2017 and Later Model Year Light-Duty Vehicle Greenhouse Gas Emissions and Corporate Average Fuel Economy Standards, 62623-63200 [2012-21972]

Download as PDF Vol. 77 Monday, No. 199 October 15, 2012 Book 2 of 2 Books Pages 62623–63200 Part II Environmental Protection Agency 40 CFR Parts 85, 86, and 600 Department of Transportation National Highway Traffic Safety Administration sroberts on DSK5SPTVN1PROD with 49 CFR Parts 523, 531, 533. et al.and 600 2017 and Later Model Year Light-Duty Vehicle Greenhouse Gas Emissions and Corporate Average Fuel Economy Standards; Final Rule VerDate Mar 15 2010 23:49 Oct 12, 2012 Jkt 229001 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 E:\FR\FM\BOOK2.SGM BOOK2 62624 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations 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–9706–5; 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), DOT. ACTION: Final rule. AGENCIES: EPA and NHTSA, on behalf of the Department of Transportation, are issuing final rules to further reduce greenhouse gas emissions and improve fuel economy for light-duty vehicles for model years 2017 and beyond. 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 improve fuel economy and reduce greenhouse gas emissions of light-duty vehicles for model years 2017–2025, building on the success of the first phase of the National Program for these vehicles for model years 2012–2016. This final rule, 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 finalizing Corporate Average Fuel Economy standards for model years 2017–2021 and issuing augural standards for model years 2022–2025 under the Energy SUMMARY: Category NAICS Codes A Industry ..................................... sroberts on DSK5SPTVN1PROD with Industry ..................................... 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 23:11 Oct 12, 2012 Jkt 229001 either electronically in www.regulations.gov by searching for the dockets using the Docket ID numbers above, 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 (DOT), West Building, Ground Floor, Rm. W12–140, 1200 New Jersey Avenue SE., Washington, DC 20590. The DOT 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 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: Examples of potentially regulated entities 336111 336112 811111 811112 811198 423110 335312 336312 Industry ..................................... VerDate Mar<15>2010 Policy and Conservation Act, as amended by the Energy Independence and Security Act. NHTSA will set final standards for model years 2022–2025 in a future rulemaking. EPA is finalizing greenhouse gas emissions standards for model years 2017–2025 under the Clean Air Act. These standards apply to passenger cars, light-duty trucks, and medium-duty passenger vehicles, and represent the continuation of a harmonized and consistent National Program. Under the National Program automobile manufacturers will 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 that are available today. EPA is also finalizing minor changes to the regulations applicable to model years 2012–2016, with respect to air conditioner performance, nitrous oxides measurement, off-cycle technology credits, and police and emergency vehicles. DATES: This final rule is effective on December 14, 2012, sixty days after date of publication in the Federal Register. The incorporation by reference of certain publications listed in this regulation is approved by the Director of the Federal Register as of December 14, 2012. ADDRESSES: EPA and NHTSA have established dockets for this action under Docket ID No. EPA–HQ–OAR–2010– 0799 and NHTSA 2010–0131, respectively. All documents in the docket are listed in the http:// 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 can be found Motor Vehicle Manufacturers. Commercial Importers of Vehicles and Vehicle Components. Alternative Fuel Vehicle Converters. 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 PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 rating. Medium-duty passenger vehicles do not include pick-up trucks. 2 ‘‘Passenger car’’ and ‘‘light truck’’ are defined in 49 CFR Part 523. E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations Category NAICS Codes A 62625 Examples of potentially regulated entities 336399 811198 A North American Industry Classification System (NAICS). 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. sroberts on DSK5SPTVN1PROD with Table of Contents I. Overview of Joint EPA/NHTSA Final 2017– 2025 National Program A. Executive Summary 1. Purpose of the Regulatory Action 2. Summary of the Major Provisions of the Final Rule 3. Costs and Benefits of National Program B. Introduction 1. Continuation of the National Program 2. Additional Background on the National Program and Stakeholder Engagement Prior to the NPRM 3. Public Participation and Stakeholder Engagement Since the NPRM Was Issued 4. California’s Greenhouse Gas Program C. Summary of the Final 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 D. Summary of Costs and Benefits for the National Program 1. Summary of Costs and Benefits for the NHTSA CAFE Standards 2. Summary of Costs and Benefits for the EPA’s GHG Standards 3. Why are the EPA and NHTSA MY 2025 estimated per-vehicle costs different? E. 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 Final Rule A. Introduction B. Developing the Future Fleet for Assessing Costs, Benefits, and Effects 1. Why did the agencies establish baseline and reference vehicle fleets? 2. What comments did the agencies receive regarding fleet projections for the NPRM? 3. Why were two fleet projections created for the FRM? 4. How did the agencies develop the MY 2008 baseline vehicle fleet? 5. How did the agencies develop the projected MY 2017–2025 vehicle VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 reference fleet for the 2008 model year based fleet? 6. How did the agencies develop the model year 2010 baseline vehicle fleet as part of the 2010 based fleet projection? 7. How did the agencies develop the projected my 2017–2025 vehicle reference fleet for the 2010 model year based fleet? 8. What are the differences in the sales volumes and characteristics of the MY 2008 based and the MY 2010 based fleets projections? 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 adopting, and why? 3. How have the agencies changed the mathematical functions for the MYs 2017–2025 standards, and why? 4. What curves are the agencies promulgating for MYs 2017–2025? 5. Once the agencies determined the slope, how did the agencies determine the rest of the mathematical function? 6. 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? 4. How did the agencies consider realworld limits when defining the rate at which technologies can be deployed? 5. Maintenance and Repair Costs Associated With New Technologies E. Joint Economic and Other Assumptions F. CO2 Credits and Fuel Consumption Improvement Values for Air Conditioning Efficiency, Off-cycle Reductions, and Full-size Pickup Trucks 1. Air Conditioning Efficiency Credits and Fuel Consumption Improvement Values 2. Off-Cycle CO2 Credits 3. Advanced Technology Incentives for Full-Size 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 final rule? PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 III. EPA MYs 2017–2025 Light-Duty Vehicle Greenhouse Gas Emissions Standards A. Overview of EPA Rule 1. Introduction 2. Why is EPA establishing MYs 2017– 2025 standards for light-duty vehicles? 3. What is EPA finalizing? 4. Basis for the GHG Standards Under Section 202(a) 5. Other Related EPA Motor Vehicle Regulations B. 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 CO2 attribute-based standards? 3. Mid-Term Evaluation 4. Averaging, Banking, and Trading Provisions for CO2 Standards 5. Small Volume Manufacturer Standards 6. Additional Lead Time for Intermediate Volume Manufacturers 7. Small Business Exemption 8. Police and Emergency Vehicle Exemption From GHG Standards 9. Nitrous Oxide, Methane, and CO2equivalent Approaches 10. Test Procedures C. Additional Manufacturer Compliance Flexibilities 1. Air Conditioning Related Credits 2. Incentives for Electric Vehicles, Plug-in Hybrid Electric Vehicles, Fuel Cell Vehicles, and Dedicated and Dual Fuel Compressed Natural Gas Vehicles 3. Incentives for Using Advanced ‘‘GameChanging’’ Technologies in 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 CO2 Standards 1. How did EPA develop reference and control fleets for evaluating standards? 2. What are the effectiveness and costs of CO2-reducing technologies? 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 final CO2 standards as compared to the alternatives has EPA considered? 7. Comments Received on the Analysis of Technical Feasibility and Appropriateness of the Standards E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with 62626 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations 8. To what extent do any of today’s vehicles meet or surpass the final 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 12. Publication of GHG Compliance Information F. How will this rule 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 This Rule’s GHG Emissions Reductions G. How will the rule 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 rule? 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. Cost of Ownership, Payback Period and Lifetime Savings on New Vehicle Purchases 6. CO2 Emission Reduction Benefits 7. Non-Greenhouse Gas Health and Environmental Impacts 8. Energy Security Impacts 9. Additional Impacts 10. Summary of Costs and Benefits 11. U.S. Vehicle Sales Impacts and Affordability of New Vehicles 12. Employment Impacts I. Statutory and Executive Order Reviews J. Statutory Provisions and Legal Authority IV. NHTSA Final Rule for Passenger Car and Light Truck CAFE Standards for Model Years 2017 and Beyond A. Executive Overview of NHTSA Final Rule 1. Introduction 2. Why does NHTSA set CAFE standards for passenger cars and light trucks? 3. Why is NHTSA presenting CAFE standards for MYs 2017–2025 now? B. Background 1. Chronology of Events Since the MY 2012–2016 Final Rule was Issued VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 2. How has NHTSA developed the CAFE standards since the President’s announcement, and what has changed between the proposal and the final rule? 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 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 final standards fulfill NHTSA’s statutory obligations? 1. Overview 2. What are NHTSA’s statutory obligations? 3. How did the agency balance the factors for the NPRM? 4. What comments did the agency receive regarding the proposed maximum feasible levels? 5. How has the agency balanced the factors for this final rule? G. Impacts of the Final 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 standards impact nonGHG emissions and their associated effects? 4. What are the estimated costs and benefits of these standards? 5. How would these final standards impact vehicle sales and employment? 6. Social Benefits, Private Benefits, and Potential Unquantified Consumer Welfare Impacts of the Standards 7. What other impacts (quantitative and unquantifiable) will these 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. Record of Decision 1. The Agency’s Decision 2. Alternatives NHTSA Considered in Reaching its Decision 3. NHTSA’s Environmental Analysis, Including Consideration of the Environmentally Preferable Alternative 4. Factors Balanced by NHTSA in Making its Decision PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 5. How the Factors and Considerations Balanced by NHTSA Entered Into its Decision 6. The Agency’s Preferences Among Alternatives Based on Relevant Factors, Including Economic and Technical Considerations and Agency Statutory Missions 7. Mitigation K. Regulatory Notices and Analyses 1. Executive Order 12866, Executive Order 13563, and DOT Regulatory Policies and Procedures 2. National Environmental Policy Act 3. Clean Air Act (CAA) as Applied to NHTSA’s Action 4. National Historic Preservation Act (NHPA) 5. Fish and Wildlife Conservation Act (FWCA) 6. Coastal Zone Management Act (CZMA) 7. Endangered Species Act (ESA) 8. Floodplain Management (Executive Order 11988 and DOT Order 5650.2) 9. Preservation of the Nation’s Wetlands (Executive Order 11990 and DOT Order 5660.1a) 10. Migratory Bird Treaty Act (MBTA), Bald and Golden Eagle Protection Act (BGEPA), Executive Order 13186 11. Department of Transportation Act (Section 4(f)) 12. Regulatory Flexibility Act 13. Executive Order 13132 (Federalism) 14. Executive Order 12988 (Civil Justice Reform) 15. Unfunded Mandates Reform Act 16. Regulation Identifier Number 17. Executive Order 13045 18. National Technology Transfer and Advancement Act 19. Executive Order 13211 20. Department of Energy Review 21. Privacy Act I. Overview of Joint EPA/NHTSA Final 2017–2025 National Program A. Executive Summary 1. Purpose of the Regulatory Action a. The Need for the Action and How the Action Addresses the Need NHTSA, on behalf of the Department of Transportation, and EPA are issuing final rules to further reduce greenhouse gas emissions and improve fuel economy for light-duty vehicles for model years 2017 and beyond. On May 21, 2010, President Obama issued a Presidential Memorandum requesting that EPA and NHTSA develop through notice and comment rulemaking a coordinated National Program to improve fuel economy and reduce greenhouse gas emissions of light-duty vehicles for model years 2017–2025, building on the success of the first phase of the National Program for these vehicles for model years 2012–2016. These final rules are consistent with the President’s request and respond to the country’s critical need to address global E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with climate change and to reduce oil consumption. These standards apply to passenger cars, light-duty trucks, and mediumduty passenger vehicles (i.e. sport utility vehicles, cross-over utility vehicles, and light trucks), and represent the continuation of a harmonized and consistent National Program for these vehicles. Under the National Program automobile manufacturers will be able to continue building a single light-duty national fleet that satisfies all requirements under both programs. The National Program is estimated to save approximately 4 billion barrels of oil and to reduce GHG emissions by the equivalent of approximately 2 billion metric tons over the lifetimes of those light duty vehicles produced in MYs 2017–2025. The agencies project 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 $326 billion to $451 billion (7 and 3 percent discount rates, respectively) over the lifetimes of those light duty vehicles sold in MYs 2017–2025. The National Program is projected to provide significant savings for consumers due to reduced fuel use. Although the agencies estimate that technologies used to meet the standards will add, on average, about $1,800 to the cost of a new light duty vehicle in MY 2025, consumers who drive their MY 2025 vehicle for its entire lifetime will save, on average, $5,700 to $7,400 (7 and 3 percent discount rates, respectively) in fuel, for a net lifetime savings of $3,400 to $5,000. This estimate assumes gasoline prices of $3.87 per gallon in 2025 with small increases most years throughout the vehicle’s lifetime. b. Legal Authority EPA and NHTSA are finalizing separate sets of standards for passenger cars and for light trucks, under their respective statutory authority. EPA is setting national CO2 emissions standards for passenger cars and lighttrucks under section 202 (a) of the Clean Air Act (CAA) ((42 U.S.C. 7521 (a)), and under its authority to measure passenger car and passenger car fleet fuel economy pursuant to the Energy Policy and Conservation Act (EPCA) 49 U.S.C. 32904 (c). NHTSA is setting national corporate average fuel economy (CAFE) standards under the Energy Policy and Conservation Act (EPCA), as amended by the Energy Independence and Security Act (EISA) of 2007 (49 U.S.C. 32902). Section 202 (a) of the Clean Air Act requires EPA to establish standards for VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 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. See Coalition for Responsible Regulation v. EPA, No. 09–1322 (D.C. Cir. June 26, 2012) slip op. p. 41 (‘‘’[i]f EPA makes a finding of endangerment, the Clean Air Act requires the [a]gency to regulate emissions of the deleterious pollutant from new motor vehicles. ‘* * * Given the non-discretionary duty in Section 202 (a)(1) and the limited flexibility available under Section 202 (a)(2), which this court has held relates only to the motor-vehicle industry,* * * EPA had no statutory basis on which it could ‘ground [any] reasons for further inaction’’ (quoting State of Massachusetts v. EPA, 549 U.S. 497, 533, 535 (2007). In establishing such standards, EPA must consider issues of technical feasibility, cost, and available lead time. Standards under section 202 (a) thus 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’’ (CAA section 202 (a)(2) (42 U.S.C. 7512 (a)(2)). EPCA, as amended by EISA, contains a number of provisions regarding how NHTSA must set CAFE standards. EPCA requires that NHTSA establish separate passenger car and light truck standards (49 U.S.C. 32902(b)(1)) at ‘‘the maximum feasible average fuel economy level that it decides the manufacturers can achieve in that model year (49 U.S.C. 32902(a)),’’ 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 (49 U.S.C. 32902(f)). 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. 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 (49 U.S.C. 32902(b)(2)(A))]. For model years 2021–2030, standards need simply be set at the maximum feasible level (49 U.S.C.32903(b)(2)(B). PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 62627 Section I.E of the preamble contains a detailed discussion of both agencies’ statutory authority. 2. Summary of the Major Provisions of the Final Rule NHTSA and EPA are finalizing rules for light-duty vehicles that the agencies believe represent the appropriate levels of fuel economy and GHG emissions standards for model years 2017 and beyond pursuant to their respective statutory authorities. a. Standards EPA is establishing 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.3 Consistent with its statutory authority, NHTSA has developed two phases of passenger car and light truck standards in this rulemaking action. The first phase, from MYs 2017–2021, includes final standards that are projected to require, on an average industry fleet wide basis, a range from 40.3–41.0 mpg in MY 2021. The second phase of the CAFE program, from MYs 2022–2025, includes standards that are not final, due to the statutory requirement that NHTSA set average fuel economy standards not more than 5 model years at a time. Rather, those standards are augural, meaning that they represent NHTSA’s current best estimate, based on the information available to the agency today, of what levels of stringency might be maximum feasible in those model years. NHTSA projects that those standards could require, on an average industry fleet wide basis, a range from 48.7–49.7 mpg in model year 2025. Both the CO2 and CAFE standards are footprint-based, as are the standards currently in effect for these vehicles through model year 2016. The standards will become more stringent on average in each model year from 2017 through 2025. Generally, the larger the vehicle footprint, the less numerically stringent the corresponding vehicle CO2 emissions and MPG targets. As a result of the footprint-based standards, the burden of compliance is distributed 3 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. 163g/mi would be equivalent to 54.5 mpg, if the entire fleet were to meet this CO2 level through tailpipe CO2 and fuel economy improvements. The agencies expect, however, that a portion of these improvements will be made through improvements in air conditioning leakage and through use of alternative refrigerants, which would not contribute to fuel economy. E:\FR\FM\15OCR2.SGM 15OCR2 62628 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations across all vehicle footprints and across all manufacturers. Manufacturers are not compelled to build vehicles of any particular size or type (nor do the rules create an incentive to do so), and each manufacturer will have its own fleetwide standard that reflects the light duty vehicles it chooses to produce. b. Mid-Term Evaluation The agencies will conduct a comprehensive mid-term evaluation and agency decision-making process for the MYs 2022–2025 standards as described in the proposal. The mid-term evaluation reflects the rules’ long time frame and, for NHTSA, the agency’s statutory obligation to conduct a de novo rulemaking in order to establish final standards for MYs 2022–2025. In order to align the agencies’ proceedings for MYs 2022–2025 and to maintain a joint national program, EPA and NHTSA will finalize their actions related to MYs 2022–2025 standards concurrently. If the EPA determination is that standards may change, the agencies will issue a joint NPRM and joint final rules. NHTSA and EPA fully expect to conduct this mid-term evaluation in coordination with the California Air Resources Board, given our interest in maintaining a National Program to address GHG emissions and fuel economy. Further discussion of the mid-term evaluation is found in Sections III.B.3 and IV.A.3.b. c. Compliance Flexibilities As proposed, the agencies are finalizing several provisions which provide compliance flexibility to manufacturers to meet the standards without compromising the program’s overall environmental and energy security objectives. Further discussion of compliance flexibilities is in Section C.4, II.F, III.B, III.C, IV.I. sroberts on DSK5SPTVN1PROD with Credit Averaging, Banking and Trading The agencies are continuing to allow manufacturers to generate credits for over-compliance with the CO2 and CAFE standards.4 A manufacturer will generate credits if its car and/or truck fleet achieves a fleet average CO2/CAFE level better than its car and/or truck standards. Conversely, a manufacturer will incur a debit/shortfall if its fleet average CO2/CAFE level does not meet the standard when all credits are taken into account. As in the prior CAFE and GHG programs, a manufacturer whose fleet generates credits in a given model year would have several options for 4 This credit flexibility is required by EPCA/EISA, see 49 U.S.C. 32903, and is well within EPA’s discretion under section 202 (a) of the CAA. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 using those credits, including credit carry-back, credit carry-forward, credit transfers, and credit trading. Air Conditioning Improvement Credits As proposed, EPA is establishing that the maximum total A/C credits available for cars will be 18.8 grams/mile CO2equivalent and 24.4 grams/mile for trucks CO2-equivalent.5 The approaches used to calculate these credits for direct and indirect A/C improvement (i.e., improvements to A/C leakage (including substitution of low GHG refrigerant) and A/C efficiency) are generally consistent with those of the MYs 2012–2016 program, although there are several revisions. Most notably, a new test for A/C efficiency, optional under the GHG program starting in MY 2014, will be used exclusively in MY 2017 and beyond. Under its EPCA authority, EPA proposed and is finalizing provisions to allow manufacturers to generate fuel consumption improvement values for purposes of CAFE compliance based on these same improvements in air conditioner efficiency. Off-Cycle Credits EPA proposed and is finalizing provisions allowing manufacturers to continue to generate and use off-cycle credits to demonstrate compliance with the GHG standards. These credits are for measureable GHG emissions and fuel economy improvements attributable to use of technologies whose benefits are not measured by the two-cycle test mandated by EPCA. Under its EPCA authority, EPA proposed and is finalizing provisions to allow manufacturers to generate fuel consumption improvement values for purposes of CAFE compliance based on the use of off-cycle technologies. Incentives for Electric Vehicles, Plug-in Hybrid Electric Vehicles, Fuel Cell Vehicles and Compressed Natural Gas Vehicles In order to provide temporary regulatory incentives to promote the penetration of certain ‘‘game changing’’ advanced vehicle technologies into the light duty vehicle fleet, EPA is finalizing, as proposed, an incentive multiplier for CO2 emissions compliance purposes for all electric vehicles (EVs), plug-in hybrid electric vehicles (PHEVs), and fuel cell vehicles (FCVs) sold in MYs 2017 through 2021. The incentives are expected to promote increased application of these advanced technologies in the program’s early 5 This is further broken down by 5.0 and 7.2 g/ mi respectively for car and truck A/C efficiency credits, and 13.8 and 17.2 g/mi respectively for car and truck alternative refrigerant credits. PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 model years, which could achieve economies of scale that will support the wider application of these technologies to help achieve the more stringent standards in MYs 2022–2025. In addition, in response to public comments persuasively explaining how infrastructure for compressed natural gas (CNG) vehicles could serve as a bridge to use of advanced technologies such as hydrogen fuel cells, EPA is finalizing an incentive multiplier for CNG vehicles sold in MYs 2017 through 2021. NHTSA currently interprets EPCA and EISA as precluding it from offering incentives for the alternative fuel operation of EVs, PHEVs, FCVs, and NGVs, except as specified by statute, and thus did not propose and is not including incentive multipliers comparable to the EPA incentive multipliers described above. Incentives for Use of Advanced Technologies Including Hybridization for full-Size Pick-up Trucks The agencies recognize that the standards presented in this final rule for MYs 2017–2025 will be challenging for large vehicles, including full-size pickup trucks. To help address this challenge, the program will, as proposed, contain incentives for the use of hybrid electric and other advanced technologies in full-size pickup trucks. 3. Costs and Benefits of National Program It is important to note that NHTSA’s CAFE standards and EPA’s GHG standards will both be in effect, and both will lead to increases in average fuel economy and reductions in GHGs. The two agencies’ standards together comprise the National Program, and the following discussions of the respective costs and benefits of NHTSA’s CAFE standards and EPA’s GHG 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. The costs and benefits projected by NHTSA to result from the CAFE standards are presented first, followed by those projected by EPA to result from the GHG emissions standards. For several reasons, the estimates for costs and benefits presented by NHTSA and EPA for their respective rules, while consistent, are not directly comparable, and thus should not be expected to be identical. See Section I.D of the preamble for further details and discussion. NHTSA has analyzed in detail the projected costs and benefits for the 2017–2025 CAFE standards for light- E:\FR\FM\15OCR2.SGM 15OCR2 62629 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations duty vehicles. NHTSA estimates that the fuel economy increases would lead to fuel savings totaling about 170 billion gallons throughout the lives of light duty vehicles sold in MYs 2017–2025. At a 3 percent discount rate, the present value of the economic benefits resulting from those fuel savings is between $481 billion and $488 billion; at a 7 percent private discount rate, the present value of the economic benefits resulting from those fuel savings is between $375 billion and $380 billion. The agency further estimates that these new CAFE standards will lead to corresponding reductions in CO2 emissions totaling 1.8 billion metric tons during the lives of light duty vehicles sold in MYs 2017– 2025. The present value of the economic benefits from avoiding those emissions is approximately $49 billion, based on a global social cost of carbon value of about $26 per metric ton (in 2017, and growing thereafter). The Table below shows NHTSA’s estimated overall lifetime discounted costs and benefits, and net benefits for the model years 2017–2025 CAFE standards. NHTSA’S ESTIMATED MYS 2017–2021 AND MYS 2017–2025 COSTS, BENEFITS, AND NET BENEFITS (BILLIONS OF 2010 DOLLARS)) UNDER THE CAFE STANDARDS 6 Totals Baseline fleet 3% Discount rate Annualized 7% Discount rate 3% Discount rate 7% Discount rate ($58)– ........... ($54) ............. $195– ........... $194 ............. $137– ........... $141 ............. ($2.4)– .......... ($2.2) ............ $9.2– ............ $9.0 .............. $6.8– ............ $6.8 .............. ($3.6)– ($3.3) $11.3– $11.0 $7.7– $7.8 ($5.4)– .......... ($5.4) ............ $21.0– .......... $21.3 ............ $15.7– .......... $15.9 ............ ($7.6)– ($7.5) $24.2– $24.4 $16.7– $16.9 Cumulative for MYs 2017–2021 Final Standards Costs ........................................................................................... Benefits ........................................................................................ Net Benefits ................................................................................. 2010 2008 2010 2008 2010 2008 ............. ............. ............. ............. ............. ............. ($61)– ........... ($57) ............. $243– ........... $240 ............. $183– ........... $184 ............. Cumulative for MYs 2017—2025 (Includes MYs 2022–2025 Augural Standards) Costs ........................................................................................... Benefits ........................................................................................ Net Benefits ................................................................................. sroberts on DSK5SPTVN1PROD with EPA has analyzed in detail the projected costs and benefits of the 2017– 2025 GHG standards for light-duty vehicles. The Table below shows EPA’s estimated lifetime discounted cost, fuel savings, and benefits for all such vehicles projected to be sold in model years 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 particulate matter-related health benefits (including premature mortality), the value of additional driving attributed to the VMT rebound effect, the value of reduced refueling time needed to fill up a more fuel efficient vehicle. The analysis also includes estimates of economic impacts stemming from additional vehicle use, such as the economic damages caused by accidents, congestion and noise (from increased VMT rebound driving). 6 ‘‘The ‘‘Estimated Achieved’’ analysis includes accounting for compliance flexibilities and advanced technologies that manufacturers may voluntarily use for compliance, but that NHTSA is prohibited from considering when determining the maximum feasible level of new CAFE standards. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 2010 2008 2010 2008 2010 2008 ............. ............. ............. ............. ............. ............. ($154)– ......... ($156) ........... $629– ........... $639 ............. $476– ........... $483 ............. EPA’S ESTIMATED 2017–2025 MODEL YEAR LIFETIME DISCOUNTED COSTS, BENEFITS, AND NET BENEFITS ASSUMING THE 3% DISCOUNT RATE SCC VALUE 7 (BILLIONS OF 2010 DOLLARS) Lifetime Present Value d—3% Discount Rate Program Costs ...................... Fuel Savings ......................... Benefits ................................. Net Benefits d ........................ $150 475 126 451 Annualized Value f—3% Discount Rate Annualized costs .................. Annualized fuel savings ........ Annualized benefits .............. Net benefits .......................... 6.49 20.5 5.46 19.5 Lifetime Present Value d—7% Discount Rate . Program Costs ...................... Fuel Savings ......................... Benefits ................................. Net Benefits e ........................ 144 364 106 326 Annualized Value f—7% Discount Rate Annualized costs .................. Annualized fuel savings ........ PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 10.8 27.3 ($147)– ......... ($148) ........... $502– ........... $510 ............. $356– ........... $362 ............. EPA’S ESTIMATED 2017–2025 MODEL YEAR LIFETIME DISCOUNTED COSTS, BENEFITS, AND NET BENEFITS ASSUMING THE 3% DISCOUNT RATE SCC VALUE 7 (BILLIONS OF 2010 DOLLARS)—Continued Annualized benefits .............. Net benefits .......................... 7.96 24.4 B. Introduction EPA is announcing final greenhouse gas emissions standards for model years 2017–2025 and NHTSA is announcing final Corporate Average Fuel Economy standards for model years 2017–2021 and issuing augural 8 standards for 7 Further notes and details concerning these SCC. Value are found in Section I.D.2. Table I–17. 8 For the NPRM/PRIA/Draft EIS, NHTSA described the proposed standards for MYs 2022– 2025 as ‘‘conditional.’’ ‘‘Conditional’’ was understood and objected to by some readers as implying that the future proceeding would consist merely of a confirmation of the conclusions and analysis of the current rulemaking, which would be incorrect and inconsistent with the agency’s obligations under both EPCA/EISA and the Administrative Procedure Act. The agency must conduct a de novo rulemaking for MYs 2022–2025. To avoid creating an incorrect impression, the agency is changing the descriptor for the MY 2022– 2025 standards that are presented and discussed in these documents. The descriptor must convey that E:\FR\FM\15OCR2.SGM Continued 15OCR2 62630 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with model years (MYs) 2022–2025. These rules establish 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. transportationrelated greenhouse gas (GHG) emissions and fuel consumption. These final rules extend the MYs 2012–2016 National Program by establishing more stringent Federal light-duty vehicle GHG emissions and corporate average fuel economy (CAFE) standards in MYs 2017 and beyond. This coordinated program will 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. NHTSA’s final rule also constitutes the agency’s Record of Decision for purposes of its NEPA analysis. This joint rulemaking 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 MYs 2012– 2016. As with the MY 2012–2016 final rules, a key element in developing this the standards we are now presenting for MYs 2022– 2025 reflect the agency’s current best judgment of what we would have set at this time had we the authority to do so, but also avoid suggesting that the future process for establishing final standards for MYs 2022–2025 would be anything other than a new and separate rulemaking based on the freshly gathered and solicited information before the agency at that future time and on a fresh assessing and balancing of all statutorily relevant factors, in light of the considerations existing at the time of that rulemaking. The agency deliberated extensively, considering many alternative descriptors, and concluded that the best descriptor was ‘‘augural,’’ from the verb ‘‘to augur,’’ meaning to foretell future events based on current information (as in, ‘‘these standards may augur well for what the agency might establish in the future’’). This is precisely what the MYs 2022–2025 standards presented in these documents are—our effort to help interested parties anticipate the future by providing our current best judgment as to what standards we would now set, based on the information before us today, recognizing that our future decision as to what standards we will actually set will be based on the information then before us. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 rulemaking was the agencies’ discussions with automobile manufacturers, the California Air Resources Board (CARB) and many other stakeholders. During the extended public comment period, the agencies received nearly 300,000 written comments (and nearly 400 oral comments through testimony at three public hearings held in Detroit, Philadelphia and San Francisco) on this rule and received strong support from most auto manufacturers, the United Auto Workers (UAW), nongovernmental organizations (NGOs), consumer groups, national security experts and veterans, State/local government and auto suppliers. Continuing the National Program in coordination with California will help to ensure that all manufacturers can build a single fleet of vehicles that satisfy all requirements under both federal programs as well as under California’s program,9 which will in turn help to reduce costs and regulatory complexity while providing significant energy security, consumer savings, and environmental benefits.10 Combined with the standards already in effect for MYs 2012–2016, as well as the MY 2011 CAFE standards, the final standards will result in MY 2025 lightduty vehicles with nearly double the fuel economy, and approximately onehalf of the GHG emissions compared to MY 2010 vehicles—representing the most significant federal actions ever taken to reduce GHG emissions and improve fuel economy in the U.S. EPA is establishing 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 9 Section I.B.4 provides a explanation of California’s authority to set air pollution standards for vehicles. 10 The California Air Resources Board (CARB) adopted California MYs 2017–2025 GHG emissions standards on January 26, 2012. At its March 22, 2012 meeting the Board gave final approval to the California standards. The Board directed CARB’s Executive Officer to ‘‘continue collaborating with EPA and NHTSA as their standards are finalized and in the mid-term review * * *’’ and the Board also reconfirmed its commitment to propose to revise its GHG emissions standards for MYs 2017 to 2025 ‘‘to accept compliance with the 2017 through 2025 MY National Program as compliance with California’s greenhouse gas emission standards in the 2017 through 2025 model years if the Executive Officer determines that U.S. EPA has adopted a final rule that at a minimum preserve greenhouse reductions benefits set forth’’ in the NPRM issued by EPA on December 1, 2011. State of California Air Resources Board, Resolution 12– 11, January 26, 2012, at 20. Available at http:// www.arb.ca.gov/regact/2012/cfo2012/res12–11.pdf (last accessed July 9, 2012). PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 efficiency.11 Consistent with its statutory authority,12 NHTSA has developed two phases of passenger car and light truck standards in this rulemaking action. The first phase, from MYs 2017–2021, includes final standards that are projected to require, on an average industry fleet wide basis, a range from 40.3–41.0 mpg in MY 2021.13 The second phase of the CAFE program, from MYs 2022–2025, includes standards that are not final due to the statutory provision that NHTSA shall issue regulations prescribing average fuel economy standards for at least 1 but not more than 5 model years at a time.14 The MYs 2022–2025 CAFE standards, then, are not final based on this rulemaking, but rather augural, meaning that they represent the agency’s current judgment, based on the information available to the agency today, of what levels of stringency would be maximum feasible in those model years. NHTSA projects that those standards could require, on an average industry fleet wide basis, a range from 48.7–49.7 mpg in model year 2025. The agencies note that these estimated combined fleet average mpg levels are projections and, in fact the agencies are establishing separate standards for passenger cars and trucks, based on a vehicle’s size or ‘‘footprint,’’ and the actual average achieved fuel economy and GHG emissions levels will be determined by the actual footprints and production volumes of the vehicle models that are produced. NHTSA will undertake a de novo rulemaking at a later date to set legally binding CAFE standards for MYs 2022–2025. See 11 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. 163g/mi would be equivalent to 54.5 mpg, if the entire fleet were to meet this CO2 level through tailpipe CO2 and fuel economy improvements. The agencies expect, however, that a portion of these improvements will be made through improvements in air conditioning leakage and use of alternative refrigerants, which would not contribute to fuel economy. 12 49 U.S.C. 32902. 13 The range of values here and through this rulemaking document reflect the results of coanalyses conducted by NHTSA using two different light-duty vehicle market forecasts through model year 2025. To evaluate the effects of the standards, the agencies must project what vehicles and technologies will exist in future model years and then evaluate what technologies can feasibly be applied to those vehicles to raise their fuel economy and reduce their greenhouse gas emissions. To project the future fleet, the agencies must develop a baseline vehicle fleet. For this final rule, the agencies have analyzed the impacts of the standards using two different forecasts of the light-duty vehicle fleet through MY 2025. The baseline fleets are discussed in detail in Section II.B of this preamble, and in Chapter 2 of the Technical Support Document. EPA’s sensitivity analysis of the alternative fleet is included in Chapter 10 of its RIA. 14 49 U.S.C. 32902(b)(3)(B). E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations Section IV for more information. The agencies will conduct a comprehensive mid-term evaluation and agency decision-making process for the MYs 2022–2025 standards as described in the proposal. The mid-term evaluation reflects the rules’ long time frame and, for NHTSA, the agency’s statutory obligation to conduct de novo rulemaking in order to establish final standards for vehicles for those model years. In order to align the agencies’ proceedings for MYs 2022–2025 and to maintain a joint national program, EPA and NHTSA will finalize their actions related to MYs 2022–2025 standards concurrently. The agencies project that manufacturers will comply with the final rules by using a range of technologies, including improvements in air conditioning efficiency, which reduce both GHG emissions and fuel consumption. Compliance with EPA’s GHG standards is also likely to be achieved through improvements in air conditioning system leakage and through the use of alternative air conditioning refrigerants with a lower global warming potential (GWP), which reduce GHGs (i.e., hydrofluorocarbons) but which do not generally improve fuel economy. The agencies believe there is a wide range of technologies already available to reduce GHG emissions and improve fuel economy from both passenger cars and trucks. The final rules facilitate long-term planning by manufacturers and suppliers for the continued development and deployment across their fleets of fuel saving and GHG 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 and lower leakage air conditioning systems. Many of these technologies are already available today, some on a limited number of vehicles while others are more widespread in the fleet, and manufacturers will be able to meet the standards through significant efficiency improvements in these VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 technologies, as well as through 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 result in possible alternative, more cost-effective paths to compliance. From a societal standpoint, this second phase of the National Program is estimated to save approximately 4 billion barrels of oil and to reduce GHG emissions by the equivalent of approximately 2 billion metric tons over the lifetimes of those light duty vehicles produced in MYs 2017–2025. These savings and reductions come on top of those that are being achieved through the MYs 2012–2016 standards.15 The agencies project 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 $326 billion to $451 billion (7 and 3 percent discount rates, respectively) over the lifetimes of those light duty vehicles sold in MY 2017– 2025. These final standards are projected to provide significant savings for consumers due to reduced fuel use. Although the agencies estimate that technologies used to meet the standards will add, on average, about $1,800 to the cost of a new light duty vehicle in MY 2025, consumers who drive their MY 2025 vehicle for its entire lifetime will save, on average, $5,700 to $7,400 (7 and 3 percent discount rates, respectively) in fuel, for a net lifetime savings of $3,400 to $5,000. This estimate assumes gasoline prices of $3.87 per gallon in 2025 with small increases most years throughout the vehicle’s lifetime.16 For those consumers who purchase their new MY 2025 vehicle with cash, the discounted fuel savings will offset the higher vehicle cost in roughly 3.3 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 immediately benefit from an average monthly cash flow savings of about $12 during the loan period, or about $140 per year, on average. So this type of consumer would benefit immediately from the time of purchase: the increased monthly fuel savings would more than offset the 15 The cost and benefit estimates provided in this final rule are only for the MYs 2017–2025 rulemaking. EPA and DOT’s rulemaking establishing standards for MYs 2012–2016 are already part of the baseline for this analysis. 16 See Chapter 4.2.2 of the Joint TSD for full discussion of fuel price projections over the vehicle’s lifetime. PO 00000 Frm 00009 Fmt 4701 Sfmt 4700 62631 higher monthly payment. Section I.D provides a detailed discussion of the projected costs and benefits of the MYs 2017–2025 for CAFE and GHG emissions standards for light-duty vehicles. In addition to saving consumers money at the pump, the agencies have designed their final standards to preserve consumer choice—that is, the 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 (technically they are based on vehicle footprint, which is the area defined by the points where the tires contact the ground), and larger vehicles have numerically less stringent fuel economy/GHG emissions targets and smaller vehicles have numerically more stringent fuel economy/GHG emissions targets. Footprint based standards promote fuel economy and GHG emissions improvements in vehicles of all sizes, and are not expected to create incentives for manufacturers to change the size of their vehicles in order to comply with the standards. Moreover, since the standards are fleet average standards for each manufacturer, no specific vehicle must meet a target.17 Thus, nothing in these rules prevents consumers in the 2017 to 2025 timeframe from choosing from the same mix of vehicles that are currently in the marketplace. 1. Continuation of the National Program EPA is adopting final greenhouse gas emissions standards for model years 2017–2025 and NHTSA is adopting final Corporate Average Fuel Economy standards for model years 2017–2021 and presenting augural standards for model years 2022–2025. These rules will implement strong and coordinated Federal greenhouse gas and fuel economy standards for passenger cars, light-duty trucks, and medium-duty passenger vehicles. 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 final rules continue the National Program by setting more stringent standards for MY 2017 and beyond light duty vehicles. This coordinated program will achieve important reductions of 17 A specific vehicle would only have to meet a fuel economy or GHG target value on the target curve standards being finalized today in the rare event that a manufacturer produces a single vehicle model. E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with 62632 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations greenhouse gas (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. In working together to finalize these standards, 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 light duty vehicle standards for model years (MY) 2012–2016. As with the MY 2012–2016 final rules, a key element in developing the final rules was the agencies’ collaboration with the California Air Resources Board (CARB) and discussions with automobile manufacturers and many other stakeholders. Continuing the National Program will help to ensure that all manufacturers can build a single fleet of U.S. light duty vehicles that satisfy all requirements under both federal programs as well as under California’s program, helping to reduce costs and regulatory complexity while providing significant energy security, consumer savings and environmental benefits. The agencies have been developing the basis for these final standards almost since the conclusion of the rulemaking establishing the first phase of the National Program. Consistent with Executive Order 13563, this rule 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. After much research and deliberation by the agencies, along with CARB and other stakeholders, on July 29, 2011 President Obama announced plans for extending the National Program to MY 2017–2025 light duty vehicles and NHTSA and EPA issued a Supplemental Notice of Intent (NOI) outlining the agencies’ plans for proposing the MY 2017–2025 standards and program.18 This July NOI built upon the extensive analysis conducted by the agencies during 2010 and 2011, including an initial technical assessment report and NOI issued in September 2010, and a supplemental NOI issued in December 2010. The State of California and thirteen auto manufacturers representing over 90 percent of U.S. vehicle sales provided letters of support for the program 18 76 FR 48758 (August 9, 2011). VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 concurrent with the Supplemental NOI.19 The United Auto Workers (UAW) also supported the announcement,20 as did many consumer and environmental groups. As envisioned in the Presidential announcement, Supplemental NOI, and the December 2011 Notice of Proposed Rulemaking (NPRM), these final rules establish standards for MYs 2017– and beyond light duty vehicles. These standards take into consideration significant public input that was received in response to the NPRM from the regulated industry, consumer groups, labor unions, states, environmental organizations, national security experts and veterans, industry suppliers and dealers, as well as other organizations and by thousands of U.S. citizens. The agencies anticipate that these final standards will spur the development of a new generation of clean and more fuel efficient 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. As described below, NHTSA and EPA are finalizing a continuation of the National Program for light-duty vehicles that the agencies believe represents the appropriate levels of fuel economy and GHG emissions standards for model years 2017 and beyond, given the technologies that the agencies project 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 establishing GHG emissions standards under the Clean Air Act (CAA), and NHTSA is establishing CAFE standards under EPCA, as amended by the Energy Independence and Security Act of 2007 (EISA). This joint final rulemaking reflects a carefully coordinated and harmonized approach to implementing these two statutes, in accordance with all substantive and procedural requirements imposed by law.21 These final rules allow for long-term planning by manufacturers and 19 Letters of support are available at http://www. epa.gov/otaq/climate/regulations.htm and at http:// www.nhtsa.gov/fuel-economy (last accessed June 12, 2012). 20 The UAW’s support was expressed in a statement on July 29, 2011, which can be found at http://www.uaw.org/articles/uaw-supportsadministration-proposal-light-duty-vehicle-cafeand-greenhouse-gas-emissions-r (last accessed June 12, 2012). 21 For NHTSA, this includes the requirements of the National Environmental Policy Act (NEPA). PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 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 utilizing to reduce GHG emissions and improve fuel economy. The agencies believe that advances in gasoline engines and transmissions will continue during these model years and that these technologies are likely to play a key role in compliance strategies for the MYs 2017–2025 standards, which is a view that is supported in the literature, among the vehicle manufacturers, suppliers, and by public comments.22 The agencies also believe that there will be continued improvement in diesel engines, vehicle aerodynamics, and tires as well as the use of lighter weight materials and optimized designs that will reduce vehicle mass. 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.23 Finally, the agencies expect that vehicle air conditioners will continue to become more efficient, thereby improving fuel efficiency. The agencies also expect that air conditioning leakage will be reduced and that manufacturers will use reduced global warming refrigerants. Both of these improvements will reduce GHG emissions. Although a number of these technologies are available today, the agencies’ assessments support that there will be continuing improvements in the efficiency of some of the technologies and that the cost of many of the technologies will be lower in the future. 22 There are a number of competing gasoline engine technologies, with one in particular that the agencies project will increase beyond MY 2016. This is the downsized gasoline direct injection engine equipped with a turbocharger and cooled exhaust gas recirculation, which has better fuel efficiency than a larger engine and similar steadystate power performance. 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 contribute to providing fuel efficiency 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 MY 2016, we anticipate that by MY 2025 these will be common in new light duty vehicles. 23 For example, while today less than three percent of annual vehicle sales are strong hybrids, plug-in hybrids and all electric vehicles, by MY 2025 we estimate in our analyses for this final rule that these technologies could represent 3–7%, while ‘‘mild’’ hybrids may be as high as 17– 27% of new sales and vehicles with stop/start systems only may be as high as 6–15% of new sales. Thus by MY 2025, 26–49% of the fleet may have some level of electrification. E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with We anticipate that the standards will require most manufacturers to considerably increase the application of these technologies across their light duty vehicle fleets in order to comply with the standards. Manufacturers may also develop and introduce other technologies that we have not considered for this rulemaking analysis, which could play important roles in compliance with the standards and potentially offer more cost effective alternatives. Due to the relatively long lead time for the later model years in this rule, it is quite possible that innovations may arise that the agencies (and the automobile manufacturers) are not considering today, which may even become commonplace by MY 2025. As discussed further below, and as with the standards for MYs 2012–2016, the agencies believe that the final standards help to preserve consumer choice, that is, the standards should not affect consumers’ opportunity to purchase the size and type of vehicle that meets their needs, and should not otherwise affect vehicles’ performance attributes. NHTSA and EPA are finalizing standards based on vehicle footprint, which is the area defined by the points where the tires contact the ground, where smaller vehicles have relatively more stringent targets, and larger vehicles have less stringent targets. Footprint based standards promote fuel economy and GHG emissions improvements in vehicles of all sizes, and are not expected to create incentives for manufacturers to change the size of their vehicles in order to comply with the standards. Consequently, these rules should not have a significant effect on the relative availability of different size vehicles in the fleet. The agencies’ analyses used a constraint of preserving all other aspects of vehicles’ functionality and performance, and the technology cost and effectiveness estimates developed in the analyses reflect this constraint.24 In addition, as with the standards for MYs 2012–2016, the agencies believe that the standards should not have a negative effect on vehicle safety, as it 24 One commenter asserted that the standards ‘‘value purported consumer choice and the continued production of every vehicle in its current form over the need to conserve energy: as soon as increased fuel efficiency begins to affect any attribute of any existing vehicle, stringency increases cease.’’ CBD Comments p. 4. This assertion is incorrect. As explained in the text above, the agencies’ cost estimates include costs of preserving existing attributes, such as vehicle performance. These costs are reflected in the agencies’ analyses of reasonableness of the costs of the rule, but do not by themselves dictate any particular level of standard stringency much less cause stringency to ‘‘cease’’ as the commenter would have it. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 relates to vehicle size and mass as described in Section II.C and II.G below, respectively. Because the standards are fleet average standards for each manufacturer, no specific vehicle must meet a target.25 Thus, nothing in these rules prevents consumers in the 2017 to 2025 timeframe from choosing from the same mix of vehicles that are currently in the marketplace. Given the long time frame at issue in setting standards for MYs 2022–2025 light-duty vehicles, and given NHTSA’s statutory obligation to conduct a de novo rulemaking in order to establish final standards for vehicles for the 2022–2025 model years, the agencies will conduct a comprehensive mid-term evaluation and agency decision-making process for the MYs 2022–2025 standards, as described in the proposal. As stated in the proposal, both NHTSA and EPA will develop and compile upto-date information for the mid-term evaluation, through a collaborative, robust and transparent process, including public notice and comment. The mid-term evaluation will assess the appropriateness of the MYs 2022–2025 standards, based on information available at the time of the mid-term evaluation and 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 maintaining a National Program to address GHG emissions and fuel economy. NHTSA’s rulemaking, which will incorporate findings from the midterm evaluation, will be a totally fresh consideration of all relevant information and fresh balancing of statutory and other relevant factors in order to determine the maximum feasible CAFE standards for MYs 2022–2025. In order to align the agencies proceedings for MYs 2022–2025 and to maintain a joint national program, if the EPA determination is that its standards will not change, NHTSA will issue its final rule concurrently with the EPA determination. If the EPA determination is that standards may change, the agencies will issue a joint NPRM and joint final rule. Further discussion of the mid-term evaluation is found later in this section, as well as in Sections III.B.3 and IV.A.3.b. The 2017–2025 National Program is estimated to reduce GHGs by 25 A specific vehicle would only have to meet a fuel economy or GHG target value on the target curve standards being finalized today in the rare event that a manufacturer produces a single vehicle model. PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 62633 approximately 2 billion metric tons and to save 4 billion barrels of oil over the lifetime of MYs 2017–2025 vehicles relative to the MY 2016 standard curves already in place.26 The average cost for a MY 2025 vehicle to meet the standards is estimated to be about $1800 compared to a vehicle that meets the level of the MY 2016 standards in MY 2025. Fuel savings for consumers are expected to more than offset the higher vehicle costs. The typical driver will save a total of $5,700 to $7,400 (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 will save a net $3,400 to $5,000 (7 percent and 3 percent discount rate, respectively) over the vehicle’s lifetime. This estimate assumes a gasoline price of $3.87 per gallon in 2025 with small increases most years over the vehicle’s lifetime.27 Further, the payback period for a consumer purchasing a 2025 light-duty vehicle with cash would be, on average, 3.4 years at a 7 percent discount rate or 3.2 years at a 3 percent discount rate, while consumers who buy with a 5-year loan would save more each month on fuel than the increased amount they will 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 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, perfluorocarbons, 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 Clean 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 26 The cost and benefit estimates provided here are only for the MY 2017–2025 rulemaking. The CAFE and GHG emissions standards for MYs 2012– 2016 and CAFE standards for MY 2011 are already part of the baseline for this analysis. 27 See Chapter 4.2.2 of the Joint TSD for full discussion of fuel price projections of the vehicle lifetimes. E:\FR\FM\15OCR2.SGM 15OCR2 62634 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with 50 years.28 Mobile sources emitted 30 percent of all U.S. GHGs in 2010 (transportation sources, which do not include certain off-highway sources, account for 27 percent) and have been the source of the largest absolute increases in U.S. GHGs since 1990.29 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 emissions in 2010.30 Light-duty vehicles emit CO2, methane, nitrous oxide, and hydrofluorocarbons and were responsible for nearly 60 percent of all mobile source GHGs and over 70 percent of Section 202(a) mobile source GHGs in 2010.31 For light-duty vehicles in 2010, CO2 emissions represented about 94 percent of all greenhouse emissions (including HFCs), and similarly, the CO2 emissions measured over the EPA tests used for fuel economy compliance represent about 90 percent of total light-duty vehicle GHG emissions.32,33 28 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, http:// epa.gov/climatechange/endangerment/index.html (last accessed August 9. 2012) 29 Memorandum: Mobile Source Contribution to U.S. GHGs in 2010 (Docket EPA–HQ–OAR–2010– 0799). See generally, U.S. Environmental Protection Agency. 2012. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990–2010. EPA 430–R–12– 001. Available at http://epa.gov/climatechange/ emissions/downloads12/US-GHG-Inventory-2012Main-Text.pdf (last accessed June 12, 2012). 30 Section 202(a) sources include passenger cars, light-duty trucks, motorcycles, buses, and mediumand heavy-duty trucks. EPA’s GHG Inventory groups these modes into on-road totals. However, the on-road totals in the Inventory include refrigerated transport for medium- and heavy-duty trucks, which is not considered a source for Section 202(a). In order to determine the Section 202(a) total, we took the on-road GHG total of 1556.8 Tg and subtracted the 11.6 Tg of refrigerated transport to yield a value of 1545.2 Tg. 31 Memorandum: Mobile Source Contribution to U.S. GHGs in 2010 (Docket EPA–HQ–OAR–2010– 0799). See generally, U.S. Environmental Protection Agency. 2012. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990–2010. EPA 430–R–12– 001. Available at http://epa.gov/climatechange/ emissions/downloads12/US-GHG-Inventory-2012Main-Text.pdf (last accessed June 12, 2012) 32 Memorandum: Mobile Source Contribution to U.S. GHGs in 2010 (Docket EPA–HQ–OAR–2010– 0799). See generally, U.S. Environmental Protection Agency. 2009. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990–2007. EPA 430–R–09– 004. Available at http://epa.gov/climatechange/ emissions/downloads09/GHG2007entire_report508.pdf. 33 Memorandum: Mobile Source Contribution to U.S. GHGs in 2010 (Docket EPA–HQ–OAR–2010– 0799). See generally, U.S. Environmental Protection Agency. 2012. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990–2010. EPA 430–R–12– 001. Available at http://epa.gov/climatechange/ emissions/downloads12/US-GHG-Inventory-2012Main-Text.pdf VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 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. Although our dependence on foreign petroleum has declined since peaking in 2005, net petroleum imports accounted for approximately 45 percent of U.S. petroleum consumption in 2011.34 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 over $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 72 percent of U.S. petroleum consumption in 2010.35 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.36 2. Additional Background on the National Program and Stakeholder Engagement Prior to the NPRM Following the successful adoption of a National Program for model years (MY) 2012–2016 light duty vehicles, President Obama issued a Memorandum on May 21, 2010 requesting that the NHTSA, on behalf of the Department of Transportation, and the U.S. EPA 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 for model years 2017– 2025.’’ 37 Among other things, the 34 Energy Information Administration, ‘‘How dependent are we on foreign oil?’’ Available at http://www.eia.gov/energy_in_brief/foreign_oil_ dependence.cfm (last accessed June12, 2012). 35 Energy Information Administration, Annual Energy Outlook 2011, ‘‘Oil/Liquids.’’ Available at http://www.eia.gov/forecasts/aeo/MT_liquidfuels. cfm (last accessed June 12, 2012). 36 Energy Information Administration, Annual Energy Outlook 2012 Early Release Overview. Available at http://www.eia.gov/forecasts/aeo/er/ early_fuel.cfm (last accessed Jun. 14, 2012). 37 The Presidential Memorandum is found at: http://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 PO 00000 Frm 00012 Fmt 4701 Sfmt 4700 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. 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 announcement.38 The President’s memorandum requested that the agencies, ‘‘work with the State of California to develop by September 1, 2010, a technical assessment to inform the rulemaking process * * *’’. Together, NHTSA, EPA, and CARB issued the joint Technical Assessment Report (TAR) consistent with Section 2(a) of the Presidential Memorandum.39 In developing this assessment, the agencies 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. Concurrent with issuing the TAR, NHTSA and EPA also issued a joint Notice of Intent to Issue a Proposed Rulemaking (NOI) 40 which highlighted the results of the TAR analyses, 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 lightduty trucks built in MYs 2017–2025. 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 standards for heavy duty vehicles and engines for MYs 2014–2018. 76 FR 57106 (September 15, 2011). 38 These letters of support in response to the May 21, 2010 Presidential Memorandum are available at http://www.epa.gov/otaq/climate/letters.htm (last accessed August 9, 2012). 39 This Interim Joint Technical Assessment Report (TAR) is available at http://www.epa.gov/ otaq/climate/regulations/ldv-ghg-tar.pdf (last accessed August 9, 2012) and http://www.nhtsa. gov/staticfiles/rulemaking/pdf/cafe/2017+CAFEGHG_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.’’ 40 75 FR 62739, October 13, 2010. E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations year 2016 fleet-wide average of 250 gram/mile (g/mi), which 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.41,42 For each of these scenarios, the TAR also evaluated four illustrative ‘‘technological pathways’’ by which these levels could be attained, each pathway offering a different mix of advanced technologies and assuming various degrees of penetration of advanced gasoline technologies, mass reduction, hybrid electric vehicles (HEVs), plug-in hybrids (PHEVs), and electric vehicles (EVs). 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. Manufacturers and others commented extensively on a variety of topics in the TAR, including the stringency of the standards, program design elements, the effect of potential standards on vehicle safety, and the 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. EPA and NHTSA issued a follow-on Supplemental NOI in November 2010,43 highlighting many of the key comments the agencies received in response to the September NOI and TAR, and summarized some of the key themes from the comments and the additional stakeholder meetings. The agencies’ stakeholder engagement between December 2010 and July 29, 2011 focused on ensuring that the agencies possessed the most complete and comprehensive set of information to inform the proposed rulemaking. Information that the agencies presented to stakeholders is posted in the NPRM docket and referenced in multiple places in the NPRM. Throughout this period, the stakeholders repeated many of the broad concerns and suggestions described in the TAR, NOI, and November 2010 SNOI. For example, stakeholders uniformly expressed sroberts on DSK5SPTVN1PROD with 41 75 FR 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: http://www.epa.gov/otaq/climate/letters.htm (last accessed August 9, 2012). 43 75 FR 76337, December 8, 2010. 42 Statement VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 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 final rule 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 publication of the November 2010 Supplemental NOI and that were summarized in that document. Manufacturers provided the agencies more detailed information related to their product plans for vehicle models PO 00000 Frm 00013 Fmt 4701 Sfmt 4700 62635 and fuel efficiency improving technologies and associated cost estimates, as well as more detailed feedback regarding the potential program design elements to be included in the program. The second stage of meetings occurred between June 21, 2011 and July 14, 2011, during which EPA, NHTSA, CARB and several components of the Executive Office of the President kicked-off an intensive series of meetings, primarily with manufacturers, to share tentative regulatory concepts including concept stringency curves and program flexibilities based on the analyses completed by the agencies as of June 21, 2011 44 and requested manufacturer feedback; specifically 45 detailed and reliable information on how they might comply with the concepts, potential changes to the concept stringency levels and program flexibilities available under EPA’s and NHTSA’s respective authority that might facilitate compliance, and if they projected they could not comply, information supporting that belief. In these second stage meetings, the agencies received considerable input from the manufacturers related to the questions asked by the agencies and also related to consumer acceptance and adoption of some advanced technologies and program costs based on their independent assessment or information previously submitted to the agencies. The third stage of meetings occurred between July 15, 2011 and July 28, 2011 during which the agencies continued to refine concept stringencies and compliance flexibilities based on further consideration of the information available to them as well as meeting with manufacturers who expressed ongoing interest in engaging with the agencies.46 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. Environmental organizations consistently stated that stringent standards are technically achievable and critical to important national interests. Labor interests stressed the need to 44 The agencies consider a range of standards that may satisfy applicable legal criteria, taking into account the complete record before them. The initial concepts shared with stakeholders were within the range the agencies were considering, based on the information then available to the agencies. 45 ‘‘Agency Materials Provided to Manufacturers’’ Memo to docket NHTSA–2010–0131. 46 ‘‘Agency Materials Provided to Manufacturers’’ Memo to docket NHTSA–2010–0131. E:\FR\FM\15OCR2.SGM 15OCR2 62636 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations 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. On July 29, 2011, President Obama with the support of thirteen major automakers, announced plans 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 2017–2025.47 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 environmental and consumer groups, also announced their support. On the same day as the President’s announcement, EPA and NHTSA released a second SNOI (published in the Federal Register on August 9, 2011) describing the joint proposal that the agencies expected to issue to establish the National Program for model years 2017–2025. The agencies 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. The input of stakeholders, which is encouraged by Executive Order 13563, was invaluable to the agencies in developing the NPRM. A more detailed summary of the process leading to the proposed rulemaking is found at 76 FR 74862–865. sroberts on DSK5SPTVN1PROD with 3. Public Participation and Stakeholder Engagement Since the NPRM Was Issued The agencies signed their respective proposed rules on November 16, 2011 (76 FR 74854 (December 1, 2011)), and subsequently received a large number of comments representing many perspectives. Between January 17 and 24, 2012 the EPA and NHTSA held three public hearings in Detroit, Philadelphia and San Francisco. Nearly 400 people testified and many more attended the hearings. In response to requests, the written comment period 47 The President’s remarks are available at http://www.whitehouse.gov/the-press-office/2011/ 07/29/remarks-president-fuel-efficiency-standards (last accessed August 9, 2012); see also http://www. nhtsa.gov/fuel-economy for more information from the agency about the announcement. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 was extended by two weeks for a total of 74 days from Federal Register publication, closing on February 13, 2012. The agencies received extensive written comments from more than 140 organizations, including auto manufacturers and suppliers, State and local governments and their associations, consumer groups, labor unions, fuels and energy providers, auto dealers, academics, national security experts and veterans, environmental and other non-governmental organizations (NGOs), and nearly 300,000 comments from private individuals. In addition to comments received on the proposal, the agencies met with many different stakeholder groups between issuance of the NPRM and this final rule. Generally, the agencies met with nearly all automakers individually to discuss flexibilities such as the A/C, off-cycle, and pickup truck incentives, as well as different ways to meet the standards; with suppliers to discuss the same flexibilities; with environmental groups to discuss flexibilities and that the agencies maintain strong standards for the final rule; and with the natural gas interests to discuss incentives for natural gas in the final rule. Memoranda summarizing these meetings can be found in the EPA and NHTSA dockets for this rulemaking. EPA–HQ–OAR–2010–0799 and NHTSA–2010–0131.48 An overwhelming majority of commenters supported the proposed 2017–2025 CAFE and GHG standards with most organizations and nearly all of the private individuals expressing broad support for the program and for the continuation of the National Program to model years (MY) 2017– 2025 light-duty vehicles, and the Program’s projected achievement of an emissions level of 163 gram/mile fleet average CO2, which would be equivalent to 54.5 miles per gallon if the automakers were to meet this CO2 level solely through fuel economy improvements.49 48 NHTSA is required to provide information on these meetings per DOT Order 2100.2, available at http://www.reg-group.com/library/DOT2100-2.PDF (last accessed Jun. 12, 2012). The agencies have placed memos summarizing these meetings in their respective dockets. 49 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. 163 g/mi would be equivalent to 54.5 mpg, if the entire fleet were to meet this CO2 level through tailpipe CO2 and fuel economy improvements, and assumes gasoline fueled vehicles (significant diesel fuel penetration would have a different mpg equivalent). The agencies expect, however, that a portion of these improvements will be made through improvements in air conditioning leakage and alternative refrigerants, which would not contribute to fuel economy. PO 00000 Frm 00014 Fmt 4701 Sfmt 4700 In general, more than a dozen automobile manufacturers supported the proposed standards as well as the credit opportunities and other provisions that provide compliance flexibility, while also recommending some changes to the credit and flexibility provisions—in fact, a significant majority of comments from industry focused on the credit and flexibility provisions. Nearly all automakers stressed the importance of the mid-term evaluation to assess the progress of technology development and cost, and the accuracy of the agencies’ assumptions due to the long time-frame of the rule. Many industry commenters expressly predicated their support of the 2017–2025 National Program on the existence of this evaluation. Environmental and public interest nongovernmental organizations (NGOs), as well as States that commented were also very supportive of extending the National Program to MYs 2017–2025 passenger vehicles and light trucks. Many of these organizations expressed concern that the mid-term evaluation might be used as an opportunity to weaken standards or to delay the environmental benefits of the National Program. The agencies also received comments that either opposed the issuance of the standards, or that argued that they should be modified in various ways. The Center for Biological Diversity (CBD) commented that the proposed standards were not sufficiently stringent, recommending that the agencies increase the standards to 60–70 mpg in 2025. CBD, as well as several other organizations,50 also argued that minimum standards (‘‘backstops’’) were necessary for all fleets in order to ensure anticipated fuel economy gains. Several environmental groups expressed concern that flexibilities, such as offcycle credits, could result in significantly lower gains through double-counting and allowing manufacturers to avoid making fuel economy improvements. Some car-focused manufacturers objected to the truck curves, which they considered lenient while some small truck manufacturers objected to the large truck targets, which they considered lenient; and some intermediate and small volume manufacturers with limited product lines requested additional lead time, as well as less stringent standards for their vehicles. Manufacturers in general argued that backstops were not 50 The Natural Resources Defense Council, the Union of Concerned Scientists, the Sierra Club, and the Consumer’s Union. E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations necessary for fuel economy gains and would be outside NHTSA’s authority. Manufacturers also commented extensively on the programs’ flexibilities, such as off-cycle credits, generally requesting more permissive applications and requirements. The National Automobile Dealers Association (NADA) opposed the MYs 2017–2025 proposed standards, arguing that the agencies should delay rulemaking since they believe there was no need to set standards so far in advance, that the costs of the proposed program are higher than agencies have projected, and that some (mostly low income) consumers will not be able to acquire financing for new cars meeting these more stringent standards. Many environmental and consumer groups commented that the benefits of the rule were understated and the costs overstated, arguing that several potential benefits had not been included and the technology effectiveness estimates were overly conservative. Some environmental groups also expressed concern that the benefits of the rule could be eroded if the agencies’ assumptions about the market do not come to pass or if manufacturers build larger vehicles. Other groups, such as NADA, Competitive Enterprise Institute, and the Institute for Energy Research, argued that the benefits of the rule were overstated and the costs understated, asserting that manufacturers would have already made improvements if the agencies’ calculations were correct. Many commenters discussed potential environmental and health aspects of the rule. Producers of specific materials, such as aluminum, steel, or plastic, commented that standards should ultimately reflect a life cycle analysis that accounts for the greenhouse gas emissions attributable to the materials from which vehicles are manufactured. Some environmental groups requested that standards for electrified vehicles reflect emissions attributable to upstream electricity generation. Many commenters expressed support for the rule and its health benefits, while other commenters were concerned about possible negative health impacts due to assumptions about future fuel properties. Many commenters also addressed issues relating to safety, with most generally supporting the agencies’ efforts to continue to improve their understanding of the relationship between mass reduction and safety. Consistent with their comments in prior rulemakings, several environmental and consumer organizations commented that data exist that mass reduction does not have adverse safety impacts, and stated VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 62637 that the use of better designs and materials can improve both fuel economy and safety. Dynamic Research Institute (DRI) submitted a study, and other commenters pointed to DRI’s work and additional studies for the agencies’ consideration, as discussed in more detail in Section II.G below. Materials producers (aluminum, steel, composite, etc.) commented that their respective materials can be used to improve safety. The Alliance commented that while some recent mass reduction vehicle design concept studies have created designs that perform well in simulation modeling of safety standard and voluntary safety guideline tests, the design concepts yield aggressively stiffer crash pulses may be detrimental to rear seat occupants, vulnerable occupants and potential crash partners. The Alliance also commented that there are simulation model uncertainties with respect to advanced materials, and the real-world crash behavior of these concepts may not match that predicted in those studies. The Alliance and Volvo commented that it is important to monitor safety trends, and the Alliance urged that the agencies revisit this topic during the mid-term evaluation. Additional comments touched on the use of ‘‘miles per gallon’’ to describe the standards, the agencies’ baseline market forecast, consumer welfare and trends in consumer preferences for fuel economy, and a wide range of other topics. Throughout this notice, the agencies discuss key issues arising from the public comments and the agencies’ responses to those comments. The agencies also respond to comments in the Joint TSD and in their respective RIAs. In addition, EPA has addressed all of the public comments specific to the GHG program in a Response to Comments document.51 June 30, 2009, EPA granted California’s request for a waiver of preemption under the CAA with respect to these standards.53 Thirteen states and the District of Columbia, comprising approximately 40 percent of the lightduty vehicle market, adopted California’s standards.54 The granting of the waiver permits California and the other states to proceed with implementing the California emission standards for MYs 2009 and later. 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.55 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 worked closely with CARB throughout the development of the proposed rules. CARB staff released its proposal for MYs 2017–2025 GHG emissions standards consistent with the standards proposed by EPA on December 9, 2011 and the California Air Resources Board adopted these standards at its January 26, 2012 Board meeting, with final approval at its March 22, 2012 Board meeting.56 In adopting their GHG standards the California Air Resources Board directed the Executive Officer to ‘‘continue collaborating with EPA and NHTSA as their standards are finalized and in the mid-term review to minimize potential lost benefits from federal treatment of upstream emissions of electricity and hydrogen fueled vehicles,’’ and also, ‘‘to participate in U.S. EPA’s review of the 2022 through 2025 model year 4. 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.52 On 53 74 FR 32744 (July 8, 2009). See also Chamber of Commerce v. EPA, 642 F.3d 192 (D.C. Cir. 2011) (dismissing petitions for review challenging EPA’s grant of the waiver). 54 The Clean Air Act allows other states to adopt California’s motor vehicle emissions standards under section 177 if such standards are identical to the California standards for which a waiver has been granted. States are not required to seek EPA approval under the terms of section 177. 55 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 at 7. Available at http:// www.arb.ca.gov/regact/2010/ghgpv10/oaltp.pdf (last accessed June 12, 2012). 56 See California Low-Emission Vehicles (LEV) & GHG 2012 regulations adopted by State of California Air Resources Board, March 22, 2012, Resolution 12–21 incorporating by reference Resolution 12–11 (see especially Resolution 12–11 at 20) which was adopted January 26, 2012. Available at http://www.arb.ca.gov/regact/2012/ leviiighg2012/leviiighg2012.htm (last accessed July 9, 2012). 51 EPA Response to Comments document. (EPA– 420–F–12–017) Available in the docket and at: http://www.epa.gov/otaq/climate/regs-lightduty.htm (last accessed August 8, 2012). 52 Through operation of section 209(b) of the Clean Air Act, California is able to seek and receive a waiver of section 209(a)’s preemptions to enforce such standards. Section 209(b)(1) requires a waiver to be granted for any State that had adopted standards (other than crankcase emission standards) for the control of emissions from new motor vehicles or new motor vehicles’ engines prior to March 30, 1966. California is the only state to have adopted standards prior to 1966 and is therefore the only state qualified to seek and receive a waiver. EPA evaluates California’s request under the three waiver criteria set forth in section 209(b)(1)(A)–(C) and must grant a waiver under section 209(e)(2) if these criteria are met. PO 00000 Frm 00015 Fmt 4701 Sfmt 4700 E:\FR\FM\15OCR2.SGM 15OCR2 62638 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations passenger vehicle greenhouse gas standards being proposed under the 2017 through 2025 MY National Program.’’ 57 CARB also reconfirmed its commitment, previously made in July 2011 in conjunction with release of the Supplemental NOI,58 to propose to revise its GHG emissions standards for MYs 2017–2025 such that compliance with EPA GHG emissions standards shall be deemed compliance with the California GHG emissions standards. The Board directed CARB’s Executive Officer that, ‘‘it is appropriate to accept compliance with the 2017 through 2025 model year National Program as compliance with California’s greenhouse gas emission standards in the 2017 through 2025 model years, once United States Environmental Protection Agency (U.S. EPA) issues their final rule on or after its current July 2012 planned release, provided that the greenhouse gas reductions set forth in U.S. EPA’s December 1, 2011 Notice of Proposed Rulemaking for 2017 through 2025 model year passenger vehicles are maintained, except that California shall maintain its own reporting requirements.’’ 59 C. Summary of the Final 2017–2025 National Program sroberts on DSK5SPTVN1PROD with 1. Joint Analytical Approach These final rules continue the collaborative analytical effort between NHTSA and EPA, which began with the MYs 2012–2016 rulemaking for lightduty vehicles. NHTSA and EPA have worked together on nearly every aspect of the technical analysis supporting these joint rules. The results of this collaboration are reflected in key elements of the respective NHTSA and EPA rules, as well as in the analytical work contained in the Joint Technical Support Document (Joint TSD). The agencies have continued to develop and refine the supporting analyses since issuing the proposed rule last December. The Joint TSD, in particular, describes important details of the analytical work that are common to both agencies’ rules, and also explains any key differences in approach. The joint analyses addressed in the TSD include the build-up of the baseline and reference fleets, the derivation of the shape of the footprintbased attribute curves that define the agencies’ respective standards, a detailed description of the estimated costs and effectiveness of the 57 Id. 58 See State of California July 28, 2011 letter available at: http://www.epa.gov/otaq/climate/ letters.htm (last accessed August 9, 2012). 59 Id., CARB Resolution 12–21 (March 22, 2012) (last accessed June 6, 2012). VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 technologies that are available to vehicle manufacturers, the economic inputs used to calculate the costs and benefits of the final rules, a description of air conditioner and other off-cycle technologies, and the agencies’ assessment of the impacts of hybrid technology incentive provisions for fullsize pick-up trucks. This comprehensive joint analytical approach has provided a sound and consistent technical basis for both agencies in developing their final standards, which are summarized in the sections below. 2. Level of the Standards EPA and NHTSA are finalizing separate sets of standards for passenger cars and for light trucks, each under its respective statutory authority. EPA is setting national CO2 emissions standards for passenger cars and lighttrucks under section 202(a) of the Clean Air Act (CAA), while NHTSA is setting national corporate average fuel economy (CAFE) standards under the Energy Policy and Conservation Act (EPCA), as amended by the Energy Independence and Security Act (EISA) of 2007 (49 U.S.C. 32902). Both the CO2 and CAFE standards for passenger cars and standards for light trucks are footprintbased, similar to the standards currently in effect for these vehicles through model year 2016, and will become more stringent on average in each model year from 2017 through 2025. The basis for measuring performance relative to standards continues to be based predominantly on the EPA city and highway test cycles (2-cycle test). However, EPA is finalizing optional air conditioning and off-cycle credits for the GHG program and adjustments to calculated fuel economy for the CAFE program that are based on test procedures other than the 2-cycle tests. As proposed, EPA is finalizing 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 and improvements in non-CO2 GHG emissions from reduced air conditioning (A/C) system leakage and use of lower global warming potential (GWP) refrigerants. The level of 163 grams/mile CO2 is equivalent on a mpg basis to 54.5 mpg, if this level was achieved solely through improvements in fuel efficiency.60 60 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 A/C-related reductions. In PO 00000 Frm 00016 Fmt 4701 Sfmt 4700 Consistent with the proposal, for passenger cars, the CO2 compliance values associated with the footprint curves will be reduced on average by 5 percent per year from the model year 2016 projected passenger car industrywide 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 the fleet transitions 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 finalizing standards reflecting an annual rate of improvement for lightduty trucks which is lower than that for passenger cars in the early years of the program. For light-duty trucks, the average annual rate of CO2 emissions reduction in model years 2017 through 2021 is 3.5 percent per year. As proposed, EPA is also changing 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 will be higher than 3.5 percent, and the annual rate of improvement for larger light-duty trucks over the same time period will be lower than 3.5 percent. For model years 2022 through 2025, EPA is finalizing an average annual rate of CO2 emissions reduction for light-duty trucks of 5 percent per year. Consistent with its statutory authority,61 NHTSA has developed two phases of passenger car and light truck standards in this rulemaking action. The first phase, from MYs 2017–2021, includes final standards that are projected to require, on an average industry fleet wide basis, a range from 40.3 to 41 mpg in MY 2021.62 For passenger cars, the annual increase in addition, greater penetration of diesel fuel (as opposed to gasoline) will change the fuel economy equivalent. 61 49 U.S.C. 32902. 62 The range of values here and through this rulemaking document reflect the results of coanalyses conducted by NHTSA using two different light-duty vehicle market forecasts through model year 2025. To evaluate the effects of the standards, the agencies must project what vehicles and technologies will exist in future model years and then evaluate what technologies can feasibly be applied to those vehicles to raise their fuel economy and reduce their greenhouse gas emissions. To project the future fleet, the agencies must develop a baseline vehicle fleet. For this final rule, the agencies have analyzed the impacts of the standards using two different forecasts of the light-duty vehicle fleet through MY 2025. The baseline fleets are discussed in detail in Section II.B of this preamble, and in Chapter 1 of the Technical Support Document. EPA’s sensitivity analysis of the alternative fleet is included in Chapter 10 of its RIA. E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations the stringency of the target curves between model years 2017 to 2021 is expected to average 3.8 to 3.9 percent. In recognition of manufacturers’ unique challenges in improving the fuel economy and GHG emissions of full-size pickup trucks as the fleet transitions 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 finalizing a lower annual rate of improvement for light trucks in the first phase of the program. For light trucks, the annual increase in the stringency of the target curves in model years 2017 through 2021 is 2.5 to 2.7 percent per year on average. NHTSA is changing the slopes of the fuel economy footprint curves for light trucks from those in the MYs 2012–2016 final rule, which effectively make the annual rate of improvement for smaller light trucks in MYs 2017– 2021 higher than 2.5 or 2.7 percent per year, and the annual rate of improvement for larger light trucks over that time period lower than 2.5 or 2.7 percent per year. The second phase of the CAFE program, from MYs 2022–2025, includes standards that are not final due to the statutory provision that NHTSA shall issue regulations prescribing average fuel economy standards for at least 1 but not more than 5 model years at a time.63 The MYs 2022–2025 standards, then, are not final as part of this rulemaking, but rather augural, meaning that they represent the agency’s current judgment, based on the information available to the agency today, of what levels of stringency would be maximum feasible in those model years. NHTSA projects that those standards would require, on an average industry fleet wide basis, a range from 48.7 to 49.7 mpg in model year 2025. NHTSA will undertake a de novo rulemaking at a later date to set legally binding standards for MYs 2022–2025. See Section IV for more information. For passenger cars, the annual increase in the stringency of the target curves between model years 2022 and 2025 is expected to average 4.7 64 percent, and 63 49 U.S.C. 32902(b)(3)(B). rate of increase is rounded at 4.7 percent per year using 2010 and 2008 baseline. sroberts on DSK5SPTVN1PROD with 64 The VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 for light trucks, the annual increase during those model years is expected to average 4.8 to 4.9 percent. NHTSA notes that for the first time in this rulemaking, EPA is finalizing, under its EPCA authority, rules allowing the impact of air conditioning system efficiency improvements to be included in the calculation of fuel economy for CAFE compliance. Given that these realworld improvements will be available to manufacturers for compliance, NHTSA has accounted for this by determining the amount that industry is expected to improve air conditioning system efficiency in each model year from 2017–2025, and setting the CAFE standards to reflect these improvements, in a manner consistent with EPA’s GHG standards. See Sections III.B.10 and IV.I.4.b of this final rule preamble for more information. NHTSA also notes that the rates of increase in stringency for CAFE standards are lower than EPA’s 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 standards, unlike EPA’s, do not reflect the inclusion of air conditioning system refrigerant and leakage improvements, but EPA’s standards allows consideration of such A/C refrigerant improvements which reduce GHGs but do not affect fuel economy. As another example, the Clean Air Act allows various compliance flexibilities (among them certain credit generating mechanisms) not present in EPCA. As with the MYs 2012–2016 standards, NHTSA and EPA’s final MYs 2017–2025 passenger car and light truck standards are expressed as mathematical functions depending on the vehicle footprint attribute.65 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 will be determined by computing the production-weighted average of the 65 NHTSA is required to set attribute-based CAFE standards for passenger cars and light trucks. 