Petroleum-Equivalent Fuel Economy Calculation, 22041-22060 [2024-06101]

Download as PDF 22041 Rules and Regulations Federal Register Vol. 89, No. 62 Friday, March 29, 2024 This section of the FEDERAL REGISTER contains regulatory documents having general applicability and legal effect, most of which are keyed to and codified in the Code of Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510. The Code of Federal Regulations is sold by the Superintendent of Documents. Table of Contents DEPARTMENT OF ENERGY 10 CFR Part 474 [EERE–2021–VT–0033] RIN 1904–AF47 Petroleum-Equivalent Fuel Economy Calculation Office of Energy Efficiency and Renewable Energy, Department of Energy. ACTION: Final rule. AGENCY: The U.S. Department of Energy (DOE) publishes a final rule that revises the value for the petroleumequivalency factor (PEF). This final rule revises DOE’s regulations regarding procedures for calculating a value for the petroleum-equivalent fuel economy of electric vehicles (EVs). The PEF is used by the Environmental Protection Agency (EPA) in calculating light-duty vehicle manufacturers’ compliance with the Department of Transportation’s (DOT) Corporate Average Fuel Economy (CAFE) standards. DATES: This rule is effective June 12, 2024. SUMMARY: The docket for this rulemaking, which includes Federal Register notices, public meeting attendee lists and transcripts, comments, and other supporting documents/materials, is available for review at www.regulations.gov/docket/ EERE-2021-VT-0033. All documents in the docket are listed in the www.regulations.gov index. However, not all documents listed in the index may be publicly available, such as information that is exempt from public disclosure. FOR FURTHER INFORMATION CONTACT: Mr. Kevin Stork, U.S. Department of Energy, Vehicle Technologies Office, EE–3V, 1000 Independence Avenue SW, Washington, DC 20585. Telephone: (202) 586–8306. Email: Kevin.Stork@ ee.doe.gov. khammond on DSKJM1Z7X2PROD with RULES ADDRESSES: VerDate Sep<11>2014 15:53 Mar 28, 2024 Jkt 262001 Ms. Laura Zuber, U.S. Department of Energy, Office of the General Counsel, Forrestal Building, GC–33, 1000 Independence Avenue SW, Washington, DC 20585. Telephone: (240) 306–7651. Email: laura.zuber@hq.doe.gov. SUPPLEMENTARY INFORMATION: I. Introduction and Background II. Public Comments on the 2023 NOPR III. Discussion of Final Rule A. Statutory Factors B. Current Methodology C. Revised Methodology 1. Approximate Electrical Energy Efficiency of EVs 2. Gasoline-Equivalent Fuel Economy of Electricity a. Average Electricity Generation and Transmission Efficiency b. Petroleum Refining and Distribution Efficiency c. Annual Gasoline-Equivalent Fuel Economy of Electricity 3. Cumulative Gasoline-Equivalent Fuel Economy of Electricity 4. Fuel Content Factor 5. Accessory Factor 6. Driving Pattern Factor 7. Revised PEF Value 8. Compliance Period 9. Annual Review IV. Responses to Additional Comments A. Revisions to Section 474.3 B. Consideration of All Forms of Energy Conservation C. Need for Multiple PEF Values D. Impact of Revised PEF on Plug-In Hybrid Electric Vehicles E. Compliance With NHTSA and EPA Standards F. Related Rulemakings G. Miscellaneous V. Revisions to 10 CFR P art 474 A. 10 CFR 474.3 B. Appendix to Part 474 VI. Procedural Issues and Regulatory Review A. Review Under Executive Orders 12866, 13563 and 14094 B. Review Under the Regulatory Flexibility Act C. Review Under the Paperwork Reduction Act of 1995 D. Review Under the National Environmental Policy Act of 1969 E. Review Under Executive Order 13132 F. Review Under Executive Order 12988 G. Review Under the Unfunded Mandates Reform Act of 1995 H. Review Under the Treasury and General Government Appropriations Act of 1999 I. Review Under Executive Order 12630 J. Review Under the Treasury and General Government Appropriations Act, 2001 K. Review Under Executive Order 13211 L. Congressional Notification VII. Approval of the Office of the Secretary PO 00000 Frm 00001 Fmt 4700 Sfmt 4700 I. Introduction and Background In an effort to conserve energy through improvements in the energy efficiency of motor vehicles, in 1975, Congress passed the Energy Policy and Conservation Act (EPCA), Public Law 94–163. Title III of EPCA amended the Motor Vehicle Information and Cost Savings Act (15 U.S.C. 1901 et seq.) (the Motor Vehicle Act) by mandating fuel economy standards for automobiles produced in, or imported into, the United States. This legislation, as amended, requires every manufacturer to meet applicable specified corporate average fuel economy (CAFE) standards for their fleets of light-duty vehicles under 8,500 pounds that the manufacturer manufactures in any model year.1 The Secretary of Transportation (through the National Highway Traffic Safety Administration (NHTSA)) is responsible for prescribing the CAFE standards and enforcing the penalties for failure to meet these standards. 49 U.S.C. 32902. The Administrator of the Environmental Protection Agency (EPA) is responsible for calculating each manufacturer’s fleet CAFE value. 49 U.S.C. 32902 and 32904. On January 7, 1980, President Carter signed the Chrysler Corporation Loan Guarantee Act of 1979 (Pub. L. 96–185). Section 18 of the Chrysler Corporation Loan Guarantee Act of 1979 added a new paragraph (2) to section 13(c) of the Electric and Hybrid Vehicle Research, Development, and Demonstration Act of 1976 (Pub. L. 94–413). Part of the new section 13(c) added paragraph (a)(3) to section 503 of the Motor Vehicle Act. That subsection provides: If a manufacturer manufactures an electric vehicle, the Administrator [of EPA] shall include in the calculation of average fuel economy under paragraph (1) of this subsection equivalent petroleum based fuel economy values determined by the Secretary of Energy for various classes of electric vehicles. The Secretary shall review those values each year and determine and propose necessary revisions based on the following factors: 1 The relevant provisions of the CAFE program, including DOE’s establishment of equivalent petroleum-based fuel economy values were transferred to Title 49 of the U.S. Code by Public Law 103–272 (July 5, 1984). See 49 U.S.C. 32901 et seq. The authority for DOE’s establishment of equivalent petroleum-based fuel economy values was transferred to 49 U.S.C. 32904(a)(2)(B). E:\FR\FM\29MRR1.SGM 29MRR1 22042 Federal Register / Vol. 89, No. 62 / Friday, March 29, 2024 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES (i) The approximate electrical energy efficiency of the vehicle, considering the kind of vehicle and the mission and weight of the vehicle. (ii) The national average electrical generation and transmission efficiencies. (iii) The need of the United States to conserve all forms of energy and the relative scarcity and value to the United States of all fuel used to generate electricity. (iv) The specific patterns of use of electric vehicles compared to petroleum-fueled vehicles. 49 U.S.C. 32904(a)(2)(B). Section 18 of the Chrysler Corporation Loan Guarantee Act of 1979 further amended the Electric and Hybrid Vehicle Research, Development, and Demonstration Act of 1976 by adding a new paragraph (3) to section 13(c), which directed the Secretary of Energy, in consultation with the Secretary of Transportation and the Administrator of EPA, to conduct a seven-year evaluation program of the inclusion of electric vehicles 2 in the calculation of average fuel economy. As required by section 503(a)(3) of the Motor Vehicle Act, DOE proposed a method of calculating the petroleum-equivalent fuel economy of electric vehicles utilizing a PEF in a new 10 CFR part 474 on May 21, 1980. 45 FR 34008. The rule was finalized on April 21, 1981, and became effective May 21, 1981. 46 FR 22747. The sevenyear evaluation program was completed in 1987, and the calculation of the annual petroleum equivalency factors was not extended past 1987. DOE published a proposed rule for a permanent PEF for use in calculating petroleum-equivalent fuel economy values of electric vehicles on February 4, 1994, and obtained comments from interested parties. 59 FR 5336. Following consideration of comments, DOE’s own internal re-examination of the assumptions underlying the proposed rule, and existing regulations for other classes of alternative fuel vehicles, DOE decided to modify the PEF calculation approach proposed in 1994. The 1994 proposed rule was later withdrawn, and DOE proposed a modified approach in a July 14, 1999, notice of proposed rulemaking. 64 FR 37905 (1999 NOPR). DOE published a final rule with a PEF of 82,049 Watthours per gallon on June 12, 2000, that amended 10 CFR part 474. 65 FR 36985 (2000 Final Rule). DOE has not updated 10 CFR part 474 since the 2000 Final Rule. On October 22, 2021, DOE received a petition for rulemaking from the Natural 2 For purposes of paragraph (a)(2) of 49 U.S.C. 32904, EPCA defines an ‘‘electric vehicle’’ as ‘‘a vehicle powered primarily by an electric motor drawing electrical current from a portable source.’’ VerDate Sep<11>2014 15:53 Mar 28, 2024 Jkt 262001 Resources Defense Council (NRDC) and Sierra Club requesting DOE to update its regulations at 10 CFR part 474. DOE published a notice of receipt of the petition on December 29, 2021, and solicited comment on the petition and whether DOE should proceed with a rulemaking. 86 FR 73992. In April 2023, DOE agreed that the inputs upon which the calculations and PEF values are based were outdated and that the technology and market penetration of EVs has significantly changed since the 2000 Final Rule and granted the petition from NRDC and Sierra Club. When granting the petition, DOE also published a notice of proposed rulemaking. 88 FR 21525 (2023 NOPR). In the 2023 NOPR, DOE proposed to update the PEF value and revise the methodology used to calculate the PEF. Specifically, the 2023 NOPR proposed the following revisions to the methodology: • Change the accessory factor, used to account for petroleum-fueled on-board accessories, to 1. • Revise the generation and transmission efficiency factor by using updated grid mix projection that account for policy changes since June 2000 and more recent data. • Remove the fuel content factor. In accordance with these proposed revisions, DOE proposed a revised PEF value of 23,160 Watt-hours per gallon. 88 FR 21525, 21532. In addition, DOE proposed that the revised PEF value would apply to model year (MY) 2027 and later electric vehicles. 88 FR 21525, 21531. DOE also proposed to delete 10 CFR 474.5, which requires DOE to review the PEF value every five years. 88 FR 21525, 21533. The public comment period for the 2023 NOPR closed on June 12, 2023. DOE received 20 comments on the proposed rule.3 Several commenters, including the Alliance for Automotive Innovation (Alliance), expressed concern that auto manufacturers would not have sufficient lead time to incorporate changes into their plans for MY 2027 vehicles, given that the new PEF value would significantly impact their CAFE compliance and given that manufacturing changes require significant lead times. On September 14, 2023, DOE issued letters to member companies of the Alliance that invited recipients to provide data, documents, or analysis to clarify the Alliance’s concerns in relation to the proposed 3 DOE received comments from an individual on October 1, 2023, after the comment period closed. Doc. No. 36. Despite the fact that these comments were filed late, DOE considered the issues raised in these comments when reviewing the rule. PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 effective date. DOE also published a Notification of Ex Parte Communication and Request for Comments in the Federal Register, which stated that DOE sent the September 14, 2023, letters and asked interested stakeholders to provide similar data, documents, or analysis. 88 FR 67682 (Oct. 2, 2023). DOE received data in response to the letters and the notification and incorporated the data into its analysis. The letters and responses to the letters and the notification are available in the docket. DOE is finalizing revisions to 10 CFR part 474 and the methods to calculate the PEF value in accordance with the statutory factors in 49 U.S.C. 32904(a)(2)(B). After considering comments, DOE is modifying the methodology as initially proposed in the 2023 NOPR in the following ways: • Updating the grid mix projection from the 2021 National Renewable Energy Laboratory (NREL) ‘‘95 by 2050’’ Scenario to the more current electricity generation forecast in the 2022 NREL ‘‘Standard Scenario Mid-Case,’’ which accounts for the latest technology and policies. • Changing the method of calculating the PEF value from using an average of annual PEF values between MY 2027 to MY 2031 to calculating a PEF value based on the survivability-weighted lifetime mileage schedule of the fleet of vehicles sold during the regulatory period. • Phasing-out the use of the fuel content factor between MY 2027 and MY 2030 rather than removing it from the PEF equation as of the effective date of the rule, as proposed in the 2023 NOPR. Each of these changes are discussed in detail in the following sections. II. Public Comments on the 2023 NOPR DOE received comments in response to the 2023 NOPR from the individuals and interested parties listed in Table 1. These comments are available in the public docket for this rulemaking. The specific issues relating to the final rule raised by the commenters are addressed in section III of this document. A parenthetical reference at the end of a comment quotation or paraphrase provides the location of the item in the public record.4 4 The parenthetical reference provides a reference for information located in the docket for this rulemaking. (Docket No. EERE–2021–VT–0033, which is maintained at www.regulations.gov). The references are arranged as follows: commenter name, comment docket ID number, page of that document. E:\FR\FM\29MRR1.SGM 29MRR1 22043 Federal Register / Vol. 89, No. 62 / Friday, March 29, 2024 / Rules and Regulations TABLE 1—2023 NOPR WRITTEN COMMENTS Commenter(s) Abbreviation Gilles DeBrouwer .................................................................................................................................... Vivat ........................................................................................................................................................ Anonymous 1 .......................................................................................................................................... Transport Evolved ................................................................................................................................... Tesla, Inc ................................................................................................................................................. International Council on Clean Transportation ....................................................................................... Natural Resources Defense Council and Sierra Club ............................................................................ Zero Emission Transportation Association ............................................................................................. Ford Motor Company .............................................................................................................................. National Automobile Dealers Association ............................................................................................... Porsche Cars ........................................................................................................................................... Alliance for Automotive Innovators ......................................................................................................... American Fuel & Petrochemical Manufacturers ..................................................................................... State of California et al ........................................................................................................................... Our Children’s Trust ................................................................................................................................ American Council for an Energy Efficient Economy ............................................................................... International Union, United Automobile, Aerospace & Agricultural Implement Workers of America ..... American Free Enterprise Chamber of Commerce et al ........................................................................ Clean Fuels Development Coalition et al ............................................................................................... Omer Sevindir ......................................................................................................................................... ........................................ ........................................ ........................................ ........................................ Tesla .............................. ICCT ............................... NRDC and Sierra Club .. ZETA .............................. Ford ................................ NADA ............................. Porsche .......................... Alliance .......................... AFPM ............................. California et al ................ ........................................ ACEEE ........................... UAW ............................... AmFree et al .................. Clean Fuels et al ........... ........................................ khammond on DSKJM1Z7X2PROD with RULES III. Discussion of Final Rule A. Statutory Factors In accordance with 49 U.S.C. 32904, DOE reviewed the equivalent petroleum-based fuel economy values for EVs, including both the current PEF value and the methodology used to calculate that value, which are found in 10 CFR part 474. When reviewing the equivalent petroleum-based fuel economy values for EVs, DOE must consider four factors: (i) The approximate electrical energy efficiency of the vehicle, considering the kind of vehicle and the mission and weight of the vehicle. (ii) The national average electrical generation and transmission efficiencies. (iii) The need of the United States to conserve all forms of energy and the relative scarcity and value to the United States of all fuel used to generate electricity. (iv) The specific patterns of use of electric vehicles compared to petroleum-fueled vehicles. 49 U.S.C. 32904(a)(2)(B). Based on more recent data, changes to market conditions, and comments received in response to the 2023 NOPR, DOE is revising the methodology used to calculate PEF and the resulting PEF value in this final rule. DOE discusses its consideration of the statutory factors and its conclusions in the following sections. B. Current Methodology 10 CFR 474.3 provides the current methodology for determining the equivalent petroleum-based fuel economy values for EVs. First, DOE determines the EVs’ urban and highway VerDate Sep<11>2014 15:53 Mar 28, 2024 Jkt 262001 energy consumption value in Watthours (Wh) per mile. To do this, DOE uses the energy consumption values provided by the Highway Fuel Economy Driving Schedule (HFEDS) and Urban Dynamometer Driving Schedule (UDDS) test cycles established by EPA at 40 CFR parts 86 and 600. 10 CFR 474.3(a)(1). DOE then determines the combined energy consumption value by averaging the urban and highway energy consumption values using a weighting of 55 percent urban and 45 percent highway. 10 CFR 474.3(a)(2). Finally, DOE converts this combined energy consumption value (expressed in Wh per mile) to a petroleum-equivalent fuel economy value, which is measured in miles per gallon (mpg), by dividing the PEF (measured in Wh per gallon) by the combined energy consumption value. The current PEF calculation procedure converts the measured electrical energy consumption of an electric vehicle into a gasolineequivalent fuel economy of electricity (Eg). 65 FR 36986, 36987. Then, the methodology multiplies the Eg by the fuel content factor (FCF), which is intended to represent the energy content equivalent the alternative fuel to a gallon of gasoline; the accessory factor (AF), which represents possible use of petroleum-powered accessories, such as cabin heater/defroster systems; and the driving pattern factor (DPF), which represents the potential for different uses of EVs compared to internal combustion engine (ICE) vehicles. Id. The general form of the PEF equation is: PEF = Eg × FCF × AF × DPF In the 2000 Final Rule, DOE used this equation to calculate the PEF value and determined that the PEF for EVs that do PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 Document No. 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 36 not have any petroleum-powered accessories is 82,049 Watt-hours per gallon (Wh/gal). See 10 CFR 474.3(b)(1). For EVs that have petroleum-powered accessories, DOE determined that the PEF is 73,844 Wh/gal. See 10 CFR 474.3(b)(2). C. Revised Methodology As stated previously, DOE concluded that the current PEF value and methodology were based on outdated data and that the technology and market penetration of EVs has significantly changed since the 2000 Final Rule. Accordingly, in the 2023 NOPR, DOE proposed a revised PEF value and revisions to the methodology used to calculate the PEF. Specifically, the 2023 NOPR proposed changing the accessory factor to 1.0, revising the generation and transmission efficiency factor by using updated electrical grid mix projections, and removing the fuel content factor. The 2023 NOPR also proposed maintaining the driving pattern factor at 1.0. 1. Approximate Electrical Energy Efficiency of EVs DOE considers the approximate electrical energy efficiency of EVs in determining the PEF value pursuant to 49 U.S.C. 32904(a)(2)(B)(i). As discussed, the current methodology converts the energy consumption of an EV from Wh of electricity to gallons of gasoline based upon energy consumption values provided by Highway Fuel Economy Driving Schedule (HFEDS) and Urban Dynamometer Driving Schedule (UDDS) test cycles established by EPA at 40 CFR parts 86 and 600. See 10 CFR 474.3 and E:\FR\FM\29MRR1.SGM 29MRR1 Federal Register / Vol. 89, No. 62 / Friday, March 29, 2024 / Rules and Regulations 474.4. In the 2023 NOPR, DOE proposed to retain this methodology because it provided an ‘‘accurate measure of the electrical energy efficiency of the relevant EV during typical use and is appropriately utilized in the PEF equation.’’ 88 FR 21525, 21527. khammond on DSKJM1Z7X2PROD with RULES One commenter supported maintaining the current energy efficiency regime. Tesla, Doc. No. 18, pg. 2. In addition, although NRDC and Sierra Club did not oppose the current methodology expressly, they urged DOE to ‘‘clarify whether it will use unadjusted dynamometer testing results or adjusted values’’ when measuring energy consumption of an EV. NRDC and Sierra Club, Doc. No. 20, pg. 5. NRDC and Sierra Club observed that dynamometer testing overstates realworld performance for vehicles by as much as 30 percent. NRDC and Sierra Club, Doc. No. 20, pg. 5 (citing 87 FR 25710, 25720 (May 2, 2022)). Thus, they recommended that DOE consider using adjusted dynamometer values to better approximate the actual electrical efficiency of EVs for use in determining the equivalent petroleum-based fuel economy values for EVs. NRDC and Sierra Club, Doc. No. 20, pg. 5. Other commenters opposed retaining the current methodology and argued that both HFEDS and UDDS test cycles are unrepresentative of typical use cases of EVs. AFPM, Doc. No. 26, pg. 5; Clean Fuels et al., Doc. No. 32, pg. 3; AmFree, Doc. No. 31, pg. 4. Specifically, these commenters claimed that HFEDS fails to capture the most typical use case of EVs, such as commuting to and from work. AFPM, Doc. No. 26, pg. 5; Clean Fuels et al., Doc. No. 32, pg. 3–4. In addition, they asserted that UDDS fails to capture variations in climate or extended periods of idling. AFPM, Doc. No. 26, pg. 6; Clean Fuels et al., Doc. No. 32, pg. 4. As a result of these and other failures, these commenters argued that these test cycles overestimate the performance of EVs. AFPM, Doc. No. 26, pg. 6; Clean Fuels et al., Doc. No. 32, pg. 4–5. These commenters stated that ‘‘DOE must revisit its chosen procedure and apply more robust and accurate test methods,’’ and that DOE’s decision to retain the current methodology is arbitrary and capricious. Clean Fuels et al., Doc. No. 32, pg. 5; AFPM, Doc. No. 26, pg. 6. The commenters noted there are other more representative tests currently available, like EPA’s 5-cycle formula, to calculate the fuel economy of vehicles. AFPM, Doc. No. 26, pg. 6; Clean Fuels et al., VerDate Sep<11>2014 15:53 Mar 28, 2024 Jkt 262001 Doc. No. 32, pg. 5; AmFree, Doc. No. 31, pg. 4. Both of these comments regarding adjusting the dynamometer readings or using different test cycles were addressed in DOE’s methodology for calculating the energy consumption of an EV in terms of miles per gallon. DOE notes that DOE’s methodology is aligned with EPA’s methodology for calculating the compliance fuel economy values for ICE vehicles in the CAFE program. The adjustment and the test cycles recommended by commenters, however, are not used to calculate fuel economy for purposes of CAFE compliance. Rather, the recommended adjustment and test cycles are used to calculate fuel economy for the EPA/DOT Fuel Economy and Environment Label (window sticker).5 DOE notes that 49 U.S.C. 32904(c) requires EPA to use the ‘‘same procedures for passenger automobiles the Administrator used for model year 1975’’ to measure the fuel economy of passenger vehicles for CAFE purposes. Pursuant to this directive, EPA uses the HFEDS and UDDS test cycles to calculate fuel economy for ICE vehicles and does not adjust the dynamometer results. A consistent methodology applied to all auto manufacturers for calculating the fuel economy of ICE vehicles helps to ensure a level playing field. Because the purpose of the PEF is to provide a fuel economy conversion factor for EVs (so that they may be averaged with ICE vehicles for determining CAFE performance) it is reasonable and appropriate to keep all else as equal as possible. Because CAFE compliance for ICE vehicles is determined using the HFEDS and UDDS test cycles, determining EV energy consumption values using those two same test cycles is consistent and reasonable. In this final rule, as proposed in the 2023 NOPR, DOE retains its current methodology to convert energy consumption of an EV into gallons of gasoline based upon energy consumption values provided by the HFEDS and UDDS test cycles established by EPA at 40 CFR parts 86 and 600. See 10 CFR 474.3 and 474.4. DOE determines that using unadjusted dynamometer results from the HFEDs and UDDS to calculate energy consumption for EVs provides a calculation of fuel economy for EVs 5 Similarly, other commenters, such as Hyundai, suggested that DOE harmonize the PEF with EPA’s use of 33,705 Wh/gal used by EPA in its fuel economy labeling. Hyundai, Doc. No. 39, pg. 2. PO 00000 Frm 00004 Fmt 4700 Sfmt 4700 most comparable to the existing gasoline fuel economy that EPA calculates. Because the PEF value provides a fuel economy conversion factor for EVs (so that they may be averaged with ICE vehicles for determining CAFE performance), it is reasonable and appropriate to adopt a consistent methodology that helps ensure a level playing field. 2. Gasoline-Equivalent Fuel Economy of Electricity When comparing ICE vehicles with EVs, it is essential to consider the efficiency of the respective upstream processes in the two relevant energy cycles.6 The critical difference between the processes is that an ICE vehicle burns its fuel on-board, and an EV burns its fuel (the majority of electricity in the U.S. is generated at fossil fuel burning powerplants) off-board. In both cases, the burning of fuels to produce work is the least efficient step of the respective energy cycles. Therefore, the 2000 Final Rule included a term, gasolineequivalent energy content of electricity (Eg), to express the relative energy efficiency of the full energy cycles of gasoline and electricity. 65 FR 36986, 36987. Under the current rule, the gasolineequivalent energy content of electricity, is calculated by multiplying the U.S. average electricity generation efficiency (Tg), the U.S. average electricity transmission efficiency (Tt), and the Watt-hours of energy per gallon of gasoline conversion factor (C) 7, and then dividing that value by the petroleum refining and distribution efficiency (Tp). 65 FR 36986, 36987. The equation calculating the gasolineequivalent energy content of electricity factor is written as follows.8 In the 2000 Final Rule, DOE calculated a gasoline-equivalent energy content of electricity factor of 12,307 Wh/gal by using the following inputs: 6 In this context ‘‘upstream’’ means everything prior to storage of energy on the vehicle, also commonly referred to as well-to-tank. 7 The Watt-hours of energy per gallon of gasoline conversion factor is a standard value, 33705 Wh/ gal. 8 The equation is revised from the form in the 2000 Final Rule to correct a printing error in the 2000 Final Rule. The calculation of Eg is correct in the 2000 Final Rule despite the printing error. E:\FR\FM\29MRR1.SGM 29MRR1 ER29MR24.053</GPH> 22044 Federal Register / Vol. 89, No. 62 / Friday, March 29, 2024 / Rules and Regulations 0.328 x 0.924 22045 Wh 33,705 gal Wh E = ------=-=-::-:::------ = 12,307-l n 0.830 ga 65 FR 36986, 36987. The gasoline-equivalent energy content of electricity factor involves the consideration of the national average electrical generation and transmission efficiencies and the need to conserve all forms of energy and the relative scarcity and value to the United States of all fuel used to generate electricity. 49 U.S.C. 32904(a)(2)(B)(ii) and (iii). In the analysis that follows, DOE updates the electricity generation and transmission efficiency factor and the petroleum refining and distribution efficiency factor used to calculate the gasolineequivalent fuel economy of electricity. X a. Average Electricity Generation and Transmission Efficiency The calculation for electricity efficiency considers production of the energy source, generation of electricity from that source, and transmission of the electricity to the EV charging location. The efficiency of the production of the energy source and the generation of electricity from that source vary widely. In the 2023 NOPR, DOE updated its calculations of the average generation and transmission efficiency for all fuels based on the latest data available. In the 2023 NOPR, DOE used the efficiency data from Greenhouse Gases, Regulated Emissions, and Energy use in Transportation (GREET).9 To calculate the well-to-tank efficiency for electricity from specific energy sources, DOE multiplied the production efficiency,10 generation efficiency,11 and transmission efficiency 12 for each source. The efficiencies of electricity generated from specific sources used in this analysis are provided in Table 2. DOE used the same efficiencies of electricity generated from specific sources in this final rule. TABLE 2—ELECTRICITY GENERATION AND TRANSMISSION EFFICIENCY BY SOURCE Natural gas ...................................................................................................... Coal .................................................................................................................. Oil ..................................................................................................................... Biomass ........................................................................................................... Nuclear ............................................................................................................. Solar ................................................................................................................. Wind ................................................................................................................. Hydroelectric .................................................................................................... Geothermal ...................................................................................................... 91.81 97.90 88.41 97.54 97.40 100 100 100 100 47.34 34.55 31.92 21.65 100 100 100 100 100 Transmission efficiency (%) Calculated efficiency (%) 95.14 95.14 95.14 95.14 95.14 95.14 95.14 95.14 95.14 41.35 32.18 26.85 20.09 92.67 95.14 95.14 95.14 95.14 In the 2023 NOPR, due to the abundance of renewable energy sources such as wind and solar, DOE proposed treating renewable energy sources as effectively 100 percent efficient in their generation. 88 FR 21525, 21530. DOE also treated nuclear electricity generation as effectively 100 percent efficient because, like solar and wind, there is no practical, aggregate resourceavailability limitation for nuclear materials. 88 FR 21525, 21530. Some commenters disagreed with DOE’s proposal to treat renewable and nuclear energy generation as effectively 100 percent efficient. AmFree, Doc. No. 31, pg. 4–5; AFPM, Doc. No. 26, pg. 9. These commenters asserted that there is no basis for DOE to assume renewable or nuclear energy generation is 100 percent efficient, and therefore DOE must revise its generation efficiencies for such energy. AmFree, Doc. No. 31, pg. 4–5; AFPM, Doc. No. 26, pg. 9. In response to these concerns, DOE notes that the methodology accounts for transmission losses from such electricity sources. The DOE interpretation of energy scarcity relies on primary energy sources. As such, with an effectively inexhaustible supply of primary energy—sun, wind, fissile nuclear material—it is not appropriate to use a conversion efficiency with these sources when calculating the PEF. By contrast, fossil energy sources used to generate electricity are large but finite. DOE considers the combustion efficiency of electric generation as part of the full energy lifecycle. Renewable gaseous fuel burned for electricity, though expected to be a small contributor to renewable electricity overall, are treated similarly to fossil natural gas with respect to combustion efficiency. DOE is retaining the 100 percent conversion efficiency assumption for nuclear and renewable generation (other than for renewable natural gas) in this rule. 9 The GREET model is a life-cycle analysis tool, structured to systematically examine the energy and environmental effects of a wide variety of transportation fuels and vehicle technologies in major transportation sectors (i.e., road, air, marine, and rail) and other end-use sectors, and energy systems. Development of the GREET model by Argonne National Laboratory has been supported by multiple offices of DOE, DOT, and other agencies over the past 28 years. The GREET model is available at greet.anl.gov/, doi:10.11578/GREETNet-2021/dc.20210903.1. 10 ‘‘Production efficiency’’ includes efficiencies related to producing the raw material and transport to the electricity generation facility. 11 ‘‘Generation efficiency’’ relates to the conversion of the limited resources into electricity, e.g., by combustion, heating a boiler, and turning a turbine. 