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DEPARTMENT OF TRANSPORTATION half a million barrels per day (2–3 Æ EPA: Docket Center (EPA/DC), EPA percent of total daily consumption, West, Room B102, 1301 Constitution National Highway Traffic Safety according to the Energy Information Avenue NW, Washington, DC, Attention Administration Administration) and would impact the Docket ID No. EPA–HQ–OAR–2018– global climate by 3/1000th of one degree 0283. Such deliveries are only accepted 49 CFR Parts 523, 531, 533, 536, and Celsius by 2100, also when compared to during the Docket’s normal hours of 537 the standards set forth in 2012. operation, and special arrangements DATES: Comments: Comments are should be made for deliveries of boxed ENVIRONMENTAL PROTECTION requested on or before October 23, 2018. information. Æ AGENCY Under the Paperwork Reduction Act, NHTSA: West Building, Ground comments on the information collection Floor, Rm. W12–140, 1200 New Jersey 40 CFR Parts 85 and 86 provisions must be received by the Avenue SE, Washington, DC 20590, [NHTSA–2018–0067; EPA–HQ–OAR–2018– Office of Management and Budget between 9 a.m. and 4 p.m. Eastern Time, 0283; FRL–9981–74–OAR] (OMB) on or before October 23, 2018. Monday through Friday, except Federal See the SUPPLEMENTARY INFORMATION holidays. RIN 2127–AL76; RIN 2060–AU09 section on ‘‘Public Participation,’’ Instructions: All submissions received below, for more information about must include the agency name and The Safer Affordable Fuel-Efficient docket number or Regulatory (SAFE) Vehicles Rule for Model Years written comments. Public Hearings: NHTSA and EPA Information Number (RIN) for this 2021–2026 Passenger Cars and Light rulemaking. All comments received will Trucks will jointly hold three public hearings in Washington, DC; the Detroit, MI area; be posted without change to http:// AGENCY: Environmental Protection and in the Los Angeles, CA area. The www.regulations.gov, including any Agency and National Highway Traffic agencies will announce the specific personal information provided. For Safety Administration. dates and addresses for each hearing detailed instructions on sending comments and additional information ACTION: Notice of proposed rulemaking. location in a supplemental Federal Register notice. The agencies will on the rulemaking process, see the SUMMARY: The National Highway Traffic accept oral and written comments to the ‘‘Public Participation’’ heading of the Safety Administration (NHTSA) and the rulemaking documents, and NHTSA SUPPLEMENTARY INFORMATION section of Environmental Protection Agency (EPA) will also accept comments to the Draft this document. are proposing the ‘‘Safer Affordable Environmental Impact Statement (DEIS) Docket: For access to the dockets to Fuel-Efficient (SAFE) Vehicles Rule for at these hearings. The hearings will start read background documents or Model Years 2021–2026 Passenger Cars at 10 a.m. local time and continue until comments received, go to http:// and Light Trucks’’ (SAFE Vehicles www.regulations.gov, and/or: everyone has had a chance to speak. See • Rule). The SAFE Vehicles Rule, if the SUPPLEMENTARY INFORMATION section For EPA: EPA Docket Center (EPA/ finalized, would amend certain existing on ‘‘Public Participation,’’ below, for DC), EPA West, Room 3334, 1301 Corporate Average Fuel Economy more information about the public Constitution Avenue NW, Washington, (CAFE) and tailpipe carbon dioxide hearings. DC 20460. The Public Reading Room is emissions standards for passenger cars open from 8:30 a.m. to 4:30 p.m., and light trucks and establish new ADDRESSES: You may send comments, Monday through Friday, excluding legal standards, all covering model years identified by Docket No. EPA–HQ– holidays. The telephone number for the 2021 through 2026. More specifically, OAR–2018–0283 and/or NHTSA–2018– Public Reading Room is (202) 566–1744. NHTSA is proposing new CAFE 0067, by any of the following methods: • For NHTSA: Docket Management • standards for model years 2022 through Federal eRulemaking Portal: http:// Facility, M–30, U.S. Department of 2026 and amending its 2021 model year www.regulations.gov. Follow the Transportation, West Building, Ground CAFE standards because they are no instructions for sending comments. Floor, Rm. W12–140, 1200 New Jersey • longer maximum feasible standards, and Fax: EPA: (202) 566–9744; NHTSA: Avenue SE, Washington, DC 20590. The EPA is proposing to amend its carbon (202) 493–2251. Docket Management Facility is open dioxide emissions standards for model • Mail: between 9 a.m. and 4 p.m. Eastern Time, years 2021 through 2025 because they Æ EPA: Environmental Protection Monday through Friday, except Federal are no longer appropriate and Agency, EPA Docket Center (EPA/DC), holidays. reasonable in addition to establishing Air and Radiation Docket, Mail Code FOR FURTHER INFORMATION CONTACT: new standards for model year 2026. The 28221T, 1200 Pennsylvania Avenue EPA: Christopher Lieske, Office of preferred alternative is to retain the NW, Washington, DC 20460, Attention Transportation and Air Quality, model year 2020 standards (specifically, Docket ID No. EPA–HQ–OAR–2018– Assessment and Standards Division, the footprint target curves for passenger 0283. In addition, please mail a copy of Environmental Protection Agency, 2000 cars and light trucks) for both programs your comments on the information Traverwood Drive, Ann Arbor, MI through model year 2026, but comment collection provisions for the EPA 48105; telephone number: (734) 214– is sought on a range of alternatives proposal to the Office of Information 4584; fax number: (734) 214–4816; discussed throughout this document. and Regulatory Affairs, Office of email address: lieske.christopher@ Compared to maintaining the post-2020 Management and Budget (OMB), Attn: epa.gov, or contact the Assessment and standards set forth in 2012, current Desk Officer for EPA, 725 17th St. NW, Standards Division, email address: estimates indicate that the proposed Washington, DC 20503. [email protected]. NHTSA: James SAFE Vehicles Rule would save over Æ NHTSA: Docket Management Tamm, Office of Rulemaking, Fuel 500 billion dollars in societal costs and Facility, M–30, U.S. Department of Economy Division, National Highway reduce highway fatalities by 12,700 Transportation, West Building, Ground Traffic Safety Administration, 1200 New lives (over the lifetimes of vehicles Floor, Rm. W12–140, 1200 New Jersey Jersey Avenue SE, Washington, DC through MY 2029). U.S. fuel Avenue SE, Washington, DC 20590. 20590; telephone number: (202) 493– consumption would increase by about • Hand Delivery: 0515.

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5 SUPPLEMENTARY INFORMATION: CO2—‘‘cause[s] or contribute[s] to air section 202(a) of the Clean Air Act. The I. Overview of Joint NHTSA/EPA Proposal pollution which may reasonably be regulations also required the issuance of II. Technical Foundation for NPRM Analysis anticipated to endanger public health or a draft Technical Assessment Report 3 III. Proposed CAFE and CO2 Standards for welfare.’’ NHTSA and EPA are (TAR) by November 15, 2017, an MYs 2021–2026 proposing these standards concurrently opportunity for public comment on the IV. Alternative CAFE and GHG Standards because tailpipe CO2 emissions draft TAR, and, before making a Final Considered for MYs 2021/22–2026 standards are directly and inherently Determination, an opportunity for V. Proposed Standards, the Agencies’ related to fuel economy standards,4 and public comment on whether the GHG Statutory Obligations, and Why the if finalized, these rules would apply Agencies Propose To Choose Them Over standards for MY 2022–2025 remain the Alternatives concurrently to the same fleet of appropriate. In July 2016, the draft TAR VI. Preemption of State and Local Laws vehicles. By working together to was issued for public comment jointly VII. Impacts of the Proposed CAFE and CO2 develop these proposals, the agencies by the EPA, NHTSA, and the California Standards reduce regulatory burden on industry Air Resources Board (CARB).6 VIII. Impacts of Alternative CAFE and CO2 and improve administrative efficiency. Following the draft TAR, EPA published Standards Considered for MYs 2021/22– Consistent with both agencies’ a Proposed Determination for public 2026 statutes, this proposal is entirely de IX. Vehicle Classification comment on December 6, 2016 and X. Compliance and Enforcement novo, based on an entirely new analysis provided less than 30 days for public XI. Public Participation reflecting the best and most up-to-date comments over major holidays.7 EPA XII. Regulatory Notices and Analyses information available to the agencies at published the January 2017 the time of this rulemaking. The Determination on EPA’s website and I. Overview of Joint NHTSA/EPA agencies worked together in 2012 to regulations.gov finding that the MY Proposal develop CAFE and CO2 standards for 2022–2025 standards remained MYs 2017 and beyond; in that A. Executive Summary appropriate.8 rulemaking action, EPA set CO2 In this notice, the National Highway standards for MYs 2017–2025, while On March 15, 2017, President Trump Traffic Safety Administration (NHTSA) NHTSA set final CAFE standards for announced a restoration of the original and the Environmental Protection MYs 2017–2021 and also put forth mid-term review timeline. The Agency (EPA) (collectively, ‘‘the ‘‘augural’’ CAFE standards for MYs President made clear in his remarks, agencies’’) are proposing the ‘‘Safer 2022–2025, consistent with EPA’s CO2 ‘‘[i]f the standards threatened auto jobs, Affordable Fuel-Efficient (SAFE) standards for those model years. EPA’s then commonsense changes’’ would be Vehicles Rule for Model Years 2021– CO2 standards for MYs 2022–2025 were made in order to protect the economic 2026 Passenger Cars and Light Trucks’’ subject to a ‘‘mid-term evaluation,’’ by viability of the U.S. automotive (SAFE Vehicles Rule). The proposed which EPA bound itself through industry.’’ 9 In response to the SAFE Vehicles Rule would set regulation to re-evaluate the CO2 President’s direction, EPA announced in Corporate Average Fuel Economy standards for those model years and to a March 22, 2017, Federal Register (CAFE) and carbon dioxide (CO2) undertake to develop new CO2 notice, its intention to reconsider the emissions standards, respectively, for standards through a regulatory process Final Determination of the mid-term passenger cars and light trucks if it concluded that the previously evaluation of GHGs emissions standards manufactured for sale in the United finalized standards were no longer for MY 2022–2025 light-duty vehicles.10 States in model years (MYs) 2021 appropriate. EPA regulations on the The Administrator stated that EPA 1 through 2026. CAFE and CO2 standards mid-term evaluation process required would coordinate its reconsideration have the power to transform the vehicle EPA to issue a Final Determination no with the rulemaking process to be fleet and affect Americans’ lives in later than April 1, 2018 on whether the undertaken by NHTSA regarding CAFE significant, if not always immediately GHG standards for MY 2022–2025 light- standards for cars and light trucks for obvious, ways. The proposed SAFE duty vehicles remain appropriate under the same model years. Vehicles Rule seeks to ensure that On August 21, 2017, EPA published a government action on these standards is 3 42 U.S.C. 7521, see also 74 FR 66495 (Dec. 15, notice in the Federal Register appropriate, reasonable, consistent with 2009) (‘‘Endangerment and Cause or Contribute announcing the opening of a 45-day law, consistent with current and Findings for Greenhouse Gases under Section 202(a) of the Clean Air Act’’). public comment period and inviting foreseeable future economic realities, 4 See, e.g., 75 FR 25324, at 25327 (May 7, 2010) stakeholders to submit any additional and supported by a transparent (‘‘The National Program is both needed and comments, data, and information they assessment of current facts and data. possible because the relationship between believed were relevant to the The agencies must act to propose and improving fuel economy and reducing tailpipe CO2 emissions is a very direct and close one. The Administrator’s reconsideration of the finalize these standards and do not have amount of those CO emissions is essentially discretion to decline to regulate. 2 constant per gallon combusted of a given type of 5 40 CFR 86.1818–12(h)(1); see also 77 FR 62624 fuel. Thus, the more fuel efficient a vehicle is, the Congress requires NHTSA to set CAFE (Oct. 15, 2012). 2 less fuel it burns to travel a given distance. The less standards for each model year. 6 81 FR 49217 (Jul. 27, 2016). fuel it burns, the less CO2 it emits in traveling that Congress also requires EPA to set distance. [citation omitted] While there are 7 81 FR 87927 (Dec. 6, 2016). emissions standards for light-duty emission control technologies that reduce the 8 Docket item EPA–HQ–OAR–2015–0827–6270 vehicles if EPA has made an pollutants (e.g., carbon monoxide) produced by (EPA–420–R–17–001). This conclusion generated a ‘‘endangerment finding’’ that the imperfect combustion of fuel by capturing or significant amount of public concern. See, e.g., converting them to other compounds, there is no Letter from Auto Alliance to Scott Pruitt, pollutant in question—in this case, such technology for CO . Further, while some of 2 Administrator, Environmental Protection Agency those pollutants can also be reduced by achieving 1 NHTSA sets CAFE standards under the Energy a more complete combustion of fuel, doing so only (Feb. 21, 2017); Letter from Global Automakers to Policy and Conservation Act of 1975 (EPCA), as increases the tailpipe emissions of CO2. Thus, there Scott Pruitt, Administrator, Environmental amended by the Energy Independence and Security is a single pool of technologies for addressing these Protection Agency (Feb. 21, 2017). Act of 2007 (EISA). EPA sets CO2 standards under twin problems, i.e., those that reduce fuel 9 See https://www.whitehouse.gov/briefings- the Clean Air Act (CAA). consumption and thereby reduce CO2 emissions as statements/remarks-president-trump-american- 2 49 U.S.C. 32902. well.’’) center-mobility-detroit-mi/. 10 82 FR 14671 (Mar. 22, 2017).

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January 2017 Determination.11 EPA held suggest that the CAFE standards below presents those alternatives. We a public hearing in Washington DC on previously set for MY 2021 are no note further that prior to MY 2021, CO2 12 September 6, 2017. EPA received longer maximum feasible, and the CO2 targets include adjustments reflecting more than 290,000 comments in standards previously set for MY 2021 the use of automotive refrigerants with response to the August 21, 2017 are no longer appropriate. Agencies reduced global warming potential notice.13 always have authority under the (GWP) and/or the use of technologies EPA has since concluded, based on Administrative Procedure Act to revisit that reduce the refrigerant leaks, and more recent information, that those previous decisions in light of new facts, optionally offsets for nitrous oxide and standards are no longer appropriate.14 as long as they provide notice and an methane emissions. In the interests of NHTSA’s ‘‘augural’’ CAFE standards for opportunity for comment, and it is harmonizing with the CAFE program, MYs 2022–2025 were not final in 2012 plainly the best practice to do so when EPA is proposing to exclude air because Congress prohibits NHTSA changed circumstances so warrant.16 conditioning refrigerants and leakage, from finalizing new CAFE standards for Thus, the proposed SAFE Vehicles and nitrous oxide and methane more than five model years in a single Rule would maintain the CAFE and CO2 emissions for compliance with CO2 rulemaking.15 NHTSA was therefore standards applicable in MY 2020 for standards after model year 2020 but obligated from the beginning to MYs 2021–2026, while taking comment seeks comment on whether to retain undertake a new rulemaking to set on a wide range of alternatives, these element, and reinsert A/C leakage CAFE standards for MYs 2022–2025. including different stringencies and offsets, and remain disharmonized with The proposed SAFE Vehicles Rule retaining existing CO2 standards and the the CAFE program. EPA also seeks 17 begins the rulemaking process for both augural CAFE standards. Table I–4 comment on whether to change existing agencies to establish new standards for methane and nitrous oxide standards MYs 2022–2025 passenger cars and light 16 See FCC v. Fox Television, 556 U.S. 502 (2009). that were finalized in the 2012 rule. 17 Note: This does not mean that the miles per trucks. Standards are concurrently being gallon and grams per mile levels that were Specifically, EPA seeks information proposed for MY 2026 in order to estimated for the MY 2020 fleet in 2012 would be from the public on whether those provide regulatory stability for as many the ‘‘standards’’ going forward into MYs 2021–2026. existing standards are appropriate, or years as is legally permissible for both Both NHTSA and EPA set CAFE and CO2 standards, whether they should be revised to be respectively, as mathematical functions based on agencies together. vehicle footprint. These mathematical functions less stringent or more stringent based on Separately, the proposed SAFE that are the actual standards are defined as ‘‘curves’’ any updated data. Vehicles Rule includes revised that are separate for passenger cars and light trucks, While actual requirements will standards for MY 2021 passenger cars under which each vehicle manufacturer’s ultimately vary for automakers compliance obligation varies depending on the and light trucks. The information now footprints of the cars and trucks that it ultimately depending upon their individual fleet available and the current analysis produces for sale in a given model year. It is the mix of vehicles, many stakeholders will MY 2020 CAFE and CO2 curves which we propose likely be interested in the current would continue to apply to the passenger car and 11 82 FR 39551 (Aug. 21, 2017). estimate of what the MY 2020 CAFE and light truck fleets for MYs 2021–2026. The mpg and 12 82 FR 39976 (Aug. 23, 2017). g/mi values which those curves would eventually CO2 curves would translate to, in terms 13 The public comments, public hearing require of the fleets in those model years would be of miles per gallon (mpg) and grams per transcript, and other information relevant to the known for certain only at the ends of each of those mile (g/mi), in MYs 2021–2026. These Mid-term Evaluation are available in docket EPA– model years. While it is convenient to discuss estimates are shown in the following HQ–OAR–2015–0827. CAFE and CO2 standards as a set ‘‘mpg,’’ ‘‘g/mi,’’ 14 83 FR 16077 (Apr. 2, 2018). or ‘‘mpg-e’’ number, attempting to define those tables. 15 49 U.S.C. 32902. values today will end up being inaccurate. BILLING CODE 4910–59–P

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Table 1-1- Average of OEM's CAFE an d CO2 E s f 1ma t e d R eqmreme nts for Passenger Cars Avg. ofOEMs' Est. Model Year Requirements CAFE (mpg) C02 (g/mi) 2017 39.1 220 2018 40.5 210 2019 42.0 201 2020 43.7 191 2021 43.7 204 2022 43.7 204 2023 43.7 204 2024 43.7 204 2025 43.7 204 2026 43.7 204

Table 1-2- Average of OEM's CAFE an d CO 2 E st1mate . d R eqmrem ents for Light Trucks Avg. ofOEMs' Est. Model Year Requirements CAFE (mpg) C02 (g/mi) 2017 29.5 294 2018 30.1 284 2019 30.6 277 2020 31.3 269 2021 31.3 284 2022 31.3 284 2023 31.3 284 2024 31.3 284 2025 31.3 284 2026 31.3 284

Table 1-3- Average of OEMs' Estimated CAFE and C02 Requirements (Passenger Cars and Li~ht Trucks) Avg. ofOEMs' Est. Model Year Requirements CAFE (mpg) C02 (g/mi) 2017 34.0 254 2018 34.9 244 2019 35.8 236 2020 36.9 227 2021 36.9 241 2022 36.9 241 2023 36.9 241 2024 37.0 241 2025 37.0 240 2026 37.0 240

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BILLING CODE 4910–59–C air conditioning refrigerants and leakage alternatives and have specifically In the tables above, estimated (and, optionally, offsets for nitrous modeled eight alternatives (including required CO2 increases between MY oxide and methane emissions) after the proposed alternative) and the 2020 and MY 2021 because, again, EPA model year 2020. current requirements (i.e., baseline/no- is proposing to exclude CO2-equivalent As explained above, the agencies are action). The modeled alternatives are emission improvements associated with taking comment on a wide range of provided below:

T a bl e I - 4 - R egu atory AI ternat1ves c urrently un d er c ons1 eratwn Alternative Change in stringency A/C C02 Equivalent efficiency AC Refrigerant and off- Leakage, cycle Nitrous Oxide .. provisiOns and Methane Emissions Included for Compliance? Baseline/ MY 2021 standards remain in place; MYs 2022-2025 augural No change Yes, for all No-Action CAFE standards are finalized and GHG standards remain MYs 18 unchanged; MY 2026 standards are set at MY 2025 levels 1 Existing standards through MY 2020, then 0%/year increases No change No, beginning (Proposed) for both passenger cars and light trucks, for MY s 2021-2026 in MY 2021 19 2 Existing standards through MY 2020, then 0.5%/year increases No change No, beginning for both passenger cars and light trucks, for MY s 2021-2026 in MY 2021 3 Existing standards through MY 2020, then 0.5%/year increases Phase out No, beginning for both passenger cars and light trucks, for MY s 2021-2026 these in MY 2021 adjustments overMYs 2022-2026 4 Existing standards through MY 2020, then 1%/year increases No change No, beginning for passenger cars and 2%/year increases for light trucks, for in MY 2021 MYs 2021-2026 5 Existing standards through MY 2021, then 1%/year increases No change No, beginning for passenger cars and 2%/year increases for light trucks, for in MY 2022 MY s 2022-2026 6 Existing standards through MY 2020, then 2%/year increases No change No, beginning for passenger cars and 3 %/year increases for light trucks, for in MY 2021 MYs 2021-2026 7 Existing standards through MY 2020, then 2%/year increases Phase out No, beginning for passenger cars and 3 %/year increases for light trucks, for these in MY 2021 MYs 2021-2026 adjustments overMYs 2022-2026 8 Existing standards through MY 2021, then 2%/year increases No change No, beginning for passenger cars and 3 %/year increases for light trucks, for in MY 2022 MY s 2022-2026

Summary of Rationale Light-Duty Vehicle Greenhouse Gas evaluation’’ process, the agencies have Since finalizing the agencies’ previous Emission and Corporate Average Fuel gathered new information, and have joint rulemaking in 2012 titled ‘‘Final Economy Standards,’’ and even since performed new analysis. That new Rule for Model Year 2017 and Later EPA’s 2016 and early 2017 ‘‘mid-term information and analysis has led the

18 Carbon dioxide equivalent of air conditioning calculated using the Global Warming Potential refrigerant leakage, nitrous oxide and methane refrigerant leakage, nitrous oxide and methane (GWP) of each of the emissions. emissions would no longer be able to be included emissions are included for compliance with the 19 Beginning in MY 2021, the proposal provides with the tailpipe CO2 for compliance with tailpipe EPA standards for all MYs under the baseline/no that the GWP equivalents of air conditioning CO2 standards. action alternative. Carbon dioxide equivalent is

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agencies to the tentative conclusion that phenomenon. First, as discussed, there that precluded observation in the holding standards constant at MY 2020 is a known pool of technologies for known (MYs 2008 and 2010) fleets, levels through MY 2026 is maximum improving fuel economy and reducing likely leading to double counting in feasible, for CAFE purposes, and CO2 emissions. Many of these cases where the known vehicles already appropriate, for CO2 purposes. technologies, when actually reflected the assumed efficiency Technologies have played out implemented on vehicles, can be used improvement. For example, the agencies differently in the fleet from what the to improve other vehicle attributes such assumed that transmission ‘‘shift agencies assumed in 2012. as ‘‘zero to 60’’ performance, towing, optimizers’’ would be available and The technology to improve fuel and hauling, etc., either instead of or in fairly widely used in MYs 2017–2025, economy and reduce CO2 emissions has addition to improving fuel economy and but involving software controls, a not changed dramatically since prior reducing CO2 emissions. As one ‘‘technology’’ not defined in a way that analyses were conducted: A wide example, a V6 engine can be would be observed in the fleet (unlike, variety of technologies are still available turbocharged and downsized so that it for example, a dual clutch to accomplish the goals of the programs, consumes only as much fuel as an inline transmission). and a wide variety of technologies 4-cylinder engine, or it can be would likely be used by industry to turbocharged and downsized so that it To be clear, this is no one’s ‘‘fault’’— accomplish these goals. There remains consumes less fuel than it would the CAFE and CO2 standards do not no single technology that the majority of originally have consumed (but more require manufacturers to use particular vehicles made by the majority of than the inline 4-cylinder would) while technologies in particular ways, and manufacturers can implement at low also providing more low-end torque. As both agencies’ past analyses generally cost without affecting other vehicle another example, a vehicle can be sought to illustrate technology paths to attributes that consumers value more lightweighted so that it consumes less compliance that were assumed to be as than fuel economy and CO2 emissions. fuel than it would originally have cost-effective as possible. If Even when used in combination, consumed, or so that it consumes the manufacturers choose different paths for technologies that can improve fuel same amount of fuel it would originally reasons not accounted for in regulatory economy and reduce CO2 emissions still have consumed but can carry more analysis, or choose to use technologies need to (1) actually work together and content, like additional safety or differently from what the agencies (2) be acceptable to consumers and infotainment equipment. Manufacturers previously assumed, it does not avoid sacrificing other vehicle attributes employing ‘‘fuel-saving/emissions- necessarily mean that the analyses were while also avoiding undue increases in reducing’’ technologies in the real world unreasonable when performed. It does vehicle cost. Optimism about the costs make decisions regarding how to mean, however, that the fleet ought to and effectiveness of many individual employ that technology such that fewer be reflected as it stands today, with the technologies, as compared to recent than 100% of the possible fuel-saving/ technology it has and as that technology prior rounds of rulemaking, is emissions-reducing benefits result. They has been used, and consider what somewhat tempered; a clearer do this because this is what consumers technology remains on the table at this understanding of what technologies are want, and more so than exclusively fuel point, whether and when it can already on vehicles in the fleet and how economy improvements. realistically be available for widespread they are being used, again as compared This makes actual fuel economy gains use in production, and how much it to recent prior rounds of rulemaking, more expensive. would cost to implement. means that technologies that previously Thus, even though the technologies Incremental additional fuel economy appeared to offer significant ‘‘bang for may be largely the same, previous benefits are subject to diminishing the buck’’ may no longer do so. assumptions about how much fuel can returns. Additionally, in light of the reality that be saved or how much emissions can be vehicle manufacturers may choose the reduced by employing various As fleet-wide fuel efficiency improves relatively cost-effective technology technologies may not have played out as and CO2 emissions are reduced, the option of vehicle lightweighting for a prior analyses suggested, meaning that incremental benefit of continuing to wide array of vehicles and not just the previous assumptions about how much improve/reduce inevitably decreases. largest and heaviest, it is now it would cost to save that much fuel or This is because, as the base level of fuel recognized that as the stringency of reduce that much in emissions fall economy improves, fewer gallons are standards increases, so does the correspondingly short. For example, the saved from subsequent incremental likelihood that higher stringency will agencies assumed in the 2010 final rule improvements. Put simply, a one mpg increase on-road fatalities. As it turns that dual clutch transmissions would be increase for vehicles with low fuel out, there is no such thing as a free widely used to improve fuel economy economy will result in far greater lunch.20 due to expectations of strong savings than an identical 1 mpg increase Technology that can improve both effectiveness and very low cost: In for vehicles with higher fuel economy, fuel economy and/or performance may practice, dual clutch transmissions had and the cost for achieving a one-mpg not be dedicated solely to fuel economy. significant customer acceptance issues, increase for low fuel economy vehicles As fleet-wide fuel efficiency has and few manufacturers employ them in is far less than for higher fuel economy improved over time, additional the U.S. market today.21 The agencies vehicles. This means that improving improvements have become both more included some ‘‘technologies’’ in the fuel economy is subject to diminishing complicated and more costly. There are 2012 final rule analysis that were returns. Annual fuel consumption can two primary reasons for this defined ambiguously and/or in ways be calculated as follows:

20 Mankiw, N. Gregory, Principles of e.g., Steve Lehto, ‘‘What you need to know about what-you-need-to-know-about-the-proposed- Macroeconomics, Sixth Edition, 2012, at 4. the settlement for Ford Powershift owners,’’ Road settlement-for-ford-powershift-owners/ (last 21 In fact, one manufacturer saw enough customer and Track, Oct. 19, 2017. Available at https:// accessed Jul. 2, 2018). pushback that it launched a buyback program. See, www.roadandtrack.com/car-culture/a10316276/

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For purposes of illustration, assume a as large. Going from 40 to 50 mpg would reference case projections in the Energy vehicle owner who drives a light vehicle save only 75 gallons/year. Yet, each Information Administration’s (EIA’s) 15,000 miles per year (a typical additional fuel economy improvement Annual Energy Outlook (AEO 2017 and assumption for analytical purposes).22 If becomes much more expensive as the AEO 2018) do not indicate particularly that owner trades in a vehicle with fuel low-hanging fruit of low-cost high fuel prices in the foreseeable economy of 15 mpg for one with fuel technological improvement options are future, given underlying assumptions,24 economy of 20 mpg, the owner’s annual picked.23 Automakers, who must and (2) as the baseline level of fuel fuel consumption would drop from nonetheless continue adding technology economy continues to increase, the 1,000 gallons to 750 gallons—saving 250 to improve fuel economy and reduce marginal cost of the next gallon saved gallons annually. If, however, that CO2 emissions, will either sacrifice similarly increases with the cost of the owner were to trade in a vehicle with other performance attributes or raise the technologies required to meet the fuel economy of 30 mpg for one with price of vehicles—neither of which is savings. The following figure illustrates fuel economy of 40 mpg, the owner’s attractive to most consumers. the fact that fuel savings and annual gasoline consumption would If fuel prices are high, the value of corresponding avoided costs diminish drop from 500 gallons/year to 375 those gallons may be enough to offset with increasing fuel economy, showing gallons/year—only 125 gallons even the cost of further fuel economy the same basic pattern as a 2014 though the mpg improvement is twice improvements, but (1) the most recent illustration developed by EIA.25

22 A different vehicle-miles-traveled (VMT) percent improvement is 60 g/mi, so that the vehicle every joint CAFE and CO2 rulemaking since 2009) assumption would change the absolute numbers in would emit 240 g/mi. At 180 g/mi, a 20% has applied fuel price projections from EIA’s the example, but would not change the improvement is 36 g/mi, so the vehicle would get Annual Energy Outlook (AEO). AEO projections, mathematical principles. Today’s analysis uses 144 g/mi. In order to continue achieving similarly documentation, and underlying data and estimates mileage accumulation schedules that average about large (on an absolute basis) emissions reductions, are available at https://www.eia.gov/outlooks/aeo/. 15,000 miles annually over the first six years of mathematics require the percentage reduction to vehicle operation. continue increasing. 25 Today in Energy: Fuel economy improvements 23 The examples in the text above are presented 24 The U.S. Energy Information Administration show diminishing returns in fuel savings, U.S. in mpg because that is a metric which should be (EIA) is the statistical and analytical agency within Energy Information Administration (Jul. 11, 2014), readily understandable to most readers, but the the U.S. Department of Energy (DOE). EIA is the https://www.eia.gov/todayinenergy/detail.php?id= example would hold true for grams of CO2 per mile nation’s premiere source of energy information, and 17071. as well. If a vehicle emits 300 g/mi CO2, a 20 every fuel economy rulemaking since 2002 (and

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This effect is mathematical in nature value fuel economy and low CO2 increase the overall average CO2 and long-established, but when emissions above other attributes, and emission rates of the new vehicle fleet. combined with relatively low fuel prices thanks in part to CAFE and CO2 Consumers are also demonstrating a potentially through 2050, and the standards, they have a plentiful preference for more powerful engines likelihood that a large majority of selection of high-fuel economy and low and vehicles with higher seating American consumers could CO2-emitting vehicles to choose from, positions and ride height (and consequently continue to place a higher but those consumers represent a accompanying mass increase relative to value on vehicle attributes other than relatively small percentage of buyers. footprint) 30—all of which present fuel economy, it makes manufacturers’ Changed petroleum market has challenges for achieving increased fuel ability to sell light vehicles with ever- supported a shift in consumer economy levels and lower CO2 emission higher fuel economy and ever-lower preferences. rates. carbon dioxide emissions increasingly In 2012, the agencies projected fuel The Consequence of Unreasonable difficult. Put more simply, if gas is prices would rise significantly, and the Fuel Economy and CO2 Standards: cheap and each additional improvement United States would continue to rely Increased vehicle prices keep consumers saves less gas anyway, most consumers heavily upon imports of oil, subjecting in older, dirtier, and less safe vehicles. would rather spend their money on the country to heightened risk of price Consumers tend to avoid purchasing attributes other than fuel economy when shocks.28 Things have changed things that they neither want or need. they are considering a new vehicle significantly since 2012, with fuel prices The analysis in today’s proposal moves purchase, whether that is more safety significantly lower than anticipated, and closer to being able to represent this fact technology, a better infotainment projected to remain low through 2050. through an improved model for vehicle package, a more powerful powertrain, or Furthermore, the global petroleum scrappage rates. While neither this nor other features (or, indeed, they may market has shifted dramatically with the a sales response model, also included in prefer to spend the savings on United States taking advantage of its today’s analysis, nor the combination of something other than automobiles). own oil supplies through technological the two, are consumer choice models, Manufacturers trying to sell consumers advances that allow for cost-effective today’s analysis illustrates market-wide more fuel economy in such extraction of shale oil. The U.S. is now impacts on the sale of new vehicles and circumstances may convince consumers the world’s largest oil producer and the retention of used vehicles. Higher who place weight on efficiency and expected to become a net petroleum vehicle prices, which result from more- reduced carbon emissions, but exporter in the next decade.29 stringent fuel economy standards, have consumers decide for themselves what At least partially in response to lower an effect on consumer purchasing attributes are worth to them. And while fuel prices, consumers have moved decisions. As prices increase, the some contend that consumers do not more heavily into crossovers, sport market-wide incentive to extract sufficiently consider or value future fuel utility vehicles and pickup trucks, than additional travel from used vehicles savings when making vehicle anticipated at the time of the last increases. The average age of the in- purchasing decisions,26 information rulemaking. Because standards are service fleet has been increasing, and regarding the benefits of higher fuel based on footprint and specified when fleet turnover slows, not only economy has never been made more separately for passenger cars and light does it take longer for fleet-wide fuel readily available than today, with a host trucks, these shifts do not necessarily economy and CO2 emissions to improve, of online tools and mandatory pose compliance challenges by but also safety improvements, criteria prominent disclosures on new vehicles themselves, but they tend to reduce the pollutant emissions improvements, on the Monroney label showing fuel overall average fuel economy rates and many other vehicle attributes that also savings compared to average vehicles. provide societal benefits take longer to This is not a question of ‘‘if you build increasing vehicle footprint size in order to get be reflected in the overall U.S. fleet as ‘‘easier’’ CAFE and CO2 standards. This well because of reduced turnover. it, they will come.’’ Despite the misunderstands, somewhat, how the footprint- widespread availability of fuel economy based standards work. While it is correct that larger- Raising vehicle prices too far, too fast, information, and despite manufacturers footprint vehicles have less stringent ‘‘targets,’’ the such as through very stringent fuel difficulty of compliance rests in how far above or economy and CO2 emissions standards building and marketing vehicles with below those vehicles are as compared to their higher fuel economy and increasing (especially considering that, on a fleet- targets, and more specifically, whether the wide basis, new vehicle sales and their offerings of hybrid and electric manufacturer is selling so many vehicles that are far vehicles, in the past several years as gas short of their targets that they cannot average out turnover do not appear strongly to compliant levels through other vehicles sold that responsive to fuel economy), has effects prices have remained low, consumer beat their targets. For example, under the CAFE preferences have shifted markedly away beyond simply a slowdown in sales. program, a manufacturer building a fleet of larger- Improvements over time have better from higher-fuel-economy smaller and footprint vehicles may have an objectively lower longer-term effects simply by not midsize passenger vehicles toward mpg-value compliance obligation than a alienating consumers, as compared to crossovers and truck-based utility manufacturer building a more mixed fleet, but it may still be more challenging for the first great leaps forward that drive people out vehicles.27 Some consumers plainly manufacturer to reach its compliance obligation if of the new car market or into vehicles it is selling only very-low-mpg variants at any given 26 In docket numbers EPA–HQ–OAR–2015–0827 footprint. There is only so much that increasing that do not meet their needs. The and NHTSA–2016–0068, see comments submitted footprint makes it ‘‘easier’’ for a manufacturer to industry has achieved tremendous gains by, e.g., Consumer Federation of America (NHTSA– reach compliance. in fuel economy over the past decade, 2016–0068–0054, at p. 57, et seq.) and the 28 The 2012 final rule analysis relied on the and these increases will continue at Environmental Defense Fund (EPA–HQ–OAR– Energy Information Administration’s Annual 2015–0827–4086, at p. 18, et seq.). Energy Outlook 2012 Early Release, which assumed least through 2020. 27 Carey, N. Lured by rising SUV sales, significantly higher fuel prices than the AEO 2017 Along with these gains, there have automakers flood market with models, Reuters (or AEO 2018) currently available. See 77 FR 62624, also been tremendous increases in (Mar. 29, 2018), available at https:// 62715 (Oct. 15, 2012) for the 2012 final rule’s vehicle prices, as new vehicles become www.reuters.com/article/us-autoshow-new-york- description of the fuel price estimates used. increasingly unaffordable—with the suvs/lured-by-rising-suv-sales-automakers-flood- 29 Annual Energy Outlook 2018, U.S. Energy market-with-models-idUSKBN1H50KI (last accessed Information Administration, at 53 (Feb. 6, 2018), average new vehicle transaction price Jun. 13, 2018). Many commentators have recently https://www.eia.gov/outlooks/aeo/pdf/ argued that manufacturers are deliberately AEO2018.pdf. 30 See id.

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recently exceeding $36,000—up by allow a consumer to keep their monthly changed, the analytical methods and more than $3,000 since 2014 alone.31 In payment affordable but can have serious inputs have been updated (including fact, a recent independent study potential financial consequences. updates to address issues still present in indicated that the average new car price Longer-term financing leads (generally) analyses published in 2016, 2017, and is unaffordable to median-income to higher interest rates, larger finance early 2018), and today, the analysis families in every metropolitan region in charges and total consumer costs, and a suggests that, compared to the proposed the United States except one: longer period of time with negative standards today, the previously-issued 32 Washington, DC. That analysis used equity. In 2012, the agencies expected standards would increase average the historically accepted approach that prices to increase under the standards vehicle prices by about $2,100. While consumers should make a down- announced at that time. The agencies today’s estimate is similar in magnitude payment of at least 20% of a vehicle’s estimated that, compared to a to the 2012 estimate, it is relative to a purchase price, finance for no longer continuation of the model year 2016 than four years, and make payments of standards, the standards issued through baseline that includes increases in 10% or less of the consumer’s annual model year 2025 would eventually stringency between MY 2016 and MY income to car payments and insurance. increase average prices by about $1,500– 2020. Compared to leaving vehicle But the market looks nothing like that $1,800.34 35 36 Circumstances have technology at MY 2016 levels, today’s these days, with average financing terms analysis shows the previously-issued of 68 months, and an increasing www.valuepenguin.com/auto-loans/average-auto- standards through model year 2025 proportion exceeding 72 or even 84 loan-interest-rates (last accessed Jun. 15, 2018). could eventually increase average 34 months.33 Longer financing terms may 77 FR 62624, 62666 (Oct. 15, 2012). vehicle prices by approximately $2,700. 35 The $1,500 figure reported in 2012 by NHTSA reflected application of carried-forward credits in A pause in continued increases in fuel 31 See, e.g., Average New-Car Prices Rise Nearly model year 2025, rather than an achieved CAFE economy standards, and cost increases 4 Percent for January 2018 On Shifting Sales Mix, level that could be sustainably compliant beyond attributable thereto, is appropriate. According To Kelley Blue Book, Kelley Blue Book, 2025 (with standards remaining at 2025 levels). As https://mediaroom.kbb.com/2018-02-01-Average- for the 2016 draft TAR, NHTSA has since updated New-Car-Prices-Rise-Nearly-4-Percent-For-January- its modeling approach to extend far enough into the 2018-On-Shifting-Sales-Mix-According-To-Kelley- future that any unsustainable credit deficits are explicitly for multiyear planning and credit Blue-Book (last accessed Jun. 15, 2018). eliminated. Like analyses published by EPA in banking. 32 Bell, C. What’s an ‘affordable’ car where you 2016, 2017, and early 2018, the $1,800 figure 36 live? The answer may surprise you, Bankrate.com reported in 2012 by EPA did not reflect either While EPA did not refer to the reported $1,800 (Jun. 28, 2017), available at https:// simulation of manufacturers’ multiyear plans to as an estimate of the increase in average prices, www.bankrate.com/auto/new-car-affordability- progress from the initial MY 2008 fleet to the MY because EPA did not assume that manufacturers survey/ (last accessed Jun. 15, 2018). 2025 fleet or any accounting for manufacturers’ would reduce profit margins, the $1,800 estimate is 33 Average Auto Loan Interest Rates: 2018 Facts potential application of banked credits. Today’s appropriately interpreted as an estimate of the and Figures, ValuePenguin, available at https:// analysis of both CAFE and CO2 standards accounts average increase in vehicle prices.

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Preferred Alternative technological feasibility and economic improved fleet turnover as more For all of these reasons, the agencies practicability. The analysis suggests consumers will be able to afford newer are proposing to maintain the MY 2020 that, compared to the standards issued and safer vehicles. previously for MYs 2021–2025, today’s Recent NHTSA analysis shows that fuel economy and CO2 emissions standards for MYs 2021–2026. Our goal proposed rule will eventually (by the the proportion of passengers killed in a is to establish standards that promote early 2030s) increase U.S. petroleum vehicle 18 or more model years old is consumption by about 0.5 million nearly double that of a vehicle three both energy conservation and safety, in 39 light of what is technologically feasible barrels per day—about two to three model years old or newer. As the and economically practicable, as percent of projected total U.S. average car on the road is approaching directed by Congress. consumption. While significant, this 12 years old, apparently the oldest in additional petroleum consumption is, our history,40 major safety benefits will Energy Conservation from an economic perspective, dwarfed occur by reducing fleet age. Other safety EPCA requires that NHTSA, when by the cost savings also projected to benefits will occur from other areas determining the maximum feasible result from today’s proposal, as such as avoiding the increased driving levels of CAFE standards, consider the indicated by the consideration of net need of the Nation to conserve energy. benefits appearing below. 39 Passenger Vehicle Occupant Injury Severity by However, EPCA also requires that Vehicle Age and Model Year in Fatal Crashes, Safety Benefits From Preferred Traffic Safety Facts Research Note, DOT HS 812 NHTSA consider other factors, such as Alternative 528. Washington, DC: National Highway Traffic Safety Administration. April 2018. 37 Data on new vehicle prices are from U.S. Today’s proposed rule is anticipated 40 See, e.g., IHS Markit, Vehicles Getting Older: Bureau of Economic Analysis, National Income and Average Age of Light Cars and Trucks in U.S. Rises Product Accounts, Supplemental Table 7.2.5S, Auto to prevent more than 12,700 on-road Again in 2016 to 11.5 years, IHS Markit Says, IHS and Truck Unit Sales, Production, Inventories, fatalities 38 and significantly more Markit (Nov. 22, 2016), http://news.ihsmarkit.com/ Expenditures, and Price (https://www.bea.gov/ injuries as compared to the standards press-release/automotive/vehicles-getting-older- iTable/iTable.cfm?reqid=19&step=2#reqid= set forth in the 2012 final rule over the average-age-light-cars-and-trucks-us-rises-again-201 19&step=3&isuri=1&1921=underlying&1903=2055, (‘‘. . . consumers are continuing the trend of last accessed Jul. 20, 2018). Median Household lifetimes of vehicles as more new, safer holding onto their vehicles longer than ever. As of Income data are from U.S. Census Bureau, Table A– vehicles are purchased than the current the end of 2015, the average length of ownership 1, Households by Total Money Income, Race, and (and augural) standards. A large portion measured a record 79.3 months, more than 1.5 Hispanic Origin of Householder: 1967 to 2016 of these safety benefits will come from months longer than reported in the previous year. (https://www.census.gov/data/tables/2017/demo/ For used vehicles, it is nearly 66 months. Both are income-poverty/p60-259.html, last accessed Jul. 20, significantly longer lengths of ownership since the 2018). 38 Over the lifetime of vehicles through MY 2029. same measure a decade ago.’’).

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that would otherwise result from higher The Preferred Alternative Would Have reducing corresponding emissions. On fuel efficiency (known as the rebound Negligible Environmental Impacts on the other hand, increasing fuel effect) and avoiding the mass reductions Air Quality consumption would increase emissions in passenger cars that might otherwise Improving fleet turnover will result in resulting from petroleum refining and be required to meet the standards consumers getting into newer and related ‘‘upstream’’ processes. Our established in 2012.41 Together these cleaner vehicles, accelerating the rate at analysis shows that none of the and other factors lead to estimated which older, more-polluting vehicles regulatory alternatives considered in annual fatalities under the proposed are removed from the roadways. Also, this proposal would noticeably impact standards that are significantly reducing fuel economy (relative to net emissions of smog-forming or other reduced 42 relative to those that would levels that would occur under ‘‘criteria’’ or toxic air pollutants, as occur under current (and augural) previously-issued standards) would illustrated by the following graph. That standards. increase the marginal cost of driving said, the resultant tailpipe emissions newer vehicles, reducing mileage reductions should be especially accumulated by those vehicles, and beneficial to highly trafficked corridors.

Climate Change Impacts From Preferred NHTSA’s Environmental Impact minimal. The following graph compares Alternative Statement performed for this the estimated atmospheric CO2 rulemaking shows that the preferred concentration (789.76 ppm) in 2100 The estimated effects of this proposal alternative would result in 3/1,000ths of under the proposed standards to the in terms of fuel savings and CO2 a degree Celsius increase in global estimated level (789.11 ppm) under the emissions, again perhaps somewhat average temperatures by 2100, relative standards set forth in 2012—or an 8/ counter-intuitively, is relatively small as to the standards finalized in 2012. On a 100ths of a percentage increase: 43 compared to the 2012 final rule. net CO2 basis, the results are similarly

41 The agencies are specifically requesting necessarily choose to avoid mass reductions in the annually for the CAFE program and 1,150 fewer comment on the appropriateness and level of the ways that the agencies assumed. See, 77 FR 623624, fatalities for the CO2 program over calendar years effects of the rebound effect. The agencies also seek 62763 (Oct. 15, 2012). By choosing where and how 2036–2045. comment on changes as compared to the 2012 to limit assumed mass reduction, the 2012 rule’s 43 Counter-intuitiveness is relative, however. The modeling relating to mass reduction assumptions. safety analysis reduced the projected apparent risk During that rulemaking, the analysis limited the to safety associated with aggressive fuel economy estimated effects of the 2012 final rule on climate amount of mass reduction assumed for certain and CO2 targets. That specific assumption has been were similarly small in magnitude, as shown in the vehicles, which impacted the results regarding removed for today’s analysis. Final EIS accompanying that rule and available on potential for adverse safety effects, even while 42 The reduction in annual fatalities varies each NHTSA’s website. acknowledging that manufacturers would not calendar year, averaging 894 fewer fatalities

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Net Benefits From Preferred Alternative as compared to if EPA retained the other alternatives analyzed, recognizing previously-set CO2 standards and the statutory considerations for both Maintaining the MY 2020 curves for NHTSA finalized the augural standards. agencies. Comment is sought on MYs 2021–2026 will save American This was identified as the preferred whether this is an appropriate basis for consumers, the auto industry, and the alternative, in part, because it selection. public a considerable amount of money maximizes net benefits compared to the

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These estimates, reported as changes Compliance Flexibilities adjustment- and incentive-type relative to impacts under the standards flexibilities, where there is not always issued in 2012, account for impacts on This proposal also seeks comment on consumer interest in the technologies to a variety of changes to NHTSA’s and vehicles produced during model years be incentivized nor is there necessarily EPA’s compliance programs for CAFE 2016–2029, as well as (through changes clear fuel-saving and emissions- and CO2 as well as related programs. reducing benefit to be derived from that in utilization) vehicles produced in Compliance flexibilities can generally earlier model years, throughout those incentivization. The agencies seek be grouped into two categories. The first comment on all of those requests as part vehicles’ useful lives. Reported values category are those compliance are in 2016 dollars, and reflect three- of this proposal. flexibilities that reduce unnecessary Over-compliance credits, which can percent and seven-percent discount compliance costs and provide for a more be built up in part through use of the rates. Under CAFE standards, costs are efficient program. The second category above-described per-vehicle estimated to decrease by $502 billion of compliance flexibilities are those that adjustments and incentives, can be overall at a three-percent discount rate distort the market—such as by saved and either applied retroactively to ($335 billion at a seven-percent incentivizing the implementation of one accounts for previous non-compliance, discount rate); benefits are estimated to type of technology by providing credit or carried forward to mitigate future decrease by $326 billion at a three- for compliance in excess of real-world non-compliance. Such credits can also percent discount rate ($204 billion at a fuel savings. be traded to other automakers for cash seven-percent discount rate). Thus, net Both programs provide for the or for other credits for different fleets. benefits are estimated to increase by generation of credits based upon fleet- But such trading is not pursued openly. $176 billion at a three-percent discount wide over-compliance, provide for Under the CAFE program, the public is rate and $132 billion at a seven-percent adjustments to the test measured value not made aware of inter-automaker discount rate. The estimated impacts of each individual vehicle based upon trades, nor are shareholders. And even under CO2 standards are similar, with the implementation of certain fuel the agencies are not informed of the net benefits estimated to increase by saving technologies, and provide price of credits. With the exception of $201 billion at a three-percent discount additional incentives for the statutorily-mandated credits, the rate and $141 billion at a seven-percent implementation of certain preferred agencies seek comment on all aspects of discount rate. technologies (regardless of actual fuel the current system. The agencies are savings). Auto manufacturers and others particularly interested in comments on have petitioned for a host of additional flexibilities that may distort the market.

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The agencies seek comment as to standards are, in the aggregate, at least related to fuel economy. Tailpipe CO2 whether some adjustments and non- as protective of public health and standards, whether in the form of fleet- statutory incentives and other welfare as applicable Federal standards, wide CO2 limits or in the form of provisions should be eliminated and is arbitrary and capricious; that requirements that manufacturers selling stringency levels adjusted accordingly. California does not need its own vehicles in California sell a certain In general, well-functioning banking standards to meet compelling or number of low- and no-tailpipe-CO2 and trading provisions increase market extraordinary conditions; or that such emissions vehicles as part of their efficiency and reduce the overall costs California standards and accompanying overall sales, are unquestionably related of compliance with regulatory enforcement procedures are not to fuel economy standards. Standards objectives. The agencies request consistent with Section 202(a) of the that control tailpipe CO2 emissions are comment on whether the current system CAA. In this proposal, EPA is proposing de facto fuel economy standards as implemented might need to withdraw the waiver granted to because CO2 is a direct and inevitable improvements to achieve greater California in 2013 for the GHG and ZEV byproduct of the combustion of carbon- efficiencies. We seek comment on requirements of its Advanced Clean based fuels to make energy, and the vast specific programmatic changes that Cars program, in light of all of these majority of the energy that powers could improve compliance with current factors. passenger cars and light trucks comes standards in the most efficient way, Attempting to solve climate change, from carbon-based fuels. ranging from requiring public disclosure even in part, through the Section 209 Improving fuel economy means of some or all aspects of credit trades, waiver provision is fundamentally getting the vehicle to go farther on a to potentially eliminating credit trading different from that section’s original gallon of gas; a vehicle that goes farther in the CAFE program. We request purpose of addressing smog-related air on a gallon of gas produces less CO2 per commenters to provide any data, quality problems. When California was unit of distance; therefore, improving evidence, or existing literature to help merely trying to solve its air quality fuel economy necessarily reduces agency decision-making. issues, there was a relatively- tailpipe CO2 emissions, and reducing straightforward technology solution to CO2 emissions necessarily improves fuel One National Standard the problems, implementation of which economy. EPCA therefore necessarily Setting appropriate and maximum did not affect how consumers lived and preempts California’s Advanced Clean feasible fuel economy and tailpipe CO2 drove. Section 209 allowed California to Cars program to the extent that it emissions standards requires regulatory pursue additional reductions to address regulates or prohibits tailpipe CO2 efficiency. This proposal addresses a its notorious smog problems by emissions. Section VI of this proposal, fundamental and unnecessary requiring more stringent standards, and below, discusses the CAA waiver and complication in the currently-existing allowed California and other States that EPCA preemption in more detail. regulatory framework, which is the failed to comply with Federal air quality Eliminating California’s regulation of regulation of GHG emissions from standards to make progress toward fuel economy pursuant to Congressional passenger cars and light trucks by the compliance. Trying to reduce carbon direction will provide benefits to the State of California through its GHG emissions from motor vehicles in any American public. The automotive standards and Zero Emission Vehicle significant way involves changes to the industry will, appropriately, deal with (ZEV) mandate and subsequent entire vehicle, not simply the addition fuel economy standards on a national adoption of these standards by other of a single or a handful of control basis—eliminating duplicative States. Both EPCA and the CAA technologies. The greater the emissions regulatory requirements. Further, preempt State regulation of motor reductions are sought, the greater the elimination of California’s ZEV program vehicle emissions (in EPCA’s case, likelihood that the characteristics and will allow automakers to develop such standards that are related to fuel capabilities of the vehicle currently vehicles in response to consumer economy standards). The CAA gives sought by most American consumers demand instead of regulatory mandate. EPA the authority to waive preemption will have to change significantly. Yet, This regulatory mandate has required for California under certain even decades later, California continues automakers to spend tens of billions of circumstances. EPCA does not provide to be in widespread non-attainment dollars to develop products that a for a waiver of preemption under any with Federal air quality standards.46 In significant majority of consumers have circumstances. In short, the agencies the past decade, California has not adopted, and consequently to sell propose to maintain one national disproportionately focused on GHG such products at a loss. All of this is standard—a standard that is set emissions. Parts of California have a real paid for through cross subsidization by exclusively by the Federal government. and significant local air pollution increasing prices of other vehicles not problem, but CO2 is not part of that local just in California and other States that Proposed Withdrawal of California’s problem. have adopted California’s ZEV mandate, Clean Air Act Preemption Waiver but throughout the country. California’s Tailpipe CO Emissions EPA granted a waiver of preemption 2 Standards and ZEV Mandate Conflict Request for Comment to California in 2013 for its ‘‘Advanced With EPCA Clean Car’’ regulations, composed of its The agencies look forward to all GHG standards, its ‘‘Low Emission Moreover, California regulation of comments on this proposal, and wish to Vehicle (LEV)’’ program and the ZEV tailpipe CO2 emissions, both through its emphasize that obtaining public input is program,44 and, as allowed under the GHG standards and ZEV program, extremely important to us in selecting CAA, a number of other States adopted conflicts directly and indirectly with from among the alternatives in a final California’s standards.45 The CAA states EPCA and the CAFE program. EPCA rule. While the agencies and the that EPA shall not grant a waiver of expressly preempts State standards Administration met with a variety of preemption if EPA finds that stakeholders prior to issuance of this California’s determination that its 46 See California Nonattainment/Maintenance proposal, those meetings have not Status for Each County by Year for All Criteria resulted in a predetermined final rule Pollutants, current as of May 31, 2018, at https:// 44 78 FR 2112 (Jan. 9, 2013). www3.epa.gov/airquality/greenbook/anayo_ca.html outcome. The Administrative Procedure 45 CAA Section 177, 42 U.S.C. 7507. (last accessed June 15, 2018). Act requires that agencies provide the

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public with adequate notice of a and GHG emissions also used the CAFE EPA developed two models after proposed rule followed by a meaningful model for analysis.47 2009, referred to as the ‘‘ALPHA’’ and opportunity to comment on the rule’s DOT recently arranged for a formal ‘‘OMEGA’’ models, which provide some content. The agencies are committed to peer review of the model. In general, of the same capabilities as the following that directive. reviewers’ comments strongly supported Autonomie and CAFE models. EPA the model’s conceptual basis and applied the OMEGA model to conduct II. Technical Foundation for NPRM implementation, and commenters analysis of GHG standards promulgated Analysis provided several specific in 2010 and 2012, and the ALPHA and A. Basics of CAFE and CO2 Standards recommendations. DOT staff agreed OMEGA models to conduct analysis Analysis with many of these recommendations discussed in the above-mentioned 2016 and have worked to implement them Draft TAR and Proposed and Final The agencies’ analysis of CAFE and wherever practicable. Implementing Determinations regarding standards CO2 standards involves two basic some of them would require beyond 2021. In an August 2017 notice, elements: first, estimating ways each considerable further research, the agencies requested comments on, manufacturer could potentially respond development, and testing, and will be among other things, whether EPA to a given set of standards in a manner considered going forward. For a handful should use alternative methodologies that considers potential consumer of other recommendations, DOT staff and modeling, including DOE/ response; and second, estimating disagreed, often finding the Argonne’s Autonomie full-vehicle various impacts of those responses. recommendations involved simulation tool and DOT’s CAFE Estimating manufacturers’ potential considerations (e.g., other policies, such model.53 responses involves simulating as those involving fuel taxation) beyond Having reviewed comments on the manufacturers’ decision-making the model itself or were based on subject and having considered the processes regarding the year-by-year concerns with inputs rather than how matter fully, the agencies have application of fuel-saving technologies the model itself functioned. A report determined it is reasonable and to specific vehicles. Estimating impacts available in the docket for this appropriate to use DOE/Argonne’s involves calculating resultant changes rulemaking presents peer reviewers’ model for full-vehicle simulation, and to in new vehicle costs, estimating a detailed comments and use DOT’s CAFE model for analysis of variety of costs (e.g., for fuel) and effects recommendations, and provides DOT’s regulatory alternatives. EPA interprets (e.g., CO2 emissions from fuel detailed responses.48 Section 202(a) of the CAA as giving the combustion) occurring as vehicles are The agencies also use four DOE and agency broad discretion in how it driven over their lifetimes before DOE-sponsored models to develop develops and sets GHG standards for eventually being scrapped, and inputs to the CAFE model, including light-duty vehicles. Nothing in Section estimating the monetary value of these three developed and maintained by 202(a) mandates that EPA use any effects. Estimating impacts also involves DOE’s Argonne National Laboratory. specific model or set of models for The agencies use the DOE Energy consideration of the response of analysis of potential CO2 standards for consumers—e.g., whether consumers Information Administration’s (EIA’s) light-duty vehicles. EPA weighs many will purchase the vehicles and in what National Energy Modeling System factors when determining appropriate (NEMS) to estimate fuel prices,49 and quantities. Both of these basic analytical levels for CO2 standards, including the elements involve the application of used Argonne’s Greenhouse gases, cost of compliance (see Section many analytical inputs. Regulated Emissions, and Energy use in 202(a)(2)), lead time necessary for The agencies’ analysis uses the CAFE Transportation (GREET) model to compliance (also Section 202(a)(2)), model to estimate manufacturers’ estimate emissions rates from fuel 50 safety (see NRDC v. EPA, 655 F.2d 318, potential responses to new CAFE and production and distribution processes. 336 n. 31 (D.C. Cir. 1981) and other DOT also sponsored DOE/Argonne to CO2 standards and to estimate various impacts on consumers,54 and energy impacts of those responses. The model use their Autonomie full-vehicle impacts associated with use of the makes use of many inputs, values of simulation system to estimate the fuel technology.55 Using the CAFE model which are developed outside of the economy impacts for roughly a million combinations of technologies and model to estimate the battery cost associated with model and not by the model. For 51 52 example, the model applies fuel prices; vehicle types. each technology combination based on it does not estimate fuel prices. The characteristics of the simulated vehicle and its level 47 While this rulemaking employed the CAFE of electrification. Information regarding Argonne’s model does not determine the form or model for analysis, EPA and DOT used different BatPAC model is available at http:// stringency of the standards; instead, the versions of the CAFE model for establishing their www.cse.anl.gov/batpac/. model applies inputs specifying the respective standards, and EPA also used the EPA 52 Additionally, the impact of engine technologies form and stringency of standards to be MOVES model. See 81 FR 73478, 73743 (Oct. 25, on fuel consumption, torque, and other metrics was 2016). characterized using GT POWER simulation analyzed and produces outputs showing 48 Docket No. NHTSA–2018–0067. modeling in combination with other engine effects of manufacturers working to 49 See https://www.eia.gov/outlooks/aeo/info_ modeling that was conducted by IAV Automotive meet those standards, which become the nems_archive.php. Today’s notice uses fuel prices Engineering, Inc. (IAV). The engine characterization basis for comparing between different estimated using the Annual Energy Outlook (AEO) ‘‘maps’’ resulting from this analysis were used as inputs for the Autonomie full-vehicle simulation potential stringencies. 2017 version of NEMS (see https://www.eia.gov/ outlooks/archive/aeo17/ and https://www.eia.gov/ modeling. Information regarding GT Power is DOT’s Volpe National Transportation outlooks/aeo/data/browser/#/?id=3-AEO2017 available at https://www.gtisoft.com/gt-suite- Systems Center (often simply referred to &cases=ref2017&sourcekey=0). applications/propulsion-systems/gt-power-engine- 50 simulation-software. as the ‘‘Volpe Center’’) develops, Information regarding GREET is available at https://greet.es.anl.gov/index.php. Availability of 53 82 FR 39533 (Aug. 21, 2017). maintains, and applies the model for NEMS is discussed at https://www.eia.gov/ 54 Since its earliest Title II regulations, EPA has NHTSA. NHTSA has used the CAFE outlooks/aeo/info_nems_archive.php. Today’s considered the safety of pollution control model to perform analyses supporting notice uses fuel prices estimated using the AEO technologies. See 45 FR 14496, 14503 (1980). every CAFE rulemaking since 2001, and 2017 version of NEMS. 55 See George E. Warren Corp. v. EPA, 159 F.3d 51 As part of the Argonne simulation effort, 616, 623–624 (D.C. Cir. 1998) (ordinarily the 2016 rulemaking regarding heavy- individual technology combinations simulated in permissible for EPA to consider factors not duty pickup and van fuel consumption Autonomie were paired with Argonne’s BatPAC specifically enumerated in the Act).

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allows consideration of the following future, and manufacturers’ year-by-year business, frequency of engine on/off factors: the CAFE model explicitly plans involve some vehicles ‘‘carrying transitions). This steadily increasing evaluates the cost of compliance for forward’’ technology from prior model realism has, in turn, steadily increased each manufacturer, each fleet, and each years and some other vehicles possibly confidence in the appropriateness of model year; it accounts for lead time applying ‘‘extra’’ technology in using Autonomie to make significant necessary for compliance by directly anticipation of standards in ensuing investment decisions. Notably, DOE incorporating estimated manufacturer model years, and manufacturers’ uses Autonomie for analysis supporting production cycles for every vehicle in planning also involves applying credits budget priorities and plans for programs the fleet, ensuring that the analysis does carried forward between model years. managed by its Vehicle Technologies not assume vehicles can be redesigned Furthermore, manufacturers cannot Office (VTO). Considering the to incorporate more technology without optimize the powertrain for fuel advantages of DOE/Argonne’s regard to lead time considerations; it economy on every vehicle model Autonomie model, it is reasonable and provides information on safety effects configuration—for example, a given appropriate to use Autonomie to associated with different levels of engine shared among multiple vehicle estimate fuel economy levels and CO2 standards and information about many models cannot practicably be split into emission rates for different other impacts on consumers, and it different versions for each configuration combinations of technologies as applied calculates energy impacts (i.e., fuel of each model, each with a slightly to different types of vehicles. saved or consumed) as a primary different displacement. The CAFE Commenters have also suggested that function, besides being capable of model is designed to account for these the CAFE model’s graphical user providing information about many other real-world factors. interface (GUI) facilitates others’ ability factors within EPA’s broad CAA Considering the technological to use the model quickly—and without discretion to consider. heterogeneity of manufacturers’ current specialized knowledge or training—and Because the CAFE model simulates a product offerings, and the wide range of to comment accordingly.56 For today’s wide range of actual constraints and ways in which the many fuel economy- proposal, DOT has significantly practices related to automotive improving/CO2 emissions-reducing expanded and refined this GUI, engineering, planning, and production, technologies included in the analysis providing the ability to observe the such as common vehicle platforms, can be combined, the CAFE model has model’s real-time progress much more sharing of engines among different been designed to use inputs that provide closely as it simulates year-by-year vehicle models, and timing of major an estimate of the fuel economy compliance with either CAFE or CO2 vehicle redesigns, the analysis produced achieved for many tens of thousands of standards.57 Although the model’s by the CAFE model provides a different potential combinations of fuel- ability to produce realistic results is transparent and realistic basis to show saving technologies. Across the range of independent of the model’s GUI, it is pathways manufacturers could follow technology classes encompassed by the anticipated the CAFE model’s GUI will over time in applying new technologies, analysis fleet, today’s analysis involves facilitate stakeholders’ meaningful which helps better assess impacts of more than a million such estimates. review and comment during the potential future standards. Furthermore, While the CAFE model requires no comment period. because the CAFE model also accounts specific approach to developing these Beyond these general considerations, fully for regulatory compliance inputs, the National Academy of several specific related technical provisions (now including CO2 Sciences (NAS) has recommended, and comments and considerations underlie compliance provisions), such as stakeholders have commented, that full- the agencies’ decision in this area, as adjustments for reduced refrigerant vehicle simulation provides the best discussed, where applicable, in the leakage, production ‘‘multipliers’’ for balance between realism and remainder of this Section. some specific types of vehicles (e.g., practicality. DOE/Argonne has spent Other commenters expressed a PHEVs), and carried-forward (i.e., several years developing, applying, and number of concerns with whether banked) credits, the CAFE model expanding means to use distributed DOT’s CAFE model could be used for provides a transparent and realistic computing to exercise its Autonomie CAA analysis. Many of these concerns basis to estimate how such technologies full-vehicle simulation tool over the focused on inputs used by the CAFE might be applied over time in response scale necessary for realistic analysis of model for prior rulemaking to CAFE or CO2 standards. CAFE or average CO2 standards. This analyses.58 59 60 Because inputs are There are sound reasons for the scalability and related flexibility (in agencies to use the CAFE model going terms of expanding the set of 56 From Docket Number EPA–HQ–OAR–2015– forward in this rulemaking. First, the technologies to be simulated) makes 0827, see Comment by Global Automakers, Docket ID EPA–HQ–OAR–2015–0827–9728, at 34. CAFE and CO2 fact analyses are Autonomie well-suited for developing 57 The updated GUI provides a range of graphs inextricably linked. Furthermore, the inputs to the CAFE model. updated in real time as the model operates. These analysis produced by the CAFE model Additionally, DOE/Argonne’s graphs can be used to monitor fuel economy or CO2 and DOE/Argonne’s Autonomie Autonomie also has a long history of ratings of vehicles in manufacturers’ fleets and to addresses several analytical needs. The development and widespread monitor year-by-year CAFE (or average CO2 ratings), costs, avoided fuel outlays, and avoided CO2-related CAFE model provides an explicit year- application by a much wider range of damages for specific manufacturers and/or specific by-year simulation of manufacturers’ users in government, academia, and fleets (e.g., domestic passenger car, light truck). application of technology to their industry. Many of these users apply Because these graphs update as the model products in response to a year-by-year Autonomie to inform funding and progresses, they should greatly increase users’ progression of CAFE standards and design decisions. These real-world understanding of the model’s approach to considerations such as multiyear planning, accounts for sharing of technologies and exercises have contributed significantly payment of civil penalties, and credit use. the implications for timing, scope, and to aspects of Autonomie important to 58 For example, EDF’s recent comments (EDF at limits on the potential to optimize producing realistic estimates of fuel 12, Docket ID. EPA–HQ–OAR–2015–0827–9203) powertrains for fuel economy. In the economy levels and CO2 emission rates, stated ‘‘the data that NHTSA needs to input into its model is sensitive confidential business real world, standards actually are such as estimation and consideration of information that is not transparent and cannot be specified on a year-by-year basis, not performance, utility, and driveability independently verified . . .’’ and claimed ‘‘the simply some single year well into the metrics (e.g., towing capability, shift Continued

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exogenous to any model, they do not decision may be informed by non-EPA- that includes the specific engines and determine whether it would be created models does not, in any way, transmissions on each model variant, reasonable and appropriate for EPA to constitute a delegation of its statutory observed sales volumes, and all fuel use DOT’s model for analysis. Other power to set standards or decision- economy improvement technology that concerns focused on characteristics of making authority.61 Arguing to the is already present on those vehicles. the CAFE model that were developed to contrary would suggest, for example, From there it adds technology, in better align the model with EPCA and that EPA’s decision would be invalid response to the standards being EISA; the model has been revised to because it relied on EIA’s Annual considered, in a way that minimizes the accommodate both EPCA/EISA and Energy Outlook for fuel prices rather cost of compliance and reflects many CAA analysis, as explained further than developing its own model for real-world constraints faced by below. Some commenters also argued estimating future trends in fuel prices. automobile manufacturers. After that use of any models other than Yet, all Federal agencies that have simulating compliance, the model ALPHA and OMEGA for CAA analysis occasion to use forecasts of future fuel calculates impacts of the simulated would constitute an arbitrary and prices regularly (and appropriately) standard: technology costs, fuel savings capricious delegation of EPA’s decision- defer to EIA’s expertise in this area and (both in gallons and dollars), CO2 making authority to DOT, if DOT rely on EIA’s NEMS-based analysis in reductions, social costs and benefits, models are used for analysis instead. the AEO, even when those same and safety impacts. These comments were made prior to the agencies are using EIA’s forecasts to Today’s analysis reflects several development of the CAA analysis inform their own decision-making. changes made to the CAFE model since function in the CAFE model, and, Moreover, DOT’s CAFE model with 2012, when NHTSA used the model to moreover, appear to conflate the inputs from DOE/Argonne’s Autonomie estimate the effects, costs, and benefits analytical tool used to inform decision- model has produced analysis supporting of final CAFE standards for light-duty making with the action of making the rulemaking under the CAA. In 2015, vehicles produced during MYs 2017– decision. As explained elsewhere in this EPA proposed new GHG standards for 2021 and augural standards for MYs document and as made repeatedly clear MY 2021–2027 heavy-duty pickups and 2022–2025. Key changes relevant to this over the past several rulemakings, the vans, finalizing standards in 2016. analysis include the following: CAFE model neither sets standards nor Supporting the NPRM and final rule, • Expansion of model inputs, dictates where and how to set standards; EPA relied on analysis implemented by procedures, and outputs to it simply informs as to the effects of DOT using DOT’s CAFE model, and accommodate technologies not included setting different levels of standards. In DOT used inputs developed by DOE/ in prior analyses, this rulemaking, EPA will be making its Argonne using DOE/Argonne’s • Updated approach to estimating the own decisions regarding what CO2 Autonomie model. combined effect of fuel-saving standards would be appropriate under The following sections provide a brief technologies using large scale the CAA. The CAA does not require technical overview of the CAFE model, simulation modeling, EPA to create a specific model or use a including changes NHTSA made to the • Modules that dynamically estimate specific model of its own creation in model since 2012, before discussing new vehicle sales and existing vehicle setting GHG standards. The fact EPA’s inputs to the model and then diving scrappage in response to changes to new more deeply into how the model works. vehicle prices that result from OMEGA model’s focus on direct technological For more information on the latter topic, manufacturers’ compliance actions, inputs and costs—as opposed to industry self- see the CAFE model documentation July • A safety module that estimates the reported data—ensures the model more accurately changes in light-duty traffic fatalities characterizes the true feasibility and cost 2018 draft, available in the docket for effectiveness of deploying greenhouse gas reducing this rulemaking and on NHTSA’s resulting from changes to vehicle technologies.’’ Neither statement is correct, as website. exposure, vehicle retirement rates, and nothing about either the CAFE or OMEGA model reductions in vehicle mass to improve either obviates or necessitates the use of CBI to 1. Brief Technical Overview of the fuel economy, develop inputs. Model • 59 In recent comments (CARB at 28, Docket ID. Disaggregation of each EPA–HQ–OAR–2015–0827–9197), CARB stated The CAFE model is designed to manufacturer’s fleet into separate ‘‘another promising technology entering the market simulate compliance with a given set of ‘‘domestic’’ passenger car and ‘‘import’’ was not even included in the NHTSA compliance CAFE or CO2 standards for each passenger car fleets to better represent modeling’’ and that EPA assumes a five-year redesign cycle, whereas NHTSA assumes a six to manufacturer selling vehicles in the the statutory requirements of the CAFE seven-year cycle.’’ Though presented as criticisms United States. The model begins with a program, of the models, these comments—at least with representation of the current (for today’s • Changes to the algorithm used to respect to the CAFE model—actually concern analysis, model year 2016) vehicle apply technologies, enabling more model inputs. NHTSA did not agree with CARB about the commercialization potential of the engine model offerings for each manufacturer explicit accounting of shared vehicle technology in question (‘‘Atkinson 2’’) and applied components (engines, transmissions, model inputs accordingly. Also, rather than 61 ‘‘[A] federal agency may turn to an outside platforms) and ‘‘inheritance’’ of major applying a one-size-fits-all assumption regarding entity for advice and policy recommendations, technology within or across powertrains redesign cadence, NHTSA developed estimates provided the agency makes the final decisions and/or platforms over time, specific to each vehicle model and applied these as itself.’’ U.S. Telecom. Ass’n v. FCC, 359 F.3d 554, • model inputs. 565–66 (D.C. Cir. 2004). To the extent commenters An industry labor quantity module, 60 NRDC’s recent comments (NRDC at 37, Docket meant to suggest outside parties have a reliance which estimates net changes in the ID. EPA–HQ–OAR–2015–0827–9826) state EPA interest in EPA using ALPHA and OMEGA to set amount of U.S. automobile labor for should not use the CAFE model because it ‘‘allows standards, EPA does not agree a reliance interest is dealerships, Tier 1 and 2 supplier manufacturers to pay civil penalties in lieu of properly placed on an analytical methodology (as meeting the standards, an alternative compliance opposed to on the standards themselves). Even if it companies, and original equipment pathway currently allowed under EISA and EPCA.’’ were, all parties that closely examined ALPHA and manufacturers (OEMs), While the CAFE model can simulate civil penalty OMEGA-based analyses in the past either also • Cost estimation of batteries for payment, NRDC’s comment appears to overlook the simultaneously closely examined CAFE and electrification technologies incorporates fact that this result depends on model inputs; the Autonomie-based analyses in the past, or were fully inputs can easily be specified such that the CAFE capable of doing so, and thus, should face no an updated version of Argonne National model will set aside civil penalty payment as an additional difficulty now they have only one set of Laboratory’s BatPAC (battery) model for alternative to compliance. models and inputs/outputs to examine. hybrid electric vehicles (HEVs), plug-in

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hybrid electric vehicles (PHEVs), and alternatives the agencies are CO2 standards is the analysis fleet, battery electric vehicles (BEVs), considering. All but one involve which is a snapshot of the recent consistent with how we estimate different standards, and three involve a vehicle market. The analysis fleet effectiveness for those values, gradual discontinuation of CAFE and provides a snapshot to project what • Expanded accounting for CAFE GHG adjustments reflecting the vehicles will exist in future model years credits carried over from years prior to application of technologies that improve covered by the standards and what those included in the analysis (a.k.a. air conditioner efficiency or, in other technologies they will have, and then ‘‘banked’’ credits) and application to ways, improve fuel economy under evaluate what additional technologies future CAFE deficits to better evaluate conditions not represented by long- can feasibly be applied to those vehicles anticipated manufacturer responses to standing fuel economy test procedures. in a cost-effective way to raise their fuel 62 proposed standards, Like the baseline no action alternative, economy and lower their CO2 emission • The ability to represent a all of these alternatives are more levels.63 manufacturer’s preference for fine stringent than the preferred alternative. Part of reflecting what vehicles will payment (rather than achieving full Section III and Section IV describe the exist in future model years is knowing compliance exclusively through fuel preferred and other regulatory which vehicles are produced by which economy improvements) on a year-by- alternatives, respectively. manufacturers, how many of each are year basis, These alternatives were examined sold, and whether they are passenger • Year-by-year simulation of how because they will be considered as cars or light trucks. This is important manufacturers could comply with EPA’s options for the final rule. The agencies because it improves our understanding seek comment on these alternatives, CO2 standards, including of the overall impacts of different levels Æ seek any relevant data and information, Calculation of vehicle models’ CO2 of CAFE and CO2 standards; overall emission rates before and after and will review responses. That review impacts result from industry’s response application of fuel-saving (and, could lead to the selection of one of the to standards, and industry’s response is other regulatory alternatives for the final therefore, CO2-reducing) technologies, made up of individual manufacturer rule or some combination of the other Æ Calculation of manufacturers’ fleet responses to the standards in light of the regulatory alternatives (e.g., combining average CO2 emission rates, overall market and their individual passenger cars standards from one Æ Calculation of manufacturers’ fleet assessment of consumer acceptance. alternative with light truck standards average CO2 emission rates under Having an accurate picture of attribute-based CO standards, from a different alternative). 2 Because outputs depend on inputs manufacturers’ existing fleets (and the Æ Accounting for adjustments to vehicle models in them) that will be average CO emission rates reflecting (e.g., the results of the analysis in terms 2 of quantities and kinds of technologies subject to future standards helps us reduction of air conditioner refrigerant better understand individual leakage, required to meet different levels of standards, and the societal and private manufacturer responses to those future Æ Accounting for the treatment of standards in addition to potential alternative fuel vehicles for CO benefits associated with manufacturers 2 meeting different levels of standards changes in those standards. compliance, Another part of reflecting what Æ Accounting for production depend on input data, estimates, and assumptions), the analysis also explores vehicles will exist in future model years ‘‘multipliers’’ for PHEVs, BEVs, is knowing what technologies are compressed natural gas (CNG) vehicles, the sensitivity of results to many of these inputs. For example, the net already on those vehicles. Accounting and fuel cell vehicles (FCVs), for technologies already being on Æ Accounting for transfer of CO benefits of any regulatory alternative 2 will depend strongly on fuel prices well vehicles helps avoid ‘‘double-counting’’ credits between regulated fleets, the value of those technologies, by Æ Accounting for carried-forward beyond 2025. Fuel prices a decade and more from now are not knowable with assuming they are still available to be (a.k.a. ‘‘banked’’) CO2 credits, including applied to improve fuel economy and credits from model years earlier than certainty. The sensitivity analysis reduce CO2 emissions. It also promotes modeled explicitly. involves repeating the ‘‘central’’ or ‘‘reference case’’ analysis under more realistic determinations of what 2. Sensitivity Cases and Why We alternative inputs (e.g., higher fuel additional technologies can feasibly be Examine Them prices in one case, lower fuel prices in applied to those vehicles: if a manufacturer has already started down Today’s notice presents estimated another case), and exploring changes in analytical results, which is discussed a technological path to fuel economy or impacts of the proposed CAFE and CO2 further in the agencies’ Preliminary performance improvements, we do not standards defining the proposals, assume it will completely abandon that relative to a baseline ‘‘no action’’ Regulatory Impact Analysis (PRIA) accompanying today’s notice. path because that would be unrealistic regulatory alternative under which the and would not accurately represent standards announced in 2012 remain in B. Developing the Analysis Fleet for manufacturer responses to standards. place through MY 2025 and continue Assessing Costs, Benefits, and Effects of Each vehicle model (and configurations unchanged thereafter. Relative to this Alternative CAFE Standards of each model) in the analysis fleet, same baseline, today’s notice also The following sections describe what therefore, has a comprehensive list of its presents analysis estimating impacts the analysis fleet is and why it is used, technologies, which is important under a range of other regulatory how it was developed for this NPRM, because different configurations may have different technologies applied to 62 While EPCA/EISA precludes NHTSA from and the analysis-fleet-related topics on considering manufacturers’ potential use of credits which comment is sought. in model years for which the agency is establishing 63 The CAFE model does not generate compliance new standards, NHTSA considers credit use in 1. Purpose of Developing and Using an paths a manufacturer should, must, or will deploy. earlier model years. Also, as allowed by NEPA, Analysis Fleet It is intended as a tool to demonstrate a compliance NHTSA’s EISs present results of analysis that pathway a manufacturer could choose. It is almost considers manufacturers’ potential use of credits in The starting point for the evaluation certain all manufacturers will make compliance all model years, including those for which the of the potential feasibility of different choices differing from those projected in the CAFE agency is establishing new standards. stringency levels for future CAFE and model.

