EPA's Denial of the Petition To Reconsider the Greenhouse Gas Emissions Standards and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles, 51701-51705 [2012-21032]

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You may review a Privacy Act notice regarding our public dockets in the January 17, 2008, issue of the Federal Register (73 FR 3316). pmangrum on DSK3VPTVN1PROD with RULES Public Meeting We do not now plan to hold a public meeting. But you may submit a request for one using one of the four methods specified under ADDRESSES. Please explain why one would be beneficial. If we determine that one would aid this rulemaking, we will hold one at a time and place announced by a later notice in the Federal Register. VerDate Mar<15>2010 14:47 Aug 24, 2012 Jkt 226001 Basis and Purpose The S41 Swingbridge across Wando River mile 10.0, Cainhoy, Berkeley County, South Carolina has a vertical clearance of 6 feet in the closed position. The operating schedule as published in 33 CFR 117.939 states the draw of the S41 bridge shall open on signal if at least 12 hours notice is given. This regulation has been in effect since 1965. Local mariners have asked the Coast Guard to evaluate the operating schedule to determine if more frequent openings would improve the accessibility of the waterway to maritime navigation. An estimated 400 recreational boats use the waterway in the local area. However, boaters upriver from the bridge have stated that the bridge’s low vertical clearance and requirement for 12-hours notice prevents boaters from accessing waterways, like Charleston harbor and the ocean, on the downriver side of the bridge. The South Carolina Department of Transportation has advised that approximately 1000 to 3000 vehicles per day cross this bridge. The Coast Guard anticipates daily bridge openings during this test a positive impact on navigation with the increased use of the waterway by vessel traffic. This deviation is effective from 8 p.m. on September 1, 2012 through 5 p.m. on December 31, 2012. The S41 Swingbridge shall open on the hour and the half hour, 24 hours-a-day, seven days-a-week. Following the test deviation period, the Coast Guard will review the bridge logs from the bridge owner to evaluate the impact of this test on local marine traffic. The Coast Guard will also consider all comments and related materials submitted in response to this test deviation. The Coast Guard will then evaluate whether a permanent change to the operating schedule of the S41 Swingbridge is necessary, and under what conditions the bridge should open. In accordance with 33 CFR 117.35(e), the drawbridge must return to its regular operating schedule immediately at the end of the designated time period. This deviation from the operating regulations is authorized under 33 CFR 117.35. Dated: August 10, 2012. B.L. Dragon, Bridge Program Director, Seventh Coast Guard District. [FR Doc. 2012–20978 Filed 8–24–12; 8:45 am] BILLING CODE 9110–04–P PO 00000 Frm 00021 Fmt 4700 Sfmt 4700 51701 ENVIRONMENTAL PROTECTION AGENCY 40 CFR Parts 85, 86, 600, 1033, 1036, 1037, 1039, 1065, 1066, and 1068 [EPA–HQ–OAR–2010–0162; FRL–9720–9] EPA’s Denial of the Petition To Reconsider the Greenhouse Gas Emissions Standards and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles Environmental Protection Agency (EPA). ACTION: Denial of petition to reconsider. AGENCY: The Environmental Protection Agency (EPA or Agency) is denying the petition of Plant Oil Powered Diesel Fuel Systems, Inc. (‘‘POP Diesel’’) to reconsider the final rules establishing emissions standards to reduce greenhouse gas emissions from on-road heavy-duty vehicles. DATES: This denial is effective August 27, 2012. ADDRESSES: EPA’s docket for this action is Docket ID No. EPA–HQ–OAR–2010– 0162. All documents in the docket are listed on the https://www.regulations.gov Web site. 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, is not placed on the Internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically through https://www.regulations.gov or in hard copy at EPA’s Docket Center, Public Reading Room, EPA West Building, Room 3334, 1301 Constitution Avenue NW., Washington, DC 20004. This Docket Facility 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, and the telephone number for the Air Docket is (202) 566– 1742. FOR FURTHER INFORMATION CONTACT: Steven Silverman, Office of General Counsel, Environmental Protection Agency, 1200 Pennsylvania Avenue NW., Washington, DC 20460; telephone number: (202) 564–5523; email address: silverman.steven@epa.gov. SUPPLEMENTARY INFORMATION: Acronyms and Abbreviations. The following acronyms and abbreviations are used in this Decision. SUMMARY: CAA Clean Air Act CO2 carbon dioxide EV electric vehicle E:\FR\FM\27AUR1.SGM 27AUR1 51702 Federal Register / Vol. 77, No. 166 / Monday, August 27, 2012 / Rules and Regulations EPA Environmental Protection Agency FR Federal Register FCV fuel cell vehicle GHG greenhouse gas GVWR gross vehicle weight rating HD heavy-duty N2O nitrous oxide NHTSA National Highway Traffic Safety Administration POP Diesel Plant Oil Powered Diesel Fuel Systems, Inc. PHEV plug-in hybrid electric vehicle RFS Renewable Fuel Standard RIN Renewable Identification Number VMT vehicle miles travelled I. Introduction On September 15, 2011, the EPA issued final rules establishing standards limiting emissions of CO2, methane, nitrous oxide (N2O) and hydrofluorocarbons (greenhouse gases or GHGs) from on-road heavy-duty vehicles, including combination tractors, heavy-duty pickup trucks and vans, and vocational vehicles. 76 FR 57106 (September 15, 2011). In this joint rulemaking the National Highway Traffic Safety Administration (NHTSA), on behalf of the Department of Transportation, issued rules for fuel consumption from these vehicles at the same time. Together these rules comprise a coordinated and comprehensive Heavy-Duty (HD) National Program designed to address the urgent and closely intertwined challenges of reduction of dependence on oil, achievement of energy security, and amelioration of global climate change. POP Diesel petitioned EPA to reconsider its greenhouse standards. Because the petition does not state grounds which satisfy the requirements of section 307(d)(7)(B) of the Act, and does not provide substantial support for the argument that the promulgated regulation should be revised, EPA is denying the petition. pmangrum on DSK3VPTVN1PROD with RULES II. Standard for Reconsideration Section 307(d)(7)(B) of the Clean Air Act (CAA) states that: ‘‘Only an objection to a rule or procedure which was raised with reasonable specificity during the period for public comment (including any public hearing) may be raised during judicial review. If the person raising an objection can demonstrate to the Administrator that it was impracticable to raise such objection within such time or if the grounds for such objection arose after the period for public comment (but within the time specified for judicial review) and if such objection is of central relevance to the outcome of the rule, the Administrator shall convene a proceeding for reconsideration of the VerDate Mar<15>2010 14:47 Aug 24, 2012 Jkt 226001 rule and provide the same procedural rights as would have been afforded had the information been available at the time the rule was proposed. If the Administrator refuses to convene such a proceeding, such person may seek review of such refusal in the United States court of appeals for the appropriate circuit. Such reconsideration shall not postpone the effectiveness of the rule. The effectiveness of the rule may be stayed pending such reconsideration, however, by the Administrator or the court for a period not to exceed three months.’’ Thus, for reconsideration to be mandated, a petition for reconsideration must show why the objection or claim could not have been presented during the comment period—either because it was impracticable to raise the objection during that time or because the grounds for raising the objection arose after the period for public comment but within 60 days of publication of the final action (i.e. ‘‘the time specified for judicial review’’). To be of central relevance to the outcome of a rule, an objection must provide substantial support for the argument that the promulgated regulation should be revised. See 76 FR 28318 (May 17, 2011) and other actions there cited. Because all of the objections or claims raised in POP Diesel’s petition could have been presented to EPA during the rulemaking, EPA is denying the request for reconsideration. EPA also finds that the petitioner has not provided substantial support for the argument that the promulgated regulation should be revised and is denying the request for reconsideration for that reason as well. III. POP Diesel’s Petition for Reconsideration POP Diesel filed a petition for reconsideration with EPA on November 14, 2011 and supplemented this petition on February 12, 2012. The company produces equipment intended to be installed after-market on diesel engines to permit the engines to operate on 100 percent untransestrified plant oil. February 12 Petition p. 12. The engine starts and shuts down on diesel from an original fuel tank during startup and shutoff but at all other times would run on 100 percent plant oil coming from an auxiliary tank. Id POP Diesel states that engines operated on vegetable oils with its systems incur ‘‘only a modest fuel consumption penalty’’ but would have superior GHG performance if evaluated on a full lifecycle basis. November 14, Petition p. 13; February 12 Petition p. 22. The objection raised in POP Diesel’s petitions is that EPA failed to PO 00000 Frm 00022 Fmt 4700 Sfmt 4700 adequately consider the so-called rebound effect during the rulemaking. POP Diesel maintains that ‘‘[t]he GHG standards will have the effect of making diesel engines less expensive to operate on petroleum fuel, which may, in fact, spur demand and have the result of increasing overall energy consumption and likely, consumption of fossil fuels.’’ November 14, 2011 Petition p. 15. In its supplement to its original petition, POP Diesel elaborated on this objection, maintaining that the rules would increase GHG emissions from heavyduty vehicles due to aspects of the rebound effect not accounted for in EPA’s analysis. Specifically, POP Diesel maintains that EPA underestimated the direct rebound effect and that a revised estimate of the direct rebound effect would result in an increase in greenhouse gas emissions Also, POP Diesel maintains that there are indirect, ‘‘embedded energy’’ (increased energy use as a result of additional goods and services produced) and ‘‘frontier’’ (creation of new, energy-intense products) rebound effects which EPA failed to examine, instead only analyzing direct effects in the form of estimated increase in vehicle miles travelled (and increases in GHG and criteria pollutant emissions associated with that increase). February 12, 2012 Supplemental Petition p. 12. These objections are accompanied by a supporting declaration of Dr. Harry Duston Saunders (a published researcher in energy economics) likewise dated February 12, 2012. POP Diesel does not address why this objection could not have been raised during the public comment period, as required by section 307(d)(7)(B). EPA discussed the rebound effect at length in the proposed rule. See 75 FR 74152, 74316–20 (November 30, 2010). The proposal included specific discussions of factors affecting the magnitude of the rebound effect, options for quantifying the effect (including aggregate estimates, sector-specific estimates, econometric estimates, and other modeling approaches), as well as quantified estimates of the effect which EPA thereupon applied in estimating the proposed rules’ impacts on GHG emissions, criteria pollutant emissions, as well as overall costs and benefits of the proposed program. Id. and 75 FR at 74290, 74313; see also Regulatory Impact Analysis: Final Rulemaking to Establish Greenhouse Gas Emissions Standards and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles, Docket #EPA– HQ–OAR–2010–0162–3634, pages 9–9 through 9–18. EPA received comments E:\FR\FM\27AUR1.SGM 27AUR1 Federal Register / Vol. 77, No. 166 / Monday, August 27, 2012 / Rules and Regulations pmangrum on DSK3VPTVN1PROD with RULES on its approach to the rebound effect and responded to them as part of the rulemaking. 76 FR at 57326–30; see also Response to Comments Document at 14–24. It is therefore apparent that POP Diesel had the opportunity to present all of its objections regarding the rebound effect during the rulemaking. Indeed, POP Diesel properly acknowledges that its objections are ‘‘belate[d]’’. February Petition p. 4. A second reason that POP Diesel’s objections do not require EPA to reconsider the rule is that the declaration of Dr. Saunders is dated February 12, 2012, outside of the period specified for judicial review—i.e. November 11, 2011. Even if POP Diesel’s objections could not have been raised during the public comment period (which is not the case), the grounds for objection did not arise ‘‘during the time specified for judicial review’’, as required by section 307(d)(7)(B). POP Diesel also reiterates a number of arguments it already presented to EPA in its comments to the proposed rule. Specifically, the petition maintains that EPA should have evaluated all emission control technologies on a lifecycle basis (‘‘[i]n considering only tailpipe emissions, rather than the full lifecycle GHG emissions of a technology and fuel that would result from a wells-to-wheels analysis, the Regulations arbitrarily favor and disfavor some alternatives over others’’, February amended petition p. 7). EPA addressed these issues during the rulemaking. See 75 FR at 74198, 255–56 (proposal); 76 FR at 57246–47 (final rule) and Response to Comment Document at 16–157. EPA’s proposal likewise addressed the issues of whether compliance with the standards should be measured on a tailpipe or lifecycle basis, and what if any incentives were appropriate for advanced technologies and alternative fuel vehicles. See 75 FR at 74198, 255– 56. Consequently, these are not issues which EPA is compelled to reconsider under section 307(d)(7)(B), since these objections could have been and were raised during the public comment period on the proposed rule. EPA also rejects the substance of the arguments raised in the petitions.1 A. Direct Rebound Effect POP Diesel first maintains that EPA underestimated the extent of the direct rebound effect, and that assigning 1 EPA may permissibly respond to a request for reconsideration without triggering additional notice and comment opportunities for a petitioner or other entities. Coalition for Responsible Regulation v. EPA, No. 09–1322 (D.C. Cir. June 26, 2012) slip op. p. 39. VerDate Mar<15>2010 14:47 Aug 24, 2012 Jkt 226001 different estimates of rebound effects to different heavy-duty vehicle classes (medium-duty pickups and vans, vocational vehicles, and combination tractors) was arbitrary. Saunders Affidavit paras. 35–36.2 EPA explained its rationale for selecting VMT rebound values for these three categories of vehicles in both the proposed and final rules. In short, the values for vocational vehicles and combination tractors fall within the range of estimates presented in two available analyses of the HD rebound effect.3 See 76 FR 57326–330. For medium-duty pickups and vans, EPA applied the light-duty VMT rebound effect estimate from the final rule establishing GHG standards for MYs 2012–2016 light-duty vehicles. Id. at 57329. EPA reasonably did so since there were no estimates of the direct rebound effect for medium-duty pickup trucks and vans (class 2b and 3) cited in the literature, and these classes of vehicles are used for purposes more similar to large light-duty vehicles than the other heavy-duty vehicle categories. These values are based on the best available data and econometric methods 4 and reflect many of the components of the VMT rebound effect that POP Diesel alleges (mistakenly) that EPA ignored (e.g., shifts of freight shipments from other transportation modes to trucking). At proposal, we explicitly requested, but did not receive, comment on all of the rebound estimates and assumptions in our 2 Dr. Saunders cites Knittel, Automobiles on Steroids, for the proposition that ‘‘in the personal transportation sector of the United States, a rebound effect of 75% between 1980 and 2006 existing because most of the technical engine efficiency gains were offset by consumers choosing to take improvements in engine efficiency in the form of increased vehicle weight and substantial increases in average horsepower.’’ Saunders Affidavit para. 14. The Knittel study does not attribute any fleet shifts to a rebound effect, and also discusses the light-duty vehicle sector exclusively. The study therefore has no apparent relevance to the heavyduty GHG rulemaking, or to a discussion of rebound effects. 3 The first analysis, from Cambridge Systematics, Inc., was commissioned by the National Academy of Sciences and uses a range of freight elasticities in the literature combined with technology cost and fuel saving scenarios to estimate the potential magnitude of the HD rebound effect. See 76 FR 74328. The second analysis, conducted by NHTSA, is an econometric analysis that estimates short-run and long-run elasticities of annual VMT with respect to fuel cost per mile driven using data on national and state VMT and a variety of other variables such as GDP, the volume of imports and exports, and factors affecting the price of trucking services (e.g., driver wages). Id. at 57329. 