12 Under GREET, electricity transmission has a national average efficiency of 95.14 percent. i. Efficiency of Renewable and Nuclear Electricity Generation khammond on DSKJM1Z7X2PROD with RULES Generation efficiency (%) VerDate Sep<11>2014 15:53 Mar 28, 2024 Jkt 262001 PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 ii. U.S. Electrical Grid Projections As discussed in section III.C.3, in this final rule, DOE adopts a methodology that calculates a PEF value based on the expected survivability-weighted lifetime mileage schedule of the fleet of vehicles sold over the regulatory period. DOE recognizes that while the average life of a vehicle is around 15 years, the influence of a fleet of vehicles produced in a given model lasts much longer. To capture this influence, DOE has adopted the survivability-weighted annual vehicle miles traveled parameters from E:\FR\FM\29MRR1.SGM 29MRR1 ER29MR24.054</GPH> Production efficiency (%) Energy source 22046 Federal Register / Vol. 89, No. 62 / Friday, March 29, 2024 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES the CAFE model that establishes values for a 40-year span. Beyond 40 years, only an insignificant population of vehicles from that given model year will remain on the road.13 Thus, calculating a PEF value based on the expected fleet of EVs requires calculating electricity generation and transmission efficiency 40 years into the future. This methodology provides a better representation of how vehicles sold during the regulatory period will be used than did the methodology used in the 2023 NOPR of averaging the calculated annual PEF based on the grid characteristics at the time the vehicles were sold. When calculating electricity generation and transmission efficiency, DOE weights each of the generation source-specific total efficiencies based on that source’s share of the entire U.S. electricity grid. This mix of energy sources changes over time and is likely to continue changing in the future. Thus, the mix of electricity generation sources is a critical variable impacting the value of the PEF, consistent with Congressional direction at 49 U.S.C. 32904(a)(2)(B)(ii) and (iii) to consider the national average electrical generation efficiency and the need to conserve all forms of energy. In the 2023 NOPR, DOE considered numerous projections available in 2022 and selected the projection model 2021 Electrification 95 by 2050, Standard Scenario, from NREL, in which the United States achieves 95 percent renewable generation of electricity by 2050 (NREL 2021 95 by 2050). 88 FR 21525, 21531. In selecting this grid projection, DOE stated that NREL 2021 95 by 2050 is more representative of the likely future grid mix after the effects of recent policy changes, such as those in the Inflation Reduction Act of 2022 (IRA) and the Infrastructure Investment and Jobs Act (IIJA), are fully realized, particularly given that these policies will result in a substantial addition of renewable resources onto the grid. In the 2023 NOPR, DOE noted that it also considered EIA’s Annual Energy Outlook (AEO) Reference Case for 2022 (AEO 2022). DOE opted not to use AEO 2022 because it did not incorporate recent policy changes in the IRA. 88 FR 21525, 21531. While NREL 2021 95 by 2050 also did not incorporate IRA 13 In its notice of proposed rulemaking that establishes CAFE standards for passenger cars and light trucks for MY 2027–2032, NHTSA estimates the average maximum lifespan of such vehicles to be 40 years. 88 FR 56128 (Aug. 17, 2023); Light Duty Central Analysis, file LD_Central_ Analysis.zip, spreadsheet: parameters_ref.xlsx, on tab ‘‘Vehicle Age Date’’. Available at www.nhtsa.gov/file-downloads?p=nhtsa/ downloads/CAFE/2023-NPRM-LD-2b3-2027-2035/ Central-Analysis/. VerDate Sep<11>2014 15:53 Mar 28, 2024 Jkt 262001 impacts, the NREL forecast better represented expected renewable energy growth through 2030 than the AEP 2022 forecast. However, DOE said that for the final rule, it would consider using other projections, such as EIA’s AEO for 2023 (AEO 2023), which was not available when DOE conducted its analysis for the 2023 NOPR. Some commenters supported DOE’s decision to use the 95 by 2050 grid projections from NREL’s 2021 forecast. Tesla, Doc. No. 18, pg. 3–4; ICCT, Doc. No. 19, pg. 1. Other commenters believed that DOE should use AEO 2023. NRDC and Sierra Club, Doc. No. 20, pg. 3; California et al., Doc. No. 27, pg. 4–5. These commenters noted that the grid projections in AEO 2023 account for policy changes in IRA. They also observed that NHTSA uses the EIA AEO model in the recent CAFE rulemaking. NRDC and Sierra Club, Doc. No. 20, pg. 3. Another commenter stated that DOE should use the ‘‘relative scarcity’’ scenario explored in the spreadsheet that accompanied the 2023 NOPR. Alliance, Doc. No. 25, pg. 14. For this final rule, DOE assessed the grid projections that have become available since 2022. These include AEO 2023, which does account for some impacts of the IRA and IIJA, and the ‘‘relative scarcity’’ scenario. After this consideration and analysis, in this final rule, DOE continues to use the NREL model (updated for 2022 data) that it used in the 2023 NOPR, but DOE selects the Standard Scenario Mid-Case instead of the 95 by 2050 Scenario. Specifically, DOE is using the NREL 2022 Standard Scenario, ‘‘Mid-case, nascent techs, current policies’’ to forecast the grid mix for the final rule. Among the factors the Secretary must consider when setting the PEF is ‘‘the need of the United States to conserve all forms of energy and the relative scarcity and value to the United States of all fuel used to generate electricity.’’ 49 U.S.C. 32904(a)(2)(B)(iii). DOE believes that Congress’ directive to set a PEF and to consider the conservation of all forms of energy, including the relative scarcity and value of fuels used to generate electricity, are intended to ensure that average fuel economy of a manufacturer’s entire fleet recognize and account for the full energy conservation benefits of EVs relative to ICE vehicles, taking into account both energy conservation overall, and the relative need for and supply constraints of different types of fuels. ‘‘[T]he relative scarcity and value to the United States of all fuel used to generate electricity’’ is anticipated by every forecast DOE considered to change over time, largely in response to U.S. PO 00000 Frm 00006 Fmt 4700 Sfmt 4700 government policy decisions regarding ‘‘the need of the United States to conserve energy.’’ Renewable and other clean energy sources of electricity are integral in addressing the need to conserve energy and improve energy security, and so current policies are directed at increasing the production of electricity from such energy sources. In this specific statutory context, DOE believes it is particularly important to ensure that the model used to estimate the future energy conservation benefit of EVs focuses on projecting how the mix of renewable and other clean energy generation in the grid will change over the long term. The NREL model has this specific focus. In the 2023 NOPR, DOE selected the 2021 NREL 95 by 2050 scenario because DOE believed it was the closest forecast to approximately capture the projected impacts of the IRA, which had been adopted too recently to be fully incorporated into any published projection.14 Since DOE published the 2023 NOPR, the NREL 2022 forecast has been published. To affect the purposes of this statute, DOE believes the NREL 2022 Standard Midcase scenario best captures the impact of the IRA and IIJA on renewable and other clean electricity generation over time. As described on NREL’s website: ‘‘[e]very year, the Standard Scenarios includes a scenario called the Mid-case that serves as a baseline or middleground scenario to reflect what might happen if current trends and conditions continue. The Mid-case has central values for model inputs like technology and fuel costs and how much electricity people use. In addition, the Mid-case represents currently enacted electric sector policies.’’ 15 In addition, the AEO scenarios have historically made relatively more conservative assumptions regarding the growth of renewable generation, relative to the NREL model. Because DOE believes that, for the reasons described previously, the 2022 NREL 2022 Standard Scenario, ‘‘Mid-case, nascent techs, current policies’’ best captures the impact of the IRA and IIJA on renewable and other clean electricity generation on the U.S. electrical grid for the specific purposes of this rule, DOE used this projection in its calculation of the PEF value. DOE will annually review forecasts for electricity generation and determine if a change is necessary for this value for future model 14 The NREL 2021 forecast did include impacts of some relatively recent policies, such as the IIJA. 15 See www.nrel.gov/news/program/2024/nrelreleases-the-2023-standard-scenarios.html. E:\FR\FM\29MRR1.SGM 29MRR1 Federal Register / Vol. 89, No. 62 / Friday, March 29, 2024 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES years as required by 49 U.S.C. 32904(a)(2)(B). b. Petroleum Refining and Distribution Efficiency In the 2023 NOPR, DOE also updated its calculations of the petroleum refining and distribution efficiency factor to reflect the most recent GREET data. 88 FR 21525, 21527. In the 2023 NOPR, DOE used GREET efficiency factors to determine that crude oil production and transportation has an efficiency of 93.96 percent, gasoline refining has an efficiency of 87.01 percent, and gasoline transportation and distribution has an energy efficiency of 99.52 percent. Multiplying these three terms provides an overall well-to-tank petroleum refining and distribution efficiency of 81.36 percent. NRDC and Sierra Club argued that petroleum refining and distribution efficiency should not be considered when considering the national average electrical generation and transmission efficiency. NRDC and Sierra Club, Doc. No. 20, pg. 4. They asserted that section 32904(a)(2)(B)(ii) only directs DOE to consider ‘‘electrical generation and transmission efficiencies,’’ and does not direct DOE to consider petroleum refining and distribution efficiencies or compare them to electric ones. NRDC and Sierra Club, Doc. No. 20, pg. 4. Furthermore, these commenters stated that because nothing in the statute requires DOE to consider petroleum refining and distribution efficiency, DOE should remove the term from the methodology used to calculate PEF. NRDC and Sierra Club, Doc. No. 20, pg. 4. Comparing electricity and gasoline on an equivalent basis requires consideration of the full energy-cycle energy efficiency from the point of primary energy production through enduse to power a vehicle for both gasoline and electricity. Assessing the full energy cycle of electricity and conventional fuel requires a holistic approach to address energy conservation when energy losses occur at different stages of an energy cycle for different energy products and fuels, such as electricity and gasoline. Moreover, DOE interprets the ‘‘need of the U.S. to conserve energy’’ as applying broadly to all forms of energy, which includes petroleum. 49 U.S.C. 32904(a)(2)(B)(iii). Therefore, it is appropriate to assess the full energy cycle of both gasoline and electricity the energy is converted to a useful form at different stages—gasoline onboard the vehicle, electricity upstream—and a reasonable comparison of the two systems requires taking into account the same steps. VerDate Sep<11>2014 15:53 Mar 28, 2024 Jkt 262001 Another commenter opposed the calculations for petroleum refining and distribution efficiency because they believed that the data available from the fossil fuel industry is unreliable. Transport Evolved, Doc. No. 17, pg. 2. In this final rule, as with the 2023 NOPR, DOE used the best data available on refining and distribution efficiency by using the efficiency numbers in the GREET model. It is a widely used lifecycle analysis model for vehicle technologies and transportation fuels and has been used in regulation development and evaluation by DOE, EPA, and DOT. The data obtained from the GREET model are reliable. 22047 TABLE 3—ANNUAL GASOLINE-EQUIVALENT FUEL ECONOMY OF ELECTRICITY—Continued Year 2049 ...................................... 2050 and later ...................... Annual Eg (Wh/gal) 28,434 28,097 The Alliance argued that the 2000 Final Rule underestimates the fuel economy of EVs because EVs do not use any petroleum (or only minimal amounts through the grid) when operating in fully electric mode. Alliance, Doc. No. 25, pg. 15. They note that the electrical grid has only become c. Annual Gasoline-Equivalent Fuel more efficient since 2000. Therefore, Economy of Electricity they argue that the 2027 PEF value should be higher than the 2000 PEF. As discussed previously, DOE uses This argument both misunderstands the the average electricity generation and purpose of the PEF in the compliance transmission efficiency and the calculations and discounts the DOE’s petroleum refining and distribution attempt to better align the PEF with the efficiency to determine the gasolinestatutory factors prescribed by Congress. equivalent fuel economy of electricity The purpose of the PEF is to convert the (Eg). In order to calculate the electricity energy used by EVs to a miles per generation and transmission efficiency, gallon-equivalent in order to average EV DOE uses the 2022 NREL Standard and ICE vehicle fuel economy for Scenario, ‘‘Mid-case, nascent techs, determining vehicle manufacturers’ current policies’’ to forecast the U.S. electrical grid mix. The annual gasoline- CAFE performance. Although DOE agrees that the electrical grid has equivalent fuel economy of electricity become more efficient since 2000, in values used in this analysis are this rulemaking, DOE is holistically provided in Table 3. The modeling reviewing all of the factors used to source only goes until 2050, so DOE calculate the PEF, including the use of assumed an unchanging grid for the fuel content factor. The efficiency of subsequent years. the grid is only one input to these TABLE 3—ANNUAL GASOLINE-EQUIVA- calculations and does not solely LENT FUEL ECONOMY OF ELEC- determine the final result. TRICITY 3. Cumulative Gasoline-Equivalent Fuel Economy of Electricity Annual Eg Year In the 2023 NOPR, DOE explained (Wh/gal) that NHTSA’s next CAFE regulation was 2023 ...................................... 21,407 expected to cover MYs 2027–2031 and 2024 ...................................... 22,299 proposed that the proposed PEF value 2025 ...................................... 22,880 would be the applicable PEF for 2026 ...................................... 23,481 calculating EV fuel economy when 2027 ...................................... 24,897 2028 ...................................... 26,449 enforcing the CAFE regulations those 2029 ...................................... 27,498 model years. 88 FR 21525, 21531. To 2030 ...................................... 28,595 calculate a PEF value usable over the 2031 ...................................... 29,000 entire period covered by the next 2032 ...................................... 29,404 revision of the CAFE regulations, DOE 2033 ...................................... 29,788 considered a forward-looking approach 2034 ...................................... 30,171 based on projections for the electricity 2035 ...................................... 30,412 2036 ...................................... 30,651 generation grid in the future. In the 2023 2037 ...................................... 30,717 NOPR, DOE only considered the annual 2038 ...................................... 30,781 calculated PEF over the expected 2039 ...................................... 30,836 regulatory period and used an average of 2040 ...................................... 30,889 those values. DOE explained that the 2041 ...................................... 30,613 average of the annually calculated value 2042 ...................................... 30,349 of the PEF, based on calendar-year 2043 ...................................... 30,041 projections for the electric grid, would 2044 ...................................... 29,747 2045 ...................................... 29,490 be applied for MYs 2027 through 2031. 2046 ...................................... 29,243 88 FR 21525, 21531. Several commenters opposed this 2047 ...................................... 29,011 2048 ...................................... 28,787 approach and noted that vehicles are PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 E:\FR\FM\29MRR1.SGM 29MRR1 22048 Federal Register / Vol. 89, No. 62 / Friday, March 29, 2024 / Rules and Regulations driven for many years after their initial sale, not just the five years considered in the 2023 NOPR. DeBrouwer, Doc. No. 14, pg. 1; ACEEE, Doc. No. 29, pg. 1– 2. On further analysis, and in response to these comments, this final rule adopts a PEF value based on the expected survivability-weighted lifetime mileage schedule of the fleet of vehicles sold during the regulatory period. To determine this, DOE uses the survivability-weighted lifetime mileage schedule derived from NHTSA’s CAFE rulemaking.16 The data that NHTSA used to develop the average annual vehicle miles traveled (VMT) schedule used in its analysis divided the light duty vehicle fleet 17 into three categories: passenger cars, pickup trucks, and Vans/SUVs. Each vehicle category has different scrappage rates and annual driving patterns. For this analysis DOE used a weighted average of 62.4 percent Vans/SUVs, 17.4 percent pickup trucks, and 20.2 percent passenger cars to generate the average annual VMT shown in Table 4 below.18 DOE uses the same average for the electric-fueled sub-fleet because DOE lacks accurate information about individual automaker plans for electrifying their product lines. Table 4 shows the average annual VMT expected for the fleet of vehicles for the first forty years after initial sale. TABLE 4—ANNUAL VMT FOR LIGHT DUTY VEHICLE FLEET—Continued TABLE 4—ANNUAL VMT FOR LIGHT DUTY VEHICLE FLEET Year after initial sale Annual VMT 1 ............................................ 2 ............................................ 3 ............................................ 4 ............................................ 5 ............................................ 6 ............................................ 7 ............................................ 8 ............................................ 9 ............................................ 10 .......................................... 11 .......................................... 12 .......................................... 13 .......................................... 14 .......................................... 15 .......................................... 16 .......................................... 17 .......................................... 18 .......................................... 19 .......................................... 20 .......................................... 21 .......................................... 22 .......................................... 23 .......................................... 24 .......................................... 25 .......................................... 26 .......................................... 27 .......................................... 28 .......................................... 29 .......................................... 16,647 15,989 15,336 14,679 14,012 13,331 12,627 11,894 11,131 10,334 9,504 8,639 7,755 6,873 6,008 5,188 4,439 3,773 3,196 2,704 2,293 1,953 1,674 1,443 1,253 1,096 965 856 764 Year after initial sale 30 31 32 33 34 35 36 37 38 39 40 Annual VMT .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... 686 564 463 380 312 256 209 171 139 114 92 The current methodology uses the annual gasoline-equivalent fuel economy of electricity to calculate PEF. Thus, the current PEF methodology must be revised to calculate a PEF value based on expected operation of the vehicles sold. To represent the expected operation of these vehicles, DOE calculates a cumulative gasolineequivalent fuel economy of electricity (CEg) in Table 5. The cumulative gasoline-equivalent fuel economy of electricity is determined by multiplying the annual gasoline-equivalent fuel economy of electricity by the corresponding annual share of lifetime VMT based on the survivabilityweighted lifetime mileage schedule. TABLE 5—CUMULATIVE GASOLINE-EQUIVALENT FUEL ECONOMY OF ELECTRICITY FOR MY 2027 EVS khammond on DSKJM1Z7X2PROD with RULES Calendar year 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 Vehicle age ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. 16 See NHTSA NPRM Draft Technical Support Document, Chapter 4, p. 4–41, Table 4–12, ‘‘VMT Schedule by Body Style and Age’’ for vehicle type breakdown and Section 4.2.2.3.3, ‘‘Estimating the Scrappage Models’’, beginning on p. 4–26. NHTSA TSD available at: www.nhtsa.gov/document/cafe- VerDate Sep<11>2014 15:53 Mar 28, 2024 Jkt 262001 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 2027-2032-hdpuv-2030-2035-draft-technicalsupport-document. 17 This rule considers all passenger cars and trucks up to 8,500 pounds to be light-duty vehicles. This aligns to those vehicles that are subject to NHTSA’s CAFE regulations for passenger cars and light trucks. PO 00000 Frm 00008 Fmt 4700 Sfmt 4700 Annual share of lifetime VMT (%) Eg 24,898 26,450 27,498 28,596 29,000 29,405 29,789 30,171 30,413 30,651 30,717 30,782 30,836 30,889 30,613 30,349 30,042 29,747 29,490 29,243 29,011 28,788 28,434 7.94 7.62 7.31 7.00 6.68 6.36 6.02 5.67 5.31 4.93 4.53 4.12 3.70 3.28 2.86 2.47 2.12 1.80 1.52 1.29 1.09 0.93 0.80 Partial CEg 1,976 2,016 2,011 2,001 1,937 1,869 1,793 1,711 1,614 1,510 1,392 1,268 1,140 1,012 877 751 636 535 449 377 317 268 227 18 The distribution was derived from the file: LD_ Central_Analysis.zip/output/LD_ref/reports_csv/ vehicles_report.csv available at: www.nhtsa.gov/ file-downloads?p=nhtsa/downloads/CAFE/2023NPRM-LD-2b3-2027-2035/Central-Analysis/. E:\FR\FM\29MRR1.SGM 29MRR1 Federal Register / Vol. 89, No. 62 / Friday, March 29, 2024 / Rules and Regulations 22049 TABLE 5—CUMULATIVE GASOLINE-EQUIVALENT FUEL ECONOMY OF ELECTRICITY FOR MY 2027 EVS—Continued Calendar year 2050 2051 2052 2053 2054 2055 2056 2057 2058 2059 2060 2061 2062 2063 2064 2065 2066 Annual share of lifetime VMT (%) Eg Partial CEg ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. ............................................................................................................. 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 28,097 28,097 28,097 28,097 28,097 28,097 28,097 28,097 28,097 28,097 28,097 28,097 28,097 28,097 28,097 28,097 28,097 0.69 0.60 0.52 0.46 0.41 0.36 0.33 0.27 0.22 0.18 0.15 0.12 0.10 0.08 0.07 0.05 0.04 193 168 147 129 115 102 92 76 62 51 42 34 28 23 19 15 12 CEg ....................................................................................................... ........................ ........................ ............................ 28,996 DOE recognizes that the value of CEg is substantially higher than the value of Eg used in the 2000 rule (12,307 Wh/ gal). This change is due to a combination of: increased fossil generation efficiency; increased renewable generation; the assumption of resource inexhaustibility for nuclear and renewables; increases in electric transmission efficiency; reduction in petroleum production, refining and distribution efficiency; and the use of a forward-looking grid mix. By far the largest impact is due to changes to electricity generation since the 2000 Final Rule. The grid mix used in the 2000 Final Rule had almost no nonhydropower renewable generation, while renewables are forecasted to grow to over half of total electricity generation by 2030. As described previously, DOE treats nuclear, solar, wind, and hydro power as 100 percent efficient based on the effective inexhaustibility of the energy source. In addition, fossil generation now includes a significant amount of combined cycle generation, which has a much higher thermal efficiency than conventional combustion for heat generation. Changes in efficiency due to petroleum production, refining and distribution, and electricity transmission are smaller. khammond on DSKJM1Z7X2PROD with RULES Vehicle age 4. Fuel Content Factor Pursuant to 49 U.S.C. 32904(a)(2)(B), among the factors the Secretary must consider when setting the PEF is ‘‘the need of the United States to conserve all forms of energy and the relative scarcity and value to the United States of all fuel used to generate electricity.’’ 49 U.S.C. 32904(a)(2)(B)(iii). In the 2000 Final Rule, DOE added the current 1.0/0.15 VerDate Sep<11>2014 15:53 Mar 28, 2024 Jkt 262001 fuel content factor to the PEF to reward electric vehicles for their ‘‘benefits to the Nation relative to petroleum-fueled vehicles, in a manner consistent with the regulatory treatment of other types of alternative fueled vehicles and the authorizing legislation.’’ 65 FR 36986, 36988. In the 2000 Final Rule, DOE explained that it chose the 1.0/0.15 ratio for the fuel content factor (1) for consistency with existing regulatory and statutory procedures for alternative fuel vehicles under 49 U.S.C. 32905, (2) to provide similar treatment of all types of alternative fueled vehicles, and (3) for simplicity and ease of use in calculating the PEF. 65 FR 36986, 36988. In the 2023 NOPR, DOE proposed removing the fuel content factor and requested comment on its elimination. 88 FR 21525, 21528–21530. DOE stated that it considered the need of the United States to conserve all forms of energy and the relative scarcity and value to the United States of all fuel used to generate electricity in proposing to eliminate the factor. 88 FR 21525, 21528. As discussed in the 2023 NOPR in more detail, in considering the need for energy conservation and the relative scarcity and value of fuels used to generate electricity, in particular DOE emphasized the need to conserve finite petroleum resources. 88 FR 21525, 21529–215230. Conserving petroleum resources can be achieved through increased production and sales of EVs and through fuel economy improvements to ICE vehicles. In the context of the statutory directive for the PEF and the need to conserve finite petroleum resources, DOE identified in the 2023 NOPR three key reasons supporting removal of the PO 00000 Frm 00009 Fmt 4700 Sfmt 4700 fuel content factor. 88 FR 21525, 21528– 21530. First, DOE explained that the fuel content factor does not accurately represent current EV technology or market penetration. Second, DOE stated that applying the current fuel content factor to EVs results in miles per gallon equivalent ratings significantly higher than ICE vehicles. This overvaluing of EVs can allow a few EV models to provide overall compliance with CAFE standards, which in turn permits manufacturers to maintain less efficient ICE vehicles and disincentivizes production of additional EVs. 88 FR 21525, 21529–21530. Third, DOE proposed that the reasoning offered in the 2000 Final Rule in support of the use of 1.0/0.15 as a fuel content factor was not grounded in DOE’s authority to set the PEF in section 32904, although DOE also noted that a fuel content factor could potentially be justified under the four factors of section 32904. 88 FR 21525, 21530. Several commenters supported the elimination of the fuel content factor. California et al., Doc. No. 27, pg. 5; NRDC and Sierra Club, Doc. No. 20, pg. 1–2; Tesla, Doc. No. 18, pg. 3; ICCT, Doc. No. 19, pg. 1; AFPM, Doc. No. 26, pg. 2. Specifically, California et al. and AFPM stated that the current fuel content factor is based on an inapplicable statutory section. California et al., Doc. No. 27, pg. 5; AFPM, Doc. No. 26, pg. 2. In addition, NRDC and Sierra Club asserted that the current fuel content factor ‘‘dwarfs the rest of the PEF calculation, and has no factual, legal, or logical connection to electricity/petroleum equivalence.’’ NRDC and Sierra Club, Doc. No. 20, pg. E:\FR\FM\29MRR1.SGM 29MRR1 khammond on DSKJM1Z7X2PROD with RULES 22050 Federal Register / Vol. 89, No. 62 / Friday, March 29, 2024 / Rules and Regulations 2. Commenters noted that the fuel content factor leads to the overvaluation of EVs, which is counter to the need to conserve energy, particularly petroleum. Other commenters, however, opposed the elimination of the fuel content factor. For example, the Alliance stated that DOE should focus on the role of the PEF as an incentive for manufacturing EVs, which would keep DOE’s analysis more closely tied to the applicable statutory factors. Alliance, Doc. No. 25, pg. 10. Similarly, UAW asserted that the fuel content factor is needed to continue to incentivize the production of EVs. UAW, Doc. No. 30, pg. 1–2. The Alliance and UAW stated that the 2023 NOPR overstated the scale of the EV market and encouraged DOE to ‘‘incorporate a more realistic projection of EV adoption and charging infrastructure build-out.’’ Alliance, Doc. No. 25, pg. 7–8; UAW, Doc. No. 30, pg. 2. Furthermore, the Alliance and UAW noted that federal investment and incentives would take time to reach maturity. Alliance, Doc. No. 25, pg. 8; UAW, Doc. No. 30, pg. 2. The Alliance argued that EV purchase incentive provisions in IRA are evidence that Congress believes EVs are not sufficiently commercialized. Alliance, Doc. No. 25, pg. 10. And finally, the Alliance noted that supply constraints and investment limitations impair manufacturers’ ability to respond rapidly to changes in the PEF value, arguing that research and production resources are effectively zero-sum. Alliance, Doc. No. 25, pg. 17. The Alliance stated that the proposal could cause manufacturers to divert scarce investment resources to ICE vehicle lines and away from EV production, and noted the difficulty with doing even that, citing a lack of opportunity for engine redesigns, and arguing that engine design and development cycles are typically much longer than three years. Id. After careful consideration of the comments, DOE concludes that removing the fuel content factor will, over the long term, further the statutory goals of conserving all forms of energy while considering the relative scarcity and value to the United States of all fuels used to generate electricity. This is because, as explained in the 2023 NOPR and in more detail below, by significantly overvaluing the fuel savings effects of EVs in a mature EV market with CAFE standards in place, the fuel content factor will disincentivize both increased production of EVs and increased deployment of more efficient ICE vehicles. Hence, the fuel content factor VerDate Sep<11>2014 15:53 Mar 28, 2024 Jkt 262001 results in higher petroleum use than would otherwise occur. DOE recognizes, however, the persuasive points made by commenters as to how the fuel content factor will continue to incentivize EV production in the near term. As commenters note, while EV market penetration has dramatically increased, EVs currently represent only approximately 10 percent of new passenger car and light truck sales.19 Moreover, while the recently adopted IIJA and IRA are in effect, the critical incentives and support for EVs and charging infrastructure that these laws provide are in the early stages of implementation and will become more fully operative and effective over time. DOE agrees with commenters that there is still an opportunity to incentivize additional EV production, and the resulting greater petroleum conservation, through a fuel content factor over the next several years. Thus, as explained in more detail below, DOE is retaining the current fuel content factor through MY 2026, under a revised statutory basis, and then gradually phasing out the fuel content factor by MY 2030. DOE begins with the statutory text. Congress directed DOE to set the PEF based, in part, on ‘‘the need of the United States to conserve all forms of energy’’ and ‘‘the relative scarcity and value to the United States of all fuel used to generate electricity.’’ 49 U.S.C. 32904(a)(2)(B)(iii). First, DOE confirms that increased use of EVs, relative to ICE vehicles, would help the United States meet its need to conserve all forms of energy, taking into consideration the relative scarcity and value of all fuel used to generate electricity. As detailed in the 2023 NOPR, EVs are substantially more energy efficient than ICE vehicles on an energy input required basis. In addition, when comparing EVs to ICE vehicles on the basis of their use of scarce fuels, EVs provide even greater fuel conservation benefits when compared to gasoline used in ICE vehicles. See 88 FR 21525, 21536 (calculating a significantly higher PEF when using a methodology that compares only vehicle-based petroleum use and electricity production using scarce fossil energy resources). Accordingly, an increased use of EVs, relative to ICE vehicles, would allow the United States to get greater transportation value from relatively 19 DOE, Plug-in EV Sales in December of 2023 Rose to 9.8% of All Light-Duty Vehicles Sales in the U.S., January 15, 2024. Available at www.energy.gov/eere/vehicles/articles/fotw-1325january-15-2024-plug-ev-sales-december-2023-rose98-all-light-duty. PO 00000 Frm 00010 Fmt 4700 Sfmt 4700 scarce fuels, including those used to generate electricity. These individual-vehicle measures understate the magnitude of the fuel conservation benefits of substantially increasing EV production and use in the near term. Accelerating adoption of EVs now can significantly further accelerate and increase EV market penetration, due to network effects related to expanded demand for and availability of charging infrastructure. These network effects include rapid shifts in consumer acceptance and increased access to immediate incentives, the redeployment of capital and human resources at the firm and country level, accelerated technology development with greater production of vehicles in multiple segments at scale, and increases in domestic battery manufacturing capacity in line with projected market demand. This has been demonstrated based on the EV adoption experience of other countries, which tends to follow an ‘‘S-Curve’’—a long period of relatively slow adoption followed by a rapid increase in adoption as EV sales grow.20 This implies that if EV adoption is accelerated in the near term to reach the tipping point of growth sooner, significantly more EV adoption could result in a shorter timeframe than would otherwise occur. The energy conservation benefits would also accelerate commensurately. Accordingly, DOE concludes that the nation’s need to conserve all forms of energy is best served not simply by EV adoption generally, but specifically by accelerating EV adoption in the near term. Next, DOE evaluates the maturity of the EV market and the sufficiency of the incentives, other than the fuel content factor, for EV production and sales in the near term. As DOE stated in the 2023 NOPR, since the 2000 Final Rule, EV technology has matured and the market share of EVs is growing. 88 FR 21525, 21528. Advances in electrification technology have resulted in improved performance and efficiency and reduced costs. 