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them.64 Additionally, the analysis development, and manufacturing and trucks, and between manufacturers) accounts for platforms within equipment budgets and resources.66 endogenously as part of the analysis, manufacturers’ fleets, recognizing Manufacturers have repeatedly told the rather than using external forecasts of platforms will share technologies, and agencies that sustainable business plans future car/truck split and future the vehicles that make up that platform require careful management of resources manufacturer sales volumes. This leads should receive (or not receive) and capital spending, and that the the model to produce different estimates additional technological improvements length of time each product remains in of future production volumes under together. The specific engineering production is crucial to recouping the different standards and in response to characteristics of each model/ upfront product development and plant/ different inputs, reflecting the configuration are available in the equipment costs, as well as the capital expectation that regulatory standards aforementioned input file.65 For the needed to fund the development and and other external factors will, in fact, regulatory alternatives considered in manufacturing equipment needed for impact the market. today’s proposal, estimates of rates at future products. Because the production The input file for the CAFE model which various technologies might be volume of any given vehicle model characterizing the analysis fleet 67 expected to penetrate manufacturers’ varies within a manufacturer’s product includes a large amount of data about fleets (and the overall market) are line and also varies among different vehicle models/configurations, their summarized below in Sections VI and manufacturers, redesign schedules technological characteristics, the VII, and in Chapter 6 of the typically vary for each model and manufacturers and fleets to which they accompanying PRIA and in detailed manufacturer. Some (relatively few) belong, and initial prices and model output files available at NHTSA’s technological improvements are small production volumes which provide the website. A solid characterization of a enough they can be applied in any starting points for projection (by the recent model year as an analytical model year; others are major enough sales model) to ensuing model years. starting point helps to realistically they can only be cost-effectively applied The following sections discuss aspects estimate ways manufacturers could at a vehicle redesign, when many other of how the analysis fleet was built for potentially respond to different levels of things about the vehicle are already this proposal and seek comment on standards, and the modeling strives to changing. Ensuring the CAFE model those topics. realistically simulate how makes technological improvements to 2. Source Data for Building the Analysis manufacturers could progress from that vehicles only when it is feasible to do Fleet starting point. Nevertheless, so also helps the analysis better manufacturers can respond in many represent manufacturer responses to The source data for the vehicle ways beyond those represented in the different levels of standards. models/configurations in the analysis analysis (e.g., applying other A final important aspect of reflecting fleet and their technologies is a central technologies, shifting production what vehicles will exist in future model input for the analysis. The sections volumes, changing vehicle footprint), years and potential manufacturer below discuss pros and cons of different such that it is impossible to predict with responses to standards is estimating potential sources and what was used for any certainty exactly how each how future sales might change in this proposal. manufacturer will respond. Therefore, response to different potential (a) Use of Confidential Business recent trends in manufacturer standards. If potential future standards Information Versus Publicly-Releasable performance and technology appear likely to have major effects in Sources application, although of interest in terms of shifting production from cars to terms of understanding manufacturers’ trucks (or vice versa), or in terms of Since 2001, CAFE analysis has used current compliance positions, are not in shifting sales between manufacturers or either confidential, forward-estimating themselves innately indicative of future groups of manufacturers, that is product plans from manufacturers, or potential. important for the agencies to consider. publicly available data on vehicles Yet, another part of reflecting what For previous analyses, the CAFE model already sold, as a starting point for vehicles will exist in future model years used a static forecast contained in the determining what technologies can be is having reasonable real-world analysis fleet input file, which specified applied to what vehicles in response to assumptions about when certain changes in production volumes over potential different levels of standards. technologies can be applied to vehicles. time for each vehicle model/ These two sources present a tradeoff. Each vehicle model/configuration in the configuration. This approach yielded Confidential product plans analysis fleet also has information about results that, in terms of production comprehensively represent what its redesign schedule, i.e., the last year volumes, did not change between vehicles a manufacturer expects to it was redesigned and when the scenarios or with changes in important produce in coming years, accounting for agencies expect it to be redesigned model inputs. For example, very plans to introduce new vehicles and again. Redesign schedules are a key part stringent standards with very high fuel-saving technologies and, for of manufacturers’ business plans, as technology costs would result in the example, plans to discontinue other each new product can cost more than same estimated production volumes as vehicles and even brands. This $1.0B and involve a significant portion less stringent standards with very low information can be very thorough and of a manufacturer’s scarce research, technology costs. can improve the accuracy of the New for today’s proposal, the CAFE analysis, but for competitive reasons, 64 Considering each vehicle model/configuration model begins with the first-year most of this information must be also improves the ability to consider the differential production volumes (i.e., MY 2016 for redacted prior to publication with impacts of different levels of potential standards on today’s analysis) and adjusts ensuing rulemaking documentation. This makes different manufacturers, since all vehicle model/ it difficult for public commenters to configurations ‘‘start’’ at different places, in terms sales mix year by year (between cars and of the technologies they already have and how reproduce the analysis for themselves as those technologies are used. 66 Shea, T. Why Does It Cost So Much For 65 Available with the model and other input files Automakers To Develop New Models?, Autoblog 67 Available with the model and other input files supporting today’s announcement at https:// (Jul. 27, 2010), https://www.autoblog.com/2010/07/ supporting today’s announcement at https:// www.nhtsa.gov/corporate-average-fuel-economy/ 27/why-does-it-cost-so-much-for-automakers-to- www.nhtsa.gov/corporate-average-fuel-economy/ compliance-and-effects-modeling-system. develop-new-models/. compliance-and-effects-modeling-system.

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they develop their comments. Some information from manufacturers.68 the potential for change is likely not non-industry commenters have also Information from MY 2016 was chosen significant enough to merit using final expressed concern manufacturers would as the foundation for today’s analysis data from an earlier model year have an incentive in the submitted fleet because, at the time the rulemaking reflecting a more outdated fleet. plans to (deliberately or not) analysis was initiated, the 2016 fleet Moreover, even ostensibly final CAFE underestimate their future fuel economy represented the most up-to-date compliance data can sometimes be capabilities and overstate their information available in terms of subject to later revision (e.g., if errors in expectations about, for example, the individual vehicle models and fuel economy tests are discovered), and levels of performance of future vehicle configurations, production technology the purpose of today’s analysis is not to levels, and production volumes. If MY support enforcement actions but rather models in order to affect the analysis. 2017 data had been used while this to provide a realistic assessment of Since 2010, EPA and NHTSA have analysis was being developed, the manufacturers’ potential responses to based analysis fleets almost exclusively agencies would have needed to use future standards. on information from commercial and product planning information that could Manufacturers integrated a significant public sources, starting with CAFE not be made available to the public until amount of new technology in the MY compliance data and adding a later date. 2016 fleet, and this was especially true information from other sources. The analysis fleet was initially for newly-designed vehicles launched in An analysis fleet based primarily on developed with 2016 mid-model year MY 2016. While subsequent fleets will public sources can be released to the compliance data because final involve even further application of public, solving the issue of commenters compliance data was not available at technology, using available data for MY being unable to reproduce the overall that time, and the timing provided 2016 provides the most realistic detailed analysis when they want to. However, manufacturers the opportunity to review foundation for analysis that can be made industry commenters have argued such and comment on the characterization of available publicly in full detail, allowing stakeholders to independently an analysis fleet cannot accurately their vehicles in the fleet. With a view toward developing an accurate reproduce the analysis presented in this reflect manufacturers actual plans to characterization of the 2016 fleet to proposal. Insofar as future product apply fuel-saving technologies (e.g., serve as an analytical starting point, offerings are likely to be more similar to manufacturers may apply turbocharging corrections and updates to mid-year vehicles produced in 2016 than to to improve not just fuel economy, but data (e.g., to production estimates) were vehicles produced in earlier model also to improve vehicle performance) or sought, in addition to corroboration or years, using available data regarding the manufacturers’ plans to change product correction of technical information 2016 model year provides the most offerings by introducing some vehicles obtained from commercial and other realistic, publicly releasable foundation and brands and discontinuing other sources (to the extent that information for constructing a forecast of the future vehicles and brands, precisely because was not included in compliance data), vehicle market for this proposal. that information is typically although future product planning A number of comments to the Draft confidential business information (CBI). information from manufacturers (e.g., TAR, EPA’s Proposed Determination, A fully-publicly-releasable analysis fleet future product offerings, products to be and EPA’s 2017 Request for Comment 69 holds vehicle characteristics unchanged discontinued) was not requested, as stated that the most up-to-date analysis over time and arguably lacks some level most manufacturers view such fleet possible should be used, because a of accuracy when projected into the information as CBI. Manufacturers more up-to-date analysis fleet will better future. For example, over time, offered a range of corrections to indicate capture how manufacturers apply manufacturers introduce new products engineering characteristics (e.g., technology and will account better for vehicle model/configuration and even entire brands. On the other footprint, curb weight, transmission introductions and deletions.70 On the hand, plans announced in press releases type) of specific vehicle model/ other hand, some commenters suggested do not always ultimately bear out, nor configurations, as well as updates to fuel economy and production volume that because manufacturers continue do commercially-available third-party improving vehicle performance and forecasts. Assumptions could be made estimates in mid-year reporting. After following up on a case-by-case basis to utility over time, an older analysis fleet about these issues to improve the should be used to estimate how the fleet accuracy of a publicly-releasable investigate significant differences, the analysis fleet was updated. could have evolved had manufacturers analysis fleet, but concerns include that Sales, footprint, and fuel economy applied all technological potential to this information would either be largely values with final compliance data were incorrect, or information would be also updated if that data was available. 69 82 FR 39551 (Aug. 21, 2017). 70 released that manufacturers would In a few cases, final production and fuel For example, in 2016 comments to dockets consider CBI. We seek comment on how EPA–HQ–OAR–2015–0827 and NHTSA–2016– economy values may be slightly 0068, the Alliance of Automobile Manufacturers to address this issue going forward, different for specific model year 2016 commented that ‘‘the Alliance supports the use of recognizing the competing interests vehicle models and configurations than the most recent data available in establishing the involved and also recognizing typical baseline fleet, and therefore believes that NHTSA’s are indicated in today’s analysis; selection [of, at the time, model year 2015] was timeframes for CAFE and CO2 standards however, other vehicle characteristics more appropriate for the Draft TAR.’’ (Alliance at rulemakings. (e.g., footprint, curb weight, technology 82, Docket ID. EPA–HQ–OAR–2015–0827–4089) content) important to the analysis Global Automakers commented that ‘‘a one-year (b) Use of MY 2016 CAFE Compliance difference constitutes a technology change-over for should be accurate. While some Data Versus Other Starting Points up to 20% of a manufacturer’s fleet. It was also commenters have, in the past, raised generally understood by industry and the agencies concerns that non-final CAFE that several new, and potentially significant, Based on the assumption that a technologies would be implemented in MY 2015. publicly-available analysis fleet compliance data is subject to change, The use of an older, outdated baseline can have continues to be desirable, for this significant impacts on the modeling of subsequent 68 NPRM, an analysis fleet was constructed CO2 emissions rates are directly related to fuel Reference Case and Control Case technologies.’’ economy levels, and the CAFE model uses the latter (Global Automakers at A–10, Docket ID. EPA–HQ– starting with CAFE compliance to calculate the former. OAR–2015–0827–4009).

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73 fuel economy rather than continuing to confidence into an analysis fleet for economy and reduce CO2 emissions. improve vehicle performance and modeling supporting deliberations With a portfolio of descriptive utility.71 Because manufacturers change regarding today’s proposal. technologies arranged by manufacturer and improve product offerings over In short, the 2016 fleet was, in fact, and model, the analysis fleet can be time, conducting analysis with an older the most up-to-date fleet that could be summarized and project how vehicles in analysis fleet (or with a fleet using fuel produced for this NPRM. Moreover, that fleet may improve over time via the economy levels and CO emissions rates 2 during late 2016 and early 2017, nearly application of additional technology. that have been adjusted to reflect an all manufacturers provided comments In many cases, vehicle technology is assumed return to levels of performance clearly observable from the 2016 on the characterization of their vehicles and utility typical of some past model compliance data (e.g., compliance data in the analysis fleet, and many provided year) would miss this real-world trend. indicates clearly which vehicles have specific feedback about their vehicles, While such an analysis could turbochargers and which have including aerodynamic drag demonstrate what industry could do if, continuously variable transmissions), coefficients, tire rolling resistance for example, manufacturers devoted all but in some cases technology levels are technological improvements toward values, transmission efficiencies, and less observable. For the latter, like levels other information used in the analysis. raising fuel economy and reducing CO2 of mass reduction, the analysis emissions (and if consumers decided to NHTSA worked with manufacturers to categorized levels of technology already purchase these vehicles), we do not clarify and correct some information used in a given vehicle. Similarly, believe it would be consistent with a and integrated the information into a engineering judgment was used to transparent examination of what effects single input file for use in the CAFE determine if higher mass reduction different levels of standards would have model. Accordingly, the current levels may be used practicably and on individual manufacturers and the analysis fleet is reasonable to use for safely in a given vehicle. fleet as a whole. purposes of the NPRM analysis. Either in mid-year compliance data Generally, all else being equal, using As always, however, ways to improve for MY 2016 or, separately and at the a newer analysis fleet will produce more the analysis fleet used for subsequent agencies’ invitation (as discussed realistic estimates of impacts of modeling to evaluate potential new above), most manufacturers identified potential new standards than using an CAFE and CO standards will undergo most of the technology already present outdated analysis fleet. However, among 2 continuous consideration. As described in each of their MY 2016 vehicle model/ relatively current options, a balance above, the compliance data is only the configurations. This information was must be struck between, on one hand, starting point for developing the not as complete for all manufacturers’ inputs’ freshness, and on the other, products as needed for today’s analysis, 72 analysis fleet; much additional inputs’ completeness and accuracy. so in some cases, information was During assembly of the inputs for information comes directly from manufacturers (such as details about supplemented with publicly available today’s analysis, final compliance data data, typically from manufacturer media was available for the MY 2015 model technologies, platforms, engines, transmissions, and other vehicle sites. In limited cases, manufacturers year but not in a few cases for MY 2016. did not supply information, and However, between mid-year compliance information, that may not be present in compliance data), and other information information from commercial and information and manufacturers’ specific publicly available sources was used. updates discussed above, a robust and must come from commercial and public detailed characterization of the MY sources (for example, fleet-wide (d) Mapping Technology Content of 2016 fleet was developed. However, information like market share, because 2016 Fleet to Argonne Technology while information continued to develop individual manufacturers do not Effectiveness Simulation Work provide this kind of information). If regarding the MY 2017 and, to a lesser While each vehicle model/ newer compliance data (i.e., MY 2017) extent MY 2018 and even MY 2019 configuration in the analysis fleet has its becomes available and can be analyzed fleets, this information was—even in list of observed technologies and mid-2017—too incomplete and during the pendency of this rulemaking, equipment, the ways in which inconsistent to be assembled with and if all of the other necessary steps manufacturers apply technologies and can be performed, the analysis fleet will 71 equipment do not always coincide For example, in 2016 comments to dockets be updated, as feasible, and made perfectly with how the analysis EPA–HQ–OAR–2015–0827 and NHTSA–2016– publicly available. The agencies seek 0068, UCS stated ‘‘in modeling technology characterizes the various technologies effectiveness and use, the agencies should use 2010 comment on the option used today and that improve fuel economy and reduce levels of performance as the baseline.’’ (UCS at 4, any other options, as well as on the CO2 emissions. To improve how the Docket ID. EPA–HQ–OAR–2015–0827–4016). tradeoffs between, on one hand, fidelity 72 Comments provided through a recent peer observed vehicle fleet ‘‘fits into’’ the review of the CAFE model recognize the need for with manufacturers’ actual plans and, analysis, each vehicle model/ this balance. For example, referring to NHTSA’s on the other, the ability to make detailed configuration is ‘‘mapped’’ to the full- 2016 analysis documented in the draft TAR, one of analysis inputs and outputs publicly the peer reviewers commented as follows: ‘‘The available. NHTSA decision to use MY 2015 data is wise. In 73 These technologies are generally grouped into the TAR they point out that a MY 2016 foundation (c) Observed Technology Content of the following categories: Vehicle technologies would require the use of confidential data, which include mass reduction, aerodynamic drag is less desirable. Clearly they would also have a 2016 Fleet reduction, low rolling resistance tires, and others. qualitative vision of the MY 2016 landscape while Engine technologies include engine attributes employing MY 2015 as a foundation. Although MY As explained above, the analysis fleet describing fuel type, engine aspiration, valvetrain 2015 data may still be subject to minor revision, is defined not only by the vehicle configuration, compression ratio, number of this is unlikely to impact the predictive ability of models/configurations it contains but cylinders, size of displacement, and others. the model . . . A more complex alternative Transmission technologies include different approach might be to employ some 2016 changes also by the technologies on those transmission arrangements like manual, 6-speed in technology, and attempt a blend of MY 2015 and vehicles. Each vehicle model/ automatic, 8-speed automatic, continuously MY 2016, while relying of estimation gained from configuration in the analysis fleet has an variable transmission, and dual-clutch only MY 2015 for sales. This approach may add associated list of observed technologies transmissions. Hybrid and electric powertrains may some relevancy in terms of technology, but might complement traditional engine and transmission introduce substantial error in terms of sales.’’ and equipment that can improve fuel designs or replace them entirely.

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vehicle simulation modeling 74 by Instead, Argonne simulated 10 different observed technologies and equipment Argonne National Laboratory that is vehicle types, corresponding to the on that vehicle.75 This mapping to a used to estimate the effectiveness of the ‘‘technology classes’’ generally used in specific simulation result most closely fuel economy-improving/CO2 CAFE analysis over the past several representing a given vehicle model/ emissions-reducing technologies rulemakings (e.g., small car, small configuration’s initial technology considered. Argonne produces full- performance car, pickup truck, etc.). ‘‘state’’ enables the CAFE model to vehicle simulation modeling for many Each of those 10 different vehicle types estimate the same vehicle model/ combinations of technologies, on many was assigned a set of ‘‘baseline configuration’s fuel economy after types of vehicles, but it did not simulate characteristics,’’ to which Argonne application of some other combination literally every single vehicle model/ added combinations of fuel-saving of technologies, leading to an alternative configuration in the analysis fleet technologies and then ran simulations technology state. because it would be impractical to to determine the fuel economy achieved BILLING CODE 4910–59–P assemble the requisite detailed when applying each combination of information—much of which would technologies to that vehicle type given 75 Mapping vehicle model/configurations in the likely only be provided on a its baseline characteristics. These analysis fleet to Argonne simulations was generally confidential basis—specific to each inputs, discussed at greater length in straightforward, but occasionally the mapping was vehicle model/configuration and Sections II.D and II.G, provide the basis complicated by factors like a vehicle model/ because the scale of the simulation for the CAFE model’s estimation of fuel configuration being a great match for simulations within more than one technology class (in which effort would correspondingly increase economy levels and CO2 emission rates. case, the model/configuration was assigned to the by at least two orders of magnitude. In the analysis fleet, inputs assign technology class that it best matched), or when each specific vehicle model/ technologies on the model/configuration were 74 Full-vehicle simulation modeling uses software configuration to a technology class, and difficult to observe directly (like friction reduction and physics models to compute and estimate energy once there, map to the simulation or parasitic loss characteristics of a transmission, in use of a vehicle during explicit driving conditions. which case the agencies relied on manufacturer- Section II.D below contains more information on within that technology class most reported data or CBI to help map the vehicle to a the Argonne work for this analysis. closely matching the combination of simulation).

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BILLING CODE 4910–59–C may appear on many vehicles on a families to retain reasonable powertrain (e) Shared Vehicle Platforms, Engines, platform, and changes to that engine complexity.82 and Transmissions may or may not carry through to all the Like with engines, manufacturers vehicles. Some engines are shared often use transmissions that are the Another aspect of characterizing same or similar on multiple vehicles.83 vehicle model/configurations in the across a range of different vehicle To reflect this reality, shared analysis fleet is based on whether they platforms. Vehicle model/configurations transmissions were considered for share a ‘‘platform’’ with other vehicle in the analysis fleet that share engines manufacturers as appropriate. To define model/configurations. A ‘‘platform’’ belonging to the same platform are also refers to engineered underpinnings identified as such. common transmissions, the agencies shared on several differentiated It is important to note that considered transmission type (manual, products. Manufacturers share and manufacturers define common engines automatic, dual-clutch, continuously standardize components, systems, differently. Some manufacturers variable), number of gears, and vehicle tooling, and assembly processes within consider engines as ‘‘common’’ if the architecture (front-wheel-drive, rear- their products (and occasionally with engines shared an architecture, wheel-drive, all-wheel-drive based on a the products of another manufacturer) to components, or manufacturing front-wheel-drive platform, or all-wheel- cost-effectively maintain vibrant processes. Other manufacturers take a drive based on a rear-wheel-drive portfolios.76 narrower definition, and only assume platform). If vehicles shared these Vehicle model/configurations derived ‘‘common’’ engines if the parts in the attributes, these transmissions were from the same platform are so identified engine assembly are the same. In some grouped for the analysis. Vehicles in the in the analysis fleet. Many analysis fleet with the same cases, manufacturers designate each 84 manufacturers’ use of vehicle platforms engine in each application as a unique transmission configuration will adopt is well documented in the public record 79 transmission technology together, as powertrain. Engine families for each 85 and widely recognized among the manufacturer were tabulated and described above. vehicle engineering community. assigned 80 based on data-driven Having all vehicles that share a Engineering knowledge, information criteria. If engines shared a common platform (or engines that are part of a from trade publications, and feedback cylinder count and configuration, family) adopt fuel economy-improving/ from manufacturers and suppliers was displacement, valvetrain, and fuel type, CO2 emissions-reducing technologies also used to assign vehicle platforms in those engines may have been considered together, subject to refresh/redesign the analysis fleet. together. Additionally, if the constraints, reflects the real-world When the CAFE model is deciding compression ratio, horsepower, and considerations described above but also where and how to add technology to displacement of engines were only overlooks some decisions manufacturers vehicles, if one vehicle on the platform slightly different, those engines were might make in the real world in receives new technology, other vehicles considered to be the same for the response to market pull, meaning that on the platform also receive the purposes of redesign and sharing. even though the analysis fleet is technology as part of their next major Vehicles in the analysis fleet with the incredibly complex, it is also over- 77 redesign or refresh. Similar to vehicle same engine family will therefore adopt simplified in some respects compared to platforms, manufacturers create engines engine technology in a coordinated the real world. For example, the CAFE 78 that share parts. One engine family fashion.81 By grouping engines together, model does not currently attempt to the CAFE model controls future engine simulate the potential for a 76 The concept of platform sharing has evolved manufacturer to shift the application of with time. Years ago, manufacturers rebadged technologies to improve performance vehicles and offered luxury options only on out common engine block castings with different premium nameplates (and manufacturers shared diameters to create engines with an array of rather than fuel economy. Therefore, the some vehicle platforms in limited cases). Today, displacements. Head assemblies for different model’s representation of the manufacturers share parts across highly displacement engines may share many components ‘‘inheritance’’ of technology can lead to differentiated vehicles with different body styles, and manufacturing processes across the engine estimates a manufacturer might sizes, and capabilities that may share the same family. Manufacturers may finish crankshafts with platform. For instance, the Honda Civic and Honda the same tools, to similar tolerances. Engines on the eventually exceed fuel economy CR–V share many parts and are built on the same same architecture may share pistons, connecting platform. Engineers design chassis platforms with rods, and the same engine architecture may include 82 This does mean, however, that for the ability to vary wheelbase, ride height, and even both six and eight cylinder engines. manufacturers that submitted highly atomized driveline configuration. Assembly lines can 79 For instance, a manufacturer may have listed engine and transmission portfolios, there is a produce hatchbacks and sedans to cost-effectively two engines for a pair that share designs for the practical cap on powertrain complexity and the utilize manufacturing capacity and respond to shifts engine block, the crank shaft, and the head because ability of the manufacturer to optimize the in market demand. Engines made on the same line the accessory drive components, oil pans, and displacement of (a.k.a. ‘‘right size’’) engines may power small cars or mid-size sport utility engine calibrations differ between the two. In perfectly for each vehicle configuration. vehicles. Additionally, although the agencies’ practice, many engines share parts, tooling, and 83 Manufacturers may produce transmissions that analysis, like past CAFE analyses, considers assembly resources, and manufacturers often have nominally different machining to castings, or vehicles produced for sale in the U.S., the agency coordinate design updates between two similar manufacturers may produce transmissions that are notes these platforms are not constrained to vehicle engines. internally identical, except for final output gear models built for sale in the United States; many 80 Engine family is referred to in the analysis as ratio. In some cases, manufacturers sub-contract manufacturers have developed, and use, global an ‘‘engine code.’’ with suppliers that deliver whole transmissions. In platforms, and the total number of platforms is 81 Specifically, if such vehicles have different other cases, manufacturers form joint-ventures to decreasing across the industry. Several automakers design schedules (i.e., refresh and redesign develop shared transmissions, and these (for example, General Motors and Ford) either plan schedules), and a subset of vehicles using a given transmission platforms may be offered in many to, or already have, reduced their number of engine add engine technologies in the course of a vehicles across manufacturers. Manufacturers use platforms to less than 10 and account for the redesign or refresh that occurs in an early model supplier and joint-venture transmissions to a greater overwhelming majority of their production volumes year (e.g., 2018), other vehicles using the same extent than engines. on that small number of platforms. engine ‘‘inherit’’ these technologies at the soonest 84 Transmission configurations are referred to in 77 The CAFE model assigns mass reduction ensuing refresh or redesign. This is consistent with the analysis as ‘‘transmission codes.’’ technology at a platform level, but many other a view that, over time, most manufacturers are 85 Similar to the inheritance approach outlined technologies may be assigned and shared at a likely to find it more practicable to shift production for engines, if one vehicle application of a shared vehicle nameplate or vehicle model level. to a new version of an engine than to indefinitely transmission family upgraded the transmission, 78 For instance, manufacturers may use different continue production of both the new engine and a other vehicle applications also upgraded the piston strokes on a common engine block or bore ‘‘legacy’’ engine. transmission at the next refresh or redesign year.

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standards as technology continues to In addition to refresh and redesign cycles (e.g., four to five years), and this propagate across shared platforms and schedules associated with vehicle approach was considered for the engines. In the past, there were some model/configurations, vehicles that analysis.87 Some manufacturers tend to examples of extended periods during share a platform subsequently have operate with faster redesign cycles and which some manufacturers exceeded platform-wide refresh and redesign may continue to do so, and one or both of the CAFE and/or GHG schedules for mass reduction manufacturers tend to redesign some standards, but in plenty of other technologies. products more frequently than others. examples, manufacturers chose to To develop the refresh/redesign However, especially considering that introduce (or even reintroduce) cycles used for the MY 2016 vehicles in information presented by manufacturers technological complexity into their the analysis fleet, information from largely supports estimates discussed vehicle lineups in response to buyer commercially available sources was above, applying a ‘‘one size fits all’’ preferences. Going forward, and used to project redesign cycles through acceleration of redesign cycles would recognizing the recent trend for MY 2022, as for NHTSA’s analysis for likely not improve the analysis; instead, consolidating platforms, it seems likely the Draft TAR published in 2016.86 doing so would likely reduce manufacturers will be more likely to Commercially available sources’ consistency with the real world, choose efficiency over complexity in estimates through MY 2022 are especially for light trucks. Moreover, if this regard; therefore, the potential generally supported by detailed some manufacturers accelerate should be lower that today’s analysis consideration of public announcements redesigns in response to new standards, turns out to be over-simplified plus related intelligence from suppliers doing so would likely involve costs compared to the real world. and other sources, and recognize that (greater levels of stranded capital, Options will be considered to further uncertainty increases considerably as reduced opportunity to benefit from refine the representation of sharing and the forecasting horizon is extended. For ‘‘learning’’-related cost reductions) inheritance of technology, possibly MYs 2023–2035, in recognition of that greater than reflected in other inputs to including model revisions to account for uncertainty, redesign schedules were the analysis. However, a wider range of tradeoffs between fuel economy and extended considering past pacing for technologies can practicably be applied performance when applying technology. each product, estimated schedules during mid-cycle ‘‘freshenings’’ than Please provide comments on the sharing through MY 2022, and schedules for has been represented by past analyses, and inheritance-related aspects of the other products in the same technology and this part of the analysis has been analysis fleet and the CAFE model along classes. As mentioned above, potentially expanded, as discussed below in with information that would support confidential forward-looking Section II.D.88 Also, in the sensitivity refinement of the current approach or information was not requested from analysis supporting today’s proposal development and implementation of manufacturers; nevertheless, all and presented in Chapter 13 of the alternative approaches. manufacturers had an opportunity to PRIA, one case involving faster redesign review the estimates of product-specific schedules and one involving slower (f) Estimated Product Design Cycles redesign schedules, a few manufacturers redesign schedules has been analyzed. provided related forecasts and, for the Another aspect of characterizing Manufacturers use diverse strategies most part, that information corroborated vehicle model/configurations in the with respect to when, and how often analysis fleet is based on when they can the estimates. Some commenters suggested they update vehicle designs. While most next be refreshed or redesigned. vehicles have been redesigned sometime Redesign schedules play an important supplanting these estimated redesign schedules with estimates applying faster in the last five years, many vehicles role in determining when new have not. In particular, vehicles with technologies may be applied. Many 86 In some cases, data from commercially lower annual sales volumes tend to be technologies that improve fuel economy available sources was found to be incomplete or redesigned less frequently, perhaps and reduce CO2 emissions may be inconsistent with other available information. For giving manufacturers more time to difficult to incorporate without a major instance, commercially available sources identified amortize the investment needed to bring product redesign. Therefore, each some newly imported vehicles as new platforms, but the international platform was midway through the product to market. In some cases, vehicle model in the analysis fleet has the product lifecycle. While new to the U.S. market, manufacturers continue to produce and an associated redesign schedule, and the treating these vehicles as new entrants would have sell vehicles designed more than a CAFE model uses that schedule to resulted in artificially short redesign cycles if decade ago. restrict significant advances in some carried forward, in some cases. Similarly, commercially available sources labeled some technologies (like major mass reduction) product refreshes as redesigns, and vice versa. In 87 In response to the EPA’s August 21, 2017, to redesign years, while allowing these limited cases, the data was revised to be Request for Comments (docket numbers EPA–HQ– manufacturers to include minor consistent with other available information or OAR–2015–0827 and NHTSA–2016–0068), see, e.g., advances (such as improved tire rolling typical redesign and refresh schedules, for the CARB at 28 (Docket ID. EPA–HQ–OAR–2015–0827– purpose of the CAFE modeling. In these limited 9197), EDF at 12 (Docket ID. EPA–HQ–OAR–2015– resistance) during a vehicle ‘‘refresh,’’ or cases, the forecast time between redesigns and 0827–9203), and NRDC, et. al. at 29–33 (Docket ID. a smaller update made to a vehicle, refreshes was updated to match the observed past EPA–HQ–OAR–2015–0827–9826). which can happen between redesigns. product timing. 88 NRDC, et al., at 32.

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BILLING CODE 4910–59–P refresh and redesign cycles. Table II–3 vehicle technology class in the MY 2016 Each manufacturer may use different below summarizes the average time analysis fleet. Across the industry, strategies throughout their product between redesigns, by manufacturer, by manufacturers average 6.5 years portfolio, and a component of each vehicle technology class.89 Dashes mean between product redesigns. strategy may include the timing of the manufacturer has no volume in that

89 Technology class, or tech class, refers to a vehicles. As explained, each vehicle is assigned to a representative simulation to estimate technology group of fuel-economy simulations of similar effectiveness for purposes of the analysis.

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There are a few notable observations industry, light-duty vehicle designs last technology class. A value of ‘‘0.0’’ from this table. Pick-up trucks have for about 6.5 years. means that every vehicle for a much longer redesign schedules (7.8 Even if two manufacturers have manufacturer in that vehicle technology years on average) than small cars (5.5 similar redesign cadence, the model class, represented in the MY 2016 years on average). Some manufacturers years in which the redesigns occur may analysis fleet was new in MY 2016. redesign vehicles often (every 5.2 years still be different and dependent on Across the industry, manufacturers in the case of Hyundai), while other where each of the manufacturer’s redesigned MY 2016 vehicles an average manufacturers redesign vehicles less products are in their life cycle. of 3.2 years earlier. often (FCA waits on average 8.6 years Table II–4 summarizes the average age between vehicle redesigns). Across the of manufacturers’ offering by vehicle

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BILLING CODE 4910–59–C vehicle emissions. EPCA, as amended methodologies used to develop current Based on historical observations and by EISA, expressly requires that CAFE attribute-based standards, and the refresh/redesign schedule forecasts, standards for passenger cars and light agencies’ current proposal to continue careful consideration to redesign cycles trucks be based on one or more vehicle to do so for MYs 2022–2026. Section for each manufacturer and each vehicle attributes related to fuel economy and II.C.5 discusses the methodologies used is important. Simply assuming every be expressed in the form of a to reconsider the mathematical function vehicle is redesigned by 2021 and by mathematical function.90 While the for the proposed standards. 2025 is not appropriate, as this would CAA includes no specific requirements misrepresent both the likely timing of regarding GHG regulation, EPA has 1. Why attribute-based standards, and redesigns and the likely time between chosen to adopt standards consistent what are the benefits? redesigns in most cases. with the EPCA/EISA requirements in the interest of simplifying compliance Under attribute-based standards, C. Development of Footprint-Based 91 every vehicle model has fuel economy Curve Shapes for the industry since 2010. Section II.C.1 describes the advantages of and CO2 targets, the levels of which As in the past four CAFE rulemakings, attribute standards, generally. Section depend on the level of that vehicle’s the most recent two of which included II.C.2 explains the agencies’ specific determining attribute (for this proposed related standards for CO2 emissions, decision to use vehicle footprint as the rule, footprint is the determining NHTSA and EPA are proposing to set attribute over which to vary stringency attribute, as discussed below). The attribute-based CAFE standards that are for past and current rules. Section II.C.3 manufacturer’s fleet average defined by a mathematical function of discusses the policy considerations in performance is calculated by the vehicle footprint, which has observable selecting the specific mathematical harmonic production-weighted average correlation with fuel economy and function. Section II.C.4 discusses the of those targets, as defined below:

90 49 U.S.C. 32902(a)(3)(A). 91 Such an approach is permissible under section based approach in issuing standards under 202(a) of the CAA, and EPA has used the attribute- analogous provisions of the CAA.

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Here, i represents a given model 92 in vehicle model has its own target 2. Why footprint as the attribute? a manufacturer’s fleet, Productioni (determined by a size-related attribute), It is important that the CAFE and CO2 represents the U.S. production of that properly fitted attribute-based standards standards be set in a way that does not model, and Targeti represents the target provide little, if any, incentive to build encourage manufacturers to respond by as defined by the attribute-based smaller vehicles simply to meet a fleet- selling vehicles that are less safe. standards. This means no vehicle is wide average, because smaller vehicles Vehicle size is highly correlated with required to meet its target; instead, are subject to more stringent compliance vehicle safety—for this reason, it is manufacturers are free to balance targets. important to choose an attribute improvements however they deem best correlated with vehicle size (mass or within (and, given credit transfers, at Second, attribute-based standards, if properly fitted, better respect some dimensional measure). Given this least partially across) their fleets. consideration, there are several policy The idea is to select the shape of the heterogeneous consumer preferences and technical reasons why footprint is mathematical function relating the than do single-valued standards. As considered to be the most appropriate standard to the fuel economy-related discussed above, a single-valued attribute upon which to base the attribute to reflect the trade-offs standard encourages a fleet mix with a standards, even though other vehicle manufacturers face in producing more larger share of smaller vehicles by of that attribute over fuel efficiency (due creating incentives for manufacturers to size attributes (notably, curb weight) are to technological limits of production use downsizing the average vehicle in more strongly correlated with fuel economy and emissions. and relative demand of each attribute). their fleet (possibly through fleet First, mass is strongly correlated with If the shape captures these trade-offs, mixing) as a compliance strategy, which fuel economy; it takes a certain amount every manufacturer is more likely to may result in manufacturers building of energy to move a certain amount of continue adding fuel efficient vehicles for compliance reasons that mass. Footprint has some positive technology across the distribution of the consumers do not want. Under a size- attribute within their fleet, instead of correlation with frontal surface area, related, attribute-based standard, likely a negative correlation with potentially changing the attribute—and reducing the size of the vehicle is a less other correlated attributes, including aerodynamics, and therefore fuel viable compliance strategy because economy, but the relationship is less fuel economy—as a part of their smaller vehicles have more stringent compliance strategy. Attribute-based deterministic. Mass and crush space regulatory targets. As a result, the fleet (correlated with footprint) are both standards that achieve this have several mix under such standards is more likely advantages. important safety considerations. As First, assuming the attribute is a to reflect aggregate consumer demand discussed below and in the measurement of vehicle size, attribute- for the size-related attribute used to accompanying PRIA, NHTSA’s research based standards reduce the incentive for determine vehicle targets. of historical crash data indicates that manufacturers to respond to CAFE Third, attribute-based standards holding footprint constant, and standards by reducing vehicle size in provide a more equitable regulatory decreasing the mass of the largest ways harmful to safety.93 Larger framework across heterogeneous vehicles, will have a net positive safety vehicles, in terms of mass and/or crush manufacturers who may each produce impact to drivers overall, while holding space, generally consume more fuel, but different shares of vehicles along footprint constant and decreasing the are also generally better able to protect attributes correlated with fuel mass of the smallest vehicles will have occupants in a crash.94 Because each economy.95 A single, industry-wide a net decrease in fleetwide safety. Properly fitted footprint-based standards CAFE standard imposes 92 provide little, if any, incentive to build If a model has more than one footprint variant, disproportionate cost burden and here each of those variants is treated as a unique smaller vehicles to meet CAFE and CO compliance challenges on 2 model, i, since each footprint variant will have a standards, and therefore help minimize unique target. manufacturers who produce more the impact of standards on overall fleet 93 The 2002 NAS Report described at length and vehicles with attributes inherently safety. quantified the potential safety problem with average correlated with lower fuel economy— fuel economy standards that specify a single Second, it is important that the numerical requirement for the entire industry. See i.e. manufacturers who produce, on attribute not be easily manipulated in a Transportation Research Board and National average, larger vehicles. As discussed manner that does not achieve the goals Research Council. 2002. Effectiveness and Impact of above, retaining the ability for Corporate Average Fuel Economy (CAFE) of EPCA or other goals, such as safety. Standards, Washington, DC: The National manufacturers to produce vehicles Although weight is more strongly Academies Press (‘‘2002 NAS Report’’) at 5, finding which respect heterogeneous market correlated with fuel economy than 12, available at https://www.nap.edu/catalog/ preferences is an important footprint, there is less risk of 10172/effectiveness-and-impact-of-corporate- consideration. Since manufacturers may average-fuel-economy-cafe-standards (last accessed manipulation (changing the attribute(s) June 15, 2018). Ensuing analyses, including by target different markets as a part of their to achieve a more favorable target) by NHTSA, support the fundamental conclusion that business strategy, ensuring that these increasing footprint under footprint- standards structured to minimize incentives to manufacturers do not incur a downsize all but the largest vehicles will tend to based standards than there would be by produce better safety outcomes than flat standards. disproportionate share of the regulatory increasing vehicle mass under weight- 94 Bento, A., Gillingham, K., & Roth, K. (2017). cost burden is an important part of based standards. It is relatively easy for The Effect of Fuel Economy Standards on Vehicle conserving consumer choices within the a manufacturer to add enough weight to Weight Dispersion and Accident Fatalities. NBER market. Working Paper No. 23340. Available at http:// a vehicle to decrease its applicable fuel www.nber.org/papers/w23340 (last accessed June economy target a significant amount, as 15, 2018). 95 2002 NAS Report at 4–5, finding 10. compared to increasing vehicle

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footprint, which is a much more nature of the function. The CAA • Given the same industry-wide complicated change that typically takes provides no specific direction regarding average required fuel economy or CO2 place only with a vehicle redesign. CO2 regulation, and EPA has continued standard, dramatically steeper standards Further, some commenters on the MY to harmonize this aspect of its CO2 tend to place greater compliance 2011 CAFE rulemaking were concerned regulations with NHTSA’s CAFE burdens on limited-line manufacturers that there would be greater potential for regulations. The relationship between (depending of course, on which vehicles gaming under multi-attribute standards, fuel economy (and GHG emissions) and are being produced). such as those that also depend on footprint, though directionally clear • If cutpoints are adopted, given the weight, torque, power, towing (i.e., fuel economy tends to decrease and same industry-wide average required capability, and/or off-road capability. As CO2 emissions tend to increase with fuel economy, moving small-vehicle discussed in NHTSA’s MY 2011 CAFE increasing footprint), is theoretically cutpoints to the left (i.e., up in terms of 96 final rule, it is anticipated that the vague, and quantitatively uncertain; in fuel economy, down in terms of CO2 possibility of gaming is lowest with other words, not so precise as to a priori emissions) discourages the introduction footprint-based standards, as opposed to yield only a single possible curve. of small vehicles, and reduces the weight-based or multi-attribute-based The decision of how to specify this incentive to downsize small vehicles in standards. Specifically, standards that mathematical function therefore reflects ways that could compromise overall incorporate weight, torque, power, some amount of judgment. The function highway safety. towing capability, and/or off-road can be specified with a view toward • If cutpoints are adopted, given the capability in addition to footprint would achieving different environmental and same industry-wide average required not only be more complex, but by petroleum reduction goals, encouraging fuel economy, moving large-vehicle providing degrees of freedom with different levels of application of fuel- cutpoints to the right (i.e., down in respect to more easily-adjusted saving technologies, avoiding any terms of fuel economy, up in terms of attributes, they could make it less adverse effects on overall highway CO emissions) better accommodates the certain that the future fleet would 2 safety, reducing disparities of design requirements of larger vehicles actually achieve the projected average manufacturers’ compliance burdens, — especially large pickups — and fuel economy and CO levels. This is 2 and preserving consumer choice, among extends the size range over which not to say that a footprint-based system other aims. The following are among the downsizing is discouraged. will eliminate gaming, or that a specific technical concerns and footprint-based system will eliminate resultant policy tradeoffs the agencies 4. What mathematical functions have the possibility that manufacturers will have considered in selecting the details been used previously, and why? change vehicles in ways that of specific past and future curve shapes: compromise occupant protection, but Notwithstanding the aforementioned • Flatter standards (i.e., curves) footprint-based standards achieve the discretion under EPCA/EISA, data increase the risk that both the size of best balance among affected should inform consideration of potential vehicles will be reduced, potentially considerations. Please provide mathematical functions, but how comments on whether vehicular compromising highway safety, and relevant data is defined and interpreted, footprint is the most suitable attribute reducing any utility consumers would and the choice of methodology for upon which to base standards. have gained from a larger vehicle. fitting a curve to that data, can and • Steeper footprint-based standards should include some consideration of 3. What mathematical function should may create incentives to upsize specific policy goals. This section be used to specify footprint-based vehicles, potentially oversupplying summarizes the methodologies and standards? vehicles of certain footprints beyond policy concerns that were considered in In requiring NHTSA to ‘‘prescribe by what consumers would naturally developing previous target curves (for a regulation separate average fuel demand, and thus increasing the complete discussion see the 2012 FRIA). economy standards for passenger and possibility that fuel savings and CO2 As discussed below, the MY 2011 non-passenger automobiles based on 1 reduction benefits will be forfeited final curves followed a constrained or more vehicle attributes related to fuel artificially. logistic function defined specifically in economy and express each standard in • Given the same industry-wide the final rule.97 The MYs 2012–2021 the form of a mathematical function’’, average required fuel economy or CO2 final standards and the MYs 2022–2025 EPCA/EISA provides ample discretion standard, flatter standards tend to place augural standards are defined by regarding not only the selection of the greater compliance burdens on full-line constrained linear target functions of attribute(s), but also regarding the manufacturers. footprint, as shown below: 98

Here, Target is the fuel economy upper asymptote, a, and the lower lower and upper asymptotes, target applicable to vehicles of a given asymptote, b, are specified in mpg; the respectively, when the curve is instead footprint in square feet (Footprint). The reciprocal of these values represent the specified in gallons per mile (gpm). The

96 See 74 FR at 14359 (Mar. 30, 2009). 98 The right cutpoint for the light truck curve was for light trucks for MYs 2017–2021 is the maximum 97 See 74 FR 14196, 14363–14370 (Mar. 30, 2009) moved further to the right for MYs 2017–2021, so of the MY 2016 target curves and the target curves for NHTSA discussion of curve fitting in the MY that more possible footprints would fall on the for the give MY standard. This is defined further in sloped part of the curve. In order to ensure that, for 2011 CAFE final rule. the 2012 final rule. See 77 FR 62624, at 62699–700 all possible footprints, future standards would be at (Oct. 15, 2012). least as high as MY 2016 levels, the final standards

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slope, c, and the intercept, d, of the functions defining the standards. as percentage improvements over a linear portion of the curve are specified NHTSA then identified footprints at previous MY target curve. as gpm per change in square feet, and which to apply minimum and (c) MYs 2017 and Beyond Standards gpm, respectively. maximum values (rather than letting the (Constrained Linear) The min and max functions will take standards extend without limit) and the minimum and maximum values transposed these functions vertically The mathematical functions finalized within their associated parentheses. (i.e., on a gallons-per-mile basis, in 2012 for MYs 2017 and beyond Thus, the max function will first find uniformly downward) to produce the changed somewhat from the functions the maximum of the fitted line at a promulgated standards. In the preceding for the MYs 2012–2016 standards. These given footprint value and the lower rule, for MYs 2008–2011 light truck changes were made to both address asymptote from the perspective of gpm. standards, NHTSA examined a range of comments from stakeholders, and to If the fitted line is below the lower potential functional forms, and further consider some of the technical asymptote it is replaced with the floor, concluded that, compared to other concerns and policy goals judged more which is also the minimum of the floor considered forms, the constrained preeminent under the increased and the ceiling by definition, so that the logistic form provided the expected and uncertainty of the impacts of finalizing target in mpg space will be the appropriate trend (decreasing fuel and proposing standards for model 103 reciprocal of the floor in mpg space, or economy as footprint increases), but years further into the future. simply, a. If, however, the fitted line is avoided creating ‘‘kinks’’ the agency Recognizing the concerns raised by full- not below the lower asymptote, the was concerned would provide line OEMs, it was concluded that fitted value is returned from the max distortionary incentives for vehicles continuing increases in the stringency of function and the min function takes the with neighboring footprints.100 the light truck standards would be more minimum value of the upper asymptote feasible if the light truck curve for MYs (in gpm space) and the fitted line. If the (b) MYs 2012–2016 Standards 2017 and beyond was made steeper than fitted value is below the upper (Constrained Linear) the MY 2016 truck curve and the right asymptote, it is between the two For the MYs 2012–2016 rule, (large footprint) cut-point was extended asymptotes and the fitted value is potential methods for specifying only gradually to larger footprints. To appropriately returned from the min mathematical functions to define fuel accommodate these considerations, the 2012 final rule finalized the slope fit to function, making the overall target in economy and CO2 standards were mpg the reciprocal of the fitted line in reevaluated. These methods were fit to the MY 2008 fleet using a sales- gpm. If the fitted value is above the the same MY 2008 data as the MY 2011 weighted, ordinary least-squares upper asymptote, the upper asymptote standard. Considering these further regression, using a fleet that had is returned is returned from the min specifications, the constrained logistic technology applied to make the function, and the overall target in mpg form, if applied to post-MY 2011 technology application across the fleet is the reciprocal of the upper asymptote standards, would likely contain a steep more uniform, and after adjusting the in gpm space, or b. mid-section that would provide undue data for the effects of weight-to- In this way curves specified as incentive to increase the footprint of footprint. Information from an updated constrained linear functions are midsize passenger cars.101 A range of MY 2010 fleet was also considered to specified by the following parameters: methods to fit the curves would have support this decision. As the curve was vertically shifted (with fuel economy a = upper limit (mpg) been reasonable, and a minimum specified as mpg instead of gpm or CO b = lower limit (mpg) absolute deviation (MAD) regression 2 emissions) upwards, the right cutpoint c = slope (gpm per sq. ft.) without sales weighting on a was progressively moved for the light d = intercept (gpm) technology-adjusted car and light truck truck curves with successive model The slope and intercept are specified fleet was used to fit a linear equation. years, reaching the final endpoint for as gpm per sq. ft. and gpm instead of This equation was used as a starting MY 2021; this is further discussed and mpg per sq. ft. and mpg because fuel point to develop mathematical functions shown in Chapter 4.3 of the PRIA. consumption and emissions appear defining the standards. Footprints were roughly linearly related to gallons per then identified at which to apply 5. Reconsidering the Mathematical mile (the reciprocal of the miles per minimum and maximum values (rather Functions for This Proposal gallon). than letting the standards extend (a) Why is it important to reconsider the (a) NHTSA in MY 2008 and MY 2011 without limit). Finally, these mathematical functions? CAFE (Constrained Logistic) constrained/piecewise linear functions were transposed vertically (i.e., on a By shifting the developed curves by a single factor, it is assumed that the For the MY 2011 CAFE rule, NHTSA gpm or CO2 basis, uniformly downward) estimated fuel economy levels by by multiplying the initial curve by a underlying relationship of fuel footprint from the MY 2008 fleet after single factor for each MY standard to consumption (in gallons per mile) to normalization for differences in produce the final attribute-based targets vehicle footprint does not change technology,99 but did not make for passenger cars and light trucks significantly from the model year data adjustments to reflect other vehicle described in the final rule.102 These used to fit the curves to the range of attributes (e.g., power-to-weight ratios). transformations are typically presented model years for which the shifted curve Starting with the technology-adjusted shape is applied to develop the passenger car and light truck fleets, 100 See 71 FR 17556, 17609–17613 (Apr. 6, 2006) standards. However, it must be NHTSA used minimum absolute for NHTSA discussion of ‘‘kinks’’ in the MYs 2008– recognized that the relationship deviation (MAD) regression without 2011 light truck CAFE final rule (there described as sales weighting to fit a logistic form as ‘‘edge effects’’). A ‘‘kink,’’ as used here, is a portion 103 The MYs 2012–2016 final standards were of the curve where a small change in footprint signed April 1st, 2010—putting 6.5 years between a starting point to develop mathematical results in a disproportionally large change in its signing and the last affected model year, while stringency. the MYs 2017–2021 final standards were signed 99 See 74 FR 14196, 14363–14370 (Mar. 30, 2009) 101 75 FR at 25362. August 28th, 2012—giving just more than nine for NHTSA discussion of curve fitting in the MY 102 See generally 74 FR at 49491–96; 75 FR at years between signing and the last affected final 2011 CAFE final rule. 25357–62. standards.

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between vehicle footprint and fuel conducted that do not require adjustments to the data to make the economy is not necessarily constant underlying engineering models of how fleets less technologically heterogeneous over time; newly developed fuel economy and footprint might be were performed. There were several technologies, changes in consumer expected to be related, and a separate adjustments to the data that were demand, and even the curves analysis that uses vehicle simulation common to all of the statistical analyses themselves could, if unduly susceptible results as the basis to estimate the considered. to gaming, influence the observed relationship from a perspective more With a view toward isolating the relationships between the two vehicle explicitly informed by engineering relationship between fuel economy and characteristics. For example, if certain theory was conducted as well. Despite footprint, the few diesels in the fleet technologies are more effective or more changes in the new vehicle fleet both in were excluded, as well as the limited marketable for certain types of vehicles, terms of technologies applied and in number of vehicles with partial or full their application may not be uniform market demand, the underlying electric propulsion; when the fleet is over the range of vehicle footprints. statistical relationship between footprint normalized so that technology is more Further, if market demand has shifted and fuel economy has not changed homogenous, application of these between vehicle types, so that certain significantly since the MY 2008 fleet technologies is not allowed. This is vehicles make up a larger share of the used for the 2012 final rule; therefore, consistent with the methodology used fleet, any underlying technological or it is proposed to continue to use the in the 2012 final rule. curve shapes fit in 2012. The analysis market restrictions which inform the The above adjustments were applied average shape of the curves could and reasoning supporting this decision follows. to all statistical analyses considered, change. That is, changes in the regardless of the specifics of each of the technology or market restrictions (b) What statistical analyses did NHTSA methods, weights, and technology level themselves, or a mere re-weighting of consider? of the data, used to view the different vehicles types, could reshape In considering how to address the relationship of vehicle footprint and the fit curves. various policy concerns discussed fuel economy. Table II–5, below, For the above reasons, the curve above, data from the MY 2016 fleet was summarizes the different assumptions shapes were reconsidered using the considered, and a number of descriptive considered and the key attributes of newest available data, from MY 2016. statistical analyses (i.e., involving each. The analysis was performed With a view toward corroboration observed fuel economy levels and considering all possible combinations of through different techniques, a range of footprints) using various statistical these assumptions, producing a total of descriptive statistical analyses were methods, weighting schemes, and eight footprint curves.

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(1) Current Technology Level Curves and fuel consumption. The results of all footprints; augmenting a largely updated analysis for maximum statistical analysis with an analysis that The ‘‘current technology’’ level curves technology level curves are also shown exclude diesels and vehicles with more explicitly incorporates engineering in Chapter 4.4.2.2 of the PRIA. electric propulsion, as discussed above, theory helps to corroborate that the Especially if vehicles progress over time but make no other changes to each relationship between fuel economy and toward more similar size-specific model year fleet. Comparing the MY footprint is in fact being characterized. efficiency, further removing variation in 2016 curves to ones built under the Tractive energy is the amount of technology application both better energy it will take to move a vehicle.104 same methodology from previous model isolates the relationship between fuel Here, tractive energy effectiveness is year fleets shows whether the observed consumption and footprint and further defined as the share of the energy curve shape has changed significantly supports the curve slopes finalized in content of fuel consumed which is over time as standards have become the 2012 final rule. more stringent. Importantly, these converted into mechanical energy and curves will include any market forces (c) What other methodologies were used to move a vehicle—for internal which make technology application considered? combustion engine (ICE) vehicles, this variable over the distribution of The methods discussed above are will vary with the relative efficiency of footprint. These market forces will not descriptive in nature, using statistical specific engines. Data from ANL be present in the ‘‘maximum analysis to relate observed fuel economy simulations suggest that the limits of technology’’ level curves: By making levels to observed footprints for known tractive energy effectiveness are technology levels homogenous, this vehicles. As such, these methods are approximately 25% for vehicles with variation is removed. The current clearly based on actual data, answering internal combustion engines which do technology level curves built using both the question ‘‘how does fuel economy not possess ISG, other hybrid, plug-in, regression types and both regression appear to be related to footprint?’’ pure electric, or fuel cell technology. weight methodologies from the MY However, being independent of explicit A tractive energy prediction model 2008, MY 2010, and MY 2016 fleets, engineering theory, they do not answer was also developed to support today’s shown in more detail in Chapter 4.4.2.1 the question ‘‘how might one expect proposal. Given a vehicle’s mass, frontal of the PRIA, support the curve slopes fuel economy to be related to footprint?’’ area, aerodynamic drag coefficient, and finalized in the 2012 final rule. The Therefore, as an alternative to the above rolling resistance as inputs, the model curves built from most methodologies methods, an alternative methodology will predict the amount of tractive using each fleet generally shift, but was also developed and applied that, energy required for the vehicle to remain very similar in slope. This using full-vehicle simulation, comes complete the Federal test cycle. This suggests that the relationship of closer to answer the second question, model was used to predict the tractive footprint to fuel economy, including providing a basis to either corroborate energy required for the average vehicle both technology and market limits, has answers to the first, or suggest that of a given footprint 105 and ‘‘body not significantly changed. further investigation could be technology package’’ to complete the (2) Maximum Technology Level Curves important. cycle. The body technology packages As discussed in the 2012 final rule, considered are defined in Table II–6, As in prior rulemakings, technology several manufacturers have below. Using the absolute tractive differences between vehicle models confidentially shared with the agencies were considered to be a significant what they described as ‘‘physics-based’’ energy predicted and tractive energy factor producing uncertainty regarding curves, with each OEM showing effectiveness values spanning possible the relationship between fuel significantly different shapes for the ICE engines, fuel economy values were consumption and footprint. Noting that footprint-fuel economy relationships. then estimated for different body attribute-based standards are intended This variation suggests that technology packages and engine tractive to encourage the application of manufacturers face different curves energy effectiveness values. additional technology to improve fuel given the other attributes of the vehicles 104 Thomas, J. ‘‘Drive Cycle Powertrain efficiency and reduce CO2 emissions in their fleets (i.e., performance Efficiencies and Trends Derived from EPA Vehicle across the distribution of footprint in characteristics) and/or that their curves Dynamometer Results,’’ SAE Int. J. Passeng. Cars— the fleet, approaches were considered in reflected different levels of technology Mech. Syst. 7(4):2014, doi:10.4271/2014–01–2562. which technology application is application. In reconsidering the shapes Available at https://www.sae.org/publications/ simulated for purposes of the curve of the proposed MYs 2021–2026 technical-papers/content/2014-01-2562/ (last accessed June 15, 2018). fitting analysis in order to produce fleets standards, a similar estimation of 105 The mass reduction curves used elsewhere in that are less varied in technology physics-based curves leveraging third- this analysis were used to predict the mass of a content. This approach helps reduce party simulation work form Argonne vehicle with a given footprint, body style box, and ‘‘noise’’ (i.e., dispersion) in the plot of National Laboratories (ANL) was mass reduction level. The ‘Body style Box’ is 1 for hatchbacks and minivans, 2 for pickups, and 3 for vehicle footprints and fuel consumption developed. Estimating physics-based sedans, and is an important predictor of levels and identify a more technology- curves better ensures that technology aerodynamic drag. Mass is an essential input in the neutral relationship between footprint and performance are held constant for tractive energy calculation.

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Chapter 6 of the PRIA shows the improve the fuel economy of new manufacturers occasionally use a resultant CAFE levels estimated for the vehicles, in both the near future and the technology in today’s new vehicle fleet vehicle classes ANL simulated for this timeframe of this proposed rulemaking, (like turbocharged engines). For a few analysis, at different footprint values to meet the fuel economy and CO2 technologies considered in the 2012 and by vehicle ‘‘box.’’ Pickups are standards proposed in this rulemaking. rulemaking, manufacturers began considered 1-box, hatchbacks and The analysis evaluated costs for these implementing the technologies but have minivans are 2-box, and sedans are 3- technologies, and looked at how these since largely pivoted to other box. These estimates are compared with costs may change over time. The technologies due to consumer the MY 2021 standards finalized in analysis also considered how fuel- acceptance issues (for instance, in some 2012. The general trend of the simulated saving technologies may be used on cases drivability and performance feel data points follows the pattern of the many types of vehicles (ranging from issues associated with dual clutch previous MY 2021 standards for all small cars to trucks) and how the transmissions without a torque technology packages and tractive energy technologies may perform in improving converter) or limited commercial effectiveness values presented in the fuel economy and CO2 emissions in success. The analysis utilizes new PRIA. The tractive energy curves are combination with other technologies. information as manufacturers’ use of intended to validate the curve shapes With cost and effectiveness estimates for technologies evolves. against a physics-based alternative, and technologies, the analysis can forecast Some of the emerging technologies the analysis suggests that the curve how manufacturers may respond to described in the Draft TAR were not shapes track the physical relationship potential standards and can estimate the included in this analysis, but this between fuel economy and tractive associated costs and benefits related to includes some additional technologies energy for different footprint values. technology and equipment changes. not previously considered. As industry Physical limitations are not the only This assists the assessment of invents and develops new fuel-savings forces manufacturers face; they must technological feasibility and is a technologies, and as suppliers and also produce vehicles that consumers building block for the consideration of manufacturers produce and apply the will purchase. For this reason, in setting economic practicability of potential technologies, and as consumers react to future standards, the analysis will standards. the new technologies, efforts are continue to consider information from NHTSA, EPA, and CARB issued the continued to learn more about the statistical analyses that do not Draft Technical Assessment Report capabilities and limitations of new homogenize technology applications in (Draft TAR) 106 as the first step in the technologies. While a technology is in addition to statistical analyses which EPA MTE process. The Draft TAR early development, theoretical do, as well as a tractive energy analysis provided an opportunity for the constructs, limited access to test data, similar to the one presented above. agencies to share with the public and CBI is relied on to assess the The relationship between fuel updated technical analysis relevant to technology. After manufacturers economy and footprint remains development of future standards. For commercialize the technology and bring directionally discernable but this NPRM, the analysis relies on products to market, the technology may quantitatively uncertain. Nevertheless, portions of the analysis presented in the be studied in more detail, which each standard must commit to only one Draft TAR, along with new information generally leads to the most reliable function. Approaching the question that has been gathered and developed information about the technology. In ‘‘how is fuel economy related to since conducting that analysis, and the addition, once in production, the footprint’’ from different directions and significant, substantive input that was technology is represented in the fuel applying different approaches will received during the public comment economy and CO2 status of the baseline provide the greatest confidence that the period. fleet. The technology analysis is kept as single function defining any given The Draft TAR considered many current as possible in light of the technologies previously assessed in the ongoing technology development and standard appropriately and reasonably 107 reflects the relationship between fuel 2012 final rule. In some cases, implementation in the automotive economy and footprint. Please provide manufacturers have nearly universally industry. adopted a technology in today’s new comments on this tentative conclusion Some technology assumptions have vehicle fleet (for example, electric and the above discussion. been updated since the MYs 2017–2025 power steering). In other cases, final rule and, in many cases, since the D. Characterization of Current and 2016 Draft TAR. In some cases, EPA and Anticipated Fuel-Saving Technologies 106 Available at https://www.nhtsa.gov/staticfiles/ rulemaking/pdf/cafe/Draft-TAR-Final.pdf (last NHTSA presented different analytical The analysis evaluates a wide array of accessed June 15, 2018). approaches in the Draft TAR; the technologies manufacturers could use to 107 77 FR 62624 (Oct. 15, 2012). analysis is now presented using the

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same direct manufacturing costs, retail fuel-saving technologies to a retail price. Model or ALPHA), and applied cost costs, and learning rates. In addition, Today’s analysis utilizes the direct effective technologies to manufacturers’ the effectiveness of fuel-economy manufacturing costs (DMC) and the fleets in response to potential standards. technologies is now assessed based on retail price equivalent (RPE) Many stakeholders commented that the the same assumptions, and with the methodology published in the Draft OMEGA model oversimplified fleet- same tools. Finally, manufacturers’ TAR. wide analysis, resulting in significant response to stringency alternatives is Two tools to estimate effectiveness of shortcomings.114 For instance, OMEGA forecast with the same simulation fuel-saving technologies were used in assumed manufacturers would redesign the Draft TAR, and for today’s analysis, model. all vehicles in the fleet by 2021, and Since the 2017 and later final rule, only one tool was used (Autonomie).111 then again by 2025; stakeholders many cost assessments, including tear Previously, EPA developed ‘‘ALPHA’’, down studies, were funded and an in-house model that estimated fuel- purported that these assumptions did completed, and presented as part of the savings for technologies, which not reflect practical constraints in many 115 Draft TAR analysis. These studies provided a foundation for EPA’s manufacturers’ business models. evaluated transmissions, engines, analysis. EPA’s ‘‘ALPHA’’ results were Additionally, stakeholders commented hybrid technologies, and mass used to calibrate a much simpler that OMEGA did not adequately take reduction.108 As a result, the analysis ‘‘Lumped Parameter Model’’ that was into consideration common parts like uses updated cost estimates for many developed by EPA to estimate shared engines, shared transmissions, technologies, some of which have been technology effectiveness for many and engineering platforms. The CAFE updated since the Draft TAR. In technologies. The Lumped Parameter model does consider refresh and addition to those studies, the analysis Model (LPM) approximated simulation redesign cycles and parts sharing. The also leveraged research reports from modeling results instead of directly CAFE model can evaluate responses to other organizations to assess costs.109 using the results and lead to less any policy alternative on a year-by-year Today’s analysis also updates the costs accurate estimates of technology basis, as required by EPCA/EISA 116 and to 2016 dollars, as in many cases effectiveness. Many stakeholders as allowed by the CAA, and can also technology costs were estimated several questioned the efficacy of the Lumped account for manufacturers’ year-by-year years ago. Parameter Model and ALPHA plans that involve ‘‘carrying forward’’ The analysis uses an updated, peer- assumptions and outputs in technology from prior model years, and reviewed model developed by ANL for 112 combination, especially as the tool some other vehicles possibly applying the Department of Energy to provide a was used to evaluate increasingly ‘‘extra’’ technology in anticipation of more rigorous estimate for battery costs. heterogeneous combinations of standards in ensuing model years. For The new battery model provides an technologies in the baseline fleet.113 For estimate future for battery costs for today’s analysis, EPA and NHTSA used today’s analysis, an updated version of hybrids, plug-in hybrids, and electric an updated version of the Autonomie the CAFE model is used—an improved vehicles, taking into account the model—an improved version of what version of what NHTSA presented in different battery design characteristics NHTSA presented in the 2016 Draft the 2016 Draft TAR—to assess and taking into account the size of the TAR—to assess technology effectiveness manufacturers’ response to policy battery for different applications.110 of technologies and combinations of alternatives. See Section II.A.1 above for In the Draft TAR, two possible technologies. The Department of further discussion of the decision to use methodologies to estimate indirect costs Energy’s ANL developed Autonomie the CAFE model for the NPRM analysis. from direct manufacturing costs, and the underpinning model Each aforementioned change is described as ‘‘indirect cost multipliers’’ assumptions leveraged research from discussed briefly in the remainder of and ‘‘retail price equivalent’’ were the DOE’s Vehicle Technologies Office this section and in much greater detail presented. Both of these methodologies and feedback from the public. in Chapter 6 of the PRIA. A brief attempted to relate the price of parts for Autonomie is commercially available summary of the technologies considered and widely used; third parties such as in this proposal is discussed below. 108 FEV prepared several cost analysis studies for suppliers, automakers, and academic Please provide comments on all aspects EPA on subjects ranging from advanced 8-speed researchers (who publish findings in transmissions to belt alternator starter, or Start/Stop peer reviewed academic journals) of the analysis as discussed here and as systems. NHTSA also contracted with Electricore, detailed in the PRIA. EDAG, and Southwest Research on teardown commonly use the Autonomie studies evaluating mass reduction and simulation software. transmissions. The 2015 NAS report on fuel Similarly for today’s analysis, only economy technologies for light-duty vehicles also 114 The Alliance of Automobile Manufacturers evaluated the agencies’ technology costs developed one tool is used. Previously, EPA developed ‘‘OMEGA,’’ a tool that looked commented that ‘‘the OMEGA model is over- based on these teardown studies, and the optimized and unrealistic . . . many of these issues technology costs used in this proposal were at costs of technologies and either are not present or are accounted for in DOT’s updated accordingly. These studies are discussed in effectiveness of technologies (as detail in Chapter 6 of the PRIA accompanying this Volpe model. The Alliance therefore recommends proposal. estimated by EPA’s Lumped Parameter that EPA focus on ensuring needs specific to its 109 For example, the agencies relied on reports regulatory analysis are appropriately addressed in from the Department of Energy’s Office of Energy 111 ANL’s Full-Vehicle Simulation Autonomie the Volpe model.’’ Alliance at 48 (Docket ID. EPA– Efficiency & Renewable Energy’s Vehicle Model is discussed in Chapter 6 of the PRIA and HQ–OAR–2015–0827–9194). Technologies Office. More information on that in the ANL Model Documentation available at 115 For example, FCA provided the following office is available at https://www.energy.gov/eere/ Docket No. NHTSA–2018–0067. comments: ‘‘EPA’s expectation of 10–20% mass 112 vehicles/vehicle-technologies-office. Other agency At NHTSA–2016–0068–0082, p. 49, FCA reduction rates across 70% of FCA’s fleet, which reports that were relied on for technology or other provided the following comments, ‘‘FCA believes includes a 70% truck mix, is simply unreasonable information are referenced throughout this proposal EPA is overestimating the benefits of technology. As as the magnitude of change would require complete and accompanying PRIA. the LPM is calibrated to those projections, so too product redesigns in less than eight years 110 For instance, battery electric vehicles with is the LPM too optimistic.’’ FCA also shared the high levels of mass reduction may use a smaller chart, ‘‘LPM vs. Actual for 8 Speed Transmissions.’’ shortening existing production needed to amortize battery than a comparable vehicle with less mass 113 See e.g., Automotive News ‘‘CAFE math gets the large capital cost involved.’’ FCA at 19 (Docket reduction technology and still deliver the same trickier as industry innovates’’ (Kulisch), March 26, ID. EPA–HQ–OAR–2015–0827–6160). range on a charge. 2018. 116 49 U.S.C. 32902(b)(2)(B).

