(i) Credits generated and calculated
according to the method in paragraphs
(k)(4) and (5) of this section may not be
used to offset deficits other than those
deficits accrued with respect to the
standard in § 86.1818. Credits may be
banked and used in a future model year
in which a manufacturer’s average CO2
level exceeds the applicable standard.
Credits may be transferred between the
passenger automobile and light truck
fleets of a given manufacturer. Credits
may also be traded to another
manufacturer according to the
provisions in paragraph (k)(8) of this
section. Before trading or carrying over
credits to the next model year, a
manufacturer must apply available
credits to offset any deficit, where the
deadline to offset that credit deficit has
not yet passed.
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(8) * * *
(iv) * * *
(A) If a manufacturer ceases
production of passenger automobiles
and light trucks, the manufacturer
continues to be responsible for offsetting
any debits outstanding within the
required time period. Any failure to
offset the debits will be considered a
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l. By revising paragraph (d).
m. By adding paragraph (e).
The revisions and additions read as
follows:
§ 86.1866–12 CO2 fleet average credit and
incentive programs.
(a) Advanced technology vehicles. (1)
Electric vehicles, plug-in hybrid electric
vehicles, and fuel cell vehicles, as those
terms are defined in § 86.1803–01, that
are certified and produced and
delivered for sale in the United States in
the 2012 through 2025 model years may
use a value of zero (0) grams/mile of
CO2 to represent the proportion of
electric operation of a vehicle that is
derived from electricity that is generated
from sources that are not onboard the
vehicle.
(i) Model years 2012 through 2016:
The use of zero (0) grams/mile CO2 is
limited to the first 200,000 combined
electric vehicles, plug-in hybrid electric
vehicles, and fuel cell vehicles
produced and delivered for sale by a
manufacturer in the 2012 through 2016
model years, except that a manufacturer
that produces and delivers for sale
25,000 or more such vehicles in the
2012 model year shall be subject to a
limitation on the use of zero (0) grams/
mile CO2 to the first 300,000 combined
electric vehicles, plug-in hybrid electric
vehicles, and fuel cell vehicles
produced and delivered for sale by a
manufacturer in the 2012 through 2016
model years.
(ii) Model years 2017 through 2021:
For electric vehicles, plug-in hybrid
electric vehicles, and fuel cell vehicles
produced and delivered for sale in the
2017 through 2021 model years, such
use of zero (0) grams/mile CO2 is
unrestricted.
(iii) Model years 2022 through 2025:
The use of zero (0) grams/mile CO2 is
limited to the first 200,000 combined
electric vehicles, plug-in hybrid electric
vehicles, and fuel cell vehicles
produced and delivered for sale by a
manufacturer in the 2022 through 2025
model years, except that a manufacturer
that produces and delivers for sale
300,000 or more such vehicles in the
2019 through 2021 model years shall be
subject to a limitation on the use of zero
(0) grams/mile CO2 to the first 600,000
combined electric vehicles, plug-in
hybrid electric vehicles, and fuel cell
vehicles produced and delivered for sale
by a manufacturer in the 2022 through
2025 model years.
(2) For electric vehicles, plug-in
hybrid electric vehicles, and fuel cell
vehicles, as those terms are defined in
§ 86.1803–01, that are certified and
produced and delivered for sale in the
United States in the 2017 through 2021
model years and that meet the
additional specifications in this section,
the manufacturer may use the
production multipliers in this paragraph
(a)(2) when determining the
manufacturer’s fleet average carbonrelated exhaust emissions under
§ 600.512 of this chapter. Full size
pickup trucks eligible for and using a
production multiplier are not eligible
for the performance-based credits
described in paragraph (e)(3) of this
section.
(i) The production multipliers, by
model year, for electric vehicles and
fuel cell vehicles, are as follows:
(ii) (A) The production multipliers, by
model year, for plug-in hybrid electric
vehicles, are as follows:
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violation of paragraph (k)(8)(i) of this
section and may subject the
manufacturer to an enforcement action
for sale of vehicles not covered by a
certificate, pursuant to paragraphs
(k)(8)(ii) and (iii) of this section.
*
*
*
*
*
(l) * * *
(1) * * *
(ii) Manufacturers producing any
passenger automobiles or light trucks
subject to the provisions in this subpart
must establish, maintain, and retain all
the following information in adequately
organized records for each passenger
automobile or light truck subject to this
subpart:
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*
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*
(F) Carbon-related exhaust emission
standard, N2O emission standard, and
CH4 emission standard to which the
passenger automobile or light truck is
certified.
*
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*
16. Section 86.1866–12 is amended as
follows:
a. By revising the heading,
b. By revising paragraphs (a) and (b).
c. By revising paragraph (c)
introductory text.
d. By revising paragraphs (c)(1)
through (3).
e. By revising paragraph (c)(5)
introductory text.
f. By revising paragraph (c)(5)(i).
g. By revising paragraph (c)(5)(iii)
introductory text.
h. By redesignating paragraph
(c)(5)(iv) and paragraph (c)(5)(v).
i. By adding new paragraph (c)(5)(iv).
j. By redesignating paragraph (c)(6) as
(c)(8).
k. By adding paragraphs (c)(6) and (7).
Federal Register / Vol. 76, No. 231 / Thursday, December 1, 2011 / Proposed Rules
(B) The minimum all-electric driving
range that a plug-in hybrid electric
vehicle must have in order to qualify for
use of a production multiplier is 10.2
miles on its nominal storage capacity of
electricity when operated on the
highway fuel economy test cycle.
Alternatively, a plug-in hybrid electric
Fuel Economy of Hybrid-Electric
Vehicles, Including Plug-In Hybrid
Vehicles (incorporated by reference, see
§ 86.1).
shall be calculated according to this
paragraph (b) for each air conditioning
system that the manufacturer is using to
generate CO2 credits. Manufacturers
may also generate early air conditioning
refrigerant leakage credits under this
paragraph (b) for the 2009 through 2011
model years according to the provisions
of § 86.1867–12(b).
(1) The manufacturer shall calculate
an annual rate of refrigerant leakage
from an air conditioning system in
grams per year according to the
provisions of § 86.166–12.
(2) The CO2-equivalent gram per mile
leakage reduction to be used to calculate
the total leakage credits generated by the
air conditioning system shall be
determined according to the following
formulae, rounded to the nearest tenth
of a gram per mile:
(i) Passenger automobiles:
Where:
HiLeakDis means the high leak disincentive,
which is zero for model years 2012
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through 2016, and for 2017 and later
model years is determined using the
following equation, except that if
GWPREF is greater than 150 or if the
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E:\FR\FM\TEST.SGM
result is less than zero HiLeakDis shall
be set equal to zero and if the result is
greater than 1.8 g/mi HiLeakDis shall be
set to 1.8 g/mi:
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EP01de11.712</GPH>
EP01de11.713</GPH>
(iii) The actual production of
qualifying vehicles may be multiplied
by the applicable value according to the
model year, and the result, rounded to
the nearest whole number, may be used
to represent the production of qualifying
vehicles when calculating average
carbon-related exhaust emissions under
§ 600.512 of this chapter.
(b) Credits for reduction of air
conditioning refrigerant leakage.
Manufacturers may generate credits
applicable to the CO2 fleet average
program described in § 86.1865–12 by
implementing specific air conditioning
system technologies designed to reduce
air conditioning refrigerant leakage over
the useful life of their passenger
automobiles and/or light trucks. Credits
Recommended Practice for Measuring
the Exhaust Emissions and Fuel
Economy of Hybrid-Electric Vehicles,
Including Plug-In Hybrid Vehicles
(incorporated by reference, see § 86.1).
The equivalent all-electric range of a
PHEV is determined from the following
formula:
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Where:
EAER = the equivalent all-electric range
attributed to charge-depleting operation
of a plug-in hybrid electric vehicle on
the highway fuel economy test cycle.
RCDA = The actual charge-depleting range
determined according to SAE J1711,
Recommended Practice for Measuring
the Exhaust Emissions and Fuel
Economy of Hybrid-Electric Vehicles,
Including Plug-In Hybrid Vehicles
(incorporated by reference, see § 86.1).
CO2CS = The charge-sustaining CO2
emissions in grams per mile on the
highway fuel economy test determined
according to SAE J1711, Recommended
Practice for Measuring the Exhaust
Emissions and Fuel Economy of HybridElectric Vehicles, Including Plug-In
Hybrid Vehicles (incorporated by
reference, see § 86.1).
CO2CD = The charge-depleting CO2 emissions
in grams per mile on the highway fuel
economy test determined according to
SAE J1711, Recommended Practice for
Measuring the Exhaust Emissions and
vehicle may qualify for use of a
production multiplier by having an
equivalent all-electric driving range
greater than or equal to 10.2 miles
during its actual charge-depleting range
as measured on the highway fuel
economy test cycle and tested according
to the requirements of SAE J1711,
75373
Federal Register / Vol. 76, No. 231 / Thursday, December 1, 2011 / Proposed Rules
only electric compressors), the rate for
the purpose of this formula shall be 8.3
grams/year (4.1 grams/year for systems
using only electric compressors).
The constant 16.6 is the average passenger
automobile impact of air conditioning
leakage in units of grams/year;
GWPREF means the global warming potential
of the refrigerant as indicated in
paragraph (b)(5) of this section or as
Where:
HiLeakDis means the high leak disincentive,
which is zero for model years 2012
through 2016, and for 2017 and later
model years is determined using the
following equation, except that if
GWPREF is greater than 150 or if the
MaxCredit is 15.6 (grams CO2-equivalent/
mile) for air conditioning systems using
HFC–134a, and 17.2 (grams CO2equivalent/mile) for air conditioning
systems using a refrigerant with a lower
global warming potential.
Leakage means the annual refrigerant leakage
rate determined according to the
provisions of § 86.166–12(a), except if
the calculated rate is less than 10.4
grams/year (5.2 grams/year for systems
using only electric compressors), the rate
for the purpose of this formula shall be
10.4 grams/year (5.2 grams/year for
systems using only electric compressors).
The constant 20.7 is the average light truck
impact of air conditioning leakage in
units of grams/year.
GWPREF means the global warming potential
of the refrigerant as indicated in
paragraph (b)(5) of this section or as
otherwise determined by the
Administrator.
GWPR134a means the global warming
potential of HFC–134a as indicated in
paragraph (b)(5) of this section or as
otherwise determined by the
Administrator.
MinScore is 10.4 grams/year, except that for
systems using only electric compressors
it is 5.2 grams/year.
Total Credits (megagrams) = (Leakage ×
Production × VLM) ÷ 1,000,000
(4) The results of paragraph (b)(3) of
this section, rounded to the nearest
whole number, shall be included in the
manufacturer’s credit/debit totals
calculated in § 86.1865–12(k)(5).
(5) The following values for
refrigerant global warming potential
(GWPREF), or alternative values as
determined by the Administrator, shall
be used in the calculations of this
paragraph (b). The Administrator will
determine values for refrigerants not
included in this paragraph (b)(5) upon
request by a manufacturer.
(i) For HFC–134a, GWPREF = 1430;
(ii) For HFC–152a, GWPREF = 124;
(iii) For HFO–1234yf, GWPREF = 4;
(iv) For CO2, GWPREF = 1.
(c) Credits for improving air
conditioning system efficiency.
(ii) Light trucks:
result is less than zero HiLeakDis shall
be set equal to zero and if the result is
greater than 2.1 g/mi HiLeakDis shall be
set to 2.1g/mi:
Manufacturers may generate credits
applicable to the CO2 fleet average
program described in § 86.1865–12 by
implementing specific air conditioning
system technologies designed to reduce
air conditioning-related CO2 emissions
over the useful life of their passenger
automobiles and/or light trucks. Credits
shall be calculated according to this
paragraph (c) for each air conditioning
system that the manufacturer is using to
generate CO2 credits. Manufacturers
may also generate early air conditioning
efficiency credits under this paragraph
(c) for the 2009 through 2011 model
years according to the provisions of
§ 86.1867–12(b). For model years 2012
and 2013 the manufacturer may
determine air conditioning efficiency
credits using the requirements in
paragraphs (c)(1) through (4) of this
section. For model years 2014 and later
the eligibility requirements specified in
either paragraph (c)(5) or (6) of this
section must be met before an air
conditioning system is allowed to
generate credits.
(1)(i) 2012 through 2016 model year
air conditioning efficiency credits are
available for the following technologies
in the gram per mile amounts indicated
in the following table:
BILLING CODE 4910–59–P
EP01DE11.715</GPH>
(3) The total leakage reduction credits
generated by the air conditioning system
shall be calculated separately for
passenger automobiles and light trucks
according to the following formula:
Where:
Leakage = the CO2-equivalent leakage credit
value in grams per mile determined in
paragraph (b)(2) of this section.
Production = The total number of passenger
automobiles or light trucks, whichever is
applicable, produced with the air
conditioning system to which to the
leakage credit value from paragraph
(b)(2) of this section applies.
VLM = vehicle lifetime miles, which for
passenger automobiles shall be 195,264
and for light trucks shall be 225,865.
otherwise determined by the
Administrator;
GWPHFC134a means the global warming
potential of HFC–134a as indicated in
paragraph (b)(5) of this section or as
otherwise determined by the
Administrator.
MinScore is 8.3 grams/year, except that for
systems using only electric compressors
it is 4.1 grams/year.
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MaxCredit is 12.6 (grams CO2-equivalent/
mile) for air conditioning systems using
HFC–134a, and 13.8 (grams CO2equivalent/mile) for air conditioning
systems using a refrigerant with a lower
global warming potential.
LeakScore means the annual refrigerant
leakage rate determined according to the
provisions of § 86.166–12(a), except if
the calculated rate is less than 8.3 grams/
year (4.1 grams/year for systems using
EP01DE11.716</GPH>
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EP01DE11.717</GPH>
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Federal Register / Vol. 76, No. 231 / Thursday, December 1, 2011 / Proposed Rules
BILLING CODE 4910–59–C
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(i) 2017 and later model year air
conditioning efficiency credits are
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available for the following technologies
in the gram per mile amounts indicated
for each vehicle category in the
following table:
BILLING CODE 4910–59–P
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75376
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75377
EP01DE11.719</GPH>
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Federal Register / Vol. 76, No. 231 / Thursday, December 1, 2011 / Proposed Rules
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10:03 Dec 01, 2011
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Federal Register / Vol. 76, No. 231 / Thursday, December 1, 2011 / Proposed Rules
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Where:
(A) If the increased CO2 emissions
determined from the Idle Test Procedure
in § 86.165–12 is less than or equal to
the Idle Test Threshold, the total credit
value for use in paragraph (c)(3) of this
section shall be as determined in
paragraph (c)(2) of this section.
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*
*
*
*
(5) For the 2014 through 2016 model
years, manufacturers must validate air
conditioning credits by using the Air
Conditioning Idle Test Procedure
according to the provisions of this
paragraph (c)(5). In lieu of using the Air
Conditioning Idle Test Procedure to
determine eligibility to generate air
conditioning efficiency credits in the
2014 through 2016 model years, the
manufacturer may choose the AC17
reporting option specified in paragraph
(c)(7) of this section.
(i) After the 2013 model year, for each
air conditioning system selected by the
manufacturer to generate air
conditioning efficiency credits, the
manufacturer shall perform the Air
Conditioning Idle Test Procedure
specified in § 86.165–12 of this part.
*
*
*
*
*
(iii) For an air conditioning system to
be eligible to generate credits in the
2014 through 2016 model years the
increased CO2 emissions as a result of
the operation of that air conditioning
system determined according to the Idle
Test Procedure in § 86.165–14 must be
less than 21.3 grams per minute. In lieu
of using 21.3 grams per minute,
manufacturers may optionally use the
procedures in paragraph (c)(5)(iv) of this
section to determine an alternative limit
value.
*
*
*
*
*
(iv) Optional Air Conditioning Idle
Test limit value for 2014 through 2016
model years. For an air conditioning
system to be eligible to generate credits
in the 2014 through 2016 model years,
the increased CO2 emissions as a result
of the operation of that air conditioning
system determined according to the Idle
Test Procedure in § 86.165–12 must be
less than the value calculated by the
following equation and rounded to the
nearest tenth of gram per minute:
(B) If the increased CO2 emissions
determined from the Idle Test Procedure
in § 86.165–12 is greater than the Idle
Test Threshold and less than the Idle
Test Threshold plus 6.4, the total credit
value for use in paragraph (c)(3) of this
section shall be as determined according
to the following formula:
Where:
TCV = The total credit value for use in
paragraph (c)(3) of this section;
TCV1 = The total credit value determined
according to paragraph (c)(2) of this
section; and
*
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EP01DE11.723</GPH>
Total Credits (Megagrams) = (Credit ×
Production × VLM) ÷ 1,000,000
Credit = the CO2 efficiency credit value in
grams per mile determined in paragraph
(c)(2) or (c)(5) of this section, whichever
is applicable.
Production = The total number of passenger
automobiles or light trucks, whichever is
applicable, produced with the air
conditioning system to which to the
efficiency credit value from paragraph
(c)(2) of this section applies.
VLM = vehicle lifetime miles, which for
passenger automobiles shall be 195,264
and for light trucks shall be 225,865.
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EP01DE11.722</GPH>
(2) Air conditioning efficiency credits
are determined on an air conditioning
system basis. For each air conditioning
system that is eligible for a credit based
on the use of one or more of the items
listed in paragraph (c)(1) of this section,
the total credit value is the sum of the
gram per mile values listed in paragraph
(c)(1) of this section for each item that
applies to the air conditioning system.
(i) In the 2012 through 2016 model
years the total credit value for an air
conditioning system may not be greater
than 5.7 grams per mile.
(ii) In the 2017 and later model years
the total credit value for an air
conditioning system may not be greater
than 5.0 grams per mile for any
passenger automobile or 7.2 grams per
mile for any light truck.
(3) The total efficiency credits
generated by an air conditioning system
shall be calculated separately for
passenger automobiles and light trucks
according to the following formula:
EP01DE11.721</GPH>
BILLING CODE 4910–59–C
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Federal Register / Vol. 76, No. 231 / Thursday, December 1, 2011 / Proposed Rules
ITP = the increased CO2 emissions
determined from the Idle Test Procedure
in § 86.165–14.
ITT = the Idle Test Threshold from paragraph
(c)(5)(iii) or (c)(5)(iv) of this section,
whichever is applicable.
bjneal on DSK3VPTVN1PROD with PROPOSALS
(6) For the 2017 and later model
years, manufacturers must validate air
conditioning credits by using the AC17
Test Procedure according to the
provisions of this paragraph (c)(6).
(i) For each air conditioning system
selected by the manufacturer to generate
air conditioning efficiency credits, the
manufacturer shall perform the AC17
Air Conditioning Efficiency Test
Procedure specified in § 86.167–14 of
this part, according to the requirements
of this paragraph (c)(6).
(ii) Each air conditioning system shall
be tested as follows:
(A) Perform the AC17 test on a vehicle
that incorporates the air conditioning
system with the credit-generating
technologies.
(B) Perform the AC17 test on a vehicle
which does not incorporate the creditgenerating technologies. The tested
vehicle must be similar to the vehicle
tested under paragraph (c)(6)(ii)(A) of
this section.
(C) Subtract the CO2 emissions
determined from testing under
paragraph (c)(6)(ii)(A) of this section
from the CO2 emissions determined
from testing under paragraph
(c)(6)(ii)(B) of this section and round to
the nearest 0.1 grams/mile. If the result
is less than or equal to zero, the air
conditioning system is not eligible to
generate credits. If the result is greater
than or equal to the total of the gram per
mile credits determined in paragraph
(c)(2) of this section, then the air
conditioning system is eligible to
generate the maximum allowable value
determined in paragraph (c)(2) of this
section. If the result is greater than zero
but less than the total of the gram per
mile credits determined in paragraph
(c)(2) of this section, then the air
conditioning system is eligible to
generate credits in the amount
determined by subtracting the CO2
emissions determined from testing
under paragraph (c)(6)(ii)(A) of this
section from the CO2 emissions
determined from testing under
paragraph (c)(6)(ii)(B) of this section and
rounding to the nearest 0.1 grams/mile.
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(iii) For the first model year for which
an air conditioning system is expected
to generate credits, the manufacturer
must select for testing the highestselling subconfiguration within each
vehicle platform that uses the air
conditioning system. Credits may
continue to be generated by the air
conditioning system installed in a
vehicle platform provided that:
(A) The air conditioning system
components and/or control strategies do
not change in any way that could be
expected to cause a change in its
efficiency;
(B) The vehicle platform does not
change in design such that the changes
could be expected to cause a change in
the efficiency of the air conditioning
system; and
(C) The manufacturer continues to test
at least one sub-configuration within
each platform using the air conditioning
system, in each model year, until all
sub-configurations within each platform
have been tested.
(iv) Each air conditioning system
must be tested and must meet the
testing criteria in order to be allowed to
generate credits. Using good engineering
judgment, in the first model year for
which an air conditioning system is
expected to generate credits, the
manufacturer must select for testing the
highest-selling subconfiguration within
each vehicle platform using the air
conditioning system. Credits may
continue to be generated by an air
conditioning system in subsequent
model years if the manufacturer
continues to test at least one subconfiguration within each platform on
an annual basis, as long as the air
conditioning system and vehicle
platform do not change substantially.