88 FR 21525, 21529. Commenters also noted that technology development, infrastructure 20 See International Energy Agency, Global EV Outlook 2022, (May 2022), available at www.iea.org/ reports/global-ev-outlook-2022; Energy and Power Group, Department of Engineering Science, University of Oxford, Forecast of electric vehicle uptake across counties in England: Dataset from Scurve analysis, (Dec. 2021), available at www.sciencedirect.com/science/article/pii/ S2352340921009379?via%3Dihub; European Commission, Joint Research Centre, Analysis and testing of electric car incentive scenarios in the Netherlands and Norway (2020), available at www.sciencedirect.com/science/article/pii/ S0040162519301210#fig0004. E:\FR\FM\29MRR1.SGM 29MRR1 khammond on DSKJM1Z7X2PROD with RULES Federal Register / Vol. 89, No. 62 / Friday, March 29, 2024 / Rules and Regulations deployment, and especially recent changes to Federal law, such as the IRA and the IIJA, provide significant incentives for tremendous investment in the entire EV ecosystem. These incentives are driving investments in further technological development of EVs and charging infrastructure, production (especially domestic production) of EVs, components such as batteries and chargers, and production of supply chain components, including critical minerals. These laws also provide multiple substantial incentives for EV purchases and leases, private purchases, and installation of charging infrastructure, and the build-out of a nationwide public charging system. It is critical to note, however, that the EV market is still small relative to ICE vehicles, and while these incentives are already driving massive industry investments, it will take some years for all these investments to fully translate into production and sales. Further, although consumer purchase incentives are currently available, only a relatively limited number of vehicles qualify for a portion or all of the available credits. Over the next six years, these incentives will increasingly result in greater EV deployment on the roads, as their effectiveness phases in over time. For example, as a result of component sourcing requirements and developing supply chains in the EV battery sector, DOE projected that an increasing share of electric vehicles will benefit from IRA tax incentives between 2023 and 2032, with a fleetwide average credit increasing from $3,900 per vehicle in 2023 to $6,000 in 2032 (nominal dollars).21 Similarly, DOE’s IIJA-enabled investments in enabling infrastructure, such as EV fast charging and domestic EV component manufacturing, will scale over time as projects are identified, permitted, and constructed. Considering the timing over which the bulk of the IIJA and IRA EV incentives will become fully effective, DOE concludes that there is still a fuel conservation benefit from additional EV incentives in the near term. By 2030, DOE expects that the EV market will be sufficiently developed that further support from the fuel content factor will be unnecessary. As noted previously, commenters disagreed whether the fuel content factor incentivizes or disincentivizes EV production. On the basis of the record before it, DOE concludes that the 21 See Department of Energy, ‘‘Estimating Federal Tax Incentives for Heavy Duty Electric Vehicle Infrastructure and for Acquiring Electric Vehicles Weighing Less Than 14,000 Pounds,’’ March 11, 2024. Available at https://www.regulations.gov/ docket/EERE-2021-VT-0033. VerDate Sep<11>2014 15:53 Mar 28, 2024 Jkt 262001 answer is: it depends. In other words, the effect of the fuel content factor on manufacturer EV production will vary according to the maturity of the EV market and the effectiveness of other available incentives at the time DOE applies the fuel content factor and resulting PEF value. Vehicle manufacturers indicate that the present fuel content factor is an important incentive for current EV production. See Alliance, Doc. No. 25, pg. 7–8; Porsche, Doc. No. 24, pg. 2. By significantly increasing the PEF, the fuel content factor makes it relatively more costeffective for manufacturers to improve their fleets’ average fuel economy by selling more EVs. Where manufacturers are not yet adequately incentivized to develop, manufacture, and market EVs, as is currently the case, an inflated fuel content factor can increase EV adoption and the accompanying petroleum conservation in the near term. In the context of an emerging market for EVs, this additional near-term EV production is disproportionately valuable in leveraging network effects and further accelerating EV adoption and petroleum conservation. Because including the fuel content factor when calculating the PEF value can increase EV adoption, in the near term, which results in greater petroleum conservation, retaining the fuel content factor in the near term is consistent with ‘‘the need of the United States to conserve all forms of energy.’’ See 49 U.S.C. 32904(a)(2)(B)(iii). However, as explained in the 2023 NOPR, an ‘‘artificially inflate[d]’’ fuel content factor may conversely allow manufacturers to meet CAFE standards with fewer EVs and little improvement in their ICE fleets. As also explained in the 2023 NOPR, the higher the PEF, the greater the value of each EV for compliance purposes, and the fewer EVs (or improvements in ICE fuel economy savings) are needed. DOE expects this effect to predominate as the incentives for producing and selling EVs, such as those included in IRA and IIJA, ramp up and as the EV market grows. Once manufacturers are selling relatively large numbers of EVs, giving each EV a higher effective fuel economy for CAFE compliance purposes is less likely to incentivize greater EV production and more likely simply to eliminate the need for ICE fuel economy improvements, given the statutory structure of the CAFE program. In the 2023 NOPR, DOE explained its view that ‘‘current EV technology and market penetration’’ are sufficiently developed such that further incentives for EVs through the PEF are unnecessary. 88 FR 21525, 21534. Based on DOE’s review of comments and PO 00000 Frm 00011 Fmt 4700 Sfmt 4700 22051 further analysis, DOE concludes that incentives provided by IRA and IIJA, coupled with the expansion of supporting infrastructure, such as public fast chargers, and increasing consumer interest in EVs, will eventually provide adequate incentives, and the anticipated network effects, to achieve widespread EV adoption. DOE thus affirms the analysis in the 2023 NOPR that, at such time, a fuel content factor will reduce, and eventually eliminate, the net energy conservation benefit of incentivizing EV deployment through the fuel content factor. Although the 2023 NOPR identified recent changes, such as IRA and IIJA incentives, as reasons to remove the fuel content factor (88 FR 21525, 21534), because these incentives will not be fully available when the PEF becomes effective, DOE concludes that EVs will remain inadequately incentivized for purposes of energy conservation over the next few years.22 Additionally, DOE expects a continued reduction in battery prices from innovation and economies of scale, resulting in lower purchase price and increased competitiveness of EVs by 2030. Accordingly, DOE expects that incentivizing EVs through a fuel content factor will reduce petroleum use in the near term. Based on DOE’s determination that EVs will be adequately incentivized for purposes of energy conservation by 2030, DOE has determined that the fuel content factor can be, and ought to be, phased out by 2030. DOE concludes that, for a limited time, retaining a fuel content factor in the PEF calculation is likely to incentivize manufacturers’ production of EVs in the near term. DOE determines that phasing out a fuel content factor, as compared to removing it over a single model year, will help manufacturers continue to invest in the EV transition and serve as a near-term incentive for vehicle manufacturers to invest in and sell EVs, thereby contributing to the reduced consumption of petroleum by accelerating the widespread adoption of EVs in the United States during this pivotal time. Moreover, given the industry’s concern that revising the PEF value over the course of a single model year could actually slow EV adoption in the near term, due to the potential need for industry to rapidly shift investment from EV development back to interim 22 See, e.g., IRA, Section 50142 (provides $3 billion to DOE’s Advanced Technology Vehicle Manufacturing Loan Program through September 30, 2028, for loans to manufacture clean vehicles and their components in the United States); IRA, Section 50143 (provides $2 billion to the U.S. Treasury through September 30, 2031, to provide grants for the domestic production of EVs). E:\FR\FM\29MRR1.SGM 29MRR1 22052 Federal Register / Vol. 89, No. 62 / Friday, March 29, 2024 / Rules and Regulations ICE based vehicle development, a phase in of the revised value would be more consistent with the statute and better spur the technological transition that will ultimately result in greater energy conservation. In addition, by phasing in a new PEF value over several years, the risk for manufacturers of expediting their investment in EV technology is reduced, because they are able to spread product changes (and associated research and production dollars) over more model years. Alleviating this risk for manufacturers is likely to result in an increase in EV development and adoption in the near term. For these reasons, DOE determines that immediate and complete removal of the fuel content factor from the PEF calculation would not serve the need of the United States to conserve energy. In addition, DOE finds that there is an adequate statutory basis for retaining the fuel content factor for a limited time period. As stated in the 2023 NOPR, DOE concludes that it need not rely upon 49 U.S.C. 32905 to apply a fuel content factor to EVs. 88 FR 21525, 21530. That provision applies to the use of alternative fuels, not to EVs. Section 32904(a)(2)(B), which requires the Secretary to consider, among other things, ‘‘the need of the United States to conserve all forms of energy and the relative scarcity and value to the United States of all fuel used to generate electricity,’’ does, however, provide a basis to apply a fuel content factor to the PEF calculation in the circumstances where applying such a fuel content factor would in fact conserve energy. As discussed previously, in this final rule DOE finds that for the immediate near term the fuel content factor serves to incentivize EV production, and hence to conserve energy, specifically petroleum. Accordingly, currently the fuel content factor meets the statutory directive to set the PEF taking into account the need ‘‘to conserve all forms of energy and the relative scarcity and value to the United States of all fuel used to generate electricity.’’ 49 U.S.C. 32904(a)(2)(B). DOE also finds in this rule, however, that as the EV market matures and the incentives under the IRA and IIJA become more powerful, the fuel content factor will rapidly shift from incentivizing EV production and energy conservation to undercutting the effectiveness of other requirements for energy conservation. These conclusions support the current use, and eventual phase-out, of the fuel content factor. Therefore, to reflect its declining net conservation benefit, the PEF calculation methodology in this final rule will gradually increase the denominator of the fuel content factor, starting with the currently applicable 1.0/0.15 factor in MY 2026 and increasing the denominator to a value of 1.00 by MY 2030. Given the date of 2030 for full phase out, DOE will reduce the impact of the fuel content factor by increasing the denominator of the factor by 4four equal increments of 0.2125 over MYs 2027 through 2030. The annual increase in the fuel content factor denominator value will decrease the factor’s value until it is phased out in MY 2030. The fuel content factor for MYs 2026 to 2030 is represented in Table 6. TABLE 6—FUEL CONTENT FACTOR FOR MY 2026 TO 2030 Model year 2026 2027 2028 2029 2030 Fuel content factor ............................................................... 1/0.15 1/0.3625 1/0.575 1/0.7875 1 khammond on DSKJM1Z7X2PROD with RULES 5. Accessory Factor The 2000 Final Rule added an accessory factor to the PEF calculation to account for petroleum-fueled onboard accessories, such as cabin heaters, defrosters, or air-conditioning, which were envisioned as an approach to avoid low energy-density and/or low power-density limitations of battery technology at the time.23 No EVs currently produced include such accessories and it is unlikely that future EVs will include them. Furthermore, plug-in hybrid electric vehicles (PHEVs) petroleum-fueled on-board accessories are distinct from gasoline consumption, with a fuel economy weighted according to the expected percentage of driving attributed to charge-depleting and charge-sustaining modes. Therefore, in the 2023 NOPR, DOE proposed to set the accessory factor equal to 1.00 in its calculation. Two commenters supported setting the accessory factor to 1. NRDC and Sierra Club, Doc. No. 20, pg. 7; California et al., Doc. No. 27, pg. 3–4. 23 For example, in the mid-1990s, the experimental Ford Ecostar vehicle, a two-door, small van, included a diesel-powered heater while being powered primarily by a sodium-sulfur battery with notable power density limitations and a very high operating temperature. VerDate Sep<11>2014 15:53 Mar 28, 2024 Jkt 262001 These commenters agreed with DOE’s determination that no EVs in production use petroleum powered accessories. No commenter opposed setting the accessory factor equal to 1.00. Accordingly, as proposed in the 2023 NOPR, DOE sets the accessory factor equal to 1.00 in its PEF calculation. 6. Driving Pattern Factor In the 2000 Final Rule, DOE established a driving pattern factor to account for the statutory criterion in 49 U.S.C. 32904(a)(2)(B)(iv). The purpose of the driving pattern factor is to recognize the fact that electric vehicles may be used differently than gasoline vehicles, primarily due to their shorter range and longer ‘‘refueling’’ times. Then-existing EPA regulations, however, did not make driving-patternbased adjustments to the fuel economy of various classes of gasoline vehicles when calculating a manufacturer’s CAFE value, even though gasolinepowered vehicles are also used in many different ways. 64 FR 37907, 37908. Therefore, DOE set the driving pattern factor at 1.00 because it believed that EVs offer capabilities like those of conventional gasoline-powered vehicles. 65 FR 36986, 36987. In the PO 00000 Frm 00012 Fmt 4700 Sfmt 4700 2023 NOPR, DOE did not propose a change to the driving pattern factor and proposed keeping the driving pattern factor at 1.00. 88 FR 21525, 21530. DOE stated that it continued to believe that EVs are equivalently capable vehicles that are likely to be used similarly to gasoline-powered or hybrid-electric vehicles. 88 FR 21525, 21530. DOE received comments that supported the proposed driving pattern factor. For example, NRDC, Sierra Club, the Alliance, and California et al., supported a driving pattern factor of 1.0 and agreed that current EVs are full utility vehicles. NRDC and Sierra Club, Doc. No. 20, pg. 7; Alliance, Doc. No. 25, pg. 27; California et al., Doc. No. 27, pg. 6. By contrast, AFPM opposed the proposed driving pattern factor and asserted that the driving patterns and use of ICE vehicles are different from that of EVs, primarily due to range considerations for EVs. AFPM, Doc. No. 26, pg. 16. AFPM asserted that DOE should analyze specific patterns of use of EVs compared to ICE vehicles. AFPM, Doc. No. 26, pg. 16. In its comments, AFPM claimed that EVs are more likely to be driven shorter distances for purposes such as commuting or running E:\FR\FM\29MRR1.SGM 29MRR1 Federal Register / Vol. 89, No. 62 / Friday, March 29, 2024 / Rules and Regulations errands, as compared to ICE vehicles, which are more associated with longer trips and towing. AFPM, Doc. No. 26, pg. 17. In addition, AFPM cited a study by iSeeCars.com that examined usedvehicle listings showing that used-EVs had driven fewer miles than used-ICE vehicles.24 However, a more recent study 25 noted that the iSeeCars.com study methodology is biased toward examining older vehicles with lower EV ranges because it explored used-EV listings from 2016–2022 from the secondary market, and the more recent study advocated for updating the iSeeCars.com study to reflect newer EVs. A range of annual miles have been found in previous studies of BEV use ranging from 6,300 miles per year to 12,522 miles per year.26 Another study by University of California-Davis researchers found that long-range BEVs are driven significantly more than shortrange BEVs and more than ICE vehicles.27 That same study uncovered other factors influencing the number of miles that EVs are driven, such as how many additional ICE vehicles are operated within a household. Many early EV adopters owned several vehicles, thus reducing the miles operated by each vehicle. While some EVs are currently driven less than comparable conventional vehicles, the difference between them is clearly shrinking. Moreover, current and growing EV ranges support DOE’s position that EVs are equivalently capable vehicles likely to be used similarly to ICE vehicles or hybrid electric vehicles. Accordingly, as proposed in the 2023 NOPR, DOE maintains the driving pattern factor at 1.00 in this final rule. DOE continues to believe that current EVs are equivalently capable vehicles that are likely to be used similarly to gasoline-powered or hybrid-electric vehicles. In addition, the deployment of a national charging network, enabled by the DOT’s National Electric Vehicle Infrastructure program along with additional private investment, will help ensure EVs can continue to match the utility and driving demands of ICE vehicles. DOE maintains that current EVs are full-utility vehicles, capable of comparable performance and range to conventional counterparts. 7. Revised PEF Value As discussed in the preceding sections, DOE concluded that the current PEF value and methodology 22053 were based on outdated data and that the technology and market penetration of EVs has significantly changed since the 2000 Final Rule. In this final rule, DOE uses the following equation to calculate the PEF: PEF = CEg × FCF × AF × DPF Where CEg, or cumulative Eg, is the sum of annual gasoline-equivalent energy content of electricity (Eg) over the 40-year survivability-weighted lifetime mileage schedule (in Wh/gal), FCF is the fuel content factor (unitless and taking the value indicated in Table 6, above), AF is the accessory factor (unitless and equal to 1), and DPF is the driving pattern factor (unitless and equal to 1). In Sections III.C.3, III.C.4, III.C.5, and III.C.6, DOE calculated the values for CEg, FCF, AF, and DPF respectively. The CEg is 28,996 Wh/gal and AF and DPF are each 1.0. In addition, the final rule gradually reduces the fuel content factor, starting with the currently applicable 1.0/0.15 factor in MY 2026 and phasing out to a factor of 1.0/1.00 by MY 2030, see Section III.C.4 for a full discussion. Table 7 provides the inputs for MY 2024 to MY 2030 EVs. The final rule adopts the PEF values for the model years specified in Table 7. TABLE 7—REVISED PEF VALUES FOR MY 2024–MY 2030 EVS AND LATER Model year CEg 2024–2026 ........................................................................... 2027 ..................................................................................... 2028 ..................................................................................... 2029 ..................................................................................... 2030 and later ...................................................................... a 12,307 FCF a 12,307 28,996 28,996 28,996 28,996 AF DPF b 1.0 1/0.15 1/0.3625 1/0.575 1/0.7875 1.0 1.0 1.0 1.0 1.0 PEF 1.0 1.0 1.0 1.0 1.0 82,049 79,989 50,427 36,820 28,996 Wh/gal is the Eg for MY 2024–2026, not the CEg as the revised PEF methodology does not apply to MY 2024–2026 EVs. no petroleum-powered accessories for MY 2024–2026 EVs. khammond on DSKJM1Z7X2PROD with RULES b Assumes Several commenters, mainly auto manufacturers and their representatives, opposed the revised PEF value.28 Some commenters argued that DOE should maintain the PEF established in the 2000 Final Rule. Porsche, Doc. No. 24, pg. 1; NADA, Doc. No 23, pg. 2–3; UAW, Doc. No. 30, pg. 1. They noted that the consistent PEF has provided regulatory certainty to automakers and that the PEF is an important planning tool and regulatory incentive in the context of CAFE compliance strategies that rely on the existing PEF to improve efficiency. Porsche, Doc. No. 24, pg.1; NADA, Doc. No. 23, pg. 2–3. NADA claimed that unless CAFE standards are lowered, changing the PEF as proposed will force automobile manufacturers to alter CAFE compliance strategy by reverting to investing more in costly ICE 24 iSeeCars, The Most and Least Driven Electric Cars. Available at www.iseecars.com/most-drivenevs-study. 25 Zhao et al., ‘‘Quantifying electric vehicle mileage in the United States’’, Joule, Volume 7, Issue 11, 15 November 2023, pg. 2537–2551. Available at doi.org/10.1016/j.joule.2023.09.015. 26 Davis, L.W., How much are electric vehicles driven? Appl. Econ. Lett. 26, 1497–1502 (2019), available at www.tandfonline.com/doi/full/10.1080/ 13504851.2019.1582847; Tal, G., Raghavan, S.S., Karanam, V.C., Favetti, M.P., Sutton, K.M., Ogunmayin, J.M., Lee, J.H., Nitta, C., Kurani, K., Chakraborty, D. et al., advanced plug-in electric vehicle travel and charging behavior final report (2020), available at csiflabs.cs.ucdavis.edu/∼cjnitta/ pubs/2020_03.pdf; Burlig, F., Bushnell, J., Rapson, D., and Wolfram, C., Low energy: estimating electric vehicle electricity use. AEA Pap. Proc. 111, 430– 435 (2021), available at www.aeaweb.org/ articles?id=10.1257/pandp.20211088; Rush, L., Zhou, Y., and Gohlke, D., Vehicle residual value analysis by powertrain type and impacts on total cost of ownership (2022), available at www.osti.gov/ biblio/1876197; Jia, W., and Chen, T.D., Beyond adoption: examining electric vehicle miles traveled in households with zero-emission vehicles. Transp. Res. Rec. 2676, 642–654 (2022), available at journals.sagepub.com/doi/10.1177/ 03611981221082536; Chakraborty, D., Hardman, S., and Tal, G., Integrating plug-in electric vehicles (PEVs) into household fleets-factors influencing miles traveled by PEV owners in California. Travel Behaviour and Society 26, 67–83 (2022), available at doi.org/10.1016/j.tbs.2021.09.004. 27 UC Davis, Advanced Plug-in Electric Vehicle Travel and Charging Behavior Final Report, April 10, 2020. Available at csiflabs.cs.ucdavis.edu/ ∼cjnitta/pubs/2020_03.pdf. 28 DOE notes that these commenters opposed the revised PEF value proposed in the 2023 NOPR. In this final rule, the revised PEF value differs from the PEF value proposed in the 2023 NOPR. Specifically, the final rule retains the fuel content factor and phases it out over MY 2027 to MY 2030. In addition, the final rule uses an updated NREL projection of the electrical grid. Overall, these differences result in a greater PEF value for MY 2027 to MY 2030 EVs than proposed in the 2023 NOPR. VerDate Sep<11>2014 15:53 Mar 28, 2024 Jkt 262001 PO 00000 Frm 00013 Fmt 4700 Sfmt 4700 E:\FR\FM\29MRR1.SGM 29MRR1 22054 Federal Register / Vol. 89, No. 62 / Friday, March 29, 2024 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES vehicle technology improvements or incur penalties. NADA, Doc. No 23, pg. 2. Porsche stated that if PEF must change, then the change should be phased in to reduce the effect on auto manufacturers. Porsche, Doc. No. 24, pg. 6. DOE has a specific task of developing a PEF value that accounts for EV efficiency, national electrical generation and transmission efficiencies, conservation of all energy types and the relative scarcity and value of all fuels used to generate electricity, and EV driving patterns compared to petroleumfueled vehicles. Although the Department has not changed the PEF value for over 23 years, DOE has statutory authority to review the PEF value on an annual basis. After reviewing the current PEF value and inputs, DOE determined that it was necessary to revise the PEF value consistent with the statutory factors identified in section 32904(a)(2)(B) and described above in greater detail. The revised PEF value reflects updated inputs upon which PEF values are calculated and advancements in the technology and market penetration of EVs since the 2000 Final Rule. 8. Compliance Period As noted in the 2023 NOPR, DOE proposed that the new PEF value take effect with MY 2027 vehicles. 88 FR 21525, 21531. DOE explained that NHTSA’s next CAFE regulation was expected to cover MYs 2027–2031 and that the proposed PEF value would be the applicable PEF for calculating EV fuel economy for those model years. 88 FR 21525, 21531. DOE stated that having a fixed PEF value for the CAFE standard period improves NHTSA’s ability to set CAFE standards that are the maximum feasible average fuel economy level and provides greater certainty to stakeholders from year to year. 88 FR 21525, 21531. DOE requested comment on this approach. DOE received comments on this approach from numerous and diverse stakeholder groups, including nongovernmental organizations, auto manufacturers and their representatives, energy and agricultural interest groups, and members of the public. Some commenters, such as NRDC and Sierra Club, supported the proposed effective date and agreed that DOE should conduct its most in-depth reviews of the PEF to coincide with anticipated CAFE rulemakings. NRDC and Sierra Club, Doc. No. 20, pg. 6. In contrast, most auto manufacturers and automotive industry representatives opposed the proposed effective date and asserted that incorporating PEF-driven VerDate Sep<11>2014 15:53 Mar 28, 2024 Jkt 262001 changes into existing product plans for MY 2027 vehicles would be challenging. The Alliance explained that several years of lead time is necessary to incorporate technologies into new vehicles, electric or ICE. Alliance, Doc. No. 25, pg. 17. In particular, the Alliance noted that by the time the PEF rule is finalized, it is likely to be near the market introduction of MY 2025 vehicles and asserted that ‘‘[e]ngine design and development cycles are typically much longer than three years.’’ Alliance, Doc. No. 25, pg. 17. On September 14, 2023, DOE issued letters to member companies of the Alliance that invited recipients to provide data, documents, or analysis to clarify the concerns the Alliance expressed on behalf of its member companies in its response to comments on the 2023 NOPR in relation to the proposed effective date. DOE received responses from several Alliance member companies that provided data on how the proposed PEF value could affect their ability to comply with proposed CAFE standards for MYs 2027 to MY 2031. Specifically, Hyundai, Toyota, Stellantis, Mitsubishi, and the Alliance indicated that the proposed PEF value could lead to challenges complying with the proposed CAFE standards. Alliance, Doc. No. 25, pg. 6, 10, 11; Hyundai Doc. No. 38, pg. 1; Toyota, Doc. No. 54, pg. 1; Stellantis, Doc. No. 53, pg. 6–7; Mitsubishi, Doc. No. 50, pg. 1 Alliance, Doc. No. 25, pg. 6, 10, 11. In response to this request for clarification on the lead-time challenges expressed by the Alliance on behalf of its member companies, several commenters opposed delaying the implementation date beyond what was proposed in the 2023 NOPR. These commenters echoed comments from AFPM and stated that DOE lacks authority to postpone the effective date because DOE is required to review the PEF annually. See Tesla, Doc. No. 18, pg. 2; NRDC and Sierra Club, Doc. No. 20, pg. 2; AmFree et al., Doc. No. 31, pg. 3. Additionally, these commenters also observed that lead time challenges are not included amongst the statutory factors DOE must consider when reviewing the PEF. Tesla, Doc. 18, pg. 2; AmFree et al., 31, pg. 2. Although DOE is sensitive to the concerns of auto manufacturers, 49 U.S.C. 32904 clearly identifies the factors DOE must consider when reviewing the PEF. DOE has a specific task of developing a PEF that accounts for EV efficiency, national electrical generation and transmission efficiencies, conservation of all energy types and the relative scarcity and value of fuels used to generate electricity, and PO 00000 Frm 00014 Fmt 4700 Sfmt 4700 EV driving patterns compared to petroleum-fueled vehicles. See 49 U.S.C. 32904(a)(2)(B). While NHTSA is required to provide 18 months of lead time for new CAFE standards per 49 U.S.C. 32902, lead time is not included in the factors that DOE must consider in its required annual review of the PEF. DOE is not required to consider lead time. However, DOE believes that applying the revised PEF beginning with MY 2027 vehicles is reasonable This will provide automotive manufacturers with more time to incorporate a new PEF than is required under the mandate that DOE review the PEF each year and determine if revisions to the PEF are required. Moreover, as DOE explained in the 2023 NOPR, applying revised PEF values to a predictable schedule provides greater certainty to stakeholders from year to year. Accordingly, as proposed in the 2023 NOPR, the revised PEF value will apply beginning with MY 2027 EVs. 9. Annual Review In the 2023 NOPR, DOE stated that the statutory directive for an annual review is sufficient to require DOE to review the PEF. Accordingly, DOE proposed to delete section 10 CFR 474.5, which currently requires DOE to review 10 CFR part 474 every five years. 88 FR 21525, 21533. DOE stated that it would review the PEF value annually and if DOE determined that the PEF value needed to be changed, DOE would initiate a rulemaking to revise the value PEF appropriately. DOE also noted its intention to seek stakeholder input for its annual reviews through available methods (e.g., requests for information). 88 FR 21525, 21533. Several commenters opposed the deletion of 10 CFR 474.5. NRDC and Sierra Club, Doc. No. 20, pg. 6; California et al., Doc. No. 27, pg. 7–8. These commenters acknowledged that DOE must review the PEF value on an annual basis and supported DOE’s intention to seek stakeholder input during these annual reviews. However, they stated that § 474.5 requirements for public participation and publication are warranted to ensure DOE fulfills its statutory responsibilities to review the PEF. NRDC and Sierra Club, Doc. No. 20, pg. 6; California et al., Doc. No. 27, pg. 7–8. Instead of deleting § 474.5, NRDC and Sierra Club suggested that DOE revise § 474.5 to reflect the review process described in the 2023 NOPR. NRDC and Sierra Club, Doc. No. 20, pg. 6. DOE does not believe additional regulation regarding public review is necessary for DOE to meet its statutory responsibilities. The public is E:\FR\FM\29MRR1.SGM 29MRR1 Federal Register / Vol. 89, No. 62 / Friday, March 29, 2024 / Rules and Regulations authorized to petition DOE should DOE neglect its duties.29 In addition, if DOE determines that it is necessary to change the PEF value, this will require revisions to 10 CFR part 474, which would require DOE to publish a notice of proposed rulemaking and request comments. Thus, any revisions to the PEF value or changes to the methodology will be published in the Federal Register and the public may file comments, making the language in § 474.5 requiring public participation and publication unnecessary. Accordingly, in this final rule, DOE deletes § 474.5 as proposed in the 2023 NOPR. DOE also received comments that expressed concern that DOE would only change the revised PEF value for MYs 2027–2031 if there is a ‘‘compelling reason’’ to change the PEF calculation. AFPM, Doc. No. 26, pg. 4 (citing 88 FR 21525, 21533). However, AFPM noted that the statute does not require a compelling reason to change the PEF value. AFPM, Doc. No. 26, pg. 4. DOE agrees that 49 U.S.C. 32904 does not require a ‘‘compelling reason’’ to change the PEF calculation. However, DOE did not intend to imply such a requirement exists. Rather, as explained previously, in this final rule, DOE provides the PEF values for MYs 2024 EVs and later. The 2023 NOPR expressed DOE’s view that it was unlikely that over the near term, annual reviews will identify sufficient changes in the inputs to warrant revising the PEF value. Regardless, if DOE concludes during an annual review that grid mix projections or any other changes result in a PEF value that meaningfully differs from the revised PEF values set forth in this final rule, DOE will take steps to revise the PEF accordingly. khammond on DSKJM1Z7X2PROD with RULES IV. Responses to Additional Comments A. Revisions to Section 474.3 One commenter noted that the 2023 NOPR proposed revisions to 10 CFR 474.3 that remove all description of the PEF value that applies to EVs prior to MY 2027. Alliance, Doc. No. 25, pg. 27. It was not DOE’s intention to imply that there would be no PEF value from the effective date of the final rule to MY 2027. Accordingly, DOE revises § 474.3 to retain the current regulatory description relating to the PEF value that applies to EVs prior to MY 2027. This clarification requires revisions to the definition of the ‘‘petroleum29 AFPM stated that its comments to the 2023 NOPR are also a petition for a rulemaking to update the PEF for 2024/25. DOE will undertake an annual review process. Therefore, AFPM’s petition is premature at this time. VerDate Sep<11>2014 15:53 Mar 28, 2024 Jkt 262001 equivalency factor’’ in 10 CFR 474.2. DOE revises the definition of ‘‘petroleum-equivalency factor’’ to reference the new paragraphs in § 474.3 that provide the revised PEF values applicable to MY 2027 EVs and later. B. Consideration of All Forms of Energy Conservation Commenters suggested that DOE needed to consider all forms of energy conservation. AFPM, Doc. No. 26, pg. 12–16. For example, AFPM asserted that DOE did not account for resource depletion associated with transitioning to renewable electricity (e.g., constraints on critical minerals for EV batteries and copper for transmission wiring), energy used to develop and manufacture EVs and infrastructure, and barriers to new renewable energy projects. AFPM suggested that DOE consider lifecycle energy demand associated with production of batteries, minerals, concrete, transition and storing, and charging infrastructure. DOE notes in response that energy use associated with production of vehicles and components are incorporated in the lifecycle analysis methodology within GREET, which does include energy use of all associated vehicle materials. Charging infrastructure does not impact vehicle fuel economy, with the exception of grid losses, which are accounted for. Other factors, such as commodity pricing and supply, are beyond the factors DOE is directed to consider. In contrast, the Alliance asserted that DOE’s rulemaking should focus only on the lifetime petroleum consumption of passenger vehicles. However, such a limited focus is not supported by the statute. Developing ‘‘equivalent petroleum based fuel economy values[,]’’ as required in 49 U.S.C. 32904, requires DOE to develop a way to equate EV fuel economy in miles per kWh with a miles per gasoline gallon equivalent. If Congress wanted DOE to only consider petroleum consumption of EVs in calculating PEF, it would not have required DOE to consider the national average electrical generation and transmission efficiencies. 