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1. Data Sources and Processes for costs (the retail price equivalent, or assess costs because the product is not Developing Individual Technology RPE) was taken into account. Finally, yet in the marketplace for evaluation. In Assumptions costs for technologies may change over these cases, third-party estimates and Technology assumptions were time as industry streamlines design and confidential information from suppliers developed that provide a foundation for manufacturing processes. Potential cost and manufacturers are relied upon; conducting a fleet-wide compliance improvements with learning effects (LE) however, there are some common analysis. As part of this effort, the were also considered. The retail cost of pitfalls with relying on confidential analysis estimated technology costs, equipment in any future year is business information to estimate costs. projected technology effectiveness estimated to be equal to the product of The agencies and the source may have had incongruent or incompatible values, and identified possible the DMC, RPE, and LE. Considering the definitions of ‘‘baseline.’’ 119 The source limitations for some fuel-saving retail cost of equipment, instead of may have provided direct manufacturer technologies. There is a preference to merely direct manufacturing costs, is costs at a date many years in the future, use values developed from careful important to account for the real-world and assumed very high production review of commercialized technologies; price effects of a technology, as well as volumes, important caveats to consider however, in some cases for technologies market realities. Absent government for agency analysis. In addition, a that are new, and are not yet for sale in mandate, a manufacturer will not source, under no contractual obligation any vehicle, the analysis relied on undertake expensive development and to the agencies, may provide incomplete information from other sources, support costs to implement technologies and/or misleading information. In other including CBI and third-party research without realistic prospects of consumer cases, intellectual property reports and publications. Many willingness to pay enough for such considerations and strategic business emerging technologies are still being technology to allow for the partnerships may have contributed to a evaluated for the analysis supporting manufacturer to recover its investment. manufacturer’s cost information and the final rule, including those that are (1) Direct Manufacturing Costs could be difficult to account for in the currently emerging. In many instances, the analysis used model as not all manufacturer’s may For today’s analysis, one set of cost agency-sponsored tear-down studies of have access to proprietary technologies assumptions, one set of effectiveness vehicles and parts to estimate the direct at stated costs. New information is values (developed with one tool), and manufacturing costs of individual carefully evaluated in light of these one set of assumptions about the technologies. In the simplest cases, the common pitfalls, especially regarding limitations of some technologies are studies produced results that confirmed emerging technologies. The analysis presented. Many sources of data were third-party industry estimates, and used third-party, forward looking evaluated, in addition to many aligned with confidential information information for advanced cylinder stakeholder comments received on the provided by manufacturers and deactivation and variable compression Draft TAR. Throughout the process of suppliers. In cases with a large ratio engines, and while these cost developing the assumptions for today’s difference between the tear-down study estimates may be cursory (as is the case analysis, the preferred approach was to results and credible independent with many emerging technologies prior harmonize on sources and sources, study assumptions were to commercialization), the agencies took methodologies that were data-driven scrutinized, and sometimes the analysis care to use early information provided and reproducible in independent was revised or updated accordingly.117 fairly and reasonably. While costs for verification, produced using tools Studies were conducted on vehicles and fuel-saving technologies reflect the best utilized by OEMs, suppliers, and technologies that would cover a breadth estimates available today, technology academic institutions, and using tools of fuel-savings technologies, but because cost estimates will likely change in the that could support both CAFE and CO 2 tear-down studies can be time-intensive future as technologies are deployed and analysis. A single set of assumptions and expensive, the agencies did not as production is expanded. For also facilitates and focuses public sponsor teardown studies for every emerging technologies, the best comment by reducing burden on technology. For some technologies, information available at the time of the stakeholders who seek to review all of independent tear-down studies were analysis was utilized, and cost the supporting documentation for this also utilized, in addition to other assumptions will continue to be proposal. publications and confidential business updated. (a) Technology Costs information.118 Due to the variety of (2) Indirect Costs The analysis estimated present and technologies and their applications, a detailed tear-down study could not be As explained above, in addition to future costs for fuel-saving technologies, direct manufacturing costs, the analysis taking into consideration the type of conducted for every technology, including pre-production technologies. estimates and considers indirect vehicle, or type of engine if technology manufacturing costs. To estimate costs vary by application. Cost estimates Many fuel-saving technologies were considered that are pre-production, or indirect costs, direct manufacturing were developed based on three main costs are multiplied by a factor to inputs. First, direct manufacturing costs sold in very small pilot volumes. For emerging technologies that could be represent the average price for fuel- (DMC), or the component costs of the saving technologies at retail. This factor, physical parts and systems, were applied in the rulemaking timeframe, a tear-down study cannot be conducted to referred to as the retail price considered, with estimated costs equivalence (RPE), accounts for indirect assuming high volume production. 117 For instance, in previous analysis, EPA costs like engineering, sales, and DMCs generally do not include the referenced an old study that purported the first 7– administrative support, as well as other indirect costs of tools, capital 10% of mass reduction to be ‘‘free’’ or at a overhead costs, business expenses, significant ‘‘cost savings’’ to for many vehicles and equipment, and financing costs, nor do warranty costs, and return on capital they cover indirect costs like many manufacturers. 118 The analysis referenced studies from private engineering, sales, and administrative businesses and business analysts for emerging 119 ‘‘Baseline’’ here refers to a reference part, support. Second, indirect costs via a technologies and for off-the-shelf technologies that piece of equipment, or engineering system that scalar markup of direct manufacturing were commercially mature. efficiency improvements and costs are relative to.

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considerations. This approach to the industry and their uncertain effect on responds dynamically to volume, and RPE remains unchanged from the RPE capital amortization, and given the volume responds dynamically to approach NHTSA presented in the Draft difficulty of handling this uncertainty in learning, an internally consistent model TAR. the CAFE model, this analysis does not solution would likely require iteration The RPE was chosen for this analysis account for stranded capital. However, of the CAFE model to seek a stable instead of indirect cost multipliers these trends will be monitored to assess solution within the model’s (ICM) because it provides the best the role of stranded capital moving representation multiyear planning. Thus estimate of indirect costs. For a more forward. far, these challenges suggest it would be detailed discussion of the approach to The analysis continues to rely on infeasible to calculate degrees of indirect costs, see PRIA Chapter 9. projected refresh and redesign cycles in volume-based learning in a manner that the CAFE model to moderate the (3) Stranded Capital Costs responds dynamically to modeled cadence for technology adoption and technology application. Nevertheless, Past analyses accounted for costs limit the occurrence of stranded capital the agencies invite comment on the associated with stranded capital when and the need to account for it. Stranded issue, and seek data and methods that fuel economy standards caused a capital is an important consideration to would provide the basis for a technology to be replaced before its appropriately account for costs if there practicable approach to doing so. costs were fully amortized. The idea is too rapid of a turnover for certain Today’s analysis also updates the way behind stranded capital is that technologies. learning effects apply to costs. In the manufacturers amortize research, Draft TAR analysis, NHTSA applied (4) Cost Learning development, and tooling expenses over learning curves only to the incremental many years, especially for engines and Manufacturers make improvements to direct manufacturing costs or costs over transmissions. The traditional production processes over time, often the previous technology on the tech production life-cycles for transmissions resulting in lower costs. Today’s tree. In practice, two things were and engines have been a decade or analysis estimates cost learning by observed: (1) If the incremental direct longer. If a manufacturer launches or considering Wright’s learning theory, manufacturing costs were positive, updates a product with fuel-saving which states that as every time technologies could not become less technology, and then later replaces that cumulative volume for a product expensive than their predecessors on technology with an unrelated or doubles, the cost lowers by a scalar the tech tree, and (2) absolute costs over different fuel-saving technology before factor. The analysis accounts for baseline technology depended on the the equipment and research and learning effects with model year-based learning curves of root technologies on development investments have been cost learning forecasts for each the tech tree. Today’s analysis applies fully paid off, there will be unrecouped, technology that reduce direct learning effects to the incremental cost or stranded, capital costs. Quantifying manufacturing costs over time. over the null technology state on the stranded capital costs attempted to Historical use of technologies were tech tree. After this step, the analysis account for such lost investments. In the evaluated, and industry forecasts were calculates year-by-year incremental Draft TAR analysis, there were only a reviewed to estimate future volumes for costs over preceding technologies on the few technologies for a few the purpose of developing the model tech tree to create the CAFE model manufacturers that were projected to year-based technology cost learning inputs. have stranded capital costs. curves. The CAFE model does not Direct manufacturing costs and As more technologies are included in dynamically update learning curves, learning effects for many technologies this analysis, and as the CAFE model based on compliance pathways chosen were reviewed by evaluating historical has been expanded to account for in simulation. use of technologies and industry platform and engine sharing and As discussed above, cost inputs to the forecasts to estimate future volumes. updated with redesign and refresh CAFE model incorporate estimates of This approach produced reasonable cycles, accounting for stranded capital volume-based learning. As an estimates for technologies already in has become increasingly complex. alternative approach, Volpe Center staff production. For technologies not yet in Separately, the fact that manufacturers have considered modifications such that production in MY 2016, the cumulative may be shifting their investment the CAFE model would calculate volume in MY 2016 is zero, because strategies in ways that may affect degrees of volume-based learning manufacturers have not yet produced stranded capital calculations was dynamically, responding to the model’s the technologies. For pre-production considered. For instance, Ford and application of affected technologies. cost estimates, the analysis often relies General Motors agreed to jointly While it is intuitive that the degree of on confidential business information develop next generation transmission cost reduction achieved through sources to predict future costs. Many technologies,120 and some suppliers sell experience producing a given sources for pre-production cost similar transmissions to multiple technology should depend on the actual estimates include significant learning manufacturers. These arrangements accumulated experience (i.e., volume) effects, often providing cost estimates allow manufacturers to share in capital producing that technology, staff have assuming high volume production, and expenditures, or amortize expenses thus far found such dynamic often for a timeframe late in the first more quickly. Manufacturers implementation in the CAFE model production generation or early in the increasingly share parts on vehicles infeasible. Insufficient data has been second generation of the technology. around the globe, achieving greater scale available regarding manufacturers’ Rapid doubling and re-doubling of a low and greatly affecting tooling strategies historical application of specific cumulative volume base with Wright’s and costs. Given these trends in the technology. Also, insofar as underlying learning curves can provide unrealistic direct manufacturing costs already make cost estimates. In addition, direct 120 See, e.g., Nick Bunkley, Ford to invest $1.4 some assumptions about volume and manufacturing cost projections can vary billion to build 10-speed transmissions for 2017 F– scale, insufficient information is depending on the initial production 150, Automotive News (Apr. 26, 2016), http:// www.autonews.com/article/20160426/OEM01/ currently available to determine how to volume assumed. Direct costs with 160429878/ford-to-invest-$1.4-billion-to-build-10- dynamically adjust these underlying learning were carefully examined, and speed-transmissions-for-2017. costs. It should be noted that if learning adjustments were made to the starting

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point for those technologies on the improvements of technologies. First, stated as model inputs and are available learning curve to better align with the technology effectiveness often differs for review and comment. For today’s assumptions used for the initial direct significantly depending on the type of analysis, every effort was made to make cost estimate. See PRIA Chapter 9 for vehicle and the other technologies that the input specifications and modeling more detailed information on cost are on the vehicle, and this is shown in assumptions available for review and learning. full-vehicle simulations. Different comment. PRIA Chapter 6 and technologies may provide different fuel referenced documents provide more (b) Technology Effectiveness economy improvements depending on detailed information. (1) Technology Effectiveness Simulation whether they are implemented alone or Technology development and Modeling in tandem with other technologies. application will be monitored to acquire Full-vehicle simulation modeling was Single point estimates often more information for the final rule. The used to estimate the fuel economy oversimplify these important, complex agencies may update the analysis for the improvements manufacturers could relationships and lead to less accurate final rule based on comments and/or make to their fleet by adding new effectiveness estimates. Also, because new information that becomes available. technologies, taking into account MY manufacturers often implement a Today’s analysis utilizes effectiveness 2016 vehicle specifications, as well as number of fuel-saving technologies estimates for technologies developed 121 how combinations of technologies simultaneously at vehicle redesigns, it is using Autonomie software, a physics- interact. Full-vehicle simulation generally difficult to isolate the effect of based full-vehicle simulation tool modeling uses computer software and individual technologies using laboratory developed and maintained by the physics-based models to predict how measurement of production vehicles Department of Energy’s ANL. combinations of technologies perform alone. Simulation modeling offers the Autonomie has a long history of together. opportunity to isolate the effects of development and widespread The simulation and modeling requires individual technologies by using a application by users in industry, detailed specifications for each single or small number of baseline academia, research institutions and 122 technology that describes its efficiency configurations and incrementally government. Real-world use has and performance-related characteristics. adding technologies to those baseline contributed significantly to aspects of Those specifications generally come configurations. This provides a Autonomie important to producing from design specifications, laboratory consistent reference point for the realistic estimates of fuel economy and measurements, simulation or modeling, incremental effectiveness estimates for CO2 emission rates, such as estimation and may involve additional analysis. each technology and for combinations of and consideration of performance, For example, the analysis used engine technologies for each vehicle type and utility, and driveability metrics (e.g., maps showing fuel use vs. engine torque reduces potential double counting or towing capability, shift business, vs. engine speed, and transmission undercounting technology effectiveness. frequency of engine on/off transitions). maps taking into account gear efficiency Note: It is most important that the This steadily increasing realism has, in for a range of loads and speeds. With incremental effectiveness of each turn, steadily increased confidence in physics-based technology specifications, technology and combinations be the appropriateness of using Autonomie full-vehicle simulation modeling can be accurate and relative to a consistent to make significant investment used to estimate technology baseline, because it is the incremental decisions. Notably, DOE uses effectiveness for various combinations effectiveness that is applied to each Autonomie for analysis supporting and permutations of technologies for vehicle model/configuration in the MY budget priorities and plans for programs many vehicle classes. To develop the 2016 baseline fleet (and to each vehicle managed by its Vehicle Technologies specifications used for the simulation model/configuration’s absolute fuel Office (VTO) and to decide among and modeling, laboratory test data was economy value) to determine the competing vehicle technology R&D evaluated for production and pre- absolute fuel economy of the model/ projects. production technologies, technical configuration with the additional In the 2015 National Academies of publications, manufacturer and supplier technology. The absolute fuel economy Science (NAS) study of fuel economy CBI, and simulation modeling of values of the simulation modeling runs improving technologies, the Committee specific technologies. Evaluating by themselves are used only to recommended that the agencies use full- recently introduced production determine the incremental effectiveness vehicle simulation to improve the products to inform the technology and are never used directly to assign an analysis method of estimating 123 effectiveness models of emerging absolute fuel economy value to any technology effectiveness. The technologies is preferred because doing vehicle model/configuration for the committee acknowledged that so allows for a more reliable analysis of rulemaking analysis. Therefore, developing and executing tens or incremental improvements over commenters on technology effectiveness hundreds of thousands of constantly previous technologies; however, some should be specific about the incremental changing vehicle packages models in technologies were considered that are effectiveness of technologies relative to 121 not yet in production. As technologies other specifically defined technologies. More information about Autonomie is The fuel economy of a specific vehicle available at https://www.anl.gov/technology/ evolve and new applications emerge, project/autonomie-automotive-system-design (last this work will be continued and may or simulation modeling run in isolation accessed June 21, 2018). include additional technologies and/or may be less useful. 122 ANL Model Documentation, ‘‘A Detailed updated modeling for the final rule. The Second, full-vehicle simulation Vehicle Simulation Process To Support CAFE modeling requires explicit Standards’’ ANL/ESD–18/6. details of new and emerging 123 National Research Council. 2015. Cost, technologies are discussed in PRIA specifications and assumptions for each Effectiveness, and Deployment of Fuel Economy Chapter 6. technology; therefore, these Technologies for Light-Duty Vehicles. Washington, Using full-vehicle simulation assumptions can be presented for public DC: The National Academies Press [hereinafter review and comment. For instance, ‘‘2015 NAS Report’’] at pg. 263, available at https:// modeling has two primary advantages www.nap.edu/catalog/21744/cost-effectiveness- over using single or limited point transmission gear efficiencies, shift and-deployment-of-fuel-economy-technologies-for- estimates for fuel efficiency logic, and gear ratios are explicitly light-duty-vehicles (last accessed June 21, 2018).

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real-time is extremely challenging. simulations were run. In addition, Additional transmission technologies While initially this approach was not simulation modeling was conducted to and more levels of aerodynamic considered practical to implement, a determine the appropriate amount of technologies than NHTSA presented in process developed by Argonne in engine downsizing needed to maintain the Draft TAR analysis were also added collaboration with NHTSA and the DOT baseline performance across all modeled for today’s analysis. Having additional Volpe Center has succeeded in enabling vehicle performance metrics when technologies allowed the agencies to large scale simulation modeling. For advanced mass reduction technology or assign baselines and estimate fuel- more details about the Autonomie advanced engine technology was savings opportunities with more simulation model and its submodels applied, so these simulations take into precision. and inputs, see PRIA Chapter 6.2. account performance neutrality, given The 10 vehicle types (referred to as Today’s analysis modeled more than logical engine down-sizing ‘‘technology classes’’ in the modeling 50 fuel economy-improving opportunities associated with specific documentation) are shown in Table II– technologies, and combinations thereof, technologies. 7. Each vehicle type (technology class) on 10 vehicle types (an increase from Some baseline vehicle assumptions represented a large segment of vehicles, five vehicle types in NHTSA’s Draft used in the simulation modeling were such as medium cars, small SUVs, and TAR analysis). While 10 vehicle types updated based on public comment and medium performance SUVs.125 Baseline may seem like a small number, a large the assessment of the MY 2016 parameters were defined with ANL for portion of the production volume in the production fleet. The analysis included each technology class, including MY 2016 fleet have specifications that updated assumptions about curb weight, baseline curb weight, time required to are very similar, especially in highly component inertia, as well as accelerate from stop to 60 miles per competitive segments (for instance, technology properties like baseline hour, time required to accelerate from many mid-sized sedans, many small rolling resistance, aerodynamic drag 50 miles per hour to 80 miles per hour, SUVs, and many large SUVs coalesce coefficients, and frontal areas. Many of ability of the vehicle to maintain around similar specifications, the assumptions are aligned with constant 65 miles per hour speed on a respectively), and baseline simulations published research from the Department six percent upgrade, and (for some have been aligned around these modal of Energy’s Vehicle Technologies Office classes) assumptions about towing specifications. The sequential addition and other independent sources.124 capability. of these technologies generated more than 100,000 unique technology 124 Pannone, G. ‘‘Technical Analysis of Vehicle Load Reduction Potential for Advanced Clear Cars,’’ 125 Separate technology classes were created for combinations per vehicle class. The April 29, 2015. Available at https://www.arb.ca.gov/ high performance and low performance vehicles to analysis included 10 technology classes, research/apr/past/13-313.pdf (last accessed June 21, better account for performance diversity across the so more than one million full-vehicle 2018). fleet.

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From these baseline specifications, engines to the extent that performance engine. Manufacturers have repeatedly incremental combinations of fuel saving was maintained for the least capable told the agencies that the high costs for technologies were applied. As the performance criteria to maintain vehicle redesign and the increased combinations of technologies change, so utility for that criteria; therefore, manufacturing complexity that would too may predicted performance. sometimes other performance attributes result from resizing engines for such The analysis attempts to maintain may improve. For instance, the amount small changes in the vehicle preclude performance by resizing engines at a few of engine resizing may be determined doing so. The analysis should not, in specific incremental technology steps. based on its high speed acceleration fact, include engine resizing with the Steps from one technology to another time if it is the least capable criteria, but application of every technology or for typically associated with a major that resizing may also improve the low combinations of technologies that drive vehicle redesign, or engine redesign, speed acceleration time.128 The analysis small performance changes so that the were identified, and engine resizing was did not re-size the engine in response to analysis better reflects what is feasible restricted only to these steps. The adding technologies that have small for manufacturers to do.129 analysis allowed engine resizing when effects on vehicle performance. For 2. CAFE model mass reduction of 10% or greater was instance, if a vehicle’s weight is reduced applied to the vehicle glider mass,126 by a small amount causing the 0–60 The CAFE model is designed to and when one powertrain architecture mile per hour time to improve slightly, simulate compliance with a given set of was replaced with another the analysis would not resize the CAFE or CO2 standards for each architecture.127 The analysis resized manufacturer that sells vehicles in the belt-integrated starter generators, and other basic United States. The model begins with a 126 The vehicle glider is defined here as the technologies. However, switching from a naturally vehicle without the engine, transmission, and aspirated engine to a turbo-downsized engine is an 129 For instance, a vehicle would not get a driveline. See PRIA Chapter 6.3 for further engine architecture change typically associated modestly bigger engine if the vehicle comes with information. with a major redesign and radical change in engine floor mats, nor would the vehicle get a modestly 127 Some engine and accessory technologies may displacement. smaller engine without floor mats. This example be added to an engine without an engine 128 The simulation database, or summary of demonstrates small levels of mass reduction. If architecture change. For instance, manufacturers simulation outputs, includes all of the estimated manufacturers resized engines for small changes, may adapt, but not replace engine architectures to performance metrics for each combination of manufacturers would have dramatically more part include cylinder deactivation, variable valve lift, technology as modeled. complexity, potentially losing economies of scale.

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representation of the MY 2016 vehicle • Technology costs too low or too matched to historical values for each model offerings for each manufacturer high. Tear down cost studies, CBI, manufacturer. that includes the specific engines and literature, and the 2015 NAS study • Customer acceptance under transmissions on each model variant, information were referenced to estimate estimated or over estimated. Resale observed sales volumes, and all fuel technology costs. In cases that one prices for hybrid vehicles, electric economy improving technology that is technology appeared exemplary on cost vehicles, and internal combustion already present on those vehicles. From and effectiveness relative to all other engine vehicles were evaluated to assess there the model adds technology, in technologies, information was acquired consumer willingness to pay for those response to the standards being from additional sources to confirm or technologies. The analysis accounts for considered, in a way that minimizes the reject assumptions. Cost assumptions the differential in the cost for those cost of compliance and reflects many for emerging technologies are technologies and the amount consumers real-world constraints faced by continuously being evaluated. have actually paid for those automobile manufacturers. The model • Technology effectiveness too high technologies. Separately, new dual- addresses fleet year-by-year compliance, or too low in combination with other clutch transmissions and manual taking into consideration vehicle refresh vehicle technologies. Technology transmissions were applied to vehicles and redesign schedules and shared effectiveness was evaluated using the already equipped with these platforms, engines, and transmissions Autonomie full-vehicle simulation transmission architectures. among vehicles. modeling, taking into account the Please provide comments on all As a result of simulating compliance, impact of other technologies on the assumptions for fuel economy and CO2 the CAFE model provides the vehicle and the vehicle type. Inputs and technology costs, effectiveness, technology pathways that manufacturers modeling for the analysis took into availability, and applicability to could use to comply with regulations, account laboratory test data for vehicles in the fleet. including how technologies could be production and some pre-production The technology effectiveness applied to each of their vehicle model/ technologies, technical publications, modeling results show effectiveness of a configurations in response to a given set manufacturer and supplier CBI, and technology often varies with the type of of standards. The model calculates the simulation modeling of specific vehicle and the other technologies that impacts of the simulated standard: technologies. Evaluating recently are on the vehicle. Figure II–1 and Technology costs, fuel savings (both in introduced production products to Figure II–2 show the range of gallons and dollars), CO2 reductions, inform the technology effectiveness effectiveness for each technology for the social costs and benefits, and safety models of emerging technologies was range of vehicle types and technology impacts. preferred; however, some technologies combinations included in this NPRM The current analysis reflects several that are not yet in production were analysis. The data reflect the change in changes made to the CAFE model since considered, via CBI. Simulation effectiveness for applying each 2012, when NHTSA used the model to modeling used carefully chosen baseline technology by itself while all other estimate the effects, costs, and benefits configurations to provide a consistent, technologies are held unchanged. The of final CAFE standards for light-duty reasonable reference point for the data show the improvement in fuel vehicles produced during MYs 2017– incremental effectiveness estimates. consumption (in gallons per mile) and 2021 and augural standards for MYs • Vehicle performance not considered tailpipe CO2 over the combined 2-cycle 2022–2025. The changes are discussed or applied in an infeasible manner. test procedures. For many technologies, in Section II.A.1, above, and PRIA Performance criteria, including low effectiveness values ranged widely; only Chapter 6. speed acceleration (0–60 mph time), a few technologies for which high speed acceleration (50–80 mph effectiveness may be reasonably 3. Assumptions About Individual time), towing, and gradeability (six represented as a fixed offset were Technology Cost and Effectiveness percent grade at 65 mph) were also identified. Values considered. In the simulation modeling, For engine technologies, the Cost and effectiveness values were resizing was applied to achieve the effectiveness improvement range is estimated for each technology included same performance level as the baseline relative to a comparably equipped in the analysis, with a summary list of for the least capable performance vehicle with only variable valve timing all technologies provided in Table II–1 criteria but only with significant design (VVT) on the engine. For automatic (List of Technologies with Data Sources changes. The analysis struck a balance transmission technologies, the for Technology Assignments) of by employing a frequency of engine effectiveness improvement range is over Preamble Chapter II.B, above. In all, downsizing that took product a 5-speed automatic transmission. For more than 50 technologies were complexity and economies of scale into manual transmission technologies, the considered in today’s analysis, and the account. effectiveness improvement range is over analysis evaluated many combinations • Availability of technologies for a 5-speed manual transmission. For road of these technologies on many production application too soon or too load technologies like aerodynamics, applications. Potential issues in late. A number of technologies were rolling resistance, and mass reduction, assessing technology effectiveness and evaluated that are not yet in production. the effectiveness improvement ranges cost were identified, including: CBI was gathered on the maturity and are relative to the least advanced • Baseline (MY 2016) vehicle timing of these technologies and the technology state, respectively. For technology level assessed as too low, or likely cadence at which manufacturers hybrid and electric drive systems that too high. Compliance information was might adopt these technologies. wholly replace an engine and extensively reviewed and supplemented • Product complexity and design transmission, the effectiveness with available literature on many MY cadence constraints too low or too high. improvement ranges are relative to a 2016 vehicle models. Manufacturers Product platforms, refresh and redesign comparably equipped vehicle with a could also review the baseline cycles, shared engines, and shared basic engine with VVT only and a 5- technology assignments for their transmissions were also considered in speed automatic transmission. For vehicles, and the analysis incorporates the analysis. Product complexity and hybrid or electrification technologies feedback received from manufacturers. the cadence of product launches were that complement other advanced engine

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and transmission technologies, the instance, parallel strong hybrids and range of estimated effectiveness values. effectiveness improvement ranges are belt integrated starter generators retain Figure II–3 below shows a hierarchy of relative to a comparably equipped engine technologies, such as a turbo technologies discussed. vehicle without the hybrid or charged engine or an Atkinson cycle BILLING CODE 4910–59–P electrification technologies (for engine). Many technologies have a wide

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4. Engine Technologies and ‘‘advanced engine technologies’’ are an entirely new engine architecture. In used only to define how the CAFE the CAFE model, basic engine There are a number of engine model applies a specific engine technologies may be applied in technologies that manufacturers can use technology and handles incremental combination with other basic engine to improve fuel economy and CO2. Some engine technologies can be costs and effectiveness improvements. technologies; advanced engine incorporated into existing engines with ‘‘Basic engine technologies’’ refer to technologies (defined by an engine map) minor or moderate changes to the technologies that, in many cases, can be stand alone as an exclusive engine engines, but many engine technologies adapted to an existing engine with technology. The words ‘‘basic’’ and require an entirely new engine minor or moderate changes to the ‘‘advanced’’ are not meant to confer any architecture. engine. ‘‘Advanced engine information about the level of In this section and for this analysis, technologies’’ refer to technologies that sophistication of the technology. Also, the terms ‘‘basic engine technologies’’ generally require significant changes or many advanced engine technology

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definitions include some basic engine the incremental engine costs and engine, and the agencies evaluated technologies, but these basic effectiveness values often depend on many production engines to better technologies are already accounted for engine architecture. The agencies understand how costs and capabilities in the costs and effectiveness values of modeled single overhead cam (SOHC), may vary with engine configuration. the advance engine. The ‘‘basic engine dual overhead cam (DOHC), and Table II–8, Table II–9, Table II–10 below technologies’’ need not be (and are not) overhead valve (OHV) engines shows the summary of absolute costs 130 applied in addition to the ‘‘advanced separately to account for differences in for different technologies. engine technologies’’ in the CAFE engine architecture. The agencies model. adjusted costs for some engine 130 ‘‘Absolute’’ being in reference to cost above the lowest level of technology considered in Engines come in a wide variety of technologies based on the number of simulations. For instance, an engine of the same shapes, sizes, and configurations, and cylinders and number of banks in the architecture with no VVT, VVL, SGDI, or DEAC.

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00048 Fmt 4701 Sfmt 4702 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43033 and 150.72 104.13 143.17 980.78 681.67 388.34 418.51 estimated 1,742.36 1,022.34 1,403.80 1,108.63 5,110.08 5,661.68 $ $ $ $ $ $ $ $ $ $ $ $ $ C-2029 not Effects Learning 106.24 146.07 153.41 396.22 980.78 683.64 427.00 estimated including 1,849.36 1,156.83 1,044.43 1,490.01 5,110.08 5,661.68 $ $ $ $ $ $ $ $ $ $ $ $ $ C-2025 not Engine, Basic 14 156.22 10R.79 149.58 980.78 692.23 405.74 437.26 estimated 1,237.93 1,078.90 1,612.78 5,110.08 2,001.73 5,661.68 vs. $ $ $ $ $ $ $ $ $ $ $ $ $ C-2021 not Cost Eauival Price 153.95 111.97 159.54 735.65 980.78 450.04 417.59 Technology estimated U47.98 1,370.86 1,722.96 5,110.08 5,661.68 2,138.49 $ $ $ $ $ $ $ $ $ $ $ $ $ Retail C-2017 not Engine Absolute of Engine Engine Engine Engine Pathway Engine Engine Engine Engine Engine Engine Engine Summary Engine DEAC - Fuel Basic Basic Turbocharged Turbocharged Turbocharged HCREngine HCREngine Basic Basic Diesel Diesel Technology VCR Adv. Alt. 11-8 Table SGDI CNG CEGR1 DEAC DSLI TURB01 TURB02 VVT VVL VCR ADEAC ADSL HCR1 HCR2 Name

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00049 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.023 43034 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules Price 150.72 20R.25 679.83 634.57 247.29 estimated 1,845.60 1,050.09 1,490.32 1,116.49 1,507.05 1,710.48 6,122.76 6,841.17 $ $ $ $ $ $ $ $ $ $ $ $ $ Retail C-2029 not and Effects 153.41 212.4R 693.63 647.45 252.31 estimated 1,490.32 1,784.85 1,140.61 1,599.60 1,053.11 1,958.95 6,122.76 6,841.17 Learning $ $ $ $ $ $ $ $ $ $ $ $ $ C-2025 not including 156.22 217.5R 710.29 663.00 258.37 estimated 1,066.34 1,490.32 1,909.98 1,178.26 1,731.39 6,122.76 2,12035 6,841.17 Engine, $ $ $ $ $ $ $ $ $ $ $ $ $ C-2021 not Basic V6 vs. Eauival 159.54 Cost 223.94 731.05 682.38 265.92 estimated 1253.70 1,849.68 1,133.23 1,490.32 6,122.76 6,841.17 2,115.07 2,265.21 $ $ $ $ $ $ $ $ $ $ $ $ $ C-2017 not Technology Engine Engine Engine Engine Engine Pathway Engine Absolute Engine Engine Engine Engine Engine Engine Engine DEAC Fuel of Basic Basic Basic Basic Turbocharged Turbocharged Turbocharged HCREngine HCREngine Diesel Diesel Technology VCR Adv. Alt. Summary 11-9- Table SGDI CEGR1 CNG DEAC DSLI TURB01 TURB02 VVT VCR VVL ADEAC ADSL HCR1 HCR2 Name

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BILLING CODE 4910–59–C Many types of production powertrains analysis, and engine maps were were reviewed and tested for this developed for each combination of

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engine technologies. For a given engine VVT is nearly universally used in the turbo technologies were modeled and configuration, some production engines MY 2016 fleet. considered separately in today’s may be less efficient than the engine analysis. (2) Variable Valve Lift (VVL) maps presented in the analysis, and (b) ‘‘Advanced’’ Engine Technologies some may be more efficient. Developing Variable Valve Lift (VVL) dynamically engine maps that reasonably adjusts the travel of the valves to The analysis included ‘‘advanced’’ represented most vehicles equipped optimize airflow over a broad range of engine technologies that can deliver with the engine technology, and that are engine operating conditions. The high levels of effectiveness but often in production today, was the preferred technology increases effectiveness by require a significant engine design approach for this analysis. Additionally, reducing pumping losses and may change or a new engine architecture. In some advanced engines were included improve efficiency by affecting in- the CAFE model, ‘‘basic’’ engine in the simulation that are not yet in cylinder charge (fuel and air mixture), technologies may be considered in production. The engine maps for these motion, and combustion. combination and applied before advanced engine technologies. engines were either based on CBI or (3) Stoichiometric Gasoline Direct ‘‘Advanced’’ engine technologies were theoretical. The most recently Injection (SGDI) released production engines are still generally include one or more basic being reviewed, and the analysis may Stoichiometric Gasoline Direct engine technologies in the simulation, include updated engine maps in the Injection (SGDI) sprays fuel at high without the need to layer on ‘‘basic’’ future or add entirely new engine maps pressure directly into the combustion engine technologies on top of to the analysis if either action could chamber, which provides cooling of the ‘‘advanced’’ engines. Once an advanced improve the quality of the fleet-wide in-cylinder charge via in-cylinder fuel engine technology is applied, the model analysis. vaporization to improve spark knock does not reconsider the basic engine Stakeholders provided many tolerance and enable an increase in technologies. The characterization of comments on the engine maps that were compression ratio and/or more optimal each advanced engine technology takes presented in the Draft TAR. These spark timing for improved efficiency. into account the prerequisite comments were considered, and today’s SGDI appears in about half of basic technologies. analysis utilizes several engine maps engines produced in MY 2016, and the Many of the newest advanced engine that were updated since the Draft TAR. technology is used in many advanced technologies improve effectiveness over Most notably, for turbocharged and engines as well. their predecessors, but the engines may also include sophisticated materials or downsized engines, the engine maps (4) Basic Cylinder Deactivation (DEAC) were adjusted in high torque, low speed manufacturing processes that contribute operating conditions to address engine Basic Cylinder Deactivation (DEAC) to efficiency improvements. For knock with regular octane fuel to align disables intake and exhaust valves and instance, one recently introduced turbo with the fuel octane that manufacturers prevents fuel injection into some charged engine uses sodium filled valve recommend be used for the majority of cylinders during light-load operation. stems.131 Another recently introduced vehicles. In the Draft TAR, NHTSA The engine runs temporarily as though high compression ratio engine uses a assumed high octane fuel to develop it were a smaller engine, which reduces sophisticated laser cladding process to engine maps. See the discussion below pumping losses and improves manufacture valve seats and improve and in PRIA Chapter 6.3 for more efficiency. Manufacturers typically airflow.132 To fully consider these details. Please provide comment on the disable one-cylinder bank with basic advancements (and their potential appropriateness of assuming the use of cylinder deactivation. In the MY 2016 benefits), the incremental costs of these lower octane fuels. fleet, manufacturers used DEAC on V6, technologies, as well as the effectiveness V8, V10, and V12 engines on OHV, improvements, must be accounted for. (a) ‘‘Basic’’ Engine Technologies SOHC, and DOHC engine (1) Turbocharged Engines The four ‘‘basic’’ engine technologies configurations. With some engine in today’s model are Variable Valve configurations in some operating Turbo engines recover energy from Timing (VVT), Variable Valve Lift conditions, DEAC creates noise- hot exhaust gas and compress intake air, (VVL), Stoichiometric Gasoline Direct vibration-and-harshness (NVH) thereby increasing available airflow and Injection (SGDI), and basic Cylinder challenges. NVH challenges are increasing specific power level. Due to Deactivation (DEAC). Over the last significant for V6 and I4 DEAC specific power improvements on turbo decade, manufacturers upgraded many configurations. For I4 engine engines, engine displacement can be engines with these engine technologies. configurations, manufacturers can downsized. The downsizing reduces Implementing these technologies operate the DEAC function of an engine pumping losses and improves fuel involves changes to the cylinder head of in very few operating conditions, with economy at lower loads. For the NPRM the engine, but the engine block, limited potential to save fuel. No analysis, a level of downsizing is crankshaft, pistons, and connecting rods manufacturers sold I4 DEAC engines in assumed to be applied that achieves require few, if any, changes. In today’s the MY 2016 fleet. Typically, the performance similar to the baseline analysis, manufacturers may apply the smaller the engine displacement, the naturally-aspirated engine. This four basic engine technologies in less opportunity DEAC provides to assumes manufacturers would apply the various combinations, just as improve fuel consumption. benefits toward improved fuel economy manufacturers have done recently. Manufacturers and suppliers continue to evaluate more improved versions of 131 See Honda, ‘‘2018 Honda Accord Press Kit— (1) Variable Valve Timing (VVT) Powertrain,’’ Oct. 2, 2017. Available at http:// cylinder deactivation, including news.honda.com/newsandviews/article.aspx?g= Variable Valve Timing (VVT) is a advanced cylinder deactivation and honda-automobiles&id=9932-en. (last accessed June family of valve-train designs that pairing basic cylinder deactivation with 21, 2018). dynamically adjusts the timing of the turbo charged engines. No 132 Hakariya et al., ‘‘The New Toyota Inline 4- Cylinder 2.5L Gasoline Engine,’’ SAE Technical intake valves, exhaust valves, or both, in manufacturers produced such Paper 2017–01–1021 (Mar. 28, 2017), available at relation to piston position. This family technologies in the MY 2016 fleet. https://www.sae.org/publications/technical-papers/ of technologies reduces pumping losses. Advanced cylinder deactivation and content/2017-01-1021/.

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and not trade off fuel economy with regular octane fuel. Using the performance and greater engine improvements to increase overall updated criteria assures the NPRM downsizing for lower pumping losses. vehicle performance. In practice, analysis reflects real-world constraints CEGR1 technology is used in only a few manufacturers have often also improved faced by manufacturers to assure engine vehicles in the MY 2016 fleet, and many some vehicle performance attributes at durability, and acceptable drivability, of these vehicles include high- the expense of not maximizing potential noise and harshness, and addresses the performance utility either for towing or fuel economy improvements. over-estimation of potential fuel acceleration. Manufacturers may develop engines economy improvements related to the 133 (a) Turbocharged Engine Technologies to operate on varying levels of boost, fuel octane assumptions, which did not Not Considered with higher levels of boost achieving fully account for these constraints, in higher engine specific power and the Draft TAR. Compared with the Previous analyses considered turbo enabling greater levels of engine NHTSA analysis in the Draft TAR, these charged engines with even higher BMEP downsizing and corresponding engine maps adjust the fuel use at high than today’s Turbo2 and CEGR1 reductions in pumping losses for torque and low speed operation and at technologies, but today’s analysis does improved efficiency. However, engines high speed operation to fully account not present 27 bar BMEP turbo engines. operating at higher boost levels are for knock limitations with regular Turbo engines with very high BMEP generally more susceptible to engine octane fuel. have demonstrated limited potential to knock,134 especially at higher torques The analysis assumes engine improve fuel economy due to practical and low engine speeds. Additionally, downsizing with the addition of turbo limitations on engine downsizing and engines with higher boost levels technology. For instance, in the tradeoffs with launch performance and typically require larger induction and simulations, manufacturers may have drivability. Based on the analysis, and exhaust system components, dissipate replaced a naturally-aspirated V8 engine based on CBI, CEGR2 turbo engine greater amounts of heat, and with with a turbo V6 engine, and technology was not included in this greater levels of engine downsizing have manufacturers may have replaced a NPRM analysis. increased challenges with turbo lag.135 naturally-aspirated V6 engine with a (2) High Compression Ratio Engines For these reasons, three levels of turbo turbo I4 engine. When manufacturers (Atkinson Cycle Engines) downsizing technologies are separately reduced the number of banks or Atkinson cycle gasoline engines use modeled in this analysis. cylinders of an engine, some cost changes in valve timing (e.g., late- The analysis also modeled savings is projected due to fewer intake-valve-closing or LIVC) to reduce turbocharged engines with parallel cylinders and fewer valves. Such cost the effective compression ratio while hybrid technology. In simulations with savings is projected to help offset the maintaining the expansion ratio. This high stringencies, many manufacturers additional costs of turbo charger specific approach allows a reduction in top- produced turbo-hybrid electric vehicles. hardware, making turbo downsizing a dead-center (TDC) clearance ratio (e.g., In the MY 2016 fleet, of the vehicles that very attractive technology progression 137 increase in ‘‘mechanical’’ or ‘‘physical’’ use parallel hybrid technology, many for some engines. compression ratio) to increase the use turbocharged engines. (a) TURBO1 effective expansion ratio without Since the Draft TAR, the turbo family increasing the effective compression Level 1 Turbo Charging (TURBO1) engine maps were updated to reflect ratio to a point that knock-limited adds a turbo charger to a DOHC engine operation on 87 AKI regular octane operation is encountered. Increasing the 136 with SGDI, VVT, and continuously VVL. fuel. In the Draft TAR, turbo engine expansion ratio in this manner improves The engine operates at up to 18 bar maps were developed assuming thermal efficiency but also lowers peak brake mean effective pressure (BMEP). premium fuel. For this rulemaking BMEP, particularly at lower engine Manufacturers used Turbo1 analyses, pathways to improving fuel speeds. economy and CO2 are analyzed, while technology in a little less than a quarter Often knock concerns for these also maintaining vehicle performance, of the MY 2016 fleet with particularly engines limit applications in high load, capability, and other attributes. This high concentrations in premium low RPM conditions. Some includes assuming there is no change in vehicles. manufacturers have mitigated knock the fuel octane required to operate the (b) TURBO2 concerns by lowering back pressure vehicle. Using 87 AKI regular octane with long, intricate exhaust systems, but Level 2 Turbo Charging (TURBO2) fuel is consistent with the fuel octane these systems must balance knock operates at up to 24 bar BMEP. The step that manufacturers specify for the performance with emissions tradeoffs, from Turbo1 to Turbo2 is accompanied majority of vehicles, and enables the and the increased size of the exhaust with additional displacement modeling to account for important manifold can pose packaging concerns, downsizing for reduced pumping losses. design and calibration issues associated particularly on V-engine Very few manufacturers have Turbo2 configurations.138 133 Boost refers to the degree to which the technology in the MY 2016 fleet. Only a few manufacturers produced turbocharger compresses the intake air for the engine, which may affect the specific power of the (c) CEGR1 internal combustion engine vehicles engine. with Atkinson cycle engines in MY Turbo Charging with Cooled Exhaust 134 Knock refers to rapid uncontrolled combustion Gas Recirculation (CEGR1) improves the in the cylinder part way through the combustion 138 Some HCR1 4-cylinder (I–4) engines use an process, which can create an audible sound and can knock resistance of Turbo2 engines by intricate 4–2–1 exhaust manifold to lower damage the engine. mixing cooled inert exhaust gases into backpressure and to improve engine efficiency. 135 Turbo lag refers to the delay time between the engine’s air intake. That allows Manufacturers sometimes fitted such an exhaust power demanded and power delivered; it is greater boost levels, more optimal spark system into a front-wheel-drive vehicle with an I– typically associated with rapid accelerations from a 4 engine by using a high underbody tunnel or stopped vehicle at idle. timing for improved fuel economy, and rearward dashpanel (trading off some interior 136 Specifically, 87 Anti-Knock Index (AKI) Tier space), but packaging such systems on rear-wheel- 3 certification fuel. 87 AKI is also known as 87 137 In particular, the step from a naturally- drive vehicles may pose challenges, especially if the (R+M)/2 or 87 (Research Octane + Motor Octane)/ aspirated V6 to a turbo I4 was particularly cost engine has two banks and would therefore require 2. effective in agency simulations. room for two such exhaust manifolds.

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2016; however, these engines are engine as outlined in the EPA SAE attributable to friction and thermal commonly paired with hybrid electric paper has ever been commercially efficiency before drawing conclusions. vehicle technologies due to the synergy produced or even produced as a Using vehicle level data may of peak efficiency of Atkinson cycle prototype in a lab setting. Furthermore, misrepresent or conflate complex engines and immediate torque from the engine map has not been validated interactions between a high thermal electric motors in strong hybrids. with hardware and bench data, even on efficiency engine, engine friction Atkinson cycle engines are very a prototype level (as no such engine reduction, accessory load common on power split hybrids and are exists to test to validate the engine improvements, transmission sometimes observed as part of a parallel map). technologies, mass reduction, hybrid system or plug-in hybrid system. Previously, EPA relied heavily on the aerodynamics, rolling resistance, and Atkinson cycle engines played a HCR2 (or sometimes referred to as ATK2 other vehicle technologies. For instance, prominent role in EPA’s January 2017 in previous EPA analysis) engine as a some of the newest high compression final determination, which has since cost effective pathway to compliance for ratio engines show improved thermal been withdrawn. Today’s analysis stringent alternatives, but many engine efficiency, in large part due to improved recognizes that the technology is not experts questioned its technical accessory loads or reduced parasitic suitable for many vehicles due to feasibility and near term commercial losses from accessory systems.144 The performance, emissions and packaging practicability. Stakeholders asked for CAFE model allows for incremental issues, and/or the extensive capital and the engine to be removed from improvement over existing HCR1 resources that would be required for compliance simulations until the technologies with the addition of manufacturers to shift from other performance could be validated with improved accessory devices (IACC), a powertrain technology pathways (such engine hardware.141 142 While for the technology that is available to be as turbocharging and downsizing) to Draft TAR, the agencies ran full-vehicle applied on many baseline MY 2016 standalone Atkinson cycle engine simulations with the theoretical engine vehicles with HCR1 engines and may be technology. map and made these available in the applied as part of a pathway of CAFE model, HCR2 technology as compliance to further improve the (a) HCR1 described in EPA’s SAE paper was not effectiveness of existing HCR1 engines. A number of Asian manufacturers included in today’s analysis because have launched Atkinson cycle engines there has been no observable physical (c) Emerging Gasoline Engine in smaller vehicles that do not use demonstration of the speculative Technologies technology, and many questions remain hybrid technologies. These production Manufacturers and suppliers continue engines have been benchmarked to about its practicability as specified, especially in high load, low engine to invest in many emerging engine characterize HCR1 technology for technologies, and some of these today’s analysis. speed operating conditions. Simulations with EPA’s HCR2 engine map produce technologies are on the cusp of Today’s analysis restricted the commercialization. Often, application of stand-alone Atkinson results that approach (and sometimes exceed) diesel powertrain efficiency.143 manufacturers submit information about cycle engines in the CAFE model in new engine technologies that they may some cases. The engines benchmarked Given the prominence of this unproven technology in previous rule-makings, soon bring into production. When this for today’s analysis were not suitable for happens, a collaborative effort is MY 2016 baseline vehicle models that the CAFE model may be configured to consider the application of HCR2 undertaken with suppliers and have 8-cylinder engines and in many manufacturers to learn as much as cases 6-cylinder engines. technology for reference only. As new engines emerge that achieve possible and sometimes begin (b) HCR2 high thermal efficiency, questions may simulation modeling efforts. Bench data, or performance data for preproduction EPA conceptualized a ‘‘future’’ be raised as to whether the HCR2 engine is a simulation proxy for the new engine vehicles and engines, is usually closely Atkinson cycle engine and published held confidential business information. the theoretical engine map in an SAE technology. It is important to conduct a 139 140 thorough evaluation of the actual new To properly characterize the paper. For this engine, EPA staff technologies, it is often necessary to began with a best-in-class 2.0L Atkinson production engines to measure the brake specific fuel consumption and to wait until the engine technologies are in cycle engine and then increased the production to study them. efficiency of the engine map further, characterize the improvements through the theoretical application of (1) Advanced Cylinder Deactivation 141 At NHTSA–2016–0068–0082, FCA additional technologies in combination, recommended, ‘‘Remove ATK2 from OMEGA (ADEAC) like cylinder deactivation, engine model until the performance is validated.’’, p. viii. friction reduction, and cooled exhaust And FCA stated, ‘‘ATK2—High Compression Advanced cylinder deactivation gas recirculation. This engine remains engines coupled with Cylinder Deactivation and systems (or rolling or dynamic cylinder Cooled EGR are unlikely to deliver modeled results, deactivation systems) allows a further entirely speculative, as no production meet customer needs, or be ready for commercial application.’’, p. 6–9. degree of cylinder deactivation than 139 Ellies, B., Schenk, C., and Dekraker, P., 142 At Docket ID No EPA–HQ–OAR–2015–0827– DEAC. The technology allows the ‘‘Benchmarking and Hardware-in-the-Loop 6156, The Alliance of Automobile Manufacturers engine to vary the percentage of Operation of a 2014 MAZDA SkyActiv 2.0L 13:1 commented, ‘‘[There] is no current example of cylinders deactivated and the sequence Compression Ratio Engine,’’ SAE Technical Paper combined Atkinson, plus cooled EGR, plus cylinder 2016–01–1007, 2016. Available at https:// deactivation technology in the present fleet to verify in which cylinders are deactivated, www.sae.org/publications/technical-papers/ EPA’s modeled benefits and . . . EPA could not essentially providing ‘‘displacement on content/2016-01-1007/. provide physical test results replicating its modeled demand’’ for low load operations, so 140 Lee, S., Schenk, C., and McDonald, J., ‘‘Air benefits of these combined technologies,’’ p. 40. long as the calibration avoids certain Flow Optimization and Calibration in High- 143 Thomas, J. ‘‘Drive Cycle Powertrain frequencies. Compression-Ratio Naturally Aspirated SI Engines Efficiencies and Trends Derived from EPA Vehicle with Cooled-EGR,’’ SAE Technical Paper 2016–01– Dynamometer Results,’’ SAE Int. J. Passeng. Cars— 0565, 2016. Available at https://www.sae.org/ Mech. Syst. 7(4):2014. Available at https:// 144 For instance, the MY 2018 2.5L Camry engine publications/technical-papers/content/2016-01- www.sae.org/publications/technical-papers/ that uses HCR technology also reduces parasitic 0565/. content/2014-01-2562/. losses with a variable capacity oil pump.

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ADEAC systems may be integrated Should VCR technology be employed in modeling for past rulemakings, and is into the valvetrains with moderate the timeframe of this proposed not included in this NPRM analysis, modifications on OHV engines. rulemaking? Why or why not? Do primarily because effectiveness, cost, However, while the ADEAC operating commenters believe VCR technology and mass market implementation concept remains the same on DOHC will see widespread adoption in the US readiness data are not available. engines, the valvetrain hardware vehicle fleet? Why or why not? What Please comment on the potential use configuration is very different, and vehicle segments may it best be suited of HCCI technology in the timeframe application on DOHC engines is for, and which segments would it not be covered by this rule. More specifically, projected to be more costly per cylinder best suited for? Why or why not? What should HCCI be included in the final due to the valvetrain differences. cost and effectiveness values should be rulemaking analysis for this proposed Some preproduction 8-cylinder OHV used if VCR is modeled for analysis? rulemaking? Why or why not? Please prototype vehicles were briefly Please provide supporting data. provide supporting data, including evaluated for this analysis, but no Additionally, please provide any effectiveness values, costs in relation production versions of the technology comments on the sponsored work varying engine types and applications, have been studied. related to VCR, described further in and production timing that supports the Today’s analysis relied on CBI to PRIA Chapter 6.3. timeframe of this rulemaking. estimate costs and effectiveness values of ADEAC. Since no engine map was (3) Compression Ignition Gasoline (d) Diesel Engines Engines (SpCCI, HCCI) available at the time of the NPRM Diesel engines have several analysis, ADEAC was estimated to For many years, engine developers, characteristics that give superior fuel improve a basic engine with VVL, VVT, researchers, manufacturers have efficiency, including reduced pumping SGDI, and DEAC by three percent (for 4 explored ways to achieve the inherent losses due to lack of (or greatly reduced) cylinder engines) six percent (for efficiency of a diesel engine while throttling, high pressure direct injection engines with more than 4 cylinders). maintaining the operating of fuel, a combustion cycle that operates ADEAC systems will continue to be characteristics of a gasoline engine. A at a higher compression ratio, and a very studied as production begins. potential pathway for striking this lean air/fuel mixture relative to an balance is utilizing compression equivalent-performance gasoline engine. (2) Variable Compression Ratio Engines ignition for gasoline fueled engines, (VCR) This technology requires additional more commonly referred to as enablers, such as a NO adsorption Engines using variable compression X Homogeneous Charge Compression catalyst system or a urea/ammonia ratio (VCR) technology appear to be at Ignition (HCCI). selective catalytic reduction system for a production-intent stage of Ongoing, periodic discussions with control of NO emissions during lean development but also appear to be manufacturers on future fuel saving X (excess air) operation. targeted primarily towards limited technologies and powertrain plans have, production, high performance and very generally, included HCCI as a long-term (e) Alternative Fuel Engines strategy. The technology appears to high BMEP (27–30 bar) applications. (1) Compressed Natural Gas (CNG) Variable compression ratio engines always be a strong consideration as, in work by changing the length of the theory, it provides the ‘‘best of both Compressed Natural Gas (CNG) piston stroke of the engine to operate at worlds,’’ meaning a way to provide engines use compressed natural gas as a a more optimal compression ratio and diesel engine efficiency with gasoline fuel source. The fuel storage and supply improve thermal efficiency over the full engine performance and emissions systems for these engines differ range of engine operating conditions. levels. tremendously from gasoline, diesel, and A number of manufacturers and Developments in both the research flex fuel vehicles. suppliers provided information about and the potential production (2) Flex Fuel Engines VCR technologies, and several design implementation of HCCI for the US concepts were reviewed that could market is continually assessed. In 2017, Flex fuel engines can run on regular achieve a similar functional outcome. In a significant, potentially production gasoline and fuel blended with ethanol. addition to design concept differences, breakthrough was announced by Mazda These vehicles may require additional intellectual property ownership regarding a gasoline-fueled engine equipment in the fuel system to complicates the ability of the agencies to employing Spark Controlled effectively supply different blends of define a VCR hardware system that Compression Ignition (SpCCI), where fuel to the engine. HCCI is employed for a portion of its could be widely adopted across the (f) Lubrication and Friction Reduction industry. normal operation and spark ignition is For today’s analysis, VCR engines used at other times.145 Soon after, Low-friction lubricants including low have a spot on the technology Mazda publicly stated they plan to viscosity and advanced low friction simulation tree, but VCR is not actively introduce this engine as part of the lubricant oils are now available (and used in the NPRM simulation. Skyactiv family of engines in 2019.146 widely used). If manufacturers choose to Reasonable representations of costs and However, HCCI was not included in make use of these lubricants, they may technology characterizations remain the simulation and vehicle fleet need to make engine changes and open questions for VCR engine conduct durability testing to technology and the analysis. 145 Mazda Next-Generation Technology—Press accommodate the lubricants. The level NHTSA is sponsoring work to Information, Mazda USA (Oct. 24, 2017), https:// of low friction lubricants exceeded 85% insidemazda.mazdausa.com/press-release/mazda- develop engine maps for additional next-generation-technology-press-information/ (last penetration in the MY 2016 fleet. combinations of technologies. Some of visited Apr. 13, 2018). Reduction of engine friction can be these technologies being researched 146 Mazda introduces updated 2019 CX–3 at 2018 achieved through low-tension piston presently, including VCR, may be used New York International Auto Show, Mazda USA rings, roller cam followers, improved (Mar. 28, 2018), https:// in the analysis supporting the final rule. insidemazda.mazdausa.com/press-release/mazda- material coatings, more optimal thermal Please provide comment on variable introduces-2019-cx-3-2018-new-york-auto-show/ management, piston surface treatments, compression ratio engine technology. (last visited Apr. 13, 2018). and other improvements in the design of

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engine components and subsystems that Currently, throughout the United could also limit consumer choice, or, in improve efficient engine operation. States, pump fuel is a blend of 90% the case of higher elevation regions, Manufacturers have already widely gasoline and 10% ethanol. It is standard present an opportunity for consumers to adopted both lubrication and friction practice for refiners to manufacture use a fuel grade that is below the reduction technologies. This analysis gasoline and ship it, usually via minimum recommended. As such, includes advanced engine maps that pipelines, to bulk fuel terminals across vehicle manufacturers employ strategies already assume application of low- the country. In many cases, refiners for scenarios where a lower than friction lubricants and engine friction supply lower octane fuels than the recommended, or required, fuel grade is reduction technologies. Therefore, minimum 87-octane required by law to used, mitigating engine damage over the additional friction reduction is not these terminals. The terminals then life of a vehicle. considered in today’s analysis. perform blending operations to bring the When knock (also referred to as The use and commercial development fuel octane level up to the minimum detonation) is encountered during of improved lubricants and friction required by law, and higher. In some engine operation, at the most basic reduction components will continue to cases, typically to lowest fuel grade, the level, non-turbo charged engines can be monitored, including conical boring ‘‘base fuel’’ is blended with ethanol, reduce or eliminate knock by adjusting and oblong cylinders, and future which has a typical octane rating of the timing of the spark that ignites the analyses may be updated if new approximately 113. For example, in fuel, as well as the amounts of fuel information becomes available. 2013, the State of Nebraska Ethanol injected at each intake stroke 5. Fuel Octane Board defined requirements for refiners (‘‘fueling’’). In turbo-charged to 84-octane gas for blending to achieve applications, boost levels are typically (a) What is fuel octane level? 87-octane prior to final dispensing to reduced along with spark timing and Gasoline octane levels are an integral consumers.150 fueling adjustments. Past rulemakings part of potential engine performance. have also discussed other techniques (b) Fuel Octane Level and Engine that may be employed to allow higher According the United States Energy Performance Information Administration (EIA), compression ratios, more optimal spark octane ratings are measures of fuel A typical, overarching goal of optimal timing to be used without knock, such stability. These ratings are based on the spark-ignited engine design and as the addition of cooled exhaust gas pressure at which a fuel will operation is to maximize the greatest recirculation (EGR). Regardless of the spontaneously combust (auto-ignite) in amount of energy from the fuel type of spark-ignition engine or a testing engine.147 Spontaneous available, without manifesting technology employed, reducing or combustion is an undesired condition detrimental impacts to the engine over preventing knock results in the loss of that will lead to serious engine damage its expected operating conditions. potential power output, creating a and costly repairs for consumers if not Design factors, such as compression ‘‘knock-limited’’ constraint on properly managed. The higher an octane ratio, intake and exhaust value control performance and efficiency. number, the more stable the fuel, specifications, combustion chamber and Despite limits imposed by available mitigating the potential for spontaneous piston characteristics, among others, are fuel grades, manufacturers continue to combustion, also commonly known as all impacted by octane (stability) of the make progress in extracting more power ‘‘knock.’’ Modern engine control fuel consumers are anticipated to use.151 and efficiency from spark-ignited systems are sophisticated and allow Vehicle manufacturers typically engines. Production engines are safely manufacturers to detect when ‘‘knock’’ develop their engines and engine operating with regular 87 AKI fuel with occurs during engine operation. These control system calibrations based on the compression ratios and boost levels control systems are designed to adjust fuel available to consumers. In many once viewed as only possible with operating parameters to reduce or cases, manufacturers may recommend a premium fuel. According to the eliminate ‘‘knock’’ once detected. fuel grade for best performance and to Department of Energy, the average In the United States, consumers are prevent potential damage. In some gasoline octane level has remained typically able to select from three cases, manufacturers may require a fundamentally flat starting in the early distinct grades of fuel, each of which specific fuel grade for both best 1980’s and decreased slightly starting in provides a different octane rating. The performance and/or to prevent potential the early 2000s. During this time, octane levels can vary from region to engine damage. however, the average compression ratio region, but on the majority, the octane Consumers, though, may or may not for the U.S. fleet has increased from 8.4 levels offered are regular (the lowest choose to follow the recommendation or to 10.52, a more than 20% increase, octane fuel–generally 87 Anti-Knock requirement for a specific fuel grade. yielding the statement that, ‘‘There is Index (AKI) also expressed as (the Additionally, regional fuel availability some concern that in the future, auto average of Research Octane + Motor manufacturers will reach the limit of Octane), midgrade (the middle range visited Mar. 19, 2018). 85 octane fuel is available technological increases in compression in high-elevation regions where the barometric octane fuel–generally 89–90 AKI), and ratios without further increases in the pressure is lower causing naturally-aspirated 152 premium (the highest octane fuel– engines to operate with less air and, therefore, at octane of the fuel.’’ generally 91–94 AKI).148 At higher lower torque and power. This creates less benefit As such, manufacturers are still elevations, the lowest octane rating and need for higher octane fuels as compared to at limited by the available fuel grades to lower elevations where engine airflow, torque, and available can drop to 85 AKI.149 consumers and the need to safeguard power levels are higher. the durability of their products for all of 150 Nebraska Ethanol Board, Oil Refiners Change 147 U.S. Energy Information Administration, What Nebraska Fuel Components, Nebraska.gov, http:// the available fuels; thus, the potential is Octane?, https://www.eia.gov/energyexplained/ ethanol.nebraska.gov/wordpress/oil-refiners- _ index.cfm?page=gasoline home#tab2 (last visited change-nebraska-fuel-components/ (last visited 152 Fact of the Week, Fact #940: August 29, 2016 Mar. 19, 2018). Mar. 19, 2018). Diverging Trends of Engine Compression Ratio and 148 Id. 151 Additionally, PRIA Chapter 6 contains a brief Gasoline Octane Rating, U.S. Department of Energy, 149 See e.g., U.S. Department of Energy and U.S. discussion of fuel properties, octane levels used for https://www.energy.gov/eere/vehicles/fact-940- Environmental Protection Agency, What is 85 engine simulation and in real-world testing, and august-29-2016-diverging-trends-engine- octane, and is it safe to use in my vehicle?, https:// how octane levels can impact performance under compression-ratio-and-gasoline-octane (last visited www.fueleconomy.gov/feg/octane.shtml#85 (last these test conditions. Mar. 21, 2018).

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improvement in the design of spark- and/or the Draft TAR regarding the transmission may work with ignition engines continues to be potential for increasing octane levels for complementary equipment to improve overshadowed by the fuel grades the U.S. market. fuel economy. In the meetings with HOLC and the available to consumers. Today’s analysis significantly FFA, the groups advocated for the (c) Potential of Higher Octane Fuels potential benefits high octane fuels increased the number of transmissions Automakers and advocacy groups could provide via the blending of non- modeled in full-vehicle simulations, have expressed support for increases to petroleum feedstocks to increase octane attempting to more closely align the fuel octane levels for the U.S. market levels available at the pump. The Department of Energy full-vehicle and are actively participating in groups’ positions on benefits took both simulations with existing vehicles. Department of Energy research programs a technical approach by suggesting an Previously, EPA included just five on the potential of higher octane fuel octane level of 100 is desired for the transmissions 155 by vehicle class in usage.153 154 Some positions for potential marketplace, as well as, the benefits their analysis, and often EPA future octane levels include advocacy from potential increased national energy represented upgrades among manual, for today’s premium grade becoming the security by reduced dependencies on automatic, continuously variable, and base grade of fuel available, which foreign petroleum. dual clutch transmissions with the same could enable low cost design changes 156 157 (d) Fuel Octane—Request for Comments effectiveness and cost values that would improve fuel economy and within a vehicle class. Today’s analysis CO2. Challenges associated with this Please comment on the potential simulated nearly 20 transmissions, with approach include the increased fuel cost benefits, or dis-benefits, of considering explicit assumptions about gear ratios, the impacts of increased fuel octane to consumers who drive vehicles gear efficiencies, gear spans, shift logic, designed for current regular octane levels available to consumers for and transmission architecture.158 159 grade fuel that would not benefit from purposes of the model. More This analysis improves transparency by the use of the higher cost higher octane specifically, please comment on how fuel. The net costs for a shift to higher increasing fuel octane levels would play making clear the assumptions octane fuel would persist well into the a role in product offerings and engine underlying the transmissions in the full- future. Net benefits for the transition technologies. Are there potential vehicle simulations and by increasing would not be achieved until current improvements to fuel economy and CO2 the number of transmissions simulated regular octane fuel is not available in reductions from higher octane fuels? since the Draft TAR. Methods will be the North American market, causing Why or why not? What is an ideal continuously evaluated to improve manufacturers to redesign all engines to octane level for mass-market transmission models in full-vehicle operate the higher octane fuel, and then consumption balanced against cost and simulations. For the box plots of after those vehicles have been in potential benefits? What are the effectiveness values, as shown in the production a sufficient number of model negatives associated with increasing the PRIA Chapter 6, all automatic years to largely replace the current on- available octane levels and, potentially, transmissions are relative to a 5-speed road vehicle fleet. The transition to net eliminating today’s lower octane fuel automatic, and all manual transmissions positive benefits could take many years. blends? Please provide supporting data are relative to a 5-speed manual. Table In anticipation of this proposed for your position(s). II–11 below shows the absolute costs of rulemaking, organizations such as the 6. Transmission Technologies transmission used for this analysis High Octane Low Carbon Alliance including learning and retail price Transmissions transmit torque from (HOLC) and the Fuel Freedom equivalent. Foundation (FFA), have shared their the engine to the wheels. Transmissions positions on the potential for making may improve fuel efficiency primarily 155 Null, TRX11, TRX12, TRX21, TRX22. higher octane fuels available for the U.S. through two mechanisms: (1) 156 Draft TAR, p. 5–297 through 5–298 market. Other stakeholders also Transmissions with more gears allow summarizes effectiveness values previously commented to past NHTSA rulemakings the engine to operate more regularly at assumed for stepping between transmission the most efficient speed-load points, technologies (Null, TRX11, TRX12, TRX21, TRX22). 157 153 Mark Phelan, High octane gas coming—but and (2) transmissions may have Draft TAR, p. 5–299. ‘‘For future vehicles, it you’ll pay more for it, Detroit Free Press (Apr. 25, improvements in friction (gears, was assumed that the costs for transitioning from 2017), https://www.freep.com/story/money/cars/ one technology level (TRX11–TRX22) to another mark-phelan/2017/04/25/new-gasoline-promises- bearings, seals, and so on), or level is the same for each transmission type (AT, lower-emissions-higher-mpg-and-cost-octane- improvements in shift efficiency that AMT, DCT, and CVT).’’ society-of-automotive-engineers/100716174/. help the transmission transfer torque 158 See PRIA Chapter 6.3. 154 The octane game: Auto industry lobbies for 95 more efficiently, lowering parasitic 159 Ehsan, I.S., Moawad, A., Kim, N., & Rousseau, as new regular, Automotive News (April 17, 2018), A. ‘‘A Detailed Vehicle Simulation Process To http://www.autonews.com/article/20180417/ losses. These mechanisms are very Support CAFE Standards.’’ ANL/ESD–18/6. Energy BLOG06/180419780/the-octane-game-auto- different, so full-vehicle simulation is Systems Division, Argonne National Laboratory. industry-lobbies-for-95-as-new-regular. helpful to understand how a 2018.

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(a) Automatic Transmissions higher speed transmissions were more (1) Continuously Variable prevalent in the MY 2016 fleet. Transmissions Five-, six-, seven-, eight-, nine- and ten-speed automatic transmissions are ‘‘L2’’ and ‘‘L3’’ transmissions Continuously variable transmission optimized by changing the gear ratios to designate improved gear efficiency and (CVT) commonly uses V-shaped pulleys enable the engine to operate in a more reduced parasitic losses. Few connected by a metal belt rather than efficient operating range over a broader transmissions in the MY 2016 fleet have gears to provide ratios for operation. range of vehicle operating conditions. achieved ‘‘L2’’ efficiency, and the Unlike manual and automatic While a six speed transmission highest level of transmission efficiencies transmissions with fixed transmission application was most prevalent for the modeled are assumed to be available in ratios, continuously variable MYs 2012–2016 final rule, eight and MY 2022. transmissions can provide fully variable and an infinite number of transmission

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ratios that enable the engine to operate gear is pre-selected, which allows for analysis limits the application of in a more efficient operating range over faster and smoother shifting. The 2012– improved DCTs to vehicles that already a broader range of vehicle operating 2016 final rule limited DCT applications use DCTs. Many of these vehicles are conditions. In this NPRM, two levels of to a maximum of 6-speeds. Both 6-speed imported performance products. CVTs are considered for future vehicles. and 8-speed DCT transmissions are (b) Manual Transmissions The second level CVT would have a considered in today’s proposal. wider transmission ratio, increased Dual clutch transmissions are very Manual 6- and 7-speed transmissions torque capacity, improvements in oil effective transmission technologies, and offer an additional gear ratio, sometimes pump efficiency, lubrication previous rule-making projected rapid, with a higher overdrive gear ratio, over improvements, and friction reduction. and wide adoption into the fleet. a 5-speed manual transmission. Similar While CVTs work well with light loads, However, early DCT product launches to automatic transmissions, more gears the technology as modeled is not in the U.S. market experienced shift often means the engine may operate in suitable for larger vehicles such as harshness and poor launch the efficient zone more frequently. trucks and large SUVs. performance, resulting in customer satisfaction issues—some so extreme as 7. Vehicle Technologies (2) Dual Clutch Transmissions to prompt vehicle buyback As discussed earlier in Section 160 Dual clutch or automated shift campaigns. Most manufacturers are II.D.1.b)(1), several technologies were manual transmissions (DCT) are similar not using DCTs in the U.S. market due considered for this analysis, and Table to manual transmissions except for the to the customer satisfaction issues. II–12, Table II–13, and Table II–14 vehicle controls shifting and launch Manufacturers used DCTs in about three below shows the full list of vehicle functions. A dual-clutch automated shift percent of the MY 2016 fleet. Today’s technologies analyzed and the manual transmission uses separate associated absolute cost.161 160 Ford Powershift Transmission Settlement, clutches for even-numbered and odd- http://fordtransmissionsettlement.com/ (last visited numbered gears, so the next expected June 21, 2018). 161 Mass reduction costs are in $/lb.