(7) AC17 reporting requirements for
model years 2014 through 2016. As an
alternative to the use of the Air
Conditioning Idle Test to demonstrate
eligibility to generate air conditioning
efficiency credits, manufacturers may
use the provisions of this paragraph
(c)(7).
(i) The manufacturer shall perform the
AC17 test specified in § 86.167–14 of
this part on each vehicle platform for
which the manufacturer intends to
accrue air conditioning efficiency
credits and report the results separately
for all four phases of the test to the
Environmental Protection Agency.
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(ii) The manufacturer shall also report
the following information for each
vehicle tested: The vehicle class, model
type, curb weight, engine displacement,
transmission class and configuration,
interior volume, climate control system
type and characteristics, refrigerant
used, compressor type, and evaporator/
condenser characteristics.
(d) Off-cycle credits. Manufacturers
may generate credits for CO2-reducing
technologies where the CO2 reduction
benefit of the technology is not
adequately captured on the Federal Test
Procedure and/or the Highway Fuel
Economy Test. These technologies must
have a measurable, demonstrable, and
verifiable real-world CO2 reduction that
occurs outside the conditions of the
Federal Test Procedure and the
Highway Fuel Economy Test. These
optional credits are referred to as ‘‘offcycle’’ credits. Off-cycle technologies
used to generate emission credits are
considered emission-related
components subject to applicable
requirements, and must be
demonstrated to be effective for the full
useful life of the vehicle. Unless the
manufacturer demonstrates that the
technology is not subject to in-use
deterioration, the manufacturer must
account for the deterioration in their
analysis. The manufacturer must use
one of the three options specified in this
paragraph (d) to determine the CO2 gram
per mile credit applicable to an off-cycle
technology. Note that the option
provided in paragraph (d)(1) of this
section applies only to the 2017 and
later model years. The manufacturer
should notify EPA in their pre-model
year report of their intention to generate
any credits under this paragraph (d).
(1) Credit available for certain offcycle technologies. The provisions of
this paragraph (d)(1) are applicable only
to 2017 and later model year vehicles.
(i) The manufacturer may generate a
CO2 gram/mile credit for certain
technologies as specified in the
following table, provided that each
technology is applied to the minimum
percentage of the manufacturer’s total
U.S. production of passenger
automobiles and light trucks specified
in the table in each model year for
which credit is claimed. Technology
definitions are in paragraph (d)(1)(iv) of
this section.
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the amounts shown in the following
table:
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(A) Credits may also be accrued for
thermal control technologies as defined
in paragraph (d)(1)(iv) of this section in
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Federal Register / Vol. 76, No. 231 / Thursday, December 1, 2011 / Proposed Rules
(B) The maximum credit allowed for
thermal control technologies is limited
to 3.0 g/mi for passenger automobiles
and to 4.3 g/mi for light trucks. The
maximum credit allowed for glass or
glazing is limited to 3.0 g/mi for
passenger automobiles and to 4.3 g/mi
for light trucks.
(C) Glass or glazing credits are
calculated using the following equation:
Where:
Ttsnew = the total solar transmittance of the
glass, measured according to ISO 13837,
‘‘Safety glazing materials—Method for
determination of solar transmittance’’
(incorporated by reference; see § 86.1).
Ttsbase = 62 for the windshield, side-front,
side-rear, rear-quarter, and backlite
locations, and 40 for rooflite locations.
(ii) The maximum allowable decrease
in the manufacturer’s combined
passenger automobile and light truck
fleet average CO2 emissions attributable
to use of the default credit values in
paragraph (d)(1)(i) of this section is 10
grams per mile. If the total of the CO2
g/mi credit values from the table in
paragraph (d)(1)(i) of this section does
not exceed 10 g/mi for any passenger
automobile or light truck in a
manufacturer’s fleet, then the total offcycle credits may be calculated
according to paragraph (d)(5) of this
section. If the total of the CO2 g/mi
credit values from the table in paragraph
(d)(1)(i) of this section exceeds 10 g/mi
for any passenger automobile or light
truck in a manufacturer’s fleet, then the
gram per mile decrease for the
combined passenger automobile and
light truck fleet must be determined
according to paragraph (d)(1)(ii)(A) of
this section to determine whether the 10
g/mi limitation has been exceeded.
(A) Determine the gram per mile
decrease for the combined passenger
automobile and light truck fleet using
the following formula:
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(B) If the value determined in
paragraph (d)(1)(ii)(A) of this section is
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greater than 10 grams per mile, the total
credits, in Megagrams, that may be
accrued by a manufacturer using the
default gram per mile values in
paragraph (d)(1)(i) of this section shall
be determined using the following
formula:
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ProdC = The number of passenger
automobiles produced by the
manufacturer and delivered for sale in
the U.S.
ProdT = The number of light trucks produced
by the manufacturer and delivered for
sale in the U.S.
EP01DE11.726</GPH>
Where:
Credits = The total of passenger automobile
and light truck credits, in Megagrams,
determined according to paragraph (d)(5)
of this section and limited to those
credits accrued by using the default gram
per mile values in paragraph (d)(1)(i) of
this section.
EP01DE11.725</GPH>
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EP01DE11.728</GPH>
Where:
Credit = the total glass or glazing credits, in
grams per mile, for a vehicle, which may
not exceed 3.0 g/mi for passenger
automobiles or 4.3 g/mi for light trucks;
Z = 0.3 for passenger automobiles and 0.4 for
light trucks;
Gi = the measured glass area of window i, in
square meters and rounded to the nearest
tenth;
G = the total glass area of the vehicle, in
square meters and rounded to the nearest
tenth;
Ti = the estimated temperature reduction for
the glass area of window i, determined
using the following formula:
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Where:
ProdC = The number of passenger
automobiles produced by the
manufacturer and delivered for sale in
the U.S.
ProdT = The number of light trucks produced
by the manufacturer and delivered for
sale in the U.S.
(C) If the value determined in
paragraph (d)(1)(ii)(A) of this section is
not greater than 10 grams per mile, then
the credits that may be accrued by a
manufacturer using the default gram per
mile values in paragraph (d)(1)(i) of this
section do not exceed the allowable
limit, and total credits may be
determined for each category of vehicles
according to paragraph (d)(5) of this
section.
(D) If the value determined in
paragraph (d)(1)(ii)(A) of this section is
greater than 10 grams per mile, then the
combined passenger automobile and
light truck credits, in Megagrams, that
may be accrued using the calculations
in paragraph (d)(5) of this section must
not exceed the value determined in
paragraph (d)(1)(ii)(B) of this section.
This limitation should generally be
done by reducing the amount of credits
attributable to the vehicle category that
caused the limit to be exceeded such
that the total value does not exceed the
value determined in paragraph
(d)(1)(ii)(B) of this section.
(iii) In lieu of using the default gram
per mile values specified in paragraph
(d)(1)(i) of this section for specific
technologies, a manufacturer may
determine an alternative value for any of
the specified technologies. An
alternative value must be determined
using one of the methods specified in
paragraph (d)(2) or (3) of this section.
(iv) Definitions for the purposes of
this paragraph (d)(1) are as follows:
(A) Active aerodynamic
improvements means technologies that
are activated only at certain speeds to
improve aerodynamic efficiency by a
minimum of three percent, while
preserving other vehicle attributes or
functions.
(B) Electric heater circulation pump
means a pump system installed in a
stop-start equipped vehicle or in a
hybrid electric vehicle or plug-in hybrid
electric vehicle that continues to
circulate hot coolant through the heater
core when the engine is stopped during
a stop-start event. This system must be
calibrated to keep the engine off for 1
minute or more when the external
ambient temperature is 30 deg F.
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(C) High efficiency exterior lighting
means a lighting technology that, when
installed on the vehicle, is expected to
reduce the total electrical demand of the
exterior lighting system by a minimum
of 60 watts when compared to
conventional lighting systems. To be
eligible for this credit the high
efficiency lighting must be installed in
the following components: Parking/
position, front and rear turn signals,
front and rear side markers, stop/brake
lights (including the center-mounted
location), taillights, backup/reverse
lights, and license plate lighting.
(D) Engine start-stop means a
technology which enables a vehicle to
automatically turn off the engine when
the vehicle comes to a rest and restart
the engine when the driver applies
pressure to the accelerator or releases
the brake. Off-cycle engine start-stop
credits will only be allowed if the
Administrator has made a determination
under the testing and calculation
provisions in 40 CFR part 600 that
engine start-stop is the predominant
operating mode.
(E) Solar roof panels means the
installation of solar panels on an electric
vehicle or a plug-in hybrid electric
vehicle such that the solar energy is
used to provide energy to the electric
drive system of the vehicle by charging
the battery or directly providing power
to the electric motor with the equivalent
of at least 50 Watts of rated electricity
output.
(F) Active transmission warmup
means a system that uses waste heat
from the exhaust system to warm the
transmission fluid to an operating
temperature range quickly using a heat
exchanger in the exhaust system,
increasing the overall transmission
efficiency by reducing parasitic losses
associated with the transmission fluid,
such as losses related to friction and
fluid viscosity.
(G) Active engine warmup means a
system using waste heat from the
exhaust system to warm up targeted
parts of the engine so that it reduces
engine friction losses and enables the
closed-loop fuel control more quickly. It
would allow a faster transition from
cold operation to warm operation,
decreasing CO2 emissions, and
increasing fuel economy.
(H) Engine heat recovery means a
system that captures heat that would
otherwise be lost through the exhaust
system or through the radiator and
converting that heat to electrical energy
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that is used to meet the electrical
requirements of the vehicle. Such a
system must have a capacity of at least
100W to achieve 0.7 g/mi of credit.
Every additional 100W of capacity will
result in an additional 0.7 g/mi of credit.
(I) Active seat ventilation means a
device which draws air from the seating
surface which is in contact with the
occupant and exhausts it to a location
away from the seat.
(J) Solar reflective paint means a
vehicle paint or surface coating which
reflects at least 65 percent of the
impinging infrared solar energy, as
determined using ASTM standards
E903, E1918–06, or C1549–09. These
ASTM standards are incorporated by
reference; see § 86.1.
(K) Passive cabin ventilation means
ducts or devices which utilize
convective airflow to move heated air
from the cabin interior to the exterior of
the vehicle.
(L) Active cabin ventilation means
devices which mechanically move
heated air from the cabin interior to the
exterior of the vehicle.
(2) Technology demonstration using
EPA 5-cycle methodology. To
demonstrate an off-cycle technology and
to determine a CO2 credit using the EPA
5-cycle methodology, the manufacturer
shall determine the off-cycle city/
highway combined carbon-related
exhaust emissions benefit by using the
EPA 5-cycle methodology described in
40 CFR Part 600. Testing shall be
performed on a representative vehicle,
selected using good engineering
judgment, for each model type for
which the credit is being demonstrated.
The emission benefit of a technology is
determined by testing both with and
without the off-cycle technology
operating. Multiple off-cycle
technologies may be demonstrated on a
test vehicle. The manufacturer shall
conduct the following steps and submit
all test data to the EPA.
(i) Testing without the off-cycle
technology installed and/or operating.
Determine carbon-related exhaust
emissions over the FTP, the HFET, the
US06, the SC03, and the cold
temperature FTP test procedures
according to the test procedure
provisions specified in 40 CFR part 600
subpart B and using the calculation
procedures specified in § 600.113–08 of
this chapter. Run each of these tests a
minimum of three times without the offcycle technology installed and operating
and average the per phase (bag) results
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for each test procedure. Calculate the 5cycle weighted city/highway combined
carbon-related exhaust emissions from
the averaged per phase results, where
the 5-cycle city value is weighted 55%
and the 5-cycle highway value is
weighted 45%. The resulting combined
city/highway value is the baseline 5cycle carbon-related exhaust emission
value for the vehicle.
(ii) Testing with the off-cycle
technology installed and/or operating.
Determine carbon-related exhaust
emissions over the US06, the SC03, and
the cold temperature FTP test
procedures according to the test
procedure provisions specified in 40
CFR part 600 subpart B and using the
calculation procedures specified in
§ 600.113–08 of this chapter. Run each
of these tests a minimum of three times
with the off-cycle technology installed
and operating and average the per phase
(bag) results for each test procedure.
Calculate the 5-cycle weighted city/
highway combined carbon-related
exhaust emissions from the averaged per
phase results, where the 5-cycle city
value is weighted 55% and the 5-cycle
highway value is weighted 45%. Use the
averaged per phase results for the FTP
and HFET determined in paragraph
(d)(2)(i) of this section for operation
without the off-cycle technology in this
calculation. The resulting combined
city/highway value is the 5-cycle
carbon-related exhaust emission value
showing the off-cycle benefit of the
technology but excluding any benefit of
the technology on the FTP and HFET.
(iii) Subtract the combined city/
highway value determined in paragraph
(d)(2)(i) of this section from the value
determined in paragraph (d)(2)(ii) of this
section. The result is the off-cycle
benefit of the technology or technologies
being evaluated. If this benefit is greater
than or equal to three percent of the
value determined in paragraph (d)(2)(i)
of this section then the manufacturer
may use this value, rounded to the
nearest tenth of a gram per mile, to
determine credits under paragraph
(d)(4) of this section.
(iv) If the value calculated in
paragraph (d)(2)(iii) of this section is
less than three percent of the value
determined in paragraph (d)(2)(i) of this
section, then the manufacturer must
repeat the testing required under
paragraphs (d)(2)(i) and (ii) of this
section, except instead of running each
test three times they shall run each test
two additional times. The off-cycle
benefit of the technology or technologies
being evaluated shall be calculated as in
paragraph (d)(2)(iii) of this section using
all the tests conducted under paragraph
(d) of this section. If the value
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calculated in paragraph (d)(2)(iii) of this
section is less than three percent of the
value determined in paragraph (d)(2)(i)
of this section, then the manufacturer
must verify the emission reduction
potential of the off-cycle technology or
technologies using the EPA Vehicle
Simulation Tool (incorporated by
reference; see § 86.1), and if the results
support a credit value that is less than
three percent of the value determined in
paragraph (d)(2)(i) of this section then
the manufacturer may use the off-cycle
benefit of the technology or technologies
calculated as in paragraph (d)(2)(iii) of
this section using all the tests conducted
under paragraph (d) of this section,
rounded to the nearest tenth of a gram
per mile, to determine credits under
paragraph (d)(4) of this section.
(3) Technology demonstration using
alternative EPA-approved methodology.
(i) This option may be used only with
EPA approval, and the manufacturer
must be able to justify to the
Administrator why the 5-cycle option
described in paragraph (d)(2) of this
section insufficiently characterizes the
effectiveness of the off-cycle technology.
In cases where the EPA 5-cycle
methodology described in paragraph
(d)(2) of this section cannot adequately
measure the emission reduction
attributable to an innovative off-cycle
technology, the manufacturer may
develop an alternative approach. Prior
to a model year in which a manufacturer
intends to seek these credits, the
manufacturer must submit a detailed
analytical plan to EPA. The
manufacturer may seek EPA input on
the proposed methodology prior to
conducting testing or analytical work,
and EPA will provide input on the
manufacturer’s analytical plan. The
alternative demonstration program must
be approved in advance by the
Administrator and should:
(A) Use modeling, on-road testing, onroad data collection, or other approved
analytical or engineering methods;
(B) Be robust, verifiable, and capable
of demonstrating the real-world
emissions benefit with strong statistical
significance;
(C) Result in a demonstration of
baseline and controlled emissions over
a wide range of driving conditions and
number of vehicles such that issues of
data uncertainty are minimized;
(D) Result in data on a model type
basis unless the manufacturer
demonstrates that another basis is
appropriate and adequate.
(ii) Notice and opportunity for public
comment. The Administrator will
publish a notice of availability in the
Federal Register notifying the public of
a manufacturer’s proposed alternative
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off-cycle credit calculation
methodology. The notice will include
details regarding the proposed
methodology, but will not include any
Confidential Business Information. The
notice will include instructions on how
to comment on the methodology. The
Administrator will take public
comments into consideration in the
final determination, and will notify the
public of the final determination.
Credits may not be accrued using an
approved methodology until the first
model year for which the Administrator
has issued a final approval.
(4) Review and approval process for
off-cycle credits. (i) Initial steps
required. (A) A manufacturer requesting
off-cycle credits under the provisions of
paragraph (d)(2) of this section must
conduct the testing and/or simulation
described in that paragraph.
(B) A manufacturer requesting offcycle credits under the provisions of
paragraph (d)(3) of this section must
develop a methodology for
demonstrating and determining the
benefit of the off-cycle technology, and
carry out any necessary testing and
analysis required to support that
methodology.
(C) A manufacturer requesting offcycle credits under paragraph (d) of this
section must conduct testing and/or
prepare engineering analyses that
demonstrate the in-use durability of the
technology for the full useful life of the
vehicle.
(ii) Data and information
requirements. The manufacturer seeking
off-cycle credits must submit an
application for off-cycle credits
determined under paragraphs (d)(2) and
(d)(3) of this section. The application
must contain the following:
(A) A detailed description of the offcycle technology and how it functions
to reduce CO2 emissions under
conditions not represented on the FTP
and HFET.
(B) A list of the vehicle model(s)
which will be equipped with the
technology.
(C) A detailed description of the test
vehicles selected and an engineering
analysis that supports the selection of
those vehicles for testing.
(D) All testing and/or simulation data
required under paragraph (d)(2) or (d)(3)
of this section, as applicable, plus any
other data the manufacturer has
considered in the analysis.
(E) For credits under paragraph (d)(3)
of this section, a complete description of
the methodology used to estimate the
off-cycle benefit of the technology and
all supporting data, including vehicle
testing and in-use activity data.
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(F) An estimate of the off-cycle benefit
by vehicle model and the fleetwide
benefit based on projected sales of
vehicle models equipped with the
technology.
(G) An engineering analysis and/or
component durability testing data or
whole vehicle testing data
demonstrating the in-use durability of
the off-cycle technology components.
(iii) EPA review of the off-cycle credit
application. Upon receipt of an
application from a manufacturer, EPA
will do the following:
(A) Review the application for
completeness and notify the
manufacturer within 30 days if
additional information is required.
(B) Review the data and information
provided in the application to
determine if the application supports
the level of credits estimated by the
manufacturer.
(C) For credits under paragraph (d)(3)
of this section, EPA will make the
application available to the public for
comment, as described in paragraph
(d)(3)(ii) of this section, within 60 days
of receiving a complete application. The
public review period will be specified
as 30 days, during which time the
public may submit comments.
Manufacturers may submit a written
rebuttal of comments for EPA
consideration or may revise their
application in response to comments. A
revised application should be submitted
after the end of the public review
period, and EPA will review the
application as if it was a new
application submitted under this
paragraph (d)(4)(iii).
(iv) EPA decision. (A) For credits
under paragraph (d)(2) of this section,
EPA will notify the manufacturer of its
decision within 60 days of receiving a
complete application.
(B) For credits under paragraph (d)(3)
of this section, EPA will notify the
manufacturer of its decision after
reviewing and evaluating the public
comments. EPA will make the decision
and rationale available to the public.
(C) EPA will notify the manufacturer
in writing of its decision to approve or
deny the application, and will provide
the reasons for the decision. EPA will
make the decision and rationale
available to the public.
(5) Calculation of total off-cycle
credits. Total off-cycle credits in
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Megagrams of CO2 (rounded to the
nearest whole number) shall be
calculated separately for passenger
automobiles and light trucks according
to the following formula:
Total Credits (Megagrams) = (Credit ×
Production × VLM) ÷ 1,000,000
Where:
Credit = the credit value in grams per mile
determined in paragraph (d)(1), (d)(2) or
(d)(3) of this section.
Production = The total number of passenger
automobiles or light trucks, whichever is
applicable, produced with the off-cycle
technology to which to the credit value
determined in paragraph (d)(1), (d)(2), or
(d)(3) of this section applies.
VLM = vehicle lifetime miles, which for
passenger automobiles shall be 195,264
and for light trucks shall be 225,865.
(e) Credits for certain full-size pickup
trucks. Full-size pickup trucks may be
eligible for additional credits based on
the implementation of hybrid
technologies or on exhaust emission
performance, as described in this
paragraph (e). Credits may be generated
under either paragraph (e)(2) or (e)(3) of
this section for a qualifying pickup
truck, but not both.
(1) The following definitions apply for
the purposes of this paragraph (e).
(i) Full size pickup truck means a light
truck which has a passenger
compartment and an open cargo box
and which meets the following
specifications:
(A) A minimum cargo bed width
between the wheelhouses of 48 inches,
measured as the minimum lateral
distance between the limiting
interferences (pass-through) of the
wheelhouses. The measurement shall
exclude the transitional arc, local
protrusions, and depressions or pockets,
if present. An open cargo box means a
vehicle where the cargo box does not
have a permanent roof. Vehicles sold
with detachable covers are considered
‘‘open’’ for the purposes of these
criteria.
(B) A minimum open cargo box length
of 60 inches, where the length is defined
by the lesser of the pickup bed length
at the top of the body and the pickup
bed length at the floor, where the length
at the top of the body is defined as the
longitudinal distance from the inside
front of the pickup bed to the inside of
the closed endgate as measured at the
cargo floor surface along vehicle
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centerline, and the length at the floor is
defined as the longitudinal distance
from the inside front of the pickup bed
to the inside of the closed endgate as
measured at the cargo floor surface
along vehicle centerline.