49 U.S.C. 32904(a)(2)(B)(ii). In addition, Congress would not have identified four distinct factors for DOE to consider when reviewing the equivalent petroleumbased fuel economy values of EVs. In particular, the statutory language about ‘‘the need of the United States to conserve all forms of energy and the relative scarcity and value to the United States of all fuel used to generate electricity’’ would be superfluous. DOE must consider all of the factors presented by Congress and it cannot PO 00000 Frm 00015 Fmt 4700 Sfmt 4700 22055 isolate a single factor, such as petroleum consumption, and use it exclusively when calculating the PEF value. However, this final rule does give special consideration to the capability of EVs to conserve scarce fuels like petroleum, including by retaining a fuel content factor through 2030, as discussed in Section III.C.4. C. Need for Multiple PEF Values AFPM also asserted that one PEF for all EVs of different types and sizes is inappropriate, and instead, there should be PEF values that reflect actual energy efficiency of various classes of EVs during real world operation. However, the PEF is not designed to reflect the actual energy efficiency of various classes of EVs. Rather, the PEF value is a conversion factor between the forms of energy that are used in a vehicle, specifically to convert a Watt-hour of electricity into a gallon of gasoline for purposes of fuel economy regulation. The energy efficiency of various classes of EVs are determined by calculating the EV’s combined electrical energy consumption value. An EV’s combined energy consumption value is not considered when calculating the PEF value, but it is part of the equation to calculate the EV’s petroleum-equivalent fuel economy. 10 CFR 474.3(a). To determine an EV’s petroleum-equivalent fuel economy, one divides the appropriate PEF value by the EV’s combined energy consumption value. 10 CFR 474.3(a)(3). Because the combined electrical energy consumption value already accounts for the energy efficiency of different types and sizes of EVs, DOE determines that having multiple PEF values is unnecessary here. DOE agrees, however, that 49 U.S.C. 32904(a)(2)(B) would allow DOE to apply various factors to the CEg when calculating the PEF value for ‘‘various classes of electric vehicles,’’ if DOE determined that such factors were necessary. For example, 49 U.S.C. 32904(a)(2)(B)(iv) requires DOE to consider ‘‘the specific patterns of use of electric vehicles compared to petroleum-fueled vehicles.’’ In this final rule, DOE determines that current classes of EVs are equivalently capable vehicles that are likely to be used similarly to ICE vehicles. Accordingly, DOE maintains a driving pattern factor as 1.0. However, if there were a class of EVs that are used differently than ICE vehicles, then DOE could include a different driving pattern factor to reflect this different use when calculating the PEF value for such vehicles. DOE will monitor the field and consider whether including different driving pattern E:\FR\FM\29MRR1.SGM 29MRR1 22056 Federal Register / Vol. 89, No. 62 / Friday, March 29, 2024 / Rules and Regulations factors for different classes of EVs is appropriate during its annual reviews. D. Impact of Revised PEF on Plug-In Hybrid Electric Vehicles Some stakeholders commented on the application of the PEF to Plug-in Hybrid EVs (PHEVs) and argued that PHEVs were disproportionately advantaged by the new PEF. Tesla, Doc. No. 18, pg. 4; ZETA, Doc. No. 21, pg. 2. Specifically, they asserted that revised PEF value would decrease the fuel economy of PHEVs to approximately 60 to 75 percent of their current levels. However, according to these commenters, the revised PEF value would decrease the fuel economy of battery EVs (BEVs) to approximately 30 percent of their current levels. These commenters stated that DOE should address this ‘‘skewed incentive’’ because the revised PEF value would favor the inefficient PHEVs over more efficient BEVs. Tesla, Doc. No. 18, pg. 4; ZETA, Doc. No. 21, pg. 2. The PEF value is used to convert the measured electrical energy consumption of an EV into a gasoline-equivalent fuel economy of electricity. For PHEVs, which consume both electricity and petroleum, PEF only applies to the measured electrical energy consumption and does not apply to the energy consumption of petroleum. Accordingly, the impact of a decreased PEF value on the fuel economy of a PHEV is less than the impact of a decreased PEF value on the fuel economy of a BEV, which consumes only electricity. In addition, the fuel economy of a BEV is still significantly greater than that of a PHEV. Accordingly, under the revised PEV value, auto manufacturers are still incentivized to invest in the more efficient BEVs. khammond on DSKJM1Z7X2PROD with RULES E. Compliance With NHTSA and EPA Standards Several commenters expressed concerns that the revised PEF value would negatively affect auto manufacturers’ ability to comply with NHTSA’s CAFE standards and EPA’s standards related to greenhouse gas (GHG) emissions. Ford and the Alliance asserted that the proposed PEF value would cause the NHTSA and EPA compliance programs to become misaligned. Alliance, Doc. No. 25, pg. 21; Ford, Doc. No. 22, pg. 2. Several commenters stated that the revised PEF would expose auto manufacturers to additional penalties associated with noncompliance with the NHTSA and or EPA compliance programs. Ford, Doc. No. 22, pg. 2; Alliance Doc. No. 25, pg. 6, 10, 11. VerDate Sep<11>2014 15:53 Mar 28, 2024 Jkt 262001 DOE has carefully considered the impact of the revised PEF value under the factors in section 32904. The imposition of any penalties associated with noncompliance with the CAFE and GHG programs is not within the considerations required by section 32904(a)(2)(B) and is therefore outside the scope of this rulemaking. Because NHTSA and EPA are responsible for the CAFE and GHG compliance programs, those agencies are in the best position to consider any such concerns from commenters. F. Related Rulemakings Several commenters expressed concerns with the timing of the DOE’s rulemaking and noted that EPA and NHTSA were considering their GHG and CAFE standards. For example, the Alliance asserted that DOE should defer action on the 2023 NOPR to allow NHTSA and EPA to finalize their pending rulemakings first.30 Porsche also objected to the publication of 2023 NOPR prior to the release of the proposed CAFE rule. Specifically, Porsche argued that DOE is prejudging the relevancy of the PEF value to future CAFE standards that had not been proposed at the time of the 2023 NOPR. Porsche, Doc. No. 24, pg. 5. DOE is obligated to complete the PEF rulemaking without further delay, given that an assessment of the PEF value is several years past due. In the 2023 NOPR, DOE acknowledged that the inputs upon which the calculations and PEF values in current 10 CFR part 474 are based are outdated, and the technology and market penetration of electric vehicles has significantly changed since the 2000 Final Rule. 88 FR 21525, 21526. DOE is statutorily mandated to review the PEF annually and to revise it as necessary. Such review is neither contingent upon nor tied to NHTSA and EPA rulemakings, and any impact of the PEF value on other programs is not part of the factors DOE must consider. Accordingly, DOE is not deferring this statutorily required action to update the PEF. G. Miscellaneous DOE received a number of comments that are outside the scope of its authority or outside the scope of this rulemaking. For example, Transport Evolved argued that automakers should not be permitted to transfer CAFE credits from year-to-year or with other automakers. Transport Evolved, Doc. No. 17, pg. 2. In addition, Transport 30 Alliance, Doc. No. 25, pg. 24. DOE notes that several auto manufacturers and their representatives made similar arguments in their letters responded to the September 14, 2023, letters. PO 00000 Frm 00016 Fmt 4700 Sfmt 4700 Evolved stated that CAFE calculations should account for the size of vehicles, specifically by reducing the benefit for ‘‘larger, heavier, more inefficient vehicles.’’ Transport Evolved, Doc. No. 17, pg. 2. However, these comments from Transport Evolved relate to standards or programs administered by other federal agencies, NHTSA’s CAFE program and the greenhouse gas and fuel economy calculations of EPA and NHTSA, and are, therefore, outside the scope of this rulemaking. Our Children’s Trust stated that the revised PEF value would authorize a level of GHG emissions that exceed levels safe for children. Our Children’s Trust, Doc. No. 28, pg. 1. The PEF value does not authorize (or limit) GHG emissions. In this final rule DOE addresses the statutorily mandated factors for consideration in establishing the PEF value. The comments expressed concerns outside the scope of the PEF or the statutory factors. UAW suggested that DOE incorporate a more realistic projection of EV adoption and charging infrastructure in the considerations, with an eye towards ensuring domestic manufacturing and the relevant supply chain. UAW, Doc. No. 30, pg. 2. In section III.3, DOE explained its methodology for deriving the PEF value. Omer Sevindir asserted that the change to the PEF will hinder the ability of individuals who prefer ICE vehicles to acquire them. Doc. No. 36, pg. 1. The PEF value does not dictate market strategy for automakers. Each automaker selects its own manufacturer-specific CAFE compliance strategy and determines the vehicle models it will offer for sale. An anonymous commenter suggested that DOE nationalize the oil and gas industry. This comment is not relevant to the scope of this rulemaking. V. Revisions to 10 CFR Part 474 A. 10 CFR 474.3 In the 2023 NOPR, DOE proposed revising § 474.3 by revising paragraph (b) and adding paragraph (c). Proposed paragraph (b) stated that the PEF value is 23,160 Watt-hours per gallon. 88 FR 21525, 21539. Proposed paragraph (c) provided that the PEF value applies to MY 2027 and later EVs. 88 FR 21525, 21539. As previously discussed, DOE received comments that stated the proposed revisions to § 474.3 would remove all description of the PEF value that applies to EVs prior to MY 2027. Alliance, Doc. No. 25, pg. 27. It was not DOE’s intention to imply that there would be no PEF value from the effective date of the final rule to MY E:\FR\FM\29MRR1.SGM 29MRR1 Federal Register / Vol. 89, No. 62 / Friday, March 29, 2024 / Rules and Regulations 2027. Accordingly, DOE revises § 474.3 to retain the current regulatory description relating to the PEF value that applies to EVs prior to MY 2027. Specifically, DOE revises paragraph (b) to clarify that the current PEF value applies to pre-MY 2027 EVs. DOE also adds paragraph (c)–(f) to provide PEF values for MY2027 to MY 2030 and later vehicles. These revised PEF values reflect the decreasing fuel content factor that applies to MY 2027 to MY 2030 EVs. The revisions to § 474.3 also necessitate revisions to the definition for ‘‘petroleum equivalency factor’’ in § 474.2 to include references to new paragraphs (c)–(f). B. Appendix to Part 474 In the 2023 NOPR, DOE also proposed revisions to the appendix to part 474. The proposed revisions to the sample petroleum-equivalent fuel economy calculations reflected the proposed revised PEF. In the final rule, DOE amends the appendix to part 474 to reflect the revisions to the PEF methodology and PEF value adopted in the final rule. For example, the sample calculation reflects the revised PEF value for MY 2029, which includes a fuel content factor of 1/0.7875. In addition, the DOE revises the appendix to clarify that the fuel content factor is part of the calculation of PEF, not the calculation of petroleum-equivalent fuel economy. Instead, to calculate the petroleum-equivalent fuel economy, one divides the PEF by the combined electrical energy consumption value. VI. Procedural Issues and Regulatory Review khammond on DSKJM1Z7X2PROD with RULES A. Review Under Executive Orders 12866, 13563 and 14094 Executive Order (‘‘E.O.’’) 12866, ‘‘Regulatory Planning and Review,’’ 58 FR 51735 (Oct. 4, 1993), as supplemented and reaffirmed by E.O. 13563, ‘‘Improving Regulation and Regulatory Review,’’ 76 FR 3821 (Jan. 21, 2011) and amended by E.O. 14094, ‘‘Modernizing Regulatory Review,’’ 88 FR 21879 (April 11, 2023), requires agencies, to the extent permitted by law, to (1) propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs (recognizing that some benefits and costs are difficult to quantify); (2) tailor regulations to impose the least burden on society, consistent with obtaining regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations; (3) select, in choosing among alternative regulatory VerDate Sep<11>2014 15:53 Mar 28, 2024 Jkt 262001 approaches, those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity); (4) to the extent feasible, specify performance objectives, rather than specifying the behavior or manner of compliance that regulated entities must adopt; and (5) identify and assess available alternatives to direct regulation, including providing economic incentives to encourage the desired behavior, such as user fees or marketable permits, or providing information upon which choices can be made by the public. DOE emphasizes as well that E.O. 13563 requires agencies to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible. In its guidance, the Office of Information and Regulatory Affairs (‘‘OIRA’’) within the Office of Management and Budget (OMB) has emphasized that such techniques may include identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes. For the reasons stated in this preamble, this regulatory action is consistent with these principles. As a preliminary matter, we note that the PEF is a numeric value determined through a highly technical analysis, which bounds DOE’s discretion in deriving the value. Once calculated, the PEF has no independent effects, but serves as an input to calculations that other agencies perform. Thus, the general costs and benefits that could be attributed to these revisions are somewhat removed from this action, and DOE has not attempted to quantify them here. From a qualitative perspective, however, as discussed in section III.C, DOE expects the decision to retain a fuel content factor over the next several years, when combined with the revised PEF value and methodology to result in greater petroleum conservation by incentivizing EV production and adoption. On the other hand, the phaseout of the fuel content factor and the use of the revised PEF value may lead some manufacturers to incur additional costs, because of the potential effects of the revised PEF value on the average fuel economy of their fleets. The fact that the fuel content factor is phased out over four years, however, should have the effect of mitigating any such costs. Section 6(a) of E.O. 12866 also requires agencies to submit ‘‘significant regulatory actions’’ to the OIRA for review. OIRA has determined that this action constitutes a significant PO 00000 Frm 00017 Fmt 4700 Sfmt 4700 22057 regulatory action within the scope of section 3(f) of E.O. 12866. Accordingly, this action was subject to review by OIRA. B. Review Under the Regulatory Flexibility Act The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires the preparation of an initial regulatory flexibility analysis (IRFA) for any rule that by law must be proposed for public comment, unless the agency certifies that the rule, if promulgated, will not have a significant economic impact on a substantial number of small entities. As required by E.O. 13272, Proper Consideration of Small Entities in Agency Rulemaking, 67 FR 53461 (Aug. 16, 2002), DOE published procedures and policies on February 19, 2003, to ensure that the potential impacts of its rules on small entities are properly considered during the rulemaking process. 68 FR 7990. The Department has made its procedures and policies available on the Office of General Counsel’s website: www.energy.gov/gc/ office-general-counsel. The final rule revises DOE’s regulations on electric vehicles regarding procedures for calculating a value for the petroleum-equivalent fuel economy of EVs for use in the CAFE program administered by DOT. Once calculated, the PEF has no independent effects, but serves as an input to calculations that other agencies perform. Because this final rule does not directly regulate small entities but instead only amends a factor used to calculate the average fuel economy of a manufacturer’s entire fleet, DOE certifies that this final rule will not have a significant economic impact on a substantial number of small entities, and, therefore, no regulatory flexibility analysis is required.31 Mid-Tex Elec. CoOp, Inc. v. F.E.R.C., 773 F.2d 327 (1985). Accordingly, DOE certifies that this rule would not have a significant economic impact on a substantial number of small entities, and, therefore, no regulatory flexibility analysis is required. DOE transmitted a certification and supporting statement of factual basis to the Chief Counsel for Advocacy of the Small Business Administration for review under 5 U.S.C. 605(b). C. Review Under the Paperwork Reduction Act of 1995 The final rule does not impose new information or record keeping requirements. Accordingly, OMB 31 DOE notes that passenger vehicle manufacturers that manufacture fewer than 10,000 vehicles per year can petition NHTSA to have alternative CAFE standards. See 49 U.S.C. 32902(d). E:\FR\FM\29MRR1.SGM 29MRR1 22058 Federal Register / Vol. 89, No. 62 / Friday, March 29, 2024 / Rules and Regulations clearance is not required under the Paperwork Reduction Act. (44 U.S.C. 3501 et seq.). khammond on DSKJM1Z7X2PROD with RULES D. Review Under the National Environmental Policy Act of 1969 DOE analyzed this regulation in accordance with the National Environmental Policy Act of 1969 (‘‘NEPA’’) and DOE’s NEPA implementing regulations (10 CFR part 1021). DOE’s regulations include a categorical exclusion for amending an existing rule or regulation that does not change the environmental effect of the rule or regulation being amended. 10 CFR part 1021, subpart D, appendix A5. This rulemaking qualifies for categorical exclusion A5 because this final rule, which amends an existing rule or regulation does not change the environmental effect of the rule or regulation being amended, no extraordinary circumstances exist that require further environmental analysis, and it otherwise meets the requirements for application of a categorical exclusion. See 10 CFR 1021.410. Because this rule revises and updates the PEF value to ensure that it continues to serve the statutory purpose of conserving energy and conserving petroleum, given changes in circumstances that would diminish the effectiveness of the prior PEF value over time, this rule does not change the environmental effect of the prior rule. Thus, DOE concludes that this rulemaking to amend 10 CFR part 474 does not change the environmental effect of 10 CFR part 474. In addition, no extraordinary circumstances exist that would require further environmental analysis and the final rule otherwise meets the requirements for application of categorical exclusion A5. E. Review Under Executive Order 13132 Executive Order 13132, ‘‘Federalism,’’ 64 FR 43255 (Aug. 10, 1999), imposes certain requirements on agencies formulating and implementing policies or regulations that preempt State law or that have federalism implications. The E.O. requires agencies to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and to carefully assess the necessity for such actions. The E.O. also requires agencies to have an accountable process to ensure meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications. On March 14, 2000, DOE published a statement of policy describing the intergovernmental consultation process it will follow in the VerDate Sep<11>2014 15:53 Mar 28, 2024 Jkt 262001 development of such regulations. See 65 FR 13735. DOE examined this final rule and determined that it will not preempt State law and will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of Government. No further action is required by E.O. 13132. F. Review Under Executive Order 12988 With respect to the review of existing regulations and the promulgation of new regulations, section 3(a) of E.O. 12988, ‘‘Civil Justice Reform,’’ 61 FR 4729 (Feb. 7, 1996), imposes on Federal agencies the general duty to adhere to the following requirements: (1) eliminate drafting errors and ambiguity; (2) write regulations to minimize litigation; and (3) provide a clear legal standard for affected conduct, rather than a general standard and promote simplification and burden reduction. Section 3(b) of E.O. 12988 specifically requires that executive agencies make every reasonable effort to ensure that the regulation: (1) clearly specifies its preemptive effect, if any; (2) clearly specifies any effect on existing Federal law or regulation; (3) provides a clear legal standard for affected conduct, while promoting simplification and burden reduction; (4) specifies its retroactive effect, if any; (5) adequately defines key terms; and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General. Section 3(c) of E.O. 12988 requires executive agencies to review regulations in light of applicable standards in section 3(a) and section 3(b) to determine whether they are met, or it is unreasonable to meet one or more of them. DOE has completed the required review and determined that, to the extent permitted by law, the final rule does meet the relevant standards of E.O. 12988. G. Review Under the Unfunded Mandates Reform Act of 1995 Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Pub. L. 104–4) requires each Federal agency to assess the effects of Federal regulatory actions on State, local, and tribal governments and the private sector. For a proposed regulatory action likely to result in a rule that may cause the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector of $100 million or more in any one year (adjusted annually for inflation), section 202 of UMRA requires a Federal agency to publish a written PO 00000 Frm 00018 Fmt 4700 Sfmt 4700 statement that estimates the resulting costs, benefits, and other effects on the national economy. (2 U.S.C. 1532(a) and (b)). The section of UMRA also requires a Federal agency to develop an effective process to permit timely input by elected officers of State, local, and tribal governments on a proposed ‘‘significant intergovernmental mandate’’ and requires an agency plan for giving notice and opportunity for timely input to potentially affected small governments before establishing any requirements that might significantly or uniquely affect small governments. On March 18, 1997, DOE published a statement of policy on its process for intergovernmental consultation under UMRA (62 FR 12820) (also available at www.energy.gov/gc/office-generalcounsel). This final rule contains neither an intergovernmental mandate nor a mandate that may result in the expenditure of $100 million or more in any year by State, local, and tribal governments, in the aggregate, or by the private sector, so these requirements under the Unfunded Mandates Reform Act do not apply. H. Review Under the Treasury and General Government Appropriations Act of 1999 Section 654 of the Treasury and General Government Appropriations Act of 1999 (Pub. L. 105–277) requires Federal agencies to issue a Family Policymaking Assessment for any rule that may affect family well-being. This final rule would not have any impact on the autonomy or integrity of the family as an institution. Accordingly, DOE concludes that it is not necessary to prepare a Family Policymaking Assessment. I. Review Under Executive Order 12630 DOE has determined, under E.O. 12630, ‘‘Governmental Actions and Interference with Constitutionally Protected Property Rights,’’ 53 FR 8859 (Mar. 18, 1988), that this final rule will not result in any takings which might require compensation under the Fifth Amendment to the United States Constitution. J. Review Under the Treasury and General Government Appropriations Act, 2001 Section 515 of the Treasury and General Government Appropriations Act, 2001 (44 U.S.C. 3516, note) provides for agencies to review most disseminations of information to the public under guidelines established by each agency pursuant to general guidelines issued by OMB. OMB’s guidelines were published at 67 FR E:\FR\FM\29MRR1.SGM 29MRR1 Federal Register / Vol. 89, No. 62 / Friday, March 29, 2024 / Rules and Regulations K. Review Under Executive Order 13211 Executive Order 13211, ‘‘Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use,’’ 66 FR 28355 (May 22, 2001), requires Federal agencies to prepare and submit to OIRA, a Statement of Energy Effects for any proposed significant energy action. A ‘‘significant energy action’’ is defined as any action by an agency that promulgated or is expected to lead to promulgation of a final rule, and that: (1) is a significant regulatory action under E.O. 12866, or any successor order; and (2) is likely to have a significant adverse effect on the supply, distribution, or use of energy, or (3) is designated by the Administrator of OIRA as a significant energy action. For any proposed significant energy action, the agency must give a detailed statement of any adverse effects on energy supply, distribution, or use should the proposal be implemented, and of reasonable alternatives to the action and their expected benefits on energy supply, distribution, and use. The final rule amends a factor used to calculate CAFE compliance and is not expected to have a significant adverse effect on the supply, distribution, or use of energy. Additionally, OIRA has not designated this rule as a significant energy action. Accordingly, the requirements of E.O. 13211 do not apply. Electric power, Energy conservation, Motor vehicles, Research. Signing Authority This document of the Department of Energy was signed on March 18, 2024, by Jeffrey Marootian, Principal Deputy Assistant Secretary for Energy Efficiency and Renewable Energy, pursuant to delegated authority from the Secretary of Energy. That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of the Department of Energy. This administrative process in no way alters the legal effect of this document upon publication in the Federal Register. Signed in Washington, DC, on March 19, 2024. Treena V. Garrett, Federal Register Liaison Officer, U.S. Department of Energy. For the reasons stated in the preamble, DOE amends part 474 of Chapter II of Title 10 of the Code of Federal Regulations as set forth below: PART 474—ELECTRIC AND HYBRID VEHICLE RESEARCH, DEVELOPMENT, AND DEMONSTRATION PROGRAM; PETROLEUM-EQUIVALENT FUEL ECONOMY CALCULATION 1. The authority citation for part 474 continues to read as follows: ■ Authority: 49 U.S.C. 32901 et seq. 2. Amend § 474.2 by revising definition for ‘‘Petroleum-equivalency factor’’ to read as follows: ■ L. Congressional Notification As required by 5 U.S.C. 801, DOE will report to Congress on the promulgation of this rule prior to its effective date. The report will state that the Office of Information and Regulatory Affairs has determined that this rule meets the criteria set forth in 5 U.S.C. 804(2). VII. Approval of the Office of the Secretary The Secretary of Energy has approved publication of this final rule. khammond on DSKJM1Z7X2PROD with RULES List of Subjects in 10 CFR Part 474 § 474.2 Definitions. * * * * * Petroleum equivalency factor means the values specified in § 474.3, paragraphs (b) through (f) of this part, which incorporate the parameters listed in 49 U.S.C. 32904(a)(2)(B) and are used to calculate petroleum-equivalent fuel economy. * * * * * 28 996 Wh ' gal BEV Fuel Economy= Wh 244.75 mi VerDate Sep<11>2014 15:53 Mar 28, 2024 Jkt 262001 PO 00000 Frm 00019 Fmt 4700 Sfmt 4725 3. Amend § 474.3 by revising the introductory text of paragraph (b) and adding paragraphs (c), (d), (e), and (f) to read as follows: ■ § 474.3 Petroleum-equivalent fuel economy calculation. * * * * * (b) For model year (MY) 2024, MY 2025, and MY 2026 electric vehicles, the petroleum-equivalency factors are as follows: * * * * * (c) For MY 2027 electric vehicles, the petroleum-equivalency factor is 79,989 Watt-hours per gallon. (d) For MY 2028 electric vehicles, the petroleum-equivalency factor is 50,427 Watt-hours per gallon. (e) For MY 2029 electric vehicles, the petroleum-equivalency factor is 36,820 Watt-hours per gallon. (f) For MY 2030 and later electric vehicles, the petroleum-equivalency factor is 28,996 Watt-hours per gallon. § 474.5 [Removed and Reserved] 4. Remove and reserve § 474.5. ■ 5. Revise appendix A to to 474 to read as follows: ■ Appendix A to Part 474—Sample Petroleum-Equivalent Fuel Economy Calculations Example 1: Battery Electric Vehicle (BEV) A battery electric vehicle is tested in accordance with Environmental Protection Agency procedures and is found to have an Urban Dynamometer Driving Schedule energy consumption value of 265 Watt-hours per mile and a Highway Fuel Economy Driving Schedule energy consumption value of 220 Watt-hours per mile. The vehicle is not equipped with any petroleum-powered accessories. The combined electrical energy consumption value is determined by averaging the Urban Dynamometer Driving Schedule energy consumption value and the Highway Fuel Economy Driving Schedule energy consumption value using weighting factors of 55 percent urban, and 45 percent highway: combined electrical energy consumption value = (0.55 * urban) + (0.45 * highway) = (0.55 * 265) + (0.45 * 220) = 244.75 Wh/mile The petroleum-equivalent fuel economy is: PEF ÷ combined electrical energy consumption value Thus, fuel economy for the example vehicle in MY 2030 would be: = 118.47 MPGe E:\FR\FM\29MRR1.SGM 29MRR1 ER29MR24.055</GPH> 8452 (February 22, 2002), and DOE’s guidelines were published at 67 FR 62446 (October 7, 2002). DOE has reviewed the final rule under the OMB and DOE guidelines and concludes that it is consistent with applicable policies in those guidelines. 22059 22060 Federal Register / Vol. 89, No. 62 / Friday, March 29, 2024 / Rules and Regulations Example 2: Plug-In Hybrid Electric Vehicle A plug-in hybrid electric vehicle is tested in accordance with Environmental Protection Agency procedures and is found to have an Urban Dynamometer Driving Schedule energy consumption value of 265 Watt-hours per mile and a Highway Fuel Economy Driving Schedule energy consumption value of 220 Watt-hours per mile in charge depleting mode, a combined gasoline fuel economy of 50.0 miles per gallon in charge sustaining mode, and an all-electric range corresponding to a percentage utilization of 60 percent travel on electricity and 40 percent travel on gasoline. The combined electrical energy consumption value is determined by averaging the Urban Dynamometer Driving Schedule energy consumption value and the Highway Fuel Economy Driving Schedule PHEV Fuel Economy= [FR Doc. 2024–06101 Filed 3–28–24; 8:45 am] BILLING CODE 6450–01–P DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency 12 CFR Parts 24, 25, 35, and 192 [Docket ID OCC–2022–0002] RIN 1557–AF26 FEDERAL RESERVE SYSTEM 12 CFR Parts 207 and 228 [Regulation BB; Docket No. R–1830] RIN 7100–AG75 FEDERAL DEPOSIT INSURANCE CORPORATION 12 CFR Parts 345 and 346 RIN 3064–AG03 Community Reinvestment Act; Supplemental Rule Office of the Comptroller of the Currency, Treasury; Board of Governors of the Federal Reserve System; and Federal Deposit Insurance Corporation. ACTION: Interim final rule; technical amendments; correction. AGENCY: The Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (Board), and the Federal Deposit Insurance Corporation (FDIC) (together referred to as the agencies, and each, individually, the agency) are issuing this supplemental rulemaking related to the agencies’ Community Reinvestment Act (CRA) final rule issued on October 24, 2023, and published in the Federal Register on February 1, 2024 (2023 CRA Final Rule). The rulemaking has two components. First, the agencies are khammond on DSKJM1Z7X2PROD with RULES SUMMARY: VerDate Sep<11>2014 15:53 Mar 28, 2024 Jkt 262001 1 0 _60 118.47 MPGe Frm 00020 Fmt 4700 = 76.5 MPGe 0.40 + 50.00 MPG adopting an interim final rule that amends, and requests comment on, the applicability date of the facility-based assessment areas provision and public file provision included in the 2023 CRA Final Rule. Second, the agencies are adopting a final rule that makes technical amendments to the 2023 CRA Final Rule and related regulations. In addition to the rulemaking, this document makes a correction to the preamble to the 2023 CRA Final Rule regarding the OCC’s Unfunded Mandates Reform Act (UMRA) regulatory analysis. DATES: Effective date: This rule (including interim final rule and technical amendments) is effective on April 1, 2024. Comment due date: Comments on the interim final rule (regarding the applicability date for §§ 25.16, 25.43, 228.16, 228.43, 345.16, and 345.43) must be received by May 13, 2024. ADDRESSES: Comments should be directed to: OCC: Commenters are encouraged to submit comments through the Federal eRulemaking Portal. Please use the title ‘‘Community Reinvestment Act; Supplemental Rule’’ to facilitate the organization and distribution of the comments. You may submit comments by any of the following methods: • Federal eRulemaking Portal— Regulations.gov: Go to https:// regulations.gov/. Enter ‘‘Docket ID OCC– 2022–0002’’ in the search box and click ‘‘Search.’’ Public comments can be submitted via the ‘‘Comment’’ box below the displayed document information or by clicking on the document title and then clicking the ‘‘Comment’’ box on the top-left side of the screen. For help with submitting effective comments, please click on ‘‘Commenter’s Checklist.’’ For assistance with the Regulations.gov site, please call (866) 498–2945 (toll free) Monday–Friday, between 8 a.m. and 7 PO 00000 energy consumption value using weighting factors of 55 percent urban, and 45 percent highway to be 244.75 Wh/mile, which corresponds to 118.47 miles/gal equivalent as shown above for a BEV (using the MY 2030and-beyond PEF value of 28,997 Wh/gal). The PHEV fuel economy is calculated by dividing one by the sum of the percentage utilization for petroleum and electricity divided by their respective fuel economy. In this case: Sfmt 4700 p.m. ET during Federal business weekdays, or email regulationshelpdesk@gsa.gov. • Mail: Chief Counsel’s Office, Attention: Comment Processing, Office of the Comptroller of the Currency, 400 7th Street SW, Suite 3E–218, Washington, DC 20219. • Hand Delivery/Courier: 400 7th Street SW, Suite 3E–218, Washington, DC 20219. Instructions: You must include ‘‘OCC’’ as the agency name and ‘‘Docket ID OCC–2022–0002’’ in your comment. In general, the OCC will enter all comments received into the docket and publish the comments on the Regulations.gov website without change, including any business or personal information provided such as name and address information, email addresses, or phone numbers. Comments received, including attachments and other supporting materials, are part of the public record and subject to public disclosure. Do not include any information in your comment or supporting materials that you consider confidential or inappropriate for public disclosure. You may review comments and other related materials that pertain to this action by the following method: • Viewing Comments Electronically— Regulations.gov: Go to https:// regulations.gov/. Enter ‘‘Docket ID OCC– 2022–0002’’ in the search box and click ‘‘Search.’’ Click on the ‘‘Documents’’ tab and then the document’s title. After clicking the document’s title, click the ‘‘Browse Comments’’ tab. Comments can be viewed and filtered by clicking on the ‘‘Sort By’’ drop-down on the right side of the screen or the ‘‘Refine Results’’ option on the left side of the screen. Supporting materials can be viewed by clicking on the ‘‘Documents’’ tab and filtered by clicking on the ‘‘Sort By’’ drop-down on the right side of the screen or the ‘‘Refine Documents Results’’ option on the left side of the E:\FR\FM\29MRR1.SGM 29MRR1 ER29MR24.056</GPH> where MPGe is miles per gallon equivalent.