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Table 11-12 - Summary of Absolute Vehicle Technology Cost vs. Baseline for Cars, I nc I u d.mg L earnmg . Enects an d R eta•·1 P nee . E;qmva . I ent Name Technology Pathway C-2017 C-2021 C-2025 C-2029

LDB DLR $ 88.32 $ 81.14 $ 75.14 $ 70.94

SAX DLR $ 93.43 $ 83.15 $ 77.05 $ 72.87

ROLLO ROLL $ - $ - $ - $ -

ROLLlO ROLL $ 7.47 $ 6.69 $ 6.25 $ 5.96

ROLL20 ROLL $ 58.32 $ 47.14 $ 42.24 $ 39.54

MRO MR $ - $ - $ - $ -

MRl MR $ 0.42 $ 0.37 $ 0.34 $ 0.32

MR2 MR $ 0.51 $ 0.45 $ 0.42 $ 0.39

MR3 MR $ 0.78 $ 0.71 $ 0.66 $ 0.62

MR4 MR $ 1.44 $ 1.17 $ 1.04 $ 0.95

MRS MR $ 2.62 $ 2.11 $ 1.87 $ 1.70

AEROO AERO $ - $ - $ - $ -

AER05 AERO $ 56.65 $ 50.44 $ 46.71 $ 44.33

AEROlO AERO $ 115.82 $ 103.13 $ 95.49 $ 90.62

AER015 AERO $ 163.66 $ 145.72 $ 134.93 $ 128.05

AER020 AERO $ 289.56 $ 257.82 $ 238.72 $ 226.56

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Table 11-13- Summary of Absolute Vehicle Technology Cost vs. Baseline for SUVs, I ncI u d.mg L earnmg . Enects and R eta•·1 P nee . E;qmva . I ent Name Technology Pathway C-2017 C-2021 C-2025 C-2029

LDB DLR $ 88.32 $ 81.14 $ 75.14 $ 70.94

SAX DLR $ 93.43 $ 83.15 $ 77.05 $ 72.87

ROLLO ROLL $ - $ - $ - $ -

ROLLlO ROLL $ 7.47 $ 6.69 $ 6.25 $ 5.96

ROLL20 ROLL $ 58.32 $ 47.14 $ 42.24 $ 39.54

MRO MR $ - $ - $ - $ -

MRl MR $ 0.25 $ 0.22 $ 0.20 $ 0.19

MR2 MR $ 0.34 $ 0.30 $ 0.28 $ 0.27

MR3 MR $ 0.59 $ 0.54 $ 0.50 $ 0.47

MR4 MR $ 1.37 $ 1.11 $ 0.99 $ 0.90

MRS MR $ 2.44 $ 1.96 $ 1.74 $ 1.58

AEROO AERO $ - $ - $ - $ -

AER05 AERO $ 56.65 $ 50.44 $ 46.71 $ 44.33

AEROlO AERO $ 115.82 $ 103.13 $ 95.49 $ 90.62

AER015 AERO $ 163.66 $ 145.72 $ 134.93 $ 128.05

AER020 AERO $ 289.56 $ 257.82 $ 238.72 $ 226.56

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(a) Reduced Rolling Resistance rolling resistance reduction. In this (b) Reduced Aerodynamic Drag Lower-rolling-resistance tires have NPRM, baseline vehicle reference Coefficient characteristics that reduce frictional rolling resistance values were determined based on the MY 2016 Aerodynamic drag reduction can be losses associated with the energy achieved via two approaches, either by dissipated mainly in the deformation of vehicles rather than the MY 2008 reducing the drag coefficients or the tires under load, thereby improving vehicles used in the 2012 final rule. reducing vehicle frontal area. To reduce fuel economy and reducing CO Rolling resistance values were assigned 2 the drag coefficient, skirts, air dams, emissions. New for this proposal, and based on CBI shared by manufacturers. underbody covers, and more also marking an advance over low In some cases, low rolling resistance rolling resistance tires considered aerodynamic side view mirrors can be tires can affect traction, which may be applied. In the MY 2017–2025 final rule during the heavy duty greenhouse gas untenable for some high performance rulemaking,162 is a second level of lower and the 2016 Draft TAR, the analysis vehicles. For cars and SUVs with more rolling resistance tires that reduce included two levels of aerodynamic than 405 horsepower, the analysis frictional losses even further. The first technologies. The second level included level of low rolling resistance tires will restricted the application of the highest active grille shutters, rear visors, and have 10% rolling resistance reduction levels of rolling resistance. For cars and larger under body panels. This NPRM while the second level would have 20% SUVs with more than 500 horsepower, expanded the aerodynamic drag the analysis restricted the application of improvements from two levels to four to 162 See 76 FR 57106, at 57207, 57229 (Sep. 15, any additional rolling resistance provide more discrete levels. The NPRM 2011). technology. levels are 5%, 10%, 15%, and 20%

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improvement relative to baseline modeling. That level of drag reduction (e) Secondary Axle Disconnect (SAX) reference vehicles. The agencies relied is likely not technologically feasible on the wind tunnel testing performed by with today’s technology, and the Front or secondary axle disconnect for National Research Council (NRC), analysis accordingly restricted the all-wheel drive systems provides a Canada, Transport Canada (TC), and application of advanced levels of torque distribution disconnect between Environment and Climate Change, aerodynamics in some instances, such front and rear axles when torque is not Canada (ECCC) to quantify the as in this case, due to bodystyle form required for the non-driving axle. This aerodynamic drag impacts of various drag limitations. Separate from form results in the reduction of associated OEM aerodynamic technologies and to drag limitations, some high performance parasitic energy losses. explore the improvement potential of vehicles already use advanced 8. Electrification Technologies these technologies by expanding the aerodynamics technologies to generate capability and/or improving the design down force, and sometimes these For this NPRM, the analysis of of MY 2016 state-of-the-art aerodynamic applications must trade-off between electrification technologies relies treatments. The agencies estimated the aerodynamic drag coefficient reduction primarily on research published by the level of aerodynamic drag in each and down force. Today’s analysis does Department of Energy, ANL.164 ANL’s vehicle model in the MY 2016 baseline not apply 15% or 20% aerodynamic assumptions regarding all hybrid fleet and gathered CBI on aerodynamic drag coefficient reduction to cars and systems, including belt-integrated drag coefficients, so each vehicle has an SUVs with more than 405 horsepower. starter generators, strong parallel and appropriate initial value for further series hybrids, plug-in hybrids,165 and (c) Mass Reduction improvements. battery electric vehicles, and most Notably, today’s analysis assumes Mass Reduction can be achieved in projected technology costs were adopted aerodynamic drag reduction can only many ways, such as material for this analysis. In addition, the most come from reduction in the substitution, design optimization, part recent ANL BatPaC model is used to aerodynamic drag coefficient and not consolidation, improving manufacturing estimate battery costs. Table II–15 and from reduction of frontal area.163 For process, etc. The analysis utilizes mass Table II–16 below show the absolute some bodystyles, the agencies have no reduction levels of 5, 10, 15, and 20% costs of all electrification technologies evidence that manufacturers may be relative to a reference glider vehicle for estimated for this NPRM analysis able to achieve 15% or 20% each vehicle subsegment. For HEV, relative to a basic internal combustion aerodynamic drag coefficient reduction PHEV, and BEV vehicles, net mass engine vehicle with a 5-speed automatic relative to baseline for some bodystyles reduction was considered, including the transmission.166 (for instance, with pickup trucks) due to mass reduction applied to the glider and form drag limitions. Previously, EPA the added mass of electrification 164 Moawad et al., Assessment of vehicle sizing, analysis assumed some vehicles from all components. An extensive discussion of energy consumption, and cost through large-scale simulation of advanced engine technologies, bodystyles could (and would) reduce mass reduction technologies as well as Argonne National Laboratory (March 2016), aerodynamic forces by 20%, which in the cost of mass reduction is located in available at https://www.autonomie.net/pdfs/ some cases led to future pickup trucks Chapter 6.3 of the PRIA. The analysis Report%20ANL%20ESD-1528%20-%20Assessment having aerodynamic drag coefficients included an estimated level of mass %20of%20Vehicle%20Sizing,%20Energy%20 Consumption%20and%20Cost%20through better than some of today’s typical cars, reduction technology in each vehicle %20Large%20Scale%20Simulation%20 if frontal area were held constant. While model in the MY 2016 baseline fleet so of%20Advanced%20Vehicle%20Technologies%20- ANL created full-vehicle simulations for that each vehicle model has an %201603.pdf. trucks with 20% drag reduction, those appropriate initial value for further 165 Notably all power split hybrids, and all plug- improvements. in hybrid vehicles were assumed to be paired with simulations were not used in the CAFE a high compression ratio internal combustion (d) Low Drag Brakes (LDB) engine for this analysis. 163 EPA previously assumed that manufacturers 166 Note: These costs do not include value loss for could reduce frontal area as well as aerodynamic Low-drag brakes reduce the sliding HEVs, PHEVs, and BEVs. Powertrain hardware drag coefficient to achieve 20% aerodynamic force friction of disc brake pads on rotors between cars and small SUV’s is often similar, reduction relative to ‘‘Null’’ or initial aerodynamic especially if technology is used vehicles on the technology level; however, reducing frontal area when the brakes are not engaged same platform; however, battery pack sizes may would likely degrade other utility features like because the brake pads are pulled away vary meaningfully to deliver similar range in interior volume, or ingress/egress. from the rotors. different applications.

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Table 11-15 - Summary of Car and Small SUV Absolute Electrification Technology Cost Without Batteries vs. Baseline Internal Combustion Engine, Including Learning Effects an d R et a•·1 P nee . E.qmva . Ien t Name Technology Pathway C-2017 C-2021 C-2025 C-2029

CONV Electrification $ - $ - $ - $ -

SS12V Electrification $ 657.92 $ 568.03 $ 508.83 $ 473.05

BISG Electrification $ 1,137.19 $ 829.75 $ 714.98 $ 655.86

CISG Electrification $ 893.28 $ 781.09 $ 691.89 $ 651.54

SHEVP2 Hybrid/Electric $ 2,206.07 $ 1,942.13 $ 1,732.29 $ 1,637.38

SHEVPS Hybrid/Electric $ 6,477.91 $ 5,664.33 $ 5,017.49 $ 4,724.85

PHEV30 Advanced Hybrid/Electric $ 8,180.35 $ 6,956.06 $ 6,008.25 $ 5,587.55

PHEV50 Advanced Hybrid/Electric $ 8,338.69 $ 7,011.23 $ 5,994.55 $ 5,546.75

BEV200 Advanced Hybrid/Electric $ 2,976.02 $ 2,324.66 $ 1,859.67 $ 1,664.95

FCV Advanced Hybrid/Electric $19,673.32 $17,607.59 $16,485.05 $15,702.81

Table 11-16- Summary of Truck and Medium SUV Absolute Electrification Technology Cost Without Batteries vs. Baseline Internal Combustion Engine, Including Learning Enec t san d R e t a•·1 P nee . E.qmva . I en t Name Technology Pathway C-2017 C-2021 C-2025 C-2029

CONV Electrification $ - $ - $ - $ -

SS12V Electrification $ 735.31 $ 634.85 $ 568.69 $ 528.70

BISG Electrification $ 524.86 $ 382.96 $ 329.99 $ 302.70

CISG Electrification $ 1,786.54 $ 1,562.17 $ 1,383.78 $ 1,303.07

SHEVP2 Hybrid/Electric $ 1,924.68 $ 1,696.08 $ 1,514.34 $ 1,432.14

SHEVPS Hybrid/Electric $ 8,038.86 $ 7,029.24 $ 6,226.53 $ 5,863.38

PHEV30 Advanced Hybrid/Electric $10,395.42 $ 8,839.62 $ 7,635.17 $ 7,100.55

PHEV50 Advanced Hybrid/Electric $10,683.13 $ 8,982.46 $ 7,679.93 $ 7,106.23

BEV200 Advanced Hybrid/Electric $ 4,351.27 $ 3,398.92 $ 2,719.04 $ 2,434.34

FCV Advanced Hybrid/Electric $25,969.16 $23,242.36 $21,760.59 $20,728.01

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(a) Hybrid Technologies electric operation and more efficient a control system that allows the battery (1) 12-Volt Stop-Start brake-energy recovery. Engaging the pack to be substantially depleted under clutch allows efficient coupling of the electric-only or blended mechanical/ 12-volt Stop-Start, sometimes referred engine and electric motor and, when electric operation and batteries that can to as idle-stop or 12-volt micro hybrid, combined with a DCT transmission, be cycled in charge sustaining operation is the most basic hybrid system that reduces gear-train losses relative to at a lower state of charge than is typical facilitates idle-stop capability. These power-split or 2-mode hybrid systems. of other hybrid electric vehicles. These systems typically incorporate an Battery costs are now considered vehicles are sometimes referred to as enhanced performance battery and other separately from other HEV hardware. Range Extended Electric Vehicles features such as electric transmission P2 Hybrid systems typically rely on (REEV). In this NPRM analysis, PHEVs pump and cooling pump to maintain the internal combustion engine to with two all-electric ranges—both a 30 vehicle systems during idle-stop. deliver high, sustained power levels. mile and a 50 mile all-electric range— (2) Higher Voltage Stop-Start/Belt While many vehicles may use HCR1 have been included as potential Integrated Starter Generator engines as part of a hybrid powertrain, technologies. Again, battery costs are HCR1 engines may not be suitable for all now considered separately from other Higher Voltage Stop-Start/Belt vehicles, especially high performance PHEV hardware. Integrated Starter Generator (BISG), vehicles, or vehicles designed to carry The ANL Autonomie simulations sometimes referred to as a mild hybrid or tow large loads. Many manufacturers assumed all PHEVs use a high system, provides idle-stop capability may prefer turbo engines (with high compression ratio engine. Therefore, all and uses a higher voltage battery with specific power output) for P2 Hybrid vehicles equipped with PHEV increased energy capacity over typical systems. technology in the CAFE model inputs automotive batteries. The higher system (5) Power-Split Hybrid and simulations are assumed to have voltage allows the use of a smaller, more high compression ratio engines. In powerful electric motor. This system Power-split Hybrid (SHEVPS) is a practice, many PHEVs recently replaces a standard alternator with an hybrid electric drive system that introduced in the marketplace use enhanced power, higher voltage, higher replaces the traditional transmission turbo-charged engines in the PHEV with a single planetary gearset and a efficiency starter-alternator, that is belt system, and this is particularly true for motor/generator. This motor/generator driven and that can recover braking PHEVs produced by European uses the engine to either charge the energy while the vehicle slows down manufacturers and for other PHEV battery or supply additional power to (regenerative braking). Today’s analysis performance vehicle applications. assumes 48V systems on cars and small the drive motor. A second, more Please provide comment on the SUVs and high voltage systems for large powerful motor/generator is modeling of PHEV systems. Should SUVs and trucks. Future analysis may permanently connected to the vehicle’s turbo PHEVs be considered instead, or reference the application and operation final drive and always turns with the in addition to high compression ratio of 48V systems on large SUVs and wheels. The planetary gear splits engine PHEVs? Why or why not? What vehicle trucks, if applicable. power between the first motor/generator segments may turbo PHEVs best be and the drive motor to either charge the suited for, and which segments would it (3) Integrated Motor Assist (IMA)/Crank battery or supply power to the wheels. Integrated Starter Generator not be best suited for? What vehicle The power-split hybrid technology is segments may high compression ratio Integrated Motor Assist (IMA)/Crank included in this analysis as an enabling PHEVs best be suited for, and which integrated starter generator (CISG) technology supporting this proposal, segments would it not be best suited provides idle-stop capability and uses a (the agencies evaluate the P2 hybrid for? Similarly, the analysis currently high voltage battery with increased technology discussed above where considers PHEVs with 30-mile and 50- energy capacity over typical automotive power-split hybrids might otherwise mile all-electric range, and should other batteries. The higher system voltage have been appropriate). As stated above, ranges be considered? For instance, a allows the use of a smaller, more battery costs are now considered 20-mile all-electic range may decrease powerful electric motor and reduces the separately from other HEV hardware. the battery pack size, and hence the weight of the wiring harness. This Power-split hybrid technology as battery pack cost relative to a 30-mile system replaces a standard alternator modeled in this analysis is not suitable all-electric range system, while still with an enhanced power, higher for large vehicles that must handle high providing electric-vehicle functionality voltage, higher efficiency starter loads. in many applications. Do commenters alternator that is crankshaft-mounted The ANL Autonomie simulations believe PHEV technology will see and can recover braking energy while assumed all power-split hybrids use a widespread adoption in the US vehicle the vehicle slows down (regenerative high compression ratio engine. fleet? Why or why not? Please provide braking). Therefore, all vehicles equipped with supporting data. SHEVPS technology in the CAFE model (4) P2 Hybrid inputs and simulations are assumed to (b) Full Electrification and Fuel Cell P2 Hybrid (SHEVP2) is a newly have high compression ratio engines. Vehicles emerging hybrid technology that uses a transmission-integrated electric motor (6) Plug-in Hybrid Electric (1) Battery Electric placed between the engine and a Plug-in hybrid electric vehicles Electric vehicles (EV) are equipped gearbox or CVT, much like the IMA (PHEV) are hybrid electric vehicles with with all-electric drive and with systems system described above except with a the means to charge their battery packs powered by energy-optimized batteries wet or dry separation clutch that is used from an outside source of electricity charged primarily from grid electricity. to decouple the motor/transmission (usually the electric grid). These EVs with range of 200 miles have been from the engine. In addition, a P2 vehicles have larger battery packs with included as a potential technology in hybrid would typically be equipped more energy storage and a greater this NPRM. Battery costs are now with a larger electric machine. capability to be discharged than other considered separately from other EV Disengaging the clutch allows all- hybrid electric vehicles. They also use hardware.

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(2) Fuel Cell Electric (c) Electric Vehicle Infrastructure and charge convenience is not taken BEVs and PHEVs may be charged at into account in the CAFE model. Also, Fuel cell electric vehicles (FCEVs) today’s analysis assumes HEVs, PHEVs, utilize a full electric drive platform but home or elsewhere. Home chargers may access electricity from a regular wall and BEVs have the same survival rates consume electricity generated by an outlet, or they may require special and mileage accumulation schedules as onboard fuel cell and hydrogen fuel. equipment to be installed at the home. vehicles with conventional powertrains, Fuel cells are electrochemical devices Commercial chargers may sometimes be and that HEVs, PHEVs, and BEVs never that directly convert reactants (hydrogen found at businesses or other travel receive replacement batteries before and oxygen via air) into electricity, with locations. These chargers often may being scrapped. The agencies invite the potential of achieving more than supply power to the vehicle at a faster comment on these assumptions and on twice the efficiency of conventional rate of charge but often require data and practicable methods to internal combustion engines. High significant capital investment to install. implement any alternatives. pressure gaseous hydrogen storage tanks Time to charge, and availability and are used by most automakers for FCEVs. convenience of charging are significant 9. Accessory Technologies The high pressure tanks are similar to factors for plug-in vehicle operators. For Two accessory technologies, electric those used for compressed gas storage in many consumers, accessible charging power steering (EPS) and improved more than 10 million CNG vehicles stations present inconveniences that accessories (IACC) (accessory worldwide, except that they are may deter the adoption of battery technologies categorized for the 2012 designed to operate at a higher pressure electric and plug-in hybrid vehicles. rule) were considered in this analysis, (350 bar or 700 bar vs. 250 bar for CNG). More detail about charging and and are described below.167 Table II–17 FCEVs are currently produced in charging infrastructure, including a discussion of potential electric vehicle and Table II–18 below shows the limited numbers and are available in impacts on the electric grid, is available estimated absolute costs including limited geographic areas. in the PRIA, Chapter 6. For today’s learning effects and retail price analysis, costs for installing chargers equivalent utilized in today’s analysis.

(a) Electric Power Steering (EPS) because it replaces a continuously types of light-duty vehicles, including operated hydraulic pump, thereby large trucks. However, this analysis Electric power steering (EPS)/ reducing parasitic losses from the applies the EHPS technology to large Electrohydraulic power steering (EHPS) accessory drive. Manufacturers have trucks and the EPS technology to all is an electrically-assisted steering informed the agencies that full EPS other light-duty vehicles. system that has advantages over systems are being developed for all traditional hydraulic power steering

167 For further discussion of accessory technologies, see Chapter 6 of the PRIA accompanying this NPRM.

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(b) Improved Accessories (IACC) supercharger for engine breathing. The (b) Electrified Vehicle Powertrain Improved accessories (IACC) may efficiency may be significantly higher • Advanced battery chemistries— include high efficiency alternators, than MY 2016 turbocharged gasoline many emerging battery technologies electrically driven (i.e., on-demand) engines with competitive costs. This promise to eventually improve the cost, water pumps, variable geometry oil engine architecture could run on many safety, charging time, and durability in pumps, cooling fans, a mild fuels, including gasoline and diesel. comparison to the MY 2016 automotive regeneration strategy, and high Packaging constraints, emissions lithium-ion batteries. For instance, efficiency alternators. It excludes other compliance, and performance across a many view solid state batteries as a electrical accessories such as electric oil wide range of operating conditions promising medium-term automotive pumps and electrically driven air remain as open considerations. No technology. Solid state batteries replace conditioner compressors. In the MY production vehicles have been publicly the battery’s liquid electrolyte with a 2017–2025 final rule, two levels of IACC announced, and multiple manufacturers solid electrolyte to potentially improve were offered as a technology path (a low continue to evaluate the safety, power and energy density, improvement level and a high technology.169 170 durability, and cost. Some variations • improvement level). Since much of the Dual-fuel—engine concepts such as use ceramic, polymer, or sulfide-based market has incorporated some of these reactivity controlled compression solid electrolytes. Multiple automakers technologies in the MY 2016 fleet, the ignition (RCCI) combine multiple fuels and suppliers are exploring the analysis assumes all vehicles have (e.g. gasoline and diesel) in cylinder to technology and possible incorporated what was previously the improve brake thermal efficiency while commercialization that may occur in the low level, so only the high level remains reducing NOX and particulate early 2020s.175 176 177 as an option for some vehicles. emissions. This technology is still in the • Supercapacitors/Ultracapacitors— research phase.171 An electrical energy storage device with 10. Other Technologies Considered but • Smart accessory technologies—can Not Included in This Aanalysis higher power density but lower energy improve fuel efficiency through smarter density than batteries. Advanced Manufacturers, suppliers, and controls of existing systems given capacitors may reduce battery researchers continue to create a diverse imminent or expected controls inputs in degradation associated with charge and set of fuel economy technologies. Many real world driving conditions. For discharge cycles, with some tradeoffs to high potential technologies that are still instance, a vehicle could adjust the use cost and engineering complexity. in the early stages of the development of accessory systems to conserve energy Supercapacitors/Ultracapacitors are and commercialization process are still and fuel as a vehicle approaches a red currently not used in parallel or as a being evaluated for any final analysis. light. Vehicle connectivity and sensors standalone traction motor energy storage Due to uncertainties in the cost and can further refine the operation for more device.178 capabilities of emerging technologies, benefit and smoother operation.172 • Motor/Drivetrain: some new and pre-production • High Compression Miller Cycle Æ Lower-cost magnets for Brushless technologies are not yet a part of the Engine with Variable Geometry Direct Current (BLDC) motors—BLDC CAFE model simulation. Evaluating and Turbocharger or Electric Supercharger— motor technology, common in hybrid benchmarking promising fuel economy Atkinson cycle gasoline engines with and battery electric vehicles, uses rare technologies continues to be a priority sophisticated forced induction system earth magnets. By substituting and as commercial development matures. that requires advanced controls. The eliminating rare earths from the benefits of these technologies provide (a) Engine Technologies magnets, motor cost can be significantly better control of EGR rates and boost • reduced. This technology is announced, Variable compression ratio (VCR)— which is achieved with electronically but not yet in production. The varies the compression ratio and swept controlled turbocharger or supercharger. capability and material configuration of volume by changing the piston stroke on The electric version of this technology these systems remains a closely guarded all cylinders. Manufacturers accomplish which incorporates 48V is called E- trade secret.179 this by changing the effective length of boost.173 174 the piston connecting rod, with some maps were not available in time for the NPRM prototypes having a range of 8:1 to 14:1 169 Murphy, T. Achates: Opposed-Piston Engine analysis. Please see Chapter 6.3 of the PRIA compression ratio. In turbocharged makers tooling up, Wards Auto (Jan. 23, 2017), accompanying this proposal for more information. form, early publications suggest VCR http://wardsauto.com/engines/achates-opposed- 175 Schmitt, B. Ultrafast-Charging Solid-State EV may be possible to deliver up to 35% piston-engine-makers-tooling. Batteries Around The Corner, Toyota Confirms, 170 Our Formula, Achates Power, http:// Forbes (Jul. 25, 2017), https://www.forbes.com/ improved efficiency over the existing achatespower.com/our-formula/opposed-piston/ sites/bertelschmitt/2017/07/25/ultrafast-charging- equivalent-output naturally-aspirated (last visited June 21, 2018). solid-state-ev-batteries-around-the-corner-toyota- engine.168 171 Robert Wagner, Enabling the Next Generation confirms/#5736630244bb. • Opposed-piston engine—sometimes of High Efficiency Engines, Oak Ridge National 176 Moving toward clean mobility, Robert Bosch known as opposed-piston opposed- Laboratory, U.S. Department of Energy (2012), GmbH, https://www.bosch.com/explore-and- available at https://www.energy.gov/sites/prod/ experience/moving-toward-clean-mobility/ (last cylinder (OPOC), operates with two files/2014/03/f8/deer12_wagner_0.pdf. visited June 21, 2018). pistons per cylinder working in 172 EfficientDynamics—The intelligent route to 177 Reuters Staff, Honda considers developing all opposite reciprocal motion and running lower emissions, BMW Group (2007), https:// solid-state EV batteries, Reuters (Dec. 21, 2017), on a two-stroke combustion cycle. It has www.bmwgroup.com/content/dam/bmw-group- https://www.reuters.com/article/us-honda-nissan/ websites/bmwgroup_com/responsibility/downloads/ honda-considers-developing-all-solid-state-ev- no cylinder head or valvetrain but en/2007/Alex_ED__englische_Version.pdf. batteries-idUSKBN1EF0FM. requires a turbocharger and 173 Volkswagen at the 37th Vienna Motor 178 Burke, A. & Zhao,H. Applications of Symposium, Volkswagen (Apr. 28, 2016), https:// Supercapacitors in Electric and Hybrid Vehicles, 168 See e.g., VC—Turbo—The world’s first www.volkswagen-media-services.com/en/ Institute of Transportation Studies University of production-ready variable compression ratio detailpage/-/detail/Volkswagen-at-the-37th-Vienna- California, Davis (Apr. 2015), available at https:// engine, Nissan Motor Corporation (Dec. 13, 2017), Motor-Symposium/view/3451577/ steps.ucdavis.edu/wp-content/uploads/2017/05/ https://newsroom.nissan-global.com/releases/ 5f5a4dcc90111ee56bcca439f2dcc518?p_p_ 2015-UCD-ITS-RR-15-09-1.pdf. release-917079cb4af478a2d26bf8e5ac00ae49-vc- auth=M2yfP3Ze. 179 Buckland, K. & Sano, N. Toyota Readies turbo-the-worlds-first-production-ready-variable- 174 These engines may be considered in the Cheaper Electric Motor by Halving Rare Earth Use, compression-ratio-engine. analysis supporting the final rule, but these engine Continued

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Æ Integrated multi-phase integrated and high cost.185 These systems are not about which off-cycle technologies are electric vehicle drivetrains. Research yet in production. present on which vehicles (see Section has been conducted on 6-phase and 9- • Suspension energy recovery— X for further discussion of reporting off- phase integrated systems to potentially Multiple electromechanical and cycle technology information). reduce cost and improve power density. electrohydraulic suspension The 2012 final rule for MYs 2017 and Manufacturers may improve system technologies exist that can convert later outlined two test procedures to power density through integration of the motion from uneven roads into determine credit or FCIV eligibility for motor, inverter, control, and gearing. electricity.186 187 These technologies are A/C efficiency menu credits, the idle These systems are in the research limited to luxury vehicles with limited test, and the AC17 test. The idle test, phase.180 181 production volumes. This technology is performed while the vehicle is at idle, not produced in 2016 but planned for determined the additional CO2 (c) Transmission Technologies production as early as 2018.188 generated at idle when the A/C system is operated.191 The AC17 test is a four- • Beltless CVT—Most MY 2016, 11. Air Conditioning Efficiency and Off- part performance test that combines the commercially available CVTs rely on Cycle Technologies belt technology. A new architecture of existing SC03 driving cycle, the fuel (a) Air Conditioning Efficiency CVT replaces belts or pulleys with a economy highway test cycle, and a pre- Technologies conditioning cycle, and solar soak continuously variable variator, which is 192 a special type of planetary set with balls Air conditioning (A/C) is a virtually period. Manufacturers could use the and rings instead of gears. The standard automotive accessory, with idle test or AC17 test to determine technology promises to improve more than 95% of new cars and light improvement values for MYs 2014– efficiency, handle higher torques, and trucks sold in the United States 2016, while for MYs 2017 and later, the change modes more quickly. This equipped with mobile air conditioning AC17 test is the exclusive test that manufacturers can use to demonstrate technology may be commercially (MAC) systems. Most of the additional eligibility for menu A/C improvement available as early as 2020.182 air conditioning related load on an engine is due to the compressor, which values. • Multi-speed electric motor pumps the refrigerant around the system In MYs 2020 and later, manufacturers transmission—MY 2016 battery electric loop. The less the compressor operates will use the AC17 test to demonstrate vehicle transmissions are single-speed. or the more efficiently it operates, the eligibility for A/C credits and to Multiple gears can allow for more less load the compressor places on the partially quantify the amount of the torque multiplication at lower speeds or engine, and the better fuel consumption credit earned. AC17 test results equal to a downsized electric machine, increased will be. This high penetration means A/ or greater than the menu value will efficiency, and higher top speed. Two- C systems can significantly impact allow manufacturers to claim the full speed transmission designs are available energy consumed by the light duty menu value for the credit. A test result 183 but not currently in production. vehicle fleet. less than the menu value will limit the (d) Energy-Harvesting Technology Vehicle manufacturers can generate amount of credit to that demonstrated credits for improved A/C systems under on the AC17 test. In addition, for MYs • Vehicle waste heat recovery EPA’s GHG program and receive a fuel 2017 and beyond, A/C fuel consumption systems—Internal combustion engines consumption improvement value (FCIV) improvement values will be available convert the majority of the fuel’s energy equal to the value of the benefit not for CAFE calculations, whereas to heat. Thermoelectric generators and captured on the 2-cycle test under efficiency credits were previously only heat pipes can convert this heat to NHTSA’s CAFE program.189 Table II–19 available for GHG compliance. The electricity.184 Thermoelectric provides a ‘‘menu’’ of qualifying A/C agencies proposed these changes in the generators, often made of technologies, with the magnitude of 2012 final rule for MYs 2017 and later semiconductors, have been tested by each improvement value or credit largely as a result of new data collected, automakers but have traditionally not estimated based on the expected as well as the extensive technical 193 been implemented due to low efficiency reduction in CO2 emissions from the comments submitted on the proposal. technology.190 NHTSA converts the The pre-defined technology menu and Bloomberg (Feb, 20, 2018), https:// improvement in grams per mile to a associated car and light truck credit www.bloomberg.com/news/articles/2018-02-20/ FCIV for each vehicle for purposes of value is shown in Table II–19 below. toyota-readies-cheaper-electric-motor-by-halving- measuring CAFE compliance. As part of The regulations include a definition of rare-earth-use. a manufacturer’s compliance data, each technology that must be met to be 180 Burkhardt, Y., Spagnolo, A., Lucas, P., eligible for the menu credit.194 Zavesky, M., & Brockerhoff, P. ‘‘Design and analysis manufacturers will provide information of a highly integrated 9-phase drivetrain for EV Manufacturers are not required to applications ’’ 20 November 2014. DOI. 10.1109/ 185 Patel, P. Powering Your Car with Waste Heat, submit any other emissions data or ICELMACH.2014.6960219. IEEE xplore. MIT Technology Review (May 25, 2011), https:// information beyond meeting the 181 Patel, V., Wang, J., Nugraha, D., Vuletic, R., & www.technologyreview.com/s/424092/powering- definition and useful life Tousen, J. ‘‘Enhanced Availability of Drivetrain your-car-with-waste-heat/. requirements 195 to use the pre-defined Through Novel Multi-Phase Permanent Magnet 186 Baeuml, B. et al., The Chassis of the Future, Machine Drive’’ 2016. IEEE Transactions on Schaeffler, https://www.schaeffler.com/ Industrial Electronics Pages. 469–480. remotemedien/media/_shared_media/08_media_ 191 75 FR 25324, 25431 (May 7, 2010). The A/C 182 Murphy, T. Planets Aligning for Dana’s library/01_publications/schaeffler_2/symposia_1/ CO2 Idle Test is run with and without the A/C VariGlide Beltless CVT, Wards Auto (Aug. 22, downloads_11/Schaeffler_Kolloquium_2014_27_ system cooling the interior cabin while the vehicle’s 2017), http://wardsauto.com/technology/planets- en.pdf (last visited June 21, 2018). engine is operating at idle and with the system aligning-dana-s-variglide-beltless-cvt. 187 Advanced Suspension, Tenneco, http:// under complete control of the engine and climate 183 Faid, S. A Highly Efficient Two Speed www.tenneco.com/overview/rc_advanced_ control system. Transmission for Electric Vehicles (May 2015), suspension/ (last visited June 21, 2018). 192 77 FR 62624, 62723 (Oct. 15, 2012). available at http://www.evs28.org/event_file/event_ 188 Audi A8 Active Chassis, Audi, https:// 193 Id. file/1/pfile/EVS28_Saphir_Faid.pdf. www.audi.com/en/innovation/design/more_ 194 Id. at 62725. 184 Orr et al., A review of car waste heat recovery personal_comfort_a8_active_chassis.html (last 195 Lifetime vehicle miles travelled (VMT) for MY systems utilising thermoelectric generators and heat visited June 21, 2018). 2017–2025 are 195,264 miles and 225,865 miles for pipes, 101 Applied Thermal Engineering 490–495 189 77 FR 62624, 62720 (Oct. 15, 2012). passenger cars and light trucks, respectively. The (May 25, 2016). 190 40 CFR 86.1868–12 (2016). manufacturer must also demonstrate that the off-

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credit value. Manufacturers’ use of of the standards.197 Many manufacturers amounted to more than 12 million Mg menu-based credits for A/C efficiency is have since incorporated A/C technology of fuel consumption improvement subject to a regulatory cap: 5.7 g/mi for throughout their fleets, and the values of the total net fuel consumption cars and trucks through MY 2016 and utilization of advanced A/C improvement values reported. This is separate caps of 5.0 g/mi for cars and technologies has become a significant equivalent to approximately four grams 7.2g/mi for trucks for later MYs.196 contributor to industry compliance per mile across the 2016 fleet. plans. As summarized in the EPA Accordingly, a significant amount of In the 2012 final rule for MYs 2017 Manufacturer Performance Report for new information about A/C technology and later, the agencies estimated that the 2016 model year,198 15 auto and the efficacy of test procedures has manufacturers would employ significant manufacturers included A/C efficiency become available since the 2012 final advanced A/C technologies throughout credits as part of their compliance rule. their fleets to improve fuel economy, demonstration in the 2016 MY. These The sections below provide a brief and this was reflected in the stringency history of the AC17 test procedure for 197 See e.g., 77 FR 62623, 62803–62806 (Oct. 15, evaluating A/C efficiency improving cycle technology is effective for the full useful life 2012). 198 technology and discuss stakeholder of the vehicle. Unless the manufacturer See Greenhouse Gas Emission Standards for Light-Duty Vehicles: Manufacturer Performance comments on the AC17 test procedure demonstrates that the technology is not subject to Report for the 2016 Model Year (EPA Report 420– in-use deterioration, the manufacturer must account approach and discuss A/C efficiency R18–002), U.S. EPA (Jan. 2018), available at https:// technology valuation through the off- for the deterioration in their analysis. nepis.epa.gov/Exe/ZyPDF.cgi?Dockey= 196 40 CFR 86.1868–12(b)(2) (2016). P100TGIA.pdf. cycle program.

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(1) Evaluation of the AC17 Test technology and the other does not.199 than during just idle (as measured in the Procedure Since the Draft TAR The agencies believe that the AC17 test old idle test procedure). As described procedure is more capable of detecting above and in the 2012 final rule,200 the In developing the AC17 test the effect of more efficient A/C AC17 test is a four-part performance test procedure, the agencies sought to components and controls strategies that combines the existing SC03 driving develop a test procedure that could during a transient drive cycle rather more reliably generate an appropriate 200 See 77 FR 62624, 62723 (Oct. 15, 2012); Joint fuel consumption improvement value Technical Support Document: Final Rulemaking for 199 based on an ‘‘A’’ to ‘‘B’’ comparison, For an explanation of how the agencies, in 2017–2025 Light-Duty Vehicle Greenhouse Gas collaboration with stakeholders, developed the that is, a comparison of substantially Emission and Corporate Average Fuel Economy AC17 test procedure, see the 2017 and later final Standards, U.S. EPA, National Highway Traffic similar vehicles in which one has the rule at 77 FR 62624, 62723 (Oct. 15, 2012). Safety Administration at 5–40 (August 2012) .

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cycle, the fuel economy highway cycle, The agencies disagree this makes the Similarly, the Alliance commented that, as well as a pre-conditioning cycle, and test unworkable. The regulation ‘‘[t]he future success of the MAC credit a solar soak period. describes the baseline vehicle as a program in generating emissions The agencies received several ‘‘similar’’ vehicle, selected with good reductions will depend to a large extent comments on the Draft TAR evaluation engineering judgment (such that the test on the manner in which it is of the AC17 test procedure. FCA comparison is not unduly affected by administered by EPA, especially with commented generally that A/C other differences). Also, OEMs respect to making the AC17 A-to-B efficiency technologies ‘‘are not expressed confidence in using A-to-B provisions function smoothly, without showing their full effect on this AC17 testing to qualify for fuel consumption becoming a prohibitive obstacle to fully test as most technologies provide benefit improvement values for software-based achieving the MAC indirect credits.’’ 204 at different temperatures and humidity A/C efficiency technologies. While As described in the Draft TAR, in conditions in comparison to a standard hardware technologies may pose a 2016, USCAR members initiated a test conditions. All of these technologies greater challenge in locating a Cooperative Research Program (CRP) are effective at different levels at sufficiently similar ‘‘A’’ baseline through the Society of Automotive different conditions. So there is not one vehicle, the engineering analysis Engineers (SAE) to develop bench size fits all in this very complex testing provision under 40 CFR 86.1868– testing standards for the four hardware approach. Selecting one test that 12(g)(2) provides an alternative to technologies in the fuel consumption captures benefits of all of these locating and performing an AC17 test on 201 improvement value menu (blower motor conditions has not been possible.’’ such a vehicle. Further, as the USCAR The agencies acknowledge that any control, internal heat exchanger, program in general and the GM Denso single test procedure is unlikely to improved evaporators and condensers, SAS compressor application specifically equally capture the real-world effect of and oil separator). The intent of the have shown, the test is able to resolve every potential technology in every program is to streamline the process of small differences in CO effectiveness potential use case. Both the agencies 2 conducting bench testing and (1.3 grams in the latter case) when and stakeholders understood this engineering analysis in support of an carefully conducted. difficulty when developing the AC17 application for A/C credits under 40 test procedure. While no test is perfect, Commenters on the Draft TAR also CFR part 86.1868–12(g)(2), by creating the AC17 test procedure represents an expressed a desire for improvements in uniform standards for bench testing and industry best effort at identifying a test the process by which manufacturers for establishing the expected GHG effect that would greatly improve upon the without an ‘‘A’’ vehicle (for the A-to-B of the technology in a vehicle idle test by capturing a greater range of comparison) could apply under the application. operating conditions. General industry engineering analysis provision, such as An update to the list of SAE standards evaluation of the AC17 test procedure is development of standardized under development originally presented in agreement that the test achieves this engineering analysis and bench testing in the Draft TAR is listed in Table II– objective. procedures that could support such 20. Since completion of the Draft TAR, FCA also noted that ‘‘[i]t is a major applications. For example, Toyota work has continued on these standards, problem to find a baseline vehicle that requested that ‘‘EPA consider an which appear to be nearing completion. is identical to the new vehicle but optional method for validation via an The agencies seek comment with the without the new A/C technology. This engineering analysis, as is currently latest completion of these SAE alone makes the test unworkable.’’ 202 being developed by industry.’’ 203 standards.

(2) A/C Efficiency Technology Valuation by utilizing technologies on the menu; also requires ‘‘A-to-B’’ comparison Through the Off-Cycle Program however, the agencies recognize that testing under the AC17 test, that is, manufacturers will develop additional testing substantially similar vehicles in The A/C technology menu, discussed which one has the technology and the at length above, includes several A/C technologies that are not currently listed efficiency-improving technologies that on the menu. These additional A/C other does not. were well defined and had been efficiency-improving technologies are To date, the agencies have received quantified for effectiveness at the time eligible for fuel consumption one type off-cycle application for an A/ of the 2012 final rule for MYs 2017 and improvement values on a case-by-case C efficiency technology. In December beyond. Manufacturers claimed the vast basis under the off-cycle program. 2014, General Motors submitted an off- majority of A/C efficiency credits to date Approval under the off-cycle program cycle application for the Denso SAS A/

201 See Comment by FCA US LLC, Docket ID 203 See Comment by Toyota (revised), Docket ID 204 See Comment by Alliance of Automobile NHTSA 2016–0068–0082, at 123–124. NHTSA–2016–0068–0088, at 23. Manufacturers, Docket ID EPA–HQ–OAR–2015– 202 Id. at 124. 0827–4089 and NHTSA–2016–0068–0072, at 160.

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C compressor with variable crankcase that new A/C technologies not currently values and are not part of the off-cycle suction valve technology, requesting an on the menu will emerge over the time regulation (40 CFR 86.1869–12). off-cycle GHG credit of 1.1 grams CO2 frame of the MY 2021–2026 standards. However, it should be noted that off- per mile. In December 2017, BMW of This proposal requests comment on cycle applications submitted via the North America, Ford Motor Company, adding one additional A/C technology public process pathway are decided Hyundai Motor Company, and Toyota to the menu—the A/C compressor with individually on merits through a petitioned and received approval to variable crankcase suction valve process involving public notice and receive the off-cycle improvement value technology, discussed below (and also opportunity for comment. In deciding for the same A/C efficiency one off-cycle technology, discussed whether to approve or deny a request, technology.205 206 EPA, in consultation below). The agencies also request the agencies may take into account any with NHTSA, evaluated the applications comment on whether to change any fuel factors deemed relevant, including such and found methodologies described economy improvement values currently issues as the realization of claimed fuel therein were sound and appropriate.207 assigned to technologies on the menu. consumption improvement value in Accordingly, the agencies approved the Next, as mentioned above, the menu- real-world use. Such considerations fuel economy improvement value based improvement values for A/C could include synergies or interactions applications. efficiency established in the 2012 final among applied technologies, which The agencies received additional rule for MYs 2017 and by end are could potentially be addressed by stakeholder comments on the off-cycle subject to a regulatory cap. The rule set application of some form of cap or other approval process as an alternate route to a cap of 5.7 g/mi for cars and trucks applicable limit, if warranted. receiving A/C technology credit values. through MY 2016 and separate caps of Therefore, applying for A/C efficiency The Alliance requested that EPA 5.0 g/mi for cars and 7.2g/mi for trucks fuel consumption improvement values ‘‘simplify and standardize the for later MYs.210 Several commenters through the off-cycle provisions in 40 procedures for claiming off-cycle credits asked EPA to reconsider the CFR 86.1869–12 should not be seen as for the new MAC technologies that have applicability of the cap to non-menu A/ a route to unlimited A/C fuel been developed since the creation of the C efficiency technologies claimed consumption improvement values. The MAC indirect credit menu.’’ 208 Other through the off-cycle process and agencies discuss air conditioning commenters noted the importance of questioned the applicability of this cap efficiency improvement values further continuing to incentivize further on several different grounds. These in Section X of this NPRM. innovation in A/C efficiency comments appear to be in response to a technologies as new technologies Draft TAR passage that stated: (b) Off-Cycle Technologies emerge that are not listed on the menu ‘‘Applications for A/C efficiency credits ‘‘Off-cycle’’ emission reductions and or when manufacturers begin to reach made under the off-cycle credit program fuel consumption improvements can be regulatory caps. The commenters rather than the A/C credit program will achieved by employing off-cycle suggested that EPA should consider continue to be subject to the A/C technologies resulting in real-world adding new A/C efficiency technologies efficiency credit cap’’ (Draft TAR, p. 5– benefits but where that benefit is not to the menu and/or update the fuel 210). The agencies considered these adequately captured on the test consumption improvement values for comments and present clarification procedures used to demonstrate technology already listed on the menu, below. As additional context, the 2012 compliance with fuel economy emission particularly in cases where TSD states: standards. EPA initially included off- manufacturers can show through an off- ‘‘. . . air conditioner efficiency is an off- cycle technology credits in the MY cycle application that the technology cycle technology. It is thus appropriate [. . .] 2012–2016 rule and revised the program actually deserves more credit than that to employ the standard off-cycle credit in the MY 2017–2025 rule.212 NHTSA listed on the menu. For example, Toyota approval process [to pursue a larger credit adopted equivalent off-cycle fuel commented that ‘‘the incentive values than the menu value]. Utilization of bench consumption improvement values for for A/C efficiency should be updated tests in combination with dynamometer tests MYs 2017 and later in the MY 2017– and simulations [. . .] would be an 213 along with including new technologies appropriate alternate method of 2025 rule. being deployed.’’ 209 demonstrating and quantifying technology Manufacturers can demonstrate the The agencies note that some of these credits (up to the maximum level of credits value of off-cycle technologies in three comments are directed towards the off- allowed for A/C efficiency) [emphasis added]. ways: First, they may select fuel cycle technology approval process A manufacturer can choose this method even economy improvement values and CO2 generally, which is described in more for technologies that are not currently credit values from a pre-defined 211 detail in Section X of this preamble. included in the menu.’’ ‘‘menu’’ for off-cycle technologies that This suggests the concept of placing a Regarding the A/C technology menu meet certain regulatory specifications. limit on total A/C fuel consumption specifically, the agencies do anticipate As part of a manufacturer’s compliance improvement values, even when some data, manufacturers will provide are granted under the off-cycle program, 205 EPA Decision Document: Off-Cycle Credits for information about which off-cycle is not entirely new and that EPA BMW Group, Ford Motor Company, and Hyundai technologies are present on which Motor Company, U.S. EPA (Dec. 2017), available at considered the menu cap as being vehicles. https://nepis.epa.gov/Exe/ZyPDF.cgi?Dockey= appropriate at the time. The pre-defined list of technologies P100TF06.pdf. A/C regulatory caps specified under 206 Alternative Method for Calculating Off-cycle and associated off-cycle light-duty 40 CFR 86.1868–12(b)(2) apply to A/C Credits under the Light-Duty Vehicle Greenhouse vehicle fuel economy improvement Gas Emissions Program: Applications from General efficiency menu-based improvement Motors and Toyota Motor North America, 83 FR values and GHG credits is shown in 214 8262 (Feb. 26, 2018). 210 40 C.F.R § 86.1868–12(b)(2) (2016). Table II–21 and Table II–22 below. A 207 Id. 211 Joint Technical Support Document: Final 208 Comment by Alliance of Automobile Rulemaking for 2017–2025 Light-Duty Vehicle 212 77 FR 62624, 62832 (Oct. 15, 2012). Manufacturers, Docket ID EPA–HQ–OAR–2015– Greenhouse Gas Emission and Corporate Average 213 Id. at 62839. 0827–4089 and NHTSA–2016–0068–0072, at 152. Fuel Economy Standards, U.S. EPA, National 214 For a description of each technology and the 209 Comment by Toyota (revised), Docket ID Highway Traffic Safety Administration at 5–58 derivation of the pre-defined credit levels, see NHTSA–2016–0068–0088, at 23. (August 2012). Chapter 5 of the Joint Technical Support Document:

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definition of each technology equipment to submit any other emissions data or Credits based on the pre-defined list are must meet to be eligible for the menu information beyond meeting the subject to an annual manufacturer fleet- credit is included at 40 CFR 86.1869– definition and useful life requirements wide cap of 10 g/mile. 12(b)(4). Manufacturers are not required to use the pre-defined credit value.

Manufacturers can also perform their cold temperature, enabling use an alternative methodology for own 5-cycle testing and submit test improvements to be measured for determining the value of an off-cycle results to the agencies with a request technologies that do not impact technology. This option is only explaining the off-cycle technology. The operation on the 2-cycle tests. Credits available if the benefit of the technology additional three test cycles have determined according to this cannot be adequately demonstrated different operating conditions including methodology do not undergo public using the 5-cycle methodology. high speeds, rapid accelerations, high review. Manufacturers may also use this option temperature with A/C operation and The third pathway allows to demonstrate reductions that exceed manufacturers to seek EPA approval to

Final Rulemaking for 2017–2025 Light-Duty Vehicle Fuel Economy Standards, U.S. EPA, National Highway Traffic Safety Administration (August Greenhouse Gas Emission and Corporate Average 2012).

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those available via use of the determine these off-cycle credits in credit values, manufacturers have yet to predetermined menu list. The September 2014.215 Subsequently, FCA, report credits to EPA based on those manufacturer must also demonstrate Ford, and GM requested off-cycle alternative methodologies. that the off-cycle technology is effective credits using this same methodology. As discussed below, all three methods for the full useful life of the vehicle. FCA and Ford submitted applications have been used by manufacturers to Unless the manufacturer demonstrates for off-cycle credits from high efficiency generate off-cycle improvement values that the technology is not subject to in- exterior lighting, solar reflective glass/ and credits. use deterioration, the manufacturer glazing, solar reflective paint, and active must account for the deterioration in seat ventilation. Ford’s application also (1) Use of Off-Cycle Technologies to their analysis. demonstrated off-cycle benefits from Date Manufacturers must develop a active aerodynamic improvements methodology for demonstrating the Manufacturers used a wide array of (grille shutters), active transmission off-cycle technologies in MY 2016 to benefit of the off-cycle technology, and warm-up, active engine warm-up EPA makes the methodology available generate off-cycle GHG credits using the technologies, and engine idle stop-start. pre-defined menu. Table II–23 below for public comment prior to an EPA GM’s application described real-world determination, in consultation with shows the percent of each benefits of an air conditioning manufacturer’s production volume NHTSA, on whether to allow the use of compressor with variable crankcase the methodology to measure using each menu technology reported to suction valve technology. EPA approved EPA for MY 2016 by manufacturer. improvements. The data needed for this the credits for FCA, Ford, and GM in demonstration may be extensive. Table II–24 shows the g/mile benefit September 2015.216 Note, however, that Several manufacturers have requested each manufacturer reported across its and been granted use of alternative test although EPA granted the use of fleet from each off-cycle technology. methodologies for measuring alternative methodologies to determine Like Table II–23, Table II–24 provides improvements. In 2013, Mercedes the mix of technologies used in MY requested off-cycle credits for the 215 EPA Decision Document: Mercedes-Benz Off- 2016 by manufacturer and the extent to cycle Credits for MYs 2012–2016, U.S. EPA (Sept. which each technology benefits each following off-cycle technologies in use 2014), available at https://nepis.epa.gov/Exe/ or planned for implementation in the ZyPDF.cgi/P100KB8U.PDF?Dockey= manufacturer’s fleet. Fuel consumption 2012–2016 model years: Stop-start P100KB8U.PDF. improvement values for off-cycle systems, high-efficiency lighting, 216 EPA Decision Document: Off-cycle Credits for technologies were not available in the Fiat Chrysler Automobiles, Ford Motor Company, CAFE program until MY 2017; therefore, infrared glass glazing, and active seat and General Motors Corporation, U.S. EPA (Sept. ventilation. EPA approved 2015), available at https://nepis.epa.gov/Exe/ only GHG off-cycle credits have been methodologies for Mercedes to ZyPDF.cgi/P100N19E.PDF?Dockey=P100N19E.PDF. generated by manufacturers thus far.

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In 2016, manufacturers generated the was the first year that manufacturers Rover generated the most off-cycle vast majority of credits using the pre- could generate credits using pre-defined credits on a fleet-wide basis, reporting defined menu.217 Although MY 2014 menu values, manufacturers have acted credits equivalent to approximately 6 g/ quickly to generate substantial off-cycle mile and 5 g/mile, respectively. Several 217 Thus far, the agencies have only granted one improvements. FCA and Jaguar Land other manufacturers report fleet-wide manufacturer (GM) off-cycle credits for technology credits in the range of approximately 1 based on 5-cycle testing. These credits are for an off-cycle technology used on certain GM gasoline- weather while the vehicle is stopped and the engine to 4 g/mile. In MY 2016, the fleet total electric hybrid vehicles, an auxiliary electric pump, is off, thus allowing the engine stop-start system to across manufacturers equaled which keeps engine coolant circulating in cold be active more frequently in cold weather. approximately 2.5 g/mile. The agencies

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expect that as manufacturers continue extent that it clarifies the benefits and Note: They include costs which are expanding their use of off-cycle costs of the proposed action’s impacts transfers between different economic technologies, the fleet-wide effects will on car and light truck producers, actors—these will appear as both a cost continue to grow with some illustrates how these are transmitted to and a benefit in equal amounts (to manufacturers potentially approaching buyers of new vehicles, shows the separate affected parties). Societal cost the 10 g/mile fleet-wide cap. action’s collateral economic effects on and benefit values shown elsewhere in E. Development of Economic owners of used cars and light trucks, this document do not show costs which Assumptions and Information Used as and identifies how these impacts create are transfers for the sake of simplicity Inputs to the Analysis costs and benefits for the remainder of but report the same net societal costs the U.S. economy. It will achieve the and benefits. As it indicates, the 1. Purpose of Developing Economic second objective by showing clearly proposed action first reduces costs to Assumptions for Use in Modeling how the economy-wide or ‘‘social’’ manufacturers for adding technology Analysis benefits and costs of the proposed necessary to enable new cars and light (a) Overall Framework of Costs and action are composed of its direct effects trucks to comply with fuel economy and Benefits on vehicle producers, buyers, and users, emission regulations (line 1). It may also It is important to report the benefits plus the indirect or ‘‘external’’ benefits reduce fine payments by manufacturers and costs of this proposed action in a and costs it creates for the general who would have failed to comply with format that conveys useful information public. the more demanding baseline standards. about how those impacts are generated Table II–25 through Table II–28 Manufacturers are assumed to transfer and that also distinguishes the impacts present the economic benefits and costs these cost savings on to buyers by of those economic consequences for of the proposed action to reduce CAFE charging lower prices (line 5); although private businesses and households from and CO2 emissions standards for model this reduces their revenues (line 3), on the effects on the remainder of the U.S. years 2021–26 at three percent and balance, the reduction in compliance economy. A reporting format will seven percent discount rates in a format costs and lower sales revenue leaves accomplish the first objective to the that is intended to meet these objectives. them financially unaffected (line 4).

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00077 Fmt 4701 Sfmt 4702 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 43062 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules ($61.0) $51.9 $3.0 ($1.2) ($255.6) ($4.3) ($10.9) ($3.0) ($8.5) ($152.6) $88.3 $124.2 $255.6 $2.4 $35.9 $0.0 $252.6 Amount Amount from air weight of costs use*** retail petroleum economy (at vehicle GHG added damage fuel emissions vehicle prices Standards higher refueling from added economy lower added vehicle vehicles increase from property fuel CAFE from to reduced driving buyers from from non-compliance new and revenue frequent lower for for lower costs from (Costs) costs externalities fatalities (Costs) more vehicle from damages injuries penalty damages and from Proposed and and prices vehicles new manufacturers from for benefits payments civil external the to to costs benefits climate economic health revenue technology in in used injuries costs fine Benefits in in in in in in Benefits fuel purchase from mobility loss private benefits benefits Savings Reduction Reduction Reduced Reduced Private Emissions** Lower Lost External Increase Increase Increase Reduced driving Inconvenience pollutants** prices)* use** Higher Net Net Net Net Resulting Costs and 2) + 11 -(1 3 0+ = 1 Benefits Model model model model - 1+2+3 5+6+7+8+9 4+ = Source Source CAFE CAFE CAFE CAFE assumed= net assumed net= net= 11-25 Table Party Party U.S. Vehicle Vehicle of Private Owners Used Rest Parties Economy Buyers Manufacturers All Affected Affected Vehicle New 11 13 15 12 14 16 17 10 1 8 7 9 6 3 5 4 Line Line 2

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Table 11-26 - Benefits and Costs Resulting from the Proposed CAFE Standards (present values discounted at 7%) Line Affected Party Source Private Benefits and (Costs) Amount Savings in technology costs to increase fuel $192.2 1 CAFE model economy 2 Vehicle Reduced fine payments for non-compliance $2.1 Manufacturers 3 assumed= -(1 +2) Net loss in revenue from lower vehicle prices ($194.3) 4 net= 1+2+3 Net benefits to manufacturers $0.0 5 assumed = 3 Lower purchase prices for new vehicles $194.3 Reduced injuries and fatalities from higher $1.3 6 vehicle weight Higher fuel costs from lower fuel economy (at ($96.9) 7 New Vehicle CAFE model retail prices)* Buyers 8 Inconvenience from more frequent refueling ($5.4) 9 Lost mobility benefits from reduced driving ($37.1) 10 net= 5+6+7+8+9 Net benefits to new vehicle buyers $56.2 Used Vehicle Reduced costs for injuries and property damage $45.9 11 CAFE model Owners costs from driving in used vehicles 12 All Private Parties net = 4+1 0+ 11 Net private benefits $102.1

Line Affected Party Source External Benefits and (Costs) Amount h1crease in climate damages from added GHG ($2.7) 13 Emissions** Increase in health damages from added ($1.1) 14 emissions of air pollutants** Increase in economic externalities from added ($6.9) 15 RestofU.S. CAFE Model petroleUlll use** 16 Economy Reduction in civil penalty revenue ($2.1) Reduction in external costs from lower vehicle $29.6 17 use*** 18 Increase in Fuel Tax Revenues $12.7 19 net= 13+14+15+16+17+18 Net external benefits $29.4

Line Affected Party Source Economy-Wide Benefits and (Costs) Amount 20 total= 1+2+5+6+11+17+18 Total benefits $478.1 Entire U.S. 21 total= 3+7+8+9+13+14+15+16 Total costs ($346.6) Economy 22 net= 20+21 (also =12+19) Net Benefits $131.5

*Value represents lost fuel savings from lowered fuel economy of MY's 2017-2029 and gained fuel savings from more quickly replacing MY's 1977 to 2029 with newer vehicles. **Value represents lost external benefits from lowered fuel economy of MY's 2017-2029 and lowered external costs from more quickly replacing MY's 1977 to 2029 with newer vehicles. *** Value includes lower external costs from reducing rebound effect and any change in overall fleet usage from more quickly replacing MY's 1977 to 2029 with newer vehicles.

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Table 11-27- Benefits and Costs Resulting from the Proposed GHG Standards (present values discounted at 3%) Line Affected Party Source Private Benefits and (Costs) Amount Savings in technology costs to increase fuel 1 $259.8 CAFE model economy Vehicle 2 Reduced fine payments for non-compliance $0.0 Manufacturers 3 assumed= -(1 +2) Net loss in revenue from lower vehicle prices ($259.8) 4 net= 1+2+3 Net benefits to manufacturers $0.0 5 assumed = 3 Lower purchase prices for new vehicles $259.8 Reduced injuries and fatalities from higher 6 $7.5 vehicle weight Higher fuel costs from lower fuel economy (at 7 ($165.2) New Vehicle CAFE model retail prices)* Buyers 8 h1cmwenience from more frequent refueling ($9.4) 9 Lost mobility benefits from reduced driving ($69.5) 10 net= 5+6+7+8+9 Net benefits to new vehicle buyers $23.2 Used Vehicle Reduced costs for injuries and property damage 11 CAFE model $111.0 Owners costs from driving in used vehicles 12 All Private Parties net = 4+1 0+ 11 Net private benefits $134.2

Line Affected Party Source External Benefits and (Costs) Amount mcrease in climate damages from added GHG 13 ($4.7) Emissions** mcrease in health damages from added 14 ($0.8) emissions of air pollutants** mcrease in economic externalities from added 15 ($11.9) Rest of U.S. CAFE Model petrolemn use** 16 Economy Reduction in civil penalty revenue $0.0 Reduction in external costs from lower vehicle 17 $62.4 use*** 18 mcrease in Fuel Tax Revenues $21.5 19 net= 13+14+15+16+17+18 Net external benefits $66.5

Line Affected Party Source Economy-Wide Benefits and (Costs) Amount 20 total= 1+2+5+6+11+17+18 Total benefits $722.0 Entire U.S. 21 total= 3+7+8+9+13+14+15+16 Total costs ($521.3) Economy 22 net= 20+21 (also =12+19) Net Benefits $200.7

*Value represents lost fuel savings from lowered fuel economy of MY's 2017-2029 and gained fuel savings from more quickly replacing MY's 1977 to 2029 with newer vehicles. **Value represents lost external benefits from lowered fuel economy of MY's 2017-2029 and lowered external costs from more quickly replacing MY's 1977 to 2029 with newer vehicles. ***Value includes lower external costs from reducing rebound effect and any change in overall fleet usage from more quickly replacing MY's 1977 to 2029 with newer vehicles.

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Table 11-28- Benefits and Costs Resulting from the Proposed GHG Standards (present values discounted at 7%) Line Affected Party Source Private Benefits and (Costs) Amount Savings in technology costs to increase fuel 1 $195.6 CAFE model economy 2 Vehicle Reduced fine payments for non-compliance $0.0 3 Manufacturers assumed= -(1 +2) Net loss in revenue from lower vehicle prices ($195.6) 4 net= 1+2+3 Net benefits to manufacturers $0.0 5 assumed= 3 Lower purchase prices for new vehicles $195.6 Reduced injuries and fatalities from higher 6 $4.4 vehicle weight Higher fuel costs from lower fuel economy (at 7 New Vehicle ($105.3) CAFE model retail prices)* Buyers 8 Inconvenience from more frequent refueling ($6.0) 9 Lost mobility benefits from reduced driving ($42.0) 10 net= 5+6+7+8+9 Net benefits to new vehicle buyers $46.7 Used Vehicle Reduced costs for injuries and property damage 11 CAFE model $56.7 Owners costs from driving in used vehicles 12 All Private Parties net = 4+1 0+ 11 Net private benefits $103.4

Line Affected Party Source External Benefits and (Costs) Amount Increase in climate damages from added GHG 13 ($3.0) Emissions** Increase in health damages from added 14 ($1.0) emissions of air pollutants** Increase in economic externalities from added 15 ($7.6) RcstofU.S. CAFE Model petroleum use** 16 Economy Reduction in civil penalty revenue $0.0 Reduction in external costs from lower vehicle 17 $35.0 use*** 18 Increase in Fuel Tax Revenues $13.8 19 net= 13+14+15+16+17+18 Net external benefits $37.2

Line Affected Party Source Economy-Wide Benefits and (Costs) Amount 20 total= 1+2+5+6+11+17+18 Total benefits $501.1 Entire U.S. 21 total= 3+7+8+9+13+14+15+16 Total costs ($360.5) Economy 22 net= 20+21 (also= 12+ 19) Net Benefits $140.6

*Value represents lost fuel savings from lowered fuel economy of MY's 2017-2029 and gained fuel savings from more quickly replacing MY's 1977 to 2029 with newer vehicles. **Value represents lost external benefits from lowered fuel economy of MY's 2017-2029 and lowered external costs from more quickly replacing MY's 1977 to 2029 with newer vehicles. ***Value includes lower external costs from reducing rebound effect and any change in overall fleet usage from more quickly replacing MY's 1977 to 2029 with newer vehicles.

As the tables show, most impacts of consumers who purchase, drive, and during model years prior to those the proposed action will fall on the subsequently sell or trade-in new covered by this action. Compared to the businesses and individuals who design, models (and ultimately bear the cost of baseline standards, if the preferred manufacture, and sell (at retail and fuel economy technology), and owners alternative is finalized, buyers of new wholesale) cars and light trucks, the of used cars and light trucks produced cars and light trucks will benefit from

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their lower purchase prices and remainder of the U.S. economy. These additional benefits will be experienced financing costs (line 5). They will also impacts are ‘‘external,’’ in the sense that throughout much of the U.S. economy avoid the increased risks of being they are by-products of decisions by (line 17). Finally, some of the higher injured in crashes that would have private firms and individuals that alter fuel costs to buyers of new cars and resulted from manufacturers’ efforts to vehicle use and fuel consumption but light trucks will consist of increased reduce the weight of new models to are experienced broadly throughout the fuel taxes; this increase in revenue will comply with the baseline standards, U.S. economy rather than by the firms enable Federal and State government which represents another benefit from and individuals who indirectly cause agencies to provide higher levels of road reducing stringency vis-a`-vis the them. Increased refining and capacity or maintenance, producing baseline (line 6). consumption of petroleum-based fuel benefits for all road and transit users At the same time, new cars and light will increase emissions of carbon (line 18). trucks will offer lower fuel economy dioxide and other greenhouse gases that On balance, Table II–27 through Table with more lenient standards in place, theoretically contribute to climate II–28 show that the U.S. economy as a and this imposes various costs on their change, and some of the resulting (albeit whole will experience large net buyers and users. Drivers will uncertain) increase in economic economic benefits from the proposed experience higher costs as a damages from future changes in the action (line 22). While the proposal to consequence of new vehicles’ increased global climate will be borne throughout establish less stringent CAFE and GHG fuel consumption (line 7), and from the the U.S. economy (line 13). Similarly, emission standards will produce net added inconvenience of more frequent added fuel production and use will external economic costs, as the increase refueling stops required by their increase emissions of more localized air in environmental and energy security reduced driving range (line 8). They will pollutants (or their chemical externalities outweighs external benefits also forego some mobility benefits as precursors), and the resulting increase from reduced driving and higher fuel they use newly-purchased cars and light in the U.S. population’s exposure to tax revenue (line 19), the table also trucks less in response to their higher harmful levels of these pollutants will shows that combined benefits to vehicle fueling costs, although this loss will be lead to somewhat higher costs from its manufacturers, buyers, and users of cars almost fully offset by the fuel and other adverse effects on health (line 14). On and light trucks, and the general public costs they save by driving less (line 9). the other hand, it is expected that the (line 20), including the value of the lives On balance, consumers of new cars and proposed standards, by reducing new saved and injuries avoided, will greatly light trucks produced during the model vehicle prices relative to the baseline, outweigh the combined economic costs years subject to this proposed action will accelerate fleet turnover to cleaner, they experience as a consequence of this will experience significant economic safer, more efficient vehicles (as proposed action (line 21). benefits (line 10). compared to used vehicles that might The finding that this action to reduce By lowering prices for new cars and otherwise continue to be driven or the stringency of previously-established light trucks, this proposed action will purchased). CAFE and GHG standards will create cause some owners of used vehicles to As discussed in PRIA Section 9.8, significant net economic benefits— retire them from service earlier than increased consumption and imports of when it was initially claimed that they would otherwise have done, and crude petroleum for refining higher establishing those standards would also replace them with new models. In volumes of gasoline and diesel will also generate large economic benefits to effect, it will transfer some driving that impose some external costs throughout vehicle buyers and others throughout would have been done in used cars and the U.S. economy, in the form of the economy—is notable. This contrast light trucks under the baseline scenario potential losses in production and costs with the earlier finding is explained by to newer and safer models, thus for businesses and households to adjust the availability of updated information reducing costs for injuries (both fatal rapidly to sudden changes in energy on the costs and effectiveness of and less severe) and property damages prices (line 15 of the table), although technologies that will remain available sustained in motor vehicle crashes. This these costs should be tempered by to improve fuel economy in model years improvement in safety results from the increasing U.S. oil production.218 2021 and beyond, the fleet-wide fact that cars and light trucks have consequences for vehicle use, fuel Reductions in driving by buyers of new become progressively more protective in consumption, and safety from requiring cars and light trucks in response to their crashes over time (and also slightly less higher fuel economy (that is, higher operating costs will also reduce prone to certain types of crashes, such considering these consequences for used the external costs associated with their as rollovers). Thus, shifting some travel cars and light trucks as well as new contributions to traffic delays and noise from older to newer models reduces ones), and new estimates of some levels in urban areas, and these injuries and damages sustained by external costs of fuel in petroleum use. drivers and passengers because they are 218 Note: This output was based upon the EIA traveling in inherently safer vehicles 2. Macroeconomic Assumptions That Annual Energy Outlook from 2017. The 2018 Affect the Benefit Cost Analysis and not because it changes the risk Annual Energy Outlook projects the U.S. will be a profiles of drivers themselves. This net exporter by around 2029, with net exports Unlike previous CAFE and GHG reduction in injury risks and other peaking at around 0.5 mbd circa 2040. See Annual rulemaking analyses, the economic Energy Outlook 2018, U.S. Energy Information damage costs produces benefits to Administration, at 53 (Feb, 6, 2018), https:// context in which the alternatives are owners and drivers of older cars and www.eia.gov/outlooks/aeo/pdf/AEO2018.pdf. simulated is more explicit. While both light trucks. This also results in benefits Furthermore, pursuant to Executive Order 13783 this analysis and previous analyses in terms of improved fuel economy and (Promoting Energy Independence and Economy contained fuel price projections from Growth), agencies are expected to review and revise significant reductions of emissions from or rescind policies that unduly burden the the Annual Energy Outlook, which has newer vehicles (line 11). development of domestic energy resources beyond embedded assumptions about future Table II–27 through Table II–28 also what is necessary to protect the public interest or macroeconomic conditions, this show that the changes in fuel otherwise comply with the law. Therefore, it is analysis requires explicit assumptions reasonable to anticipate further increases in consumption and vehicle use resulting domestic production of petroleum. The agencies about future GDP growth, labor force from this proposed action will in turn may update the analysis and table to account for participation, and interest rates in order generate both benefits and costs to the this revised information. to evaluate the alternatives.

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Table-11-- 29 M acroeconomic. p ro.tec . f IOns th rougJh CY 2050 Calendar Real Real Labor Force Year Interest GDP Participation Rate Growth (thousands) Rate 2015 2.70 2.60 122,700 2016 1.00 1.60 124,248 2017 -0.30 2.90 125,739 2018 -0.30 3.00 127,625 2019 1.10 3.00 129,284 2020 1.70 2.90 130,577 2021 2.00 2.70 131,752 2022 2.20 2.40 132,674 2023 2.40 2.20 133,471 2024 2.40 2.20 134,271 2025 2.60 2.20 135,077 2026 2.70 2.10 135,887 2027 2.70 2.20 136,703 2028 2.70 2.20 137,386 2029 2.70 2.20 138,073 2030 2.70 2.10 138,764 2031 2.70 2.10 139,457 2032 2.70 2.10 140,155 2033 2.70 2.10 140,855 2034 2.70 2.10 141,560 2035 2.70 2.10 142,268 2036 2.70 2.10 142,979 2037 2.70 2.10 143,694 2038 2.70 2.20 144,556 2039 2.70 2.20 145,423 2040 2.70 2.20 146,296 2041 2.70 2.20 147,174 2042 2.70 2.20 148,057 2043 2.70 2.20 148,945 2044 2.70 2.20 149,839 2045 2.70 2.20 150,738 2046 2.70 2.20 151,642 2047 2.70 2.20 152,552 2048 2.70 2.20 153,467 2049 2.70 2.20 154,388 2050 2.70 2.20 155,314

The analysis simulates compliance order to estimate their lifetime mileage cover a similar span of years. Due to the through MY 2032 explicitly and must accumulation and fuel consumption. long time horizon, a source that consider the full useful lives of those This means that any macroeconomic regularly produces such lengthy vehicles, approximately 40 years, in forecast influencing those factors must forecasts of these factors was selected:

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the 2017 OASDI Trustees Report from fuel calendar year and fuel type are the U.S. Social Security Administration. rulemaking, and this is one of several important presented in Table–II–30, in real 2016 While Table–II–29 only displays changes in circumstances supporting revision of dollars. Fuel prices in this analysis assumptions through CY 2050, the previously-issued standards. affect not only the value of each gallon remaining years merely continue the After significant portions of today’s analysis had of fuel consumed but relative valuation already been completed, EIA released AEO 2018, trends present in the table. which reports reference case fuel prices about 10% of fuel-saving technologies demanded The analysis once again uses fuel higher than reported in AEO 2017, though still well by the market as a result of their price projections from the 2017 Annual below the above-mentioned prices from AEO 2011. associated fuel savings. Energy Outlook.219 The projections by The sensitivity analysis therefore includes a case that applies fuel prices from the AEO 2018 net benefits between the two are about five percent 219 The central analysis supporting today’s reference case. The AEO 2018 low oil price case different, especially considering that decisions proposal uses reference case estimates of fuel prices reports fuel prices somewhat higher than the AEO regarding future standards are not single-factor reported in the Energy Information 2017 low oil price case, and the AEO 2018 high oil decisions, but rather reflect a balancing of factors, Administration’s (EIA’s) Annual Energy Outlook price case reports fuel prices very similar to the applying AEO 2018-based fuel prices would not 2017 (AEO 2017). Today’s proposal also examines AEO 2017 high oil price case. Adding the AEO 2018 materially change the extent to which today’s the sensitivity of this analysis to changes in key low and high oil price cases to the sensitivity analysis supports the selection of the preferred inputs, including fuel prices, and includes cases analysis would thus have provided little, if any, alternative. that apply fuel prices from the AEO 2017 low oil additional insight into the sensitivity of the analysis Like other inputs to the analysis, fuel prices will price and high oil price cases. The reference case to fuel prices. As shown in the summary of the be updated for the analysis supporting the final rule prices are considerably lower than AEO 2011-based sensitivity analysis, results obtained applying AEO after consideration of related new information and reference cases prices applied in the 2012 2018-based fuel prices are similar to those obtained public comment. applying AEO 2017-based fuel prices. For example,

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Tabl e-II --30 F ue I P nee . P ro . ec f wns th rou~Jh CY 2050 Calendar Gasoline Diesel Electricity Year ($/gallon) ($/gallon) ($/kwh)

2015 2.55 2.76 0.11 2016 2.21 2.31 0.10 2017 2.30 2.63 0.10 2018 2.28 2.90 0.10 2019 2.48 3.08 0.11 2020 2.59 3.19 0.11 2021 2.71 3.27 0.11 2022 2.83 3.35 0.11 2023 2.86 3.41 0.11 2024 2.88 3.45 0.11 2025 2.93 3.51 0.11 2026 2.98 3.57 0.11 2027 2.99 3.59 0.11 2028 2.98 3.60 0.11 2029 3.01 3.64 0.11 2030 3.06 3.71 0.11 2031 3.10 3.76 0.11 2032 3.14 3.82 0.11 2033 3.13 3.82 0.11 2034 3.17 3.86 0.11 2035 3.19 3.88 0.11 2036 3.25 3.95 0.11 2037 3.26 3.97 0.11 2038 3.27 3.97 0.11 2039 3.32 4.02 0.11 2040 3.35 4.05 0.11 2041 3.37 4.07 0.11 2042 3.37 4.07 0.11 2043 3.36 4.07 0.11 2044 3.37 4.09 0.11 2045 3.38 4.10 0.11 2046 3.39 4.13 0.11 2047 3.41 4.17 0.11 2048 3.41 4.16 0.11 2049 3.42 4.18 0.12 2050 3.46 4.24 0.12

3. New Vehicle Sales and Employment combination of manufacturer alternatives, for each manufacturer Assumptions compliance data, public data sources, down to the make/model level where and proprietary forecasts were used. the exact same number of each model In all previous CAFE and GHG When simulating compliance with variant was simulated to be sold in a rulemaking analyses, static fleet regulatory alternatives, the analysis given model year under both the least forecasts that were based on a projected identical sales across the stringent alternative (typically the

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baseline) and the most stringent will fully reflect future fuel cost savings fuel savings from purchasing a model alternative considered. To the extent consumers would realize from owning— with higher fuel economy. Most studies that an alternative matched the and potentially re-selling—more fuel- have relied on car buyers’ purchasing assumptions made in the production of efficient models. In this case, more behavior to estimate their willingness- the proprietary forecast, using a static stringent fuel economy standards will to-pay for future fuel savings; a typical fleet based upon those assumptions may impose net costs on vehicle owners and approach has been to use ‘‘discrete have been warranted. However, it seems can only result in social benefits by choice’’ models that relate individual intuitive that any sufficiently large span correcting externalities, since buyers’ choices among competing of regulatory alternatives would contain consumers would already fully vehicles to their purchase prices, fuel alternatives for which that static forecast incorporate private savings into their economy, and other attributes (such as was unrepresentative. A number of purchase decisions. If instead performance, carrying capacity, and commenters have encouraged consumers systematically undervalue reliability), and to infer buyers’ consideration of the potential impact of the cost savings generated by valuation of higher fuel economy from CAFE/GHG standards on new vehicle improvements in fuel economy when the relative importance of purchase prices and sales, and the changes to choosing among competing models, prices and fuel economy.221 Empirical compliance strategies that those shifts more stringent fuel economy standards estimates using this approach span a could necessitate.220 In particular, the will also lead manufacturers to adopt wide range, extending from substantial continued growth of the utility vehicle improvements in fuel economy that undervaluation of fuel savings to segment creates compliance challenges buyers might not choose despite the cost significant overvaluation, thus making it within some manufacturers’ fleets as savings they offer. difficult to draw solid conclusions about sales volumes shift from one region of The potential for car buyers to forego the influence of fuel economy on the footprint curve to another. improvements in fuel economy that vehicle buyers’ choices (see Helfand & Any model of sales response must offer savings exceeding their initial Wolverton, 2011; Green (2010) for satisfy two requirements: It must be costs is one example of what is often detailed reviews of these cross-sectional appropriate for use in the CAFE model, termed the ‘‘energy-efficiency gap.’’ studies). Because a vehicle’s price is and it must be econometrically This appearance of such a gap, between often correlated with its other attributes reasonable. The first of these the level of energy efficiency that would (both measured and unobserved), requirements implies that any variable minimize consumers’ overall expenses analysts have often used instrumental used in the estimation of the and what they actually purchase, is variables or other approaches to address econometric model, must also be typically based on engineering endogeneity and other resulting available as a forecast throughout the calculations that compare the initial concerns (e.g., Barry, et al. 1995). duration of the years covered by the cost for providing higher energy Despite these efforts, more recent simulations (this analysis explicitly efficiency to the discounted present research has criticized these cross- simulates compliance through MY value of the resulting savings in future sectional studies; some have questioned 2032). Some values the model calculates energy costs. the effectiveness of the instruments they endogenously, making them available in There has long been an active debate use (Allcott & Greenstone, 2012), while future years for sales estimation, but about why such a gap might arise and others have observed that coefficients others must be known in advance of the whether it actually exists. Economic estimated using non-linear statistical simulation. As the CAFE model theory predicts that individuals will methods can be sensitive to the simulates compliance, it accumulates purchase more energy-efficient products optimization algorithm and starting technology costs across the industry and only if the savings in future energy costs values (Knittel & Metaxoglou, 2014). over time. By starting with the last they offer promise to offset their higher Collinearity (i.e., high correlations) known transaction price and adding the initial costs. However, the additional among vehicle attributes—most notably accumulated technology cost to that cost of a more energy-efficient product among fuel economy, performance or value, the model is able to represent the includes more than just the cost of the power, and vehicle size—and between average selling price in each future technology necessary to improve its vehicles’ measured and unobserved efficiency; it also includes the model year assuming that manufacturers features also raises questions about the opportunity cost of any other desirable are able to pass all of their compliance reliability and interpretation of features that consumers give up when costs on to buyers of new vehicles. coefficients that may conflate the value they choose the more efficient Other variables used in the estimation of fuel economy with other attributes alternative. In the context of vehicles, must enter the model as inputs prior to (Sallee, et al., 2016; Busse, et al., 2013; whether the expected fuel savings the start of the compliance simulation. Allcott & Wozny, 2014; Allcott & outweigh the opportunity cost of Greenstone, 2012; Helfand & Wolverton, (a) How do car and light truck buyers purchasing a model offering higher fuel 2011). value improved fuel economy? economy will depend on how much its In an effort to overcome shortcomings How potential buyers value buyer expects to drive, his or her of past analyses, three recently improvements in the fuel economy of expectations about future fuel prices, published studies rely on panel data new cars and light trucks is an the discount rate he or she uses to value from sales of individual vehicle models important issue in assessing the benefits future expenses, the expected effect on to improve their reliability in and costs of government regulation. If resale value, and whether more efficient identifying the association between buyers fully value the savings in fuel models offer equivalent attributes such vehicles’ prices and their fuel economy costs that result from higher fuel as performance, carrying capacity, (Sallee, et al. 2016; Allcott & Wozny, economy, manufacturers will reliability, quality, or other 2014; Busse, et al., 2013). Although they presumably supply any improvements characteristics. differ in certain details, each of these Published literature has offered little that buyers demand, and vehicle prices consensus about consumers’ 221 In a typical vehicle choice model, the ratio of willingness-to-pay for greater fuel estimated coefficients on fuel economy—or more 220 See e.g., Comment by Alliance of Automobile commonly, fuel cost per mile driven—and purchase Manufacturers, Docket ID EPA–HQ–OAR–2015– economy, and whether it implies over- price is used to infer the dollar value buyers attach 0827–4089 and NHTSA–2016–0068–0072. , under- or full-valuation of the expected to slightly higher fuel economy.