49 U.S.C. 32902(b)(3). PO 00000 Frm 00017 Fmt 4701 Sfmt 4700 62639 targets applicable to each of the manufacturer’s fleet of passenger cars and light trucks.66 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 in any given model year. The values in the tables below reflect the agencies’ projection of the range 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 these standards. EPA and NHTSA have each finalized the attribute-based curves, as proposed, for the model years covered by these final rules, as discussed in detail in Section II.B of this preamble and Chapter 2 of the Joint TSD. The agencies have updated their projections of the impacts of the final rule standards since the proposal, as discussed in Sections III and IV of this preamble and in the agencies’ respective RIAs. As shown in Table I–1 NHTSA’s fleetwide estimated required CAFE levels for passenger cars would increase from between 40.1 and 39.6 mpg in MY 2017 to between 55.3 and 56.2 mpg in MY 2025. Fleet-wide required CAFE levels for light trucks, in turn, are estimated to increase from between 29.1 and 29.4 mpg in MY 2017 and between 39.3 and 40.3 mpg in MY 2025. 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 a range from 48.7 to 49.7 mpg in MY 2025. Considering these combined car and truck increases, the standards together represent approximately a 4.0 percent annual rate of increase,67 on average, relative to the MY 2016 required CAFE levels. 66 For CAFE calculations, a harmonic average is used. 67 This estimated average percentage increase includes the effect of changes in standard stringency and changes in the forecast fleet sales mix. E:\FR\FM\15OCR2.SGM 15OCR2 62640 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations 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 Flexible Fuel Vehicle (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 CAFE standards will lead to the following average achieved fuel economy levels, based on the agencies’ projections of what each manufacturer’s fleet will comprise in each year of the program: 68 68 The 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 final levels. To receive these incentives, manufacturers must produce vehicles with these technologies or performance levels at volumes that meet or exceed final penetration levels (percentage of full size pickup truck volume). This incentive is described in detail in Section IV.I.3.a.. The NHTSA estimates in Table I–2 do not account for the reduction in estimated average achieved fleet-wide CAFE fuel economy that will 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 RIA. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 PO 00000 Frm 00018 Fmt 4701 Sfmt 4700 E:\FR\FM\15OCR2.SGM 15OCR2 ER15OC12.000</GPH> sroberts on DSK5SPTVN1PROD with The estimated average required mpg levels for passenger cars and trucks under the 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 flexibilities and credits that manufacturers may use for compliance that NHTSA cannot consider in establishing standards based on EPCA/ EISA constraints. These flexibilities 62641 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations 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 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, 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 is finalizing minimum standards for domestic passenger cars for MYs 2017–2021 and providing augural standards for MYs 2022–2025 as presented below in Table I–3. TABLE I–3—MINIMUM STANDARD FOR DOMESTICALLY MANUFACTURED PASSENGER CARS (MPG) 2017 2018 2019 2020 2021 2022 2023 2024 2025 36.7 38.0 39.4 40.9 42.7 44.7 46.8 49.0 51.3 EPA is finalizing 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 passenger car and truck footprint curves, but do not account for EPA’s projection of how manufacturers will implement two of the incentive programs being finalized in today’s rulemaking (advanced technology vehicle multipliers, and hybrid and performance-based incentives for full- size pickup trucks). Table I–4 also does not account for the intermediate volume manufacturer lead-time provisions that EPA is adopting. EPA’s projection of fleet-wide emissions levels that do reflect these provisions is shown in Table I–5 below. TABLE I–4—PROJECTED FLEET-WIDE CO2 COMPLIANCE TARGETS UNDER THE FOOTPRINT-BASED CO2 STANDARDS (G/MI) (PRIMARY ANALYSIS) a 2016 base 225 298 69 250 2018 212 295 243 2019 202 285 232 191 277 222 2020 182 269 213 2021 172 249 199 2022 164 237 190 2023 157 225 180 2024 150 214 171 2025 143 203 163 a Projected results using MY 2008 based fleet projection analysis. These values differ slightly from those shown in the proposal because of revisions to the MY 2008 based fleet. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 PO 00000 Frm 00019 Fmt 4701 Sfmt 4700 E:\FR\FM\15OCR2.SGM 15OCR2 ER15OC12.001</GPH> sroberts on DSK5SPTVN1PROD with Passenger Cars ............................................... Light Trucks ...................................................... Combined Cars and Trucks ............................. 2017 62642 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations As shown in Table I–4, projected fleet-wide CO2 emission compliance targets for cars increase in stringency from 212 to 143 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 are made with fuel economy improvements. EPA anticipates that manufacturers will take advantage of program flexibilities, credits and incentives, such as car/truck credit transfers, air conditioning credits, off-cycle credits, advanced technology vehicle multipliers, intermediate volume manufacturer lead-time provisions, and hybrid and performance-based incentives for full size pick-up trucks. Three of these flexibility provisions— advanced technology vehicle multipliers, intermediate volume manufacturer lead-time provisions, 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.70 Therefore, Table I–5 shows EPA’s projection of the achieved emission levels of the fleet for MY 2017 through 2025. The differences between the emissions levels shown in Tables I– 4 and I–5 reflect the impact on stringency due EPA’s projection of manufacturers’ use of the advanced technology vehicle multipliers, and the full size pick-up hybrid/performance incentives, but does not reflect car-truck trading, air conditioning credits, or offcycle credits, because, while the latter credit provisions 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. TABLE I–5—PROJECTED FLEET-WIDE ACHIEVED CO2-EQUIVALENT EMISSION LEVELS UNDER THE FOOTPRINT-BASED CO2 STANDARDS (G/MI) 71 (PRIMARY ANALYSIS) a 2016 base Passenger Cars ................................................... Light Trucks .......................................................... Combined Cars and Trucks ................................. 225 298 72 250 2017 213 295 243 2018 203 287 234 2019 193 278 223 2020 2021 183 270 214 2022 173 250 200 164 238 190 2023 157 226 181 2024 150 214 172 2025 143 204 163 a Projected results using 2008 based fleet projection analysis. These values differ slightly from those shown in the proposal because of revisions to the MY 2008 based fleet and updates to the analysis. sroberts on DSK5SPTVN1PROD with A more detailed description of how the agency arrived at the year by year progression of both the projected compliance targets and the achieved CO2 emission levels can be found in Sections III of this preamble. As previously stated, there was broad support for the proposed standards by auto manufacturers including BMW, Chrysler, Ford, GM, Honda, Hyundai, Kia, Jaguar/Land Rover, Mazda, Mitsubishi, Nissan, Tesla, Toyota, Volvo, as well as the Global Automakers. Of the larger manufacturers, Volkswagen and Mercedes commented that the proposed passenger car standards were relatively too stringent while light truck standards were relatively too lenient and suggested several alternatives to the proposed standards. Toyota also commented that lower truck stringency puts more burdens on small cars. Honda was concerned that small light trucks face disproportionate stringency compared to larger footprint trucks under the proposed standards. The agencies’ consideration of these and other comments and of the updated technical analyses did not lead to changes to the stringency of the standards nor in the shapes of the curves discussed above. These issues are discussed in more detail in Sections II, III and IV. NHTSA and EPA reviewed the technology assessment employed in the proposal in developing this final rule, and concluded that there is a wide range of technologies available in the MY 2017–2025 timeframe for manufacturers to consider in upgrading light-duty vehicles to reduce GHG emissions and improve fuel economy. Commenters generally agreed with this assessment and conclusion.73 The final technology assessment relied on our joint analyses for the proposed rule, as well as some new information and analyses, including information we received during the public comment period, as discussed in Section II.D below. The analyses performed for this final rule included an updated assessment of the cost, effectiveness and availability of several technologies. As noted further in Section II.D, for this final rule, the agencies considered over 40 current and evolving vehicle and engine 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 we considered are available today, some on a limited number of vehicles and others more widespread throughout the fleet, and the agencies believe they could be incorporated into vehicles as manufacturers make their product development decisions. These ‘‘nearterm’’ technologies are identical or very similar to those anticipated in the agencies’ analyses of compliance strategies for the MYs 2012–2016 final rule, but we believe they can achieve wider penetration throughout the 69 As noted at proposal, the projected fleet compliance levels for 2016 are different for trucks and the fleet than were projected in the 2012–2016 rule. See 76 FR 74868 n. 44. Our assessment for this final rule is based on a predicted 2016 car value of 224, a 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. 70 There are extremely small (and unquantified) impacts on the achieved values from other flexibilities such as small volume manufacturer specific standards and emergency vehicle exemptions. 71 Electric vehicles are assumed at 0 gram/mile in this analysis. 72 The projected fleet achieved levels for 2016 are different for the fleet than were projected in the 2012–2016 rule. Our assessment is based on a predicted 2016 car value of 224, and a 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 achieved levels for any model year will not be known until the end of that model year based on actual vehicle sales. 73 For more detail on comments regarding the agencies’ technology assessment, see Section II.D. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 PO 00000 Frm 00020 Fmt 4701 Sfmt 4700 E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations vehicle fleet during the MYs 2017–2025 timeframe. For this rulemaking, given its timeframe, we also considered other technologies 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 emerging hybrid architecture combined with an 8-speed dual clutch transmission, a combination that is not available today. These are technologies that the agencies believe that manufacturers can, for the most part, apply both to cars and trucks, and that we expect will achieve significant improvements in fuel economy and reductions in CO2 emissions at reasonable cost in the MYs 2017–2025 timeframe. Chapter 3 of the joint TSD provides the full assessment of these technologies. Due to the relatively long lead time before MY 2017, the agencies expect that manufacturers will be able to employ combinations of these and potentially other technologies and that manufacturers and the supply industry will be able to produce them in sufficient volumes to comply with the final standards. A number of commenters suggested that the proposed standards were either too stringent or not stringent enough (either in some model years or in all model years, depending on the commenter), and nearly all auto manufacturers and their associations stressed the importance of the mid-term evaluation of the MYs 2022–2025 standards in their comments due to the long timeframe of the rule and uncertainty in assumptions given this timeframe. Our consideration of these comments as well as our revised analyses, leads us to conclude that the general rate of increase in the stringency of the standards as proposed remains appropriate. The comprehensive midterm evaluation process being finalized and our evaluation of the stringency of the standards is discussed further in Sections III and IV. 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 final standards. EPA’s and NHTSA’s analyses of these regulatory alternatives (and explanation of why we are finalizing the standards) are contained in Sections III and IV of this preamble, respectively, as well as in the agencies’ respective Regulatory Impact Analyses (RIAs). VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 3. Form of the Standards NHTSA and EPA are finalizing attribute-based standards for passenger cars and light trucks, as required by EISA and as allowed by the CAA, and will continue to use vehicle footprint as the attribute.74 Footprint is defined as a vehicle’s wheelbase multiplied by its average 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.75 The agencies continue to believe that footprint is the most appropriate attribute on which to base the proposed standards, as discussed in Section II.C and in Chapter 2 of the Joint TSD. The majority of commenters supported the continued use of footprint as the vehicle attribute; those comments and the agencies’ response are discussed in Section II.C below. 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 higher CO2 grams/mile targets and lower CAFE mpg targets than smaller vehicles. This is because, generally 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 the projected production volume of its vehicle fleet (and are estimated as part of the EPA certification process), the standards to which the manufacturer must comply will be determined by its final model 74 NHTSA and EPA 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 CAFE program will also be classified as a car under the EPA GHG program, and likewise for trucks. This approach of using common definitions allows the CO2 standards and the CAFE standards to continue to be harmonized across all vehicles for the National Program. 75 NHTSA also used the footprint attribute in its Reformed CAFE program for light trucks for model years 2008–2011 and passenger car CAFE standards for MY 2011. PO 00000 Frm 00021 Fmt 4701 Sfmt 4700 62643 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.76 The final footprint-based standards are identical to those proposed. The passenger car curves are also similar in shape to the car curves for MYs 2012– 2016. However, as proposed, the final light truck curves for MYs 2017–2025 reflect more significant changes compared to the light truck curves for MYs 2012–2016; specifically, the agencies have increased the slope and extended the large-footprint cutpoint for the light truck curves over time to larger footprints. We continue to believe that these changes from the MYs 2012–2016 curves represent an appropriate balance of both technical and policy issues, as discussed in Section II.C below and Chapter 2 of the Joint TSD. NHTSA is adopting the attribute curves below for model years 2017 through 2021 and presenting the augural attribute curves below for model years 2022–2025. As just explained, these targets, expressed as 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 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 curves for model years 2017 through 2025 while Figure I–2 below illustrates the light truck CAFE curves for model years 2017 through 2025. EPA is finalizing the attribute curves shown in Figure I–3 and Figure I–4 below, for model years 2017 through 2025. 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– 76 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 production weighted average of the target levels for each model) with fleet average performance (based on the production weighted average of the performance for each model). E:\FR\FM\15OCR2.SGM 15OCR2 62644 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations 4 shows the CO2 truck standard curves for model years 2017–2025. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 PO 00000 Frm 00022 Fmt 4701 Sfmt 4725 E:\FR\FM\15OCR2.SGM 15OCR2 ER15OC12.002</GPH> sroberts on DSK5SPTVN1PROD with BILLING CODE 6560–50–P VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 PO 00000 Frm 00023 Fmt 4701 Sfmt 4725 E:\FR\FM\15OCR2.SGM 15OCR2 62645 ER15OC12.003</GPH> sroberts on DSK5SPTVN1PROD with Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations VerDate Mar<15>2010 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations 23:11 Oct 12, 2012 Jkt 229001 PO 00000 Frm 00024 Fmt 4701 Sfmt 4725 E:\FR\FM\15OCR2.SGM 15OCR2 ER15OC12.004</GPH> sroberts on DSK5SPTVN1PROD with 62646 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations EPA and NHTSA received a number of comments about the shape of the car and truck curves. Some commenters, including Honda, Toyota and Volkswagen, stated that the light truck curve was too lenient for large trucks, while Nissan and Honda stated the light truck curve was too stringent for small trucks; Porsche and Volkswagen stated the car curve was too stringent generally, and Toyota stated it was too stringent for small cars. A number of NGOs (Center for Biological Diversity, International Council on Clean Transportation, Natural Resources Defense Council, Sierra Club, Union of Concerned Scientists) also commented on the truck curves as well as the relationship between the car and truck curves. We address all these comments further in Section II.C as well as in Sections III and IV. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 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 a comparable level of fuel efficiency improvement technology. Since the finalized standards apply to a manufacturer’s overall passenger car fleet and overall light truck fleet, not to an individual vehicle, if one of a manufacturer’s fleets 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 final standards more evenly distribute the compliance burdens of the standards among different manufacturers, based on their respective product offerings. PO 00000 Frm 00025 Fmt 4701 Sfmt 4700 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 these standards, which will help to maintain consumer choice during the MY 2017 to MY 2025 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 final standards that different vehicle sizes will have, although we emphasize again that these targets are not actual standards—the standards are manufacturer-specific, rather than vehicle-specific. E:\FR\FM\15OCR2.SGM 15OCR2 ER15OC12.005</GPH> sroberts on DSK5SPTVN1PROD with BILLING CODE 6560–50–C 62647 62648 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations TABLE I–6—MODEL YEAR 2025 CO2 AND FUEL ECONOMY TARGETS FOR VARIOUS MY 2012 VEHICLE TYPES Vehicle type Example model footprint (sq. ft.) Example models CO2 Emissions target (g/mi) a Fuel economy target (mpg) b 40 46 53 131 147 170 61.1 54.9 48.0 43 49 56 67 170 188 209 252 47.5 43.4 39.2 33.0 Example Passenger Cars Compact car .................................................... Midsize car ...................................................... Full size car ..................................................... Honda Fit ....................................................... Ford Fusion .................................................... Chrysler 300 ................................................... Example Light-duty Trucks Small SUV ....................................................... Midsize crossover ........................................... Minivan ............................................................ Large pickup truck ........................................... 4WD Ford Escape ......................................... Nissan Murano ............................................... Toyota Sienna ................................................ Chevy Silverado (extended cab, 6.5 foot bed). a,b Real-world CO is typically 25 percent higher and real-world fuel economy is typically 20 percent lower than the CO and fuel economy tar2 2 get values presented here. 4. Program Flexibilities for Achieving Compliance sroberts on DSK5SPTVN1PROD with a. CO2/CAFE Credits Generated Based on Fleet Average Over-Compliance As proposed, the agencies are finalizing several provisions which provide compliance flexibility to manufacturers to meet the standards. Many of the provisions are also found in the MYs 2012–2016 rules. For example, the agencies are continuing to allow manufacturers to generate credits for over-compliance with the CO2 and CAFE standards.77 As noted above, under the footprint-based standards, a manufacturer’s ultimate compliance obligations are determined at the end of each model year, when production of vehicles for that 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 its 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 77 This credit flexibility is required by EPCA/ EISA, see 49 U.S.C. 32903, and is well within EPA’s discretion under section 202(a) of the CAA. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 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 carry back 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, as proposed, EPA is continuing this limitation in the MY 2017–2025 program. In its comments, Volkswagen requested that credits under the GHG rules be allowed to be carried back for five model years rather than three as proposed. A five year carry back could create a perverse incentive for shortfalls to accumulate past the point where they can be rectified by later model year performance. EPA is therefore adopting the three year carry back period in its rule. NHTSA is required to allow a three year carry-back period by statute. However, to facilitate the transition to the increasingly more stringent standards, EPA proposed, and is finalizing under its CAA authority a one-time CO2 carry-forward beyond 5 years, such that any credits generated from MYs 2010 through 2016 will be able to be used to comply with light duty vehicle GHG standards at any time through MY 2021. This provision does not apply to early credits generated in MY 2009. EPA received comments from the Alliance of Automobile Manufacturers and several individual manufacturers supporting the proposed PO 00000 Frm 00026 Fmt 4701 Sfmt 4700 additional credit carry-forward flexibility and also comments from the Center for Biological Diversity opposing the additional credit carry-forward provisions which are addressed in section III.B.4. NHTSA’s program will continue the 5-year carry-forward and 3year 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. As part of the EISA amendments to EPCA, NHTSA was required to establish by regulation a CAFE credit 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 standards through transferred credits: 1 mpg for MYs 2011–2013; 1.5 mpg for MYs 2014– 2017; and 2 mpg for MYs 2018 and beyond.78 These statutory limits will continue to apply to the determination of compliance with the CAFE standards. EISA also prohibits the use of transferred credits to meet the minimum domestic passenger car fleet CAFE standard.79 Under section 202 (a) of the CAA there is no statutory limitation on cartruck credit transfers, and EPA’s GHG program allows unlimited credit transfers across a manufacturer’s carlight truck fleet to meet the GHG 78 49 79 49 E:\FR\FM\15OCR2.SGM U.S.C. 32903(g)(3). U.S.C. 32903(g)(4). 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with 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 in the MY 2012–2016 rule,80 as doing so would reduce the flexibility to achieve the standards in the lead time provided, and would increase costs with no corresponding environmental benefit. EPA did not propose and is not finalizing any constraints on credit transfers for MY 2017 and later, consistent with the MY 2012–2016 program. As discussed in Section III.B.4, EPA received one comment from Center for Biological Diversity that it should be consistent with EISA and establish limitations on credit transfers. EPA disagrees with the commenter and continues to believe that limiting transfers and trading would unnecessarily constrain program flexibility as discussed in section III.B.4 below. 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 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. EISA also prohibits manufacturers from using traded credits to meet the minimum domestic passenger car CAFE standard.81 b. Air Conditioning Improvement Credits/Fuel Economy Value Increases Air conditioning (A/C) systems contribute to GHG emissions in two ways. The primary refrigerant used in automotive air conditioning systems today—a hydrofluorocarbon (HFC) refrigerant and potent GHG called HFC– 134a—can leak directly from the A/C system (direct A/C emissions). In addition, operation of the A/C system places an additional load on the engine that increases fuel consumption and thus results in additional CO2 tailpipe emissions (indirect A/C emissions). In the MY 2012–2016 program, EPA allows 80 EPA’s GHG program will continue to adjust car and truck credits by vehicle miles traveled (VMT), as in the MY2012–2016 program. 81 49 U.S.C. 32903(f)(2). VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 manufacturers to generate credits by reducing either or both types of GHG emissions related to A/C systems. For those model years, EPA anticipated that manufacturers would pursue these relatively inexpensive reductions in GHGs due to improvements in A/C systems and accounted for generation and use of both of these credits in setting the levels of the CO2 standards. For this rule, as with the MYs 2012– 2016 program, EPA is finalizing its proposal to allow manufacturers to generate CO2-equivalent82 credits to use in complying with the CO2 standards by reducing direct and/or indirect A/C emissions. These reductions can be achieved by improving A/C system efficiency (and thus reducing tailpipe CO2 and improving fuel consumption), by reducing refrigerant leakage, and by using refrigerants with lower global warming potentials (GWPs) than HFC– 134a. As proposed, EPA is establishing that the maximum total A/C credits available for cars will be 18.8 grams/ mile CO2-equivalent and for trucks will be 24.4 grams/mile CO2-equivalent.83 The approaches to be used to calculate these direct and indirect A/C credits are generally consistent with those of the MYs 2012–2016 program, although there are several revisions, including as proposed the introduction of a new A/ C efficiency test procedure that will be applicable starting in MY 2014 for compliance with EPA’s GHG standards. In addition to the grams-per-mile CO2equivalent credits, for the first time the agencies are establishing provisions in the CAFE program that would account for improvements in air conditioner efficiency. Improving A/C efficiency leads to real-world fuel economy benefits, because as explained above, A/ C operation represents an additional load on the engine. Thus, 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 to calculate CAFE compliance values.84 Under this authority, EPA is establishing that manufacturers can generate fuel consumption improvement values for purposes of CAFE compliance based on air conditioning system efficiency improvements for cars and trucks. An 82 CO equivalence (CO e) expresses the global 2 2 warming potential of a greenhouse gas (for A/C, hydrofluorocarbons) by normalizing that potency to CO2’s. Thus, the maximum A/C credit for direct emissions is the equivalent of 18.8 grams/mile of CO2 for cars. 83 This is further broken down by 5.0 and 7.2 g/ mi respectively for car and truck AC efficiency credits, and 13.8 and 17.2 g/mi respectively for car and truck alternative refrigerant credits. 84 See 49 U.S.C. 32904(c). PO 00000 Frm 00027 Fmt 4701 Sfmt 4700 62649 increase in a vehicle’s CAFE grams-permile value would be allowed up to a maximum based on 0.000563 gallon/ mile for cars and on 0.000810 gallon/ mile for trucks. This is equivalent to the A/C efficiency CO2 credit allowed by EPA under the GHG program. For the CAFE program, EPA would use the same methods to calculate the values for air conditioning efficiency improvements for cars and trucks as are used in EPA’s GHG program. Additionally, given that these realworld improvements will be available to manufacturers for compliance, NHTSA has accounted for this by determining the amount that industry is expected to improve air conditioning system efficiency in each model year from 2017–2025, and setting the CAFE standards to reflect these improvements, in a manner consistent with EPA’s GHG standards. EPA is not allowing generation of fuel consumption improvement values for CAFE purposes, nor is NHTSA increasing stringency of the CAFE standard, for the use of A/C systems that reduce leakage or employ alternative, lower GWP refrigerant. This is because those changes do not generally affect fuel economy. Most industry commenters supported this proposal, while one NGO noted that the inclusion of air conditioning improvements for purposes of CAFE car compliance was a change from prior interpretations. c. Off-cycle Credits/Fuel Economy Value Increases For MYs 2012–2016, EPA provided an option for manufacturers to generate credits for utilizing 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 and active aerodynamics, among other technologies. See generally 75 FR 25438–39. EPA’s current program allows off-cycle credits to be generated through MY 2016. EPA proposed and is finalizing provisions allowing manufacturers to continue to generate and use off-cycle credits for MY 2017 and later to demonstrate compliance with the lightduty vehicle GHG standards. In addition, as with A/C efficiency, improving efficiency through the use of off-cycle technologies leads to realworld fuel economy benefits and allows the vehicle to go farther on a gallon of gas. Thus, under its EPCA authority EPA proposed and is finalizing provisions to allow manufacturers to generate fuel consumption improvement E:\FR\FM\15OCR2.SGM 15OCR2 62650 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with 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.D and IV.I of this final rule preamble, the ability to generate off-cycle credits and increases in fuel economy for use in compliance will not affect or change the stringency of the GHG or CAFE standards established by each agency.85 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. Other commenters, such as suppliers and some NGOs, also provided technical input on various aspects of the off-cycle credit program. Some environmental groups expressed concerns about the uncertainties in calculating off-cycle credits and that the ability for manufacturer’s to earn credits from off-cycle technologies should not be a disincentive for implementing other (2-cycle) technologies. For MY 2017 and later, EPA is finalizing several proposed provisions to expand and streamline the MYs 2012–2016 off-cycle credit provisions, including an approach by which the agencies will provide default values, which will eliminate the need for case-by-casetesting, for a subset of off-cycle technologies whose benefits are reliably and conservatively quantified. EPA is finalizing a list of technologies and default credit values for these technologies, as well as capping the 85 The agencies have developed estimates for the cost and effectiveness of various off-cycle technologies, including active aerodynamics and stop-start. For the final rule analysis, NHTSA assumed that these two technologies are available to manufacturers for compliance with the standards, similar to all of the other fuel economy improving technologies that the analysis assumes are available. The costs and benefits of these technologies are included in the analysis, similar to all other available technologies and therefore, NHTSA has included the assessment of off-cycle credits in the assessment of maximum feasible standards. EPA has included the 2-cycle benefit of stop-start and active aerodynamics in the standards setting analysis because these technologies have 2cycle, in addition to off-cycle, effectiveness. As with all the technologies considered in TSD Chapter 3 which are modeled as part of potential compliance paths, EPA considers the 2-cycle effectiveness when setting the standard. The only exception where off-cycle effectiveness is reflected in the standard is for improvements to air conditioning leakage and efficiency. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 maximum amount of these credits which can be utilized unless a manufacturer demonstrates through testing that greater amounts are justified. The agencies believe that our assessment of off-cycle technologies and associated credit values on this list is conservative, and emphasize that automakers may apply for additional off-cycle credits beyond the minimum credit value and cap if they present sufficient supporting data. Manufacturers may also apply to receive credit for off-cycle technologies besides those listed, again, if they have sufficient data. EPA received several comments regarding the list of technologies and associated credit values and has modified the list somewhat in response to these comments, as discussed in Section II.F.2. EPA was also persuaded by the public comments that the default credit values should not be contingent upon a minimum penetration of the technology into a manufacturer’s fleet, and so is not adopting this aspect of the proposal. Manufacturers often apply new technologies on a limited basis to gain experience, gauge consumer acceptance, allow refinement of the manufacturing and production processes for quality and cost, and other legitimate reasons. The proposed minimum penetration requirement might have discouraged introduction of off-cycle technologies in these legitimate circumstances. In addition, as requested by commenters, EPA is providing additional detail on the process and timing for the credit/fuel consumption improvement values application and approval process for those instances where manufacturers seek off-cycle credits rather than using the default values from the list provided, or seek credits for technologies other than those provided through the list. EPA is finalizing a timeline for the approval process, including a 60-day EPA decision process from the time a manufacturer submits a complete application for credits based on 5-cycle testing. As proposed, EPA is also finalizing a detailed, step-by-step process, including a specification of the data that manufacturers must submit. EPA will also consult with NHTSA during the review process. For off-cycle 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, EPA is retaining the public comment process from the MYs 2012–2016 rule, and will PO 00000 Frm 00028 Fmt 4701 Sfmt 4700 consult with NHTSA during the review process. Finally, in response to many OEM and supplier comments encouraging EPA to allow access to the pre-defined credit menu earlier than MY 2017, EPA is allowing use of the credit menu for the GHG program beginning in MY 2014 to facilitate compliance with the GHG standards for MYs 2014–2016. This provision is for the GHG rules only, and does not apply to the 2012–2016 CAFE standards; the off-cycle credit program will not begin until MY 2017 for the CAFE program, as discussed in Section IV.I.4.c. A full description of the program, including an overview of key comments and responses, is provided in Section III.C.5. A number of technical comments were also submitted by a variety of stakeholders, which are addressed in Chapter 5 of the joint TSD. d. Incentives for Electric Vehicles, Plugin Hybrid Electric Vehicles, Fuel Cell Vehicles, and Compressed Natural Gas Vehicles In order to provide temporary regulatory incentives to promote advanced vehicle technologies, EPA is finalizing, as proposed, an incentive multiplier for CO2 emissions compliance purposes for all electric vehicles (EVs), plug-in hybrid electric vehicles (PHEVs), and fuel cell vehicles (FCVs) sold in MYs 2017 through 2021. In addition, in response to public comments explaining how infrastructure and technologies for compressed natural gas (CNG) vehicles could serve as a bridge to use of advanced technologies such as hydrogen fuel cells, EPA is finalizing an incentive multiplier for CNG vehicles sold in MYs 2017 through 2021. This multiplier approach means that each EV/PHEV/FCV/CNG vehicle would count as more than one vehicle in the manufacturer’s compliance calculation. EPA is finalizing, as proposed, that EVs and FCVs start with a multiplier value of 2.0 in MY 2017 and phase down to a value of 1.5 in MY 2021, and that PHEVs would start at a multiplier value of 1.6 in MY 2017 and phase down to a value of 1.3 in MY 2021.86 EPA is finalizing multiplier values for both dedicated and dual fuel CNG vehicles for MYs 2017–2021 that are equivalent to the multipliers for PHEVs. All incentive multipliers in EPA’s program expire at the end of MY 2021. See Section III.C.2 for more discussion of these incentive multipliers. 86 The multipliers are for EV/FCVs: 2017–2019— 2.0, 2020—1.75, 2021—1.5; for PHEVs and dedicated and dual fuel CNG vehicles: 2017–2019— 1.6, 2020—1.45, 2021—1.3. E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with NHTSA currently interprets EPCA and EISA as precluding it from offering additional incentives for the alternative fuel operation of EVs, PHEVs, FCVs, and NGVs, except as specified by statute,87 and thus did not propose and is not including incentive multipliers comparable to the EPA incentive multipliers described above. For EVs, PHEVs and FCVs, EPA is also finalizing, as proposed, to set a value of 0 g/mile for the tailpipe CO2 emissions 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 finalizing, as proposed, that 0 g/mi only be allowed up to a per-company cumulative sales cap, tiered as follows: 1) 600,000 EV/ PHEV/FCVs for companies that sell 300,000 EV/PHEV/FCVs in MYs 2019– 2021; or 2) 200,000 EV/PHEV/FCVs for all other manufacturers. Starting with MY 2022, the compliance value for EVs, FCVs, and the electric portion of PHEVs in excess of individual automaker cumulative production caps must be based on net upstream accounting. These provisions are discussed in detail in Section III.C.2. As proposed and as discussed above, for EVs and other dedicated alternative fuel vehicles, EPA will calculate fuel economy for the CAFE program (under its EPCA statutory authority, as further described in Section I.E.2.a) using the same methodology as in the MYs 2012– 2016 rulemaking.88 For liquid alternative fuels, this methodology generally counts 15 percent of the volume of fuel used in determining the mpg-equivalent fuel economy. For gaseous alternative fuels (such as natural gas), 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 87 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, 49 U.S.C. 32905(a) expressly requires EPA to calculate the fuel economy of FCVs using a specified incentive, and 49 U.S.C. 32905(c) expressly requires EPA to calculate the fuel economy of natural gas vehicles 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. 88 See 49 U.S.C. 32904 and 32905. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 electricity, the methodology generally determines a gasoline equivalent mpg by measuring the electrical energy consumed, and then uses a petroleum equivalency factor to convert to a mpgequivalent value. The petroleum equivalency factor for electricity includes an adjustment that effectively only counts 15 percent of the actual energy consumed. Counting 15 percent of the fuel volume or energy provides an incentive for alternative fuels in the CAFE program. The methodology that EPA is finalizing for dual fueled vehicles under the GHG program and to calculate fuel economy for the CAFE program is discussed below in subsection I.C.7.a. e. Incentives for Using Advanced, ‘‘Game-Changing’’ Technologies in FullSize Pickup Trucks The agencies recognize that the standards presented in this final rule for MYs 2017–2025 will be challenging for large vehicles, including full-size pickup trucks often used in commercial applications. To help address this challenge, the program will, as proposed, adopt incentives for the use of hybrid electric and non-hybrid electric ‘‘game changing’’ technologies in full-size pickup trucks. EPA is providing the incentive for the GHG program under EPA’s CAA authority, and for the CAFE program under EPA’s EPCA authority. EPA’s GHG and NHTSA’s CAFE standards are set at levels that take into account this flexibility as an incentive for the introduction of advanced technology. This provides the opportunity in the program’s early model years to begin penetration of advanced technologies into this category of vehicles, and in turn creates more opportunities for achieving the more stringent MYs 2022– 2025 truck standards. EPA is providing a per-vehicle CO2 credit in the GHG program and an equivalent fuel consumption improvement value in the CAFE program for manufacturers that sell significant numbers of large pickup trucks that are mild or strong hybrid electric vehicles (HEVs). To qualify for these incentives, a truck must meet minimum criteria for bed size, and for towing or payload capability. In order to encourage rapid penetration of these technologies in this vehicle segment, the final rules also establish minimum HEV sales thresholds, in terms of a percentage of a manufacturer’s full-size pickup truck fleet, which a manufacturer must satisfy in order to qualify for the incentives. The program requirements and incentive amounts differ somewhat for PO 00000 Frm 00029 Fmt 4701 Sfmt 4700 62651 mild and strong HEV pickup trucks. As proposed, mild HEVs will be eligible for a per-vehicle CO2 credit of 10 g/mi (equivalent to 0.0011 gallon/mile for a gasoline-fueled truck) during MYs 2017–2021. To be eligible a manufacturer would have to show that the mild hybrid technology is utilized in a specified portion of its truck fleet beginning with at least 20% of a company’s full-size pickup production in MY 2017 and ramping up to at least 80% in MY 2021. The final rule specifies a lower level of technology penetration for MYs 2017 and 2018 than the 30% and 40% penetration rates proposed, based on our consideration of industry comments that too high a penetration requirement could discourage introduction of the technology. The lower required rates will help factor in the early experience gained with this technology and allow for a more efficient ramp up in manufacturing capacity. As proposed, strong HEV pickup trucks will be eligible for a 20 g/mi credit (0.0023 gallon/mile) during MYs 2017–2025 if the technology is used on at least 10% of a company’s full-size pickups in that model year. EPA and NHTSA are adopting specific definitions for mild and strong HEV pickup trucks, based on energy flow to the high-voltage battery during testing. These definitions are slightly different from those proposed— reflecting the agencies’ consideration of public comments and additional pertinent data. The details of this program are described in Sections II.F.3 and III.C.3, as well as in Chapter 5.3 of the joint TSD. Because there are other promising technologies besides hybridization that can provide significant reductions in GHG emissions and fuel consumption from full size pickup trucks, EPA is also adopting, as proposed, a performancebased CO2 emissions credit and equivalent fuel consumption improvement value for full-size pickup trucks. Eligible pickup trucks certified as performing 15 percent better than their applicable CO2 target will receive a 10 g/mi credit (0.0011 gallon/mile), and those certified as performing 20 percent better than their target will receive a 20 g/mi credit (0.0023 gallon/ mile). The 10 g/mi performance-based credit will be available for MYs 2017 to 2021 and, once qualifying; a vehicle model will continue to receive the credit through MY 2021, provided its CO2 emissions level does not increase. The 20 g/mi performance-based credit will be provided to a vehicle model for a maximum of 5 years within the 2017 to 2025 model year period provided its E:\FR\FM\15OCR2.SGM 15OCR2 62652 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with CO2 emissions level does not increase. Minimum sales penetration thresholds apply for the performance-based credits, similar to those adopted for HEV credits. To avoid double-counting, no truck will receive credit under both the HEV and the performance-based approaches. Further details on the full-size truck technology credit program are provided in sections II.F.3 and III.C.3, as well as in Chapter 5.3 of the joint TSD. The agencies received a variety of comments on the proposal for this technology incentive program for full size pickup trucks. Some environmental groups and manufacturers questioned the need for it, arguing that this vehicle segment is not especially challenged by the standards, that hybrid systems would readily transfer to it from other vehicle classes, and that the credit essentially amounts to an economic advantage for manufacturers of these trucks. Other industry commenters requested that it be made available to a broader class of vehicles, or that the minimum penetration thresholds be removed or relaxed. There were also a number of comments on the technical requirements defining eligibility and mild/strong HEV performance. In response to the comments, the agencies made some changes to the proposed program, including adjustments to the penetration thresholds for mild HEVs, clarification that non-gasoline HEVs can qualify, and improvements to the technical criteria for mild and strong hybrids. The comments and changes are discussed in detail in sections II.F.3, and III.C.3, and in Chapter 5 of the TSD. 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 de novo rulemaking in order to establish final standards for vehicles for those model years, the agencies will conduct a comprehensive mid-term evaluation and agency decision-making process for the MYs 2022–2025 standards, as described in the proposal. The agencies received many comments about the importance of the proposed mid-term evaluation due to the long time-frame of the rule and the uncertainty in assumptions due to this long timeframe. Nearly all auto manufacturers and associations predicated their support of the MY 2017–2025 National Program on the agencies conducting this evaluation and decision-making process. In addition, a number of auto manufacturers suggested additional factors that the agencies should consider during the evaluation process and also stressed the VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 importance of completing the evaluation no later than April 1, 2018, the timeframe proposed by the agencies. Several associations also asked for more detail to be codified regarding the timeline, content and procedures of the review process. Several automakers and organizations suggested that the agencies also conduct a series of smaller, focused evaluations or ‘‘checkins’’ on key issues and technological and market trends. Several organizations and associations stressed the importance of involving CARB and broad public participation in the review process. The agencies also received a number of comments from environmental and consumer organizations expressing concerns about the mid-term evaluation—that it could occur too early, before reliable data on the new standards is available, be disruptive to auto manufacturers’ product planning and add uncertainty, and that it should not be used as an opportunity to delay benefits or weaken the overall National Program for MY 2022–2025. Those organizations commented that if the agencies determined that a mid-term evaluation was necessary, it should be used as an opportunity to increase the stringency of the 2022–2025 standards. Some environmental groups opposed the concept of the agencies performing additional interim reviews. Finally, several environmental organizations urged transparency and recommended that the agencies provide periodic updates on technology progress and compliance trends. One commenter, NADA, stated that the rule should not be organized in a way that would require a mid-term evaluation and that the agencies should wait to set standards for MYs 2017–2021 until more information is available. The midterm evaluation comments are discussed in detail in sections III.B.3 and IV.A.3.b. The agencies are finalizing the midterm evaluation and agency decisionmaking process as proposed. As stated in the proposal, both NHTSA and EPA will develop and compile up-to-date information for the mid-term 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 this final 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. In order to align the agencies’ rulemaking for MYs 2022– PO 00000 Frm 00030 Fmt 4701 Sfmt 4700 2025 and to maintain a joint national program, if the EPA determination is that standards will not change, NHTSA will issue its final rule concurrently with the EPA determination. If the EPA determination is that standards may change, the agencies will issue a joint NPRM and joint final rule. The comprehensive evaluation process will lead to final agency action by both agencies, as described in sections III.B.3 and IV.A.3 of this Notice. NHTSA’s final action will be a de novo rulemaking conducted, as explained, with fresh inputs and a fresh consideration and balancing of all relevant factors, based on the best and most current information before the agency at that time. EPA will conduct a mid-term evaluation of the later model year light-duty GHG standards (MY2022–2025). The evaluation will determine what standards are appropriate for those model years. Consistent with the agencies’ commitment to maintaining a single national framework for regulation of vehicle GHG emissions and fuel economy, the agencies fully expect to conduct the mid-term evaluation in close coordination with the California Air Resources Board (CARB). In adopting their GHG standards on March 22, 2012, the California Air Resources Board directed the Executive Officer to continue collaborating with EPA and NHTSA as the Federal GHG standards were finalized and also ‘‘to participate in U.S. EPA’s mid-term review of the 2022 through 2025 model year passenger vehicle greenhouse gas standards being proposed under the 2017 through 2025 MY National Program’’.89 In addition, in order to align the agencies’ proceedings for MYs 2022–2025 and to maintain a joint national program, if the EPA determination is that standards will not change, NHTSA will issue its final rule concurrently with the EPA determination. If the EPA determination is that standards may change, the agencies will issue a joint NPRM and joint final rule. Further discussion of the mid-term evaluation can be found in Sections III.B.3 and IV.A.3.b of this final rule preamble. 6. Coordinated Compliance The MYs 2012–2016 final rules established detailed and comprehensive regulatory provisions for compliance and enforcement under the GHG and 89 See California Low-Emission Vehicles (LEV) & GHG 2012 regulations approved by State of California Air Resources Board, Resolution 12–11. Available at: http://www.arb.ca.gov/regact/2012/ cfo2012/res12-11.pdf (last accessed August 9, 2012). E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations 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 finalizing 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 is also continuing the provisions adopted in the MYs 2012–2016 GHG rule for in-use compliance with the GHG emissions standards. This 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 instances of noncompliance. sroberts on DSK5SPTVN1PROD with 7. Additional Program Elements a. Compliance Treatment of Plug-in Hybrid Electric Vehicles (PHEVs), Dual Fuel Compressed Natural Gas (CNG) Vehicles, and Flexible Fuel Vehicles (FFVs) As proposed, EPA is finalizing provisions which state that CO2 emissions compliance values for plug-in hybrid electric vehicles (PHEVs) and dual fuel compressed natural gas (CNG) vehicles will be based on estimated use of the alternative fuels, recognizing that if a consumer incurs significant cost for a dual fuel vehicle and can use an alternative fuel that has significantly VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 lower cost than gasoline, it is very likely that the consumer will seek to use the lower cost alternative fuel whenever possible. Accordingly, for CO2 emissions compliance, EPA is using 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 dual fuel CNG vehicles, along with the CO2 emissions test values on the alternative fuel and gasoline. Dual fuel CNG vehicles must have a minimum natural gas range-to-gasoline range of 2.0 in order to use this utility factor approach. Any dual fuel CNG vehicles that do not meet this requirement would use a utility factor of 0.50, the value that has been used in the past for dual fuel vehicles under the CAFE program. EPA is also finalizing, as proposed, an option allowing the manufacturer to use this utility factor methodology for CO2 emissions compliance for dual fuel CNG vehicles for MY 2012 and later model years. As proposed, EPA is accounting 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 tailpipe emissions reduction attributed to alternative fuels. Unlike PHEV and dual fuel CNG vehicles, there is not a significant cost differential between an FFV and a conventional gasoline vehicle and historically consumers have fueled these vehicles with E85 a very small percentage of the time. But E85 use in FFVs is expected to rise in the future due to Renewable Fuel Standard program requirements. GHG emissions compliance issues for dual fuel vehicles are discussed further in Section III.C.4.a. 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 finalizing its proposal, under its EPCA authority, to use the ‘‘utility factor’’ methodology for PHEV and CNG vehicles described above to determine how to apportion the fuel economy when operating on gasoline or diesel fuel and the fuel economy when operating on the alternative fuel. For FFVs under the CAFE program, EPA is using the same methodology it uses for the GHG program to apportion the fuel economy, namely based on actual usage of E85. As proposed, EPA is continuing to use Petroleum Equivalency Factors PO 00000 Frm 00031 Fmt 4701 Sfmt 4700 62653 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.C.4.b and in Section IV.I.3.a. b. Exclusion of Emergency and Police Vehicles Under EPCA, manufacturers are allowed to exclude emergency vehicles from their CAFE fleet 90 and all manufacturers that produce emergency vehicles have historically done so. In the MYs 2012–2016 program, EPA’s GHG program applies to these vehicles. However, after further consideration of this issue, EPA proposed and is finalizing the same type of exclusion provision for these vehicles for MY 2012 and later because of their unique features. Law enforcement and emergency vehicles are necessarily equipped with features which reduce the ability of manufacturers to sufficiently improve the emissions control without compromising necessary vehicle utility. Manufacturers commented in support of this provision and EPA received only one comment against exempting emergency vehicles. These comments are addressed in Section III.B.8. c. Small Businesses, Small Volume Manufacturers, and Intermediate Volume Manufacturers As proposed, EPA is finalizing 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 exempting small businesses—that is, any company that meets the SBA’s definition of a small business—from the MY 2017 and later GHG standards. 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, there is no significant impact on emission reductions. As proposed, EPA is also finalizing an opt-in provision that will allow small businesses wishing to waive their exemption and comply with the GHG standards to do so. EPA received no adverse comments on its proposed approach for small businesses. EPA’s final rule also addresses small volume manufacturers, those with U.S. annual sales of less than 5,000 vehicles. 90 49 E:\FR\FM\15OCR2.SGM U.S.C. 32902(e). 15OCR2 62654 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with Under the MYs 2012–2016 program, these small volume manufacturers are eligible for an exemption from the CO2 standards. As proposed, EPA will 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 to be developed manufacturer-bymanufacturer in a public process. 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.91 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.92 The exemption and alternative standard apply only if the exempted manufacturer also produces fewer than 10,000 passenger cars worldwide in the year for which the exemption was granted. NHTSA is not changing its regulations pertaining to exemptions and alternative standards (49 CFR Part 525) as part of this rulemaking. Also, EPA requested comment on allowing manufacturers able to demonstrate that they are operationally independent from a parent company (defined as 10% or greater ownership), to also be eligible for small volume manufacturer alternative standards and treatment under the GHG program. Under the current program, the vehicle sales of such companies must be aggregated with the parent company in determining eligibility for small volume manufacturer provisions. The only comments addressing this issue supported including a provision recognizing operational independence in the rules. EPA has continued to evaluate the issue and the final GHG rule includes provisions allowing manufacturers to demonstrate to EPA that they are operationally independent. This is different from the CAFE program, which aggregates manufacturers for compliance purposes if a control relationship exists, either in terms of stock ownership or design control, or both.93 91 49 U.S.C. 32902(d). Implementing regulations may be found in 49 CFR Part 525. 92 NHTSA may also apply an alternative average fuel economy standard to all automobiles manufactured by small volume manufacturers, or to classes of automobiles manufactured by small manufacturers, per EPCA, although this particular provision has not yet been exercised. See 49 U.S.C. 32902(d)(2). 93 See 49 U.S.C. 32901(a)(4) and 49 CFR Part 534. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 EPA sought comment on whether additional lead-time is needed for niche intermediate sized manufacturers. Under the Temporary Lead-time Allowance Alternative Standards (TLAAS) provisions in the MYs 2012– 2016 GHG rules (see 75 FR 25414–417), manufacturers with sales of less than 50,000 vehicles were provided additional flexibility through MY 2016. EPA invited comment on whether this or some other form of flexibility is warranted for niche intermediate volume, limited line manufacturers (see section III.B.7). NRDC commented in support of EPA’s proposal not to extend the TLAAS program. EPA received comments from Jaguar Land Rover, Porsche and Suzuki that the standards will raise significant feasibility concerns for some intermediate volume manufacturers that will be part of the expanded TLAAS program in MY 2016, especially in the early transition years of the program. Porsche commented that they would need to meet standards up to 25 percent more stringent in MY 2017 compared to MY 2016, requiring utilization of advanced technologies at rates wholly disproportionate to rates expected for larger manufacturers with more diverse product lines. EPA is persuaded that these manufacturers require additional lead-time to make the transition from the TLAAS regime to the more stringent standards. To provide this needed lead-time, EPA is finalizing provisions for manufacturers with sales below 50,000 vehicles per year that are part of the TLAAS program through MY 2016, which will allow eligible manufacturers to remain at their MY 2016 standards through MY 2018 and then begin making the transition to more stringent standards. The manufacturers that utilize this added lead time will be required to meet the primary program standards in MY 2021 and later. The intermediate volume manufacturer lead-time provisions are discussed in detail in Section III.B.8. d. Nitrous Oxide and Methane Standards As proposed, EPA is extending to MY 2017 and later the flexibility for manufacturers to use CO2 credits on a CO2-equivalent basis to comply with the nitrous oxides (N2O) and methane (CH4) cap standards. These cap standards, established in the MYs 2012–2016 rulemaking were intended to prevent future emissions increases and were generally not expected to result in the application of new technologies or significant costs for manufacturers using current vehicle designs. EPA is also finalizing additional lead time for PO 00000 Frm 00032 Fmt 4701 Sfmt 4700 manufacturers to use compliance statements in lieu of N2O testing through MY 2016, as proposed. In addition, in response to comments, EPA is allowing the continued use of compliance statements in MYs 2017– 2018 in cases where manufacturers are not conducting new emissions testing for a test group, but rather carrying over certification data from a previous year. EPA is also clarifying that manufacturers will not be required to conduct in-use testing for N2O in cases where a compliance statement has been used for certification. All of these provisions are discussed in detail below in section III.B.9. D. Summary of Costs and Benefits for the National Program This section summarizes the projected costs and benefits of the MYs 2017– 2025 CAFE and GHG emissions standards for light-duty vehicles. These projections helped inform the agencies’ choices among the alternatives considered and provide further confirmation that the final standards are appropriate under the agencies’ respective statutory authorities. The costs and benefits projected by NHTSA to result from the CAFE standards are presented first, followed by those projected by EPA to result from the GHG emissions standards. 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. NHTSA and EPA’s standards are projected to result in slightly different fuel efficiency improvements. EPA’s GHG standard is more stringent in part due to its assumptions about manufacturers’ use of air conditioning leakage/refrigerant replacement credits, which will result in reduced emissions of HFCs. NHTSA’s final standards are at levels of stringency that assume improvements in the efficiency of air conditioning systems, but these standards do not require reductions in HFC emissions, which are generally not related to fuel economy or energy conservation. In addition, as noted above, the CAFE and GHG standards offer somewhat different program flexibilities and provisions, and the agencies’ analyses differ in their accounting for these flexibilities, primarily because NHTSA is statutorily prohibited from considering some flexibilities when establishing CAFE standards,94 while EPA is not. These differences contribute to differences in the agencies’ respective estimates of 94 See E:\FR\FM\15OCR2.SGM 49 U.S.C. 32902(h). 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with costs and benefits resulting from the new standards. Specifically, the projected costs and benefits presented by NHTSA and EPA are not directly comparable because EPA’s standards include air conditioning-related improvements in HFC reductions, and reflect compliance with the GHG standards, whereas NHTSA projects some manufacturers will pay civil penalties as part of their compliance strategy, as allowed by EPCA. EPCA also prohibits NHTSA from considering manufacturers’ ability to earn, transfer or trade credits earned for over-compliance when setting standards. The Clean Air Act imposes no such limitations. The Clean Air Act also allows EPA to provide incentives for particular technologies, such as for electric vehicles and dual fueled vehicles. For these reasons, EPA’s estimates of GHG reductions and fuel savings achieved by the GHG standards are higher than those projected by NHTSA for the CAFE standards. For these same reasons, EPA’s estimates of manufacturers’ costs for complying with the passenger car and light truck GHG standards are slightly higher than NHTSA’s estimates for complying with the CAFE standards. It also bears discussion here that, for this final rulemaking, the agencies have analyzed the costs and benefits of the standards using two different forecasts of the light vehicle fleet through MY 2025. The agencies have concluded that the significant uncertainty associated with forecasting sales volumes, vehicle technologies, fuel prices, consumer demand, and so forth out to MY 2025, make it reasonable and appropriate to evaluate the impacts of the final CAFE and GHG standards using two baselines.95 One market forecast (or fleet projection), very similar to the one used for the NPRM, uses (corrected) MY 2008 CAFE certification data, information from AEO 2011, and information purchased from CSM in December of 2009. The agencies received comments regarding the market forecast used in the NPRM suggesting that updates in several respects could be helpful to the agencies’ analysis of final standards; given those comments and since the agencies were already considering producing an updated fleet projection, the final rulemakings also utilize a second market forecast using MY 2010 CAFE certification data, information from AEO 2012, and information 95 We refer to these baselines as ‘‘fleet projections’’ or ‘‘market forecasts’’ in Section II.B of the preamble and Chapter 1 of the TSD and elsewhere in the administrative record. The term ‘‘baseline’’ has a specific definition and is described in Chapter 1 of the TSD. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 purchased from LMC Automotive (formerly J.D. Power Forecasting). These two market forecasts contain certain differences, although as will be discussed below, the differences are not significant enough to change the agencies’ decision as to the structure and stringency of the final standards, and indeed corroborate the reasonableness of the EPA final GHG standards and that the NHTSA standards are the maximum feasible. For example, the 2008 based fleet forecast uses the MY 2008 ‘‘baseline’’ fleet, which represents the most recent model year for which the industry had sales data that was not affected by the subsequent economic recession. On the other hand, the 2010 based fleet projection employs a market forecast (provided by LMC Automotive) which is more current than the projection provided by CSM (utilized for the MY 2008 based fleet projection). The CSM forecast appears to have been particularly influenced by the recession, showing major declines in market share for some manufacturers (e.g., Chrysler) which the agencies do not believe are reasonably reflective of future trends. However, the MY 2010 based fleet projection also is highly influenced by the economic recession. The MY 2010 CAFE certification data has become available since the proposal (see section 1.2.1 of the Joint TSD for the proposed rule, which noted the possibility of these data becoming available), and is used in EPA’s alternative analysis, and continues to show the effects of the recession. For example, industry-wide sales were skewed down 20% 96 compared to pre-recession MY 2008 levels. For some companies like Chrysler, Mitsubishi, and Subaru, sales were down 30–40% 97 from MY 2008 levels. For BMW, General Motors, Jaguar/Land Rover, Porsche, and Suzuki, sales were down more than 40% 98 from 2008 levels. Using the MY 2008 vehicle data avoids projecting these abnormalities in predicting the future fleet, although it also perpetuates vehicle brands and models (and thus, their outdated fuel economy levels and engineering characteristics) that have since been discontinued. The MY 2010 CAFE certification data accounts for the phase-out of some brands (e.g., Saab) and the introduction of some 96 These figures are derived from the manufacturer and fleet volume tables in Chapter 1 of the TSD. 97 These figures are derived from the manufacturer and fleet volume tables in Chapter 1 of the TSD. 98 These figures are derived from the manufacturer and fleet volume tables in Chapter 1 of the TSD. PO 00000 Frm 00033 Fmt 4701 Sfmt 4700 62655 technologies (e.g., Ford’s Ecoboost engine), which may be more reflective of the future fleet in this respect. Thus, given the volume of information that goes into creating a baseline forecast and given the significant uncertainty in any projection out to MY 2025, the agencies think that the best way to illustrate the possible impacts of that uncertainty for purposes of this rulemaking is the approach taken here of analyzing the effects of the final standards under both the MY 2008based and the MY 2010-based fleet projections. EPA is presenting its primary analysis of the standards using the same baseline/future fleet projection that was used in the NPRM (i.e., corrected MY 2008 CAFE certification data, information from AEO 2011, and a future fleet forecast purchased from CSM). EPA also conducted an alternative analysis of the standards based on MY 2010 CAFE certification data, updated AEO 2012 (early release) projections of the future fleet sales volumes, and a forecast of the future fleet mix projections to MY 2025 purchased from LMC Automotive. At the same time, given that EPA believes neither projection is strongly superior to the other, EPA has performed a detailed analysis of the final standards using the MY 2010 baseline, and we have concluded that the final standards are likewise appropriate using this alternative baseline/fleet projection. EPA’s analysis of the alternative baseline/future fleet (based on MY 2010) is presented in EPA’s Final Regulatory Impact Analysis (RIA), Chapter 10. NHTSA’s primary analysis uses both market forecasts, and accordingly presents values from both in tables throughout this preamble and in NHTSA’s FRIA. Joint TSD Chapter 1 includes a full description of the two market projections and their derivation. As with the MYs 2012–2016 standards, and the MYs 2014–2018 standards for heavy duty vehicles and engines, NHTSA and EPA have harmonized the programs as much as possible, and continuing the National Program to MYs 2017–2025 will result in significant cost savings and other advantages for the automobile industry by allowing them to manufacture and sell one fleet of vehicles across the U.S., rather than potentially having to comply with multiple state standards that may occur in the absence of the National Program. It is also 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 GHGs. The two agencies’ standards together comprise the National Program, E:\FR\FM\15OCR2.SGM 15OCR2 62656 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations and the following discussions of the respective costs and benefits of NHTSA’s CAFE standards and EPA’s GHG standards do not change the fact that both the CAFE and GHG standards, jointly, are the source of the benefits and costs of the National Program. 1. Summary of Costs and Benefits for the 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 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 CAFE standards that helps to illustrate their real-world impacts. As an example of one of the effects, including the use of FFV credits reduces estimated pervehicle 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 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 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 a range from 180 billion to 184 billion gallons throughout the lives of light duty vehicles sold in MYs 2017–2025. At a 3 percent discount rate, the present value of the economic benefits resulting from those fuel savings is between $513 billion and $525 billion; at a 7 percent private discount rate, the present value of the economic benefits resulting from those fuel savings is between $400 billion and $409 billion. The agency further estimates that these new CAFE standards will lead to corresponding reductions in CO2 emissions totaling 1.9 billion metric tons during the lives of light duty vehicles sold in MYs 2017–2025. The present value of the economic benefits from avoiding those emissions is approximately $53 billion, based on a global social cost of carbon value of about $26 per metric ton (in 2017, and growing thereafter).99 All costs are in 2010 dollars. Accounting for compliance flexibilities reduces the fuel savings achieved by the standards, as manufacturers are able to comply through credit mechanisms that reduce the amount of fuel economy technology that must be added to new vehicles in order to meet the targets set by the standards. NHTSA estimates that the fuel economy increases would lead to fuel savings totaling about 170 billion gallons throughout the lives of light duty vehicles sold in MYs 2017–2025, when compliance flexibilities are considered. At a 3 percent discount rate, the present value of the economic benefits resulting from those fuel savings is between $481 billion and $488 billion; at a 7 percent private discount rate, the present value of the economic benefits resulting from those fuel savings is between $375 billion and $380 billion. The agency further estimates that these new CAFE standards will lead to corresponding reductions in CO2 emissions totaling 1.8 billion metric tons during the lives of light duty vehicles sold in MYs 2017– 2025. The present value of the economic benefits from avoiding those emissions is approximately $49 billion, based on a global social cost of carbon value of about $26 per metric ton (in 2017, and growing thereafter). TABLE I–7—NHTSA’S ESTIMATED MYS 2017–2025 COSTS, BENEFITS, AND NET BENEFITS ($BILLION) UNDER THE CAFE STANDARDS (ESTIMATED ACHIEVED) Totals Baseline Fleet 3% Discount rate Annualized 7% Discount rate 3% Discount rate 7% Discount rate Cumulative for MYs 2017–2021 Final Standards Costs .................................................................................... sroberts on DSK5SPTVN1PROD with Benefits ................................................................................ Net Benefits ......................................................................... 99 NHTSA also estimated the benefits associated with three more estimates of a one ton GHG VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 2010 2008 2010 2008 2010 2008 ($61)– ($57) $243– $240 $183– $184 reduction in 2017 ($6, $41, and $79), which will PO 00000 Frm 00034 Fmt 4701 Sfmt 4700 ($58)– ($54) $195– $194 $137– $141 ($2.4)– ($2.2) $9.2– $9.0 $6.8– $6.8 ($3.6)– ($3.3) $11.3– $11.0 $7.7– $7.8 likewise grow thereafter. See Section II.E for a more detailed discussion of the social cost of carbon. E:\FR\FM\15OCR2.SGM 15OCR2 62657 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations TABLE I–7—NHTSA’S ESTIMATED MYS 2017–2025 COSTS, BENEFITS, AND NET BENEFITS ($BILLION) UNDER THE CAFE STANDARDS (ESTIMATED ACHIEVED)—Continued Totals Baseline Fleet 3% Discount rate Annualized 7% Discount rate 3% Discount rate 7% Discount rate Cumulative for MYs 2017–2025 (Includes MYs 2022–2025 Augural Standards) Costs .................................................................................... 2010 2008 2010 2008 2010 2008 Benefits ................................................................................ Net Benefits ......................................................................... ($154)– ($156) $629– $639 $476– $483 ($147)– ($148) $502– $510 $356– $362 ($5.4)– ($5.4) $21.0– $21.3 $15.7– $15.9 ($7.6)– ($7.5) $24.2– $24.4 $16.7– $16.9 TABLE I–8—NHTSA’S ESTIMATED FUEL SAVED (BILLION GALLONS AND BARRELS) AND CO2 EMISSIONS AVOIDED (MMT) UNDER THE CAFE STANDARDS (ESTIMATED REQUIRED) MY baseline Passenger Cars: Fuel (b. gallons) ..................... Fuel (b. barrels) ..................... CO2 (mmt) .............................. Light Trucks: Fuel (b. gallons) ..................... Fuel (b. barrels) ..................... CO2 (mmt) .............................. Combined Fuel (b. gallons) ..................... Fuel (b. barrels) ..................... CO2 (mmt) .............................. Earlier 2017 2018 2019 2020 2021 Total through 2021 2022 2023 2024 2025 Total through 2025 2008 2010 2008 2010 2008 2010 5.3– 7.7 0.1– 0.2 58.1– 83.9 2.8– 3.6 0.1– 0.1 31.0– 39.5 5.3– 5.3 0.1– 0.1 58.1– 57.2 7.7– 8.3 0.2– 0.2 84.0– 90.1 10.9– 10.8 0.3– 0.3 116.9– 117.4 13.0– 13.0 0.3– 0.3 139.9– 140.9 45.0– 48.7 1.1– 1.2 488.0– 529.0 14.4– 14.3 0.3– 0.3 155.5– 155.8 15.8– 16.2 0.4– 0.4 171.0– 176.3 18.0– 18.3 0.4– 0.4 192.7– 198.5 19.7– 20.0 0.5– 0.5 210.9– 216.4 112.9– 117.4 2.7– 2.8 1,218.2– 1,275.9 2008 2010 2008 2010 2008 2010 0.5– 0.9 0.0– 0.0 5.8– 10.1 1.0– 0.8 0.0– 0.0 11.1– 8.6 2.5– 1.5 0.1– 0.0 26.8– 16.1 4.8– 3.7 0.1– 0.1 52.1– 39.9 6.8– 5.6 0.2– 0.1 74.0– 60.1 9.4– 8.2 0.2– 0.2 102.1– 87.8 25.0– 20.7 0.6– 0.4 271.9– 222.6 10.3– 8.9 0.2– 0.2 112.1– 95.8 10.9– 10.0 0.3– 0.2 118.6– 107.5 11.8– 11.1 0.3– 0.3 128.5– 119.9 12.7– 12.1 0.3– 0.3 138.0– 130.8 70.7– 62.9 1.7– 1.5 769.1– 676.6 2008 2010 2008 2010 2008 2010 5.9– 8.6 0.1– 0.2 63.9– 93.9 3.9– 4.4 0.1– 0.1 42.1– 48.1 7.8– 6.7 0.2– 0.2 84.9– 73.3 12.5– 12.0 0.3– 0.3 136.1– 130.0 17.7– 16.4 0.4– 0.4 191.0– 177.5 22.3– 21.1 0.5– 0.5 242.0– 228.6 70.1– 69.2 1.6– 1.7 760.0– 751.4 24.7– 23.2 0.6– 0.6 267.7– 251.6 26.7– 26.2 0.6– 0.6 289.6– 283.9 29.8– 29.5 0.7– 0.7 321.2– 318.4 32.4– 32.1 0.8– 0.8 348.9– 347.2 183.5– 180.3 4.4– 4.3 1,987.3– 1,952.5 Considering manufacturers’ ability to employ compliance flexibilities and advanced technologies for meeting the standards, NHTSA estimates the following for fuel savings and avoided CO2 emissions, assuming FFV credits will be used toward both the baseline and final standards: TABLE I–9—NHTSA’S ESTIMATED FUEL SAVED (BILLION GALLONS AND BARRELS) AND CO2 EMISSIONS AVOIDED (MMT) UNDER THE CAFE STANDARDS (ESTIMATED ACHIEVED) MY baseline Passenger Cars: Fuel (b. gallons) ..................... Fuel (b. barrels) ..................... CO2 (mmt) .............................. Light Trucks: Fuel (b. gallons) ..................... Fuel (b. barrels) ..................... sroberts on DSK5SPTVN1PROD with CO2 (mmt) .............................. Combined Fuel (b. gallons) ..................... Fuel (b. barrels) ..................... CO2 (mmt) .............................. VerDate Mar<15>2010 23:11 Oct 12, 2012 Earlier 2017 2018 2019 2020 2021 Total through 2021 2022 2023 2024 2025 Total through 2025 2008 2010 2008 2010 2008 2010 5.5– 6.1 0.1– 0.1 59.9– 66.5 2.9– 3.5 0.1– 0.1 32.2– 38.7 5.1– 5.1 0.1– 0.1 55.1– 55.6 7.5– 7.8 0.2– 0.2 81.5– 85.3 10.3– 9.7 0.2– 0.2 111.7– 105.4 12.0– 12.0 0.3– 0.3 130.6– 130.4 43.3– 44.2 1.0– 1.0 471.0– 481.9 13.7– 13.2 0.3– 0.3 148.8– 143.7 14.9– 15.0 0.4– 0.4 161.2– 162.9 16.8– 17.1 0.4– 0.4 180.8– 185.4 18.5– 18.2 0.4– 0.4 196.6– 196.9 107.3– 107.7 2.6– 2.6 1,158.3– 1,170.7 2008 2010 2008 2010 2008 2010 0.8– 2.0 0.0– 0.0 8.1– 22.2 1.0– 1.2 0.0– 0.0 10.4– 13.3 2.2– 1.6 0.1– 0.0 24.1– 17.8 4.1– 4.2 0.1– 0.1 44.5– 45.6 5.9– 5.6 0.1– 0.1 63.9– 60.2 7.9– 7.7 0.2– 0.2 86.4– 82.4 21.9– 22.3 0.5– 0.4 237.4– 241.5 9.0– 8.4 0.2– 0.2 97.9– 90.5 9.6– 9.5 0.2– 0.2 104.7– 101.8 10.7– 10.4 0.3– 0.2 116.2– 112.3 11.8– 10.7 0.3– 0.3 128.3– 115.5 62.8– 61.5 1.5– 1.5 684.5– 661.5 2008 2010 2008 2010 2008 2010 6.3– 8.1 0.1– 0.2 68.0– 88.7 3.9– 4.8 0.1– 0.1 42.6– 51.9 7.3– 6.7 0.2– 0.2 79.2– 73.5 11.6– 12.0 0.3– 0.3 126.0– 130.9 16.2– 15.2 0.4– 0.4 175.5– 165.5 20.0– 19.7 0.5– 0.5 216.9– 212.8 65.3– 66.5 1.6– 1.7 708.2– 723.3 22.7– 21.6 0.5– 0.5 246.6– 234.2 24.5– 24.5 0.6– 0.6 265.9– 264.7 27.4– 27.5 0.7– 0.7 296.9– 297.6 30.3– 28.9 0.7– 0.7 324.9– 312.4 170.1– 169.2 4.0– 4.0 1,842.7– 1,832.2 Jkt 229001 PO 00000 Frm 00035 Fmt 4701 Sfmt 4700 E:\FR\FM\15OCR2.SGM 15OCR2 62658 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations NHTSA estimates that the fuel economy increases resulting from the standards will 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),100 as well as some disbenefits (e.g., increased traffic congestion) caused by 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 standards will produce significant net benefits to society. Using a 3 percent discount rate, NHTSA estimates that the present value of these net benefits will range from $498 billion to $507 billion over the lives of the vehicles sold during MYs 2017–2025; using a 7 percent discount rate a narrower range from $372 billion to $377 billion. More discussion regarding monetized benefits can be found in Section IV of this preamble and in NHTSA’s FRIA. Note that the benefit calculation in the following tables includes the benefits of reducing CO2 emissions,101 but not the benefits of reducing other GHG emissions (those have been addressed in a sensitivity analysis discussed in Section IV of this preamble and in NHTSA’s FRIA). TABLE I–10 NHTSA’S DISCOUNTED BENEFITS ($BILLION) UNDER THE CAFE STANDARDS USING A 3 AND 7 PERCENT DISCOUNT RATE (ESTIMATED REQUIRED) MY baseline 2017 2018 2019 2020 2021 Total through 2021 2022 2023 2024 2025 Total through 2025 19.2– 27.5 1.9– 3.3 21.1– 30.8 10.4– 13.2 3.7– 2.8 14.1– 16.0 19.6– 19.3 8.9– 5.3 28.5– 24.5 28.6– 30.5 17.3– 13.1 45.9– 43.6 40.2– 40.1 24.8– 19.9 65.0– 60.0 48.4– 48.5 34.4– 29.4 82.8– 77.9 166.4– 179.1 91.0– 73.8 257.4– 252.8 54.2– 54.0 38.1– 32.4 92.3– 86.4 60.1– 61.6 40.7– 36.7 100.7– 98.3 68.6– 70.1 44.5– 41.3 113.1– 111.3 75.9– 77.0 48.3– 45.6 124.2– 122.5 425.3– 441.9 262.6– 229.9 687.5– 671.4 15.3– 22.0 1.5– 2.6 16.8– 24.7 8.3– 10.6 2.9– 2.2 11.2– 12.8 15.7– 15.5 7.0– 4.2 22.7– 19.6 22.9– 24.5 13.7– 10.4 36.6– 34.8 32.2– 32.1 19.7– 15.8 51.9– 47.9 38.8– 38.9 27.3– 23.4 66.0– 62.2 133.2– 143.6 72.1– 58.6 205.2– 202.0 43.4– 43.3 30.2– 25.7 73.6– 69.0 48.2– 49.4 32.3– 29.1 80.4– 78.4 55.0– 56.2 35.3– 32.8 90.3– 88.8 60.8– 61.7 38.3– 36.1 99.1– 97.8 340.7– 354.1 208.2– 182.3 548.6– 536.0 Earlier 3% discount rate Passenger cars ................................. 2008 2010 2008 2010 2008 2010 Light trucks ....................................... Combined .......................................... 7% discount rate Passenger cars ................................. 2008 2010 2008 2010 2008 2010 Light trucks ....................................... Combined .......................................... Considering manufacturers’ ability to employ compliance flexibilities and advanced technologies for meeting the standards, NHTSA estimates the present value of these benefits will be reduced as follows: TABLE I–11 NHTSA’S DISCOUNTED BENEFITS ($BILLION) UNDER THE CAFE STANDARDS USING A 3 AND 7 PERCENT DISCOUNT RATE (ESTIMATED ACHIEVED) MY baseline Earlier 2017 2018 2019 2020 2021 Total through 2021 2022 2023 2024 2025 Total through 2025 45.2– .. 44.9 .... 29.2– .. 27.6 .... 74.4– .. 72.4 .... 160.6– 163.2. 79.6– 80.0. 239.9– 242.9. 51.9– .. 49.9 .... 33.4– .. 30.6 .... 85.2– .. 80.3 .... 56.8– .. 57.0 .... 36.0– .. 34.7 .... 92.7– .. 91.6 .... 64.4– .. 65.4 .... 40.3– .. 38.7 .... 104.6– 104.0 .. 71.1– .. 70.2 .... 44.8– .. 40.2 .... 115.9– 110.2 .. 404.8– 405.6 234.2– 224.1 638.5– 629.1 36.2– .. 36.0 .... 23.2– .. 21.9 .... 59.4– .. 57.8 .... 128.8– 130.6. 63.2– 63.5. 191.8– 194.0. 41.6– .. 40.0 .... 26.5– .. 24.3 .... 68.0– .. 64.1 .... 45.5– .. 45.7 .... 28.6– .. 27.5 .... 74.0– .. 73.1 .... 51.6– .. 52.5 .... 32.0– .. 30.7 .... 83.5– .. 83.0 .... 57.0– .. 56.2 .... 35.5– .. 31.8 .... 92.5– .. 88.0 .... 324.3– 325.0 185.7– 177.7 509.7– 502.2 3% discount rate Passenger cars ............................. Light trucks ................................... Combined ...................................... 2008 2010 2008 2010 2008 2010 ... ... ... ... ... ... 19.7– .. 21.8 .... 2.7– .... 7.2 ...... 22.4– .. 29.0 .... 10.8– .. 12.9 .... 3.4– .... 4.4 ...... 14.2– .. 17.3 .... 18.7– .. 18.7 .... 8.0– .... 5.9 ...... 26.6– .. 24.6 .... 27.8– .. 28.9 .... 14.8– .. 15.0 .... 42.5– .. 43.8 .... 38.4– .. 36.0 .... 21.5– .. 19.9 .... 59.8– .. 55.8 .... 7% discount rate Passenger cars ............................. Light trucks ................................... Combined ...................................... 2008 2010 2008 2010 2008 2010 ... ... ... ... ... ... 15.8– .. 17.4 .... 2.1– .... 5.7 ...... 17.9– .. 23.2 .... 8.7– .... 10.3 .... 2.7– .... 3.5 ...... 11.4– .. 13.8 .... 15.0– .. 15.0 .... 6.3– .... 4.7 ...... 21.3– .. 19.6 .... 22.3– .. 23.1 .... 11.8– .. 11.9 .... 34.0– .. 35.0 .... 30.8– .. 28.8 .... 17.1– .. 15.8 .... 47.8– .. 44.6 .... sroberts on DSK5SPTVN1PROD with NHTSA attributes most of these benefits (between $513 billion and $525 billion at a 3 percent discount rate, or between $400 billion and $409 billion at a 7 percent discount rate, excluding consideration of compliance 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 Information Administration’s (EIA) reference case 100 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 its RIA. 101 CO benefits for purposes of these tables are 2 calculated using the $26/ton SCC value. 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. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 PO 00000 Frm 00036 Fmt 4701 Sfmt 4700 E:\FR\FM\15OCR2.SGM 15OCR2 62659 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations forecast from the Annual Energy Outlook (AEO) 2012. NHTSA’s RIA accompanying this rulemaking presents a detailed analysis of specific benefits of the rule. TABLE I–12—SUMMARY OF NHTSA’S FUEL SAVINGS AND CO2 EMISSIONS REDUCTION UNDER THE CAFE STANDARDS (ESTIMATED REQUIRED) MY baseline 2017–2021 standards: Fuel savings (billion gallons) .................................................................... 7% discount rate 2008 2010 2008 2010 2017–2025 standards: Fuel savings (billion gallons) .................................................................... CO2 emissions reductions (million metric tons) ....................................... 70.1 – 69.2 760 – 751.40 $196 – $193 $19.3 – $19 $153 – $151 $19.3 – $19 2008 2010 2008 2010 CO2 emissions reductions (million metric tons) ....................................... NHTSA estimates that the increases in technology application necessary to achieve the projected improvements in fuel economy will entail considerable 3% discount rate Amount 183.5 – 180.3 1,987 – 1,953 $525 – $513 $53 – $52 $409 – $400 $53 – $52 monetary outlays. The agency estimates that the incremental costs for achieving the CAFE standards—that is, outlays by vehicle manufacturers over and above those required to comply with the MY 2016 CAFE standards—will total between about $134 billion and $140 billion. TABLE I–13—NHTSA’S INCREMENTAL TECHNOLOGY OUTLAYS ($BILLION) UNDER THE CAFE STANDARDS (ESTIMATED REQUIRED) MY baseline Passenger cars ................ Light trucks ....................... Combined ......................... Earlier 2008 2010 2008 2010 2008 2010 3.9 7.7 0.1 1.1 4.0 8.7 ....... ....... ....... ....... ....... ....... 2017 – ... ...... – ... ...... – ... ...... 2.3 3.6 0.4 0.8 2.8 4.4 However, NHTSA estimates that manufacturers employing compliance flexibilities and advanced technologies – ... ...... – ... ...... – ... ...... 2018 4.3 4.8 1.1 1.1 5.4 5.8 – ... ...... – ... ...... – ... ...... 2019 6.1 6.5 2.3 2.2 8.4 8.7 – ... ...... – ... ...... – ... ...... 2020 2021 9.4 – ... 8.5 ...... 3.4 – ... 3.4 ...... 12.8 – 11.9 .... 11.7 – 9.9 ...... 4.8 – ... 4.9 ...... 16.5 – 14.9 .... Total through 2021 37.7 41.0 12.1 13.5 49.9 54.4 – .... – .... – .... 2022 2023 2024 2025 13.1 – ..... 11.0 ........ 5.4 – ....... 5.1 .......... 18.5 – ..... 16.1 ........ 14.6 – 12.4 .... 5.6 – ... 5.7 ...... 20.2 – 18.1 .... 18.8 – 15.5 .... 6.1 – ... 6.2 ...... 24.9 – 21.7 .... 20.2 – 16.7 .... 6.6 – ... 6.6 ...... 26.8 – 23.3 .... Total through 2025 104.4 – 96.6 35.9 – 37.1 140.3 – 133.7 to meet the standards can significantly reduce these outlays: TABLE I–14—NHTSA’S INCREMENTAL TECHNOLOGY OUTLAYS ($BILLION) UNDER THE CAFE STANDARDS (ESTIMATED ACHIEVED) MY baseline Passenger cars ................ Light trucks ....................... Combined ......................... Earlier 2008 2010 2008 2010 2008 2010 3.3 4.6 0.4 1.6 3.7 6.2 ....... ....... ....... ....... ....... ....... 2017 – ... ...... – ... ...... – ... ...... 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 2.0 2.8 0.5 0.9 2.5 3.7 – ... ...... – ... ...... – ... ...... 2018 3.6 4.2 1.0 1.0 4.6 5.2 – ... ...... – ... ...... – ... ...... 2019 5.5 6.0 1.8 2.3 7.3 8.3 – ... ...... – ... ...... – ... ...... 2020 2021 Total through 2021 2022 2023 2024 2025 8.5 – ... 7.6 ...... 2.6 – ... 3.2 ...... 11.1 – 10.8 .... 10.6 – 9.4 ...... 3.6 – ... 4.7 ...... 14.2 – 14.0 .... 33.5 – 34.6 .... 9.9 – ... 13.7 .... 43.4 – 48.2 .... 12.2 – ..... 10.3 ........ 4.2 – ....... 4.9 .......... 16.4 – ..... 15.3 ........ 13.2 – 11.5 .... 4.5 – ... 5.4 ...... 17.8 – 16.9 .... 15.6 – 13.9 .... 5.0 – ... 5.8 ...... 20.6 – 19.7 .... 17.5 – 14.4 .... 5.8 – ... 5.7 ...... 23.3 – 20.0 .... 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 will lead to increase Total through 2025 91.9 – 84.6 29.5 – 35.5 121.4 – 120.1 in average new vehicle prices ranging from $183 to $287 per vehicle in MY 2017 to between $1,461 and $1,616 per vehicle in MY 2025: sroberts on DSK5SPTVN1PROD with TABLE I–15—NHTSA’S INCREMENTAL INCREASES IN AVERAGE NEW VEHICLE COSTS ($) UNDER THE CAFE STANDARDS (ESTIMATED REQUIRED) MY baseline Passenger cars ......................................................... VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 PO 00000 2017 2018 2019 2020 2021 2022 2023 2024 2025 2008 ..... 244 – 455 – 631 – 930 – 1,143 –. 1,272 –. 1,394 –. 1,751 –. 1,827 – Fmt 4701 Sfmt 4700 Frm 00037 E:\FR\FM\15OCR2.SGM 15OCR2 62660 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations TABLE I–15—NHTSA’S INCREMENTAL INCREASES IN AVERAGE NEW VEHICLE COSTS ($) UNDER THE CAFE STANDARDS (ESTIMATED REQUIRED)—Continued MY baseline 2017 2018 2019 2020 2021 2022 2023 2024 2025 Light trucks ............................................................... 2010 ..... 2008 ..... 364 ... 78 – .. 484 ... 192 – 659 ... 423 – 858 ... 622 – 994 ... 854 – 1,091 951 – 1,221 997 – Combined ................................................................. 2010 ..... 2008 ..... 147 ... 183 – 196 ... 360 – 397 ... 557 – 629 ... 823 – 2010 ..... 287 ... 382 ... 567 ... 779 ... 908 ... 1,043 –. 964 ... 948 ... 1,162 –. 1,042 1,056 1,259 –. 1,165 1,482 1,081 –. 1,148 1,528 –. 1,370 1,578 1,183 – 1,226 1,616 – 1,461 And as before, NHTSA estimates that manufacturers employing compliance flexibilities and advance technologies to meet the standards will significantly reduce these increases. TABLE I–16—NHTSA’S INCREMENTAL INCREASES IN AVERAGE NEW VEHICLE COSTS ($) UNDER THE CAFE STANDARDS (ESTIMATED ACHIEVED) MY baseline Passenger cars ......................................................... Light trucks ............................................................... Combined ................................................................. sroberts on DSK5SPTVN1PROD with Despite estimated increases in average vehicle prices of between $183 to $287 per vehicle in MY 2017 to between $1,461 and $1,616 per vehicle in MY 2025, NHTSA estimates that discounted fuel savings over the vehicles’ lifetimes will be sufficient to offset initial costs. Even discounted at 7%, lifetime fuel VerDate Mar<15>2010 01:07 Oct 13, 2012 Jkt 229001 2008 2010 2008 2010 2008 2010 ..... ..... ..... ..... ..... ..... 2017 2018 2019 2020 2021 2022 2023 2024 2025 208– 284 ... 87– ... 158 ... 164– 239 ... 377– 424 ... 179– 187 ... 306– 340 ... 571– 603 ... 331– 416 ... 486– 537 ... 837– 762 ... 470– 596 ... 709– 704 ... 1,034– 934 ... 648– 863 ... 900– 909 ... 1,168– 1,024 752– 911 ... 1,025– 985 ... 1,255– 1,129 808– 1,000 1,104– 1,085 1,440– 1,328 888– 1,081 1,256– 1,245 1,577– 1,361 1,040– 1,047 1,400– 1,257 savings are estimated to be more than 2.5 times the incremental price increase induced by manufacturers’ compliance with the standards. Although NHTSA estimates lifetime fuel cost savings using 3% and 7% discount rates based on OMB guidance, it is possible that consumers use different discount rates PO 00000 Frm 00038 Fmt 4701 Sfmt 4700 when valuing fuel savings, or value savings over a period of time shorter than the vehicle’s full useful life. A more nuanced discussion of consumer valuation of fuel savings appears in Section IV.G.6. E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 compliance flexibilities reduces savings in lifetime fuel expenditures due to PO 00000 Frm 00039 Fmt 4701 Sfmt 4700 lower levels of achieved fuel economy than are required under the standards. E:\FR\FM\15OCR2.SGM 15OCR2 ER15OC12.006</GPH> sroberts on DSK5SPTVN1PROD with As is the case with technology costs, accounting for the program’s 62661 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations The CAFE standards are projected to produce net benefits in a range from $498 billion to $507 billion at a 3 percent discount rate (a range of $476 billion to $483 billion, with compliance flexibilities), or between $372 billion and $377 billion at a 7 percent discount rate (a range of $356 billion to $362 billion, with compliance flexibilities), over the useful lives of the light duty vehicles sold during MYs 2017–2025. While the estimated incremental technology outlays and incremental increases in average vehicle costs for the final MYs 2017–2021 standards in today’s analysis are similar to the estimates in the proposal, we note for the reader’s reference that the incremental cost estimates for the augural standards in MYs 2022–2025 are lower than in the proposal. The lower costs in those later model years result from the updated analysis used in this final rule. In MY 2021, the VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 estimated incremental technology outlays for the combined fleet range from $14.9 billion to $16.5 billion as compared to $17 billion in the proposal, while the estimated incremental increases in average vehicle costs range from $964 to $1,043, as compared to $1,104 in the proposal. In MY 2025, the estimated incremental technology outlays for the combined fleet range from $23.3 billion to $26.8 billion, as compared to $32.4 billion in the proposal, while the estimated incremental increases in average vehicle costs range from $1,461 to $1,616, as compared to $1,988 in the proposal. The changes in the MY 2025 incremental costs reflect the combined result of a number of changes and corrections to the CAFE model and inputs, including (but not limited to) the following items: • Focused corrections were made to the MY2008-based market forecast; PO 00000 Frm 00040 Fmt 4701 Sfmt 4700 • A new MY2010-based market forecast was introduced; • Mild HEV technology and off-cycle technologies are now available in the analysis; • The amount of mass reduction applied in the analysis 102 has changed; • The effectiveness of advanced transmissions when applied to conventional naturally aspirated engines has been revised based on a study completed by Argonne National Laboratory for NHTSA; • Estimates of future fuel prices were updated; • The model was corrected to ensure that post-purchase fuel prices are 102 The agencies limited the maximum amount of mass reduction technology that was applied to lighter vehicles in order that the analysis would show a way manufacturers could comply with the standards while maintaining overall societal safety. to demonstrate a path that industry could use to meet standards while maintaining societal safety E:\FR\FM\15OCR2.SGM 15OCR2 ER15OC12.007</GPH> sroberts on DSK5SPTVN1PROD with 62662 sroberts on DSK5SPTVN1PROD with Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations applied when calculating the effective cost of available options to add technologies to specific vehicle models; and • The model was corrected to ensure that the incremental costs and fuel savings are fully accounted for when applying diesel engines. These changes to the model and inputs are discussed in detail in Sections II.G, IV.C.2, and IV.C.4 of the preamble; Chapter V of NHTSA’s FRIA, and Chapters 3 and 4 of the joint TSD. Acting together, these changes and corrections caused technology costs attributable to the baseline MYs 2009– 2016 CAFE standards to increase for both fleets in most model years. In addition, the changes and corrections had the combined effect of reducing the total technology costs (i.e., including technology attributable to the baseline standards) in MYs 2022–2025, when greater levels of fuel economyimproving technologies would be required to comply with the augural standards. Because today’s analysis applies these changes simultaneously, and because they likely interact in ways that would complicate attribution of impact, the agency has not attempted to quantify the extent to which each change impacted results. The combined effect of the increase in the baseline technology costs and reduction in the total technology costs in MYs 2022– 2025 led to a reduction in the estimated incremental technology cost in MYs 2022–2025 in NHTSA’s analysis, although estimated incremental technology costs were higher than or very similar to those reported in the NPRM for model years prior to MY 2022. While the incremental costs for MYs 2022–2025 are lower than in the NPRM, the total estimated costs for compliance (inclusive of baseline costs) were reduced to a lesser extent. In assessing the appropriate level for maximum feasible standards, NHTSA takes into consideration a number of factors, including technological feasibility, economic practicability (which includes the consideration of cost as well as many other factors), the effect of other motor vehicle standards of the Government on fuel economy, the need of the United States to conserve energy, and safety, as well as other factors. Considering all of these factors, NHTSA continues to believe that the final standards are maximum feasible, as discussed below in Section IV.F. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 2. Summary of Costs and Benefits for the EPA’s GHG Standards EPA has analyzed in detail the projected costs and benefits of the 2017– 2025 GHG standards for light-duty vehicles. Table I–19 shows EPA’s estimated lifetime discounted cost, fuel savings, and benefits for all such vehicles projected to be sold in model years 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 particulate matter-related health benefits (including premature mortality), the value of additional driving attributed to the VMT rebound effect, the value of reduced refueling time needed to fill up a more fuel efficient vehicle. The analysis also includes estimates of economic impacts stemming from additional vehicle use, such as the economic damages caused by accidents, congestion and noise (from increased VMT rebound driving). TABLE I–19—EPA’S ESTIMATED 2017–2025 MODEL YEAR LIFETIME DISCOUNTED COSTS, BENEFITS, AND NET BENEFITS ASSUMING THE 3% DISCOUNT RATE SCC VALUE a b c [Billions of 2010 dollars] Lifetime Present Value d—3% Discount Rate Program Costs ...................... Fuel Savings ......................... Benefits ................................. Net Benefitsd ........................ ¥$150 475 126 451 Annualized Value f—3% Discount Rate Annualized costs .................. Annualized fuel savings ........ Annualized benefits .............. Net benefits .......................... ¥6.49 20.5 5.46 19.5 Annualized fuel savings ........ Annualized benefits .............. 62663 TABLE I–19—EPA’S ESTIMATED 2017–2025 MODEL YEAR LIFETIME DISCOUNTED COSTS, BENEFITS, AND NET BENEFITS ASSUMING THE 3% DISCOUNT RATE SCC VALUE a b c— Continued [Billions of 2010 dollars] Net benefits .......................... 24.4 Notes: a The agencies estimated the benefits associated with four different values of a one ton CO2 reduction (model average at 2.5% discount rate, 3%, and 5%; 95th percentile at 3%), which each increase over time. For the purposes of this overview presentation of estimated costs and benefits, however, we are showing the benefits associated with the marginal value deemed to be central by the interagency working group on this topic: the model average at 3% discount rate, in 2010 dollars. Section III.H provides a complete list of values for the 4 estimates. b Note that net present value of reduced GHG emissions is calculated differently than 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. Refer to Section III.H for more detail. c Projected results using 2008 based fleet projection analysis. d Present value is the total, aggregated amount that a series of monetized costs or benefits that occur over time is worth in a given year. For this analysis, lifetime present values are calculated for the first year of each model year for MYs 2017–2025 (in year 2010 dollar terms). The lifetime present values shown here are the present values of each MY in its first year summed across MYs. e Net benefits reflect the fuel savings plus benefits minus costs. f The annualized value is the constant annual value through a given time period (the lifetime of each MY in this analysis) whose summed present value equals the present value from which it was derived. Annualized SCC values are calculated using the same rate as that used to determine the SCC value, while all other costs and benefits are annualized at either 3% or 7%. 27.3 7.96 Table I–20 shows EPA’s estimated lifetime fuel savings and CO2 equivalent emission reductions for all light-duty Lifetime Present Value d—7% Discount vehicles sold in the model years 2017– Rate 2025. The values in Table I–20 are Program Costs ...................... ¥144 projected lifetime totals for each model Fuel Savings ......................... 364 year and are not discounted. As Benefits ................................. 106 documented in EPA’s RIA, the potential Net Benefits e ........................ 326 credit transfer between cars and trucks may change the distribution of the fuel Annualized Value f—7% Discount Rate savings and GHG emission impacts Annualized costs .................. ¥10.8 between cars and trucks. PO 00000 Frm 00041 Fmt 4701 Sfmt 4700 E:\FR\FM\15OCR2.SGM 15OCR2 62664 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations TABLE I–20—EPA’S ESTIMATED 2017–2025 MODEL YEAR LIFETIME FUEL SAVED AND GHG EMISSIONS AVOIDED (PRIMARY ANALYSIS) a 2017 MY Cars: Fuel (billion gallons) .................. Fuel (billion barrels) .................. CO2 EQ (mmt) .......................... Light Trucks: Fuel (billion gallons) .................. Fuel (billion barrels) .................. CO2 EQ (mmt) .......................... Combined: Fuel (billion gallons) .................. Fuel (billion barrels) .................. CO2 EQ (mmt) .......................... a Projected 2018 MY 2019 MY 2020 MY 2021 MY 2022 MY 2023 MY 2024 MY 2025 MY 2.4 0.06 29.7 4.5 0.11 55.7 6.8 0.16 83.0 9.3 0.22 113 11.9 0.28 146 14.8 0.35 178 17.4 0.41 207 20.2 0.48 238 23.0 0.55 269 110.3 2.63 1,319 0.1 0.00 0.8 1.0 0.02 13.9 1.7 0.04 24.6 2.6 0.06 36 5.5 0.13 70 7.5 0.18 92 9.4 0.22 113 11.3 0.27 134 13.1 0.31 154 52.2 1.24 638 2.5 0.06 30.5 5.5 0.13 69.6 8.5 0.20 108 11.9 0.28 149 17.4 0.41 216 22.3 0.53 270 26.8 0.64 320 31.5 0.75 371 36.2 0.86 423 Total 162.5 3.87 1,956 results using 2008 based fleet projection analysis. Table I–21 shows EPA’s estimated lifetime discounted benefits for all lightduty vehicles sold in model years 2017– 2025. Although EPA estimated the benefits associated with four different values of a one ton CO2 reduction ($6, $26, $41, $79 in CY 2017 and in 2010 dollars, see Section III.H), for the purposes of this overview presentation of estimated benefits EPA is showing the benefits associated with one of these marginal values, $26 per ton of CO2, in 2010 dollars and 2017 emissions. The values in Table I–21 are discounted values for each model year of vehicles throughout their projected lifetimes. The estimated benefits include GHG reductions, particulate matter-related health impacts (including premature mortality), energy security, reduced refueling time and additional driving as well as the impacts of accidents, congestion and noise from VMT rebound driving. The values in Table I– 21 do not include costs associated with new technology projected to be needed to meet the GHG standards and they do not include the fuel savings expected from that technology. TABLE I–21—EPA’S ESTIMATED 2017–2025 MODEL YEAR LIFETIME DISCOUNTED BENEFITS ASSUMING THE $26/TON SCC VALUE a b c d [Billions of 2010 dollars] Model year Discount rate 2017 3% ............................ 7% ............................ 2018 $1.81 $1.52 2019 $4.05 $3.41 $6.37 $5.35 2020 $9.0 $7.6 2021 $13.4 $11.3 2022 $17.3 $14.6 2023 2024 $20.9 $17.6 $24.7 $20.8 2025 $28.6 $24.1 Sum of Present Values $126 $106 a Note that net present value of reduced CO emissions is calculated differently than other benefits. The same discount rate used to discount 2 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. The estimates in this table are based on the average SCC at a 3 percent discount rate. Refer to Section III.H.6 for more detail. b As noted in Section III.H.6, the $26/ton (2010$) value applies to 2017 emissions and grows larger over time. The estimates in this table include monetized benefits for CO2 impacts but exclude the monetized benefits of impacts on non-CO2 GHG emissions (HFC, CH4, N2O). EPA has instead conducted a sensitivity analysis of the final rule’s monetized non-CO2 GHG impacts in section III.H.6. c Model year values are discounted to the first year of each model year; the ‘‘Sum’’ represents those discounted values summed across model years. d Projected results using 2008 based fleet projection analysis. sroberts on DSK5SPTVN1PROD with Table I–22 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 light-duty vehicles sold in the model VerDate Mar<15>2010 01:07 Oct 13, 2012 Jkt 229001 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–22 are totals for the nine model years throughout these vehicles’ projected lifetime and are not discounted. The monetized values shown in Table I–22 are the summed PO 00000 Frm 00042 Fmt 4701 Sfmt 4700 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–22 reflect both a 3 percent and a 7 percent discount rate as noted. E:\FR\FM\15OCR2.SGM 15OCR2 62665 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations TABLE I–22—EPA’S ESTIMATED 2017–2025 MODEL YEAR LIFETIME FUEL SAVINGS, CO2 EMISSION REDUCTIONS, AND DISCOUNTED MONETIZED SCC BENEFITS USING THE $26/TON SCC VALUE a,b,c [Monetized values in 2010 dollars] $ value (billions) Amount Fuel savings (3% discount rate) ................................................. $475 Fuel savings (7% discount rate) ................................................. 163 billion gallons ...................................................................... (3.9 billion barrels) ..................................................................... 163 billion gallons ...................................................................... (3.9 billion barrels) ..................................................................... CO2e emission reductions (CO2 portion valued assuming $22/ton CO2 in 2010) ................ 1,956 MMT CO2e ....................................................................... a, b $46.6 $364 a $46.6 billion for 1,747 MMT of reduced CO2 emissions. As noted in Section III.H.6, the $26/ton (2010$) value applies to 2017 emissions and grows larger over time. The estimates in this table include monetized benefits for CO2 impacts but exclude the monetized benefits of impacts on non-CO2 GHG emissions (HFC, CH4, N2O). EPA has instead conducted a sensitivity analysis of the final rule’s monetized non-CO2 GHG impacts in section III.H.6. b Note that net present value of reduced CO emissions is calculated differently than other benefits. The same discount rate used to discount 2 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. The estimates in this table are based on one of four SCC estimates (average SCC at a 3 percent discount rate). Refer to Section III.H.6 for more detail. c Projected results using 2008 based fleet projection analysis. Table I–23 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 are for the industry as a whole and do not account for fuel savings associated with the program. Also, the technology outlays shown in Table I–21 do not include the estimated maintenance costs which are included in the program costs presented in Table I–19. Table I–24 shows EPA’s estimated incremental cost increase of the average new vehicle for each model year 2017–2025. The values shown are incremental to a baseline vehicle and are not cumulative. In other words, the estimated increase for 2017 model year cars is $206 relative to a 2017 model year car meeting the MY 2016 standards. The estimated increase for a 2018 model year car is $374 relative to a 2018 model year car meeting the MY 2016 standards (not $206 plus $374). TABLE I–23—EPA’S ESTIMATED INCREMENTAL TECHNOLOGY OUTLAYS ASSOCIATED WITH THE STANDARDS a b [Billions of 2010 dollars] Sum of present values 2017 MY 3% discount rate: Cars ....................................................... Trucks ................................................... Combined .............................................. 7% discount rate: Cars ....................................................... Trucks ................................................... Combined .............................................. 2018 MY 2019 MY 2020 MY 2021 MY 2022 MY 2023 MY 2024 MY 2025 MY $2.03 0.33 2.40 $3.65 1.10 4.78 $5.02 1.67 6.72 $6.43 2.29 8.73 $7.94 4.28 12.2 $11.4 6.67 18.1 $14.7 8.75 23.4 $18.0 10.70 28.7 $19.6 11.6 31.2 $88.8 47.4 136 1.99 0.32 2.36 3.58 1.08 4.69 4.93 1.64 6.59 6.32 2.25 8.57 7.80 4.20 12.0 11.2 6.54 17.7 14.4 8.59 23.0 17.7 10.51 28.1 19.3 11.4 30.6 87.2 46.5 134 a Model year values are discounted to the first year of each model year; the ‘‘Sum’’ represents those discounted values summed across model years. b Projected results from using 2008 based fleet projection analysis. TABLE I–24—EPA’S ESTIMATED INCREMENTAL INCREASE IN AVERAGE NEW VEHICLE COST RELATIVE TO THE REFERENCE CASE a b [2010 dollars per unit] 2017 MY Cars ................................................................ Trucks ............................................................. Combined ....................................................... a The 2018 MY $206 57 154 2019 MY $374 196 311 $510 304 438 2020 MY $634 415 557 2021 MY $767 763 766 2022 MY 2023 MY 2024 MY 2025 MY $1,079 1,186 1,115 $1,357 1,562 1,425 $1,622 1,914 1,718 $1,726 2,059 1,836 reference case assumes the 2016MY standards continue indefinitely. results from using 2008 based fleet projection analysis. sroberts on DSK5SPTVN1PROD with b Projected VerDate Mar<15>2010 01:07 Oct 13, 2012 Jkt 229001 PO 00000 Frm 00043 Fmt 4701 Sfmt 4700 E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with 62666 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations 3. Why are the EPA and NHTSA MY 2025 Estimated Per-Vehicle Costs Different? In Section I.C.1 and I.C.2 NHTSA and EPA present the agencies’ estimates of the incremental costs and benefits of the final CAFE and GHG standards, relative to costs and benefits estimated to occur absent the new standards. Taken as a whole, these represent the incremental costs and benefits of the National Program for Model Years 2017–2025. On a year-by-year comparison for model years 2017–2025, the two agencies’ pervehicle cost estimates are similar for the beginning years of the program, but in the last few model years, EPA’s cost estimates are significantly higher than the NHTSA cost estimates. When comparing the CAFE required new vehicle cost estimate in Table I–15 with the GHG standard new vehicle cost estimate in Table I–24, we see that the model year 2025 CAFE incremental new vehicle cost estimate is $1,461–$1,616 per vehicle (when, as required by EISA/ EPCA, NHTSA sets aside EVs, preMY2019 PHEVs, and credit-based CAFE flexibilities), and the GHG standard incremental cost estimate is $1,836 per vehicle—a difference of $220–$375. The agencies have examined these cost estimate differentials, and as discussed below, it is principally explained by how the two agencies modeled future compliance with their respective standards, and by the application of low-GWP refrigerants attributable only to EPA’s standards. As also described below, in reality auto companies will build a single fleet of vehicles to comply with both the CAFE and GHG standards, and the only significant real-world difference in the program costs are is limited to the hydrofluorocarbon (HFC) reductions expected under the GHG standards, which EPA estimates at $68/ vehicle cost. As documented below in Section IV, although NHTSA is precluded by EISA/ EPCA from considering CAFE credits, EVs, and pre-MY2019 PHEVs when determining the maximum feasible stringency of new CAFE standards, NHTSA has conducted additional analysis that accounts for EISA/EPCA’s provisions regarding CAFE credits, EVs, and PHEVs. Under that analysis, as shown in Table I–16, NHTSA’s estimate of the incremental new vehicle costs attributable to the new CAFE standards ranges from $1,257 to $1,400. Insofar as EPA’s analysis focuses on the agencies’ MY 2008-based market forecast and attempts to account for some CAA-based flexibilities (most notably, unlimited credit transfers between the PC and LT fleets), NHTSA’s $1,400 result is based VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 on methods conceptually more similar to those applied by EPA. Therefore, although the difference in MY 2025 is considerably greater than differences in earlier model years, the agencies have focused on understanding the $436 difference between NHTSA’s $1,400 result and EPA’s $1,836 result, both for the MY 2008-based market forecast. Of this $436 difference, $247 is explained by NHTSA’s simulation of EISA/EPCA’s credit carry-forward provisions. EISA/EPCA allows manufacturers to ‘‘carry forward’’ credits up to five model years, applying those credits to offset compliance shortfalls and thereby avoid civil penalties.103 In meetings with the agency, some manufacturers have indicated that, even under the preexisting MY 2012–2016 standards, they would make full use of these provisions, effectively entering MY 2017 with little, if any, credit ‘‘in reserve.’’ 104 As in the NPRM, NHTSA’s analysis exercises its CAFE model in a manner that simulates manufacturers’ carryingforward and use of CAFE credits. This simulation of credit carry-forward acts in combination with the model’s explicit simulation of multiyear planning—that is, the tendency of manufacturers to apply ‘‘extra’’ technology in earlier model years if doing so would economically facilitate compliance in later model years, considering estimated product cadence (i.e., estimated timing of vehicle redesigns) facilitate. When the potential to carry forward CAFE credits is also simulated, multiyear planning simulation estimates the extent to which manufacturers could generate CAFE credits in earlier model years and use those credits in later model years. In meetings with the agency, manufacturers have often provided forward-looking plans exhibiting this type of strategic timing of investment in technology. For the NPRM, NHTSA estimated that in MY 2025, accounting for credit carry-forward (and other flexibilities offered under EISA/EPCA), manufacturers could, on average, achieve 47.0 mpg, 2.6 mpg less than the agency’s 49.6 mpg estimate of the average of manufacturers’ fuel economy requirements in that model year. Using the corrected MY 2008-based market forecast, NHTSA today estimates that in MY 2025, manufacturers could achieve 103 49 U.S.C. 32903. the other hand, although EISA/EPCA also allows manufacturers to carry back CAFE credits, most manufacturers have indicated extreme reluctance to make use of these provisions, insofar as doing so would constitute ‘‘borrowing against the future’’ and incurring risk of paying civil penalties in the future. 104 On PO 00000 Frm 00044 Fmt 4701 Sfmt 4700 47.4 mpg, 2.3 mpg less than the agency’s current 49.7 mpg estimate (also under the corrected MY 2008-based market forecast) of the average of the manufacturers’ fuel economy requirements in MY 2025. This 47.4 mpg estimate corresponds to the incremental cost estimate of $1,400 cited above. When credit carry-forward is excluded from this analysis, NHTSA’s estimate of manufacturers’ average achieved fuel economy in MY 2025 increases to 49.0 mpg, and NHTSA’s estimate of the average incremental cost in MY 2025 increases to $1,647, an increase of $247. Although EPA’s GHG standards allow manufacturers to bank (i.e., carry forward) GHG-based credits up to five years, EPA’s OMEGA model was designed to estimate the costs of a specific standard in a specific year and EPA for this action did not estimate the potential credit bank companies could have on a year-by-year basis. As explained, this difference in simulation capabilities explains $247 of the $436 difference mentioned above. As it has in past rulemakings and in the NPRM preceding today’s final rule, NHTSA has also applied its CAFE model in a manner that simulates the potential that, as allowed under EISA/ EPCA and as suggested by their past CAFE levels, some manufacturers could elect to pay civil penalties rather than achieving compliance with future CAFE standards.105 EISA/EPCA allows NHTSA to take this flexibility into account when determining the maximum feasible stringency of future CAFE standards. As in the NPRM, simulating this flexibility leads NHTSA to estimate that, under EISA/EPCA, some manufacturers (e.g., BMW, Mercedes, Porsche, and Volkswagen) could achieve fuel economy levels 6 to 9 mpg or more short of their respective required CAFE levels in MY 2025. Having set aside the potential to carry forward CAFE credits, when NHTSA also sets aside the potential to pay civil penalties, NHTSA estimates that manufacturers could achieve a fuel economy average of 49.7 mpg in MY 2025, reflecting, on average, manufacturers’ achievement of their respective required CAFE levels. For MY 2025, this analysis shows this 0.7 mpg increase in average achieved fuel economy accompanied by a $119 increase in average incremental cost, increasing the average incremental cost to $1,766. Because the Clean Air Act, unlike EISA/EPCA, does not allow manufacturers to pay civil penalties rather than achieving compliance with GHG standards, EPA’s OMEGA model 105 49 E:\FR\FM\15OCR2.SGM U.S.C. 32912. 15OCR2 62667 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations does not simulate this type of flexibility.106 Therefore, this further difference in simulation capabilities explains $119 of the $436 difference mentioned above, and results in an estimated average incremental cost of $1,766 in MY 2025. In addition to these differences in modeling of programmatic features, EPA projects that manufacturers will achieve significant GHG emissions reductions through the use of different air conditioning refrigerants (the HFC refrigerant in today’s vehicles is a powerful greenhouse gas, with a global warming potential 1,430 times that of CO2).107 EPA estimates that in 2025, the incremental cost of the substitute is $68/ vehicle. While all other technologies in the agencies’ analyses are equally relevant to compliance with both CAFE and GHG standards, CAFE standards do not address HFC emissions, and NHTSA’s analysis therefore does not include the costs of this HFC substitution. This factor results in the EPA 2025 cost estimate being $68/ vehicle higher than the NHTSA MY 2025 per-vehicle cost estimate. Taken together, as shown in Table I– 25, these three factors suggest a difference of $434, based on $247 and $119 for NHTSA’s simulation of EISA/ EPCA’s credit carry-forward and civil penalty provisions, respectively, and $68 for EPA’s estimate of HFC costs. While $2 lower than the $436 difference mentioned above, the agencies consider this remaining difference to be small (about 0.1% of average incremental cost) and well within the range of differences to be anticipated given other structural differences between the agencies analyses and modeling systems. TABLE I—25—MAJOR FACTORS CONTRIBUTING TO DIFFERENCE IN EPA AND NHTSA ACHIEVED MY2025 PER-VEHICLE COST ESTIMATES (2010 DOLLARS) Average pervehicle cost impact in MY 2025 Factor contributing to epa and nhtsa my2025 per-vehicle cost estimate difference Air conditioning refrigerant substitution ............................................................................................................................................... CAFE program provisions for civil penalties ....................................................................................................................................... CAFE program credit carry-forward value ........................................................................................................................................... $68 119 247 Total impact on the difference between EPAs 2025 estimate and NHTSA’s 2025 achieved estimate (sum of individual factors) ........................................................................................................................................................................................... 434 sroberts on DSK5SPTVN1PROD with The agencies’ estimates are based on each agency’s different modeling tools for forecasting costs and benefits between now and MY 2025. As described in detail in the Joint Technical Support Document, the agencies harmonized inputs for our modeling tools. However, our modeling tools (the NHTSA-developed CAFE model and the EPA-developed OMEGA model), while similar in core function, were developed to estimate the program costs based on each agencies’ respective statutory authorities, which in some cases include specific constraints. It is important to note that these are modeling tool differences, but that, while the models result in different estimates of the costs of compliance, manufacturers will ultimately produce a single fleet of vehicles to be sold in the United States that considers both EPA greenhouse gas emissions standards and NHTSA CAFE standards. Manufacturers are currently selling MY2012 and MY2013 vehicles based on considering these standards. Every technology an automotive company applies to its vehicles that improves fuel economy will also lower CO2 emissions—thus each dollar of technology investment 106 See 75 FR 25341. with the MY 2012–2016 Light Duty rule and the MY 2014–2018 Medium and Heavy Duty rule, the GWPs used in this rule are consistent with 100-year time frame values in the 2007 Intergovernmental Panel on Climate Change (IPCC) 107 As VerDate Mar<15>2010 01:07 Oct 13, 2012 Jkt 229001 will count towards the company’s overall compliance with the CAFE standard as well as the CO2 standard. The agencies’ final footprint curve standards for passenger cars and for light trucks have been closely coordinated, with the principle difference being EPA’s estimate of the application of HFC air conditioning refrigerant technology across a company’s fleet of vehicles. Thus, within the entire fleet of vehicle models ultimately produced for sale in the United States, the agencies expect the only technology attributable solely to EPA’s standards will be the low-GWP refrigerants, which EPA estimates at an average incremental unit cost of $68 in 2025. E. Background and Comparison of NHTSA and EPA Statutory Authority Section I.E of the preamble contains a detailed overview discussion of the NHTSA and EPA respective statutory authorities. In addition, each agency discusses comments pertaining to its statutory authority and the agencies’ responses in Sections III and IV, respectively and EPA responds as well in its response to comment documents. Fourth Assessment Report (AR4). At this time, the 100-year GWP values from the 1995 IPCC Second Assessment Report are used in the official U.S. GHG inventory submission to the United Nations Framework Convention on Climate Change (UNFCCC) per the reporting requirements under PO 00000 Frm 00045 Fmt 4701 Sfmt 4700 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 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. 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 that international convention. The UNFCCC recently agreed on revisions to the national GHG inventory reporting requirements, and will begin using the 100-year GWP values from AR4 for inventory submissions in the future. E:\FR\FM\15OCR2.SGM 15OCR2 62668 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with 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.108 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 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 sought comment in the NPRM on whether or how EPCA, as amended by EISA, could be interpreted to allow such alternate standards for certain parts of the industry. Suzuki requested that NHTSA and EPA both adopt an approach similar to California’s of providing more lead time to manufacturers with national average sales below 50,000 units, by allowing those ‘‘limited line manufacturers’’ to meet the MY 2017 standards in MY 2020, the MY 2018 standards in MY 2021, and so on, with a 3-year time lag 108 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.’’). VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 in complying with the standards generally applicable for a compliance category. Suzuki stated simply that the standards are harder for small manufacturers to meet than for larger manufacturers, because the per-vehicle cost of developing or purchasing the necessary technology is higher, and that since the GHG emissions attributable to vehicles built by manufacturers who would be eligible for this option represent a very small portion of overall emissions, the impact should be minimal.109 Although EPA is adopting such an approach as part of its final rule (see Section I.C.7.c above and III.X), no commenter provided legal analysis that might lead NHTSA to change its current interpretation of EPCA/EISA. Thus, NHTSA is not finalizing such an option for purposes of this rulemaking. i. Factors That Must Be Considered in Deciding the Appropriate Stringency of CAFE Standards (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 decision 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.’’ 110 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 109 Suzuki comments, at 2–3. Available at http://www.regulations.gov, Docket No. ID No. EPA–HQ–OAR–2010–0799. 110 67 FR 77015, 77021 (Dec. 16, 2002). PO 00000 Frm 00046 Fmt 4701 Sfmt 4700 jobs). Consumer acceptability is also an element of economic practicability, one which is particularly difficult to gauge during times of uncertain fuel prices.111 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.’’ 112 Instead, NHTSA is compelled ‘‘to weigh the benefits to the nation of a higher fuel economy standard against the difficulties of individual automobile manufacturers.’’ 113 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. 111 See, 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 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). 112 CEI–I, 793 F.2d 1322, 1352 (D.C. Cir. 1986). 113 Id. E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations agrees that no further action is required as part of this rulemaking. (3) The Effect of Other Motor Vehicle Standards of the Government on Fuel Economy sroberts on DSK5SPTVN1PROD with ‘‘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 114 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, 549 U.S. 497 (2007), 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. In the NPRM, NHTSA sought comment 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. NHTSA explained that the agency had already considered EPA’s proposal and the harmonization benefits of the National Program in developing its own proposal. The only comment received was from the Sierra Club, noting that the structure of the National Program accounts for both NHTSA’s and EPA’s authority and requires no separate action.115 NHTSA 114 42 FR 63184, 63188 (Dec. 15,1977). See also 42 FR 33534, 33537 (Jun. 30, 1977). 115 Sierra Club et al. comments, at 10. Available at http://www.regulations.gov, Docket No. ID No. EPA–HQ–OAR–2010–0799. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 (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.’’ 116 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. (5) Fuel Prices and the Value of Saving Fuel Projected future fuel prices are a critical input into the 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 energyrelated 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 116 42 PO 00000 FR 63184, 63188 (1977). Frm 00047 Fmt 4701 Sfmt 4700 62669 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 117 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,118 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.’’ 119 In 1988, NHTSA included climate change concepts in its CAFE notices and prepared its first environmental assessment addressing that subject.120 It cited concerns about climate change as 117 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. 118 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). 119 42 FR 63184, 63188 (Dec. 15, 1977) (emphasis added). 120 53 FR 33080, 33096 (Aug. 29, 1988). E:\FR\FM\15OCR2.SGM 15OCR2 62670 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations one of its reasons for limiting the extent of its reduction of the CAFE standard for MY 1989 passenger cars.121 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.122 Under the universal or ‘‘flat’’ 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 presented in this final rule, 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 attribute-based standards, there is still risk that manufacturers will rely on down-weighting to improve their fuel economy (for a given vehicle at a given footprint target) in ways that may reduce safety.123 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 121 53 FR 39275, 39302 (Oct. 6, 1988). the United States Court of Appeals pointed out in upholding NHTSA’s exercise of judgment in setting the 1987–1989 passenger car standards, ‘‘NHTSA has always examined the safety consequences of the CAFE standards in its overall consideration of relevant factors since its earliest rulemaking under the CAFE program.’’ Competitive Enterprise Institute v. NHTSA (CEI I), 901 F.2d 107, 120 at n.11 (D.C. Cir. 1990). 123 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. sroberts on DSK5SPTVN1PROD with 122 As VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 (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.124 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 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.’’ 125 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,’’ 126 and as long as that balancing reasonably accommodates ‘‘conflicting policies that were committed to the agency’s care by the statute.’’ 127 Thus, EPCA does not mandate that any particular number be 124 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 maximum feasible standards in MYs 2020 and beyond. 125 Center for Auto Safety v. NHTSA, 793 F.2d 1322, at 1341 (D.C. Cir. 1986). 126 CBD v. NHTSA, 538 F.3d at 1195 (9th Cir. 2008). 127 Id. PO 00000 Frm 00048 Fmt 4701 Sfmt 4700 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 2020.128 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.129 Standards after 2020 must simply be set at the maximum feasible level.130 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.131 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 smaller-footprint 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 largefootprint. 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 revising the procedures for measuring fuel economy and calculating average fuel economy for the CAFE program, however, to account for certain impacts on fuel economy not currently included 128 49 U.S.C. 32902(b)(2)(C). 74 FR 14196, 14375–76 (Mar. 30, 2009). 130 49 U.S.C. 32902(b)(2)(B). 131 49 U.S.C. 32902(b)(3). 129 See E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with in these procedures, specifically 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 pick-up 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 considered manufacturers’ ability to comply with the CAFE standards using these efficiency improvements in determining the stringency of the fuel economy standards presented in this final rule. These changes would be the same as program elements that are part of EPA’s greenhouse gas performance standards, discussed in Section III.B.10. As discussed below, these three elements will 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 revision to the CAFE calculations is discussed in more detail in Sections III.B.10 and III.C and IV.I.4 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. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 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.132 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 volume of those vehicles in the affected fleet (i.e., import or domestic passenger car, or light truck), manufactured for that model year.133 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 134 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 132 EPCA does not provide authority for seeking to enjoin violations of the CAFE standards. 133 49 U.S.C. 32912(b), 49 CFR 578.6(h)(2). 134 49 U.S.C. 30120, Remedies for defects and noncompliance. PO 00000 Frm 00049 Fmt 4701 Sfmt 4700 62671 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 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 E:\FR\FM\15OCR2.SGM 15OCR2 62672 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with 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 cost projected by EPA at the time of regulation, which result in even more favorable real world benefit-to-cost ratios.135 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, 135 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, 2011. http://www.whitehouse.gov/ omb/inforeg_regpol_reports_congress/ (Last accessed on August 12, 2012). Several commenters asserted that EPA had underestimated costs of rules controlling emissions of criteria pollutants from heavy duty diesel engines. These comments, which are incorrect and misplaced, are addressed in EPA’s Response to Comments Section 18.2. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 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 final rule implements a specific provision from Title II, section 202(a).136 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. Indeed, EPA’s obligation to do so is mandatory: ‘‘Coalition for Responsible Regulation v. EPA, No. 09–1322, slip op. at pp. 40–1 (D.C. Cir. June 26, 2012); Massachusetts v. EPA, 549 U.S. at 533. Moreover, EPA’s mandatory legal duty to promulgate these emission standards derives from ‘‘a statutory obligation wholly independent of DOT’s mandate to promote energy efficiency.’’ Massachusetts, 549 U.S. at 532. Consequently, EPA has no discretion to decline to issue greenhouse standards under section 202(a), or to defer issuing such standards due to NHTSA’s regulatory authority to establish fuel economy standards. Rather, ‘‘[j]ust as EPA lacks authority to refuse to regulate on the grounds of NHTSA’s regulatory authority, EPA cannot defer regulation on that basis.’’ Coalition for Responsible Regulation v. EPA, slip op. at p. 41. 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 (D.C. Cir. 1981)). EPA must consider costs to those entities which are directly subject to the standards. Motor & Equipment Mfrs. Ass’n Inc. v. EPA, 627 F. 2d 1095, 1118 (D.C. Cir. 1979). Thus, 136 42 PO 00000 U.S.C. 7521 (a) Frm 00050 Fmt 4701 Sfmt 4700 ‘‘the [s]ection 202 (a)(2) reference to compliance costs encompasses only the cost to the motor-vehicle industry to come into compliance with the new emission standards.’’ Coalition for Responsible Regulation v. EPA, slip op. p. 44; see also id. at pp. 43–44 rejecting arguments that EPA was required to, or should have considered costs to other entities, such as stationary sources, which are not directly subject to the emission standards. 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 (D.C. 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). Finally, with respect to regulation of vehicular greenhouse gas emissions, EPA is not ‘‘required to treat NHTSA’s * * * regulations as establishing the baseline for the [section 202 (a) standards].’’ Coalition for Responsible Regulation v. EPA, slip op. at p. 42 (noting further that ‘‘the [section 202 (a) standards] provid[e] benefits above and beyond those resulting from NHTSA’s fueleconomy standards’’.) 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 E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations consumers,137 and energy impacts associated with use of the technology. See George E. Warren Corp. v. EPA, 159 F.3d 616, 623–624 (D.C. 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 (D.C. 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.138 sroberts on DSK5SPTVN1PROD with This interpretation was upheld as reasonable in NACAA v. EPA, (489 F.3d 1221, 1230 (D.C. 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 (D.C. 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 (D.C. Cir. 2001) (great discretion to balance statutory factors in considering level of 137 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 trapoxidizer safety problems are discovered, EPA would reconsider the control requirements implemented by this rulemaking’’). 138 70 FR 69664, 69676, November 17, 2005. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 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 (D.C. 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 (D.C. Cir. 2002) (same). One commenter mistakenly characterized section 202(a) as a ‘‘technology-forcing’’ provision. Comments of CBD p. 5. As just explained, it is not, but even if it were, EPA retains considerable discretion to balance the various relevant statutory factors, again as just explained. The same commenter maintained that the GHG standards should ‘‘protect the public health and welfare with an adequate margin of safety.’’ Id. p. 2. The commenter paraphrases the statutory standard for issuing health-based National Ambient Air Quality Standards under section 109(b) of the CAA.139 Section 202(a) is a technology-based provision with an entirely different legal standard. Moreover, the commenter’s assertion that the standards must reduce the amount of greenhouse gases emitted by light duty motor vehicles (id. pp. 2– 3) has no statutory basis. Section 202(a)(2) does not spell out any minimum level of effectiveness for standards, but instead directs EPA to set the standards at a level that is reasonable in light of applicable compliance costs and technology considerations. Nor is there any requirement that the GHG standards result in some specific quantum of amelioration of the endangerment to which light-duty vehicle emissions contribute. See Coalition for Responsible Regulation v. EPA, slip op. pp. 42–43. In addition, substantial GHG emission reductions required by section 202(a) standards in and of themselves constitute ‘‘meaningful mitigation of greenhouse gas emissions’’ without regard to the extent to which these reductions ameliorate the endangerment to public health and welfare caused by greenhouse gas emissions. Coalition for Responsible Regulation v. EPA, slip op. p. 43. 139 42 PO 00000 U.S.C. 7409(b). Frm 00051 Fmt 4701 Sfmt 4700 62673 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.140 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.141 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.142 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 final changes to the procedures for measuring fuel economy and calculating 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 140 See 49 U.S.C. 32904(c). 41 FR 38674 (Sept. 10, 1976), which is codified at 40 CFR Part 600. 142 See 49 U.S.C. 32904(c). 141 See E:\FR\FM\15OCR2.SGM 15OCR2 62674 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations 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. sroberts on DSK5SPTVN1PROD with 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 finalizing 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. See 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 U.S.C. § 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 (HFET) to be used in conjunction with the FTP for fuel 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 25439; 76 FR 57252. In this rule, EPA is retaining the VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 FTP and HFET for purposes of testing the fleetwide average standards, and is further modifying 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 rule takes into account reductions of direct air conditioning emissions, and establishes standards for methane and N2O, but NHTSA’s do not, because these emissions generally do not relate to fuel economy. A second important difference is that EPA is adopting certain compliance flexibilities, such as the multiplier for advanced technology vehicles, and has taken those flexibilities into account in its technical analysis and modeling supporting the GHG standards. 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.143 The Clean Air Act, on the other hand, contains no such prohibition. As explained earlier, these considerations result in some differences in the technical analysis and modeling used to support the agencies’ respective 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 truck fleets. 49 U.S.C. 32903(g)(3). Under CAA section 202(a), EPA is continuing 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, 143 49 PO 00000 U.S.C. 32902(h). Frm 00052 Fmt 4701 Sfmt 4700 recognizing that manufacturers must comply with both the CAFE standards and the GHG 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 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. Among the other factors that is considers in determining maximum E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with feasible standards, 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).144 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 these 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 attributebased 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 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’ standards are fully justified under their respective statutory criteria. The 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 cases are already in commercial application in 144 It should be noted, however, that the D.C. Circuit noted the absence of an explicit obligation for EPA to consider NHTSA fuel economy standards as one basis for holding that the existence of NHTSA’s fuel economy regulatory program provides no basis for EPA deferring regulation of vehicular greenhouse gas emissions. Coalition for Responsible Regulation v. EPA, slip op. pp. 41–42. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 the fleet to varying degrees. Detailed assessment of the technologies that could be employed by each manufacturer supports this conclusion. The agencies also carefully assessed the costs of the 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 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 standards, to the extent practicable. The agencies’ analyses to date indicate that the overall quantified benefits of the standards far outweigh the projected costs. All of these factors support the reasonableness of the standards. See Section III (GHG standards) and Section IV (CAFE standards) for a detailed discussion of each agency’s basis for its selection of its standards. The fact that the benefits are estimated to considerably exceed their costs supports the view that the standards represent an appropriate balance of the relevant statutory factors.145 In drawing this conclusion, 145 The comment that the standards are insufficiently stringent because estimated benefits of the standards substantially exceed the estimated costs shows (Comment of CBD p.8) is misplaced. Neither EPCA/EISA nor the CAA dictates a particular weighing of costs and benefits, so the commenter’s insistence that the respective statutes require ‘‘maximized societal benefits, where the benefits most optimally compare to the anticipated costs’’ (id. p. 23) is not correct. PO 00000 Frm 00053 Fmt 4701 Sfmt 4700 62675 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 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. II. Joint Technical Work Completed for This Final Rule A. Introduction In this section, NHTSA and EPA discuss several aspects of our joint technical analyses. These analyses are common to the development of each agency’s standards. Specifically we discuss: The development of the vehicle market forecasts 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 credit programs for air conditioning; offcycle technology, and full-sized pickup trucks; as well as the effects of the standards on vehicle safety. The Joint Technical Support Document (TSD) discusses the agencies’ joint technical work in more detail. The agencies have based this final rule 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 Joint TSD, the NHTSA RIA, and the EPA RIA, new information has become available since the proposal from a range of sources. These include work the agencies have completed (e.g., work on technology costs and effectiveness and creating a second future fleet forecast based on model year 2010 baseline data). In addition, information from other sources is now incorporated into our analyses, including the Energy Information E:\FR\FM\15OCR2.SGM 15OCR2 62676 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations Agency’s Annual Energy Outlook 2012 Early Release, as well as other information from the public comment process. Wherever appropriate, and as summarized throughout this preamble, we have used inputs for the final rule based on information from the proposal as well as new data and information that has become available since the proposal (either through the comments or through the agencies’ analyses). B. Developing the Future Fleet for Assessing Costs, Benefits, and Effects sroberts on DSK5SPTVN1PROD with 1. Why did the agencies establish baseline and reference vehicle fleets? 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 regulatory action, to provide a reference point relative to which costs, benefits, and effects of the regulations are assessed. As in the NPRM, EPA and NHTSA have developed comparison fleets in two parts. The first step was to develop baseline estimates of the fleets of new vehicles to be produced for sale in the U.S. through MY2025, one starting with the actual MY 2008 fleet, and one starting with the actual MY 2010 fleet. These baselines include vehicle sales volumes, GHG/fuel economy performance levels, and contain listings of the base technologies on every MY 2008 or MY 2010 vehicle sold. This information comes from CAFE certification data submitted by manufacturers to EPA, and for purposes of rulemaking analysis, was supplemented with publicly and commercially available information regarding some vehicle characteristics (e.g., footprint). The second step was to project the baseline fleet volumes into model years 2017–2025. The vehicle volumes projected out to MY 2025 are referred to as the reference fleet volumes. The third step was to modify those MY 2017–2025 reference fleets such that they reflect the technology that manufacturers could apply if the MY 2016 standards were extended without change through MY 2025.146 Each agency used its modeling system to develop modified or final reference fleets, or adjusted baselines, for use in its analysis of regulatory alternatives, as discussed below and in each agency’s 146 EPA’s MY 2016 GHG standards under the CAA would continue into the future absent this final rule. 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. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 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 discusses the first two steps, development of the baseline fleets and the reference fleets. 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.147 2. What comments did the agencies receive regarding fleet projections for the NPRM? During the comment period, the agencies also received formal comments regarding the NPRM baseline and reference fleets. Chrysler questioned the agencies’ assumption that the company’s sales would decline by 53% over 17 years, and stated that the forecast had implications not just for the agencies’ analysis, but also, indirectly, for Chrysler’s competitiveness, because suppliers and customers who ‘‘see [such] projections supported by Federal agencies * * * are potentially given a highly negative view of the viability of the company * * * [which] may result in less favorable contracts with suppliers and lower sales to customers.’’ Chrysler requested that the agencies update their volume projections for the final rule.148 The agencies’ projection that Chrysler’s sales would steadily decline was primarily attributable to the manufacturer- and segment-level forecasts provided in December 2009 by CSM. The agencies thought that forecast to have been credible at the time considering economic and industry conditions during the months before CSM provided the agencies with a longrange forecast, when the overall light vehicle market was severely depressed and Chrysler and GM were—with nascent federal assistance—in the process of reorganizing. We recognize that Chrysler’s production has since recovered to levels suggesting much better long-term prospects than forecast by CSM in 2009. While the agencies are continuing to use the market forecast 147 EPA’s Omega Model and input sheets are available at http://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 http://www.nhtsa.gov/fuel-economy. 148 Chrysler, Docket No. NHTSA–2010–0131– 0241, at 21. PO 00000 Frm 00054 Fmt 4701 Sfmt 4700 developed for the NPRM (after minor corrections unrelated to Chrysler’s comments), we are also using a second market forecast we have developed for today’s final rule, making use of a newer forecast (in this case, from LMC) of manufacturer- and segment-level shares, a forecast that shows significantly higher sales (more than double that of the earlier forecast) for Chrysler in 2025. Environmental Consultants of Michigan commented that use of 4-yearold certification data was ‘‘unconscionable’’ and unreflective of technology improvements already made to vehicles since then, requesting that the agencies delay the final rule until the market forecast can be updated with appropriate data.149 As described in this chapter, even though the year of publication of this rule is 2012, model year 2010 was the most recent baseline dataset available due to the lag between the actual conclusion of a given model year and the submission (for CAFE compliance purposes) of production volumes for that model year. Moreover, as explained below in the joint TSD and in our respective RIAs, EPA and NHTSA measure the costs and benefits of new standards as incremental levels beyond those that would result from the application of technology given continuation of baseline standards (i.e., continuation of the standards that will be in place in MY 2016). Therefore, our analysis of manufacturers’ capabilities is informed by analysis of technology that could be applied in the future even absent the new standards, not just technology that had been applied in 2008 or 2010. We further note that, while NHTSA has, in the past, made use of confidential product planning information provided to the agency by many manufacturers—information that typically extended roughly five years into the future—other stakeholders previously commented negatively regarding the agency’s resultant inability to publish some of the detailed inputs to and outputs of its analysis. As during the rulemaking establishing the MYs 2012–2016 standards, EPA and NHTSA have determined that the benefits of a fully transparent market forecast outweigh the disbenefits of a market forecast that may not fully reflect likely forthcoming changes in manufacturers’ products. The agencies also received a comment from Volkswagen, stating that ‘‘Volkswagen sees no evidence that would suggest a near 30% decline in truck market share from domestic OEMs 149 Environmental Consultants of Michigan, Docket No. NHTSA–2010–0131–0166, at 7. E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations [original emphasis].’’ 150 Volkswagen further suggested that the agencies’ forecast was based on confidential ‘‘strategic plans by [Volkswagen’s] competitors’’. On the contrary, the agencies’ forecast was based on public and commercial information made fully available to all stakeholders, including Volkswagen. Also, while the agencies’ 2008 based fleet projection showed a decline in the share of light trucks expected to be produced by the aggregate of Chrysler, Ford, and General Motors, Volkswagen’s statement mischaracterized the magnitude and nature of the decline. Between MY2008 and MY2025, the agencies’ forecast showed declines from 17.8% to 5.8% for Chrysler, from 14.5% to 12.0% for Ford, from 26.8% to 27.8% from General Motors, and from 58.3% to 44.5% for the aggregate of these three manufacturers. The latter represents a 22.5% reduction, not the 30% reduction cited by Volkswagen, and is dominated by the underlying forecast regarding Chrysler’s overall position in the market; for General Motors, the agencies’ forecast showed virtually no loss of share in the light truck market. As discussed above, the agencies’ market forecast for the NPRM was informed by CSM’s forecast of manufacturer- and segment-level shares, and by EIA’s forecast of overall volumes of the passenger car and light truck markets, and CSM’s forecast, in particular, was provided at a time when market conditions were economically severe. While the agencies are continuing to use this forecast, this agency is also using a second forecast, informed by MY 2010 certification data, an updated AEO-based forecast of overall volumes of passenger cars and light trucks, and an updated manufacturer- and segment-level market forecast from LMC Automotive. The Union of Concerned Scientists (UCS) expressed concern that if the light vehicle market does not shift toward passenger cars as indicated in the agencies’ market forecast, energy and environmental benefits of the new standards could be less than projected.151 As discussed below, our MY 2008-based and MY 2010-based market forecasts, while both subject to uncertainty, reflect passenger car market shares estimated using EIA’s National Energy Modeling System (NEMS). For both market forecasts, we re-ran NEMS by holding standards constant after MY 2016 and also preventing the model from increasing the passenger car 150 Volkswagen, 151 UCS, NHTSA–2010–0131–0247, at 9. Docket No. EPA–HQ–OAR–2010–0799– 9567, p. 8. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 market share to achieve increases in fleetwide average fuel economy levels. Having done so, we obtained a somewhat lower passenger car market share than EIA obtained for AEO 2011 and AEO 2012, respectively. In our judgment, this approach provides a reasonable basis for developing a forecast of the overall sales of passenger cars and light trucks, while remaining consistent with our use of EIA’s reference case estimates of future fuel prices. In any event, we note that EPCA/ EISA requires NHTSA to ensure that the overall new vehicle fleet achieves average fuel economy of at least 35 mpg by MY 2020. Our analysis, discussed below, indicates based on the information currently before us that the fleet could achieve 39.9–40.8 mpg by MY 2020 (accounting for flexibilities available under EPCA)—well above the 35 mpg statutory requirement. However, NHTSA will monitor the fleet’s progress and, if necessary, adjust standards to ensure that EPCA/EISA’s ‘‘35-by-2020’’ requirement is met, even if this requires issuing revised fuel economy standards before the planned joint mid-term evaluation process has been completed. However, insofar as NHTSA’s current analysis indicates the fleet could achieve 40–41 mpg by MY 2020, NHTSA currently expects the need for such a rulemaking to be unlikely. Beyond MY 2020, EPCA/EISA does not provide a minimum requirement for the overall fleet, but requires NHTSA to continue setting separate standards for passenger cars and light trucks, such that each standard is at the maximum feasible level in each model year. In other words, as long as the ‘‘35-by2020’’ requirement is achieved, NHTSA is required to consider stringency for passenger cars and light trucks separately, not to set those standards at levels achieving any particular level of average performance for the overall fleet. Nonetheless, the agencies recognize that overall fuel consumption and GHG emissions by the light vehicle fleet will depend on, among many other things, the relative market shares of passenger cars and light trucks. In its probabilistic uncertainty analysis, presented in NHTSA’s RIA accompanying today’s notice as required by OMB for significant rulemakings, NHTSA has varied the passenger car share (as a function of fuel price), such that the resultant distributions of estimated model results—including fuel savings and CO2 emission reductions—reflect uncertainty regarding the relative market shares of passenger cars and light trucks. The results of the PO 00000 Frm 00055 Fmt 4701 Sfmt 4700 62677 probabilistic uncertainty analysis along with the other analysis in this rulemaking support that the NHTSA standards are maximum feasible standards. The probabilistic uncertainty analysis is discussed in NHTSA’s RIA Chapter XII. Like all other aspects of the outlook for the future light vehicle market, the agencies will closely monitor the relative market shares of passenger cars and light trucks in preparation for the planned midterm review. 3. Why were two fleet projections created for the FRM? Although much of the discussion in this and following sections describes the methodology for creating a single baseline and reference fleet, for this final rule the agencies actually developed two baseline and reference fleets. In the NPRM, the agencies used MY 2008 CAFE certification data to establish the ‘‘2008-based fleet projection.’’ 152 The agencies noted that MY 2009 CAFE certification data was not likely to be representative of future conditions since it was so dramatically influenced by the economic recession (Joint Draft TSD section 1.2.1). The agencies further noted that MY 2010 CAFE certification data might be available for use in the final rulemaking for purposes of developing a baseline fleet. The agencies stated that a copy of the MY 2010 CAFE certification data would be put in the public docket if it became available during the comment period. The MY 2010 data was reported by the manufacturers throughout calendar year 2011 as the final sales figures were compiled and submitted to the EPA database. Due to the lateness of the CAFE data submissions,153 however, it was not possible to submit the new 2010 data into the docket during the public comment period. As explained below, however, consistent with the agencies’ expectations at proposal, and with the agencies’ standard practice of updating relevant information as practicable between proposals and final rules, the agencies are using these data in one of the two fleet-based projections we are using to estimate the impacts of the final rules. For analysis supporting the NPRM, the agencies developed a forecast of the light vehicle market through MY 2025 152 ‘‘2008 based fleet projection’’ is a new term that is the same as the reference fleet. The term is added to clarify when we are using the 2008 baseline and reference fleet vs. the 2010 baseline and reference fleet. 153 Partly due to the earthquake and tsunami in Japan and the significant impact this had on their facilities, some manufacturers requested and were granted an extension on the deadline to submit their CAFE data. E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with 62678 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations based on (a) the vehicle models in the MY 2008 CAFE certification data, (b) the AEO 2011 interim projection of future fleet sales volumes, and (c) the future fleet forecast conducted by CSM in 2009. In the proposal, the agencies stated we would consider using MY 2010 CAFE certification data, if available, for analysis supporting the final rule (Joint Draft TSD, p. 1–2). Shortly after the NPRM was issued, the agencies reiterated this intention in statements to Automotive News in response to a pending article by that publication.154 The agencies also indicated our intention to, for analysis supporting the final rule, use the most recent version of EIA’s AEO available, and a market forecast updated relative to that purchased from CSM (Joint Draft TSD section 1.3.5). For this final rulemaking, the agencies have analyzed the costs and benefits of the standards using two different forecasts of the light vehicle fleet through MY 2025. The agencies have concluded that the significant uncertainty associated with forecasting sales volumes, vehicle technologies, fuel prices, consumer demand, and so forth out to MY 2025 makes it reasonable and appropriate to evaluate the impacts of the final CAFE and GHG standards using two baselines. One market forecast, similar to the one used for the NPRM, uses corrected data regarding the MY 2008 fleet, information from AEO 2011, and information purchased from CSM. As noted above, the agencies received comments regarding the market forecast used in the NPRM suggesting that updates in several respects could be helpful to the agencies’ analysis of final standards; given those comments and since the agencies were already planning to produce an updated market forecast, the final rule also contains another market forecast using MY 2010 CAFE certification data, information from AEO 2012, and information purchased from LMC Automotive (formerly JD Powers Automotive). The two market forecasts contain certain differences, although as will be discussed below, the differences are not significant enough to change the agencies’ decision as to the structure and stringency of the final standards. For example, MY 2008 certification data represents the most recent model year for which the industry’s offerings were not strongly affected by the subsequent economic recession, which may make it reasonable to use if we believe that the 154 ‘‘For CAFE rules, feds look at aging sales data’’, Automotive News, December 22, 2011. Available at http://www.autonews.com/article/ 20111222/OEM11/111229956 (last accessed Jun. 27, 2012). VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 future vehicle mix of models are more likely to be reflective of the prerecession mix than mix of models produced after MY 2008 (e.g., in MY 2010). Also, the MY 2010-based fleet projection employs a future fleet forecast provided by LMC Automotive, which is more current than the projection provided by CSM in 2009. The CSM forecast, utilized for the MY 2008-based fleet projection, appears to have been influenced by the recession, in particular in predicting major declines in market share for some manufacturers (e.g., Chrysler) which the agencies do not believe are reasonably reflective of future trends. The MY 2010 based fleet projection, which is used in EPA’s alternative analysis and in NHTSA’s co-analysis, employs a future fleet forecast provided by LMC Automotive, which is more current than the projection provided by CSM in 2009, and which reflects the post-proposal MY 2010 CAFE certification data. However, this MY 2010 CAFE data also shows effects of the economic recession. For example, industry-wide sales were skewed down 20% compared to MY 2008 levels. For some companies like Chrysler, Mitsubishi, and Subaru, sales were down by 30–40% from MY 2008 levels, as documented in today’s joint TSD. For BMW, General Motors, Jaguar/Land Rover, Porsche, and Suzuki, sales were down by more than 40%. Employing the MY 2008 vehicle data avoids using these baseline market shifts when projecting the future fleet. On the other hand, it also perpetuates vehicle brands and models (and thus, their outdated fuel economy levels and engineering characteristics) that have since been discontinued. The MY 2010 CAFE certification data accounts for the phaseout of some brands (e.g., Saab, Pontiac, Hummer) 155 and the introduction of some technologies (e.g., Ford’s Ecoboost engine), which may be more reflective of the future fleet in this respect. Thus, given the volume of information that goes into creating a baseline forecast and given the significant uncertainty in any projection out to MY 2025, the agencies think that a reasonable way to illustrate the possible impacts of that uncertainty for purposes of this rulemaking is the approach taken here of analyzing the effects of the final standards under both the MY 2008-based baseline and the MY 2010-based baseline. The agencies’ 155 Based on our review of the CAFE certification, the MY 2010-based fleet contains no Saabs, and compared to the MY 2008-based fleet, about 90% fewer Hummers and about 75% fewer Pontiacs. PO 00000 Frm 00056 Fmt 4701 Sfmt 4700 analyses are presented in our respective RIAs and preamble sections. 4. How did the Agencies develop the MY 2008 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 used for the NPRM and was updated for this FRM. There was only one change since the NPRM. A contractor working on a market share model noted some problems with some of the 2008 MY vehicle wheelbase data. Each of the affected vehicle’s wheelbase and footprint were corrected for the MY 2008-based fleet used for this final rule. A more complete discussion of these changes is available in Chapter 1.3.1 of the TSD. The 2008 baseline fleet reflects all fuel economy technologies in use on MY 2008 light duty vehicles as reported by manufacturers in their CAFE certification data. 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.156 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.157 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 TSD. 5. How did the Agencies develop the projected MY 2017–2025 vehicle reference fleet for the 2008 model year based fleet? As in the NPRM, 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 (EIAEIA publishes a mid-term 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 156 Note that WardsAuto.com is a fee-based service, but all information is public to subscribers. 157 Motortrend.com and Edmunds.com are free, no-fee internet sites. E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations 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 and early release AEO came out in December of 2011, but for consistency with the NPRM, EPA and NHTSA chose to use the data from February 2011. 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 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 NPRM analysis, the agencies developed a new projection of passenger car and lighttruck 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. 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 62679 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 a long range forecast158 from CSM Worldwide (CSM) the firm which, at the time of proposal development, offered the most detailed forecasting for the model years in question. 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. Since proposal, the agencies have worked with LMC Automotive (formerly J.D. Powers Forecasting) and found them to be capable of doing forecasting of equivalent detail and are using the LMC forecast for the 2010 baseline fleet projection. 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 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. TABLE II–1—ANNUAL SALES OF LIGHT-DUTY VEHICLES BY MANUFACTURER IN 2008 AND ESTIMATED FOR 2025 Cars sroberts on DSK5SPTVN1PROD with 2008 MY Light trucks 2025 MY 2008 MY Aston Martin ............................................. BMW ........................................................ Chrysler/Fiat ............................................. Daimler ..................................................... Ferrari ....................................................... Ford .......................................................... Geely/Volvo .............................................. GM ........................................................... Honda ....................................................... Hyundai .................................................... Kia ............................................................ Lotus ........................................................ Mazda ...................................................... Mitsubishi ................................................. Nissan ...................................................... Porsche .................................................... Spyker/Saab ............................................. Subaru ...................................................... Suzuki ...................................................... Tata/JLR ................................................... Tesla ........................................................ Toyota ...................................................... 1,370 291,796 703,158 208,195 1,450 956,699 65,649 1,587,391 1,006,639 337,869 221,980 252 246,661 85,358 717,869 18,909 21,706 116,035 79,339 9,596 800 1,260,364 158 The CSM Sales Forecast Excel file (‘‘CSM North America Sales Forecasts 2017–2025 for the 01:07 Oct 13, 2012 Jkt 229001 PO 00000 Frm 00057 Fmt 4701 Sfmt 4700 0 61,324 956,792 79,135 0 814,194 32,748 1,507,797 505,140 53,158 59,472 0 55,885 15,371 305,546 18,797 4,250 82,546 35,319 55,584 0 951,136 2025 MY Docket’’) is available in the docket (Docket EPA– HQ–OAR–2010–0799). VerDate Mar<15>2010 1,182 405,256 436,479 340,719 7,658 1,540,109 101,107 1,673,936 1,340,321 677,250 362,783 316 306,804 73,305 1,014,775 40,696 23,130 256,970 103,154 65,418 31,974 2,108,053 Total 0 145,409 331,762 101,067 0 684,476 42,588 1,524,008 557,697 168,136 97,653 0 61,368 36,387 426,454 11,219 3,475 74,722 21,374 56,805 0 1,210,016 E:\FR\FM\15OCR2.SGM 15OCR2 2008 MY 1,370 353,120 1,659,950 287,330 1,450 1,770,893 98,397 3,095,188 1,511,779 391,027 281,452 252 302,546 100,729 1,023,415 37,706 25,956 198,581 114,658 65,180 800 2,211,500 2025 MY 1,182 550,665 768,241 441,786 7,658 2,224,586 143,696 3,197,943 1,898,018 845,386 460,436 316 368,172 109,692 1,441,229 51,915 26,605 331,692 124,528 122,223 31,974 3,318,069 62680 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations TABLE II–1—ANNUAL SALES OF LIGHT-DUTY VEHICLES BY MANUFACTURER IN 2008 AND ESTIMATED FOR 2025— Continued Cars 2008 MY Light trucks 2025 MY 2008 MY Total 2025 MY 2008 MY 2025 MY Volkswagen .............................................. 291,483 630,163 26,999 154,284 318,482 784,447 Total .................................................. 8,230,568 11,541,560 5,621,193 5,708,899 13,851,761 17,250,459 TABLE II–2—ANNUAL SALES OF LIGHT-DUTY VEHICLES BY MARKET SEGMENT IN 2008 AND ESTIMATED FOR 2025 Cars Light trucks 2008 MY 2025 MY 2008 MY 2025 MY Full-Size Car ..................................... Luxury Car ........................................ Mid-Size Car ..................................... Mini Car ............................................. Small Car .......................................... Specialty Car ..................................... 829,896 1,048,341 2,103,108 617,902 1,912,736 469,324 245,355 1,637,410 2,713,078 1,606,114 2,826,190 808,183 Full-Size Pickup ............................... Mid-Size Pickup ............................... Full-Size Van .................................... Mid-Size Van .................................... Mid-Size MAV* ................................. Small MAV ....................................... Full-Size SUV* ................................. Mid-Size SUV ................................... Small SUV ........................................ Full-Size CUV* ................................. Mid-Size CUV ................................... Small CUV ........................................ 1,332,335 452,013 33,384 719,529 110,353 231,265 559,160 436,080 196,424 264,717 923,165 1,612,029 1,002,806 431,272 88,572 839,452 548,457 239,065 46,978 338,849 71,827 671,665 1,259,483 1,875,703 Total Sales** .............................. 6,981,307 9,836,330 ........................................................... 6,870,454 7,414,129 * MAV—Multi-Activity Vehicle, or a vehicle with a tall roof and elevated seating positions such as a Mazda5. SUV—Sport Utility Vehicle, CUV—Crossover Utility Vehicle. **Total Sales are based on the classic Car/Truck definition. NHTSA has changed the definition of a truck for 2011 model year and beyond. The new definition has moved some 2 wheel 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 table shows the difference in 2008, 2021, and 2025 to give a feel for how the change in definition changes the car/ truck split. TABLE II–3—NEW AND OLD CAR AND TRUCK DEFINITION IN 2008, 2016, 2021, AND 2025 2008 Vehicle type Old Cars Definition .......................................................................................... New Cars Definition ......................................................................................... Old Truck Definition ......................................................................................... New Truck Definition ....................................................................................... 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 2016 159 6,981,307 8,230,568 6,870,454 5,621,193 8,576,717 10,140,463 7,618,459 6,054,713 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 2021 8,911,173 10,505,165 7,277,894 5,683,902 2025 9,836,330 11,541,560 7,414,129 5,708,899 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 1.3.2 of the TSD. TABLE II–4—CSM MANUFACTURER VOLUMES IN 2016, 2021, AND 2025 sroberts on DSK5SPTVN1PROD with 2016 BMW ............................................................................................................................................ Chrysler/Fiat ................................................................................................................................. Daimler ......................................................................................................................................... Ford* ............................................................................................................................................ Subaru ......................................................................................................................................... General Motors ............................................................................................................................ Honda .......................................................................................................................................... Hyundai ........................................................................................................................................ 2021 2025 328,220 391,165 298,676 971,617 205,486 1,309,246 1,088,449 429,926 325,231 346,960 272,049 893,528 185,281 1,192,641 993,318 389,368 317,178 316,043 271,539 858,215 181,062 1,135,305 984,401 377,500 159 In the NPRM, MY 2016 values reported for the New Cars Definition and Old Truck Definition were erroneously reversed. VerDate Mar<15>2010 01:07 Oct 13, 2012 Jkt 229001 PO 00000 Frm 00058 Fmt 4701 Sfmt 4700 E:\FR\FM\15OCR2.SGM 15OCR2 62681 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations TABLE II–4—CSM MANUFACTURER VOLUMES IN 2016, 2021, AND 2025—Continued 2016 Kia ................................................................................................................................................ Mazda .......................................................................................................................................... Mitsubishi ..................................................................................................................................... Spyker/Saab ................................................................................................................................ Tesla ............................................................................................................................................ Aston Martin ................................................................................................................................. Lotus ............................................................................................................................................ Porsche ........................................................................................................................................ Nissan .......................................................................................................................................... Suzuki .......................................................................................................................................... Tata/JLR ...................................................................................................................................... Toyota .......................................................................................................................................... Volkswagen .................................................................................................................................. 2021 2025 234,246 215,117 47,414 6 800 1,370 252 12 803,177 88,142 58,594 1,751,661 578,420 213,252 200,003 42,693 6 800 1,370 252 12 729,723 81,042 53,143 1,576,499 530,378 205,473 199,193 42,227 6 800 1,370 252 12 707,361 76,873 52,069 1,564,975 494,596 *Ford volumes include Volvo in this table. TABLE II–5—CSM SEGMENT PERCENTAGES IN 2016, 2021, AND 2025 2016 (percent) Full-Size CUV .............................................................................................................................. Full-Size Pickup ........................................................................................................................... Full-Size SUV .............................................................................................................................. Full-Size Van ............................................................................................................................... Mid-Size CUV .............................................................................................................................. Mid-Size MAV .............................................................................................................................. Mid-Size Pickup ........................................................................................................................... Mid-Size SUV .............................................................................................................................. Mid-Size Van ............................................................................................................................... Small CUV ................................................................................................................................... Small MAV ................................................................................................................................... Small Pickup ................................................................................................................................ Small SUV ................................................................................................................................... The overall result was a projection of car and truck sales for model years 2017–2025—the reference fleet—which matched the total sales projections of the AEO forecast and the manufacturer and segment splits of the CSM forecast. 2021 (percent) 3.66 19.39 3.27 0.92 19.29 1.63 4.67 2.28 11.80 30.67 0.88 0.00 1.53 2025 (percent) 8.34 15.42 0.90 1.29 16.88 5.93 5.74 4.73 11.63 25.06 2.98 0.00 1.12 9.06 13.53 0.63 1.19 16.99 7.40 5.82 4.57 11.32 25.30 3.22 0.00 0.97 These sales splits are shown in Table II– 6 below. TABLE II–6—CAR AND TRUCK VOLUMES AND SPLIT BASED ON NHTSA NEW TRUCK DEFINITION 2016 Car Volume* ..................................................... Truck Volume* .................................................. Car Split ........................................................... Truck Split ........................................................ 2017 2018 2019 2020 2021 2022 2023 2024 2025 10,140 6,054 62.6% 37.4% 9,988 5,819 63.2% 36.8% 9,905 5,671 63.6% 36.4% 9,996 5,583 64.2% 35.8% 10,292 5,604 64.7% 35.3% 10,505 5,684 64.9% 35.1% 10,736 5,704 65.3% 34.7% 10,968 5,687 65.9% 34.1% 11,258 5,676 66.5% 33.5% 11,542 5,709 66.9% 33.1% sroberts on DSK5SPTVN1PROD with *In thousands Given publicly- and commerciallyavailable sources that can be made equally transparent to all reviewers, the forecast described above represented the agencies’ best forecast available at the time of its publishing 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. While the agencies have not included variations in the market forecast as aspects of our respective sensitivity analyses, we have VerDate Mar<15>2010 01:07 Oct 13, 2012 Jkt 229001 conducted our central analyses twice— once each for the MY 2008- and MY 2010-based market forecasts that reflect differences in available vehicle models, differences in manufacturer- and segment-level market shares, and differences in the overall volumes of passenger cars and light trucks. In addition, as discussed above, NHTSA’s probabilistic uncertainty analysis accounts for uncertainty regarding the relative market shares of passenger cars and light trucks. The final step in the construction of the 2008 based fleet projection involves applying additional technology to individual vehicle models—that is, PO 00000 Frm 00059 Fmt 4701 Sfmt 4700 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 in the agencies’ respective RIAs. 6. How did the agencies develop the model year 2010 baseline vehicle fleet as part of the 2010 based fleet projection? NHTSA and EPA also developed a baseline fleet comprised of model year E:\FR\FM\15OCR2.SGM 15OCR2 62682 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations 2010 data gathered from EPA’s emission and fuel economy database. This alternative baseline fleet has the model year 2010 vehicle volumes and attributes. The 2010 baseline fleet reflects all fuel economy technologies in use on MY 2010 light duty vehicles as reported by manufacturers in their CAFE certification data. The 2010 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, as with the 2008 baseline fleet, the agencies relied on publicly available data like the more complete technology descriptions from Ward’s Automotive Group. 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. A description of all of the technologies used in modeling the 2010 vehicle fleet and how it was constructed are available in Chapter 1.4 of the Joint TSD. 7. How did the Agencies develop the projected my 2017–2025 vehicle reference fleet for the 2010 model year based fleet? 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). EIA published its Early Annual Energy Outlook for 2012 in December 2011. EIA released updated data to NHTSA in February (AEO Early Release). The final version of AEO 2012 was released June 25, 2012, after the agencies had already completed our analyses using the early release results. As the we did with the Interim 2011 AEO data, the agencies developed a new projection of passenger car and light truck sales shares by running scenarios from the Early Release AEO 2012 reference case that first deactivate the above-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 2012 Early Release 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 8.7 million (55 percent) and truck sales are projected to be 7.1 million (45 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 1.4.3 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 2012 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 a custom long range forecast purchased from LMC Automotive (formerly J.D. Powers Forecasting). NHTSA and EPA decided to use the forecast from LMC for the 2010 model year based fleet for several reasons discussed in Chapter 1 of the Joint TSD, and believe the projection provides a useful cross-check for the forecast used for the projections reflected in the 2008 model year based fleet. For the public’s reference, a copy of LMC’s long range forecast has been placed in the docket for this rulemaking.160 The next step was to project the LMC forecasts for relative sales of cars and trucks by manufacturer and by market segment onto the total sales estimates of AEO 2012. Table II–7 and Table II–8 show the resulting projections for the reference 2025 model year and compare these to actual sales that occurred in the baseline 2010 model year. Both tables show sales using the traditional definition of cars and light trucks. As discussed above, the new forecast from LMC shown in Table II–7 shows a significant increase in Chrysler/Fiat’s sales (1.6 million) from those projected by CSM (768 thousand). TABLE II–7—ANNUAL SALES OF LIGHT-DUTY VEHICLES BY MANUFACTURER IN 2010 AND ESTIMATED FOR 2025 Cars sroberts on DSK5SPTVN1PROD with 2010 MY Light trucks 2025 MY 2010 MY Aston Martin ............................................. BMW ........................................................ Chrysler/Fiat ............................................. Daimler ..................................................... Ferrari ....................................................... Ford .......................................................... Geely ........................................................ GM ........................................................... Honda ....................................................... Hyundai .................................................... Kia ............................................................ Lotus ........................................................ Mazda ...................................................... Mitsubishi ................................................. Nissan ...................................................... Porsche .................................................... Spyker ...................................................... Subaru ...................................................... Suzuki ...................................................... 601 143,638 496,998 157,453 1,780 940,241 28,223 1,010,524 845,318 375,656 226,157 354 249,489 54,263 619,918 11,937 0 184,587 25,002 160 The LMC Automotive’s Sales Forecast Excel file (‘‘LMC North America Sales Forecasts 2017– 01:07 Oct 13, 2012 Jkt 229001 PO 00000 Frm 00060 Fmt 4701 Sfmt 4700 0 26,788 665,806 72,393 0 858,798 29,719 735,367 390,028 35,360 21,721 0 61,451 9,146 255,566 3,978 0 73,665 3,938 2025 MY 2025 for the Docket’’) is available in the docket (Docket EPA–HQ–OAR–2010–0799). VerDate Mar<15>2010 639 363,380 899,843 261,242 1,894 1,441,350 65,883 1,696,474 1,295,234 935,619 350,765 377 262,732 67,925 919,920 17,609 0 218,870 48,710 Total 0 101,013 726,403 119,090 0 997,694 31,528 1,261,546 504,020 117,662 37,957 0 53,183 15,464 312,005 19,091 0 96,326 4,173 E:\FR\FM\15OCR2.SGM 15OCR2 2010 MY 601 170,426 1,162,804 229,846 1,780 1,799,039 57,942 1,745,891 1,235,346 411,016 247,878 354 310,940 63,409 875,484 15,915 0 258,252 28,940 2025 MY 639 464,394 1,626,246 380,332 1,894 2,439,045 97,411 2,958,020 1,799,254 1,053,281 388,723 377 315,916 83,389 1,231,925 36,701 0 315,196 52,883 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations 62683 TABLE II–7—ANNUAL SALES OF LIGHT-DUTY VEHICLES BY MANUFACTURER IN 2010 AND ESTIMATED FOR 2025— Continued Cars 2010 MY Light trucks 2025 MY 2010 MY Total 2025 MY 2010 MY 2025 MY Tata/JLR ................................................... Tesla ........................................................ Toyota ...................................................... Volkswagen .............................................. 11,279 0 1,508,866 284,046 30,949 0 1,622,242 479,423 37,475 0 696,324 36,327 50,369 0 921,183 105,009 48,754 0 2,205,190 320,373 81,319 0 2,543,426 584,432 Total .................................................. 7,176,330 10,981,082 4,013,850 5,473,718 11,190,180 16,454,800 TABLE II–8—ANNUAL SALES OF LIGHT-DUTY VEHICLES BY MARKET SEGMENT IN 2010 AND ESTIMATED FOR 2025 Cars Light Trucks 2010 MY 2025 MY 2010 MY 2025 MY Compact Conventional ...................... Compact Premium Conventional ...... Compact Premium Sporty ................. Compact Sporty ................................ Large Conventional ........................... Large Premium Conventional ........... Large Premium Sporty ...................... Midsize Conventional ........................ Midsize Premium Conventional ........ Midsize Premium Sporty ................... Midsize Sporty .................................. Sub-Compact Conventional .............. Unity Class * ...................................... 2,107,568 498,107 45,373 136,464 485,656 61,291 8,551 1,742,494 176,193 27,023 244,895 336,971 7,351 2,380,540 868,582 59,523 170,121 832,113 187,898 21,346 3,353,080 412,950 67,005 257,865 748,210 7,820 Compact CUV .................................. Compact MPV .................................. Compact Premium CUV ................... Compact Utility ................................. Large Pickup .................................... Large Premium Utility ....................... Large Utility ...................................... Large Van ......................................... Midsize CUV .................................... Midsize Pickup ................................. Midsize Premium CUV ..................... Midsize Premium Utility .................... Midsize Utility ................................... Midsize Van ...................................... 1,201,018 250,816 154,808 216,634 992,473 72,411 164,416 17,516 825,743 288,508 333,790 18,584 267,035 508,491 1,172,645 409,034 204,204 234,737 1,426,193 139,719 323,992 31,198 1,351,888 443,502 493,977 33,087 331,291 492,280 Total Sales * * ............................ 5,877,937 9,367,054 ........................................................... 5,312,243 7,087,746 * Unity Class—Is a special class created by the EPA for luxury brands that were not covered by the forecast. * * Total Sales are based on the classic Car/Truck definition. NHTSA has changed the definition of a truck for 2011 model year and beyond. The new definition has moved some 2 wheel drive SUVs and CUVs to the car category. Table II–9 shows the different volumes for car and trucks based on the new and old NHTSA definition. The table shows the difference in 2010, 2021, and 2025 to give a feel for how the change in definition changes the car/ truck split. TABLE II–9—NEW AND OLD CAR AND TRUCK DEFINITION IN 2010, 2016, 2021, AND 2025 Vehicle type 2010 2016 2021 2025 Old Cars Definition .......................................................................................... New Cars Definition ......................................................................................... 6,016,063 7,176,330 8,725,700 10,227,185 8,898,400 10,310,594 9,525,700 10,981,082 Old Truck Definition ......................................................................................... New Truck Definition ....................................................................................... 