Agencies

DEPARTMENT OF ENERGY

[Federal Register Volume 89, Number 62 (Friday, March 29, 2024)]
[Rules and Regulations]
[Pages 22041-22060]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-06101]



========================================================================
Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 

========================================================================


Federal Register / Vol. 89, No. 62 / Friday, March 29, 2024 / Rules 
and Regulations

[[Page 22041]]



DEPARTMENT OF ENERGY

10 CFR Part 474

[EERE-2021-VT-0033]
RIN 1904-AF47


Petroleum-Equivalent Fuel Economy Calculation

AGENCY: Office of Energy Efficiency and Renewable Energy, Department of 
Energy.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The U.S. Department of Energy (DOE) publishes a final rule 
that revises the value for the petroleum-equivalency factor (PEF). This 
final rule revises DOE's regulations regarding procedures for 
calculating a value for the petroleum-equivalent fuel economy of 
electric vehicles (EVs). The PEF is used by the Environmental 
Protection Agency (EPA) in calculating light-duty vehicle 
manufacturers' compliance with the Department of Transportation's (DOT) 
Corporate Average Fuel Economy (CAFE) standards.

DATES: This rule is effective June 12, 2024.

ADDRESSES: The docket for this rulemaking, which includes Federal 
Register notices, public meeting attendee lists and transcripts, 
comments, and other supporting documents/materials, is available for 
review at www.regulations.gov/docket/EERE-2021-VT-0033. All documents 
in the docket are listed in the www.regulations.gov index. However, not 
all documents listed in the index may be publicly available, such as 
information that is exempt from public disclosure.

FOR FURTHER INFORMATION CONTACT: 
    Mr. Kevin Stork, U.S. Department of Energy, Vehicle Technologies 
Office, EE-3V, 1000 Independence Avenue SW, Washington, DC 20585. 
Telephone: (202) 586-8306. Email: [email protected].
    Ms. Laura Zuber, U.S. Department of Energy, Office of the General 
Counsel, Forrestal Building, GC-33, 1000 Independence Avenue SW, 
Washington, DC 20585. Telephone: (240) 306-7651. Email: 
[email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction and Background
II. Public Comments on the 2023 NOPR
III. Discussion of Final Rule
    A. Statutory Factors
    B. Current Methodology
    C. Revised Methodology
    1. Approximate Electrical Energy Efficiency of EVs
    2. Gasoline-Equivalent Fuel Economy of Electricity
    a. Average Electricity Generation and Transmission Efficiency
    b. Petroleum Refining and Distribution Efficiency
    c. Annual Gasoline-Equivalent Fuel Economy of Electricity
    3. Cumulative Gasoline-Equivalent Fuel Economy of Electricity
    4. Fuel Content Factor
    5. Accessory Factor
    6. Driving Pattern Factor
    7. Revised PEF Value
    8. Compliance Period
    9. Annual Review
IV. Responses to Additional Comments
    A. Revisions to Section 474.3
    B. Consideration of All Forms of Energy Conservation
    C. Need for Multiple PEF Values
    D. Impact of Revised PEF on Plug-In Hybrid Electric Vehicles
    E. Compliance With NHTSA and EPA Standards
    F. Related Rulemakings
    G. Miscellaneous
V. Revisions to 10 CFR P art 474
    A. 10 CFR 474.3
    B. Appendix to Part 474
VI. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866, 13563 and 14094
    B. Review Under the Regulatory Flexibility Act
    C. Review Under the Paperwork Reduction Act of 1995
    D. Review Under the National Environmental Policy Act of 1969
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act of 1999
    I. Review Under Executive Order 12630
    J. Review Under the Treasury and General Government 
Appropriations Act, 2001
    K. Review Under Executive Order 13211
    L. Congressional Notification
VII. Approval of the Office of the Secretary

I. Introduction and Background

    In an effort to conserve energy through improvements in the energy 
efficiency of motor vehicles, in 1975, Congress passed the Energy 
Policy and Conservation Act (EPCA), Public Law 94-163. Title III of 
EPCA amended the Motor Vehicle Information and Cost Savings Act (15 
U.S.C. 1901 et seq.) (the Motor Vehicle Act) by mandating fuel economy 
standards for automobiles produced in, or imported into, the United 
States. This legislation, as amended, requires every manufacturer to 
meet applicable specified corporate average fuel economy (CAFE) 
standards for their fleets of light-duty vehicles under 8,500 pounds 
that the manufacturer manufactures in any model year.\1\ The Secretary 
of Transportation (through the National Highway Traffic Safety 
Administration (NHTSA)) is responsible for prescribing the CAFE 
standards and enforcing the penalties for failure to meet these 
standards. 49 U.S.C. 32902. The Administrator of the Environmental 
Protection Agency (EPA) is responsible for calculating each 
manufacturer's fleet CAFE value. 49 U.S.C. 32902 and 32904.
---------------------------------------------------------------------------

    \1\ The relevant provisions of the CAFE program, including DOE's 
establishment of equivalent petroleum-based fuel economy values were 
transferred to Title 49 of the U.S. Code by Public Law 103-272 (July 
5, 1984). See 49 U.S.C. 32901 et seq. The authority for DOE's 
establishment of equivalent petroleum-based fuel economy values was 
transferred to 49 U.S.C. 32904(a)(2)(B).
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    On January 7, 1980, President Carter signed the Chrysler 
Corporation Loan Guarantee Act of 1979 (Pub. L. 96-185). Section 18 of 
the Chrysler Corporation Loan Guarantee Act of 1979 added a new 
paragraph (2) to section 13(c) of the Electric and Hybrid Vehicle 
Research, Development, and Demonstration Act of 1976 (Pub. L. 94-413). 
Part of the new section 13(c) added paragraph (a)(3) to section 503 of 
the Motor Vehicle Act. That subsection provides:
    If a manufacturer manufactures an electric vehicle, the 
Administrator [of EPA] shall include in the calculation of average fuel 
economy under paragraph (1) of this subsection equivalent petroleum 
based fuel economy values determined by the Secretary of Energy for 
various classes of electric vehicles. The Secretary shall review those 
values each year and determine and propose necessary revisions based on 
the following factors:


[[Page 22042]]


    (i) The approximate electrical energy efficiency of the vehicle, 
considering the kind of vehicle and the mission and weight of the 
vehicle.
    (ii) The national average electrical generation and transmission 
efficiencies.
    (iii) The need of the United States to conserve all forms of 
energy and the relative scarcity and value to the United States of 
all fuel used to generate electricity.
    (iv) The specific patterns of use of electric vehicles compared 
to petroleum-fueled vehicles.

49 U.S.C. 32904(a)(2)(B).
    Section 18 of the Chrysler Corporation Loan Guarantee Act of 1979 
further amended the Electric and Hybrid Vehicle Research, Development, 
and Demonstration Act of 1976 by adding a new paragraph (3) to section 
13(c), which directed the Secretary of Energy, in consultation with the 
Secretary of Transportation and the Administrator of EPA, to conduct a 
seven-year evaluation program of the inclusion of electric vehicles \2\ 
in the calculation of average fuel economy. As required by section 
503(a)(3) of the Motor Vehicle Act, DOE proposed a method of 
calculating the petroleum-equivalent fuel economy of electric vehicles 
utilizing a PEF in a new 10 CFR part 474 on May 21, 1980. 45 FR 34008. 
The rule was finalized on April 21, 1981, and became effective May 21, 
1981. 46 FR 22747. The seven-year evaluation program was completed in 
1987, and the calculation of the annual petroleum equivalency factors 
was not extended past 1987.
---------------------------------------------------------------------------

    \2\ For purposes of paragraph (a)(2) of 49 U.S.C. 32904, EPCA 
defines an ``electric vehicle'' as ``a vehicle powered primarily by 
an electric motor drawing electrical current from a portable 
source.''
---------------------------------------------------------------------------

    DOE published a proposed rule for a permanent PEF for use in 
calculating petroleum-equivalent fuel economy values of electric 
vehicles on February 4, 1994, and obtained comments from interested 
parties. 59 FR 5336. Following consideration of comments, DOE's own 
internal re-examination of the assumptions underlying the proposed 
rule, and existing regulations for other classes of alternative fuel 
vehicles, DOE decided to modify the PEF calculation approach proposed 
in 1994. The 1994 proposed rule was later withdrawn, and DOE proposed a 
modified approach in a July 14, 1999, notice of proposed rulemaking. 64 
FR 37905 (1999 NOPR). DOE published a final rule with a PEF of 82,049 
Watt-hours per gallon on June 12, 2000, that amended 10 CFR part 474. 
65 FR 36985 (2000 Final Rule). DOE has not updated 10 CFR part 474 
since the 2000 Final Rule.
    On October 22, 2021, DOE received a petition for rulemaking from 
the Natural Resources Defense Council (NRDC) and Sierra Club requesting 
DOE to update its regulations at 10 CFR part 474. DOE published a 
notice of receipt of the petition on December 29, 2021, and solicited 
comment on the petition and whether DOE should proceed with a 
rulemaking. 86 FR 73992.
    In April 2023, DOE agreed that the inputs upon which the 
calculations and PEF values are based were outdated and that the 
technology and market penetration of EVs has significantly changed 
since the 2000 Final Rule and granted the petition from NRDC and Sierra 
Club. When granting the petition, DOE also published a notice of 
proposed rulemaking. 88 FR 21525 (2023 NOPR).
    In the 2023 NOPR, DOE proposed to update the PEF value and revise 
the methodology used to calculate the PEF. Specifically, the 2023 NOPR 
proposed the following revisions to the methodology:
     Change the accessory factor, used to account for 
petroleum-fueled on-board accessories, to 1.
     Revise the generation and transmission efficiency factor 
by using updated grid mix projection that account for policy changes 
since June 2000 and more recent data.
     Remove the fuel content factor.
    In accordance with these proposed revisions, DOE proposed a revised 
PEF value of 23,160 Watt-hours per gallon. 88 FR 21525, 21532. In 
addition, DOE proposed that the revised PEF value would apply to model 
year (MY) 2027 and later electric vehicles. 88 FR 21525, 21531. DOE 
also proposed to delete 10 CFR 474.5, which requires DOE to review the 
PEF value every five years. 88 FR 21525, 21533.
    The public comment period for the 2023 NOPR closed on June 12, 
2023. DOE received 20 comments on the proposed rule.\3\ Several 
commenters, including the Alliance for Automotive Innovation 
(Alliance), expressed concern that auto manufacturers would not have 
sufficient lead time to incorporate changes into their plans for MY 
2027 vehicles, given that the new PEF value would significantly impact 
their CAFE compliance and given that manufacturing changes require 
significant lead times. On September 14, 2023, DOE issued letters to 
member companies of the Alliance that invited recipients to provide 
data, documents, or analysis to clarify the Alliance's concerns in 
relation to the proposed effective date. DOE also published a 
Notification of Ex Parte Communication and Request for Comments in the 
Federal Register, which stated that DOE sent the September 14, 2023, 
letters and asked interested stakeholders to provide similar data, 
documents, or analysis. 88 FR 67682 (Oct. 2, 2023).
---------------------------------------------------------------------------

    \3\ DOE received comments from an individual on October 1, 2023, 
after the comment period closed. Doc. No. 36. Despite the fact that 
these comments were filed late, DOE considered the issues raised in 
these comments when reviewing the rule.
---------------------------------------------------------------------------

    DOE received data in response to the letters and the notification 
and incorporated the data into its analysis. The letters and responses 
to the letters and the notification are available in the docket.
    DOE is finalizing revisions to 10 CFR part 474 and the methods to 
calculate the PEF value in accordance with the statutory factors in 49 
U.S.C. 32904(a)(2)(B). After considering comments, DOE is modifying the 
methodology as initially proposed in the 2023 NOPR in the following 
ways:
     Updating the grid mix projection from the 2021 National 
Renewable Energy Laboratory (NREL) ``95 by 2050'' Scenario to the more 
current electricity generation forecast in the 2022 NREL ``Standard 
Scenario Mid-Case,'' which accounts for the latest technology and 
policies.
     Changing the method of calculating the PEF value from 
using an average of annual PEF values between MY 2027 to MY 2031 to 
calculating a PEF value based on the survivability-weighted lifetime 
mileage schedule of the fleet of vehicles sold during the regulatory 
period.
     Phasing-out the use of the fuel content factor between MY 
2027 and MY 2030 rather than removing it from the PEF equation as of 
the effective date of the rule, as proposed in the 2023 NOPR.
    Each of these changes are discussed in detail in the following 
sections.

II. Public Comments on the 2023 NOPR

    DOE received comments in response to the 2023 NOPR from the 
individuals and interested parties listed in Table 1. These comments 
are available in the public docket for this rulemaking. The specific 
issues relating to the final rule raised by the commenters are 
addressed in section III of this document. A parenthetical reference at 
the end of a comment quotation or paraphrase provides the location of 
the item in the public record.\4\
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    \4\ The parenthetical reference provides a reference for 
information located in the docket for this rulemaking. (Docket No. 
EERE-2021-VT-0033, which is maintained at www.regulations.gov). The 
references are arranged as follows: commenter name, comment docket 
ID number, page of that document.

[[Page 22043]]



                                       Table 1--2023 NOPR Written Comments
----------------------------------------------------------------------------------------------------------------
                 Commenter(s)                                     Abbreviation                     Document No.
----------------------------------------------------------------------------------------------------------------
Gilles DeBrouwer..............................  ................................................              14
Vivat.........................................  ................................................              15
Anonymous 1...................................  ................................................              16
Transport Evolved.............................  ................................................              17
Tesla, Inc....................................  Tesla...........................................              18
International Council on Clean Transportation.  ICCT............................................              19
Natural Resources Defense Council and Sierra    NRDC and Sierra Club............................              20
 Club.
Zero Emission Transportation Association......  ZETA............................................              21
Ford Motor Company............................  Ford............................................              22
National Automobile Dealers Association.......  NADA............................................              23
Porsche Cars..................................  Porsche.........................................              24
Alliance for Automotive Innovators............  Alliance........................................              25
American Fuel & Petrochemical Manufacturers...  AFPM............................................              26
State of California et al.....................  California et al................................              27
Our Children's Trust..........................  ................................................              28
American Council for an Energy Efficient        ACEEE...........................................              29
 Economy.
International Union, United Automobile,         UAW.............................................              30
 Aerospace & Agricultural Implement Workers of
 America.
American Free Enterprise Chamber of Commerce    AmFree et al....................................              31
 et al.
Clean Fuels Development Coalition et al.......  Clean Fuels et al...............................              32
Omer Sevindir.................................  ................................................              36
----------------------------------------------------------------------------------------------------------------

III. Discussion of Final Rule

A. Statutory Factors

    In accordance with 49 U.S.C. 32904, DOE reviewed the equivalent 
petroleum-based fuel economy values for EVs, including both the current 
PEF value and the methodology used to calculate that value, which are 
found in 10 CFR part 474. When reviewing the equivalent petroleum-based 
fuel economy values for EVs, DOE must consider four factors:
    (i) The approximate electrical energy efficiency of the vehicle, 
considering the kind of vehicle and the mission and weight of the 
vehicle.
    (ii) The national average electrical generation and transmission 
efficiencies.
    (iii) The need of the United States to conserve all forms of energy 
and the relative scarcity and value to the United States of all fuel 
used to generate electricity.
    (iv) The specific patterns of use of electric vehicles compared to 
petroleum-fueled vehicles.
49 U.S.C. 32904(a)(2)(B).
    Based on more recent data, changes to market conditions, and 
comments received in response to the 2023 NOPR, DOE is revising the 
methodology used to calculate PEF and the resulting PEF value in this 
final rule. DOE discusses its consideration of the statutory factors 
and its conclusions in the following sections.

B. Current Methodology

    10 CFR 474.3 provides the current methodology for determining the 
equivalent petroleum-based fuel economy values for EVs. First, DOE 
determines the EVs' urban and highway energy consumption value in Watt-
hours (Wh) per mile. To do this, DOE uses the energy consumption values 
provided by the Highway Fuel Economy Driving Schedule (HFEDS) and Urban 
Dynamometer Driving Schedule (UDDS) test cycles established by EPA at 
40 CFR parts 86 and 600. 10 CFR 474.3(a)(1). DOE then determines the 
combined energy consumption value by averaging the urban and highway 
energy consumption values using a weighting of 55 percent urban and 45 
percent highway. 10 CFR 474.3(a)(2). Finally, DOE converts this 
combined energy consumption value (expressed in Wh per mile) to a 
petroleum-equivalent fuel economy value, which is measured in miles per 
gallon (mpg), by dividing the PEF (measured in Wh per gallon) by the 
combined energy consumption value.
    The current PEF calculation procedure converts the measured 
electrical energy consumption of an electric vehicle into a gasoline-
equivalent fuel economy of electricity (Eg). 65 FR 36986, 
36987. Then, the methodology multiplies the Eg by the fuel 
content factor (FCF), which is intended to represent the energy content 
equivalent the alternative fuel to a gallon of gasoline; the accessory 
factor (AF), which represents possible use of petroleum-powered 
accessories, such as cabin heater/defroster systems; and the driving 
pattern factor (DPF), which represents the potential for different uses 
of EVs compared to internal combustion engine (ICE) vehicles. Id. The 
general form of the PEF equation is:

PEF = Eg x FCF x AF x DPF

    In the 2000 Final Rule, DOE used this equation to calculate the PEF 
value and determined that the PEF for EVs that do not have any 
petroleum-powered accessories is 82,049 Watt-hours per gallon (Wh/gal). 
See 10 CFR 474.3(b)(1). For EVs that have petroleum-powered 
accessories, DOE determined that the PEF is 73,844 Wh/gal. See 10 CFR 
474.3(b)(2).

C. Revised Methodology

    As stated previously, DOE concluded that the current PEF value and 
methodology were based on outdated data and that the technology and 
market penetration of EVs has significantly changed since the 2000 
Final Rule. Accordingly, in the 2023 NOPR, DOE proposed a revised PEF 
value and revisions to the methodology used to calculate the PEF. 
Specifically, the 2023 NOPR proposed changing the accessory factor to 
1.0, revising the generation and transmission efficiency factor by 
using updated electrical grid mix projections, and removing the fuel 
content factor. The 2023 NOPR also proposed maintaining the driving 
pattern factor at 1.0.
1. Approximate Electrical Energy Efficiency of EVs
    DOE considers the approximate electrical energy efficiency of EVs 
in determining the PEF value pursuant to 49 U.S.C. 32904(a)(2)(B)(i). 
As discussed, the current methodology converts the energy consumption 
of an EV from Wh of electricity to gallons of gasoline based upon 
energy consumption values provided by Highway Fuel Economy Driving 
Schedule (HFEDS) and Urban Dynamometer Driving Schedule (UDDS) test 
cycles established by EPA at 40 CFR parts 86 and 600. See 10 CFR 474.3 
and

[[Page 22044]]

474.4. In the 2023 NOPR, DOE proposed to retain this methodology 
because it provided an ``accurate measure of the electrical energy 
efficiency of the relevant EV during typical use and is appropriately 
utilized in the PEF equation.'' 88 FR 21525, 21527.
    One commenter supported maintaining the current energy efficiency 
regime. Tesla, Doc. No. 18, pg. 2. In addition, although NRDC and 
Sierra Club did not oppose the current methodology expressly, they 
urged DOE to ``clarify whether it will use unadjusted dynamometer 
testing results or adjusted values'' when measuring energy consumption 
of an EV. NRDC and Sierra Club, Doc. No. 20, pg. 5. NRDC and Sierra 
Club observed that dynamometer testing overstates real-world 
performance for vehicles by as much as 30 percent. NRDC and Sierra 
Club, Doc. No. 20, pg. 5 (citing 87 FR 25710, 25720 (May 2, 2022)). 
Thus, they recommended that DOE consider using adjusted dynamometer 
values to better approximate the actual electrical efficiency of EVs 
for use in determining the equivalent petroleum-based fuel economy 
values for EVs. NRDC and Sierra Club, Doc. No. 20, pg. 5.
    Other commenters opposed retaining the current methodology and 
argued that both HFEDS and UDDS test cycles are unrepresentative of 
typical use cases of EVs. AFPM, Doc. No. 26, pg. 5; Clean Fuels et al., 
Doc. No. 32, pg. 3; AmFree, Doc. No. 31, pg. 4. Specifically, these 
commenters claimed that HFEDS fails to capture the most typical use 
case of EVs, such as commuting to and from work. AFPM, Doc. No. 26, pg. 
5; Clean Fuels et al., Doc. No. 32, pg. 3-4. In addition, they asserted 
that UDDS fails to capture variations in climate or extended periods of 
idling. AFPM, Doc. No. 26, pg. 6; Clean Fuels et al., Doc. No. 32, pg. 
4. As a result of these and other failures, these commenters argued 
that these test cycles overestimate the performance of EVs. AFPM, Doc. 
No. 26, pg. 6; Clean Fuels et al., Doc. No. 32, pg. 4-5. These 
commenters stated that ``DOE must revisit its chosen procedure and 
apply more robust and accurate test methods,'' and that DOE's decision 
to retain the current methodology is arbitrary and capricious. Clean 
Fuels et al., Doc. No. 32, pg. 5; AFPM, Doc. No. 26, pg. 6. The 
commenters noted there are other more representative tests currently 
available, like EPA's 5-cycle formula, to calculate the fuel economy of 
vehicles. AFPM, Doc. No. 26, pg. 6; Clean Fuels et al., Doc. No. 32, 
pg. 5; AmFree, Doc. No. 31, pg. 4.
    Both of these comments regarding adjusting the dynamometer readings 
or using different test cycles were addressed in DOE's methodology for 
calculating the energy consumption of an EV in terms of miles per 
gallon. DOE notes that DOE's methodology is aligned with EPA's 
methodology for calculating the compliance fuel economy values for ICE 
vehicles in the CAFE program. The adjustment and the test cycles 
recommended by commenters, however, are not used to calculate fuel 
economy for purposes of CAFE compliance. Rather, the recommended 
adjustment and test cycles are used to calculate fuel economy for the 
EPA/DOT Fuel Economy and Environment Label (window sticker).\5\ DOE 
notes that 49 U.S.C. 32904(c) requires EPA to use the ``same procedures 
for passenger automobiles the Administrator used for model year 1975'' 
to measure the fuel economy of passenger vehicles for CAFE purposes. 
Pursuant to this directive, EPA uses the HFEDS and UDDS test cycles to 
calculate fuel economy for ICE vehicles and does not adjust the 
dynamometer results. A consistent methodology applied to all auto 
manufacturers for calculating the fuel economy of ICE vehicles helps to 
ensure a level playing field. Because the purpose of the PEF is to 
provide a fuel economy conversion factor for EVs (so that they may be 
averaged with ICE vehicles for determining CAFE performance) it is 
reasonable and appropriate to keep all else as equal as possible. 
Because CAFE compliance for ICE vehicles is determined using the HFEDS 
and UDDS test cycles, determining EV energy consumption values using 
those two same test cycles is consistent and reasonable.
---------------------------------------------------------------------------

    \5\ Similarly, other commenters, such as Hyundai, suggested that 
DOE harmonize the PEF with EPA's use of 33,705 Wh/gal used by EPA in 
its fuel economy labeling. Hyundai, Doc. No. 39, pg. 2.
---------------------------------------------------------------------------

    In this final rule, as proposed in the 2023 NOPR, DOE retains its 
current methodology to convert energy consumption of an EV into gallons 
of gasoline based upon energy consumption values provided by the HFEDS 
and UDDS test cycles established by EPA at 40 CFR parts 86 and 600. See 
10 CFR 474.3 and 474.4. DOE determines that using unadjusted 
dynamometer results from the HFEDs and UDDS to calculate energy 
consumption for EVs provides a calculation of fuel economy for EVs most 
comparable to the existing gasoline fuel economy that EPA calculates. 
Because the PEF value provides a fuel economy conversion factor for EVs 
(so that they may be averaged with ICE vehicles for determining CAFE 
performance), it is reasonable and appropriate to adopt a consistent 
methodology that helps ensure a level playing field.
2. Gasoline-Equivalent Fuel Economy of Electricity
    When comparing ICE vehicles with EVs, it is essential to consider 
the efficiency of the respective upstream processes in the two relevant 
energy cycles.\6\ The critical difference between the processes is that 
an ICE vehicle burns its fuel on-board, and an EV burns its fuel (the 
majority of electricity in the U.S. is generated at fossil fuel burning 
powerplants) off-board. In both cases, the burning of fuels to produce 
work is the least efficient step of the respective energy cycles. 
Therefore, the 2000 Final Rule included a term, gasoline-equivalent 
energy content of electricity (Eg), to express the relative 
energy efficiency of the full energy cycles of gasoline and 
electricity. 65 FR 36986, 36987.
---------------------------------------------------------------------------

    \6\ In this context ``upstream'' means everything prior to 
storage of energy on the vehicle, also commonly referred to as well-
to-tank.
---------------------------------------------------------------------------

    Under the current rule, the gasoline-equivalent energy content of 
electricity, is calculated by multiplying the U.S. average electricity 
generation efficiency (Tg), the U.S. average electricity 
transmission efficiency (Tt), and the Watt-hours of energy 
per gallon of gasoline conversion factor (C) \7\, and then dividing 
that value by the petroleum refining and distribution efficiency 
(Tp). 65 FR 36986, 36987. The equation calculating the 
gasoline-equivalent energy content of electricity factor is written as 
follows.\8\
---------------------------------------------------------------------------

    \7\ The Watt-hours of energy per gallon of gasoline conversion 
factor is a standard value, 33705 Wh/gal.
    \8\ The equation is revised from the form in the 2000 Final Rule 
to correct a printing error in the 2000 Final Rule. The calculation 
of Eg is correct in the 2000 Final Rule despite the 
printing error.
[GRAPHIC] [TIFF OMITTED] TR29MR24.053

    In the 2000 Final Rule, DOE calculated a gasoline-equivalent energy 
content of electricity factor of 12,307 Wh/gal by using the following 
inputs:

[[Page 22045]]

[GRAPHIC] [TIFF OMITTED] TR29MR24.054

65 FR 36986, 36987.
    The gasoline-equivalent energy content of electricity factor 
involves the consideration of the national average electrical 
generation and transmission efficiencies and the need to conserve all 
forms of energy and the relative scarcity and value to the United 
States of all fuel used to generate electricity. 49 U.S.C. 
32904(a)(2)(B)(ii) and (iii). In the analysis that follows, DOE updates 
the electricity generation and transmission efficiency factor and the 
petroleum refining and distribution efficiency factor used to calculate 
the gasoline-equivalent fuel economy of electricity.
a. Average Electricity Generation and Transmission Efficiency
    The calculation for electricity efficiency considers production of 
the energy source, generation of electricity from that source, and 
transmission of the electricity to the EV charging location. The 
efficiency of the production of the energy source and the generation of 
electricity from that source vary widely.
    In the 2023 NOPR, DOE updated its calculations of the average 
generation and transmission efficiency for all fuels based on the 
latest data available. In the 2023 NOPR, DOE used the efficiency data 
from Greenhouse Gases, Regulated Emissions, and Energy use in 
Transportation (GREET).\9\ To calculate the well-to-tank efficiency for 
electricity from specific energy sources, DOE multiplied the production 
efficiency,\10\ generation efficiency,\11\ and transmission efficiency 
\12\ for each source. The efficiencies of electricity generated from 
specific sources used in this analysis are provided in Table 2. DOE 
used the same efficiencies of electricity generated from specific 
sources in this final rule.
---------------------------------------------------------------------------

    \9\ The GREET model is a life-cycle analysis tool, structured to 
systematically examine the energy and environmental effects of a 
wide variety of transportation fuels and vehicle technologies in 
major transportation sectors (i.e., road, air, marine, and rail) and 
other end-use sectors, and energy systems. Development of the GREET 
model by Argonne National Laboratory has been supported by multiple 
offices of DOE, DOT, and other agencies over the past 28 years. The 
GREET model is available at greet.anl.gov/, doi:10.11578/GREET-Net-
2021/dc.20210903.1.
    \10\ ``Production efficiency'' includes efficiencies related to 
producing the raw material and transport to the electricity 
generation facility.
    \11\ ``Generation efficiency'' relates to the conversion of the 
limited resources into electricity, e.g., by combustion, heating a 
boiler, and turning a turbine.
    \12\ Under GREET, electricity transmission has a national 
average efficiency of 95.14 percent.