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analyses relates changes over time in large proportion—and perhaps even As Table 1 indicates, Allcott & Wozny individual models’ selling prices to all—of the future savings that models (2014) find that consumers incorporate fluctuations in fuel prices, differences in with higher fuel economy offer.223 55% of future fuel costs into vehicle their fuel economy, and increases in Because they rely on estimates of fuel purchase decisions at a six percent their age and accumulated use, which costs over vehicles’ expected remaining discount rate, when their expectations affects their expected remaining life, lifetimes, these studies’ estimates of for future gasoline prices are assumed to and thus their market value. Because a how buyers value fuel economy are reflect prevailing prices at the time of vehicle’s future fuel costs are a function sensitive to the strategies they use to their purchases. With the same of both its fuel economy and expected isolate differences among individual expectation about future fuel prices, the gasoline prices, changes in fuel prices models’ fuel economy, as well as to authors report that consumers would have different effects on the market their assumptions about buyers’ fully value fuel costs only if they apply values of vehicles with different fuel discount rates and gasoline price discount rates of 24% or higher. economy; comparing these effects over expectations, among others. Since However, these authors’ estimates are time and among vehicle models reveals Anderson et al. (2013) find evidence closer to full valuation when using the fraction of changes in fuel costs that that consumers expect future gasoline gasoline price forecasts that mirror oil is reflected in changes in their selling prices to resemble current prices, we futures markets because the petroleum prices (Allcott & Wozny, 2014). Using use this assumption to compare the market expected prices to fall during very large samples of sales enables these findings of the three studies and this period (this outlook reduces the studies to define vehicle models at an examine how their findings vary with discounted value of a vehicle’s expected extremely disaggregated level, which the discount rates buyers apply to future remaining lifetime fuel costs). With this enables their authors to isolate fuel savings.224 expectation, Allcott & Wozny (2014) differences in their fuel economy from find that buyers value 76% of future the many other attributes, including 223 Killian & Sims (2006) and Sawhill (2008) rely cost savings (discounted at six percent) those that are difficult to observe or on similar longitudinal approaches to examine from choosing a model that offers higher 222 consumer valuation of fuel economy except that measure, that affect their sale prices. they use average values or list prices instead of fuel economy, and that a discount rate These studies point to a somewhat actual transaction prices. Since these studies of 15% would imply that they fully narrower range of estimates than remain unpublished, their empirical results are value future cost savings. Sallee et al. subject to change, and they are excluded from this suggested by previous cross-sectional (2016) begin with the perspective that studies; more importantly, they discussion. 224 Each of the studies makes slightly different buyers fully internalize future fuel costs consistently suggest that buyers value a assumptions about appropriate discount rates. into vehicles’ purchase prices and Sallee et al. (2016) use five percent in their base cannot reliably reject that hypothesis; 222 These studies rely on individual vehicle specification, while Allcott & Wozny (2014) rely on transaction data from dealer sales and wholesale six percent. As some authors note, a five to six their base specification suggests that auctions, which includes actual sale prices and percent discount rate is consistent with current changes in vehicle prices incorporate allows their authors to define vehicle models at a interest rates on car loans, but they also slightly more than 100% of changes in highly disaggregated level. For instance, Allcott & acknowledge that borrowing rates could be higher future fuel costs. For discount rates of Wozny (2014) differentiate vehicles by in some cases, which could be justify higher manufacturer, model or nameplate, trim level, body discount rates. Rather than assuming a specific five to six percent, the Busse et al. type, fuel economy, engine displacement, number discount rate, Busse et al. (2013) directly estimate (2013) results imply that vehicle prices of cylinders, and ‘‘generation’’ (a group of implicit discount rates at which future fuel costs reflect 60 to 100% of future fuel costs. successive model years during which a model’s would be fully internalized; they find discount rates As Table II–31 suggests, higher private design remains largely unchanged). All three of six to 21% for used cars and one to 13% for new studies include transactions only through mid-2008 cars at assumed demand elasticities ranging from discount rates move all of the estimates to limit the effect of the recession on vehicle prices. ¥2 to ¥3. Their estimates can be translated into closer to full valuation or to over- To ensure that the vehicle choice set consists of true the percent of fuel costs internalized by consumers, valuation, while lower discount rates substitutes, Allcott & Wozny (2014) define the assuming a particular discount rate. To make these imply less complete valuation in all choice set as all gasoline-fueled light-duty cars, results more directly comparable to the other two trucks, SUVs, and minivans that are less than 25 studies, we assume a range of discount rates and three studies. years old (i.e., they exclude vehicles where the uses the authors’ spreadsheet tool to translate their substitution elasticity is expected to be small). results into the percent of fuel costs internalized quartile, these results depend on which quartiles of Sallee et al. (2016) exclude diesels, hybrids, and into the purchase price at each rate. Because Busse the fuel economy distribution are compared; our used vehicles with less than 10,000 or more than et al. (2013) estimate the effects of future fuel costs summary shows results using the full range of 100,000 miles. on vehicle prices separately by fuel economy quartile comparisons.

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The studies also explore the repeat sales, most of the valuation Perhaps more important in assessing the sensitivity of the results to other estimates reported in these studies case for regulating fuel economy, one parameters that could influence their apply most directly to buyers of used study suggests that buyers of new cars results. Busse et al. (2013) and Allcott vehicles. Only Busse et al. (2013) and light trucks value three-quarters or & Wozny (2014) find that relying on examine new vehicle sales; they find more of the savings in future fuel costs data that suggest lower annual vehicle that consumers value between 75 to they anticipate from purchasing higher- use or survival probabilities, which 133% of future fuel costs for new mpg models, although this result is imply that vehicles will not last as long, vehicles, a higher range than they based on more limited information. moves their estimates closer to full estimate for used vehicles. Allcott & In contrast, previous regulatory valuation, an unsurprising result Wozny (2014) examine how their analyses of fuel economy standards because both reduce the changes in estimates vary by vehicle age and find implicitly assumed that buyers expected future fuel costs caused by fuel that fluctuations in purchase prices of undervalue even more of the benefits price fluctuations. Allcott & Wozny’s younger vehicles imply that buyers they would experience from purchasing (2014) base results rely on an whose fuel price expectations mirror the models with higher fuel economy so instrumental variables estimator that petroleum futures market value a higher that without increases in fuel economy groups miles-per-gallon (MPG) into two fraction of future fuel costs: 93% for standards little improvement would quantiles to mitigate potential one- to three-year-old vehicles, occur, and the entire value of fuel attenuation bias due to measurement compared to their estimate of 76% for savings from raising CAFE standards error in fuel economy, but they find that all used vehicles assuming the same represented private benefits to car and greater disaggregation of the MPG price expectation.225 light truck buyers themselves. For groups implies greater undervaluation Accounting for differences in their instance, in the EPA analysis of the (for example, it reduces the 55% data and estimation procedures, the 2017–2025 model year greenhouse gas estimated reported in Table 1 to 49%). three studies described here suggest that emission standards, fuel savings alone Busse et al. (2013) allow gasoline prices car buyers who use discount rates of added up to $475 billion (at three to vary across local markets in their five to six percent value at least half— percent discount rate) over the lifetime main specification; using national and perhaps all—of the savings in future of the vehicles, far outweighing the average gasoline prices, an approach fuel costs they expect from choosing compliance costs: $150 billion). The more directly comparable to the other models that offer higher fuel economy. assertion that buyers were unwilling to studies, results in estimates that are take voluntary advantage of this closer to or above full valuation. Sallee 225 Allcott & Wozny (2014) and Sallee, et al. opportunity implies that collectively, et al. (2016) find modest undervaluation (2016) also find that future fuel costs for older they must have valued less than a third vehicles are substantially undervalued (26–30%). by vehicle fleet operators or ($150 billion/$475 billion = 32%) of the The pattern of Allcott and Wozny’s results for fuel savings that would have resulted manufacturers making large-scale different vehicle ages is similar when they use retail 226 purchases, compared to retail dealer transaction prices (adjusted for customer cash from those standards. The evidence sales (i.e., 70 to 86%). rebates and trade-in values) instead of wholesale auction prices, although the degree of valuation 226 In fact, those earlier analyses assumed that Since they rely predominantly on falls substantially in all age cohorts with the new car and light truck buyers attach relatively changes in vehicles’ prices between smaller, retail price based sample. Continued

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reviewed here makes that perspective tends to move in parallel with changes to purchase new cars and light trucks in extremely difficult to justify and would in economic growth; that is, average conjunction with the total number sold, call into question any analysis that new vehicle prices tend to be higher and other approaches. However, none of claims to show large private net benefits when the total number of new vehicles these methods offered a significant for vehicle buyers. sold is increasing and lower when the improvement over estimating the total What analysts assume about total number of new sales decreases number of vehicles sold directly from its consumers’ vehicle purchasing (typically during periods of low historical relationship to directly behavior, particularly about potential economic growth or recessions). Finally, measurable factors such as their average buyers’ perspectives on the value of counts of the total number of new cars sales price, macroeconomic variables increased fuel economy, clearly matters and light trucks that are sold do not such as GDP or Personal Disposable a great deal in the context of benefit-cost capture shifts in demand among vehicle Income, U.S. labor force participation, analysis for fuel economy regulation. In size classes or body styles (‘‘market and regularly published surveys of light of recent evidence on this segments’’); nor do they measure consumer sentiment or confidence. question, a more nuanced approach changes in the durability, safety, fuel Quarterly, rather than annual data on than assuming that buyers drastically economy, carrying capacity, comfort, or total sales of new cars and light trucks, undervalue benefits from higher fuel other aspects of vehicles’ quality. their average selling price, and economy, and that as a consequence, The historical series of new light-duty macroeconomic variables was used to these benefits are unlikely to be realized vehicle sales exhibits cyclic behavior develop an econometric model of sales, without stringent fuel economy over time that is most responsive to in order to increase the number of standards, seems warranted. One larger cycles in the macro economy— observations and more accurately possible approach would be to use a but has not increased over time in the capture the causal effects of individual baseline scenario where fuel economy same way the population, for example, explanatory variables. Applying levels of new cars and light trucks has. While U.S. population has grown conventional data diagnostics for time- reflected full (or nearly so) valuation of over 35 percent since 1980, the series economic data revealed that most fuel savings by potential buyers in order registered vehicle population has grown variables were non-stationary (i.e., they to reveal whether setting fuel economy at an even faster pace—nearly doubling reflected strong underlying time trends) 227 standards above market-determined between 1980 and 2015. But annual and displayed unit roots, and statistical levels could produce net social benefits. vehicle sales did not grow at a similar tests revealed co-integration between Another might be to assume that, unlike pace –even accounting for the cyclical the total vehicle sales—the model’s in the agencies’ previous analyses, nature of the industry. Total new light- dependent variable—and most where buyers were assumed to greatly duty sales prior to the 2008 recession candidate explanatory variables. climbed as high as 16 million, though undervalue higher fuel economy under (c) Current Estimation of Sales Impacts the baseline but to value it fully under similarly high sales years occurred in the 1980’s and 1990’s as well. In fact, To address the complications of the the proposed standards, buyers value time series data, the analysis estimated improved fuel economy identically when considering a 10-year moving average to smooth out the effect of an autoregressive distributed-lag (ARDL) under both the baseline scenario and model that employs a combination of with stricter CAFE standards in place. cycles, most 10-year averages between 1992 and 2015 are within a few percent lagged values of its dependent The agencies ask for comment on these variable—in this case, last year’s and the and any alternative approaches they of the 10-year average in 1992. And although average transaction prices for prior year’s vehicle sales—and the should consider for valuing fuel savings, new vehicles have been rising steadily change in average vehicle price, new peer-reviewed evidence on vehicle since the recession ended, prices are not quarterly changes in the U.S. GDP buyers’ behavior that casts light on how yet at historical highs when adjusted for growth rate, as well as current and they value improved fuel economy, the inflation. The period of highest lagged values of quarterly estimates of appropriate private discount rate to inflation-adjusted transaction prices U.S. labor force participation. The apply to future fuel savings, and thus occurred from 1996–2006, when the number of lagged values of each the degree to which private fuel savings average transaction price for a new explanatory variable to include was should be considered as private benefits light-duty vehicle was consistently determined empirically (using the of increasing fuel economy standards. higher than the price in 2015. Bayesian information criterion), by (b) Sales Data and Relevant In an attempt to overcome these examining the effects of including Macroeconomic Factors analytical challenges, various different combinations of their lagged approaches were experimented with to values on how well the model Developing a procedure to predict the predict the response of new vehicle ‘‘explained’’ historical variation in car effects of changes in prices and sales to the changes in prices, fuel and light truck sales. attributes of new vehicles is economy, and other features. These The results of this approach were complicated by the fact that their sales included treating new vehicle demand encouraging: The model’s predictions fit are highly pro-cyclical—that is, they are as a product of changes in total demand the historical data on sales well, each of very sensitive to changes in for vehicle ownership and demand its explanatory variables displayed the macroeconomic conditions—and also necessary to replace used vehicles that expected effect on sales, and analysis of statistically ‘‘noisy,’’ because they are retired, analyzing total expenditures its unexplained residual terms revealed reflect the transient effects of other little evidence of autocorrelation or factors such as consumers’ confidence 227 There are two measurements of the size of the other indications of statistical problems. in the future, which can be difficult to registered vehicle population that are considered to The model coefficients suggest that observe and measure accurately. At the be authoritative. One is produced by the Federal Highway Adminstration, and the other by R.L. Polk positive GDP growth rates and increases same time, their average sales price (now part of IHS). The Polk measurement shows in labor force participation are both fleet growth between 1980 and 2015 of about 85%, indicators of increases in new vehicle little value to higher fuel economy, since their while the FHWA measurement shows a slower sales, while positive changes in average baseline scenarios assumed that fuel economy growth rate over that period; only about 60%. Both levels would not increase in the absence of are still considerably larger than the growth in new new vehicle price reduce new sales. progressively tighter standards. vehicle sales over the same period. However, the magnitude of the

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coefficient on change in average price is buyer is (at least theoretically) choosing price increases, fuel economy, and new not as determinative of total sales as the between a more or less efficient version vehicle sales, as well as methods to other variables. of a pickup truck (for example) that is appropriately account for these Based on the model, a $1,000 increase otherwise identical. In an aggregate relationships. in the average new vehicle price causes sense, the average is not comparable to (d) Projecting New Vehicle Sales and approximately 170,000 lost units in the the decision an individual consumer Comparisons to Other Forecasts first year, followed by a reduction of faces. another 600,000 units over the next ten Estimating the sales response at the The purpose of the sales response years as the initial sales decrease level of total new vehicle sales likely model is to allow the CAFE model to propagates over time through the lagged fails to address valid concerns about simulate new vehicle sales in a given variables and their coefficients. The changes to the quality or attributes of future model year, accounting for the price elasticity of new car and light new vehicles sold—both over time and impact of a regulatory alternative’s truck sales implied by alternative in response to price increases resulting stringency on new vehicle prices (in a estimates of the model’s coefficients from CAFE standards. However, macro-economic context that is ¥ ¥ ranged from 0.2 to 0.3—meaning attempts to address such concerns identical across alternatives). In order to that changes in their prices have would require significant additional accomplish this, it is important that the moderate effects on total sales—which data, new statistical approaches, and model of sales response be dynamically contrasts with estimates of higher structural changes to the CAFE model stable, meaning that it responds to sensitivity to prices implied by some over several years. It is also the case that shocks not by ‘‘exploding,’’ increasing 228 models. The analysis was unable to using absolute changes in the average or decreasing in a way that is incorporate any measure of new car and price may be more limited than another unbounded, but rather returns to a light truck fuel economy in the model characterization of price that relies on stable path, allowing the shock to that added to its ability to explain distributions of household income over dissipate. The CAFE model uses the historical variation in sales, even after time or percentage change in the new sales model described above to experimenting with alternative vehicle price. The former would require dynamically project future sales; after measures of such as the unweighted and forecasting a deeply uncertain quantity the first year of the simulation, lagged sales-weighted averages fuel economy of many years into the future, and the values of new vehicle sales are those models sold in each quarter, the level of latter only become relevant once the that were produced by the model itself fuel economy they were required to simulation moves beyond the rather than observed. The sales response achieve, and the change in their fuel magnitude of observed price changes in model constructed here uses two lagged economy from previous periods. the historical series. Future versions of dependent variables and simple Despite the evidence in the literature, econometric conditions determine if the summarized above, that consumers this model may use a different characterization of cost that accounts for model is dynamically stable. The value most, if not all, of the fuel coefficients of the one-year lag and the economy improvements when some of these factors if their inclusion improves the model estimation and two-year lag, b1 and b2, respectively purchasing new vehicles, the model must satisfy three conditions. Their sum described here operates at too high a corresponding forecast projections are must be less than one, b ¥ b <1, and level of aggregation to capture these available. 2 1 the absolute value of b must be less preferences. By modeling the total The changes in selling prices, fuel 2 than one. The coefficients of this model number of new vehicles sold in a given economy, and other features of cars and satisfy all three conditions. year, it is necessary to quantify light trucks produced during future important measures, like sales price or model years that result from Using the Augural CAFE standards as fuel economy, by averages. Our model manufacturers’ responses to lower CAFE the baseline, it is possible to produce a operates at a high level of aggregation, and GHG emission standards are likely series of future total sales as shown in where the average fuel economy to affect both sales of individual models Table–II–32. For comparison, the table represents an average across many and the total number of new vehicles includes the calculated total light-duty vehicle types, usage profiles, and fuel sold. Because the values of changes in sales of a proprietary forecast purchased economy levels. In this context, the fuel economy and other features to to support the 2016 Draft TAR analysis, average fuel economy was not a potential buyers are not completely the total new light-duty sales in EIA’s meaningful value with respect to its understood; however, the magnitude, 2017 Annual Energy Outlook, and a influence on the total number of new and possibly even the direction, of their (short) forecast published in the Center vehicles sold. A number of recent effect on sales of new vehicles is for Automotive Research’s Q4 2017 studies have indeed shown that difficult to anticipate. On balance, it is Automotive Outlook. All of the forecasts consumers value fuel savings (almost) reasonable to assume that the changes in in Table–II–32 assume the Augural fully. Those studies are frequently based prices, fuel economy, and other Standards are in place through MY on large datasets that are able to control attributes expected to result from their 2025, though assumptions about the for all other vehicle attributes through a proposed action to amend and establish costs required to comply with them variety of econometric techniques. They fuel economy and GHG emission likely differ. As the table shows, despite represent micro-level decisions, where a standards are likely to increase total differences among them, the sales of new cars and light trucks during dynamically produced sales projection 228 Effects on the used car market are accounted future model years. Please provide from the CAFE model is not for separately. comment on the relationship between qualitatively different from the others.

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While this forecast projects a vehicles during the analysis period, Outlook; this integration continues that relatively high, but flat, level of new though it would continue the trend at a approach in a way that ensures greater vehicle sales into the future, it is worth slower rate. internal consistency when simulating noting that it continues another trend In addition to the statistical model multiple regulatory alternatives (and observed in the historical data. The time that estimates the response of total new conducting sensitivity analysis on any series of annual new vehicle sales is vehicle sales to changes in the average of the factors that influence fleet share). volatile from year to year, but multi-year new vehicle price, the CAFE model (e) Vehicle Choice Models as an averages are less so being sufficient to incorporates a dynamic fleet share Alternative Method To Estimate New wash out the variation associated with model that modifies the light truck (and, Vehicle Sales them peaks and valleys of the series. symmetrically, passenger car) share of Despite the fact that the moving average the new vehicle market. A version of Another potential option to estimate annual new vehicle sales has been this model first appeared in the 2012 future new vehicle sales would be to use growing over the last four decades, it final rule, when this fleet share a full consumer choice model. The has not kept pace with U.S. population component was introduced to ensure agencies simulate compliance with growth. Data from the Federal Reserve greater internal consistency within CAFE and CO2 standards for each Bank of St. Louis shows that the per- inputs in the uncertainty analysis. For manufacturer using a disaggregated capita sales of new vehicles peaked in today’s analysis, this dynamic fleet representation of its regulated vehicle 1986 and has declined more than 25% share is enabled throughout the analysis fleets. This means that each from this peak to today’s level.231 While of alternatives. manufacturer may have hundreds of the sales projection in Table–II–32 The dynamic fleet share model is a vehicle model variants (e.g., the Honda would represent a historically high series of difference equations that Civic with the 6-cylinder engine, and average of new vehicle sales over the determine the relative share of light the Honda Civic with the 4-cylinder analysis period, it would not be trucks and passenger cars based on the engine would each be treated as sufficient to reverse the trend of average fuel economy of each, the fuel different, in some ways, during the declining per-capita sales of new price, and average vehicle attributes like compliance simulation).232 While the horsepower and vehicle mass (the latter analysis accounts for a wide variety of 229 Out of necessity, the analysis in today’s rule of which explicitly evolves as a result of attributes across these vehicles, only a conflates production year (or ‘‘model year’’) and the compliance simulation). While this few of them change during the calendar year. The volumes cited in the CAFE model was taken from EIA’s National compliance simulation. However, all of model forecast represent forecasted production Energy Modeling System (NEMS), it is volumes for those model years, while the other those attributes are relevant in the represent calendar year sales (rather than applied at a different level. Rather than context of consumer choice models. production)—during which two, or possibly three, apply the shares based on the regulatory Aside from the computational different model year vehicles are sold. In the long class distinction, the CAFE model intensity of simulating new vehicle run, the difference is not important. In the early applies the shares to body-style. This is sales at the level of individual models— years, there are likely to be discrepancies. done to account for the large-scale shift 230 U.S. Total Sales by Make, Automotive News, for all manufacturers, under each http://www.autonews.com/section/datalist18 (last in recent years to crossover utility regulatory alternative, over the next visited June 22, 2018). vehicles that have model variants in decade or more—it would be necessary 231 Mislinski, J. Light Vehicle Sales Per Capita: both the passenger car and light truck to include additional relationships Our Latest Look at the Long-Term Trend, Advisor regulatory fleets. The agencies have Perspectives (June 1, 2018), https:// www.advisorperspectives.com/dshort/updates/ always modified their static forecasts of 232 For more detail about the compliance 2018/05/01/light-vehicle-sales-per-capita-our-latest- new vehicle sales to reflect the PC/LT simulation and manufacturer fleet representation, look-at-the-long-term-trend. split present in the Annual Energy see Section II.G.

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about how consumers trade off among quality and reliability, interior volume, branding. While the marketing budget of vehicle attributes, which types of or comfort. However, other factors also individual manufacturers may help a consumers prefer which types of influence customers’ purchase decision, consumer choice model estimate market attributes (and how much), and how and some of these can be challenging to share for a given brand, estimating the manufacturers might strategically price model. Consumer proximity to impact of a given campaign on new these modified vehicles. This requires a dealerships, quality of service and sales is more challenging as consumers strategic pricing model, which each customer experience at dealerships, make purchasing decisions based upon manufacturer has and would likely be availability and terms of financing, and their own needs and desires. unwilling to share. Some of this basic product awareness may Modelers must understand how strategic pricing behavior occurs on significantly factor into sales success. small time-scale through the use of Manufacturers’ marketing choices consumers and commercial buyers dealer incentives, rebates on specific may significantly and unpredictably select vehicles in order to effectively models, and creative financing offers. affect sales. Ad campaigns may increase develop and implement a consumer When simulating compliance at the awareness in the market, and campaigns choice model in a compliance annual scale, it is effectively impossible may reposition consumers’ perception simulation. Consumers purchase to account for these types of strategic of the brands and products. For vehicles for a variety of reasons such as decisions. example, in 2011 the Volkswagen Passat family need, need for more space, new It is also true consumers have featured an ad with a child in a Darth technology, changes to income and heterogeneous preferences that change Vader costume (and showcased remote affordability of a new vehicle, improved over time and determine willingness-to- start technology on the Passat). In MY fuel economy, operating costs of current pay for a variety of vehicle attributes. 2012, Kia established the Kia Soul with vehicles, and others. Once committed to These preferences change in response to party rocking, hip-hop hamster buying a vehicle, consumers use marketing, distribution, pricing, and commercials showcasing push-button different processes to narrow down their product strategies that manufacturers ignition, a roomy interior, and design shopping list. Consumer choice decision may change over time. With enough features in the brake lights. Both attributes include factors both related data, a consumer choice model could commercials raised awareness and and not related to the vehicle design. stratify new vehicle buyers into types highlighted basic product features. Each The vehicle’s utility for those attributes and attempt to measure the strength of commercial also impressed is researched across many different each type’s preference for fuel economy, demographic groups with pop culture information sources as listed in the table acceleration, safety rating, perceived references, product placement, and co- below.

An objective, attribute-based projections of future sales volumes at not so stringent as to’’ lead to ‘‘adverse consumer choice model could lead to the model, segment, or manufacturer economic consequences, such as a projected swings in manufacturer level. significant loss of jobs or unreasonable market shares and individual model Comment is sought on the elimination of consumer choice.’’ 233 volumes. The current approach development and use of potential EPA similarly conducted an industry simulates compliance for each consumer choice model in compliance employment analysis under the broad manufacturer assuming that it produces simulations. Comment is also sought on authority granted to the agency under the same set of vehicles that it produced the appropriate breadth, depth, and the Clean Air Act.234 Both agencies in the initial year of the simulation (MY complexity of considerations in a recognized the uncertainties inherent in 2016 in today’s analysis). If a consumer consumer choice model. estimating industry employment choice model were to drive projected impacts; in fact, both agencies dedicated sales of a given vehicle model below (f) Industry Employment Baseline a substantial amount of discussion to some threshold, as consumers have (Including Multiplier Effect) and Data uncertainty in industry employment done in the real market, the simulation Description analyses in the 2012 final rule for MYs 235 currently has no way to generate a new In the first two joint CAFE/CO2 2017 and beyond. Notwithstanding vehicle model to take its place. As rulemakings, the agencies considered an these uncertainties, CAFE and CO2 demand changes across specific market analysis of industry employment standards do impact industry labor segments and models, manufacturers impacts in some form in setting both hours, and providing the best analysis adapt by supplying new vehicle CAFE and emissions standards; NHTSA practicable better informs stakeholders nameplates and models (e.g., the conducted an industry employment proliferation of crossover utility analysis in part to determine whether 233 67 FR 77015, 77021 (Dec. 16, 2002). vehicles in recent years). Absent that the standards the agency set were 234 See George E. Warren Corp. v. EPA, 159 F.3d 616, 623–624 (D.C. Cir. 1998) (ordinarily flexibility in the compliance simulation, economically practicable, that is, permissible for EPA to consider factors not even the more accurate consumer choice whether the standards were ‘‘within the specifically enumerated in the Act). model may produce unrealistic financial capability of the industry, but 235 See 77 FR 62624, 62952, 63102 (Oct. 15, 2012).

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and the public about the standards’ The analysis also accounts for sales consider changes in labor at retail gas impact than would omitting any projections in response to the different stations. The analysis did not consider estimates of potential labor impacts. regulatory alternatives; the labor possible labor changes due to raw Today many of the effects that were analysis considers changes in new material production, such as production previously qualitatively identified, but vehicle prices and new vehicle sales (for of aluminum, steel, copper and lithium, not considered, are quantified. For further discussion of the sales model, nor did the agencies consider possible instance, in the PRIA for the 2017–2025 see Section 2.E). As vehicle prices rise, labor impacts due to changes in rule EPA identified ‘‘demand effects,’’ the analysis expected consumers to production of oil and gas, ethanol, and ‘‘cost effects,’’ and ‘‘factor shift effects’’ purchase fewer vehicles than they electricity. The analysis did not analyze as important considerations for industry would have at lower prices. As effects of how consumers could spend labor, but the analysis did not attempt manufacturers sell fewer vehicles, the money saved due to improved fuel to quantify either the demand effect or manufacturers may need less labor to economy, nor did the analysis assess the the factor shift effect.236 Today’s produce the vehicles and less labor to effects of how consumers would pay for industry labor analysis quantifies direct sell the vehicles. However, as more expensive fuel savings labor changes that were qualitatively manufacturers add equipment to each technologies at the time of purchase; discussed previously. new vehicle, the manufacturers will either could affect consumption of other Previous analyses and new require human resources to develop, goods and services, and hence affect methodologies to consider direct labor sell, and produce additional fuel-saving labor in other industries. The effects of effects on the automotive sector in the technologies. The analysis also accounts increased usage of car-sharing, ride- United States were improved upon and for the potential that new standards sharing, and automated vehicles were developed. Potential changes that were could shift the relative shares of not analyzed. The analysis did not evaluated include (1) dealership labor passenger cars and light trucks in the estimate how changes in labor from any related to new light duty vehicle unit overall fleet (see Section 2.E); insofar as industry could affect gross domestic sales; (2) changes in assembly labor for different vehicles involved different product and possibly affect other vehicles, for engines and for amounts of labor, this shifting impacts industries as a result. transmissions related to new vehicle the quantity of estimated labor. The Finally, no assumptions were made CAFE model automotive labor analysis unit sales; and (3) changes in industry about full-employment or not full- takes into account reduction in vehicle labor related to additional fuel savings employment and the availability of sales, shifts in the mix of passenger cars technologies, accounting for new human resources to fill positions. When and light trucks, and addition of fuel- vehicle unit sales. All automotive labor the economy is at full employment, a savings technologies. effects were estimated and reported at a fuel economy regulation is unlikely to 237 For today’s analysis, it was assumed national level, in job-years, assuming have much impact on net overall U.S. 2,000 hours of labor per job-year. that some observations about the production of MY 2016 vehicles would employment; instead, labor would The analysis estimated labor effects primarily be shifted from one sector to from the forecasted CAFE model carry forward, unchanged into the future. For instance, assembly plants another. These shifts in employment technology costs and from review of impose an opportunity cost on society, automotive labor for the MY 2016 fleet. would remain the same as MY 2016 for all products now, and in the future. The approximated by the wages of the For each vehicle in the CAFE model employees, as regulation diverts analysis, the locations for vehicle analysis assumed percent U.S. content would remain constant, even as workers from other activities in the assembly, engine assembly, and economy. In this situation, any effects transmission assembly and estimated manufacturers updated vehicles and introduced new fuel-saving on net employment are likely to be labor in MY 2016 were recorded. The transitory as workers change jobs (e.g., percent U.S. content for each vehicle technologies. It was assumed that assembly labor hours per unit would some workers may need to be retrained was also recorded. Not all parts are or require time to search for new jobs, made in the United States, so the remain at estimated MY 2016 levels for vehicles, engines, and transmissions, while shortages in some sectors or analysis also took into account the regions could bid up wages to attract percent U.S. content for each vehicle as and the factor between direct assembly labor and parts production jobs would workers). On the other hand, if a manufacturers add fuel-savings regulation comes into effect during a technologies. As manufacturers added remain the same. When considering shifts from one technology to another, period of high unemployment, a change fuel-economy technologies in the CAFE in labor demand due to regulation may model simulations, the analysis the analysis assumed revenue per employee at suppliers and original affect net overall U.S. employment assumed percent U.S. content would because the labor market is not in remain constant in the future, and that equipment manufacturers would remain in line with MY 2016 levels, even as equilibrium. Schmalansee and Stavins the U.S. labor added would be point out that net positive employment proportional to U.S. content. From this manufacturers added fuel-saving technologies and realized cost effects are possible in the near term foundation, the analysis forecasted when the economy is at less than full automotive labor effects as the CAFE reductions from learning. The analysis focused on automotive employment due to the potential hiring model added fuel economy technology labor because adjacent employment of idle labor resources by the regulated and adjusted future sales for each factors and consumer spending factors sector to meet new requirements (e.g., to vehicle. for other goods and services are install new equipment) and new uncertain and difficult to predict. The economic activity in sectors related to 236 Regulatory Impact Analysis: Final Rulemaking for 2017–2025 Light-Duty Vehicle Greenhouse Gas analysis did not consider how direct the regulated sector longer run, the net Emission Standards and Corporate Average Fuel labor changes may affect the macro effect on employment is more difficult Economy Standards, U.S. EPA at 8–24 to 8–32 economy and possibly change to predict and will depend on the way (Aug. 2012). employment in adjacent industries. For in which the related industries respond 237 The agencies recognize a few local production to the regulatory requirements. For that facilities may contribute meaningfully to local instance, the analysis did not consider economies, but the analysis reported only on possible labor changes in vehicle reason, this analysis does not include national effects. maintenance and repair, nor did it multiplier effects but instead focuses on

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labor impacts in the most directly assembly plant employment and analysis looked at financial reports from affected industries. Those sectors are production statistics and other publicly publicly traded automotive likely to face the most concentrated available information. The analysis businesses.240 Based on recent figures, it labor impacts. recognizes that some plants may use was estimated that OEMs would add Comment is sought on these less labor than the analysis estimates to one labor year per $633,066 revenue 241 assumptions and approaches in the produce the vehicle, the engine, or the and that suppliers would add one labor labor analysis. transmission, and other plants may have year per $247,648 in revenue.242 These 4. Estimating Labor for Fuel Economy used more labor. The analysis used the global estimates are applied to all Technologies, Vehicle Components, assembly locations and industry revenues, and U.S. content is applied as Final Assembly, and Retailers averages for labor per unit to estimate a later adjustment. In today’s analysis, it U.S. assembly labor hours for each was assumed these ratios would remain The following sections discuss the vehicle. U.S. assembly labor hours per constant for all technologies rather than approaches to estimating factors related vehicle ranged from as high as 39 hours that the increased labor costs would be to dealership labor, final assembly labor if the manufacturer assembled the shifted toward foreign countries. and parts production, and fuel economy vehicle, engine, and transmission at Comment is sought on the realism of technology labor. U.S. plants, to as low as zero hours if this assumption. the manufacturer imported the vehicle, (a) Dealership Labor (d) Labor Calculations engine, and transmission. The analysis evaluated dealership The analysis also considered labor for The analysis estimated the total labor labor related to new light-duty vehicle part production in addition to labor for as the sum of three components: sales, and estimated the labor hours per final assembly. Motor vehicle and Dealership hours, final assembly and new vehicle sold at dealerships, equipment manufacturing labor parts production, and labor for fuel- including labor from sales, finance, statistics from the U.S. Census Bureau, economy technologies (at OEM’s and insurance, and management. The effect the Bureau of Labor Statistics,239 and suppliers). The CAFE model calculated of new car sales on the maintenance, other publicly available sources were additional labor hours for each vehicle, repair, and parts department labor is surveyed. Based on these sources, the based on current vehicle manufacturing expected to be limited, as this need is analysis noted that the historical locations and simulation outputs for based on the vehicle miles traveled of average ratio of vehicle assembly additional technologies, and sales the total fleet. To estimate the labor manufacturing employment to changes. The analysis applied some hours at dealerships per new vehicle employment for total motor vehicle and constants to all vehicles,243 but other sold, the National Automobile Dealers equipment manufacturing for new constants were vehicle specific,244 or Association 2016 Annual Report, which vehicles remained roughly constant over year specific for a vehicle.245 provides franchise dealer employment the period from 2001 through 2013, at While a multiplier effect of all U.S. by department and function, was a ratio of 5.26. Observations from 2001– automotive related jobs on non-auto referenced.238 The analysis estimated 2013 spanned many years, many related U.S. jobs was not considered for that slightly less than 20% of dealership combinations of technologies and today’s analysis, the analysis did employees’ work relates to new car sales technology trends, and many economic program a ‘‘global multiplier’’ that can (versus approximately 80% in service, conditions, yet the ratio remained about be used to scale up or scale down the parts, and used car sales), and that on the same. Accordingly, the analysis total labor hours. This multiplier exists average dealership employees working scaled up estimated U.S. assembly labor in the parameters file, and for today’s on new vehicle sales labor for 27.8 hours by a factor of 5.26 to consider U.S. analysis the analysis set the value at hours per new vehicle sold. parts production labor in addition to 1.00. (b) Final Assembly Labor and Parts assembly labor for each vehicle. 5. Additional Costs and Benefits Production The industry estimates for vehicle Incurred by New Vehicle Buyers assembly labor and parts production How the quantity of assembly labor labor for each vehicle scaled up or down Some costs of purchasing and owning and parts production labor for MY 2016 as unit sales scaled up or down over a new or used vehicle scale with the vehicles would increase or decrease in time in the CAFE model. the future as new vehicle unit sales 240 The analysis considered suppliers that won increased or decreased was estimated. (c) Fuel Economy Technology Labor the Automotive News ‘‘PACE Award’’ from 2013– 2017, covering more than 40 suppliers, more than Specific assembly locations for final As manufacturers spend additional 30 of which are publicly traded companies. vehicle assembly, engine assembly, and dollars on fuel-saving technologies, Automotive News gives ‘‘PACE Awards’’ to transmission assembly for each MY parts suppliers and manufacturers innovative manufacturers, with most recent 2016 vehicle were identified. In some winners earning awards for new fuel-savings require human resources to bring those technologies. cases, manufacturers assembled technologies to market. Manufacturers 241 The analysis assumed incremental OEM products in more than one location, and may add, shift, or replace employees in revenue as the retail price equivalent for the analysis identified such products ways that are difficult for the agencies technologies, adjusting for changes in sales volume. and considered parallel production in 242 The analysis assumed incremental supplier to predict in response to adding fuel- revenue as the technology cost for technologies the labor analysis. savings technologies; however, it is before retail price equivalent mark-up, adjusting for The analysis estimated industry expected that the revenue per labor hour changes in sales volume. average direct assembly labor per at original equipment manufacturers 243 The analysis applied the same assumptions to vehicle (30 hours), per engine (four (OEMs) and suppliers will remain about all manufacturers for annual labor hours per hours), and per transmission (five employee, dealership hours per unit sold, OEM the same as in MY 2016 even as revenue per employee, supplier revenue per hours) based on a sample of U.S. industry includes additional fuel-saving employee, and factor for the jobs multiplier. technology. 244 The analysis made vehicle specific 238 NADA Data 2016: Annaul Financial Profile of To estimate the average revenue per assumptions about percent U.S. content and U.S. America’s Franchised New-Car Dealerships, assembly employment hours. National Automobile Dealers Association, https:// labor hour at OEMs and suppliers, the 245 The analysis estimated technology cost for www.nada.org/2016NADAdata/ (last visited June each vehicle, for each year based on the technology 22, 2018). 239 NAICS Code 3361, 3363. content applied in the CAFE model, year-by-year.

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value of the vehicle. Where fuel national weighted-average sales tax rate average new vehicle MSRP. Using the economy standards increase the almost identical to that resulting from assumption that 85% of new vehicle transaction price of vehicles, they will the use of Census population estimates purchases involve some financing, the affect both the absolute amount paid in as weights, just slightly above 5.5%. The average share of the MSRP financed for sales tax and the average amount of analysis opted to utilize Census all vehicles purchased, including non- financing required to purchase the population rather than the registration- financed transactions, rather than only vehicle. Further, where they increase based proxy of new vehicle sales as the those that are financed, was computed. the MSRP, they increase the appraised basis for computing this weighted Table–II–34 shows that this share ranges value upon which both value-related average, as the end results were between 70 and 72%. From this, the registration fees and a portion of negligibly different and the analytical analysis assumed that on an aggregate insurance premiums are based. The approach involving new vehicle level, including all new vehicle analysis assumes that the transaction registrations had not been as thoroughly price is a set share of the MSRP, which reviewed. Note: Sales taxes and purchases, 70% of the value of all allows calculation of these factors as registration fees are transfer payments vehicles’ MSRP is financed. It is likely shares of MSRP. Below the assumptions between consumers and the Federal that the share financed is correlated made about how each of these government and are therefore not with the MSRP of the new vehicle additional costs of vehicle purchase and considered a cost in the societal purchased, but for simplification ownership scale with the MSRP and perspective. However, these costs are purposes, it is assumed that 70% of all how the analysis arrived at these considered as additional costs in the vehicle costs are financed, regardless of assumptions are discussed. private consumer perspective. the MSRP of the vehicle. In measurements of the impacts on the (a) Sales Taxes (b) Financing Costs average consumer, this assumption will The analysis took auto sales taxes by The analysis assumes 85% of not affect the outcome of our state 246 and weighted them by automobiles are financed based on calculation, though this assumption will population by state to determine a Experian’s quarter 4, 2016 ‘‘State of the matter for any discussions about how national weighted-average sales tax of Automotive Finance Market,’’ which many, or which, consumers bear the 5.46%. The analysis sought to weight notes that 85.2% of 2016 new vehicles brunt of the additional cost of owning sales taxes by new vehicle sales by state; were financed, as were 85.9% of 2015 more expensive new vehicles. For sake however, such data were unavailable. It new vehicle purchases.247 The analysis of simplicity, the model also assumes is recognized that for this purpose, new used data from Wards Automotive and vehicle sales by state is a superior JD Power on the average transaction that increasing the cost of new vehicles weighting mechanism to Census price of new vehicle purchases, average will not change the share of new vehicle population; in effort to approximate financed new auto beginning principal, MSRP that is financed; the relatively new vehicle sales by state, a study of the and the average incentive as a percent constant share from 2011–2016 when change in new vehicle registrations of MSRP to compute the ratio of the the average MSRP of a vehicle increased (using R.L. Polk data) by state across average financed new auto principal to 10% supports this assumption. It is recent years was conducted, resulting in the average new vehicle MSRP for recognized that this is not indicative of a corresponding set of weights. Use of calendar years 2011–2016. Table–II–34 average individual consumer the weights derived from the study of shows that the average financed auto transactions but provides a useful tool vehicle registration data resulted in a principal is between 82 and 84% of the to analyze the aggregate marketplace.

From Wards Auto data, the average average finance term length for new include higher interest rates. The share 48- and 60-month new auto interest autos was 68 months. It is recognized financed, interest rate, and finance term rates were 4.25% in 2016, and the that longer financing terms generally length are added as inputs in the

246 See Car Tax by State, locality rates, and lack of availability of weights to the effect of the exclusion of municipality-specific FactoryWarrantyList.com, http://www.factory apply to locality taxes complicate the ability to taxes from this analysis. warrantylist.com/car-tax-by-state.html (last visited reliably analyze the subject at this level of detail. 247 Zabritski, M. State of the Automotive Finance June 22, 2018). Note: County, city, and other Localities with relatively high automobile sales Market: A look at loans and leases in Q4 2016, municipality-specific taxes were excluded from taxes may have relatively fewer auto dealerships, as Experian, https://www.experian.com/assets/ weighted averages, as the variation in locality taxes consumers would endeavor to purchase vehicles in automotive/quarterly-webinars/2016-Q4-SAFM- within states, lack of accessible documentation of areas with lower locality taxes, therefore reducing revised.pdf (last visited June 22, 2018).

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parameters file so that they are easier to financing payments paid for the average update in the future. Using these inputs financed purchases as the following: the model computes the stream of

Note: The above assumes the interest this reason, it is not included in the new vehicle based upon increased new is distributed evenly over the period, societal cost and benefit analysis. vehicle prices in response to increased when in reality more of the interest is However, because it is an additional CAFE standard stringency. paid during the beginning of the term. cost paid by the consumer, it is However, the incremental amount calculated as a part of the private (c) Insurance Costs calculated as attributable to the standard consumer welfare analysis. More expensive vehicles will require will represent the difference in the It is recognized that increased finance more expensive collision and annual payments at the time that they terms, combined with rising interest comprehensive (e.g., fire and theft) car are paid, assuming that a consumer does rates, lead to a longer period of time not repay early. This will represent the before a consumer will have positive insurance. Actuarially fair insurance expected change in the stream of equity in the vehicle to trade in toward premiums for these components of financing payments at the time of the purchase of a newer vehicle. This value-based insurance will be the financing. has impacts in terms of consumers amount an insurance company will pay The above stream does not equate to either trading vehicles with negative out in the case of an incident type the average amount paid to finance the equity (thereby increasing the amount weighted by the risk of that type of purchase of a new vehicle. In order to financed and potentially subjecting the incident occurring. It is expected that compute this amount, the share of consumer to higher interest rates and/or the same driver in the same vehicle type financed transactions at each interest rendering the consumer unable to will have the same risk of occurrence for rate and term combination would have obtaining financing) or delaying the the entirety of a vehicle’s life so that the to be known. Without having replacement of the vehicle until they share of the value of a vehicle paid out projections of the full distribution of the achieve suitably positive equity to allow should be constant over the life of a auto finance market into the future, the for a trade. Comment is sought on the vehicle. However, the value of vehicles above methodology reasonably accounts effect these developments will have on will decline at some depreciation rate so for the increased amount of financing the new vehicle market, both in general, that the absolute amount paid in value- costs due to the purchase of a more and in light of increased stringency of related insurance will decline as the expensive vehicle, on an average basis fuel economy and GHG emission vehicle depreciates. This is represented taking into account non-financed standards. Comment is also sought on in the model as the following stream of transactions. Financing payments are whether and how the model should expected collision and comprehensive also assumed to be an intertemporal account for consumer decisions to insurance payments: transfer of wealth for a consumer; for purchase a used vehicle instead of a

To utilize the above framework, and comprehensive coverage was computed. Then each regulatory class in estimates of the share of MSRP paid on computed for 1979–2003. For cars the the fleet is weighted by share to estimate collision and comprehensive insurance share ranges from 49 to 55%, with the the overall average amount paid for and of annual vehicle depreciations are share tending to be largest towards the collision and comprehensive insurance needed to implement the above end of the series. For trucks the share by model year as shown in Table–II–35. equation. Wards has data on the average ranges from 43 to 61%, again, with the The average share of the initial MSRP annual amount paid by model year for share increasing towards the end of the paid in collision and comprehensive new light trucks and passenger cars on series. It is assumed that for model years insurance by model year is then collision, comprehensive and damage 2004–2016, 60% of insurance premiums computed. The average share paid for and liability insurance for model years for trucks, and 55% for cars, is paid for model years 2010–2016 is 1.83% of the 1992–2003; for model years 2004–2016, collision and comprehensive. Using initial MSRP. This is used as the share they only offer the total amount paid for these shares the absolute amount paid of the value of a new vehicle paid for insurance premiums. The share of total for collision and comprehensive collision and comprehensive in the insurance premiums paid for collision coverage for cars and trucks is future.

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2017 data from Fitch Black Book was cumulative share of the initial MSRP of If a vehicle lives to 10 years, 9.9% of the used as a source for vehicle depreciation a vehicle assumed to be paid in initial MSRP is expected to be paid in rates; two- to six-year-old vehicles in collision and comprehensive insurance collision and comprehensive payments; 2016 had an average annual in five-year age increments under this by 20 years 11.9% of the initial MSRP; depreciation rate of 17.3%.248 It is depreciation assumption, conditional on finally, if a vehicle lives to age 40, assumed that future depreciation rates a vehicle surviving to that age—that is, 12.4% of the initial MSRP. As can be will be like recent depreciation, and the the expected insurance payments at the seen, the majority of collision and analysis used the same assumed time of purchase will be weighted by comprehensive payments are paid by depreciation. Table–II–36 shows the the probability of surviving to that age. the time the vehicle is 10 years old.

The increase in insurance premiums model a 75-mile EV for early adopters, the economic value of the difference resulting from an increase in the average who we assume would not be concerned between the useful life of a conventional value of a vehicle is a result of an with the lower range, and a 150-mile EV ICE and the 150-mile EV when it increase in the expected amount for the broader market. The initial five reaches a 55% battery capacity (as a insurance companies will have to pay percent of EV sales were assumed to go result of battery deteroriation).250 In out in the case of damage occurring to to early adopters, with the remainder subsequent analyses (the 2016 Draft the driver’s vehicle. In this way, it is a being 150-mile EVs. The broader market TAR analysis and today’s analysis), cost to the private consumer, was assumed to have some lower utility NHTSA removed the low-range EVs attributable to the CAFE standard that for the 150-mile EV, due to the lower from its technology set due to both weak caused the price increase. driving range between refueling events consumer demand for low-range EVs in (d) Consumer Acceptance of Specific relative to a conventional vehicle. Thus, the marketplace and subsequent Technologies an additional social cost of about $3,500 technology advances that make 200-mile per vehicle was assigned to the EV150 EVs a more practical option for new EVs In previous rulemaking analyses, to capture the lost utility to produced in future model years. The NHTSA imposed an economic cost of consumers.249 Additionally, NHTSA exclusion of low-range EVs in the lost welfare to buyers of advanced imposed a ‘‘relative value loss’’ of technology set reduced the need to electric vehicles. NHTSA chose to 1.94% of the vehicle’s MSRP to reflect account for consumer welfare losses

248 Fitch Ratings Vehicle Depreciation Report 249 Based on Michael K. Hidrue, George R. 250 The vehicle was assumed to be retired once February 2017, Black Book, http:// Parsons, Willett Kempton, Meryl P. Gardner, the capacity reached 55 percent of its initial www.blackbook.com/wp-content/uploads/2017/02/ Willingness to pay for electric vehicles and their capacity, and the residual lifetime miles from that Final-February-Fitch-Report.pdf (last visited June attributes, Resource and Energy Economics,Volume point forward were valued, discounted, and 22, 2018). 33, Issue 3, 2011, Pages 686–705. expressed as a fraction of initial MSRP.

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attributable to reduced driving range. confidential business information about versus some amount of electrification). While the sensitivity analysis explores the costs, revenues, and profitability of For instance, the dataset contained used some potential for continuing consumer their electrified vehicle lines. The CBI vehicle prices for the Honda Accord and value loss, even in the improved provided a valuable check on the Honda Accord Hybrid, Toyota Camry electrified powertrain vehicles, the empirical work described below. As a and Toyota Camry Hybrid, Ford Fusion central analysis assumes that no value result of this examination, we no longer and Ford Fusion Hybrid, Kia Soul and loss exists for electrified powertrains. assume manufacturers can pass on the Kia Soul EV, and so on for several However, ongoing low sales volumes entire incremental cost of hybrid, plug- model years. In some cases, the and a growing body of literature suggest in hybrid, and battery electric vehicles manufacturer produced no identically that consumer welfare losses may still to buyers of those vehicles. The equivalent internal combustion engine exist if manufacturers are forced to difference between the buyer’s vehicle, so a similar internal produce electric vehicles in place of willingness-to-pay for those combustion vehicle produced by the vehicles with internal combustion technologies, and the cost to produce same manufacturer was used as the engines (forcing sacrifices to cargo them, must be recovered from buyers of point of comparison. For example, the capacity or driving range) in order to other vehicles in a manufacturer’s Nissan Leaf was paired with the Nissan comply with standards. This topic will product portfolio or sacrificed from its Versa, as well as the Toyota Prius and receive ongoing investigation and profits, or sacrificed from dealership Toyota Corolla. Only vehicles available revision before the publication of the profits, or supplemented with State or for private sale, and in good vehicle final rule. Please provide comments and Federal incentives (or, some condition were included in the any relevant data that would help to combination of the four). analysis.254 The dataset contains fewer inform the estimation of Using data from the used vehicle observations for PHEVs and BEVs implementation of any value loss market, statistical models were fit to because manufacturers have produced related to sacrificed attributes in electric estimate consumer willingness to pay fewer examples of vehicles with these vehicles. for new vehicles with varying levels of technologies, compared to HEV and ICE One reason it was necessary to electrification relative to comparable vehicles. In all of these cases, trim level account for welfare losses from reduced internal combustion engine vehicles and options packages were matched driving range in this way is that, in was evaluated in four steps. The between ICE and electric powertrains to previous rulemakings, the agencies analysis (1) gathered used car fair minimize the degree of non-powertrain implicitly assumed that every vehicle in market value for select vehicles; (2) difference between vehicle pairs. The the forecast would be produced and developed regression models to estimate resale price data spanned many model purchased and that manufacturers the portion of vehicle depreciation rate years, but most observations in the would pass on the entire incremental attributable to the vehicle nameplate dataset represent MY 2013 through MY cost of fuel-saving technologies to new and the portion attributable to the 2016. car (and truck) buyers. However, many vehicle’s technology content at each age The regression models used to stakeholders commented that (using fixed effects for nameplates and estimate the transaction price (or consumers are not willing to pay the full specific electrification technologies); (3) ‘‘Value’’) as a function of age, control for incremental costs for hybrids, plug-in estimated the value of vehicles at age the type of powertrain (ICE, HEV, PHEV, 251 hybrids, and battery electric vehicles. zero (i.e., when the vehicles were new); and BEV) and nameplate to account for For this analysis, consumer willingness and (4) compared new vehicle values for their impact on the value of the vehicle to pay for HEVs, PHEVs, BEVs relative comparable vehicles across different as it ages.255 The regression takes the to comparable ICE vehicles was electrification levels (i.e., internal following form, with ICE, HEV, PHEV, investigated. The analysis compared the combustion, HEV, PHEV, and BEV) to and BEV binary variables (0, or 1), and estimated price premium the electrified estimate willingness-to-pay for the age defined as 2017 minus the model vehicles command in the used car electric technology relative to an ICE. year was used: market and estimated the willingness to The dataset used for estimation pay premium for new vehicles with consisted of vehicle attribute data from 1n(Value = ,b1(ICE * Age) + b2(HEV * electrification technologies at age zero Edmunds and transaction data from Age) + b3(PHEV * Age) + b4(BEV * relative to their internal combustion Kelley Blue Book published online in Age) + b5(HEV) + b6(PHEV) + engine counterparts. For the analysis, June and July of 2017 for select vehicles b7(BEV) + FENameplate the willingness to pay was compared of interest.252 253 The dataset was For each observation in the dataset, with the expected incremental cost to constructed to contain pairs of vehicles the ‘‘Value’’ at age zero is determined by produce electrification technologies. that were nearly the same, except for setting the age variable to zero and Manufacturers also contributed type of powertrain (internal combustion solving.

251 See e.g., Comment by Alliance of Automobile 254 It is possible ‘‘good’’ vehicles for all ages may equivalent, and the used vehicle market for Tesla Manufacturers, Docket ID EPA–HQ–OAR–2015– have inadvertently introduced a small bias in the has not cleared in the same way because of a variety 0827–4089 and NHTSA–2016–0068–0072. sample, as a ‘‘good’’ conditioning rating on a of unique business factors (previously, Tesla 252 See Edmunds, https://www.edmunds.com/ vehicle just a year or two old may not be in average guaranteed resale value prices for their products, condition relative to other vehicles of the vintage, (last visited June 22, 2018). Edmunds publishes which was a factory incentive program that only but a ‘‘good’’ rating for a much older car may reflect automotive data, reviews, and advice. an impeccably maintained vehicle. recently ended, no longer applying to vehicles sold 253 See Kelley Blue Book, https://www.kbb.com/ 255 In the case of electrified vehicles with no after July 1, 2016). These two factors impaired the (last visited June 22, 2018). Kelley Blue Book, part internal combustion engine equivalent, the analysis quality of used Tesla data for the purposes of the of Cox Automotive’s Autotrader brand, provides grouped like vehicle pairs together under the same analysis, so the agencies excluded Tesla vehicles automotive research, reviews, and advice, including nameplate fixed effects (or FENameplate). Tesla from today’s analysis on customer willingness-to- estimated market values of new and used vehicles. vehicles have no internal combustion engine pay for electrified vehicles.

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The estimated willingness-to-pay for price premium for new vehicles with incremental cost to produce these electrified powertrain packages over an HEV, PHEV, and BEV technologies. This vehicles. Specifically, the analysis internal combustion engine in an analysis suggests that consumers are estimated consumers are willing to pay otherwise similar vehicle is computed willing to pay more for new electrified between $2,000 and $3,000 more for the as the difference between their vehicles than their new internal engine electrified powertrains considered here estimated initial values, using the combustion counterparts, but only a than their internal combustion engine functions above. These pair-wise little more, and not necessarily enough counterparts. differences are averaged to estimate a to cover the relatively large projected

Table–II–37 illustrates the variation in luxury vehicles in the set retained value the statistical model, we estimate that willingness-to-pay by electrification in a way that skewed the average. The strong hybrids hold less than $100 of level (although the statistical model did CBI acquired from manufacturers was the initial price premium by age eight not distinguish between PHEV30 and more consistent with the mean than (on average). While the battery electric PHEV50 due to the small number of median value (except for the PHEVs). vehicles appear to be worth less than available operations for plug-in Additionally, the Kelley Blue Book their ICE counterparts by age eight, hybrids). As the table demonstrates, the data suggest that the used electrified there is limited data about this emerging difference between the median and vehicles were often worth less than their segment of the new vehicle market. mean predicted price premium for used internal combustion engine These independently-produced results PHEVs is significant. The limited counterpart vehicles after a few years of using publicly available data were in number of PHEV observations were not use.256 As Table–II–38 illustrates, the line with manufacturers’ reported uniformly distributed among the value of the price premium shrinks as confidential business information. nameplates present, and some of the the vehicles age and depreciate. Using

The ‘‘technology cost burden’’ business information received from equivalent markups (with a large numbers used in today’s analysis manufacturers any tax credits that can portion of those costs being batteries), represent the amount of a given be passed through in the price, and the but the estimated willingness-to-pay is technology’s incremental cost that cost of the technology. In general, the only about $3,000. While tax credits manufacturers are unable to pass along incremental willingness-to-pay falls offset some, if not most of that to the buyer of a given vehicle at the well short of the costs currently difference for PHEVs and BEVs, there is time of purchase. The burden is defined projected for HEVs, PHEVs, and BEVs; some residual amount that buyers of as the difference between estimated for example, BEV technology can add new electrified vehicles are currently willingness-to-pay, itself a combination roughly $18,000 in equipment costs to unwilling to cover, and that must either of the estimated values and confidential the vehicle after standard retail price come from forgone profits or be passed

256 The analysis did not identify an underlying interaction between maintenance costs and batteries superior to previous generation vehicles, and new reason for this observation, but the agencies posit or maintenance costs and low volume vehicles. electrified vehicles may be offered at lower prices for discussion purposes there could be some Alternatively, new electrified vehicles may be still because of a variety of market conditions.

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along to buyers of other vehicles in a both the initial purchase price of the not include ICE vehicles with no similar manufacturer’s portfolio. vehicle and its later value in the used HEV, PHEV, or BEV nameplate or Manufacturers may be able to recover vehicle market. As such, the analysis counterpart, so the analysis presented some or all of these costs by charging would continue to be relevant even if here looks at a small portion of all higher prices for their other models, in incentive programs for vehicle transactions and is more likely to which case it will represent a welfare electrification change or phase out in include fuel efficient models where loss to buyers of other vehicles (even if the future. By considering a variety of market demand for hybrid (or higher) not to buyers of HEVs, PHEVs, or BEVs nameplates and body styles produced versions may exist. One possible themselves). To the extent that they are by several manufacturers, this analysis alternative is to rely on new vehicle unable to do so and must absorb part or produces average willingness-to-pay transaction prices to estimate consumer all of these costs, their profits will estimates that can be applied to the willingness-to-pay for new vehicles decline, and in effect this cost will be whole industry. By evaluating matched with certain attributes. However, new borne by their investors. In practice, the pairs of vehicles from the same vehicle transaction data is highly analysis estimates benefits and costs to manufacturer, the analysis accounts for proprietary and difficult to obtain in a car and light truck manufacturers and many additional factors that may be tied form that may be disclosed to the buyers under the assumption that each to the brand, rather than the technology, public. manufacturer recovers all technology and influence the fair market price of While estimating willingness-to-pay costs and civil penalties it incurs from vehicles. In particular, the data for electrification technologies from buyers via higher average prices for the inherently include customer valuations depreciation and MSRP data is models it produces and sells, although for fuel-savings and vehicle appealing, many manufacturers handle sufficient information to support maintenance schedules, as well as other MSRP and pricing strategies differently, specific assumptions about price factors like noise-vibration-and- with some preferring to deviate only a increases for individual models is not harshness, interior space,257 and fueling little from sticker price and others present. In effect, this means that any convenience in the context of the preferring to offer high discounts. There part of a manufacturer’s costs to convert vehicles considered. is evidence of large differences between specific models to electric drive There are some limitations to this MSRP and effective market prices to technologies that it cannot recover by approach. There are currently few consumers for many vehicles, especially charging higher prices to their buyers observations of PHEV and BEV BEVs. Please provide comments on methods will be borne collectively by buyers of technologies in the data, and most of the and data used to evaluate consumer the other models they produce. Each of observations for BEVs are sedans and willingness-to-pay for electrification those buyers is in effect assumed to pay small cars, the values for which are technologies. a slight premium (or ‘‘markup’’) over the extrapolated to other market segments. manufacturer’s cost to produce the Additionally, the used vehicle data (e) Refueling Surplus models they purchase (including the supporting these estimates inherently Direct estimates of the value of cost of any technology used to improve includes both older and newer extended vehicle range are not available its fuel economy), this premium on generations of technology, so the in the literature, so the reduction in the average is modeled to recover the full historical regression may be slow to required annual number of refueling cost of technology applied to all react to rapid changes in the new cycles due to improved fuel economy vehicles to improve the fuel economy of vehicle marketplace. As new vehicle was calculated and the economic value the fleet. So, even though electrified nameplates emerge, and existing of the resulting benefits assessed. Chief vehicles are modeled as if their buyers nameplates improve their among these benefits is the time that are unwilling to pay the full cost of the implementation of electrification owners save by spending less time both technology associated with their fuel technologies, this model will require re- in search of fueling stations and in the economy improvement, the price borne estimation to determine how these new act of pumping and paying for fuel. by the average new vehicle buyer entrants impact the estimated industry The economic value of refueling time represents the average incremental average willingness-to-pay. savings was calculated by applying technology cost for all applied Additionally, the willingness-to-pay DOT-recommended valuations for travel technology, the sum of all technology analysis does not consider electric time savings to estimates of how much costs divided by the number of units vehicles with no direct ICE counterpart. time is saved.258 The value of travel sold, across all classes, for each For example, today’s evaluation does time depends on average hourly manufacturer. not consider Tesla because the Tesla valuations of personal and business The willingness-to-pay analysis brand has no ICE equivalent, and time, which are functions of total hourly described above relies on used vehicle because the free-market prices for used compensation costs to employers. The data that is widely available to the Tesla vehicles have been difficult (if not total hourly compensation cost to public. Market tracking services update impossible) to obtain, primarily due to employers, inclusive of benefits, in used vehicle price estimates regularly as factory guaranteed resale values (which 2010$ is $29.68.259 Table–II–39 below fuel prices and other market conditions is a program that still affects the used demonstrates the approach to estimating change, making the data easy to update market for many Tesla vehicles). Still, the value of travel time ($/hour) for both in the future as market conditions Tesla vehicles have a large share of the urban and rural (intercity) driving. This change. The used vehicle data also BEV market by both unit sales and approach relies on the use of DOT- account for consumer willingness-to- dollar sales, it may be possible to recommended weights that assign a pay absent State and Federal rebates at include Tesla data in a future update to lesser valuation to personal travel time the time of sale, which are reflected in this analysis. Similarly, the analysis did than to business travel time, as well as

257 Often HEVs and PHEVs place batteries in 258 See https://www.transportation.gov/sites/ 259 Total hourly employer compensation costs for functional storage space, such as the trunk or floor dot.gov/files/docs/ValueofTravelTime 2010 (average of quarterly observations across all storage bins, thereby forcing consumers to trade-off Memorandum.pdf (last accessed July 3, 2018). occupations for all civilians). See https:// fuel-savings with other functional vehicle www.bls.gov/ncs/ect/tables.htm (last accessed July attributes. 3, 2018).

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weights that adjust for the distribution between personal and business travel.

The estimates of the hourly value of time—independent of urban or rural adjustment is performed separately for urban and rural travel time ($15.67 and status—may be produced. passenger cars and for light trucks, yielding $21.93, respectively) shown in Table–II– occupancy-adjusted valuations of vehicle Note: The calculations above assume only travel time during refueling trips for each 39 above must be adjusted to account one adult occupant per vehicle. To fully fleet. for the nationwide ratio of urban to rural estimate the average value of vehicle travel driving. By applying this adjustment (as time, the presence of additional adult Note: Children (persons under age 16) are shown in Table–II–40 below), an overall passengers during refueling trips must be excluded from average vehicle occupancy estimate of the hourly value of travel accounted for. The analysis applies such an counts, as it is assumed that the opportunity adjustment as shown in Table–II–40; this cost of children’s time is zero.

260 Time spent on personal travel during rural the divergence in these values: (1) Time is scarcer food, and entertainment because time at the (intercity) travel is valued at a greater rate than that on a long trip; (2) a long trip involves destination is worth such high costs. of urban travel. There are several reasons behind complementary expenditures on travel, lodging,

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The analysis estimated the amount of Among these characteristics of fueling which interview respondents indicated refueling time saved using (preliminary) station visits is the total amount of time the primary reason was due to a low survey data gathered as part of our spent pumping and paying for fuel. reading on the gas gauge.265 This 2010–2011 National Automotive From a separate sample (also part of the restriction was imposed so as to exclude Sampling System’s Tire Pressure TPMS study), researchers conducted drivers who refuel on a fixed (e.g., Monitoring System (TPMS) study.263 interviews at the pump to gauge the weekly) schedule and may be unlikely The study was conducted at fueling distances that drivers travel in transit to to alter refueling patterns as a result of stations nationwide, and researchers and from fueling stations, how long that increased driving range. The relevant made observations regarding a variety of transit takes, and how many gallons of TPMS survey data on average refueling characteristics of thousands of fuel are being purchased. trip characteristics are presented below individual fueling station visits from This analysis of refueling benefits in Table–II–41. August 2010 through April 2011.264 considers only those refueling trips

As an illustration of how the value of level in the absence of a higher CAFE their tanks are 35% full (i.e. as shown extended refueling range was estimated, standard for the given model year). in Table–II–41, with 7.0 gallons in assume a small light truck model has an TPMS survey data indicate that drivers reserve, and the consumer purchases 13 average fuel tank size of approximately who indicated the primary reason for gallons). By this measure, a typical 20 gallons and a baseline actual on-road their refueling trips was a low reading driver would have an effective driving fuel economy of 24 mpg (its assumed on the gas gauge typically refuel when range of 312 miles (= 13.0 gallons × 24

261 See Travel Monitoring, Traffic Volume Trends, on the TPMS study. TPMS data are preliminary at vehicles. For more information on the National U.S. Department of Transportation Federal Highway this time, and rates are subject to change pending Automotive Sampling System and to access TPMS Administration, https://www.fhwa.dot.gov/policy availability of finalized TPMS data. Average data when they are made available, see http:// information/travellmonitoring/tvt.cfm (last visited occupancy rates shown here are specific to www.nhtsa.gov/NASS. June 22, 2018). Weights used for urban versus rural refueling trips and do not include children under 264 The data collection period for the TPMS study travel are computed using cumulative 2011 16 years of age. ranged from October 10, 2010, through April 15, estimates of urban versus rural miles driven 263 TPMS data are preliminary and not yet provided by the Federal Highway Administration. published. Estimates derived from TPMS data are 2011. 262 Source: National Automotive Sampling therefore preliminary and subject to change. 265 Approximately 60% of respondents indicated System 2010–2011 Tire Pressure Monitoring System Observational and interview data are from distinct ‘‘gas tank low’’ as the primary reason for the (TPMS) study. See next page for further background subsamples, each consisting of approximately 7,000 refueling trip in question.