5,174,117 4,013,850 7,136,500 5,635,015 6,831,700 5,419,506 6,929,100 5,473,718 The LMC forecast provides estimates of car and truck sales by manufacturer 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–10 is an example of the data received from LMC. The task of estimating future sales using these tables is complex. Table II–11 is the LMC projected volumes for each manufacturer. Table II–12 has the LMC segment percentages for 2016, 2021, and 2025. We used a new methodology that is different than we used for the 2008 fleet projection. A detailed description of how the projection process was done is found in Chapter 1 of the TSD. sroberts on DSK5SPTVN1PROD with TABLE II–10—EXAMPLE OF THE LMC SEGMENTED CHRYSLER VOLUMES IN 2016, 2021, AND 2025 Manufacturer Chrysler/Fiat Chrysler/Fiat Chrysler/Fiat Chrysler/Fiat ............................ ............................ ............................ ............................ VerDate Mar<15>2010 01:07 Oct 13, 2012 LMC segment Compact Compact Compact Compact Jkt 229001 2016 Basic ....................................................................... Conventional ........................................................... CUV ........................................................................ MPV ........................................................................ PO 00000 Frm 00061 Fmt 4701 Sfmt 4700 2021 0 66,300 66,861 42,609 E:\FR\FM\15OCR2.SGM 15OCR2 0 80,131 73,867 73,673 2025 0 90,032 79,812 108,134 62684 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations TABLE II–10—EXAMPLE OF THE LMC SEGMENTED CHRYSLER VOLUMES IN 2016, 2021, AND 2025—Continued Manufacturer Chrysler/Fiat Chrysler/Fiat Chrysler/Fiat Chrysler/Fiat Chrysler/Fiat Chrysler/Fiat Chrysler/Fiat Chrysler/Fiat Chrysler/Fiat Chrysler/Fiat Chrysler/Fiat Chrysler/Fiat Chrysler/Fiat Chrysler/Fiat Chrysler/Fiat Chrysler/Fiat Chrysler/Fiat Chrysler/Fiat LMC segment ............................ ............................ ............................ ............................ ............................ ............................ ............................ ............................ ............................ ............................ ............................ ............................ ............................ ............................ ............................ ............................ ............................ ............................ 2016 Compact Premium Conventional ........................................... Compact Premium CUV ......................................................... Compact Premium Sporty ...................................................... Compact Utility ....................................................................... Large Conventional ................................................................ Large Pickup .......................................................................... Large Van ............................................................................... Midsize Conventional ............................................................. Midsize CUV ........................................................................... Midsize Pickup ....................................................................... Midsize Premium Conventional .............................................. Midsize Premium CUV ........................................................... Midsize Premium Sporty ........................................................ Midsize Sporty ........................................................................ Midsize Utility ......................................................................... Midsize Van ............................................................................ Sub-Compact Conventional ................................................... Unity Class* ............................................................................ 2021 32,080 10,780 164 227,901 182,468 334,980 19,981 106,105 82,615 31,246 9,078 10,983 4,132 0 219,206 181,402 77,361 3,163 36,654 11,229 151 249,383 231,692 366,592 20,639 108,965 90,608 42,374 13,074 19,432 3,753 0 185,386 155,543 75,478 3,163 2025 40,287 11,811 140 274,171 251,766 382,492 21,569 112,637 95,281 48,862 15,891 24,749 3,728 0 162,149 145,019 79,533 3,163 * Note: Unity Class is created by EPA to account for luxury brands. TABLE II–11 LMC MANUFACTURER VOLUMES IN 2016, 2021, AND 2025 Manufacturer 2016 2021 2025 Aston Martin ................................................................................................................................. BMW ............................................................................................................................................ Daimler ......................................................................................................................................... Chrysler/Fiat ................................................................................................................................. Ford .............................................................................................................................................. Geely ............................................................................................................................................ GM ............................................................................................................................................... Honda .......................................................................................................................................... Hyundai ........................................................................................................................................ Lotus ............................................................................................................................................ Mazda .......................................................................................................................................... Mitsubishi ..................................................................................................................................... Nissan .......................................................................................................................................... Subaru ......................................................................................................................................... Spyker .......................................................................................................................................... Suzuki .......................................................................................................................................... Tata/JLR ...................................................................................................................................... Toyota .......................................................................................................................................... Volkswagen .................................................................................................................................. 601 411,137 354,175 1,709,415 2,692,193 91,711 3,382,343 1,635,473 1,325,712 354 309,864 69,397 1,221,374 313,619 ........................ 44,935 83,824 2,492,707 608,484 601 441,500 385,197 1,841,787 2,818,737 97,548 3,532,217 1,758,092 1,378,186 354 308,298 80,028 1,247,279 321,934 ........................ 48,861 87,169 2,582,404 604,255 601 461,752 404,899 1,951,226 2,935,409 100,912 3,676,282 1,838,444 1,438,427 354 318,450 87,468 1,288,609 339,206 ........................ 52,594 89,011 2,658,145 619,274 TABLE II–12—LMC SEGMENT PERCENTAGES IN 2016, 2021, AND 2025 2016 (percent) sroberts on DSK5SPTVN1PROD with LMC segment Unity Class* ................................................................................................................................. Compact Basic ............................................................................................................................. Compact Conventional ................................................................................................................ Compact CUV .............................................................................................................................. Compact MPV .............................................................................................................................. Compact Premium Conventional ................................................................................................. Compact Premium CUV .............................................................................................................. Compact Premium Sporty ........................................................................................................... Compact Sporty ........................................................................................................................... Compact Utility ............................................................................................................................. Large Conventional ...................................................................................................................... Large Pickup ................................................................................................................................ Large Premium Conventional ...................................................................................................... Large Premium Pickup ................................................................................................................ Large Premium Sporty ................................................................................................................. Large Premium Utility .................................................................................................................. Large Utility .................................................................................................................................. Large Van .................................................................................................................................... Midsize Conventional ................................................................................................................... Midsize CUV ................................................................................................................................ Midsize Pickup ............................................................................................................................. VerDate Mar<15>2010 01:07 Oct 13, 2012 Jkt 229001 PO 00000 Frm 00062 Fmt 4701 Sfmt 4700 E:\FR\FM\15OCR2.SGM 0.04 0.00 12.44 7.74 2.61 4.59 1.49 0.41 0.95 1.37 3.95 12.62 0.88 0.00 0.09 0.91 2.32 2.24 16.49 9.28 2.56 15OCR2 2021 (percent) 0.04 0.00 12.07 7.38 2.47 4.68 1.54 0.34 0.91 1.45 4.27 12.95 0.95 0.00 0.11 0.91 2.21 2.34 17.04 8.84 2.79 2025 (percent) 0.04 0.00 12.03 7.30 2.56 4.69 1.55 0.31 0.88 1.53 4.27 12.92 0.98 0.00 0.11 0.91 2.11 2.40 17.17 8.92 2.89 62685 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations TABLE II–12—LMC SEGMENT PERCENTAGES IN 2016, 2021, AND 2025—Continued 2016 (percent) LMC segment Midsize Premium Conventional ................................................................................................... Midsize Premium CUV ................................................................................................................ Midsize Premium Sporty .............................................................................................................. Midsize Premium Utility ............................................................................................................... Midsize Sporty ............................................................................................................................. Midsize Utility ............................................................................................................................... Midsize Van ................................................................................................................................. Sub-Compact Conventional ......................................................................................................... 2021 (percent) 2.06 2.87 0.40 0.23 1.59 2.57 3.53 3.77 2025 (percent) 2.18 3.08 0.36 0.22 1.41 2.42 3.32 3.72 2.21 3.11 0.34 0.22 1.33 2.16 3.21 3.85 * Note: Unity Class is created by EPA to account for luxury brands. The overall result was a projection of car and truck sales for model years 2017–2025—the reference fleet—which matched the total sales projections of the AEO forecast and the manufacturer and segment splits of the LMC forecast. These sales splits are shown in Table II– 13 below. TABLE II–13—CAR AND TRUCK VOLUMES AND SPLIT BASED ON NHTSA NEW TRUCK DEFINITION 2016 Car Volume* ................................. Truck Volume* .............................. Car Split ....................................... Truck Split .................................... * In 2017 2018 2019 2020 2021 2022 2023 2024 2025 10,227 5,635 64.5% 35.5% 10,213 5,599 64.6% 35.4% 10,089 5,516 64.7% 35.3% 10,140 5,522 64.7% 35.3% 10,194 5,436 65.2% 34.8% 10,311 5,420 65.5% 34.5% 10,455 5,432 65.8% 34.2% 10,594 5,413 66.2% 33.8% 10,812 5,435 66.5% 33.5% 10,981 5,474 66.7% 33.3% thousands. The final step in the construction of the 2010 model year based fleet involves applying additional technology to individual vehicle models—that is, technology beyond that already present in MY 2010——reflecting alreadypromulgated standards through MY 2016, and reflecting the assumption that MY 2016 standards would continue to apply in each model year through MY 2025. A description of the agencies’ modeling work to develop their respective final reference (or adjusted baseline) fleets appear in the agencies’ respective RIAs. 8. What are the Differences in the Sales Volumes and Characteristics of the MY 2008 Based and the MY 2010 Based Fleets Projections? Table II–14 is the difference in actual and projected sales volumes between the 2010 based and the 2008 based fleet forecast. This summary table is the most convenient way to compare the projections from CSM and LMC, since the forecasting companies use different segmentations of vehicles. It also provides a comparison of the two AEO forecasts since the projections are normalized to AEO’s total volume of cars and trucks in each year of the projection. The table shows a total projected reduction from the 2008 fleet to the 2010 fleet in 2025 of .5 million cars and .8 million trucks. The largest manufacturer changes in the 2025 model projections are for Chrysler and Toyota. The newer projection increases Chrysler’s total vehicles by .9 million vehicles, while it decreases Toyota’s total vehicles by .8 million. The table also shows that the total actual reduction in cars from 2008 MY to 2010 MY is 1.0 million vehicles, and the reduction in trucks is 1.6 million vehicles. TABLE II–14—DIFFERENCES IN ANNUAL SALES OF LIGHT-DUTY VEHICLES BY MANUFACTURER Cars sroberts on DSK5SPTVN1PROD with 2010–2008 MY Aston Martin ............................................. BMW ........................................................ Chrysler/Fiat ............................................. Daimler ..................................................... Ferrari ....................................................... Ford .......................................................... Geely ........................................................ GM ........................................................... Honda ....................................................... Hyundai .................................................... Kia ............................................................ Lotus ........................................................ Mazda ...................................................... Mitsubishi ................................................. Nissan ...................................................... Porsche .................................................... Spyker ...................................................... Subaru ...................................................... VerDate Mar<15>2010 01:07 Oct 13, 2012 Jkt 229001 ¥769 ¥148,158 ¥206,160 ¥50,742 330 ¥16,458 ¥37,426 ¥576,867 ¥161,321 37,787 4,177 102 2,828 ¥31,095 ¥97,951 ¥6,972 ¥21706 68,552 PO 00000 Frm 00063 Light trucks 2010–2008 MY 2025 MY ¥543 ¥41,876 463,364 ¥79,477 ¥5,764 ¥98,759 ¥35,224 22,538 ¥45,087 258,369 ¥12,018 61 ¥44,072 ¥5,380 ¥94,855 ¥23,087 ¥23130 ¥38,100 Fmt 4701 Sfmt 4700 0 ¥34,536 ¥290,986 ¥6,742 0 44,604 ¥3,029 ¥772,430 ¥115,112 ¥17,798 ¥37,751 0 5,566 ¥6,225 ¥49,980 ¥14,819 ¥4250 ¥8,881 Total 2025 MY 0 ¥44,396 394,641 18,023 0 313,218 ¥11,060 ¥262,462 ¥53,677 ¥50,474 ¥59,696 0 ¥8,185 ¥20,923 ¥114,449 7,872 ¥3475 21,604 E:\FR\FM\15OCR2.SGM 15OCR2 2010–2008 MY ¥769 ¥182,694 ¥497,146 ¥57,484 330 28,146 ¥40,455 ¥1,349,297 ¥276,433 19,989 ¥33,574 102 8,394 ¥37,320 ¥147,931 ¥21,791 ¥25956 59,671 2025 MY ¥543 ¥86,271 858,005 ¥61,454 ¥5,764 214,459 ¥46,285 ¥239,923 ¥98,764 207,895 ¥71,713 61 ¥52,256 ¥26,303 ¥209,304 ¥15,214 ¥26605 ¥16,496 62686 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations TABLE II–14—DIFFERENCES IN ANNUAL SALES OF LIGHT-DUTY VEHICLES BY MANUFACTURER—Continued Cars 2010–2008 MY Light trucks 2010–2008 MY 2025 MY Total 2010–2008 MY 2025 MY 2025 MY Suzuki ...................................................... Tata/JLR ................................................... Tesla ........................................................ Toyota ...................................................... Volkswagen .............................................. ¥54,337 1,683 ¥800 248,502 ¥7,437 ¥54,444 ¥34,469 ¥31974 ¥485,811 ¥150,740 ¥31,381 ¥18,109 0 ¥254,812 9,328 ¥17,201 ¥6,436 0 ¥288,833 ¥49,275 ¥85,718 ¥16,426 ¥800 ¥6,310 1,891 ¥71,645 ¥40,904 ¥31974 ¥774,643 ¥200,015 Total .................................................. ¥1,054,238 ¥560,478 ¥1,607,343 ¥235,181 ¥2,661,581 ¥795,659 Table II–15 shows the change in volumes between the two forecasts for cars and trucks based on the new and old NHTSA definition. The table shows the change to give a feel for how the change in definition impacts the car/ truck split. Many factors impact the changes shown here including differences in AEO, differences in the number of SUV and CUV vehicles becoming cars, and the future volume projected by CSM and LMC. TABLE II–15—DIFFERENCES IN NEW AND OLD CAR AND TRUCK DEFINITION IN 2008, 2016, 2021, AND 2025 Vehicle type 2010–2008 ¥965,244 ¥1,054,238 ¥1,696,337 ¥1,607,343 Old Cars Definition .......................................................................................... New Cars Definition ......................................................................................... Old Truck Definition ......................................................................................... New Truck Definition ....................................................................................... Table II–16 is the changes in car and truck split due to the difference between the 2010 and 2008 forecast. The table shows that the different AEO forecasts, CSM and LMC projections have an 2016 2021 2025 148,983 86,722 ¥481,959 ¥419,698 ¥12,773 ¥194,571 ¥446,194 ¥264,396 ¥310,630 ¥560,478 ¥485,029 ¥235,181 insignificant impact on the car and truck split. TABLE II–16—DIFFERENCES IN CAR AND TRUCK VOLUMES AND SPLIT BASED ON NHTSA NEW TRUCK DEFINITION 2016 Car Volume * ............ Truck Volume * ......... Car Split ................... Truck Split ................ * in 2017 2018 2019 2020 2021 2022 2023 87 ¥419 1.9% ¥1.9% 225 ¥220 1.4% ¥1.4% 184 ¥155 1.1% ¥1.1% 144 ¥61 0.5% ¥0.5% ¥98 ¥168 0.5% ¥0.5% ¥194 ¥264 0.6% ¥0.6% ¥281 ¥272 0.5% ¥0.5% ¥374 ¥274 0.3% ¥0.3% ¥446 ¥241 0.0% 0.0% 2025 ¥561 ¥235 ¥0.2% 0.2% thousands. The joint TSD contains further comparisons of the two projections at the end of Chapter 1. So, given all of the discussion above, the agencies have created these two baselines to illustrate possible uncertainty in the future market forecast. The industry-wide differences between the forecasts are relatively minor, even if there are some fairly significant differences for individual manufacturers. Analysis under both baselines supports the agencies’ respective decisions as to the stringency of the final standards, as discussed further in Sections III and IV below. C. Development of Attribute-Based Curve Shapes sroberts on DSK5SPTVN1PROD with 2024 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 VerDate Mar<15>2010 01:07 Oct 13, 2012 Jkt 229001 2011 CAFE rule, NHTSA and EPA are promulgating 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.161 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 using engine size as the attribute,162 in the recent GHG standards for heavy duty pickups and vans using a work factor attribute,163 and in the MYs 161 49 U.S.C. 32902(a)(3)(A). FR 38958 (June 29, 2004). 163 76 FR 57106, 57162–64, (Sept. 15, 2011). 2012–2016 GHG rule itself which used vehicle footprint as the attribute). As for the MYs 2012–2016 rulemaking, public comments on the MYs 2017–2025 proposal widely supported attributebased standards for both agencies’ standards as further discussed in section II.C.2. 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 final rule, footprint, as discussed below). Each manufacturers’ fleet average standard is determined by the production-weighted 164 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 162 69 PO 00000 Frm 00064 Fmt 4701 Sfmt 4700 164 Production E:\FR\FM\15OCR2.SGM 15OCR2 for sale in the United States. Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with 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.165 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.166 Third, attribute-based standards provide a more equitable regulatory framework for different vehicle manufacturers.167 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 have the incentive to invest in technologies that improve the 165 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. 166 Assuming that the attribute is related to vehicle size. 167 2002 NAS Report at 4–5, finding 10. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 fuel economy of the vehicles they sell rather than shifting their 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 adopting, 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 promulgating CAFE and CO2 standard curves 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 for the vehicles covered by this rulemaking, 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 less safe. While NHTSA’s research of historical crash data also indicates that reductions in vehicle mass tend to compromise overall highway safety, reductions in vehicle footprint do so to a much greater extent. If footprint-based standards are defined in a way that creates a relatively uniform burden for compliance for vehicles of all sizes, then footprintbased standards should not create incentives for manufacturers to downsize their fleets as a strategy for compliance which could compromise societal safety, or to upsize their fleets which might reduce the program’s fuel savings and GHG emission reduction benefits. Footprint-based standards also enable manufacturers to apply weightefficient materials and designs to their vehicles while maintaining footprint, as an effective means to improve fuel economy and reduce GHG emissions. On the other hand, depending on their design, weight-based standards can create disincentives for manufacturers to apply weight-efficient materials and designs. This is because weight-based standards would become more stringent as vehicle mass is reduced. The agencies discuss mass reduction and its relation to safety in more detail in Preamble section II.G. 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 PO 00000 Frm 00065 Fmt 4701 Sfmt 4700 62687 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 to 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 168 that the possibility of gaming an attribute-based standard 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 easilyadjusted 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.169 This is not to say that a footprint-based system will eliminate gaming, or that a footprintbased system eliminates the possibility that manufacturers will change vehicles in ways that compromise occupant protection. Such risks cannot be completely avoided, and in the agencies’ judgment, footprint-based standards achieved the best balance among affected considerations. 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. The agencies recognize that a recent independent analysis, discussed below, suggests that the NPRM form of the MY 2014 standards could, under some circumstances posited by the authors, induce some increases in vehicle footprint. Underlining the potential uncertainty, considering a range of scenarios, the authors obtained a wide range of results in their analyses. As discussed in later in this section, 168 See 74 FR 14359 (Mar. 30, 2009). for heavy-duty pickups and vans not covered by today’s standards, the agencies determined that use of footprint and work factor as attributes for heavy duty pickup and van GHG and fuel consumption standards could reasonably avoid excessive risk of gaming. See 76 FR 57106, 57161– 62 (Sept. 15, 2011). 169 However, E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with 62688 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations slopes of the linear relationships underlying today’s standards are within the range of technically reasonable analyses of the relationships between fuel consumption and footprint, and the agencies continue to expect that there will not be significant shifts in the distribution of footprints as a direct consequence of this final rule. The agencies also recognize that some attribute-based standards in other countries/regions use attributes other than footprint and that there could be benefits for some manufacturers if there was greater international harmonization of fuel economy and GHG standards for light-duty vehicles, but this is largely a question of how stringent standards are and how they are tested and enforced. It is entirely possible that footprintbased 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 fuel economy and related GHG emissions test procedures and standards might be approached in ways that least burden manufacturers while respecting each country’s need to meet its own particular challenges. In the NPRM, the agencies stated that we 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 sought comment on whether the agencies should consider setting standards for the final rule based on another attribute or another combination of attributes. The agencies also specifically requested 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. The agencies received several comments regarding the attribute(s) upon which post-MY 2016 CAFE and GHG standards should be based. The National Auto Dealers Association VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 (NADA) 170 and the Consumer Federation of America (CFA) 171 expressed support for attribute-based standards, generally, indicating that such standards accommodate consumer preferences, level the playing field between manufacturers, and remove the incentive to push consumers into smaller vehicles. Many commenters, including automobile manufacturers, NGOs, trade associations and parts suppliers (e.g., General Motors,172 Ford,173 American Chemistry Council,174 Alliance of Automobile Manufacturers,175 International Council on Clean Transportation,176 Insurance Institute for Highway Safety,177 Society of the Plastics Industry,178 Aluminum Association,179 Motor and Equipment Manufacturers Association,180 and others) expressed support for the continued use of vehicle footprint as the attribute upon which to base CAFE and CO2 standards, citing advantages similar to those mentioned by NADA and CFA. Conversely, the Institute for Policy Integrity (IPI) at the New York University School of Law questioned whether non-attribute-based (flat) or an alternative attribute basis would be preferable to footprint-based standards as a means to increase benefits, improve safety, reduce ‘‘gaming,’’ and/or equitably distribute compliance obligations.181 IPI argued that, even under flat standards, credit trading provisions would serve to level the playing field between manufacturers. IPI acknowledged that NHTSA, unlike EPA, is required to promulgate attributebased standards, and agreed that a footprint-based system could be at much less risk of gaming than a weight-based system. IPI suggested that the agencies consider a range of options, including a fuel-based system, and select the approach that maximizes net benefits. 170 NADA, Docket No. NHTSA–2010–0131–0261, at 11. 171 CFA, Docket No. EPA–HQ–OAR–2010–0799– 9419 at 810, 44. 172 GM, Docket No. NHTSA–2010–0131–0236, at 2. 173 Ford, Docket No. NHTSA–2010–0131–0235, at 8. 174 ACC, Docket No. EPA–HQ–OAR–2010–0799– 9517 at 2. 175 Alliance, Docket No. NHTSA–2010–0131– 0262, at 85. 176 ICCT, Docket No. NHTSA–2010–0131–0258, at 48. 177 IIHS, Docket No. NHTSA–2010–0131–0222, at 1. 178 SPI, Docket No. EPA–HQ–OAR–2010–0799– 9492 at 4. 179 Aluminum Association, Docket No. NHTSA– 2010–0131–0226, at 1. 180 MEMA, Docket No. EPA–HQ–OAR–2010– 0799–9478 at 1. 181 IPI, Docket No. EPA–HQ–OAR–2010–0799– 11485 at 13–15. PO 00000 Frm 00066 Fmt 4701 Sfmt 4700 Ferrari and BMW suggested that the agencies consider weight-based standards, citing the closer correlation between fuel economy and footprint, and BMW further suggested that weightbased standards might facilitate international harmonization (i.e., between U.S. standards and related standards in other countries).182 Porsche commented that the footprint attribute is not well suited for manufacturers of high performance vehicles with a small footprint.183 Regarding the comments from IPI, as IPI appears to acknowledge, EPCA/EISA expressly requires that CAFE standards be attribute-based and defined in terms of mathematical functions. Also, NHTSA has, in fact, considered and reconsidered options other than footprint, over the course of multiple CAFE rulemakings conducted throughout the past decade. When first contemplating attribute-based systems, NHTSA considered attributes such as weight, ‘‘shadow’’ (overall area), footprint, power, torque, and towing capacity. NHTSA also considered approaches that would combine two or potentially more than two such attributes. To date, every time NHTSA (more recently, with EPA) has considered options for light-duty vehicles, the agency has concluded that a properly designed footprint-based approach provides the best means of achieving the basic policy goals (i.e., by reducing disparities between manufacturers’ compliance burdens, increasing the likelihood of improved fuel economy and reduced GHG emissions across the entire spectrum of footprint targets; and by reducing incentives for manufacturers to respond to standards by reducing vehicle size in ways that could compromise overall highway safety) involved in applying an attribute-based standards, and at the same time structuring footprint-based standards in a way that furthers the energy and environmental policy goals of EPCA and the CAA by not creating inappropriate incentives to increase vehicle size in ways that could increase fuel consumption and GHG emissions. As to IPI’s suggestion to use fuel type as an attribute, although neither NHTSA nor EPA have presented quantitative analysis of standards that differentiate between fuel type, such standards would effectively use fuel type to identify different subclasses of vehicles, thus requiring mathematical functions— not addressed by IPI’s comments—to 182 BMW, Docket No. NHTSA–2010–0131–0250, at 3. 183 Porsche, Docket No. EPA–HQ–OAR–2010– 0799–9264. E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations recombine these fuel types into regulated classes. Insofar as EPCA/EISA already specifies how different fuel types are to be treated for purposes of calculating fuel economy and CAFE levels, and moreover, insofar as the EISA revisions to EPCA removed NHTSA’s previously-clear authority to set separate CAFE standards for different classes of light trucks, using fuel type to further differentiate subclasses of vehicles could conflict with the intent, and possibly the letter, of NHTSA’s governing statute. Finally, in the agencies’ judgment, while regarding IPI’s suggestion that the agencies select the attribute-based approach that maximizes net benefits may have merit, net benefits are but one of many considerations which lead to the setting of the standard. Also, such an undertaking would be impracticable at this time, considering that the mathematical forms applied under each attribute-based approach would also need to be specified, and that the agencies lack methods to reliably quantify the relative potential for induced changes in vehicle attributes. Regarding Ferrari’s and BMW’s comments, as stated previously, in the agencies’ judgment, footprint-based standards (a) discourage vehicle downsizing that might compromise occupant protection, (b) encourage the application of technology, including weight-efficient materials (e.g., highstrength steel, aluminum, magnesium, composites, etc.), and (c) are less susceptible than standards based on other attributes to ‘‘gaming’’ that could lead to less-than-projected energy and environmental benefits. It is also important to note that there are many differences between both the standards and the on-road light-duty vehicle fleets in Europe and the United States. The stringency of standards, independent of the attribute used, is another factor that influences harmonization. While the agencies agree that international harmonization of test procedures, calculation methods, and/or standards could be a laudable goal, again, harmonization is not simply a function of the attribute upon which the standards are based. Given the differences in the on-road fleet, in fuel composition and availability, in regional consumer preferences for different vehicle characteristics, in other vehicle regulations besides for fuel economy/ CO2 emissions, and in the balance of program goals given all of these factors in the model years affected, among other things, it would not necessarily be expected that the CAFE and GHG emission standards would align with VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 standards of other countries. Thus, the agencies continue to judge vehicle footprint to be a preferable attribute for the same reasons enumerated in the proposal and reiterated above. Finally, as explained in section III.B.6 and documented in section III.D.6 below, EPA agrees with Porsche that the MY2017 GHG standards, and the GHG standards for the immediately succeeding model years, pose special challenges of feasibility and (especially) lead time for intermediate volume manufacturers, in particular for limitedline manufacturers of smaller footprint, high performance passenger cars. It is for this reason that EPA has provided additional lead time to these manufacturers. NHTSA, however, is providing no such additional lead time. As required under EISA/EPCA, manufacturers continue—as since the 1970s—to have the option of paying civil penalties in lieu of achieving compliance with the standards, and NHTSA is uncertain as to what authority would allow it to promulgate separate standards for different classes of manufacturers, having raised this issue in the proposal and having received no legal analysis with suggestions from Porsche or other commenters. 3. How have the agencies changed the mathematical functions for the MYs 2017–2025 standards, and why? By requiring NHTSA to set CAFE standards that are attribute-based and defined by a mathematical function, NHTSA interprets Congress as intending that the post-EISA standards to be datadriven—a mathematical function defining the standards, in order to be ‘‘attribute-based,’’ should reflect the observed relationship in the data between the attribute chosen and fuel economy.184 EPA is also setting attribute-based 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,185 and which supports a harmonization with the CAFE standards. The relationship between fuel economy (and GHG emissions) and footprint, though directionally clear 184 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. 185 See 76 FR 74913 et seq. (Dec. 1, 2011). PO 00000 Frm 00067 Fmt 4701 Sfmt 4700 62689 (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.186 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 since the statutes do not dictate a particular mathematical function for curve shape. 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 reduce GHG emissions.187 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 reflect legitimate policy judgments, where the agencies adjust the function that would define the relationship in order to achieve environmental goals, reduce petroleum consumption, encourage application of fuel-saving technologies, not adversely affect highway safety, reduce disparities of manufacturers’ compliance burdens (increasing the likelihood of improved fuel economy and reduced GHG emissions across the entire spectrum of footprint targets), 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) 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 target curves that define 186 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. 187 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. E:\FR\FM\15OCR2.SGM 15OCR2 62690 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with the MYs 2017–2025 CAFE and CO2 standards presented in this final rule, and the technical work supporting selection of the curves defining those standards. 4. What curves are the agencies promulgating for MYs 2017–2025? The mathematical functions for the MYs 2017–2025 curves are somewhat changed from the functions for the MYs 2012–2016 curves, in response to comments received from stakeholders pre-proposal in order to address technical concerns and policy goals that the agencies judge more significant in this rulemaking than in the prior one, given their respective timeframes, and have retained those same mathematical functions for the final rule as supported by commenters. 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 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 curves to account 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, as in past rules, the agencies added equivalent levels of technology to the baseline fleet as a starting point for the curve analysis. The agencies continue to believe that this is a valid method to adjust for technology differences between actual vehicle models in the MY 2008 and MY 2010 fleets. The statistical method for fitting that curve, however, was revisited by the agencies in this rule. For the NPRM, the agencies chose to fit the proposed standard curves using an ordinary leastsquares formulation, on sales-weighted data, using a fleet that has had technology applied, and after adjusting the data for the effects of weight-tofootprint, as described below. This represented 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 VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 (the inverse of fuel economy), CO2 emission rates, and footprint, thereby providing a range within which decisions about standards would be potentially supportable. In preparing for analysis supporting today’s final rule, the agencies updated analytical inputs, including by developing two market forecasts (as discussed above in Section II.B of the preamble and in Chapter 1 of the joint TSD). Using all of this information, the agencies repeated the curve fitting analysis, once for each market forecast. The agencies obtained results that were broadly similar, albeit not identical, to those supporting the NPRM. Results obtained for the NPRM and for today’s final rule span similar regions in footprint—fuel economy space, areas within which it would be technically reasonable to select specific linear relationships upon which to base new attribute-based standards. The agencies thus believe it is reasonable to finalize the curves as proposed. This updated analysis is presented in Chapter 2 of the joint TSD. 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 between when the MYs 2012–2016 final rule was issued and when the MYs 2017–2025 NPRM was issued, NHTSA and EPA 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 production of 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 PO 00000 Frm 00068 Fmt 4701 Sfmt 4700 explain how fuel economy should depend on footprint.188 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 improvements without compromising load carrying and towing capacity. The related issue of the stringency of the CAFE and GHG standards for light trucks is discussed in sections and III.D and IV.F of the preamble to this final rule. In developing the curve shapes for the 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 continued to believe that the methodology for fitting curves for the MYs 2012–2016 standards was technically sound, we recognized manufacturers’ concerns regarding their abilities to comply with a similarly shallow curve after MY 2016 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 the economic losses that could be incurred if curve shapes unduly discourage market shifts—including vehicle upsizing—that have vehicle buyers value. In addition, the agencies sought to improve the balance of compliance burdens among manufacturers, and thereby increase the likelihood of improved fuel economy and reduced GHG emissions across the entire spectrum of footprint targets. 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, potentially compromising highway safety. • Flatter standards potentially impact the utility of vehicles by providing an incentive for vehicle downsizing. • Steeper footprint-based standards may create incentives to upsize 188 See E:\FR\FM\15OCR2.SGM footnote 186 15OCR2 sroberts on DSK5SPTVN1PROD with Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations vehicles, thus increasing the possibility that fuel economy and greenhouse gas reduction benefits will be less than expected. • Given the same industry-wide average required fuel economy or CO2 level, flatter standards tend to place greater compliance burdens on full-line manufacturers. • Given the same industry-wide average required fuel economy or CO2 level, steeper standards tend to place greater compliance burdens on limitedline 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 ways that could compromise overall 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 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 weighing and consideration. Ultimately, the agencies did not agree that the MY 2017 target curves for the proposal, on a relative basis, should be made significantly flatter than the MY 2016 curve,189 as we believed that this would undo some of the safety-related incentives and balancing of compliance burdens among manufacturers—effects that attribute-based standards are intended to provide. Nonetheless, the agencies recognized full-line OEM concerns and tentatively concluded that further increases in the stringency of the light truck standards would be more feasible if the light truck curve was made steeper than the MY 2016 truck curve and the right (large footprint) cut-point was extended over time to larger footprints. This conclusion was supported by the agencies’ technical analyses of regulatory alternatives defined using the curves developed in the manner described below. The Alliance, GM, and the UAW commented in support of the 189 While ‘‘significantly’’ flatter is subjective, the year over year change in curve shapes is discussed in greater detail in Section II.C.6.a and Chapter 2 of the joint TSD. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 reasonableness of the agencies’ proposals regarding the shape and slope of the curves and how they were developed, although the Alliance stated that the weighting and regression analysis used to develop the curves for MYs 2022–2025 should be reviewed during the mid-term evaluation process. Other commenters objected to specific aspects of the agencies’ approach to developing the curves. ACEEE provided extensive comments, arguing generally that agencies appeared to be proposing curve choices in response to subjective policy concerns (namely, protecting large trucks) rather than on a sound technical basis.190 ACEEE recommended that the agencies choose ‘‘the most robust technical approach,’’ and then make policy-driven adjustments to the curves for a limited time as necessary, and explain the curves in those terms, revisiting this issue for the final rule.191 The agencies reaffirm the reasonable technical and policy basis for selecting the truck curve. Three primary drivers form this technical basis: (a) The largest trucks have unique equipment and design, as described in the Ford comment referenced below in section II.C.4.f; (b) the agencies agree with those large truck manufacturers who indicated in discussions prior to the proposal that they believed that the light truck standard should be somewhat steeper after MY 2016, primarily because, after more than ten recent years of progressive increases in the stringency of applicable CAFE standards (after nearly ten years during which Congress did not allow NHTSA to increase light truck CAFE standards), manufacturers of large pickups would have limited options to comply with more stringent standards without resorting to compromising large truck load carrying and towing capacity; and (c) given the relatively few platforms which comprise the majority of the sales at the largest truck footprints, the agencies were concerned about requiring levels of average light truck performance that might lead to overly aggressive technology penetration rates in this important segment of the work fleet. Specifically, the agencies were concerned at proposal, and remain concerned about issues of lead time and cost with regard to manufacturers of these work vehicles. As noted later in this chapter, while the largest trucks are a small segment of the overall truck fleet, and an even smaller segment of 190 ACEEE comments, Docket No. EPA–HQ– OAR–2010–0799–9528 at 6. 191 Id. PO 00000 Frm 00069 Fmt 4701 Sfmt 4700 62691 the overall fleet, 192 these changes to the truck slope have been made in order to provide a clearer path toward compliance for manufacturers of these vehicles, and reduce the potential that new standards would lead these manufacturers to choose to downpower, modify the structure, or otherwise reduce the utility of these work vehicles. As discussed in the NPRM and in Chapter 2 of the TSD, as well as in section III.D and IV.E below, we considered all of the utilized methods of normalizing (including not normalizing) fuel economy levels and the different methods for fitting functional forms to the footprint and fuel economy and CO2 levels, to be technically reasonable options. We indicated that, within the range spanned by these technically reasonable options, the selection of curves for purposes of specifying standards involves consideration of technical concerns and policy implications. Having considered the above comments on the estimation and selection of curves, we have not changed our judgment about the process—that is, that the agencies can make of policy-informed selection within the range spanned by technically reasonable quantitative methods. We disagree with ACEEE’s portrayal of this involving the ‘‘protection’’ of large trucks. We have selected a light truck slope that addresses real engineering aspects of large light trucks and real fleet aspects of the manufacturers producing these trucks, and sought to avoid creating an incentive for such manufacturers to reduce the hauling and towing capacity of these vehicles, an undesirable loss of utility. Such concerns are applicable much more directly to light trucks than to passenger cars. The resulting curves are well within the range of curves we have estimated. The steeper slope at the right hand of the truck curve recognizes the physical differences in these larger vehicles 193 and the fleet differences in 192 The agencies’ market forecast used at proposal 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, In the MY2010 based market forecast, there are 14 vehicle configurations with a total volume of 130,000 vehicles or less during any MY in the 2017–2025 time frame. This is a similarly small portion of the overall number of vehicle models or vehicle sales. 193 As Ford Motor Company detailed, in its public comments, ‘‘towing capability generally requires increased aerodynamic drag caused by a modified frontal area, increased rolling resistance, and a heavier frame and suspension to support this additional capability.’’ Ford further noted that these vehicles further require auxiliary transmission oil coolers, upgraded radiators, trailer hitch connectors E:\FR\FM\15OCR2.SGM Continued 15OCR2 62692 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with manufacturers that produce them. Further, we disagree with ACEEE’s suggestion that the agencies should commit to a particular method for selecting curves; as the approaches we have considered demonstrate that the range of technically reasonable curve fitting methods spans a wide range, indicating uncertainty that could make it unwise to ‘‘lock in’’ a particular method for all future rulemakings. The agencies plan on observing fleet trends in the future to see if there are any unexpected shifts in the distribution of technology and utility within the footprint range for both cars and trucks. We note that comments by CBD, ACEEE, NACAA, and an individual, Yegor Tarazevich, referenced a 2011 study by Whitefoot and Skerlos, ‘‘Design incentives to increase vehicle size created from the U.S. footprint-based fuel economy standards.’’ 194 This study concluded that MY 2014 standards, as proposed, ‘‘create an incentive to increase vehicle size except when consumer preference for vehicle size is near its lower bound and preference for acceleration is near its upper bound.’’ 195 The commenters who cited this study generally did so as part of arguments in favor of flatter standards (i.e., curves that are flatter across the range of footprints) for MYs 2017–2025. While the agencies consider the concept of the Whitefoot and Skerlos analysis to have some potential merits, it is also important to note that, among other things, the authors assumed different inputs than the agencies actually used in the MYs 2012–2016 rule regarding the baseline fleet, the cost and efficacy of potential future technologies, and the relationship between vehicle footprint and fuel economy. Were the agencies to use the Whitefoot and Skerlos methodology (e.g., methods to simulate manufacturers’ potential decisions to increase vehicle footprint) with the actual inputs to the MYs 2012–2016 rules, the agencies would likely obtain different findings. Underlining the potential uncertainty, the authors obtained a wide range of results in their analyses. Insofar as Whitefoot and Skerlos found, for some scenarios, that manufacturers might respond to footprint-based standards by and wiring harness equipment, different steering ratios, upgraded rear bumpers and different springs for heavier tongue load (for upgraded towing packages), body-on-frame (vs. unibody) construction (also known as ladder frame construction) to support this capability and an aggressive duty cycle, and lower axle ratios for better pulling power/capability. 194 Available at Docket No. EPA–HQ–OAR–2010– 0799. 195 page 410. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 deliberately increasing vehicle footprint, these findings are attributable to a combination of (a) the assumed baseline market characteristics, (b) the assumed cost and fuel economy impacts involved in increasing vehicle footprint, (c) the footprint-based fuel economy targets, and (d) the assumed consumer preference for vehicle size. Changes in any of these assumptions could yield different analytic results, and potentially result in different technical implications for agency action. As the authors note when interpreting their results: ‘‘Designing footprint-based fueleconomy standards in practice such that manufacturers have no incentive to adjust the size of their vehicles appears elusive at best and impossible at worst.’’ Regarding the cost impacts of footprint increases, that authors make an ad hoc assumption that changes in footprint would incur costs linearly, such that a 1% change in footprint would entail a 1% increase in production costs. The authors refer to this as a conservative assumption, but present no supporting evidence. The agencies have not attempted to estimate the engineering cost to increase vehicle footprint, but we expect that it would be considerably nonlinear, with costs increasing rapidly once increases available through small incremental changes—most likely in track width— have been exhausted. Moreover, we expect that were a manufacturer to deliberately increase footprint in order to ease compliance burdens, it would confine any significant changes to coincide with vehicle redesigns, and engaging in multiyear planning, would consider how the shifts would impact compliance burdens and consumer desirability in ensuing model years. With respect to the standards promulgated today, the standards become flatter over time, thereby diminishing any ‘‘reward’’ for deliberately increasing footprint beyond normal market expectations. Regarding the fuel economy impacts of footprint increases, the authors present a regression analysis based on which increases in footprint are estimated to entail increases in weight which are, in turn, estimated to entail increases in fuel consumption. However, this relationship was not the relationship the agencies used to develop the MY 2014 standards the authors examine in that study. Where the target function’s slope is similar to that of the tendency for fuel consumption to increase with footprint, fuel economy should tend to decrease approximately in parallel with the fuel economy target, thereby obviating the ‘‘benefit’’ of deliberate increases in PO 00000 Frm 00070 Fmt 4701 Sfmt 4700 vehicle footprint. The agencies’ analysis supporting today’s final rule indicates relatively wide ranges wherein the relationship between fuel consumption and footprint may reasonably be specified. As part of the mid-term evaluation and future NHTSA rulemaking, the agencies plan to further investigate methods to estimate the potential that standards might tend to induce changes in the footprint. The agencies will also continue to closely monitor trends in footprint (and technology penetration) as manufacturers come into compliance with increasing levels of the footprint standards. b. What methodologies and data did the agencies consider in developing the MYs 2017–2025 curves? 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 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 proposed standard developed by a given combination of these statistical methods was 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. As discussed below, for today’s final rule, the agencies used updated information to repeat these analyses, found that results were generally similar and spanned a similarly wide range, and found that the curves underlying the E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations proposed standards were well within this range. 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 the proposal (i.e., the baseline fleet), with vehicles’ fuel economy levels and technological characteristics at MY 2008 levels.196 For today’s final rule, the agencies made minor corrections to this market forecast, and also developed a MY 2010based market forecast. The development, scope, and content of these market forecasts are discussed in detail in Chapter 1 of the joint Technical Support Document supporting the rulemaking. sroberts on DSK5SPTVN1PROD with d. What adjustments did the agencies evaluate? 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 2003.197 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 support policy outcomes the agencies judged to be more desirable. 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 196 While the agencies jointly conducted this analysis, the coefficients ultimately used in the slope setting analysis are from the CAFE model. 197 68 FR 74920–74926. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 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, ISGs, strong HEVs, PHEVs, EVs, and FCVs. The agencies included 15 percent mass reduction on all vehicles.198 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 most multi-attribute standards to be more subject to gaming than a footprint-only standard.199,200 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 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 promulgating a multi-attribute standard; the proposed fuel economy and CO2 targets for each vehicle are still functions of footprint alone. No 198 As described in the preceding paragraph, applying technology in this manner helps to reduce the effect of technology differences across the vehicle fleet. The particular technologies used for the normalization were chosen as a reasonable selection of technologies which could potentially be used by manufacturers over this time period. 199 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 be calculated as follows: target = f(SWA), where target is the fuel economy target applicable to a given vehicle model and SWA = footprint + torque1/1.5 + weight 1/2.5. (NHTSA–2008–0089–0174.) 200 74 FR 14359. PO 00000 Frm 00071 Fmt 4701 Sfmt 4700 62693 adjustment will be used in the compliance process. For the proposal, the agencies also examined some differences between the technology-adjusted 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’ MY 2008-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 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. While the agencies considered this technique for purposes of fitting curves, the agencies are not promulgating a multi-attribute standard, as the proposed fuel economy and CO2 targets for each vehicle are still functions of footprint alone. No adjustment will be used in the compliance process. For today’s final rule, the agencies repeated the above analyses, using the corrected MY 2008-based market forecast and, separately, the MY 2010based market forecasts. As discussed in section 2.6 of the joint TSD and further detailed in a memorandum available at Docket No. NHTSA–2010–0131–0325, doing so produced results similar to the analysis used in the proposal. The agencies sought comment on the appropriateness of the adjustments 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 E:\FR\FM\15OCR2.SGM 15OCR2 62694 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with and reduce CO2 emissions. The agencies also sought comment regarding whether these adjustments effectively ‘‘lock in’’ through MY 2025 relationships that were observed in MY 2008. ACEEE objected to the agencies’ adjustments to the truck curves, arguing that if the truck slope needs to be adjusted for ‘‘density,’’ then that suggests that the MY 2008-based market forecast used to build up the reference fleet must be ‘‘incorrect and show * * * unrealistically low pickup truck fuel consumption, due to the overstatement of the benefits of certain technologies.’’ 201 ACEEE stated that ‘‘If that is the case, the agencies should revisit the adjustments made to generate the reference fleet and remove technologies from pickups that are not suited to those trucks,’’ which ‘‘would be a far more satisfactory approach than the speculative and non-quantitative approach of adjusting for vehicle density.’’ 202 ACEEE further stated that ‘‘the fuel consumption trend that the density adjustment is meant to correct appears in the unadjusted fleet as well as the technology-adjusted fleet of light trucks (TSD Figures 2–1 and 2–2),’’ which they argued is evidence that ‘‘the flattening of fuel consumption at higher footprints is not a byproduct of unrealistic technology adjustments, but rather a reflection of actual fuel economy trends in today’s market.’’ 203 ACEEE stated that therefore it did not make sense to adjust the fuel consumption of ‘‘lowdensity’’ trucks upwards before fitting the curve.204 ACEEE pointed out that it would appear that trucks’ HP-to-weight ratio should be higher than the agencies’ analysis indicated, and stated that the weight-based EU CO2 standard curves are adjusted for HP-to-weight, which resulted in flatter curves, and which are intended to avoid incentivizing upweighting.205 ACEEE argued that by not choosing this approach and by adjusting for density, along with using salesweighting and an OLS method instead of MAD, the proposed curves encourage vehicle upsizing.206 Thus, ACEEE stated, the deviations from the analytical approach previously adopted were not justified with data provided in the NPRM, and the resulting ‘‘ad hoc adjustments’’ to the curve-fitting process detracted from the agencies’ argument for the proposals. 201 ACEEE comments, Docket No. EPA–HQ– OAR–2010–0799–9528 at 3–4. 202 Id. 203 Id. 204 Id. 205 Id. 206 Id. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 ACEEE further commented that increasing the slope of the truck curve would be ‘‘counter-productive’’ from a policy perspective as well, implying that challenging light truck standards have helped manufacturers of light trucks to recover from the recent downturn in the light vehicle market.207 The Sierra Club and CBD also opposed increasing the slope of the truck curve for MYs 2017 and beyond as compared to the MY 2016 truck curve, on the basis that it would encourage upsizing and reduce fuel economy and CO2 emissions improvements.208 Conversely, the UAW strongly supported the agencies’ balancing of ‘‘the challenges of adding fuel-economy improving technologies to the largest light trucks with the need to maintain the full functionality of these vehicles across a wide range of applications’’ 209 through their approach to curve fitting. The Alliance also expressed support for the agencies’ analyses (including the consideration of different weightings), and the selected relationships between the fuel consumption and footprint for MYs 2017–2021.210 Both ACEEE and the Alliance urged the agencies to revisit the estimation and selection of curves during the mid-term evaluation, and the agencies plan to do so. In response, the agencies maintain that the adjustments (including no adjustments) considered in the NPRM are all reasonable to apply for purposes of developing potential fuel economy and GHG target curves, and that it is left to policy makers to determine an appropriate perspective involved in selecting weights (if any) to be applied, and to interpret the consequences of various alternatives. As described above and in Chapter 2 of the TSD, the agencies believe that the adjustments made to the truck curve are appropriate because work trucks provide utility (towing and load-carrying capability) that requires more torque and power, more cooling and braking capability, and more fuel-carrying capability (i.e., larger fuel tanks) than would be the case for other vehicles of similar size and curb weight. Continuing the 2016 truck curve would disadvantage full-line manufacturers active in this portion of the fleet disproportionately to the rest of the trucks. The agencies do not include power to weight, density, towing, or hauling, as a technology. Neither does the agency consider them as part of a 207 Id. at 6 Club et al. comments, Docket No. EPA– HQ–OAR–2010–0799–9549 at 6. 209 UAW comments, Docket No. EPA–HQ–OAR– 2010–0799–9563, at 2. 210 Alliance comments, Docket No. EPA–HQ– OAR–2010–0799–9487, at 86. 208 Sierra PO 00000 Frm 00072 Fmt 4701 Sfmt 4700 multi-attribute standard. Considering these factors, the agencies believe that the ‘‘density’’ adjustment, as applied to the data developed for the NPRM, provided a reasonable basis to develop curves for light trucks. Having repeated our analysis using a corrected MY 2008based market forecast and, separately, a new MY 2010-based market forecast, we obtained results spanning ranges similar to those covered by the analysis we performed for the NPRM. See section 2.6 of the Joint TSD. In the agencies’ judgment, considering the above comments (and others), the curves proposed in the NPRM strike a sound balance between the legitimate policy considerations discussed in section II.C. 2—the interest in discouraging manufacturers from responding to standards by reducing vehicle size in ways that might compromise highway safety, the interest in more equitably balancing compliance burdens among limited- and full-line manufacturers, and the interest in avoiding excessive risk that projected energy and environmental benefits might be less than expected due to regulationincented increases in vehicle size. Regarding ACEEE’s specific comments about the application of these adjustments to the light truck fleet, we disagree with the characterization of the adjustments as ad hoc. Choosing from among a range of legitimate possibilities based on relevant policy and technical considerations is not an arbitrary, ad hoc exercise. Throughout multiple rulemaking analyses, NHTSA (more recently, with EPA) has applied normalization to adjust for differences in technologies. Also, while the agencies have previously considered and declined to apply normalizations to reflect differences in other characteristics, such as power, our judgment that some such normalizations could be among the set of technically reasonable approaches was not ad hoc, but in fact based on further technical analysis and reconsideration. Moreover, that reconsideration occurred with respect to passenger cars as well as light trucks. Still, we recognize that results of the different methods we have examined depend on inputs that are subject to uncertainty; for example, normalization to adjust for differences in technology depend on uncertain estimates of technology efficacy, and sales-weighted regressions depend on uncertain forecasts of future market volumes. Such uncertainties support the agencies’ strong preference to avoid permanently ‘‘locking in’’ any particular curve estimation technique. E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with e. What statistical methods did the agencies evaluate? For the NPRM, 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. Beginning with the corrected MY 2008-based market forecast and the MY 2010-based market forecast developed for today’s final rule, the above approaches resulted in six data sets— three for each of the two market forecasts. 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.211 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 used OLS in early development of attribute-based CAFE 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 212 and because the MAD approach helped achieve the agencies’ policy goals with regard to curve slope in those rulemakings.213 In the interest of taking a fresh look at appropriate regression methodologies as promised in the 2012–2016 light duty rulemaking, in developing this rule, 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 75 FR 25359. at 25362–63. 213 Id. at 25363. 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 sought comment on the use of robust regression techniques under such circumstances. ACEEE stated that either MAD (i.e., one robust regression technique) or OLS was ‘‘technically sound,’’ 214 and other stakeholders that commented on the agencies’ analysis supporting the selection of curves did not comment specifically on robust regression techniques. On the other hand, ACEEE did suggest that the application of multiple layers of normalization may provide tenuous results. For this rulemaking, we consider the range of methods we have examined to be technically reasonable, and our selected curves fall within those ranges. However, all else being equal, we agree that simpler or more stable methods are likely preferable to more complex or unstable methods, and as mentioned above, we agree with ACEEE and the Alliance that revisiting the selection of curves would be appropriate as part of the required future NHTSA rulemaking and midterm evaluation. 211 See 212 Id. VerDate Mar<15>2010 23:11 Oct 12, 2012 214 ACEEE comments, Docket No. EPA–HQ– OAR–2010–0799–9528 at 4. Jkt 229001 PO 00000 Frm 00073 Fmt 4701 Sfmt 4700 62695 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 differed by less than 10,000 in the MY 2021 market forecast (in the MY 2008-based forecast), 62 F–150s models and 38 Silverado models were reported in the agencies baselines. Without salesweighting, the F–150 models, because there are more of them, were 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 MYs 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. Salesweighted regression gives the highest sales vehicle model types vastly more emphasis than the lowest-sales vehicle model types thus driving the regression toward the sales-weighted fleet norm. For unweighted regression, vehicle sales do not matter. The agencies note that the MY 2008-based 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’ MY 2008based 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. Sales-weighted 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.215 The MY 2010-based market forecast includes similar examples of extreme disparities in production volumes, and therefore, degree of influence over sales215 75 E:\FR\FM\15OCR2.SGM FR 25362 and n. 64. 15OCR2 sroberts on DSK5SPTVN1PROD with 62696 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations weighted regression results. Moreover, unlike unweighted approaches, salesweighted approaches are subject to more uncertainties surrounding sales volumes. For example, in the MY 2008based market forecast, Chrysler’s production volumes are projected to decline significantly through MY 2025, in stark contrast to the prediction for that company in the MY 2010-based market forecast. Therefore, under a sales-weighted approach, Chrysler’s vehicle models have considerably less influence on regression results for the MY 2008-based fleet than for the MY 2010-based fleet. 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 demand.’’ 216 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. To expand on this point, low volume cars in the agencies’ MY 2008 and 2010 baseline include specialty vehicles such as the Bugatti Veyron, Rolls Royce Phantom, and General Motors Funeral Coach Hearse. These vehicle models all represent specific engineering designs, and in a regression without sales weighting, they are given equal weighting to other vehicles with single models with more relevance to the typical vehicle buyer including mass market sedans like the Toyota Prius referenced above. Similar disparities exist on the truck side, where small manufacturers such as Roush manufacturer numerous low sale vehicle models that also represent specific engineering designs. Given that the curve fit is ultimately used in compliance, and compliance is based on sales-weighted average performance, although the agencies are not currently attempting to estimate consumer responses to today’s standards, sales weighting could be a reasonable approach to fitting curves. In the interest of taking a fresh look at appropriate methodologies as promised in the last final rule, in developing the proposal, the agencies gave full consideration to both salesweighted and unweighted regressions. 216 75 FR 25632/3. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 iii. Analyses Performed For the NPRM, 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; salesweighted 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.D and IV.G below) as well as our discussions with large number of automotive companies and suppliers. Supporting today’s final rule, we repeated all of this analysis twice—once for the corrected MY 2008based market forecast, and once for the MY 2010-based market forecast. Doing so produced results generally similar to those documented in the joint TSD supporting the NPRM. See section 2.6 of the joint TSD and the docket memo. 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 sought comments on the application of the weights as described above, and the implications for interpreting the relationship between fuel efficiency (or CO2) and footprint. As discussed above, ACEEE questioned adjustment of the light truck data. The Alliance, in contrast, generally supported the weightings applied by the agencies, and the resultant relationships between fuel efficiency and footprint. Both ACEEE and the Alliance PO 00000 Frm 00074 Fmt 4701 Sfmt 4700 commented that the agencies should revisit the application of weights—and broader aspects of analysis to develop mathematical functions—in the future. We note that although ACEEE expressed concern regarding the outcomes of the application of the weight/footprint adjustment, ACEEE did not indicate that all adjustment would be problematic, rather, they endorsed the method of adjusting fuel economy data based on differences in vehicle models’ levels of applied technology. As we have indicated above, considering the policy implications, the agencies have selected curves that fall within the range spanned by the many methods we have evaluated and consider to be technically reasonable. We disagree with ACEEE that we have selected curves that are, for light trucks, too steep. However, recognizing uncertainties in the estimates underlying our analytical results, and recognizing that our analytical results span a range of technically reasonable outcomes, we agree with ACEEE and the Alliance that revisiting the curve shape would be appropriate as part of the required future NHTSA rulemaking and planned mid-term evaluation. f. What results did the agencies obtain and why were the selected curves reasonable? For both the NPRM and today’s final rule, 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 rule on those obtained by NHTSA. Chapter 2 of the joint TSD contains a large set of illustrative 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. For the curves presented in the NPRM and finalized today, the choice among the alternatives presented in Chapter 2 of the draft Joint TSD was to use the OLS formulation, on sales-weighted data developed for the NPRM (with some errors not then known to the agencies), using a fleet that has had technology applied, and after adjusting the data for the effect of weight-tofootprint, as described above. The agencies believe that this represented a technically reasonable approach for purposes of developing target curves to define the proposed standards, and that E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations it represented 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 have provided 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’ MY 2008based 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 helped 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 the proposed rule likely outweigh the potential that resultant curves might somehow encourage reduced load carrying capability or vehicle performance (note that we are not suggesting that we believe these 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 agreed 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 MY 2008-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 have adjusted the slope of the curve defining fuel economy and CO2 targets. Several comments were submitted subsequent to the NPRM with regard to the non-homogenous nature of the truck fleet, and the ‘‘unique’’ attributes of pickup trucks. As noted above, Ford described the attributes of these vehicles, noting that ‘‘towing capability generally requires increased aerodynamic drag caused by a modified frontal area, increased rolling resistance, and a heavier frame and suspension to VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 support this additional capability.’’ 217 Ford further noted that these vehicles further require auxiliary transmission oil coolers, upgraded radiators, trailer hitch connectors and wiring harness equipment, different steering ratios, upgraded rear bumpers and different springs for heavier tongue load (for upgraded towing packages), body-onframe (vs. unibody) construction (also known as ladder frame construction) to support this capability and an aggressive duty cycle, and lower axle ratios for better pulling power/ capability. ACEEE, as discussed above, objected to the adjustments to the truck curves. In the agencies’ judgment, the curves and cutpoints defining the light truck standards appropriately account for engineering differences between different types of vehicles. For example, the agencies’ estimates of the applicability, cost, and effectiveness of different fuel-saving technologies differentiate between small, medium, and large light trucks. While we acknowledge that uncertainties regarding technology efficacy affect the outcome of methods including normalization to account for differences in technology, the other normalizations we have considered are not intended to somehow compensate for this uncertainty, but rather to reflect other analytical concepts that could be technically reasonable for purposes of estimating relationships between footprint and fuel economy. Furthermore, we agree with Ford that pickup trucks have distinct attributes that warrant consideration of slopes other than the flattest within the range spanned by technically reasonable options. We also note that, as documented in the joint TSD, even without normalizing light truck fuel economy values for any differences (even technology), unweighted MAD and OLS yielded slopes close to or steeper than those underlying today’s light truck standards. We will revisit the estimation and selection of these curves as part of NHTSA’s future rulemaking and the mid-term evaluation. As described above, however, other approaches are also technically reasonable, and also represent a way of expressing the underlying relationships. The agencies revisited the analysis for the final rule, having corrected the underlying 2008-based market forecast, having developed a MY 2010-based market forecast, having updated estimates of technology effectiveness, and having considered relevant public 217 Ford comments, Docket No. EPA–HQ–OAR– 2010–0799–9463 at 5–6. PO 00000 Frm 00075 Fmt 4701 Sfmt 4700 62697 comments. In addition, the agencies updated the technology cost estimates, which altered the NPRM analysis results, but not the balance of the tradeoffs being weighed to determine the final curves. As discussed above, based in part on the Whitefoot/Skerlos paper and its findings regarding the implied potential for vehicle upsizing, some commenters, such as NACAA and Center for Biological Diversity, considered the slopes for both the car and truck curves to be too steep, and ACEEE, Sierra Club, Volkswagen, Toyota, and Honda more specifically commented that the truck slope was too steep. On the other hand, the UAW, Ford, GM, and Chrysler supported the slope of both the car and truck curves. ICCT commented, as they have in prior rulemakings, that the car and the truck curve should be identical, and UCS commented that the curves should be adjusted to minimize the ‘‘gap’’ in target stringency in the 45 ft2 (+/¥ 3 ft2) range to avoid giving manufacturers an incentive to classify CUVs as trucks rather than as cars.218 As also discussed above, the agencies continue to believe that the slopes for both the car and the truck curves finalized in this rulemaking remain appropriate. There is also good reason for the slopes of the car and truck curves potentially to be distinct from one another—for one, our analysis produces different results for these fleets based on their different characteristics, and more importantly for NHTSA, EPCA/EISA requires that standards for passenger cars and light trucks be established separately. The agencies agree with Ford (and others) that the properties of cars and trucks are different. The agencies agree with Ford’s observation (and illustration) that ‘‘* * * cars and trucks have different functional characteristics, even if they have the same footprint and nearly the same base curb weights. For example, the Ford Edge and the Ford Taurus have the same footprint, but vastly different capabilities with respect to cargo space and towing capacity. Some of the key features incorporated on the Edge that enable the larger tow capability include an engine oil cooler, larger radiator and updated cooling fans. This is just one of the many examples that show the functional difference between cars and trucks * * *’’ 219 On balance, given the agencies’ analysis, and all of the issues the agencies have taken into account, we believe that the slopes of cars and trucks have been 218 UCS comments, Docket No. EPA–HQ–OAR– 2010–0799–9567 at 9. 219 Ford comment, Docket No. EPA–HQ–OAR– 2010–0799–9463 at 5. E:\FR\FM\15OCR2.SGM 15OCR2 62698 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations selected with proper consideration and represent a reasonable and appropriate balance of technical and policy factors. sroberts on DSK5SPTVN1PROD with g. Implications of the slope compared to MY 2016 The slope has several implications relative to the MY 2016 curves, with the majority of changes on the truck curve. For the NPRM, the agencies selected a car curve slope similar to that finalized in the MYs 2012–2016 final rulemaking (4.7 g/mile-ft2 in MY 2016, vs. 4.5 g/ mile-ft2 proposed in MY 2017). By contrast, the selected truck curve is steeper in MY 2017 than in MY 2016 (4.0 g/mile-ft2 in MY 2016 vs. 4.9 g/ mile-ft2 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. 5. Once the agencies determined the slope, 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 rule, 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. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 a. Cutpoints for Passenger Car Curve The passenger car fleet upon which the agencies based the target curves proposed for MYs 2017–2025 was 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 vehicles to achieve the very challenging average requirements that could apply in the absence of a constraint, EPA and NHTSA again proposed to cut off the sloped portion of the passenger car function at 41 square feet, consistent with the MYs 2012–2016 rulemaking. The agencies recognized 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 rule, 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. The MY 2010 PO 00000 Frm 00076 Fmt 4701 Sfmt 4700 fleet was similar, with three BMW models, the Maybach 57S, the Rolls Royce Ghost, and four versions of the Rolls Royce Phantom in this size range. As in the MYs 2012–2016 rulemaking, NHTSA and EPA therefore proposed 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 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 thus proposed to again ‘‘cut off’’ the passenger car curve at 41 square feet, notwithstanding these comments. The agencies sought comment on setting cutpoints for the MYs 2017–2025 passenger car curves at 41 square feet and 56 square feet. IIHS expressed some concern regarding the ‘‘breakpoint’’ of the fuel economy curve at the lower extreme where footprint is the smallest– that is, the leveling-off point on the fuel economy curve where the fuel economy requirement ceases to increase as footprint decreases.220 IIHS stated that moving this breakpoint farther to the left so that even smaller vehicles have increasing fuel economy targets would reduce the chance that manufacturers would downsize the lightest vehicles for further fuel economy credits.221 The agencies agree with IIHS that moving the 41 square foot cutpoint to an even smaller value would additionally discourage downsizing of the smallest vehicles—that is, the vehicles for which downsizing would be most likely to compromise occupant protection. However, in the agencies’ judgment, notwithstanding narrow market niches for some types vehicles (exemplified by, e.g., the Smart Fortwo), consumer preferences are likely to remain such that manufacturers will be unlikely to deliberately respond to today’s standards by downsizing the smallest vehicles. However, the agencies will monitor developments in the passenger car market and revisit this issue as part of NHTSA’s future rulemaking to establish final MYs 2022–2025 220 IIHS comments, Docket No. NHTSA–2010– 0131–0222, at 1. 221 Id. E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with b. Cutpoints for Light Truck Curve The light truck fleet upon which the agencies based the proposed target curves for MYs 2017–2025, like the passenger car fleet, was 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 proposed to cut off the sloped portion of the light truck function at the same footprint, 41 square feet, although we recognized 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 the proposal of the MY 2017–2025 standards that the location of the cutpoint in the MYs 2012–2016 rules, 66 square feet, resulted in challenging targets for the largest light trucks in the later years of that rulemaking. See 76 FR 74864–65. Those VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 manufacturers requested that the agencies extend the cutpoint to a larger footprint, to reduce targets for the 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 was legitimate basis for these comments. The agencies’ MY 2008-based market forecast supporting the NPRM included 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 PO 00000 Frm 00077 Fmt 4701 Sfmt 4725 a relatively small portion of the overall truck fleet, for some manufacturers, these vehicles are a 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 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 supported the gradual extension of the cutpoint for large light trucks in the proposal from 66 square feet in MY 2016 out to a larger footprint square feet before MY 2025. BILLING CODE 6560–50–P E:\FR\FM\15OCR2.SGM 15OCR2 ER15OC12.008</GPH> standards and the concurrent mid-term evaluation process. 62699 62700 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations The agencies proposed 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 reasonable in a subsequent model year—manufacturers should have no reason to remove fuel economyimproving/CO2-reducing technology from a vehicle once it has been applied. Put another way, the agencies proposed 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.’’ 222 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 were no curve crossing issues in the proposed (or final) standards. The agencies received some comments on the selection of these cutpoints. ACEEE commented that the extension of the light truck cutpoint upward from 66 square feet to 74 square feet. would reduce stringency for large trucks even though there is no safetyrelated reason to discourage downsizing of these trucks.223 Sierra Club 224 and Volkswagen commented that moving this cutpoint could encourage trucks to get larger and may be detrimental to societal fatalities, and the Sierra Club suggested that the agencies could mitigate this risk by providing an alternate emissions target for light trucks of 60 square feet or more that exceed the sales projected in the rule in the year that sales exceed the projection.225 ACEEE similarly suggested that the agencies include a provision to fix the upper bound for the light truck targets at the 66 square foot target once sales of trucks larger than that in a given year reach the level of MY 2008 sales, to discourage upsizing.226 Global Automakers commented that the cutpoint for the smallest light trucks should be set at approximately ten percent of sales (as for passenger cars) rather than at 41 square feet.227 Conversely, IIHS 222 74 FR 14370 (Mar. 30, 2009). Docket No. EPA–HQ–OAR–2010– 0799–9528 at 4–5. 224 Sierra Club et al., Docket No. EPA–HQ–OAR– 2010–0799–9549 at 6. 225 Sierra Club et al., Docket No. EPA–HQ–OAR– 2010–0799–9549 at 6. 226 ACEEE, Docket No. EPA–HQ–OAR–2010– 0799–9528 at 7. 227 Global Automakers, Docket No. NHTSA– 2010–0131–0237, at 4. sroberts on DSK5SPTVN1PROD with 223 ACEEE, VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 commented that, for both passenger cars and light trucks, the 41 square foot cutpoint should be moved further to the left (i.e., to even smaller footprints), to reduce the incentive for manufacturers to downsize the lightest vehicles.228 The agencies have considered these comments regarding the cutpoint applied to the high footprint end of the target function for light trucks, and we judge there to be minimal risk that manufacturers would respond to this upward extension of the cutpoint by deliberately increasing the size of light trucks that are already at the upper end of marketable vehicle sizes. Such vehicles have distinct size, maneuverability, fuel consumption, storage, and other characteristics as opposed to the currently more popular vehicles between 43 and 48 square feet, and are likely not suited for all consumers in all usage scenarios. Further, larger vehicles typically also have additional production costs that make it unlikely that these vehicles will become the predominant vehicles in the fleet. Therefore, we remain concerned that not to extend this cutpoint to 74 square feet would fail to take into adequate consideration the challenges to improving fuel economy and CO2 emissions to the levels required by this final rule for vehicles with footprints larger than 66 square feet, given their increased utility. As noted above, because CAFE and GHG standards are based on average performance, manufacturers need not ensure that every vehicle model meets its CAFE and GHG targets. Still, the agencies are concerned that standards with stringent targets for large trucks would unduly burden full-line manufacturers active in the market for full-size pickups and other large light trucks, as discussed earlier, and evidenced by the agencies’ estimates of differences between compliance burdens faced by OEMs active and not active in the market for full-size pickups. While some manufacturers have recently indicated 229 that buyers are currently willing to pay a premium for fuel economy improvements, the agencies are concerned that disparities in longterm regulatory requirements could lead to future market distortions undermining the economic practicability of the standards. Absent an upward extension of the cutpoint, such disparities would be even greater. 228 IIHS, Docket No. NHTSA–2010–0131–0222, at 1. 229 For example, in its June 11, 2012 edition, Automotive News quoted a Ford sales official saying that ‘‘fuel efficiency continues to be a top purchaser driver.’’ (‘‘More MPG—ASAP’’, Automotive News, Jun 11, 2012.) PO 00000 Frm 00078 Fmt 4701 Sfmt 4700 For these reasons, the agencies do not expect that gradually extending the cutpoint to 74 square feet will create incentives to upsize large trucks and, thus, believe there will be no adverse effects on societal safety. Therefore, we are promulgating standards that, as proposed, gradually extend the cutpoint to 74 square feet We have also considered the above comments by Global Automakers and IIHS on the cutpoints for the smallest passenger cars and light trucks. In our judgment, placing these cutpoints at 41 square feet continues to strike an appropriate balance between (a) not discouraging manufacturers from introducing new small vehicle models in the U.S. and (b) not encouraging manufacturers to downsize small vehicles. We have considered the Sierra Club and ACEEE suggestion that the agencies provide an alternate emissions target for light trucks larger than 60 square feet (Sierra Club) or 66 square feet (ACEEE) that exceed the sales projected in the rule in the year that sales exceed the projection. Doing so would effectively introduce sales volume as a second ‘‘attribute’’; in our judgment, this would introduce additional uncertainty regarding outcomes under the standards, and would not clearly be within the scope of notice provided by the NPRM. 6. 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 above, that affected both the shape of the curve, and the location of the curve, that helped the agencies determine curves that defined the proposed standards. The minimum stringency determination was done using the two 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 E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with adjustments cause neither the GHG nor CAFE curves (with A/C) to contact the 2016 curves when charted. 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 the proposal for MYs 2017–2025, the agencies reconsidered the use of this approach, and 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 fuel consumption without the technology. It is, therefore, more consistent with the agencies’ estimates of technology effectiveness to develop 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 concluded that this approach to offsetting the curves to develop year-byyear regulatory alternatives neither recreates a situation in which manufacturers are likely to respond to standards in ways that compromise highway safety, nor undoes the VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 attribute-based standard’s more equitable balancing of compliance burdens among disparate manufacturers. The agencies invited 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. As indicated earlier, ACEEE 230 and the Alliance 231 both expressed support for the application of relative adjustments in order to develop year-over-year increases in the stringency of fuel consumption and CO2 targets, although the Alliance also commented that this approach should be revisited as part of the mid-term evaluation. EPCA/EISA requires NHTSA to establish the maximum feasible passenger car and light truck standards separately in each specific model year—a requirement that is not necessarily compatible with any predetermined approach to year-overyear changes in stringency. As part of the future NHTSA rulemaking to finalize standards for MYs 2022–2025 and the concurrent mid-term evaluation, the agencies plan to reexamine potential approaches to developing regulatory options for successive model years. b. Adjusting for Anticipated Improvements to Mobile Air Conditioning Systems The fuel economy values in the agencies’ market forecasts 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 manufacturers to implement these changes. For the proposed CAFE standards and alternatives, an offset was 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 was included based on air conditioning system efficiency, leakage and refrigerant improvements. As 230 ACEEE, Docket No. EPA–HQ–OAR–2010– 0799–9528 at 6. 231 Alliance, Docket No. NHTSA–2010–0131– 0262, at 86. PO 00000 Frm 00079 Fmt 4701 Sfmt 4700 62701 discussed above in Chapter 5 of the joint 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 adjusted 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 MYs 2012–2016 rules. For the CAFE target curves, NHTSA for the first time is accounting 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 that air conditioning system technologies, creating a series of curve shapes that are ‘‘fanned’’ based on twocycle performance. Then the curves were offset vertically by the air conditioning improvement by an equal amount at every point. While the agencies received many comments regarding the provisions for determining adjustments to reflect improvements to air conditioners, the agencies received no comments regarding how curves developed considering 2-cycle fuel economy and CO2 values should be adjusted to reflect the inclusion of A/C adjustments in fuel economy and CO2 values used to determine compliance with corresponding standards. For today’s final rule, the agencies have maintained the same approach as applied for the NPRM. D. Joint Vehicle Technology Assumptions For the past five years, the agencies have been working together closely to follow the development of fuel consumption- and GHG-reducing technologies, which continue to evolve rapidly. We based the proposed rule on the results of two major joint technology analyses that EPA and NHTSA had recently completed—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 and was also done in conjunction with CARB). For this final rule, we relied on our joint analyses for the proposed rule, as well as new information and analyses, including information we E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with 62702 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations received during the public comment period. In the proposal, we presented our assessments of the costs and effectiveness of all the technologies that we believe manufacturers are likely to use to meet the requirements of this rule, including the latest information on several quickly-changing technologies. The proposal included new estimates for hybrid costs based on a peerreviewed ANL battery cost model. We also presented in the proposal new cost data and analyses relating to several technologies based on a study by FEV: an 8-speed automatic transmission replacing a 6-speed automatic transmission; an 8-speed dual clutch transmission replacing a 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. Also in the proposal, we presented an updated assessment of our estimated costs associated with mass reduction. 