                      Table 2--Electricity Generation and Transmission Efficiency by Source
----------------------------------------------------------------------------------------------------------------
                                                    Production      Generation     Transmission     Calculated
                  Energy source                   efficiency (%)  efficiency (%)  efficiency (%)  efficiency (%)
----------------------------------------------------------------------------------------------------------------
Natural gas.....................................           91.81           47.34           95.14           41.35
Coal............................................           97.90           34.55           95.14           32.18
Oil.............................................           88.41           31.92           95.14           26.85
Biomass.........................................           97.54           21.65           95.14           20.09
Nuclear.........................................           97.40             100           95.14           92.67
Solar...........................................             100             100           95.14           95.14
Wind............................................             100             100           95.14           95.14
Hydroelectric...................................             100             100           95.14           95.14
Geothermal......................................             100             100           95.14           95.14
----------------------------------------------------------------------------------------------------------------

i. Efficiency of Renewable and Nuclear Electricity Generation
    In the 2023 NOPR, due to the abundance of renewable energy sources 
such as wind and solar, DOE proposed treating renewable energy sources 
as effectively 100 percent efficient in their generation. 88 FR 21525, 
21530. DOE also treated nuclear electricity generation as effectively 
100 percent efficient because, like solar and wind, there is no 
practical, aggregate resource-availability limitation for nuclear 
materials. 88 FR 21525, 21530.
    Some commenters disagreed with DOE's proposal to treat renewable 
and nuclear energy generation as effectively 100 percent efficient. 
AmFree, Doc. No. 31, pg. 4-5; AFPM, Doc. No. 26, pg. 9. These 
commenters asserted that there is no basis for DOE to assume renewable 
or nuclear energy generation is 100 percent efficient, and therefore 
DOE must revise its generation efficiencies for such energy. AmFree, 
Doc. No. 31, pg. 4-5; AFPM, Doc. No. 26, pg. 9.
    In response to these concerns, DOE notes that the methodology 
accounts for transmission losses from such electricity sources. The DOE 
interpretation of energy scarcity relies on primary energy sources. As 
such, with an effectively inexhaustible supply of primary energy--sun, 
wind, fissile nuclear material--it is not appropriate to use a 
conversion efficiency with these sources when calculating the PEF. By 
contrast, fossil energy sources used to generate electricity are large 
but finite. DOE considers the combustion efficiency of electric 
generation as part of the full energy lifecycle. Renewable gaseous fuel 
burned for electricity, though expected to be a small contributor to 
renewable electricity overall, are treated similarly to fossil natural 
gas with respect to combustion efficiency. DOE is retaining the 100 
percent conversion efficiency assumption for nuclear and renewable 
generation (other than for renewable natural gas) in this rule.
ii. U.S. Electrical Grid Projections
    As discussed in section III.C.3, in this final rule, DOE adopts a 
methodology that calculates a PEF value based on the expected 
survivability-weighted lifetime mileage schedule of the fleet of 
vehicles sold over the regulatory period. DOE recognizes that while the 
average life of a vehicle is around 15 years, the influence of a fleet 
of vehicles produced in a given model lasts much longer. To capture 
this influence, DOE has adopted the survivability-weighted annual 
vehicle miles traveled parameters from

[[Page 22046]]

the CAFE model that establishes values for a 40-year span. Beyond 40 
years, only an insignificant population of vehicles from that given 
model year will remain on the road.\13\ Thus, calculating a PEF value 
based on the expected fleet of EVs requires calculating electricity 
generation and transmission efficiency 40 years into the future. This 
methodology provides a better representation of how vehicles sold 
during the regulatory period will be used than did the methodology used 
in the 2023 NOPR of averaging the calculated annual PEF based on the 
grid characteristics at the time the vehicles were sold. When 
calculating electricity generation and transmission efficiency, DOE 
weights each of the generation source-specific total efficiencies based 
on that source's share of the entire U.S. electricity grid. This mix of 
energy sources changes over time and is likely to continue changing in 
the future. Thus, the mix of electricity generation sources is a 
critical variable impacting the value of the PEF, consistent with 
Congressional direction at 49 U.S.C. 32904(a)(2)(B)(ii) and (iii) to 
consider the national average electrical generation efficiency and the 
need to conserve all forms of energy.
---------------------------------------------------------------------------

    \13\ In its notice of proposed rulemaking that establishes CAFE 
standards for passenger cars and light trucks for MY 2027-2032, 
NHTSA estimates the average maximum lifespan of such vehicles to be 
40 years. 88 FR 56128 (Aug. 17, 2023); Light Duty Central Analysis, 
file LD_Central_Analysis.zip, spreadsheet: parameters_ref.xlsx, on 
tab ``Vehicle Age Date''. Available at www.nhtsa.gov/file-downloads?p=nhtsa/downloads/CAFE/2023-NPRM-LD-2b3-2027-2035/Central-Analysis/.
---------------------------------------------------------------------------

    In the 2023 NOPR, DOE considered numerous projections available in 
2022 and selected the projection model 2021 Electrification 95 by 2050, 
Standard Scenario, from NREL, in which the United States achieves 95 
percent renewable generation of electricity by 2050 (NREL 2021 95 by 
2050). 88 FR 21525, 21531. In selecting this grid projection, DOE 
stated that NREL 2021 95 by 2050 is more representative of the likely 
future grid mix after the effects of recent policy changes, such as 
those in the Inflation Reduction Act of 2022 (IRA) and the 
Infrastructure Investment and Jobs Act (IIJA), are fully realized, 
particularly given that these policies will result in a substantial 
addition of renewable resources onto the grid. In the 2023 NOPR, DOE 
noted that it also considered EIA's Annual Energy Outlook (AEO) 
Reference Case for 2022 (AEO 2022). DOE opted not to use AEO 2022 
because it did not incorporate recent policy changes in the IRA. 88 FR 
21525, 21531. While NREL 2021 95 by 2050 also did not incorporate IRA 
impacts, the NREL forecast better represented expected renewable energy 
growth through 2030 than the AEP 2022 forecast. However, DOE said that 
for the final rule, it would consider using other projections, such as 
EIA's AEO for 2023 (AEO 2023), which was not available when DOE 
conducted its analysis for the 2023 NOPR.
    Some commenters supported DOE's decision to use the 95 by 2050 grid 
projections from NREL's 2021 forecast. Tesla, Doc. No. 18, pg. 3-4; 
ICCT, Doc. No. 19, pg. 1. Other commenters believed that DOE should use 
AEO 2023. NRDC and Sierra Club, Doc. No. 20, pg. 3; California et al., 
Doc. No. 27, pg. 4-5. These commenters noted that the grid projections 
in AEO 2023 account for policy changes in IRA. They also observed that 
NHTSA uses the EIA AEO model in the recent CAFE rulemaking. NRDC and 
Sierra Club, Doc. No. 20, pg. 3. Another commenter stated that DOE 
should use the ``relative scarcity'' scenario explored in the 
spreadsheet that accompanied the 2023 NOPR. Alliance, Doc. No. 25, pg. 
14.
    For this final rule, DOE assessed the grid projections that have 
become available since 2022. These include AEO 2023, which does account 
for some impacts of the IRA and IIJA, and the ``relative scarcity'' 
scenario. After this consideration and analysis, in this final rule, 
DOE continues to use the NREL model (updated for 2022 data) that it 
used in the 2023 NOPR, but DOE selects the Standard Scenario Mid-Case 
instead of the 95 by 2050 Scenario. Specifically, DOE is using the NREL 
2022 Standard Scenario, ``Mid-case, nascent techs, current policies'' 
to forecast the grid mix for the final rule.
    Among the factors the Secretary must consider when setting the PEF 
is ``the need of the United States to conserve all forms of energy and 
the relative scarcity and value to the United States of all fuel used 
to generate electricity.'' 49 U.S.C. 32904(a)(2)(B)(iii). DOE believes 
that Congress' directive to set a PEF and to consider the conservation 
of all forms of energy, including the relative scarcity and value of 
fuels used to generate electricity, are intended to ensure that average 
fuel economy of a manufacturer's entire fleet recognize and account for 
the full energy conservation benefits of EVs relative to ICE vehicles, 
taking into account both energy conservation overall, and the relative 
need for and supply constraints of different types of fuels. ``[T]he 
relative scarcity and value to the United States of all fuel used to 
generate electricity'' is anticipated by every forecast DOE considered 
to change over time, largely in response to U.S. government policy 
decisions regarding ``the need of the United States to conserve 
energy.'' Renewable and other clean energy sources of electricity are 
integral in addressing the need to conserve energy and improve energy 
security, and so current policies are directed at increasing the 
production of electricity from such energy sources. In this specific 
statutory context, DOE believes it is particularly important to ensure 
that the model used to estimate the future energy conservation benefit 
of EVs focuses on projecting how the mix of renewable and other clean 
energy generation in the grid will change over the long term. The NREL 
model has this specific focus. In the 2023 NOPR, DOE selected the 2021 
NREL 95 by 2050 scenario because DOE believed it was the closest 
forecast to approximately capture the projected impacts of the IRA, 
which had been adopted too recently to be fully incorporated into any 
published projection.\14\ Since DOE published the 2023 NOPR, the NREL 
2022 forecast has been published. To affect the purposes of this 
statute, DOE believes the NREL 2022 Standard Mid-case scenario best 
captures the impact of the IRA and IIJA on renewable and other clean 
electricity generation over time. As described on NREL's website: 
``[e]very year, the Standard Scenarios includes a scenario called the 
Mid-case that serves as a baseline or middle-ground scenario to reflect 
what might happen if current trends and conditions continue. The Mid-
case has central values for model inputs like technology and fuel costs 
and how much electricity people use. In addition, the Mid-case 
represents currently enacted electric sector policies.'' \15\ In 
addition, the AEO scenarios have historically made relatively more 
conservative assumptions regarding the growth of renewable generation, 
relative to the NREL model. Because DOE believes that, for the reasons 
described previously, the 2022 NREL 2022 Standard Scenario, ``Mid-case, 
nascent techs, current policies'' best captures the impact of the IRA 
and IIJA on renewable and other clean electricity generation on the 
U.S. electrical grid for the specific purposes of this rule, DOE used 
this projection in its calculation of the PEF value. DOE will annually 
review forecasts for electricity generation and determine if a change 
is necessary for this value for future model

[[Page 22047]]

years as required by 49 U.S.C. 32904(a)(2)(B).
---------------------------------------------------------------------------

    \14\ The NREL 2021 forecast did include impacts of some 
relatively recent policies, such as the IIJA.
    \15\ See www.nrel.gov/news/program/2024/nrel-releases-the-2023-standard-scenarios.html.
---------------------------------------------------------------------------

b. Petroleum Refining and Distribution Efficiency
    In the 2023 NOPR, DOE also updated its calculations of the 
petroleum refining and distribution efficiency factor to reflect the 
most recent GREET data. 88 FR 21525, 21527. In the 2023 NOPR, DOE used 
GREET efficiency factors to determine that crude oil production and 
transportation has an efficiency of 93.96 percent, gasoline refining 
has an efficiency of 87.01 percent, and gasoline transportation and 
distribution has an energy efficiency of 99.52 percent. Multiplying 
these three terms provides an overall well-to-tank petroleum refining 
and distribution efficiency of 81.36 percent.
    NRDC and Sierra Club argued that petroleum refining and 
distribution efficiency should not be considered when considering the 
national average electrical generation and transmission efficiency. 
NRDC and Sierra Club, Doc. No. 20, pg. 4. They asserted that section 
32904(a)(2)(B)(ii) only directs DOE to consider ``electrical generation 
and transmission efficiencies,'' and does not direct DOE to consider 
petroleum refining and distribution efficiencies or compare them to 
electric ones. NRDC and Sierra Club, Doc. No. 20, pg. 4. Furthermore, 
these commenters stated that because nothing in the statute requires 
DOE to consider petroleum refining and distribution efficiency, DOE 
should remove the term from the methodology used to calculate PEF. NRDC 
and Sierra Club, Doc. No. 20, pg. 4.
    Comparing electricity and gasoline on an equivalent basis requires 
consideration of the full energy-cycle energy efficiency from the point 
of primary energy production through end-use to power a vehicle for 
both gasoline and electricity. Assessing the full energy cycle of 
electricity and conventional fuel requires a holistic approach to 
address energy conservation when energy losses occur at different 
stages of an energy cycle for different energy products and fuels, such 
as electricity and gasoline. Moreover, DOE interprets the ``need of the 
U.S. to conserve energy'' as applying broadly to all forms of energy, 
which includes petroleum. 49 U.S.C. 32904(a)(2)(B)(iii). Therefore, it 
is appropriate to assess the full energy cycle of both gasoline and 
electricity the energy is converted to a useful form at different 
stages--gasoline onboard the vehicle, electricity upstream--and a 
reasonable comparison of the two systems requires taking into account 
the same steps.
    Another commenter opposed the calculations for petroleum refining 
and distribution efficiency because they believed that the data 
available from the fossil fuel industry is unreliable. Transport 
Evolved, Doc. No. 17, pg. 2. In this final rule, as with the 2023 NOPR, 
DOE used the best data available on refining and distribution 
efficiency by using the efficiency numbers in the GREET model. It is a 
widely used life-cycle analysis model for vehicle technologies and 
transportation fuels and has been used in regulation development and 
evaluation by DOE, EPA, and DOT. The data obtained from the GREET model 
are reliable.
c. Annual Gasoline-Equivalent Fuel Economy of Electricity
    As discussed previously, DOE uses the average electricity 
generation and transmission efficiency and the petroleum refining and 
distribution efficiency to determine the gasoline-equivalent fuel 
economy of electricity (Eg). In order to calculate the 
electricity generation and transmission efficiency, DOE uses the 2022 
NREL Standard Scenario, ``Mid-case, nascent techs, current policies'' 
to forecast the U.S. electrical grid mix. The annual gasoline-
equivalent fuel economy of electricity values used in this analysis are 
provided in Table 3. The modeling source only goes until 2050, so DOE 
assumed an unchanging grid for subsequent years.

     Table 3--Annual Gasoline-Equivalent Fuel Economy of Electricity
------------------------------------------------------------------------
                                                          Annual Eg (Wh/
                          Year                                 gal)
------------------------------------------------------------------------
2023....................................................          21,407
2024....................................................          22,299
2025....................................................          22,880
2026....................................................          23,481
2027....................................................          24,897
2028....................................................          26,449
2029....................................................          27,498
2030....................................................          28,595
2031....................................................          29,000
2032....................................................          29,404
2033....................................................          29,788
2034....................................................          30,171
2035....................................................          30,412
2036....................................................          30,651
2037....................................................          30,717
2038....................................................          30,781
2039....................................................          30,836
2040....................................................          30,889
2041....................................................          30,613
2042....................................................          30,349
2043....................................................          30,041
2044....................................................          29,747
2045....................................................          29,490
2046....................................................          29,243
2047....................................................          29,011
2048....................................................          28,787
2049....................................................          28,434
2050 and later..........................................          28,097
------------------------------------------------------------------------

    The Alliance argued that the 2000 Final Rule underestimates the 
fuel economy of EVs because EVs do not use any petroleum (or only 
minimal amounts through the grid) when operating in fully electric 
mode. Alliance, Doc. No. 25, pg. 15. They note that the electrical grid 
has only become more efficient since 2000. Therefore, they argue that 
the 2027 PEF value should be higher than the 2000 PEF. This argument 
both misunderstands the purpose of the PEF in the compliance 
calculations and discounts the DOE's attempt to better align the PEF 
with the statutory factors prescribed by Congress. The purpose of the 
PEF is to convert the energy used by EVs to a miles per gallon-
equivalent in order to average EV and ICE vehicle fuel economy for 
determining vehicle manufacturers' CAFE performance. Although DOE 
agrees that the electrical grid has become more efficient since 2000, 
in this rulemaking, DOE is holistically reviewing all of the factors 
used to calculate the PEF, including the use of the fuel content 
factor. The efficiency of the grid is only one input to these 
calculations and does not solely determine the final result.
3. Cumulative Gasoline-Equivalent Fuel Economy of Electricity
    In the 2023 NOPR, DOE explained that NHTSA's next CAFE regulation 
was expected to cover MYs 2027-2031 and proposed that the proposed PEF 
value would be the applicable PEF for calculating EV fuel economy when 
enforcing the CAFE regulations those model years. 88 FR 21525, 21531. 
To calculate a PEF value usable over the entire period covered by the 
next revision of the CAFE regulations, DOE considered a forward-looking 
approach based on projections for the electricity generation grid in 
the future. In the 2023 NOPR, DOE only considered the annual calculated 
PEF over the expected regulatory period and used an average of those 
values. DOE explained that the average of the annually calculated value 
of the PEF, based on calendar-year projections for the electric grid, 
would be applied for MYs 2027 through 2031. 88 FR 21525, 21531.
    Several commenters opposed this approach and noted that vehicles 
are

[[Page 22048]]

driven for many years after their initial sale, not just the five years 
considered in the 2023 NOPR. DeBrouwer, Doc. No. 14, pg. 1; ACEEE, Doc. 
No. 29, pg. 1-2. On further analysis, and in response to these 
comments, this final rule adopts a PEF value based on the expected 
survivability-weighted lifetime mileage schedule of the fleet of 
vehicles sold during the regulatory period. To determine this, DOE uses 
the survivability-weighted lifetime mileage schedule derived from 
NHTSA's CAFE rulemaking.\16\ The data that NHTSA used to develop the 
average annual vehicle miles traveled (VMT) schedule used in its 
analysis divided the light duty vehicle fleet \17\ into three 
categories: passenger cars, pickup trucks, and Vans/SUVs. Each vehicle 
category has different scrappage rates and annual driving patterns. For 
this analysis DOE used a weighted average of 62.4 percent Vans/SUVs, 
17.4 percent pickup trucks, and 20.2 percent passenger cars to generate 
the average annual VMT shown in Table 4 below.\18\ DOE uses the same 
average for the electric-fueled sub-fleet because DOE lacks accurate 
information about individual automaker plans for electrifying their 
product lines. Table 4 shows the average annual VMT expected for the 
fleet of vehicles for the first forty years after initial sale.
---------------------------------------------------------------------------

    \16\ See NHTSA NPRM Draft Technical Support Document, Chapter 4, 
p. 4-41, Table 4-12, ``VMT Schedule by Body Style and Age'' for 
vehicle type breakdown and Section 4.2.2.3.3, ``Estimating the 
Scrappage Models'', beginning on p. 4-26. NHTSA TSD available at: 
www.nhtsa.gov/document/cafe-2027-2032-hdpuv-2030-2035-draft-technical-support-document.
    \17\ This rule considers all passenger cars and trucks up to 
8,500 pounds to be light-duty vehicles. This aligns to those 
vehicles that are subject to NHTSA's CAFE regulations for passenger 
cars and light trucks.
    \18\ The distribution was derived from the file: 
LD_Central_Analysis.zip/output/LD_ref/reports_csv/
vehicles_report.csv available at: www.nhtsa.gov/file-downloads?p=nhtsa/downloads/CAFE/2023-NPRM-LD-2b3-2027-2035/Central-Analysis/.

            Table 4--Annual VMT for Light Duty Vehicle Fleet
------------------------------------------------------------------------
                 Year after initial sale                    Annual VMT
------------------------------------------------------------------------
1.......................................................          16,647
2.......................................................          15,989
3.......................................................          15,336
4.......................................................          14,679
5.......................................................          14,012
6.......................................................          13,331
7.......................................................          12,627
8.......................................................          11,894
9.......................................................          11,131
10......................................................          10,334
11......................................................           9,504
12......................................................           8,639
13......................................................           7,755
14......................................................           6,873
15......................................................           6,008
16......................................................           5,188
17......................................................           4,439
18......................................................           3,773
19......................................................           3,196
20......................................................           2,704
21......................................................           2,293
22......................................................           1,953
23......................................................           1,674
24......................................................           1,443
25......................................................           1,253
26......................................................           1,096
27......................................................             965
28......................................................             856
29......................................................             764
30......................................................             686
31......................................................             564
32......................................................             463
33......................................................             380
34......................................................             312
35......................................................             256
36......................................................             209
37......................................................             171
38......................................................             139
39......................................................             114
40......................................................              92
------------------------------------------------------------------------

    The current methodology uses the annual gasoline-equivalent fuel 
economy of electricity to calculate PEF. Thus, the current PEF 
methodology must be revised to calculate a PEF value based on expected 
operation of the vehicles sold. To represent the expected operation of 
these vehicles, DOE calculates a cumulative gasoline-equivalent fuel 
economy of electricity (CEg) in Table 5. The cumulative 
gasoline-equivalent fuel economy of electricity is determined by 
multiplying the annual gasoline-equivalent fuel economy of electricity 
by the corresponding annual share of lifetime VMT based on the 
survivability-weighted lifetime mileage schedule.

               Table 5--Cumulative Gasoline-Equivalent Fuel Economy of Electricity for MY 2027 EVs
----------------------------------------------------------------------------------------------------------------
                                                                                 Annual share of    Partial CEg
                 Calendar year                    Vehicle age         Eg        lifetime VMT (%)
----------------------------------------------------------------------------------------------------------------
2027..........................................               1          24,898              7.94           1,976
2028..........................................               2          26,450              7.62           2,016
2029..........................................               3          27,498              7.31           2,011
2030..........................................               4          28,596              7.00           2,001
2031..........................................               5          29,000              6.68           1,937
2032..........................................               6          29,405              6.36           1,869
2033..........................................               7          29,789              6.02           1,793
2034..........................................               8          30,171              5.67           1,711
2035..........................................               9          30,413              5.31           1,614
2036..........................................              10          30,651              4.93           1,510
2037..........................................              11          30,717              4.53           1,392
2038..........................................              12          30,782              4.12           1,268
2039..........................................              13          30,836              3.70           1,140
2040..........................................              14          30,889              3.28           1,012
2041..........................................              15          30,613              2.86             877
2042..........................................              16          30,349              2.47             751
2043..........................................              17          30,042              2.12             636
2044..........................................              18          29,747              1.80             535
2045..........................................              19          29,490              1.52             449
2046..........................................              20          29,243              1.29             377
2047..........................................              21          29,011              1.09             317
2048..........................................              22          28,788              0.93             268
2049..........................................              23          28,434              0.80             227

[[Page 22049]]

 
2050..........................................              24          28,097              0.69             193
2051..........................................              25          28,097              0.60             168
2052..........................................              26          28,097              0.52             147
2053..........................................              27          28,097              0.46             129
2054..........................................              28          28,097              0.41             115
2055..........................................              29          28,097              0.36             102
2056..........................................              30          28,097              0.33              92
2057..........................................              31          28,097              0.27              76
2058..........................................              32          28,097              0.22              62
2059..........................................              33          28,097              0.18              51
2060..........................................              34          28,097              0.15              42
2061..........................................              35          28,097              0.12              34
2062..........................................              36          28,097              0.10              28
2063..........................................              37          28,097              0.08              23
2064..........................................              38          28,097              0.07              19
2065..........................................              39          28,097              0.05              15
2066..........................................              40          28,097              0.04              12
                                               -----------------------------------------------------------------
    CEg.......................................  ..............  ..............  ................          28,996
----------------------------------------------------------------------------------------------------------------

    DOE recognizes that the value of CEg is substantially 
higher than the value of Eg used in the 2000 rule (12,307 
Wh/gal). This change is due to a combination of: increased fossil 
generation efficiency; increased renewable generation; the assumption 
of resource inexhaustibility for nuclear and renewables; increases in 
electric transmission efficiency; reduction in petroleum production, 
refining and distribution efficiency; and the use of a forward-looking 
grid mix. By far the largest impact is due to changes to electricity 
generation since the 2000 Final Rule. The grid mix used in the 2000 
Final Rule had almost no non-hydropower renewable generation, while 
renewables are forecasted to grow to over half of total electricity 
generation by 2030. As described previously, DOE treats nuclear, solar, 
wind, and hydro power as 100 percent efficient based on the effective 
inexhaustibility of the energy source. In addition, fossil generation 
now includes a significant amount of combined cycle generation, which 
has a much higher thermal efficiency than conventional combustion for 
heat generation. Changes in efficiency due to petroleum production, 
refining and distribution, and electricity transmission are smaller.
4. Fuel Content Factor
    Pursuant to 49 U.S.C. 32904(a)(2)(B), among the factors the 
Secretary must consider when setting the PEF is ``the need of the 
United States to conserve all forms of energy and the relative scarcity 
and value to the United States of all fuel used to generate 
electricity.'' 49 U.S.C. 32904(a)(2)(B)(iii). In the 2000 Final Rule, 
DOE added the current 1.0/0.15 fuel content factor to the PEF to reward 
electric vehicles for their ``benefits to the Nation relative to 
petroleum-fueled vehicles, in a manner consistent with the regulatory 
treatment of other types of alternative fueled vehicles and the 
authorizing legislation.'' 65 FR 36986, 36988. In the 2000 Final Rule, 
DOE explained that it chose the 1.0/0.15 ratio for the fuel content 
factor (1) for consistency with existing regulatory and statutory 
procedures for alternative fuel vehicles under 49 U.S.C. 32905, (2) to 
provide similar treatment of all types of alternative fueled vehicles, 
and (3) for simplicity and ease of use in calculating the PEF. 65 FR 
36986, 36988.
    In the 2023 NOPR, DOE proposed removing the fuel content factor and 
requested comment on its elimination. 88 FR 21525, 21528-21530. DOE 
stated that it considered the need of the United States to conserve all 
forms of energy and the relative scarcity and value to the United 
States of all fuel used to generate electricity in proposing to 
eliminate the factor. 88 FR 21525, 21528. As discussed in the 2023 NOPR 
in more detail, in considering the need for energy conservation and the 
relative scarcity and value of fuels used to generate electricity, in 
particular DOE emphasized the need to conserve finite petroleum 
resources. 88 FR 21525, 21529-215230. Conserving petroleum resources 
can be achieved through increased production and sales of EVs and 
through fuel economy improvements to ICE vehicles.
    In the context of the statutory directive for the PEF and the need 
to conserve finite petroleum resources, DOE identified in the 2023 NOPR 
three key reasons supporting removal of the fuel content factor. 88 FR 
21525, 21528-21530. First, DOE explained that the fuel content factor 
does not accurately represent current EV technology or market 
penetration. Second, DOE stated that applying the current fuel content 
factor to EVs results in miles per gallon equivalent ratings 
significantly higher than ICE vehicles. This overvaluing of EVs can 
allow a few EV models to provide overall compliance with CAFE 
standards, which in turn permits manufacturers to maintain less 
efficient ICE vehicles and disincentivizes production of additional 
EVs. 88 FR 21525, 21529-21530. Third, DOE proposed that the reasoning 
offered in the 2000 Final Rule in support of the use of 1.0/0.15 as a 
fuel content factor was not grounded in DOE's authority to set the PEF 
in section 32904, although DOE also noted that a fuel content factor 
could potentially be justified under the four factors of section 32904. 
88 FR 21525, 21530.
    Several commenters supported the elimination of the fuel content 
factor. California et al., Doc. No. 27, pg. 5; NRDC and Sierra Club, 
Doc. No. 20, pg. 1-2; Tesla, Doc. No. 18, pg. 3; ICCT, Doc. No. 19, pg. 
1; AFPM, Doc. No. 26, pg. 2. Specifically, California et al. and AFPM 
stated that the current fuel content factor is based on an inapplicable 
statutory section. California et al., Doc. No. 27, pg. 5; AFPM, Doc. 
No. 26, pg. 2. In addition, NRDC and Sierra Club asserted that the 
current fuel content factor ``dwarfs the rest of the PEF calculation, 
and has no factual, legal, or logical connection to electricity/
petroleum equivalence.'' NRDC and Sierra Club, Doc. No. 20, pg.

[[Page 22050]]

2. Commenters noted that the fuel content factor leads to the 
overvaluation of EVs, which is counter to the need to conserve energy, 
particularly petroleum.
    Other commenters, however, opposed the elimination of the fuel 
content factor. For example, the Alliance stated that DOE should focus 
on the role of the PEF as an incentive for manufacturing EVs, which 
would keep DOE's analysis more closely tied to the applicable statutory 
factors. Alliance, Doc. No. 25, pg. 10. Similarly, UAW asserted that 
the fuel content factor is needed to continue to incentivize the 
production of EVs. UAW, Doc. No. 30, pg. 1-2. The Alliance and UAW 
stated that the 2023 NOPR overstated the scale of the EV market and 
encouraged DOE to ``incorporate a more realistic projection of EV 
adoption and charging infrastructure build-out.'' Alliance, Doc. No. 
25, pg. 7-8; UAW, Doc. No. 30, pg. 2. Furthermore, the Alliance and UAW 
noted that federal investment and incentives would take time to reach 
maturity. Alliance, Doc. No. 25, pg. 8; UAW, Doc. No. 30, pg. 2. The 
Alliance argued that EV purchase incentive provisions in IRA are 
evidence that Congress believes EVs are not sufficiently 
commercialized. Alliance, Doc. No. 25, pg. 10. And finally, the 
Alliance noted that supply constraints and investment limitations 
impair manufacturers' ability to respond rapidly to changes in the PEF 
value, arguing that research and production resources are effectively 
zero-sum. Alliance, Doc. No. 25, pg. 17. The Alliance stated that the 
proposal could cause manufacturers to divert scarce investment 
resources to ICE vehicle lines and away from EV production, and noted 
the difficulty with doing even that, citing a lack of opportunity for 
engine redesigns, and arguing that engine design and development cycles 
are typically much longer than three years. Id.
    After careful consideration of the comments, DOE concludes that 
removing the fuel content factor will, over the long term, further the 
statutory goals of conserving all forms of energy while considering the 
relative scarcity and value to the United States of all fuels used to 
generate electricity. This is because, as explained in the 2023 NOPR 
and in more detail below, by significantly overvaluing the fuel savings 
effects of EVs in a mature EV market with CAFE standards in place, the 
fuel content factor will disincentivize both increased production of 
EVs and increased deployment of more efficient ICE vehicles. Hence, the 
fuel content factor results in higher petroleum use than would 
otherwise occur.
    DOE recognizes, however, the persuasive points made by commenters 
as to how the fuel content factor will continue to incentivize EV 
production in the near term. As commenters note, while EV market 
penetration has dramatically increased, EVs currently represent only 
approximately 10 percent of new passenger car and light truck 
sales.\19\ Moreover, while the recently adopted IIJA and IRA are in 
effect, the critical incentives and support for EVs and charging 
infrastructure that these laws provide are in the early stages of 
implementation and will become more fully operative and effective over 
time. DOE agrees with commenters that there is still an opportunity to 
incentivize additional EV production, and the resulting greater 
petroleum conservation, through a fuel content factor over the next 
several years. Thus, as explained in more detail below, DOE is 
retaining the current fuel content factor through MY 2026, under a 
revised statutory basis, and then gradually phasing out the fuel 
content factor by MY 2030.
---------------------------------------------------------------------------

    \19\ DOE, Plug-in EV Sales in December of 2023 Rose to 9.8% of 
All Light-Duty Vehicles Sales in the U.S., January 15, 2024. 
Available at www.energy.gov/eere/vehicles/articles/fotw-1325-january-15-2024-plug-ev-sales-december-2023-rose-98-all-light-duty.
---------------------------------------------------------------------------

    DOE begins with the statutory text. Congress directed DOE to set 
the PEF based, in part, on ``the need of the United States to conserve 
all forms of energy'' and ``the relative scarcity and value to the 
United States of all fuel used to generate electricity.'' 49 U.S.C. 
32904(a)(2)(B)(iii). First, DOE confirms that increased use of EVs, 
relative to ICE vehicles, would help the United States meet its need to 
conserve all forms of energy, taking into consideration the relative 
scarcity and value of all fuel used to generate electricity. As 
detailed in the 2023 NOPR, EVs are substantially more energy efficient 
than ICE vehicles on an energy input required basis. In addition, when 
comparing EVs to ICE vehicles on the basis of their use of scarce 
fuels, EVs provide even greater fuel conservation benefits when 
compared to gasoline used in ICE vehicles. See 88 FR 21525, 21536 
(calculating a significantly higher PEF when using a methodology that 
compares only vehicle-based petroleum use and electricity production 
using scarce fossil energy resources). Accordingly, an increased use of 
EVs, relative to ICE vehicles, would allow the United States to get 
greater transportation value from relatively scarce fuels, including 
those used to generate electricity.
    These individual-vehicle measures understate the magnitude of the 
fuel conservation benefits of substantially increasing EV production 
and use in the near term. Accelerating adoption of EVs now can 
significantly further accelerate and increase EV market penetration, 
due to network effects related to expanded demand for and availability 
of charging infrastructure. These network effects include rapid shifts 
in consumer acceptance and increased access to immediate incentives, 
the redeployment of capital and human resources at the firm and country 
level, accelerated technology development with greater production of 
vehicles in multiple segments at scale, and increases in domestic 
battery manufacturing capacity in line with projected market demand. 
This has been demonstrated based on the EV adoption experience of other 
countries, which tends to follow an ``S-Curve''--a long period of 
relatively slow adoption followed by a rapid increase in adoption as EV 
sales grow.\20\ This implies that if EV adoption is accelerated in the 
near term to reach the tipping point of growth sooner, significantly 
more EV adoption could result in a shorter timeframe than would 
otherwise occur. The energy conservation benefits would also accelerate 
commensurately. Accordingly, DOE concludes that the nation's need to 
conserve all forms of energy is best served not simply by EV adoption 
generally, but specifically by accelerating EV adoption in the near 
term.
---------------------------------------------------------------------------