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mpg) before he or she is likely to refuel. will continue to do. Based on peer the number of miles (VMT) driven by Increasing this model’s actual on-road reviewer comments to NHTSA’s initial those that stay in service, and for the fuel economy from 24 to 25 mpg would implementation of refueling time percentage of refueling trips that occur therefore extend its effective driving savings (subsequent to the CAFE NPRM for reasons other than a low reading on range to 325 miles (= 13.0 gallons × 25 issued in 2011), the analysis of refueling the gas gauge; a discount rate is also mpg). Assuming that the truck is driven time savings was updated for the final applied in the valuation of future 12,000 miles/year,266 this one mpg rule to reflect peer reviewer benefits. Using this direct estimation improvement in actual on-road fuel suggestions.269 Beyond updating time approach to quantify the value of this economy reduces the expected number values to current dollars, that analysis benefit by model year was considered; of refueling trips per year from 38.5 (= has been used, unchanged, in today’s however, it was concluded that the 12,000 miles per year/312 miles per analysis as well. value of this benefit is implicitly refueling) to 36.9 (= 12,000 miles per Because a reduction in the expected captured in the separate measure of year/325 miles per refueling), or by 1.6 number of annual refueling trips leads overall valuation of fuel savings. refuelings per year. If a typical fueling to a decrease in miles driven to and Therefore, direct estimates of this cycle for a light truck requires a total of from fueling stations, the value of benefit are not added to net benefits 6.83 minutes, then the annual value of consumers’ fuel savings associated with calculations. It is noted that there are time saved due to that one mpg this decrease can also be calculated. As other benefits resulting from the improvement would amount to $3.97 (= shown in Table–II–41, the typical reduction in miles driven to and from (6.83/60) × $21.81 × 1.6). incremental round-trip mileage per fueling stations, such as a reduction in In the central analysis, this refueling cycle is 1.08 miles for light greenhouse gas emissions—CO2 in calculation was repeated for each future trucks and 0.97 miles for passenger cars. particular—which, as per the case of calendar year that light-duty vehicles of Going back to the earlier example of a fuel savings discussed in the preceding each model year affected by the light truck model, a decrease of 1.6 in paragraph, are implicitly accounted for standards considered in this rule would the number of refuelings per year leads elsewhere. remain in service. The resulting to a reduction of 1.73 miles driven per Special mention must be made with cumulative lifetime valuations of time year (= 1.6 refuelings × 1.08 miles regard to the value of refueling time savings account for both the reduction driven per refueling). Again, if this savings benefits to owners of electric over time in the number of vehicles of model’s actual on-road fuel economy and plug-in electric (both referred to a given model year that remain in was 24 mpg, the reduction in miles here as EV) vehicles. EV owners who service and the reduction in the number driven yields an annual savings of routinely drive daily distances that do of miles (VMT) driven by those that stay approximately 0.07 gallons of fuel (= not require recharging on-the-go may in service. The analysis also adjusts the 1.73 miles/24 mpg), which at $3.25/ eliminate the need for trips to fueling or value of time savings that will occur in gallon 270 results in a savings of $0.23 charging stations. It is likely that early future years both to account for per year to the owner. adopters of EVs will factor this benefit expected annual growth in real into their purchasing decisions and Note: This example is illustrative only of wages 267 and to apply a discount rate to maintain driving patterns that require the approach used to quantify this benefit. In once-daily at-home recharging (a determine the net present value of time practice, the societal value of this benefit saved.268 A further adjustment is made process which generally takes five to excludes fuel taxes (as they are transfer 271 to account for evidence from the payments) from the calculation and is eleven hours for a full charge) for interview-based portion of the TPMS modeled using fuel price forecasts specific to those EV owners who have purchased study which suggests that 40% of each year the given fleet will remain in and installed a Level Two charging refueling trips are for reasons other than service. station to a high-voltage outlet at their a low reading on the gas gauge. It is The annual savings to each consumer home or parking place. However, EV therefore assumed that only 60% of the shown in the above example may seem owners who regularly or periodically theoretical refueling time savings will like a small amount, but the reader need to drive distances further than the be realized, as it was assumed that should recognize that the valuation of fully-charged EV range may need to owners who refuel on a fixed schedule the cumulative lifetime benefit of this recharge at fixed locations. A savings to owners is determined distributed network of charging stations 266 2009 National Household Travel Survey separately for passenger car and light (e.g., in parking lots, at parking meters) (NHTS), U.S Department of Transportation Federal truck fleets and then aggregated to show may allow some EV owners to recharge Highway Administration at 48 (June 2011), the net benefit across all light-duty their vehicles while at work or while available at http://nhts.ornl.gov/2009/pub/stt.pdf. shopping, yet the lengthy charging 12,000 miles/year is an approximation of a light vehicles, which is much more duty vehicle’s annual mileage during its initial significant at the macro level. cycles of current charging technology decade of use (the period in which the bulk of Calculations of benefits realized in may pose a cost to owners due to the benefits are realized). The CAFE model estimates future years are adjusted for expected value of time spent waiting for EVs to VMT by model year and vehicle age, taking into real growth in the price of gasoline, for charge and potential EV shoppers who account the rebound effect, secular growth rates in do not have access to charging at home VMT, and fleet survivability; these complexities are the decline in the number of vehicles of omitted in the above example for simplicity. a given model year that remain in (e.g., because they live in an apartment 267 See The Economics Daily, The compensation- service as they age, for the decrease in without a vehicle charging station, only productivity gap, U.S. Department of Labor Bureau of Labor Statistics (Feb. 24, 2011), http:// 271 269 Peer review materials, peer reviewer See generally All-New Nissan Leaf Range & www.bls.gov/opub/ted/2011/ted_20110224.htm. A backgrounds, comments, and NHTSA responses for Charging, Nissan USA, https://www.nissanusa.com/ 1.1% annual rate of growth in real wages is used this prior assessment are available at Docket vehicles/electric-cars/leaf/range-charging.html (last to adjust the value of travel time per vehicle NHTSA–2012–0001. visited June 22, 2018); Home Charging Calculator, ($/hour) for future years for which a given model Tesla, https://www.tesla.com/support/home- is expected to remain in service. This rate is 270 Estimate of $3.25/gallon is the forecasted cost charging-calculator (last visited June 22, 2018); supported by a BLS analysis of growth in real wages per gallon (including taxes, as individual 2018 Chevrolet Bolt EV, GM, https://media.gm.com/ from 2000–2009. consumers consider reduced tax expenditures to be content/media/us/en/chevrolet/vehicles/bolt-ev/ 268 Note: Here, as elsewhere in the analysis, savings) for motor gasoline in 2025. Source of price 2018/_jcr_content/iconrow/textfile/file.res/2018- discounting is applied on an annual basis from CY projections: U.S. Energy Information Chevrolet-Bolt-EV-Product-Guide.pdf (last visited 2017. Administration, Annual Energy Outlook Early 2018. June 22, 2018).

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have street parking, or have garages with during the Great Recession. The 2017 to calculate each average odometer insufficient voltage). Moreover, EV NHTS was not available at the time of reading by make, model, and model year owners who primarily recharge their this rulemaking. Because of the age of are representative of the total vehicles at home will still experience the last available NHTS and the unusual population of vehicles of that type. some level of inconvenience due to their economic conditions under which it Several indicators suggest that this is a vehicle being either unavailable for was collected, NHTSA built the new reasonable assumption. unplanned use or to its range being schedule using a similar method from a First, the majority of vehicle make/ limited during this time should they proprietary dataset collected in the fall models is well-represented in the interrupt the charging process. of 2015. This new data source has the sample. For more than 85% of make/ Therefore, at present EVs hold potential advantages of both being newer, a larger model combinations, the average in offering significant time savings but sample, and collected by a third party. odometer readings are collected for 20% only to owners with driving patterns or more of the total population. Most (1) Data Sources and Estimation (Polk optimally suited for EV characteristics. make/model observations have Odometer Data) If fast-charging technologies emerge and sufficient sample sizes, relative to their a widespread network of fast-charging To develop new mileage representation in the vehicle stations is established, it is expected accumulation schedules for vehicles population, to produce meaningful that a larger segment of EV vehicle regulated under the CAFE program average odometer totals at that level. owners will fully realize the potential (classes 1–3), NHTSA purchased a data Second, we considered whether the refueling time savings benefits that EVs set of vehicle odometer readings from representativeness of the odometer offer. This is an area of significant IHS/Polk (Polk). Polk collects odometer sample varies by vehicle age because uncertainty. readings from registered vehicles when VMT schedules in the CAFE model are they encounter maintenance facilities, specific to each age. It is possible that, 6. Vehicle Use and Survival state inspection programs, or for some of those models, an insufficient To properly account for the average interactions with dealerships and number of odometer readings is value of consumer and societal costs OEMs—these readings are more likely to recorded to create an average that is and benefits associated with vehicle be precise than the self-reported likely to be representative of all of those usage under various CAFE and GHG odometer readings collected in the models in operation for a given year. For alternatives, it is necessary to estimate NHTS. The average odometer readings all model years other than 2015, the portion of these costs and benefits in the data set NHTSA purchased are approximately 95% or more of vehicles that will occur at each age (or calendar based on more than 74 million unique types are represented by at least five year) for each model year cohort. Doing odometer readings across 16 model percent of their population. For this so requires some estimate of how many years (2000–2015) and vehicle classes reason, observations from all model miles the average vehicle of a given present in the data purchase (all years, other than 2015, were included in type 272 is expected to drive at each age registered vehicles less than 14,000 lbs. the estimation of the new VMT and what share of the initial model year GVW). This sample represents schedules. cohort is expected to remain at each age. approximately 28% of the light-duty Because model years are sold in in the The first estimates are referred to as the vehicles registered in 2015, and thus has Fall of the previous calendar year, vehicle miles travelled (VMT) schedules the benefit of not only being a newer, throughout the same calendar year, and and the second as the survival rate but also, a larger, sample. even into the following calendar year— schedules. In this section the data Comparably to the NHTS, the Polk not all registered vehicles of a make/ sources and general methodologies used data provide a measure of the model/model year will have been to develop these two essential inputs are cumulative lifetime vehicle miles registered for at least a year (or more) briefly discussed. More complete traveled (VMT) for vehicles, at the time until age three. The result is that some discussions of the development of both of measurement, aggregated by the MY 2014 vehicles may have been driven the VMT schedules and the survival rate following parameters: Make, model, for longer than one year, and some less, schedules are present in the PRIA model year, fuel type, drive type, door at the time the odometer was observed. Chapter 8. count, and ownership type (commercial In order to consider this in the or personal). Within each of these definition of age, an age of a vehicle is (a) Updates to Vehicle Miles Traveled subcategories they provide the average assigned to be the difference between Schedules Since 2012 FR odometer reading, the number of the average reading date of a make/ The MY 2017–2021 FRM built odometer readings in the sample from model and the average first registration estimates of average lifetime mileage which Polk calculated the averages, and date of that make/model. The result is accumulation by body style and age the total number of that subcategory of that the continuous age variable reflects using the 2009 National Household vehicles in operation. the amount of time that a car has been Travel Survey (NHTS), which surveys In estimating the VMT models, each registered at the time of odometer odometer readings of the vehicles data point was weighted (make/model reading and presumably the time span present from the approximately 113,000 classification) by the share of each that the car has accumulated the miles. households sampled. Approximately make/model in the total population of After creating the ‘‘age’’ variable, the 210,000 vehicles were in the sample of the corresponding vehicle body style. analysis fits the make/model lifetime self-reported odometer readings This weighting ensures that the VMT data points to a weighted quartic collected between April 2008 and April predicted odometer readings, by body polynomial regression of the age of the 2009. This represents a sample size of style and model year, represent each vehicle (stratified by vehicle body less than one percent of the more than vehicle classification among observed styles). The predicted values of the 250 million light-duty vehicles vehicles (i.e., the vehicles for which quartic regressions are used to calculate registered in 2008 and 2009. The NHTS Polk has odometer readings), based on the marginal annual VMT by age for sample is now 10 years old and taken each vehicles’ representation in the each body style by calculating registered vehicle population of its body differences in estimated lifetime mileage 272 Type here refers to the following body styles: style. Implicit in this weighting scheme accumulation by age. However, the Polk Pickups, vans/SUVs, and other cars. is the assumption that the samples used data acquired by NHTSA only contains

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observations for vehicles newer than 16 (2) Using New Schedules in the CAFE vehicles analyzed within the CAFE years of age. In order to estimate the Model/Analysis Model simulation. schedule for vehicles older than the age As discussed in Section 0, recent While the Polk registration data set 15 vehicles in the Polk data, information literature supports a 20% ‘‘rebound contains odometer readings for about that portion of the schedule from effect’’ for light-duty vehicle use, which individual vehicles, the CAFE model represents an elasticity of annual use the VMT schedules used in both the tabulates ‘‘mileage accumulation’’ 2017–2021 Final Light Duty Rule and with respect to fuel cost per mile of schedules, which relate average annual ¥0.2. Because fuel cost per mile is 2019–2025 Medium-Duty NPRM was miles driven to vehicle age, based on combined. The light-duty schedules calculated as fuel price per gallon vehicles’ body style. For the purposes of divided by fuel economy (in miles per were derived from the survey data VMT accounting, the CAFE model contained in the 2009 National gallon), this same elasticity applies to classifies vehicles in the analysis fleet as changes in fuel cost per mile that result Household Travel Survey (NHTS). being one of the following: Passenger from variation in fuel prices or From the old schedules, the annual car, SUV, pickup truck, passenger van, differences in fuel economy. It suggests 273 VMT is expected to be decreasing for all or medium-duty pickup/van. In order that a five percent reduction in the cost ages. Towards the end of the sample, the to use the Polk data to develop VMT per mile of travel for vehicles of a predictions for annual VMT increase. In schedules for each of these vehicle certain body style will result in a one order to force the expected classes in the CAFE model, a mapping percent increase in the average number monotonicity, a triangular smoothing between the classification of each model of miles they are driven annually. algorithm is performed until the in the Polk data and the classes in the The average cost per mile (CPM) of a schedule is monotonic. This performs a CAFE model was first constructed. This vehicle of a given age and vehicle style mapping enabled separate tabulations of weighted average which weights the in CY 2016 (the first analysis year of the average annual miles driven at each age observations close to the observation simulation) was used as the reference for each of the vehicle classes included point to calculate the rebound effect more than those farther from it. The in the CAFE model. result is a monotonic function, that within the CAFE model. However, this The only revision made to the predicts similar lifetime VMT for the does not perfectly align with the time of mappings used to construct the new sample span as the original function. the collection of the Polk dataset. The VMT schedules was to merge the SUV Because the analysis does not have data Polk data were collected in 2015 (so that and passenger van body styles into a 2014 fuel prices were the last to beyond 15 years of age, it is not able to single class. These body styles were correctly capture that part of the annual influence sampled vehicles’ odometer merged because there were very few readings), and represents the average VMT curve using only the new dataset. examples of vans—only 38 models were odometer reading at a single point in For this reason, trends in the old data in use during 2014, where every other time for age (model year) included in to extrapolate the new schedule for ages body style had at least three times as the cross-section. We use the difference beyond the sample range are used. many models. Further, as shown in the in the average odometer reading for each To use the VMT information from the PRIA Chapter 8, there was not a vintage during 2014 to calculate the newer data source for ages outside of the significant difference between the 2009 number of miles vehicles are driven at sample, final in-sample age (15 years) NHTS van and SUV mileage schedules, each age (see PRIA Chapter 8 for are used as a seed and then applied to nor was there a significant difference specific details on the analysis). For the proportional trend from the old between the schedules built with the example, we interpret the difference in schedules to extrapolate the new two body styles merged or kept separate the average odometer reading between schedules out to age 40. To do this, the using the 2015 Polk data. Merging these the five- and six-year-old vehicles of a annual percentage difference in VMT of body styles does not change the given body style as the average number the old schedule for ages 15–40 is workings of the CAFE model in any of miles they are driven during the year way, and the merged schedule is simply calculated. The same annual percentage when they were five years old. entered as an input for both vans and difference in VMT is applied to the new However, vehicles produced during SUVs. schedule to extend beyond the final in- different model years do not have the sample value. This assumes that the Although there is a single VMT by age same average fuel economy, so it is overall proportional trend in the outer schedule used as an input for each body important to consider the average fuel style, the assumptions about the economy of each vintage (or model year) years is correctly modeled in the old rebound effect require that this schedule used to measure mileage accumulation VMT schedule and imposes this same be scaled for future analysis years to at a given age when scaling VMT for the trend for the outer years of the new reflect changes in the cost of travel from rebound calculation. schedule. The extrapolated schedules the time the Polk sample was originally The first step in doing so is to adjust are the final input for the VMT collected. These changes result from for any change in average annual use schedules in the CAFE model. PRIA both changes in fuel prices between the that would have been caused by Chapter 8 contains a lengthier time the sample was collected and any differences in fuel prices between CYs discussion of both the data source and future analysis year and differences in 2014 and 2016. This is done by scaling the methodology used to create the new fuel economy between the vehicles the original schedules of annual VMT schedules. included in the sample used to build the by age tabulated from the Polk sample mileage schedules and the future-year using the following equation:

273 Though not included in today’s analysis, and vans were developed using the same corresponding schedules for heavy-duty pickups methodology.

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Here, the average fuel economy for (2) the difference between the average differences in fuel cost per mile that vehicles of a given body style and age fuel economy for vehicles of that body result from changes in fuel prices or refers to a different MY in 2016 than it type and age during a future calendar from differences in fuel economy. The did in 2014; for example, a MY 2014 year and the average fuel economy for model then repeats this calculation for vehicle had reached age two vehicle vehicles of that same body type and age each calendar year during the lifetimes during CY 2016, whereas a 2012 model during 2016. These two factors combine of vehicles of other body types, and year vehicle was age two during CY to determine the average fuel cost per subsequently repeats this entire set of 2014. mile for vehicles of that body type and calculations for each regulatory To estimate the average annual use of age during each future calendar year alternative under consideration. The vehicles of a specified body type and and the average fuel cost per mile for resulting differences in average annual age during future calendar years under vehicles of that same body type and age use of vehicles of each body type at each a specific regulatory alternative, the during 2016. age interact with the number estimated CAFE model adjusts the resulting The elasticity of annual vehicle use to remain in use at that age to determine estimates of vehicle use by age for that with respect to fuel cost per mile is total annual VMT by vehicles of each body type during CY 2016 to reflect (1) applied to the difference between these body type. the projected change in fuel prices from two values because vehicle use is This adjustment is defined by the 2016 to each future calendar year; and assumed to respond identically to equation below:

This equation uses the observed cost vehicles of each given type and age The mileage estimates described per mile of a vehicle of each age and relative to CPM resulting from the above are a crucial input in the CAFE style in CY 2016 as the reference point average fuel economy of vehicles of that model’s calculation of fuel consumption for all future calendar years. That is, the type and age and observed fuel prices and savings, energy security benefits, reference fuel price is fixed at 2016 during the year when the mileage consumer surplus from cheaper travel, levels, and the reference fuel economy accumulation schedules were originally recovered refueling time, tailpipe of vehicles of each age is fixed to the measured. This is consistent with a emissions, and changes in crashes, average fuel economy of the vintage that definition of the rebound effect as the fatalities, noise and congestion. had reached that age in 2016. For elasticity of annual vehicle use with (3) Comparison to other VMT example, the reference CPM for a one- respect to changes in the fuel cost per projections (2012 FR, AEO average year-old SUV is always the CPM of the mile of travel, regardless of the source lifetime miles, totals?) average MY 2015 SUV in CY 2016, and of changes in fuel cost per mile. the CPM for a two-year-old SUV is Alternative forms of referencing are Across all body styles and ages, the always the CPM of the average possible, but none can guarantee that previous VMT schedules estimate MYv2014 SUV in CY 2016. projected future vehicle use will higher average annual VMT than the This referencing ensures that the respond to both projected changes in updated schedules. Table–II—42 model’s estimates of annual mileage fuel prices and differences in individual compares the lifetime VMT under the accumulation for future calendar years models’ fuel economy among regulatory 2009 NHTS and the 2015 Polk dataset. reflect differences in the CPM of alternatives. The 40-year lifetime VMT gives the

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expected lifetime VMT of a vehicle The dynamic survival-weighted lifetime proportional reduction than the conditional on surviving to age 40. The VMT represents the expected number of unweighted lifetime assumptions. Using new schedules predict between 24 and miles driven by each body style, the updated schedules, the expected 31% fewer miles for a 40-year old weighting by the dynamic survival lifetime mileage accumulation is vehicle depending on the body style. schedules under baseline between approximately 150k and 170k The new schedules predict that the assumptions.274 There is a similar miles depending on the body style, average 40-year old vehicle will drive proportional reduction in expected rather than the approximately 180k to between approximately 260k and 280k lifetime VMT under both survival 210k miles under the previous miles depending on the body style assumptions, with the dynamic schedules. For more detail on when the versus between approximately 350k and scrappage model predicting lifetime mileage and survival rates occur, mileage accumulation within 10,000 380k for the previous schedules. chapter 8 of the PRIA gives the full VMT The static survival-weighted lifetime miles of the previous static model under schedules by age. The section below VMT represents the expected number of both VMT schedules. The expected miles the average vehicle of each body lifetime mileage accumulation reduces gives further estimates of how lifetime style will drive, weighting by the between 13 and 15% under the current VMT estimates vary under different likelihood it survives to each age using VMT schedules when compared to the assumptions within the dynamic the previous static scrappage schedules. previous schedules—a smaller scrappage model.

We have several reasons for preferring reported information). Further, the 2009 next VMT schedule iteration, NHTSA the new VMT schedules over the prior NHTS represents approximately one intends to use panel data to test the iterations. Before discussing these percent of the sample of vehicles magnitude of any attrition effect that reasons, it is important to note that registered in 2008/2009, while the 2015 may exist. While this caveat is NHTSA uses the same general Polk dataset represents approximately important, all previous iterations were methodology in developing both 30% of all registered light-duty vehicles; also built from a single calendar year schedules. We consider data on average it is a much larger dataset, and less cross-section and contain the same odometer readings by age and body style likely to oversample certain vehicles. inherent bias. collected once during a given window Additionally, while the NHTS may be a (b) How does CAFE affect vehicle of time; we then estimate a weighted representative sample of households, it retirement rates? polynomial function between vehicle is less likely to be a representative age and lifetime accumulation for a sample of vehicles. However, by Lightly used vehicles are a close given vehicle style. As with the properly accounting for vehicle substitute for new vehicles; thus, there previous schedules, we use the inter- population weights in the new averages is relationship between the two markets. annual differences as the estimate of and models, we corrected for this issue As the price for new vehicles increases, annual miles traveled for a given age. in the derivation of the new schedules. there is an upward shift in the demand The primary advantage of the current Importantly, this methodology treats for used vehicles. As a result of the schedules is the data source. The the cross-section of ages in a single upward shift in the demand curve, the previous schedules are based on data calendar year as a panel of the same equilibrium price and quantity of used that is outdated and self-reported, while model year vehicle, when in reality each vehicles both increase; the value of used the observations from Polk are between age represents a single model year, and vehicles increases as a result. The five and seven years newer than those not a true panel. We have some concern decision to scrap or maintain a used in the NHTS and represent valid that where the most heavily driven vehicle is closely linked with the value odometer readings (rather than self- vehicles drop out of the sample that the of the vehicle; when the value is lesser lifetime odometer readings will be lower than the cost to maintain the vehicle, it 274 In estimating the dynamic survival rate to than they would be if the scrapped will be scrapped. In general, as a result weight the annual VMT schedules, we make the vehicles had been left in the dataset of new vehicle price increases, the following input assumptions: The reference vehicle is MY 2016, GDP growth rates and fuel prices are without additional mileage scrappage rate, or the proportion of our central estimates, and the future average new accumulation. This would bias our vehicles remaining on the road vehicle fuel economies by body style and overall estimates of inter-annual mileage unregistered in a given year, of used average new vehicle prices are those simulated by accumulation downward and may result vehicles will decline. Because older the CAFE model when CAFE standards are omitted (by setting standards at 1 mpg), such that only in an undervaluation of costs and vehicles are on average less efficient and technologies that pay back within 30 months are benefits associated with additional less safe, this will have important applied. travel for vehicles of older ages. For the implications for the evaluations of costs

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and benefits of fuel economy standards, in incremental fatalities will decrease reduced form to approximate used car which increase the cost of new vehicles the societal net benefits of increasing scrappage in response to increasing fuel and reduce the average cost per mile of new vehicle fuel economy standards. economy standards. fuel costs. Our previous estimates of vehicle Greenspan & Cohen (1996) offer Fuel economy standards result in the scrappage did not include a dynamic additional foundations from which to application of more fuel saving response to new vehicle price, but think about vehicle stock and scrappage. technologies for at least some models, recent literature has continued to Their work identifies two types of which result in a higher cost for illustrate that this an omission which scrappage: Engineering scrappage and manufacturers to produce otherwise could rival the rebound effect in cyclical scrappage. Engineering identical vehicles. This increase in magnitude (Jacobsen & van Bentham, scrappage represents the physical wear production cost amounts to an upward 2015). For this reason, we worked to on vehicles, which results in their being shift in the supply curve for new develop an econometric survival model scrapped. Cyclical scrappage represents vehicles. This increases the equilibrium which captures the effect of increasing the effects of macroeconomic conditions price and reduces the quantity of the price of new vehicles on the survival on the relative value of new and used vehicles demanded. While the cost of rate of used vehicles discussed in the vehicles; under economic growth the new vehicles increases under increased following sections and in more detail in demand for new vehicles increases and fuel economy standards, the fuel cost the PRIA Chapter 8. We discuss the the value of used vehicles declines, per mile of travel declines. Consumers literature on vehicle scrappage rate and resulting in increased scrappage. In will place some value on the fuel discuss in the succeeding section. A addition to allowing new vehicle prices savings associated with the additional brief explanation of why we develop our to affect cyclical vehicle scrappage a` la technology, to the extent that they value own models and the data sources and the Gruenspecht effect, Greenspan and reduced operating expenses against the econometric estimations we use to do Cohen also note that engineering increased price of a new vehicle, so, follows. We conclude the discussion scrappage seems to increase where EPA increased financing costs (and of the updates to vehicle survival emission standards also increase; as impediments to obtaining financing), estimates with a summary of the results, more costs goes towards compliance and increased insurance costs. a description of how we use them in the technologies, it becomes more There is a trade-off between fuel CAFE model, and finally, how the expensive to maintain and repair more economy and other attributes that updated schedules compare with the complicated parts, and scrappage consumers value such as: Vehicle previous static scrappage schedules. increases. In this way, Greenspan and performance, interior volume, etc. Cohen identify two ways that fuel Where the additional value of fuel (1) What does the literature say about economy standards could affect vehicle savings associated with a technology is the relationship? scrappage: (1) Through increasing new greater than any loss of value from (a) How Fuel Economy Standards vehicle prices, thereby increasing used trade-offs with other attributes, the Impact Vehicle Scrappage vehicle prices, and finally, reducing on- demand for new vehicles will also shift road vehicle scrappage, and (2) by The effects of differentiated upwards. Where the additional shifting resources towards fuel-saving regulation 275 in the context of fuel evaluation of fuel savings is lesser than technologies—potentially reducing the economy (particularly, emission any loss of value from changes to other durability of new vehicles by making standards only affecting new vehicles) attributes, the demand will shift them more complex. downwards. Thus, the direction of the was discussed in detail in Gruenspecht demand shift is unknown. However, if (1981) and (1982), and has since been (b) Aggregate vs. Atomic Data Source in we assume that manufacturers pass all coined the ‘‘Gruenspecht effect.’’ the Literature costs associated with a model off to the Gruenspecht recognized that because One important distinction between consumer of that vehicle, then the per fuel economy standards affect only new the literatures on vehicles scrappage is vehicle profit remains constant. If we vehicles, any increase in price (net of between those that use atomic vehicle also assume that manufacturers are good the portion of reduced fuel savings data, data following specific individual predictors of the valuation and elasticity valued by consumers) will increase the vehicles, and those that use some level of certain vehicle attributes, then we can expected life of used vehicles and of aggregated data, data that counts the assume that even if there is some reduce the number of new vehicles total number of vehicles of a given type. positive demand shift, it is not enough entering the fleet. In this way, increased The decision to scrap a vehicle is an to increase demand above the original fuel economy standards slow the atomic one—that is, made on an equilibrium levels, or manufacturers turnover of the fleet and the entrance of individual vehicle basis. The decision would apply those technologies even in any regulated attributes tied only to new relates to the cost of maintaining a the absence of regulation. vehicles. Although Gruenspecht vehicle, and the value of the vehicle As noted above, the increase in the acknowledges that a structural model both on the used car market, and as price of new vehicles will result in which allows new vehicle prices to scrap metal. Generally, a used car owner increased demand for used vehicles as affect used vehicle scrappage only will decide to scrap a vehicle where the substitutes, extending the expected age through their effect on used vehicle value of the vehicle is less than the and lifetime vehicle miles travelled of prices would be preferable, the data value of the vehicle as scrap metal plus less efficient, and generally, less safe available on used vehicle prices was the cost to maintain or repair the vehicles. The additional usage of older (and still is) limited. Instead he tested vehicle. In other words, the owner gets vehicles will result in fewer gallons his hypothesis in his 1981 dissertation more value from scrapping the vehicle saved and more total on-road fatalities using new vehicle price and other than continuing to drive it or from under more stringent CAFE alternatives. determinants of used car prices as a selling it. For more on the topic of safety, the Recent work is able to model relative safety of specific model year 275 Differentiated regulations are regulations scrappage as an atomic decision due to affecting segments of the market differently; here, vehicles is discussed in Section 0 of the it references the fact that emission and fuel the availability of a large database of preamble and PRIA Chapter 11. Both the economy standards have largely only applied to used vehicle transactions. Following erosion of fuel savings and the increase new and not used vehicles. works by other authors including:

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Busse, Knittel, & Zettelmeyer (2013); repair prices to impute some measure of ‘durability’ factor as a function of model Sallee, West, & Fan (2010); Alcott & the effect of new vehicle prices on year vintage is included. Wozny (2013); and Li, Timmins, & von vehicle scrappage. (d) Models of the Gruenspecht Effect Haefen (2009)—Jacobsen & van Benthem (c) Historical Trends in Vehicle Used in Other Policy Analyses (2015) considers the impact of changes Durability in gasoline prices on used vehicle This is not the first estimation of the values and scrappage rates. In turn, they Waker (1968); Park (1977); Feeney & ‘Gruenspecht Effect’ for policy consider the impact of an increase in Cardebring (1988); Hamilton & considerations. In their Technical used vehicle values on the scrappage Macauley (1999); and Bento, Ruth, & Support Document (TSD) for the 2004 rate of those vehicles. They find that Zhuo (2016) all note that vehicles proposal to reduce greenhouse gas increases in gasoline price result in a change in durability over time. Walker emissions from motor vehicles, reduction in the scrappage rate of the (1968) simply notes a significant California Air Resources Board (CARB) most fuel efficient vehicles and an distinction in expected vehicle lifetimes outlines how they utilized the CARBITS increase in the scrappage rate of the pre- and post-World War I. Park (1977) vehicle transaction choice model in an least fuel efficient vehicles. This has discusses a ‘durability factor’ set by the attempt to capture the effect of important implications for the validity producer for each year so that different increasing new vehicle prices on vehicle of the average fuel economy values vintages and makes will have varying replacement rates. They consider data linked to model years and assumed to expected lifecycles. Feeney & from the National Personal be constant over the life of that model Cardebring (1988) show that durability Transportation Survey (NPTS) as a year fleet within this study. Future of vehicles appears to have generally source of revealed preferences and a iterations of this study could further increased over time both in the U.S. and University of California (UC) study as a investigate the relationship between fuel Swedish fleets using registration data source of stated preferences for the economy, vehicle usage, and scrappage, from each country. They also note that purchase and sale of household fleets as noted in other places in this the changes in median lifetime between under different prices and attributes discussion. the Swedish and U.S. fleet track well, (including fuel economy) of new While the decision to scrap a vehicle with a 1.5 year lag in the U.S. fleet. This vehicles. is made atomically, the data available to lag is likely due to variation in how the The transaction choice model NHTSA on scrappage rates and data is collected—the Swedish vehicle represents the addition and deletion of variables that influence these scrappage registry requires a title to unregister a a vehicle from a household fleet within rates are aggregate measures. This vehicle, and therefore gets immediate a short period of time as a influences the best available methods to responses, where the U.S. vehicle ‘‘replacement’’ of a vehicle, rather than measure the impacts of new vehicle registry requires re-registration, which as two separate actions. Their final data prices on existing vehicle scrappage. creates a lag in reporting. set consists of 790 vehicle replacements, The result is that this study models Hamilton & Macauley (1999) argue for 292 additions, and 213 deletions; they aggregate trends in vehicle scrappage a clear distinction between embodied do not include the deletions, but assume and not the atomic decisions that make versus disembodied impacts on vehicle any vehicle over 19 years old that is up these trends. Many other works longevity. They define embodied sold is scrapped. This allows them to within the literature use the same data impacts as inherent durability similar to capture a slowing of vehicle source and general scrappage construct, Park’s producer supplied ‘durability replacement under higher new vehicle such as: Walker (1968); Park (1977), factor’ and Greenspan’s ‘engineering prices, but because their model does not Greene & Chen (1981); Gruenspecht scrappage’ and disembodied effects include deletions, does not explicitly (1981); Gruenspecht (1982); Feeney & those which are environmental, not model vehicle scrappage, but assumes Cardebring (1988); Greenspan & Cohen unlike Greenspan and Cohen’s ‘cyclical all vehicles aged 20 and older are (1996); Jacobsen & van Bentham (2015); scrappage.’ They use calendar year and scrapped rather than resold. They and Bento, Roth, & Zhuo (2016) all use vintage dummy variables to isolate the calibrate the model so that the overall the same aggregate vehicle registration effects—concluding that the fleet size is benchmarked to Emissions data as the source to compute vehicle environmental factors are greater than FACtors (EMFAC) fleet predictions for scrappage. any pre-defined ‘durability factor.’ Some the starting year; the simulation then Walker (1968) and Bento, Roth, & of their results could be due to some produces estimates that match the Zhuo (2016) use aggregate data to inflexibility of assuming model year EMFAC predictions without further directly compute the elasticity of coefficients are constant over the life of calibration. scrappage from measures of used a vehicle, and there may be some The CARB study captures the effect vehicle prices. Walker (1968) uses the correlation between the observed life of on new vehicle prices on the fleet ratio of used vehicle Consumer Price the later model years of their sample replacement rates and offers some Index (CPI) to repair and maintenance and the ‘stagflation’ 276 of the 1970’s. precedence for including some estimate CPI. Bento, Roth, & Zhuo (2016) use Bento, Ruth, & Zhuo (2016) find that the of the Gruenspecht Effect. One used vehicle prices directly. While the average vehicle lifetime has increased important thing to note is that because direct measurement of the elasticity of 27% from 1969 to 2014 by sub-setting vehicles that exited the fleet without scrappage is preferable in a theoretical their data into three model year cohorts. replacement were excluded, the effect of sense, the CAFE model does not predict To implement these findings in the new vehicle prices on scrappage rates future values of used vehicles, only scrappage model incorporated into the where the scrapped vehicle is not future prices of new vehicles. For this CAFE model, this study takes pains to replaced is not captured. Because new reason, any model compatible with the estimate the effect of durability changes and used vehicles are substitutes, it is current CAFE model must estimate a in such a way that the historical expected that used vehicle prices will reduced form similar to Park (1977); durability trend can be projected into increase with new vehicle prices. Gruenspecht (1981); Greenspan & Cohen the future; for this reason, a continuous Because higher used vehicle prices will (1996), who use some form of new lower the number of vehicles whose vehicle prices or the ratio of new 276 Continued high inflation combined with high cost of maintenance is higher than their vehicle prices to maintenance and unemployment and slow economic growth. value, it is expected that not only will

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replacements of used vehicles slow, but represent the number of vehicles of that preference for more fuel efficient and also, that some vehicles that would have vintage and type scrapped in a given expensive new vehicles, are not used. been scrapped without replacement year. There were a couple other As further justification for using the under lower new vehicle prices will important data considerations for the NADA price series over the BLS New now remain on the road because their calculations of the historical scrappage Vehicle CPI, Park (1977) cites a value will have increased. Aggregate rates not discussed here but discussed discontinuity found in the amount of measures of the Gruenspecht effect will in detail in the PRIA Chapter 8.277 quality adjustments made to the series include changes to scrappage rates both For historical data on vehicle so that more adjustments are made over from slower replacement rates, and transaction prices, the models use data time. This could further limit the ability slower non-replacement scrappage rates. from the National Automobile Dealers for the BLS New Vehicle CPI to predict changes in vehicle scrappage. (2) Description of Data Sources Association (NADA), which records the average transaction price of all light- Vehicle scrappage rates are also NHTSA purchases proprietary data on duty vehicles. These transaction prices influenced by fuel economy and fuel the registered vehicle population from represent the prices consumers paid for prices. Historical data on the fuel IHS/Polk for safety analyses. IHS/Polk new vehicles but do not include any economy by vehicle style from model has annual snapshots of registered value of vehicles that may have been years 1979–2016 was obtained from the vehicle counts beginning in calendar traded in to dealers. Importantly, these 2016 EPA Motor Trends Report.279 The year (CY) 1975 and continuing until transaction prices were not available by van/SUV fuel economy values represent calendar year 2015. The data includes vehicle body styles; thus, the models a sales-weighted harmonic average of the following regulatory classes as will miss any unique trends that may the individual body styles. Fuel prices defined by NHTSA: Passenger cars, light have occurred for a particular vehicle were obtained from Department of trucks (classes 1 and 2a), and medium body style. This may be particularly Energy (DOE) historical values, and and heavy-duty trucks (classes 2b and relevant for pickup trucks, which future fuel prices within the CAFE 3). Polk separates these vehicles into observed considerable average price model use the Annual Energy Outlook 280 another classification scheme: Cars and increases as luxury and high option (AEO) future oil price projections. trucks. Under their schema, pickups, pickups entered the market. Future From these values the average cost per vans, and SUVs are treated as trucks, models will further consider 100 miles of travel for the cohort of new and all other body styles are included as incorporating price series that consider vehicles in a given calendar year and cars. In order to build scrappage models the price trends for cars, SUVs and vans, the average cost per 100 miles of travel to support the model year (MY) 2021– and pickups separately.278 for each used model year cohort in that 2026 light duty vehicle (LDV) standards, 281 The models use the NADA price same calendar year are computed. It it was important to separate these series rather than the Bureau of Labor is expected that as the new vehicle fleet vehicle types in a way compatible with Statistics (BLS) New Vehicle Consumer becomes more efficient (holding all the existing CAFE model. other attributes constant) that it will be There were two compatible choices to Price Index (CPI), used by Park (1977) and Greenspan & Cohen (1997), because more desirable, and the demand for aggregate scrappage rates: (1) By used vehicles should decrease regulatory class or (2) by body style. the BLS New Vehicle CPI makes quality adjustments to the new vehicle prices. (increasing their scrappage). As a given Because for NHTSA’s purposes vans/ model year cohort becomes more SUVs are sometimes classified as BLS assumes that additions of safety and fuel economy equipment are a expensive to operate due to increases in passenger cars and sometimes as light fuel prices, it is expected the scrappage trucks, and there was no quick way to quality adjustment to a vehicle model, which changes the good and should not of that model year will increase. It is reclassify some SUVs as passenger cars perhaps worth noting that more efficient within the Polk dataset, NHTSA chose be represented as an increase in its price. While this is good for some model year vintages will be less to aggregate survival schedules by body susceptible to changes in fuel prices, as style. This approach is also preferable purposes, it presumes consumers fully value technologies that improve fuel because NHTSA uses body style specific 279 Light-Duty Automotive Technology, Carbon lifetime VMT schedules. Vehicles economy. Because it is the purpose to Dioxide Emissions, and Fuel Economy Trends: 1975 experience increased wear with use; this study to measure whether this is Through 2016, U.S. EPA (Nov. 2016), available at many maintenance and repair events are true, it is important that vehicle prices https://nepis.epa.gov/Exe/ZyPDF.cgi?Dockey= closely tied to the number of miles on adjusted to fully value fuel economy P100PKK8.pdf. improving technologies, which would 280 Note: The central analysis uses the AEO a vehicle. The current version of the reference fuel price case, but sensitivity analysis CAFE model considers separate lifetime obscure the ability to measure the also considers the possibility of AEO’s low and high VMT schedules for cars, vans/SUVs, fuel price cases. 277 pickups and classes 2b and 3 vehicles. The first is any discontinuity caused by a 281 Work by Jacobsen and van Bentham suggests change in how Polk collected their data beginning that these initial average fuel economy values may These vehicles are assumed to serve in calendar year 2010, and the second is the use of not represent the average fuel economy of a model different purposes and, as a result, are the adjustment described in Greenspan & Cohen year cohort as it ages—mainly, they find that the modelled to have different average (1996). most fuel efficient vehicles scrap earlier than the lifetime VMT patterns. These different 278 Note: Using historical data aggregated by body least fuel efficient models in a given cohort. This styles to capture differences in price trends by body may be an important consideration in future uses likely also result in different style does not require the assertion technology costs endeavors that work to link fuel economy, vehicle lifetime scrappage patterns. are or are not borne by the body style to which they miles travelled (VMT), and scrappage. Studies on Once stratified into body style level are applied. If the body-style level average price ‘‘the rebound effect’’ suggest that lowering the fuel buckets, the data can be aggregated into change is used, then the assumption is cost per driven mile increases the demand for VMT. manufacturers do not cross-subsidize across body With more miles, a vehicle will be worth less as its population counts by vintage and age. styles, whereas if the average price change is used perceived remaining useful life will be shorter; this These counts represent the population then the assumption is they would proportion costs will result in the vehicle being more likely to be of vehicles of a given body style and equally for each vehicle. These are implementation scrapped. A rebound effect is included in the CAFE vintage in a given calendar year. The questions to be worked out once NHTSA has a model, but because reliable data on how average historical data source separating price series by VMT by age has varied over calendar year and difference between the counts of a given body styles, but these do not matter in the current model year vintage is not available, expected vintage and vehicle type from one model which only considers the average price of all lifetime VMT is not included within the current calendar year to the next is assumed to light-duty vehicles. dynamic scrappage model.

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absolute changes in their cost per mile and Cohen deem ‘engineering consistent trend in new vehicle prices. will be smaller. The functional forms of scrappage.’ This source of scrappage is The optimal number of lags is three so the cost per mile measures are further largely determined by the age of a that the price trend from the current discussed in the model specification vehicle and the durability of a specific year and the three prior years influences subsection 3 below. model year vintage. Vehicle scrappage the demand for and scrappage of used Aggregate measures that cyclically typically follows a roughly logistic vehicles. Note: The average lease length affect the value of used vehicles include function with age—that is, is three years 283 so that the price of an macroeconomic factors like the real instantaneous scrappage increases to average vehicle coming off lease is interest rate, the GDP growth rate, some peak, and then declines, with age estimated to affect the scrappage rate of unemployment rates, cost of as noted in Walker (1968); Park (1977); used vehicles—this is a major source of maintenance and repairs, and the value Greene & Chen (1981); Gruenspecht the newest used vehicles that enter the of a vehicle as scrap metal or as parts. (1981); Feeney & Cardebring (1988); used car fleet. Further, because Here only the GDP growth rate is Greenspan & Cohen (1996); Hamilton & increases in new vehicle prices due to discussed, as this is the only measure Macauley (1999); and Bento, Roth, & increased stringency of CAFE standards included in the final model. Extended Zhuo (2016). Thus, this analysis also is the primary mechanism through reasoning as to why other variables are uses a logistic function to capture this which CAFE standards influence not included in the final model in the trend of vehicle scrappage with age but vehicle scrappage and the CAFE Model PRIA Chapter 8 is offered, but the allows non-linear terms to capture any assumes that usage, efficiency, and discussion was omitted here for brevity skew to the logistic relationship. safety vary with the age of the vehicle, in describing only the final model. Specific details about the final and particular attention is paid to the form Generally economic growth will result considered forms of engineering of this effect. It is important to know the in a higher demand for new vehicles— scrappage by body styles is presented in likelihood of scrappage by the age of the cars in aggregate are normal goods—and the PRIA Chapter 8. vehicle to correctly account for the The final and considered independent a reduction in the value of used additional costs of additional fatalities variables intended to capture cyclical vehicles. The result should be an and increased fuel consumption from elements of vehicle scrappage and the increase in the scrappage rate of existing deferred scrappage. Thus, the influence considered forms of each are discussed vehicles so that we expect the GDP of increasing new vehicle prices is growth rate to be an important predictor in PRIA Chapter 8; here only inclusion of the GDP growth rate is discussed. The allowed to influence the demand for of vehicle scrappage rates. used vehicles (and reduce their NHTSA sourced the GDP growth rate GDP growth rate is not a single-period scrappage) differently for different ages from the 2017 OASDI Trustees effect; both the current and previous of vehicles in the scrappage model. We Report.282 The Trustees Report offers GDP growth rates will affect vehicle discuss both how we determined the credible projections beyond 2032. scrappage rates. A single year increase correct form and number of lags for each Because the purpose of building this will affect scrappage differently than a body style in PRIA Chapter 8. scrappage model is to project vehicle multi-period trend. For this reason, an survival rates under different fuel optimal number of lagged terms are The final cyclical factor affecting economy alternatives and the current included: The within-period GDP vehicle scrappage in the preferred fuel economy projections go as far growth rate, the previous period GDP model is the cost per 100 miles of travel forward as calendar year 2032, using a growth rate, and the growth rate from both of new vehicles and of the vehicle data set that encompasses projections at two prior years for the car model, while which is the subject of the decision to least through 2032 is an essential for vans/SUVs, and pickups, the current scrap or not to scrap. The new vehicle characteristic of any source used for this and previous period GDP growth rate cost per 100 miles is defined as the ratio analysis. are sufficient. of the average fuel price faced by new Similarly, the considered model vehicles in a given calendar year and (3) Summary of Model Estimation allows that one-period changes in new the average new vehicle fuel economy The most predictive element of vehicle prices will affect the used for 100 miles in the same calendar year, vehicle scrappage is what Greenspan vehicle market differently than a and varies only with calendar year:

The cost per 100 miles of the price faced by that model year vintage that model year when it was new, and potentially scrapped vehicle is in a given calendar year and the average varies both with calendar year and described as the ratio of the average fuel fuel economy for 100 miles of travel for model year:

282 The 2017 Annual Report of the Board of available at https://www.ssa.gov/oact/tr/2017/ dealers.edmunds.com/static/assets/articles/lease- Trustees of the Federal Old-Age and Survivors tr2017.pdf. report-jan-2017.pdf. Insurance and Federal Disability Insurance Trust 283 See e.g., Edmunds January 2017 Lease Market Funds, Social Security Administration (2017), Report, Edmunds (Jan. 2017), https://

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The average per-gallon fuel price model year fleet for the given calendar of fuel types present in a given model faced by a model year vintage in a given year, weighted by the share of each fuel year vintage: calendar year is the annual average fuel type in that model year fleet. Or the price of all fuel types present in that following, where FT represents the set

For these variables, the best fit model section VII.H.1 of this document. In increase. However, given the includes the cost per mile of both the order to isolate the effect, the price of distribution of the mileage new and the used vehicle for the current new vehicles is held constant at CY accumulation schedule by age, this and prior year. This is congruent with 2016 levels. The specific methodology amounts only to a two percent increase research that suggests consumers used to do so is described in detail in in the expected lifetime mileage respond to current fuel prices and fuel PRIA Chapter 8, as is the leakage accumulation of an individual vehicle. price changes. The selection process of implied by comparing the reference and This range is consistent with DOT this form for the cost per mile and the no Gruenspecht effect sensitivity cases. expectations in terms of direction and implications is discussed in PRIA It is important to note here that the magnitude. Chapter 8. leakage calculated ranges between 12 The use of a static retirement There are a couple other controlling and 18% across regulatory alternatives. schedule, while deemed a reasonable factors considered in our final model. This is in line with Jacobsen & van approach in the past, is a limited The 2009 Car Allowance Rebate System Bentham (2015) estimates which put representation of scrappage behavior. It (CARS) is not outlined here but is leakage for their central case between 13 fails to account for increasing vehicle outlined in PRIA Chapter 8. This and 16%. Their high gasoline price case durability—occurring for the last several program aimed to accelerate the is more in line this analysis’ central decades—and the resulting increase in retirement of less fuel efficient vehicles case—with fuel prices of $3/gallon—and average vehicle age in the on-road fleet, and replace them with more fuel predicts leakage of 21%. This further which has nearly doubled since 1980.284 efficient vehicles. Further discussion of validates the scrappage model effects Thus, turning off the dynamic scrappage how this is controlled for is located in against examples in the literature. model described above would not PRIA Chapter 8. Finally, evidence of The models used for this analysis are impose a perspective on the analysis autocorrelation was found, and able to capture the relationship for that is neutral with respect to observed including three lagged values of the vehicle scrappage as it varies with age scrappage behavior but would instead dependent variable addresses the and how this relationship changes with represent a strong assumption that concern. Treatment of autocorrelation is increases to new vehicle price, the cost asserts important trends in the historical discussed in PRIA Chapter 8. per mile of travel of new and used record will abruptly cease or change One additional issue encountered in vehicles, and how the rate varies direction. the estimations of scrappage rates is that cyclically with the GDP growth rate. It As discussed above, the dynamic the models predict too many vehicles also controls for the CARS program and scrappage model implemented to remain on the road in the later years. checks the influence of a change in support this proposal affects total fleet This issue occurs because the data Polk’s data collection procedures. The size through several mechanisms. beyond age 15 are progressively more goodness of fit measures and the Although the model accounts for the sparsely populated; vehicles over 15 plausibility of the predictions of the influence of changes to average new years were not captured in the Polk data model are discussed at some length in vehicle price and U.S. GDP growth, the until 1994, when each successive PRIA Chapter 8. In the next section, the most influential mechanism, by far, is collection year added an additional age impacts of updating the static scrappage the observed trend of increasing vehicle of vehicles until 2005 when all ages models to the dynamic models on durability over successive model years. began to be collected. This means that average vehicle age and usage, by body This phenomenon is prominently for vehicles over the age of 25 there are styles, and across different regulatory discussed in the academic literature only 10 years of data. In order to correct assumptions are discussed. related to vehicle retirement, where for this issue the fact that the final fleet there is no disagreement about its share converges to roughly the same (c) What is the estimated effect on existence or direction.285 In fact, when share for most model years for a given vehicle retirement and how do results the CAFE model is exercised in a way vehicle type is used. The predicted compare to previously estimated fleets that keeps average new vehicle prices at versus historical relationships seem to and VMT? (approximately) MY 2016 levels, the on- deviate beginning around age 20; thus, The expected lifetime of a car road fleet grows from an initial level of for scrappage rates for vehicles beyond estimated using the static scrappage 228 million in 2016 to 340 million in age 20 an exponential decay function schedule from the 2012 final rule, both 2050, an increase of 49% over the 35- which guarantees that by age 40 the in years and miles, is between the year period from 2016 to 2050. final fleet share reaches the convergence expected lifetime of the dynamic The historical data show the size of level observed in the historical data is scrappage model in the absence of CAFE the registered vehicle population (i.e., applied. The application of the decay standards and under the baseline the on-road fleet) growing by about 60% function and mathematical definition is standards. Estimated by the dynamic in the 35 years between 1980 and further defended in PRIA Chapter 8. scrappage model, the average vehicle is A sensitivity case is also developed to expected to live 15.1 years under the 284 Based on data from FHWA and IHS/Polk. 285 Waker (1968); Park (1977); Feeney & isolate the magnitude of the influence of only market demand for Cardebring (1988); Hamilton & Macauley (1999); Greunspecht effect. The impacts on new technology, and 15.6 years under and Bento, Ruth, & Zhuo (2016) note that vehicles costs and benefits are presented in the baseline scenario, a four percent change in durability over time.

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2015.286 In the 35 years between 2016 observed over the course of decades are model relies on its own estimated and 2050, our simulation shows the on- likely to persist. Analyzing fuel values as the previous scrappage rates at road fleet growing from about 230 economy standards requires an earlier ages, forcing any estimation million vehicles to about 345 million understanding of the mechanisms that errors to propagate through to future vehicles when the market adopts only influence new vehicle sales, the size of years. This exercise is discussed further the amount of fuel economy, which it the on-road fleet, and vehicle miles in PRIA Chapter VII. While the years of naturally demands. The simulated traveled. It is upon these mechanisms the recession represent a significant growth over this period is about 50% that the policy acts: Increasing/ shock to the size of the fleet, briefly from today’s level, rather than the 60% decreasing new vehicle prices changes reversing many years of annual growth, observed in the historical data over the the rate at which new vehicles are sold, the model recovers quickly and last 35 years. Under the baseline changing the attributes and prices of produces results within one percent of regulatory scenario, the growth over the these vehicles influences the rates at the actual fleet size, as it did prior to the next 35 years is simulated to be about which all used vehicles are retired, the recession. 54%—still short of the observed growth overall size of the on-road fleet In order to compare the magnitudes of over a comparable period of time. In determines the total amount of VMT, the sales and scrappage effects across fact, the simulated annual growth rate in which in turn affects total fuel different fuel economy standards the size of the on-road fleet in this consumption, fatalities, and other considered it is important to define analysis, about 1.3%, is lower than the externalities. The fact that DOT’s comparable measures. The sales effect long-term average annual growth rate of bottom-up approach produces results in in a single calendar year is simply the about two percent dating back to the line with historical trends is both difference in new vehicle sales across 1970s.287 expected and intended. alternatives. However, the scrappage Additionally, there are inherent This is not to say that all details of effect in a single calendar year is not precision limitations in measuring this new approach will be immediately simply the change in fleet size across something as vast and complex as the intuitive for reviewers accustomed to regulatory alternatives. The scrappage registered vehicle population. For results that do not include a dynamic model predicts the probability that a decades, the two authoritative sources sales model or dynamic scrappage vehicle will be scrapped in the next year for the size of the on-road fleet have model, much less results that combine conditional on surviving to that age; the been R.L. Polk (now IHS/Polk) and the two. For example, some reviewers absolute probability that a vehicle FHWA. For two decades these two may observe that today’s analysis shows survives to a given age is conditional on sources differed by more than 10% each that, compared to the baseline the scrappage effect for all previous year, only lately converging to within a standards, the proposed standards analysis years. In other words, if few percent of each other. These produce a somewhat smaller on-road successive calendar years observe lower discrepancies over the correct fleet (i.e., fewer vehicles in service) average new vehicle prices, the effect of interpretation of the data by each source despite somewhat increased sales of increased scrappage on fleet size will have consistently represented new vehicles (consistent with reduced accumulate with each successive differences of more than 10 million new vehicle prices) and decreased calendar year—because fewer vehicles vehicles. prices for used vehicles. While it might survived to previous ages, the same The total number of new vehicles be natural to assume that reduced prices probability of scrappage would result in of new vehicles and increased sales a smaller fleet size for the following year projected to enter the fleet is slightly should lead to a larger on-road fleet, in as well, though fewer vehicles will have higher than the historical trend (though our modelling, the increased sales are been scrapped than in the previous year. the impact of the great recession makes more than offset by the somewhat To isolate the number of vehicles not it hard to say by how much). More accelerated scrappage that accompanies scrapped in a single calendar year generally, the projections used in the the estimated decrease in new vehicle because of the change in standards, the analysis cover long periods of time prices. This outcome represents an on- first step is to calculate the number of without exhibiting the kinds of road fleet that is both smaller and a little vehicles scrapped in every calendar year fluctuation that are present in the younger on average (relative to the for both the proposed standards and the historical record. For example, the baseline) and ‘‘turns over’’ more baseline; this is calculated by the inter- forecast of GDP growth in our analysis quickly. annual change in the size of the used posits a world in which the United To further test the validity of the vehicle fleet (vehicles ages 1–39) for States sees uninterrupted positive scrappage model, a dynamic forecast each alternative. The difference in this annual growth in real GDP for four was constructed for calendar years 2005 measure across regulatory alternatives decades. The longest such period in the through 2015 to see how well it predicts represents the change in vehicle historical record is 17 years and still the fleet size for this period. The last scrappage because of a change in the included several years of low (but true population the scrappage model standards. The resulting scrappage positive) growth during that interval. ‘‘sees’’ is the 2005 registered vehicle effect for a single calendar year can be Over such a long period of time, in population. It then takes in known compared to the difference across the absence of deep insight into the production volumes for the new model regulatory alternatives in new vehicle future of the U.S. auto industry, it is year vehicles and dynamically estimates sales for the same calendar year as a sensible to assume that the trends instantaneous scrappage rates for all comparison of the relative magnitudes registered vehicles at each age for CYs of the two effects. In most years, under 286 There are two measurements of the size of the 2006–2015, based only on the observed the proposed standards relative to the registered vehicle population that are considered to be authoritative. One is produced by the Federal exogenous values that inform the model baseline standards, the analysis shows Highway Administration, and the other by R.L. Polk (GDP growth rate, observed new vehicle that for each additional new vehicles (now part of IHS). The Polk measurement shows prices, and cost per mile of operation), sold, two to four used vehicles are fleet growth between 1980 and 2015 of about 85%, fleet attributes of the vehicles (body removed from the fleet. Over the time while the FHWA measurement shows a slower growth rate over that period, only about 60%. style, age, cost per mile of operation), period of the analysis these predicted 287 Based on calculations using Polk’s National and estimated scrappage rates at earlier differences in the numbers of vehicles Vehicle Population Profile (NVPP). ages. Within this exercise, the scrappage accumulate, resulting in a maximum of

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seven million fewer vehicles by CY vehicle to the used car market if the scrappage rates does not respond to the 2033 for the proposed CAFE standards price of the vehicle is greater than the quantity of new vehicles sold. As one relative to the augural standards, and cost of supplying it. Lowering the potential option for development, the nine million fewer vehicles by CY 2035 equilibrium price of used vehicles will potential for an integrated model of for the proposed GHG standards relative lower the increase the number of sales and scrappage, or for a dynamic to the current GHG standards. Tables scrapped vehicles, lowering the supply connection between the two models will 11–29 and 11–30 in the PRIA show the of used vehicles, and decreasing the be considered. Comment is sought on difference in the fleet size by calendar equilibrium quantity. The change in both the sales and scrappage models, on year for the proposed standards relative new vehicle sales is related to demand potential alternatives, and on data and to the augural standards for the CAFE of new vehicles at a given price, but the methods that may enable practicable and GHG programs, respectively. change in used vehicle scrappage is integration of any alternative models To understand why the sales and related to the shift in the demand curve into the CAFE model. scrappage effects do not perfectly offset for used vehicles, and the resulting each other to produce a constant fleet change in the quantity current owners 7. Accounting for the Rebound Effect size across regulatory alternatives it is will supply; these effects are likely not Caused by Higher Fuel Economy important to remember that the decision exactly offsetting. (a) What is the rebound effect and how to buy a new vehicle and the decision Our models indicate that the ratio of to scrap a used vehicle are often not the magnitude of the scrappage effect to is it measured? made by the same household as a joint the sales effect is greater than one so Amending and establishing fuel decision. The average length of initial that the fleet grows under more economy and GHG standards at a lesser ownership for new vehicles is stringent scenarios. However, it is stringency than the augural standards approximately 6.5 years (and increasing important to remember that not all for future model years will lead to over time). Cumulative scrappage up to vehicles are driven equally; used comparatively lower fuel economy for age seven is typically less than 10%of vehicles are estimated to deliver new cars and light trucks, thus the initial fleet. This suggests that most considerably less annual travel than increasing the amount of fuel they vehicles belong to more than one new vehicles. Further, used vehicles consume in traveling each mile than household over the course of their only have a portion of their original life they would under the augural standard. lifetimes. The household that is left so that it will take more than one deciding whether or not to purchase a used vehicle to replace the full lifetime The resulting increase in their per-mile new vehicle is rarely the same of a new vehicle, at least in the long- fuel and total driving costs will lead to household deciding whether or not to run. The result of the lower annual VMT a reduction in the number of miles they scrap a vehicle. So a vehicle not and shorter remaining lifetimes of used are driven each year over their lifetimes, scrapped in a given year is seldom the vehicles, is that although the fleet is and example of the rebound effect that direct substitute for a new vehicle 1.5% bigger in CY 2050 for the augural is usually associated with energy purchased by that household. baseline than it is for the proposed efficiency improvements working in Considering this, it is not expected that standards, the total non-rebound VMT reverse. The fuel economy rebound for every additional vehicle scrapped, for CY 2050 is 0.4% larger in the effect—a specific example of the energy there is also an additional new one sold, augural baseline than in the proposed efficiency rebound effect for the case of under the proposed standards relative to standards. This small increase in VMT motor vehicles—refers to the well- the baseline standards. is consistent with a larger fleet size; if documented tendency of vehicles’ use Further, while sales and scrappage more used vehicles are supplied, there to increase when their fuel economy is decisions are both influenced by likely is some small resulting increase improved and the cost of driving each changes in new vehicle prices, the in VMT. mile declines as a result. mechanism through which these Our models face some limitations, decisions change are different for the and work will continue toward (b) What does the literature say about two effects. A decrease in average new developing methods for estimating the magnitude of this effect? vehicle prices will directly increase the vehicle sales, scrappage, and mileage Table–II–43 summarizes estimates of demand for new vehicles along the same accumulation. For example, our the fuel economy rebound effect for demand curve. This decrease in new scrappage model assumes that the light-duty vehicles from studies vehicle prices will cause a substitution average VMT for a vehicle of a conducted through 2008, when the towards new vehicles and away from particular vintage is fixed—that is, aside agencies originally surveyed research on used vehicles, shifting the entire from rebound effects, vehicles of a this subject.288 After summarizing all of demand curve for used vehicles particular vintage drive the same downwards. This will decrease both the amount annually, regardless of changes the estimates reported in published and equilibrium prices of used vehicles, as to the average expected lifetimes. The other publicly-available research shown in Figure 8–16 of the PRIA. Since agencies seek comment on ways to available at that time, it distinguishes the decision to scrap a vehicle in a given further integrate the survival and among estimates based on the type of year is closely related to the difference mileage accumulation schedules. Also, data used to develop them. As the table between the vehicle’s value and the cost our analysis uses sales and scrappage reports, estimates of the rebound effect to maintain it, if the value of a vehicle models that do not dynamically interact ranged from 6% to as high as 75%, and is lower than the cost to maintain it, the (though they are based on similar sets of the range spanned by published current owner will not choose to underlying factors); while both models estimates was nearly as wide (7–75%). maintain the vehicle for their own use are informed by new vehicle prices, the 288 or for resale in the used car market, and model of vehicle sales does not respond Complete references to the studies summarized in Table 8–2 are included in the PRIA, the vehicle will be scrapped. That is, a to the size and age profile of the on-road and many of the unpublished studies are available current owner will only supply a fleet, and the model of vehicle in the docket for this rulemaking.

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Most studies reported more than one the single estimate in which they were estimates spanned only a slightly empirical estimate, and the authors of most confident; these preferred narrower range (9–75%). published studies typically identified

Despite their wide range, these Of these studies, a then recently- Table–II–44 summarizes estimates of estimates displayed a strong central published analysis by Small & Van the rebound effect reported in research tendency, as Table–II–43 also shows. Dender (2007), which reported that the that has become available since the The average values of all estimates, rebound effect appeared to be declining agencies’ original survey, which those that were published, and authors’ over time in response to increasing extended through 2008, and the preferred estimates from published income of drivers, was singled out. following discussion briefly summarizes studies were 22–23%, and the median These authors theorized that rising the approaches used by these more estimates in each category were close to income increased the opportunity cost recent studies. Bento et al. (2009) these values, indicating nearly of drivers’ time, leading them to be less combined demographic characteristics symmetric distributions. The estimates responsive over time to reductions in of more than 20,000 U.S. households, in each category also clustered fairly the fuel cost of driving each mile. Small the manufacturer and model of each tightly around their respective average and Van Dender reported that while the vehicle they owned, and their annual values, as shown by their standard rebound effect averaged 22% over the usage of each vehicle from the 2001 deviations in the table’s last column. entire time period they analyzed (1967– National Household Travel Survey with When classified by the type of data they 2001), its value had declined by half— detailed data on fuel economy and other relied on, U.S. aggregate time-series data or to 11%—during the last five years attributes for each vehicle model produced slightly smaller values they studied (1997–2001). Relying obtained from commercial publications. (averaging 18%) than did panel-type primarily on forecasts of its continued The authors aggregated vehicle models data for individual states (23%) or decline over time, the analysis reduced into 350 categories representing household survey data (25%). In each the 20% rebound effect that NHTSA combinations of manufacturer, vehicle category, the median estimate was again used to analyze the effects of CAFE type, and age, and use the resulting data quite close to the average reported standards for light trucks produced to estimate the parameters of a complex value, and comparing the standard during model years 2005–07 and 2008– model of households’ joint choices of deviations of estimates based on each 11 to 10% for their analysis of CAFE the number and types of vehicles to type of data again suggests a fairly tight and GHG standards for MY 2012–16 own, and their annual use of each scatter around their respective means. passenger cars and light trucks. vehicle.

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Bento et al. estimate the effect of and aggregate economic activity year when changes in economic activity vehicles’ operating costs per mile, (measured by gross product) using and fuel prices initially occurred, with including fuel costs, which depend in panel-type data for the 10 Canadian three to five years typically required for part on each vehicle’s fuel economy, as provinces over the period from 1990 behavioral adjustments to stabilize. well as maintenance and insurance through 2004. The authors estimated a After controlling for the joint expenses, on households’ annual use of system of equations for these three relationship among vehicle ownership, each vehicle they own. Combining the variables using statistical procedures driving demand, and the fuel efficiency authors’ estimates of the elasticity of appropriate for models where the of cars and light trucks, Barla et al. vehicle use with respect to per-mile variables of interest are simultaneously estimated elasticities of average vehicle operating costs with the reported determined (that is, where each variable use with respect to fuel efficiency that fraction of total operating costs is one of the factors explaining variation corresponded to a rebound effect of accounted for by fuel (slightly less than in the others). This procedure enabled eight percent in the short run, rising to one-half) yields estimates of the them to control for the potential nearly 20% within five years. A notable rebound effect. The resulting values ‘‘reverse influence’’ of households’ feature of their analysis was that vary by household composition, vehicle demand for vehicle travel on their variation in average fuel efficiency size and type, and vehicle age, ranging choices of how many vehicles to own among the individual Canadian from 21 to 38%, with a composite and their fuel efficiency levels when provinces and over the time period they estimate of 34% for all households, estimating the effect of variation in fuel studied was adequate to identify its vehicle models, and ages. The smallest efficiency on vehicle use. effect on vehicle use, without the need values apply to new luxury cars, while Their analysis found that provincial- to combine it with variation in fuel the largest estimates are for light trucks level aggregate economic activity had prices in order to identify its effect. and households with children, but the moderately strong effects on car and Wadud et al. (2009) combine data on implied rebound effects differ little by light truck ownership and use but that U.S. households’ demographic vehicle age. fuel prices had only modest effects on characteristics and expenditures on Barla et al. (2009) analyzed the driving and the average fuel efficiency gasoline over the period 1984–2003 responses of car and light truck of the light-duty vehicle fleet. Each of from the Consumer Expenditure Survey ownership, vehicle travel, and average these effects became considerably with data on gasoline prices and an fuel efficiency to variation in fuel prices stronger over the long term than in the estimate of the average fuel economy of

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vehicles owned by individual vehicle use than did differences in annual use. Using variation in the fuel households (constructed from a variety vehicles’ fuel economy. West and economy and per-mile cost of and of sources). They employ these data to Pickrell also found that while the detailed controls for the demographic, explore variation in the sensitivity of rebound effect for households’ use of economic, and locational characteristics individual households’ gasoline passenger cars appeared to be quite of the households that owned them (e.g., consumption to differences in income, large—ranging from 17% to nearly twice road and population density) and each gasoline prices, the number of vehicles that value—it was difficult to detect a vehicle’s main driver (as identified by owned by each household, and their consistent rebound effect for SUVs. survey respondents), the author average fuel economy. Using an Anjovic & Haas (2012) examined employs specialized regression methods estimation procedure intended to variation in vehicle use and fuel to capture the variation in the rebound account for correlation among efficiency among six European nations effect across 10 different categories of unmeasured characteristics of over an extended period (1970–2006), vehicle use. households and among estimation errors using an elaborate model and estimation Su estimated the overall rebound for successive years, the authors explore procedure intended to account for the effect for all vehicles in the sample variation in the response of fuel existence of common underlying trends averaged 13%, and that its magnitude consumption to fuel economy and other among the variables analyzed and thus varied from 11–19% among the 10 variables among households in different avoid identifying spurious or different categories of annual vehicle income categories and between those misleading relationships among them. use. The smallest rebound effects were residing in urban and rural areas. The six nations included in their estimated for vehicles at the two Dividing U.S. households into five analysis were Austria, Germany, extremes of the distribution of annual equally-sized income categories, Wadud Denmark, France, Italy, and Sweden; the use—those driven comparatively little, et al. estimate rebound effects ranging authors also conducted similar analyses and those used most intensively—while from 1–25%, with the smallest estimates for the six nations combined. The the largest estimated effects applied to (8% and 1%) for the two lowest income authors focused on the effects of average vehicles that were driven slightly more categories, and significantly larger income levels, fuel prices, and the fuel than average. Controlling for the estimates for the middle (18%) and two efficiency of each nation’s fleet of cars possibility that high-mileage drivers highest income groups (18 and 25%). In on the total distance they were driven respond to the increased importance of a separate analysis, the authors estimate each year and their total fuel energy fuel costs by choosing vehicles that offer rebound effects of seven percent for consumption. They also tested whether higher fuel economy narrowed the range households of all income levels residing the responses of energy consumption to of Su’s estimated rebound effects in U.S. urban areas and 21% for rural rising and falling fuel prices appeared to slightly (to 11–17%), but did not alter households. be symmetric in the different nations. the finding that they are smallest for West & Pickrell (2011) analyzed data Anjovic and Haas report a long-run lightly- and heavily-driven vehicles and on more than 100,000 households and aggregate rebound effect of 44% for the largest for those with slightly above 300,000 vehicles from the 2009 six nations their study included, with average use. Nationwide Household Transportation corresponding values for individual Linn (2013) also uses the 2009 NHTS Survey to explore how households nations ranging from a low of 19% (for to develop a linear regression approach owning multiple vehicles chose which Austria) to as high as 56% (Italy). These to estimate the relationship between the of them to use and how much to drive estimates are based on the estimated VMT of vehicles belonging to each each one on the day the household was response of vehicle use to variation in household and a variety of different surveyed. Their study focused on how average fuel cost per kilometer driven in factors: Fuel costs, vehicle the type and fuel economy of each each of the six nations and for their characteristics other than fuel economy vehicle a household owned, as well as combined total. Other information (e.g., horsepower, the overall ‘‘quality’’ its demographic characteristics and reported in their study, however, of the vehicle), and household location, influenced household suggests lower rebound effects; their characteristics (e.g., age, income). Linn members’ decisions about whether and estimates of the response of total fuel reports a fuel economy rebound effect how much to drive each vehicle. They energy consumption to fuel efficiency with respect to VMT of between 20– also investigated whether fuel economy appear to imply an aggregate rebound 40%. and fuel prices exerted similar effect of 24% for the six nations, with One interesting result of the study is influences on vehicle use, and whether values ranging from as low as 0–3% (for that when the fuel efficiency of all households owning more than one Austria and Denmark) to as high as 70% vehicles increases, which would be the vehicle tended to substitute use of one (Sweden), although the latter is very long-run effect of rising fuel efficiency for another—or vary their use of all of uncertain. These results suggest that standards, two factors have opposing them similarly—in response to vehicle use in European nations may be effects on the VMT of a particular fluctuations in fuel prices and somewhat less sensitive to variation in vehicle. First, VMT increases when that differences in their vehicles’ fuel driving costs caused by changes in fuel vehicle’s fuel efficiency increases. But economy. efficiency than to changes in driving the increase in the fuel efficiency of the Their estimates of the fuel economy costs arising from variation in fuel household’s other vehicles causes the rebound effect ranged from as low as prices, but they find no evidence of vehicle’s own VMT to decrease. Because nine percent to as high as 34%, with asymmetric responses of total fuel the effect of a vehicle’s own fuel their lowest estimates typically applying consumption to rising and falling prices. efficiency is larger than the other to single-vehicle households and their Using data on household characteristics vehicles’ fuel efficiency, VMT increases highest values to households owning and vehicle use from the 2009 if the fuel efficiency of all vehicles three or more vehicles. They generally Nationwide Household Transportation increases proportionately. Linn also found that differences in fuel prices Survey (NHTS), Su (2012) analyzes the finds that VMT responds much more faced by households who were surveyed effects of locational and demographic strongly to vehicle fuel economy than to on different dates or who lived in factors on household vehicle use and gasoline prices, which is at variance different regions of the U.S. explained investigates how the magnitude of the with the Hymel et al. and Greene results more of the observed variation in daily rebound effect varies with vehicles’ discussed above.