4 The ‘‘Saunders study’’ discussed in the Saunders affidavit (Saunders Affidavit para. 31–36) was not presented to EPA during the public comment period, it reflects no expert peer review and, as Dr. Saunders acknowledges, examines the entire transportation sector rather than the mediumand heavy-duty vehicle sector covered under EPA’s rule. PO 00000 Frm 00023 Fmt 4700 Sfmt 4700 51703 proposed rule. 75 FR at 74320. EPA continues to believe that its estimate of direct VMT rebound effect in the final rule is reasonable. B. Indirect Rebound Effects POP Diesel also maintains that EPA should account for the energy and GHG emissions impact associated with the so-called ‘‘indirect’’ rebound effects (distinct from the ‘‘direct’’ rebound effect). These effects could arise from the decline in fuel costs as a result of the rule, which could make goods and services transported by the U.S. trucking industry less expensive. In turn, less expensive goods and services could result in increased consumption of goods and service in the overall economy. Producing extra goods and services requires that more energy be used. This extra energy use can be thought of as ‘‘embodied’’ in the extra goods and services. Hence the term for this type of indirect rebound effect is the ‘‘embodied energy’’ rebound effect. The increased energy use from this type of indirect rebound effect could result in increased greenhouse gas emissions. Saunders Affidavit para. 46 Appendix A. A further indirect rebound effect unaccounted for, according to the petition, is the ‘‘frontier’’ rebound effect whereby energy efficiency gains enable creation of completely new products which are themselves energy intensive. Id. para. 26.5 POP Diesel maintains that these assorted indirect effects are of such magnitude as to create a ‘‘backfire’’ condition, negating all of the emission benefits of the rule. EPA is not aware of any data to indicate that the magnitude of indirect rebound effects, if any, would be significant for this rule. Research on indirect rebound effects is nascent. The magnitude of effects from our rule postulated in the Saunders affidavit has no support in the literature,6 reflects no 5 The Saunders declaration does not provide any examples of potential ‘‘frontier’’ rebound effects from the heavy-duty GHG rule, besides ‘‘the rise of internet shopping’’ that allows people to buy products from distant locations instead of purchasing products locally. Increased internet shopping is a well established market trend, so we do not see how it could be reasonably attributed to the modest increase in truck fuel efficiency that our standards will bring about. Furthermore, there are many factors that have contributed to increased internet shopping, most notably the widespread use of computers and advances in internet applications, which took place and would likely continue to take place in the absence of any improvements in truck efficiency. 6 Dr. Saunders cited only one published study quantifying indirect rebound effects (Druckman et al., 2011). Saunders affidavit para. 16. Although this UK-based study could offer insights into how to estimate indirect rebound effects in some contexts, the method may not be appropriate here for many E:\FR\FM\27AUR1.SGM Continued 27AUR1 51704 Federal Register / Vol. 77, No. 166 / Monday, August 27, 2012 / Rules and Regulations pmangrum on DSK3VPTVN1PROD with RULES expert peer review, and in the end is speculative. It appears highly improbable that all of the GHG emissions benefits of this rule would be negated by putative indirect rebound effects. As discussed in the proposed and final rules, all of the fuel costs savings will not necessarily be passed through to the consumer in terms of cheaper goods and services. First, there may be market barriers that impede trucking companies from passing along the fuel cost savings from the rule in the form of lower rates; see 75 FR at 74320 and 76 FR at 57329–30. Second, there are upfront vehicle costs (and potentially transaction or transition costs associated with the adoption of new technologies) that would partially offset some of the fuel cost savings from our rule, thereby limiting the magnitude of the impact on prices of final goods and services. Furthermore, there are additional benefits to consumers associated with increased consumption of goods and services, which would be important to consider if we were assessing the overall costs and benefits associated with potential indirect rebound effects from our rule. EPA thus reasons. First, the U.S. economy and consumer behavior is likely to differ from other countries (e.g., Americans have different product and service preferences and our products and services have different levels of embedded energy). Similar data and models may not exist to replicate the UK study in a U.S.-context. Second, the study is designed to examine behavioral strategies (e.g., lowering thermostats, reducing food waste, and biking instead of using a car) rather than improving technology. Among other things, the study does not consider capital expenditures associated with energy savings that could dampen any increase in consumption of additional goods and services (e.g., our rule increases the cost of new vehicles, which offsets the fuel cost savings that trucking firms may pass along to shippers, which in turn, would dampen any decrease in product prices that shippers pass along to consumers). Third, the study does not consider the potential for economic restructuring in response to decreased energy consumption (i.e., it does not consider ‘‘general equilibrium’’ effects), which could lead to either lower or higher energy consumption as a result of our rule. Fourth, the authors recognize that there is a major limitation of the study: they have only a very small number of expenditure categories in their model and there is considerable disparity in GHG intensities of commodities within each category (p. 3578). Fifth, the study does not directly explore the market mechanism through which our rule could influence the amount of goods and services consumed since it focuses on energy efficiency improvements that more directly increase consumers’ disposable income rather than the more complex and indirect pathway where greater truck fuel efficiency may result in lower-priced goods and services. Finally, the authors do not attempt to quantify the additional benefits to consumers associated with increased consumption of goods and services, which would be important to consider if we were assessing the overall costs and benefits associated with potential indirect rebound effects from our rule. VerDate Mar<15>2010 14:47 Aug 24, 2012 Jkt 226001 does not accept this speculative assessment. C. Fuel-Based Rule Rather Than a Vehicle-Based Rule POP Diesel requests EPA to reevaluate the weight given to various alternative technologies and fuels according to a lifecycle approach, and to decouple fuel efficiency policy from GHG emissions policy. February 12 Petition p. 2. In setting emissions standards for heavy-duty vehicles, EPA reasonably chose to consider the impact on GHG emissions of the fuels used by the different types of vehicles by measuring the tailpipe emissions of vehicles, including alternative fuel vehicles (which normally emit less GHG emissions than gasoline or dieselpowered vehicles).7 In a separate program, the Congressionally mandated Renewable Fuels Standard (RFS) program, there are strong incentives for use of renewable diesel fuels and other renewable fuels. See 76 FR at 57124. This program is specifically designed to mandate increasing volumes of renewable fuel use in transportation fuels, including renewable fuel used in heavy-duty diesel vehicles. The definition of renewable fuel includes thresholds for reductions in lifecycle greenhouse gas emissions, compared to petroleum fuel. For example, specified volumes of biomass-based diesel fuel must be used in the diesel transportation sector, and biomassbased diesel is defined in part as a diesel fuel that achieves a 50 percent reduction in lifecycle greenhouse emissions compared to baseline petroleum diesel fuel. POP Diesel points out that its product is not presently eligible to receive Renewable Identification Number (RIN) credits under that program, but this is an issue which is properly considered under the RFS program, which contains the mechanisms for determining whether a diesel fuel qualifies as a renewable fuel. EPA also does not accept the major premise of POP Diesel’s reconsideration petition and rulemaking comments. The company argues that it is arbitrary that 7 POP Diesel’s statement that the rules arbitrarily assign zero emissions and zero fuel consumption to electric vehicles (February revised petition, p. 6) is also misplaced. In fact, compliance with the standards is measured identically for all mediumand heavy-duty vehicles and engines: at the tailpipe. See 76 FR at 57247. Electric vehicles have zero GHG emissions measured at the tailpipe. POP Diesel states further that the standards are arbitrary in the GHG-reducing weight given to some alternative technologies and fuels. POP Diesel’s complaint (February amended petition p. 6) that the rule provides incentives for use of certain advanced technologies such as hybrid electrification and hydrogen fuel cells questions legitimate policy choices unrelated to the issue of fuel use. PO 00000 Frm 00024 Fmt 4700 Sfmt 4700 EPA has not established greenhouse gas emission standards for heavy-duty vehicles premised on use of their technology and its fuel. Under such a standard, the GHG level of a vehicle using POP Diesel would be tailpipe emissions adjusted by a factor reflecting the claimed reduction in lifecycle GHG emissions to produce the POP Diesel fuel. See, e.g., November 14, 2011 Petition for Reconsideration pp. 1–2 (‘‘If