(C) A minimum towing capability of
5,000 pounds, where minimum towing
capability is determined by subtracting
the gross vehicle weight rating from the
gross combined weight rating, or a
minimum payload capability of 1,700
pounds, where minimum payload
capability is determined by subtracting
the curb weight from the gross vehicle
weight rating.
(ii) Mild hybrid gasoline-electric
vehicle means a vehicle that has start/
stop capability and regenerative braking
capability, where the recaptured braking
energy over the Federal Test Procedure
is at least 15 percent but less than 75
percent of the total braking energy,
where the percent of recaptured braking
energy is measured and calculated
according to § 600.116–12(c).
(iii) Strong hybrid gasoline-electric
vehicle means a vehicle that has start/
stop capability and regenerative braking
capability, where the recaptured braking
energy over the Federal Test Procedure
is at least 75 percent of the total braking
energy, where the percent of recaptured
braking energy is measured and
calculated according to § 600.116–12(c).
(2) Credits for implementation of
gasoline-electric hybrid technology. Full
size pickup trucks that implement
hybrid gasoline-electric technologies
may be eligible for an additional credit
under this paragraph (e)(2). Pickup
trucks using the credits under this
paragraph (e)(2) may not use the credits
described in paragraph (e)(3) of this
section.
(i) Full size pickup trucks that are
mild hybrid gasoline-electric vehicles
and that are produced in the 2017
through 2021 model years are eligible
for a credit of 10 grams/mile. To receive
this credit, the manufacturer must
produce a quantity of mild hybrid full
size pickup trucks such that the
proportion of production of such
vehicles, when compared to the
manufacturer’s total production of full
size pickup trucks, is not less than the
amount specified in the table below for
each model year.
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(ii) Full size pickup trucks that are
strong hybrid gasoline-electric vehicles
and that are produced in the 2017
through 2025 model years are eligible
for a credit of 20 grams/mile. To receive
this credit, the manufacturer must
produce a quantity of strong hybrid full
size pickup trucks such that the
proportion of production of such
vehicles, when compared to the
manufacturer’s total production of full
size pickup trucks, is not less than 10
percent for each model year.
(3) Credits for emission reduction
performance. Full size pickup trucks
that achieve carbon-related exhaust
emission values below the applicable
target value determined in 86.1818–
12(c)(3) may be eligible for an additional
credit. For the purposes of this
paragraph (e)(3), carbon-related exhaust
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emission values may include any
applicable air conditioning leakage and/
or efficiency credits as determined in
paragraphs (b) and (c) of this section.
Pickup trucks using the credits under
this paragraph (e)(3) may not use the
credits described in paragraph (e)(2) of
this section or the production
multipliers described in paragraph (a)(2)
of this section.
(i) Full size pickup trucks that achieve
carbon-related exhaust emissions less
than or equal to the applicable target
value determined in 86.1818–12(c)(3)
multiplied by 0.85 (rounded to the
nearest gram/mile) and greater than the
applicable target value determined in
86.1818–12(c)(3) multiplied by 0.80
(rounded to the nearest gram/mile) in a
model year are eligible for a credit of 10
grams/mile. A pickup truck that
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qualifies for this credit in a model year
may claim this credit for subsequent
model years through the 2021 model
year if the carbon-related exhaust
emissions of that pickup truck do not
increase relative to the emissions in the
model year in which the pickup truck
qualified for the credit. To qualify for
this credit in each model year, the
manufacturer must produce a quantity
of full size pickup trucks that meet the
initial emission eligibility requirements
of this paragraph (e)(3)(i) such that the
proportion of production of such
vehicles, when compared to the
manufacturer’s total production of full
size pickup trucks, is not less than the
amount specified in the table below for
each model year.
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(ii) Full size pickup trucks that
achieve carbon-related exhaust
emissions less than or equal to the
applicable target value determined in
86.1818–12(c)(3) multiplied by 0.80
(rounded to the nearest gram/mile) in a
model year are eligible for a credit of 20
grams/mile. A pickup truck that
qualifies for this credit in a model year
may claim this credit for a maximum of
five subsequent model years if the
carbon-related exhaust emissions of that
pickup truck do not increase relative to
the emissions in the model year in
which the pickup truck first qualified
for the credit. This credit may not be
claimed in any model year after 2025.
To qualify for this credit, the
manufacturer must produce a quantity
of full size pickup trucks that meet the
emission requirements of this paragraph
(e)(3)(i) such that the proportion of
production of such vehicles, when
compared to the manufacturer’s total
production of full size pickup trucks, is
not less than 10 percent in each model
year. A pickup truck that qualifies for
this credit in a model year and is subject
to a major redesign in a subsequent
model year such that it qualifies for the
credit in the model year of the redesign
may be allowed to qualify for an
additional five years (not to go beyond
the 2025 model year) with the approval
of the Administrator.
(4) Calculation of total full size
pickup truck credits. Total credits in
Megagrams of CO2 (rounded to the
nearest whole number) shall be
calculated for qualifying full size pickup
trucks according to the following
formula:
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Total Credits (Megagrams) = ([(10 ×
Production10) + (20 × Production20)]
× 225,865) ÷ 1,000,000
Where:
Production10 = The total number of full size
pickup trucks produced with a credit
value of 10 grams per mile from
paragraphs (e)(2) and (e)(3).
Production20 = The total number of full size
pickup trucks produced with a credit
value of 20 grams per mile from
paragraphs (e)(2) and (e)(3).
17. Section 86.1867–12 is amended by
revising paragraph (a)(2)(i) to read as
follows:
§ 86.1867–12
programs.
Optional early CO2 credit
*
*
*
*
*
(a) * * *
(2) * * *
(i) Credits under this pathway shall be
calculated according to the provisions of
paragraph (a)(1) of this section, except
credits may only be generated by
vehicles sold in a model year in
California and in states with a section
177 program in effect in that model
year. For the purposes of this section,
‘‘section 177 program’’ means State
regulations or other laws that apply to
vehicle emissions from any of the
following categories of motor vehicles:
Passenger automobiles, light-duty trucks
up through 6,000 pounds GVWR, and
medium-duty vehicles from 6,001 to
14,000 pounds GVWR, as these
categories of motor vehicles are defined
in the California Code of Regulations,
Title 13, Division 3, Chapter 1, Article
1, Section 1900.
*
*
*
*
*
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PART 600—FUEL ECONOMY AND
GREENHOUSE GAS EXHAUST
EMISSIONS OF MOTOR VEHICLES
18. The authority citation for part 600
continues to read as follows:
Authority: 49 U.S.C. 32901—23919q, Pub.
L. 109–58.
Subpart B—[Amended]
19. Section 600.002 is amended by
revising the definitions of ‘‘combined
fuel economy’’ and ‘‘fuel economy’’ to
read as follows:
§ 600.002
Definitions.
*
*
*
*
*
Combined fuel economy means:
(1) The fuel economy value
determined for a vehicle (or vehicles) by
harmonically averaging the city and
highway fuel economy values, weighted
0.55 and 0.45, respectively.
(2) For electric vehicles, for the
purpose of calculating average fuel
economy pursuant to the provisions of
part 600, subpart F, the term means the
equivalent petroleum-based fuel
economy value as determined by the
calculation procedure promulgated by
the Secretary of Energy. For the purpose
of labeling pursuant to the provisions of
part 600, subpart D, the term means the
fuel economy value as determined by
the procedures specified in § 600.116–
12.
*
*
*
*
*
Fuel economy means:
(1) The average number of miles
traveled by an automobile or group of
automobiles per volume of fuel
consumed as calculated in this part; or
(2) For the purpose of calculating
average fuel economy pursuant to the
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provisions of part 600, subpart F, fuel
economy for electrically powered
automobiles means the equivalent
petroleum-based fuel economy as
determined by the Secretary of Energy
in accordance with the provisions of 10
CFR part 474. For the purpose of
labeling pursuant to the provisions of
part 600, subpart D, the term means the
fuel economy value as determined by
the procedures specified in § 600.116–
12.
*
*
*
*
*
20. Section 600.111–08 is amended by
revising the introductory text to read as
follows:
§ 600.111–08
Test procedures.
This section provides test procedures
for the FTP, highway, US06, SC03, and
the cold temperature FTP tests. Testing
shall be performed according to test
procedures and other requirements
contained in this part 600 and in part 86
of this chapter, including the provisions
of part 86, subparts B, C, and S. Test
hybrid electric vehicles using the
procedures of SAE J1711 (incorporated
by reference in § 600.011). For FTP
testing, this generally involves emission
sampling over four phases (bags) of the
UDDS (cold-start, transient, warm-start,
transient); however, these four phases
may be combined into two phases
(phases 1 + 2 and phases 3 + 4). Test
plug-in hybrid electric vehicles using
the procedures of SAE J1711
(incorporated by reference in § 600.011)
as described in § 600.116–12. Test
electric vehicles using the procedures of
SAE J1634 (incorporated by reference in
§ 600.011) as described in § 600.116–12.
*
*
*
*
*
21. Section 600.113–12 is amended by
revising paragraphs (g)(2)(iv)(C) and (j)
through (m) to read as follows:
§ 600.113–12 Fuel economy, CO2
emissions, and carbon-related exhaust
emission calculations for FTP, HFET, US06,
SC03 and cold temperature FTP tests.
not required to be adjusted by a
deterioration factor.
*
*
*
*
*
(j)(1) For methanol-fueled
automobiles and automobiles designed
to operate on mixtures of gasoline and
methanol, the fuel economy in miles per
gallon of methanol is to be calculated
using the following equation:
mpg = (CWF × SG × 3781.8)/((CWFexHC
× HC) + (0.429 × CO) + (0.273 ×
CO2) + (0.375 × CH3OH) + (0.400 ×
HCHO))
Where
CWF = Carbon weight fraction of the fuel as
determined in paragraph (f)(2)(ii) of this
section and rounded according to
paragraph (g)(3) of this section.
SG = Specific gravity of the fuel as
determined in paragraph (f)(2)(i) of this
section and rounded according to
paragraph (g)(3) of this section.
CWFexHC = Carbon weight fraction of exhaust
hydrocarbons = CWF as determined in
paragraph (f)(2)(ii) of this section and
rounded according to paragraph (g)(3) of
this section (for M100 fuel, CWFexHC =
0.866).
HC = Grams/mile HC as obtained in
paragraph (g)(1) of this section.
CO = Grams/mile CO as obtained in
paragraph (g)(1) of this section.
CO2 = Grams/mile CO2 as obtained in
paragraph (g)(1) of this section.
CH3OH = Grams/mile CH3OH (methanol) as
obtained in paragraph (g)(1) of this
section.
HCHO = Grams/mile HCHO (formaldehyde)
as obtained in paragraph (g)(1) of this
section.
(2)(i) For 2012 and later model year
methanol-fueled automobiles and
automobiles designed to operate on
mixtures of gasoline and methanol, the
carbon-related exhaust emissions in
grams per mile while operating on
methanol is to be calculated using the
following equation and rounded to the
nearest 1 gram per mile:
CREE = (CWFexHC/0.273 × HC) + (1.571
× CO) + (1.374 × CH3OH) + (1.466
× HCHO) + CO2
*
*
*
*
(g) * * *
(2) * * *
(iv) * * *
(C) For the 2012 through 2016 model
years only, manufacturers may use an
assigned value of 0.010 g/mi for N2O
FTP and HFET test values. This value is
Where:
CREE means the carbon-related exhaust
emission value as defined in § 600.002.
CWFexHC = Carbon weight fraction of exhaust
hydrocarbons = CWF as determined in
paragraph (f)(2)(ii) of this section and
rounded according to paragraph (g)(3) of
this section (for M100 fuel, CWFexHC =
0.866).
Where:
mpge = miles per gasoline gallon equivalent
of natural gas.
CWFHC/NG = carbon weight fraction based on
the hydrocarbon constituents in the
natural gas fuel as obtained in paragraph
(f)(3) of this section and rounded
bjneal on DSK3VPTVN1PROD with PROPOSALS
*
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HC = Grams/mile HC as obtained in
paragraph (g)(2) of this section.
CO = Grams/mile CO as obtained in
paragraph (g)(2) of this section.
CO2 = Grams/mile CO2 as obtained in
paragraph (g)(2) of this section.
CH3OH = Grams/mile CH3OH (methanol) as
obtained in paragraph (g)(2) of this
section.
HCHO = Grams/mile HCHO (formaldehyde)
as obtained in paragraph (g)(2) of this
section.
(ii) For manufacturers complying with
the fleet averaging option for N2O and
CH4 as allowed under § 86.1818 of this
chapter, the carbon-related exhaust
emissions in grams per mile for 2012
and later model year methanol-fueled
automobiles and automobiles designed
to operate on mixtures of gasoline and
methanol while operating on methanol
is to be calculated using the following
equation and rounded to the nearest 1
gram per mile:
CREE = [(CWFexHC/0.273) × NMHC] +
(1.571 × CO) + (1.374 × CH3OH) +
(1.466 × HCHO) + CO2 + (298 ×
N2O) + (25 × CH4)
Where:
CREE means the carbon-related exhaust
emission value as defined in § 600.002.
CWFexHC = Carbon weight fraction of exhaust
hydrocarbons = CWF as determined in
paragraph (f)(2)(ii) of this section and
rounded according to paragraph (g)(3) of
this section (for M100 fuel, CWFexHC =
0.866).
NMHC = Grams/mile HC as obtained in
paragraph (g)(2) of this section.
CO = Grams/mile CO as obtained in
paragraph (g)(2) of this section.
CO2 = Grams/mile CO2 as obtained in
paragraph (g)(2) of this section.
CH3OH = Grams/mile CH3OH (methanol) as
obtained in paragraph (g)(2) of this
section.
HCHO = Grams/mile HCHO (formaldehyde)
as obtained in paragraph (g)(2) of this
section.
N2O = Grams/mile N2O as obtained in
paragraph (g)(2) of this section.
CH4 = Grams/mile CH4 as obtained in
paragraph (g)(2) of this section.
(k)(1) For automobiles fueled with
natural gas and automobiles designed to
operate on gasoline and natural gas, the
fuel economy in miles per gallon of
natural gas is to be calculated using the
following equation:
according to paragraph (g)(3) of this
section.
DNG = density of the natural gas fuel [grams/
ft3 at 68 °F (20 °C) and 760 mm Hg (101.3
E:\FR\FM\TEST.SGM
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Federal Register / Vol. 76, No. 231 / Thursday, December 1, 2011 / Proposed Rules
75389
kPa)] pressure as obtained in paragraph
(g)(3) of this section.
CH4, NMHC, CO, and CO2 = weighted mass
exhaust emissions [grams/mile] for
methane, non-methane HC, carbon
monoxide, and carbon dioxide as
obtained in paragraph (g)(2) of this
section.
CWFNMHC = carbon weight fraction of the
non-methane HC constituents in the fuel
as determined from the speciated fuel
composition per paragraph (f)(3) of this
section and rounded according to
paragraph (g)(3) of this section.
CO2NG = grams of carbon dioxide in the
natural gas fuel consumed per mile of
travel.
= cubic feet of natural gas fuel consumed per
mile
Where:
CWFNG = the carbon weight fraction of the
natural gas fuel as calculated in
paragraph (f)(3) of this section.
WFCO2 = weight fraction carbon dioxide of
the natural gas fuel calculated using the
mole fractions and molecular weights of
the natural gas fuel constituents per
ASTM D 1945 (incorporated by reference
in § 600.011).
CREE means the carbon-related exhaust
emission value as defined in § 600.002.
CH4 = Grams/mile CH4as obtained in
paragraph (g)(2) of this section.
NMHC = Grams/mile NMHC as obtained in
paragraph (g)(2) of this section.
CO = Grams/mile CO as obtained in
paragraph (g)(2) of this section.
CO2 = Grams/mile CO2 as obtained in
paragraph (g)(2) of this section.
CWFNMHC = carbon weight fraction of the
non-methane HC constituents in the fuel
as determined from the speciated fuel
composition per paragraph (f)(3) of this
section and rounded according to
paragraph (f)(3) of this section.
N2O = Grams/mile N2O as obtained in
paragraph (g)(2) of this section.
C2H4O = Grams/mile C2H4O (acetaldehyde)
as obtained in paragraph (g)(1) of this
section.
bjneal on DSK3VPTVN1PROD with PROPOSALS
Where:
CREE means the carbon-related exhaust
emission value as defined in § 600.002.
CH4 = Grams/mile CH4 as obtained in
paragraph (g)(2) of this section.
NMHC = Grams/mile NMHC as obtained in
paragraph (g)(2) of this section.
CO = Grams/mile CO as obtained in
paragraph (g)(2) of this section.
CO2 = Grams/mile CO2 as obtained in
paragraph (g)(2) of this section.
CWFNMHC = carbon weight fraction of the
non-methane HC constituents in the fuel
as determined from the speciated fuel
composition per paragraph (f)(3) of this
section and rounded according to
paragraph (f)(3) of this section.
(ii) For manufacturers complying with
the fleet averaging option for N2O and
CH4 as allowed under § 86.1818 of this
chapter, the carbon-related exhaust
emissions in grams per mile for 2012
and later model year automobiles fueled
with natural gas and automobiles
designed to operate on gasoline and
natural gas while operating on natural
gas is to be calculated using the
following equation and rounded to the
nearest 1 gram per mile:
CREE = (25 × CH4) + [(CWFNMHC/0.273)
× NMHC] + (1.571 × CO) + CO2 +
(298 × N2O)
Where:
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(l)(1) For ethanol-fueled automobiles
and automobiles designed to
operate on mixtures of gasoline and
ethanol, the fuel economy in miles
per gallon of ethanol is to be
calculated using the following
equation:
mpg = (CWF × SG × 3781.8)/((CWFexHC×
HC) + (0.429 × CO) + (0.273 × CO2)
+ (0.375 × CH3OH) + (0.400 ×
HCHO) + (0.521 × C2H5OH) + (0.545
× C2H4O))
Where:
CWF = Carbon weight fraction of the fuel as
determined in paragraph (f)(4) of this
section and rounded according to
paragraph (f)(3) of this section.
SG = Specific gravity of the fuel as
determined in paragraph (f)(4) of this
section and rounded according to
paragraph (f)(3) of this section.
CWFexHC = Carbon weight fraction of exhaust
hydrocarbons = CWF as determined in
paragraph (f)(4) of this section and
rounded according to paragraph (f)(3) of
this section.
HC = Grams/mile HC as obtained in
paragraph (g)(1) of this section.
CO = Grams/mile CO as obtained in
paragraph (g)(1) of this section.
CO2 = Grams/mile CO2 as obtained in
paragraph (g)(1) of this section.
CH3OH = Grams/mile CH3OH (methanol) as
obtained in paragraph (g)(1) of this
section.
HCHO = Grams/mile HCHO (formaldehyde)
as obtained in paragraph (g)(1) of this
section.
C2H5OH = Grams/mile C2H5OH (ethanol) as
obtained in paragraph (g)(1) of this
section.
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Where:
(2)(i) For 2012 and later model year
ethanol-fueled automobiles and
automobiles designed to operate on
mixtures of gasoline and ethanol, the
carbon-related exhaust emissions in
grams per mile while operating on
ethanol is to be calculated using the
following equation and rounded to the
nearest 1 gram per mile:
CREE = (CWFexHC/0.273 × HC) + (1.571
× CO) + (1.374 × CH3OH) + (1.466
× HCHO) + (1.911 × C2H5OH) +
(1.998 × C2H4O) + CO2
Where:
CREE means the carbon-related exhaust
emission value as defined in § 600.002.
CWFexHC = Carbon weight fraction of exhaust
hydrocarbons = CWF as determined in
paragraph (f)(4) of this section and
rounded according to paragraph (f)(3) of
this section.
HC = Grams/mile HC as obtained in
paragraph (g)(2) of this section.
CO = Grams/mile CO as obtained in
paragraph (g)(2) of this section.
CO2 = Grams/mile CO2 as obtained in
paragraph (g)(2) of this section.
CH3OH = Grams/mile CH3OH (methanol) as
obtained in paragraph (g)(2) of this
section.
HCHO = Grams/mile HCHO (formaldehyde)
as obtained in paragraph (g)(2) of this
section.
C2H5OH = Grams/mile C2H5OH (ethanol) as
obtained in paragraph (g)(2) of this
section.
C2H4O = Grams/mile C2H4O (acetaldehyde)
as obtained in paragraph (g)(2) of this
section.
(ii) For manufacturers complying with
the fleet averaging option for N2O and
CH4 as allowed under § 86.1818 of this
chapter, the carbon-related exhaust
emissions in grams per mile for 2012
and later model year ethanol-fueled
automobiles and automobiles designed
to operate on mixtures of gasoline and
ethanol while operating on ethanol is to
be calculated using the following
equation and rounded to the nearest 1
gram per mile:
CREE = [(CWFexHC/0.273) × NMHC] +
(1.571 × CO) + (1.374 × CH3OH) +
(1.466 × HCHO) + (1.911 × C2H5OH)
E:\FR\FM\TEST.SGM
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(2)(i) For automobiles fueled with
natural gas and automobiles
designed to operate on gasoline and
natural gas, the carbon-related
exhaust emissions in grams per
mile while operating on natural gas
is to be calculated for 2012 and later
model year vehicles using the
following equation and rounded to
the nearest 1 gram per mile:
CREE = 2.743 × CH4 + CWFNMHC/0.273
× NMHC + 1.571 × CO + CO2
CO2NG = FCNG × DNG × WFCO2
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Federal Register / Vol. 76, No. 231 / Thursday, December 1, 2011 / Proposed Rules
+ (1.998 × C2H4O) + CO2 + (298 ×
N2O) + (25 × CH4)
CH4 = Grams/mile CH4 as obtained in
paragraph (g)(2) of this section.
calculated using the method specified in
paragraph (m)(1) of this section, except
that CREEUP shall be determined
according to procedures established by
the Administrator under § 600.111–
08(f). As described in § 86.1866 of this
chapter the value of CREE may be set
equal to zero for a certain number of
2012 through 2025 model year fuel cell
vehicles.