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Like Su and Linn, Liu et al. (2014) of 90%. Although their analysis finds no vehicles are generally less fuel-efficient. employed the 2009 NHTS to develop an significant variation of the rebound The survey data they rely on includes elaborate model of an individual effect with household income, vehicle both owners’ estimates of their annual household’s choices about how many ownership, or urban versus rural use of each car and the distance it was vehicles to own, what types and ages of location, it concludes that the rebound actually driven on a specific day; vehicles to purchase, and how much effect is substantially larger for because they are not closely correlated, combined driving to do using all of households that drive less (90%) than the authors employ them as alternative them. Their analysis used a complex for those who use their vehicles most measures of vehicle use to estimate the mathematical formulation and statistical intensively (56%). rebound effect, but this restricts their methods to represent and measure the Gillingham (2014) analyzed variation sample to the roughly 8,100 cars for interdependence among households’ in the use of approximately five million which both measures are available. choices of the number, types, and ages new vehicles sold in California from Weber and Farsi’s estimates of the of vehicles to purchase, as well as how 2001 to 2003 during the first several rebound effect are extremely large: 75% intensively to use them. years after their purchase, focusing using estimated annual driving and 81% Liu et al. employed their model to particularly on how their use responded when they measure vehicle use by simulate variation in households’ total to geographic and temporal variation in actual daily driving. Excluding vehicle vehicle use to changes in their income fuel prices. His sample consisted size (weight) and limiting the choices levels, neighborhood characteristics, primarily of personal or household that households are assumed to consider and the per-mile fuel cost of driving vehicles (87%) but also included some simultaneously to just vehicles’ fuel averaged over all vehicles each that were purchased by businesses, efficiency and how much to drive household owns. The complexity of the rental car companies, and government approximately reverses these estimates, relationships among the number of agencies. Using county-level data, he but both are still very large. Using a vehicles owned, their specific types and analyzed the effect of differences in the simpler procedure that does not account ages, fuel economy levels, and use monthly average fuel price paid by their incorporated in their model required drivers on variation in their monthly for the potential effect of driving them to measure these effects by use and explored how that effect varied demand on households’ choices among introducing variation in income, with drivers’ demographic vehicle models of different size and fuel neighborhood attributes, and fuel costs, characteristics and household incomes. efficiency produces much smaller and observing the response of Gillingham’s analysis did not include values for the rebound effect: 37% using households’ annual driving. Their a measure of vehicles’ fuel economy or annual driving and 19% using daily results imply a rebound effect of fuel cost per mile driven, so he could travel. The authors interpret these latter approximately 40% in response to not measure the rebound effect directly, estimates as likely to be too low because significant (25–50%) variation in fuel but his estimates of the effect of fuel actual on-road fuel efficiency has not costs, with almost exactly symmetrical prices on vehicle use correspond to a improved as rapidly as suggested by the responses to increases and declines. rebound effect of 22–23% (depending manufacturer-reported measure they A study of the rebound effect by on whether he controlled for the employ. This introduces an error in Frondel et al. (2012) used data from potential effect of gasoline demand on their measure that may be related to a travel diaries recorded by more than its retail price). His estimation vehicle’s age, and their more complex 2,000 German households from 1997 procedure and results imply that vehicle estimation procedure may reduce its through 2009 to estimate alternative use requires nearly two years to adjust effect on their estimates. Nevertheless, measures of the rebound effect, and to fully to changes in fuel prices. He found even their lower estimates exceed those explore variation in their magnitude little variation in the sensitivity of from many other studies of the rebound among households. Each household vehicle use to fuel prices among car effect, as Table 8–2 shows. participating in the survey recorded its buyers with different demographic Hymel, Small, & Van Dender (2010)— automobile travel and fuel purchases characteristics, although his results and more recently, Hymel & Small over a period of one to three years and suggested that it increases with their (2015)—extended the simultaneous supplied information on its composition income levels. equations analysis of time-series and Weber & Farsi (2014) analyzed and the personal characteristics of each state-level variation in vehicle use variation in the use of more than 70,000 of its members. The authors converted originally reported in Small & Van individual cars owned by Swiss households’ travel and fuel Dender (2007) and to test the effect of consumption to a monthly basis, and households who were included in a including more recent data. As in the used specialized estimation procedures 2010 survey of travel behavior. Their original 2007 study, both subsequent (quantile and random-effects panel analysis focuses on the simultaneous extensions found that the fuel economy regression) to analyze monthly variation relationships among households’ rebound effect had declined over time in their travel and fuel use in relation choices of the fuel efficiency and size in response to increasing personal to differences in fuel prices, the fuel (weight) of the vehicles they own, and efficiency of each vehicle a household how much they drive each one, income and urbanization but had risen owned, and the fuel cost per mile of although they recognize that fuel during periods when fuel prices driving each vehicle. efficiency cannot be chosen increased. Because they rely on the Frondel et al. estimate four separate independently of vehicle weight. The response of vehicle use to fuel cost per measures of the rebound effect, three of authors employ a model specification mile to estimate the rebound effect, which capture the response of vehicle and statistical estimation procedures however, none of these three studies is use to variation in fuel efficiency, fuel that account for the likelihood that able to detect whether its apparent price, and fuel cost per mile traveled, households intending to drive more will decline in response to rising income and a fourth capturing the response of purchase more fuel-efficient cars but levels over time truly reflects its effect fuel consumption to changes in fuel may also choose more spacious and on drivers’ responses to changing fuel price. Their first three estimates range comfortable—and thus heavier— economy—the rebound effect itself—or from 42% to 57%, while their fourth models, which affects their fuel simply captures the effect of rising estimate corresponds to a rebound effect efficiency indirectly, since heavier income on their sensitivity to fuel

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prices.289 These updated studies each above—made them barely ineligible for change in households’ vehicle use in revised Small and Van Dender’s original the program. response to differences in the fuel estimate of an 11% rebound effect for The authors reported that the higher economy between vehicles they had 1997–2011 upward when they included fuel economy of new models that owned previously and the new models more recent experience: To 13% for the eligible households purchased in they purchased to replace them, over period 2001–04, and subsequently to response to the generous financial and above any change in vehicle use 18% for 2000–2009. incentives offered under the ‘‘Cash for among households who did not buy In their 2015 update, Hymel and Clunkers’’ did not prompt their buyers new cars (and thus saw no change in Small hypothesized that the recent to use them more than the older, low- fuel economy). increase in the rebound effect could be MPG vehicles they replaced. They These authors’ data enabled them to traced to a combination of expanded attributed this apparent absence of a control for the effects of changes over media coverage of changing fuel prices, fuel economy rebound effect—which time in household characteristics and increased price volatility, and an they described as an ‘‘attribute- vehicle features other than fuel economy that were likely to have asymmetric response by drivers to adjusted’’ measure of its magnitude—to contributed to observed changes in variation in fuel costs. The authors the fact that eligible households chose vehicle use. They also employed estimated that about half of the apparent to buy less expensive, smaller, and complex statistical methods to account increase in the rebound effect for recent lower-performing models to replace for the fact that some households years could be attributed to greater those they retired. Because these replacing their vehicles may have done volatility in fuel prices and more media replacements offered lower-quality so in anticipation of changes in their coverage of sudden price changes. Their transportation service, their buyers did driving demands (rather than the results also suggest that households not drive them more than the vehicles reverse), as well as for the possibility curtail their vehicle use within the first they replaced. The applicability of this result to the that some households who replaced year following an increase in fuel prices proposal’s analysis is doubtful because their cars may have done so because and driving costs, while the increase in previous regulatory analyses assumed their driving behavior was more driving that occurs in response to that manufacturers could achieve sensitive to fuel prices than other declining fuel prices—and by required improvements in fuel economy households. Their estimates ranged implication, to improvements in fuel without compromising the performance, from 8–10%, varying only minimally economy—occurs more slowly. carrying and towing capacity, comfort, among alternative model specifications West et al. (2015) attempted to infer or safety of cars and light trucks from and statistical estimation procedures or the fuel economy rebound effect using recent model years.290 While this may in response to whether their sample was data from Texas households who be technically true, doing so would restricted to households that replaced replaced their vehicles with more fuel- come at a combined greater cost. If this their vehicles or also included efficient models under the 2009 ‘‘Cash argument is correct, then amending households that kept their original for Clunkers’’ program, which offered future standards at a reduced stringency vehicles throughout the period.291 sizeable financial incentives to do so. from their previously-adopted levels Finally, De Borger et al. found no Under the program, households that would lead to less driving attributable to evidence that the rebound effect is retired older vehicles with fuel economy rebound, and should therefore not lead smaller among lower-income levels of 18 miles per gallon (MPG) or to artificial constraints in new vehicles’ households than among their higher- less were eligible for cash incentives other features that offset the reduction income counterparts. ranging from $3,500–4,000, while those in their use stemming from lower fuel (c) What value have the agencies retiring vehicles with higher fuel economy. economy were ineligible for such Most recently, De Borger et al. (2017) assumed in this rule? rebates. The authors examined the fuel analyze the response of vehicle use to On the basis of all of the evidence economy, other features, and changes in fuel economy among a summarized here, a fuel economy subsequent use of new vehicles sample of nearly 350,000 Danish rebound effect of 20% has been chosen households in Texas purchased to households owning the same model to analyze the effects of the proposed replace older models that narrowly vehicle, of which almost one-third action. This is a departure from the 10% qualified for the program’s financial replaced it with a different model value used in regulatory analyses for incentives because their fuel economy sometime during the period from 2001 MYs 2012–2016 and previous analyses was only slightly below the 18 MPG to 2011. By comparing the changes in for MYs 2017–2025 CAFE and GHG threshold. They then compared these to households’ driving from the early years standards and represents a return to the the fuel economy, features, and use of of this period to its later years among value employed in the analyses for MYs new vehicles that demographically those who replaced their vehicles 2005–2011 CAFE standards. There are comparable households bought to during the intervening period to the several reasons the estimate of the fuel replace older models, but whose slightly changes in driving among households economy rebound effect for this analysis higher fuel economy—19 MPG or who kept their original vehicles, the has been increased. authors attempted to isolate the effect of First, the 10% value is inconsistent 289 DeBorger et al. (2016) analyze the separate changes in fuel economy on vehicle use with nearly all research on the effects of variation in household income on the from those of other factors. They magnitude of the rebound effect, as sensitivity of their vehicle use to fuel prices and the Table–II–43 and Table–II–44 indicate. fuel economy of vehicles they own. Their results measured the rebound effect as the imply the decline in the fuel economy rebound Instead, it is based almost exclusively effect with income reported in Small & Van Dender 290 As discussed, this does not mean attributes of (2007) and its subsequent extensions appears to future cars and light trucks will be anything close 291 This latter result suggests their estimates were result entirely from a reduction in drivers’ to those manufacturers could have offered if lower not biased by any tendency for households whose sensitivity to fuel prices as their incomes rise, standards had remained in effect. Instead, the demographic characteristics, economic rather than from any effect of rising income on the agencies asserted features other than fuel economy circumstances, or driving demands changed over sensitivity of vehicle use to improving fuel could be maintained at the levels offered in recent the period in ways that prompted them to replace economy; i.e., on the fuel economy rebound effect model years—that features will not likely be their vehicles with models offering different fuel itself. removed, but may not be improved. economy.

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on the finding of the 2007 study by In addition, buyers of new cars and light benefits to vehicle owners, which reflect Small and Van Dender that the rebound trucks belong disproportionately to the value to drivers and other vehicle effect had been declining over time in higher-income households that already occupants of the added (or more response to drivers’ rising incomes and own multiple vehicles, which further desirable) social and economic on extending that decline through future suggests that the higher values of the opportunities that become accessible years using an assumption of steady rebound effect estimated by many with additional travel. As evidenced by income growth. As indicated above, studies for such households are more the fact that they elect to make more however, subsequent extensions of relevant for analyzing use of newly- frequent or longer trips when the cost of Small and Van Dender’s original purchased cars and light trucks. driving declines, the benefits from this research have produced larger estimates Finally, research on the rebound added travel exceed drivers’ added of the rebound effect for recent years: effect conducted since the agencies’ outlays for the fuel it consumes While their original study estimated the original 2008 review of evidence almost (measured at the improved level of fuel rebound effect at 11% for 1997–2001, universally reports estimates in the 10– economy resulting from stricter CAFE the 2010 update by Hymel, Small, and 40% (and larger) range, as Table–II–43 standards). The amount by which the Van Dender reported a value of 13% for shows. Thus, the 20% rebound effect benefits from this increased driving 2004, and Hymel and Small’s 2015 used in this analysis more accurately travel exceed its increased fuel costs update estimated the rebound effect at represents the findings from both the measures the net benefits they receive 18% for 2003–09. Further, the issues studies considered in 2008 review and from the additional travel, usually are with state-level measures of vehicle use, the more recent analyses. referred to as increased consumer fuel consumption, and fuel economy (1) What are the implications of the surplus. identified previously raise some doubt rebound effect for VMT? NHTSA’s analysis estimates the about the reliability of these studies’ economic value of the decreased estimates of the rebound effect. The assumed rebound effect not only consumer surplus provided by reduced At the same time, the continued influences the use of new vehicles in driving using the conventional increases in income that were today’s analysis but also affects the approximation, which is one half of the anticipated to produce a continued response of the initial registered vehicle product of the increase in vehicle population to changes in fuel price decline in the rebound effect have not operating costs per vehicle-mile and the throughout their remaining useful lives. materialized. The income measure (real resulting decrease in the annual number The fuel prices used in this analysis are personal income per Capita) used in of miles driven. Because it depends on lower than the projections used to these analyses has grown only the extent of the change in fuel inform the 2012 Final Rule but generally approximately one percent annually economy, the value of economic increase from today’s level over time. As over the past two decades and is impacts from decreased vehicle use they do so, the rebound effect acts as a projected to grow at approximately changes by model year and varies price elasticity of demand for travel—as 1.5% for the next 30 years, in contrast among alternative CAFE standards. to the two to three percent annual the cost-per-mile of travel increases, growth assumed by the agencies when owners of all vehicles in the registered (d) Societal Externalities Associated developing earlier forecasts of the future population respond by driving less. In With CAFE Alternatives particular, they drive 20% less than the rebound effect. Further, another recent (1) Energy Security Externalities study by DeBorger et al. (2016) analyzed difference between the cost-per-mile of the separate effects of variation in travel when they were observed in Higher U.S. fuel consumption will household income on the sensitivity of calendar year 2016 and the relevant produce a corresponding increase in the their vehicle use to fuel prices and the cost-per-mile at any future age. For the nation’s demand for crude petroleum, fuel economy of vehicles they own. new vehicles subject to this proposal which is traded actively in a worldwide These authors’ results indicate that the (and explicitly simulated by the CAFE market. The U.S. accounts for a large decline in the fuel economy rebound model), fuel economies increase relative enough share of global oil consumption effect with income reported in Small & to MY 2016 levels, and generally that the resulting boost in global Van Dender (2007) and subsequent improve enough to offset the effect of demand will raise its worldwide price. research results entirely from a rising fuel prices—at least during the The increase in global petroleum prices reduction in drivers’ sensitivity to fuel years covered by the proposal. For those that results from higher U.S. demand prices as their incomes rise rather than vehicles, the difference between the causes a transfer of revenue to oil from any effect of rising income on the initial cost-per-mile of travel and future producers worldwide from not only sensitivity of vehicle use to fuel travel costs is negative. As the vehicles buyers of new cars and light trucks, but economy itself. This latter measure, become less expensive to operate, they also other consumers of petroleum which DeBorger et al. find has not are driven more (20% more than the products in the U.S. and throughout the changed significantly as incomes have difference between initial and present world, all of whom pay the higher price risen over time, is the correct measure travel costs, precisely). Of course, each that results. of the fuel economy rebound effect, so of the regulatory alternatives considered Although these effects will be their analysis calls into question its in the analysis would result in lower tempered by growing U.S. oil assumed sensitivity to income. fuel economy levels for vehicles production, uncertainty in the long-term Some studies of households’ use of produced in model year 2020 and later import-export balance makes it difficult individual vehicles also find that the than if the baseline standards remained to precisely project how these effects fuel economy rebound effect increases in effect, so total VMT is lower under might change in response to that with the number of vehicles they own. these alternatives than under the increased production. Growing U.S. Because vehicle ownership is strongly baseline. petroleum consumption will also associated with household income, this increase potential costs to all U.S. common finding suggests that the (2) What is the mobility benefit that petroleum users from possible overall value of the rebound effect is accrues to vehicle owners? interruptions in the global supply of unlikely to decline with rising incomes The increase in travel associated with petroleum or rapid increases in global as the agencies had previously assumed. the rebound effect produces additional oil prices, not all of which are borne by

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the households or businesses who The social damage costs associated the baseline, which generates savings in increase their petroleum consumption with changes in the emissions of criteria congestion and road noise relative to the (that is, they are partly ‘‘external’’ to pollutants and CO2 was calculated, baseline. petroleum users). If U.S. demand for attributing benefits and costs to the F. Impact of CAFE Standards on Vehicle regulatory alternatives considered based imported petroleum increases, it is also Safety possible that increased military on the sign of the change in each spending to secure larger oil supplies pollutant. In previous rulemakings, the In past CAFE rulemakings, NHTSA from unstable regions of the globe will agencies have considered the social cost has examined the effect of CAFE be necessary. of CO2 emissions from a global standards on vehicle mass and the These three effects are often referred perspective, accumulating social costs subsequent effect mass changes will have on vehicle safety. While setting to collectively as ‘‘energy security for CO2 emissions based on adverse externalities’’ resulting from U.S. outcomes attributable to climate change standards based on vehicle footprint petroleum consumption, and increases in any country. In this analysis, helps reduce potential safety impacts associated with CAFE standards as in their magnitude are sometimes cited however, the costs of CO2 emissions and compared to setting standards based on as potential social costs of increased resulting climate damages from both some other vehicle attribute, footprint- U.S. demand for oil. To the extent that domestic and global perspectives were based standards cannot entirely they represent real economic costs that considered. Chapter 9 of the Regulatory eliminate those impacts. Although prior would rise incrementally with increases Impact Analysis provides a detailed analyses noted that there could also be in U.S. petroleum consumption of the discussion of how the agencies estimate impacts because of other factors besides magnitude likely to result from less changes in emissions of criteria air mass changes, those impacts were not stringent CAFE and GHG standards, pollutants and CO2 and reports the estimated quantitatively.292 In this these effects represent potential values the agencies use to estimate current analysis, the safety analysis has additional costs of this proposed action. benefits or costs associated with those changes in emissions. been expanded to include a broader and Chapter 7 of the Regulatory Impact more comprehensive measure of safety Analysis for this proposed action (3) Traffic Externalities (Congestion, impacts, as discussed below. A number defines each of these energy security Noise) of factors can influence motor vehicle externalities in detail, assesses whether Increased vehicle use associated with fatalities directly by influencing vehicle its magnitude is likely to change as a the rebound effect also contributes to design or indirectly by influencing consequence of this action, and increased traffic congestion and consumer behavior. These factors identifies whether that change highway noise. To estimate the include: represents a real economic cost or economic costs associated with these (1) Changes, which affect the benefit of this action. consequences of added driving, the crashworthiness of vehicles impact (2) Environmental Externalities estimates of per-mile congestion and other vehicles or roadside objects, in noise costs caused by increased use of vehicle mass made to reduce fuel The change in criteria pollutant automobiles and light trucks developed consumption. NHTSA’s statistical emissions that result from changes in previously by the Federal Highway analysis of historical crash data to vehicle usage and fuel consumption is Administration (FHWA) were applied. understand effects of vehicle mass and estimated as part of this analysis. These values are intended to measure size on safety indicates reducing mass Criteria air pollutants include carbon the increased costs resulting from added in light trucks generally improves monoxide (CO), hydrocarbon congestion and the delays it causes to safety, while reducing mass in compounds (usually referred to as other drivers and passengers and noise passenger cars generally reduces safety. ‘‘volatile organic compounds,’’ or VOC), levels contributed by automobiles and NHTSA’s crash simulation modeling of nitrogen oxides (NOX), fine particulate light trucks. NHTSA previously vehicle design concepts for reducing matter (PM2.5), and sulfur oxides (SOX). employed these estimates in its analysis mass revealed similar trends.293 These pollutants are emitted during accompanying the MY 2011 final CAFE (2) The delay in the pace of consumer vehicle storage and use, as well as rule as well as in its analysis of the acquisition of newer safer vehicles that throughout the fuel production and effects of higher CAFE standards for MY results from higher vehicle prices distribution system. While increases in 2012–16 and MY 2017–2021. After associated with technologies needed to domestic fuel refining, storage, and reviewing the procedures used by meet higher CAFE standards. Because of distribution that result from higher fuel FHWA to develop them and considering a combination of safety regulations and consumption will increase emissions of other available estimates of these values voluntary safety improvements, these pollutants, reduced vehicle use and recognizing that no commenters passenger vehicles have become safer associated with the fuel economy have addressed these costs directly in over time. Compared to prior decades, rebound effect will decrease their their comments on previous rules, the fatality rates have declined significantly emissions. The net effect of less values continue to be appropriate for stringent CAFE standards on total use in this proposal. For this analysis, 292 NHTSA included a quantification of rebound- emissions of each criteria pollutant FHWA’s estimates of per-mile costs are associated safety impacts in its Draft TAR analysis, but because the scrappage model is new for this depends on the relative magnitudes of multiplied by the annual increases in rulemaking, did not include safety impacts increases in its emissions during fuel automobile and light truck use from the associated with the effect of standards on new refining and distribution, and decreases rebound effect to yield the estimated vehicle prices and thus on fleet turnover. The fact in its emissions resulting from increases in total congestion and noise that the scrappage model did not exist previously does not mean that the effects that it aims to show additional vehicle use. Because the externality costs during each year over were not important considerations, simply that the relationship between emissions in fuel the lifetimes of the cars and light trucks agency was unable to account for them refining and vehicle use is different for in the on-road fleet. Due to the fact that quantitatively prior to the current analysis. each criteria pollutant, the net effect of this proposal represents a decrease in 293 DOT HS 812051a—Methodology for evaluating fleet protection of new vehicle designs increased fuel consumption from the stringency, the fuel economy rebound Application to lightweight vehicle designs, DOT HS proposed standards on total emissions effect results in fewer miles driven 812051b Methodology for evaluating fleet of each pollutant is likely to differ. under the action alternatives relative to protection of new vehicle designs_Appendices.

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because of technological safety higher vehicle prices are directly because older vehicle vintages are improvements as well as behavioral attributed to CAFE standards.294 This is associated with higher rates of shifts such as increased seat belt use. reflected monetarily by valuing extra involvement in fatal crashes than newer The results of this analysis project that rebound miles at the full value of their vehicles. Finally, a dynamic fleet share vehicle prices will be nearly $1,900 added driving cost plus the added safety model also predicts the effects of higher under the augural CAFE risk consumers experience, which changes in the standards on the share of standards compared to the preferred completely offsets the societal impact of light trucks and passenger cars in future alternative that would hold stringency any added fatalities from this voluntary model year light-duty vehicle fleets. at MY 2020 levels in MYs 2021–2026. consumer choice. Vehicles of different body styles have This will induce some consumers to The safety component of CAFE different rates of involvement in fatal delay or forgo the purchase of newer analysis has evolved over time. In the crashes, so that changing the share of safer vehicles and slow the transition of 2012 final rule, the analysis accounted each in the projected future fleet has the on-road fleet to one with the for the change in projected fatalities safety impacts; the implied safety effects improved safety available in newer attributable to mass reduction of new are captured in the current modelling. vehicles. This same factor can also shift vehicles. The model assumed that The agencies seek comment on changes the mix of passenger cars and light manufacturers would choose mass to the safety analysis made in this trucks. reduction as a compliance method proposal, they seek particular comment (3) Increased driving because of better across vehicle classes such that the net on the following changes: fuel economy. The ‘‘rebound effect’’ effect of mass reduction on fatalities was (1) The sales scrappage models as predicts consumers will drive more zero. However, in the 2016 draft independent models: Two separate models when the cost of driving declines. More Technical Assessment Report, DOT capture the effects of new vehicle prices on stringent CAFE standards reduce made two consequential changes to the new vehicle demand and used vehicle vehicle operating costs, and in response, analysis of fatalities associated with the retirement rates—the sales model and the some consumers may choose to drive CAFE standards. In particular, first, the scrappage model, respectively. We seek more. Driving more increases exposure modelling assumed that mass reduction public comment on the methods used for to risks associated with on-road each of these models, in particular we seek technology was available to all vehicles, comment on: transportation, and this added exposure regardless of net safety impact, and translates into higher fatalities. • The assumptions and variables included in second, it accounted for the incremental the independent models Although all three factors influence safety costs associated with additional • predicted fatality levels that may occur, The techniques and data used to estimate miles traveled due to the rebound effect. the independent models only two of them, the changes in vehicle The current analysis extends the • The structure and implementation of the mass and the changes in the acquisition analysis to report incremental fatality independent models of safer vehicles—are actually imposed impacts associated with additional (2) Integration of the sales and scrappage on consumers by CAFE standards. The miles traveled due to the rebound effect, models: The new sales and scrappage models safety of vehicles has improved over use many of the same predictors, but are not and identifies the increase in fatalities time and is expected to continue directly integrated. We seek public comment associated with additional driving improving in the future commensurate on, and data supporting whether integrating separately from changes in fatalities with the pace of safety technology the two models is appropriate. attributable other sources.295 (3) Integration of the scrappage rates and innovation and implementation and The current analysis adds another mileage accumulation: The current model motor vehicle safety regulation. Safety element: The effect that higher new assumes that annual mileage accumulation improvements will likely continue vehicle prices have on new vehicle sales and scrappage rates are independent of one regardless of changes to CAFE another. We seek public comment on the and on used vehicle scrappage, which standards. However, its pace may be appropriateness of this assumption, and data modified if manufacturers choose to influences total expected fatalities that would support developing an interaction delay or forgo investments in safety between scrappage rates and mileage 294 It could be argued fatalities resulting from accumulation, or testing whether such an technology because of the demand consumer’s decision to delay the purchase of newer CAFE standards impose on research, interaction is important to include. safer vehicles is also a market decision implying (4) Increased risk of older vehicles: The consumers fully accept the added safety risk development, and manufacturing observed increase in crash and injury risk budgets. Increased driving associated associated with this delay and value the time value of money saved by the delayed purchase more than associated with older vehicles is likely due with rebound is a consumer choice. this risk. This scenario is likely accurate for some to a combination of vehicle factors and driver Improved CAFE will reduce driving purchasers. For others, the added cost may factors. For example, older vehicles are less costs, but nothing in the higher CAFE represent a threshold price increase effectively crashworthy because in general they’re standards compels consumers to drive preventing them from being financially able to equipped with fewer or less modern safety purchase a new vehicle. Presently there is no way features, and drivers of older cars are on additional miles. If consumers choose to to determine the proportion of lost sales reflected do so, they are making a decision that average younger and may be less skilled by these two scenarios. The added driving from the drivers or less risk-averse than drivers of new the utility of more driving exceeds the rebound effect results from a positive benefit of CAFE, which reduces the cost of driving. By vehicles. We fit a model which includes both marginal operating costs as well as the an age and vintage affect, but assume that the added crash risk it entails. Thus, while contrast, the effect of retaining older vehicles longer results from costs imposed on consumers, which age effect is entirely a result of changes in the predicted fatality impacts with all potentially limit their purchase options. Thus, average driver demographics, and not three factors embedded into the model fatalities are attributed to retaining older vehicles impacted by changes in CAFE or GHG are measured, the fatalities associated due to CAFE but not those resulting from decisions standards. We seek comment on this with consumer choice decisions are to drive more. Comments are sought on this approach for attributing increased older assumption. vehicle risk. Is the analysis likely to accounted for separately from those 295 Drivers who travel additional miles are resulting from technologies overestimate or underestimate the safety assumed to experience benefits that at least offset benefits under the proposed alternative? the costs they incur in doing so, including the implemented in response to CAFE (5) Changes in the mix of light trucks and regulations or economic limitations increased safety risks they face. Thus while the number of additional fatalities resulting from passenger cars: The dynamic fleet share resulting from CAFE regulation. Only increased driving is reported, the associated costs model predicts changes in the future share of those safety impacts associated with are not included among the social costs of the light truck and passenger car vehicles. mass reduction and those resulting from proposal. Changes in the mix of vehicles may result in

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increased or decreased fatalities. Does the response to the more stringent future safety analyses in the NPRM and final dynamic fleet share model reasonably CAFE and GHG standards. rule are based with newer vehicle data capture consumers’ decisions about how they Manufacturers stated they will reduce and create a common database that substitute between different types and sizes vehicle mass as one of the cost-effective could be made publicly available to of vehicles depending on changes in fuel address concerns that differences in economy, relative and absolute prices, and means of increasing fuel economy and other vehicle attributes? We seek comment reducing CO2 to meet standards, and data were leading to different results in on whether our safety analysis provides a this approach is incorporated this statistical analyses by different reasonable estimate of the effects of changes expectation into the modeling analysis researchers. in fleet mix on future fatalities. supporting the standards. Because the And third, to assess if the design of analysis discerns a historical recent model year vehicles 1. Impact of Weight Reduction on Safety relationship between vehicle mass, size, incorporating various mass reduction methods affect relationships among The primary goals of CAFE and CO and safety, it is reasonable to assume 2 vehicle mass, size, and safety, the standards are reducing fuel these relationships will continue in the agencies sought to identify vehicles consumption and CO emissions from future. 2 using material substitution and smart the on-road light-duty vehicle fleet; in (a) Historical Analyses of Vehicle Mass design and to assess if there is sufficient addition to these intended effects, the and Safety crash data involving those vehicles for potential of the standards to affect statistical analysis. If sufficient data vehicle safety is also considered.296 As Researchers have been using statistical analysis to examine the exists, statistical analysis would be a safety agency, NHTSA has long conducted to compare the relationship considered the potential for adverse relationship of vehicle mass and safety in historical crash data for many years among mass, size, and safety of these safety consequences when establishing smart design vehicles to vehicles of CAFE standards, and under the CAA, and continue to refine their techniques. In the MY 2012–2016 final rule, the similar size and mass with more EPA considers factors related to public traditional designs. health and human welfare, including agencies stated we would conduct further study and research into the By the time of the MY 2017–2025 safety, in regulating emissions of air final rule, significant progress was made pollutants from mobile sources. interaction of mass, size, and safety to assist future rulemakings and start to on these tasks: The independent review Safety trade-offs associated with fuel of recent and updated statistical economy increases have occurred in the work collaboratively by developing an interagency working group between analyses of the relationship between past, particularly before NHTSA CAFE vehicle mass, size, and crash fatality standards were attribute-based; past NHTSA, EPA, DOE, and CARB to evaluate all aspects of mass, size, and rates had been completed. NHTSA safety trade-offs may have occurred contracted with the University of because manufacturers chose at the safety. The team would seek to coordinate government-supported Michigan Transportation Research time, in response to CAFE standards, to Institute (UMTRI) to conduct this build smaller and lighter vehicles. studies and independent research to the greatest extent possible to ensure the review, and the UMTRI team led by Although the agency now uses attribute- Green evaluated more than 20 papers, based standards, in part to protect work is complementary to previous and ongoing research and to guide further including studies done by NHTSA’s against excessive vehicle downsizing, Kahane, Wenzel of the U.S. Department the agency must be mindful of the research in this area. The agencies also identified three of Energy’s Lawrence Berkeley National possibility of related safety trade-offs in Laboratory, Dynamic Research, Inc., and the future. In cases where fuel economy specific areas to direct research in preparation for future CAFE/CO others. UMTRI’s basic findings are improvements were achieved through 2 discussed in Chapter 11 of the PRIA rulemaking regarding statistical analysis reductions in vehicle size and mass, the accompanying this NPRM. of historical data. First, NHTSA would smaller, lighter vehicles did not fare as Some commenters in recent CAFE well in crashes as larger, heavier contract with an independent rulemakings, including some vehicle vehicles, on average. institution to review statistical methods manufacturers, suggested designs and Historically, as shown in FARS data NHTSA and DRI used to analyze materials of more recent model year analyzed by NHTSA, the safest cars historical data related to mass, size, and vehicles may have weakened the generally have been heavy and large, safety, and to provide recommendations historical statistical relationships while cars with the highest fatal-crash on whether existing or other methods between mass, size, and safety. It was rates have been light and small. The should be used for future statistical agreed that the statistical analysis would question, then, is whether past is analysis of historical data. This study be improved by using an updated necessarily a prologue when it comes to would include a consideration of database reflecting more recent safety potential changes in vehicle size (both potential near multicollinearity in the technologies, vehicle designs and footprint and ‘‘overhang’’) and mass in historical data and how best to address materials, and reflecting changes in the it in a regression analysis. The 2010 vehicle fleet. An updated database was 296 In this rulemaking document, ‘‘vehicle safety’’ NHTSA report (hereinafter 2010 Kahane created and employed for assessing is defined as societal fatality rates per vehicle mile report) was also peer reviewed by two safety effects for that final rule. The of travel (VMT), including fatalities to occupants of other experts in the safety field—Farmer agencies also believed, as UMTRI found, all vehicles involved in collisions, plus any (Insurance Institute for Highway Safety) pedestrians. Injuries and property damage are not different statistical analyses may have within the scope of the statistical models discussed and Lie (Swedish Transport produced different results because they 297 in this section because of data limitations (e.g., Administration). used slightly different datasets for their limited information on observed or potential Second, NHTSA and EPA, in analyses. relationships between safety standards and injury consultation with DOE, would update and property damage outcomes, consistency of To try to mitigate this issue and to reported injury severity levels). Rather, injuries and the MY 1991–1999 database where support the current rulemaking, NHTSA property damage are represented within the CAFE created a common, updated database for model through adjustment factors based on 297 All three peer reviews are available in Docket observed relationships between societal costs of No. NHTSA–2010–0152, Relationships Between statistical analysis consisting of crash fatalities and societal injury and property damage Fatality Risk, Mass, and Footprint, https:// data of model years 2000–2007 vehicles costs. www.regulations.gov/docket?D=NHTSA-2010-0152. in calendar years 2002–2008, as

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compared to the database used in prior NHTSA’s baseline results and casualty 2021 passenger cars and light trucks NHTSA analyses, which was based on risk per VMT; included a statistical analysis of model years 1991–1999 vehicles in • the 2012 DRI reports on, among relationships between fatality risk, calendar years 1995–2000. The new other things, the effects of mass mass, and footprint in MY 2000–2007 database was the most up-to-date reduction on crash frequency and passenger cars and LTVs (light trucks possible, given the processing lead time fatality risk per crash; and vans), based on calendar year (CY) for crash data and the need for enough • LBNL’s subsequent review of DRI’s 2002–2008 crash and vehicle- crash cases to permit statistically study; registration data; 302 this analysis was meaningful analyses. NHTSA made the • the 2015 National Academy of also detailed in the 2012 Kahane report. preliminary version of the new Sciences Report; and The principal findings and database, which was the basis for • the 2017 NBER working paper conclusions of the 2012 Kahane report NHTSA’s 2011 preliminary report analyzing the relationships among were mass reduction in the lighter cars, (hereinafter 2011 Kahane report), traffic fatalities, CAFE standards, and even while holding footprint constant, available to the public in May 2011, and distributions of MY 1989–2005 light- would significantly increase fatality an updated version in April 2012 (used duty vehicle curb weights. risk, whereas mass reduction in the in NHTSA’s 2012 final report, A detailed discussion of each analysis heavier LTVs would reduce societal hereinafter 2012 Kahane report),298 is discussed in Chapter 11 of the PRIA fatality risk by reducing the fatality risk enabling other researchers to analyze accompanying this proposed rule. of occupants of lighter vehicles the same data and hopefully minimize colliding with those heavier LTVs. (b) Recent NHTSA Analysis Supporting discrepancies in results because of NHTSA concluded, as a result, any CAFE Rulemaking inconsistencies across databases.299 reasonable combination of mass Since the publication of the MYs As mentioned previously, NHTSA reductions that held footprint constant 2017–2025 final rule, NHTSA has and EPA’s 2012 joint final rule for MYs in MY 2017–2021 vehicles— sponsored, and is sponsoring, new 2017 and beyond set ‘‘footprint-based’’ concentrated, at least to some extent, in studies and research to inform the standards, with footprint being defined the heavier LTVs and limited in the lighter cars—would likely be current CAFE and CO2 rulemaking. In as roughly equal to the wheelbase addition, the National Academy of multiplied by the average of the front approximately safety-neutral; it would Sciences published a new report in this and rear track widths. Basing standards not significantly increase fatalities and area.300 Throughout the rulemaking on vehicle footprint ideally helps to might well decrease them. NHTSA released a preliminary report process, NHTSA’s goal is to publish as discourage vehicle manufacturers from (2016 Puckett and Kindelberger report) much of our research as possible. In downsizing their vehicles; the agencies on the relationship between fatality risk, establishing standards, all available set higher (more stringent) mile per mass, and footprint in June 2016 in data, studies, and information gallon (mpg) targets for smaller-footprint advance of the Draft TAR. The objectively without regard to whether vehicles but would not similarly preliminary report covered the same they were sponsored by the agencies, discourage mass reduction that scope as the 2012 Kahane report, will be considered. maintains footprint while potentially offering a detailed description of the Undertaking these tasks has helped improving fuel economy. Several technologies, such as substitution of databases, modeling approach, and come closer to resolving ongoing analytical results on relationships debates in statistical analysis research of light, high-strength materials for conventional materials during vehicle among vehicle size, mass, and fatalities historical crash data. It is intended that that informed the Draft TAR. Results in these conclusions will be applied going redesigns, have the potential to reduce weight and conserve fuel while the Draft TAR and the 2016 Puckett and forward in future rulemakings, and it is Kindelberger report are consistent with maintaining a vehicle’s footprint and believed the research will assist the results in the 2012 Kahane report; maintaining or possibly improving the public discussion of the issues. Specific chiefly, societal effects of mass vehicle’s structural strength and historical analyses (in addition to reduction are small, and mass reduction handling. NHTSA’s own analysis) on vehicle mass concentrated in larger vehicles is likely In considering what technologies are and safety used to support this to have a beneficial effect on fatalities, available for improving fuel economy, rulemaking include: while mass reduction concentrated in • including mass reduction, an important The 2011 and 2013 NHTSA smaller vehicles is likely to have a corollary issue for NHTSA to consider is Workshops on Vehicle Mass, Size, and detrimental effect on fatalities. Safety; the potential effect those technologies For the 2016 Puckett and • the University of Michigan may have on safety. NHTSA has thus far Kindelberger report and Draft TAR, Transportation Research Institute specifically considered the likely effect NHTSA, working closely with EPA and (UMTRI) independent review of a set of of mass reduction that maintains the DOE, performed an updated statistical relationships between vehicle footprint on fatal crashes. The statistical analysis of relationships curb weight, footprint variables (track relationship between a vehicle’s mass, between fatality rates, mass and width, wheelbase), and fatality rates size, and fatality risk is complex, and it footprint, updating the crash and from vehicle crashes; varies in different types of crashes. As exposure databases to the latest • the 2012 Lawrence Berkeley mentioned above, NHTSA, along with available model years. The agencies National Laboratory (LBNL) Phase 1 and others, has been examining this analyzed updated databases that 301 Phase 2 reports on the sensitivity of relationship for more than a decade. included MY 2003–2010 vehicles in CY The safety chapter of NHTSA’s April 2005–2011 crashes. For this proposed 298 Those databases are available at ftp:// 2012 final regulatory impact analysis ftp.nhtsa.dot.gov/CAFE/. (FRIA) of CAFE standards for MY 2017– 302 Kahane, C.J. Relationships Between Fatality 299 See 75 FR 25324, 25395–25396 (May 7, 2010) Risk, Mass, and Footprint in Model Year 2000–2007 (for a discussion of planned statistical analyses). 301 A complete discussion of the historical Passenger Cars and LTVs—Final Report, National 300 Cost, Effectiveness and Deployment of Fuel analysis of vehicle mass and safety is located in Highway Traffic Safety Administration (Aug. 2012), Economy Technologies for Light-Duty Vehicles, Chapter 10 of the PRIA accompanying this available at https://crashstats.nhtsa.dot.gov/Api/ National Academy of Sciences (2015). proposed rulemaking. Public/ViewPublication/811665.

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rule, databases are the most up-to-date minivans in fatal crashes in the The adjustment for ESC, a feature of the possible (MY 2004–2011 vehicles in CY database); car, CUV, or minivan ≥ 3,187 analysis added in 2012, takes into 2006–2012), given the processing time pounds; truck-based LTV < 4,360 account results will be used to analyze for crash data and the need for enough pounds (the median curb weight of effects of mass reduction in future crash cases to permit statistically other truck-based LTVs in fatal crashes vehicles, which will all be ESC- meaningful analyses. As in previous in the database); and truck-based LTV ≥ equipped, as required by NHTSA’s analyses, NHTSA has made the new 4,360 pounds. An additional crash type regulations. databases available to the public on its includes all other fatal crash types (e.g., Techniques developed in the 2011 website, enabling other researchers to collisions involving more than two (preliminary) and 2012 (final) Kahane analyze the same data and hopefully vehicles, animals, or trains). Splitting reports have been retained to test minimizing discrepancies in results that the ‘‘other’’ vehicles into a lighter and statistical significance and to estimate would have been because of a heavier group permits more accurate 95 percent confidence bounds (sampling inconsistencies across databases. analyses of the mass effect in collisions error) for mass effects and to estimate of two light vehicles. Grouping partner- the combined annual effect of removing (c) Updated Analysis for This vehicle CUVs and minivans with cars 100 pounds of mass from every vehicle Rulemaking rather than LTVs is more appropriate (or of removing different amounts of The basic analytical method used to because their front-end profile and mass from the various classes of analyze the impacts of weight reduction rigidity more closely resembles a car vehicles), while holding footprint on safety in this proposed rule is the than a typical truck-based LTV. constant. same as in NHTSA’s 2012 Kahane The curb weight of passenger cars is NHTSA considered the near report, 2016 Puckett and Kindelberger formulated, as in the 2012 Kahane multicollinearity of mass and footprint report, and the Draft TAR: The agency report, 2016 Puckett and Kindelberger to be a major issue in the 2010 Kahane analyzed cross sections of the societal report, and Draft TAR, as a two-piece report 303 and voiced concern about fatality rate per billion vehicle miles of linear variable to estimate one effect of inaccurately estimated regression travel (VMT) by mass and footprint, mass reduction in the lighter cars and coefficients.304 High correlations while controlling for driver age, gender, another effect in the heavier cars. The between mass and footprint and and other factors, in separate logistic boundary between ‘‘lighter’’ and variance inflation factors (VIF) have not regressions by vehicle class and crash ‘‘heavier’’ cars is 3,201 pounds (which changed from MY 1991–1999 to MY type. ‘‘Societal’’ fatality rates include is the median mass of MY 2004–2011 2004–2011; large vehicles continued to fatalities to occupants of all the vehicles cars in fatal crashes in CY 2006–2012, be, on the average, heavier than small involved in the collisions, plus any up from 3,106 for MY 2000–2007 cars in vehicles to the same extent as in the pedestrians. CY 2002–2008 in the 2012 NHTSA previous decade.305 The temporal range of the data is now safety database, and up from 3,197 for Nevertheless, multicollinearity MY 2004–2011 vehicles in CY 2006– MY 2003–2010 cars in CY 2005–2011 in appears to have become less of a 2012, updated from previous databases the 2016 NHTSA safety database). problem in the 2012 Kahane, 2016 of MY 2000–2007 vehicles in CY 2002– Likewise, for truck-based LTVs, curb Puckett and Kindelberger/Draft TAR, 2008 (2012 Kahane Report) and MY weight is a two-piece linear variable and current NHTSA analyses. 2003–2010 vehicles in CY 2005–2011 with the boundary at 5,014 pounds Ultimately, only three of the 27 core (2016 Puckett and Kindelberger report (again, the MY 2004–2011 median, models of fatality risk by vehicle type in and Draft TAR). NHTSA purchased a higher than the median of 4,594 for MY the current analysis indicate the file of odometer readings by make, 2000–2007 LTVs in CY 2002–2008 and potential presence of effects of model, and model year from Polk that the median of 4,947 for MY 2003–2010 multicollinearity, with estimated effects helped inform the agency’s improved LTVs in CY 2005–2011). Curb weight is of mass and footprint reduction greater VMT estimates. As in the 2012 Kahane formulated as a simple linear variable than two percent per 100-pound mass report, 2016 Puckett and Kindelberger for CUVs and minivans. Historically, reduction and one-square-foot footprint report, and the Draft TAR, the vehicles CUVs and minivans have accounted for reduction, respectively; these three are grouped into three classes: Passenger a relatively small share of new-vehicle models include passenger cars and cars (including both two-door and four- sales over the range of the data, CUVs in first-event rollovers, and CUVs door cars); CUVs and minivans; and resulting in less crash data available in collisions with LTVs greater than truck-based LTVs. than for cars or truck-based LTVs. 4,360 pounds. This result is consistent There are nine types of crashes For a given vehicle class and weight with the 2016 Puckett and Kindelberger specified in the analysis. Single-vehicle range (if applicable), regression report, which also found only three crashes include first-event rollovers, coefficients for mass (while holding cases out of 27 models with estimated collisions with fixed objects, and footprint constant) in the nine types of effects of mass and footprint reduction collisions with pedestrians, bicycles and crashes are averaged, weighted by the greater than two percent per 100-pound motorcycles. Two-vehicle crashes number of baseline fatalities that would mass reduction and one-square-foot include collisions with: heavy-duty have occurred for the subgroup MY footprint reduction. vehicles; car, CUV, or minivan < 3,187 2008–2011 vehicles in CY 2008–2012 if Table II–45 presents the estimated pounds (the median curb weight of these vehicles had all been equipped percent increase in U.S. societal fatality other, non-case, cars, CUVs and with electronic stability control (ESC). risk per 10 billion VMT for each 100-

303 Kahane, C. J. Relationships Between Fatality 304 Van Auken and Green also discussed the issue 305 Greene, W. H. Econometric Analysis 266–68 Risk, Mass, and Footprint in Model Year 1991–1999 in their presentations at the NHTSA Workshop on (Macmillan Publishing Company 2d ed. 1993); Paul and Other Passenger Cars and LTVs (Mar. 24, Vehicle Mass-Size-Safety in Washington, DC D. Allison, Logistic Regression Using the SAS 2010), in Final Regulatory Impact Analysis: February 25, 2011. More information on the NHTSA System 48–51 (SAS Institute Inc. 2001). VIF scores Corporate Average Fuel Economy for MY 2012–MY Workshop on Vehicle Mass-Size-Safety is available are in the 6–9 range for curb weight and footprint at https://one.nhtsa.gov/Laws-&-Regulations/CAFE- in NHTSA’s new database—i.e., in the somewhat 2016 Passenger Cars and Light Trucks, National %E2%80%93-Fuel-Economy/NHTSA-Workshop- unfavorable 2.5–10 range where near Highway Traffic Safety Administration (Mar. 2010) on-Vehicle-Mass%E2%80%93Size%E2%80%93 multicollinearity begins to become a concern in at 464–542. Safety. logistic regression analyses.

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pound reduction in vehicle mass, while holding footprint constant, for each of the five vehicle classes:

None of the estimated effects have 95- estimated increases in societal fatality components of the analysis, as percent confidence bounds that exclude risk for mass reduction in the heavier discussed at the end of this section. zero, and thus are not statistically cars and the lighter truck-based LTVs, However, this degree of uncertainty is significant at the 95-percent confidence and the estimated decrease in societal methodological in nature rather than level. Two estimated effects are fatality risk for mass reduction in CUVs statistical. statistically significant at the 85-percent and minivans are not significant, even at It is useful to compare the new results level. Societal fatality risk is estimated the 85-percent confidence level. in Table II–45 to results in the 2012 to: (1) Increase by 1.2 percent if mass is Confidence bounds estimate only the Kahane report (MY 2000–2007 vehicles reduced by 100 pounds in the lighter sampling error internal to the data used in CY 2002–2008) and the 2016 Puckett cars; and (2) decrease by 0.61 percent if in the specific analysis that generated and Kindelberger report and Draft TAR mass is reduced by 100 pounds in the the point estimate. Point estimates are (MY 2003–2010 vehicles in CY 2005– heavier truck-based LTVs. The also sensitive to the modification of 2011), presented in Table II–46 below:

New results are directionally the same passenger cars; for all reports, the while the corresponding estimate in the as in 2012; in the 2016 analysis, the estimate for lighter passenger cars is 2016 Puckett and Kindelberger report estimate for lighter LTVs was of statistically significant at the 85-percent was insignificant and negative. opposite sign (but small magnitude). confidence level, while the estimate for Vehicle mass continued an historical Consistent with the 2012 Kahane and heavier passenger cars is insignificant. upward trend across the MYs in the 2016 Puckett and Kindelberger reports, The estimated mass effect for heavier newest databases. The average (VMT- mass reductions in lighter cars are truck-based LTVs is stronger in this weighted) masses of passenger cars and estimated to lead to increases in analysis and in the 2016 Puckett and CUVs both increased by approximately Kindelberger report than in the 2012 three percent from MYs 2004 to 2011 fatalities, and mass reductions in Kahane report; both estimates are (3,184 pounds to 3,289 pounds for heavier LTVs are estimated to lead to statistically significant at the 85-percent passenger cars, and 3,821 pounds to decreases in fatalities. However, NHTSA confidence level, unlike the 3,924 pounds for CUVs). Over the same does not consider this conclusion to be corresponding insignificant estimate in period, the average mass of minivans definitive because of the relatively wide the 2012 Kahane report. The estimated increased by six percent (from 4,204 confidence bounds of the estimates. The mass effect for lighter truck-based LTVs pounds to 4,462 pounds), and the estimated mass effects are similar is insignificant and positive in this average mass of LTVs increased by 10% among analyses for both classes of analysis and the 2012 Kahane report, (from 4,819 pounds to 5,311 pounds).

306 Median curb weights in the 2012 Kahane truck-based LTVs. Median curb weights in the 2016 Puckett and Kindelberger report: 3,197 pounds for report: 3,106 pounds for cars, 4,594 pounds for cars, 4,947 pounds for truck-based LTVs.

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Historical reasons for mass increases The principal difference between vehicle. Through conservation of within vehicle classes include: heavier vehicles, especially truck-based momentum, the degree to which the Manufacturers discontinuing lighter LTVs, and lighter vehicles, especially delta V in the lighter vehicle is greater models; manufacturers re-designing passenger cars, is mass reduction has a than in the heavier vehicle is models to be heavier and larger; and different effect in collisions with proportional to the ratio of mass in the shifting consumer preferences with another car or LTV. When two vehicles heavier vehicle to mass in the lighter respect to cabin size and overall vehicle of unequal mass collide, the change in vehicle: size. velocity (delta V) is greater in the lighter

Because fatality risk is a positive lower, they may more successfully The regression results are best suited function of delta V, the fatality risk in avoid crashes or reduce the severity of to predict the effect of a small change in the lighter vehicle in two-vehicle crashes. mass, leaving all other factors, including collisions is also higher. Removing some Farmer, Green, and Lie, who reviewed footprint, the same. With each mass from the heavy vehicle reduces the 2010 Kahane report, again peer- additional change from the current delta V in the lighter vehicle, where reviewed the 2011 Kahane report.307 In environment (e.g., the scale of mass fatality risk is higher, resulting in a large preparing his 2012 report (along with change, presence and prevalence of benefit, offset by a small penalty the 2016 Puckett and Kindelberger safety features, demographic because delta V increases in the heavy report and Draft TAR), Kahane also took characteristics), the model may become vehicle where fatality risk is low— into account Wenzel’s 308 assessment of less accurate. It is recognized that the adding up to a net societal benefit. the preliminary report and its peer light-duty vehicle fleet in the MY 2021– Removing some mass from the lighter reviews, DRI’s analyses published early 2026 timeframe will be different from vehicle results in a large penalty offset in 2012, and public comments such as the MY 20042011 fleet analyzed here. by a small benefit—adding up to net the International Council on Clean Nevertheless, one consideration harm. Transportation’s comments submitted provides some basis for confidence in applying regression results to estimate These considerations drive the overall on NHTSA and EPA’s 2010 notice of 309 effects of relatively large mass result: Mass reduction is associated with joint rulemaking. These comments prompted supplementary analyses, reductions or mass reductions over an increase in fatality risk in lighter longer periods. This is NHTSA’s sixth cars, a decrease in fatality risk in especially sensitivity tests, discussed at the end of this section. evaluation of effects of mass reduction heavier LTVs, CUVs, and minivans, and and/or downsizing,310 comprising has smaller effects in the intermediate 307 Items 0035 (Lie), 0036 (Farmer) and 0037 groups. Mass reduction may also be 310 As outlined throughout this section, NHTSA’s (Green) in Docket No. NHTSA–2010–0152. harmful in a crash with a movable six related studies include the new analysis 308 Wenzel, T. An Analysis of the Relationship object such as a small tree, which may supporting this rulemaking, and: Kahane, C. J. Between Casualty Risk Per Crash and Vehicle Mass Vehicle Weight, Fatality Risk and Crash break if hit by a high mass vehicle and Footprint for Model Year 2000–2007 Light Duty Compatibility of Model Year 1991–99 Passenger resulting in a lower delta V than may Vehicles, Lawrence Berkeley National Laboratory Cars and Light Trucks, National Highway Traffic occur if hit by a lower mass vehicle (Dec. 2011), available at http://eta- Safety Administration (Oct. 2003), available at publications.lbl.gov/sites/default/files/lbnl- which does not break the tree and https://crashstats.nhtsa.dot.gov/Api/Public/View 5695e.pdf; Tom Wenzel, Lawrence Berkeley Publication/809662; Kahane, C. J. Relationships therefore has a higher delta V. However, National Laboratory -Assessment of NHTSA Report Between Fatality Risk, Mass, and Footprint in in some types of crashes not involving Relationships Btw Fatality Risk Mass and Footprint Model Year 1991–1999 and Other Passenger Cars collisions between cars and LTVs, in MY 2000–2007 PC and LTV,’’ Docket NHTSA– and LTVs (Mar. 24, 2010), in Final Regulatory 2010–0131–0315; and a peer review of Wenzel’s especially first-event rollovers and Impact Analysis: Corporate Average Fuel Economy reports—Peer Review of LBNL Statistical Analysis for MY 2012–MY 2016 Passenger Cars and Light impacts with fixed objects, mass of the Effect of Vehicle Mass & Footprint Reduction Trucks, National Highway Traffic Safety reduction may not be harmful and may on Safety (LBNL Phase 1 and 2 Reports), prepared Administration (Mar. 2010) at 464–542; Kahane, C. be beneficial. To the extent lighter for U.S. EPA (Feb. 2012), available at Docket ID J. Relationships Between Fatality Risk, Mass, and NHTSA–2010–0131–0328. vehicles may respond more quickly to Footprint in Model Year 2000–2007 Passenger Cars 309 Comment by International Council on Clean and LTVs—Preliminary Report, National Highway braking and steering, or may be more Transportation, Docket ID NHTSA–2010–0131– Traffic Safety Administration (Nov. 2011), available stable because their center of gravity is 0258. at Docket ID NHTSA–2010–0152- 0023); Kahane, C.

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databases ranging from MYs 1985 to (d) Calculation of MY 2021–2026 Safety The agency assumed safety trends 2011. Impact will result in a reduction in the target Results of the six studies are not Neither CAFE standards nor this population of fatalities from which the identical, but they have been consistent analysis mandate mass reduction, or vehicle mass impacts are derived. Table to a point. During this time period, mandate mass reduction occur in any II–47 through Table II–52 show results many makes and models have increased specific manner. However, mass of NHTSA’s vehicle mass-size-safety substantially in mass, sometimes as reduction is one of the technology analysis over the cumulative lifetime of much as 30–40%.311 If the statistical applications available to manufacturers, MY 1977–2029 vehicles, for both the analysis has, over the past years, been and thus a degree of mass reduction is CAFE and GHG programs, based on the able to accommodate mass increases of allowed within the CAFE model to: (1) MY 2016 baseline fleet, accounting for this magnitude, perhaps it will also Determine capabilities of manufacturers; the projected safety baselines. The and (2) to predict cost and fuel succeed in modeling effects of mass reported fatality impacts are consumption effects of improved CAFE undiscounted, but the monetized safety reductions of approximately 10–20%, standards. should they occur in the future. impacts are discounted at three-percent The agency utilized the relationships and seven-percent discount rates. The between weight and safety from the new reported fatality impacts are estimated NHTSA analysis, expressed as percentage increases in fatalities per increases or decreases in fatalities over J. Relationships Between Fatality Risk, Mass, and the lifetime of the model year fleet. A Footprint in Model Year 2000–2007 Passenger Cars 100-pound weight reduction, and and LTVs: Final Report, NHTSA Technical Report. examined the weight impacts assumed positive number means that fatalities are Washington, DC: NHTSA, Report No. DOT–HS– in this CAFE analysis. The effects of projected to increase; a negative number 811–665; and Puckett, S. M., & Kindelberger, J. C. mass reduction on safety were estimated (in parentheses) means that fatalities are Relationships between Fatality Risk, Mass, and relative to estimated baseline levels of projected to decrease. Footprint in Model Year 2003–2010 Passenger Cars and LTVs—Preliminary Report, National Highway safety across vehicle classes and model Results are driven extensively by the Traffic Safety Administration (June 2016), available years. To identify baseline levels of degree to which mass is reduced in at https://www.nhtsa.gov/sites/nhtsa.dot.gov/files/ safety, the agency examined effects of relatively light passenger cars and in 2016-prelim-relationship-fatalityrisk-mass- identifiable safety trends over lifetimes relatively heavy vehicles because their footprint-2003-10.pdf. of vehicles produced in each model coefficients in the logistic regression 311 For example, one of the most popular models year. The projected effectiveness of of small 4-door sedans increased in curb weight analysis have the most significant existing and forthcoming safety values. We assume any impact on from 1,939 pounds in MY 1985 to 2,766 pounds in technologies and expected on-road fleet fatalities will occur over the lifetime of MY 2007, a 43% increase. A high-sales mid-size penetration of safety technologies were sedan grew from 2,385 to 3,354 pounds (41%); a the vehicle, and the chance of a fatality best-selling pickup truck from 3,390 to 4,742 incorporated into observed trends in fatality rates to estimate baseline fatality occurring in any particular year is pounds (40%) in the basic model with two-door cab directly related to the weighted vehicle and rear-wheel drive; and a popular minivan from rates in future years across vehicle 2,940 to 3,862 pounds (31%). classes and model years. miles traveled in that year.

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For all light-duty vehicles, mass decrease in fatalities over the vehicles in all alternatives evaluated. changes are estimated to lead to a cumulative lifetime of MY 1977–2029 The effects of mass changes on fatalities

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range from a combined decrease that to social costs of fatalities, but in relative to the augural standards at a (relative to the augural standards, the this case NHTSA does not have a model three-percent discount rate and by baseline) of 12 fatalities for Alternative estimating the effect of vehicle mass on between $97 million and $1.6 billion at #7 to a combined decrease of 173 injuries. Blincoe et al. estimates that a seven-percent discount rate. The fatalities for Alternative #4. The fatalities account for 39.5% of total estimated decreases in social safety difference in results by alternative comprehensive costs due to injury.312 If costs are driven by estimated decreases depends upon how much weight vehicle mass impacts non-fatal injuries in costs associated with passenger cars, reduction is used in that alternative and proportionally to its impact on fatalities, ranging from $264 million (for the types and sizes of vehicles to which then total costs would be approximately Alternative #7) to $4.4 billion (for the weight reduction applies. The 2.53 (1⁄0.395) times the value of fatalities Alternative #1) relative to the Augural decreases in fatalities are driven by alone or around $25.07 million per standards at a three-percent discount impacts within passenger cars fatality. NHTSA has selected this value (decreases of between 17 and 281 as representative of the relationship rate and by between $146 million and fatalities) and are offset by impacts between fatality costs and injury costs $2.5 billion at a seven-percent discount within light trucks (increases of between because this approach is internally rate. The estimated decreases in costs 6 and 120 fatalities). consistent among NHTSA studies. associated with passenger cars are offset Additionally, social effects of Changes in vehicle mass are estimated by estimated increases in costs increasing fatalities can be monetized to decrease social safety costs over the associated with light trucks, ranging using NHTSA’s estimated lifetime of the nine model years by from $88 million (for Alternative #7) to comprehensive cost per life of between $176 million (for Alternative $2.0 billion (for Alternative #1) relative $9,900,000 in 2016 dollars. This #7) and $2.7 billion (for Alternative #4) to the Augural standards at a three- consists of a value of a statistical life of percent discount rate and by between $9.6 million in 2015 dollars plus 312 Blincoe, L. et al., The Economic and Social $49 million and $1.3 billion at a seven- external economic costs associated with Impact of Motor Vehicle Crashes, 2010 (Revised), National Highway Traffic Safety Administration percent discount rate. fatalities such as medical care, (May 2015), available at https:// Table II–53 through Table II–55 insurance administration costs and legal crashstats.nhtsa.dot.gov/Api/Public/View presents average annual estimated safety costs, updated for inflation to 2016 Publication/812013. The estimate of 39.5% (see dollars. Table 1–8) is equal to the estimated value of MAIS6 effects of vehicle mass changes, for CYs (fatal) injuries in vehicle incidents divided by the 2035–2045: Typically, NHTSA would also estimated value of MAIS0–MAIS6 (non-fatal and estimate the effect on injuries and add fatal) injuries in vehicle incidents.

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For all light-duty vehicles, mass average annual decrease in fatalities in 2045. The effects of mass changes on changes are estimated to lead to an all alternatives evaluated for CYs 2035– fatalities range from a combined

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decrease (relative to the Augural costs in CY 2035–2045 by between $2 increases in costs associated with light standards) of 1 fatality per year for million (for Alternative #7) and $271 trucks, decreasing between $11 million Alternative #7 to a combined increase of million (for Alternative #1) relative to (for Alternative #7) and $153 million 22 fatalities per year for Alternative #1. the Augural standards at a three-percent (for Alternative #1) relative to the The difference in the results by discount rate and by between $1 million Augural standards at a three-percent alternative depends upon how much and $111 million at a seven-percent discount rate and decreasing between $5 weight reduction is used in that discount rate. The estimated decreases million and $64 million at a seven- alternative and the types and sizes of in social safety costs are generally percent discount rate. vehicles to which the weight reduction driven by estimated decreases in costs applies. The decreases in fatalities are associated with passenger cars, To help illuminate effects at the generally driven by impacts within decreasing between $13 million (for model year level, Table II–59 presents passenger cars (decreases of between 1 Alternative #7) and $424 million (for the lifetime fatality impacts associated and 33 fatalities per year relative to the Alternative #1) relative to the Augural with vehicle mass changes for passenger Augural standards) and are generally standards at a three-percent discount cars, light trucks, and all light-duty offset by impacts within light trucks rate and decreasing between $5 million vehicles by model year under (increases of between 1 and 12 fatalities and $175 million at a seven-percent Alternative #1, relative to the Augural per year). discount rate. The estimated decreases standards for the CAFE Program. Table Changes in vehicle mass are estimated in costs associated with passenger cars II–59 presents an analogous table for the to decrease average annual social safety are generally offset by estimated GHG Program.

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Under Alternative #1, passenger car fatalities), peaking in MY 2025 (37 in MYs 2017 and 2018 to an increase of fatalities associated with mass changes fatalities). Corresponding estimates of 14 fatalities in MYs 2026 through 2029. are estimated to decrease generally from light truck fatalities associated with Altogether, light-duty vehicle fatality MY 2017 (decrease of three fatalities) mass changes are generally positive, reductions associated with mass through MY 2029 (decrease of 36 ranging from a decrease of one fatality changes under Alternative #1 are

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estimated to be concentrated among MY Table II–61 and Table II–62 present respectively for the CAFE Program. 2023 through MY 2029 vehicles (146 out estimates of monetized lifetime social Table II–63 and Table II–64 show of 165, or 91% of net fatalities safety costs associated with mass comparable tables from the perspective mitigated). changes by model year at three-percent of the GHG Program. and seven-percent discount rates,

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00145 Fmt 4701 Sfmt 4702 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 43130 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules Year Year TOTAL 0.79 -0.94 -1.73 0.49 TOTAL -0.99 -0.50 Model Model 0.08 -0.20 -0.12 2029 by by 0.04 -0.10 -0.06 2029 0.09 -0.21 -0.13 2028 MY MY 0.05 -0.11 -0.06 2028 MY MY Program Program 7'X 3'X at at 0.09 -0.21 -0.13 2027 MY 0.05 -0.12 -0.07 2027 CAFE CAFE for for 0.08 -0.22 -0.14 2026 MY 0.05 -0.13 -0.08 2026 Discounted Discounted 0.08 -0.23 -0.15 Changes Changes 2025 MY 0.05 -0.14 -0.09 2025 ------Dollars Dollars Mass Mass ---;;- 0.09 -0.20 -0.11 MY 2024 2024 0.05 -0.12 -0.07 MY MY MY MY 0.06 -0.12 -0.06 2023 ·------Standards. Standards. 0.08 -0.19 -0.10 2023 MY ------0.00 0.06 -0.07 2022 Associated with Associated with 0.10 -0.11 -0.01 2022 MY Amwral Amwral ------to to Costs Costs 0.01 0.06 -0.04 2021 MY MY MY 0.08 0.01 -0.07 2021 Safety Safety Relative Relative ------·- 0.00 0.02 -0.02 2020 MY -;; 0.02 -0.03 -0.01 2020 MY MY #1. #1. Social Social 0.01 0.02 -0.01 2019 MY 0.02 0.01 -0.01 2019 MY 0.00 -0.01 -0.01 2018 Lifetime Lifetime Alternative Alternative ------.- -0.02 -0.01 -0.02 2018 of of der der 0.00 -0.01 -0.01 on 2017 MY MY ------0.00 -0.02 -0.02 2017 paris 1977- 0.00 -0.01 -0.01 2016 MY Comparison Com - 1977- -0.01 -0.01 -0.02 2016 MY MY MY -62 II 11-61- Trucks Total Cars Passenger Light Table Table Cars Trucks Total r Passenge Light

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Lifetime social safety costs are model year, with decreases associated partially by increases associated with estimated to decrease generally by with passenger cars generally offset light trucks. At a three-percent discount

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rate, decreases in lifetime social safety a seven-percent discount rate, 97% of Green (UMTRI) in their peer reviews; costs related to passenger cars are the reduction in total lifetime costs Van Auken (DRI) in his public estimated to range from $13 million for ($486 million out of $501 million) is comments; or Wenzel in his parallel existing (MY 1977 through MY 2016) attributed to MY 2023 through MY 2029 research for DOE. The 2012 Kahane and cars, to $230 million for MY 2025 cars. light-duty vehicles. 2016 Puckett and Kindelberger reports The corresponding estimates at a seven- (e) Sensitivity Analyses provide further discussion of the models percent discount rate range from $7 and the rationales behind them. Table II–65 shows the principal million to $136 million. At a three- Alternative models use NHTSA’s percent discount rate, impacts on findings and includes sampling-error confidence bounds for the five databases and regression-analysis lifetime social safety costs related to approach but differ from the baseline light trucks are estimated to range from parameters used in the CAFE model. The confidence bounds represent the model in one or more explanatory a decrease of $5 million for MY 2017 variables, assumptions, or data light trucks to an increase of $96 million statistical uncertainty that is a restrictions. NHTSA applied the 11 for MY 2022 light trucks. The consequence of having less than a techniques to the latest databases to corresponding estimates at a seven- census of data. NHTSA’s 2011, 2012, generate alternative CAFE model percent discount rate range from $3 and 2016 reports acknowledged another coefficients. The range of estimates million to $65 million. source of uncertainty: The baseline Consistent with the analysis of fatality statistical model can be varied by produced by the sensitivity tests offers impacts by model year in Table II–61, choosing different control variables or insight to the uncertainty inherent in decreases in lifetime social safety costs redefining the vehicle classes or crash the formulation of the models, subject to associated with mass changes are types, which for example, could the caveat these 11 tests are, of course, generally concentrated in MY 2023 produce different point estimates. not an exhaustive list of conceivable through MY 2029 light-duty vehicles Beginning with the 2012 Kahane alternatives. under Alternative #1. At a three-percent report, NHTSA has provided results of The baseline and alternative results discount rate, 93% of the reduction in 11 plausible alternative models that follow, ordered from the lowest to the total lifetime costs ($872 million out of serve as sensitivity tests of the baseline highest estimated increase in societal $937 million) is attributed to MY 2023 model. Each alternative model was risk per 100-pound reduction for cars through MY 2029 light-duty vehicles; at tested or proposed by: Farmer (IIHS) or weighing less than 3,201 pounds:

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The sensitivity tests illustrate both the unbelted driver occupants were • 2009/2010 model year Toyota fragility and the robustness of baseline considered in this fleet simulation. The Venza finite element baseline vehicle estimates. On the one hand, the occupant injury risk from each and two design variants included a 20% variation among NHTSA’s coefficients is simulation was calculated and summed light-weight vehicle model (2010 Venza) quite large relative to the baseline to obtain combined occupant injury (Low option mass reduction vehicle estimate: In the preceding example of risk. The combined occupant injury risk funded by EPA and International cars < 3,201 pounds, the estimated was weighted according to the Council on Clean Transportation (ICCT)) coefficients range from almost zero to frequency of real world occurrences to and a 35% light-weight vehicle (2009 almost double the baseline estimate. develop overall societal risk for baseline Venza) (High option mass reduction This result underscores the key and light-weighted vehicles. Note: The vehicle funded by California Air relationship that the societal effect of generic restraint system developed and Resources Board).317 mass reduction is small and, as Wenzel used in the baseline occupant Light weight vehicles were designed has said, it ‘‘is overwhelmed by other simulations was also used in the light- to have similar vehicle crash pulses as known vehicle, driver, and crash weighted vehicle occupant simulations baseline vehicles. More than 440 vehicle factors.’’ 313 In other words, varying how as the purpose of this fleet simulation crash simulations were conducted for to model some of these other vehicle, was to understand changes in societal the range of crash speeds and crash driver, and crash factors, which is injury risks because of mass reduction configurations to generate crash pulse exactly what sensitivity tests do, can for different classes of vehicles in and intrusion data points. The crash appreciably change the estimate of the frontal crashes. No modifications to the pulse data and intrusion data points societal effect of mass reduction. restraint systems were made for light- will be used as inputs in the occupant On the other hand, variations are not weighted vehicle occupant simulations. simulation models. particularly large in absolute terms. The Any modifications to restraint systems For vehicle to vehicle impact ranges of alternative estimates are to improve occupant injury risks or simulations, four finite element models generally in line with the sampling-error societal injury risks in the light- were chosen to represent the fleet. The confidence bounds for the baseline weighted vehicle would have conflated partner vehicle models were selected to estimates. Generally, in alternative results without identifying effects of represent a range of vehicle types and models as in the baseline models, mass mass reduction only. The following weights. It was assumed vehicle models reduction tends to be relatively more sections provide an overview of the fleet would reflect the crash response for all harmful in the lighter vehicles and more simulation study: vehicles of the same type, e.g. mid-size beneficial in the heavier vehicles, just as NHTSA contracted with George car. Only the safety or injury risk for the they are in the central analysis. In all Washington University to develop a driver in the target vehicle and in the models, the point estimate of NHTSA’s fleet simulation model 314 to study the partner vehicle were evaluated in this coefficient is positive for the lightest impact and relationship of light- study. vehicle class, cars < 3,201 pounds. In weighted vehicle design with injuries As noted, vehicle simulations nine out of 11 models, the point and fatalities. In this study, there were generated vehicle deformations and estimate is negative for CUVs and eight vehicles as follows: acceleration responses utilized to drive minivans, and in eight out of 11 models • 2001 model year Ford Taurus finite occupant restraint simulations and the point estimate is negative for LTVs element model baseline and two simple ≥ predict the risk of injury to the head, 5,014 pounds. design variants included a 25% lighter neck, chest, and lower extremities. In (f) Fleet Simulation Model vehicle while maintaining the same all, more than 1,520 occupant restraint vehicle front end stiffness and 25% simulations were conducted to evaluate NHTSA has traditionally used real overall stiffer vehicle while maintaining the risk of injury for mid-size male and world crash data as the basis for the same overall vehicle mass.315 small female drivers. projecting the future safety implications • 2011 model year Honda Accord The computed societal injury risk for regulatory changes. However, finite element baseline vehicle and its (SIR) for a target vehicle v in frontal because lightweight vehicle designs are 20% light-weight vehicle designed by crashes is an aggregate of individual introducing fundamental changes to the Electricore. (This mass reduction study serious crash injury risks weighted by structure of the vehicle, there is some was sponsored by NHTSA).316 concern that historical safety trends may real-world frequency of occurrence (v) not apply. To address this concern, of a frontal crash incident. A crash 314 Samaha, R. R. et al., Methodology for incident corresponds to a crash with NHTSA developed an approach to Evaluating Fleet Protection of New Vehicle Designs: utilize lightweight vehicle designs to Application to Lightweight Vehicle Designs, different partners (Npartner) at a given evaluate safety in a subset of real-world National Highway Traffic Safety Administration impact speed (Pspeed), for a given representative crashes. The (Aug. 2014), available at https://www.nhtsa.gov/ driver occupant size (Loccsize), in the crashworthiness/vehicle-aggressivity-and-fleet- target or partner vehicle (T/P), in a given methodology focused on frontal crashes compatibility-research (accessed by clicking on the because of the availability of existing .zip file for DOT HS 812 051). crash configuration (Mconfig), and in a vehicle and occupant restraint models. 315 Samaha, R. R. et al., Methodology for single- or two-vehicle crash (Kevent). Representative crashes were simulated Evaluating Fleet Protection of New Vehicle Designs: CIR (v) represents the combined injury Application to Lightweight Vehicle Designs, between baseline and lightweight risk (by body region) in a single crash appendices, National Highway Traffic Safety incident. (v) designates the weighting vehicles against a range of vehicles and Administration (Aug. 2014), available at https:// roadside objects using two different size www.nhtsa.gov/crashworthiness/vehicle- factor, i.e., percent of occurrence, belted driver occupants (adult male and aggressivity-and-fleet-compatibility-research derived from National Automotive (accessed by clicking on the .zip file for DOT HS small female) only. No passenger(s) or Sampling System Crashworthiness Data 812 051 [appendices are Part 2]). System (NASS CDS) for the crash 316 Singh, H. et al., Update to future midsize 313 Wenzel, T. Assessment of NHTSA’s Report lightweight vehicle findings in response to incident. A driver age group of 16 to 50 ‘‘Relationships Between Fatality Risk, Mass, and manufacturer review and IIHS small-overlap Footprint in Model Year 2000–2007 Passenger Cars testing, National Highway Traffic Safety 317 Light-Duty Vehicle Mass Reduction and Cost and LTVs,’’ Lawrence Berkeley National Laboratory Administration (Feb. 2016), available at https:// Analysis — Midsize Crossover Utility Vehicle, U.S. at iv (Nov. 2011), available at Docket ID NHTSA– www.nhtsa.gov/sites/nhtsa.dot.gov/files/812237_ EPA (Aug. 2012), https://cfpub.epa.gov/si/si_ 2010–0152–0026. lightweightvehiclereport.pdf. public_record_report.cfm?dirEntryID=230748.

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years old was chosen to provide a will provide insight into the estimate of In general, the societal injury risk in population with a similar, i.e., more modification needed in the restraint and the frontal crash simulation associated consistent, injury tolerance. airbag systems of lightweight vehicles. If with the small size driver is elevated The fleet simulation was performed the difference extends beyond the when compared to that of the mid-size using the best available engineering expected baseline vehicle restraint and driver. However, both occupant sizes models, with base vehicle restraint and airbag capability, then adjustments to had reasonable injury risk in the airbag settings, to estimate societal risks the structural designs would be needed. simulated impact configurations of future lightweight vehicles. The range Results from the fleet simulation study representative of the regulatory and of the predicted risks for the baseline show the trend of increased societal consumer information testing. NHTSA vehicles is from 1.25% to 1.56%, with injury risk for light-weighted vehicle examined three methods for combining an average of 1.39%, for the NASS designs, as compared to their baselines, injuries with different body regions. frontal crashes that were simulated. The occurs for both single vehicle and two- One observation was the baseline mid- change in driver injury risk between the vehicle crashes. Results are listed in size CUV model was more sensitive to baseline and light-weighted vehicles Table II–66. leg injuries.