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 (2010 dollars are used in this final rule while 2009 dollars were used in the proposal). As proposed, we have also updated our methodology for calculating indirect costs associated with new technologies since completing 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. Since the MYs 2012–2016 rule and TAR, the agencies 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 a number of the technologies most heavily relied on in the agencies’ analysis of potential standards for MYs 2017–2025. Additionally for the final rule, NHTSA conducted a vehicle simulation project with Argonne National Laboratory (ANL), as described in NHTSA’s FRIA, that performed additional analyses on mild hybrid technologies and advanced transmissions to help NHTSA develop effectiveness values better tailored for the CAFE model’s incremental VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 structure. The effectiveness values for the mild hybrid vehicles were applied by both agencies for the final rule.232 Additionally, NHTSA updated the effectiveness values of advanced transmissions coupled with naturallyaspirated engines for the final rule.233 The agencies also reviewed the findings and recommendations in the updated NAS report ‘‘Assessment of Fuel Economy Technologies for LightDuty Vehicles’’ that was completed and issued after the MYs 2012–2016 final rule.234 NHTSA’s sensitivity analysis examining the impact of using some of the NAS cost and effectiveness estimates on the proposed standards is presented in NHTSA’s final RIA. The agencies received comments to the proposal on some of these assessments as discussed further below. Also, since the time of the proposal, in some cases we have been able to improve on our earlier assessments. We note these comments and the improvements made in the assessments in the discussion of each technology, below. However, the agencies did not receive comments for most of the technical and cost assessments presented in the proposal, and the agencies have concluded the assessments in the proposal remain valid for this final rule. Key changes in the final rule relative to the proposal are the use of 2010 dollars rather than 2009 dollars, updates to all battery pack and non-battery costs for hybrids, plug-in hybrids and full electric vehicles (because an updated version of the Argonne National Labs BatPaC model was available which more appropriately included a battery discharge safety system in the costs), and the inclusion of a mild hybrid technology that was not included in the proposal. NHTSA updated the effectiveness values of advanced transmissions coupled with naturallyaspirated engines based on ANL’s simulation work. We describe these changes below and in Chapter 3 of the Joint TSD. We next provide a brief summary of the technologies that we considered for this final rule; Chapter 3 of the Joint TSD presents our assessments of these technologies in much greater detail. 232 EPA’s lumped parameter model gave similar results as ANL’s model for three of five vehicle classes, which served as a valuable validation to the tool. However EPA used the same ANL effectiveness values for mild hybrids to be harmonized with NHTSA’s inputs. 233 The Ricardo simulations did not include this technology combination, and EPA did not include this combination in their packages. 234 ‘‘Assessment of Fuel Economy Technologies for Light-Duty Vehicles’’, National Research Council of the National Academies, June 2010. PO 00000 Frm 00080 Fmt 4701 Sfmt 4700 1. What technologies did the agencies consider? The agencies conclude 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 was essential to have a thorough understanding of the technologies available to the manufacturers. As was the case for the proposal, the analyses we performed for this final rule included 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 Joint TSD, the point in time when we project that a technology can be applied affects our estimates of the costs as well as the technology penetration rates (‘‘phase-in caps’’). 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 we considered are available today, are in production of some vehicles, and could be incorporated into vehicles more widely as manufacturers make their product development decisions. These are ‘‘near-term’’ technologies and are identical or very similar to those anticipated in the agencies’ analyses of compliance strategies for the MYs 2012– 2016 final rule. For this rulemaking, given its time frame, we also considered other technologies 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 that the agencies believe that manufacturers can, for the most part, apply both to cars and trucks, and that we expect will 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 E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations technologies like high-efficiency transmissions. VW cautioned the agencies about the uncertainties with high BMEP engines, including the possible costs due to increased durability requirements and questioned the potential benefit for this type of engine of engine technology. VW commented that additional development is necessary to overcome the significant obstacles of these types of engines. ICCT emphasized that many of the powertrain effectiveness values, derived by Ricardo, were too conservative as technology in this area is expected to improve at a faster pace during the rulemaking period. As described in the joint TSD, the agencies relied on a number of technical sources for this engine technology. Additionally as described in the Ricardo report, Ricardo was tasked with extrapolating technologies to their expected performance and efficiency levels in the 2020–2025 timeframe to account for future improvements. The agencies continue to believe that the modeling and simulation conducted by Ricardo is robust, as they have built prototypes of these engines and used their knowledge to help inform the modeling. The agencies will, of course, continue to watch the development of this key technology in the future. For transparency purposes and full disclosure, it is important to note the ICCT partially funded the Ricardo study. 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 final rule 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 manufacturers may be able to use them to generate credits under a number of the flexibility and incentive programs provided in this final rule. The technologies that we 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).235 We discuss the specific technologies within each broad group below. The list of technologies presented below and in the proposal 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; mild hybrid technologies that were not included in the proposal; continued improvements in gasoline 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 preamble and in Chapter 5 of the Joint TSD. Few comments were received specific to these technologies. The Alliance emphasized the agencies should examine the progress in the development of powertrain improvements as part of the mid-term evaluation and determine if researchers are making the kind of breakthroughs anticipated by the agencies for 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 MY 2017 and reach nearly 100 percent in MY 2025.236 Reduction of engine friction losses (first level) 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 the efficiency of engine 235 NHTSA’s analysis considers these technologies in five groups rather than four— hybridization is one category, and ‘‘electrification/ accessories’’ is another. 236 The penetration rates shown in this section are general results applicable to either the NHTSA or EPA analysis, to either the 2008 based or the 2010 based fleet projection. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 a. Types of Engine Technologies Considered PO 00000 Frm 00081 Fmt 4701 Sfmt 4700 62703 operation. This level of engine friction reduction is expected to exceed 70 percent penetration by MY 2017 Advanced low friction lubricants and reduction of engine friction losses (second level) are new for our analysis for the proposal and this final rule. As technologies advance in the coming years, we expect that there will be further development in both low friction lubricants and engine friction reductions. The agencies grouped the development in these two related 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 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 electro-hydraulic system in which valve timing is changed as lift height is controlled. This yields a wide range of opportunities for optimizing volumetric efficiency and performance, 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. Turbocharging 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 E:\FR\FM\15OCR2.SGM 15OCR2 62704 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations range of engine operation than conventional 18 bar BMEP engines. The 27 bar BMEP technology would require higher boost levels 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 the proposal and this final rule, cooled EGR is considered to be a technology that can be added to 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. sroberts on DSK5SPTVN1PROD with 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. This technology is included because it exists in the baseline fleets, but its penetration is expected to decrease over time as it is replaced by other more efficient technologies. 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 selecting VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 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 MYs 2012–2016 final rule limited DCT applications to a maximum of 6 speeds. For the proposal and this final rule, we have considered both 6-speed and 8speed 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 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 rule 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) represents 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. For the proposal and final PO 00000 Frm 00082 Fmt 4701 Sfmt 4700 rule, we considered two levels of lower rolling resistance tires that reduce frictional losses even further. The first level of low rolling resistance tires would have 10 percent rolling resistance reduction while the 2nd level would have 20 percent rolling resistance reduction compared to 2008 baseline vehicle. This second level of development marks an advance over low rolling resistance tires considered during the MYs 2014–2018 mediumand heavy- duty vehicle greenhouse gas emissions and fuel efficiency rulemaking, see 76 FR 57207, 57229.) The first level of lower rolling resistance tires is expected to exceed 90 percent penetration by the 2017. 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 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. We estimate that the first level of aerodynamic drag improvement will reduce aerodynamic drag by 10 percent relative to the baseline 2008 vehicle while the second level would reduce aerodynamic 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 through either substitution of lower density and/or higher strength materials, or changing the design to use less material. With design optimization, part consolidation, and improved manufacturing processes, these strategies can be applied while maintaining the performance attributes of the component, system, or vehicle. The agencies applied mass reduction of up to 20 percent relative to MY 2008 levels in this final rule compared to only 10 percent in the MYs 2012–2016 final rule. The agencies also determined effectiveness values for hybrid, plug-in E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with and electric vehicles based on net mass reduction, or the difference 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 levels of vehicle mass reduction that, in our estimation, would not adversely affect overall fleet safety. An extensive discussion of mass reduction technologies and their associated costs is provided in Chapter 3 of the Joint TSD, and the discussion on safety is in Section II.G of the Preamble. 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 the engine-driven and 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, lacking data about when these transitions will occur, 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 and 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 rule is a second level of IACC (IACC2), which consists of the IACC technologies with 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 50 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 VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 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 technology was mentioned but not included in the proposal because the agencies had incomplete information at that time. Since the proposal, the agencies have obtained better data on the costs and effectiveness of this technology (see Chapter 3.4.3 of the joint TSD). Therefore, the agencies have revised their technical analysis on both the cost and effectiveness and found that the technology is now competitive with the others in NHTSA’s technology decision trees and EPA’s technology packages. EPA and NHTSA are providing incentives to encourage this and other hybrid technologies on full-size pick-up trucks, as described in Section II.F.3. 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 and higher efficiency starter-alternator 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 rule because we believe that other technologies provide better cost effectiveness, although it is included as a baseline technology because it exists in our 2008 and 2010 baseline fleets. 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, provides similar efficiency at lower cost than power-split or 2-mode hybrid systems. 2-Mode Hybrid is a hybrid electric drive system that uses an adaptation of PO 00000 Frm 00083 Fmt 4701 Sfmt 4700 62705 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 rule because we believe that other technologies provide better cost effectiveness, although it is included as a baseline technology because it exists in our 2008 and 2010 baseline fleets. Power-split Hybrid is a hybrid electric drive system that replaces the traditional transmission with a single planetary gearset and two motor/ generators. One 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 powersplit hybrid technology is not included by either agency as an enabling technology in the analysis supporting this rule because we believe that other technologies provide better cost effectiveness, 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 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/ electrical 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, the agencies have included PHEVs with several all-electric ranges as potential technologies. EPA’s analysis includes a 20-mile and 40-mile range PHEVs, while NHTSA’s analysis only includes a 30-mile PHEV. E:\FR\FM\15OCR2.SGM 15OCR2 62706 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations Electric vehicles (EV) are equipped with all-electric drive and with systems powered by energy-optimized batteries charged primarily from grid electricity. For this rule, the agencies have included EVs with several ranges—75 miles, 100 miles, and 150 miles—as potential technologies. sroberts on DSK5SPTVN1PROD with 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. Most automakers that currently have FCEVs under development use high-pressure gaseous hydrogen storage tanks. The highpressure 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 marketplace in the time frame of this rule, we expect the total number of vehicles produced with this technology will be relatively small. Thus, the agencies did not consider FCEVs in the modeling analysis conducted for this rule. There are a number of other potential technologies available to manufacturers in meeting the 2017–2025 standards that the agencies have evaluated but have not considered in our final analyses. 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 subsequently used in this final rule 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, our estimated learning effects have resulted in further cost reductions for some technologies, the indirect costs are calculated using a modified methodology, and the impact of long-term ICMs is now present during VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 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. New for the final rule relative to the proposal are the use of 2010 dollars rather than 2009 dollars, updates to all battery pack and non-battery costs for hybrids, plug-in and full electric vehicles because an updated version of the ANL BatPaC model was available and because we wanted to include a battery discharge safety system in the costs, and the inclusion of a mild hybrid technology that was not included in the proposal. We describe these changes below and in Chapter 3 of the Joint TSD. The agencies note that the technology costs included in this final rule take into account those associated with the initial build of the vehicle. We received comments on the proposal for this rule suggesting that there could be additional maintenance required with some new technologies, and that additional maintenance costs could occur as a result because ‘‘the technology will be more complicated and time consuming for mechanics to repair.’’ 237 For this final rule, the agencies have estimated such maintenance costs. The maintenance costs are not included as new vehicle costs and are not, therefore, used in either agency’s modeling work. However, the maintenance costs are included when estimating costs to society in each agency’s benefit-cost analyses. We discuss these maintenance costs briefly in section II.D.5 below, and in detail in Chapter 3 of the final Joint TSD and in sections III and IV of this preamble. 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 ‘‘tear-down’’ studies (see below). 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 237 See NADA (OAR–2009–0472–7182.1, p.10) and Dawn Brooks (OAR–2009–0472–3851, pp.1–2). PO 00000 Frm 00084 Fmt 4701 Sfmt 4700 Energy. For mass reduction DMC, the agencies have relied on several studies as described in detail in Chapter 3 of the Joint TSD. We discuss each of these briefly here and in more detail in the Joint TSD. For the majority of the other technologies considered in this rule and described above, and where no new data were available, the agencies have relied on the MYs 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. EPA documented FEV’s methodology in a report published as part of the MYs 2012–2016 rulemaking, detailing the costing of the first tear-down conducted in this work (#1 in the list below).238 238 U.S. EPA, ‘‘Light-Duty Technology Cost Analysis Pilot Study,’’ Contract No. EP–C–07–069, Work Assignment 1–3, December 2009, EPA–420– E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with This report was peer reviewed by experts in the industry, who focused especially on the methodology used in the tear-down study, and revised by FEV in response to the peer review comments.239 EPA documented subsequent tear-down studies (#2–#5 in the list below) using the peer reviewed methodology in follow-up FEV reports made available in the public docket for the MYs 2012–2016 rulemaking, although the results for some of these additional studies were not peer reviewed.240 Since then, FEV’s work under this contract has continued. Additional cost studies have been completed and are available for public review.241 The most extensive study, performed after the MYs 2012–2016 final rule, involved whole-vehicle tear-downs of a 2010 Ford Fusion power-split hybrid and a conventional 2010 Ford Fusion. (The latter served as a baseline vehicle for comparison.) In addition to providing power-split HEV costs, the results for individual components in these vehicles were subsequently used by FEV/Munro to estimate the cost of 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 to provide supplemental battery costing information to that associated with the NiMH battery in the Fusion. FEV has extensively documented this HEV cost work, including the extension of results to P2 HEVs, in a new report.242 Because of the complexity and comprehensive scope of this HEV analysis, EPA commissioned a separate peer review focused exclusively on the new tear down costs developed for the HEV analysis. 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 R–09–020, Docket EPA–HQ–OAR–2009–0472– 11282. 239 FEV pilot study response to peer review document November 6, 2009, is at EPA–HQ–OAR– 2009–0472–11285. 240 U.S. EPA, ‘‘Light-duty Technology Cost Analysis—Report on Additional Case Studies,’’ EPA–HQ–OAR–2009–0472–11604. 241 FEV, Inc., ‘‘Light-Duty Technology Cost Analysis, Report on Additional Transmission, Mild Hybrid, and Valvetrain Technology Case Studies’’, November 2011. 242 FEV, Inc., ‘‘Light-Duty Technology Cost Analysis, Power-Split and P2 HEV Case Studies’’, EPA–420–R–11–015, November 2011. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 are available in the rulemaking docket.243,244 Over the course of this contract, teardown-based studies 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. New for this final rule, the agencies have used portions of this tear-down study in estimating mild hybrid costs. 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 because the technology is under a very recently awarded patent and we have chosen not to base our analyses on its widespread use across the industry in the 2017–2025 timeframe.) Items 6 through 10 in the list above are new since the MYs 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: 243 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. 244 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. PO 00000 Frm 00085 Fmt 4701 Sfmt 4700 62707 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 HEVs, EVs & PHEVs The agencies have also reevaluated the costs for HEVs, PHEVs, and EVs since we issued the MYs 2012–2016 final rule and the 2010 TAR. In the proposal, we noted that electrified vehicle technologies were developing rapidly and the agencies sought to capture results from the most recent analysis. Further, we noted that the MYs 2012–2016 rule employed a single $/ kWh 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 $/kWh as the power to energy ratio of the battery varies for different applications. To address those issues for the proposal, the agencies did two things. First, EPA developed a spreadsheet tool 245 that the agencies used to size the motor and battery based on the different road loads of various vehicle classes. Second, the agencies used a battery cost model developed by Argonne National Laboratory (ANL) for the Vehicle Technologies Program of the Office of Energy Efficiency and Renewable Energy (U.S. Department of Energy (DOE)).246 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 245 See ‘‘LDGHG 2017–2025 Cost Development Files,’’ CD in Docket No. EPA–HQ–OAR–2010– 0799. 246 ANL BatPac model Docket number EPA–HQ– OAR–2010–0799. E:\FR\FM\15OCR2.SGM 15OCR2 62708 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with energy storage technologies for future HEV, PHEV and EV applications. Since publication of the 2010 TAR, ANL’s battery cost model underwent peerreview and ANL subsequently 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, and other changes.247 Subsequent to the proposal for this rule, the agencies requested changes to the BatPaC model. These requests were that an option be added to select between liquid or air thermal management and that adequate surface area and cell spacing be determined accordingly. Also, the agencies requested a feature to allow battery packs to be configured as subpacks in parallel or modules in parallel, as additional options for staying within voltage and cell size limits for large packs. ANL added these features in a version of the model distributed March 1, 2012. This version of the model is used for the battery cost estimates in the final rule. The agencies have chosen to use the ANL model as the basis for estimating the cost of large-format lithium-ion batteries for this assessment for several reasons. The model was developed by scientists at ANL who have significant experience in this area. Also, 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 generally consistent with the supplier cost estimates that EPA received from large-format lithium-ion battery pack manufacturers. This includes data the EPA received during on-site visits in the 2008–2011 time frame. Finally, the agencies chose to use the ANL model because it 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). 247 Nelson, P.A., Santini, 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). VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 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 updated BatPaC model and supports its use in this final rule. As we did in the proposal, we have also estimated the costs (hardware and labor) associated with in-home electric vehicle charging equipment, which we expect to be necessary for PHEVs and EVs, and their installation. New for the final rule are costs associated with an on-vehicle battery discharge system. These battery discharge systems allow the batteries in HEVs, PHEVs and EVs to be discharged safely at the site of an accident prior to moving affected vehicles to storage or repair facilities. Charging equipment and battery discharge system costs are covered in more detail in Chapter 3 of the 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 rule, 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. Both agencies have mass reduction feasibility and cost studies that were completed in time for the final rule. However the results from these studies were not employed in the rulemaking analysis because the peer reviews had not been completed and changes to the studies based on the peer reviews were not completed. Both have since been completed. For the primary analyses, both agencies use the same mass reduction costs as were used in the proposal, although they have been updated to 2010 dollars. All of these studies are discussed in Chapter 3 of the Joint TSD as well as in the respective publications. The use of the new cost results from the studies would have made little difference to the final rule cost analysis for two reasons: (1) The NPRM (+/¥ 40%) sensitivity analysis conducted by the agencies showed little difference in overall costs due to the change in mass reduction costs; PO 00000 Frm 00086 Fmt 4701 Sfmt 4700 (2) The agencies project even less mass reduction levels in the final rule compared to the NPRM based on the use of revised fatality coefficients from NHTSA’s updated study of the effects on vehicle mass and size on highway safety, which is discussed in section II.G of this preamble. b. Indirect Costs (IC) i. Markup Factors To Estimate Indirect Costs As done in the proposal, the agencies have estimated the indirect costs by applying indirect cost multipliers (ICM) to direct cost estimates. EPA derived ICMs a basis for estimating the impact on indirect costs of individual vehicle technology changes that would result from regulatory actions. EPA derived separate ICMs 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. The agencies also applied ICMs in our MYs 2012–2016 rulemaking. Prior to the development of the ICM methodology,248 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 248 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. E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with 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 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 rule group all technologies into four broad categories in terms of complexity 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.249 Both of these processes were carried out by panels composed of EPA staff members with previous background in the automobile industry; the memberships of the two panels overlapped but were not identical.250 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 used 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 249 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. 250 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. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 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 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.’’ 251 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.252 As EPA has developed its ICM approach to indirect cost estimation, the agency has publicly discussed and responded to comment on its approach during the MYs 2012–2016 light-duty GHG rule, and also in the more recent heavy-duty GHG rule (see 76 FR 57106) and in the 2010 TAR. The agency published its work in the Journal of Production Economics 253 and has also published a memorandum furthering the development of ICMs.254 As 251 NRC, Finding 3–2 at page 3–23. at page 3–19. 253 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. 254 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. 252 NRC PO 00000 Frm 00087 Fmt 4701 Sfmt 4700 62709 thinking has matured, we have adjusted our ICM factors such that they are slightly higher and, importantly, we have changed the way in which the factors are applied. For the proposal for this rule, EPA concluded that ICMs are fully developed for regulatory purposes and used these factors in developing the indirect costs presented in the proposal. The agencies received comments on the approach used to estimate indirect costs in the proposal. One commenter (NADA) argued that the ICM approach was not valid and an RPE approach was the only appropriate approach.255 Further, that commenter argued that the RPE factor should be 2.0 times direct costs rather than the 1.5 factor that is supported by filings to the Securities and Exchange Commission. Another commenter (ICCT) commented positively on the new ICM approach as presented in the proposal, but argued that sensitivity analyses examining the impact of using an RPE should be deleted from the final rule.256 Both agencies have conducted thorough analysis of the comments received on the RPE versus ICM approach. Regarding NADA’s concerns about the accuracy of ICMs, although the agencies recognize that there is uncertainty regarding the impact of indirect costs on vehicle prices, they have retained ICMs for use in the central analysis because it offers advantages of focusing cost estimates on only those costs impacted by a regulatory imposed change, and it provides a disaggregated approach that better differentiates among technologies. The agencies disagree with NADA’s contention that the correct factor to reflect the RPE should be 2.0, and we cite data in Chapter 3 of the joint TSD that demonstrates that the overall RPE should average about 1.5. Regarding ICCTs contention that NHTSA should delete sensitivity analyses examining the impact of using an RPE, NHTSA rejects this proposal. OMB Circular No. A–94 establishes guidelines for conducting benefit-cost analysis of Federal programs and recommends sensitivity analyses to address uncertainty and imprecision in both underlying data and modeling assumptions. The agencies have addressed uncertainty in separate sensitivity analyses, with NHTSA examining uncertainty stemming from the shift away from the use of the RPE and EPA examining uncertainty around the ICM values. Further analysis of NADA’s comments is summarized in 255 NADA, Docket No. NHTSA–2010–0131–0261, at 4. 256 ICCT, Docket No. NHTSA–2010–0131–0258, at 19–20. E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with 62710 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations Chapter 3 of the Joint TSD and in Chapter 7 of NHTSA’s FRIA and in EPA’s Response to Comments document. NHTSA’s full response to ICCT is also presented in chapter 7 of NHTSA’s FRIA. For this final rule, each agency is using an ICM approach with ICM factors identical to those used in the proposal. The impact of using an RPE rather than ICMs to calculate indirect costs is examined in sensitivity and uncertainty analyses in chapters 7, 10, and 12 of NHTSA’s FRIA where NHTSA shows that even under the higher cost estimates that result using the RPE, the rulemaking is highly cost beneficial. The impact of alternate ICMs is examined in Chapter 3 of EPA’s RIA. Note that our ICM, while identical to those used in the proposal, have changed since the MYs 2012–2016 rule. The first change—increased ICM factors—was 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 eliminated the averaging of original RTI values with modified-Delphi values and instead are relying solely on the modified-Delphi values for low and medium complexity technologies. The second change was a re-evaluation by agency staff of the complexity classification of each of the technologies that were not directly examined in the RTI and modified Delphi studies. As a result, more technologies have been classified as medium complexity and fewer as low complexity. The third change—the way the factors are applied—resulted 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 third 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 made as part of this ICM recalculation. 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 VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 year variation, the average RPE has remained roughly constant at 1.5. ICMs are applied to future years’ data and, therefore, NHTSA and EPA staffs believed that it would be appropriate to base ICMs on the historical average rather than a single year’s result. Therefore, ICMs were adjusted to reflect this average level. These changes to the ICMs since the MYs 2012–2016 rule and the methodology are described in greater detail in Chapter 3 of the Joint TSD. NHTSA also has further discussion of ICMs in Chapter 7 of NHTSA’s FRIA. 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 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 standards in this final rule 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 process-specific, 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 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.257 257 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. PO 00000 Frm 00088 Fmt 4701 Sfmt 4700 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. 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 RIA. The methodology used by NHTSA in applying the results to the technology costs is described in NHTSA’s RIA section V. In their written comments on the proposal, the Center for Biological Diversity and the International Council on Clean Transportation argued that the long lead times being provided for the phase-in of new standards, stretching out as they do over two complete redesign cycles, will virtually eliminate any capital stranding, making it inappropriate to carry over what they consider to be a ‘‘relic’’ from shorterterm rulemakings. As discussed above, it is difficult to quantify accurately any capital stranding associated with new technology phase-ins, especially given the projected and unprecedented deployment of technologies in the rulemaking timeframe. The FEV analysis attempted to define the possible stranded capital costs, for a select set of technologies, using the above set of assumptions. Since the direct manufacturing costs developed by FEV assumed a 10 year production life (i.e., capital costs amortized over 10 years) the agencies applied the FEV E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations derived stranded capital costs whenever technologies were replaced prior to being utilized for the full 10 years. The other option would be to assume a 5 year product life (i.e., capital costs amortized over 5 years), which would have increased the direct manufacturing costs. It seems only reasonable to account for stranded capital costs in the instances where the fleet modeling performed by the agencies replaced technologies before the capital costs were fully amortized. The agencies did not derive or apply stranded capital costs to all technologies only the ones analyzed by FEV. While there is uncertainty about the possible stranded capital costs (i.e., understated or overstated), their impact would not call into question the overall results of our cost analysis or otherwise affect the stringency of the standards, since costs of stranded capital are a relatively minor component of the total estimated costs of the rules. 62711 c. Cost Adjustment to 2010 Dollars This simple change from the earlier analyses and from the proposal is to update any costs presented in earlier analyses to 2010 dollars using the GDP price deflator as reported by the Bureau of Economic Analysis on January 27, 2011. The factors used to update costs from 2007, 2008 and 2009 dollars to 2010 dollars are shown below. TABLE II–17—GDP PRICE DEFLATORS USED IN THIS FINAL RULE 2007 Price Index for Gross Domestic Product ................................................. Factor applied to convert to 2010 dollars ................................................ 106.2 1.04 2008 2009 108.6 1.02 109.7 1.01 2010 111.0 1.00 Source: Bureau of Economic Analysis, Table 1.1.4. Price Indexes for Gross Domestic Product, downloaded 2/9/2012, last revised 1/27/2012. sroberts on DSK5SPTVN1PROD with d. Cost Effects Due to Learning The agencies have not changed the approach to manufacturer learning since the proposal. 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. For this rule, 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, in the proposal, we 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 learning-by-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 VerDate Mar<15>2010 01:21 Oct 13, 2012 Jkt 229001 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 Joint TSD. NHTSA has further discussion in Chapter 7 of the NHTSA FRIA. 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 PO 00000 Frm 00089 Fmt 4701 Sfmt 4700 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. The agencies did not receive comments on the issue of manufacturer learning. 3. How did the agencies determine the effectiveness of each of these technologies? For this final rule, EPA has conducted another peer reviewed study with the global engineering consulting firm, Ricardo, Inc., adding to and refining the results of the 2007 study, consistent with a longer-term outlook through model years MYs 2017–2025. The 2007 study was a detailed, peer reviewed vehicle simulation project to quantify the effectiveness of a multitude of technologies for the MYs 2012–2016 rule (as well as the 2010 NOI) published in 2008. The extent of the new study 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 E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with 62712 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations 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 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 for low-friction lubricants, depending on the vehicle class, 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 that 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 this rule, NHTSA and EPA believe that employing average values for technology effectiveness estimates, as adjusted depending on vehicle class, 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. As discussed in the proposal, the U.S. D.O.T. Volpe Center entered into a contract with Argonne National Laboratory (ANL) to provide full vehicle simulation modeling support for this MYs 2017–2025 rulemaking. While modeling was not complete in time for use in the NPRM, the ANL results were available for the final rule and were used to define the effectiveness of mild hybrids for both agencies, and NHTSA used the results to update the effectiveness of advanced transmission VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 technologies coupled with naturallyaspirated engines for the CAFE analysis, as discussed in the Joint TSD and more fully in NHTSA’s RIA. This simulation modeling was 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 that includes sophisticated models for advanced vehicle technologies. The ANL simulation modeling process and results are documented in multiple reports and are peer reviewed. Both the ANL reports and peer review report can be found in NHTSA’s docket.258 4. How did the agencies consider realworld limits when defining the rate at which technologies can be deployed? a. Refresh and Redesign Schedules During MYs 2017–2025 manufacturers are expected to go through the normal automotive business cycle of redesigning and upgrading their light-duty vehicle products, and in some cases introducing entirely new vehicles not in the market today. The MYs 2017– 2025 standards timeframe allows manufacturers the time needed to incorporate GHG reduction and fuelsaving technologies into their normal business cycle while considering the requirements of the MYs 2012–2016 standards. This is important because it has the potential to avoid the much higher costs that could occur if manufacturers need to add or change technology at times other than their scheduled vehicle redesigns. This time period also provides manufacturers the opportunity to plan for compliance using a multi-year time frame, again consistent with normal business practice. Over these 9 model years, and the 5 prior model years that make up the MYs 2012–2016 standards, there will be an opportunity for manufacturers to evaluate, presumably, every one of their vehicle platforms and models and add technology in a cost effective way to control GHG emissions and improve fuel economy. This includes all the technologies considered here and the redesign of the air conditioner systems in ways that will further reduce GHG emissions and improve fuel economy. Because of the complexities of the automobile manufacturing process, manufacturers are generally only able to add new technologies to vehicles on a specific schedule; just because a technology exists in the marketplace or is made available, does not mean that it is immediately available for 258 Docket PO 00000 No: NHTSA–2010–0131. Frm 00090 Fmt 4701 Sfmt 4700 applications on all of a manufacturer’s vehicles. 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. Across the industry, redesign of models generally takes place about every 5 years. However, while 5 years is a typical design period, there are many instances where redesign cycles can be longer or shorter. For example, it has generally been the case that pickup trucks and full size vans have longer redesign cycles (e.g., 6 to 7 years), while high-volume cars have shorter redesign cycles in order to remain competitive in the market. There are many other factors that can also affect redesign such as availability of capital and engineering resources and the extent of platform and component sharing between models, or even manufacturers. We have a more detailed discussion in Chapter 3.4 of the joint TSD that describes how refresh and redesign cycles play into the modeling each agency has done in support of the final standards. b. Vehicle Phase-In Caps GHG-reducing and fuel-saving technologies for vehicle applications vary widely in function, cost, effectiveness and availability. Some of these attributes, like cost and availability vary from year to year. New technologies often take several years to become available across the entire market. The agencies use phase-in caps to manage the maximum rate that the CAFE and OMEGA models can apply new technologies. Phase-in caps are intended to function as a proxy for a number of real-world limitations in deploying new technologies in the auto industry. These limitations can include but are not limited to, engineering resources at the OEM or supplier level, restrictions on intellectual property that limit deployment, and/or limitations in material or component supply as a market for a new technology develops. Without phase-in caps, the models may apply technologies at rates that are not representative of what the industry is actually capable of producing, which would suggest that more stringent standards might be feasible than actually would be. E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations EPA applies the caps on an OEM vehicle platform basis for most technologies. For a given technology with a cap of x%, this means that x% of a vehicle platform can receive that technology. On a fleet average basis, since all vehicle platforms can receive x% of this technology, x% of a manufacturer’s fleet can also receive that technology. EVs and PHEVs are an exception to this rule as the agencies limit the availability of these technologies to some subclasses. Unlike other technologies, in order to maintain utility, EPA only allows non-towing vehicle types to be electrified in the OMEGA model. As a result, the PHEV and EV cap was applied so that the average manufacturer could produce to the cap levels. As would be expected, manufacturers that make more nontowing vehicles can have a higher fraction of their fleet converted to EVs and PHEVs, while those that make fewer non-towing vehicles have a lower potential maximum limit on EV and PHEV production. NHTSA applies phase-in caps in addition to 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, Unlike vehiclelevel cycle settings, phase-in caps, defined on a percent per year basis, constrain technology application at the OEM level. As discussed above phase- in caps 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 CAFE modeling process out-pacing an OEM’s limited pool of available resources during the rulemaking time frame, especially in years where many models may be scheduled for refresh or redesign. This helps to ensure technological feasibility and economic practicability in determining the stringency of the standards. We have a more detailed discussion of phase-in caps in Chapter 3.4 of the joint TSD. 5. Maintenance and Repair Costs Associated With New Technologies In the proposal, we requested comment on maintenance, repair, and other operating-costs and whether these might increase or decrease with the new technologies. (See 76 FR 74925) We received comments on this topic from NADA. These comments stated that the agencies should include maintenance and repair costs in estimates of total cost of ownership (i.e., in our payback analyses).259 NADA proffered their Web site 260 as a place to find information on 62713 operating costs that might be used in our final analyses. This Web site tool is meant to help consumers quantify the cost of ownership of a new vehicle. The tool includes estimates for depreciation, fees, financing, insurance, fuel maintenance, opportunity costs and repairs for the first five years of ownership. The agencies acknowledge that the tool may be useful for consumers; however, there is no information provided on how these estimates were determined. Without documentation of the basis for estimates, the Web site information is of limited use in this rulemaking where the agencies document the source and basis for each factual assertion. There are also evident substantive anomalies in the Web site information.261 For these reasons, the agencies have performed an independent analysis to quantify maintenance costs. For the first time in CAFE and GHG rulemaking, both agencies now include maintenance costs in their benefit-cost analyses and in their respective payback analyses. This analysis is presented in Chapter 3.6 of the joint TSD and the maintenance intervals and costs per maintenance event used by both agencies are summarized in Table II–18. For information on how each agency has folded the maintenance costs into their respective final analyses, please refer to each agency’s respective RIA (Chapter 5 of EPA’s RIA, Chapter VIII of NHTSA’s FRIA). TABLE II–18—MAINTENANCE EVENT COSTS & INTERVALS [2010 dollars] Cost per maintenance event New technology Reference case Low rolling resistance tires level 1 ............................... Low rolling resistance tires level 2 ............................... Diesel fuel filter replacement ........................................ EV oil change ............................................................... EV air filter replacement ............................................... EV engine coolant replacement ................................... EV spark plug replacement .......................................... EV/PHEV battery coolant replacement ........................ EV battery health check ............................................... Standard tires ............................................................... Standard tires ............................................................... Gasoline vehicle ........................................................... Gasoline vehicle ........................................................... Gasoline vehicle ........................................................... Gasoline vehicle ........................................................... Gasoline vehicle ........................................................... Gasoline vehicle ........................................................... Gasoline vehicle ........................................................... Maintenance interval (mile) $6.44 43.52 49.25 ¥38.67 ¥28.60 ¥59.00 ¥83.00 117.00 38.67 40,000 40,000 20,000 7,500 30,000 100,000 105,000 150,000 15,000 Note: Negative values represent savings due to the EV not needing the maintenance required of the gasoline vehicle; EPA applied a battery coolant replacement cost to PHEVs and EVs, while NHTSA applied it to EVs only. sroberts on DSK5SPTVN1PROD with E. Joint Economic and Other Assumptions The agencies’ analysis of CAFE and GHG standards for the model years covered by this final rule rely on a range of forecast information, estimates of 259 See NADA (EPA–HQ–OAR–2010–0799–0639, p.10). 260 http://www.nadaguides.com/Cars/Cost-toOwn. VerDate Mar<15>2010 01:21 Oct 13, 2012 Jkt 229001 economic variables, and input parameters. This section briefly describes the sources of the agencies’ 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 final rule, NHTSA and EPA considered comments received in 261 For example, comparing the 2012 Hyundai Sonata showed the same cost for fuel ($11,024) regardless of whether it is a hybrid option or not. The HEV fuel economy rating is 35/40 mpg City/ Highway for the HEV and 2.4L non HEV rating is 24/35. Another example is the 2012 Ford Fusion SEL: the front wheel drive and the all-wheel drive versions have identical fuel cost despite having different fuel economies. PO 00000 Frm 00091 Fmt 4701 Sfmt 4700 E:\FR\FM\15OCR2.SGM 15OCR2 62714 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with response to the proposed rule, and also reviewed newly available literature. For this final rule, we made several changes to the economic assumptions used in our proposed rule, including revised technology costs to reflect more recently available data; updated values of the cost of owning a vehicle based on new data; updated fuel price and transportation demand forecasts that reflect the Annual Energy Outlook (AEO) 2012 Early Release; and changes to vehicle miles travelled (VMT) schedules, survival rates, and projection methods. The final values summarized below are discussed in greater detail in Chapter 4 of the joint TSD and elsewhere in the preamble and in the agencies’ respective RIAs. • Costs of fuel economy-improving technologies—These inputs are discussed in summary form in Section II.D above and in more detail in the agencies’ respective sections of this preamble, in Chapter 3 of the joint TSD, and in the agencies’ respective RIAs. The direct manufacturing cost estimates for fuel economy improving and GHG emissions reducing technologies that are used in this analysis are intended to represent manufacturers’ direct costs for high-volume production of vehicles equipped with these technologies in the year for which we state the cost is considered ‘‘valid.’’ Technology direct manufacturing cost estimates are the same as those used to analyze the proposed rule, with the exception of those for hybrid electric vehicles, plugin hybrid electric vehicle (PHEV) and electric vehicle (EV) battery costs which have been updated using an updated version of Argonne National Laboratory’s (ANL’s) BatPaC model.262 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. As explained at proposal, the indirect cost markup factors have been revised from the MYs 2012–2016 rulemaking and the Interim Joint TAR to reflect the agencies current thinking regarding a number of 262 Technology direct manufacturing cost estimates for most technologies are fundamentally unchanged from those used by the agencies in the MYs 2012–2016 final rule, the heavy-duty truck rule (to the extent relevant), and TAR, although the agencies have revised costs for mass reduction, transmissions, and a few other technologies from those used in these earlier regulatory actions and analyses. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 issues. The final rules use the same factors the agencies used at proposal. These factors are discussed in detail in Section II.D.2 of this preamble and in Chapter 3 of the joint TSD, where we also discuss comments received on the proposal and our response to them. Details of the agencies’ technology cost assumptions and how they were derived can be found in Chapter 3 of the joint TSD. We did not receive specific comments on our estimated technology direct manufacturing costs. • 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 this were the case, 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 assume that these vehicle attributes will not change as a result of these rules. Section II.C above and Chapter 2 of the joint TSD describe how the agencies carefully selected an attribute-based 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 rules themselves will not result in such changes. Importantly, EPA and NHTSA have sought to include the cost of maintaining these attributes as part of the cost and effectiveness estimates for technologies that are included in the analysis for this final rule. For example, downsized engines are assumed to be turbocharged, so that they provide the same performance and utility even though they are smaller, and the costs of turbocharging and downsizing are included in the agencies’ cost estimates.263 The two instances where 263 The modeling work underlying the agencies’ estimates of technology effectiveness build in the need to maintain vehicle performance (utility). See chapter 3.2 of the Joint TSD for details behind these effectiveness estimates. Our technology costs include all costs of implementing the technologies required to achieve these effectiveness values while maintaining performance and other utility. Thus, the costs of maintaining performance and other utility are an inherent element of the agencies’ cost estimation process. The agencies consequently believe it reasonable to conclude that there will be no loss of vehicle utility as a direct result of these final rules. The agencies also do not believe that adding fuel-saving technology should 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. PO 00000 Frm 00092 Fmt 4701 Sfmt 4700 the rules might result in loss of vehicle utility, as described in Section III.D.3, III.H.1.b, and Section IV.G, involve cases where vehicles are converted to hybrid or full electric vehicles (EVs) and some buyers may experience a loss of welfare due to the reduced range of driving on a single charge compared to the range of an otherwise similar gasoline vehicle. However, in such cases, we believe that sufficient options would exist for consumers concerned about the possible loss of this utility (e.g., they could purchase the nonhybridized version of the vehicle or not buy an EV) that the agencies do not attribute a welfare loss for these vehicles resulting from the final rules. Though some comments raised concerns over consumer acceptance of EVs, other comments expressed optimism that consumer interest in EVs would be sufficient for the low levels of adoption projected in these rules to be used for compliance with the standards. The agencies maintain their assumption that purchasers of EVs will not incur welfare losses given that they will have sought out vehicles with these properties. Moreover, given the modest levels of EV penetration which the agencies project as a compliance strategy for manufacturers, the agencies likewise do not project any general loss of societal welfare since many other compliance alternatives remain available to manufacturers and thus to vehicle purchasers. Consumer vehicle choice modeling is a method to understand and predict what vehicles consumers might buy. In principle these models can be used to estimate the effects of these rules on vehicle sales and fleet mix. In practice, though, past analyses using such models have not produced consistent estimates of how buyers might respond to improved fuel economy, and it is difficult to decide whether one data source, model specification, or estimation procedure is clearly preferable over another. Thus, for these final rules, the agencies continue to use forecasts of total industry sales, the share of total sales accounted for by passenger cars, and the market shares of individual models for all years between 2010 and 2025 that do not vary among regulatory alternatives. The agencies requested 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. Some E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations commenters considered vehicle choice models too uncertain for use in this rulemaking, while another requested that we conduct explicit consumer vehicle choice modeling (although without providing a justification as to which models to use or why any particular modeling approach is likely to generate superior estimates). Because the agencies have not yet developed sufficient confidence in their vehicle choice modeling efforts, we believe it is premature to use them in this rulemaking. The agencies have continued to explore the possible use of these models, as discussed in Sections III.H.1.a and IV.G.6, below. • 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 CAFE and GHG standards (and which is mandated by statute for measuring compliance with CAFE passenger car standards) 264. The modeling approach in this final rule is consistent with the proposal, and also follows the MYs 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 models that operate on liquid fuels will be 20 percent lower than their fuel economy ratings as measured for purposes of CAFE fuel economy testing. 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).265 Based on manufacturer confidential business information, as 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.266 The U.S. Coalition for Advanced Diesel Cars suggested that the on-road gap used in 264 49 U.S.C. 32904(c). 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. (Docket No. EPA–HQ– OAR–2010–0799–1125). 266 See 71 FR 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, Docket No. EPA–HQ–OAR–2010–0799– 1113) 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. sroberts on DSK5SPTVN1PROD with 265 U.S. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 the proposal was overly conservative at 20%, and that advanced technology vehicles may have on-road gaps that are larger than current vehicles. The agencies recognize the potential for future changes in driver behavior or vehicle technology to change the onroad gap to be either larger or smaller. The agencies continue to use the same estimates of the on-road gap as in the proposed rule for estimating fuel savings and other impacts, and will monitor the EPA fuel economy database as these future model year vehicles enter the fleet. • 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 rule’s estimated benefits. For these rules, the agencies are using the most recent fuel price projections from the U.S. Energy Information Administration’s (EIA) Annual Energy Outlook (AEO) 2012 Early Release reference case. The projections of fuel prices reported in EIA’s AEO 2012 Early Release extend through 2035. Fuel prices beyond the time frame of AEO’s forecast were estimated by applying the average growth rate for the years 2017– 2035 for each year after 2035. This is the same general methodology used by the agencies in the analysis for the proposed rule, as well as in the MYs 2012–2016 rulemaking, in the heavy duty truck and engine rule (76 FR 57106), and in the Interim Joint TAR. For example, the AEO 2012 Early Release projections of gasoline fuel prices (in constant 2010$) are $3.63 per gallon in 2017, $3.76 in 2020, and $4.09 in 2035. Extrapolating as described above, retail gasoline prices are projected to reach $4.57 per gallon in 2050 (measured in constant 2010 dollars). Several commenters (Volkwagen, Consumer Federation of America, Environmental Defense Fund, Consumer’s Union, National Resources Defense Council, Union of Concerned Scientists) stated that the EIA AEO 2011 future fuel price projections used in the proposal were similar to current prices, and thus were modest, or lower than expected. The agencies note that if a higher fuel prices projection were used, it would increase the value of the fuel savings from the rule, while a lower fuel price projection would decrease the value of the fuel savings from the rule. Another commenter noted the uncertainty projecting automotive fuel prices during this extended time period (National Auto Dealers’ Association). As PO 00000 Frm 00093 Fmt 4701 Sfmt 4700 62715 discussed in Chapter 4 of the Joint TSD, while the agencies believe that EIA’s AEO reference case generally represents a reasonable forecast of future fuel prices for use in our analysis of the benefits of this rule, we recognize that there is a great deal of uncertainty in future fuel prices. However, given that no commenters offered alternative sources for fuel price projections, and the agencies have found no better source since the NPRM, in this final rulemaking the agencies continue to rely upon EIA projections of future gasoline and diesel prices. • Consumer cost of ownership and payback period—The agencies provide, in Sections III.H.3 and IV.G.4, estimates of the impacts of these rules on the net costs of owning new vehicles, as well as the time period necessary for the fuel savings to outweigh the expected increase in prices for the new vehicles (i.e., the payback period). These analyses focus specifically on the buyers’ perspectives, and therefore take into account the effect of the rule on insurance premiums, sales tax, and finance charges. From a social perspective, these are transfers of money from one group to another, rather than net gains or losses, and thus have no net effect on the net benefits of the rules. For instance, a sales tax is a cost to a vehicle buyer, but the money does not represent economic resources that are consumed; instead, it goes to finance state and local government activities, such as schools or roads. The role of finance charges is to spread payments over time, taking into account the opportunity cost of financing; this is just a reversal of the process of discounting, and thus does not affect the present value of the vehicle cost. Though the net benefits analysis is not affected by these payments, from the buyers’ viewpoint, these are additional costs. In the NPRM, EPA included these factors in its payback period analysis and asked for comment on them; no comments were received. The agencies have updated these values for these final rules; the details of the estimation of these factors are found in TSD Chapter 4.2.13. Though the agencies use these common values for their respective cost of ownership and payback period analyses, each agency’s estimates for the cost of ownership and the payback period differ due to somewhat different estimates for vehicle cost increases and fuel savings. Some comments encouraged our inclusion of maintenance and repair costs in these calculations and the agencies have responded by including maintenance costs in that analysis of the final rule. E:\FR\FM\15OCR2.SGM 15OCR2 62716 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with The potential effects of the rule on maintenance and repair costs are discussed in Sections III.H.2, IV.C.2, and Chapter 3.6 of the Joint TSD. When a new vehicle is destroyed in an accident, the higher costs of the replacement vehicle are already accounted for in the technology costs of new vehicles sold, since some of these are purchased to replace vehicles destroyed in accidents.267 • Vehicle sales assumptions—The first step in estimating lifetime fuel consumption by vehicles produced during a model year is to calculate the number of vehicles that are expected to be produced and sold. The agencies relied on the AEO 2011 and AEO 2012 Early Release Reference Cases 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 analysis for the proposed rule (and as in the MYs 2012– 2016 final rule and Interim Joint TAR), we apply updated values of age-specific survival rates for cars and light trucks to the 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. Since the proposal, these values were updated using the same methodology with which the original estimates were developed, together with recent vehicle registration data obtained from R.L. Polk. No comments were received on the vehicle lifetime and survival rates in the proposal. • Vehicle miles traveled (VMT)—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 2009 National Household Travel Survey (NHTS).268 In order to insure that the resulting 267 The agencies do not have information to estimate the effect of the rule on repair costs for vehicles that are damaged but not destroyed. Some repairs, such as minor dents, may be unaffected by changes in vehicles; others may be more or less expensive. Insurance premiums in principle could provide insight into the costs of damages associated with more expensive vehicles, but, because insurance premiums include costs for destroyed vehicles, which are already implicitly covered in the sales estimates, it is not possible to separately estimate the costs for repairs from insurance data. See Joint TSD Chapter 3.6 for further discussion of this issue. 268 For a description of the Survey, see http:// www.bts.gov/programs/ national_household_travel_survey/ (last accessed Sept. 9, 2011). VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 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 meet the levels projected in the AEO 2012 Early Release Reference Case. The growth rate in average annual car and light truck use produced by this calculation is approximately 0.6 percent per year, and is applied in the agencies’ modeling through 2050. We applied this growth rate to the mileage figures derived from the 2009 NHTS to estimate annual mileage by vehicle age during each year of the expected lifetimes of MY 2017–2025 vehicles. A generally similar approach to estimating future vehicle use was used in the MYs 2012– 2016 final rules and Interim Joint TAR, but the future growth rates in average vehicle use have been revised for this rule. No substantive technical comments were received on this approach. • Accounting for the fuel economy rebound effect—The fuel economy rebound effect refers to the increase in vehicle use (VMT) that results if an increase in fuel economy lowers the cost of driving. The agencies are continuing to use a 10 percent fuel economy rebound effect, consistent with the proposal, in their analyses of fuel savings and other benefits from more stringent standards. This value is also consistent with that used in the MYs 2012–2016 light-duty vehicle rulemaking and the Interim Joint TAR. That is, we assume that a 10 percent decrease in fuel cost per mile resulting from our standards would result in a 1 percent increase in the annual number of miles driven at each age over a vehicle’s lifetime. We received comments recommending values both higher and lower than our proposed value of 10 percent for the fuel economy rebound effect, as well as comments maintaining that there were indirect rebound effects for which the agencies should account. The agencies discuss comments on this topic in more detail in sections III.H.4 and IV.C.3 of the preamble. The agencies do not regard any of these comments as providing new data or analysis that justify revising the 10 percent value. In Chapter 4 of the joint TSD, we provide a detailed explanation of the basis for our fuel economy rebound estimate, including a summary of new literature published since the MYs 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 RIA and Chapter 4 of EPA’s PO 00000 Frm 00094 Fmt 4701 Sfmt 4700 RIA for sensitivity and uncertainty analyses of alternative fuel economy rebound assumptions. • Benefits from increased vehicle use—The increase in vehicle use from the rebound effect results from vehicle buyers’ decisions to 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 during that additional travel, plus the consumer surplus drivers receive from the improved accessibility their travel provides. No comments were received on this particular issue. As in the analysis for the proposed rule (and as in the MYs 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 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 fuel economy 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 the number of vehicles using 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 additional travel also increases costs associated with traffic accidents and vehicle noise. No comments were received on the specific economic assumptions employed in the proposal. The agencies are using the same methodology as used in the analysis for the proposed rule, relying on estimates of congestion, accident, and noise costs imposed by automobiles and light trucks developed by the Federal Highway Administration to estimate these increased external costs caused by added driving.269 This method is also 269 These estimates were developed by FHWA for use in its 1997 Federal Highway Cost Allocation Study; http://www.fhwa.dot.gov/policy/hcas/final/ index.htm (last accessed July 8, 2012). E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with consistent with the MYs 2012–2016 final rules. • Petroleum consumption and import externalities—U.S. consumption of imported petroleum products imposes costs on the domestic economy that are not reflected in the market price for crude oil, or in the prices paid by consumers of petroleum products such as gasoline (often referred to as ‘‘energy security’’ costs). 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 (the ‘‘monopsony effect’’); (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. (often referred to as ‘‘macroeconomic disruption and adjustment costs’’); 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 (i.e., ‘‘military/SPR costs’’).270 While the agencies received a number of comments regarding these energy security costs, particularly the treatment of military costs, we continue to use the same methodology from the proposal. Further discussion of these comments and the agencies’ responses can be found in Sections III.H.8 and IV.3. • Monopsony Component—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.271,272 Although the reduction in the global price of crude oil and refined petroleum 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 sellers of crude petroleum and refined products from other countries. Recognizing the 270 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. 271 Leiby, Paul. Oak Ridge National Laboratory. ‘‘Approach to Estimating the Oil Import Security Premium for the MY 2017–2025 Light Duty Vehicle Rule’’ 2012, EPA Docket EPA–HQ–OAR–2010– 0799–41789. 272 Note that this change in world oil price is not reflected in the AEO fuel price projections described earlier in this section. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 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 estimated to result from this program exclude the value of this monopsony effect. • Macroeconomic Disruption Component: In contrast to monopsony costs, 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 we include the estimated reduction in their expected value stemming from reduced U.S. petroleum imports in our energy security benefits estimated for this program. • Military and SPR Component: We recognize that there may be significant (if unquantifiable) benefits in improving national security by reducing U.S. oil imports, and public comments supported the agencies inclusion of such benefits. Quantification of military security benefits is challenging because attribution to particular missions or activities is difficult and because it is difficult to anticipate the impact of reduced U.S. oil imports on military spending. The agencies do not have a robust way to calculate these benefits at this time, and thus exclude U.S. military costs from the analysis. Similarly, since the size of the SPR, or other factors affecting the cost of maintaining the SPR, historically have not varied in response to changes in U.S. oil import levels, we exclude changes in the cost of maintaining the SPR from the estimates of the energy security benefits of the program. The agencies continue to examine appropriate methodologies for estimating the impacts on military and SPR costs as U.S. oil imports are reduced. To summarize, the agencies have included only the macroeconomic disruption and adjustment costs portion of potential energy security benefits to estimate the monetary value of the total energy security benefits of this program. The energy security premium values in this final rule have been updated since the proposal to reflect the AEO2012 Early Release Reference Case projection of future world oil prices. Otherwise, the methodology for estimating the energy security benefits is consistent with that used in the proposal. Based on an update of an earlier peer-reviewed Oak Ridge National Laboratory study that was used in support of the both the MYs 2012–2016 light duty vehicle and the MYs 2014–2018 medium- and PO 00000 Frm 00095 Fmt 4701 Sfmt 4700 62717 heavy-duty vehicle rulemakings, 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 $0.197 (2010$) in 2025. Each gallon of fuel saved as a consequence of higher standards is anticipated to reduce total U.S. imports of crude oil or refined fuel by 0.95 gallons.273 • Air pollutant emissions— • Impacts on criteria air pollutant emissions—Criteria air pollutants emitted by vehicles, during fuel production and distribution, and during electricity generation 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 generation to power PHEVs and EVs will increase emissions. Thus the net effect of more stringent GHG and fuel economy 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 per-mile criteria pollutant emission rates for cars and light trucks produced during the model years affected by the 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 proposal and in the MYs 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, as well as new estimates of the emission rates from electricity generation. No comments were received on the use of the MOVES model. The agencies analyses of 273 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. E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with 62718 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations emissions from electric power plants are discussed in EPA RIA chapter 4, NHTSA RIA chapter VIII and NHTSA’s EIS. • Economic value of reductions in criteria pollutant emissions—To evaluate benefits from reducing emissions of criteria pollutants over the lifetimes of MY 2017–2025 vehicles, EPA and NHTSA estimate the economic value of the human health impacts associated with reducing population exposure to PM2.5 using a ‘‘dollar-perton’’ method. These PM2.5-related dollar-per-ton estimates provide the total monetized impacts to human health (the sum of changes in the incidence of premature mortality and morbidity) that result from eliminating or adding one ton of directly emitted PM2.5, or one ton of PM2.5 precursor (such as NOX, SOX, and VOCs, which are emitted as gases but form PM2.5 as a result of atmospheric reactions), from a specified source. These unit values remain unchanged from the proposal. Note that the agencies’ joint analysis of criteria air pollutant impacts over the model year lifetimes of 2017–2025 vehicles includes no estimates of the direct health or other impacts associated with emissions of criteria pollutants other than PM2.5 (as distinguished from their indirect effects as precursors to PM2.5). The agencies did receive comments arguing that the agencies should have included these impacts in their analyses, however, no ‘‘dollar-perton’’ method exists for ozone or toxic air pollutants due to complexity associated with atmospheric chemistry (for ozone and toxics) and a lack of economic valuation data and methods (for air toxics). For the final rule, however, EPA and NHTSA also conducted full scale, photochemical air quality modeling to estimate the change in ambient concentrations of ozone, PM2.5 and air toxics (i.e., hazardous air pollutants listed in section 112(b) of the Clean Air Act) for the year 2030, and used these results as the basis for estimating the human health impacts and their economic value of the rule in 2030. However, the agencies have not conducted such modeling over the complete life spans of the vehicle model years subject to this rulemaking, due to timing and resource limitations. Section III.H.7 below and Appendix E of NHTSA’s Final EIS present these impact estimates. • 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 VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 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 these rules.274 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 changes in emissions of non-CO2 GHGs that occur during fuel production, electricity use, and vehicle use due to their respective standards.275 The agencies approach to estimating GHG emissions is consistent with the method used at proposal (and in the MYs 2012–2016 final rule and the Interim Joint TAR). No comments were received on the method for calculating impacts on greenhouse gas emissions, although several commenters discussed the emission factors used for electricity generation. These comments are discussed in section III.C and IV.X. • Economic value of reductions in CO2 emissions—EPA and NHTSA assigned a dollar value to reductions in CO2 emissions, consistent with the proposal, using recent estimates of the ‘‘social cost of carbon’’ (SCC) developed by a federal interagency group that included representatives from both agencies and reported the results of its work in February 2010. 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 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.’’ 276 Published estimates 274 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 10,180 grams per gallon. 275 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. 276 SCC TSD, see page 2. Docket ID EPA–HQ– OAR–2010–0799–0737, Technical Support Document: Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866, Interagency Working Group on Social Cost of PO 00000 Frm 00096 Fmt 4701 Sfmt 4700 of the SCC, as well as those developed by the interagency group, 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.277 The SCC Technical Support Document (SCC TSD) provides a complete discussion of the methods used by the federal interagency group to develop its SCC estimates. Several commenters expressed support for using SCC to value reductions in CO2 emissions and provided detailed recommendations directed at improving the estimates. One commenter disagreed with the use of SCC. However, as discussed in III.H.6 and IV.C.3 of the preamble, the SCC estimates were developed using a reasonable set of input assumptions that are supported by published literature. As noted in the SCC TSD, the U.S. government intends to revise these estimates over time, if appropriate, taking into account new research findings that were not available in 2010. Several commenters also recommended presenting monetized estimates of the benefits of reductions in non-CO2 GHG emissions (i.e., methane, nitrous oxides, and hydrofluorocarbons) expected to result from the final rule. Although the agencies are not basing their primary analyses on this suggested approach, they have conducted sensitivity analyses of the final rule’s monetized non-CO2 GHG impacts in preamble section III.H.6 and Chapter X of NHTSA’s FRIA. Preamble sections III.H.6 and IV.C.3 also provide a more detailed discussion about the response to comments on SCC. • 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 efficiency provides additional benefits to vehicle owners. The primary benefits from reducing the required frequency of refueling are the value of time saved by drivers and other vehicle occupants, as well as the value of the minor savings in fuel that would have been consumed during refueling trips that are no longer 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 http://epa.gov/otaq/climate/ regulations.htm. 277 SCC TSD, see pages 6–7. E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations required. Using recent data on vehicle owners’ refueling patterns gathered from a survey conducted by the National Automotive Sampling System (NASS), NHTSA was able to more accurately estimate the characteristics of refueling trips. NASS data provided NHTSA with 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 during refueling trips, the average quantity of fuel purchased, and the distribution of reasons given by drivers for refueling. From these estimates, NHTSA constructed a revised set of assumptions to update those used in the MYs 2012–2016 FRM for calculating refueling-related benefits. The MYs 2012–2016 FRM discussed 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 benefits resulting from less frequent refueling, the framework of the analysis remains essentially the same as in the MYs 2012–2016 final rule. Note that this topic and associated benefits were not covered in the Interim Joint TAR. No comments were received on the refueling analysis presented in the NPRM. Detailed discussion and examples of the agencies’ approaches are provided in Chapter VIII of NHTSA’s FRIA and Chapter 7 of EPA’s RIA. • 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.278 The discount rate 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 proposal. One commenter (UCS) agreed with the agencies’ use of 3 and 7 percent discount rates, while another (API) stated that the Energy Information Administration (EIA) uses a 15 percent ‘‘consumer-relevant discount rate when evaluating the economic costeffectiveness of new vehicle efficiency technology,’’ which it noted would affect the agencies’ assumptions of benefits if employed. The agencies have continued to employ the 3 and 7 percent discount rate values for the final rule analysis, as discussed further below in section IV.C.3 and in Chapter 4 of the Joint TSD. For the reader’s reference, Table II–19 and Table II–20 below summarize the values used by both agencies to calculate the impacts of the final standards. The values presented in these tables 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 the Joint TSD, Chapter 4, and each agency’s respective RIA for details. A wide range of estimates is available for many of the primary inputs that are used in the agencies’ CAFE and GHG 62719 emissions models. The agencies recognize that each of these values has some degree of uncertainty, which the agencies further discuss in the Joint TSD. The agencies tested the sensitivity of their estimates of costs and benefits to a range of assumptions about each of these inputs, and found that the magnitude of these variations would not have changed the final standards. For example, NHTSA conducted separate sensitivity analyses for, among other things, discount rates, fuel prices, the social cost of carbon, the fuel economy rebound effect, consumers’ valuation of fuel economy benefits, battery costs, mass reduction costs, energy security costs, and the indirect cost markup factor. This list is similar in scope to the list that was examined in the proposal, but includes post-warranty repair costs and transmission shift optimizer effectiveness as well. NHTSA’s sensitivity analyses are contained in Chapter X of NHTSA’s RIA. Similarly, EPA conducted sensitivity analyses on discount rates, the social cost of carbon, 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, 4, and 7 of the EPA RIA. In addition, NHTSA performed 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 RIA. TABLE II–19—ECONOMIC VALUES FOR BENEFITS COMPUTATIONS (2010$) Rebound effect 10% ‘‘Gap’’ between test and on-road MPG for liquid-fueled vehicles ......................................................................... ‘‘Gap’’ between test and on-road electricity consumption for electric and plug-in hybrid electric vehicles .......... Annual growth in average vehicle use .................................................................................................................. 20%. 30%. 0.6. Fuel Prices (2017–50 average, $/gallon) Retail gasoline price .............................................................................................................................................. Pre-tax gasoline price ............................................................................................................................................ $4.13. 3.78. Economic Benefits from Reducing Oil Imports ($/gallon) ‘‘Monopsony’’ Component ..................................................................................................................................... Macroeconomic Disruption Component ................................................................................................................ Military/SPR Component ....................................................................................................................................... Total Economic Costs ($/gallon) .................................................................................................................... $ 0.0.0. 0.197 in 2025. 0.00. 0.197 in 2025. sroberts on DSK5SPTVN1PROD with Emission Damage Costs (2020, $/short ton, 3% discount rate) Carbon monoxide .................................................................................................................................................. 278 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 VerDate Mar<15>2010 01:21 Oct 13, 2012 Jkt 229001 present values as of each model year affected by the rule, and require discounting only for the purpose of expressing them as present values as of a common year (2012 for the Calendar Year analysis; PO 00000 Frm 00097 Fmt 4701 Sfmt 4700 $ 0. the first year of production for each MY vehicle— 2017 through 2025—for the Model Year analysis). E:\FR\FM\15OCR2.SGM 15OCR2 62720 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations TABLE II–19—ECONOMIC VALUES FOR BENEFITS COMPUTATIONS (2010$)—Continued Rebound effect 10% Nitrogen oxides (NOX)—vehicle use ..................................................................................................................... Nitrogen oxides (NOX)—fuel production and distribution ...................................................................................... Particulate matter (PM2.5)—vehicle use ................................................................................................................ Particulate matter (PM2.5)—fuel production and distribution ................................................................................. Sulfur dioxide (SO2) ............................................................................................................................................... Annual CO2 Damage Cost (per metric ton) .......................................................................................................... 5,600. 5,400. 310,000. 250,000. 33,000. Variable, depending on discount rate and year (see Table II–20 for 2017 estimate). External Costs from Additional Automobile Use ($/vehicle-mile) Congestion ............................................................................................................................................................. Accidents ............................................................................................................................................................... Noise ...................................................................................................................................................................... $ 0.056. 0.024. 0.001. Total External Costs ....................................................................................................................................... $ 0.081. External Costs from Additional Light Truck Use ($/vehicle-mile) Congestion ............................................................................................................................................................. Accidents ............................................................................................................................................................... Noise ...................................................................................................................................................................... $0.050. 0.027. 0.001. Total External Costs ....................................................................................................................................... Discount Rates Applied to Future Benefits ........................................................................................................... 0.078. 3%, 7%. TABLE II–20—SOCIAL COST OF CO2 ($/METRIC TON), 2017 (2010$) Discount rate 5% Source of Estimate .......................................................................................... sroberts on DSK5SPTVN1PROD with 2017 Estimate .................................................................................................. F. CO2 Credits and Fuel Consumption Improvement Values for Air Conditioning Efficiency, Off-Cycle Reductions, and Full-Size Pickup Trucks For the MYs 2012–2016 rule, 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. EPA also provided another credit generating option for 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.’’ See 76 FR 74937, 74998, 75020. EPA proposed to continue these credit mechanisms in the MYs 2017–2025 GHG program, and is finalizing these proposals in this notice. EPA also proposed that certain of the A/C credits and the off-cycle credits be included under the CAFE program. See id. and 76 FR 74995–998. For this rule, under EPA’s EPCA authority, EPA is allowing manufacturers to generate fuel VerDate Mar<15>2010 01:21 Oct 13, 2012 Jkt 229001 3% Frm 00098 Fmt 4701 Sfmt 4700 3% Mean of Estimated Values $6 consumption improvement values for purposes of CAFE compliance based on the use of A/C efficiency and the other off-cycle technologies. These fuel consumption improvement values will not apply to compliance with the CAFE program for MYs 2012–2016. Also, reductions in direct A/C emissions resulting from leakage of HFCs from air conditioning systems, which are generally unrelated to fuel consumption reductions, will not apply to compliance with the CAFE program. Thus, as discussed below, credits for refrigerant leakage emission reductions will continue to apply only to the EPA GHG program. The agencies expect that, because of the significant credits and fuel consumption improvement values available for improvements to the efficiency of A/C systems (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 0.000810 gal/mi for trucks), manufacturers will take technological steps to maximize these benefits. Since we project that all manufacturers will adopt these A/C improvements to their maximum extent, PO 00000 2.5% $26 95th percentile estimate. $41 $79. EPA has adjusted 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),279 and NHTSA has also accounted for expected A/C efficiency improvements in determining the maximum feasible CAFE standards. The agencies discuss these CO2 credits and fuel consumption improvement values below and in more detail in Chapter 5 of the Joint TSD. We also discuss below how other (non-A/C) off-cycle improvements in CO2 and fuel consumption may be eligible to apply towards compliance with the GHG and CAFE standards; however, with two exceptions (for the two-cycle benefits of stop-start and active aerodynamic improvements—technologies which EPA expects manufacturers to adopt widely and whose benefits can be reliably quantified), these off-cycle improvements are not incorporated in the stringency of the standards Finally, EPA discusses in Section III.C below the 279 Similarly, the MYs 2012–2016 GHG standards reflect direct and indirect A/C improvements. See 75 FR 25371, May 7, 2010. E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with GHG A/C leakage credits that are exclusive to the GHG standards. EPA, in coordination with NHTSA, is also introducing for MYs 2017–2025 a new incentive for certain advanced technologies used in full-sized pickup trucks. Under its EPCA authority for CAFE and under its CAA authority for GHGs, EPA is establishing 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 from these full-sized pickup trucks. We discuss each of these types of credits and incentives, in detail below and throughout Chapter 5 of the Joint TSD. We also discuss and respond to the key comments throughout this section. 1. Air Conditioning Efficiency Credits and Fuel Consumption Improvement Values After detailed consideration of the comments and other available information, the agencies are finalizing a program of A/C efficiency credits and fuel consumption improvement values. Although the agencies are making some minor changes for the final rule, as described below, we are finalizing the program establishing efficiency credits and fuel consumption improvement values largely in its proposed form. Specifically, efficiency credits will continue to be calculated from a technology ‘‘menu’’ once manufacturers qualify for eligibility to generate A/C efficiency credits through specified A/C CO2 emissions testing. The efficiency credits and fuel consumption improvement values in this rule reflect an understanding of the relationships between A/C technologies and CO2 emissions and fuel consumption that is improved from the MYs 2012–2016 rulemaking. Much of this understanding results from the use of a new vehicle simulation tool that EPA has developed and that the agencies used for the proposal and for this final rulemaking. 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, and no comments were received raising concerns about the model or its use in this rule. Chapter 2 of the EPA Regulatory Impact Analysis discusses the development of this model in more detail. The agencies have identified several technologies related to improvements in VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 A/C efficiency. 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 to align with cabin demand by using more sophisticated sensors and control strategies is one path to improving the overall efficiency of the A/C system. See generally section 5.1.3 of Joint TSD Chapter 5. A broad range of stakeholders submitted general comments expressing support for the overall proposed program for A/C efficiency credits and fuel consumption improvement values as an appropriate method of encouraging efficiency-improving technologies. One commenter, Center for Biological Diversity, stated that ‘‘[t]echnology that will be available during the rulemaking period and can be incorporated in an economically feasible manner should be built into the standard and not merely used as an ‘incentive’.’’ In fact, all of these A/C improvements (for both indirect and direct A/C improvements) are reflected in the standard stringency.280 See section II.C.7.b above. Moreover, we have every expectation that manufacturers will use most if not all of these technologies—precisely because of their ready availability and relatively low cost. Automaker and auto supplier commenters broadly supported the agencies’ assessments of likely A/C efficiency-improving technologies and the credit values assigned to them. Several commenters suggested relatively minor changes in these assessments. One commenter, ICCT, suggested an approach that would attempt to vary A/ C efficiency credits based on the degree to which other off-cycle improvements—specifically solar load reductions—may have independently reduced the demand for A/C cooling. ICCT’s suggestion was to address what the commenter viewed as a potential for ‘double-counting.’ EPA agrees with the observation that A/C efficiency improvements and solar load improvements are related technically. 280 As explained in section I.B above, one reason the CAFE and GHG standards are not the same in miles-per-gallon space is that direct leakage A/C improvements are reflected in the GHG standards. PO 00000 Frm 00099 Fmt 4701 Sfmt 4700 62721 However, we believe that the added complexity of scaling the established credit values for A/C technologies according to solar load improvements would not be warranted, given relatively small change in the overall credit values that would likely result. We are thus finalizing separate treatment of A/C efficiency and other off-cycle improvements, as proposed. (We summarize and discuss comments on A/ C efficiency test procedures below.) As described in Chapter 5.1.3.2 of the Joint TSD, EPA calculated the total eligible A/C efficiency credits from an analysis of the average impact of air conditioning on tailpipe CO2 emissions. This methodology differs from the one used for the MYs 2012–2016 rule, though it does give similar values. In the MYs 2012–2016 rule, the total impact of A/C on tailpipe emissions was estimated to be 3.9% of total GHG emissions, or approximately 14.3 g/mi. Largely based on an SAE feasibility study,281 EPA assumed that 40% of those emissions could be reduced through advanced technologies and controls. Thus, EPA calculated a maximum credit of 5.7 g/mi (for both cars and trucks) from efficiency improvements. EPA also assumed that there would be 85% penetration of these technologies when setting the standard, and consequently made the standard more stringent by 5.0 g/mi. For the MYs 2017–2025 proposal, EPA recalculated the A/C tailpipe impact using its vehicle simulation tool. Based on these simulations, it was determined that trucks should have a higher impact than cars, and the total emissions due to A/ C was calculated to be 11.9g/mi for cars and 17.1 g/mi for trucks. In the proposal, the feasible level of control was increased slightly from the MYs 2012–2016 final rule to 42% (within the uncertainty bounds of the studies cited). Thus the maximum credit became 5.0 for cars and 7.2 for trucks, and the proposed stringency of the standards reflected these new levels as the penetrations increased from 85% in MY 2016 to 100% in MY 2017 (for car) and 2019 (for truck). Volkswagen commented that the change in split in the maximum car/truck efficiency credit from the previous rule changed the context for their compliance plans for cars. The agencies understand that a slightly lower maximum credit level could have a modest effect on compliance plans. We note that the level of stringency for cars due to A/C has not changed from the value we used 281 Society of Automotive Engineers, ‘‘IMAC Team 2—Improved Efficiency, Final Report,’’ April 2006 (EPA Docket # EPA–HQ–OAR–2010–0799). E:\FR\FM\15OCR2.SGM 15OCR2 62722 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with for MY 2016, as this was assumed to be 5.0 g/mi in the previous rule as well as in the more recent proposal. We also believe that it is appropriate that the program evolve as our understanding of the inventory of in-use GHG emission inventories improves—as is the case in this instance. Having said this, the levels of the credits did not change significantly for cars and thus should not significantly affect A/C related GHG credit and fuel consumption improvement value calculations. We are therefore, finalizing the 5.0 and 7.2 g/mi maximum credits for cars and trucks respectively as proposed. This represents an improvement in current A/C related CO2 and fuel consumption of 42% (again, as proposed) and the agencies are using this level of improvement to represent the maximum efficiency credit available to a manufacturer. This degree of improvement is reflected in the stringency of the final standards. Specific components and control strategies that are available to manufacturers to reduce the air conditioning load on the engine are listed in Table II–21 below and are discussed in more detail in Chapter 5 of the joint TSD. a. A/C Idle Test Demonstrating the degree of efficiency improvement that a manufacturer’s air conditioning systems achieve—thus quantifying the appropriate GHG credit and CAFE fuel consumption improvement value that the manufacturer is eligible for—would ideally involve a performance test. That is, manufacturers would use a test that would directly measure CO2 (and thus allow calculation of fuel consumption) before and after the incorporation of the improved technologies. A performance test would be preferable to a predetermined menu value because it could—potentially—provide a more accurate assessment of the efficiency improvements of differently designed A/C systems. Progress toward such a test (or tests) 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’’ test, does not require or simulate air conditioning usage through the test cycle. The existing SC03 test, which is used for developing the fuel economy and environment label values, is designed to identify any effect that the air conditioning system has on other emissions when it is operating under extreme temperature and solar conditions, but that test is not designed to measure the relatively small VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 differences in tailpipe CO2 due to different A/C efficiency technologies. At the time of the final rule for the MYs 2012–2016 GHG program, EPA concluded that a practical, performancebased test procedure capable of quantifying efficiency credits was not yet available. Instead, EPA adopted a specialized new procedure for the more limited purpose of demonstrating that the design improvements for which a manufacturer was earning credits produced actual efficiency improvements. That is, passing the test was a precondition to generating A/C efficiency credits, but the test was not used in measuring the amount of those credits. See 76 FR 74938. EPA’s test is fairly simple, performed while the vehicle is at idle, and thus named the A/C Idle Test, or just Idle Test. Beginning with the 2014 model year, manufacturers are required to achieve a certain CO2 level on the Idle Test in order to then be able to use the technology-based lookup table (‘‘menu’’) and thus quantify the appropriate number of GHG efficiency credits that the vehicle can generate. See 75 FR 25427–31. In meetings since the MYs 2012–2016 final rule was published and during the public comment period for this rule, several manufacturers provided data that raise questions about the ability of the Idle Test to completely fulfill its intended purpose. Especially for smaller, lower-powered vehicles, the data show that it can be difficult to achieve a degree of test-to-test repeatability that manufacturers believe is necessary in order to comply with the Idle Test requirement and generate credits. Similarly, manufacturers and others have stated that the Idle Test does not accurately or sufficiently capture the improvements from many of the technologies listed in the menu. While two commenters (Hyundai and Kia) supported retaining the Idle Test for the purpose of generating A/C credits, most commenters strongly opposed any use of the Idle Test. In some cases, although they recommended that EPA abandon the Idle Test, several manufacturers suggested changes to the test if it is to remain as a part of the program. Specifically, these manufacturers supported the EPA proposals to scale the Idle Test results by engine size and to broaden the ambient temperature and humidity specifications for the Idle Test. EPA noted many of these concerns in the preamble to the proposed rule, and proposed certain changes to the A/C Idle Test as a result. See 76 FR 74938. EPA also notes that the Idle Test was PO 00000 Frm 00100 Fmt 4701 Sfmt 4700 never meant to directly quantify the credits generated and we acknowledge that it is inadequate to that task. The Idle Test was meant simply to set a threshold in order to access the menu to generate credits (and in some cases to adjust the menu values for partial credit). EPA also discussed that it had developed a more rigorous (albeit more complicated and expensive to perform) test—the AC17 test—which includes the SC03 driving cycle, the fuel economy highway cycle, a preconditioning cycle, and a solar peak period. EPA proposed that the AC17 test would be mandatory in MYs 2017 and following model years, but that the AC Idle Test would continue to be used in MYs 2014–2016 (with the AC17 test used as a reportonly alternative in those earlier model years).282 Under the proposal, the AC17 test (unlike the AC Idle Test) would be used in fixing the amount of available credit. Specifically, if the AC17 test result, compared to a baseline AC17 test of a previous model year vehicle without the improved technology, equaled or surpassed the amount of menu credit, the manufacturer would receive the full menu credit amount. If the AC17 test result was less than the menu value, the manufacturer would receive the amount of credit corresponding to the AC17 test result.283 Since proposal, EPA has continued to carefully evaluate the concerns and suggestions relating to the Idle Test. The agency recognizes that there are technical shortcomings as well as advantages to this relatively simple and inexpensive test. EPA has concluded that, given that a more sophisticated A/ C is now available, the most appropriate course is to maintain the availability of the AC Idle Test through MY 2016, but to also allow manufacturers the option of using the AC17 test to demonstrate that A/C components are indeed functioning effectively. This use of the AC17 test as an alternative to the Idle Test will be allowed, commencing with MY 2014. Thus, for MYs 2014, 2015, and 2016, manufacturers will be able to generate A/C efficiency credits from the technology menu by performing and reporting results from the AC17 test in lieu of passing the Idle Test. During these model years, the level of credit and fuel consumption improvement value manufacturers can generate from the menu will be based on the design of the A/C system. In MYs 2017–2019, eligibility for AC efficiency credits will be determined solely by performing and reporting AC17 test results. During this time, the process for determining the 282 76 283 76 E:\FR\FM\15OCR2.SGM FR 74940. FR 74940. 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with level of credit and fuel consumption improvement value will be the same as during MYs 2014, 2015, and 2016. Finally, starting in MY 2020, AC17 test results will be used both to determine eligibility for AC efficiency credits and to play a role in determining the amount of the credit, as proposed. In order to determine the amount of credit or fuel consumption improvement value after MY 2020, an A to B comparison will be required. The credit and fuel consumption improvement menu will continue to be used. Because of the general technical support for the AC17 test, and in light of several important clarifications and changes that EPA is implementing to minimize the AC17 testing burden on manufacturers, EPA believes that most if not all manufacturers wishing to generate efficiency credits will choose to perform the AC17 test. Specifically, EPA is modifying the proposed AC17 test procedure to reduce the number of vehicles requiring testing, so that many fewer vehicles will need to be tested on the AC17 than on the Idle Test. Further discussion of the AC17 test appears below in this section of the preamble and in Chapter 5.1.3.6 of the Joint TSD. However, EPA is continuing to allow the Idle Test as a testing option through MY 2016. In addition, EPA is finalizing the modifications that we proposed to the Idle Test, making the threshold for access to the menu a function of engine displacement an option instead of the flat threshold, as well as adjusting the temperature and humidity specifications in the AC Idle Test. We are also finalizing the proposed modification that would allow a partial credit if the Idle Test performance is better than typical performance, based on historic EPA results from Idle Testing. Chapter 5.1.3.5 of the Joint TSD further describes the adjustments that EPA is making to the Idle Test for MYs 2014–2016. b. AC17 Test As mentioned above, EPA, working in a joint collaboration with manufacturers (through USCAR) and CARB, has made significant progress in developing a more robust A/C-related emissions test. As noted above, the AC17 test is a fourpart performance test, which combines the existing SC03 driving cycle, the fuel economy highway cycle, as well as a pre-conditioning cycle and a solar soak period. As proposed, and as discussed below, EPA will allow manufacturers choosing to generate efficiency credits to report the results of the AC17 test in lieu of the Idle Test requirements for MYs 2014–2016, and will require them to use the AC17 test after MY 2016. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 62723 Until MY 2019, as for MYs 2014–2016, manufacturers will need to report the results from AC17 testing, but not to achieve a specific CO2 emissions reduction in order to access the menu. However, beginning with MY 2020, they will need to compare the test results to those of a baseline vehicle to demonstrate a measureable improvement in A/C CO2 emissions and fuel consumption as a precondition to generating AC efficiency credits from the A/C credit and fuel consumption improvement menu; in the event that the improvement is less than the menu value, the amount of credit would be determined by the AC17 test result. EPA is making several technical and programmatic changes to the proposed AC17 test to minimize the number of vehicles that manufacturers will need to test, and to further streamline each test in order to minimize the testing burden. Since the appropriateness of the AC17 test for actually quantifying absolute A/ C efficiency improvements (as opposed to demonstrating a relative improvement) is still being evaluated, manufacturers wishing to generate A/C efficiency credits will continue to use the technology menu to quantify the amount of CO2 credits and fuel consumption improvement values for compliance with the GHG and CAFE programs. A number of commenters, including the Alliance, Ford, The Global Automakers, and others suggested that further work with the industry on the test should occur before implementing its use. However, we believe that the general robustness of the test, combined with the technical and programmatic improvements that EPA is incorporating in this final rule (as discussed below), and the de facto phase-in of the test in MYs 2014–2016 as well as MYs 2017– 2019, support our decision to implement the test. i. AC17 Technical Issues Commenters universally agreed that in most technical respects the AC17 test represents an improvement over the Idle Test. A few commenters suggested specific technical changes, which EPA has considered. Several auto industry commenters suggested that the proposed temperature and humidity tolerances of the test cell conditions may result in voided tests, due to the difficulty they see in maintaining these conditions throughout a 4-hour test interval. However, as discussed in more detail in Chapter 5 of the joint TSD, we are allowing manufacturers to utilize a 30second moving average for the test chamber temperature; we have concluded that these tolerances are achievable with this revision, and that widening these tolerances would negatively affect the accuracy and repeatability of the test. As a result, we are finalizing the tolerances as originally proposed. Also, one commenter (Enhanced Protective Glass Automotive Association or EPGAA) suggested that for manual A/C systems, the A/C temperature control settings for the test be based on actual cabin temperatures rather than on the duration of lapsed time of the test, as proposed. EPA does not disagree in theory with the purpose of such a change—to attempt to better align the control requirements for a manual A/C system with those for an automatic system. However, the effect on test results of the slightly different control requirements is not large, and we believe that it would be impractical for the technician/driver to monitor cabin temperature and adjust the system accordingly during the test. We are therefore finalizing the automatic and manual A/C system control requirements as proposed. In several cases, commenters suggested other technical changes to the AC17 test that EPA agrees will make performance of the test more efficient, with no appreciable effect on test accuracy. The relatively minor technical changes that we are finalizing include provisions relating to: the points during the test when cell solar lamps are turned on; establishing a specification for test cell wind speed; and a simplification of the placement requirements for ambient temperature sensors in the passenger cabin. See joint TSD section 5.1.3.5 explaining these changes more fully. Overall, EPA has concluded that the AC17 test as proposed, with the improvements described above, is a technically robust method for demonstrating differences in A/C system efficiency as manufacturers progressively apply new efficiencyimproving technologies. ii. AC17 Program Issues Beyond technical issues related to the AC17 test itself, many commenters expressed concerns about several related program issues—i.e., how the agency proposed to use the test as a part of determining eligibility for A/C efficiency credits. First, many manufacturers and their trade associations stated that some characteristics of the AC17 test unnecessarily add to the burden on manufacturers of performing each individual test. For example, the roughly 4-hour duration of the AC17 test limits the number of tests that can be performed in a given facility over a period of time. Also, the test requires the use of relatively costly SC03 test PO 00000 Frm 00101 Fmt 4701 Sfmt 4700 E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with 62724 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations chambers, and manufacturers say that they have, or have access to, only a limited number of these chambers. Most of these concerns, however, are direct results of necessary design characteristics of the test. Specifically, the impacts on vehicle efficiency of improved A/C technologies are relatively small compared to total vehicle CO2 emissions and fuel consumption. Similarly, the relative contributions of various A/C-related components, systems, and controls can be difficult to isolate from one another. For these reasons, the joint government and industry collaborators designed the test to accurately and repeatably measure small differences in the efficiency of the entire vehicle related to A/C operation. The result has been that the AC17 test takes a fairly long time to perform (about 4 hours) and requires the special climate-controlled capability of an SC03 chamber, as well as relatively tight test parameters. As discussed above, EPA believes that the AC17 represents a major step toward the eventual goal of performance-based testing that could be used to directly quantify the very significant A/C efficiency credits and fuel consumption improvement values that are available to eligible manufacturers under this program. In this context, EPA believes that the characteristics of the AC17 test identified by the manufacturers in their comments generally tend to be inherent aspects needed for a robust test, and in most respects we are finalizing the requirements for the use of the AC17 as proposed. In addition to concerns about the effort required to perform each AC17 test, manufacturers also commented on what they understood as a requirement to run an unreasonable number of tests in order to qualify for efficiency credits and improvement values. On the other hand, ICCT commented that they believe that given the frequent changes in A/C technology, one or two tests per year for a manufacturer is too few, and that ‘‘each significantly changed model should be tested.’’ In response to these concerns, EPA has taken several steps in this final rule to clarify how a manufacturer will be able to use the AC17 to demonstrate the effectiveness of its different A/C systems and technologies while minimizing the number of tests that it will need to perform. In general, EPA believes that it is appropriate to limit the number of vehicles a manufacturer must test in any given model year to no more than one vehicle from each platform that generates credits (and CAFE improvement values) during each model year. For the purpose of the AC17 test VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 and generating efficiency credits, EPA will use a definition for ‘‘platform’’ that allows a manufacturer to include several generally similar vehicle models in a single ‘‘platform’’ and to generate credits (or improvement values) for all of the vehicles with that platform based on a limited number of AC17 tests, as described below. This definition is slightly modified from the proposed definition, primarily by making clear that manufacturers need not necessarily associate vehicles that have different powertrains with different platforms for A/C credit purposes. The modified definition follows: ‘‘Platform’’ means a segment of an automobile manufacturer’s vehicle fleet in which the vehicles have a degree of commonality in construction (primarily in terms of body and chassis design). Platform does not consider the model name, brand, marketing division, or level of decor or opulence, and is not generally distinguished by such characteristics as powertrain, roof line, or number of doors, seats, or windows. A platform may include vehicles from various fuel economy classes, including both light-duty vehicles and light-duty trucks/medium-duty passenger vehicles. At the same time, EPA believes that if only a limited number of vehicles in a platform are to be tested on the AC17 in any given model year, it is important that vehicles in that platform with substantially different air conditioning designs be included in that testing over time. Thus, manufacturers with vehicles in a platform that are generating credits will need to choose a different vehicle model each year for AC17 testing. Testing will begin with the model that is expected to have highest sales. In the following model year, the manufacturer will choose the model in that platform representing the next-highest expected sales not already tested, and so on. This process will continue either until all vehicles in that platform that are generating credits have been tested (in which case the previous test data can be carried over) or until the platform experiences a major redesign (at which point the AC17 testing process will start over.) We believe that by clarifying the definition of ‘‘platform’’ and more clearly limiting testing to one test per platform per year, we have addressed the manufacturers’ concerns about unreasonable test burdens. Finally, in order to further minimize the number of tests that will be required for A/C efficiency credit purposes, instead of requiring replicate testing in all cases, EPA will allow a manufacturer to submit data from as few as one AC17 test for each instance in which testing is required. A manufacturer concerned PO 00000 Frm 00102 Fmt 4701 Sfmt 4700 about the variability of its testing program may at its option choose to perform additional replicate tests and use of the AC17 test in MYs 2014–2016 is for reporting only) because the data from these initial years will form the basis on which future credits are measured as described below, and a more robust confirmation of test-to-test consistency may be in their interest. As mentioned above, for MYs 2019 and earlier (including optional AC17 testing prior to MY 2017), AC17 testing will only require reporting of results (and system characteristics) for manufacturers to be eligible to generate credits and improvement values from the technology menu. Beginning in MY 2020, manufacturers will also need to use AC17 testing to demonstrate that the A/C efficiency-improving technologies or systems on which the desired credits are based are indeed reducing CO2 emissions and fuel consumption. EPA proposed to have the manufacturer identify an appropriate comparison ‘‘baseline’’ vehicle that did not incorporate the new technology, and generate CO2 emissions data on both vehicles. The manufacturer would be eligible for credits and fuel consumption improvement values to the extent that the test results showed an improvement over the earlier version of the vehicle without the improved technology. If the test result with the new technology demonstrated an emission reduction that is greater than or equal to the menu-based credit 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. In their comments, auto manufacturers raised concerns about the potential difficulty of identifying and testing an acceptable baseline vehicle. EPA has considered these comments, and continues to believe that identifying and testing a baseline vehicle will not be overly burdensome in most cases. However, we agree that establishing an appropriate baseline vehicle can be difficult in some cases, including when the manufacturer has made major technological improvements to the vehicle, beyond the A/C technology improvements in question. Some manufacturers recommended that because of this difficulty and the other issues discussed above, the AC17 test should only be used in a ‘‘research’’ role to validate credit values on the credit E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations menu, rather than in a regulatory compliance role. However, EPA believes that with the adjustments in its use described below, the AC17 can appropriately serve as a part of the GHG and CAFE compliance programs. One such adjustment is to allow the manufacturer to compare vehicles from different ‘‘generations’’ of design (i.e., from earlier major design cycles), which expands the universe of potentially appropriate comparative baseline vehicles. Further, if cases arise where no appropriate baseline comparison vehicles are available, manufacturers will instead be able to submit an engineering analysis that describes why a comparison to a baseline vehicle is neither available nor appropriate, and also justifies the generating of credits and improvement values, in lieu of a baseline vehicle test result. EPA would evaluate these submissions as part of the vehicle certification process. EPA discusses such an engineering analysis in Chapter 5 (Section 5.5.2.8) of the Joint TSD. Other than these adjustments, this final rule adopts the AC17 testing of certification vehicles and comparative baseline vehicles beginning in MY 2020, as proposed. Thus, starting in MY 2020, the AC17 test will be used not only to establish eligibility for generating credits, but will also play a role in determining the amount of the credit. EPA discusses the revised AC17 test in more detail in Chapter 5 (section 5.1.3.8) of the joint TSD, including a graphical flow-chart designed to illustrate how the AC17 test will be used at various points during the implementation of the GHG (and from MY 2017 on, CAFE) programs. c. Technology ‘‘Menu’’ for Quantifying A/C Efficiency Credits and Fuel Consumption Improvement Values EPA believes that more testing and development will be necessary before the AC17 test could be used to measure absolute CO2 and fuel consumption performance with sufficient accuracy to completely replace the technology menu as the method for quantifying efficiency credits and fuel consumption improvement values. As EPA did in the MYs 2012–2016 rule, the agencies have used a design-based ‘‘menu’’ approach for the actual quantification of efficiency credits (upon which fuel consumption improvement values are also based) for this final rule. The menu established today is very similar to that of the earlier rule, both in terms of the technologies included in the lookup table and the effectiveness values assigned to each technology. As in the earlier rule, the agencies assign an appropriate amount of CO2 credit to each efficiency-improving air conditioning technology that the manufacturer incorporates into a vehicle model. The sum of these values for all of the technologies used on a vehicle will be the amount of CO2 credit generated by that vehicle, up to a maximum of 5.0 g/mi for cars and 7.2 g/mi for trucks. As stated above, these maximum values are equivalent to fuel consumption improvement values of 0.000563 gallons/mi for cars and 0.000810 gallons/mi for trucks. (If amendments to the menu values are made in the future, EPA will consult with NHTSA on the amount of fuel consumption improvement value manufacturers may factor into their CAFE calculations.) Several comments addressed the technology menu and its use. The Alliance of Automobile Manufacturers said that they believe that projected A/ C CO2 emissions—and thus the maximum potential reductions against which credits can be generated—are actually higher than EPA had projected. We have reassessed this issue since the MYs 2012–2017 rulemaking, including the question of how much time vehicles spend in a ‘‘compressor on’’ mode, and on balance we continue to believe that our projected A/C CO2 emissions values—and thus the potential credits from the technology menu—are 62725 appropriate. We discuss the development of the maximum efficiency credit values in more detail in Chapter 5 (section 5.5.2.1) of the Joint TSD. Honeywell recognized that a performance-based test procedure for quantifying credits is not yet available, but asked EPA to be open to using such a test if one is developed. EPA agrees, and we are making clear that the offcycle technology provisions discussed in the next section can be applied to A/ C technologies if all criteria are met. We will also continue to monitor the quality of A/C efficiency testing procedures as they develop and consider specific revisions to the AC17 as appropriate. Finally, ICCT proposed accounting for any efficiency impact of alternative refrigerants in quantifying efficiency credits. However, because the effect on efficiency of the most likely future alternative refrigerant, HFO–1234yf, is only minimal when the A/C system design is optimized for its use, we are finalizing the technology menu with no adjustments for the use of alternative refrigerants. Here too, however, EPA will monitor the development and use of alternative refrigerants and any data on their impact on A/C efficiency, and consider adjustments in the future as appropriate. Table II–21 presents the A/C efficiency credits and estimated CAFE fuel consumption improvement values being finalized in this rule for each of the efficiency-improving air conditioning technologies. We provide more detail on the agencies’ development of the A/C efficiency credits and CAFE fuel consumption improvement values in Chapter 5 of the Joint TSD. In addition, that Chapter 5 presents very specific definitions of each of the technologies in the table below, definitions intended to ensure that the A/C technologies used by manufacturers correspond with the technologies we used to derive the credits and fuel consumption improvement values. TABLE II–21—A/C EFFICIENCY CREDITS AND FUEL CONSUMPTION IMPROVEMENT VALUES Estimated reduction in A/C CO2 emissions and fuel consumption (percent) sroberts on DSK5SPTVN1PROD with Technology description Reduced reheat, with externally-controlled, variable-displacement compressor ..................................................... Reduced reheat, with externally-controlled, fixed-displacement or pneumatic variable displacement compressor ... VerDate Mar<15>2010 01:21 Oct 13, 2012 Jkt 229001 PO 00000 Frm 00103 Car A/C efficiency credit (g/mi CO2) Truck A/C efficiency credit (g/mi CO2) Car A/C efficiency fuel consumption improvement (gallon/mi) Truck A/C efficiency fuel consumption improvement (gallon/mi) 30 2.2 0.000169 0.000248 20 Fmt 4701 1.5 1.0 1.4 0.000113 0.000158 Sfmt 4700 E:\FR\FM\15OCR2.SGM 15OCR2 62726 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations TABLE II–21—A/C EFFICIENCY CREDITS AND FUEL CONSUMPTION IMPROVEMENT VALUES—Continued Estimated reduction in A/C CO2 emissions and fuel consumption (percent) Technology description Default to recirculated air with closed-loop control of the air supply (sensor feedback to control interior air quality) whenever the outside ambient temperature is 75 °F or higher (although deviations from this temperature are allowed based on additional analysis) ................................ Default to recirculated air with open-loop control of the air supply (no sensor feedback) whenever the outside ambient temperature is 75 °F or higher (although deviations from this temperature are allowed if accompanied by an engineering analysis) ............................................. Blower motor controls that limit wasted electrical energy (e.g. pulse width modulated power controller) ................. Internal heat exchanger (or suction line heat exchanger) ... Improved evaporators and condensers (with engineering analysis on each component indicating a COP improvement greater than 10%, when compared to previous design) .................................................................................. Oil Separator (internal or external to compressor) .............. sroberts on DSK5SPTVN1PROD with For the CAFE program, EPA will determine fleet average fuel consumption improvement values in a manner consistent with the way fleet average CO2 credits will be determined. EPA will convert the metric tons of CO2 credits for air conditioning (as well as for other off-cycle technologies and for full size pick-up trucks) into fleet-wide fuel consumption improvement values, consistent with the way EPA would convert the improvements in CO2 performance to metric tons of credits. Section III.C discusses this methodology in more detail. There will be separate improvement values for each type of credit, calculated separately for cars and for trucks. These improvement values are subtracted from the manufacturer’s two-cycle-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. 2. Off-Cycle CO2 Credits Although EPA employs a five-cycle test methodology to evaluate fuel economy for fuel economy labeling purposes, EPA uses the established twocycle (city, highway or correspondingly FTP, HFET) test methodology for GHG and CAFE compliance.284 EPA recognizes that there are technologies that provide real-world GHG benefits to consumers, but that the benefit of some of these technologies is not represented on the two-cycle test. For MYs 2012– 2016, EPA provided an option for 284 As noted earlier, use of the two-cycle test is mandated by statute for passenger car CAFE standards. VerDate Mar<15>2010 01:21 Oct 13, 2012 Jkt 229001 Car A/C efficiency credit (g/mi CO2) PO 00000 Truck A/C efficiency fuel consumption improvement (gallon/mi) 1.5 2.2 0.000169 0.000248 20 1.0 1.4 0.000113 0.000158 15 20 0.8 1.0 1.1 1.4 0.000090 0.000113 0.000124 0.000158 20 10 1.0 0.5 1.4 0.7 0.000113 0.000056 0.000158 0.000079 FR 74941–944. Frm 00104 Car A/C efficiency fuel consumption improvement (gallon/mi) 30 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 if, after application to EPA, EPA determined that the credits were technically appropriate. During meetings with vehicle manufacturers prior to the proposal of the MY 2017–2025 standards, manufacturers raised concerns that the approval process in the MYs 2012–2016 rule 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 efficiency improvements. These same manufacturers believed that such a process could stifle innovation and fuel efficient technologies from penetrating into the vehicle fleet. In the MYs 2017–2025 proposal, EPA, in coordination with NHTSA, proposed to extend the off-cycle credit program to MY 2017 and later, and to apply the offcycle credits and equivalent fuel consumption improvement values to both the CAFE and GHG programs.285 The proposal to extend the off-cycle credits program to CAFE was a change from the MYs 2012–2016 final rule where EPA provided the off-cycle credits only for the GHG program. In 285 76 Truck A/C efficiency credit (g/mi CO2) Fmt 4701 Sfmt 4700 addition, in response to the concerns noted above, EPA proposed to substantially streamline the off-cycle credit program process by establishing means of obtaining credits without having to prove case-by-case that such credits are justified. Specifically, EPA proposed a menu with a number of technologies that the agency believed would show real-world CO2 and fuel consumption benefits not measured, or not fully measured, by the two-cycle test procedures, which benefits could be reasonably quantified by the agencies at this time. For each of the preapproved technologies in the menu, EPA proposed a quantified default value that would be available without additional testing. Manufacturers would thus have to demonstrate that they were in fact using the menu technology but would not have to do testing to quantify the technology’s effects unless they wished to receive a credit larger than the default value. This list is conceptually similar to the menu-driven approach just described for A/C efficiency credits. The proposed default values for these off-cycle credits were largely determined from research, analysis, and simulations, rather than from full vehicle testing, which would have been both cost and time prohibitive. EPA believed that these predefined estimates were somewhat conservative to avoid the potential for windfall credits.286 If 286 While many of the assumptions made for the analysis were ‘‘conservative’’, others were ‘‘central’’. For example, in some cases an average vehicle was selected on which the analysis was conducted. In this case, a smaller vehicle may presumably be deserving of fewer credits whereas E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with manufacturers believe their specific offcycle technology achieves larger improvement, they could apply for greater credits and fuel consumption improvement values with supporting data using the case-by-case demonstration approach. For technologies not listed on the menu, EPA proposed to continue the case-bycase demonstration approach from the MYs 2012–2016 rule but with important modifications to streamline the decision-making process. Comments to the proposal (addressed at the end of this preamble section) were largely supportive. In the final rule, EPA is continuing the off-cycle credit program established in the MYs 2012–2016 rule (but with some significant procedural changes), as proposed. EPA is also finalizing a list of pre-approved technologies and credit values. The predefined list, with credit values and CAFE fuel consumption improvement values, is shown in Table II–21 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 for use in EPA’s GHG program, as proposed. In the NPRM, EPA proposed capping the amount of credits a manufacturer may generate using the defined technology list to 10 g/mile per year on a combined car and truck fleet-wide average basis. EPA also proposed 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 significant adoption by MY 2017 and later. Based on comments and consideration on the amount of data that are available, we are finalizing the cap of 10 g/mile per year on a combined car and truck fleet-wide average basis. The fleetwide cap is being finalized because the default credit values are based on limited data, and also because 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. However, we are not finalizing the minimum penetration rates applicable to certain technologies, primarily based a larger vehicle may be deserving of more. Where the estimates are central, it would obviously be inappropriate for the Agencies to grant greater credit for the larger vehicles since this value is already balanced by the smaller vehicles in the fleet. The agency will take these matters into consideration when applications are submitted to modify credits on the menu. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 the agencies’ agreement with commenters stating that penetration caps might stifle the introduction of fuel economy and GHG improving technologies particularly in cases where manufacturers would normally introduce the technologies because manufacturing capacities are limited or low initial volume reduces risk if consumer acceptance is uncertain. Allowing credits for lower production volumes may encourage manufacturers to introduce more off-cycle technologies and then over several years increase production volumes thereby bringing more of these technologies into the mainstream. These program details are discussed in further in Section III.C.5.b.i. For the final rule analysis, the agencies have developed estimates for the cost and effectiveness of two offcycle technologies, active aerodynamics and stop-start. The agencies assumed that these two technologies are available to manufacturers for compliance with the standards, similar to all of the other fuel economy improving technologies that the analysis assumes are available. EPA and NHTSA’s modeling and other final rule analyses use the 2-cycle effectiveness values for these technologies and include the additional off-cycle adjustment that reflects the real world effectiveness of the technologies. Therefore, NHTSA has included the assessment of these two off-cycle technologies in the assessment of maximum feasible standards for this final rulemaking. Including these technologies that are on the pre-defined menu recognizes that these technologies have a higher degree of effectiveness in the real-world than reflected in 2-cycle testing. EPA likewise considered the 2cycle benefits of these technologies in determining the stringency of the final standards. The agencies note that they did not consider the availability of other off-cycle technologies in their modeling analyses for the proposal or for the final rule. There are two reasons for this. First, the agencies have virtually no data on the cost, development time necessary, manufacturability, etc. of these other technologies. The agencies thus cannot project the degree of emissions reduction and fuel economy improvements properly attributable to these technologies within the MYs 2017–2025 timeframe. Second, the agencies have no data on what the penetration rates for these technologies would be during the rule timeframe, even assuming their feasibility. See 76 FR 74944 (agencies need information on ‘‘effectiveness, cost, and availability’’ before considering inclusion of off-cycle PO 00000 Frm 00105 Fmt 4701 Sfmt 4700 62727 technology benefits in determining the standards). This section provides an overview of the pre-defined technology list being finalized and the key comments the agencies received regarding the technologies on the list and the proposed credit values. Provisions regarding how the pre-defined list fits into the overall off-cycle credit program are discussed in section III.C.5, including the MY 2014 start date for using the list, the 10 g/mile credit cap for the list, and the proposed penetration thresholds for listed technologies. In addition, a detailed discussion of the comments the agencies received regarding the technical details of individual technologies and how the credit values were derived is provided in Chapter 5 of the joint TSD. In the proposal, the agencies requested comments on all aspects of the off-cycle credit menu technologies and derivations. EPA and NHTSA received many comments and, in addition, several stakeholders including Denso, Enhanced Protective Glass Automotive Association (EPGAA), ICCT and Honda, requested meetings and met with the agencies. Overall, there was general support for the menu based approach and the technologies included in the proposed list, but there were also suggestions to re-evaluate the definition of some of the technologies included in the menu, the calculation and/or test methods for determining the credits values, and recommendations to periodically re-evaluate the menu as technologies emerge or become pervasive. For most of the listed technologies, the agencies proposed single fixed credit values and for other technologies a step-function (e.g., x amount of credit for y amount of reduction or savings).287 The agencies received comments requesting a scalable calculation method for some technologies rather than the proposed fixed value or step-function approach. Some commenters requested that the credits for active aerodynamics, high efficiency exterior lighting, waste heat recovery (proposed as ‘‘engine heat recovery’’ but revised based on comments to the proposal) and solar panels (proposed as ‘‘solar roof panels’’ but also revised based on comments) be scalable (variable based on system capability) rather than an ‘‘all-or287 In the Proposal (76 FR 74943/1), we described the engine heat recovery and solar roof panel credits as ‘scalable’, however this was an error. The engine heat recovery did allow 0.7g/mi credit per 100W generated step-function, however the solar panels were not scalable. In actuality, glazing was the only continuously scalable credit on the proposed off-cycle menu. E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with 62728 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations nothing’’ single value approach proposed.288 The agencies agree with the commenters and are allowing scaling of these credits. In some cases, this created issues with the simplified methodology for determining the default values used for the proposal. Therefore, the proposed methodology required revision in order to calculate the default values for the technologies with scalable credits. The revised calculation methodology for each scalable technology is discussed in detail in Chapter 5 of the TSD. Notably, the calculation method for the solar panel credit has been changed, to provide scalability of the credit and a better estimate the benefits of solar panels for HEVs, PHEVs, and EVs. Although we are allowing scaling of the credits, we are not accepting a request or granting credit for any level of credit less than 0.05 g/mi CO2. We are requiring reporting CO2 values to the nearest tenth and, therefore, anything below 0.05 g/mi of CO2 would be rounded down to zero. Therefore, for any credit requested as part of the offcycle credit program (e.g., scalable or fixed; via the pre-defined technology list or alternate method approval process), only credit values equal to 0.05 g/mi or greater will be accepted and approved. In addition to supporting the off-cycle credit program in the MYs 2017–2025 program, comments received from the National Resources Defense Council (NRDC) and ICCT urged the agencies to ensure that off-cycle credits are verifiable via actual testing or reflect real-world in-use data from a statistically representative fleet. These comments also expressed concern that some of the proposed menu technologies would not achieve appreciably greater reductions than measured over the 2-cycle tests, that the off-cycle credit process had not fully assured that there would be component and/or system durability and had not accounted for in-use degradation. These commenters’ ultimate concern is that the off-cycle credit flexibility could create windfall credits or avoid costeffective 2-cycle improvements. The agencies believe that the off-cycle credit program, as proposed and finalized, legitimately accounts for realworld emission reductions and fuel consumption improvements not measured, or not fully measured, under the two-cycle test methodologies. The off-cycle technologies on the defined list have been assessed by the agencies using the best available data and 288 For example, in the proposal, a manufacturer had to install high efficiency lighting on all systems in order to get the 1.1 g/mi credit. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 information at the time of this action to appropriately assign default credit values. The agencies conducted extensive reviews of the proposed credit values and technologies and, based on comments (such as those from ICCT) and analysis, did adjust some credit values and technology descriptions. In addition, the comments from the Alliance of Automobile Manufacturers provided data that aligned with and supported some of the estimated credit default values (discussed in greater detail in Chapter 5 of the joint TSD). As with the proposal and further refinement in these final rules, the agencies have structured the off-cycle credit program extension for MYs 2017– 2025 to employ conservative calculation methodologies and estimates for the credit values on the defined technology list. In addition, the agencies will continue, as proposed, to apply a 10 g/ mi cap to the total amount of available off-cycle credits to help address issues of uncertainty and potential windfalls. Based on review of the technologies and credits provided for those technologies, the cap balances the goal of providing a streamlined pathway for the introduction of off-cycle technologies while controlling potential environmental risk from the uncertainty inherent with the estimated level of credits being provided. Manufacturers would need to use several listed technologies across a very large portion of their fleet before they would reach the cap. Based on manufacturer comments regarding the proposed sales thresholds, discussed below, the agencies are not anticipating widespread adoption of these technologies, at least not in the early years of the program. Also, the cap is not an absolute limitation because manufacturers have the option of submitting data and applying for credits which would not be subject to the 10 g/ mile credit limit as discussed in III.C.5. Therefore, we are confident in the underlying analysis and default values for the identified off-cycle credit technologies, and are finalizing the defined list of off-cycle credit technologies, and associated default values, with minimal changes in this final rule as discussed below. For off-cycle technologies not on the pre-defined technology list, or to obtain a credit greater than the default value for a menu pre-defined technology, a manufacturer would be required to demonstrate the benefits of the technology via 5-cycle testing or via an alternate methodology that would be subject to a public review and comment process. Further, a manufacturer must PO 00000 Frm 00106 Fmt 4701 Sfmt 4700 certify the in-use durability of the technology for the full useful life of the vehicle for any technologies submitted for off-cycle credit application to ensure enforceability of the credits granted. The agencies proposed an additive approach where manufacturers could add the credit values for all of the listed technologies employed on a vehicle model (up to the 10 g/mile cap, as discussed in III.C.5). The agencies received comments from ICCT recommending a multiplicative approach where the credit values for each technology on the list is determined by taking the total amount of available credits for off-cycle technologies and distributing it based on each technology’s percent contribution to the overall off-cycle benefit (e.g., percent benefit of technology A, B, * * * n × total available credit equals the off-cycle credit for technology A, B, * * * n). EPA understands ICCT’s recommendation, as this is similar how to the calculation methods employed in the EPA Lumped Parameter Model combine the effectiveness of some technologies when the interaction of differing technologies does not yield the combined absolute fuel consumption improvement for each technology, but rather the actual effectiveness is a fractional value of each technology’s effectiveness (often described as ‘‘synergies’’). The agencies carefully evaluated these comments and, as stated previously, held a meeting with ICCT at their request to discuss the comments fully.289 Overall, the agencies believe the recommended multiplicative approach is inherently difficult since the fractional contribution of each technology to the overall off-cycle benefit must be determined, and then the combined synergistic effectiveness would also require accurate and robust determination. This would require extensive iterative testing to determine the synergistic affects for every possible combination of off-cycle technology included on each vehicle. In addition, this would be highly dependent on the base design of the vehicle and, therefore, would need to be determined for each unique vehicle content combination. The agencies agree there may be synergistic (or non-synergistic) affects, but believe the combination of employing conservative credit value estimates and a 10 g/mi cap to the total amount of available off-cycle credits 289 The ICCT also submitted a number of additional detailed comments on the credit magnitude of certain off-cycle technologies which are discussed in Chapter 5 of the Joint TSD. E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations will achieve nearly the same overall effect of limiting the additive effect of multiple off-cycle technologies to a vehicle. Therefore, we are finalizing the calculation approach as defined in this final rule. As discussed above, the agencies are allowing scaling of the credit values in lieu of fixed values based on the comments received for the following technologies on the menu: high efficiency exterior lighting, waste heat recovery, solar panels and active aerodynamics. In the case of waste heat recovery and active aerodynamics, this did not change the numerical credit values we proposed. For waste heat recovery, 0.7 g/mi CO2 per 100 watts serves as the basis for scaling the credit. For active aerodynamics, we used the value of 0.6 g/mi for cars and 1.0 g/mi for trucks based on a 3% aerodynamic drag improvement from the table of values in the NPRM TSD. The comments simply asked to use this entire range of values rather than just using the credit values corresponding to 3% aerodynamic drag improvement. These scaling factors were calculated using both the Ricardo simulation results (described in Chapter 3 of the TSD) and the EPA full vehicle simulation tool (described in Chapter 2 of the EPA’s RIA). In contrast, for high efficiency exterior lighting and solar panels, this required a revision in the methodology to allow for proper scaling. For high efficiency exterior lighting, the comments also requested credit allowance for high efficiency lighting on individual lighting elements rather than on all lighting elements. In the NPRM, our methodology assumed a package approach where each lighting element was weighted based on contribution to the overall electrical load savings, and then this was scaled by our base load reduction estimate for 5-cycle testing (e.g., 3.2 g/mile per 100 watts saved; see TSD 5.2.2). Using this package approach, it is difficult to de-couple the grams per mile CO2 contribution of individual lighting elements. Therefore, we revised our approach by accounting for the gram per mile CO2 credit for each individual high efficiency lighting element separately. The agencies are finalizing the predefined technology list for off-cycle credits fundamentally as proposed with the exception of six technologies, primarily in response to the comments received: engine idle start-stop, electric heater circulation pump, high efficiency exterior lighting, solar panels, and active transmission and active engine warm-up. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 First, the pre-defined credit values for engine idle start-stop are revised in response to comments questioning some vehicle operation and VMT assumptions and some methods for calculating the pre-defined credit values. More details on these changes can be found in Chapter 5 of the Joint TSD. Second, the proposed stand-alone credit for an electric heater circulation pump is incorporated into the predefined credit for engine stop-start, thus aligning with the integrated nature of these two technologies. As the agencies re-evaluated the pre-defined credit values for engine idle start-stop, we recognized that a substantive amount of the off-cycle benefit attributed to engine stop-start would not be achievable in cold temperature conditions (e.g., temperatures below 40 deg F) without a technology that performs a similar function to the electric heater circulation pump as defined in the NPRM. The agencies believe that a mechanism allowing heat transfer to continue, even after the engine has shutoff, is necessary in order to maintain basic comfort in the cabin especially in colder ambient temperatures. This could occur, for example, when a vehicle is stopped at a multiple lane intersection controlling high traffic volumes. This technology can be an electric heater circulation pump, or some other cabin heat exchanger. Without this technology, the engine would need to continue operating and, therefore, circulating warm engine coolant through the HVAC system to continue providing heat to the cabin. Therefore, two credit values are being finalized for stop-start systems: a higher value (similar to the credits proposed) for systems with an electric heater circulation pump and a lesser value for stop-start systems without a pump or heat transfer mechanism. Third, the agencies have revised the proposed pre-defined credit values for high-efficiency exterior lighting after evaluation of the numerous industry data provided via comments. The fundamental impetus for the revisions resulted from the research study cited as a basis for many pre-defined values as described in Chapter 5 of the TSD. When reviewing the additional data, the agencies concluded the initially referenced research study (Schoettle, et al.290) provided current draw values for high-efficiency low beam lighting that were too high when compared to traditional incandescent lighting, 290 Schoettle, B., et al., ‘‘LEDS and Power Consumption of Exterior Automotive Lighting: Implications for Gasoline and Electric Vehicles,’’ University of Michigan Transportation Research Institute, October, 2008. PO 00000 Frm 00107 Fmt 4701 Sfmt 4700 62729 resulting in a reduced projected benefit. Data from the automakers showed a much lower power demand for highefficiency low beam lighting and, consequently, a much larger benefit than projected in the draft TSD.291 Therefore, the agencies increased the overall amount of credit for highefficiency exterior lighting on the menu to reflect the additional analysis based on the data received via comment. Fourth, as discussed above, the need for scaling the credit value resulted in a new methodology for solar panels, and, consequently, adjusted credit values. For the NPRM, we assumed a fixed solar panel power output and scaled this according to our base load estimate (e.g., 3.2 g/mile per 100 watts saved; see TSD 5.2.2). However, the rated solar panel power output depends on several factors including the size and efficiency of the panel, and the energy that the panel is able to capture and convert to useful power. Therefore, these factors need to be considered when scaling, and our new methodology takes these factors into account. The agencies also accounted for the possibility of combining solar panels for both energy storage and active ventilation in the scaling algorithm. Finally, we discuss active transmission and active engine warm-up together (although they are listed separately) since the methodology for them is the same. Chrysler commented that there should be separate car and truck credits for active transmission and active engine warm-up, as formulated for other advanced load reduction technologies (e.g., engine idle start-stop, electric heater circulation pump). In the NPRM, we used the credit value corresponding to a mid-size car to arrive at 1.8 g/mi. After considering these comments, we re-analyzed (using the Ricardo data) the credit values for active transmission and active engine warm-up using expanded vehicle classes on a sales-weighted basis. As a result, there was a clear disparity between the credit values for active transmission and active engine warm-up on cars and trucks. Accordingly, we now have separate car (1.5 g/mi) and truck (3.2 g/mi) active transmission and active engine warm-up credits. There were no other changes to the off-cycle credit defined technology list other than the expansion or clarification of definitions for certain technologies as discussed in Chapter 5 of the TSD. Many commenters advocated for the inclusion of additional technologies on the off-cycle credit defined technology 291 Alliance, Docket No. NHTSA–2010–0131– 0262, page 27 of 93; Appendix 2, page 2 of 19. E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with 62730 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations list. Some commenters suggested that technologies should be added such as high efficiency alternators (Alliance, Denso, VW, Porsche, Ford), electric cooling fans (Bosch), HVAC eco-modes, transmission cooler bypass valves (Ford), navigation systems (Garmin), separate credits for congestion mitigation/crash avoidance systems (Daimler), engine block heaters (Honda), and an ‘‘integral’’ approach utilizing a combination of technologies (Global Automakers). Some commenters were opposed to adding any technologies to the menu (CBD) and others suggested some of the proposed values should be re-evaluated (ICCT) or that the values should be based on real test data, not simulation modeling (NRDC). After reviewing and considering the comments, in general, we did not see evidence at this time to add any of these technologies to the pre-defined technology list. In many cases, there are no consistent, established methods or supporting data to determine the appropriate level of credit. Consequently, there is no reasonable basis or verifiable method for the agencies to substantiate or refute the performance claims used to support a request for pre-assigned, default credit values for such technologies, particularly for systems requiring driver intervention or action. Therefore, we are not adding any of these technologies we were asked to consider to the pre-defined technology list. In the case of crash avoidance technologies, we are prohibiting offcycle credits for these technologies under any circumstances. In the case of the other technologies for consideration, we are allowing manufacturers to use the alternate demonstration methods for technologies not on the pre-defined technology list menu as discussed in Section III.C. (see ‘‘Demonstration not based on 5-cycle testing’’) to request credit. We respond below to the comments urging the agencies to add further technologies to the pre-defined list. Additional responses are found in TSD Chapter 5 and Section 7 of EPA’s Response to Comment Document. In addition, there were substantial comments regarding allowing credits for glazing. Specifically, the comments expressed concerns about incentivizing the use of metallic glazing which may impact signals emanating from within the passenger compartment and the desire for a separate credit for polycarbonate (PC) glazing. This is discussed below as well. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 a. High Efficiency Alternators Several commenters from the automobile industry associations, individual manufacturers, and suppliers urged the agencies to include high efficiency alternators on the off-cycle defined technology list. The Alliance of Automobile Manufacturers stated that the test cycles are performed with the accessories off but that ‘‘actual real world driving has average higher loads due to accessory use.’’ They cited GM testing comparing three different alternators on four vehicles with efficiencies ranging from 61% to 70% using the Verband der Automobilindustrie (VDA; the trade association representing German automobile manufacturers) test procedure that demonstrated a savings of 1.0 grams per mile CO2 on average for an alternator with an efficiency of 68% VDA. Volkswagen and Porsche supported the comments from the Alliance of Automobile Manufacturers, however Porsche felt that a default credit of 1.6 grams per mile CO2 was possible based on their independent analysis. The Global Automakers echoed the comments above regarding real-world versus test cycle accessory usage but did not supply supporting data. Two suppliers, Bosch and Denso, also supported adding high efficiency alternators to the defined technology list. Bosch cited testing on a General Motors 2.4 liter 4 cylinder gasoline engine with an increased alternator efficiency from 65%, the level of efficiency assumed in the NPRM, to 75% showed the potential for an increase of 0.7% in fuel economy by increasing alternator efficiency by 10%. Bosch also stated that increases in efficiency up to 82% are possible using existing and new technologies. Denso used performed a similar analysis by simulating an increase in alternator efficiency of 10% (65% to 75%). Using our NPRM values for CO2 emissions reductions of 3.0 grams per mile CO2 on the 2-cycle and 3.7 grams per mile CO2 on the 5-cycle tests, they calculated a potential credit of 2.8 grams per mile CO2. In response, we agree that high efficiency alternators have the potential to reduce electrical load, resulting in lower fuel consumption and CO2 emissions. However, the problem with including this technology on the defined technology list is assigning an appropriate default credit value due to the lack of supporting data across a range of vehicle categories and range of implementation strategies. PO 00000 Frm 00108 Fmt 4701 Sfmt 4700 First, we appreciate commenters submitting data but we would need to have similar data from the range of available vehicle categories. With the exception of the data from the Alliance of Automobile Manufacturers that included a Cadillac SRX with, most recently, a 3.6 liter V6 engine, most of the data is from smaller displacement vehicles. Therefore, the range of data would need to be expanded to the midsize and large car, and large truck to even begin to develop a default credit value. Second, similar to high efficiency exterior lighting, the type of and number of electrical accessories on the vehicle may cause significant variability in the base electrical load and, consequently, the level of reduction and associated benefit of high efficiency alternator technology. However, unlike high efficiency exterior lighting with a limited amount of components, the vehicle components and accessories that affect high efficiency alternator load are seemingly unlimited. As the information from Denso suggests, there are some typical standard components but the list of standard versus optional components changes depending on manufacturer, nameplate and trim level (e.g., optional accessories on a lower trim level vehicle may be standard on a upper/luxury trim level vehicle). This makes it difficult to develop a default value given this level of variability. Third, high efficiency alternators present the opportunity for manufacturers to add vehicle content that does not contribute to reducing fuel consumption or CO2 emissions. Due to the extra electrical capacity resulting from using the high efficiency alternator, other content (e.g., seat heaters/coolers, cup holder cooler/ warmers, higher amplification sound system) can be added that may increase consumer value, however, that consumer value is unrelated to reducing fuel consumption or CO2 emissions. This potential for electrical load ‘‘backsliding’’ can counteract the benefits of a high efficiency alternator, and can also potentially affect mass reduction depending on the mass of the added content. A good example of a beneficial use of additional electrical load is the synergy between solar panels and active cabin ventilation. The solar panel can be used to power active cabin ventilation system motors but the amount of power produced by the panel may exceed the motor power requirements. Moreover, the active cabin ventilation system is only effective for the hot/sunny summer portion of the year. Rather than directing this excess power to other E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with non-fuel consumption related content (or wasting it), we are incentivizing manufacturers to use this excess power for battery charging to drive the wheels, and thus displace fuel and CO2 emissions. However, unlike a solar panel, the high efficiency alternator supplies power to many vehicle features, and the EPA does not wish to directly regulate the electrical usage on vehicles in order to prevent ‘‘load backsliding’’. This load backsliding could convert a fuel efficient technology into one that is detrimental to CO2 emissions reductions and fuel economy improvements. Because of this uncertainty the agencies are not adding high efficiency alternators to the defined technology list. However, manufacturers may request credits for high-efficiency alternators using the case-by-case procedures for technologies not on the defined technology list. There are two general issues, at a minimum, which a manufacturer would need to consider and address in such a request. First, the manufacturer would need to consider the level of alternator efficiency improvement. As stated by the Alliance of Automobile Manufacturers, current alternator efficiencies are in the range of ‘‘60% to 64%, with high efficiency models having ratings above 68% VDA.’’ Therefore, any request for high efficiency alternator credit should significantly exceed current alternator technology efficiency. The 68% VDA number stated by the Alliance of Automobile Manufacturers seems to be an appropriate starting point given current technology although EPA would make a specific determination as to the amount of needed improvement when evaluating a specific off-cycle credit application, and so is not making any final determination here. Second, manufacturers should ensure proper accounting of vehicle components and accessories and associated loads. A good example of this is Table 1 in the comments from Denso that identifies the content loads and their occurrence on the 2-cycle test versus real world. The manufacturer may need to perform this type of comparison on an annual basis so that there is a clear assessment of load content adjustments over time to minimize electrical load ‘‘backsliding’’ (i.e., adding more content due to the availability of additional load capacity) as discussed above. b. Transmission Oil Cooler Bypass Valve The transmission oil cooler is used on vehicles to cool the transmission fluid under heavy loads, especially by large trucks during towing or large payload VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 operations. As stated by the Alliance, one of the drawbacks is that this system operates continuously even under conditions where faster warm-up, such as cold conditions, would be beneficial. Therefore, the Alliance comments suggested that we add bypass valves for transmission oil coolers to the predefined technology list since ‘‘a bypass valve for the transmission oil cooler allows the oil flow to be controlled to provide maximum fuel economy under a wide variety of operating conditions.’’ They suggested a credit of 0.3 g/mi CO2 based on General Motors (GM) engineering development and that this credit could be additive with active transmission warm up strategy. The reason we are not including this technology on the pre-defined technology list is lack of available data and multiple methodologies for implementation that make determining an appropriate credit value difficult. As stated by the Alliance, ‘‘bypass valves are not currently commonly used with transmission oil coolers.’’ As a result, there is very limited data on the performance of such systems other than the engineering data cited by the Alliance. Also, the bypass valve could be implemented passively (e.g., viscosity based), actively (e.g., valve controllers based on temperature or viscosity), or by some other smart design. Consequently, depending on the implementation method, the credit value may not correspond effectively to the level of performance. However, this technology can be demonstrated using 5-cycle or alternate demonstration methods. Therefore, we recommend that manufacturers seeking credit for this technology separately or in conjunction with active transmission warm-up credits explore this approach. c. Electronic Thermostat Porsche stated in their comments that there is ‘‘potential GHG benefit for electronic thermostat * * * in configurations which do not include an electric water pump.’’ In lieu of a traditional mechanical water pump, an electric water pump facilitates engine coolant flow without the penalty of using an energy-sapping belt driven system. However, for systems that use a mechanical water pump, an electronic thermostat could be used in lieu of an electric water pump to optimally control the flow of coolant (e.g., close off coolant flow to the radiator when the engine is cold). Porsche requested that the agencies allow credit for this technology irrespective of the other cooling system specifics (e.g., mechanical or electric water pump). PO 00000 Frm 00109 Fmt 4701 Sfmt 4700 62731 This technology is not on the predefined technology list, nor does this appear to be the intent of Porsche’s comments. As such, the electronic thermostat can be demonstrated using 5cycle or alternate demonstration methods. Therefore, we agree with Porsche and, if a benefit for the electronic thermostat regardless of the type of water pump used can be demonstrated, the electronic thermostat would be eligible under the procedures for evaluating technologies not on the pre-defined technology list. d. Other Vehicle Relays Honda requested that we consider allowing credit for other electrical relays on the vehicle such as those used for power windows, wiper motors, power tailgate, defroster, and seat heaters. However, Honda states that they are unsure of how to measure the impact suggesting that lifetime usage data might be a basis to support the credit granted. In response, we feel that granting credits for other vehicle relays is best considered using the demonstration methods for evaluating technologies not on the predefined technology list. The confounding issue, as Honda points out in their comments, is how to quantify the benefit and, further, how to directly relate this benefit to fuel consumption savings. The complexity of identifying single and multiple relay impact is a daunting task and must be considered when pursuing this path. Further, the use of lifetime usage data only captures activity but does not couple this activity with a gram-permile CO2 benefit, thus falling short of demonstrating direct savings. Therefore, although the granting of credit is possible, these issues, and any others, would need to be addressed before credit is granted for other vehicle relays. e. Brushless Motor Technology for Engine Cooling Fans The comments from Bosch advocated for adding brushless motor technology for engine cooling fans to the predefined technology list. In their comments, Bosch stated that the current baseline technology is series-parallel brushed motors requiring 149 watts to operate. By switching to a brushless engine cooling fan motor, the wattage requirement is reduced to 68 watts for a savings of 87 watts, according to Bosch. Bosch reduced this number further to 81.2 watts since they considered a range of series-parallel brushed motors with varying wattage values. Based on this savings and Bosch’s assumption that reducing electrical load by 30 watts saves 0.1 mile per gallon, Bosch projected a fuel E:\FR\FM\15OCR2.SGM 15OCR2 62732 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations savings of 0.27 miles per gallon. Using our load reduction assumption of reducing 100 watts saves 0.7 gram per mile of CO2, this equates to a credit of 0.56 gram per mile of CO2. After consideration of Bosch’s comments and the data provided showing potential benefits, it is not clear from the data provided if this would be the actual benefit once this technology is implemented. Absent realworld vehicle data, it is difficult to determine what the baseline and, consequently, the resulting benefit would be. In addition, it is likely that some or all of the benefit of brushless motor technology for engine cooling fans is captured on the 2-cycle test procedures. Consequently, we are not adding brushless motor technology for engine cooling fans to the pre-defined technology list due to insufficient data on real-world, power requirements, activity profiles, and test data demonstrating the 2-cycle versus 5-cycle benefits. These factors prevent us from determining a default credit value necessary for addition to the off-cycle technology menu. A manufacturer that believes its engine cooling fan brushless motor merits credit can request it using the demonstration methods for technologies not on the predefined technology list. sroberts on DSK5SPTVN1PROD with f. Integral Fuel Saving Technologies and Advanced Combustion Concepts The Global Automakers and Ford Motor Company encouraged the agencies to consider granting credit for integral fuel saving technologies and advanced combustion concepts (e.g., camless engines, variable compression ratio engines, micro air/hydraulic launch assist devices, advanced transmissions) using demonstration methods for technologies that are not on the predefined technology list. Both parties took issue with our statements in the NPRM Preamble (see 76 FR 75024): ‘‘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. 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.’’ These commenters urged EPA to allow demonstration of benefits using some alternative testing or analytical VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 method, or to provide an opportunity to perform some type of demonstration, for integral fuel saving technologies and advance combustion concepts. In response, since these methods are integral to basic vehicle design, there are fundamental issues as to whether they would ever warrant off-cycle credits. Being integral, there is no need to provide an incentive for their use, and (more important), these technologies would be incorporated regardless. Granting credits would be a windfall. As we stated in the NPRM Preamble (see 76 FR 75024), these technologies are included in the base vehicle design to meet the standard and it is consequently inappropriate for these types of technologies to receive off-cycle credits. EPA (in coordination with NHTSA) will continue to track the progress of these technologies and attempt to collect data on their effectiveness and use. g. Congestion Avoidance Devices, Other Interactive, Driver-Based Technologies and Driver-Selectable Features As mentioned above, many commenters advocated for the inclusion of additional technologies on the offcycle credit defined technology list such as congestion avoidance, interactive/ driver-based technologies, which provide information to the driver that the driver may use to alter his/her driving route or technique, and driverselectable technologies, which cause the vehicle to operate in a different manner. Daimler commented that the agencies should provide ‘‘congestion mitigation credits based on crash avoidance technologies,’’ because crash avoidance technologies can potentially reduce traffic congestion associated with motor vehicle collisions and thus, ‘‘similar to off-cycle technologies,’’ provide ‘‘significant CO2 and fuel consumption benefits.’’ 292 Daimler argued that doing so was within both agencies’ authority, referring to the authority under which the agencies had proposed off-cycle credits.293 Daimler provided a menu of suggested congestion reduction credit values of 1.0 g/CO2 per mile for its ‘‘Primary Longitudinal Assistance Package’’ (comprised of forward collision warning plus adaptive brake assist) and an additional 0.5 g/CO2 per mile for its ‘‘Advanced Longitudinal Assistance Package’’ (the primary package plus autonomous emergency braking and adaptive cruise control), based on calculations using figures from its own analysis of the effectiveness of these technologies and from a German insurance institute,294 along with values for other congestion mitigation technologies such as driver attention monitoring and adaptive forward lighting.295 In addition to requesting that the agencies create a new category of credits, the comment further addressed means of evaluating and approving applications for such credits. Daimler suggested that NHTSA require manufacturers to submit data ‘‘specific to [their] product offerings showing that [their] technology is effective in reducing vehicle collisions,’’ and that ‘‘NHTSA may approve the application and determine the amount of the credit’’ and determine whether the technology is ‘‘robust and effective in terms of crash avoidance and the consequent fuel savings.’’ 296 Daimler suggested that NHTSA’s review process for such information could be considerably less stringent than that for ‘‘regulation to mandate new technology and/or to link technology directly to fatalities or injuries,’’ because fatalities and injuries would not be at issue for congestion mitigation credits.297 Instead, Daimler stated that ‘‘technologies [should be] appropriate if they can reasonably be shown to avoid accidents, and thereby reduce congestion and its associated fuel consumption and CO2 emissions.’’ 298 The agencies agree that there is a clear nexus between congestion mitigation and fuel/CO2 savings for the entire onroad fleet. It is less clear, however, whether there is a calculable relationship between congestion mitigation and fuel/CO2 savings directly attributable to individual vehicles produced by a manufacturer, or even to a manufacturer’s fleet of vehicles. Daimler argued that emissions of 6.0 gCO2/mi could be averted if all accidents were avoided. However, even assuming such a result were achievable, Daimler agreed that attributing those fuel consumption/CO2 benefits from reduced traffic congestion to specific individual technologies on specific vehicles would be difficult. NHTSA has extensive familiarity with the safety technologies usually associated with crash avoidance, having required some (most notably, electronic stability control) as standard equipment on all newly manufactured light vehicles, and being deeply engaged in research on others, including the 294 Id. at 13–14. at 14–16. 296 Id. at 15. 297 Id. 298 Id. 295 Id. 292 Daimler, EPA Docket # EPA–HQ–OAR–2010– 0799–9483, at 10. 293 Id. at 11, 17. PO 00000 Frm 00110 Fmt 4701 Sfmt 4700 E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations braking technologies mentioned in Daimler’s comment. When NHTSA’s research indicates sufficient maturity of a crash avoidance technology, the agency may either promote its use through its New Car Assessment Program (NCAP) or mandate its use by issuing a Federal Motor Vehicle Safety Standard (FMVSS) requiring the technology on all or some categories of new vehicles. Under the NCAP program, NHTSA tests new vehicles to determine how well they protect drivers and passengers during a crash, and how well they resist rollovers. These vehicles are then rated using a 5-star safety rating system. Five stars indicate the highest safety rating; one star, the lowest. In addition, NHTSA began in model year 2011 identifying on its Web site, www.SaferCar.gov, new vehicles equipped with any of three recommended advanced crash avoidance technologies that meet the agency’s established requirements. These technologies, Electronic Stability Control, Forward Collision Warning, and Lane Departure Warning, can help drivers avoid crashes. Additional technologies may be added to the NCAP list of crash avoidance technologies when there is sufficient information and analysis to confirm their safety value. NHTSA, for example, is carefully analyzing advanced braking systems of the type discussed in Daimler’s comments and could decide in the near future that they are ripe for inclusion in NCAP. Alternatively, NHTSA may conclude that such technologies are sufficiently developed, their safety benefits sufficiently clear, and relevant test procedures sufficiently defined that they should be the subject of a mandatory safety standard. NHTSA could not render a determination on such a request without thoroughly testing the technology as applied in that specific model and developing a specialized benefits analysis. The agency’s higher priority would clearly have to be analyzing the technologies it found to offer great safety promise on a broader basis and developing standardized tests for those technologies. Therefore the agencies believe that evaluation of crash avoidance technologies is better addressed under NHTSA’s vehicle safety authority than under a case-bycase off-cycle credit process. Furthermore, the A/C efficiency, offcycle, and pickup truck credit provisions being finalized by the agencies are premised on the installation of specific technologies that directly reduce the fuel consumption VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 and CO2 emissions of the specific vehicles in which they are installed. For all of these credits, the amount of GHG emission reduction and fuel economy improvement attributable to the technology being credited can be reliably determined, and those improvements can be directly attributed to the improved fuel economy performance of the vehicle on which the technology is installed. Thus, for a technology to be ‘‘counted’’ under the credit provisions, it must make direct improvements to the performance of the specific vehicle to which it is applied. The agencies have never considered indirect improvements 299 for the fleet as a whole, and did not discuss that possibility in the proposal. The agencies believe that there is a very significant distinction between technologies providing direct and reliably quantifiable improvements to fuel economy and GHG emission reductions, and technologies which provide those improvements by indirect means, where the improvement is not reliably quantifiable, and may be speculative (or in many instances, non-existent), or may provide benefit to other vehicles on the road more than for themselves. As the agencies have reiterated, and many commenters have likewise maintained, credits should be available only for technologies providing real-world improvements, the improvements must be verifiable, and the process by which credits are granted and implemented must be transparent. None of these factors would be satisfied for credits for these types of indirect technologies used for crash avoidance systems, safety-critical systems, or other technologies that may reduce the frequency of vehicle crashes. The agencies are consequently not providing off-cycle credits potentially attributable to crash avoidance systems, safety-critical systems, or technologies that may reduce the frequency of vehicle crashes. . Therefore, the agencies are not providing off-cycle credits for technologies and systems including, but not limited to, Electronic Stability Control, Tire Pressure Monitoring System, Forward Collision Warning, Lane Departure Warning and/ or Intervention, Collision Imminent Braking, Dynamic Brake Support, Adaptive Lighting, Blind Spot Detection, Adaptive Cruise Control, Curve Speed Warning, Fatigue Warning, systems that reduce driver distraction, and any other technologies that may reduce the likelihood of crashes. 299 i.e. improvements that improve the fuel economy or GHG emissions of other vehicles on the road. PO 00000 Frm 00111 Fmt 4701 Sfmt 4700 62733 Thus, manufacturers will not receive credits or fuel economy improvement adjustments for installing these technologies. If a manufacturer has an off-cycle technology that is not included on this list and brings it to the agencies for assessment, NHTSA will determine whether it is ineligible for a credit or adjustment by reason of the agency’s judgment that it is related to crash avoidance systems, is related to motor vehicle safety within the meaning of the National Traffic and Motor Vehicle Safety act, as amended, or may otherwise reduce the possibility and or frequency of vehicle crashes. The agencies believe that the advancement of crash avoidance systems specifically is best left to NHTSA’s exercise of its vehicle safety authority. NHTSA looks forward to working with manufacturers and other interested parties on creating opportunities to encourage the general introduction of these technologies in the context of the NCAP program and possible safety standards. To that end, the agency would welcome relevant data and analysis from interested parties. The agencies also received comments related to other technologies that may reduce CO2 emissions and fuel consumption by reducing traffic congestion or that provide information to the driver with which the driver may change his or her driving technique or the route driven (more direct route or traffic avoidance 300). All commenters addressing these issues acknowledged the difficulty of quantifying benefits associated with congestion mitigation and driver-selectable technologies.301 Commenters generally noted that the off-cycle credit provisions in the MYs 2012–2016 GHG rule, and the off-cycle credit provisions proposed in this rulemaking did not appear to cover technologies such as in-dash GPS navigation systems, driver coaching and feedback systems (such as ‘‘eco modes’’), vehicle maintenance alerts and reminders, and ‘‘other automatic and driver-initiated location content300 Agencies distinguish between congestion mitigation and congestion avoidance. Congestion mitigation affects the fuel economy and GHG emissions mainly of other vehicles on the road, whereas congestion avoidance affects the fuel economy mainly of the single vehicle with the technology. 301 Alliance, Docket No. NHTSA–2010–0131– 0262, at 11 (stating that it did not seem like there is sufficient information at this time to define specific credit opportunities); Ford, Docket No. NHTSA–2010–0131–0235, at 16 (stating that ‘‘quantifying the benefit is an acknowledged challenge’’); MEMA, Docket No. NHTSA–2010– 0131-[fill in], at 9 (stating that the benefits from these technologies ‘‘cannot be quantified literally* * *’’). E:\FR\FM\15OCR2.SGM 15OCR2 62734 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with based technologies that have been shown to reduce fuel consumption.’’ 302 These commenters requested the opportunity to work with the agencies at developing such procedures.303 With regard to EPA’s request for comment on whether the regulatory text should clarify how EPA treats driver-selectable modes,304 the Alliance stated that it believed there was no need to clarify regulatory text, but that EPA should simply update or refine informal guidance as necessary to address issues as they develop.305 MEMA stated that there was ‘‘precedent for providing CAFE credits based on a projected usage factor of a fuel saving device,’’ citing EPA letters regarding the impact of a shift indicator light on fuel economy.306 At proposal, EPA addressed the possibility of evaluating applications for off-cycle credits for technologies involving driver interaction, indicating that ‘‘driver interactive technologies face the highest demonstration hurdle because manufacturers would need to provide actual real-world usage data on driver response rates.’’ 76 FR 75025. The agencies still believe it to be highly unlikely that off-cycle credits could be justified for these non-safety technologies. This issue is addressed in detail in section III.C.5.ii below. These technologies do not improve the fuel efficiency of the vehicle under any given operating condition, but rather provide information the driver may use to change the driving cycle over which the vehicle overrates which, in turn, may improve the real-world fuel economy (miles driven per gallon consumed)/CO2 emissions (per mile driven) compared to what the fuel economy and CO2 emissions per mile would have been had the driver not used the information or if the technology was not on the vehicle. The agencies believe, for example, there would be a number of specific challenges to quantifying the effect on fuel economy and CO2 emissions per mile driven of GPS/real time traffic navigation systems. First, given that the systems available today are available through subscription services, the manufacturer would need to prove that the vehicle operators will pay for such a service for the useful life of the vehicle 302 See, e.g., MEMA at 9; Ford at 16; Garmin, Docket No. NHTSA–2010–0131–0245, at 2–3 (requesting an alternate way for manufacturers to prove the real-world fuel economy and CO2 benefits of in-dash GPS navigation systems (with or without traffic avoidance) to the agencies besides the ways laid out in the off-cycle credit approval provisions at 40 CFR 86.1866–12(d)(2) and (d)(3)). 303 Alliance at 11, Ford at 16, MEMA at 9. 304 See 76 FR 75025. 305 Id. at 90. 306 MEMA at 9. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 or the manufacturer would have to provide the service at no cost to vehicle operators over the useful life of the vehicle. Second, there would need to be an extensive data collection program to show that drivers were using the system and that they were taking alternate routes that actually improved fuel economy. It would be necessary to determine the level of fuel economy improvement as well as to show evidence that this level of improvement would be expected to be achieved by vehicle operators over the useful life of the vehicle. In addition, it would be necessary to show the sampling is representative, the effects are statistically significant, and the results are reproducible. Third, the real time traffic information must be proven to be accurate and assurances provided that the level of accuracy would be maintained over the useful life of the vehicle. Inaccurate information might lead to poorer fuel economy. Fourth, anecdotal information indicates that navigations systems are most often used to direct the driver using the shortest temporal path. The agencies believe that only rarely would a driver choose the route that achieves the highest fuel economy over one that takes the least time—especially if the time savings would be significant. In addition, other factors may need to be demonstrated, such as the effect of these technologies in differing geographical regions with various road and traffic patterns and the effect of these technologies during different parts of the day (e.g., rush hour vs. mid-day). It is for these reasons that the agencies believe that meeting the burden of proof for these class of technologies will be extremely difficult. Other ‘‘driver interactive’’ off-cycle technologies will present similar challenges. These may include, but are not limited to, in-dash GPS navigation systems, driver coaching and feedback systems such as ‘‘eco modes,’’ fuel economy performance displays and indicators, or haptic devices such as, for example, throttle pedal feedback systems, vehicle maintenance alerts and reminders, and other automatic or driver-initiated location content-based technologies that may improve fuel economy. Finally, the agencies requested comments on the treatment of driver selectable technologies as stated in 76 FR 75089: ‘‘EPA is requesting comments on whether there is a need to clarify in the regulations how EPA treats driver selectable modes (such as multi-mode transmissions and other user-selectable buttons or switches) that may impact fuel economy and GHG emissions.’’ If PO 00000 Frm 00112 Fmt 4701 Sfmt 4700 we did not receive comments to the contrary, we also stated that ‘‘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.’’ The current EPA policy on select-shift transmissions (SSTs) and multimode transmissions (MMT), and shift indicator lights (SILs) is under Manufacturer Guidance Letter CISD–09– 19 (December 3, 2009) and supersedes several previous letters on both of these topics. For, SSTs and MMTs, the manufacturer must determine the predominant mode (e.g., 75% of the drivers will have at least 90% of vehicle shift operation performed in one mode, and, on average, 75% of vehicle shift operation is performed in that mode), using default criteria in the guidance letter or a driver survey. If the worstcase mode is determined to be the predominant mode, the manufacturer must test in this mode and use the results with no benefit from the driverselectable technology reflected in the fuel economy values. If the best-case mode is determined to be the predominant mode, the manufacturer may test in this mode and use the results with the full benefit of the driver-selectable technology reflected in the fuel economy values. If the predominant mode is not discernible, the manufacturer must test in all modes and harmonically average the results (Note: in most cases, there are only two modes so this becomes a 50/50 average between best- and worst-case modes). Based on the EPA decision process under CISD–09–19, both the label and CAFE/GHG could reflect 0, 50, or 100% of the benefit of a driver-selectable device. However, when calculating CAFE, only the 2-cycle test results (e.g., Federal Test Procedure (FTP) and Highway Fuel Economy test (HWFET)) are used. Thus, the higher fuel economy results would only affect the 2-cycle testing values for CAFE purposes. For SILs, the manufacturer must perform an instrumented vehicle survey on a prototype vehicle to determine the appropriate shift schedule to optimize fuel economy. Previous guidance for SILs contained the option for A–B testing with and without the SIL. This has been eliminated in the latest guidance, allowing only an instrumented vehicle survey as the basis for determining SIL related fuel economy improvements. However, for purposes of determining CAFE compliance reporting values, the 2-cycle test results (e.g., Federal Test Procedure E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations (FTP) and Highway Fuel Economy test (HWFET)) are used to align statutory provisions allowing for these two test cycles when determining program compliance. Therefore, only fuel economy improvement values identified on during the FTP and HWFET test cycles would be applicable to the CAFE program. In response to EPA’s request for comment on whether the regulatory text should clarify how EPA treats driverselectable modes, the Alliance stated that it believed there was no need to clarify regulatory text, but that EPA should simply update or refine informal guidance as necessary to address issues as they develop.307 MEMA stated that there was ‘‘precedent for providing CAFE credits based on a projected usage factor of a fuel saving device,’’ citing EPA letters regarding the impact of a shift indicator light on fuel economy.308 Finally, the Alliance provided data from General Motors on their HVAC EcoMode button based on On-Star data from in-use vehicles (n=3,500; 50.3% of the drivers use the system 90% of the time or greater, 57.4% use it 50% of the time or greater, and 34% never use it). Based on the data supplied, they anticipate a benefit of 1.8 g/mi and, with 50% of the people using the HVAC EcoMode, a credit of 0.9 g/mi is warranted (i.e., 1.8 × 0.5). On the comments from the Alliance that there is no need to clarify regulatory text and the informal guidance should be updated or refined as necessary, we agree that the current regulations and the latest guidance letter, CISD–09–19, appropriately supersedes previous guidance letters and addresses select-shift transmissions (SSTs) and multimode transmissions, and shift indicator lights (SILs). Therefore, we will not attempt to clarify the regulatory text and we will continue to update our guidance as necessary. Regarding the comment from MEMA that there is ‘‘precedent for providing CAFE credits based on a projected usage factor of a fuel saving device,’’ citing EPA letters regarding the impact of a shift indicator light on fuel economy, the manufacturer guidance letters referenced by MEMA (CD–82–10 (LD) and CD–83–10(LD)) have been superseded by CISD–09–19. Thus, the procedures in CISD–09–19 would be the applicable guidance for comparison. As previously mentioned, CISD–09–19 requires the manufacturer to 1) determine the potential benefit of a driver selectable feature and 2) discern the predominant mode in-use. This 307 Id. at 90. at 9. 309 Alliance, Docket No. NHTSA–2010–0131– 0262, page 38 of 93; Appendix 2, page 13 of 19. 308 MEMA VerDate Mar<15>2010 23:11 Oct 12, 2012 process is very similar and consistent with the process we proposed for demonstrating technologies not on the defined technology list. Therefore, we agree with MEMA that there is a precedent within our current policy to consider the influence of driverselectable features on test cycle results. For the comments from the Alliance on the HVAC Eco-Mode 309, as discussed above, the existing policy in CISD–09–19 requires using instrumented vehicle survey data to determine the predominant mode and test the vehicle in this mode to determine the fuel economy benefits. This is very similar to the process we are using for alternate method demonstrations under the off-cycle credit program. Therefore, this further supports our previous assertion for addressing driver-selectable technologies under our alternate method demonstration process. However, we want to emphasize that although we acknowledge the similarities between the procedures under the existing policy in CISD–09–19 and the procedures used in the off-cycle program, our discussion of driverselectable devices is completely limited to their potential impact on off-cycle credits. The procedures used to conduct FTP and HFET testing for the purpose of determining CAFE and GHG values for a model type are not at issue here. Following our request for comments on how we handle these devices when testing on the FTP and HFET, comments suggested no changes to existing guidance are needed. We agree and will continue to handle these devices on a case-by-case basis consistent with the existing policy in CISD–09–19. In addition, the existing guidance and FTP/HFET testing policy in CISD–09–19 is not applicable in the context of the off-cycle program since driver-selectable technologies will always require the need for estimates of real-world customer usage to receive off-cycle credit. Therefore, in summary we believe that there is a precedent set by the existing policy in CISD–09–19 to determine a usage in-use but that the existing policy in CISD–09–19 has no bearing on the credit determinations in the off-cycle program, and the converse (i.e., the off-cycle credit program affecting existing policy in CISD–09– 19). Specifically, the section entitled ‘‘Alternative Methods for Determination of Usage Rates’’ in CISD–09–19 that allows an instrumented vehicle survey or on-board data collection are most consistent with the procedures for the Jkt 229001 PO 00000 Frm 00113 Fmt 4701 Sfmt 4700 62735 off-cycle program as discussed in III.C.5.iii. and 40 CFR § 86.1869–12(c). In the context of the off-cycle program, the test values applicable to a vehicle’s fuel economy label value are mostly independent from those generated for the CAFE compliance; where the 2-cycle results for compliance and the combination of all 5-cycle test results are used for the fuel economy label. However, as indicated with other technologies included in the finalized pre-defined technology menu, fuel economy improvements are reflected in the 2-cycle test result values used for CAFE compliance revealing the need to account for the improved 2-cycle test results when considering off-cycle credits for driver-selectable technologies. Therefore, if a manufacturer is requesting off-cycle credit but has previously used the improved fuel economy test results under the existing policy in CISD–09–19 for a driver-selectable technology, the manufacturer must use the 2-cycle results determined under CISD–09–19 for both the A and B values of the FTP and HWFET A–B tests to determine the potential benefit of the driver selectable technology when requesting off-cycle credit. This approach effectively negates the 2-cycle results and benefits, and which is consistent with the treatment for the other off-cycle technologies where credit is not granted for improvements reflected on current 2cycle test procedures. Accordingly, we are allowing driverselectable technologies to be eligible for credit in the off-cycle credit program using procedures and processes demonstrating technologies not on the defined technology list using alternative methods and the public process. Under these provisions, the manufacturer must determine the benefit of the driverselectable technology using approved methodologies and a usage factor for the technology using an instrumented vehicle survey, and applying this factor to the measured benefit to estimate and request credit. As discussed above, if a manufacturer has previously received some fuel economy improvement as a result of the decision process under CISD–09–19, the manufacturer must use the 2-cycle results from that decision process as the A and B values for the 2cycle A–B tests to estimate the off-cycle credit. Consequently, if a manufacturer uses 5-cycle testing to demonstrate the benefit of a driver selectable technology, the manufacturer must use the previously determined 2-cycle test values for the FTP and HWFET A–B tests, which effectively only captures the benefit from the remaining three cycles of 5-cycle testing (i.e., US06, E:\FR\FM\15OCR2.SGM 15OCR2 62736 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with SC03, Cold FTP). The usage factor would then be applied to these 5-cycle results (or any other approved methodology for non-5-cycle test methodologies). For driver-selectable technologies, the manufacturers must adhere to all criteria and requirements as discussed below in III.C.5.iii. and 40 CFR § 86.1869–12(b) and (c). While we are allowing credit for driver-selectable and driver interactive technologies (including congestion avoidance), the agencies believe that applicants would face formidable burdens of showing that improvements over baseline are legitimate, reliably quantifiable, certain, and transparently demonstrable as described above. As identified in CISD–09–19, there will need to be an extensive data collection program to show that drivers are using the technology and to generate a reliable usage factor, if this has not previously been established. In addition, the usage factor applied to the benefit from the driver-selectable technology will tend to lower the amount of credit unless a manufacturer can demonstrate 100% usage of a driver-selectable technology. Therefore, depending on the level of benefit, the amount of resulting credit could be minimal compared the effort to generate the necessary, supporting data, and manufacturers should consider this before undertaking this process. In summary, the agencies are not adding driver-selectable or driverinteractive features to the defined technology list. However, driverselectable and driver-interactive features are eligible for off-cycle credits using procedures and processes for demonstrating technologies not on the defined technology list under the offcycle program as discussed above. h. Credit for Glass and Glazing Technologies: Concerns With Metallic Glazing and Request for Separate Polycarbonate Glazing Credit Multiple comments were received with concerns regarding the use of metallic glazing from the Crime Victims Unit of California (CVUC), California State Sheriffs, Garmin, Honda and TechAmerica. Many commenters raised concerns the credit for glazing may unintentionally create incentives to use metallic films or small metallic particles to achieve reduced vehicle solar heat loading and access the off-cycle credit. The commenters indicated this type of metallic glazing can potentially interfere with signals for global positioning systems (GPS), cell phones, cellular signal based prisoner tracking systems, emergency and/or electronic 911 (E911) calls or other signals emanating from within or being transmitted to a VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 vehicle’s passenger compartment/cabin. In addition, some commenters cited this concern as the reason that the California Air Resources Board (CARB) removed their mandate for metallic glazing from the ‘‘Cool Cars’’ Regulation in California. To address these concerns, the agencies met with the Enhanced Protective Glass Automotive Association (EPGAA), which represents automotive glass manufacturers and suppliers. The meeting included representatives from the automotive glass suppliers Pittsburgh Glass Works LLC (PGW), Guardian Industries, and Asahi Glass Company (AGC) to discuss the potential concerns with metallic glazing, signal interference and/or radio frequency (RF) attenuation (details of this meeting are available in EPA docket # EPA–HQ–OAR–2010–0799–41752 and docket NHTSA–2010–0131). At this meeting, EPGAA provided data to the agencies that showed: In general, any glazing material can create signal interference and RF attenuation, and depending on the situation, RF attenuation and signal interference can occur without the presence of metallic glazing material; there was no statistically-significant increase in signal interference and RF attenuation when metallic glazing was used. Furthermore, many vehicles in production today are designed with metallic solar control deletion areas or zones around the window edges and/or defined areas in either the front windshield of rear backlight to minimize signal interference and RF attenuation. Following the meeting, EPGAA representatives provided a list of vehicles currently utilizing metallic glazing demonstrating to the agencies that this technology is currently in-use without significant signal interference/ RF attenuation issues being raised. EPGAA representatives indicated the technology is especially prevalent in Europe and with no significant consumer complaints. In addition, the agencies received comments from the California Air Resources Board (CARB) in response to the specific comments submitted to the proposal regarding the California Cool Cars Regulation indicating the program was withdrawn as a result of the metallic solar glazing concerns (see EPA docket #EPA–HQ–OAR–2010–0799). CARB stated the mandate for metallic glazing in the Cool Cars Regulation was withdrawn was primarily related to the timing of when the concerns regarding metallic glazing were raised in relation to the proposed mandate’s targeted finalization than to substantive concerns. CARB also clarified that they PO 00000 Frm 00114 Fmt 4701 Sfmt 4700 were not requiring a specific type of glazing and that a performance-based approach ultimately adopted in the Advanced Clean Cars Regulation accomplished the same objectives as proposed under the Cool Cars Regulation without the need for a mandate. In addition, CARB performed testing of signal interference and RF attenuation by CARB (see test results in EPA docket # EPA–HQ–OAR–2010– 0799–41752) echoing the findings of the automotive glass industry that there is ‘‘[n]o effect of reflective glazing observed on monitoring ankle bracelets or cell phones’’ and that any ‘‘[e]ffects on GPS navigation devices [are] completely mitigated by use of [the] deletion window’’ placing either the device or the external antennae in this area’’. CARB urged EPA to finalize the proposed credit values for glass and glazing as proposed. Finally, CARB issued a formal memorandum 310 confirming the timing related reasons for withdrawing the Cool Cars mandate and its test results regarding signal interference and RF attenuation, and urging the agencies to finalize the proposed credit values for glass and glazing as proposed. Based on this information, the agencies are finalizing the proposed credit values and calculation procedures for solar control glazing. EPA and NHTSA note further the off-cycle credit is performance-based and not a mandate for vehicle manufacturers. Manufacturers have options to choose from a variety of glazing technologies that meet their desired performance for rejecting vehicle cabin solar loading. We reiterate that the rule is technology neutral and that none of these potential glazing technologies are foreclosed. Second, we did not see evidence contravening the information that the automotive glass industry and CARB presented showing that there would not be significant adverse effects on signal interference and RF attenuation by any of the recognized glazing technologies. However, to address the concerns of other commenters, we will emphasize to manufacturers that they should evaluate the potential for signal interference and RF attenuation when requesting the solar control glazing credit to ensure that their designs do not cause any interference. i. Summary of Off-Cycle Credit Values As proposed, EPA is finalizing that a CAFE improvement value for off-cycle improvements be determined at the fleet 310 CARB memorandum available at EPA docket #EPA–HQ–OAR–2010–0799 and NHTSA docket NHTSA–2010–0131. E:\FR\FM\15OCR2.SGM 15OCR2 62737 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations 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 regulations at 40 CFR 600.510–12. Note that although 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. Finally, the agencies proposed that the pre-approved menu list of off-cycle technologies and default credit values would be predicated on a certain minimum percentage of technology penetration in a manufacturer’s domestic fleet. 76 FR 75381. Commenters persuasively argued that such a requirement would discourage introduction and utilization of beneficial off-cycle technologies. They pointed out that new technologies are often introduced on limited model lines or platforms both to gauge consumer acceptance and to gain additional experience with the technology before more widespread introduction. Requiring levels of technology penetration such as the 10 percent proposed for many of the menu technologies could thus create a negative rather than positive incentive to deploy off-cycle technologies. The agencies agree, and note further that having an aggressive penetration rate requirement also raises issues of sufficiency of lead time in the early years of the program. The agencies are therefore not adopting minimum penetration requirements as a prerequisite to claim default credits from the preapproved technology menu. Table II–22 shows the list of off-cycle technologies and credits and equivalent fuel consumption improvement values for cars and trucks that the agencies are finalizing in today’s action. The credits and fuel consumption improvement values for active aerodynamics, highefficiency exterior lighting, waste heat recovery and solar roof panels are scalable, depending on the amount of respective improvement these systems can generate for the vehicle. The Solar/ Thermal control technologies are varied and are limited to a total of 3.0 and 4.3 g/mi (car and truck respectively) The various pre-defined solar/thermal control technologies eligible for offcycle credit are shown in Table II–22 below. TABLE II–22—OFF-CYCLE TECHNOLOGIES AND CREDITS AND EQUIVALENT FUEL CONSUMPTION IMPROVEMENT VALUES FOR CARS AND LIGHT TRUCKS Adjustments for cars Adjustments for trucks Technology g/mi + High Efficiency Exterior Lights* (at 100 watt savings) .................................. + Waste Heat Recovery (at 100W) .................................................................. + Solar Panels (based on a 75 watt solar panel)**; Battery Charging Only .............................................................................. Active Cabin Ventilation and Battery Charging ........................................ + Active Aerodynamic Improvements (for a 3% aerodynamic drag or Cd reduction) ......................................................................................................... Engine Idle Start-Stop; w/ heater circulation system # .................................................................. w/o heater circulation system ................................................................... Active Transmission Warm-Up ........................................................................ Active Engine Warm-up ................................................................................... Solar/Thermal Control ...................................................................................... gallons/mi g/mi gallons/mi 1.0 0.7 0.000113 0.000079 1.0 0.7 0.000113 0.000079 3.3 2.5 0.000372 0.000282 3.3 2.5 0.000372 0.000282 0.6 0.000068 1.0 0.000113 2.5 1.5 1.5 1.5 Up to 3.0 0.000282 0.000169 0.000169 0.000169 0.000338 4.4 2.9 3.2 3.2 Up to 4.3 0.000496 0.000327 0.000361 0.000361 0.000484 * High efficiency exterior lighting credit is scalable based on lighting components selected from high efficiency exterior lighting list (see Joint TSD Section 5.2.3, Table 5–21). ** Solar Panel credit is scalable based on solar panel rated power, (see Joint TSD Section 5.2.4). This credit can be combined with active cabin ventilation credits. # In order to receive the maximum engine idle start stop, the heater circulation system must be calibrated to keep the engine off for 1 minute or more when the external ambient temperature is 30 deg F and when cabin heat is demanded (see Joint TSD Section 5.2.8.1). + This credit is scalable; however, only a minimum credit of 0.05 g/mi CO2 can be granted. TABLE II–23—OFF-CYCLE TECHNOLOGIES AND CREDITS FOR SOLAR/THERMAL CONTROL TECHNOLOGIES FOR CARS AND LIGHT TRUCKS Credit (g CO2/mi) Thermal control technology Car Glass or Glazing .................................................................................................................................................... Active Seat Ventilation .......................................................................................................................................... Solar Reflective Paint ............................................................................................................................................ Passive Cabin Ventilation ..................................................................................................................................... Active Cabin Ventilation* ....................................................................................................................................... Up to 2.9 ......... 1.0 ................... 0.4 ................... 1.7 ................... 2.1 ................... Truck Up to 3.9 1.3 0.5 2.3 2.8 sroberts on DSK5SPTVN1PROD with * Active cabin ventilation has potential synergies with solar panels as described in Chapter 5.2 of the joint TSD. j. Vehicle Simulation Tool Chapter 2 of EPA’s RIA provides a detailed description of the vehicle simulation tool that EPA had developed VerDate Mar<15>2010 01:21 Oct 13, 2012 Jkt 229001 and has used for the final rule. This tool is capable of simulating a wide range of conventional and advanced engine, transmission, and vehicle technologies over various driving cycles. It evaluates PO 00000 Frm 00115 Fmt 4701 Sfmt 4700 technology package effectiveness while taking into account synergy (and dissynergy) effects among vehicle components and estimates GHG emissions for various combinations of E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with 62738 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations technologies. For the MYs 2017 to 2025 GHG rule, this simulation tool was used to assist estimating the amount of GHG credits for improved A/C systems and off-cycle technologies. EPA sought public comment on this approach of using the tool for generating some of the credits. The agency received no specific comment on the model itself or on the documentation of the model. However, based on the comments described in the previous section (particularly on allowing scalable credits on off-cycle technologies), EPA modified and finetuned the vehicle simulation tool in order to properly capture the amount of scalable GHG reductions provided by off-cycle technologies. More specifically, based on the comments from the Auto Alliance, EPA used the simulation tool to generate scalable credits for the active aerodynamic technology. For this final rule, EPA utilized the simulation tool in order to quantify the (scalable) credits for Active Aerodynamics, High Efficiency Exterior Lights, Solar Panel, and Waste Heat Recovery 311 more accurately. The details of this analysis are presented in Chapter 5.2 of the Joint TSD. 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. EPA utilized the simulation tool to estimate the default credit values for the engine start-stop technology. Details of the analysis are provided in the chapter 5.2.8.1 of Joint TSD. However, 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 cannot provide full benefits of these technologies on the GHG reductions. For this reason, the agency did not use the simulation tool to generate the default GHG credits for 311 This technology was termed ‘engine heat recovery’ at proposal. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 these technologies, though future versions of the model may be more capable of quantifying the efficacy of these off-cycle technologies as well. As described in Chapter 5 of the Joint TSD, the Active Engine/Transmission Warmup credits were estimated using the results from the Ricardo vehicle simulation results. In summary, for the MYs 2017 to 2025 GHG final rule, EPA used the simulation tool to quantify the amount of GHG emissions reduced by improvements in A/C systems and to determine the default credit values for some of the offcycle technologies such as active aerodynamics, electrical load reduction, and engine start-stop. Details of the analysis and values of these scalable credits are described in Chapter 5 of Joint TSD. This simulation tool will not be officially used for credit compliance purposes (as proposed) because EPA has already made several of the credits scalable for the purposes of this final rule. However, EPA may use the tool as part of the case-by-case of off-cycle credit determination process. EPA encourages manufacturers to use this simulation tool in order to estimate the credits values of their off-cycle technologies. 3. Advanced Technology Incentives for Full-Size Pickup Trucks The agencies recognize that the standards for MYs 2017–2025 will be challenging for large vehicles, including full-size pickup trucks that are often used for commercial purposes and have generally higher payload and towing capabilities than other light-duty vehicles. Section II.C and Chapter 2 of the joint TSD describe the adjustments made to the slope of the truck curve compared to the MYs 2012–2016 rule, reflecting these considerations. Sections III.B and IV.E describe the progression of the stringency of the truck standards. Large pick-up trucks represent are a significant portion of the overall lightduty vehicle fleet and generally have higher levels of fuel consumption and GHG emissions than most other lightduty vehicles. Improvements in the fuel economy and GHG emissions of these vehicles can have significant impact on overall light-duty fleet fuel use and GHG emissions. The agencies believe that offering incentives in the earlier years of this program that encourage the deployment of technologies that can significantly improve the efficiency of these vehicles and that also will foster production of those technologies at levels that will help achieve economies of scale, will promote greater fuel savings overall and make these technologies more cost effective and PO 00000 Frm 00116 Fmt 4701 Sfmt 4700 available in the later model years of this rulemaking to assist in compliance with the standards. The agencies are therefore finalizing the proposed approach to encourage penetration of these technologies both through the standards themselves, but also through various provisions providing regulatory incentives for advanced technology use in full-size pick-up trucks. The agencies’ goal is to incentivize the penetration into the marketplace of ‘‘game changing’’ technologies for these pickups, including the marketing of hybrids. For that reason, EPA, in coordination with NHTSA, proposed and is adopting provisions for credits and corresponding equivalent fuel consumption improvement values for manufacturers that hybridize a significant number of their full-size pickup trucks, or use other technologies that significantly reduce CO2 emissions and fuel consumption.312 Most of the commenters on this issue supported the large truck credit concept. Some OEM commenters argued that it should be extended to other vehicles such as SUVs and minivans. ICCT, Volkswagen, and CBD opposed adopting the proposed incentive, arguing that this vehicle segment is not especially challenged by the proposed standards, that hybrid systems would readily transfer to it from other vehicle classes, and that the credit essentially amounts to an economic advantage for manufacturers of large trucks. CBD also commented that this credit should be eliminated, since they believe hybrid technology should be forced by aggressive standards rather than encouraged through regulatory incentives. Other environmental group commenters also expressed concern about the real-world impacts of offering this credit, and suggested various ways to tailor it to ensure that fuel savings and emissions reductions associated with it are genuine. We believe that extending the large truck credit to other light-duty trucks such as SUVs and minivans would greatly expand, and therefore dilute, the intended credit focus. The agencies do not believe that providing such incentives for hybridization in these additional categories is necessary, or that the performance levels required of 312 Note that EPA’s 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 program. Instead, EPA will 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 here to show the relationship between CO2 and fuel consumption improvements. E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations non-hybrid technologies eligible for credits are of such stringency that extending credits to all or most lightduty trucks would amount to anything more than a de facto lowering of overall program stringency. Although commenters rightly pointed out that some of these non-truck vehicles do have substantial towing capacity, most are not used as towing vehicles, in contrast to full-size pickup trucks that often serve as work vehicles. Moreover, the smaller footprint trucks fall on the lower part of the truck curve, which have a higher rate of improvement (in stringency) than the larger trucks, thus making them more comparable to cars in terms of technology access and effectiveness (as well as not having access to these credits). Arguments made by commenters for not adopting the large truck technology credit are not convincing. Although there may not be inherent reasons for a lack of hybrid technology migration to large trucks, it is clear that this migration has nevertheless been slow to materialize for practical/economic reasons, including in-use duty cycles and customer expectations. These issues still need to be addressed by the designers of large pickups to successfully introduce these technologies in these trucks, and we believe that assistance in the form of a focused, well-defined incentive program is warranted. See section III.D.6 and 7 for further discussion of EPA’s justification for this credit program in the context of the stringency of the truck standards. Volkswagen commented that any HEV or performance-based credits generated by large trucks should not be transferable to other vehicle segments, arguing that if compliance for the large truck segment is really as challenging as predicted, there should be no excess of credits to transfer anyway. This may be the case, but we do not agree that it argues for restricting the use of large pickup truck credits. We think the sizeable technology hurdle involved and the limited model years in which credits are available preclude the potential for credit windfalls. Furthermore, neither the size of the large truck market nor the size of the per-vehicle credit are so substantial that they could lead to a large pool of credits capable of skewing the competition in the lighter vehicle market. As described in Section III.D of this preamble, EPA will continue to monitor the net level of credit transfers from cars to trucks and vice versa in the MYs 2017–2025 timeframe. As proposed, the agencies are defining a full-size pickup truck based on minimum bed size and hauling VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 capability, as detailed in 86.1866–12(e) of the regulations being adopted. This definition is meant to ensure that the larger pickup trucks, which provide significant utility with respect to bed access and payload and towing capacities, are captured by the definition, while smaller pickup trucks with more limited capacities are not covered. A full-size pickup truck is defined as meeting requirements (1) and (2) below, as well as either requirement (3) or (4) below. A more detailed discussion can be found in section III.C.3. (1) Bed Width—The vehicle must have an open cargo box with a minimum width between the wheelhouses of 48 inches. And— (2) Bed Length—The length of the open cargo box must be at least 60 inches. And— (3) Towing Capability—the gross combined weight rating (GCWR) minus the gross vehicle weight rating (GVWR) must be at least 5,000 pounds. Or— (4) Payload Capability—the GVWR minus the curb weight (as defined in 40 CFR 86.1803) must be at least 1,700 pounds. EPA sought comment on extending these credits to smaller pickup trucks, specifically to those with narrower beds, down to 42 inches, but still with towing capability comparable to large trucks. This request for comment produced mixed reactions among truck manufacturers, and some argued that EPA should go further and drop the bed size limit entirely. ICCT and CBD strongly opposed any extension of credits, arguing that adopting the 42″ bed width criterion would allow virtually all pickup trucks to qualify, thereby distorting technology requirements and reducing the benefits of the rule. None of the commenters argued convincingly in favor of the extension and so we are adopting the 48″ minimum requirement as proposed. Chrysler commented that the proposed payload and towing capability minimums are too restrictive, making a sizeable number of Ram 1500 configurations ineligible to earn credits. However, the company provided no sales information to enable the agencies to reassess this issue. Moreover, the agencies did not premise the proposed incentive on every full-size truck configuration being eligible. Manufacturers typically offer a variety of truck options to suit varied customer needs in the work and recreational truck markets, and the fact that one manufacturer (or more) markets to applications lacking the towing and payload demands of the core group of vehicles in this segment does not, in the PO 00000 Frm 00117 Fmt 4701 Sfmt 4700 62739 agencies’ view, justify a revision of the hauling requirements that were a fundamental consideration in establishing the credit. The agencies also sought comment on the definitions of mild and strong hybrids based on energy capture on braking (brake regeneration). Minor modifications to these definitions were made based on these comments as well as new testing performed by the EPA. Due to the detailed nature of these comments, these responses and the description of the testing are included in section 5.3.3 of the Joint TSD. The program requirements and incentive amounts differ somewhat for mild and strong HEV pickup trucks. As proposed, mild HEVs will be eligible for a per-vehicle credit of 10 g/mi (equivalent to 0.0011 gallon/mile for a gasoline-fueled truck) during MYs 2017–2021. Eligibility also requires that the technology be used on a minimum percentage of a company’s full size pickups, beginning with at least 20% of a company’s full-size pickup production in 2017 and ramping up to at least 80% in MY 2021. These minimum percentages are lower in MYs 2017 and 2018 than proposed (20% and 30%, respectively, compared to the proposed 30% and 40%), based on our assessment of the comments arguing reasonably that the proposed percentages were too demanding, especially in the initial model years when there is the least lead time. Strong HEV pickup trucks will be eligible for a 20 g/mi CO2 credit (0.0023 gallon/mile) during MYs 2017–2025 if the technology is used on at least 10% of the company’s full-size pickups. The technology penetration thresholds and their basis, as well as comments received on our proposal for them, are discussed in more detail in section III.C below. Because of their importance in assigning credit amounts, EPA is adopting explicit regulatory definitions for mild and strong HEVs. These definitions and the relevant comments we received are discussed in section III.C.3 and in section 5.3.3 of the Joint TSD. Because there are other, non-HEV, advanced technologies that can provide significant reductions in pickup truck GHG emissions and fuel consumption (e.g., hydraulic hybrid), EPA is also adopting the proposed, more generalized, credit provisions for fullsize pickup trucks that achieve emissions levels significantly below their applicable CO2 targets. This performance-based credit will be 10 g/ mi CO2 (equivalent to 0.0011 gal/mi for the CAFE program) or 20 g/mi CO2 (0.0023 gal/mi) for full-size pickups achieving 15 or 20%, respectively, E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with 62740 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations better CO2 than their footprint-based targets in a given model year. The basis for our choice of the 15 and 20% overcompliance targets is explained in Section 5.3.4 of the Joint TSD. These performance-based credits have no specific technology or design requirements; automakers can use any technology or set of technologies as long as the vehicle’s CO2 performance is at least 15 or 20% below its footprintbased target. However, a vehicle cannot receive both HEV and performancebased credits. Because the footprint target curve has been adjusted to account for A/C-related credits, the CO2 level to be compared with the target will also include any A/C-related credits generated by the vehicles. The 10 g/mi performance-based credit will be available for MYs 2017 to 2021. In recognition of the nature of automotive redesign sequence, a vehicle model meeting the requirements in a model year will receive the credit in subsequent model years through MY 2021, unless its CO2 level increases or its production drops below the penetration threshold described below, even if the year-by-year reduction in standards levels causes the vehicle to fall short of the 15% over-compliance threshold. The 10 g/mi credit is not available after MY 2021 because the post-2021 standards quickly overtake designs that were originally 15% overcompliant, making the awarding of credits to them inappropriate. The 20 g/ mi CO2 performance-based credit will be available for a maximum of five consecutive model years within the 2017 to 2025 model year period, provided the vehicle model’s CO2 level does not increase from the level determined in its first qualifying model year, and subject to the penetration requirement described below. A qualifying vehicle model that subsequently undergoes a major redesign can requalify for the credit for an additional period starting in the redesign model year, not to exceed five model years and not to extend beyond MY 2025. As with the HEV incentives, eligibility for 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 CO2 credit (0.0011 gal/mi) is 15% in MY 2017, with a ramp up to 40% in MY 2021. The minimum percentage for the 20 g/mi credit (0.0023 gal/mi) is 10% in each year over the model years 2017–2025. The technology penetration thresholds and their basis, as well as comments VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 received on our proposal for them, are discussed in more detail in section III.C. ICCT opposed allowing vehicle models that earn performance-based credits in one year to continue receiving them in subsequent years as the increasingly more stringent standards progressively diminish the vehicle’s performance margin compared to the standard. We view the incentive over the longer term, as a multi-year package, intending it to encourage investment in lasting technology shifts. The fact that it is somewhat easier to exceed performance by 15 or 20% in the earlier years, when the bar is set lower, and, once earned, to retain that benefit for a fixed number of years (provided sales remain strong), works to focus the credit as intended—on incentivizing the introduction of new technology as early in the program as possible. G. Safety Considerations in Establishing CAFE/GHG Standards 1. Why do the Agencies consider safety? The primary goals of 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.313 As a safety agency, NHTSA has long considered the potential for adverse safety consequences when establishing CAFE standards,314 and under the CAA, EPA considers factors related to public health and human welfare, including safety, in regulating emissions of air pollutants from mobile sources.315 Safety trade-offs associated with fuel economy increases have occurred in the past, particularly before NHTSA CAFE standards were attribute-based,316 and 313 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. 314 This practice is recognized approvingly in case law. As the United States Court of Appeals for the D.C. 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 (D.C. Cir. 1990). 315 As noted in Section I.D above, EPA has considered the safety of vehicular pollution control technologies from the inception of its Title II regulatory programs. See also NRDC v. EPA, 655 F. 2d 318, 332 n. 31 (D.C. Cir. 1981). (EPA may consider safety in developing standards under section 202(a) and did so appropriately in the given instance). 316 National Research Council, ‘‘Effectiveness and Impact of Corporate Average Fuel Economy (CAFE) Standards,’’ National Academy Press, Washington, PO 00000 Frm 00118 Fmt 4701 Sfmt 4700 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, partly in response to CAFE standards, to build smaller and lighter vehicles, rather than adding more expensive fuel-saving technologies while 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 the more stringent future CAFE and GHG standards. Manufacturers have stated that they will reduce vehicle mass as one of the costeffective means of increasing fuel economy and reducing CO2 emissions in order to meet the standards, and the agencies have incorporated this expectation into our modeling analysis supporting the 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 agencies are encouraged by comments to the NPRM from the Alliance of Automotive Manufacturers reflecting a commitment to safety stating that, while improving the fuel efficiency of the vehicles, the vehicle manufacturers are ‘‘mindful that such improvements must be implemented in a manner that does not compromise the rate of safety improvement that has been achieved to date.’’ 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 ‘‘footprintDC (2002), Finding 2, p. 3, Available at http:// www.nap.edu/openbook.php?isbn=0309076013 (last accessed Aug. 2, 2012). E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with neutral,’’ 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.317 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 minimize incentive to downsize vehicles does not mean that some manufacturers will not downsize if doing so makes it easier for them to meet the overall CAFE/GHG standard in a cost-efficient manner, as for example if the smaller vehicles are so much lighter (or de-contented) 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 down-sizing (or upsizing) in terms of footprint reductions (or increases).318 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 final rule, and do not expect manufacturers to reduce vehicle footprint in response to the final rule, the agencies must attempt to predict the safety effects, if any, of the final rule based on the best information currently 317 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 Joint TSD for more information on the agencies’ choice of ‘‘cut-off’’ points for the footprint-based target curves. 318 This statement makes no prediction of how consumer choices of vehicle size will change in the future, independent of this proposal. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 62741 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. This was reinforced by comments to the proposal from Volvo which stated ‘‘Everything else being equal, several of the studies presented indicate a significant increase, up to a factor ten, in the fatality risk for the occupants in the lighter vehicle for a two-to-one weight ratio between the colliding vehicles in a head-on crash.’’319 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. To maintain an acceptable occupant compartment deceleration, the effective front-end stiffness has to be managed such that the crash pulse does not increase as lighter yet stiffer 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 for analyzing these CAFE and GHG standards, 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. 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 functionality such as durability, drivability, 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. Comments to the proposal from the Alliance of Automakers supported NHTSA’s approach of using both engineering and statistical analyses to assess the effects of the standards on safety, stating ‘‘The Alliance supports NHTSA’s intention to examine safety from the perspective of both the historical field crash data and the engineering analysis of potential future Advanced Materials Concept vehicles. NHTSA’s planned analysis rightly looks backward and forward.’’ 320 DRI furnished alternative statistical analyses in which the significant fatality increase seen for mass reduction in cars weighing less than 3,106 pounds in Kahane’s analysis tapers off to a nonsignificant or near-zero level. Other commenters (including ICCT, Center for Biological Diversity (CBD), Consumers Union, NRDC, and the Aluminum Association), in contrast, stated that 319 Docket No. NHTSA–2010–0131–0243; Section: Safety Consideration. 320 Alliance comments, Docket No. NHTSA– 2010–0131, at pg 5. available. This section explained why the agencies consider safety; the following section discusses how the agencies consider safety. PO 00000 Frm 00119 Fmt 4701 Sfmt 4700 E:\FR\FM\15OCR2.SGM 15OCR2 62742 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations mass reduction can be implemented safely and there should be no safety impacts associated with the CAFE/GHG standards. Some commenters argued that safety of future vehicles will be solely a function of vehicle design and not of weight or size, while others argued that better material usage, better design, and stronger materials will improve vehicle safety if vehicle size is maintained. More specifically, comments from ICCT stated that reducing vehicle weight through the use of strong lightweight materials, while maintaining size can reduce intrusion, as the redesigned vehicle can reduce crash forces with equivalent crush space. ICCT further stated that ‘‘this also supports that size-based standards that encourage the use of lightweight materials should reduce intrusion and, hence, fatalities.’’ 321 The American Iron and Steel Institute indicated that steel structures are particularly effective in absorbing energy during a collision over the engineered crush space (or crumple zone), and further indicated that new advanced high-strength steel technology has already demonstrated its ability to reduce mass and maintain or improve test crashworthiness performance all within the same vehicle footprint, although acknowledging that these comments did not necessarily reflect crash performance with vehicles of different sizes and masses. The agencies have looked closely at these issues, and we believe that our approach of using both statistical analyses of historical data to assess societal safety effects, and design studies to assess the ability of individual designs to comply with the FMVSS and perform well on NCAP and IIHS tests responds to these concerns. The sections below discuss more specifically the state of the research on the mass-safety relationship, and how the agencies have integrated that research into our assessment of the safety effects of the MY 2017–2025 CAFE and GHG standards. sroberts on DSK5SPTVN1PROD with 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 321 ICCT comments, Docket No. EPA–HQ–OAR– 2010–0799, Document ID: 9512, at pg 13. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 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 recommendations on whether the existing methods or other methods should be used for future statistical analysis of historical data. This study would 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).322 Second, NHTSA and EPA, in consultation with DOE, would update the MY 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 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 322 All three of the peer reviews are available in Docket No. NHTSA–2010–0152. You can access the docket at http://www.regulations.gov/#!home by typing ‘NHTSA–2010–0152’ where it says ‘‘enter keyword or ID’’ and then clicking on ‘‘Search.’’ PO 00000 Frm 00120 Fmt 4701 Sfmt 4700 final rule: 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 U.S. 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, and an updated database was created and employed for assessing safety effects in this final rule. The agencies also believe, as UMTRI also found, that different statistical analyses may have produced different results because they each used slightly different datasets for their analyses. In order to try to mitigate this issue 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 made the preliminary version of the new database, which was the basis for NHTSA’s 2011 report, available to the public in May 2011, and an updated version in April 2012,323 enabling other researchers to analyze the same data and hopefully minimizing discrepancies in the results that would have been due to inconsistencies across databases.324 The agencies recognize, however, that the updated database may not represent the future fleet, because vehicles have continued and will 323 The new databases are available at ftp:// ftp.nhtsa.dot.gov/CAFE/. 324 75 FR 25324 (May 7, 2010); the discussion of planned statistical analyses is on pp. 25395–25396. E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with continue to change. NHTSA published a preliminary report with the NPRM in November 2011, which has subsequently been revised based on peer review comments. The final report is being published concurrently with this rulemaking.325 The agencies are aware that several studies have been initiated using the 2011 version or the 2012 version of NHTSA’s newly established safety database. In addition to new Kahane studies, which are discussed in section II.G.3.d, 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 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 considers 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. Both LBNL studies were peer reviewed and subsequently revised and updated. DRI used models that separate the effect of mass reduction on two components of fatality risk, crash avoidance and crashworthiness. The LBNL and DRI studies are available in the docket for this final rule.326 The database is 325 The final report can be found in Docket No. NHTSA–2010–0131. 326 Wenzel, T. (2011a). Assessment of NHTSA’s Report ‘‘Relationships Between Fatality Risk, Mass, and Footprint in Model Year 2000–2007 Passenger Cars and LTVs—Draft Final Report.’’ (Docket No. NHTSA–2010–0152–0026). Berkeley, CA: Lawrence Berkeley National Laboratory; Wenzel, T. (2011b). An Analysis of the Relationship between Casualty Risk Per Crash and Vehicle Mass and Footprint for Model Year 2000–2007 Light-Duty Vehicles—Draft Final Report.’’ (Docket No. NHTSA–2010–0152– 0028). Berkeley, CA: Lawrence Berkeley National Laboratory; Wenzel, T. (2012a). Assessment of NHTSA’s Report ‘‘Relationships Between Fatality Risk, Mass, and Footprint in Model Year 2000–2007 Passenger Cars and LTVs—Final Report.’’ (To appear in Docket No. NHTSA–2010–0152). Berkeley, CA: Lawrence Berkeley National Laboratory; Wenzel, T. (2012b). An Analysis of the Relationship between Casualty Risk Per Crash and Vehicle Mass and Footprint for Model Year 2000– 2007 Light-Duty Vehicles—Final Report.’’ (To appear in Docket No. NHTSA–2010–0152). Berkeley, CA: Lawrence Berkeley National Laboratory; Van Auken, R.M., and Zellner, J. W. (2012a). Updated Analysis of the Effects of Passenger Vehicle Size and Weight on Safety, Phase I. Report No. DRI–TR–11–01. (Docket No. NHTSA– 2010–0152–0030). Torrance, CA: Dynamic Research, Inc.; Van Auken, R.M., and Zellner, J. W. (2012b). Updated Analysis of the Effects of Passenger Vehicle Size and Weight on Safety, Phase II; Preliminary Analysis Based on 2002 to 2008 Calendar Year Data for 2000 to 2007 Model Year Light Passenger Vehicles to Induced-Exposure and Vehicle Size Variables. Report No. DRI–TR–12–01, VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 available for download to the public from NHTSA’s Web site. Finally, EPA and NHTSA with DOT’s Volpe Center, part of DOT’s Research and Innovative Technology Administration, 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.’’ This study is also available in the docket for this final rule.327 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 in the midterm review and future rulemakings, 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.328 Vols. 1–3. (Docket No. NHTSA–2010–0152–0032). Torrance, CA: Dynamic Research, Inc.; Van Auken, R.M., and Zellner, J. W. (2012c). Updated Analysis of the Effects of Passenger Vehicle Size and Weight on Safety, Phase II; Preliminary Analysis Based on 2002 to 2008 Calendar Year Data for 2000 to 2007 Model Year Light Passenger Vehicles to InducedExposure and Vehicle Size Variables. Report No. DRI–TR–12–01, Vols. 4–5. (Docket No. NHTSA– 2010–0152–0033). Torrance, CA: Dynamic Research, Inc.; Van Auken, R.M., and Zellner, J. W. (2012d). Updated Analysis of the Effects of Passenger Vehicle Size and Weight on Safety; Sensitivity of the Estimates for 2002 to 2008 Calendar Year Data for 2000 to 2007 Model Year Light Passenger Vehicles to Induced-Exposure and Vehicle Size Variables. Report No. DRI–TR–12–03. (Docket No. NHTSA–2010–0152–0034). Torrance, CA: Dynamic Research, Inc. 327 Brewer, John. An Assessment of the Implications of ‘‘Smart Design’’ on Motor Vehicle Safety. 2011. Docket No. NHTSA–2010–0131. 328 A video recording, transcript, and the presentations from the NHTSA workshop on mass reduction, vehicle size and fleet safety is available PO 00000 Frm 00121 Fmt 4701 Sfmt 4700 62743 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 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 mass reduction for this final 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 regarding 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 recent historical 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. This study was updated and finalized in March of 2012.329 He showed that the trends in risk for various classes of vehicles—e.g., nonsports car passenger cars, vans, SUVs, at http://www.nhtsa.gov/fuel-economy (look for ‘‘NHTSA Workshop on Vehicle Mass-Size-Safety on Feb. 25.’’) 329 Wenzel, T.P. (2012). Analysis of Casualty Risk per Police-Reported Crash for Model Year 2000 to 2004 Vehicles, Using Crash Data from Five States, March 2012, LBNL–4897E, available at: http:// energy.lbl.gov/ea/teepa/pdf/lbnl-4897e.pdf (last accessed Jun. 18, 2012). E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with 62744 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations crossover utility vehicles (CUV), pickups—were similar regardless of what risk was being measured (fatality or casualty) or what exposure metric was used (e.g., registration years, policereported crashes, etc.). In general, most trends showed that societal risk tends to decrease as car or CUV size increases, while societal risk tends to increase as pickup or SUV size increases. 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 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 18 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, all else being equal, 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 also predicted that ‘‘the sky will not fall’’ as the fleet downsizes, insofar as 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. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 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 disagreement on what value of Variance Inflation Factor (VIF, a measure of multicollinearity) that would call results into question, and suggested that a 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 whether smaller, lighter vehicles maneuver better, and thus avoid more crashes, than larger, heavier vehicles. German noted that lighter vehicles should have improved handling and braking characteristics and ‘‘may be more likely to avoid collisions.’’ Lund presented 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 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 report 330 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 330 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 http://www.nhtsa.gov/ staticfiles/rulemaking/pdf/cafe/CAFE_2012– 2016_FRIA_04012010.pdf. PO 00000 Frm 00122 Fmt 4701 Sfmt 4700 safety in absolute terms. Kahane noted that if the analyses were able to consider the mass of both vehicles in a twovehicle 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 than that of its lighter crash partner, 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 absolute mass reduction (say, 100 pounds) 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 and also commented on previous analyses that using weight and wheelbase together in a logistic regression model distorts the estimates, resulting in high variance inflation factors with wrong signs and magnitudes in the results. Her results consistently showed that the ratio between the masses of two vehicles involved in a two-vehicle crash was a more important parameter than variables 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 331 of a set of 331 The review is independent in the sense that it was conducted by an outside third party without any interest in the reported outcome. E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with 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 database created by Kahane appears to be an 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 332 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 332 Kahane, C. J. (2003). Vehicle Weight, Fatality Risk and Crash Compatibility of Model Year 1991– 99 Passenger Cars and Light Trucks, NHTSA Technical Report. DOT HS 809 662. Washington, DC: National Highway Traffic Safety Administration, http://www-nrd.nhtsa.dot.gov/ Pubs/809662.PDF. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 reductions in weight or size on fatality risk seems to add unneeded complexity to the problem. • One of the biggest issues regarding the various statistical analyses 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 reduce 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 2012 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: • 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 modification, are not exposurebased risk models and inferences drawn from these models tend 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. • 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 societal fatality risk in two-vehicle crashes is expected to increase with increasing mass ratio. UMTRI concluded that the increases in fatality risk associated with a 100pound reduction in weight allowing footprint to vary with weight as estimated by Kahane and JP PO 00000 Frm 00123 Fmt 4701 Sfmt 4700 62745 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. • 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. • Two papers by Robertson, one a commentary paper and the other a peer-reviewed 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 fuel economy is used as a surrogate for curb weight. 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. d. Two Reports by Dr. Charles Kahane, NHTSA titled ‘‘Relationships Between Fatality Risk, Mass, and Footprint in Model Year 2000–2007 Passenger Cars and LTVs’’: Preliminary Report, November 2011 and Final Report, August 2012 The relationship between a vehicle’s mass, size, and fatality risk is complex, and 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 E:\FR\FM\15OCR2.SGM 15OCR2 62746 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations MYs 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 vehicleregistration data.333 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 MYs 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 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.334 333 Kahane (2010). 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 sroberts on DSK5SPTVN1PROD with 334 Van VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 In April 2010, NHTSA, working closely with EPA and the Department of Energy (DOE), commenced 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 MYs 1991–1999 vehicles in CYs 1995– 2000 crashes had become outdated as new safety technologies, vehicle designs and materials were introduced. The new databases are comprised of MYs 2000– 2007 vehicles in CY 2002–2008 crashes with the most up-to-date possible data, given the processing lead time for crash data and the need for enough crash cases to permit statistically meaningful analyses. NHTSA made the first version of the new databases available to the public in May 2011 and an updated version in April 2012,335 enabling other researchers to analyze the same data and hopefully minimizing discrepancies in the results due to inconsistencies across the data used.336 One way to estimate these effects is the use of statistical analyses of societal fatality 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 2011–2012 NHTSA reports is the same as in NHTSA’s 2010 report: crosssectional 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 2011–2012 reports337 analyze MYs LTVs. Report No. DRI–TR–05–01. Torrance, CA: Dynamic Research, Inc.; Van Auken, R.M., and Zellner, J. W. (2011).2012a). Updated Analysis of the Effects of Passenger Vehicle Size and Weight on Safety, Phase I. Report No. DRI–TR–11–01. (Docket No. NHTSA–2010–0152–0030). Torrance, CA: Dynamic Research, Inc. 335 http://www.nhtsa.gov/fuel-economy. 336 75 FR 25324 (May 7, 2010); the discussion of planned statistical analyses is on pp. 25395–25396. 337 Kahane, C. J. (2011). ‘‘Relationships Between Fatality Risk, Mass, and Footprint in Model Year 2000–2007 Passenger Cars and LTVs—Preliminary Report,’’ is available in the NHTSA docket, NHTSA–2010–0152 as item no. 0023. Kahane, C. J. (2012). ‘‘Relationships Between Fatality Risk, Mass, and Footprint in Model Year 2000–2007 Passenger Cars and LTVs—Final Report,’’ is also in that docket. You can access the docket at http:// PO 00000 Frm 00124 Fmt 4701 Sfmt 4700 2000–2007 cars and LTVs in CYs 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 MYs 2000–2007 vehicles from MYs 1991– 1999 has been the increase in crossover utility vehicles (CUV), which are SUVs of unibody construction, sometimes built upon a platform shared with passenger cars. CUVs have blurred the distinction between cars and trucks. The new analyses treat CUVs and minivans as a separate vehicle class, because they differ in some respects from pickuptruck-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. 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 more accurate VMT estimates than NHTSA’s earlier databases, derived from a file of odometer readings by make, model, and model year recently developed by R.L. Polk and purchased by NHTSA.338 For the 2011–2012 reports, 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 reducing 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 339 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 light-duty vehicles manufactured on or after September 1, 2011 are required to be equipped with ESC.340 For the 2011–2012 reports, vehicles are now grouped into five classes rather than four: passenger cars (including both 2-door and 4-door cars) are split in half by median weight; CUVs and minivans; and truck-based LTVs, which www.regulations.gov/#!home by typing ‘‘NHTSA– 2010–0152’’ where it says ‘‘enter keyword or ID’’ and then clicking on ‘‘Search.’’ 338 In the 1991–1999 data base, VMT was estimated only by vehicle class, based on NASS CDS data. 339 MY 2004–2007 vehicles with fatal crashes occurred in CY 2004–2008 are selected as the annual fatality distribution baseline in the Kahane analysis. 340 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. E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations are also split in half by median weight of the model year 2000–2007 vehicles. Table II–24 presents the 2011 preliminary report’s estimated percent increase in U.S. societal fatality risk per ten billion VMT for each 100-pound 62747 reduction in vehicle mass, while holding footprint constant, for each of the five classes of vehicles. TABLE II–24—RESULTS OF 2011 NHTSA Preliminary Report: FATALITY INCREASE (%) PER 100-POUND MASS REDUCTION WHILE HOLDING FOOTPRINT CONSTANT Fatality increase (%) per 100-pound mass reduction while holding footprint constant MY 2000–2007 CY 2002–2008 Point estimate Cars < 3,106 pounds ............................................................................................................................. Cars ≥ 3,106 pounds ............................................................................................................................. CUVs and minivans ............................................................................................................................... Truck-based LTVs < 4,594 pounds ....................................................................................................... Truck-based LTVs ≥ 4,594 pounds ....................................................................................................... Charles Farmer, Paul E. Green, and Anders Lie, who reviewed NHTSA’s 2010 report, again peer-reviewed the 2011 preliminary report.341 In preparing its 2012 final report, NHTSA also took into account Wenzel’s assessment of the preliminary report and its peer reviews, DRI’s analyses published early in 2012, and public comments such as those by ICCT.342 These comments prompted supplementary analyses, especially sensitivity tests, discussed below. However, the basic analysis of the 2012 final report is almost unchanged from the 2011 preliminary report, differing only in the addition of some crash data that became available in the interim and a minor change in the formula for 1.44 .47 ¥.46 .52 ¥.39 95% confidence bounds +.29 to +2.59 ¥.58 to +1.52 ¥1.75 to +.83 ¥.43 to +1.46 ¥1.06 to +.27 estimating annual VMT. Table II–25 presents the 2012 final report’s 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. TABLE II–25—RESULTS OF 2012 NHTSA FINAL REPORT: FATALITY INCREASE (%) PER 100-POUND MASS REDUCTION WHILE HOLDING FOOTPRINT CONSTANT Fatality increase (%) per 100-pound mass reduction While holding footprint constant MY 2000–2007 CY 2002–2008 Point estimate Cars < 3,106 pounds ............................................................................................................................. Cars ≥ 3,106 pounds ............................................................................................................................. CUVs and minivans ............................................................................................................................... Truck-based LTVs < 4,594 pounds ....................................................................................................... Truck-based LTVs ≥ 4,594 pounds ....................................................................................................... Only the 1.56 percent risk increase in the lighter-than-average cars is statistically significant. There are nonsignificant increases in the heavierthan-average cars and the lighter-thanaverage truck-based LTVs, and nonsignificant societal benefits for mass reduction in CUVs, minivans, and the heavier-than-average truck-based LTVs. The report concludes that judicious combinations of mass reductions that maintain footprint and are proportionately higher in the heavier vehicles are likely to be safety-neutral— i.e., they are unlikely to have a societal effect large enough to be detected by statistical analyses of crash data. The primarily non-significant results are not due to a paucity of data, but because the 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 amounts within this range. There are 1.56 .51 ¥.37 .52 ¥.34 95% confidence bounds +.39 to +2.73 ¥.59 to +1.60 ¥1.55 to +.81 ¥.45 to +1.48 ¥.97 to +.30 several reasons for these increases: During this time, some of the lighter make-models 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: sroberts on DSK5SPTVN1PROD with TABLE II–26—2010 REPORT: MY 1991–1999, CY 1995–2000 FATALITY INCREASE (%) PER 100-POUND MASS REDUCTION WHILE HOLDING FOOTPRINT CONSTANT Actual regression result scenario Upper-estimate scenario Lower-estimate scenario 2.21 2.21 1.02 Cars < 2,950 pounds ................................................................... 341 Items 0035 (Lie), 0036 (Farmer) and 0037 (Green) in Docket No. NHTSA–2010–0152. VerDate Mar<15>2010 01:21 Oct 13, 2012 Jkt 229001 342 Item PO 00000 0258 in Docket No. NHTSA–2010–0131. Frm 00125 Fmt 4701 Sfmt 4700 E:\FR\FM\15OCR2.SGM 15OCR2 62748 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations TABLE II–26—2010 REPORT: MY 1991–1999, CY 1995–2000 FATALITY INCREASE (%) PER 100-POUND MASS REDUCTION WHILE HOLDING FOOTPRINT CONSTANT—Continued Actual regression result scenario Upper-estimate scenario Lower-estimate scenario 0.90 0.17 ¥1.90 0.90 0.55 ¥0.62 0.44 0.41 ¥0.73 Cars ≥ 2,950 pounds ................................................................... LTVs < 3,870 pounds .................................................................. LTVs ≥ 3,870 pounds .................................................................. TABLE II–27—FATALITY INCREASE (%) to the previous report’s ‘‘lower-estimate PER 100-POUND MASS REDUCTION scenario,’’ which was an attempt to WHILE HOLDING FOOTPRINT CON- adjust for supposed inaccuracies in some regressions and for a seemingly excessive trend toward higher crash rates in smaller and lighter cars. NHTSA NHTSA The principal difference between the (2010) (2012) heavier vehicles, especially truck-based (percent) (percent) LTVs, and the lighter vehicles, Lighter cars ........... 2.21 1.56 especially passenger cars, is that mass Heavier cars ......... 0.90 0.51 reduction has a different effect Lighter LTVs ......... 0.17* 0.52 depending on whether the crash partner Heavier LTVs ........ ¥1.90* ¥0.34 CUV/minivan ......... .................. ¥0.37 is another car or LTV (34 percent of fatalities occurred in crashes involving * Includes CUV/minivan two light-duty vehicles, and another 6 percent occurred in crashes involving a The new results are directionally light-duty vehicle and a heavy-duty similar to the 2010 results: Fatality vehicle) When two vehicles of unequal increase in the lighter cars, safety mass collide, the delta V is higher in the benefit in the heavier LTVs. But the effects may have become weaker at both lighter vehicle, in the same proportion as the mass ratio. As a result, the fatality ends. (NHTSA does not consider this risk is also higher. Removing some mass conclusion to be definitive because of from the heavy vehicle reduces delta V the relatively wide confidence bounds of the estimates.) The fatality increase in in the lighter vehicle, where fatality risk is higher, resulting in a large benefit, the lighter cars tapered off from 2.21 offset by a small penalty because delta percent to 1.56 percent while the V increases in the heavy vehicle, where societal fatality-reduction benefit of fatality risk is low—adding up to a net mass reduction in the heaviest LTVs societal benefit. Removing some mass diminished from 1.90 percent to 0.34 from the lighter vehicle results in a large percent and is no longer statistically penalty offset by a small benefit— significant. The agencies believe that the changes adding up to net harm. These considerations drive the overall result: may be due to a combination of the Fatality increase in the lighter cars, characteristics of newer vehicles and reduction in the heavier LTVs, and little revisions to the analysis. NHTSA effect in the intermediate groups. believes, above all, that several light, small car models with poor safety However, in some types of crashes, performance were discontinued by 2000 especially first-event rollovers and or during MYs 2000–2007. Also, the impacts with fixed objects (which, tendency of light, small vehicles to be combined, accounted for 23 percent of driven in a manner that results in high fatalities), mass reduction is usually not crash rates is not as strong as it used to harmful and often beneficial, because be.343 Both agencies believe that at the the lighter vehicles respond more other end of the weight/size spectrum, quickly to braking and steering. blocker beams and other voluntary Offsetting this beneficial, is the compatibility improvements in LTVs, as continuing historical tendency of lighter well as compatibility-related selfand smaller vehicles to be driven less protection improvements to cars, have well—although it continues to be made the heavier LTVs less aggressive unknown why that is so, and to what in collisions with lighter vehicles extent, if any, the lightness or smallness (although the effect of mass disparity of the vehicle contributes to people remains). This report’s analysis of CUVs driving it less safely.344 and minivans as a separate class of The estimates in Table II–25 of the vehicles may have relieved some model are formulated for each 100inaccuracies in the 2010 regression pound reduction in mass; in other results for LTVs. Interestingly, the new words, if risk increases by 1 percent for actual-regression results are quite close 100 pounds reduction in mass, it would sroberts on DSK5SPTVN1PROD with STANT 343 Kahane (2012), pp. 30–36. VerDate Mar<15>2010 01:21 Oct 13, 2012 344 Ibid., Jkt 229001 PO 00000 pp. 27–30. Frm 00126 Fmt 4701 Sfmt 4700 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 MYs 2017–2025 timeframe will be different from the MYs 2000–2007 fleet analyzed for this study. Nevertheless, one consideration provides some basis for confidence in applying the regression results to estimate the effects of mass reductions larger than 100 pounds or over longer time periods. This is NHTSA’s fourth evaluation of the effects of mass reduction and/or downsizing, comprising databases ranging from MYs 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.345 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 of mass reductions on the order of 10–20 percent, if they occur in the future. NHTSA’s 2011 preliminary report acknowledged another source of uncertainty, namely that the baseline statistical model can be varied by choosing different control variables or redefining the vehicle classes or crash types, for example. Alternative models produce different point estimates. 345 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%). E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations NHTSA believed it was premature to address that in the preliminary report. ‘‘The potential for variation will perhaps be better understood after the public and other agencies have had an opportunity to work with the new database.’’ 346 Indeed, the principal comments on the 2011 preliminary report were suggestions or demonstrations of other ways to analyze NHTSA’s database, especially by Farmer and Green in their peer reviews, Van Auken (DRI) in his most recent analyses, and Wenzel in his assessment of NHTSA’s report. The analyses and findings of Wenzel’s and Van Auken’s reports are summarized in Sections II.G.3.e, II.G.3.f, and II.G.3.g, below. These reports, among other analyses, define and run specific alternative regression models to analyze NHTSA’s 2011 or 2012 databases.347 From these suggestions and demonstrations, NHTSA garnered 11 more or less plausible alternative techniques that could be construed as sensitivity tests of the baseline model.348 The models use NHTSA’s databases and regression-analysis approach, but differ from the baseline model in one or more terms or assumptions. All of them try to control for fundamentally the same driver, vehicle, and crash factors, but differ in how they define these factors or how 62749 much detail or emphasis they provide for some of them. NHTSA applied the 11 techniques to the latest databases to generate alternative estimates of the societal effect of 100-pound mass reductions in the five classes of vehicles. The range of estimates produced by the sensitivity tests gives an idea of the uncertainty inherent in the formulation of the models, subject to the caveat that these 11 tests are, of course, not an exhaustive list of conceivable alternatives. Below are the baseline and alternative results, ordered from the lowest to the highest estimated increase in societal risk for cars weighing less than 3,106 pounds: TABLE II–28—SOCIETAL FATALITY INCREASE (%) PER 100-POUND MASS REDUCTION WHILE HOLDING FOOTPRINT * CONSTANT Cars < 3,106 Cars ≥ 3,106 CUVs & minivans LTVs † < 4,594 LTVs † ≥ 4,594 1.56 .51 ¥ .37 .52 ¥ .34 .39 2.73 Baseline estimate ................................................................. 95% confidence bounds (sampling error): Lower ............................................................................ Upper ............................................................................ ¥ .59 1.60 ¥ 1.55 .81 ¥ .45 1.48 ¥ .97 .30 ¥ .89 ¥ .62 .24 .43 .51 .68 .49 .75 1.82 1.06 1.62 ¥ .13 ¥ .33 ¥ .24 .04 .53 ¥ .46 ¥ .37 1.64 1.31 ¥ .19 ¥.00 ¥ .09 .35 ¥ .07 1.20 .52 .35 .49 .68 .66 .86 1.09 ¥ .97 ¥ .80 ¥ .58 .30 ¥ .35 ¥ .54 ¥ .76 ¥ .13 ¥ .13 ¥ .58 ¥ .30 11 Alternative Models 1. Track width/wheelbase w. stopped veh data .................. 2. With stopped ¥vehicle State data .................................. 3. By track width & wheelbase ............................................ 4. W/O CY control variables ................................................ 5. CUVs/minivans weighted by 2010 sales ......................... 6. W/O non ¥ significant control variables ......................... 7. Incl. muscle/police/AWD cars/big vans ........................... 8. Control for vehicle manufacturer ..................................... 9. Control for veh manufacturer/nameplate ......................... 10. Limited to drivers with BAC=0 ....................................... 11. Limited to good drivers ‡ ................................................ .25 .97 .97 1.53 1.56 1.64 1.81 1.91 2.07 2.32 3.00 sroberts on DSK5SPTVN1PROD with * While holding track width and wheelbase constant in alternative model nos. 1 and 3. † Excluding CUVs and minivans. ‡ Blood alcohol content = 0, no drugs, valid license, at most 1 crash and 1 violation during the past 3 years. 346 Kahane (2011), p. 81. VerDate Mar<15>2010 01:21 Oct 13, 2012 Jkt 229001 on societal risk, relative to other factors. Thus, sensitivity tests which vary vehicle, driver, and crash factors can appreciably change the estimate of the effect of mass reduction on societal risk in relative terms. On the other hand, the variations are not all that large in absolute terms. The ranges of the alternative estimates, at least these alternatives, are about as wide as the sampling-error confidence bounds for the baseline estimates. As a general rule, in the alternative models, as in the baseline models, mass reduction tends to be relatively more harmful in the lighter vehicles, and more beneficial in the heavier vehicles. Thus, in all models, the estimated effect of mass reduction is a societal fatality increase (not necessarily a statistically significant increase) for cars < 3,106 pounds, and in all models except one, a societal fatality reduction for LTVs ≥ 4,594 pounds. None of these models suggest mass reduction in small cars would be beneficial. All suggest mass reduction in heavy LTVs would be beneficial or, at least, close to neutral. In general, any judicious combination of mass reductions that maintain footprint and are proportionately higher in the heavier vehicles is unlikely to have a societal effect large enough to be detected by statistical analyses of crash data. NHTSA has conducted a sensitivity analysis to estimate the fatality impact of the alternative models using the coefficients for these 11 test 347 Wenzel (2012a), Van Auken and Zellner (2012b, 2012c, 2012d). For example, in cars weighing less than 3,106 pounds, the baseline estimate associates 100minus;pound mass reduction, while holding footprint constant, with a 1.56 percent increase in societal fatality risk. The corresponding estimates for the 11 sensitivity tests range from a 0.25 to a 3.00 percent increase. The sensitivity tests illustrate both the fragility and the robustness of the baseline estimate. On the one hand, the variation among the alternative estimates is quite large relative to the baseline estimate: In the preceding example of cars < 3,106 pounds, from almost zero to almost double the baseline. In fact, the difference in estimates is a reflection of the small statistical effect that mass reduction has 348 See Kahane (2012), pp. 14–16 and 109–128 for a further discussion of the alternative models and the rationales behind them. PO 00000 Frm 00127 Fmt 4701 Sfmt 4700 E:\FR\FM\15OCR2.SGM 15OCR2 62750 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations cases. The results for these sensitivity runs can be found in Table IX–6 of NHTSA’s FRIA. Four additional comments on NHTSA’s 2011 report are addressed in the 2012 report. ICCT noted that DRI’s latest analyses are two-stage analyses that subdivide the effect of mass reduction into a fatalities-per-crash component (called ‘‘effect on crashworthiness’’) and a crashes-perVMT component (called ‘‘effect on crash avoidance’’). ICCT believes it counterintuitive that DRI’s two-stage analysis using the same independent variables as NHTSA’s basic model shows mass reduction harms ‘‘crash avoidance’’; thus, ICCT prefers DRI’s alternative models (using different independent variables) that do not show mass reduction harming crash avoidance. NHTSA’s response is that DRI’s estimates of separate fatalities-percrash and crashes-per-VMT components appear to be valid, but, in NHTSA’s opinion, these components do not necessarily correspond to the intuitive concepts of ‘‘crashworthiness’’ and ‘‘crash avoidance.’’ Specifically, the fatalities-per-crash component is affected not only by the crashworthiness of the vehicles, but also by how severe their crashes are: a crash-avoidance issue. Farmer recommended that, in the analyses of crashes between two light vehicles, NHTSA estimate the effect of mass reduction in the case vehicle separately for the occupants of that vehicle and for the occupants of the other vehicle. The analysis shows that mass reduction consistently and substantially increases risk for the vehicle’s own occupants and substantially lowers it for the occupants of the partner vehicle. Several commenters suggested that NHTSA consider logistic ridge regression as a tool for addressing multicollinearity; NHTSA was unable to acquire software for logistic ridge regression now, but will attempt to acquire it for future analyses. Lie requested—and NHTSA added—a comparison of the estimated safety effects of mass reduction to the effects of safety technologies and the differences in risk between vehicles with good and poor test ratings. 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 (LBNL Phase 1 report), 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 (LBNL Phase 2 report). Both reports have been reviewed by NHTSA, EPA, and DOE staff, as well as by a panel of reviewers.349 The final versions of the reports reflect responses to comments made in the formal review process, as well as changes made to the VMT weights developed by NHTSA for the final rule, and inclusion of 2008 data for six states that were not available for the analyses in the draft final versions included in the NPRM docket. The LBNL Phase 1 report replicates Kahane’s analysis for NHTSA, using the same data and methods, and in many cases using the same SAS programs, in order to confirm NHTSA’s results. The LBNL report confirms NHTSA’s 2012 finding that mass reduction is associated with a statistically significant 1.55% increase in fatality risk per vehicle miles travelled (VMT) for cars weighing less than 3,106 pounds; for other vehicle types, mass reduction is associated with a smaller increase, or even a small decrease, in risk. Wenzel tested the sensitivity of these estimates to changes in the measure of risk and the control variables and data used in the regression models. Wenzel also concluded that there is a wide range in fatality risk by vehicle model for models that have comparable mass or footprint, 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 Phase 1 report notes that many of the control variables NHTSA includes in its logistic regressions are statistically significant, and have a much larger estimated effect on fatality risk than vehicle mass. For example, installing torso side airbags, electronic stability control, or an automated braking system in a car is estimated to reduce fatality risk by about 10%; cars driven by men are estimated to have a 40% higher fatality risk than cars driven by women; and cars driven at night, on rural roads, or on roads with a speed limit higher than 55 mph are estimated to have a fatality risk over 100 times higher than cars driven during the daytime on low-speed non-rural roads. While the estimated effect of mass reduction may result in a statisticallysignificant increase in risk in certain cases, the increase is small and is overwhelmed by other known vehicle, driver, and crash factors. NHTSA notes these findings are additional evidence that estimating the effect of mass reduction is a complex statistical problem, given the presence of other factors that have large effects. The findings do not propose future technologies that could neutralize the potentially deleterious effects of mass reduction. Indeed, the preceding examples are limited to technologies emerging in the 2002–2008 timeframe of the crash database but that will be in all model year 2017–2025 vehicles (side airbags, electronic stability control) or factors that are simply unchangeable circumstances in the crash environment outside the control of CAFE or other vehicle regulations (for example, that about half of the drivers are males and that much driving is at night or on rural roads). Sensitivity tests: LBNL tested the sensitivity of the NHTSA estimates of the relationship between vehicle weight and risk using 19 different regression analyses that changed the measure of risk, the control variables used, or the data used in the regression models. TABLE II–29—SOCIETAL FATALITY INCREASE (%) PER 100-POUND MASS REDUCTION WHILE HOLDING FOOTPRINT * CONSTANT FROM WENZEL STUDY Cars < 3,106 sroberts on DSK5SPTVN1PROD with Baseline estimate ................................................................. Cars ≥ 3,106 1.55 CUVS & minivans 0.51 ¥0.38 349 EPA sponsored the peer review of the LBNL Phase 1 and 2 Reports. VerDate Mar<15>2010 01:21 Oct 13, 2012 Jkt 229001 PO 00000 Frm 00128 Fmt 4701 Sfmt 4700 E:\FR\FM\15OCR2.SGM 15OCR2 LTVS† < 4,594 0.52 LTVS† ≥ 4,594 ¥0.34 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations 62751 TABLE II–29—SOCIETAL FATALITY INCREASE (%) PER 100-POUND MASS REDUCTION WHILE HOLDING FOOTPRINT * CONSTANT FROM WENZEL STUDY—Continued Cars < 3,106 Cars ≥ 3,106 CUVS & minivans LTVS† < 4,594 LTVS† ≥ 4,594 19 Alternative Models 1. 2. 3. 4. 5. 6. 7. 8. Weighted by current distribution of fatalities ................... Single regression model for all crash types .................... Excluding footprint (allowing footprint to vary with mass) Fatal crashes per VMT .................................................... Fatalities per induced exposure crash ............................ Fatalities per registered vehicle-year .............................. Accounting for vehicle manufacturer ............................... Accounting for vehicle manufacturer plus five luxury brands ............................................................................... 9. Accounting for initial vehicle purchase price ................... 10. Excluding CY variables .................................................. 11. Excluding crashes with alcohol/drugs ........................... 12. Excluding crashes with alcohol/drugs or bad drivers .... 13. Accounting for median household income .................... 14. Including sports, squad, AWD cars and fullsize vans ... 15. Stopped instead of non-culpable vehicles for induced exposure ........................................................................... 16. Including track width and wheelbase instead of footprint ................................................................................... 17. Using stopped vehicles and track width/wheelbase ...... 18. Reweighting CUVs and minivans by 2010 sales .......... 19. Excluding non-significant control variables ................... 1.27 1.26 2.74 1.95 ¥0.22 0.93 1.90 0.37 0.35 1.95 0.89 ¥1.45 2.40 0.75 ¥0.70 ¥0.74 0.60 ¥0.47 ¥0.84 ¥0.40 1.62 0.42 0.41 0.47 0.54 ¥1.13 ¥0.09 0.59 ¥0.36 ¥0.42 ¥0.39 ¥0.42 ¥0.76 ¥0.76 ¥0.11 2.04 1.42 1.52 1.88 2.32 1.20 1.79 1.80 0.84 0.43 0.88 1.19 0.16 0.49 1.28 ¥0.92 0.03 ¥0.16 ¥0.01 ¥0.44 ¥0.38 0.57 0.45 1.20 0.78 1.01 0.68 0.49 ¥0.11 ¥0.52 0.30 ¥0.35 ¥0.11 ¥0.30 ¥0.77 0.97 ¥0.63 ¥0.33 0.35 ¥0.80 0.95 0.26 1.55 1.63 0.24 ¥0.90 0.51 0.69 ¥0.25 ¥0.14 0.55 ¥0.46 ¥0.07 ¥0.10 0.52 0.35 ¥0.58 ¥0.97 ¥0.34 ¥0.54 sroberts on DSK5SPTVN1PROD with * While holding track width and wheelbase constant in alternative model nos. 1 and 3. † Excluding CUVs and minivans. For all five vehicle types, the range in estimates from the nineteen alternative models spanned zero, with the individual estimated effects of a 100pound mass reduction in Table II–28 ranging from a 1.45 percent fatality reduction (cars ≥ 3,106 pounds, alternative 5) up to an increase in risk of 2.74 percent (cars < 3,106 pounds, alternative 3). Nevertheless, for cars weighing less than 3,106 pounds, only one of the 19 alternative regressions estimated a reduction rather than an increase in U.S. fatality risk: Alternative 5, where risk was defined as fatalities per induced exposure crash (rather than fatalities per VMT). Whereas for LTVs ≥ 4,594 pounds, only one of the 19 alternatives estimated an increase in fatality risk, namely the model without CY variables (alternative 10). NHTSA notes that all of these models suggest mass reduction in small cars would be harmful or, at best, close to neutral; all suggest mass reduction in heavy LTVs would be beneficial or, at worst, close to neutral. The range on these 19 sensitivity tests is similar to the range in the 11 tests included in the Kahane write-up. Multicollinearity issues (from LBNL study): 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 VerDate Mar<15>2010 01:21 Oct 13, 2012 Jkt 229001 not be strong enough to cause serious concern. The Pearson correlation coefficient r between vehicle mass and footprint ranges from 0.90 for four-door sedans and SUVs, to just under 0.50 for minivans. The variance inflation factor (VIF) is a more formal measure of multicollinearity of variables included in a regression model. Allison 350 ‘‘begins to get concerned’’ with VIF values greater than 2.5, while Menard 351 suggests that a VIF greater than 5 is a ‘‘cause for concern’’, while a VIF greater than 10 ‘‘almost certainly indicates a serious collinearity problem’’; however, O’Brien 352 suggests that ‘‘values of VIF of 10, 20, 40 or even higher do not, by themselves, discount the results of regression analyses.’’ When both weight and footprint are included in the regression models, the VIF associated with weight exceeds 5 for four-door cars, small pickups, SUVs, and CUVs, and exceeds 2.5 for two-door cars and large pickups; the VIF associated with weight is only 2.1 for minivans. NHTSA included several analyses to address possible effects of 350 Allison, P.D.. Logistic Regression Using SAS, Theory and Application. SAS Institute Inc., Cary NC, 1999. 351 Menard, S. Applied Logistic Regression Analysis, Second Edition. Sage Publications, Thousand Oaks, CA 2002. 352 O’Brien, R.M. ‘‘A Caution Regarding Rules of Thumb for Variance Inflation Factors,’’ Quality and Quantity, (41) 673–690, 2007. PO 00000 Frm 00129 Fmt 4701 Sfmt 4700 the near-multicollinearity between mass and footprint. First, NHTSA ran a sensitivity case 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.353 If the multicollinearity was so great that including both variables in the same model gave misleading results, removing footprint from the model would give much different results than keeping it in the model. NHTSA’s sensitivity test estimates that when footprint is allowed to vary with mass, the effect of mass reduction on risk increases from 1.55% to 2.74% for cars weighing less than 3,106 pounds, from a non-significant 0.51% to a statistically-significant 1.95% for cars weighing more than 3,106 pounds, and from a non-significant 0.38% decrease to a statistically-significant 0.60% increase in risk for CUVs and minivans; however, the effect of mass reduction on light trucks is unchanged. 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 353 Kahane E:\FR\FM\15OCR2.SGM (2012), pp. 93–94. 15OCR2 62752 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations 10 deciles equals 270 regressions).354 This analysis estimates the effect of mass reduction on risk separately for vehicles with similar footprint. The analysis indicates that reducing vehicle mass does not consistently increase risk across all footprint deciles for any combination of vehicle type and crash type. Risk increases with decreasing mass in a majority of footprint deciles for 12 of the 27 crash and vehicle combinations, but few of these increases are statistically significant. On the other hand, risk decreases with decreasing mass in a majority of footprint deciles for 5 of the 27 crash and vehicle combinations; in some cases these risk reductions are large and statistically significant.355 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 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 354 Ibid., pp. 73–78. in 10 of the 27 crash and vehicle combinations, risk increased in 5 deciles and decreased in 5 deciles with decreasing vehicle mass. sroberts on DSK5SPTVN1PROD with 355 And VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 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 control variables except vehicle mass and footprint, risk does decrease as mass increases; however, risk and mass are not strongly correlated, with the R2 ranging from 0.32 for CUVs to less than 0.13 for all other vehicle types (as shown in Figure II–2). 