*
*
*
*
*
22. Section 600.116–12 is amended as
follows:
a. By revising the heading.
b. By revising paragraph (a)
introductory text.
c. By adding paragraph (c).
The revisions and additions read as
follows:
(2) For plug-in hybrid electric
vehicles the carbon-related exhaust
emissions in grams per mile is to be
calculated according to the provisions of
§ 600.116, except that the CREE for
charge-depleting operation shall be the
sum of the CREE associated with
gasoline consumption and the net
upstream CREE determined according to
paragraph (m)(1)(i) of this section,
rounded to the nearest one gram per
mile.
(3) For 2012 and later model year fuel
cell vehicles, the carbon-related exhaust
emissions in grams per mile shall be
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CREE = CREEUP ¥ CREEGAS
Where:
CREE means the carbon-related exhaust
emission value as defined in § 600.002,
which may be set equal to zero for
eligible 2012 through 2025 model year
electric vehicles for a certain number of
vehicles produced and delivered for sale
as described in § 86.1866–12(a) of this
chapter.
(c) Determining the proportion of
recovered braking energy for hybrid
electric vehicles. Hybrid electric
vehicles tested under this part may
determine the proportion of braking
energy recovered over the FTP relative
to the total available braking energy
required over the FTP. This
determination is required for pickup
trucks accruing credits for
implementation of hybrid technology
under § 86. 1866–12(e)(2), and requires
the measurement of electrical current
(in amps) flowing into the hybrid
system battery for the duration of the
test.
(1) Calculate the theoretical maximum
amount of energy that could be
recovered by a hybrid electric vehicle
§ 600.116–12 Special procedures related to over the FTP test cycle, where the test
electric vehicles, hybrid electric vehicles,
cycle time and velocity points are
and plug-in hybrid electric vehicles.
expressed at 10 Hz, and the velocity
(a) Determine fuel economy values for (miles/hour) is expressed to the nearest
electric vehicles as specified in
0.01 miles/hour, as follows:
§§ 600.210 and 600.311 using the
(i) For each time point in the 10 Hz
procedures of SAE J1634 (incorporated
test cycle (i.e., at each 0.1 seconds):
by reference in § 600.011), with the follo
(A) Determine the road load power in
wing clarifications and modifications:
kilowatts using the following equation:
*
*
*
*
*
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EP01DE11.734</GPH>
(m) Manufacturers shall determine
CO2 emissions and carbon-related
exhaust emissions for electric vehicles,
fuel cell vehicles, and plug-in hybrid
electric vehicles according to the
provisions of this paragraph (m). Subject
to the limitations on the number of
vehicles produced and delivered for sale
as described in § 86.1866 of this chapter,
the manufacturer may be allowed to use
a value of 0 grams/mile to represent the
emissions of fuel cell vehicles and the
proportion of electric operation of a
electric vehicles and plug-in hybrid
electric vehicles that is derived from
electricity that is generated from sources
that are not onboard the vehicle, as
described in paragraphs (m)(1) through
(3) of this section. For purposes of
labeling under this part, the CO2
emissions for electric vehicles shall be
0 grams per mile. Similarly, for
purposes of labeling under this part, the
CO2 emissions for plug-in hybrid
electric vehicles shall be 0 grams per
mile for the proportion of electric
Where:
EC = The vehicle energy consumption in
watt-hours per mile, determined
according to procedures established by
the Administrator under § 600.116–12.
GRIDLOSS = 0.93 (to account for grid
transmission losses).
AVGUSUP = 0.642 for the 2012 through 2016
model years, and 0.574 for 2017 and later
model years (the nationwide average
electricity greenhouse gas emission rate
at the powerplant, in grams per watthour).
TargetCO2 = The CO2Target Value
determined according to § 86.1818 of this
chapter for passenger automobiles and light
trucks, respectively.
bjneal on DSK3VPTVN1PROD with PROPOSALS
Where:
CREE means the carbon-related exhaust
emission value as defined in § 600.002.
CWFexHC = Carbon weight fraction of exhaust
hydrocarbons = CWF as determined in
paragraph (f)(4) of this section and
rounded according to paragraph (f)(3) of
this section.
NMHC = Grams/mile HC as obtained in
paragraph (g)(2) of this section.
CO = Grams/mile CO as obtained in
paragraph (g)(2) of this section.
CO2 = Grams/mile CO2 as obtained in
paragraph (g)(2) of this section.
CH3OH = Grams/mile CH3OH (methanol) as
obtained in paragraph (g)(2) of this
section.
HCHO = Grams/mile HCHO (formaldehyde)
as obtained in paragraph (g)(2) of this
section.
C2H5OH = Grams/mile C2H5OH (ethanol) as
obtained in paragraph (g)(2) of this
section.
C2H4O = Grams/mile C2H4O (acetaldehyde)
as obtained in paragraph (g)(2) of this
section.
N2O = Grams/mile N2O as obtained in
paragraph (g)(2) of this section.
operation that is derived from electricity
that is generated from sources that are
not onboard the vehicle. For
manufacturers no longer eligible to use
0 grams per mile to represent electric
operation, the provisions of this
paragraph (m) shall be used to
determine the non-zero value for CREE
for purposes of meeting the greenhouse
gas emission standards described in
§ 86.1818 of this chapter.
(1) For electric vehicles, but not
including fuel cell vehicles, the carbonrelated exhaust emissions in grams per
mile is to be calculated using the
following equation and rounded to the
nearest one gram per mile:
Federal Register / Vol. 76, No. 231 / Thursday, December 1, 2011 / Proposed Rules
(ii) Calculate the change in the state
of charge (current in Watt hours) at each
second of the test using the following
equation:
bjneal on DSK3VPTVN1PROD with PROPOSALS
(ii) [Reserved]
(2) The total maximum braking energy
(Ebrake) that could theoretically be
recovered is equal to the absolute value
of the sum of all the values of Pbrake
determined in paragraph c)(1)(i)(C) of
this section, divided by 36,000 and
rounded to the nearest 0.01 kilowatt
hours.
(3) Calculate the actual amount of
energy recovered by a hybrid electric
vehicle when tested on the FTP
according to the provisions of this part.
(i) Measure the state of charge, in
Amp-hours, of the hybrid battery system
at each second of the FTP.
Where:
Erec = The actual total energy recovered, in
kilowatt hours, as determined in
paragraph (c)(2)(iii) of this section; and
Emax = The theoretical maximum amount of
energy, in kilowatt hours, that could be
recovered by a hybrid electric vehicle
over the FTP test cycle, as determined in
paragraph (c)(2) of this section.
23. Section 600.303–12 is amended as
follows:
a. By revising the introductory text.
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Where:
dSOC = the change in the state of charge of
the hybrid battery system, in Watt hours;
AHt = the state of charge of the battery
system, in Amp hours, at time t in the
test;
AHt-1 = the state of charge of the battery
system, in Amp hours, at time t-1 in the
test; and
V = the nominal voltage of the hybrid battery
system.
(iii) Depending on the equipment and
methodology used by a manufacturer,
batter charging during the test may be
represented by either a negative current
or by a positive current. Determine the
total energy recovered by the hybrid
battery system as follows:
b. By revising paragraph (b)
introductory text.
c. By revising paragraph (b)(6).
d. By revising paragraph (c).
The revisions read as follows:
§ 600.303–12 Fuel economy label—special
requirements for flexible-fuel vehicles.
Fuel economy labels for flexible-fuel
vehicles must meet the specifications
described in § 600.302, with the
modifications described in this section.
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(C) Determine braking power in
kilowatts using the following equation.
(A) If battery charging is represented
by positive current, then the total energy
recovered by the hybrid battery system,
in kilowatt hours, is the sum of the
positive current values for each second
of the test determined in paragraph
(c)(3)(ii) of this section, divided by
1,000 and rounded to the nearest 0.01
kilowatt hours.
(B) If battery charging is represented
by negative current, then the total
energy recovered by the hybrid battery
system, in kilowatt hours, is the
absolute value of the sum of the
negative current values for each second
of the test determined in paragraph
(c)(3)(ii) of this section, divided by
1,000 and rounded to the nearest 0.01
kilowatt hours.
(4) The percent of braking energy
recovered by a hybrid system relative to
the total available energy is determined
by the following equation, rounded to
the nearest one percent:
This section describes how to label
flexible-fuel vehicles equipped with
gasoline engines. If the vehicle has a
diesel engine, all the references to ‘‘gas’’
or ‘‘gasoline’’ in this section are
understood to refer to ‘‘diesel’’ or
‘‘diesel fuel’’, respectively. All values
described in this section are based on
gasoline operation, unless otherwise
specifically noted.
*
*
*
*
*
E:\FR\FM\TEST.SGM
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EP01DE11.740</GPH>
Where:
Paccel = the value determined in paragraph
(c)(1)(i)(B) of this section;
Proadload = the value determined in paragraph
(c)(1)(i)(A) of this section; and
Pbrake = 0 if Paccel is greater than or equal to
Proadload.
table, rounded to the nearest 0.01 miles/
hour.
EP01DE11.739</GPH>
V = velocity in miles/hour, rounded to the
nearest 0.01 miles/hour;
Vt∂1 = the velocity in miles/hour at the next
time point in the 10 Hz speed vs. time
EP01DE11.738</GPH>
Where:
ETW = the vehicle Emission Test Weight
(lbs);
(B) Determine the applied
deceleration power in kilowatts using
the following equation. Positive values
indicate acceleration and negative
values indicate deceleration.
EP01DE11.737</GPH>
Vmph = velocity in miles/hour, expressed to
the nearest 0.01 miles/hour.
EP01DE11.736</GPH>
Where:
A, B, and C are the vehicle-specific
dynamometer road load coefficients in
lb-force, lb-force/mph, and lb-force/
mph2, respectively; and
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§ 600.311–12 Determination of values for
fuel economy labels.
bjneal on DSK3VPTVN1PROD with PROPOSALS
*
*
*
*
*
Where:
Average MPG = the fleet average fuel
economy for a category of vehicles;
MPG = the average fuel economy for a
category of vehicles determined
according to paragraph (c)(2) of this
section;
AC = Air conditioning fuel economy credits
for a category of vehicles, in gallons per
mile, determined according to paragraph
(c)(3)(i) of this section;
OC = Off-cycle technology fuel economy
credits for a category of vehicles, in
gallons per mile, determined according
to paragraph (c)(3)(ii) of this section; and
PU = Pickup truck fuel economy credits for
the light truck category, in gallons per
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(c) * * *
(1) For vehicles with engines that are
not plug-in hybrid electric vehicles,
calculate the fuel consumption rate in
gallons per 100 miles (or gasoline gallon
equivalent per 100 miles for fuels other
than gasoline or diesel fuel) with the
following formula, rounded to the first
decimal place:
Fuel Consumption Rate = 100/MPG
Where:
MPG = The value for combined fuel economy
from § 600.210–12(c), rounded to the
nearest whole mpg.
*
*
*
*
*
(e) * * *
(3) * * *
(vii) Calculate the annual fuel cost
based on the combined values for city
and highway driving using the
following equation:
Annual fuel cost = ($/milecity × 0.55 +
$/milehwy × 0.45) × Average
Annual Miles
(4) Round the annual fuel cost to the
nearest $50 by dividing the unrounded
annual fuel cost by 50, then rounding
the result to the nearest whole number,
then multiplying this rounded result by
50 to determine the annual fuel cost to
be used for purposes of labeling.
*
*
*
*
*
25. Section 600.510–12 is amended as
follows:
a. By removing and reserving
paragraph (b)(3)(iii).
b. By adding paragraph (b)(4).
c. By revising paragraph (c).
d. By revising paragraph (g)(1)
introductory text.
e. By revising paragraph (g)(3).
f. By revising paragraph (h)
introductory text.
mile, determined according to paragraph
(c)(3)(iii) of this section.
(2) Divide the total production
volume of that category of automobiles
by a sum of terms, each of which
corresponds to a model type within that
category of automobiles and is a fraction
determined by dividing the number of
automobiles of that model type
produced by the manufacturer in the
model year by:
(i) For gasoline-fueled and dieselfueled model types, the fuel economy
calculated for that model type in
accordance with paragraph (b)(2) of this
section; or
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g. By revising paragraph (j)(2)(vii).
h. By revising paragraph (k).
The addition and revisions read as
follows:
§ 600.510–12 Calculation of average fuel
economy and average carbon-related
exhaust emissions.
*
*
*
*
*
(b) * * *
(4) Emergency vehicles may be
excluded from the fleet average carbonrelated exhaust emission calculations
described in paragraph (j) of this
section. The manufacturer should notify
the Administrator that they are making
such an election in the model year
reports required under § 600.512 of this
chapter. Such vehicles should be
excluded from both the calculation of
the fleet average standard for a
manufacturer under 40 CFR 86.1818–
12(c)(4) and from the calculation of the
fleet average carbon-related exhaust
emissions in paragraph (j) of this
section.
(c)(1) Average fuel economy shall be
calculated as follows:
(i) Except as allowed in paragraph (d)
of this section, the average fuel economy
for the model years before 2017 will be
calculated individually for each
category identified in paragraph (a)(1) of
this according to the provisions of
paragraph (c)(2) of this section.
(ii) Except as permitted in paragraph
(d) of this section, the average fuel
economy for the 2017 and later model
years will be calculated individually for
each category identified in paragraph
(a)(1) of this section using the following
equation:
(ii) For alcohol-fueled model types,
the fuel economy value calculated for
that model type in accordance with
paragraph (b)(2) of this section divided
by 0.15 and rounded to the nearest 0.1
mpg; or
(iii) For natural gas-fueled model
types, the fuel economy value
calculated for that model type in
accordance with paragraph (b)(2) of this
section divided by 0.15 and rounded to
the nearest 0.1 mpg; or
(iv) For alcohol dual fuel model types,
for model years 1993 through 2019, the
harmonic average of the following two
terms; the result rounded to the nearest
0.1 mpg:
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(b) Include the following elements
instead of the information identified in
§ 600.302–12(c)(1):
*
*
*
*
*
(6) Add the following statement after
the statements described in § 600.302–
12(c)(2): ‘‘Values are based on gasoline
and do not reflect performance and
ratings based on E85.’’ Adjust this
statement as appropriate for vehicles
designed to operate on different fuels.
(c) You may include the sub-heading
‘‘Driving Range’’ below the combined
fuel economy value, with range bars
below this sub-heading as follows:
(1) Insert a horizontal range bar
nominally 80 mm long to show how far
the vehicle can drive from a full tank of
gasoline. Include a vehicle logo at the
right end of the range bar. Include the
following left-justified expression inside
the range bar: ‘‘Gasoline: × miles’’.
Complete the expression by identifying
the appropriate value for total driving
range from § 600.311.
(2) Insert a second horizontal range
bar as described in paragraph (c)(1) of
this section that shows how far the
vehicle can drive from a full tank with
the second fuel. Establish the length of
the line based on the proportion of
driving ranges for the different fuels.
Identify the appropriate fuel in the
range bar.
24. Section 600.311–12 is amended as
follows:
a. By revising paragraph (c)(1).
b. By revising paragraph (e)(3)(vii).
c. By adding paragraph (e)(4).
The revisions and addition read as
follows:
Federal Register / Vol. 76, No. 231 / Thursday, December 1, 2011 / Proposed Rules
(A) The combined model type fuel
economy value for operation on gasoline
or diesel fuel as determined in
§ 600.208–12(b)(5)(i); and
(B) The combined model type fuel
economy value for operation on alcohol
fuel as determined in § 600.208–
12(b)(5)(ii) divided by 0.15 provided the
requirements of paragraph (g) of this
section are met; or
(v) For alcohol dual fuel model types,
for model years after 2019, the
diesel fuel as determined in § 600.208–
12(b)(5)(i).
combined model type fuel economy
determined according to the following
equation and rounded to the nearest 0.1
mpg:
MPGG = The combined model type fuel
economy for operation on gasoline or
diesel fuel as determined in § 600.208–
12(b)(5)(i).
UF = A Utility Factor (UF) value selected
from the following table based on the
driving range of the vehicle while
operating on natural gas. Determine the
(B) The combined model type fuel
economy value for operation on natural
gas as determined in § 600.208–
12(b)(5)(ii) divided by 0.15 provided the
requirements of paragraph (g) of this
section are met; or
(vii) For natural gas dual fuel model
types, for model years after 2019, the
combined model type fuel economy
determined according to the following
formula and rounded to the nearest 0.1
mpg:
vehicle’s driving range in miles by
multiplying the combined fuel economy
as determined in § 600.208–12(b)(5)(ii)
by the vehicle’s usable fuel storage
capacity (as defined at § 600.002 and
expressed in gasoline gallon
equivalents), and rounding to the nearest
10 miles.
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(vi) For natural gas dual fuel model
types, for model years 1993 through
2019, the harmonic average of the
following two terms; the result rounded
to the nearest 0.1 mpg:
(A) The combined model type fuel
economy value for operation on gasoline
or diesel as determined in § 600.208–
12(b)(5)(i); and
Where:
MPGCNG = The combined model type fuel
economy for operation on natural gas as
determined in § 600.208–12(b)(5)(ii)
divided by 0.15 provided the
requirements of paragraph (g) of this
section are met; and
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Where:
F = 0.00 unless otherwise approved by the
Administrator according to the
provisions of paragraph (k) of this
section;
MPGA = The combined model type fuel
economy for operation on alcohol fuel as
determined in § 600.208–12(b)(5)(ii)
divided by 0.15 provided the
requirements of paragraph (g) of this
section are met; and
MPGG = The combined model type fuel
economy for operation on gasoline or
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75395
(ii) Off-cycle technology fuel
consumption improvements are
calculated separately for each category
identified in paragraph (a)(1) of this
section using the following equation:
Where:
FE Credit = the fleet production-weighted
total value of off-cycle technology credits
for all off-cycle technologies in the
applicable fleet, expressed in gallons per
mile;
OCCredit = the total of all off-cycle
technology credits for the vehicle
category, in megagrams, from 40 CFR
86.1866–12(d)(5);
VLM = vehicle lifetime miles, which for
passenger automobiles shall be 195,264
and for light trucks shall be 225,865; and
Production = the total production volume for
the category of vehicles (either passenger
automobiles or light trucks).
(iii) Full size pickup truck fuel
consumption improvements are
calculated for the light truck category
identified in paragraph (a)(1) of this
section using the following equation:
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category, in megagrams, from 40 CFR
86.1866–12(c)(3);
VLM = vehicle lifetime miles, which for
passenger automobiles shall be 195,264
and for light trucks shall be 225,865; and
Production = the total production volume for
the category of vehicles (either passenger
automobiles or light trucks).
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for each category identified in paragraph
(a)(1) of this section using the following
equation:
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off-cycle, and pickup truck fuel
consumption improvement as follows:
(i) Air conditioning fuel consumption
improvements are calculated separately
Where:
FE Credit = the fleet production-weighted
total value of air conditioning efficiency
credits for all air conditioning systems in
the applicable fleet, expressed in gallons
per mile;
ACCredit = the total of all air conditioning
efficiency credits for the vehicle
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(3) Fuel consumption improvement.
Calculate the separate air conditioning,
Federal Register / Vol. 76, No. 231 / Thursday, December 1, 2011 / Proposed Rules
*
*
*
*
*
(g)(1) Dual fuel automobiles must
provide equal or greater energy
efficiency while operating on the
alternative fuel as while operating on
gasoline or diesel fuel to obtain the
CAFE credit determined in paragraphs
(c)(2)(iv) and (v) of this section or to
obtain the carbon-related exhaust
emissions credit determined in
paragraphs (j)(2)(ii) and (iii) of this
section. The following equation must
hold true:
BILLING CODE 4910–59–C
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*
*
*
(j) * * *
(2) * * *
*
10:03 Dec 01, 2011
Where:
Ealt = [FEalt/(NHValt× Dalt)] × 106 = energy
efficiency while operating on alternative
fuel rounded to the nearest 0.01 miles/
million BTU.
Epet = [FEpet/(NHVpet× Dpet)] × 106 = energy
efficiency while operating on gasoline or
diesel (petroleum) fuel rounded to the
nearest 0.01 miles/million BTU.
FEalt is the fuel economy [miles/gallon for
liquid fuels or miles/100 standard cubic
feet for gaseous fuels] while operated on
the alternative fuel as determined in
§ 600.113–12(a) and (b).
FEpet is the fuel economy [miles/gallon] while
operated on petroleum fuel (gasoline or
diesel) as determined in § 600.113–12(a)
and (b).
NHValt is the net (lower) heating value [BTU/
lb] of the alternative fuel.