the Regulations did consider this technology, they could mandate much steeper reductions in greenhouse gas * * * emissions by requiring every engine and vehicle manufacturer of medium- and heavy-duty engines and vehicles to comply with a corporate average for such emissions’’). The heavy-duty vehicle and engine GHG standards are fuel neutral in that they do not themselves require or assume that a vehicle or engine will be operated on a particular type of fuel. If POP Diesel’s technology helps manufacturers reduce tailpipe GHG emissions, then it will have the same opportunities as any other technology that manufacturers will use to meet the standards. Moreover, POP Diesel has not correctly characterized the agencies’ consideration of the interaction between the RFS program and the heavy-duty GHG standards. As explained in the final rule, the tailpipe performance measurement of alternative fuels provides sufficient incentives for their use. While the agencies noted that incentives in the RFS pointed to a lack of a need for further incentives, the rule’s treatment of alternative fuels was not premised on each alternative fuel being covered by the RFS Standard.8 Indeed, other alternative fuels are similarly not covered by the RFS standard, such as liquefied natural gas, compressed natural gas, propane, hydrogen and electricity. Only where the vehicle or engine technology inherently demands a certain type of fuel do the standards account for that fuel use, by specifying the calculation procedure used to determine tailpipe emissions. This is the case with electric vehicles (EV), plug-in hybrid electric vehicles (PHEV), and hydrogen fuel cell vehicles, where the technology itself necessitates use of electricity rather than petroleum-based fuels.9 Unlike EVs, PHEVs, or FCVs, 8 See 76 FR 57124. so, the standards for medium- and heavyduty EVs and PHEVs measure performance based on tailpipe emissions exclusively. See 76 FR at 57247. The MYs 2012–2016 standards for light-duty EVs and PHEVs do account for greenhouse gas emissions attributable to upstream electricity generation after a designated number of EVs and PHEVs are sold, but this upstream factor does not 9 Even E:\FR\FM\27AUR1.SGM 27AUR1 pmangrum on DSK3VPTVN1PROD with RULES Federal Register / Vol. 77, No. 166 / Monday, August 27, 2012 / Rules and Regulations there is nothing inherent in a diesel engine that compels use of the POP Diesel product. Therefore, a standard premised on that product’s use would presuppose or require a market outcome which need not occur and would be infeasible and arbitrary. Even if EPA were to assume that POP Diesel’s claim of lifecycle emissions reductions are valid, and considered setting a vehicle emissions standard that assumed or required use of the POP Diesel technology and fuel, POP Diesel admits this would in fact lead to an increase in the actual GHG emissions from the vehicle. The only decrease in emissions would come from the claimed reduction in lifecycle GHG emissions that POP Diesel says would occur with use of their fuel. That would amount to adopting a vehicle emissions standard to promote a vehicle technology that does not reduce but instead increases the GHG emissions of the vehicle. The vehicle emissions standard would take that approach solely as a mechanism to mandate the use of a certain diesel fuel, based on emissions impacts associated with the fuel, not the vehicle. This would dramatically distort the purpose and structure of the vehicle emissions standard program, largely turning it into a de facto fuel program. There is no good reason to consider such a result here, especially where there already is a separate fuel based program, the RFS program, that is directly aimed at achieving the result POP Diesel seeks— a fuel program that achieves a reduction in lifecycle GHG emissions associated with the diesel fuel used by motor vehicles, through a mandate to use certain renewable diesel fuels. A further reason this heavy-duty rule does not regulate GHG emissions from a lifecycle perspective, or include explicit consideration of plant-based fuels like the one utilized by POP Diesel’s technology, is that it would no longer be possible to establish harmonized, performance-based tailpipe GHG emissions standards (EPA) and fuel efficiency standards (NHTSA). As discussed throughout the final rule, close coordination in this first heavyduty rule enabled EPA and NHTSA to promulgate complementary standards that appropriately allow manufacturers to build one set of vehicles to comply with both agencies’ regulations. See, e.g., 76 FR at 57107–108. This coordination was advocated by the President, id., widely supported by stakeholders, and provides benefits for reflect a single means of generating electricity and so differs from POP Diesel’s desired outcome, which is fuel specific. See 75 FR 25326, 25436–37 (May 7, 2010). VerDate Mar<15>2010 14:47 Aug 24, 2012 Jkt 226001 industry, government, and taxpayers by increasing regulatory efficiency and reducing compliance burdens. D. Fleet-Wide Average Standards Finally, the petition maintains that EPA should impose corporate fleet averages for GHG emissions, asserting that EPA did so only for medium-duty engines and vehicles. Id. p. 23. In fact, the standards are effectively corporate averages. See EPA, Heavy-Duty Diesel Greenhouse Gas Response to Comment Document at p. 16–149—explaining that the rule allows averaging, banking, and trading of credits within the same ‘‘averaging set’’, which means a manufacturer can comply through averaging across (for example) all of its vocational vehicles under 19,501 pounds GVWR; or all of its Class 6 and 7 vocational vehicles and tractors (that is, between all vehicles above 19,500 pounds GVWR and less than 33,001 pounds GVWR); or between all vehicles with GVWR greater than 33,000 pounds; or within the engine averaging sets (spark ignition engines, compressionignition light heavy-duty engines, compression-ignition medium heavyduty engines, and compression-ignition heavy heavy-duty engines). See sections 1036.740(a) and 1037.740(a). In any case, this issue again was one which was presented at proposal and addressed in the final rule. See 75 FR at 74250–54 (proposal) and 76 FR at 57238–240 (final). Consequently, POP Diesel has again failed to show why its objection can be raised outside the period for public comment, and in any case is mistaken. CAA section 307(d)(7)(B). Accordingly, because POP Diesel has not stated grounds requiring or justifying reconsideration under section 307(d)(7)(B) EPA is denying its petition. Dated: August 17, 2012. Lisa P. Jackson, Administrator. ACTION: 51705 Withdrawal of direct final rule. FMCSA withdraws its June 27, 2012, direct final rule eliminating the quarterly financial reporting requirements for certain for-hire motor carriers of property (Form QFR) and forhire motor carriers of passengers (Form MP–1). After reviewing the adverse comment received from SJ Consulting Group in response to the direct final rule, the agency has determined that it would be inappropriate to allow the direct final rule to take effect. The FMCSA intends to publish a notice of proposed rulemaking in the near future proposing the elimination of the quarterly financial reporting requirements for Form QFR and Form MP–1. DATES: The direct final rule published at 77 FR 38211, June 27, 2012 is withdrawn, effective August 27, 2012. FOR FURTHER INFORMATION CONTACT: Ms. Vivian Oliver, Office of Research and Information Technology, Federal Motor Carrier Safety Administration, 1200 New Jersey Ave. SE., Washington, DC 20590; Telephone 202–366–2974; email Vivian.Oliver@dot.gov. SUPPLEMENTARY INFORMATION: SUMMARY: I. Public Participation and Comments A. Viewing Comments and Documents To view comments, go to https:// www.regulations.gov/ #!docketDetail;D=FMCSA-2012-0020. If you do not have access to the Internet, you may also view the docket online by visiting the Docket Management Facility in Room W12–140 on the ground floor of the Department of Transportation West Building, 1200 New Jersey Avenue SE., Washington, DC 20590, between 9 a.m. and 5 p.m. e.t., Monday through Friday, except Federal holidays. B. Privacy Act Federal Motor Carrier Safety Administration Anyone can search the electronic form of 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 association, business, labor union, etc.). You may review a Privacy Act notice regarding our public dockets in the January 17, 2008 issue of the Federal Register (73 FR 3316). 49 CFR Part 369 II. Background [Docket No. FMCSA–2012–0020] On June 27, 2012, FMCSA published a direct final rule proposing to eliminate the quarterly financial reporting requirements for certain for-hire motor carriers of property (Form QFR) and forhire motor carriers of passengers (Form MP–1), if no adverse comments were received by July 27, 2012. After [FR Doc. 2012–21032 Filed 8–24–12; 8:45 am] BILLING CODE 6560–50–P DEPARTMENT OF TRANSPORTATION RIN–2126–AB48 Rescission of Quarterly Financial Reporting Requirements Federal Motor Carrier Safety Administration (FMCSA), DOT. AGENCY: PO 00000 Frm 00025 Fmt 4700 Sfmt 4700 E:\FR\FM\27AUR1.SGM 27AUR1