    \20\ See International Energy Agency, Global EV Outlook 2022, 
(May 2022), available at www.iea.org/reports/global-ev-outlook-2022; 
Energy and Power Group, Department of Engineering Science, 
University of Oxford, Forecast of electric vehicle uptake across 
counties in England: Dataset from S-curve analysis, (Dec. 2021), 
available at www.sciencedirect.com/science/article/pii/S2352340921009379?via%3Dihub; European Commission, Joint Research 
Centre, Analysis and testing of electric car incentive scenarios in 
the Netherlands and Norway (2020), available at 
www.sciencedirect.com/science/article/pii/S0040162519301210#fig0004.
---------------------------------------------------------------------------

    Next, DOE evaluates the maturity of the EV market and the 
sufficiency of the incentives, other than the fuel content factor, for 
EV production and sales in the near term. As DOE stated in the 2023 
NOPR, since the 2000 Final Rule, EV technology has matured and the 
market share of EVs is growing. 88 FR 21525, 21528. Advances in 
electrification technology have resulted in improved performance and 
efficiency and reduced costs. 88 FR 21525, 21529. Commenters also noted 
that technology development, infrastructure

[[Page 22051]]

deployment, and especially recent changes to Federal law, such as the 
IRA and the IIJA, provide significant incentives for tremendous 
investment in the entire EV ecosystem. These incentives are driving 
investments in further technological development of EVs and charging 
infrastructure, production (especially domestic production) of EVs, 
components such as batteries and chargers, and production of supply 
chain components, including critical minerals. These laws also provide 
multiple substantial incentives for EV purchases and leases, private 
purchases, and installation of charging infrastructure, and the build-
out of a nationwide public charging system.
    It is critical to note, however, that the EV market is still small 
relative to ICE vehicles, and while these incentives are already 
driving massive industry investments, it will take some years for all 
these investments to fully translate into production and sales. 
Further, although consumer purchase incentives are currently available, 
only a relatively limited number of vehicles qualify for a portion or 
all of the available credits. Over the next six years, these incentives 
will increasingly result in greater EV deployment on the roads, as 
their effectiveness phases in over time. For example, as a result of 
component sourcing requirements and developing supply chains in the EV 
battery sector, DOE projected that an increasing share of electric 
vehicles will benefit from IRA tax incentives between 2023 and 2032, 
with a fleetwide average credit increasing from $3,900 per vehicle in 
2023 to $6,000 in 2032 (nominal dollars).\21\ Similarly, DOE's IIJA-
enabled investments in enabling infrastructure, such as EV fast 
charging and domestic EV component manufacturing, will scale over time 
as projects are identified, permitted, and constructed. Considering the 
timing over which the bulk of the IIJA and IRA EV incentives will 
become fully effective, DOE concludes that there is still a fuel 
conservation benefit from additional EV incentives in the near term. By 
2030, DOE expects that the EV market will be sufficiently developed 
that further support from the fuel content factor will be unnecessary.
---------------------------------------------------------------------------

    \21\ See Department of Energy, ``Estimating Federal Tax 
Incentives for Heavy Duty Electric Vehicle Infrastructure and for 
Acquiring Electric Vehicles Weighing Less Than 14,000 Pounds,'' 
March 11, 2024. Available at https://www.regulations.gov/docket/EERE-2021-VT-0033.
---------------------------------------------------------------------------

    As noted previously, commenters disagreed whether the fuel content 
factor incentivizes or disincentivizes EV production. On the basis of 
the record before it, DOE concludes that the answer is: it depends. In 
other words, the effect of the fuel content factor on manufacturer EV 
production will vary according to the maturity of the EV market and the 
effectiveness of other available incentives at the time DOE applies the 
fuel content factor and resulting PEF value. Vehicle manufacturers 
indicate that the present fuel content factor is an important incentive 
for current EV production. See Alliance, Doc. No. 25, pg. 7-8; Porsche, 
Doc. No. 24, pg. 2. By significantly increasing the PEF, the fuel 
content factor makes it relatively more cost-effective for 
manufacturers to improve their fleets' average fuel economy by selling 
more EVs. Where manufacturers are not yet adequately incentivized to 
develop, manufacture, and market EVs, as is currently the case, an 
inflated fuel content factor can increase EV adoption and the 
accompanying petroleum conservation in the near term. In the context of 
an emerging market for EVs, this additional near-term EV production is 
disproportionately valuable in leveraging network effects and further 
accelerating EV adoption and petroleum conservation. Because including 
the fuel content factor when calculating the PEF value can increase EV 
adoption, in the near term, which results in greater petroleum 
conservation, retaining the fuel content factor in the near term is 
consistent with ``the need of the United States to conserve all forms 
of energy.'' See 49 U.S.C. 32904(a)(2)(B)(iii).
    However, as explained in the 2023 NOPR, an ``artificially 
inflate[d]'' fuel content factor may conversely allow manufacturers to 
meet CAFE standards with fewer EVs and little improvement in their ICE 
fleets. As also explained in the 2023 NOPR, the higher the PEF, the 
greater the value of each EV for compliance purposes, and the fewer EVs 
(or improvements in ICE fuel economy savings) are needed. DOE expects 
this effect to predominate as the incentives for producing and selling 
EVs, such as those included in IRA and IIJA, ramp up and as the EV 
market grows. Once manufacturers are selling relatively large numbers 
of EVs, giving each EV a higher effective fuel economy for CAFE 
compliance purposes is less likely to incentivize greater EV production 
and more likely simply to eliminate the need for ICE fuel economy 
improvements, given the statutory structure of the CAFE program.
    In the 2023 NOPR, DOE explained its view that ``current EV 
technology and market penetration'' are sufficiently developed such 
that further incentives for EVs through the PEF are unnecessary. 88 FR 
21525, 21534. Based on DOE's review of comments and further analysis, 
DOE concludes that incentives provided by IRA and IIJA, coupled with 
the expansion of supporting infrastructure, such as public fast 
chargers, and increasing consumer interest in EVs, will eventually 
provide adequate incentives, and the anticipated network effects, to 
achieve widespread EV adoption. DOE thus affirms the analysis in the 
2023 NOPR that, at such time, a fuel content factor will reduce, and 
eventually eliminate, the net energy conservation benefit of 
incentivizing EV deployment through the fuel content factor.
    Although the 2023 NOPR identified recent changes, such as IRA and 
IIJA incentives, as reasons to remove the fuel content factor (88 FR 
21525, 21534), because these incentives will not be fully available 
when the PEF becomes effective, DOE concludes that EVs will remain 
inadequately incentivized for purposes of energy conservation over the 
next few years.\22\ Additionally, DOE expects a continued reduction in 
battery prices from innovation and economies of scale, resulting in 
lower purchase price and increased competitiveness of EVs by 2030. 
Accordingly, DOE expects that incentivizing EVs through a fuel content 
factor will reduce petroleum use in the near term. Based on DOE's 
determination that EVs will be adequately incentivized for purposes of 
energy conservation by 2030, DOE has determined that the fuel content 
factor can be, and ought to be, phased out by 2030.
---------------------------------------------------------------------------

    \22\ See, e.g., IRA, Section 50142 (provides $3 billion to DOE's 
Advanced Technology Vehicle Manufacturing Loan Program through 
September 30, 2028, for loans to manufacture clean vehicles and 
their components in the United States); IRA, Section 50143 (provides 
$2 billion to the U.S. Treasury through September 30, 2031, to 
provide grants for the domestic production of EVs).
---------------------------------------------------------------------------

    DOE concludes that, for a limited time, retaining a fuel content 
factor in the PEF calculation is likely to incentivize manufacturers' 
production of EVs in the near term. DOE determines that phasing out a 
fuel content factor, as compared to removing it over a single model 
year, will help manufacturers continue to invest in the EV transition 
and serve as a near-term incentive for vehicle manufacturers to invest 
in and sell EVs, thereby contributing to the reduced consumption of 
petroleum by accelerating the widespread adoption of EVs in the United 
States during this pivotal time. Moreover, given the industry's concern 
that revising the PEF value over the course of a single model year 
could actually slow EV adoption in the near term, due to the potential 
need for industry to rapidly shift investment from EV development back 
to interim

[[Page 22052]]

ICE based vehicle development, a phase in of the revised value would be 
more consistent with the statute and better spur the technological 
transition that will ultimately result in greater energy conservation. 
In addition, by phasing in a new PEF value over several years, the risk 
for manufacturers of expediting their investment in EV technology is 
reduced, because they are able to spread product changes (and 
associated research and production dollars) over more model years. 
Alleviating this risk for manufacturers is likely to result in an 
increase in EV development and adoption in the near term. For these 
reasons, DOE determines that immediate and complete removal of the fuel 
content factor from the PEF calculation would not serve the need of the 
United States to conserve energy.
    In addition, DOE finds that there is an adequate statutory basis 
for retaining the fuel content factor for a limited time period. As 
stated in the 2023 NOPR, DOE concludes that it need not rely upon 49 
U.S.C. 32905 to apply a fuel content factor to EVs. 88 FR 21525, 21530. 
That provision applies to the use of alternative fuels, not to EVs. 
Section 32904(a)(2)(B), which requires the Secretary to consider, among 
other things, ``the need of the United States to conserve all forms of 
energy and the relative scarcity and value to the United States of all 
fuel used to generate electricity,'' does, however, provide a basis to 
apply a fuel content factor to the PEF calculation in the circumstances 
where applying such a fuel content factor would in fact conserve 
energy. As discussed previously, in this final rule DOE finds that for 
the immediate near term the fuel content factor serves to incentivize 
EV production, and hence to conserve energy, specifically petroleum. 
Accordingly, currently the fuel content factor meets the statutory 
directive to set the PEF taking into account the need ``to conserve all 
forms of energy and the relative scarcity and value to the United 
States of all fuel used to generate electricity.'' 49 U.S.C. 
32904(a)(2)(B). DOE also finds in this rule, however, that as the EV 
market matures and the incentives under the IRA and IIJA become more 
powerful, the fuel content factor will rapidly shift from incentivizing 
EV production and energy conservation to undercutting the effectiveness 
of other requirements for energy conservation. These conclusions 
support the current use, and eventual phase-out, of the fuel content 
factor.
    Therefore, to reflect its declining net conservation benefit, the 
PEF calculation methodology in this final rule will gradually increase 
the denominator of the fuel content factor, starting with the currently 
applicable 1.0/0.15 factor in MY 2026 and increasing the denominator to 
a value of 1.00 by MY 2030. Given the date of 2030 for full phase out, 
DOE will reduce the impact of the fuel content factor by increasing the 
denominator of the factor by 4four equal increments of 0.2125 over MYs 
2027 through 2030. The annual increase in the fuel content factor 
denominator value will decrease the factor's value until it is phased 
out in MY 2030. The fuel content factor for MYs 2026 to 2030 is 
represented in Table 6.

                                                    Table 6--Fuel Content Factor for MY 2026 to 2030
--------------------------------------------------------------------------------------------------------------------------------------------------------
                             Model year                                    2026             2027             2028             2029             2030
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fuel content factor................................................          1/0.15         1/0.3625          1/0.575         1/0.7875                1
--------------------------------------------------------------------------------------------------------------------------------------------------------

5. Accessory Factor
    The 2000 Final Rule added an accessory factor to the PEF 
calculation to account for petroleum-fueled on-board accessories, such 
as cabin heaters, defrosters, or air-conditioning, which were 
envisioned as an approach to avoid low energy-density and/or low power-
density limitations of battery technology at the time.\23\ No EVs 
currently produced include such accessories and it is unlikely that 
future EVs will include them. Furthermore, plug-in hybrid electric 
vehicles (PHEVs) petroleum-fueled on-board accessories are distinct 
from gasoline consumption, with a fuel economy weighted according to 
the expected percentage of driving attributed to charge-depleting and 
charge-sustaining modes. Therefore, in the 2023 NOPR, DOE proposed to 
set the accessory factor equal to 1.00 in its calculation. Two 
commenters supported setting the accessory factor to 1. NRDC and Sierra 
Club, Doc. No. 20, pg. 7; California et al., Doc. No. 27, pg. 3-4. 
These commenters agreed with DOE's determination that no EVs in 
production use petroleum powered accessories. No commenter opposed 
setting the accessory factor equal to 1.00. Accordingly, as proposed in 
the 2023 NOPR, DOE sets the accessory factor equal to 1.00 in its PEF 
calculation.
---------------------------------------------------------------------------

    \23\ For example, in the mid-1990s, the experimental Ford 
Ecostar vehicle, a two-door, small van, included a diesel-powered 
heater while being powered primarily by a sodium-sulfur battery with 
notable power density limitations and a very high operating 
temperature.
---------------------------------------------------------------------------

6. Driving Pattern Factor
    In the 2000 Final Rule, DOE established a driving pattern factor to 
account for the statutory criterion in 49 U.S.C. 32904(a)(2)(B)(iv). 
The purpose of the driving pattern factor is to recognize the fact that 
electric vehicles may be used differently than gasoline vehicles, 
primarily due to their shorter range and longer ``refueling'' times. 
Then-existing EPA regulations, however, did not make driving-pattern-
based adjustments to the fuel economy of various classes of gasoline 
vehicles when calculating a manufacturer's CAFE value, even though 
gasoline-powered vehicles are also used in many different ways. 64 FR 
37907, 37908. Therefore, DOE set the driving pattern factor at 1.00 
because it believed that EVs offer capabilities like those of 
conventional gasoline-powered vehicles. 65 FR 36986, 36987. In the 2023 
NOPR, DOE did not propose a change to the driving pattern factor and 
proposed keeping the driving pattern factor at 1.00. 88 FR 21525, 
21530. DOE stated that it continued to believe that EVs are 
equivalently capable vehicles that are likely to be used similarly to 
gasoline-powered or hybrid-electric vehicles. 88 FR 21525, 21530.
    DOE received comments that supported the proposed driving pattern 
factor. For example, NRDC, Sierra Club, the Alliance, and California et 
al., supported a driving pattern factor of 1.0 and agreed that current 
EVs are full utility vehicles. NRDC and Sierra Club, Doc. No. 20, pg. 
7; Alliance, Doc. No. 25, pg. 27; California et al., Doc. No. 27, pg. 
6.
    By contrast, AFPM opposed the proposed driving pattern factor and 
asserted that the driving patterns and use of ICE vehicles are 
different from that of EVs, primarily due to range considerations for 
EVs. AFPM, Doc. No. 26, pg. 16. AFPM asserted that DOE should analyze 
specific patterns of use of EVs compared to ICE vehicles. AFPM, Doc. 
No. 26, pg. 16. In its comments, AFPM claimed that EVs are more likely 
to be driven shorter distances for purposes such as commuting or 
running

[[Page 22053]]

errands, as compared to ICE vehicles, which are more associated with 
longer trips and towing. AFPM, Doc. No. 26, pg. 17.
    In addition, AFPM cited a study by iSeeCars.com that examined used-
vehicle listings showing that used-EVs had driven fewer miles than 
used-ICE vehicles.\24\ However, a more recent study \25\ noted that the 
iSeeCars.com study methodology is biased toward examining older 
vehicles with lower EV ranges because it explored used-EV listings from 
2016-2022 from the secondary market, and the more recent study 
advocated for updating the iSeeCars.com study to reflect newer EVs. A 
range of annual miles have been found in previous studies of BEV use 
ranging from 6,300 miles per year to 12,522 miles per year.\26\ Another 
study by University of California-Davis researchers found that long-
range BEVs are driven significantly more than short-range BEVs and more 
than ICE vehicles.\27\ That same study uncovered other factors 
influencing the number of miles that EVs are driven, such as how many 
additional ICE vehicles are operated within a household. Many early EV 
adopters owned several vehicles, thus reducing the miles operated by 
each vehicle. While some EVs are currently driven less than comparable 
conventional vehicles, the difference between them is clearly 
shrinking. Moreover, current and growing EV ranges support DOE's 
position that EVs are equivalently capable vehicles likely to be used 
similarly to ICE vehicles or hybrid electric vehicles.
---------------------------------------------------------------------------

    \24\ iSeeCars, The Most and Least Driven Electric Cars. 
Available at www.iseecars.com/most-driven-evs-study.
    \25\ Zhao et al., ``Quantifying electric vehicle mileage in the 
United States'', Joule, Volume 7, Issue 11, 15 November 2023, pg. 
2537-2551. Available at doi.org/10.1016/j.joule.2023.09.015.
    \26\ Davis, L.W., How much are electric vehicles driven? Appl. 
Econ. Lett. 26, 1497-1502 (2019), available at www.tandfonline.com/doi/full/10.1080/13504851.2019.1582847; Tal, G., Raghavan, S.S., 
Karanam, V.C., Favetti, M.P., Sutton, K.M., Ogunmayin, J.M., Lee, 
J.H., Nitta, C., Kurani, K., Chakraborty, D. et al., advanced plug-
in electric vehicle travel and charging behavior final report 
(2020), available at csiflabs.cs.ucdavis.edu/~cjnitta/pubs/
2020_03.pdf; Burlig, F., Bushnell, J., Rapson, D., and Wolfram, C., 
Low energy: estimating electric vehicle electricity use. AEA Pap. 
Proc. 111, 430-435 (2021), available at www.aeaweb.org/articles?id=10.1257/pandp.20211088; Rush, L., Zhou, Y., and Gohlke, 
D., Vehicle residual value analysis by powertrain type and impacts 
on total cost of ownership (2022), available at www.osti.gov/biblio/1876197; Jia, W., and Chen, T.D., Beyond adoption: examining 
electric vehicle miles traveled in households with zero-emission 
vehicles. Transp. Res. Rec. 2676, 642-654 (2022), available at 
journals.sagepub.com/doi/10.1177/03611981221082536; Chakraborty, D., 
Hardman, S., and Tal, G., Integrating plug-in electric vehicles 
(PEVs) into household fleets-factors influencing miles traveled by 
PEV owners in California. Travel Behaviour and Society 26, 67-83 
(2022), available at doi.org/10.1016/j.tbs.2021.09.004.
    \27\ UC Davis, Advanced Plug-in Electric Vehicle Travel and 
Charging Behavior Final Report, April 10, 2020. Available at 
csiflabs.cs.ucdavis.edu/~cjnitta/pubs/2020_03.pdf.
---------------------------------------------------------------------------

    Accordingly, as proposed in the 2023 NOPR, DOE maintains the 
driving pattern factor at 1.00 in this final rule. DOE continues to 
believe that current EVs are equivalently capable vehicles that are 
likely to be used similarly to gasoline-powered or hybrid-electric 
vehicles. In addition, the deployment of a national charging network, 
enabled by the DOT's National Electric Vehicle Infrastructure program 
along with additional private investment, will help ensure EVs can 
continue to match the utility and driving demands of ICE vehicles. DOE 
maintains that current EVs are full-utility vehicles, capable of 
comparable performance and range to conventional counterparts.
7. Revised PEF Value
    As discussed in the preceding sections, DOE concluded that the 
current PEF value and methodology were based on outdated data and that 
the technology and market penetration of EVs has significantly changed 
since the 2000 Final Rule. In this final rule, DOE uses the following 
equation to calculate the PEF:

PEF = CEg x FCF x AF x DPF

    Where CEg, or cumulative Eg, is the sum of 
annual gasoline-equivalent energy content of electricity 
(Eg) over the 40-year survivability-weighted lifetime 
mileage schedule (in Wh/gal), FCF is the fuel content factor (unitless 
and taking the value indicated in Table 6, above), AF is the accessory 
factor (unitless and equal to 1), and DPF is the driving pattern factor 
(unitless and equal to 1). In Sections III.C.3, III.C.4, III.C.5, and 
III.C.6, DOE calculated the values for CEg, FCF, AF, and DPF 
respectively. The CEg is 28,996 Wh/gal and AF and DPF are 
each 1.0. In addition, the final rule gradually reduces the fuel 
content factor, starting with the currently applicable 1.0/0.15 factor 
in MY 2026 and phasing out to a factor of 1.0/1.00 by MY 2030, see 
Section III.C.4 for a full discussion. Table 7 provides the inputs for 
MY 2024 to MY 2030 EVs. The final rule adopts the PEF values for the 
model years specified in Table 7.

                          Table 7--Revised PEF Values for MY 2024-MY 2030 EVs and Later
----------------------------------------------------------------------------------------------------------------
           Model year                   CEg             FCF             AF              DPF             PEF
----------------------------------------------------------------------------------------------------------------
2024-2026.......................      \a\ 12,307          1/0.15         \b\ 1.0             1.0          82,049
2027............................          28,996        1/0.3625             1.0             1.0          79,989
2028............................          28,996         1/0.575             1.0             1.0          50,427
2029............................          28,996        1/0.7875             1.0             1.0          36,820
2030 and later..................          28,996             1.0             1.0             1.0          28,996
----------------------------------------------------------------------------------------------------------------
\a\ 12,307 Wh/gal is the Eg for MY 2024-2026, not the CEg as the revised PEF methodology does not apply to MY
  2024-2026 EVs.
\b\ Assumes no petroleum-powered accessories for MY 2024-2026 EVs.

    Several commenters, mainly auto manufacturers and their 
representatives, opposed the revised PEF value.\28\ Some commenters 
argued that DOE should maintain the PEF established in the 2000 Final 
Rule. Porsche, Doc. No. 24, pg. 1; NADA, Doc. No 23, pg. 2-3; UAW, Doc. 
No. 30, pg. 1. They noted that the consistent PEF has provided 
regulatory certainty to automakers and that the PEF is an important 
planning tool and regulatory incentive in the context of CAFE 
compliance strategies that rely on the existing PEF to improve 
efficiency. Porsche, Doc. No. 24, pg.1; NADA, Doc. No. 23, pg. 2-3. 
NADA claimed that unless CAFE standards are lowered, changing the PEF 
as proposed will force automobile manufacturers to alter CAFE 
compliance strategy by reverting to investing more in costly ICE

[[Page 22054]]

vehicle technology improvements or incur penalties. NADA, Doc. No 23, 
pg. 2. Porsche stated that if PEF must change, then the change should 
be phased in to reduce the effect on auto manufacturers. Porsche, Doc. 
No. 24, pg. 6.
---------------------------------------------------------------------------

    \28\ DOE notes that these commenters opposed the revised PEF 
value proposed in the 2023 NOPR. In this final rule, the revised PEF 
value differs from the PEF value proposed in the 2023 NOPR. 
Specifically, the final rule retains the fuel content factor and 
phases it out over MY 2027 to MY 2030. In addition, the final rule 
uses an updated NREL projection of the electrical grid. Overall, 
these differences result in a greater PEF value for MY 2027 to MY 
2030 EVs than proposed in the 2023 NOPR.
---------------------------------------------------------------------------

    DOE has a specific task of developing a PEF value that accounts for 
EV efficiency, national electrical generation and transmission 
efficiencies, conservation of all energy types and the relative 
scarcity and value of all fuels used to generate electricity, and EV 
driving patterns compared to petroleum-fueled vehicles. Although the 
Department has not changed the PEF value for over 23 years, DOE has 
statutory authority to review the PEF value on an annual basis. After 
reviewing the current PEF value and inputs, DOE determined that it was 
necessary to revise the PEF value consistent with the statutory factors 
identified in section 32904(a)(2)(B) and described above in greater 
detail. The revised PEF value reflects updated inputs upon which PEF 
values are calculated and advancements in the technology and market 
penetration of EVs since the 2000 Final Rule.
8. Compliance Period
    As noted in the 2023 NOPR, DOE proposed that the new PEF value take 
effect with MY 2027 vehicles. 88 FR 21525, 21531. DOE explained that 
NHTSA's next CAFE regulation was expected to cover MYs 2027-2031 and 
that the proposed PEF value would be the applicable PEF for calculating 
EV fuel economy for those model years. 88 FR 21525, 21531. DOE stated 
that having a fixed PEF value for the CAFE standard period improves 
NHTSA's ability to set CAFE standards that are the maximum feasible 
average fuel economy level and provides greater certainty to 
stakeholders from year to year. 88 FR 21525, 21531. DOE requested 
comment on this approach.
    DOE received comments on this approach from numerous and diverse 
stakeholder groups, including non-governmental organizations, auto 
manufacturers and their representatives, energy and agricultural 
interest groups, and members of the public. Some commenters, such as 
NRDC and Sierra Club, supported the proposed effective date and agreed 
that DOE should conduct its most in-depth reviews of the PEF to 
coincide with anticipated CAFE rulemakings. NRDC and Sierra Club, Doc. 
No. 20, pg. 6.
    In contrast, most auto manufacturers and automotive industry 
representatives opposed the proposed effective date and asserted that 
incorporating PEF-driven changes into existing product plans for MY 
2027 vehicles would be challenging. The Alliance explained that several 
years of lead time is necessary to incorporate technologies into new 
vehicles, electric or ICE. Alliance, Doc. No. 25, pg. 17. In 
particular, the Alliance noted that by the time the PEF rule is 
finalized, it is likely to be near the market introduction of MY 2025 
vehicles and asserted that ``[e]ngine design and development cycles are 
typically much longer than three years.'' Alliance, Doc. No. 25, pg. 
17.
    On September 14, 2023, DOE issued letters to member companies of 
the Alliance that invited recipients to provide data, documents, or 
analysis to clarify the concerns the Alliance expressed on behalf of 
its member companies in its response to comments on the 2023 NOPR in 
relation to the proposed effective date. DOE received responses from 
several Alliance member companies that provided data on how the 
proposed PEF value could affect their ability to comply with proposed 
CAFE standards for MYs 2027 to MY 2031. Specifically, Hyundai, Toyota, 
Stellantis, Mitsubishi, and the Alliance indicated that the proposed 
PEF value could lead to challenges complying with the proposed CAFE 
standards. Alliance, Doc. No. 25, pg. 6, 10, 11; Hyundai Doc. No. 38, 
pg. 1; Toyota, Doc. No. 54, pg. 1; Stellantis, Doc. No. 53, pg. 6-7; 
Mitsubishi, Doc. No. 50, pg. 1 Alliance, Doc. No. 25, pg. 6, 10, 11.
    In response to this request for clarification on the lead-time 
challenges expressed by the Alliance on behalf of its member companies, 
several commenters opposed delaying the implementation date beyond what 
was proposed in the 2023 NOPR. These commenters echoed comments from 
AFPM and stated that DOE lacks authority to postpone the effective date 
because DOE is required to review the PEF annually. See Tesla, Doc. No. 
18, pg. 2; NRDC and Sierra Club, Doc. No. 20, pg. 2; AmFree et al., 
Doc. No. 31, pg. 3. Additionally, these commenters also observed that 
lead time challenges are not included amongst the statutory factors DOE 
must consider when reviewing the PEF. Tesla, Doc. 18, pg. 2; AmFree et 
al., 31, pg. 2.
    Although DOE is sensitive to the concerns of auto manufacturers, 49 
U.S.C. 32904 clearly identifies the factors DOE must consider when 
reviewing the PEF. DOE has a specific task of developing a PEF that 
accounts for EV efficiency, national electrical generation and 
transmission efficiencies, conservation of all energy types and the 
relative scarcity and value of fuels used to generate electricity, and 
EV driving patterns compared to petroleum-fueled vehicles. See 49 
U.S.C. 32904(a)(2)(B). While NHTSA is required to provide 18 months of 
lead time for new CAFE standards per 49 U.S.C. 32902, lead time is not 
included in the factors that DOE must consider in its required annual 
review of the PEF. DOE is not required to consider lead time. However, 
DOE believes that applying the revised PEF beginning with MY 2027 
vehicles is reasonable This will provide automotive manufacturers with 
more time to incorporate a new PEF than is required under the mandate 
that DOE review the PEF each year and determine if revisions to the PEF 
are required. Moreover, as DOE explained in the 2023 NOPR, applying 
revised PEF values to a predictable schedule provides greater certainty 
to stakeholders from year to year. Accordingly, as proposed in the 2023 
NOPR, the revised PEF value will apply beginning with MY 2027 EVs.
9. Annual Review
    In the 2023 NOPR, DOE stated that the statutory directive for an 
annual review is sufficient to require DOE to review the PEF. 
Accordingly, DOE proposed to delete section 10 CFR 474.5, which 
currently requires DOE to review 10 CFR part 474 every five years. 88 
FR 21525, 21533. DOE stated that it would review the PEF value annually 
and if DOE determined that the PEF value needed to be changed, DOE 
would initiate a rulemaking to revise the value PEF appropriately. DOE 
also noted its intention to seek stakeholder input for its annual 
reviews through available methods (e.g., requests for information). 88 
FR 21525, 21533.
    Several commenters opposed the deletion of 10 CFR 474.5. NRDC and 
Sierra Club, Doc. No. 20, pg. 6; California et al., Doc. No. 27, pg. 7-
8. These commenters acknowledged that DOE must review the PEF value on 
an annual basis and supported DOE's intention to seek stakeholder input 
during these annual reviews. However, they stated that Sec.  474.5 
requirements for public participation and publication are warranted to 
ensure DOE fulfills its statutory responsibilities to review the PEF. 
NRDC and Sierra Club, Doc. No. 20, pg. 6; California et al., Doc. No. 
27, pg. 7-8. Instead of deleting Sec.  474.5, NRDC and Sierra Club 
suggested that DOE revise Sec.  474.5 to reflect the review process 
described in the 2023 NOPR. NRDC and Sierra Club, Doc. No. 20, pg. 6.
    DOE does not believe additional regulation regarding public review 
is necessary for DOE to meet its statutory responsibilities. The public 
is

[[Page 22055]]

authorized to petition DOE should DOE neglect its duties.\29\ In 
addition, if DOE determines that it is necessary to change the PEF 
value, this will require revisions to 10 CFR part 474, which would 
require DOE to publish a notice of proposed rulemaking and request 
comments. Thus, any revisions to the PEF value or changes to the 
methodology will be published in the Federal Register and the public 
may file comments, making the language in Sec.  474.5 requiring public 
participation and publication unnecessary. Accordingly, in this final 
rule, DOE deletes Sec.  474.5 as proposed in the 2023 NOPR.
---------------------------------------------------------------------------

    \29\ AFPM stated that its comments to the 2023 NOPR are also a 
petition for a rulemaking to update the PEF for 2024/25. DOE will 
undertake an annual review process. Therefore, AFPM's petition is 
premature at this time.
---------------------------------------------------------------------------

    DOE also received comments that expressed concern that DOE would 
only change the revised PEF value for MYs 2027-2031 if there is a 
``compelling reason'' to change the PEF calculation. AFPM, Doc. No. 26, 
pg. 4 (citing 88 FR 21525, 21533). However, AFPM noted that the statute 
does not require a compelling reason to change the PEF value. AFPM, 
Doc. No. 26, pg. 4. DOE agrees that 49 U.S.C. 32904 does not require a 
``compelling reason'' to change the PEF calculation. However, DOE did 
not intend to imply such a requirement exists. Rather, as explained 
previously, in this final rule, DOE provides the PEF values for MYs 
2024 EVs and later. The 2023 NOPR expressed DOE's view that it was 
unlikely that over the near term, annual reviews will identify 
sufficient changes in the inputs to warrant revising the PEF value. 
Regardless, if DOE concludes during an annual review that grid mix 
projections or any other changes result in a PEF value that 
meaningfully differs from the revised PEF values set forth in this 
final rule, DOE will take steps to revise the PEF accordingly.