NHVpet is the net (lower) heating value [BTU/
lb] of the petroleum fuel.
Dalt is the density [lb/gallon for liquid fuels
or lb/100 standard cubic feet for gaseous
fuels] of the alternative fuel.
Dpet is the density [lb/gallon] of the
petroleum fuel.
*
*
*
*
*
(3) Dual fuel passenger automobiles
manufactured during model years 1993
through 2019 must meet the minimum
driving range requirements established
by the Secretary of Transportation (49
CFR part 538) to obtain the CAFE credit
determined in paragraphs (c)(2)(iv) and
(v) of this section.
(h) For model years 1993 and later,
and for each category of automobile
identified in paragraph (a)(1) of this
section, the maximum increase in
average fuel economy determined in
paragraph (c) of this section attributable
to dual fuel automobiles, except where
the alternative fuel is electricity, shall
be as follows:
(vii) For natural gas dual fuel model
types, for model years 2016 and later,
the combined model type carbon-related
*
Where:
CREECNG = The combined model type
carbon-related exhaust emissions value
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exhaust emissions value determined
according to the following formula and
rounded to the nearest gram per mile:
for operation on natural gas as
determined in § 600.208–12(b)(5)(ii); and
CREEGAS = The combined model type carbonrelated exhaust emissions value for
operation on gasoline or diesel fuel as
determined in § 600.208–12(b)(5)(i).
UF = A Utility Factor (UF) value selected
from the following table based on the
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Where:
FE Credit = the fleet production-weighted
total value of full size pickup truck
credits for the light truck fleet, expressed
in gallons per mile;
PUCredit = the total of all full size pickup
truck credits, in megagrams, from 40 CFR
86.1866–12(e)(4); and
Production = the total production volume for
the light truck category.
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as determined in § 600.208–12(b)(5)(ii)
by the vehicle’s usable fuel storage
capacity (as defined at § 600.002 and
expressed in gasoline gallon
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equivalents), and rounding to the nearest
10 miles.
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driving range of the vehicle while
operating on natural gas. Determine the
vehicle’s driving range in miles by
multiplying the combined fuel economy
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BILLING CODE 4910–59–C
(k) Alternative in-use weighting
factors for dual fuel model types. Using
one of the methods in either paragraph
(k)(1) or (2) of this section,
manufacturers may request the use of
alternative values for the weighting
factor F in the equations in paragraphs
(c)(2)(v) and (j)(2)(vi) of this section.
Unless otherwise approved by the
Administrator, the manufacturer must
use the value of F that is in effect in
paragraphs (c)(2)(v) and (j)(2)(vi) of this
section.
(1) Upon written request from a
manufacturer, the Administrator will
determine and publish by written
guidance an appropriate value of F for
each requested alternative fuel based on
the Administrator’s assessment of realworld use of the alternative fuel. Such
published values would be available for
any manufacturer to use. The
Administrator will periodically update
these values upon written request from
a manufacturer.
(2) The manufacturer may optionally
submit to the Administrator its own
demonstration regarding the real-world
use of the alternative fuel in their
vehicles and its own estimate of the
appropriate value of F in the equations
in paragraphs (c)(2)(v) and (j)(2)(vi) of
this section. Depending on the nature of
the analytical approach, the
manufacturer could provide estimates of
F that are model type specific or that are
generally applicable to the
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manufacturer’s dual fuel fleet. The
manufacturer’s analysis could include
use of data gathered from on-board
sensors and computers, from dual fuel
vehicles in fleets that are centrally
fueled, or from other sources. The
analysis must be based on sound
statistical methodology and must
account for analytical uncertainty. Any
approval by the Administrator will
pertain to the use of values of F for the
model types specified by the
manufacturer.
26. Section 600.514–12 is amended by
revising paragraphs (b)(1)(v) and (vii)
and adding paragraphs (b)(1)(viii) and
(ix) to read as follows:
§ 600.514–12 Reports to the Environmental
Protection Agency.
*
*
*
*
*
(b) * * *
(1) * * *
(v) A description of the various credit,
transfer and trading options that will be
used to comply with each applicable
standard category, including the amount
of credit the manufacturer intends to
generate for air conditioning leakage, air
conditioning efficiency, off-cycle
technology, advanced technology
vehicles, hybrid or low emission fullsize pickup trucks, and various early
credit programs;
*
*
*
*
*
(vii) A summary by model year
(beginning with the 2009 model year) of
the number of electric vehicles, fuel cell
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vehicles and plug-in hybrid vehicles
using (or projected to use) the advanced
technology vehicle credit and incentives
program;
(viii) The methodology which will be
used to comply with N2O and CH4
emission standards;
(ix) Notification of the manufacturer’s
intent to exclude emergency vehicles
from the calculation of fleet average
standards and the end-of-year fleet
average, including a description of the
excluded emergency vehicles and the
quantity of such vehicles excluded.
*
*
*
*
*
Title 49
National Highway Traffic Safety
Administration
In consideration of the foregoing,
under the authority of 49 U.S.C. 32901,
32902, and 32903, and delegation of
authority at 49 CFR 1.50, NHTSA
proposes to amend 49 CFR Chapter V as
follows:
PART 523—VEHICLE CLASSIFICATION
27. The authority citation for part 523
continues to read as follows:
Authority: 49 U.S.C. 32901, delegation of
authority at 49 CFR 1.50.
28. Revise § 523.2 to read as follows:
§ 523.2
Definitions.
Approach angle means the smallest
angle, in a plane side view of an
automobile, formed by the level surface
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on which the automobile is standing
and a line tangent to the front tire static
loaded radius arc and touching the
underside of the automobile forward of
the front tire.
Axle clearance means the vertical
distance from the level surface on which
an automobile is standing to the lowest
point on the axle differential of the
automobile.
Base tire (for passenger automobiles,
light trucks, and medium duty
passenger vehicles) means the tire that
has the highest production sales volume
that is installed by the vehicle
manufacturer on each vehicle
configuration of a model type.
Basic vehicle frontal area is used as
defined in 40 CFR 86.1803.
Breakover angle means the
supplement of the largest angle, in a
plan side view of an automobile, that
can be formed by two lines tangent to
the front and rear static loaded radii arcs
and intersecting at a point on the
underside of the automobile.
Cab-complete vehicle means a vehicle
that is first sold as an incomplete
vehicle that substantially includes the
vehicle cab section as defined in 40 CFR
1037.801. For example, vehicles known
commercially as chassis-cabs, cabchassis, box-deletes, bed-deletes, and
cut-away vans are considered cabcomplete vehicles. A cab includes a
steering column and a passenger
compartment. Note that a vehicle
lacking some components of the cab is
a cab-complete vehicle if it substantially
includes the cab.
Cargo-carrying volume means the
luggage capacity or cargo volume index,
as appropriate, and as those terms are
defined in 40 CFR 600.315–08, in the
case of automobiles to which either of
these terms apply. With respect to
automobiles to which neither of these
terms apply, ‘‘cargo-carrying volume’’
means the total volume in cubic feet,
rounded to the nearest 0.1 cubic feet, of
either an automobile’s enclosed nonseating space that is intended primarily
for carrying cargo and is not accessible
from the passenger compartment, or the
space intended primarily for carrying
cargo bounded in the front by a vertical
plane that is perpendicular to the
longitudinal centerline of the
automobile and passes through the
rearmost point on the rearmost seat and
elsewhere by the automobile’s interior
surfaces.
Class 2b vehicles are vehicles with a
gross vehicle weight rating (GVWR)
ranging from 8,501 to 10,000 pounds
(lbs).
Class 3 through Class 8 vehicles are
vehicles with a GVWR of 10,001 lbs or
more, as defined in 49 CFR 565.15.
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Commercial medium- and heavy-duty
on-highway vehicle means an onhighway vehicle with a GVWR of 10,000
lbs or more, as defined in 49 U.S.C.
32901(a)(7).
Complete vehicle means a vehicle that
requires no further manufacturing
operations to perform its intended
function and is a functioning vehicle
that has the primary load-carrying
device or container (or equivalent
equipment) attached or is designed to
pull a trailer. Examples of equivalent
equipment include fifth wheel trailer
hitches, firefighting equipment, and
utility booms.
Curb weight is defined the same as
vehicle curb weight in 40 CFR 86.1803–
01.
Departure angle means the smallest
angle, in a plane side view of an
automobile, formed by the level surface
on which the automobile is standing
and a line tangent to the rear tire static
loaded radius arc and touching the
underside of the automobile rearward of
the rear tire.
Final stage manufacturer has the
meaning given in 49 CFR 567.3.
Footprint is defined as the product of
track width (measured in inches,
calculated as the average of front and
rear track widths, and rounded to the
nearest tenth of an inch) times
wheelbase (measured in inches and
rounded to the nearest tenth of an inch),
divided by 144 and then rounded to the
nearest tenth of a square foot. For
purposes of this definition, ‘‘track
width’’ is the lateral distance between
the centerlines of the base tires at
ground, including the camber angle. For
purposes of this definition, ‘‘wheelbase’’
is the longitudinal distance between
front and rear wheel centerlines.
Full-size pickup truck means a light
truck or medium duty passenger vehicle
that meets the requirements specified in
40 CFR 86.1866–12(e).
Gross combination weight rating
(GCWR) means the value specified by
the manufacturer as the maximum
allowable loaded weight of a
combination vehicle (e.g., tractor plus
trailer).
Gross vehicle weight rating (GVWR)
means the value specified by the
manufacturer as the maximum design
loaded weight of a single vehicle (e.g.,
vocational vehicle).
Heavy-duty engine means any engine
used for (or which the engine
manufacturer could reasonably expect
to be used for) motive power in a heavyduty vehicle. For purposes of this
definition in this part, the term
‘‘engine’’ includes internal combustion
engines and other devices that convert
chemical fuel into motive power. For
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75399
example, a fuel cell and motor used in
a heavy-duty vehicle is a heavy-duty
engine.
Heavy-duty off-road vehicle means a
heavy-duty vocational vehicle or
vocational tractor that is intended for
off-road use meeting either of the
following criteria:
(1) Vehicles with tires installed
having a maximum speed rating at or
below 55 mph.
(2) Vehicles primarily designed to
perform work off-road (such as in oil
fields, forests, or construction sites), and
meeting at least one of the criteria of
paragraph (2)(i) of this definition and at
least one of the criteria of paragraph
(2)(ii) of this definition.
(i) Vehicles must have affixed
components designed to work in an offroad environment (for example,
hazardous material equipment or
drilling equipment) or be designed to
operate at low speeds making them
unsuitable for normal highway
operation.
(ii) Vehicles must:
(A) Have an axle that has a gross axle
weight rating (GAWR), as defined in 49
CFR 571.3, of 29,000 pounds or more;
(B) Have a speed attainable in 2 miles
of not more than 33 mph; or
(C) Have a speed attainable in 2 miles
of not more than 45 mph, an unloaded
vehicle weight that is not less than 95
percent of its GVWR, and no capacity to
carry occupants other than the driver
and operating crew.
Heavy-duty vehicle means a vehicle as
defined in § 523.6.
Incomplete vehicle means a vehicle
which does not have the primary load
carrying device or container attached
when it is first sold as a vehicle or any
vehicle that does not meet the definition
of a complete vehicle. This may include
vehicles sold to secondary vehicle
manufacturers. Incomplete vehicles
include cab-complete vehicles.
Innovative technology means
technology certified as such under 40
CFR 1037.610.
Light truck means a non-passenger
automobile as defined in § 523.5.
Medium duty passenger vehicle
means a vehicle which would satisfy the
criteria in § 523.5 (relating to light
trucks) but for its gross vehicle weight
rating or its curb weight, which is rated
at more than 8,500 lbs GVWR or has a
vehicle curb weight of more than 6,000
lbs or has a basic vehicle frontal area in
excess of 45 square feet, and which is
designed primarily to transport
passengers, but does not include a
vehicle that:
(1) Is an ‘‘incomplete vehicle’’’ as
defined in this subpart; or
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(2) Has a seating capacity of more
than 12 persons; or
(3) Is designed for more than 9
persons in seating rearward of the
driver’s seat; or
(4) Is equipped with an open cargo
area (for example, a pick-up truck box
or bed) of 72.0 inches in interior length
or more. A covered box not readily
accessible from the passenger
compartment will be considered an
open cargo area for purposes of this
definition.
Mild hybrid gasoline-electric vehicle
means a vehicle as defined by EPA in
40 CFR 86.1866–12(e).
Motor home has the meaning given in
49 CFR 571.3.
Motor vehicle has the meaning given
in 40 CFR 85.1703.
Passenger-carrying volume means the
sum of the front seat volume and, if any,
rear seat volume, as defined in 40 CFR
600.315–08, in the case of automobiles
to which that term applies. With respect
to automobiles to which that term does
not apply, ‘‘passenger-carrying volume’’
means the sum in cubic feet, rounded to
the nearest 0.1 cubic feet, of the volume
of a vehicle’s front seat and seats to the
rear of the front seat, as applicable,
calculated as follows with the head
room, shoulder room, and leg room
dimensions determined in accordance
with the procedures outlined in Society
of Automotive Engineers Recommended
Practice J1100a, Motor Vehicle
Dimensions (Report of Human Factors
Engineering Committee, Society of
Automotive Engineers, approved
September 1973 and last revised
September 1975).
(1) For front seat volume, divide 1,728
into the product of the following SAE
dimensions, measured in inches to the
nearest 0.1 inches, and round the
quotient to the nearest 0.001 cubic feet.
(i) H61–Effective head room—front.
(ii) W3—Shoulder room—front.
(iii) L34—Maximum effective leg
room-accelerator.
(2) For the volume of seats to the rear
of the front seat, divide 1,728 into the
product of the following SAE
dimensions, measured in inches to the
nearest 0.1 inches, and rounded the
quotient to the nearest 0.001 cubic feet.
(i) H63—Effective head room—
second.
(ii) W4—Shoulder room—second.
(iii) L51—Minimum effective leg
room—second.
Pickup truck means a non-passenger
automobile which has a passenger
compartment and an open cargo area
(bed).
Recreational vehicle or RV means a
motor vehicle equipped with living
space and amenities found in a motor
home.
Running clearance means the distance
from the surface on which an
automobile is standing to the lowest
point on the automobile, excluding
unsprung weight.
Static loaded radius arc means a
portion of a circle whose center is the
center of a standard tire-rim
combination of an automobile and
whose radius is the distance from that
center to the level surface on which the
automobile is standing, measured with
the automobile at curb weight, the
wheel parallel to the vehicle’s
longitudinal centerline, and the tire
inflated to the manufacturer’s
recommended pressure.
Strong hybrid gasoline-electric vehicle
means a vehicle as defined by EPA in
40 CFR 86.1866–12(e).
Temporary living quarters means a
space in the interior of an automobile in
which people may temporarily live and
which includes sleeping surfaces, such
as beds, and household conveniences,
such as a sink, stove, refrigerator, or
toilet.
Van means a vehicle with a body that
fully encloses the driver and a cargo
carrying or work performing
compartment. The distance from the
leading edge of the windshield to the
foremost body section of vans is
Where:
N is the total number (sum) of passenger
automobiles produced by a
manufacturer;
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typically shorter than that of pickup
trucks and sport utility vehicles.
Vocational tractor means a tractor that
is classified as a vocational vehicle
according to 40 CFR 1037.630.
Vocational vehicle means a vehicle
that is equipped for a particular
industry, trade or occupation such as
construction, heavy hauling, mining,
logging, oil fields, refuse and includes
vehicles such as school buses,
motorcoaches and RVs.
Work truck means a vehicle that is
rated at more than 8,500 pounds 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 effective as
of December 20, 2007.
PART 531—PASSENGER
AUTOMOBILE AVERAGE FUEL
ECONOMY STANDARDS
29. 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.
30. Amend § 531.5 by revising
paragraph (a) Introductory text, revising
paragraphs (b), (c), and (d),
redesignating paragraph (e) as paragraph
(f), and adding a new paragraph (e) to
read as follows:
§ 531.5
Fuel economy standards.
(a) Except as provided in paragraph
(e) of this section, each manufacturer of
passenger automobiles shall comply
with the fleet average fuel economy
standards in Table I, expressed in miles
per gallon, in the model year specified
as applicable:
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*
*
*
*
(b) For model year 2011, a
manufacturer’s passenger automobile
fleet shall comply with the fleet average
fuel economy level calculated for that
model year according to Figure 1 and
the appropriate values in Table II.
Ni is the number (sum) of the ith passenger
automobile model produced by the
manufacturer; and
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Ti is the fuel economy target of the ith model
passenger automobile, which is
determined according to the following
75401
formula, rounded to the nearest
hundredth:
x = footprint (in square feet, rounded to the
nearest tenth) of the vehicle model.
fleet shall comply with the fleet average
fuel economy level calculated for that
model year according to Figure 2 and
the appropriate values in Table III.
Where:
CAFErequired is the fleet average fuel economy
standard for a given fleet (domestic
passenger automobiles or import
passenger automobiles);
Subscript i is a designation of multiple
groups of automobiles, where each
group’s designation, i.e., i = 1, 2, 3, etc.,
represents automobiles that share a
unique model type and footprint within
the applicable fleet, either domestic
passenger automobiles or import
passenger automobiles;
Productioni is the number of passenger
automobiles produced for sale in the
United States within each ith
designation, i.e., which share the same
model type and footprint;
TARGETi is the fuel economy target in miles
per gallon (mpg) applicable to the
footprint of passenger automobiles
within each ith designation, i.e., which
share the same model type and footprint,
calculated according to Figure 3 and
rounded to the nearest hundredth of a
mpg, i.e., 35.455 = 35.46 mpg, and the
summations in the numerator and
denominator are both performed over all
models in the fleet in question.
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Figure 3:
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Parameters a, b, c, and d are defined in Table
II;
e = 2.718; and
(c) For model years 2012–2025, a
manufacturer’s passenger automobile
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Where:
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Parameters a, b, c, and d are defined in Table
III; and
(d) In addition to the requirements of
paragraphs (b) and (c) of this section,
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Where:
TARGET is the fuel economy target (in mpg)
applicable to vehicles of a given
footprint (FOOTPRINT, in square feet);
each manufacturer shall also meet the
minimum fleet standard for
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The MIN and MAX functions take the
minimum and maximum, respectively,
of the included values.
BILLING CODE 4910–59–P
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domestically manufactured passenger
automobiles expressed in Table IV:
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(e) For model years 2022–2025, each
manufacturer shall comply with the
standards set forth in paragraphs (c) and
(d) in this section, if NHTSA determines
in a rulemaking, initiated after January
1, 2017, and conducted in accordance
with 49 U.S.C. 32902, that the standards
in paragraphs (c) and (d) are the
maximum feasible standards for model
years 2022–2025. If, for any of those
model years, NHTSA determines that
the maximum feasible standard for
passenger cars and the corresponding
minimum standard for domestically
manufactured passenger cars should be
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set at a different level, manufacturers
shall comply with those different
standards in lieu of the standards set
forth for those model years in
paragraphs (c) and (d), and NHTSA will
revise this section to reflect the different
standards.
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31. Amend § 531.6 by revising
paragraph (a) to read as follows:
§ 531.6 Measurement and calculation
procedures.
(a) The fleet average fuel economy
performance of all passenger
automobiles that are manufactured by a
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manufacturer in a model year shall be
determined in accordance with
procedures established by the
Administrator of the Environmental
Protection Agency under 49 U.S.C.
32904 and set forth in 40 CFR part 600.
For model years 2017 to 2025, a
manufacturer is eligible to increase the
fuel economy performance of passenger
cars in accordance with procedures
established by EPA set forth in 40 CFR
part 600, including any adjustments to
fuel economy EPA allows, such as for
fuel consumption improvements related
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to air conditioning efficiency and offcycle technologies.
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32. Revise Appendix A to part 531 to
read as follows:
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Appendix to Part 531—Example of
Calculating Compliance Under
§ 531.5(c)
domestic passenger automobiles in MY
2012 as follows:
Assume a hypothetical manufacturer
(Manufacturer X) produces a fleet of
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BILLING CODE 4910–59–C
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PART 533—LIGHT TRUCK FUEL
ECONOMY STANDARDS
33. The authority citation for part 531
continues to read as follows:
34. Amend § 533.5 by revising
paragraphs (a), (f), (g), (h), (i) and adding
paragraphs (j) and (k) to read as follows:
average fuel economy standards,
expressed in miles per gallon, in the
model year specified as applicable:
§ 533.5
BILLING CODE 4910–59–P
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(a) Each manufacturer of light trucks
shall comply with the following fleet
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Authority: 49 U.S.C. 32902; delegation of
authority at 49 CFR 1.50.
Requirements.
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Ni is the number (sum) of the ith light truck
model type produced by a manufacturer;
and
Ti is the fuel economy target of the ith light
truck model type, which is determined
according to the following formula,
rounded to the nearest hundredth:
Where:
Parameters a, b, c, and d are defined in
Table V;
e = 2.718; and
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according to either Figure 3 or Figure 4,
as appropriate, and rounded to the
nearest hundredth of a mpg, i.e., 35.455
= 35.46 mpg, and the summations in the
numerator and denominator are both
performed over all models in the fleet in
question.