Agencies

[Federal Register Volume 77, Number 166 (Monday, August 27, 2012)]
[Rules and Regulations]
[Pages 51701-51705]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-21032]


=======================================================================
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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 85, 86, 600, 1033, 1036, 1037, 1039, 1065, 1066, and 
1068

[EPA-HQ-OAR-2010-0162; FRL-9720-9]


EPA's Denial of the Petition To Reconsider the Greenhouse Gas 
Emissions Standards and Fuel Efficiency Standards for Medium- and 
Heavy-Duty Engines and Vehicles

AGENCY: Environmental Protection Agency (EPA).

ACTION: Denial of petition to reconsider.

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SUMMARY: The Environmental Protection Agency (EPA or Agency) is denying 
the petition of Plant Oil Powered Diesel Fuel Systems, Inc. (``POP 
Diesel'') to reconsider the final rules establishing emissions 
standards to reduce greenhouse gas emissions from on-road heavy-duty 
vehicles.

DATES: This denial is effective August 27, 2012.

ADDRESSES: EPA's docket for this action is Docket ID No. EPA-HQ-OAR-
2010-0162. All documents in the docket are listed on the https://www.regulations.gov Web site. 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, is 
not placed on the Internet and will be publicly available only in hard 
copy form. Publicly available docket materials are available either 
electronically through https://www.regulations.gov or in hard copy at 
EPA's Docket Center, Public Reading Room, EPA West Building, Room 3334, 
1301 Constitution Avenue NW., Washington, DC 20004. This Docket 
Facility 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, and the telephone number for the Air Docket is 
(202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Steven Silverman, Office of General 
Counsel, Environmental Protection Agency, 1200 Pennsylvania Avenue NW., 
Washington, DC 20460; telephone number: (202) 564-5523; email address: 
silverman.steven@epa.gov.

SUPPLEMENTARY INFORMATION:
    Acronyms and Abbreviations. The following acronyms and 
abbreviations are used in this Decision.

CAA Clean Air Act
CO2 carbon dioxide
EV electric vehicle

[[Page 51702]]

EPA Environmental Protection Agency
FR Federal Register
FCV fuel cell vehicle
GHG greenhouse gas
GVWR gross vehicle weight rating
HD heavy-duty
N2O nitrous oxide
NHTSA National Highway Traffic Safety Administration
POP Diesel Plant Oil Powered Diesel Fuel Systems, Inc.
PHEV plug-in hybrid electric vehicle
RFS Renewable Fuel Standard
RIN Renewable Identification Number
VMT vehicle miles travelled

I. Introduction

    On September 15, 2011, the EPA issued final rules establishing 
standards limiting emissions of CO2, methane, nitrous oxide 
(N2O) and hydrofluorocarbons (greenhouse gases or GHGs) from 
on-road heavy-duty vehicles, including combination tractors, heavy-duty 
pickup trucks and vans, and vocational vehicles. 76 FR 57106 (September 
15, 2011). In this joint rulemaking the National Highway Traffic Safety 
Administration (NHTSA), on behalf of the Department of Transportation, 
issued rules for fuel consumption from these vehicles at the same time. 
Together these rules comprise a coordinated and comprehensive Heavy-
Duty (HD) National Program designed to address the urgent and closely 
intertwined challenges of reduction of dependence on oil, achievement 
of energy security, and amelioration of global climate change.
    POP Diesel petitioned EPA to reconsider its greenhouse standards. 
Because the petition does not state grounds which satisfy the 
requirements of section 307(d)(7)(B) of the Act, and does not provide 
substantial support for the argument that the promulgated regulation 
should be revised, EPA is denying the petition.

II. Standard for Reconsideration

    Section 307(d)(7)(B) of the Clean Air Act (CAA) states that: ``Only 
an objection to a rule or procedure which was raised with reasonable 
specificity during the period for public comment (including any public 
hearing) may be raised during judicial review. If the person raising an 
objection can demonstrate to the Administrator that it was 
impracticable to raise such objection within such time or if the 
grounds for such objection arose after the period for public comment 
(but within the time specified for judicial review) and if such 
objection is of central relevance to the outcome of the rule, the 
Administrator shall convene a proceeding for reconsideration of the 
rule and provide the same procedural rights as would have been afforded 
had the information been available at the time the rule was proposed. 
If the Administrator refuses to convene such a proceeding, such person 
may seek review of such refusal in the United States court of appeals 
for the appropriate circuit. Such reconsideration shall not postpone 
the effectiveness of the rule. The effectiveness of the rule may be 
stayed pending such reconsideration, however, by the Administrator or 
the court for a period not to exceed three months.''
    Thus, for reconsideration to be mandated, a petition for 
reconsideration must show why the objection or claim could not have 
been presented during the comment period--either because it was 
impracticable to raise the objection during that time or because the 
grounds for raising the objection arose after the period for public 
comment but within 60 days of publication of the final action (i.e. 
``the time specified for judicial review''). To be of central relevance 
to the outcome of a rule, an objection must provide substantial support 
for the argument that the promulgated regulation should be revised. See 
76 FR 28318 (May 17, 2011) and other actions there cited.
    Because all of the objections or claims raised in POP Diesel's 
petition could have been presented to EPA during the rulemaking, EPA is 
denying the request for reconsideration. EPA also finds that the 
petitioner has not provided substantial support for the argument that 
the promulgated regulation should be revised and is denying the request 
for reconsideration for that reason as well.