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 full-size (i.e. 3⁄4- and 1-ton) pickups, societal risk increases as mass increases, with an R2 of 0.45; this is consistent with NHTSA’s basic regression results for light trucks weighing more than 4,594 pounds, with societal risk decreasing as mass decreases. LBNL also examined the relationship between vehicle mass and residual risk, that is, the remaining unexplained risk after accounting for all other vehicle, driver and crash variables, and found similarly poor correlations. This implies that the remaining factors not included in the PO 00000 Frm 00130 Fmt 4701 Sfmt 4700 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 risk 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 risk. The variation of fatality risk among individual models may reflect differences in vehicle 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 limited data for individual models. The figure shows that when the data are aggregated at the make-model level, the combination of differences in vehicle design, vehicle selection, and statistical variations has more influence than mass on fatality rates. The figure perhaps also suggests that, to the extent these variations in fatality rates are due to differences in vehicle design rather than vehicle selection or statistical variations, there is potential for lowering fatality rates through improved vehicle design. 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. E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations LBNL compared the logistic regression results of NHTSA’s analysis of U.S. fatality risk per VMT, replicated in the LBNL Phase 1 report, with an independent analysis of 13-state fatality risk and casualty risk per crash (LBNL Phase 2 report). The LBNL Phase 2 analysis differs from the NHTSA analysis in two respects: first, it analyzes risk per crash, using data on all police-reported crashes from thirteen states, rather than risk per estimated VMT; and second, it analyzes casualty (fatality plus serious injury) risk, as opposed to just fatality risk. There are several good reasons to investigate the effect of mass and footprint reduction on casualty risk per crash. First, risk per VMT includes two components that influence whether a person is killed or seriously injured in a crash: how well a vehicle can be (based on its handling, acceleration, and braking capabilities), or actually is, driven to avoid being involved in a serious crash (crash avoidance), and, once a serious crash VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 has occurred, how well a vehicle protects its occupants from fatality or serious injury (crashworthiness) as well as the occupants of any crash partner (compatibility). By encompassing both of these aspects of vehicle design, risk per VMT gives a complete picture of how vehicle design can promote, or reduce, road user safety. On the other hand, risk per crash isolates the second of these two safety effects, crashworthiness/compatibility, by examining the relationship between mass or footprint and how well a vehicle protects its occupants and others once a crash occurs. Second, estimating risk on a per crash basis only requires using data on policereported crashes from states, and does not require combining them with data from other sources, such as vehicle registration data and VMT information, as in NHTSA’s 2012 analysis. Only 16 states currently record the vehicle identification number of vehicles involved in police-reported crashes, which is necessary to determine vehicle characteristics, and only 13 states also report the posted speed limit of the roadway on which the crash occurred. Given the limited number of fatality cases in 13 States, extending the analysis to casualties (fatalities plus PO 00000 Frm 00131 Fmt 4701 Sfmt 4700 serious/incapacitating injuries; i.e., level ‘‘K’’ and ‘‘A’’ injuries in police reports, a substantially larger number of cases than fatalities alone) reduces the statistical uncertainty of the results. Finally, a serious incapacitating injury can be just as traumatic to the victim and his or her family, and costly from an economic perspective, as a fatality. Limiting the analysis to the risk of fatality, which is a relatively rare event, ignores the effect vehicle design may have on reducing the large number of incapacitating injuries that occur each year on the nation’s roadways. All risks in the report are societal risk, including fatalities and serious injuries in the case vehicle and any crash partners, and include not only driver but passenger casualties as well as non-occupant casualties such as pedestrians. NHTSA notes that casualty severity is identified by public safety officers at the crash scene prior to examination by medical professionals, and therefore reported casualty severity will inherently have a degree of subjectivity.356 356 NHTSA notes that police-reported ‘‘A’’ injuries do not necessarily correspond to lifethreatening or seriously disabling injuries as defined by medical professionals. In 2000–2008 E:\FR\FM\15OCR2.SGM Continued 15OCR2 ER15OC12.009</GPH> sroberts on DSK5SPTVN1PROD with f. Report by Tom Wenzel, LBNL, ‘‘An Analysis of the Relationship Between Casualty Risk per Crash and Vehicle Mass and Footprint for Model Year 2000–2007 Light-Duty Vehicles’’, 2012 (LBNL Phase 2 Report) 62753 62754 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations The LBNL Phase 2 report estimates that mass reduction increases crash frequency (columns B and E) in all five vehicle types, with larger estimated increases in lighter-than-average cars and light-duty trucks. As a result, mass reduction is estimated to have a more beneficial effect on casualty risk per crash (column F) than on casualty risk per VMT (column G), and on fatality risk per crash (column C) than on fatality risk per VMT (column D). Mass reduction is associated with decreases in casualty risk per crash (column F) in all vehicles except cars weighing less than 3,106 pounds; in two of the four cases these estimated reductions are statistically significant, albeit small. For cars and light trucks, lower mass is associated with a more beneficial effect on fatality risk per crash (column C) than on casualty risk per crash (column F); for CUVs/minivans we estimate the opposite: lower mass is associated with a more beneficial effect on casualty risk than fatality risk per crash. TABLE II–30—ESTIMATED EFFECT OF MASS OR FOOTPRINT REDUCTION ON TWO COMPONENTS OF 13-STATE FATALITY AND CASUALTY RISK PER VMT: CRASH FREQUENCY (CRASHES PER VMT) AND CRASHWORTHINESS/COMPATIBILITY (RISK PER CRASH) Variable Case vehicle type Mass Reduction .... A. NHTSA U.S. fatalities per VMT (percent) Cars < 3106 lbs .... Cars > 3106 lbs .... LTs < 4594 lbs ..... LTs > 4594 lbs ..... CUV/minivan ......... Cars ...................... LTs ........................ CUV/minivan ......... Footprint Reduction B. 13-state crashes per VMT (percent) C. 13-state fatalities per crash (percent) D. 13-state fatalities per VMT (percent) E. 13-state crashes per VMT (percent) 2.00 1.50 1.44 0.94 0.95 0.64 1.04 ¥0.55 ¥0.54 ¥2.39 ¥1.61 ¥1.25 0.98 0.92 0.48 ¥1.67 1.42 ¥1.07 ¥0.13 ¥0.34 1.60 2.11 1.64 ¥1.24 2.00 1.50 1.44 0.94 0.95 0.64 1.04 ¥0.55 1.55 * 0.51 0.52 ¥0.34 ¥0.38 1.87 ¥0.07 1.72 F. 13-state casualties per crash (percent) 0.09 ¥0.77 ¥0.11 ¥0.62 ¥0.16 0.23 ¥0.25 0.56 G. 13-state casualties per VMT (percent) 1.86 0.73 1.55 ¥0.04 0.10 1.54 0.94 1.54 sroberts on DSK5SPTVN1PROD with * Based on NHTSA’s estimation of uncertainty using a jack-knife method, only mass reduction in cars less than 3,106 pounds has a statistically significant effect on U.S. fatality risk. Estimates that are statistically significant at the 95% level are shown in italics. It is unclear why lower vehicle mass is associated with higher crash frequency, but lower risk per crash, in the regression models. It is possible that including variables that more accurately account for important differences among vehicles and driver behavior would reverse this relationship. For example, adding vehicle purchase price as a control variable reduces the estimated increase in crash frequency as vehicle mass decreases, for all five vehicle types; in the case of cars weighing more than 3,106 pounds, controlling for purchase price even reverses the sign of the relationship: mass reduction is estimated to slightly decrease crash frequency.357 It also appears that, in model year 2000–2007 vehicles, the effect of mass reduction on casualties per crash is simply very small, if any (estimated effects in Table II–30, column F are under 1% per 100-pound reduction in all five vehicle groups). The association of mass reduction with 13-state casualty risk per VMT (column G) is quite consistent with that NHTSA estimated for U.S. fatality risk per VMT in its 2012 report (column A), although LBNL estimated the effects on casualty risk to be more detrimental than the effects on fatality risk, for all vehicle types. In contrast with NHTSA’s estimates of U.S. fatality risk per VMT (column A), mass reduction is estimated to reduce casualty risk per crash (column F) for four of the five vehicle types, with two of these four reductions estimated to be statistically significant. Mass reduction is associated with a small but insignificant increase in casualty risk per crash for cars weighing less than 3,106 pounds. As in the LBNL Phase 1 study, replicating NHTSA methodology, many of the control variables included in the logistic regressions are statistically significant, and have a large effect on fatality or casualty risk per crash, in some cases one to two orders of magnitude larger than those estimated for mass or footprint reduction. However, the estimated effect of these variables on risk per crash is not as large as their estimated effect on fatality risk per VMT. LBNL concludes that the estimated effect of mass reduction on casualty risk per crash is small and is overwhelmed by other known vehicle, driver, and crash factors. NHTSA notes that to estimate the effect of mass reduction on safety requires careful examination of how to model the covariant effects of vehicle, driver, and crash factors. LBNL states that regarding the control variables, there are several results that, at first glance, would not be expected: side airbags in light trucks and CUVs/ minivans are estimated to reduce crash frequency; ESC and ABS, crash avoidance technologies, are estimated to reduce risk once a crash has occurred; and AWD and brand new vehicles are estimated to increase risk once a crash has occurred. In addition, male drivers are estimated to have essentially no effect on crash frequency, but are associated with a statistically significant increase in fatality risk once a crash occurs. And driving at night, on highspeed or rural roads, are associated with higher increases in risk per crash than on crash frequency. A possible explanation for these unexpected results is that important control variables are not being included in the regression models. For example, crashes involving male drivers, in vehicles equipped with AWD, or that occur at night on rural or high-speed roads, may not be more frequent but rather more severe than other crashes, and thus lead to greater fatality or casualty risk. And drivers who select vehicles with certain safety features may tend to drive more carefully, resulting in vehicle safety features designed to improve CDS data, 59% of the injuries that were coded ‘‘A’’ injuries were in fact medically minor (AIS 0–1), while 39% of serious (AIS 3) and 27% of lifethreatening (AIS 4–5) injuries are not coded ‘‘A.’’ NHTSA does not include serious casualties in its analysis of the effects of vehicle mass and size on societal safety because of these inaccuracies. 357 Wenzel (2012b), pp. 59–60, especially Figure 4–10. VerDate Mar<15>2010 01:21 Oct 13, 2012 Jkt 229001 PO 00000 Frm 00132 Fmt 4701 Sfmt 4700 E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with crashworthiness or compatibility, such as side airbags, being also associated with lower crash frequency. As with NHTSA’s analysis of fatality risk per VMT, lower mass is not consistently associated with increased casualty risk per crash across all footprint deciles for any combination of vehicle type and crash type. Lower mass is associated with increased casualty risk per crash in a majority of footprint deciles for 9 of the 27 crash and vehicle combinations, but few of these increases are statistically significant. On the other hand, lower mass is associated with decreased risk in a majority of footprint deciles for 12 of the 27 crash and vehicle combinations. The correlation between mass and the casualty risk per crash by vehicle model is very low, after accounting for all of the control variables in the logistic regression model except for vehicle mass and footprint. Furthermore, when casualty rates are aggregated at the make-model level, there is no significant correlation between the residual, unexplained risk and vehicle weight. Even after accounting for many vehicle, driver, and crash factors, the variation in casualty risk per crash by vehicle model is quite large and unrelated to vehicle weight. That parallels the LBNL Phase 1 report, which found similar variation in fatality rates per VMT at the make-model level. The variations among individual models may reflect differences in vehicle design, differences in the drivers who choose such vehicles, and statistical variation due to the limited data for individual models. To the extent the variations are due to differences in vehicle design rather than vehicle selection or statistical variations, there is potential for lowering fatality or casualty rates through improved vehicle design. To the extent that the variations are due to differences in what drivers choose what vehicles, it is possible that including variables that account for these factors in the regression models would change the estimated relationship between mass or footprint and risk. NHTSA notes that the statistical variation due to the limited data for individual models is an additional source of uncertainty inherent in the technique of aggregating the data by make and model, a technique whose primary goal is not the estimation of the effect of mass reduction on safety. g. Reports by Van Auken & Zellner, DRI—‘‘Updated Analysis of the Effects of Passenger Vehicle Size and Weight on Safety,’’ 2012 The International Council on Clean Transportation (ICCT), the Energy VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 Foundation, and American Honda Motor Co. contracted Mike Van Auken and John Zellner of Dynamic Research Institute (DRI) to conduct a study to update the analysis of the effects of passenger vehicle size and weight on safety, based on the newly released NHTSA 2011 database. As noted earlier, DRI reports its study in three parts: Phase I,358 II,359 and Supplement.360 This study was not complete in time for the NPRM, but was finished in time to be submitted to the docket as part of ICCT’s public comments. The study has not yet been peer reviewed. Phase I, which analyzed CY 1995– 2000 fatalities in MY 1991–1999 vehicles to replicate the NHTSA 2003 and 2010 studies, has already been discussed and responded to above. The purpose of Phase II was to extend and refined the analytical methods used by DRI in the Phase I of this program to the more recent model year and calendar year data used in the Kahane (2011) analysis, in order to confirm the Kahane (2011) results and to estimate the effects of vehicle weight and size reduction on fatalities per 100 reported crash involvements and reported crash involvements per VMT (which DRI calls, respectively, ‘‘effect on crashworthiness/crash compatibility’’ and ‘‘effect on crash avoidance’’). The Phase II study was accomplished by updating the regression analysis tools to use the newer databases for 2000 through 2007 model year light passenger vehicles in the 2002 through 2008 calendar years. The fatal and induced exposure databases were compiled by NHTSA from the U.S. DOT FARS database and accident data files from 13 U.S. States. In addition, police reported accident data files were obtained from 10 states. These 10 states were a subset of the 13 induced-exposure data states which NHTSA used. Data for the other three states were not available to nongovernment researchers at the time of this analysis. The main results of the DRI Phase II analyses are as follows: • The DRI one-stage analysis was able to reproduce NHTSA’s baseline results very closely. However, in these analyses, DRI, like NHTSA, defines the induced-exposure cases to be the nonculpable vehicles involved in twovehicle crashes. Later, in its supplemental report, DRI considers limiting the induced-exposure cases to stopped vehicles. 358 Van Auken and Zellner (2012a). Auken and Zellner (2012b), Van Auken and Zellner (2012c). 360 Van Auken and Zellner (2012d). 359 Van PO 00000 Frm 00133 Fmt 4701 Sfmt 4700 62755 • The DRI two-stage analysis was able to replicate the DRI and NHTSA one stage results. • The DRI Phase II two-stage results, which used more recent data were directionally similar to the DRI Phase I two-stage results. They showed an increase in reported crash involvements per VMT for lighter and smaller vehicles, but reductions of fatalities per 100 reported crash involvements. The DRI results for crash avoidance are also similar to those of Wenzel Phase 2 (2011b). • The two-stage results for passenger cars weighing less than 3,106 pounds indicated that the increase in fatalities attributed to mass reduction was due to an increase in the number of crashes per exposure, more than offsetting a reduction in the number of fatalities per crash. The underlying reasons for these offsetting effects are unknown at this time, but could involve driver, vehicle, environment or accident factors that have not been controlled for in the current analyses. These results are similar to those obtained in Wenzel Phase 2 (2011b). The overall results from DRI Phase II indicated very close agreement between the DRI and NHTSA one-stage results using the same methods and data. The results also indicate that the DRI onestage and two-stage results are similar but have some differences due to the number of stages in the regression analysis. It may be possible to reduce these differences in the future by updating the state accident data for the 2008 calendar year, and adding ‘‘internal control variables.’’ The DRI Supplemental report discusses in further detail two previous key assumptions that were used in the Kahane (2011), Wenzel (2011b), and DRI (2012b) reports, and describes two alternative assumptions. The previous key assumptions were that the effects of vehicle weight and size can be best modeled by curb weight and footprint; and that the crash exposure is best represented by non-culpable vehicle induced-exposure data. The alternative assumptions are that the weight and size can be best modeled by curb weight, wheelbase, and track width; and that the crash exposure is best represented by stopped-vehicle induced-exposure data (because non-culpable vehicle data may underrepresent vehicles and drivers that are better at avoiding crashes, even if they would have been non-culpable in those crashes). Some of the potential advantages and disadvantages of the previous assumptions and these alternative assumptions are described in the DRI supplemental report. E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with 62756 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations The results in the DRI Supplemental report indicate a range of estimates for the effects of a 100 pound curb mass reduction based on the type of inducedexposure data that is used and the candidate vehicle weight and size model. These results indicate: • The estimated effects of mass reduction on fatalities are not statistically significant for any vehicle category, if the wheelbase and track model is used with the non-culpable vehicle induced-exposure data. (This assumes the width of confidence bounds is similar to those seen in the Kahane (2011) analyses.) • The estimated effects of mass reduction on fatalities either result in a statistically significant decrease in fatalities (for truck-based LTVs weighing 4,594 lbs or more), or are not statistically significant (for all other vehicle categories), if the stoppedvehicle induced-exposure data is used (irrespective of the two candidate size models, e.g., the footprint model, or the wheelbase and track width model). • The estimated effect of curb mass reduction for passenger cars weighing less than 3,106 pounds is a statistically significant increase in fatalities (when compared to the jackknife based confidence intervals) only if the curb weight and footprint model is used with the non-culpable vehicle inducedexposure data. • All other estimated effects of mass reduction on fatalities are not statistically significant when compared to the jackknife based confidence intervals. In addition, the variance inflation factors are approximately the same when modeling the independent effects of curb weight, wheelbase and track width as when modeling curb weight and footprint, which suggests there is no adverse effect for modeling with track width and wheelbase in the context of potential overparameterization and excessive multicollinearity. In addition, wheelbase and track width would be expected to have separate, different, physics-based effects on vehicle crash avoidance and crashworthiness/ compatibility, which effects are confounded when they are combined into a single variable, footprint. DRI further recommended that the final version of the Kahane (2011) report include models based on curb weight, wheelbase and track width; and also include results based on non-culpable stopped-vehicle induced-exposure data as well as non-culpable vehicle induced-exposure. DRI concludes that the latter could be addressed by averaging the estimates from both the stopped-vehicle induce-exposure and VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 the non-culpable vehicle inducedexposure, and incorporate the range of estimates into the reported uncertainty in the results (i.e., confidence intervals). DRI also recommended that NHTSA provide the following additional variables in the current publicly available induced-exposure dataset so that other researchers can reproduce the sensitivity to the induced-exposure definition: • An additional variable indicating whether each induced-exposure vehicle was moving or stopped at the time of the initial impact. This variable could then be used to derive a non-culpable stopped-vehicle induced-exposure dataset from the non-culpable vehicle induced-exposure dataset. • Add accident case identifiers to the induced-exposure dataset that are suitable for linking to the original state accident data files, but do not otherwise disclose any private information. This would assist researchers with access to the original accident data in better understanding the induced-exposure data. As noted in the preceding discussion of the Kahane (2012) and Wenzel (2012a) reports, NHTSA and LBNL have added models based on track width and wheelbase and/or stopped-vehicle induced exposure to the report. Table II–28 (test nos. 1, 2, and 3) and Table II– 29 (tests nos. 15, 16, and 17) show results for those models. NHTSA has also made available to the public an induced-exposure database limited to stopped vehicles. h. DOT Summary and Response to Recent Statistical Studies The preceding sections reviewed three groups of reports issued in 2012 that estimated the effect of mass reduction on societal fatality or casualty risk, based on statistical analyses of crash and exposure data for model year 2000–2007 vehicles: NHTSA/Kahane’s report and LBNL/Wenzel’s Phase 1 report analyze fatality rates per VMT. DRI/Van Auken’s reports likewise estimate the overall effect of mass reduction on fatalities per VMT, but they also provide separate sub-estimates of the effect on fatalities per 100 reported crash involvements and on reported crash involvements per VMT (which Van Auken calls ‘‘effect on crashworthiness/compatibility’’ and ‘‘effect on crash avoidance’’). Wenzel’s Phase 2 report analyzes casualty rates per VMT, including sub-estimates of the effects on casualties per 100 crash involvements and crashes per VMT. ‘‘Casualties’’ include fatalities and the highest police-reported level of nonfatal injury (usually called level ‘‘A’’). PO 00000 Frm 00134 Fmt 4701 Sfmt 4700 For the final regulatory analysis, like the preliminary analysis, NHTSA and EPA rely on the coefficients in the NHTSA/Kahane study for estimating the potential safety effects of the CAFE and GHG standards for MYs 2017–2025. NHTSA takes this opportunity to summarize and compare the reports and also explain why we continue to rely on the results of our own study in projecting safety effects. The important common feature of these 2012 reports is that they all support the same principal conclusions—in NHTSA’s words: • The societal effect of mass reduction while maintaining footprint, if any, is small.361 • Any judicious combination of mass reductions that maintain footprint and are proportionately higher in the heavier vehicles is [likely to be safety-neutral— i.e., it is] unlikely to have a societal effect large enough to be detected by statistical analyses of crash data.362 This greatly contrasts with the disagreement in 2004–2005, based on earlier fatality databases, when DRI estimated a decrease of 1,518 fatalities per 100-pound mass reduction in all vehicles while maintaining wheelbase and track width 363 while NHTSA estimated a 1,118-fatality increase for downsizing all vehicles by 100 pounds (with commensurate reductions in wheelbase and track width).364 In comparison, the estimates from 11 sensitivity tests using the current database only range from a 211-fatality reduction to an increase of 486, only 25 percent of the earlier range, and basically down to the level of statistical uncertainty typically inherent in this type of analysis.365 NHTSA believes two or possibly three conditions may have contributed to the extensive convergence of the results. One is the extensive dialogue and cooperation among researchers, including the agreement to use NHTSA’s database and discussions that led to consistent definitions of control variables or shared analysis techniques. The second is the real change in the new-vehicle fleet and perhaps also in driving patterns over the 361 Kahane (2012), p. 1. p. 16. 363 Van Auken and Zellner (2005b), sum of 836 for passenger cars (Table 2, p. 27) and 682 for LTVs (Table 5, p. 36). 364 Kahane, C.J. (2003), Vehicle Weight, Fatality Risk and Crash Compatibility of Model Year 1991– 99 Passenger Cars and Light Trucks, NHTSA Technical Report. DOT HS 809 662. Washington, DC: National Highway Traffic Safety Administration, http://www-nrd.nhtsa.dot.gov/ Pubs/809662.PDF. sum of 71 and 234 on p. ix, 216 and 597 on p. xi. 365 Kahane (2012), p. 113, scenario 3 in Table 4– 2. 362 Ibid., E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations past decade, which appears to have attenuated some of the stronger effects of mass reduction and footprint reduction. A third possible factor is that multicollinearity may somehow have become less of an issue with the new database and with the new technique of treating CUVs and minivans as a separate class of vehicles. Even though the studies now agree more than they disagree, there are still qualitative differences among the results. The baseline NHTSA findings indicate a statistically significant fatality increase for mass reduction in cars weighing less than 3,106 pounds. The NHTSA results do not encourage mass reduction in the lightest cars, at least for the foreseeable future, as long as so many heavy cars and LTVs remain on the road. But DRI’s two analyses substituting track width and wheelbase for footprint or stopped-vehicle induced exposure for non-culpable vehicles each reduce the estimate fatality-increasing effect of mass reduction in lighter-thanaverage cars to a statistically nonsignificant level, while the simultaneous application of both techniques reduces the effect close to zero. DRI suggests that track width and wheelbase have more intuitive relationships with crash and fatality risk than footprint and do not aggravate multicollinearity issues, as evidenced by variance inflation factors; and that stopped-vehicle induced-exposure data may be preferable because non-culpable vehicle data may underrepresent vehicles and drivers that are good at avoiding crashes. NHTSA finds DRI’s argument plausible and has now included both techniques among the sensitivity tests in its 2012 report. But these sensitivity tests have not replaced NHTSA’s baseline analysis. In the regressions for cars and LTVs, wheelbase often did not have the expected relationships with risk and added little information (In the regressions for CUVs and minivans, it was track width that had little relationship with risk). Limiting the induced-exposure data to stopped vehicles is a technique that earlier peer reviewers criticized, eliminates 75 percent of the induced-exposure cases (even more on high-speed roads), and may underrepresent older drivers. Furthermore, Table II–28 shows that some of the other sensitivity tests increase the fatality-increasing effect of mass reduction in light cars to about the same extent that these techniques diminish it. On the whole, NHTSA does not now see adequate justification for mass reduction in light cars, but VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 additional analysis may be considered as the vehicle fleet changes.366 Another analysis strategy of DRI and also of Wenzel’s Phase 2 report is to obtain separate estimates of the effect of mass reduction on fatalities [or casualties] per reported crash and reported crashes per VMT, as well as the composite estimate of its effect on fatalities per VMT. Van Auken and Wenzel both call the first estimate the ‘‘effect on crashworthiness/ compatibility’’ and the second, the ‘‘effect on crash avoidance.’’ NHTSA believes the separate estimates are computationally valid, but these names are inaccurate characterizations that can lead to misunderstandings. For example, ICCT argues that the relationship between mass reduction and crash avoidance observed in the DRI and LBNL Phase 2 studies (i.e., that crash frequency increases as mass decreases) is counterintuitive.367 NHTSA believes the metric of fatalities per reported crash takes into account not just crashworthiness but also certain important aspects of crash avoidance, namely the severity of a crash. In addition, it could be influenced by how often crashes are reported or not reported, which varies greatly from State to State and depending on local circumstances. As Wenzel notes, these analyses produced unexpected results, such as a reduction in crash frequency with side air bags, or an increase in fatalities per crash when the driver is male (when, in fact, males are less vulnerable than females, given the same physical insult 368) or when it is nighttime. The fatality rates are higher for male drivers and at night because the crashes are more severe, not primarily because of crashworthiness issues. By the same token, the effect of mass reduction on fatalities or casualties per crash need not be purely an effect on ‘‘crashworthiness and compatibility’’ but may also comprise some aspects of crash avoidance. Wenzel’s Phase 1 and Phase 2 reports show that when fatality or casualty rates are aggregated at the make-model level, differences between the models ‘‘overwhelm’’ the effect of mass. Likewise, in the basic regression analyses, the effects of many control variables are much stronger than the effect of mass. NHTSA does not dispute the validity of these analyses or disagree with the findings, but they must not be misinterpreted. Specifically, it would be wrong to conclude that the effect of 366 Ibid., pp. 115–119. No. NHTSA–2010–0131–0258, p. 10. 368 Evans, L. (1991). Traffic Safety and the Driver. New York: Van Nostrand Reinhold, pp. 22–28. 367 Docket PO 00000 Frm 00135 Fmt 4701 Sfmt 4700 62757 mass reduction should not be estimated at all because other ambient effects are considerably stronger. Researchers must often measure a weak effect in the presence of strong effects—for example: Studying the light from faraway galaxies despite the presence of much stronger light from nearby stars; evaluating a dietary additive based on a sample of test subjects who vary greatly in age, weight, and eating habits. Furthermore, the technique of aggregating the rates by make-model, while useful for graphically depicting the effect of mass relative to other factors, is no substitute for regression analyses on the full database in terms of directly estimating the effects of mass reduction on safety; at best, the analysis aggregated by makemodel can indirectly generate less precise estimates of these effects. NHTSA believes the sensitivity tests in Table II–28 and Table II–29 are useful for addressing the effects of other factors, since most of these tests consist of alternative ways to quantify those factors. The tests showed two consistent trends: almost all (18 of Wenzel’s 19 and all 11 of Kahane’s) estimated a fatality increase for mass reduction in cars weighing less than 3,106 pounds and almost all (18 of Wenzel’s and 10 of Kahane’s) estimated a societal benefit if mass is reduced in the LTVs weighing 4,594 pounds or more. Wenzel’s Phase 2 report on casualty risk introduces one more source of datadriven uncertainty. To achieve adequate sample size, it must rely on the injury data in State crash files, specifically the highest reported level of nonfatal injury, usually called level ‘‘A.’’ But the coding of injury in police-reported crash databases is usually not based on medical records. ‘‘A’’ injuries do not necessarily correspond to lifethreatening or seriously disabling injuries as defined by medical professionals. In 2000–2008 National Automotive Sampling System data, 59% of ‘‘A’’ injuries were in fact medically minor (levels 0 or 1 on the Abbreviated Injury Scale, based on subsequently retrieved medical records), while 39% of the serious (AIS 3) and 27% of lifethreatening (AIS 4–5) injuries were not coded ‘‘A.’’ Despite this, Wenzel’s composite results for casualties per VMT show about the same effects for mass reduction as Kahane’s analyses of fatalities per VMT—e.g., in the lighter cars, the estimated effect of a 100-pound mass reduction is slightly more detrimental for casualties per VMT (1.86% increase369) than for fatalities 369 Wenzel E:\FR\FM\15OCR2.SGM (2012b), p. v, Table ES.1, column G. 15OCR2 sroberts on DSK5SPTVN1PROD with 62758 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations (1.56% increase 370). NHTSA concurs with analyzing casualties per VMT, but, given that so many of the ‘‘A’’ injuries are minor while quite a few disabling injuries are not ‘‘A,’’ does not believe the results are as critical as the fatality analyses. i. 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 vehicle 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, that database cannot fully represent what vehicles will be on the road in the MYs 2017–2025 timeframe. The vehicles manufactured in the 2000– 2007 timeframe were not subject to footprint-based fuel economy standards. As explained earlier, the agencies expect that the attribute-based 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 MYs 2000–2007 vehicles may not be fully representative of the vehicles that will be on the road in 2017 and beyond. 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. However, we 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 funded an independent review of statistical studies and held a mass-safety workshop in February 2011 in order to help the agencies sort through the ongoing debates over how statistical analysis of the historical relationship between mass and safety should be interpreted. 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 this aspect of the problem has been 370 Kahane (2012), p. 12. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 resolved. Moreover, the independent review of 18 statistical reports by UMTRI suggested that differences in data were probably less significant than the agencies may have thought. UMTRI stated that statistical analyses of historical crash data should be examined more closely for potential multicollinearity issues that exist in some of the current analyses. 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 2012 statistical fatality report finds directionally similar but fewer statistically significant relationships between vehicle mass, size, and footprint, as discussed above. Based on these findings, the agencies believe that 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. As the Alliance mentioned in its comments noted above, future updated analyses will be necessary to determine how the effect of mass reduction on safety 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 have been 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 head- PO 00000 Frm 00136 Fmt 4701 Sfmt 4700 curtain air bags by MY 2014. Additionally, based on historical trends, 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. Moreover, 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 2012 study for estimating the potential safety effects of the 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 cost-effective way without adversely affecting safety. Section II.G.5.a below discusses the methodology used by the agencies in more detail. While the results of the safety effects analysis are less statistically significant than the results in the MYs 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, and have acted accordingly in developing the final 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 historical statistical analysis. As discussed in the first part of this section, for example, careful changes in design and/or materials used might mitigate some of the potential increased risk from mass reduction for vehicle self-protection, E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations through improved distribution of crash pulse energy, etc. At the same time, these lightweighting techniques can sometimes lead to 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 yetunknown 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 advisable. 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 thus crash fatalities. Until these technologies are present in the fleet in greater numbers, however, it will be difficult to assess whether they 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 completed several technical/ engineering projects described below to estimate the maximum potential for advanced materials and improved designs to reduce mass in the MY 2017– 2021 timeframe, while continuing to meet safety regulations and maintain functionality and affordability of vehicles. Another NHTSA-sponsored study will estimate the effects of these design changes on overall fleet safety. The detailed discussions about these studies can be found in the Joint TSD section 3.3.5.5. A. NHTSA awarded a contract in December 2010 to Electricore, with EDAG and George Washington University (GWU) as subcontractors, to study the maximum feasible amount of mass reduction of a mid-size car— specifically, a Honda Accord—while maintaining the functionality of the baseline vehicle. The project team was charged to maximize the amount of mass reduction with the technologies that are considered feasible for 200,000 units per year production volume during the time frame of this rulemaking while maintaining the retail price in parity (within ±10% variation) with the baseline vehicle. When selecting materials, technologies and manufacturing processes, the Electricore/EDAG/GWU team utilized, VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 to the extent possible, only those materials, technologies and design which are currently used or planned to be introduced in the near term (MY 2012–2015) on low-volume production vehicles. This approach, commonly used in the automotive industry, is employed by the team to make sure that the technologies used in the study will be feasible for mass production for the time frame of this rulemaking. The Electricore/EDAG/GWU team took a ‘‘clean sheet of paper’’ approach and adopted collaborative design, engineering and CAE process with builtin feedback loops to incorporate results and outcomes from each of the design steps into the overall vehicle design and analysis. The team tore down and benchmarked 2011 Honda Accord and then undertook a series of baseline design selections, new material selections, new technology selections and overall vehicle design optimization. Vehicle performance, safety simulation and cost analyses were run in parallel to the design and engineering effort to help ensure that the design decisions are made in-line with the established project constrains. While the project team worked within the constraint of maintaining the baseline Honda Accord’s exterior size and shape, the body structure was first redesigned using topology optimization with six load cases, including bending stiffness, torsion stiffness, IIHS frontal impact, IIHS side impact, FMVSS pole impact, FMVSS rear impact and FMVSS roof crush cases. The load paths from topology optimization were analyzed and interpreted by technical experts and the results were then fed into low fidelity 3G (Gauge, Grade and Geometry) optimization programs to further optimize for material properties, material thicknesses and cross-sectional shapes while trying to achieve the maximum amount of mass reduction. The project team carefully reviewed the optimization results and built detailed CAD/CAE models for the body structure, closures, bumpers, suspension, and instrumentation panel. The vehicle designs were also carefully reviewed to ensure that they can be manufactured at high volume production rates, Multiple materials were used for this study. The body structure was redesigned using a significant amount of high strength steel. The closures and suspension were designed using a significant amount of aluminum. Magnesium was used for the instrument panel cross-car beam. A limited amount of composite material was used for the seat structure. PO 00000 Frm 00137 Fmt 4701 Sfmt 4700 62759 Safety performance of the lightweighted design was compared to the safety rating of the baseline MY2011 Honda Accord for seven consumer information and federal safety crash tests using LS–DYNA.371 These seven tests are the NCAP frontal test, NCAP lateral MDB test, NCAP lateral pole test, IIHS roof crush, IIHS lateral MDB, IIHS front offset test, and FMVSS No. 301 rear impact tests. These crash simulation analyses did not include use of a dummy model. Therefore only the crash pulse and intrusion were compared with the baseline vehicle test results. The vehicle achieved equivalent safety performance in all seven selfprotection tests comparing to MY 2011 Honda Accord with no damage to the fuel tank. Vehicle handling is evaluated using MSC/ADAMS 372 modeling on five maneuvers, fish-hook test, double lane change maneuver, pothole test, 0.7G constant radius turn test and 0.8G forward braking test. The results from the fish-hook test show that the lightweighted vehicle can achieve a five-star rating for rollover, same as baseline vehicle. The double lane change maneuver tests show that the chosen suspension geometry and vehicle parameter of the light-weighted design are within acceptable range for safe high speed maneuvers. Overall the complete light weight vehicle achieved a total weight savings of 22 percent (332kg) relative to the baseline vehicle (1480 kg). The study has been peer reviewed by three technical experts from the industry, academia and a DOE national lab. The project team addressed the peer review comments in the report and also composed a response to peer review comment document. The final report, CAE model and cost model are published in docket NHTSA–2010–0131 and can also be found on NHTSA’s Web site.373 The peer review comments with responses to peer review comments can also be found at the same docket and Web site. B. EPA, along with ICCT, funded a contract with FEV, with subcontractors EDAG (CAE modeling) and Munro & Associates, Inc. (component technology research) to study the feasibility, safety and cost of 20% mass reduction on a 2017–2020 production ready mid-size 371 LS–DYNA is a software developed by Livermore Software Technologies Corporation used widely by industry and researchers to perform highly non-linear transient finite element analysis. 372 MSC/ADAMS: Macneal-Schwendler Corporation/Automatic Dynamic Analysis of Mechanical Systems. 373 Final report, CAE model and cost model for NHTSA’s light weighting study can be found at NHTSA’s Web site: http://www.nhtsa.gov/fueleconomy. E:\FR\FM\15OCR2.SGM 15OCR2 62760 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with CUV (crossover utility vehicle) specifically, a Toyota Venza while trying to achieve the same or lower cost. The EPA report is entitled ‘‘Light-Duty Vehicle Mass-Reduction and Cost Analysis—Midsize Crossover Utility Vehicle’’. 374 This study is a Phase 2 study of the low development design in the 2010 Lotus Engineering study ‘‘An Assessment of Mass Reduction Opportunities for a 2017–2020 Model Year Vehicle Program’’,375 herein described as ‘‘Phase 1’’. The original 2009/2010 Phase 1 effort by Lotus Engineering was funded by Energy Foundation and ICCT to generate a technical paper which would identify potential mass reduction opportunities for a selected vehicle representing the crossover utility segment, a 2009 Toyota Venza. Lotus examined mass reduction for two scenarios—a low development (20% MR and 2017 production with technology readiness of 2014) and high development (40% MR and 2020 production with technology readiness of 2017). Lotus disassembled a 2009 Toyota Venza and created a bill of materials (BOM) with all components. Lotus then investigated emerging/ current technologies and opportunities for mass reduction. The report included the BOM for full vehicle, systems, subsystems and components as well as recommendations for next steps. The potential mass reduction for the low development design includes material changes to portions of the body in white (underfloor and body, roof, body side, etc.), seats, console, trim, brakes, etc. The Phase 1 project achieved 19% (without the powertrain), 246 kg, at 99% of original cost at full phase-in after peer review comments taken into consideration.376,377 This was calculated to be ¥$0.45/kg utilizing information from Lotus. The peer reviewed Lotus Phase 1 study created a good foundation for the next step of analyses of CAE modeling for safety evaluations and in-depth costing (these steps were not within the 374 FEV, ‘‘Light-Duty Vehicle Mass-Reduction and Cost Analysis—Midsize Crossover Utility Vehicle’’. July 2012, EPA Docket: EPA–HQ–OAR–2010–0799. 375 Systems Research and Application Corporation, ‘‘Peer Review of Demonstrating the Safety and Crashworthiness of a 2020 Model-Year, Mass-Reduced Crossover Vehicle (Lotus Phase 2 Report)’’, February 2012, EPA docket: EPA–HQ– OAR–2010–0799. 376 The original powertrain was changed to a hybrid configuration. 377 Cost estimates were given in percentages—no actual cost analysis was presented for it was outside the scope of the study, though costs were estimated by the agency based on the report. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 scope of the Phase 1 study) as noted by the peer reviewer recommendations.378 Similar to Lotus Phase 1 study, the EPA Phase 2 study begins with vehicle tear down and BOM development. FEV and its subcontractors tore down a MY 2010 Toyota Venza in order to create a BOM as well as understand the production methods for each component. Approximately 140 coupons from the BIW were analyzed in order to understand the full material composition of the baseline vehicle. A baseline CAE model was created based on the findings of the vehicle teardown and analysis. The model’s results for static bending, static torsion, and modal frequency simulations (NVH) were obtained and compared to actual results from a Toyota Venza vehicle. After confirming that the results were within acceptable limits, this model was then modified to create light-weighted vehicle models. EDAG reviewed the Lotus Phase 1 low development BIW ideas and found redesign was needed to achieve the full set of acceptable NVH characteristics. EDAG utilized a commercially available computerized optimization tool called HEEDS MDO to build the optimization model. The model consisted of 484 design variables, 7 load cases (2 NVH + 5 crash), and 1 cost evaluation. The outcome of EDAG’s lightweight design optimization included the optimized vehicle assembly and incorporated the following while maintaining the original BIW design: Optimized gauge and material grades for body structure parts, laser welded assembly at shock towers, rocker, roof rail, and rear structure subassemblies, aluminum material for front bumper, hood, and tailgate parts, TRBs on B-pillar, A-pillar, roof rail, and seat cross member parts, design change on front rail side members. EDAG achieved 13% mass reduction in the BIW including closure. If aluminum doors were included then an additional decrease of 28 kg could be achieved for a total of 18% mass reduction from the body structure. All other systems within the vehicle were examined for mass reduction, including the powertrain (engine, transmission, fuel tank, exhaust, etc.). FEV and Munro incorporated the Lotus Phase 1 low development concepts into their own idea matrix. Each component and subsystem chosen for mass reduction was scaled to the dimensions of the baseline vehicle, trying to maximize the amount of mass reduction with cost effective technologies and techniques that are 378 RTI International,‘‘Peer Review of Lotus Engineering Vehicle Mass Reduction Study’’ EPA– HQ–OAR–2010–0799–0710, November 2010. PO 00000 Frm 00138 Fmt 4701 Sfmt 4700 considered feasible and manufacturable in high volumes in MY2017. FEV included a full discussion of the chosen mass reduction options for each component and subsystem. Safety performance of the baseline and light-weighted designs (Lotus Phase 1 low development and the final EPA Phase 2 design) were evaluated by EDAG through their constructed detailed CAD/CAE vehicle models. Five federal safety crash tests were performed, including FMVSS flat frontal crash, side impact, rear impact and roof crush (using IIHS resistance requirements) as well as Euro NCAP/ IIHS offset frontal crash. Criteria including the crash pulse, intrusion and visual crash information were evaluated to compare the results of the light weighted models to the results of the baseline model. The light weighted vehicle achieved equivalent safety performance in all tests to the baseline model with no damage to the fuel tank. In addition, CAE was used to evaluate the BIW vibration modes in torsion, lateral bending, rear end match boxing, and rear end vertical bending, and also to evaluate the BIW stiffness in bending and torsion. The Phase 2 study 2010 Toyota Venza light weight vehicle achieved, with powertrain, a total weight savings of 18 percent (312 kg) relative to the baseline vehicle (1710 kg) at ¥$0.43/kg, and the cost figure is near zero at 20 percent. The study report and models have been peer reviewed by four technical experts from a material association, academia, DOE, and a National Laboratory. The peer review comments for this study were generally complimentary, and concurred with the ideas and methodology of the study. A few of the comments required further investigation, which were completed for the final report. The project team addressed the peer review comments in the report and also composed a response to peer review comment document. Changes to the BIW CAE models resulted in minimal differences. The final report is published in EPA’s docket EPA–HQ–OAR–2010–0799 and the CAE LS DYNA model files and overview cost model files are found on EPA’s Web site http://www.epa.gov/otaq/climate/ publications.htm#vehicletechnologies. The peer review comments with responses to peer review comments can also be found at the same docket and Web site. C. The California Air Resources Board (CARB) funded a study with Lotus Engineering to further develop the high development design from Lotus’ 2010 Toyota Venza work (‘‘Phase 1’’). The CARB-sponsored Lotus ‘‘Phase 2’’ study E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations provides the updated design, crash simulation results, detailed costing, and analysis of the manufacturing feasibility of the BIW and closures. Based on the safety validation work, Lotus strengthened the design with a more aluminum-intensive BIW (with less magnesium). In addition to the increased use of advanced materials, the new design by Lotus included a number of instances in which multiple parts were integrated, resulting in a reduction in the number of manufactured parts in the lightweight BIW. The Phase 2 study reports that the number of parts in the BIW was reduced from 419 to 169. The BIW was analyzed for torsional stiffness and crash test safety with ComputerAided Engineering (CAE). The new design’s torsional stiffness was 32.9 kNm/deg, which is higher than the baseline vehicle and comparable to more performance-oriented models. The research supported the conclusion that the lightweight vehicle design could pass standard FMVSS 208 frontal impact, FMVSS 210 seatbelt anchorages, FMVSS child restraint anchorage, FMVSS 214 side impact and side pole, FMVSS 216 roof crush (with 3xcurb weight), FMVSS 301 rear impact, IIHS low speed front, and IIHS low speed rear. Crash tests simulated in CAE showed results that were listed as acceptable for all crash tests analyzed. No comparisons or conclusions were made if the vehicle performed better or worse than the baseline Venza. For FMVSS 208 frontal impact, Lotus based its CAE crash test analyses on vehicle crash acceleration data rather than occupant injury as is done in the actual vehicle crash. The report from the study stated that accelerations were within acceptable levels compared to current production vehicle acceleration results and it should be possible to tune the occupant restraint system to handle the specific acceleration pulses of the Phase 2 high development vehicle. FMVSS 210 seatbelt anchorages is concerned with seatbelt retention and certain dimensional constraints for the relationship between the seatbelts and the seats. Overall both the front and rear seatbelt anchorages met the requirements specified in the standard. FMVSS 214 side impact show the energy is effectively managed. Since dummy injury criteria was not used in the CAE modeling, a maximum intrusion tolerance level of 300 mm was instituted which is the typical distance between the door panel and most outboard seating positions. For example, the Phase 2 design was measured at 115mm for the crabbed barrier test. The side pole test resulted in 120 mm VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 intrusion for the 5th percentile female and intrusion was measured at 190 mm for the 50th percentile male. The report stated FMVSS 216 roof crush simulation shows the Phase 2 high development vehicle will meet roof crush performance requirements under the specified load case of 3 times the vehicle weight. For the FMVSS rear impact, results show plastic strain in the fuel tank/system components to be less than 3.5%, which is less than the 10% strain allowed in the test. The pressure change in the fuel tank is less than 2% so risk of tank splitting is minimal. The IIHS low speed front and rear show no body structural issues, however styling adjustments should be made to improve the rear bumper low speed performance. The Lotus design achieved a 37% (141 kg) mass reduction in the body structure, a 38% (484kg) mass reduction in the vehicle excluding the powertrain, and a 32% (537 kg) mass reduction in the entire vehicle including the powertrain. The report was peer reviewed by a cross section of experts and the comments were addressed by Lotus in the peer review documents. The comments requiring modification were incorporated into the final document. The documents can be found on EPA’s Web site http://www.epa.gov/ otaq/climate/ publications.htm#vehicletechnologies. D. NHTSA has contracted with GWU to build a fleet simulation model to study the impact and relationship of light-weighted vehicle design with injuries and fatalities. This study will also include an evaluation of potential countermeasures to reduce any safety concerns associated with lightweight vehicles in the second phase. NHTSA has included 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 one funded by EPA and the International Council on Clean Transportation (ICCT). In addition to the lightweight vehicle models, these projects also created CAE models of the baseline vehicles. To estimate the fleet safety implications of light-weighting, CAE crash simulation modeling was conducted to generate crash pulse and intrusion data for the baseline and three light-weighted vehicles when they crash with objects (barriers and poles) and with four other vehicle models (Chevy Silverado, Ford Taurus, Toyota Yaris and Ford Explorer) that represent a range of current vehicles. The simulated acceleration and intrusion data were PO 00000 Frm 00139 Fmt 4701 Sfmt 4700 62761 used as inputs to MADYMO occupant models to estimate driver injury. The crashes were conducted at a range of speeds and the occupant injury risks were combined based on the frequency of the crash occurring in real world data. The change in driver injury risk between the baseline and light-weighed vehicles will provide insight into the safety performance these light-weighting design concepts. This is a large and ambitious project involves several stages over several years. NHTSA and GWU have completed the first stage of this study. The frontal crash simulation part of the study is being finished and will be peer reviewed. The report for this study will be available in NHTSA– 2010–0131. Information for this study can also be found at NHTSA’s Web site.379 The countermeasures section of the study is expected to be finished in early 2013. This phase of the study is expected to provide information about the relationship of light-weighted vehicle design with injuries and fatalities and to provide the capability to evaluate the potential countermeasures to safety concerns associated with lightweighted vehicles. NHTSA plans to include the following items in future phases of the study to help better understanding the impact of mass reduction on safety. • Light-weighted concept vehicle to light-weighted concept vehicle crash simulation; • Additional crash configurations, such as side impact, oblique and rear impact tests; • Risk analysis for elderly and vulnerable occupants; • Safety of light-weighted concept vehicles for different size occupants. • Partner vehicle protection in crashes with other light-weighted concept vehicles; While this study is expected to provide information about the relationship of light-weighted vehicle design with injuries and fatalities and to provide meaningful information to NHTSA on potential countermeasures to reduce any safety concerns associated with lightweight vehicles, because this study cannot incorporate all of the variations in vehicle crashes that occur in the real world, it is expected to provide trend information on the effect of potential future designs on highway safety, but is not expected to provide information that can be used to modify the coefficients derived by Kahane that relate mass reduction to highway crash fatalities. Because the coefficients from 379 Web site for fleet study can be found at http://www.nhtsa.gov/fuel-economy. E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with 62762 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations the Kahane study are used in the agencies’ assessment of the amount of mass reduction that may be implemented with a neutral effect on highway safety, the fact that the fleet simulation modeling study is not complete does not affect the agencies’ assessment of the amount of mass reduction that may be implemented with a neutral effect on safety. Global Automakers commented that lightweighting strategies ‘‘should be based on real world experience and in reliance upon laboratory test data.’’ 380 The agencies continue to believe that reasonable conclusions regarding the safety implication of mass reduction can be drawn from CAE simulations. As ICCT stated in their comments, CAE simulations are powerful tools that have improved rapidly over the years in terms of their ability to optimize vehicle designs and predict material and vehicle behavior in real life. Use of these highly sophisticated CAE tools has become standard industry practice in helping to verify and validate designs before real parts and vehicles are built. As the Alliance stated, however, CAE capabilities for conventional materials, such as steel and aluminum, are more mature than those of advanced materials, such as magnesium and composites. Steel and aluminum are the major materials used in some of the studies, such as EPA’s and NHTSA’s light-weighting studies that determined that a baseline vehicle’s mass could be reduced by approximately 20 percent while maintaining safety comparable to the baseline vehicle. Thus, even though CAE tools are used heavily, the agencies acknowledge the concerns the Alliance raised in its comments about CAE capabilities for some potential advanced materials for crashworthiness, and have been mindful of this issue in developing our studies. NHTSA’s study took a similar approach in vehicle body structure design as the FutureSteelVehicle, but with less aggressive material usage (e.g., using thicker gauges of steel). Only those materials, technologies and design which are currently used or planned to be introduced in the near term (MY 2012–2015) on low-volume production vehicles are used in NHTSA’s concept design. This approach is employed by the team to make sure that the technologies used in the study will be feasible for mass production for the time frame of this rulemaking. Even though NHTSA’s study is not directly based on laboratory testing of the light-weighted design as Global Automaker suggested, 380 Global Automakers comments, Docket No. NHTSA–2010–0131, at pg 3. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 the materials, designs and approaches used in the study are currently employed in mass production vehicles, which gives NHTSA confidence that results from its study are practical and feasible in the rulemaking timeframe. EPA’s study used a similar approach. It includes a baseline model which was run through crash simulations and the results were comparable to physical crash data of the vehicle in the same tests. For the light weighted design, the BIW was maintained while various components were lightened through incorporation of high strength steels whose properties reflect those materials commonly used today. The light weighted CAE model crash results were then compared to those from the baseline CAE model crash results. The model run results from the light weighted vehicle had equal or better performance on intrusion, acceleration, etc. The materials, designs and approaches used in the study are currently employed in mass production vehicles, which gives EPA confidence that results from its study are practical, feasible and reasonable in the rulemaking timeframe. 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 U.S. 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 Chrysler, and Frank Field of the Massachusetts Institute of Technology. The second session explored what degree of mass reduction and occupant PO 00000 Frm 00140 Fmt 4701 Sfmt 4700 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 fleet wide 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 or redesigned 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. The Lotus light-weighted Venza structure 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 vehicles. Transition from the current fleet was considered. He concluded that protocols resulting in safer transitions E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations (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: i.e., that the most effective mass reduction in terms of reducing GHG emissions was not necessarily the safest. German discussed several important points on the future of mass reduction. Similar to Kahane’s discussion of the difficulties of isolating the impact of mass 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 the safety impacts of size and weight are small and difficult to quantify when compared to driver, driving influences, and vehicle design influences. 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 mass reduction. Field highlighted the complexity of institutional changes that may be necessitated by mass 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 which are necessary for inclusion on a highvolume production model. Joining, damage characterization, durability, repair, and significant uncertainty in final component costs are also concerns. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 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 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 final rule? a. What was the Agencies’ methodology for estimating safety effects for the final rule? As explained above, the agencies consider the latest 2012 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 2012 analysis to calculate specific estimates of safety effects of the final rule, based on the analysis of how much mass reduction manufacturers might use to meet the final rule. The CAFE/GHG standards do not mandate mass reduction, or require 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 manufacturers and to predict both cost and fuel consumption/ emissions impacts of more stringent CAFE/GHG standards. To estimate the PO 00000 Frm 00141 Fmt 4701 Sfmt 4700 62763 amount of mass reduction to apply in the rulemaking analysis, the agencies considered fleet safety effects for mass reduction. As shown in Table II–24 and Table II–25, both the Kahane 2011 preliminary report and the Kahane 2012 final report show 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 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 as discussed in the Joint TSD Section 3.3.5.5. Thus, 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 and meet (or surpass) all applicable federal safety standards, 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. In this final rule analysis, NHTSA utilized the 2012 Kahane study relationships between weight and safety, expressed as percent changes in fatalities per 100-pound mass 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, which are not accounted for in the study. For example, the two important new safety standards that were discussed above for electronic stability control and side 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 grow, if gasoline E:\FR\FM\15OCR2.SGM 15OCR2 62764 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations 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 agencies 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 both the Kahane 2011prelimirary analysis and the Kahane 2012 final analysis), coupled with the reduced number of baseline fatalities, results in smaller absolute increases in fatalities than those predicted in the MYs 2012–2016 rulemaking. NHTSA examined the impacts of identifiable safety trends over the lifetime of the vehicles produced in each model year from 2007 through 2020. An estimate of these impacts was contained in a previous agency report that examined the impact of both safety standards and behavioral safety trends on fatality rates.381 In the NPRM analysis, based on these projections, we estimated a 12.6 percent reduction in fatality levels between the 2007 fatality base year and 2020 for the combination of safety standards and behavioral changes anticipated in this study (such as electronic stability control, headcurtain air bags, and increased belt use). See 76 FR 74959. The estimates derived from applying NHTSA fatality percentages to a baseline of 2007 fatalities were 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-road fleet used for this particular safety analysis and year 2020. Using this same methodology, for the final rule analysis, which is based on a 2010 baseline fleet, we estimated a 9.6 percent reduction in fatality level between 2010 and 2020 for the anticipated combination of safety standards and behavioral changes that will occur during that time frame.382 The estimates derived from applying NHTSA fatality percentages to a baseline of 2010 fatalities were multiplied by 0.904 to account for changes that NHTSA believes will take place in passenger car and light truck safety between the 2010 baseline onroad fleet and year 2020. 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 the agencies believe that mass reduction of up to 20 percent is feasible on light trucks, CUVs and minivans, 383 but that less mass reduction should be implemented on other vehicle types to avoid increases in societal fatalities. For the NPRM analysis, NHTSA used the mass reduction levels shown in Table II–31 with the fatality coefficients derived in Kahane 2011 preliminary study. TABLE II–31—MASS REDUCTION LEVELS TO ACHIEVE SAFETY NEUTRAL RESULTS IN THE CAFE NPRM ANALYSIS Subcompact and Subcompact Perf. PC (percent) Absolute (percent) Compact and Compact Perf. PC (percent) 0.0 0.0 0.0 0.0 0.0 2.0 0.0 0.0 0.0 0.0 MR1* ........................................................ MR2 .......................................................... MR3 .......................................................... MR4 .......................................................... MR5 .......................................................... Midsize PC and Midsize Perf. PC (percent) Large PC and Large Perf. PC (percent) 1.5 5.0 0.0 0.0 0.0 1.5 7.5 10.0 0.0 0.0 Minivan LT (percent) Small, Midsize and Large LT (percent) 1.5 7.5 10.0 15.0 20.0 1.5 7.5 10.0 15.0 20.0 Notes: *MR1–MR5: different levels of mass reduction used in CAFE model. In order to find a safety neutral compliance path for use in the agencies’ final rulemaking analysis given the coefficients from the Kahane 2012 study, the maximum amount of mass reduction applied in the final rule analysis has been modified from the NPRM levels for compact passenger cars and midsize passenger cars as shown in Table II–32. Specifically, the maximum amount of mass reduction for compact passenger cars and compact performance passenger cars is reduced in the agencies’ respective models from 2% as used in the NPRM to 0% in the final rule analysis, while for midsize passenger cars and midsize performance passenger cars, it is reduced from 5% as used in the NPRM to 3.5% in the final rule analysis. TABLE II–32—MASS REDUCTION LEVELS TO ACHIEVE SAFETY NEUTRAL RESULTS IN THE FINAL RULE ANALYSIS Subcompact and subcompact Perf. PC (percent) Absolute (%) Compact and compact Perf. PC (percent) 0.0 0.0 sroberts on DSK5SPTVN1PROD with MR1* ........................................................ 381 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 5 comparing 2020 to 2007 (37,906/ 43,363 = 0.874 or a reduction of 12.6% (100%¥87.4% = 12.6%). Since 2008 was a recession year, it did not seem appropriate to use that as a baseline, so 2007 was used as the baseline for fatalities in the NPRM. Note that additional improvements may occur between 2020 and 2025. VerDate Mar<15>2010 01:21 Oct 13, 2012 Jkt 229001 Midsize PC and midsize Perf. PC (percent) 1.5 However, since current research only projected the impact of changes through 2020, only those improvements could have been applied to that analysis. 382 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 5 comparing 2020 to 2010 (37,906/ 41,945 = 0.904 or a reduction of (100%¥90.4% = 9.6%). Note that additional improvements may PO 00000 Frm 00142 Fmt 4701 Sfmt 4700 Large PC and large Perf. PC (percent) 1.5 Minivan LT (percent) 1.5 Small, midsize and large LT (percent) 1.5 occur between 2020 and 2025. However, since current research only projected the impact of changes through 2020, only those improvements could be applied to this analysis. 383 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. E:\FR\FM\15OCR2.SGM 15OCR2 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations 62765 TABLE II–32—MASS REDUCTION LEVELS TO ACHIEVE SAFETY NEUTRAL RESULTS IN THE FINAL RULE ANALYSIS— Continued Subcompact and subcompact Perf. PC (percent) MR2 MR3 MR4 MR5 Compact and compact Perf. PC (percent) 0.0 0.0 0.0 0.0 Absolute (%) 0.0 0.0 0.0 0.0 .......................................................... .......................................................... .......................................................... .......................................................... Midsize PC and midsize Perf. PC (percent) Large PC and large Perf. PC (percent) 3.5 0.0 0.0 0.0 Minivan LT (percent) 7.5 10.0 0.0 0.0 Small, midsize and large LT (percent) 7.5 10.0 15.0 20.0 7.5 10.0 15.0 20.0 Notes: *MR1–MR5: different levels of mass reduction used in CAFE model For the CAFE model, these percentages apply to a vehicle’s total weight, including the powertrain. Table II–33 shows the amount of mass reduction in pounds for these percentage mass reduction levels for a typical vehicle weight in each subclass. TABLE II–33—EXAMPLES OF MASS REDUCTION (IN POUNDS) FOR DIFFERENT VEHICLE SUBCLASSES USING THE PERCENTAGE INFORMATION AS DEFINED IN TABLE II–32 FOR FINAL RULE ANALYSIS Mass Reduction (lbs) Subcompact and Subcompact Perf. PC Typical Vehicle Weight (lbs) ............................... MR1 (lbs) ......................... MR2 (lbs) ......................... MR3 (lbs) ......................... MR4 (lbs) ......................... MR5 (lbs) ......................... Compact and Compact Perf. PC 2795 0 0 0 0 0 3359 0 0 0 0 0 sroberts on DSK5SPTVN1PROD with These maximum amounts of mass reduction discussed above were applied in the technology input files for the CAFE model. Within some of the light truck classes, additional limitations were placed on the maximum amount of mass reduction for some of the vehicles based on which Kahane study safety class the vehicles were in, as is explained below. By way of background, NHTSA divides vehicles into classes for purposes of applying technology in the CAFE model in a way that differs from the Kahane study which divides vehicles into classes for purposes of determining safety coefficients. These differences require that the ‘‘safety class’’ coefficients be applied to the appropriate vehicles in the CAFE ‘‘technology subclasses.’’ For the reader’s reference, for purposes of this final rule, the safety classes and the technology subclasses relate 384 as shown in Table II–34. 384 This is not to say that all vehicles within a technology subclass will necessarily fall within a VerDate Mar<15>2010 01:21 Oct 13, 2012 Jkt 229001 Midsize PC and Midsize Perf. PC 3725 56 130 0 0 0 Large PC and Large Perf. PC Minivan LT 4110 62 308 411 0 0 4250 64 319 425 638 850 Small LT 3702 56 278 370 555 740 Midsize LT 4260 64 320 426 639 852 Large LT 5366 80 402 537 805 1073 subclasses was limited to 10%, as TABLE II–34—MAPPING BETWEEN SAFETY CLASSES AND TECHNOLOGY shown in Table II–35. In the final rule analysis, in order to find a safety-neutral CLASSES Safety class Technology class PC (Passenger Car) Subcompact PC. Subcompact Perf. PC. Compact PC. Compact Perf. PC. Midsize PC. Midsize Perf. PC. Large PC. Large Perf. PC. Small LT. Midsize LT. Large LT. Subcompact PC. LT (Light Truck) ........ CM (CUV and Minivan). Subcompact Perf. PC. Large PC. Large Perf. PC. Minivan. Small LT. Midsize LT. Large LT. In the NPRM analysis, the maximum amount of mass reduction for vehicles that would fall into the light truck safety class and would also fall into the small and midsize light truck technology single safety class—as the chart shows, some PO 00000 Frm 00143 Fmt 4701 Sfmt 4700 compliance path using the new safety coefficients, for vehicles in the light truck safety class that also fall into the SmallLT technology subclass, mass reduction was limited to a maximum of 1.5%, as shown in Table II–36. For vehicles in the light truck safety class that also fall into the MidsizeLT technology subclass, the amount of mass reduction applied depends on vehicle mass: if the vehicle curb weight is greater than or equal to 4,000 pounds, the maximum amount of mass reduction allowed is 7.5%; if the vehicle curb weight is less than 4,000 pounds, the maximum amount is 1.5%. Small and midsize light truck (SmallLT and MidsizeLT) that fall in the CUV and Minivan (CM) safety class are allowed up to 20% mass reduction. These changes from the NPRM analysis were incorporated in order to maximize the amount of overall fleet mass reduction in a way that achieved a safety neutral result with the updated coefficients from the Kahane 2012 study. technology subclasses are divided among safety classes. E:\FR\FM\15OCR2.SGM 15OCR2 62766 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations TABLE II–35—MAXIMUM AMOUNT OF MASS REDUCTION LIMITS FOR LIGHT TRUCK SAFETY VEHICLE CLASS FOR THE NPRM CAFE MODEL ANALYSIS NRPM—2008 Market input file Tech class Safety Class Small LT Midsize LT LT ............................... CM * ............................ Apply MR3 at 10% ............................................................... MR5 (20%) ........................................................................... Apply MR3 at 10% MR5 (20%) * CM = CUV and MiniVan. TABLE II—36—MAXIMUM AMOUNT OF MASS REDUCTION LIMITS FOR LIGHT TRUCK SAFETY VEHICLE CLASS FOR THE FINAL RULE CAFE MODEL ANALYSIS Final rule—2008 & 2010 market input file Tech class Safety Class Small LT Midsize LT LT ............................... Apply MR1 at 1.5% .............................................................. CM .............................. MR5 (20%) ........................................................................... Vehicle Weight ≥ 4000, apply MR2 at 7.5%; Vehicle Weight ≥ 4000, apply MR1 at 1.5%. MR5 (20%) Table II–37 shows CAFE model results for societal safety for each model year based on the application of the above mass reduction limits.385 These are the 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 mass reduction limitations used in the CAFE model, which allow more mass reduction in the heavy LTVs, CUVs, and minivans than in other vehicles. As the negative coefficients only appear for LTVs greater than 4,594 lbs., CUVs, and minivans, a statistically significant improvement in safety can only occur if more weight is taken out of these vehicles than out of passenger cars or smaller light trucks. Combining passenger car and light truck safety estimates for the final rule results in a decrease in fatalities over the lifetime of the nine model years of MY 2017–2025 of 8 fewer fatalities with the 2010 baseline and of 107 fewer fatalities with the 2008 baseline. Broken up into passenger car and light truck categories, there is an increase of 135 fatalities in passenger cars and a decrease of 143 fatalities in light trucks with the 2010 baseline, and there is an increase of 78 fatalities in passenger cars and a decrease of 185 fatalities in light trucks with the 2010 baseline. NHTSA also analyzed the results for different regulatory alternatives in Chapter IX of its FRIA; the difference in the results by alternative depends upon how much mass reduction is used in that alternative and the types and sizes of vehicles that the mass reduction applies to. TABLE II–37—NHTSA CALCULATED MASS-SAFETY-RELATED FATALITY IMPACTS OF THE FINAL RULE OVER THE LIFETIME OF THE VEHICLES PRODUCED IN EACH MODEL YEAR USING 2008 AND 2010 BASELINE Baseline fleet Passenger Cars ......................................... MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 MY 2022 MY 2023 MY 2024 MY 2025 Total ..... ..... ..... ..... 3– ..... 2 ....... (5)– ... (5) ..... 7– ..... 5 ....... (9)– ... (13) ... 13– ... 13 ..... 0– ..... (17) ... 12– ... 12 ..... (5)– ... (29) ... 18– ... 13 ..... (18)– (27) ... 19– ... 10 ..... (21)– (27) ... 23– ... 11 ..... (24)– (27) ... 22– ... 9 ....... (30)– (29) ... 19– ... 1 ....... (31)– (11) ... 135– 78 (143)– (185) 2010 ..... 2008 ..... Fatalities (2)– ... (3) ..... (3)– ... (8) ..... 13– ... (3) ..... 7– ..... (17) ... (1)– ... (14) ... (2)– ... (17) ... (2)– ... (16) ... (8)– ... (20) ... (12)– (10) ... (8)– (107) 2010 2008 2010 2008 Light Trucks ............................................... Total .................................................... sroberts on DSK5SPTVN1PROD with Using the same coefficients from the 2012 Kahane study, EPA used the OMEGA model to conduct a similar analysis. After applying these percentage increases to the estimated mass reductions per vehicle size by model year assumed in the Omega model, Table II–38 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 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. 385 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 the NPRM (as well as this final rule). About 1.4 million 2 wheel drive SUVs have been redefined as passenger cars instead of light trucks. The Kahane 2011 and 2012 analyses continue to use the definitions used in the Kahane 2003 analysis. VerDate Mar<15>2010 01:21 Oct 13, 2012 Jkt 229001 PO 00000 Frm 00144 Fmt 4701 Sfmt 4700 E:\FR\FM\15OCR2.SGM 15OCR2 62767 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations TABLE II–38—EPA CALCULATED MASS-SAFETY-RELATED FATALITY IMPACTS OF THE PROPOSED STANDARDS OVER THE LIFETIME OF THE VEHICLES PRODUCED IN EACH MODEL YEAR MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 MY 2022 MY 2023 MY 2024 MY 2025 Total 5 ¥5 9 ¥11 14 ¥16 20 ¥22 26 ¥29 30 ¥40 35 ¥52 40 ¥64 45 ¥77 223 ¥317 Total .......................................................... sroberts on DSK5SPTVN1PROD with Passenger cars ................................................ Light trucks ....................................................... ¥1 ¥1 ¥2 ¥2 ¥3 ¥10 ¥18 ¥25 ¥32 ¥94 b. Why might the real-world effects be less than or greater than what the Agencies have calculated? As discussed above, the ways in which future technological advances could potentially mitigate the safety effects estimated for this rulemaking include the following: 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 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 light-weighted vehicles become more prevalent. Going forward, we will continue to monitor the crash data as well as changes in vehicle mass and conduct analyses to understand the interaction of vehicle mass and size on safety. Additionally, we note that the total amount of mass reduction used in the agencies’ analysis for this rulemaking was 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 or amounts 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. As discussed in Chapter 2 of the 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 fewer than 10 percent of MY 2008 passenger cars were below 41 square feet, and due to the overall lower level VerDate Mar<15>2010 01:21 Oct 13, 2012 Jkt 229001 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 do not expect a significant increase in this segment of the market. Please see Chapter 2 of the Joint TSD for additional discussion. The agencies acknowledge that this final rule does not prohibit manufacturers from redesigning vehicles to change wheelbase and/or track width (footprint). However, as NHTSA explained in promulgating the MY 2008–2011 light truck CAFE standards and the MY 2011 passenger car and light truck CAFE standards, and as the agencies jointly explained in promulgating the MYs 2012–2016 CAFE and GHG standards and the proposal for this final rule, we believe that 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 with respect to their footprint-based targets. However, NHTSA and EPA have previously explained, because such production shifts could run counter to market demands, they could also be competitively unattractive. We sought 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. Detailed responses to the comments that the agencies received on this topic can be found in preamble Section II.C. Notwithstanding the agencies’ current judgment that such deliberate reengineering or production shifts 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 PO 00000 Frm 00145 Fmt 4701 Sfmt 4700 modeling in our analysis. So, based on the regulatory design, the analysis assumes this final rule will not have the effects described above. The agencies will monitor the vehicle fleet going forward to see if there are changes in vehicle footprint, weight, or if there are shifts in the production volumes of models that are produced, and consistent with confidentiality and other requirements, the agencies intend to make these data publicly available when they are compiled and will use that information to inform the mid-term review. c. What are the Agencies’ plans going forward? The agencies will closely be monitoring the visible effects of CAFE/ GHG standards on vehicle safety as these standards are implemented, and will conduct a full analysis of safety impacts as part of NHTSA’s future rulemaking to establish final MYs 2022– 2025 standards and the mid-term evaluation. We are mindful of the comments submitted by the Alliance and Volvo that there are many uncertainties associated with the agencies’ safety analysis in this rulemaking, including the course of development of vehicle technologies (including, but not limited to, lightweighting technologies) to achieve these standards given the timeframe covered by this rulemaking, the composition of the future fleet mix with respect to vehicle weight, vehicle size, vehicle compatibility/incompatibility that could result in response to the standards set in this rulemaking, the continued development of alternative drive trains and their penetration and how those changes interact with changes in vehicle weight, the new development of safety technologies (both active and passive), and the vehicle turn-over rate, which is driven by many factors outside of the agencies’ or manufacturers’ control. As the Alliance stated in its comments, ‘‘Achieving the proposed CAFE and GHG standards will rely on the availability of commercially viable emerging technologies for manufacturers to adopt. Should these technologies fail to mature as E:\FR\FM\15OCR2.SGM 15OCR2 62768 Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with anticipated, greater reliance on mass reduction and downsizing in order to achieve these standards could occur.’’ 386 The agencies emphasize that the final standards are premised almost entirely on increased penetration of technologies which already exist, or which are expected to be in commercial application in the early model years of the standards. See Joint TSD section 3.1. (explaining, technology-by-technology, which are already in use and their effectiveness, and which are considered available for purposes of the analyses underlying this rulemaking). The Alliance also stressed that the agencies should ‘‘continuously update the safety analysis’’ going forward, and that updating the safety analysis as part of the mid-term evaluation was ‘‘critical’’ ‘‘to reflect the most recent crash data and revised projections regarding mass reduction scenarios,’’ because ‘‘the proposed mid-term evaluation is essential in order to assure that the maximum feasible fuel economy benefits are obtained in a cost-effective and safety neutral manner.’’ 387 With respect to NHTSA’s looking-ahead approach 388 in assessing the feasible amount of mass reduction and the evaluation of concept vehicles, the Alliance stated that ‘‘it is not sufficient to only consider regulatory and consumer information crash tests. A comprehensive evaluation of vehicle safety must also take into account realworld impact scenarios and the special requirements of vulnerable populations (e.g., children and elderly). These must also be adequately accounted for in any agency policy decisions.’’ NHTSA does its best in the fleet simulation study to consider as many real world crash scenarios as possible. In the fleet simulation study, NHTSA is including risk functions for different populations. All of the crash results are weighted for their actual occurrence rates. As stated in NHTSA’s 2011–2013 research and rulemaking priority plan,389 the agency currently has programs looking into the areas of safety for vulnerable occupants. NHTSA will monitor the performance of these vulnerable occupants in the context of the changing fleet in response to the fuel economy program. 386 Alliance comments, Docket No. NHTSA– 2010–0131, at pg 5. 387 Id., at pg 6. 388 Alliance categorized NHTSA’s studies for feasible amount of mass reduction and fleet simulation as ‘‘looking-ahead’’ approach versus the statistical analysis as ‘‘looking-back’’ approach which investigates the historical data. 389 http://www.nhtsa.gov/staticfiles/rulemaking/ pdf/2011–2013_Vehicle_SafetyFuel_Economy_RulemakingResearch_Priority_Plan.pdf. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 NHTSA acknowledges these concerns and will closely monitor the safety data, the trends in vehicle weight and size, the trends in vehicle mass reduction, as well as the trend for the active and passive vehicle safety during the period between the release of this final rule and the future rulemaking to establish final CAFE standards for MYs 2022–2025 and the mid-term evaluation. Consistent with confidentiality and other requirements, NHTSA intends to make these data publicly available when they are compiled. We agree with the comments by Global Automakers that ‘‘with sufficient lead-time, the implementation of vehicle lightweighting strategies can be phased in, making it possible to observe the safety implications in comparison with vehicles in the existing fleet.’’ 390 The lead-time incorporated into these standards will help the agencies and manufacturers monitor these trends and take appropriate action. NHTSA will also continue and finish its study for estimating fleet safety impacts due to lightweighting using the CAE models available to the agency. NHTSA will also make appropriate updates to the statistical study of historical data on the effects on mass and size societal safety on an ongoing basis. At the same time, NHTSA will continue to assess its analytical methods for assessing the effects of vehicle mass and size on societal safety and make appropriate updates if necessary. III. EPA MYs 2017–2025 Light-Duty Vehicle Greenhouse Gas Emissions Standards A. Overview of EPA Rule 1. Introduction The U.S. Environmental Protection Agency (EPA) is finalizing greenhouse gas (GHG) emissions standards for lightduty vehicles, light-duty trucks, and medium-duty passenger vehicles (hereafter light-duty vehicles) for MYs 2017 through 2025. These vehicle categories, which include cars, sport utility vehicles, minivans, and pickup trucks used for personal transportation, are currently responsible for almost 60% of all U.S. transportation related GHG emissions. This rule is the second EPA rule to regulate light-duty vehicle GHG emissions under the Clean Air Act (CAA), building upon the GHG emissions standards for MYs 2012–2016 that were established in 2010,391 and the third rule to regulate GHG emissions 390 Global Automakers comments, Docket No. NHTSA–2010–0131, at pg 3. 391 75 FR 25324 (May 7, 2010). PO 00000 Frm 00146 Fmt 4701 Sfmt 4700 from the transportation sector.392 Combined with the standards already in effect for MYs 2012–2016, these standards will result in MY 2025 lightduty vehicles emitting approximately one-half of the GHG emissions of MY 2010 light duty vehicles and represent the most significant federal action ever taken to reduce GHG emissions (and improve fuel economy) in this country’s history. Soon after the completion of the successful MYs 2012–2016 rulemaking in May 2010, the President, with support from the auto manufacturers and the United Auto Workers, requested that EPA and NHTSA work to extend the National Program to MYs 2017–2025 light duty vehicles. The agencies were requested by the President 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 light-duty trucks of model years 2017–2025.’’ 393 EPA’s standards are a result of our work with NHTSA and CARB in developing such a continuation of the National Program. This final rule provides important benefits to society and consumers in the form of reduced GHG emissions and reduced consumption of oil, and significant fuel savings for consumers. It provides the automobile industry with the important certainty and lead time 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 allows for the important continuation of the National Program that started with MYs 2012–2016, and ensures that automakers will be able to continue producing and selling a single fleet of vehicles across the U.S. From a societal standpoint, the 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 lightduty vehicles sold in MYs 2017–2025. These savings come on top of savings that would already be achieved through the continuation of EPA’s MYs 2012– 2016 standards.394 EPA estimates that 392 76 FR 57106 (September 15, 2011) established GHG emission standards for heavy-duty vehicles and engines for model years 2014–2018. 393 The Presidential Memorandum is found at http://www.whitehouse.gov/the-press-office/ presidential-memorandum-regarding-fuelefficiency-standards. 394 The cost and benefit estimates provided here are only for the MYs 2017–2025 rulemaking. EPA and DOT’s rulemakings establishing standards for MYs 2012–2016, and DOT’s MY 2011 rulemaking, are already part of the baseline for this analysis. See E:\FR\FM\15OCR2.SGM 15OCR2 sroberts on DSK5SPTVN1PROD with Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 / Rules and Regulations fuel savings will far outweigh higher vehicle costs, and that the net benefits to society will be in the range of $326 billion (7% discount rate) to $451 billion (3% discount rate) over the lifetimes of those vehicles sold in MYs 2017–2025. Just in calendar year 2040 alone, after the on-road vehicle fleet has largely turned over to vehicles sold in MY 2025 and later, EPA projects GHG emissions savings of 455 million metric tons, oil savings of 2.5 million barrels per day, and net benefits of $158 billion using the $22/ton CO2 social cost of carbon value. Cumulative net benefits, for calendar years 2017 through 2050 and expressed as a net present value in 2012, are projected to be $616 billion (7% discount rate) to $1.4 trillion (3% discount rate). These standards will save consumers significant monies over time. The new technology that will be necessary to meet the CO2 standards is projected to add $1800 to the cost of a new MY 2025 vehicle. These costs come on top of costs that would already be imposed through the continuation of EPA’s MYs 2012–2016 standards. But those consumers who drive their MY 2025 vehicle for its entire lifetime will save, on average, $5700 (7% discount rate) to $7400 (3% discount rate) in fuel savings, for a net lifetime savings of $3400 (7% discount rate) to $5000 (3% discount rate). For those consumers who purchase a new MY 2025 vehicle with cash, the discounted fuel savings will offset the higher vehicle cost (plus sales tax and higher insurance and maintenance costs up to that time) in about 3.2 years (3% discount rate), i.e., that is the ‘‘breakeven’’ point and after that ongoing fuel savings will greatly exceed the small increases in insurance and maintenance costs. Those consumers that buy a new MY 2025 vehicle with a 5-year loan (assuming a 5.35% interest rate) will benefit from a positive monthly cash flow of about $12 (or $140 per year), on average, as the monthly fuel savings more than offsets the higher monthly payment. EPA projects even more favorable payback and monthly cash flow for used vehicle buyers, as most of the incremental technology cost is paid for by the initial buyer due to depreciation. A consumer who pays cash for a 5 or 10year old used vehicle will typically reach payback in approximately one year, while the monthly cash flow savings for a credit purchase (assuming EPA Regulatory Impact Analysis 7.4 for the combined cost and benefit projections for the MYs 2012–2016 and 2017–2025 rulemakings. VerDate Mar<15>2010 23:11 Oct 12, 2012 Jkt 229001 a 9.35% interest rate) will typically be around $20 per month. The 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 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 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 rule including the history and rationale for a National Program that allows manufacturers to build a single fleet of light-duty vehicles that can satisfy all federal and state requirements for GHG emissions and fuel economy, the level and structure of the GHG emissions and corporate average fuel economy (CAFE) standards, the compliance flexibilities 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 GHG emissions standards. After providi