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Productioni is the number of light trucks
produced for sale in the United States
within each ith designation, i.e., which
share the same model type and footprint;
TARGETi is the fuel economy target in miles
per gallon (mpg) applicable to the
footprint of light trucks within each ith
designation, i.e., which share the same
model type and footprint, calculated
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Where:
CAFErequired is the fleet average fuel economy
standard for a given light truck fleet;
Subscript i is a designation of multiple
groups of light trucks, where each
group’s designation, i.e., i = 1, 2, 3, etc.,
represents light trucks that share a
unique model type and footprint within
the applicable fleet.
x = footprint (in square feet, rounded to the
nearest tenth) of the model type.
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Where:
N is the total number (sum) of light trucks
produced by a manufacturer;
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The MIN and MAX functions take the
minimum and maximum, respectively,
of the included values.
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Parameters a, b, c, and d are defined in Table
VI; and
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Where:
TARGET is the fuel economy target (in mpg)
applicable to vehicles of a given
footprint (FOOTPRINT, in square feet);
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(f) For each model year 1996 and
thereafter, each manufacturer shall
combine its captive imports with its
other light trucks and comply with the
fleet average fuel economy standard in
paragraph (a) of this section.
(g) For model years 2008–2010, at a
manufacturer’s option, a manufacturer’s
light truck fleet may comply with the
fuel economy standard calculated for
each model year according to Figure 1
and the appropriate values in Table V,
with said option being irrevocably
chosen for that model year and reported
as specified in § 537.8.
(h) For model year 2011, a
manufacturer’s light truck fleet shall
comply with the fleet average fuel
economy standard calculated for that
model year according to Figure 1 and
the appropriate values in Table V.
(i) For model years 2012–2016, a
manufacturer’s light truck fleet shall
comply with the fleet average fuel
economy standard calculated for that
model year according to Figures 2 and
3 and the appropriate values in Table
VI.
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(j) For model years 2017–2025, a
manufacturer’s light truck fleet shall
comply with the fleet average fuel
economy standard calculated for that
model year according to Figures 2 and
4 and the appropriate values in Table
VII.
(k) For model years 2022–2025, each
manufacturer shall comply with the
standards set forth in paragraph (j) of
this section, if NHTSA determines in a
rulemaking, initiated after January 1,
2017, and conducted in accordance with
49 U.S.C. 32902, that the standards in
paragraph (j) are the maximum feasible
standards for model years 2022–2025. If,
for any of those model years, NHTSA
determines that the maximum feasible
standard for light trucks should be set
at a different level, manufacturers shall
comply with those different standards
in lieu of the standards set forth for
those model years in paragraph (j), and
NHTSA will revise this section to reflect
the different standards.
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*
*
35. Amend § 533.6 by revising
paragraph (b) to read as follows:
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§ 533.6 Measurement and calculation
procedures.
*
*
*
*
*
(b) The fleet average fuel economy
performance of all vehicles subject to
part 533 that are manufactured by a
manufacturer in a model year shall be
determined in accordance with
procedures established by the
Administrator of the Environmental
Protection Agency under 49 U.S.C.
32904 and set forth in 40 CFR part 600.
For model years 2017 to 2025, a
manufacturer is eligible to increase the
fuel economy performance of light
trucks in accordance with procedures
established by EPA and set forth in 40
CFR part 600, including any
adjustments to fuel economy EPA
allows, such as for fuel consumption
improvements related to air
conditioning efficiency, off-cycle
technologies, and hybridization and
other over-compliance for full-size
pickup trucks.
36. Redesignate Appendix A to part
533 as Appendix to part 533 and revise
it to read as follows:
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Appendix to Part 533—Example of
Calculating Compliance Under
§ 533.5(i)
Assume a hypothetical manufacturer
(Manufacturer X) produces a fleet of
light trucks in MY 2012 as follows:
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Where:
TARGET is the fuel economy target (in mpg)
applicable to vehicles of a given
footprint (FOOTPRINT, in square feet);
Parameters a, b, c, d, e, f, g, and h are defined
in Table VII; and
The MIN and MAX functions take the
minimum and maximum, respectively,
of the included values.
PART 536—TRANSFER AND TRADING
OF FUEL ECONOMY CREDITS
37. Revise the authority citation for
part 536 to read as follows:
Authority: 49 U.S.C. 32903; delegation of
authority at 49 CFR 1.50.
38. Amend § 536.4 by revising
paragraph (c) to read as follows:
§ 536.4
*
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*
Credits.
*
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*
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*
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(c) Adjustment factor. When traded or
transferred and used, fuel economy
credits are adjusted to ensure fuel oil
savings is preserved. For traded credits,
the user (or buyer) must multiply the
calculated adjustment factor by the
number of its shortfall credits it plans to
offset in order to determine the number
of equivalent credits to acquire from the
earner (or seller). For transferred credits,
the user of credits must multiply the
calculated adjustment factor by the
number of its shortfall credits it plans to
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offset in order to determine the number
of equivalent credits to transfer from the
compliance category holding the
available credits. The adjustment factor
is calculated according to the following
formula:
Where:
A = Adjustment factor applied to traded and
transferred credits;
VMTe = Lifetime vehicle miles traveled as
provided in the following table for the
model year and compliance category in
which the credit was earned;
VMTu = Lifetime vehicle miles traveled as
provided in the following table for the
model year and compliance category in
which the credit is used for compliance;
MPGse = Required fuel economy standard for
the originating (earning) manufacturer,
compliance category, and model year in
which the credit was earned;
MPGae = Actual fuel economy for the
originating manufacturer, compliance
category, and model year in which the
credit was earned;
MPGsu = Required fuel economy standard for
the user (buying) manufacturer,
compliance category, and model year in
which the credit is used for compliance;
and
MPGau = Actual fuel economy for the user
manufacturer, compliance category, and
model year in which the credit is used
for compliance.
§ 536.10 Treatment of dual-fuel and
alternative-fuel vehicles.
economy of dual fueled vehicles in
accordance with 40 CFR 600.510–
12(c)(2)(v) and (vii).
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(c) Transferred or traded credits may
not be used, pursuant to 49 U.S.C.
32903(g)(4) and (f)(2), to meet the
domestically manufactured passenger
automobile minimum standard
specified in 49 U.S.C. 32902(b)(4) and in
49 CFR 531.5(d).
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40. Amend § 536.10 by revising the
section heading and paragraphs (b) and
(c) and adding paragraph (d) to read as
follows:
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PART 537—AUTOMOTIVE FUEL
ECONOMY REPORTS
41. 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.
42. Amend § 537.5 by revising
paragraph (c)(4) to read as follows:
*
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*
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*
(c) * * *
(4) Be submitted on CD or by email
with the contents in a pdf or MS Word
format except the information required
in 537.7 must be provided in a MS Excel
format. Submit 2 copies of the CD to:
Administrator, National Highway
Traffic Administration, 1200 New Jersey
Avenue SW., Washington, DC 20590, or
submit reports electronically to the
following secure email address:
cafe@dot.gov;
*
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*
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*
43. Amend § 537.7 by revising
paragraphs (b)(3), (c)(4), and (c)(5) to
read as follows:
§ 537.7 Pre-model year and mid-model
year reports.
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(b) * * *
(3) State the projected required fuel
economy for the manufacturer’s
passenger automobiles and light trucks
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§ 536.9 Use of credits with regard to the
domestically manufactured passenger
automobile minimum standard.
*
*
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*
(b) If a manufacturer’s calculated fuel
economy for a particular compliance
category, including any statutorilyrequired 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 civil
penalties 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) For model years up to and
including MY 2019, if a manufacturer
builds enough dual fuel vehicles (except
plug-in electric 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
dual fuel vehicles beyond the statutory
limit.
(d) For model years 2020 and beyond,
a manufacturer must calculate the fuel
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39. Amend § 536.9 by revising
paragraph (c) to read as follows:
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determined in accordance with 49 CFR
531.5(c) and 49 CFR 533.5 and based
upon the projected sales figures
provided under paragraph (c)(2) of this
section. For each unique model type
and footprint combination of the
manufacturer’s automobiles, provide the
information specified in paragraph
(b)(3)(i) and (ii) of this section in tabular
form. List the model types in order of
increasing average inertia weight from
top to bottom down the left side of the
table and list the information categories
in the order specified in paragraphs (i)
and (ii) of this section from left to right
across the top of the table. Other
formats, such as those accepted by EPA,
which contain all of the information in
a readily identifiable format are also
acceptable.
(i) In the case of passenger
automobiles:
(A) Beginning model year 2013, base
tire as defined in 49 CFR 523.2,
(B) Beginning model year 2013, front
axle, rear axle and average track width
as defined in 49 CFR 523.2,
(C) Beginning model year 2013,
wheelbase as defined in 49 CFR 523.2,
and
(D) Beginning model year 2013,
footprint as defined in 49 CFR 523.2.
(ii) In the case of light trucks:
(A) Beginning model year 2013, base
tire as defined in 49 CFR 523.2,
(B) Beginning model year 2013, front
axle, rear axle and average track width
as defined in 49 CFR 523.2,
(C) Beginning model year 2013,
wheelbase as defined in 49 CFR 523.2,
and
(D) Beginning model year 2013,
footprint as defined in 49 CFR 523.2.
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(c) * * *
(4) (i) Loaded vehicle weight;
(ii) Equivalent test weight;
(iii) Engine displacement, liters;
(iv) SAE net rated power, kilowatts;
(v) SAE net horsepower;
(vi) Engine code;
(vii) Fuel system (number of
carburetor barrels or, if fuel injection is
used, so indicate);
(viii) Emission control system;
(ix) Transmission class;
(x) Number of forward speeds;
(xi) Existence of overdrive (indicate
yes or no);
(xii) Total drive ratio (N/V);
(xiii) Axle ratio;
(xiv) Combined fuel economy;
(xv) Projected sales for the current
model year;
(xvi) Air conditioning efficiency
improvement technologies used to
acquire the incentive in 40 CFR 86.1866
and the amount of the incentive;
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(xvii) Full-size pickup truck
technologies used to acquire the
incentive in 40 CFR 86.1866 and the
amount of the incentive;
(xviii) Off-cycle technologies used to
acquire the incentive in 40 CFR 86.1866
and the amount of the incentive;
(xix) (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;
(B) In the case of light trucks:
(1) Passenger-carrying volume;
(2) Cargo-carrying volume;
(xx) Frontal area;
(xxi) Road load power at 50 miles per
hour, if determined by the manufacturer
for purposes other than compliance
with this part to differ from the road
load setting prescribed in 40 CFR
86.177–11(d);
(xxii) Optional equipment that the
manufacturer is required under 40 CFR
parts 86 and 600 to have actually
installed on the vehicle configuration,
or the weight of which must be included
in the curb weight computation for the
vehicle configuration, for fuel economy
testing purposes.
(5) For each model type of automobile
which is classified as a non-passenger
vehicle (light truck) under part 523 of
this chapter, provide the following data:
(i) For an automobile designed to
perform at least one of the following
functions in accordance with 523.5 (a)
indicate (by ‘‘yes’’ or ‘‘no’’) whether the
vehicle can:
(A) Transport more than 10 persons (if
yes, provide actual designated seating
positions);
(B) Provide temporary living quarters
(if yes, provide applicable conveniences
as defined in 523.2);
(C) Transport property on an open bed
(if yes, provide bed size width and
length);
(D) Provide, as sold to the first retail
purchaser, greater cargo-carrying than
passenger-carrying volume, such as in a
cargo van and quantify the value; if a
vehicle is sold with a second-row seat,
its cargo-carrying volume is determined
with that seat installed, regardless of
whether the manufacturer has described
that seat as optional; or
(E) Permit expanded use of the
automobile for cargo-carrying purposes
or other non passenger-carrying
purposes through:
(1) For non-passenger automobiles
manufactured prior to model year 2012,
the removal of seats by means installed
for that purpose by the automobile’s
manufacturer or with simple tools, such
as screwdrivers and wrenches, so as to
create a flat, floor level, surface
PO 00000
Frm 00568
Fmt 4701
Sfmt 9990
extending from the forward-most point
of installation of those seats to the rear
of the automobile’s interior; or
(2) For non-passenger automobiles
manufactured in model year 2008 and
beyond, for vehicles equipped with at
least 3 rows of designated seating
positions as standard equipment, permit
expanded use of the automobile for
cargo-carrying purposes or other
nonpassenger-carrying purposes
through the removal or stowing of
foldable or pivoting seats so as to create
a flat, leveled cargo surface extending
from the forward-most point of
installation of those seats to the rear of
the automobile’s interior.
(ii) For an automobile capable of offhighway operation, identify which of
the features below qualify the vehicle as
off-road in accordance with 523.5 (b)
and quantify the values of each feature:
(A) 4-wheel drive; or
(B) A rating of more than 6,000
pounds gross vehicle weight; and
(C) Has at least four of the following
characteristics calculated when the
automobile is at curb weight, on a level
surface, with the front wheels parallel to
the automobile’s longitudinal
centerline, and the tires inflated to the
manufacturer’s recommended pressure.
The exact value of each feature should
be quantified:
(1) Approach angle of not less than 28
degrees.
(2) Breakover angle of not less than 14
degrees.
(3) Departure angle of not less than 20
degrees.
(4) Running clearance of not less than
20 centimeters.
(5) Front and rear axle clearances of
not less than 18 centimeters each.
*
*
*
*
*
44. Amend § 537.8 by revising
paragraph (a)(3) to read as follows:
§ 537.8
Supplementary reports.
(a) * * *
(3) Each manufacturer whose premodel year report omits any of the
information specified in § 537.7 (b),
(c)(1) and (2), or (c)(4) shall file a
supplementary report containing the
information specified in paragraph
(b)(3) of this section.
*
*
*
*
*
Dated: November 16, 2011.
Ray LaHood,
Secretary, Department of Transportation.
Dated: November 16, 2011.
Lisa P. Jackson,
Administrator, Environmental Protection
Agency.
[FR Doc. 2011–30358 Filed 11–30–11; 8:45 am]
BILLING CODE 4910–59–P
E:\FR\FM\TEST.SGM
TEST
]]>Agencies
[Federal Register Volume 76, Number 231 (Thursday, December 1, 2011)]
[Proposed Rules]
[Pages 74854-75420]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-30358]
[[Page 74853]]
Vol. 76
Thursday,
No. 231
December 1, 2011
Part II
Environmental Protection Agency
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40 CFR Parts 85, 86, and 600
Department of Transportation
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National Highway Traffic Safety Administration
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49 CFR Parts 523, 531, 533 et al.
2017 and Later Model Year Light-Duty Vehicle Greenhouse Gas Emissions
and Corporate Average Fuel Economy Standards; Proposed Rule
Federal Register / Vol. 76 , No. 231 / Thursday, December 1, 2011 /
Proposed Rules
[[Page 74854]]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 85, 86, and 600
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DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety Administration
49 CFR Parts 523, 531, 533, 536, and 537
[EPA-HQ-OAR-2010-0799; FRL-9495-2; NHTSA-2010-0131]
RIN 2060-AQ54; RIN 2127-AK79
2017 and Later Model Year Light-Duty Vehicle Greenhouse Gas
Emissions and Corporate Average Fuel Economy Standards
AGENCY: Environmental Protection Agency (EPA) and National Highway
Traffic Safety Administration (NHTSA).
ACTION: Proposed rule.
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SUMMARY: EPA and NHTSA, on behalf of the Department of Transportation,
are issuing this joint proposal to further reduce greenhouse gas
emissions and improve fuel economy for light-duty vehicles for model
years 2017-2025. This proposal extends the National Program beyond the
greenhouse gas and corporate average fuel economy standards set for
model years 2012-2016. On May 21, 2010, President Obama issued a
Presidential Memorandum requesting that NHTSA and EPA develop through
notice and comment rulemaking a coordinated National Program to reduce
greenhouse gas emissions of light-duty vehicles for model years 2017-
2025. This proposal, consistent with the President's request, responds
to the country's critical need to address global climate change and to
reduce oil consumption. NHTSA is proposing Corporate Average Fuel
Economy standards under the Energy Policy and Conservation Act, as
amended by the Energy Independence and Security Act, and EPA is
proposing greenhouse gas emissions standards under the Clean Air Act.
These standards apply to passenger cars, light-duty trucks, and medium-
duty passenger vehicles, and represent a continued harmonized and
consistent National Program. Under the National Program for model years
2017-2025, automobile manufacturers would be able to continue building
a single light-duty national fleet that satisfies all requirements
under both programs while ensuring that consumers still have a full
range of vehicle choices. EPA is also proposing a minor change to the
regulations applicable to MY 2012-2016, with respect to air conditioner
performance and measurement of nitrous oxides.
DATES: Comments: Comments must be received on or before January 30,
2012. Under the Paperwork Reduction Act, comments on the information
collection provisions must be received by the Office of Management and
Budget (OMB) on or before January 3, 2012. See the SUPPLEMENTARY
INFORMATION section on ``Public Participation'' for more information
about written comments.
Public Hearings: NHTSA and EPA will jointly hold three public
hearings on the following dates: January 17, 2012, in Detroit,
Michigan; January 19, 2012 in Philadelphia, Pennsylvania; and January
24, 2012, in San Francisco, California. EPA and NHTSA will announce the
addresses for each hearing location in a supplemental Federal Register
Notice. The agencies will accept comments to the rulemaking documents,
and NHTSA will also accept comments to the Draft Environmental Impact
Statement (EIS) at these hearings and to Docket No. NHTSA-2011-0056.
The hearings will start at 10 a.m. local time and continue until
everyone has had a chance to speak. See the SUPPLEMENTARY INFORMATION
section on ``Public Participation.'' for more information about the
public hearings.
ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2010-0799 and/or NHTSA-2010-0131, by one of the following methods:
Online: www.regulations.gov: Follow the on-line
instructions for submitting comments.
Email: a-and-r-Docket@epa.gov
Fax: EPA: (202) 566-9744; NHTSA: (202) 493-2251.
Mail:
EPA: Environmental Protection Agency, EPA Docket Center
(EPA/DC), Air and Radiation Docket, Mail Code 28221T, 1200 Pennsylvania
Avenue NW., Washington, DC 20460, Attention Docket ID No. EPA-HQ-OAR-
2010-0799. In addition, please mail a copy of your comments on the
information collection provisions to the Office of Information and
Regulatory Affairs, Office of Management and Budget (OMB), Attn: Desk
Officer for EPA, 725 17th St., NW., Washington, DC 20503.
NHTSA: 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:
EPA: Docket Center, (EPA/DC) EPA West, Room B102, 1301
Constitution Ave. NW., Washington, DC, Attention Docket ID No. EPA-HQ-
OAR-2010-0799. Such deliveries are only accepted during the Docket's
normal hours of operation, and special arrangements should be made for
deliveries of boxed information.
NHTSA: West Building, Ground Floor, Rm. W12-140, 1200 New
Jersey Avenue SE, Washington, DC 20590, between 9 a.m. and 4 p.m.
Eastern Time, Monday through Friday, except Federal Holidays.
Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2010-0799 and/or NHTSA-2010-0131. See the SUPPLEMENTARY INFORMATION
section on ``Public Participation'' for more information about
submitting written comments.
Docket: All documents in the dockets are listed in the https://www.regulations.gov index. Although listed in the index, some
information is not publicly available, e.g., confidential business
information (CBI) or other information whose disclosure is restricted
by statute. Certain other material, such as copyrighted material, will
be publicly available in hard copy in EPA's docket, and electronically
in NHTSA's online docket. Publicly available docket materials are
available either electronically in www.regulations.gov or in hard copy
at the following locations: EPA: EPA Docket Center, EPA/DC, EPA West,
Room 3334, 1301 Constitution Ave. NW., Washington, DC. The Public
Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through
Friday, excluding legal holidays. The telephone number for the Public
Reading Room is (202) 566-1744. NHTSA: 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. The Docket
Management Facility is open between 9 a.m. and 5 p.m. Eastern Time,
Monday through Friday, except Federal holidays.
FOR FURTHER INFORMATION CONTACT: EPA: Christopher Lieske, Office of
Transportation and Air Quality, Assessment and Standards Division,
Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI
48105; telephone number: (734) 214-4584; fax number: (734) 214-4816;
email address: lieske.christopher@epa.gov, or contact the Assessment
and Standards Division; email address: otaqpublicweb@epa.gov. NHTSA:
Rebecca Yoon, Office of the Chief Counsel, National Highway Traffic
Safety Administration, 1200 New Jersey
[[Page 74855]]
Avenue SE., Washington, DC 20590. Telephone: (202) 366-2992.
SUPPLEMENTARY INFORMATION:
A. Does this action apply to me?
This action affects companies that manufacture or sell new light-
duty vehicles, light-duty trucks, and medium-duty passenger vehicles,
as defined under EPA's CAA regulations,\1\ and passenger automobiles
(passenger cars) and non-passenger automobiles (light trucks) as
defined under NHTSA's CAFE regulations.\2\ Regulated categories and
entities include:
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\1\ ``Light-duty vehicle,'' ``light-duty truck,'' and ``medium-
duty passenger vehicle'' are defined in 40 CFR 86.1803-01.
Generally, the term ``light-duty vehicle'' means a passenger car,
the term ``light-duty truck'' means a pick-up truck, sport-utility
vehicle, or minivan of up to 8,500 lbs gross vehicle weight rating,
and ``medium-duty passenger vehicle'' means a sport-utility vehicle
or passenger van from 8,500 to 10,000 lbs gross vehicle weight
rating. Medium-duty passenger vehicles do not include pick-up
trucks.