III. POP Diesel's Petition for Reconsideration

    POP Diesel filed a petition for reconsideration with EPA on 
November 14, 2011 and supplemented this petition on February 12, 2012. 
The company produces equipment intended to be installed after-market on 
diesel engines to permit the engines to operate on 100 percent 
untransestrified plant oil. February 12 Petition p. 12. The engine 
starts and shuts down on diesel from an original fuel tank during 
startup and shutoff but at all other times would run on 100 percent 
plant oil coming from an auxiliary tank. Id POP Diesel states that 
engines operated on vegetable oils with its systems incur ``only a 
modest fuel consumption penalty'' but would have superior GHG 
performance if evaluated on a full lifecycle basis. November 14, 
Petition p. 13; February 12 Petition p. 22.
    The objection raised in POP Diesel's petitions is that EPA failed 
to adequately consider the so-called rebound effect during the 
rulemaking. POP Diesel maintains that ``[t]he GHG standards will have 
the effect of making diesel engines less expensive to operate on 
petroleum fuel, which may, in fact, spur demand and have the result of 
increasing overall energy consumption and likely, consumption of fossil 
fuels.'' November 14, 2011 Petition p. 15. In its supplement to its 
original petition, POP Diesel elaborated on this objection, maintaining 
that the rules would increase GHG emissions from heavy-duty vehicles 
due to aspects of the rebound effect not accounted for in EPA's 
analysis. Specifically, POP Diesel maintains that EPA underestimated 
the direct rebound effect and that a revised estimate of the direct 
rebound effect would result in an increase in greenhouse gas emissions 
Also, POP Diesel maintains that there are indirect, ``embedded energy'' 
(increased energy use as a result of additional goods and services 
produced) and ``frontier'' (creation of new, energy-intense products) 
rebound effects which EPA failed to examine, instead only analyzing 
direct effects in the form of estimated increase in vehicle miles 
travelled (and increases in GHG and criteria pollutant emissions 
associated with that increase). February 12, 2012 Supplemental Petition 
p. 12. These objections are accompanied by a supporting declaration of 
Dr. Harry Duston Saunders (a published researcher in energy economics) 
likewise dated February 12, 2012.
    POP Diesel does not address why this objection could not have been 
raised during the public comment period, as required by section 
307(d)(7)(B). EPA discussed the rebound effect at length in the 
proposed rule. See 75 FR 74152, 74316-20 (November 30, 2010). The 
proposal included specific discussions of factors affecting the 
magnitude of the rebound effect, options for quantifying the effect 
(including aggregate estimates, sector-specific estimates, econometric 
estimates, and other modeling approaches), as well as quantified 
estimates of the effect which EPA thereupon applied in estimating the 
proposed rules' impacts on GHG emissions, criteria pollutant emissions, 
as well as overall costs and benefits of the proposed program. Id. and 
75 FR at 74290, 74313; see also Regulatory Impact Analysis: Final 
Rulemaking to Establish Greenhouse Gas Emissions Standards and Fuel 
Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles, 
Docket EPA-HQ-OAR-2010-0162-3634, pages 9-9 through 9-18. EPA 
received comments

[[Page 51703]]

on its approach to the rebound effect and responded to them as part of 
the rulemaking. 76 FR at 57326-30; see also Response to Comments 
Document at 14-24. It is therefore apparent that POP Diesel had the 
opportunity to present all of its objections regarding the rebound 
effect during the rulemaking. Indeed, POP Diesel properly acknowledges 
that its objections are ``belate[d]''. February Petition p. 4.
    A second reason that POP Diesel's objections do not require EPA to 
reconsider the rule is that the declaration of Dr. Saunders is dated 
February 12, 2012, outside of the period specified for judicial 
review--i.e. November 11, 2011. Even if POP Diesel's objections could 
not have been raised during the public comment period (which is not the 
case), the grounds for objection did not arise ``during the time 
specified for judicial review'', as required by section 307(d)(7)(B).
    POP Diesel also reiterates a number of arguments it already 
presented to EPA in its comments to the proposed rule. Specifically, 
the petition maintains that EPA should have evaluated all emission 
control technologies on a lifecycle basis (``[i]n considering only 
tailpipe emissions, rather than the full lifecycle GHG emissions of a 
technology and fuel that would result from a wells-to-wheels analysis, 
the Regulations arbitrarily favor and disfavor some alternatives over 
others'', February amended petition p. 7). EPA addressed these issues 
during the rulemaking. See 75 FR at 74198, 255-56 (proposal); 76 FR at 
57246-47 (final rule) and Response to Comment Document at 16-157. EPA's 
proposal likewise addressed the issues of whether compliance with the 
standards should be measured on a tailpipe or lifecycle basis, and what 
if any incentives were appropriate for advanced technologies and 
alternative fuel vehicles. See 75 FR at 74198, 255-56. Consequently, 
these are not issues which EPA is compelled to reconsider under section 
307(d)(7)(B), since these objections could have been and were raised 
during the public comment period on the proposed rule. EPA also rejects 
the substance of the arguments raised in the petitions.\1\
---------------------------------------------------------------------------

    \1\ EPA may permissibly respond to a request for reconsideration 
without triggering additional notice and comment opportunities for a 
petitioner or other entities. Coalition for Responsible Regulation 
v. EPA, No. 09-1322 (D.C. Cir. June 26, 2012) slip op. p. 39.
---------------------------------------------------------------------------

A. Direct Rebound Effect

    POP Diesel first maintains that EPA underestimated the extent of 
the direct rebound effect, and that assigning different estimates of 
rebound effects to different heavy-duty vehicle classes (medium-duty 
pickups and vans, vocational vehicles, and combination tractors) was 
arbitrary. Saunders Affidavit paras. 35-36.\2\ EPA explained its 
rationale for selecting VMT rebound values for these three categories 
of vehicles in both the proposed and final rules. In short, the values 
for vocational vehicles and combination tractors fall within the range 
of estimates presented in two available analyses of the HD rebound 
effect.\3\ See 76 FR 57326-330. For medium-duty pickups and vans, EPA 
applied the light-duty VMT rebound effect estimate from the final rule 
establishing GHG standards for MYs 2012-2016 light-duty vehicles. Id. 
at 57329. EPA reasonably did so since there were no estimates of the 
direct rebound effect for medium-duty pickup trucks and vans (class 2b 
and 3) cited in the literature, and these classes of vehicles are used 
for purposes more similar to large light-duty vehicles than the other 
heavy-duty vehicle categories.
---------------------------------------------------------------------------

    \2\ Dr. Saunders cites Knittel, Automobiles on Steroids, for the 
proposition that ``in the personal transportation sector of the 
United States, a rebound effect of 75% between 1980 and 2006 
existing because most of the technical engine efficiency gains were 
offset by consumers choosing to take improvements in engine 
efficiency in the form of increased vehicle weight and substantial 
increases in average horsepower.'' Saunders Affidavit para. 14. The 
Knittel study does not attribute any fleet shifts to a rebound 
effect, and also discusses the light-duty vehicle sector 
exclusively. The study therefore has no apparent relevance to the 
heavy-duty GHG rulemaking, or to a discussion of rebound effects.
    \3\ The first analysis, from Cambridge Systematics, Inc., was 
commissioned by the National Academy of Sciences and uses a range of 
freight elasticities in the literature combined with technology cost 
and fuel saving scenarios to estimate the potential magnitude of the 
HD rebound effect. See 76 FR 74328. The second analysis, conducted 
by NHTSA, is an econometric analysis that estimates short-run and 
long-run elasticities of annual VMT with respect to fuel cost per 
mile driven using data on national and state VMT and a variety of 
other variables such as GDP, the volume of imports and exports, and 
factors affecting the price of trucking services (e.g., driver 
wages). Id. at 57329.
---------------------------------------------------------------------------