IV. Responses to Additional Comments

A. Revisions to Section 474.3

    One commenter noted that the 2023 NOPR proposed revisions to 10 CFR 
474.3 that remove all description of the PEF value that applies to EVs 
prior to MY 2027. Alliance, Doc. No. 25, pg. 27. It was not DOE's 
intention to imply that there would be no PEF value from the effective 
date of the final rule to MY 2027. Accordingly, DOE revises Sec.  474.3 
to retain the current regulatory description relating to the PEF value 
that applies to EVs prior to MY 2027. This clarification requires 
revisions to the definition of the ``petroleum-equivalency factor'' in 
10 CFR 474.2. DOE revises the definition of ``petroleum-equivalency 
factor'' to reference the new paragraphs in Sec.  474.3 that provide 
the revised PEF values applicable to MY 2027 EVs and later.

B. Consideration of All Forms of Energy Conservation

    Commenters suggested that DOE needed to consider all forms of 
energy conservation. AFPM, Doc. No. 26, pg. 12-16. For example, AFPM 
asserted that DOE did not account for resource depletion associated 
with transitioning to renewable electricity (e.g., constraints on 
critical minerals for EV batteries and copper for transmission wiring), 
energy used to develop and manufacture EVs and infrastructure, and 
barriers to new renewable energy projects. AFPM suggested that DOE 
consider lifecycle energy demand associated with production of 
batteries, minerals, concrete, transition and storing, and charging 
infrastructure.
    DOE notes in response that energy use associated with production of 
vehicles and components are incorporated in the lifecycle analysis 
methodology within GREET, which does include energy use of all 
associated vehicle materials. Charging infrastructure does not impact 
vehicle fuel economy, with the exception of grid losses, which are 
accounted for. Other factors, such as commodity pricing and supply, are 
beyond the factors DOE is directed to consider.
    In contrast, the Alliance asserted that DOE's rulemaking should 
focus only on the lifetime petroleum consumption of passenger vehicles. 
However, such a limited focus is not supported by the statute. 
Developing ``equivalent petroleum based fuel economy values[,]'' as 
required in 49 U.S.C. 32904, requires DOE to develop a way to equate EV 
fuel economy in miles per kWh with a miles per gasoline gallon 
equivalent. If Congress wanted DOE to only consider petroleum 
consumption of EVs in calculating PEF, it would not have required DOE 
to consider the national average electrical generation and transmission 
efficiencies. 49 U.S.C. 32904(a)(2)(B)(ii). In addition, Congress would 
not have identified four distinct factors for DOE to consider when 
reviewing the equivalent petroleum-based fuel economy values of EVs. In 
particular, the statutory language about ``the need of the United 
States to conserve all forms of energy and the relative scarcity and 
value to the United States of all fuel used to generate electricity'' 
would be superfluous. DOE must consider all of the factors presented by 
Congress and it cannot isolate a single factor, such as petroleum 
consumption, and use it exclusively when calculating the PEF value. 
However, this final rule does give special consideration to the 
capability of EVs to conserve scarce fuels like petroleum, including by 
retaining a fuel content factor through 2030, as discussed in Section 
III.C.4.

C. Need for Multiple PEF Values

    AFPM also asserted that one PEF for all EVs of different types and 
sizes is inappropriate, and instead, there should be PEF values that 
reflect actual energy efficiency of various classes of EVs during real 
world operation. However, the PEF is not designed to reflect the actual 
energy efficiency of various classes of EVs. Rather, the PEF value is a 
conversion factor between the forms of energy that are used in a 
vehicle, specifically to convert a Watt-hour of electricity into a 
gallon of gasoline for purposes of fuel economy regulation. The energy 
efficiency of various classes of EVs are determined by calculating the 
EV's combined electrical energy consumption value. An EV's combined 
energy consumption value is not considered when calculating the PEF 
value, but it is part of the equation to calculate the EV's petroleum-
equivalent fuel economy. 10 CFR 474.3(a). To determine an EV's 
petroleum-equivalent fuel economy, one divides the appropriate PEF 
value by the EV's combined energy consumption value. 10 CFR 
474.3(a)(3).
    Because the combined electrical energy consumption value already 
accounts for the energy efficiency of different types and sizes of EVs, 
DOE determines that having multiple PEF values is unnecessary here. DOE 
agrees, however, that 49 U.S.C. 32904(a)(2)(B) would allow DOE to apply 
various factors to the CEg when calculating the PEF value 
for ``various classes of electric vehicles,'' if DOE determined that 
such factors were necessary. For example, 49 U.S.C. 32904(a)(2)(B)(iv) 
requires DOE to consider ``the specific patterns of use of electric 
vehicles compared to petroleum-fueled vehicles.'' In this final rule, 
DOE determines that current classes of EVs are equivalently capable 
vehicles that are likely to be used similarly to ICE vehicles. 
Accordingly, DOE maintains a driving pattern factor as 1.0. However, if 
there were a class of EVs that are used differently than ICE vehicles, 
then DOE could include a different driving pattern factor to reflect 
this different use when calculating the PEF value for such vehicles. 
DOE will monitor the field and consider whether including different 
driving pattern

[[Page 22056]]

factors for different classes of EVs is appropriate during its annual 
reviews.

D. Impact of Revised PEF on Plug-In Hybrid Electric Vehicles

    Some stakeholders commented on the application of the PEF to Plug-
in Hybrid EVs (PHEVs) and argued that PHEVs were disproportionately 
advantaged by the new PEF. Tesla, Doc. No. 18, pg. 4; ZETA, Doc. No. 
21, pg. 2. Specifically, they asserted that revised PEF value would 
decrease the fuel economy of PHEVs to approximately 60 to 75 percent of 
their current levels. However, according to these commenters, the 
revised PEF value would decrease the fuel economy of battery EVs (BEVs) 
to approximately 30 percent of their current levels. These commenters 
stated that DOE should address this ``skewed incentive'' because the 
revised PEF value would favor the inefficient PHEVs over more efficient 
BEVs. Tesla, Doc. No. 18, pg. 4; ZETA, Doc. No. 21, pg. 2.
    The PEF value is used to convert the measured electrical energy 
consumption of an EV into a gasoline-equivalent fuel economy of 
electricity. For PHEVs, which consume both electricity and petroleum, 
PEF only applies to the measured electrical energy consumption and does 
not apply to the energy consumption of petroleum. Accordingly, the 
impact of a decreased PEF value on the fuel economy of a PHEV is less 
than the impact of a decreased PEF value on the fuel economy of a BEV, 
which consumes only electricity. In addition, the fuel economy of a BEV 
is still significantly greater than that of a PHEV. Accordingly, under 
the revised PEV value, auto manufacturers are still incentivized to 
invest in the more efficient BEVs.

E. Compliance With NHTSA and EPA Standards

    Several commenters expressed concerns that the revised PEF value 
would negatively affect auto manufacturers' ability to comply with 
NHTSA's CAFE standards and EPA's standards related to greenhouse gas 
(GHG) emissions. Ford and the Alliance asserted that the proposed PEF 
value would cause the NHTSA and EPA compliance programs to become 
misaligned. Alliance, Doc. No. 25, pg. 21; Ford, Doc. No. 22, pg. 2. 
Several commenters stated that the revised PEF would expose auto 
manufacturers to additional penalties associated with noncompliance 
with the NHTSA and or EPA compliance programs. Ford, Doc. No. 22, pg. 
2; Alliance Doc. No. 25, pg. 6, 10, 11.
    DOE has carefully considered the impact of the revised PEF value 
under the factors in section 32904. The imposition of any penalties 
associated with noncompliance with the CAFE and GHG programs is not 
within the considerations required by section 32904(a)(2)(B) and is 
therefore outside the scope of this rulemaking. Because NHTSA and EPA 
are responsible for the CAFE and GHG compliance programs, those 
agencies are in the best position to consider any such concerns from 
commenters.

F. Related Rulemakings

    Several commenters expressed concerns with the timing of the DOE's 
rulemaking and noted that EPA and NHTSA were considering their GHG and 
CAFE standards. For example, the Alliance asserted that DOE should 
defer action on the 2023 NOPR to allow NHTSA and EPA to finalize their 
pending rulemakings first.\30\ Porsche also objected to the publication 
of 2023 NOPR prior to the release of the proposed CAFE rule. 
Specifically, Porsche argued that DOE is prejudging the relevancy of 
the PEF value to future CAFE standards that had not been proposed at 
the time of the 2023 NOPR. Porsche, Doc. No. 24, pg. 5.
---------------------------------------------------------------------------

    \30\ Alliance, Doc. No. 25, pg. 24. DOE notes that several auto 
manufacturers and their representatives made similar arguments in 
their letters responded to the September 14, 2023, letters.
---------------------------------------------------------------------------

    DOE is obligated to complete the PEF rulemaking without further 
delay, given that an assessment of the PEF value is several years past 
due. In the 2023 NOPR, DOE acknowledged that the inputs upon which the 
calculations and PEF values in current 10 CFR part 474 are based are 
outdated, and the technology and market penetration of electric 
vehicles has significantly changed since the 2000 Final Rule. 88 FR 
21525, 21526. DOE is statutorily mandated to review the PEF annually 
and to revise it as necessary. Such review is neither contingent upon 
nor tied to NHTSA and EPA rulemakings, and any impact of the PEF value 
on other programs is not part of the factors DOE must consider. 
Accordingly, DOE is not deferring this statutorily required action to 
update the PEF.

G. Miscellaneous

    DOE received a number of comments that are outside the scope of its 
authority or outside the scope of this rulemaking. For example, 
Transport Evolved argued that automakers should not be permitted to 
transfer CAFE credits from year-to-year or with other automakers. 
Transport Evolved, Doc. No. 17, pg. 2. In addition, Transport Evolved 
stated that CAFE calculations should account for the size of vehicles, 
specifically by reducing the benefit for ``larger, heavier, more 
inefficient vehicles.'' Transport Evolved, Doc. No. 17, pg. 2. However, 
these comments from Transport Evolved relate to standards or programs 
administered by other federal agencies, NHTSA's CAFE program and the 
greenhouse gas and fuel economy calculations of EPA and NHTSA, and are, 
therefore, outside the scope of this rulemaking.
    Our Children's Trust stated that the revised PEF value would 
authorize a level of GHG emissions that exceed levels safe for 
children. Our Children's Trust, Doc. No. 28, pg. 1. The PEF value does 
not authorize (or limit) GHG emissions. In this final rule DOE 
addresses the statutorily mandated factors for consideration in 
establishing the PEF value. The comments expressed concerns outside the 
scope of the PEF or the statutory factors.
    UAW suggested that DOE incorporate a more realistic projection of 
EV adoption and charging infrastructure in the considerations, with an 
eye towards ensuring domestic manufacturing and the relevant supply 
chain. UAW, Doc. No. 30, pg. 2. In section III.3, DOE explained its 
methodology for deriving the PEF value.
    Omer Sevindir asserted that the change to the PEF will hinder the 
ability of individuals who prefer ICE vehicles to acquire them. Doc. 
No. 36, pg. 1. The PEF value does not dictate market strategy for 
automakers. Each automaker selects its own manufacturer-specific CAFE 
compliance strategy and determines the vehicle models it will offer for 
sale.
    An anonymous commenter suggested that DOE nationalize the oil and 
gas industry. This comment is not relevant to the scope of this 
rulemaking.

V. Revisions to 10 CFR Part 474

A. 10 CFR 474.3

    In the 2023 NOPR, DOE proposed revising Sec.  474.3 by revising 
paragraph (b) and adding paragraph (c). Proposed paragraph (b) stated 
that the PEF value is 23,160 Watt-hours per gallon. 88 FR 21525, 21539. 
Proposed paragraph (c) provided that the PEF value applies to MY 2027 
and later EVs. 88 FR 21525, 21539. As previously discussed, DOE 
received comments that stated the proposed revisions to Sec.  474.3 
would remove all description of the PEF value that applies to EVs prior 
to MY 2027. Alliance, Doc. No. 25, pg. 27. It was not DOE's intention 
to imply that there would be no PEF value from the effective date of 
the final rule to MY

[[Page 22057]]

2027. Accordingly, DOE revises Sec.  474.3 to retain the current 
regulatory description relating to the PEF value that applies to EVs 
prior to MY 2027. Specifically, DOE revises paragraph (b) to clarify 
that the current PEF value applies to pre-MY 2027 EVs. DOE also adds 
paragraph (c)-(f) to provide PEF values for MY2027 to MY 2030 and later 
vehicles. These revised PEF values reflect the decreasing fuel content 
factor that applies to MY 2027 to MY 2030 EVs.
    The revisions to Sec.  474.3 also necessitate revisions to the 
definition for ``petroleum equivalency factor'' in Sec.  474.2 to 
include references to new paragraphs (c)-(f).

B. Appendix to Part 474

    In the 2023 NOPR, DOE also proposed revisions to the appendix to 
part 474. The proposed revisions to the sample petroleum-equivalent 
fuel economy calculations reflected the proposed revised PEF. In the 
final rule, DOE amends the appendix to part 474 to reflect the 
revisions to the PEF methodology and PEF value adopted in the final 
rule. For example, the sample calculation reflects the revised PEF 
value for MY 2029, which includes a fuel content factor of 1/0.7875. In 
addition, the DOE revises the appendix to clarify that the fuel content 
factor is part of the calculation of PEF, not the calculation of 
petroleum-equivalent fuel economy. Instead, to calculate the petroleum-
equivalent fuel economy, one divides the PEF by the combined electrical 
energy consumption value.

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866, 13563 and 14094

    Executive Order (``E.O.'') 12866, ``Regulatory Planning and 
Review,'' 58 FR 51735 (Oct. 4, 1993), as supplemented and reaffirmed by 
E.O. 13563, ``Improving Regulation and Regulatory Review,'' 76 FR 3821 
(Jan. 21, 2011) and amended by E.O. 14094, ``Modernizing Regulatory 
Review,'' 88 FR 21879 (April 11, 2023), requires agencies, to the 
extent permitted by law, to (1) propose or adopt a regulation only upon 
a reasoned determination that its benefits justify its costs 
(recognizing that some benefits and costs are difficult to quantify); 
(2) tailor regulations to impose the least burden on society, 
consistent with obtaining regulatory objectives, taking into account, 
among other things, and to the extent practicable, the costs of 
cumulative regulations; (3) select, in choosing among alternative 
regulatory approaches, those approaches that maximize net benefits 
(including potential economic, environmental, public health and safety, 
and other advantages; distributive impacts; and equity); (4) to the 
extent feasible, specify performance objectives, rather than specifying 
the behavior or manner of compliance that regulated entities must 
adopt; and (5) identify and assess available alternatives to direct 
regulation, including providing economic incentives to encourage the 
desired behavior, such as user fees or marketable permits, or providing 
information upon which choices can be made by the public. DOE 
emphasizes as well that E.O. 13563 requires agencies to use the best 
available techniques to quantify anticipated present and future 
benefits and costs as accurately as possible. In its guidance, the 
Office of Information and Regulatory Affairs (``OIRA'') within the 
Office of Management and Budget (OMB) has emphasized that such 
techniques may include identifying changing future compliance costs 
that might result from technological innovation or anticipated 
behavioral changes.
    For the reasons stated in this preamble, this regulatory action is 
consistent with these principles. As a preliminary matter, we note that 
the PEF is a numeric value determined through a highly technical 
analysis, which bounds DOE's discretion in deriving the value. Once 
calculated, the PEF has no independent effects, but serves as an input 
to calculations that other agencies perform. Thus, the general costs 
and benefits that could be attributed to these revisions are somewhat 
removed from this action, and DOE has not attempted to quantify them 
here. From a qualitative perspective, however, as discussed in section 
III.C, DOE expects the decision to retain a fuel content factor over 
the next several years, when combined with the revised PEF value and 
methodology to result in greater petroleum conservation by 
incentivizing EV production and adoption. On the other hand, the 
phaseout of the fuel content factor and the use of the revised PEF 
value may lead some manufacturers to incur additional costs, because of 
the potential effects of the revised PEF value on the average fuel 
economy of their fleets. The fact that the fuel content factor is 
phased out over four years, however, should have the effect of 
mitigating any such costs.
    Section 6(a) of E.O. 12866 also requires agencies to submit 
``significant regulatory actions'' to the OIRA for review. OIRA has 
determined that this action constitutes a significant regulatory action 
within the scope of section 3(f) of E.O. 12866. Accordingly, this 
action was subject to review by OIRA.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires the 
preparation of an initial regulatory flexibility analysis (IRFA) for 
any rule that by law must be proposed for public comment, unless the 
agency certifies that the rule, if promulgated, will not have a 
significant economic impact on a substantial number of small entities. 
As required by E.O. 13272, Proper Consideration of Small Entities in 
Agency Rulemaking, 67 FR 53461 (Aug. 16, 2002), DOE published 
procedures and policies on February 19, 2003, to ensure that the 
potential impacts of its rules on small entities are properly 
considered during the rulemaking process. 68 FR 7990. The Department 
has made its procedures and policies available on the Office of General 
Counsel's website: www.energy.gov/gc/office-general-counsel.
    The final rule revises DOE's regulations on electric vehicles 
regarding procedures for calculating a value for the petroleum-
equivalent fuel economy of EVs for use in the CAFE program administered 
by DOT. Once calculated, the PEF has no independent effects, but serves 
as an input to calculations that other agencies perform. Because this 
final rule does not directly regulate small entities but instead only 
amends a factor used to calculate the average fuel economy of a 
manufacturer's entire fleet, DOE certifies that this final rule will 
not have a significant economic impact on a substantial number of small 
entities, and, therefore, no regulatory flexibility analysis is 
required.\31\ Mid-Tex Elec. Co-Op, Inc. v. F.E.R.C., 773 F.2d 327 
(1985). Accordingly, DOE certifies that this rule would not have a 
significant economic impact on a substantial number of small entities, 
and, therefore, no regulatory flexibility analysis is required. DOE 
transmitted a certification and supporting statement of factual basis 
to the Chief Counsel for Advocacy of the Small Business Administration 
for review under 5 U.S.C. 605(b).
---------------------------------------------------------------------------

    \31\ DOE notes that passenger vehicle manufacturers that 
manufacture fewer than 10,000 vehicles per year can petition NHTSA 
to have alternative CAFE standards. See 49 U.S.C. 32902(d).
---------------------------------------------------------------------------

C. Review Under the Paperwork Reduction Act of 1995

    The final rule does not impose new information or record keeping 
requirements. Accordingly, OMB

[[Page 22058]]

clearance is not required under the Paperwork Reduction Act. (44 U.S.C. 
3501 et seq.).

D. Review Under the National Environmental Policy Act of 1969

    DOE analyzed this regulation in accordance with the National 
Environmental Policy Act of 1969 (``NEPA'') and DOE's NEPA implementing 
regulations (10 CFR part 1021). DOE's regulations include a categorical 
exclusion for amending an existing rule or regulation that does not 
change the environmental effect of the rule or regulation being 
amended. 10 CFR part 1021, subpart D, appendix A5. This rulemaking 
qualifies for categorical exclusion A5 because this final rule, which 
amends an existing rule or regulation does not change the environmental 
effect of the rule or regulation being amended, no extraordinary 
circumstances exist that require further environmental analysis, and it 
otherwise meets the requirements for application of a categorical 
exclusion. See 10 CFR 1021.410. Because this rule revises and updates 
the PEF value to ensure that it continues to serve the statutory 
purpose of conserving energy and conserving petroleum, given changes in 
circumstances that would diminish the effectiveness of the prior PEF 
value over time, this rule does not change the environmental effect of 
the prior rule. Thus, DOE concludes that this rulemaking to amend 10 
CFR part 474 does not change the environmental effect of 10 CFR part 
474. In addition, no extraordinary circumstances exist that would 
require further environmental analysis and the final rule otherwise 
meets the requirements for application of categorical exclusion A5.

E. Review Under Executive Order 13132

    Executive Order 13132, ``Federalism,'' 64 FR 43255 (Aug. 10, 1999), 
imposes certain requirements on agencies formulating and implementing 
policies or regulations that preempt State law or that have federalism 
implications. The E.O. requires agencies to examine the constitutional 
and statutory authority supporting any action that would limit the 
policymaking discretion of the States and to carefully assess the 
necessity for such actions. The E.O. also requires agencies to have an 
accountable process to ensure meaningful and timely input by State and 
local officials in the development of regulatory policies that have 
federalism implications. On March 14, 2000, DOE published a statement 
of policy describing the intergovernmental consultation process it will 
follow in the development of such regulations. See 65 FR 13735. DOE 
examined this final rule and determined that it will not preempt State 
law and will not have a substantial direct effect on the States, on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
Government. No further action is required by E.O. 13132.

F. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of E.O. 12988, ``Civil 
Justice Reform,'' 61 FR 4729 (Feb. 7, 1996), imposes on Federal 
agencies the general duty to adhere to the following requirements: (1) 
eliminate drafting errors and ambiguity; (2) write regulations to 
minimize litigation; and (3) provide a clear legal standard for 
affected conduct, rather than a general standard and promote 
simplification and burden reduction. Section 3(b) of E.O. 12988 
specifically requires that executive agencies make every reasonable 
effort to ensure that the regulation: (1) clearly specifies its 
preemptive effect, if any; (2) clearly specifies any effect on existing 
Federal law or regulation; (3) provides a clear legal standard for 
affected conduct, while promoting simplification and burden reduction; 
(4) specifies its retroactive effect, if any; (5) adequately defines 
key terms; and (6) addresses other important issues affecting clarity 
and general draftsmanship under any guidelines issued by the Attorney 
General. Section 3(c) of E.O. 12988 requires executive agencies to 
review regulations in light of applicable standards in section 3(a) and 
section 3(b) to determine whether they are met, or it is unreasonable 
to meet one or more of them. DOE has completed the required review and 
determined that, to the extent permitted by law, the final rule does 
meet the relevant standards of E.O. 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Pub. 
L. 104-4) requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, and tribal governments and the 
private sector. For a proposed regulatory action likely to result in a 
rule that may cause the expenditure by State, local, and tribal 
governments, in the aggregate, or by the private sector of $100 million 
or more in any one year (adjusted annually for inflation), section 202 
of UMRA requires a Federal agency to publish a written statement that 
estimates the resulting costs, benefits, and other effects on the 
national economy. (2 U.S.C. 1532(a) and (b)). The section of UMRA also 
requires a Federal agency to develop an effective process to permit 
timely input by elected officers of State, local, and tribal 
governments on a proposed ``significant intergovernmental mandate'' and 
requires an agency plan for giving notice and opportunity for timely 
input to potentially affected small governments before establishing any 
requirements that might significantly or uniquely affect small 
governments. On March 18, 1997, DOE published a statement of policy on 
its process for intergovernmental consultation under UMRA (62 FR 12820) 
(also available at www.energy.gov/gc/office-general-counsel). This 
final rule contains neither an intergovernmental mandate nor a mandate 
that may result in the expenditure of $100 million or more in any year 
by State, local, and tribal governments, in the aggregate, or by the 
private sector, so these requirements under the Unfunded Mandates 
Reform Act do not apply.

H. Review Under the Treasury and General Government Appropriations Act 
of 1999

    Section 654 of the Treasury and General Government Appropriations 
Act of 1999 (Pub. L. 105-277) requires Federal agencies to issue a 
Family Policymaking Assessment for any rule that may affect family 
well-being. This final rule would not have any impact on the autonomy 
or integrity of the family as an institution. Accordingly, DOE 
concludes that it is not necessary to prepare a Family Policymaking 
Assessment.

I. Review Under Executive Order 12630

    DOE has determined, under E.O. 12630, ``Governmental Actions and 
Interference with Constitutionally Protected Property Rights,'' 53 FR 
8859 (Mar. 18, 1988), that this final rule will not result in any 
takings which might require compensation under the Fifth Amendment to 
the United States Constitution.

J. Review Under the Treasury and General Government Appropriations Act, 
2001

    Section 515 of the Treasury and General Government Appropriations 
Act, 2001 (44 U.S.C. 3516, note) provides for agencies to review most 
disseminations of information to the public under guidelines 
established by each agency pursuant to general guidelines issued by 
OMB. OMB's guidelines were published at 67 FR

[[Page 22059]]

8452 (February 22, 2002), and DOE's guidelines were published at 67 FR 
62446 (October 7, 2002). DOE has reviewed the final rule under the OMB 
and DOE guidelines and concludes that it is consistent with applicable 
policies in those guidelines.

K. Review Under Executive Order 13211

    Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 
(May 22, 2001), requires Federal agencies to prepare and submit to 
OIRA, a Statement of Energy Effects for any proposed significant energy 
action. A ``significant energy action'' is defined as any action by an 
agency that promulgated or is expected to lead to promulgation of a 
final rule, and that: (1) is a significant regulatory action under E.O. 
12866, or any successor order; and (2) is likely to have a significant 
adverse effect on the supply, distribution, or use of energy, or (3) is 
designated by the Administrator of OIRA as a significant energy action. 
For any proposed significant energy action, the agency must give a 
detailed statement of any adverse effects on energy supply, 
distribution, or use should the proposal be implemented, and of 
reasonable alternatives to the action and their expected benefits on 
energy supply, distribution, and use. The final rule amends a factor 
used to calculate CAFE compliance and is not expected to have a 
significant adverse effect on the supply, distribution, or use of 
energy. Additionally, OIRA has not designated this rule as a 
significant energy action. Accordingly, the requirements of E.O. 13211 
do not apply.

L. Congressional Notification

    As required by 5 U.S.C. 801, DOE will report to Congress on the 
promulgation of this rule prior to its effective date. The report will 
state that the Office of Information and Regulatory Affairs has 
determined that this rule meets the criteria set forth in 5 U.S.C. 
804(2).

VII. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this final 
rule.

List of Subjects in 10 CFR Part 474

    Electric power, Energy conservation, Motor vehicles, Research.

Signing Authority

    This document of the Department of Energy was signed on March 18, 
2024, by Jeffrey Marootian, Principal Deputy Assistant Secretary for 
Energy Efficiency and Renewable Energy, pursuant to delegated authority 
from the Secretary of Energy. That document with the original signature 
and date is maintained by DOE. For administrative purposes only, and in 
compliance with requirements of the Office of the Federal Register, the 
undersigned DOE Federal Register Liaison Officer has been authorized to 
sign and submit the document in electronic format for publication, as 
an official document of the Department of Energy. This administrative 
process in no way alters the legal effect of this document upon 
publication in the Federal Register.

    Signed in Washington, DC, on March 19, 2024.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.

    For the reasons stated in the preamble, DOE amends part 474 of 
Chapter II of Title 10 of the Code of Federal Regulations as set forth 
below:

PART 474--ELECTRIC AND HYBRID VEHICLE RESEARCH, DEVELOPMENT, AND 
DEMONSTRATION PROGRAM; PETROLEUM-EQUIVALENT FUEL ECONOMY 
CALCULATION

0
1. The authority citation for part 474 continues to read as follows:

    Authority:  49 U.S.C. 32901 et seq.


0
2. Amend Sec.  474.2 by revising definition for ``Petroleum-equivalency 
factor'' to read as follows:


Sec.  474.2   Definitions.

* * * * *
    Petroleum equivalency factor means the values specified in Sec.  
474.3, paragraphs (b) through (f) of this part, which incorporate the 
parameters listed in 49 U.S.C. 32904(a)(2)(B) and are used to calculate 
petroleum-equivalent fuel economy.
* * * * *

0
3. Amend Sec.  474.3 by revising the introductory text of paragraph (b) 
and adding paragraphs (c), (d), (e), and (f) to read as follows:


Sec.  474.3   Petroleum-equivalent fuel economy calculation.

* * * * *
    (b) For model year (MY) 2024, MY 2025, and MY 2026 electric 
vehicles, the petroleum-equivalency factors are as follows:
* * * * *
    (c) For MY 2027 electric vehicles, the petroleum-equivalency factor 
is 79,989 Watt-hours per gallon.
    (d) For MY 2028 electric vehicles, the petroleum-equivalency factor 
is 50,427 Watt-hours per gallon.
    (e) For MY 2029 electric vehicles, the petroleum-equivalency factor 
is 36,820 Watt-hours per gallon.
    (f) For MY 2030 and later electric vehicles, the petroleum-
equivalency factor is 28,996 Watt-hours per gallon.


Sec.  474.5   [Removed and Reserved]

0
4. Remove and reserve Sec.  474.5.

0
5. Revise appendix A to to 474 to read as follows:

Appendix A to Part 474--Sample Petroleum-Equivalent Fuel Economy 
Calculations

Example 1: Battery Electric Vehicle (BEV)

    A battery electric vehicle is tested in accordance with 
Environmental Protection Agency procedures and is found to have an 
Urban Dynamometer Driving Schedule energy consumption value of 265 
Watt-hours per mile and a Highway Fuel Economy Driving Schedule 
energy consumption value of 220 Watt-hours per mile. The vehicle is 
not equipped with any petroleum-powered accessories. The combined 
electrical energy consumption value is determined by averaging the 
Urban Dynamometer Driving Schedule energy consumption value and the 
Highway Fuel Economy Driving Schedule energy consumption value using 
weighting factors of 55 percent urban, and 45 percent highway:

combined electrical energy consumption value = (0.55 * urban) + 
(0.45 * highway) = (0.55 * 265) + (0.45 * 220) = 244.75 Wh/mile

    The petroleum-equivalent fuel economy is:

PEF / combined electrical energy consumption value

    Thus, fuel economy for the example vehicle in MY 2030 would be:
    [GRAPHIC] [TIFF OMITTED] TR29MR24.055
    

[[Page 22060]]


where MPGe is miles per gallon equivalent.

Example 2: Plug-In Hybrid Electric Vehicle

    A plug-in hybrid electric vehicle is tested in accordance with 
Environmental Protection Agency procedures and is found to have an 
Urban Dynamometer Driving Schedule energy consumption value of 265 
Watt-hours per mile and a Highway Fuel Economy Driving Schedule 
energy consumption value of 220 Watt-hours per mile in charge 
depleting mode, a combined gasoline fuel economy of 50.0 miles per 
gallon in charge sustaining mode, and an all-electric range 
corresponding to a percentage utilization of 60 percent travel on 
electricity and 40 percent travel on gasoline.
    The combined electrical energy consumption value is determined 
by averaging the Urban Dynamometer Driving Schedule energy 
consumption value and the Highway Fuel Economy Driving Schedule 
energy consumption value using weighting factors of 55 percent 
urban, and 45 percent highway to be 244.75 Wh/mile, which 
corresponds to 118.47 miles/gal equivalent as shown above for a BEV 
(using the MY 2030-and-beyond PEF value of 28,997 Wh/gal).
    The PHEV fuel economy is calculated by dividing one by the sum 
of the percentage utilization for petroleum and electricity divided 
by their respective fuel economy.
    In this case:
    [GRAPHIC] [TIFF OMITTED] TR29MR24.056
    
[FR Doc. 2024-06101 Filed 3-28-24; 8:45 am]
BILLING CODE 6450-01-P

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