\2\ ``Passenger car'' and ``light truck'' are defined in 49 CFR
part 523.
[GRAPHIC] [TIFF OMITTED] TP01DE11.000
This list is not intended to be exhaustive, but rather provides a
guide regarding entities likely to be regulated by this action. To
determine whether particular activities may be regulated by this
action, you should carefully examine the regulations. You may direct
questions regarding the applicability of this action to the person
listed in FOR FURTHER INFORMATION CONTACT.
B. Public Participation
NHTSA and EPA request comment on all aspects of this joint proposed
rule. This section describes how you can participate in this process.
How do I prepare and submit comments?
In this joint proposal, there are many issues common to both EPA's
and NHTSA's proposals. For the convenience of all parties, comments
submitted to the EPA docket will be considered comments submitted to
the NHTSA docket, and vice versa. An exception is that comments
submitted to the NHTSA docket on NHTSA's Draft Environmental Impact
Statement (EIS) will not be considered submitted to the EPA docket.
Therefore, the public only needs to submit comments to either one of
the two agency dockets, although they may submit comments to both if
they so choose. Comments that are submitted for consideration by one
agency should be identified as such, and comments that are submitted
for consideration by both agencies should be identified as such. Absent
such identification, each agency will exercise its best judgment to
determine whether a comment is submitted on its proposal.
Further instructions for submitting comments to either the EPA or
NHTSA docket are described below.
EPA: Direct your comments to Docket ID No EPA-HQ-OAR-2010-0799.
EPA's policy is that all comments received will be included in the
public docket without change and may be made available online at https://www.regulations.gov, including any personal information provided,
unless
[[Page 74856]]
the comment includes information claimed to be Confidential Business
Information (CBI) or other information whose disclosure is restricted
by statute. Do not submit information that you consider to be CBI or
otherwise protected through https://www.regulations.gov or email. The
https://www.regulations.gov Web site is an ``anonymous access'' system,
which means EPA will not know your identity or contact information
unless you provide it in the body of your comment. If you send an email
comment directly to EPA without going through https://www.regulations.gov your email address will be automatically captured
and included as part of the comment that is placed in the public docket
and made available on the Internet. If you submit an electronic
comment, EPA recommends that you include your name and other contact
information in the body of your comment and with any disk or CD-ROM you
submit. If EPA cannot read your comment due to technical difficulties
and cannot contact you for clarification, EPA may not be able to
consider your comment. Electronic files should avoid the use of special
characters, any form of encryption, and be free of any defects or
viruses. For additional information about EPA's public docket visit the
EPA Docket Center homepage at https://www.epa.gov/epahome/dockets.htm.
NHTSA: Your comments must be written and in English. To ensure that
your comments are correctly filed in the Docket, please include the
Docket number NHTSA-2010-0131 in your comments. Your comments must not
be more than 15 pages long.\3\ NHTSA 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, and there is no limit on the length of the attachments. 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 agencies to search and
copy certain portions of your submissions.\4\ Please note that pursuant
to the Data Quality Act, in order for the substantive data to be relied
upon and used by the agency, it must meet the information quality
standards set forth in the OMB and Department of Transportation (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://www.dot.gov/dataquality.htm.
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\3\ See 49 CFR 553.21.
\4\ 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.
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Tips for Preparing Your Comments
When submitting comments, please remember to:
Identify the rulemaking by docket number and other
identifying information (subject heading, Federal Register date and
page number).
Explain why you agree or disagree, suggest alternatives,
and substitute language for your requested changes.
Describe any assumptions and provide any technical
information and/or data that you used.
If you estimate potential costs or burdens, explain how
you arrived at your estimate in sufficient detail to allow for it to be
reproduced.
Provide specific examples to illustrate your concerns, and
suggest alternatives.
Explain your views as clearly as possible, avoiding the
use of profanity or personal threats.
Make sure to submit your comments by the comment period
deadline identified in the DATES section above.
How can I be sure that my comments were received?
NHTSA: 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.
How do I submit confidential business information?
Any confidential business information (CBI) submitted to one of the
agencies will also be available to the other agency. However, as with
all public comments, any CBI information only needs to be submitted to
either one of the agencies' dockets and it will be available to the
other. Following are specific instructions for submitting CBI to either
agency.
EPA: Do not submit CBI to EPA through https://www.regulations.gov or
email. Clearly mark the part or all of the information that you claim
to be CBI. For CBI information in a disk or CD ROM that you mail to
EPA, mark the outside of the disk or CD ROM as CBI and then identify
electronically within the disk or CD ROM the specific information that
is claimed as CBI. In addition to one complete version of the comment
that includes information claimed as CBI, a copy of the comment that
does not contain the information claimed as CBI must be submitted for
inclusion in the public docket. Information so marked will not be
disclosed except in accordance with procedures set forth in 40 CFR Part
2.
NHTSA: 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 confidential business information, you should include a
cover letter setting forth the information specified in our
confidential business information regulation.\5\
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\5\ See 49 CFR part 512.
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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 agencies consider late comments?
NHTSA and EPA will consider all comments received before the close
of business on the comment closing date indicated above under DATES. To
the extent practicable, we will also consider comments received after
that date. If interested persons believe that any information that the
agencies place in the docket after the issuance of the NPRM affects
their comments, they may submit comments after the closing date
concerning how the agencies should consider that information for the
final rule. However, the agencies' ability to consider any such late
comments in this rulemaking will be limited due to the time frame for
issuing a final rule.
If a comment is received too late for us to practicably consider in
developing a final rule, 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 EPA Docket Center or NHTSA Docket
[[Page 74857]]
Management Facility by going to the street addresses given above under
ADDRESSES.
How do I participate in the public hearings?
NHTSA and EPA will jointly host three public hearings on the dates
and locations described in the DATES section above. At all hearings,
both agencies will accept comments on the rulemaking, and NHTSA will
also accept comments on the EIS.
If you would like to present testimony at the public hearings, we
ask that you notify the EPA and NHTSA contact persons listed under FOR
FURTHER INFORMATION CONTACT at least ten days before the hearing. Once
EPA and NHTSA learn how many people have registered to speak at the
public hearing, we will allocate an appropriate amount of time to each
participant, allowing time for lunch and necessary breaks throughout
the day. For planning purposes, each speaker should anticipate speaking
for approximately ten minutes, although we may need to adjust the time
for each speaker if there is a large turnout. We suggest that you bring
copies of your statement or other material for the EPA and NHTSA
panels. It would also be helpful if you send us a copy of your
statement or other materials before the hearing. To accommodate as many
speakers as possible, we prefer that speakers not use technological
aids (e.g., audio-visuals, computer slideshows). However, if you plan
to do so, you must notify the contact persons in the FOR FURTHER
INFORMATION CONTACT section above. You also must make arrangements to
provide your presentation or any other aids to NHTSA and EPA in advance
of the hearing in order to facilitate set-up. In addition, we will
reserve a block of time for anyone else in the audience who wants to
give testimony. The agencies will assume that comments made at the
hearings are directed to the NPRM unless commenters specifically
reference NHTSA's EIS in oral or written testimony.
The hearing will be held at a site accessible to individuals with
disabilities. Individuals who require accommodations such as sign
language interpreters should contact the persons listed under FOR
FURTHER INFORMATION CONTACT section above no later than ten days before
the date of the hearing.
NHTSA and EPA will conduct the hearing informally, and technical
rules of evidence will not apply. We will arrange for a written
transcript of the hearing and keep the official record of the hearing
open for 30 days to allow you to submit supplementary information. You
may make arrangements for copies of the transcript directly with the
court reporter.
Table of Contents
I. Overview of Joint EPA/NHTSA Proposed 2017-2025 National PROGRAM
A. Introduction
1. Continuation of the National Program
2. Additional Background on the National Program
3. California's Greenhouse Gas Program
4. Stakeholder Engagement
B. Summary of the Proposed 2017-2025 National Program
1. Joint Analytical Approach
2. Level of the Standards
3. Form of the Standards
4. Program Flexibilities for Achieving Compliance
5. Mid-Term Evaluation
6. Coordinated Compliance
7. Additional Program Elements
C. Summary of Costs and Benefits for the Proposed National
Program
1. Summary of Costs and Benefits for the Proposed NHTSA CAFE
Standards
2. Summary of Costs and Benefits for the Proposed EPA GHG
Standards
D. Background and Comparison of NHTSA and EPA Statutory
Authority
1. NHTSA Statutory Authority
2. EPA Statutory Authority
3. Comparing the Agencies' Authority
II. Joint Technical Work Completed for This Proposal
A. Introduction
B. Developing the Future Fleet for Assessing Costs, Benefits,
and Effects
1. Why Did the Agencies Establish a Baseline and Reference
Vehicle Fleet?
2. How Did the Agencies Develop the Baseline Vehicle Fleet?
3. How Did the Agencies Develop the Projected MY 2017-2025
Vehicle Reference Fleet?
C. Development of Attribute-Based Curve Shapes
1. Why are standards attribute-based and defined by a
mathematical function?
2. What attribute are the agencies proposing to use, and why?
3. What mathematical functions have the agencies previously
used, and why?
4. How have the agencies changed the mathematical functions for
the proposed MYs 2017-2025 standards, and why?
5. What are the agencies proposing for the MYs 2017-2025 curves?
6. Once the agencies determined the appropriate slope for the
sloped part, how did the agencies determine the rest of the
mathematical function?
7. Once the agencies determined the complete mathematical
function shape, how did the agencies adjust the curves to develop
the proposed standards and regulatory alternatives?
D. Joint Vehicle Technology Assumptions
1. What Technologies did the Agencies Consider?
2. How did the Agencies Determine the Costs of Each of these
Technologies?
3. How Did the Agencies Determine the Effectiveness of Each of
these Technologies?
E. Joint Economic and Other Assumptions
F. Air Conditioning Efficiency CO2 Credits and Fuel
Consumption Improvement Values, Off-cycle Reductions, and Full-size
Pickup Trucks
1. Proposed Air Conditioning CO2 Credits and Fuel
Consumption Improvement Values
2. Off-Cycle CO2 Credits
3. Advanced Technology Incentives for Full Sized Pickup Trucks
G. Safety Considerations in Establishing CAFE/GHG Standards
1. Why do the agencies consider safety?
2. How do the agencies consider safety?
3. What is the current state of the research on statistical
analysis of historical crash data?
4. How do the agencies think technological solutions might
affect the safety estimates indicated by the statistical analysis?
5. How have the agencies estimated safety effects for the
proposed standards?
III. EPA Proposal For MYS 2017-2025 Greenhouse Gas Vehicle Standards
A. Overview of EPA Rule
1. Introduction
2. Why is EPA Proposing this Rule?
3. What is EPA Proposing?
4. Basis for the GHG Standards under Section 202(a)
5. Other Related EPA Motor Vehicle Regulations
B. Proposed Model Year 2017-2025 GHG Standards for Light-duty
Vehicles, Light-duty Trucks, and Medium duty Passenger Vehicles
1. What Fleet-wide Emissions Levels Correspond to the
CO2 Standards?
2. What Are the Proposed CO2 Attribute-based
Standards?
3. Mid-Term Evaluation
4. Averaging, Banking, and Trading Provisions for CO2
Standards
5. Small Volume Manufacturer Standards
6. Nitrous Oxide, Methane, and CO2-equivalent
Approaches
7. Small Entity Exemption
8. Additional Leadtime Issues
9. Police and Emergency Vehicle Exemption From CO2
Standards
10. Test Procedures
C. Additional Manufacturer Compliance Flexibilities
1. Air Conditioning Related Credits
2. Incentive for Electric Vehicles, Plug-in Hybrid Electric
Vehicles, and Fuel Cell Vehicles
3. Incentives for ``Game-Changing'' Technologies Including use
of Hybridization and Other Advanced Technologies for Full-Size
Pickup Trucks
4. Treatment of Plug-in Hybrid Electric Vehicles, Dual Fuel
Compressed Natural Gas Vehicles, and Ethanol Flexible Fuel Vehicles
for GHG Emissions Compliance
5. Off-cycle Technology Credits
D. Technical Assessment of the Proposed CO2 Standards
1. How did EPA develop a reference and control fleet for
evaluating standards?
2. What are the Effectiveness and Costs of CO2-
reducing technologies?
[[Page 74858]]
3. How were technologies combined into ``packages'' and what is
the cost and effectiveness of packages?
4. How does EPA Project how a manufacturer would decide between
options to improve CO2 performance to meet a fleet
average standard?
5. Projected Compliance Costs and Technology Penetrations
6. How does the technical assessment support the proposed
CO2 standards as compared to the alternatives has EPA
considered?
7. To what extent do any of today's vehicles meet or surpass the
proposed MY 2017-2025 CO2 footprint-based targets with
current powertrain designs?
E. Certification, Compliance, and Enforcement
1. Compliance Program Overview
2. Compliance With Fleet-Average CO2 Standards
3. Vehicle Certification
4. Useful Life Compliance
5. Credit Program Implementation
6. Enforcement
7. Other Certification Issues
8. Warranty, Defect Reporting, and Other Emission-related
Components Provisions
9. Miscellaneous Technical Amendments and Corrections
10. Base Tire Definition
11. Treatment of Driver-Selectable Modes and Conditions
F. How Would This Proposal Reduce GHG Emissions and Their
Associated Effects?
1. Impact on GHG Emissions
2. Climate Change Impacts From GHG Emissions
3. Changes in Global Climate Indicators Associated With the
Proposal's GHG Emissions Reductions
G. How would the proposal impact non-GHG emissions and their
associated effects?
1. Inventory
2. Health Effects of Non-GHG Pollutants
3. Environmental Effects of Non-GHG Pollutants
4. Air Quality Impacts of Non-GHG Pollutants
5. Other Unquantified Health and Environmental Effects
H. What are the estimated cost, economic, and other impacts of
the proposal?
1. Conceptual Framework for Evaluating Consumer Impacts
2. Costs Associated With the Vehicle Standards
3. Cost per ton of Emissions Reduced
4. Reduction in Fuel Consumption and its Impacts
5. CO2 Emission Reduction Benefits
6. Non-Greenhouse Gas Health and Environmental Impacts
7. Energy Security Impacts
8. Additional Impacts
9. Summary of Costs and Benefits
10. U.S. Vehicle Sales Impacts and Payback Period
11. Employment Impacts
I. Statutory and Executive Order Reviews
J. Statutory Provisions and Legal Authority
IV. NHTSA Proposed Rule for Passenger car and Light Truck Cafe
Standards for Model Years 2017-2025
A. Executive Overview of NHTSA Proposed Rule
1. Introduction
2. Why does NHTSA set CAFE standards for passenger cars and
light trucks?
3. Why is NHTSA proposing CAFE standards for MYs 2017-2025 now?
B. Background
1. Chronology of events since the MY 2012-2016 final rule was
issued
2. How has NHTSA developed the proposed CAFE standards since the
President's announcement?
C. Development and Feasibility of the Proposed Standards
1. How was the baseline vehicle fleet developed?
2. How were the technology inputs developed?
3. How did NHTSA develop its economic assumptions?
4. How does NHTSA use the assumptions in its modeling analysis?
D. Statutory Requirements
1. EPCA, as Amended by EISA
2. Administrative Procedure Act
3. National Environmental Policy Act
E. What are the proposed CAFE standards?
1. Form of the Standards
2. Passenger Car Standards for MYs 2017-2025
3. Minimum Domestic Passenger Car Standards
4. Light Truck Standards
F. How do the proposed standards fulfill NHTSA's statutory
obligations?
1. What are NHTSA's statutory obligations?
2. How did the agency balance the factors for this NPRM?
G. Impacts of the Proposed CAFE Standards
1. How will these standards improve fuel economy and reduce GHG
emissions for MY 2017-2025 vehicles?
2. How will these standards improve fleet-wide fuel economy and
reduce GHG emissions beyond MY 2025?
3. How will these proposed standards impact non-GHG emissions
and their associated effects?
4. What are the estimated costs and benefits of these proposed
standards?
5. How would these proposed standards impact vehicle sales?
6. Social Benefits, Private Benefits, and Potential Unquantified
Consumer Welfare Impacts of the Proposed Standards
7. What other impacts (quantitative and unquantifiable) will
these proposed standards have?
H. Vehicle Classification
I. Compliance and Enforcement
1. Overview
2. How does NHTSA determine compliance?
3. What compliance flexibilities are available under the CAFE
program and how do manufacturers use them?
4. What new incentives are being added to the CAFE program for
MYs 2017-2025?
5. Other CAFE enforcement issues
J. Regulatory notices and analyses
1. Executive Order 12866, Executive Order 13563, and DOT
Regulatory Policies and Procedures
2. National Environmental Policy Act
3. Regulatory Flexibility Act
4. Executive Order 13132 (Federalism)
5. Executive Order 12988 (Civil Justice Reform)
6. Unfunded Mandates Reform Act
7. Regulation Identifier Number
8. Executive Order 13045
9. National Technology Transfer and Advancement Act
10. Executive Order 13211
11. Department of Energy Review
12. Plain Language
13. Privacy Act
I. Overview of Joint EPA/NHTSA Proposed 2017-2025 National Program
Executive Summary
EPA and NHTSA are each announcing proposed rules that call for
strong and coordinated Federal greenhouse gas and fuel economy
standards for passenger cars, light-duty trucks, and medium-duty
passenger vehicles (hereafter light-duty vehicles or LDVs). Together,
these vehicle categories, which include passenger cars, sport utility
vehicles, crossover utility vehicles, minivans, and pickup trucks,
among others, are presently responsible for approximately 60 percent of
all U.S. transportation-related greenhouse gas (GHG) emissions and fuel
consumption. This proposal would extend the National Program of Federal
light-duty vehicle GHG emissions and corporate average fuel economy
(CAFE) standards to model years (MYs) 2017-2025. This proposed
coordinated program would achieve important reductions in GHG emissions
and fuel consumption from the light-duty vehicle part of the
transportation sector, based on technologies that either are
commercially available or that the agencies project will be
commercially available in the rulemaking timeframe and that can be
incorporated at a reasonable cost. Higher initial vehicle costs will be
more than offset by significant fuel savings for consumers over the
lives of the vehicles covered by this rulemaking.
This proposal builds on the success of the first phase of the
National Program to regulate fuel economy and GHG emissions from U.S.
light-duty vehicles, which established strong and coordinated standards
for model years (MY) 2012-2016. As with the first phase of the National
Program, collaboration with California Air Resources Board (CARB) and
with automobile manufacturers and other stakeholders has been a key
element in developing the agencies' proposed rules. Continuing the
National Program would ensure that all manufacturers can build a single
fleet of U.S. vehicles that would satisfy all requirements under both
programs as well as under California's
[[Page 74859]]
program, helping to reduce costs and regulatory complexity while
providing significant energy security and environmental benefits.
Combined with the standards already in effect for MYs 2012-2016, as
well as the MY 2011 CAFE standards, the proposed standards would result
in MY 2025 light-duty vehicles with nearly double the fuel economy, and
approximately one-half of the GHG emissions compared to MY 2010
vehicles--representing the most significant federal action ever taken
to reduce GHG emissions and improve fuel economy in the U.S. EPA is
proposing standards that are projected to require, on an average
industry fleet wide basis, 163 grams/mile of carbon dioxide
(CO2) in model year 2025, which is equivalent to 54.5 mpg if
this level were achieved solely through improvements in fuel
efficiency.\6\ Consistent with its statutory authority, NHTSA is
proposing passenger car and light truck standards for MYs 2017-2025 in
two phases. The first phase, from MYs 2017-2021, includes proposed
standards that are projected to require, on an average industry fleet
wide basis, 40.9 mpg in MY 2021. The second phase of the CAFE program,
from MYs 2022-2025, represents conditional \7\ proposed standards that
are projected to require, on an average industry fleet wide basis, 49.6
mpg in model year 2025. Both the EPA and NHTSA standards are projected
to be achieved through a range of technologies, including improvements
in air conditioning efficiency, which reduces both GHG emissions and
fuel consumption; the EPA standards also are projected to be achieved
with the use of air conditioning refrigerants with a lower global
warming potential (GWP), which reduce GHGs (i.e., hydrofluorocarbons)
but do not improve fuel economy. The agencies are proposing separate
standards for passenger cars and trucks, based on a vehicle's size or
``footprint.'' For the MYs 2022-2025 standards, EPA and NHTSA are
proposing a comprehensive mid-term evaluation and agency decision-
making process, given both the long time frame and NHTSA's obligation
to conduct a separate rulemaking in order to establish final standards
for vehicles for those model years.
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\6\ Real-world CO2 is typically 25 percent higher and
real-world fuel economy is typically 20 percent lower than the
CO2 and CAFE compliance values discussed here. The
reference to CO2 here refers to CO2 equivalent
reductions, as this included some degree of reductions in greenhouse
gases other than CO2, as one part of the air conditioning
related reductions.
\7\ By ``conditional,'' NHTSA means to say that the proposed
standards for MYs 2022-2025 represent the agency's current best
estimate of what levels of stringency would be maximum feasible in
those model years, but in order for the standards for those model
years to be legally binding a subsequent rulemaking must be
undertaken by the agency at a later time. See Section IV for more
information.