    These values are based on the best available data and econometric 
methods \4\ and reflect many of the components of the VMT rebound 
effect that POP Diesel alleges (mistakenly) that EPA ignored (e.g., 
shifts of freight shipments from other transportation modes to 
trucking). At proposal, we explicitly requested, but did not receive, 
comment on all of the rebound estimates and assumptions in our proposed 
rule. 75 FR at 74320. EPA continues to believe that its estimate of 
direct VMT rebound effect in the final rule is reasonable.
---------------------------------------------------------------------------

    \4\ The ``Saunders study'' discussed in the Saunders affidavit 
(Saunders Affidavit para. 31-36) was not presented to EPA during the 
public comment period, it reflects no expert peer review and, as Dr. 
Saunders acknowledges, examines the entire transportation sector 
rather than the medium- and heavy-duty vehicle sector covered under 
EPA's rule.
---------------------------------------------------------------------------

B. Indirect Rebound Effects

    POP Diesel also maintains that EPA should account for the energy 
and GHG emissions impact associated with the so-called ``indirect'' 
rebound effects (distinct from the ``direct'' rebound effect). These 
effects could arise from the decline in fuel costs as a result of the 
rule, which could make goods and services transported by the U.S. 
trucking industry less expensive. In turn, less expensive goods and 
services could result in increased consumption of goods and service in 
the overall economy. Producing extra goods and services requires that 
more energy be used. This extra energy use can be thought of as 
``embodied'' in the extra goods and services. Hence the term for this 
type of indirect rebound effect is the ``embodied energy'' rebound 
effect. The increased energy use from this type of indirect rebound 
effect could result in increased greenhouse gas emissions. Saunders 
Affidavit para. 46 Appendix A. A further indirect rebound effect 
unaccounted for, according to the petition, is the ``frontier'' rebound 
effect whereby energy efficiency gains enable creation of completely 
new products which are themselves energy intensive. Id. para. 26.\5\ 
POP Diesel maintains that these assorted indirect effects are of such 
magnitude as to create a ``backfire'' condition, negating all of the 
emission benefits of the rule.
---------------------------------------------------------------------------

    \5\ The Saunders declaration does not provide any examples of 
potential ``frontier'' rebound effects from the heavy-duty GHG rule, 
besides ``the rise of internet shopping'' that allows people to buy 
products from distant locations instead of purchasing products 
locally. Increased internet shopping is a well established market 
trend, so we do not see how it could be reasonably attributed to the 
modest increase in truck fuel efficiency that our standards will 
bring about. Furthermore, there are many factors that have 
contributed to increased internet shopping, most notably the 
widespread use of computers and advances in internet applications, 
which took place and would likely continue to take place in the 
absence of any improvements in truck efficiency.
---------------------------------------------------------------------------

    EPA is not aware of any data to indicate that the magnitude of 
indirect rebound effects, if any, would be significant for this rule. 
Research on indirect rebound effects is nascent. The magnitude of 
effects from our rule postulated in the Saunders affidavit has no 
support in the literature,\6\ reflects no

[[Page 51704]]

expert peer review, and in the end is speculative. It appears highly 
improbable that all of the GHG emissions benefits of this rule would be 
negated by putative indirect rebound effects. As discussed in the 
proposed and final rules, all of the fuel costs savings will not 
necessarily be passed through to the consumer in terms of cheaper goods 
and services. First, there may be market barriers that impede trucking 
companies from passing along the fuel cost savings from the rule in the 
form of lower rates; see 75 FR at 74320 and 76 FR at 57329-30. Second, 
there are upfront vehicle costs (and potentially transaction or 
transition costs associated with the adoption of new technologies) that 
would partially offset some of the fuel cost savings from our rule, 
thereby limiting the magnitude of the impact on prices of final goods 
and services. Furthermore, there are additional benefits to consumers 
associated with increased consumption of goods and services, which 
would be important to consider if we were assessing the overall costs 
and benefits associated with potential indirect rebound effects from 
our rule. EPA thus does not accept this speculative assessment.
---------------------------------------------------------------------------

    \6\ Dr. Saunders cited only one published study quantifying 
indirect rebound effects (Druckman et al., 2011). Saunders affidavit 
para. 16. Although this UK-based study could offer insights into how 
to estimate indirect rebound effects in some contexts, the method 
may not be appropriate here for many reasons. First, the U.S. 
economy and consumer behavior is likely to differ from other 
countries (e.g., Americans have different product and service 
preferences and our products and services have different levels of 
embedded energy). Similar data and models may not exist to replicate 
the UK study in a U.S.-context. Second, the study is designed to 
examine behavioral strategies (e.g., lowering thermostats, reducing 
food waste, and biking instead of using a car) rather than improving 
technology. Among other things, the study does not consider capital 
expenditures associated with energy savings that could dampen any 
increase in consumption of additional goods and services (e.g., our 
rule increases the cost of new vehicles, which offsets the fuel cost 
savings that trucking firms may pass along to shippers, which in 
turn, would dampen any decrease in product prices that shippers pass 
along to consumers). Third, the study does not consider the 
potential for economic restructuring in response to decreased energy 
consumption (i.e., it does not consider ``general equilibrium'' 
effects), which could lead to either lower or higher energy 
consumption as a result of our rule. Fourth, the authors recognize 
that there is a major limitation of the study: they have only a very 
small number of expenditure categories in their model and there is 
considerable disparity in GHG intensities of commodities within each 
category (p. 3578). Fifth, the study does not directly explore the 
market mechanism through which our rule could influence the amount 
of goods and services consumed since it focuses on energy efficiency 
improvements that more directly increase consumers' disposable 
income rather than the more complex and indirect pathway where 
greater truck fuel efficiency may result in lower-priced goods and 
services. Finally, the authors do not attempt to quantify the 
additional benefits to consumers associated with increased 
consumption of goods and services, which would be important to 
consider if we were assessing the overall costs and benefits 
associated with potential indirect rebound effects from our rule.
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C. Fuel-Based Rule Rather Than a Vehicle-Based Rule

    POP Diesel requests EPA to re-evaluate the weight given to various 
alternative technologies and fuels according to a lifecycle approach, 
and to decouple fuel efficiency policy from GHG emissions policy. 
February 12 Petition p. 2. In setting emissions standards for heavy-
duty vehicles, EPA reasonably chose to consider the impact on GHG 
emissions of the fuels used by the different types of vehicles by 
measuring the tailpipe emissions of vehicles, including alternative 
fuel vehicles (which normally emit less GHG emissions than gasoline or 
diesel-powered vehicles).\7\ In a separate program, the Congressionally 
mandated Renewable Fuels Standard (RFS) program, there are strong 
incentives for use of renewable diesel fuels and other renewable fuels. 
See 76 FR at 57124. This program is specifically designed to mandate 
increasing volumes of renewable fuel use in transportation fuels, 
including renewable fuel used in heavy-duty diesel vehicles. The 
definition of renewable fuel includes thresholds for reductions in 
lifecycle greenhouse gas emissions, compared to petroleum fuel. For 
example, specified volumes of biomass-based diesel fuel must be used in 
the diesel transportation sector, and biomass-based diesel is defined 
in part as a diesel fuel that achieves a 50 percent reduction in 
lifecycle greenhouse emissions compared to baseline petroleum diesel 
fuel. POP Diesel points out that its product is not presently eligible 
to receive Renewable Identification Number (RIN) credits under that 
program, but this is an issue which is properly considered under the 
RFS program, which contains the mechanisms for determining whether a 
diesel fuel qualifies as a renewable fuel.
---------------------------------------------------------------------------