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From a societal standpoint, this second phase of the National
Program is projected to save approximately 4 billion barrels of oil and
2 billion metric tons of GHG emissions over the lifetimes of those
vehicles sold in MY 2017-2025. The agencies estimate that fuel savings
will far outweigh higher vehicle costs, and that the net benefits to
society of the MYs 2017-2025 National Program will be in the range of
$311 billion to $421 billion (7 and 3 percent discount rates,
respectively) over the lifetimes of those vehicles sold in MY 2017-
2025.
These proposed standards would have significant savings for
consumers at the pump. Higher costs for new vehicle technology will
add, on average, about $2000 for consumers who buy a new vehicle in MY
2025. Those consumers who drive their MY 2025 vehicle for its entire
lifetime will save, on average, $5200 to $6600 (7 and 3 percent
discount rates, respectively) in fuel savings, for a net lifetime
savings of $3000 to $4400. For those consumers who purchase their new
MY 2025 vehicle with cash, the discounted fuel savings will offset the
higher vehicle cost in less than 4 years, and fuel savings will
continue for as long as the consumer owns the vehicle. Those consumers
that buy a new vehicle with a typical 5-year loan will benefit from an
average monthly cash flow savings of about $12 during the loan period,
or about $140 per year, on average. So the consumer would benefit
beginning at the time of purchase, since the increased monthly fuel
savings would more than offset the higher monthly payment due to the
higher incremental vehicle cost.
The agencies have designed the proposed standards to preserve
consumer choice--that is, the proposed standards should not affect
consumers' opportunity to purchase the size of vehicle with the
performance, utility and safety features that meets their needs. The
standards are based on a vehicle's size, or footprint--that is,
consistent with their general performance and utility needs, larger
vehicles have numerically less stringent fuel economy/GHG emissions
targets and smaller vehicles have more stringent fuel economy/GHG
emissions targets, although since the standards are fleet average
standards, no specific vehicle must meet a target. Thus, consumers will
be able to continue to choose from the same mix of vehicles that are
currently in the marketplace.
The agencies' believe there is a wide range of technologies
available for manufacturers to consider in reducing GHG emissions and
improving fuel economy. The proposals allow for long-term planning by
manufacturers and suppliers for the continued development and
deployment across their fleets of fuel saving and emissions-reducing
technologies. The agencies believe that advances in gasoline engines
and transmissions will continue for the foreseeable future, and that
there will be continual improvement in other technologies, including
vehicle weight reduction, lower tire rolling resistance, improvements
in vehicle aerodynamics, diesel engines, and more efficient vehicle
accessories. The agencies also expect to see increased electrification
of the fleet through the expanded production of stop/start, hybrid,
plug-in hybrid and electric vehicles. Finally, the agencies expect that
vehicle air conditioners will continue to improve by becoming more
efficient and by increasing the use of alternative refrigerants. Many
of these technologies are already available today, and manufacturers
will be able to meet the standards through significant efficiency
improvements in these technologies, as well as a significant
penetration of these and other technologies across the fleet. Auto
manufacturers may also introduce new technologies that we have not
considered for this rulemaking analysis, which could make possible
alternative, more cost-effective paths to compliance.
A. Introduction
1. Continuation of the National Program
EPA and NHTSA are each announcing proposed rules that call for
strong and coordinated Federal greenhouse gas and fuel economy
standards for passenger cars, light-duty trucks, and medium-duty
passenger vehicles (hereafter light-duty vehicles or LDVs). Together,
these vehicle categories, which include passenger cars, sport utility
vehicles, crossover utility vehicles, minivans, and pickup trucks, are
presently responsible for approximately 60 percent of all U.S.
transportation-related greenhouse gas emissions and fuel consumption.
The proposal would extend the National Program of Federal light-duty
vehicle greenhouse gas (GHG) emissions and corporate average fuel
economy (CAFE) standards to model years (MYs) 2017-2025. The
coordinated program being proposed would achieve important reductions
of greenhouse gas (GHG) emissions and fuel consumption from the light-
duty vehicle part of the
[[Page 74860]]
transportation sector, based on technologies that either are
commercially available or that the agencies project will be
commercially available in the rulemaking timeframe and that can be
incorporated at a reasonable cost.
In working together to develop the next round of standards for MYs
2017-2025, NHTSA and EPA are building on the success of the first phase
of the National Program to regulate fuel economy and GHG emissions from
U.S. light-duty vehicles, which established the strong and coordinated
standards for model years (MY) 2012-2016. As for the MYs 2012-2016
rulemaking, collaboration with California Air Resources Board (CARB)
and with industry and other stakeholders has been a key element in
developing the agencies' proposed rules. Continuing the National
Program would ensure that all manufacturers can build a single fleet of
U.S. vehicles that would satisfy all requirements under both programs
as well as under California's program, helping to reduce costs and
regulatory complexity while providing significant energy security and
environmental benefits.
The agencies have been developing the basis for these joint
proposed standards almost since the conclusion of the rulemaking
establishing the first phase of the National Program. After much
research and deliberation by the agencies, along with CARB and other
stakeholders, President Obama announced plans for these proposed rules
on July 29, 2011 and NHTSA and EPA issued a Supplemental Notice of
Intent (NOI) outlining the agencies' plans for proposing the MY 2017-
2025 standards and program.\8\ This July NOI built upon the extensive
analysis conducted by the agencies over the past year, including an
initial technical assessment report and NOI issued in September 2010,
and a supplemental NOI issued in December 2010 (discussed further
below). The State of California and thirteen auto manufacturers
representing over 90 percent of U.S. vehicle sales provided letters of
support for the program concurrent with the Supplemental NOI.\9\ The
United Auto Workers (UAW) also supported the announcement,\10\ as well
as many consumer and environmental groups. As envisioned in the
Presidential announcement and Supplemental NOI, this proposal sets
forth proposed MYs 2017-2025 standards as well as detailed supporting
analysis for those standards and regulatory alternatives for public
review and comment. The program that the agencies are proposing will
spur the development of a new generation of clean cars and trucks
through innovative technologies and manufacturing that will, in turn,
spur economic growth and create high-quality domestic jobs, enhance our
energy security, and improve our environment. Consistent with Executive
Order 13563, this proposal was developed with early consultation with
stakeholders, employs flexible regulatory approaches to reduce burdens,
maintains freedom of choice for the public, and helps to harmonize
federal and state regulations.
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\8\ 76 FR 48758 (August 9, 2011).
\9\ Commitment letters are available at https://www.epa.gov/otaq/climate/regulations.htm and at https://www.nhtsa.gov/fuel-economy
(last accessed Aug. 24, 2011).
\10\ The UAW's support was expressed in a statement on July 29,
2011, which can be found at https://www.uaw.org/articles/uaw-supports-administration-proposal-light-duty-vehicle-cafe-and-greenhouse-gas-emissions-r (last accessed September 19, 2011).
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As described below, NHTSA and EPA are proposing a continuation of
the National Program that the agencies believe represents the
appropriate levels of fuel economy and GHG emissions standards for
model years 2017-2025, given the technologies that the agencies
anticipate will be available for use on these vehicles and the
agencies' understanding of the cost and manufacturers' ability to apply
these technologies during that time frame, and consideration of other
relevant factors. Under this joint rulemaking, EPA is proposing GHG
emissions standards under the Clean Air Act (CAA), and NHTSA is
proposing CAFE standards under EPCA, as amended by the Energy
Independence and Security Act of 2007 (EISA). This joint rulemaking
proposal reflects a carefully coordinated and harmonized approach to
implementing these two statutes, in accordance with all substantive and
procedural requirements imposed by law.\11\
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\11\ For NHTSA, this includes the requirements of the National
Environmental Policy Act (NEPA).
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The proposed approach allows for long-term planning by
manufacturers and suppliers for the continued development and
deployment across their fleets of fuel saving and emissions-reducing
technologies. NHTSA's and EPA's technology assessment indicates there
is a wide range of technologies available for manufacturers to consider
in reducing GHG emissions and improving fuel economy. The agencies
believe that advances in gasoline engines and transmissions will
continue for the foreseeable future, which is a view that is supported
in the literature and amongst the vehicle manufacturers and
suppliers.\12\ The agencies also believe that there will be continual
improvement in other technologies including reductions in vehicle
weight, lower tire rolling resistance, improvements in vehicle
aerodynamics, diesel engines, and more efficient vehicle accessories.
The agencies also expect to see increased electrification of the fleet
through the expanded production of stop/start, hybrid, plug-in hybrid
and electric vehicles.\13\ Finally, the agencies expect that vehicle
air conditioners will continue to improve by becoming more efficient
and by increasing the use of alternative refrigerants. Many of these
technologies are already available today, and EPA's and NHTSA's
assessments are that manufacturers will be able to meet the standards
through significant efficiency improvements in these technologies as
well as a significant penetration of these and other technologies
across the fleet. We project that these potential compliance pathways
for manufacturers will result in significant benefits to consumers and
to society, as quantified below. Manufacturers may also introduce new
technologies that we have not considered for this rulemaking analysis,
which could make possible alternative, more cost-effective paths to
compliance.
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\12\ There are a number of competing gasoline engine
technologies, with one in particular that the agencies project will
be common beyond 2016. This is the gasoline direct injection and
downsized engines equipped with turbochargers and cooled exhaust gas
recirculation, which has performance characteristics similar to that
of larger, less efficient engines. Paired with these engines, the
agencies project that advanced transmissions (such as automatic and
dual clutch transmissions with eight forward speeds) and higher
efficiency gearboxes will provide significant improvements.
Transmissions with eight or more speeds can be found in the fleet
today in very limited production, and while they are expected to
penetrate further by 2016, we anticipate that by 2025 these will be
the dominant transmissions in new vehicle sales.
\13\ For example, while today less than three percent of annual
vehicle sales are strong hybrids, plug-in hybrids and all electric
vehicles, by 2025 we estimate these technologies could represent
nearly 15 percent of new sales.
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As discussed further below, as with the standards for MYs 2012-
2016, the agencies believe that the proposed standards would continue
to preserve consumer choice, that is, the proposed standards should not
affect consumers' opportunity to purchase the size of vehicle that
meets their needs. NHTSA and EPA are proposing to continue standards
based on vehicle footprint, where smaller vehicles have relatively more
stringent standards, and larger vehicles have less stringent standards,
so there should not be a significant effect on the relative
availability of different size vehicles in the fleet.
[[Page 74861]]
Additionally, as with the standards for MYs 2012-2016, the agencies
believe that the proposed standards should not have a negative effect
on vehicle safety, as it relates to vehicle footprint and mass as
described in Section II.C and II.G below, respectively.
We note that as part of this rulemaking, given the long time frame
at issue in setting standards for MY 2022-2025 light-duty vehicles, the
agencies are discussing a comprehensive mid-term evaluation and agency
decision-making process. NHTSA has a statutory obligation to conduct a
separate de novo rulemaking in order to establish final standards for
vehicles for the 2022-2025 model years and would conduct the mid-term
evaluation as part of that rulemaking, and EPA is proposing regulations
that address the mid-term evaluation. The mid-term evaluation will
assess the appropriateness of the MY 2022-2025 standards considered in
this rulemaking, based on an updated assessment of all the factors
considered in setting the standards and the impacts of those factors on
the manufacturers' ability to comply. NHTSA and EPA fully expect to
conduct this mid-term evaluation in coordination with the California
Air Resources Board, given our interest in a maintaining a National
Program to address GHGs and fuel economy. Further discussion of the
mid-term evaluation is found later in this section, as well as in
Sections III and IV.
Based on the agencies' analysis, the National Program standards
being proposed are currently projected to reduce GHGs by approximately
2 billion metric tons and save 4 billion barrels of oil over the
lifetime of MYs 2017-2025 vehicles relative to the MY 2016 standard
curves \14\ already in place. The average cost for a MY 2025 vehicle to
meet the standards is estimated to be about $2,000 compared to a
vehicle that would meet the level of the MY 2016 standards in MY 2025.
However, fuel savings for consumers are expected to more than offset
the higher vehicle costs. The typical driver would save a total of
$5,200 to $6,600 (7 percent and 3 percent discount rate, respectively)
in fuel costs over the lifetime of a MY 2025 vehicle and, even after
accounting for the higher vehicle cost, consumers would save a net
$3,000 to $4,400 (7 percent and 3 percent discount rate, respectively)
over the vehicle's lifetime. Further, consumers who buy new vehicles
with cash would save enough in lower fuel costs after less than 4 years
(at either 7 percent or 3 percent discount rate) of owning a MY 2025
vehicle to offset the higher upfront vehicle costs, while consumers who
buy with a 5-year loan would save more each month on fuel than the
increased amount they would spend on the higher monthly loan payment,
beginning in the first month of ownership.
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\14\ The calculation of GHG reductions and oil savings is
relative to a future in which the MY 2016 standards remain in place
for MYs 2017-2025 and manufacturers comply on average at those
levels.
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Continuing the National Program has both energy security and
climate change benefits. Climate change is widely viewed as a
significant long-term threat to the global environment. EPA has found
that elevated atmospheric concentrations of six greenhouse gases--
carbon dioxide, methane, nitrous oxide, hydrofluorocarbons,
perflurocarbons, and sulfur hexafluoride--taken in combination endanger
both the public health and the public welfare of current and future
generations. EPA further found that the combined emissions of these
greenhouse gases from new motor vehicles and new motor vehicle engines
contribute to the greenhouse gas air pollution that endangers public
health and welfare. 74 FR 66496 (Dec. 15, 2009). As summarized in EPA's
Endangerment and Cause or Contribute Findings under Section 202(a) of
the Clear Air Act, anthropogenic emissions of GHGs are very likely (90
to 99 percent probability) the cause of most of the observed global
warming over the last 50 years.\15\ Mobile sources emitted 31 percent
of all U.S. GHGs in 2007 (transportation sources, which do not include
certain off-highway sources, account for 28 percent) and have been the
fastest-growing source of U.S. GHGs since 1990.\16\ Mobile sources
addressed in the endangerment and contribution findings under CAA
section 202(a)--light-duty vehicles, heavy-duty trucks, buses, and
motorcycles--accounted for 23 percent of all U.S. GHG in 2007.\17\
Light-duty vehicles emit CO2, methane, nitrous oxide, and
hydrofluorocarbons and are responsible for nearly 60 percent of all
mobile source GHGs and over 70 percent of Section 202(a) mobile source
GHGs. For light-duty vehicles in 2007, CO2 emissions
represent about 94 percent of all greenhouse emissions (including
HFCs), and the CO2 emissions measured over the EPA tests
used for fuel economy compliance represent about 90 percent of total
light-duty vehicle GHG emissions.18 19
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\15\ 74 FR 66,496,-66,518, December 18, 2009; ``Technical
Support Document for Endangerment and Cause or Contribute Findings
for Greenhouse Gases Under Section 202(a) of the Clean Air Act''
Docket: EPA-HQ-OAR-2009-0472-11292, https://epa.gov/climatechange/endangerment.html.
\16\ U.S. Environmental Protection Agency. 2009. Inventory of
U.S. Greenhouse Gas Emissions and Sinks: 1990-2007. EPA 430-R-09-
004. Available at https://epa.gov/climatechange/emissions/downloads09/GHG2007entire_report-508.pdf.
\17\ U.S. EPA. 2009 Technical Support Document for Endangerment
and Cause or Contribute Findings for Greenhouse Gases under Section
202(a) of the Clean Air Act. Washington, DC. pp. 180-194. Available
at https://epa.gov/climatechange/endangerment/downloads/Endangerment%20TSD.pdf.
\18\ U.S. Environmental Protection Agency. 2009. Inventory of
U.S. Greenhouse Gas Emissions and Sinks: 1990-2007. EPA 430-R-09-
004. Available at https://epa.gov/climatechange/emissions/downloads09/GHG2007entire_report-508.pdf.
\19\ U.S. Environmental Protection Agency. RIA, Chapter 2.
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Improving our energy and national security by reducing our
dependence on foreign oil has been a national objective since the first
oil price shocks in the 1970s. Net petroleum imports accounted for
approximately 51 percent of U.S. petroleum consumption in 2009.\20\
World crude oil production is highly concentrated, exacerbating the
risks of supply disruptions and price shocks as the recent unrest in
North Africa and the Persian Gulf highlights. Recent tight global oil
markets led to prices over $100 per barrel, with gasoline reaching as
high as $4 per gallon in many parts of the U.S., causing financial
hardship for many families and businesses. The export of U.S. assets
for oil imports continues to be an important component of the
historically unprecedented U.S. trade deficits. Transportation
accounted for about 71 percent of U.S. petroleum consumption in
2009.\21\ Light-duty vehicles account for about 60 percent of
transportation oil use, which means that they alone account for about
40 percent of all U.S. oil consumption.
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\20\ Energy Information Administration, ``How dependent are we
on foreign oil?'' Available at https://www.eia.gov/energy_in_brief/foreign_oil_dependence.cfm (last accessed August 28, 2011).
\21\ Energy Information Administration, Annual Energy Outlook
2011, ``Oil/Liquids.'' Available at https://www.eia.gov/forecasts/aeo/MT_liquidfuels.cfm (last accessed August 28, 2011).
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The automotive market is becoming increasingly global. The U.S.
auto companies and U.S. suppliers produce and sell automobiles and
automotive components around the world, and foreign auto companies
produce and sell in the U.S. As a result, the industry has become
increasingly competitive. Staying at the cutting edge of automotive
technology while maintaining profitability and consumer acceptance has
become increasingly important for the sustainability of auto companies.
The proposed standards cover model years 2017-2025 for passenger cars
and light-duty trucks sold in the United States. Many other countries
and regions around the world have in place fuel economy or
CO2
[[Page 74862]]
emission standards for light-duty vehicles. In addition, the European
Union is currently discussing more stringent CO2 standards
for 2020, and the Japanese government has recently issued a draft
proposal for new fuel efficiency standards for 2020. The overall trend
is clear--globally many of the major economic countries are increasing
the stringency of their fuel economy or CO2 emission
standards for light-duty vehicles. When considering this common trend,
the proposed CAFE and CO2 standards for MY 2017-2025 may
offer some advantages for U.S.-based automotive companies and
suppliers. In order to comply with the proposed standards, U.S. firms
will need to invest significant research and development dollars and
capital in order to develop and produce the technologies needed to
reduce CO2 emissions and improve fuel economy. Companies
have limited budgets for research and development programs. As
automakers seek greater commonality across the vehicles they produce
for the domestic and foreign markets, improving fuel economy and
reducing GHGs in U.S. vehicles should have spillovers to foreign
production, and vice versa, thus yielding the ability to amortize
investment in research and production over a broader product and
geographic spectrum. To the extent that the technologies needed to meet
the standards contained in this proposal can also be used to comply
with the fuel economy and CO2 standards in other countries,
this can help U.S. firms in the global automotive market, as the U.S.
firms will be able to focus their available research and development
funds on a common set of technologies that can be used both
domestically as well as internationally.
2. Additional Background on the National Program
Following the successful adoption of a National Program of federal
standards for greenhouse gas emissions (GHG) and fuel economy standards
for model years (MY) 2012-2016 light duty vehicles, President Obama
issued a Memorandum on May 21, 2010 requesting that the National
Highway Traffic Safety Administration (NHTSA), on behalf of the
Department of Transportation, and the Environmental Protection Agency
(EPA) work together to develop a national program for model years 2017-
2025. Specifically, he requested that the agencies develop ``* * * a
coordinated national program under the CAA [Clean Air Act] and the EISA
[Energy Independence and Security Act of 2007] to improve fuel
efficiency and to reduce greenhouse gas emissions of passenger cars and
light-duty trucks of model years 2017-2025.'' \22\ The President
recognized that our country could take a leadership role in addressing
the global challenges of improving energy security and reducing
greenhouse gas pollution, stating that ``America has the opportunity to
lead the world in the development of a new generation of clean cars and
trucks through innovative technologies and manufacturing that will spur
economic growth and create high-quality domestic jobs, enhance our
energy security, and improve our environment.''
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\22\ The Presidential Memorandum is found at: https://www.whitehouse.gov/the-press-office/presidential-memorandum-regarding-fuel-efficiency-standards. For the reader's reference, the
President also requested the Administrators of EPA and NHTSA to
issue joint rules under the CAA and EISA to establish fuel
efficiency and greenhouse gas emissions standards for commercial
medium-and heavy-duty on-highway vehicles and work trucks beginning
with the 2014 model year. The agencies recently promulgated final
GHG and fuel efficiency standards for heavy duty vehicles and
engines for MYs 2014-2018. 76 FR 57106 (September 15, 2011).
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The Presidential Memorandum stated ``The program should also seek
to achieve substantial annual progress in reducing transportation
sector greenhouse gas emissions and fossil fuel consumption, consistent
with my Administration's overall energy and climate security goals,
through the increased domestic production and use of existing,
advanced, and emerging technologies, and should strengthen the industry
and enhance job creation in the United States.'' Among other things,
the agencies were tasked with researching and then developing standards
for MYs 2017 through 2025 that would be appropriate and consistent with
EPA's and NHTSA's respective statutory authorities, in order to
continue to guide the automotive sector along the road to reducing its
fuel consumption and GHG emissions, thereby ensuring corresponding
energy security and environmental benefits. During the public comment
period for the MY 2012-2016 proposed rulemaking, many stakeholders,
including automakers, encouraged NHTSA and EPA to begi