    \7\ POP Diesel's statement that the rules arbitrarily assign 
zero emissions and zero fuel consumption to electric vehicles 
(February revised petition, p. 6) is also misplaced. In fact, 
compliance with the standards is measured identically for all 
medium- and heavy-duty vehicles and engines: at the tailpipe. See 76 
FR at 57247. Electric vehicles have zero GHG emissions measured at 
the tailpipe. POP Diesel states further that the standards are 
arbitrary in the GHG-reducing weight given to some alternative 
technologies and fuels. POP Diesel's complaint (February amended 
petition p. 6) that the rule provides incentives for use of certain 
advanced technologies such as hybrid electrification and hydrogen 
fuel cells questions legitimate policy choices unrelated to the 
issue of fuel use.
---------------------------------------------------------------------------

    EPA also does not accept the major premise of POP Diesel's 
reconsideration petition and rulemaking comments. The company argues 
that it is arbitrary that EPA has not established greenhouse gas 
emission standards for heavy-duty vehicles premised on use of their 
technology and its fuel. Under such a standard, the GHG level of a 
vehicle using POP Diesel would be tailpipe emissions adjusted by a 
factor reflecting the claimed reduction in lifecycle GHG emissions to 
produce the POP Diesel fuel. See, e.g., November 14, 2011 Petition for 
Reconsideration pp. 1-2 (``If the Regulations did consider this 
technology, they could mandate much steeper reductions in greenhouse 
gas * * * emissions by requiring every engine and vehicle manufacturer 
of medium- and heavy-duty engines and vehicles to comply with a 
corporate average for such emissions'').
    The heavy-duty vehicle and engine GHG standards are fuel neutral in 
that they do not themselves require or assume that a vehicle or engine 
will be operated on a particular type of fuel. If POP Diesel's 
technology helps manufacturers reduce tailpipe GHG emissions, then it 
will have the same opportunities as any other technology that 
manufacturers will use to meet the standards. Moreover, POP Diesel has 
not correctly characterized the agencies' consideration of the 
interaction between the RFS program and the heavy-duty GHG standards. 
As explained in the final rule, the tailpipe performance measurement of 
alternative fuels provides sufficient incentives for their use. While 
the agencies noted that incentives in the RFS pointed to a lack of a 
need for further incentives, the rule's treatment of alternative fuels 
was not premised on each alternative fuel being covered by the RFS 
Standard.\8\ Indeed, other alternative fuels are similarly not covered 
by the RFS standard, such as liquefied natural gas, compressed natural 
gas, propane, hydrogen and electricity.
---------------------------------------------------------------------------

    \8\ See 76 FR 57124.
---------------------------------------------------------------------------

    Only where the vehicle or engine technology inherently demands a 
certain type of fuel do the standards account for that fuel use, by 
specifying the calculation procedure used to determine tailpipe 
emissions. This is the case with electric vehicles (EV), plug-in hybrid 
electric vehicles (PHEV), and hydrogen fuel cell vehicles, where the 
technology itself necessitates use of electricity rather than 
petroleum-based fuels.\9\ Unlike EVs, PHEVs, or FCVs,

[[Page 51705]]

there is nothing inherent in a diesel engine that compels use of the 
POP Diesel product. Therefore, a standard premised on that product's 
use would presuppose or require a market outcome which need not occur 
and would be infeasible and arbitrary.
---------------------------------------------------------------------------

    \9\ Even so, the standards for medium- and heavy-duty EVs and 
PHEVs measure performance based on tailpipe emissions exclusively. 
See 76 FR at 57247. The MYs 2012-2016 standards for light-duty EVs 
and PHEVs do account for greenhouse gas emissions attributable to 
upstream electricity generation after a designated number of EVs and 
PHEVs are sold, but this upstream factor does not reflect a single 
means of generating electricity and so differs from POP Diesel's 
desired outcome, which is fuel specific. See 75 FR 25326, 25436-37 
(May 7, 2010).
---------------------------------------------------------------------------

    Even if EPA were to assume that POP Diesel's claim of lifecycle 
emissions reductions are valid, and considered setting a vehicle 
emissions standard that assumed or required use of the POP Diesel 
technology and fuel, POP Diesel admits this would in fact lead to an 
increase in the actual GHG emissions from the vehicle. The only 
decrease in emissions would come from the claimed reduction in 
lifecycle GHG emissions that POP Diesel says would occur with use of 
their fuel. That would amount to adopting a vehicle emissions standard 
to promote a vehicle technology that does not reduce but instead 
increases the GHG emissions of the vehicle. The vehicle emissions 
standard would take that approach solely as a mechanism to mandate the 
use of a certain diesel fuel, based on emissions impacts associated 
with the fuel, not the vehicle. This would dramatically distort the 
purpose and structure of the vehicle emissions standard program, 
largely turning it into a de facto fuel program. There is no good 
reason to consider such a result here, especially where there already 
is a separate fuel based program, the RFS program, that is directly 
aimed at achieving the result POP Diesel seeks--a fuel program that 
achieves a reduction in lifecycle GHG emissions associated with the 
diesel fuel used by motor vehicles, through a mandate to use certain 
renewable diesel fuels.
    A further reason this heavy-duty rule does not regulate GHG 
emissions from a lifecycle perspective, or include explicit 
consideration of plant-based fuels like the one utilized by POP 
Diesel's technology, is that it would no longer be possible to 
establish harmonized, performance-based tailpipe GHG emissions 
standards (EPA) and fuel efficiency standards (NHTSA). As discussed 
throughout the final rule, close coordination in this first heavy-duty 
rule enabled EPA and NHTSA to promulgate complementary standards that 
appropriately allow manufacturers to build one set of vehicles to 
comply with both agencies' regulations. See, e.g., 76 FR at 57107-108. 
This coordination was advocated by the President, id., widely supported 
by stakeholders, and provides benefits for industry, government, and 
taxpayers by increasing regulatory efficiency and reducing compliance 
burdens.

D. Fleet-Wide Average Standards

    Finally, the petition maintains that EPA should impose corporate 
fleet averages for GHG emissions, asserting that EPA did so only for 
medium-duty engines and vehicles. Id. p. 23. In fact, the standards are 
effectively corporate averages. See EPA, Heavy-Duty Diesel Greenhouse 
Gas Response to Comment Document at p. 16-149--explaining that the rule 
allows averaging, banking, and trading of credits within the same 
``averaging set'', which means a manufacturer can comply through 
averaging across (for example) all of its vocational vehicles under 
19,501 pounds GVWR; or all of its Class 6 and 7 vocational vehicles and 
tractors (that is, between all vehicles above 19,500 pounds GVWR and 
less than 33,001 pounds GVWR); or between all vehicles with GVWR 
greater than 33,000 pounds; or within the engine averaging sets (spark 
ignition engines, compression-ignition light heavy-duty engines, 
compression-ignition medium heavy-duty engines, and compression-
ignition heavy heavy-duty engines). See sections 1036.740(a) and 
1037.740(a). In any case, this issue again was one which was presented 
at proposal and addressed in the final rule. See 75 FR at 74250-54 
(proposal) and 76 FR at 57238-240 (final). Consequently, POP Diesel has 
again failed to show why its objection can be raised outside the period 
for public comment, and in any case is mistaken. CAA section 
307(d)(7)(B).
    Accordingly, because POP Diesel has not stated grounds requiring or 
justifying reconsideration under section 307(d)(7)(B) EPA is denying 
its petition.

    Dated: August 17, 2012.
Lisa P. Jackson,
Administrator.
[FR Doc. 2012-21032 Filed 8-24-12; 8:45 am]
BILLING CODE 6560-50-P
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