This study only looked at lightweight the fleet simulation societal risk to the vehicle designs. As explained earlier, designs for a midsize sedan and a mid- 2016 update of the NHTSA 2012 the fleet simulation study assumed size CUV and did not examine safety regression analysis and the updated restraint equipment to be as in the implications for heavier vehicles. The analysis used in this NPRM, the risk baseline model, in which restraints/ study was also limited to only frontal assessment from the fleet simulation is airbags are not redesigned to be optimal crash configurations and considered just similarly directionally consistent with with light-weighting. mid-size CUVs whereas the statistical the passenger car risk assessment from 2. Impact of Vehicle Scrappage and regression model considered all CUVs the regression analysis. As noted, fleet Sales Response on Fatalities and all crash modes. simulations were performed only in Previous versions of the CAFE model, The change in the safety risk from the frontal crash mode and did not consider and the accompanying regulatory MY 2010 fleet simulation study was other crash modes including rollover 319 analyses relying on it, did not carry a directionally consistent with results for crashes. This fleet simulation study does not representation of the full on-road passenger cars from NHTSA 2012 provide information that can be used to vehicle population, only those vehicles regression analysis study,318 which modify coefficients derived for the from model years regulated under covered data for MY 2000–MY 2007. NPRM regression analysis because of proposed (or final) standards. The The NHTSA 2012 regression analysis the restricted types of crashes 320 and omission of an on-road fleet implicitly study was updated in 2016 to reflect assumed the population of vehicles newer MY 2003 to MY 2010. Comparing 319 The risk assessment for CUV in the regression registered at the time a set of CAFE model combined CUVs and minivans in all crash standards is promulgated is not affected 318 The 2012 Kahane study considered only modes and included belted and unbelted fatalities, whereas, the fleet simulation study occupants. by those standards. However, there are considered severe (AIS 3+) injuries and fatalities 320 The fleet simulation considered only frontal several mechanisms by which CAFE (DOT HS 811 665). crashes. standards can affect the existing vehicle

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population. The most significant of meet travel demand through the use of 3. Safety Model these is deferred retirement of older older, less safe vehicles. As an The analysis supporting the CAFE vehicles. CAFE standards force illustration, if we simplify by ignoring rule for MYs 2017 and beyond did not manufacturers to apply fuel saving that the share of new vehicles that are account for differences in exposure or technologies to offered vehicles and passenger cars changes with the inherent safety risk as vehicles aged then pass along the cost of those stringency of the alternatives, simply throughout their useful lives. However, technologies (to the extent possible) to changing the number of new vehicles the relationship between vehicle age buyers of new vehicles. These price between scenarios affects the mileage and fatality risk is an important one. In increases affect the length of loan terms accumulation of the fleet and therefore a 2013 Research Note,321 NHTSA’s and the desired length of ownership for all fleet level effects. Reducing the National Center for Statistics and new vehicle buyers and can discourage number of new vehicles sold, relative to Analysis concluded a driver of a vehicle some buyers on the margin from buying a baseline forecasted value, reduces the that is four to seven years old is 10% a new vehicle in a given year. To the size of the registered vehicle fleet that more likely to be killed in a crash than extent new vehicle purchases offset is able to service the underlying demand the driver of a vehicle zero to three pending vehicle retirements, delaying for travel. years old, accounting for the other new purchases in favor of continuing to Consider a simple example where we factors related to the crash. This trend use an aging vehicle affects the overall show sales effects operating on a micro- safety of the on-road fleet even if the continued for older vehicles more scale for a single household whose generally, with a driver of a vehicle 18 vehicle whose retirement was delayed choices of whether to purchase a new was not directly subject to a binding years or older being 71% more likely to vehicle is affected by vehicle price. A be killed in a crash than a driver in a CAFE standard in the model year during household starts with three vehicles, its production. new vehicle. While there are more aged three, five, and eight years old. In registered vehicles that are zero to three The sales response in the CAFE model a scenario with no CAFE standards and acts to modify new vehicle sales in two years old than there are 20 years or therefore no related changes in vehicle older (nearly three times as many) ways: sales prices, the household buys a new 1. Changes in new vehicle prices because most of the vehicles in earlier car and scraps the eight-year old car; the either increase or decrease total sales vintages are retired sooner, the average other two cars in the fleet each get a year (passenger cars and light trucks age of vehicles in the United States is older. In a scenario where CAFE combined) each year in the context of 11.6 years old and has risen standards become more stringent 322 forecasted macroeconomic conditions. significantly in the past decade. This 2. Changes in new vehicle attributes causing vehicle sales prices to increase, relationship reflects a general trend and fuel prices influence the share of this household chooses to delay buying visible in the Fatality Analysis new vehicles sold that are light trucks, a new car and each of their three Reporting System (FARS) when looking and therefore also passenger cars. existing cars gets a year older. In both at a series of calendar years: Newer These two responses change the total cases, all three vehicles (including the vintages are safer than older vintages, number of new vehicles sold in each new car in the first scenario, and the over time, at each age. This is likely model year across regulatory year-year-old car in the second scenario) because of advancements in safety alternatives and the relative proportion have to serve the family’s travel technology, like side-impact airbags, of new vehicles that are passenger cars demand. electronic stability control, and (more and light trucks. This response has two The scrappage effect is visible in the recently) sophisticated crash avoidance effects on safety. The first response household’s vehicle fleet as it moves systems starting to work their way into slows the rate at which new vehicles, from the first scenario to the second the vehicle population. In fact, the 2013 and their associated safety scenario with changes in CAFE Research Note indicated that the improvements, enter the on-road standards. In the second scenario, the percentage of occupants fatally injured population. The second response nine-year-old car remains in the in fatal crashes increased with vehicle influences the mix of vehicles on the household’s fleet to service demand for age: From 27% for vehicles three or road—with more stringent CAFE travel, when it would otherwise have fewer years old, to 41% for vehicles 12– standards leading to a higher share of been retired. While the scrappage effect 14 years old, to 50% for vehicles 18 or light trucks sold in the new vehicle can be symmetrical to the sales effect, it more years old. market, assuming all else is equal. Light need not be. The ‘‘new car’’ in the With an integrated fleet model now trucks have higher rates of fatal crashes scenario without CAFE standards could part of the analytical framework for when interacting with passenger cars be a new vehicle from the current model CAFE analysis, any effects on fleet and, as earlier sections discussed, year or a used car that is of a newer turnover (either from delayed vehicle different directional responses to mass vintage than the 8-year-old vehicle it retirement or deferred sales of new reduction technology based on the replaces. The latter instance is an effect vehicles) will affect the distribution of existing mass and body style of the of scrappage decisions that do not both ages and model years present in vehicle. directly affect new vehicle sales. the on-road fleet. Because each of these The sales response and scrappage Eventually, new vehicles transition to vintages carries with it inherent rates of response influence safety outcomes the used car market, but that on average fatal crashes, and newer vintages are through the same basic mechanism, fleet take several years, and the shift is slow. generally safer than older ones, turnover. In the case of the scrappage At the household level, the scrappage changing that distribution will change response, delaying fleet turnover keeps decision occurs in a single year, each drivers in older vehicles likely to be less year, for every vehicle in the fleet. To 321 National Center for Statistics and Analysis, safe than newer model year vehicles the extent CAFE standards affect new How Vehicle Age and Model Year Relate to Driver that could replace them. Similarly, vehicle prices and fuel economies, Injury Severity in Fatal Crashes, National Highway delaying the sale of new vehicles can relative to vehicles already owned, Traffic Safety Administration (Aug. 2013), available at https://crashstats.nhtsa.dot.gov/Api/Public/View force households to keep older vehicles scrappage could accelerate or decelerate Publication/811825. in use longer, reallocate VMT within depending upon the direction (and 322 Based on data acquired from Ward’s their household fleet, and generally magnitude) of the changes. Automotive.

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the total number of on-road fatalities this level; the safety analysis in the explicitly accounts for: The distribution under each regulatory alternative. CAFE model is statistical, using of vehicle ages in the fleet and the To estimate the empirical relationship aggregate values to represent the totality number of miles driven by those between vehicle age, model year of fleet interactions over time. The vehicles at each age. To accomplish this, vintage, and fatalities, DOT conducted a second challenge is perhaps the more DOT used data from the FARS database statistical analysis linking data from the significant of the two: The CAFE at a lower level of resolution; rather FARS database, a time series of Polk analysis is inherently forward-looking. than looking at each crash and the registration data to represent the on- To implement a statistical model specific factors that contributed to its road vehicle population, and assumed analogous to the one developed by occurrence, staff looked at the total per-vehicle mileage accumulation rates NCSA, the CAFE model would require number of fatal crashes involving light- (the derivation of which is discussed in forecasts of all factors considered in the duty vehicles over time with a focus on detail in PRIA Chapter 11). These data NCSA model—about vehicle speeds in the influence of vehicle age and vehicle were used to construct per-mile fatality crashes, driver behavior, driver and vintage. When considering the number rates that varied by vehicle vintage, passenger ages, vehicle vintages, and so of fatalities relative to the number of accounting for the influence of vehicle on. In particular, the model would registered vehicles for a given model age. However, unlike the NCSA study require distributions (joint distributions, year (without regard to the passenger referenced above, any attempt to in most cases) of these factors over a car/light-truck distinction, which has account for this relationship in the period of time spanning decades. Any evolved over time and can create CAFE analysis faces two challenges. The such forecasts would be highly inconsistent comparisons), a somewhat first challenge is the CAFE model lacks uncertain and would be likely to assume noisy pattern develops. Using data from the internal structure to account for a continuation of current conditions. calendar year 1996 through 2015, some other factors related to observed fatal Instead of trying to replicate the consistent stories develop. The points in crashes—for example, vehicle speed, NCSA work at a similar level of detail, Figure II–4 represent the number of seat belt use, drug use, or age of DOT conducted a simpler statistical fatalities per registered vehicle with involved drivers or passengers. Vehicle analysis to separate the safety impact of darker circles associated with interactions are simply not modeled at the two factors the CAFE model increasingly current calendar years.

As shown in Figure II–4, fatalities per vehicle) start out at a low point, rise schedule on the registered population registered vehicle have generally through age 15 or so, then decline and examining fatalities per billion declined over time across all vehicle through age 30 (at which point little of miles of VMT. ages (the darker points representing the initial model year cohort is still The mileage accumulation schedule newer vintages being closer to the x- registered). While this pattern is evident used in this analysis was developed axis) and, across most recent calendar in the registration data, it is magnified using odometer readings of vehicles years, fatality rates (per registered by imposing a mileage accumulation aged 0–15 years in calendar year 2015.

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The years spanned by the FARS economies, which would be associated look different than the oldest vehicles in database cover all model years from with higher per-mile driving costs, they the FARS dataset. calendar year 1996 through 2015. Given also (mostly) faced lower fuel prices. When the per-vehicle fatality rates are that there is a significant number of This adjustment increased the mileage converted into per-mile fatality rates, years between the older vehicles in the accumulation for older vehicles, but not the pattern observed in the registration 1996 CY data and the most recent model by large amounts. Because the CAFE comparison becomes clearer. As Figure years in the odometer data the informed model uses the mileage accumulation the mileage accumulation schedules, schedule and applies it to all vehicles in II–5 shows, the trend present in the staff applied an elasticity of ¥0.20 to the fleet, it is necessary to use the same fatality data on a per-registration basis is the change in the average cost per mile schedule to estimate per-mile fatality even clearer on a per-mile basis: Newer of vehicles over their lives. While the rates in the statistical analysis—even if vintages are safer than older vintages, at older vehicles had lower fuel the schedule is based on vehicles that each age, over time.

The shape of the curve in Figure II– DOT’s statistical model is based on that registered vehicles) on vehicle age with 5 suggests a polynomial relationship structure. fixed effects for the model years present between fatality rate and vehicle age, so The final model is a weighted quartic in the dataset: 323 polynomial regression (by number of

The coefficient estimates and model summary are in Table II–67.

323 Note: The dataset included MY 1975, but that term acts as the fixed effect for 1975 and all others fixed effect is excluded from the set. The constant are relative to that one.

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T a bl e II-- 67 D escn . p f IOn oftff s a IS 1ca I mo dle Coefficients: Estimate Std. Error (Intercept) 28.59*** 3.067 Vehicle Age -3.63*** 0.2298 Age2 0.76*** 0.03016 Agej -0.04*** 0.001453 Age4 0.0005*** 2.25E-05 MY 1976 -0.72 3.621 MY 1977 -2.24 3.425 MY 1978 -1.53 3.324 MY 1979 -4.46 3.268 MY 1980 -3.78 3.437 MY 1981 -2.88 3.38 MY 1982 -4.42 3.329 MY 1983 -4.93 3.236 MY 1984 -4.71 3.142 MY 1985 -4.78 3.113 MY 1986 -5.54. 3.092 MY 1987 -5.86. 3.086 MY 1988 -4.37 3.079 MY 1989 -4.78 3.074 MY 1990 -5.17. 3.077 MY 1991 -5.84. 3.072 MY 1992 -7.26* 3.07 MY 1993 -7.92** 3.062 MY 1994 -9.69** 3.058 MY 1995 -10.61 *** 3.053 MY 1996 -12.07*** 3.06 MY 1997 -12.8*** 3.056 MY 1998 -13.88*** 3.057 MY 1999 -14.91 *** 3.055 MY2000 -15.68*** 3.054 MY 2001 -16.33*** 3.059 MY2002 -17.1*** 3.06 MY2003 -17.7*** 3.065 MY2004 -18.24*** 3.069 MY2005 -18.91 *** 3.074

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This function is now embedded in the improvement is almost certain to occur. capability provided by sensing CAFE model, so the combination of The difficulty is for most of these technologies such as RADAR, LIDAR, VMT per vehicle and the distribution of technologies, their effectiveness against video camera, etc. CIB systems mitigate ages and model years present in the on- fatalities and the pace of their adoption crash severity by automatically applying road fleet determine the number of are highly uncertain. Moreover, the vehicle’s brakes shortly before the fatalities in a given calendar year. The autonomous vehicles offer the expected impact (i.e., without requiring model reproduces the observed fatalities possibility of significantly reducing or the driver to apply force to the brake of a given model year, at each age, eventually even eliminating the effect of pedal). reasonably well with more recent model human error in crash causation, a Dynamic Brake Support (DBS) is a years (to which the VMT schedule is a contributing factor in roughly 94% of all technology that actively increases the better match) estimated with smaller crashes. This conservative assumption amount of braking provided to the errors. may cause the NPRM to understate the driver during a rear-end crash avoidance While the final specification was not beneficial effect of proposed standards maneuver. If the driver has applied the only one considered, the fact this on improving (reducing) the number of force to the brake pedal, DBS uses model was intended to live inside the fatalities. forward-looking sensor data provided by CAFE model to dynamically estimate Advanced technologies that are technologies such as RADAR, LIDAR, fatalities for a dynamically changing on- currently deployed or in development video cameras, etc. to assess the road vehicle population was a include: potential for a rear-end crash. Should Forward Collision Warning (FCW) constraining factor. DBS ascertain a crash is likely (i.e., the systems are intended to passively assist sensor data indicate the driver has not (a) Predicting Future Safety Trends the driver in avoiding or mitigating the applied enough braking to avoid the The base model predicts a net impact of rear-end collisions (i.e., a increase in fatalities due primarily to vehicle striking the rear portion of a crash), DBS automatically intervenes. slower adoption of safer vehicles and vehicle traveling in the same direction Although the manner in which DBS has added driving because of less costly directly in front of it). FCW uses been implemented differs among vehicle operating costs. In earlier forward-looking vehicle detection vehicle manufacturers, the objective of calendar years, the improvement in capability, such as RADAR, LIDAR the interventions is largely the same: To safety of the on-road fleet produces a net (laser), camera, etc., to detect other supplement the driver’s commanded reduction in fatalities, but from the mid- vehicles ahead and use the information brake input by increasing the output of 2020s forward, the baseline model from these sensors to warn the driver the foundation brake system. In some predicts no further increase in safety, and to prevent crashes. FCW systems situations, the increased braking and the added risk from more VMT and provide an audible, visual, or haptic provided by DBS may allow the driver older vehicles produces a net increase warning, or any combination thereof, to to avoid a crash. In other cases, DBS in fatalities. This model thus reflects a alert the driver of an FCW-equipped interventions mitigate crash severity. conservative limitation; it implicitly vehicle of a potential collision with Pedestrian AEB (PAEB) systems assumes the trend toward increasingly another vehicle or vehicles in the provide automatic braking for vehicles safe vehicles that has been apparent for anticipated forward pathway of the when pedestrians are in the forward the past 3 decades will flatten in mid- vehicle. path of travel and the driver has taken 2020s. The agency does not assert this Crash Imminent Braking (CIB) insufficient action to avoid an imminent is the most likely case. In fact, the systems are intended to actively assist crash. Like CIB, PAEB safety systems development of advanced crash the driver by mitigating the impact of use information from forward-looking avoidance technologies in recent years rear-end collisions. These safety systems sensors to automatically apply or indicates some level of safety have forward-looking vehicle detection supplement the brakes in certain driving

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situations in which the system FMVSS No. 108 permits a rear turn to existing fatality target populations determines a pedestrian is in imminent signal lamp color of amber or red. and adjusted for current technology danger of being hit by the vehicle. Many Lane Departure Warning (LDW) penetration in the on-road fleet, taking PAEB systems use the same sensors and system is a driver assistance system that into account the retirement of existing technologies used by CIB and DBS. monitors lane markings on the road and vehicles and the pace of future Rear Automatic Braking feature alerts the driver when their vehicle is penetration required to meet statutory means installed vehicle equipment that about to drift beyond a delineated edge compliance requirements, as well as has the ability to sense the presence of line of their current travel lane. adjustments for overlapping target objects behind a reversing vehicle, alert Blind Spot Detection (BSD) systems populations. Based on these factors, as the driver of the presence of the uses digital camera imaging technology well as assumptions regarding future object(s) via auditory and visual alerts, or radar sensor technology to detect one VMT, the study predicted future fatality or more vehicles in either of the and automatically engage the available levels and rates. Because the safety braking system(s) to stop the vehicle. adjacent lanes that may not be apparent impact in the CAFE model Semi-automatic Headlamp Beam to the driver. The system warns the independently predicts future VMT, we Switching device provides either driver of an approaching vehicle’s removed the VMT growth rate from the automatic or manual control of presence to help facilitate safe lane NCSA study and developed a prediction headlamp beam switching at the option changes. of the driver. When the control is These technologies are either under of vehicle fatality trends based only on automatic, headlamps switch from the development or are currently being the penetration pace of new safety upper beam to the lower beam when offered, typically in luxury vehicles, as technologies into the on-road fleet. illuminated by headlamps on an either optional or standard equipment. These data were then normalized into approaching vehicle and switch back to To estimate baseline fatality rates in relative safety factors with CY 2015 as the upper beam when the road ahead is future years, NHTSA examined the baseline (to match the baseline dark. When the control is manual, the predicted results from a previous NCSA fatality year used in this CAFE analysis). driver may obtain either beam manually study 324 that measured the effect of These factors were then converted into regardless of the conditions ahead of the known safety regulations on fatality equivalent fatality rates/100 million vehicle. rates. This study relied on statistical VMT by anchoring them to the 2015 Rear Turn Signal Lamp Color Turn evaluations of the effectiveness of motor fatality rate/100 million VMT published signal lamps are the signaling element vehicle safety technologies based on real by NHTSA. Figure II–6 below illustrates of a turn signal system, which indicates world performance in the on-road the modelling output and projected the intention to turn or change direction vehicle fleet to determine the fatality trend from the analysis of the by giving a flashing light on the side effectiveness of each safety technology. NCSA study, prior to adjustment to toward which the turn will be made. These effectiveness rates were applied fatality rates/100 million VMT.

324 Blincoe, L. & Shankar, U. The Impact of Safety Fatality Rates, National Highway Traffic Safety www.nhtsa.gov/sites/nhtsa.dot.gov/files/ Standards and Behavioral Trends on Motor Vehicle Administration (Jan. 2007), available at https:// documents/810777v3.pdf.

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This model was based on inputs heavy truck stopping distance 2015 timeframe. In addition, the NCSA representing the impact of technology improvements (FMVSS 121). These study did not attempt to adjust for safety improvement through CY 2020. technologies were estimated to be impacts that may have resulted from Projecting this trend beyond 2020 can installed in only 40–70% of the on-road changes in the vehicle sales mix be justified based on the continued fleet as of CY 2020, implying further (vehicle types and sizes creating transformation of the on-road fleet to safety improvement well beyond the different interactions in crashes), in 100% inclusion of the known safety 2020 calendar year. commuting patterns, or in shopping or technologies. Based on projections in The NCSA study focused on socializing habits associated with the NCSA study, significant further projections to reflect known technology internet access and use. To address this, technology penetration can be expected adaptation requirements, but it was NHTSA also examined the actual in the on-road fleet for side impact conducted prior to the 2008 recession, change in the fatality rate as measured improvements (FMVSSS 214), which disrupted the economy and by fatality counts and VMT estimates. electronic stability control (FMVSS changed travel patterns throughout the 126), upper interior head impact country. Thus, while the relative trends Figure II–7 below illustrates the actual protection (FMVSS 301), tire pressure it predicts seem reasonable, they cannot fatality rates measured from 2000 monitoring systems (FMVSS 138), account for the real-world disruption through 2016 and the modeled fatality ejection mitigation (FMVSS 226), and and recovery that occurred in the 2008– rate trend based on these historical data.

The effect of the recession and vehicle safety rates. Because of the continued improvement well beyond subsequent recovery can be seen in upward shift over the 2014–2015 the 2020 timeframe, which is when the chaotic shift in the fatality rate trend period, this model, which does not historical fatality rate based model starting in 2008. The generally gradual reflect technology trend savings after breaks down. By contrast, the historical decline that had been occurring over the 2015, will predict an upward shift of fatality rate model reflects shifts in previous decade was interrupted by a fatality rates after 2020. safety not captured by the NCSA model, slowdown in the rate of change Predicting future safety trends has but gives arguably implausible results followed by subsequent upward and significant uncertainty. Although after 2020. It essentially represents a downward shifts. More recently, the rate further safety improvements are scenario in which economic, market, or has begun to increase. These shifts expected because of advanced safety behavioral factors minimize or offset reflect some combination of factors not technologies such as automatic braking much of the potential impact of future captured in the NCSA analysis and eventually, fully automated safety technology. mentioned above. The significance of vehicles, the pace of development and For the NPRM, the analysis examines this is that although there was a steady extent of consumer acceptance of these a scenario projecting safety increase in the penetration of safety improvements is uncertain. Thus, two improvements beyond 2015 using a technologies into the on-road fleet imperfect models exist for predicting simple average of the NCSA and between 2008 and 2015, other unknown future safety trends. The NCSA model historical fatality rate models, accepting factors offset their positive influence reflects the expected trend from each as an illustration of different and and eventually reversed the trend in required technologies and indicates conflicting possible future scenarios. As

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both models eventually curve up The results indicate roughly a 19% use, which was below 10% in 1960 and because of their quadratic form, each reduction in fatality rates between 2015 had risen to roughly 70% by 2000, and models’ results are flattened at the point and 2050. This is a slower pace than is now more than 90%. Because belt use where they begin to trend upward. This what has historically occurred over the is now above 90%, further such occurs in 2045 for the NCSA model and past several decades, but the biggest improvements are unlikely unless they in 2021 for the historical model. The influence on historical rates was come from new technologies. results are shown in Figure II–8 below. significant improvement in safety belt

A difficulty with these trend models VMT and the mix of drivers and type of for technologies enabling this is they are based on calendar year driving to an extent we do not believe improvement. In a standard elasticity predictions, which are derived from the the recession era gives an accurate model, sales impacts are a function of full on-road vehicle fleet rather than the picture of the safety trends inherent in the percent change in vehicle price. model year fleet, which is the basis for the vehicles themselves. Therefore, Hypothetically, increasing the base calculations in the CAFE model. As beginning in 2008, NHTSA price for added safety technologies such they are useful primarily as approximated a trend for safety would decrease the impact of higher indicators that vehicle safety has improvement through about MY 2035 to prices due to impacts of CAFE standards steadily improved over the past several reflect the continued effect of improved on vehicle sales. The percentage change decades, and given the advanced safety safety technologies such as advanced in baseline price would decrease, which technologies under current automatic braking, which manufacturers would mean a lower elasticity effect, development, we would expect some have announced will be in all new which would mean a lower impact on continuation of improvement in MY vehicles by MY 2022. The agency sales. NHTSA will consider possible vehicle safety over the near and mid- recognize this is only an estimate, and term future. To account for this, NHTSA actual MY trends could be above or ways to address this issue before the approximated a model year safety trend below this line. NHTSA examined final rule, and we request comments on continuing through about 2035 (Figure alternate trends in a sensitivity analysis the need and/or practicability for such II–9). For this trend the agency used and request comments on the best way an adjustment, as well as any data and actual data from FARS to calculate the to address future safety trends. other relevant information that could change in fatality rates through 2007. NHTSA also notes although we support such an analysis of these costs, The recession, which struck our project vehicles will continue to become as well as the future pace of economy in 2008, distorted normal safer going forward to about 2035, we do technological adoption within the behavioral patterns and affected both not have corresponding cost information vehicle fleet.

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(b) Adjusting for Behavioral Impacts newer vehicle will not in itself cause vehicles for model years 2001 through The influence of delayed purchases of those drivers to suddenly stop wearing 2008. She developed several statistical new vehicles is estimated to have the seat belts, speed, drive under the regression models that specifically most significant effect on safety influence, or shift driving to different controlled for most behavioral factors to imposed by CAFE standards. Because of land use areas. The goal of this analysis isolate model year vehicle a combination of safety regulations and is to measure the effect of different characteristics. However, her study did voluntary safety improvements, vehicle designs that change by model not specifically report the change in MY passenger vehicles have become safer year. The modelling process for fatality rates—rather, she reported total over time. Compared to prior decades, estimating safety essentially involves fatalities that could have been saved in fatality rates have declined significantly substituting fatality rates of older MY a baseline year (2008) had all vehicles because of technological improvements, vehicles for improved rates that would in the on-road fleet had the same safety as well as behavioral shifts, such as have been experienced with a newer features as the MY 2001 through MY increased seat belt use. As these safer vehicle. Therefore, it is important to 2008 vehicles. This study potentially vehicles replace older less safe vehicles control for behavioral aspects associated provides a basis for comparison with in the fleet, the on-road fleet is replaced with vehicle age so only vehicle design results of the CAFE safety estimates. To with vehicles reflecting the improved differences are reflected in the estimate make this comparison, the CY 2008 fatality rates of newer, safer vehicles. of safety impacts. To address this, the passenger car and light truck fatalities However, fatality rates associated with CAFE safety model was run to control total from FARS were modified by different model year vehicles are for vehicle age. That is, it does not subtracting the values found in Figure influenced by the vehicle itself and by reflect a decision to replace an older II–9 of her study. This gives a stream of driver behavior. Over time, used model year vehicle that is, for example, comparable hypothetical CY 2008 vehicles are purchased by drivers in 10 years old with a new vehicle. Rather, fatality totals under progressively less different demographic circumstances it reflects the difference in the average safe model year designs. Results who also tend to have different fatality rate of each model year across its indicated that had the 2008 on-road behavioral characteristics. Drivers of entire lifespan. This will account for fleet been equipped with MY 2008 older vehicles, on average, tend to have most of the difference because of vehicle safety equipment and vehicle lower belt use rates, are more likely to age, but it may still reflect a bias caused characteristics, total fatalities would drive inebriated, and are more likely to by the upward trend in societal seat belt have been reduced by 25% compared to drive over the speed limit. Additionally, use over time. Because of this secular vehicles that were actually on the road older vehicles are more likely to be trend, each subsequent model year’s in 2008. Similar results were calculated driven on rural roadways, which useful life will occur under increasingly for each model years’ vehicle typically have higher speeds and higher average seat belt use rates. This characteristics back to 2001. produce more serious crashes. These could cause some level of behavioral For comparison, predicted MY fatality relationships are illustrated graphically safety improvement to be ascribed to the rates were derived from the CAFE safety in Chapter 11 of the PRIA model year instead of the driver cohort. model and applied to the CY 2008 VMT accompanying this proposed rule. However, it is difficult to separate this calculated by that model. This gives an The behavior being modelled and effect from the belt use impacts of estimate of CY 2008 fatalities under ascribed to CAFE involves decisions by changing driver cohorts as vehicles age. each model years’ fatality rate, which, drivers who are contemplating buying a Glassbrenner (2012) analyzed the when compared to the predicted CY new vehicle, and the purchase of a effect of improved safety in newer fatality total, gives a trendline

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comparable to the Glassbrenner (instead of 12.15) and produces the through 2006, but in the last few years trendline illustrating the change in MY result shown in Figure II–10. The CAFE change decreases. This might reflect the fatality rates. Both models are sensitive model trendline shifts up, which trend in societal belt use, which rose to the initial 2008 baseline fatality total, narrows the difference in early years but steadily through 2005 and levelled off. and because the predicted CAFE total is expands it in later years. However, VMT Later model years’ fatality rates would somewhat lower than the actual total, and fatalities are linked in the CAFE benefit from this trend while earlier the agency ran a third trendline to model, so the actual level of the MY model years would suffer. This seems examine the influence of this difference. safety predicted by the CAFE curve has consistent with our using lifetime MY Results are shown in Figure II–10. uncertainty. Perhaps the most fatality rates to reflect MY change rather Using the corrected fatality count, but meaningful result from this comparison than first year MY fatality rates retaining the predicted VMT changes is the difference in slopes; the CAFE (although even first year rates would the initial 2018 CY fatality rate to 12.62 model predicts more rapid change reflect this bias, but not as much).

To provide another perspective on that time span. Kahane is currently which isolates vehicle design from the safety impacts, NHTSA accessed data working under contract for NHTSA to primary behavioral impact—seat belt from a comprehensive study of the update this study through 2016. At usage. We normalized Kahane’s index to effects of safety technologies on motor NHTSA’s request, Kahane accessed his MY 1975 and did the same to the ‘‘fixed vehicle fatalities. Kahane (2015) 325 database to provide a measure of effects’’ we are currently using from our examined all safety effects of vehicle relative MY vehicle design safety by safety model to compare the trends in safety technologies from 1960 through controlling for seat belt use. The result MY safety from the two methods. 2012 and found these technologies was a MY safety index illustrating the Results are shown in Figure II–11. saved more than 600,000 lives during progress in vehicle safety by model year

325 Kahane, C.J. Lives Saved by Safety Standards 26 FMVSS and the Effectiveness of their Associated Administration (Jan. 2015), available at https:// and Associated Vehicle Safety Technologies, 1960– Safety Technologies in Reducing Fatalities, Injuries, crashstats.nhtsa.dot.gov/Api/Public/View 2012—Passenger Cars and LTVs—with Reviews of and Crashes, National Highway Traffic Safety Publication/812069.

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From Figure II–11 both approaches demographics driving older vehicles, contributing to uncertainty, and given show similar long-term downward there is a secular trend toward more belt this, their differences are not surprising. trends, but this model shows a steeper use reflecting the increase in societal It is encouraging they show similar slope than Kahane’s model. The two awareness of belt use importance over directional trends, reinforcing the basic models involve completely different time. This trend is illustrated in Figure concept we are measuring. NHTSA approaches, so some difference is to be II–12 below.326 NHTSA’s current recognizes predicting future fatality expected. However, it is also possible approach removes the age trend in belt impacts, as well as sales impacts that this reflects different methods used to use, but it’s not clear whether it cause them, is a difficult and imprecise isolate vehicle design safety from accounts for the full impacts of the task. NHTSA will continue to behavioral impacts. As discussed secular trend as well. If not, some investigate this issue, and we seek previously, NHTSA addressed this issue portion of the gap between the two comment on these estimates as well as by removing vehicle age impacts from trendlines could reflect behavioral alternate methods for predicting the its model, whereas Kahane’s model does impacts rather than vehicle design. it by controlling for belt use. As noted These models (NHTSA, Glassbrenner, safety effects associated with delayed previously, aside from the age impact on and Kahane) involve differing new vehicle purchases. belt use associated with the different approaches and assumptions

326 Note: The drop occurring in 1994 reflects a National Occupant Protection Survey (NOPUS). surveys produced inflated results, especially in the shift in the basis for determining belt use rates. Prior to this, a conglomeration of state studies 1991–1993 period. Effective in 1994, data were reported from the provided the basis. It is likely the pre-NOPUS

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4. Impact of Rebound Effect on Fatalities in 2016. This gives a societal value of and alternative methods to estimate Based on historical data, it is possible $9.9 million for each fatality. The CAFE injury impacts. to calculate a baseline fatality rate for safety model estimates effects on traffic The adjustment factor is derived from vehicles of any model year vintage. By fatalities but does not address Tables 1–8 and I–3 in Blincoe et al. simply taking the total number of corresponding effects on non-fatal (2015). Incidence in Table I–3 reflects vehicles involved in fatal accidents over injuries and property damage that the Abbreviated Injury Scale (AIS), all ages for a model year and dividing would result from the same factors which ranks nonfatal injury severity by the cumulative VMT over the useful influencing fatalities. To address this, based on an ascending 5 level scale with life of every vehicle produced in that we developed an adjustment factor that the most severe injuries ranked as level would account for these crashes. model year, one arrives at a baseline 5. More information on the basis for Development of this factor is based on hazard rate denominated in fatalities per these classifications is available from billion miles. The fatalities associated the assumption nonfatal crashes will be affected by CAFE standards in the Association for the Advancement of with vehicles produced in that model Automotive Medicine at https:// year are then proportional to the proportion to their nationwide incidence and severity. That is, NHTSA www.aaam.org/abbreviated-injury-scale- cumulative lifetime VMT, where total ais/. fatalities equal the product of the assumes the same injury profile, the baseline hazard rate and VMT. A more relative number of cases of each injury Table 1–3 in Blincoe lists injured comprehensive discussion of the severity level, that occur nationwide, persons with their highest (maximum) rebound effect and the basis for will be increased or decreased because injury determining the AIS level calculating its impact on mileage and of CAFE. The agency recognizes this (MAIS). This scale is represented in risk is in Chapter 8 of the PRIA may not be the case, but the agency does terms of MAIS level, or maximum accompanying this proposed rule. not have data to support individual abbreviated injury scale. MAIS0 refers estimates across injury severities. There to uninjured occupants in injury 5. Adjustment for Non-Fatal Crashes are reasons why this may not be true. vehicles, MAIS1 are generally Fatalities estimated to be caused by For example, because older model year considered minor injuries, MAIS2 various alternative CAFE standards are vehicles are generally less safe than moderate injuries, MAIS3 serious valued as a societal cost within the newer vehicles, fatalities may make up injuries, MAIS4 severe injuries, and CAFE models’ cost/benefit accounting. a larger portion of the total injury MAIS5 critical injuries. PDO refers to Their value is based on the picture than they do for newer vehicles. property damage only crashes, and comprehensive value of a fatality This would imply lower ratios across counts for PDOs refer to vehicles in derived from data in Blincoe et al. the non-fatal injury and PDO profile and which no one was injured. From Table (2015), adjusted to 2016 economics and would imply our adjustment may II–68, ratios of injury incidence/fatality updated to reflect the official DOT overstate total societal impacts. NHTSA are derived for each injury severity level guidance on the value of a statistical life requests comments on this assumption as follows:

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For each fatality that occurs vehicles are worth less and will cost less 2016. There is a minor timing nationwide in traffic crashes, there are to repair, if they are repaired at all. The discrepancy in these data because the 561 vehicles involved in PDOs, 139 consumer’s property damage loss is thus new vehicle data represent January uninjured occupants in injury vehicles, reduced by longer retention of these 2017, and the used vehicle price is for 105 minor injuries, 10 moderate vehicles. To estimate this loss, average the average over 2016. NHTSA was injuries, 3 serious injuries, and new and used vehicle prices were unable to locate exact matching data at fractional numbers of the most serious compared. New vehicle transaction this time, but the agency believes the categories which include severe and prices were estimated from a study difference will be minor. critical nonfatal injuries. For each published by Kelley Blue Book.327 Based on these data, new vehicles are fatality ascribed to CAFE it is assumed Based on these data, the average new on average worth 82% more than used there will be nonfatal crashes in these vehicle transaction price in January vehicles. To estimate the effect of higher same ratios. 2017 was $34,968. Used vehicle property damage costs for newer Property damage costs associated with transaction prices were obtained from vehicles on crashes, the per unit delayed new vehicle purchases must be Edmonds Used Vehicle Market Report property damage costs from Table I–9 in treated differently because crashes that published in February of 2017.328 Blincoe et al. (2015) were multiplied by subsequently occur damage older used Edmonds data indicate the average used this factor. Results are illustrated in vehicles instead of newer vehicles. Used vehicle transaction price was $19,189 in Table II–69.

The total property damage cost F = change in fatalities estimated for CAFE reduction was then calculated as a due to retaining used vehicles function of the number of fatalities Where: r = ratio of nonfatal injuries or PDO vehicles reduced or increased by CAFE as S = total property damage savings from to fatalities (F) retaining used vehicles longer p = value of property damage prevented by follows: retaining older vehicle

327 Press Release, Kelley Blue Book, New-Car mediaroom.kbb.com/2017-02-01-New-Car- 328 Edmunds Used Vehicle Market Report, Transaction Prices Remain High, Up More Than 3 Transaction-Prices-Remain-High-Up-More-Than-3- Edmunds (Feb. 2017), https:// Percent Year-Over-Year in January 2017, According Percent-Year-Over-Year-In-January-2017- dealers.edmunds.com/static/assets/articles/2017_ to Kelley Blue Book (Feb. 1, 2017), https:// According-To-Kelley-Blue-Book. Feb_Used_Market_Report.pdf.

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n = the 8 injury severity categories calculation was more direct, a simple contribution to total fatalities of The number of fatalities ascribed to application of the ratio of the portion of different factors. As noted, although a CAFE because of older vehicle retention costs produced by fatalities. In this case, safety impact from the rebound effect is was multiplied by the unit cost per there is no need to adjust for property calculated, these impacts are considered fatality from Table I–9 in Blincoe et al. damage because all impacts were to be freely chosen rather than imposed (2015) to determine the societal impact derived from the mix of vehicles in the by CAFE and imply personal benefits at accounted for by these fatalities.329 on-road fleet. Again, from Table I–8 in least equal to the sum of their added From Table I–8 in Blincoe et al. (2015), Blincoe et al (2015), we derive this ratio costs and safety consequences. The NHTSA subtracted property damage based on all cost factors including impacts of this nonfatal crash costs from all injury severity levels and property damage to be .36. These adjustment affect costs and benefits recalculated the total comprehensive calculations are summarized as follows: equally. When considering safety value of societal losses from crashes. impacts actually imposed by CAFE The agency then divided the portion of standards, only those from mass these crashes because of fatalities by the changes and vehicle purchase delays are resulting total to estimate the portion of Where: considered. NHTSA has two different crashes excluding property damage that SV = Value of societal Impacts of all crashes factors depending on which metric is are accounted for by fatalities. Results F = change in fatalities estimated for CAFE indicate fatalities accounted for due to retaining used vehicles considered. The agency created these v = Comprehensive societal value of factors by weighting components by the approximately 40% of all societal costs preventing 1 fatality exclusive of property damage. NHTSA relative contribution to changes in x = Percent of total societal loss from crashes fatalities associated with each then divided the total cost of the added excluding property damage accounted fatalities by 0.4 to estimate the total cost for by fatalities component. This process and results are of all crashes prevented exclusive of the S = total property damage savings from shown in Table II–70. Note: For the savings in property damage. After retaining used vehicles longer NPRM, NHTSA applied the average subtracting the total savings in property M = change in fatalities due to changes in weighted factor to all fatalities. This will damage from this value, we divided the vehicle mass to meet CAFE standards tend to slightly overstate costs because fatality cost by it to estimate that c = Percent of total societal loss from all cost of sales and scrappage and understate overall, fatalities account for 43% of the factors in all crashes accounted for by fatalities costs associated with mass and rebound. total costs that would result from older The agency will consider ways to adjust vehicle retention. For purposes of application in the this minor discrepancy for the final rule. For the fatalities that occur because of CAFE model, these two factors were mass effects or to the rebound effect, the combined based on the relative

Table II–71, Table II–72, Table II–73, 7% discount rates. As noted in Section undiscounted; only the monetized and Table II–74 summarize the safety II.F.5, societal impacts are valued using societal impact is discounted. effects of CAFE standards across the a $9.9 million value per statistical life various alternatives under the 3% and (VSL). Fatalities in these tables are

329 Note: These calculations used the original adjusting for economics. These calculations produce ratios and are thus not sensitive to values in the Blincoe et all (2015) tables without adjustments for inflation.

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Table 11-71 - Change in Safety Parameters from CAFE Augural Standards Baseline A verage A nnua I F a t a r1 f 1es, CY 2036 2045 3%0 D.ISCOUn t R a t e - ' Change in Safety Parameters from Augural Standards Baseline Average Annual Fatalities, CY 2036-2045. 3% Discount Rate Alt 1 Alt2 Alt 3 Alt4 Alt 5 Alt 6 Alt 7 Alt 8 Fatalities Mass changes -22 -19 -17 -17 -16 -6 0 -2 Sales Impacts -180 -162 -151 -112 -76 -59 -24 -33 Subtotal CAFE -202 -181 -168 -129 -92 -65 -24 -35 Atrb. Rebound effect -692 -650 -605 -511 -392 -317 -174 -219 Total -894 -831 -773 -640 -484 -382 -198 -254

Fatalities Societal $B Mass changes -0.11 -0.10 -0.08 -0.08 -0.08 -0.03 0.00 -0.01 Sales Impacts -0.90 -0.81 -0.76 -0.56 -0.38 -0.30 -0.12 -0.16 Subtotal CAFE -1.01 -0.91 -0.84 -0.64 -0.46 -0.33 -0.12 -0.17 Atrb. Rebound effect -3.43 -3.21 -3.00 -2.53 -1.94 -1.57 -0.86 -1.09 Total -4.44 -4.12 -3.84 -3.18 -2.40 -1.90 -0.98 -1.26

Nonfatal Societal $B Mass changes -0.17 -0.15 -0.13 -0.13 -0.13 -0.05 0.00 -0.02 Sales Impacts -1.41 -1.27 -1.18 -0.88 -0.59 -0.46 -0.19 -0.26 Subtotal CAFE -1.58 -1.42 -1.31 -1.01 -0.72 -0.51 -0.19 -0.27 Atrb. Rebound effect -5.36 -5.03 -4.69 -3.96 -3.04 -2.46 -1.35 -1.70 Total -6.94 -6.45 -6.00 -4.97 -3.76 -2.97 -1.53 -1.97

Total Societal $B Mass changes -0.27 -0.24 -0.22 -0.21 -0.21 -0.07 0.00 -0.03 Sales Impacts -2.31 -2.08 -1.94 -1.44 -0.97 -0.76 -0.30 -0.42 Subtotal CAFE -2.59 -2.33 -2.15 -1.65 -1.18 -0.83 -0.31 -0.45 Atrb. Rebound effect -8.79 -8.24 -7.69 -6.49 -4.98 -4.03 -2.21 -2.79 Total -11.4 -10.6 -9.84 -8.15 -6.16 -4.87 -2.51 -3.23

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Table 11-72 - Change in Safety Parameters from CAFE Augural Standards Baseline

A veraee A nnua I F a t a r1 f 1es, CY 2036 2045 7%0 D.ISCOUn t R a t e - ' Change in Safety Parameters from Augural Standards Baseline Average Annual Fatalities, CY 2036-2045. 7% Discount Rate Alt 1 Alt2 Alt3 Alt4 Alt5 Alt 6 Alt 7 Alt 8 Fatalities Mass -22 -19 -17 -17 -16 -6 0 -2 changes Sales -180 -162 -151 -112 -76 -59 -24 -33 Impacts Subtotal -202 -181 -168 -129 -92 -65 -24 -35 CAFE Atrb. Rebound -692 -650 -605 -511 -392 -317 -174 -219 effect Total -894 -831 -773 -640 -484 -382 -198 -254

Fatalities Societal $B Mass -0.04 -0.04 -0.03 -0.03 -0.03 -0.01 0.00 0.00 changes Sales -0.38 -0.34 -0.32 -0.24 -0.16 -0.12 -0.05 -0.07 Impacts Subtotal -0.42 -0.38 -0.35 -0.27 -0.19 -0.14 -0.05 -0.07 CAFE Atrb. Rebound -1.42 -1.33 -1.24 -1.05 -0.80 -0.65 -0.36 -0.45 effect Total -1.84 -1.71 -1.59 -1.32 -1.00 -0.79 -0.41 -0.52

Nonfatal Societal $B Mass -0.07 -0.06 -0.05 -0.05 -0.05 -0.02 0.00 -0.01 changes Sales -0.59 -0.53 -0.50 -0.37 -0.25 -0.19 -0.08 -0.11 Impacts Subtotal -0.66 -0.60 -0.55 -0.42 -0.30 -0.21 -0.08 -0.11 CAFE Atrb. Rebound -2.22 -2.08 -1.94 -1.64 -1.26 -1.02 -0.56 -0.70 effect

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Total -2.88 -2.67 -2.49 -2.06 -1.56 -1.23 -0.64 -0.82

Total Societal $B Mass -0.11 -0.10 -0.09 -0.09 -0.09 -0.03 0.00 -0.01 changes Sales -0.97 -0.88 -0.81 -0.61 -0.41 -0.32 -0.13 -0.18 Impacts Subtotal -1.09 -0.98 -0.90 -0.69 -0.50 -0.35 -0.13 -0.19 CAFE Atrb. Rebound -3.64 -3.41 -3.18 -2.69 -2.06 -1.67 -0.92 -1.15 effect Total -4.72 -4.38 -4.08 -3.38 -2.56 -2.02 -1.04 -1.34

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Table 11-73 - Change in Safety Parameters from CAFE Augural Standards Baseline Total Fatalities MY 1977-2029, 3% Discount Rate Change in Safctv Parameters from Augural Standards Baseline Total Fatalities MY 1977-2029, 3% Discmmt Rate Alt l Alt2 Alt3 Alt4 Alt5 Alt 6 Alt 7 Alt 8 Fatalities Mass changes -160 -147 -143 -173 -152 -73 -12 -30 Sales Impacts -6,180 -5,680 -5,260 -4,280 -3,170 -2,550 -1,030 -1,480 Subtotal CAFE -6,340 -5,830 -5,400 -4,460 -3,330 -2,630 -1,050 -1,520 Atrb. Rebound effect -6,340 -5,960 -5,620 -4,850 -3,610 -3,320 -2,200 -2,170 Total -12,700 -11,800 -11,000 -9,300 -6,940 -5,950 -3,240 -3,690

Fatalities Societal $B Mass changes -0.9 -0.9 -0.8 -1.1 -0.9 -0.4 -0.1 -0.2 Sales Impacts -34.4 -31.6 -29.3 -23.9 -17.6 -14.4 -6.2 -8.3 Subtotal CAFE -35.4 -32.4 -30.1 -24.9 -18.5 -14.8 -6.3 -8.4 Atrb. Rebound effect -41.7 -39.2 -37.0 -31.9 -23.7 -22.1 -14.8 -14.3 Total -77.0 -71.6 -67.1 -56.9 -42.2 -36.9 -21.1 -22.8

Nonfatal Societal $B Mass changes -1.5 -1.3 -1.3 -1.7 -1.5 -0.7 -0.1 -0.3 Sales Impacts -53.8 -49.4 -45.8 -37.3 -27.5 -22.5 -9.7 -12.9 Subtotal CAFE -55.3 -50.7 -47.1 -39.0 -29.0 -23.2 -9.8 -13.2 Atrb. Rebound effect -65.2 -61.3 -57.9 -50.0 -37.0 -34.6 -23.2 -22.4 Total -120 -112 -105 -89.0 -66.0 -57.8 -33.0 -35.6

Total Societal $B Mass changes -2.4 -2.2 -2.1 -2.7 -2.4 -1.1 -0.2 -0.5 Sales Impacts -88.2 -81.0 -75.1 -61.2 -45.1 -36.9 -15.9 -21.2 Subtotal CAFE -90.7 -83.1 -77.2 -63.9 -47.5 -38.0 -16.0 -21.6 Atrb. Rebound effect -107 -101 -94.9 -81.9 -60.7 -56.7 -38.0 -36.7 Total -197 -184 -172 -146 -108 -94.7 -54.1 -58.4

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Table II–75 through Table II–78 noted in Section II.F.5, societal impacts monetized societal impact is summarize the safety effects of GHG are valued using a $9.9 million value discounted. standards across the various alternatives per statistical life (VSL). Fatalities in under the 3% and 7% discount rates. As these tables are undiscounted; only the

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Table 11-75- Change in Safety Parameters from GHG Augural Standards Baseline

A vera~e A nnua I F a t ar 1 f 1es, CY 2036 2045 3%0 D.ISCOUn t R a t e - ' Change in Safety Parameters from Augural Standards Baseline Average Annual Fatalities, CY 2036-2045. 3% Discount Rate Alt 1 Alt2 Alt 3 Alt4 Alt 5 Alt 6 Alt 7 Alt 8 Fatalities Mass changes -56 -52 -42 -34 -15 -13 -8 -5 Sales Impacts -221 -213 -177 -131 -93 -66 -34 -36 Subtotal CAFE -277 -265 -219 -165 -108 -79 -42 -41 Atrb. Rebound effect -872 -838 -726 -594 -415 -336 -165 -215 Total -1,150 -1,100 -945 -759 -523 -415 -207 -256

Fatalities Societal $B Mass changes -0.27 -0.25 -0.21 -0.17 -0.08 -0.07 -0.04 -0.02 Sales Impacts -1.11 -1.07 -0.89 -0.66 -0.47 -0.33 -0.17 -0.18 Subtotal CAFE -1.39 -1.33 -1.10 -0.83 -0.54 -0.40 -0.21 -0.21 Atrb. Rebound effect -4.31 -4.15 -3.60 -2.94 -2.05 -1.66 -0.82 -1.06 Total -5.70 -5.47 -4.69 -3.76 -2.59 -2.06 -1.03 -1.27

Nonfatal Societal $B Mass changes -0.43 -0.40 -0.32 -0.26 -0.12 -0.11 -0.06 -0.04 Sales Impacts -1.74 -1.68 -1.39 -1.03 -0.73 -0.52 -0.27 -0.29 Subtotal CAFE -2.17 -2.07 -1.71 -1.29 -0.85 -0.62 -0.33 -0.32 Atrb. Rebound effect -6.75 -6.48 -5.62 -4.60 -3.21 -2.60 -1.28 -1.66 Total -8.92 -8.56 -7.34 -5.89 -4.06 -3.22 -1.60 -1.99

Total Societal $B Mass changes -0.70 -0.65 -0.53 -0.43 -0.19 -0.17 -0.10 -0.06 Sales Impacts -2.85 -2.75 -2.28 -1.69 -1.20 -0.85 -0.44 -0.47 Subtotal CAFE -3.56 -3.40 -2.81 -2.12 -1.39 -1.02 -0.54 -0.53 Atrb. Rebound effect -11.1 -10.6 -9.22 -7.54 -5.26 -4.26 -2.10 -2.72 Total -14.6 -14.0 -12.0 -9.65 -6.65 -5.28 -2.63 -3.26

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Table 11-76- Change in Safety Parameters from GHG Augural Standards Baseline

A veraee A nnua I F a t ar 1 f 1es, CY 2036 2045 7%0 D.ISCOUn t R a t e - ' Change in Safety Parameters from Augural Standards Baseline Average Annual Fatalities, CY 2036-2045. 7% Discount Rate Alt 1 Alt2 Alt3 Alt4 Alt5 Alt 6 Alt 7 Alt 8 Fatalities Mass -56 -52 -42 -34 -15 -13 -8 -5 changes Sales -221 -213 -177 -131 -93 -66 -34 -36 Impacts Subtotal -277 -265 -219 -165 -108 -79 -42 -41 CAFE Atrb. Rebound -872 -838 -726 -594 -415 -336 -165 -215 effect Total -1,150 -1,100 -945 -759 -523 -415 -207 -256

Fatalities Societal $B Mass -0.11 -0.11 -0.09 -0.07 -0.03 -0.03 -0.02 -0.01 changes Sales -0.47 -0.45 -0.37 -0.28 -0.20 -0.14 -0.07 -0.08 Impacts Subtotal -0.58 -0.56 -0.46 -0.35 -0.23 -0.17 -0.09 -0.09 CAFE Atrb. Rebound -1.78 -1.71 -1.49 -1.22 -0.85 -0.69 -0.34 -0.44 effect Total -2.36 -2.27 -1.95 -1.56 -1.08 -0.86 -0.43 -0.53

Nonfatal Societal $B Mass -0.18 -0.16 -0.13 -0.11 -0.05 -0.04 -0.03 -0.02 changes Sales -0.73 -0.71 -0.59 -0.44 -0.31 -0.22 -0.11 -0.12 Impacts Subtotal -0.91 -0.87 -0.72 -0.54 -0.36 -0.26 -0.14 -0.14 CAFE Atrb. Rebound -2.79 -2.68 -2.32 -1.90 -1.33 -1.07 -0.53 -0.69 effect

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Total -3.70 -3.55 -3.04 -2.44 -1.68 -1.34 -0.67 -0.83

Total Societal $B Mass -0.29 -0.27 -0.22 -0.18 -0.08 -0.07 -0.04 -0.02 changes Sales -1.20 -1.16 -0.96 -0.72 -0.51 -0.36 -0.19 -0.20 Impacts Subtotal -1.49 -1.43 -1.18 -0.89 -0.59 -0.43 -0.23 -0.22 CAFE Atrb. Rebound -4.57 -4.39 -3.81 -3.12 -2.18 -1.76 -0.87 -1.13 effect Total -6.06 -5.82 -4.99 -4.00 -2.76 -2.20 -1.09 -1.35

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Table 11-77- Change in Safety Parameters from GHG Augural Standards Baseline Total Fatalities MY 1977-2029~ 3% Discount Rate Change in Safety Parameters from Augural Standards Baseline Total Fatalities MY 1977-2029, 3% Discount Rate Alt 1 Alt2 Alt3 Alt 4 Alt 5 Alt 6 Alt 7 Alt 8 Fatalities Mass changes -468 -461 -410 -297 -219 -186 -111 -85 Sales Impacts -7,880 -7,600 -6,630 -5,460 -4,150 -3,240 -1,530 -2,090 Subtotal -8,350 -8,060 -7,040 -5,760 -4,370 -3,430 -1,640 -2,170 CAFE Atrb. Rebound -7,300 -6,930 -6,340 -5,250 -3,480 -3,260 -2,110 -2,010 effect Total -15,600 -15,000 -13,400 -11,000 -7,850 -6,690 -3,760 -4,190

Fatalities Societal $B Mass changes -2.9 -2.9 -2.6 -1.9 -1.4 -1.2 -0.7 -0.5 Sales Impacts -43.3 -41.7 -36.6 -30.1 -22.5 -18.0 -8.9 -11.6 Subtotal -46.2 -44.6 -39.2 -32.0 -23.9 -19.2 -9.7 -12.1 CAFE Atrb. Rebound -47.8 -45.3 -41.6 -34.4 -22.7 -21.5 -14.2 -13.3 effect Total -94.0 -89.9 -80.8 -66.4 -46.6 -40.7 -23.8 -25.4

Nonfatal Societal $B Mass changes -4.6 -4.5 -4.0 -2.9 -2.2 -1.9 -1.1 -0.8 Sales Impacts -67.8 -65.2 -57.3 -47.1 -35.2 -28.2 -13.9 -18.1 Subtotal -72.3 -69.7 -61.3 -50.0 -37.3 -30.0 -15.1 -18.9 CAFE Atrb. Rebound -74.7 -70.8 -65.0 -53.9 -35.6 -33.7 -22.1 -20.8 effect Total -147 -141 -126 -104 -72.9 -63.7 -37.2 -39.7

Total Societal $B Mass changes -7.5 -7.4 -6.6 -4.8 -3.5 -3.1 -1.9 -1.4 Sales Impacts -111 -107 -93.9 -77.2 -57.7 -46.2 -22.8 -29.7 Subtotal -119 -114 -101 -82.0 -61.2 -49.2 -24.8 -31.0 CAFE Atrb. Rebound -123 -116 -107 -88.3 -58.3 -55.2 -36.3 -34.1 effect Total -241 -231 -207 -170 -120 -104 -61.0 -65.1

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While NHTSA notes the value of These costs implicitly involve a cost G. How the Model Analyzes Different rebound effect fatalities, as well as total and a benefit that are offsetting. The Potential CAFE and CO2 Standards fatalities from all causes, the agency relevant safety impacts attributable to 1. Specification of No-Action and Other does not add rebound effects to the CAFE are highlighted in bold in the Regulatory Alternatives other CAFE-related impacts because above tables. rebound-related fatalities and injuries (a) Mathematical Functions Defining result from risk that is freely chosen and Passenger Car and Light Trucks offset by societal valuations that at a Standards for Each Model Year During minimum exceed the aggregate value of 2016–2032 safety consequences plus added vehicle In the U.S. market, the stringency of operating and maintenance costs.330 CAFE and CO2 standards can influence the design of new vehicles offered for 330 It would also include some level of consumer surplus, which we have estimated using the sale by requiring manufacturers to standard triangular function. This is discussed in produce increasingly fuel efficient Chapter 8.5.1 of the PRIA. vehicles in order to meet program

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requirements. This is also true in the (b) Off-Cycle and A/C Efficiency these forward to future years with a few CAFE model simulation, where the Adjustments Anticipated for Each exceptions. Several of the technologies standards can be defined with a great Model Year described in Section II.D are associated with A/C efficiency and off-cycle FCIVs. deal of flexibility to examine the impact Another aspect of credit accounting is In particular, stop-start systems, of different program specifications on partially implemented in the CAFE integrated starter generators, and full the auto industry. Standards are defined model at this point—those related to the hybrids are assumed to generate off- for each model year and can represent application of off-cycle and A/C cycle adjustments when applied to different slopes that relate fuel economy efficiency adjustments, which vehicles to improve their fuel economy. to footprint, different regions of flat manufacturers earn by taking actions Similarly, higher levels of aerodynamic slopes, and different rates of increase for such as special window glazing or using improvements are assumed to include each of three regulatory classes covered reflective paints that provide fuel active grille shutters on the vehicle, by the CAFE program (domestic economy improvements in real-world which also qualify for off-cycle FCIVs. passenger cars, imported passenger cars, operation but do not produce The analysis assumes that any off- and light trucks). measurable improvements in fuel cycle FCIVs that are associated with consumption on the 2-cycle test. The CAFE model takes, as inputs, the actions outside of the technologies NHTSA’s inclusion of off-cycle and coefficients of the mathematical discussed in Section II.D (either chosen A/C efficiency adjustments began in MY functions described in Sections III and from the pre-approved ‘‘pick list,’’ or 2017, while EPA has collected several IV. It uses these coefficients and the granted in response to individual years’ worth of submissions from function to which they belong to define manufacturer petitions) remain at the manufacturers about off-cycle and A/C the target for each vehicle in the fleet, levels claimed by manufacturers in MY efficiency technology deployment. then computes the standard using the 2017. Any additional A/C efficiency and Currently, the level of deployment can off-cycle adjustments that accrue as the harmonic average of the targets for each vary considerably by manufacturer with result of explicit technology application manufacturer and fleet. The model also several claiming extensive Fuel are calculated dynamically in each allows the user to define the extent and Consumption Improvement Values model year for each alternative. The off- duration of various compliance (FCIV) for off-cycle and A/C efficiency cycle FCIVs for each manufacturer and flexibilities (e.g., limits on the amount technologies and others almost none. fleet, denominated in grams CO2 per of credit that a manufacturer may claim The analysis of alternatives presented mile,331 are provided in Table II–79. related to air conditioning efficiency here does not attempt to project how improvements or off-cycle fuel economy future off-cycle and A/C efficiency 331 For the purpose of estimating their adjustments) as well as limits on the technology use will evolve or speculate contribution to CAFE compliance, the grams CO2/ number of years that CAFE credits may about the potential proliferation of FCIV mile values in Table II–79 are converted to gallons/ be carried forward or the amount that proposals submitted to the agencies. mile and applied to a manufacturer’s 2-cycle CAFE performance. When calculating compliance with may be transferred between a Rather, this analysis uses the off-cycle EPA’s GHG program, there is no conversion manufacturer’s fleets. credits submitted by each manufacturer necessary (as standards are also denominated in for MY 2017 compliance and carries grams/mile).

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The model currently accounts for any consistently achieved fuel economy penalties may be a transfer from one off-cycle adjustments associated with levels below their standard. As in OEM to another. technologies that are included in the set previous versions of the CAFE model, While the Energy Policy and of fuel-saving technologies explicitly the current version allows the user to Conservation Act (EPCA), as amended simulated as part of this proposal (for specify inputs identifying such in 2007 by the Energy Independence example, start-stop systems that reduce manufacturers and to consider their and Security Act, prescribes these fuel consumption during idle or active compliance decisions as if they are specific civil penalty provisions for grille shutters that improve willing to pay civil penalties for non- CAFE standards, the Clean Air Act aerodynamic drag at highway speeds) compliance with the CAFE program. (CAA) does not contain similar and accumulates these adjustments up The assumed civil penalty rate in the provisions. Rather, the CAA’s to the 10 g/mi cap. As a practical matter, current analysis is $5.50 per 1/10 of a provisions regarding noncompliance most of the adjustments for which mile per gallon, per vehicle sold. constitute a de facto prohibition against manufacturers are claiming off-cycle selling vehicles failing to comply with FCIV exist outside of the technology It is worth noting that treating a emissions standards. Therefore, inputs tree, so the cap is rarely reached during manufacturer as if they are willing to regarding civil penalties—including compliance simulation. If those FCIVs pay civil penalties does not necessarily inputs regarding manufacturers’ become a more important compliance mean that it is expected to pay penalties potential willingness to treat civil mechanism, it may be necessary to in reality. It merely implies that the penalty payment as an economic model their application explicitly. manufacturer will only apply fuel choice—apply only to simulation of However, doing so will require data on economy technology up to a point, and CAFE standards. which vehicle models already possess then stop, regardless of whether or not these improvements as well as the cost its corporate average fuel economy is (d) Treatment of Credit Provisions for and expected value of applying them to above its standard. In practice, we ‘‘Standard Setting’’ and other models in the future. Comment is expect that many of these manufacturers ‘‘Unconstrained’’ Analyses sought on both the data requirements will continue to be active in the credit NHTSA may not consider the and strategic decisions associated with market, using trades with other application of CAFE credits toward manufacturers’ use of A/C efficiency manufacturers to transfer credits into compliance with new standards when and off-cycle technologies to improve specific fleets that are challenged in any establishing the standards CAFE and CO2 compliance. given year, rather than paying penalties themselves.332 As such, this analysis (c) Civil Penalty Rate and OEMs’ to resolve CAFE deficits. The CAFE considers 2020 to be the last model year Anticipated Willingness To Treat Civil model calculates the amount of in which carried-forward or transferred Penalties as a Program Flexibility penalties paid by each manufacturer, credits can be applied for the CAFE but it does not simulate trades between program. Beginning in model year 2021, Throughout the history of the CAFE manufacturers. In practice, some program, some manufacturers have (possibly most) of the total estimated 332 49 U.S.C. 32902(h) (2007).

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today’s ‘‘standard setting’’ analysis is model now carries a full representation (3) For manufacturers assumed to be conducted assuming each fleet must of the production multipliers related to willing to pay civil penalties (in the CAFE comply with the CAFE standard electric vehicles, fuel cell vehicles, program), the manufacturer reaches the point separately in every model year. at which doing so would be more cost- plug-in hybrids, and CNG vehicles, all effective (from the manufacturer’s The ‘‘unconstrained’’ perspective of which vary by year through MY 2021. perspective) than adding further technology. acknowledges that these flexibilities exist as part of the program and, while 2. Simulation of Manufacturers’ [and The model accounts explicitly for not considered in NHTSA’s decision of Buyers’] Potential Responses to Each each model year, applying technologies the preferred alternative, are important Alternative when vehicles are scheduled to be to consider when attempting to estimate The CAFE model provides a way of redesigned or freshened and carrying the real impact of any alternative. Under estimating how manufacturers could forward technologies between model the ‘‘unconstrained’’ perspective, credits attempt to comply with a given CAFE years once they are applied (until, if may be earned, transferred, and applied standard by adding technology to fleets applicable, they are superseded by other to deficits in the CAFE program that the agencies anticipate they will technologies). The model then uses throughout the full range of model years produce in future model years. This these simulated manufacturer fleets to in the analysis. The Draft Environmental exercise constitutes a simulation of generate both a representation of the Impact Analysis (DEIS) accompanying manufacturers’ decisions regarding U.S. auto industry and to modify a representation of the entire light-duty today’s NPRM presents results of compliance with CAFE or CO2 ‘‘unconstrained’’ modeling. Also, standards. registered vehicle population. From because the CAA provides no direction This compliance simulation begins these fleets, the model estimates regarding consideration of any CO2 with the following inputs: (a) The changes in physical quantities (gallons credit provisions, today’s analysis analysis fleet of vehicles from model of fuel, pollutant emissions, traffic includes simulation of carried-forward year 2016 discussed above in Section fatalities, etc.) and calculates the relative costs and benefits of regulatory and transferred CO2 credits in all model II.B, (b) fuel economy improving years. technology estimates discussed above in alternatives under consideration. The CAFE model accounts explicitly (e) Treatment of AFVs for ‘‘Standard Section II.D, (c) economic inputs discussed above in Section II.E, and (d) for each model year, in turn, because Setting’’ and ‘‘Unconstrained’’ Analyses manufacturers actually ‘‘carry forward’’ inputs defining baseline and potential most technologies between model years, NHTSA is also prohibited from new CAFE standards. For each tending to concentrate the application of considering the possibility that a manufacturer, the model applies new technology to vehicle redesigns or manufacturer might produce technologies in both a logical sequence mid-cycle ‘‘freshenings,’’ and design alternatively fueled vehicles as a and a cost-minimizing strategy in order 333 cycles vary widely among compliance mechanism, taking to identify a set of technologies the manufacturers and specific products. advantage of credit provisions related to manufacturer could apply in response to Comments by manufacturers and model AFVs that significantly increase their new CAFE or CO standards. The model fuel economy for CAFE compliance 2 peer reviewers strongly support explicit applies technologies to each of the year-by-year simulation. Year-by-year purposes. Under the ‘‘standard setting’’ projected individual vehicles in a perspective, these technologies (pure accounting also enables accounting for manufacturer’s fleet, considering the credit banking (i.e., carry-forward), as battery electric vehicles and fuel cell combined effect of regulatory and 334 discussed above, and at least four vehicles ) are not available in the market incentives while attempting to compliance simulation to improve fuel environmental organizations recently account for manufacturers’ production submitted comments urging the economy. Under the ‘‘unconstrained’’ constraints. Depending on how the perspective, such as is documented in agencies to consider such credits, citing model is exercised, it will apply the DEIS, the CAFE model considers NHTSA’s 2016 results showing impacts technology until one of the following these technologies in the context of all of carried-forward credits.337 Moreover, occurs: other available technologies and may EPCA/EISA requires that NHTSA make apply them if they represent cost- (1) The manufacturer’s fleet achieves a year-by-year determination of the effective compliance pathways. compliance 335 with the applicable standard appropriate level of stringency and then However, under both perspectives, the and continuing to add technology in the set the standard at that level, while analysis continues to include dedicated current model year would be attractive ensuring ratable increases in average neither in terms of stand-alone (i.e., absent fuel economy through MY 2020. The AFVs that already exist in the MY 2016 regulatory need) cost-effectiveness nor in fleet (and their projected future terms of facilitating compliance in future multi-year planning capability, volumes) in CAFE calculations. Also, model years; (optional) simulation of ‘‘market-driven because the CAA provides no direction (2) The manufacturer ‘‘exhausts’’ available overcompliance,’’ and EPCA credit regarding consideration of alternative technologies; 336 or mechanisms (again, for purposes of fuels, today’s analysis includes modeling the CAFE program) increase simulation of the potential that some 335 When determining whether compliance has the model’s ability to simulate manufacturers might introduce new been achieved in the CAFE program, existing CAFE manufacturers’ real-world behavior, credits that may be carried over from prior model AFVs in response to CO2 standards. To years or transferred between fleets are also used to accounting for the fact that fully represent the compliance benefit determine compliance status. For purposes of from such a response, NHTSA modified determining the effect of maximum feasible CAFE to be redesigned, (b) vehicles have moved to the the CAFE model to include the specific standards, NHTSA cannot consider these ends of each (relevant) technology pathway, after mechanisms for years being considered (though which no additional options exist, or (c) provisions related to AFVs under the does so for model years that are already final) and engineering aspects of available vehicles make CO2 standards. In particular, the CAFE exercises the CAFE model without enabling these available technology inapplicable (e.g., secondary options. axle disconnect cannot be applied to two-wheel 333 Id. 336 In a given model year, it is possible that drive vehicles). 334 Dedicated compressed natural gas (CNG) production constraints cause a manufacturer to 337 Comment by Environmental Law & Policy vehicles should also be excluded in this perspective ‘‘run out’’ of available technology before achieving Center, Natural Resources Defense Council (NRDC), but are not considered as a compliance strategy compliance with standards. This can occur when: Public Citizen, and Sierra Club, Docket ID EPA– under any perspective in this analysis. (a) An insufficient volume of vehicles are expected HQ–OAR–2015–0827–9826, at 28–29.

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manufacturers will seek out compliance Camry) allows the CAFE model to another compliance option in years with paths for several model years at a time, explicitly account for the fact that few planned redesigns. Finally, it while accommodating the year-by-year individual vehicle models undergo should be noted that today’s analysis requirement. This same multi-year significant redesigns relatively does not account for future new planning structure is used to simulate infrequently. Many popular vehicle products (or discontinued products)— responses to standards defined in grams models are only redesigned every six past trends suggest that some years in CO2/mile, and utilizing the set of years or so, with some larger/legacy which an OEM had few redesigns may specific credit provisions defined under platforms (the old Ford Econoline Vans, have been years when that OEM EPA’s program. for example) stretching more than a introduced significant new products. decade between significant redesigns. Such changes in product offerings can (a) Representation of Manufacturers’ Engines, which are often shared among obviously be important to Production Constraints many different models and platforms for manufacturers’ compliance positions After the light-duty rulemaking a single manufacturer, can last even but cannot be systematically and analysis accompanying the 2012 final longer—eight to ten years in most cases. transparently accounted for with a fleet rule that finalized NHTSA’s standards While these characterizations of forecast extrapolated forward 10 or more through MY 2021, NHTSA began work product cadence are important to any years from a largely-known fleet. While on changes to the CAFE model with the evaluation of the impacts of CAFE or manufacturers’ actual plans reflect intention of better reflecting constraints CO2 standards, they are not known with intentions to discontinue some products of product planning and cadence for certainty—even by the manufacturers and introduce others, those plans are which previous analyses did not themselves over time horizons as long considered CBI. Further research would account. as those covered by this analysis. be required in order to determine (b) Product Cadence However, lack of certainty about whether and, if so, how it would be redesign schedules is not license to practicable to simulate such decisions, Past comments on the CAFE model ignore them. Indeed, when especially without relying on CBI. have stressed the importance of product manufacturers meet with the agencies to Additionally, each technology cadence—i.e., the development and discuss manufacturers’ plans vis-a`-vis considered for application by the CAFE periodic redesign and freshening of CAFE and CO2 requirements, model is assigned to either a ‘‘refresh’’ vehicles—in terms of involving manufacturers typically present specific or ‘‘redesign’’ cadence that dictates technical, financial, and other practical and detailed year-by-year information when it can be applied to a vehicle. constraints on applying new that explicitly accounts for anticipated Technologies that are assigned to technologies, and DOT has steadily redesigns. Such year-by-year analysis is ‘‘refresh/redesign’’ can be applied at made changes to both the CAFE model also essential to manufacturers’ plans to either a refresh or redesign, while and its inputs with a view toward make use of provisions (for CAFE, technologies that are assigned to accounting for these considerations. For statutory and specific) allowing credits ‘‘redesign’’ can only be applied during example, early versions of the model to be carried forward to future model a significant vehicle redesign. Table II– added explicit ‘‘carrying forward’’ of years, carried back from future model 80 and Table II–81 show the applied technologies between model years, transferred between regulated technologies available to manufacturers years, subsequent versions applied fleets, and traded with other in the compliance simulation, the level assumptions that most technologies will manufacturers. Manufacturers are never at which they are applied (described in be applied when vehicles are freshened certain about future plans, but they greater detail in the CAFE model or redesigned, and more recent versions spend considerable effort developing, documentation), whether they are applied assumptions that manufacturers continually adjusting, and available outside of a vehicle redesign, would sometimes apply technology implementing them. and a short description of each. A brief earlier than ‘‘necessary’’ in order to For every model that appears in the examination of the tables shows that facilitate compliance with standards in MY 2016 analysis fleet, the model years most technologies are only assumed to ensuing model years. Thus, for example, have been estimated in which future be available during a vehicle redesign— if a manufacturer is expected to redesign redesigns (and less significant and nearly all engine improvements are many of its products in model years ‘‘freshenings,’’ which offer assumed to be available only during 2018 and 2023, and the standard’s manufacturers the opportunity to make redesign. In a departure from past CAFE stringency increases significantly in less significant changes to models) will analyses, all transmission improvements model year 2021, the CAFE model will occur. These appear in the market data are assumed to be available during estimate the potential that the file for each model variant. Mid-cycle refresh as well as redesign. While there manufacturer will add more technology freshenings provide additional are past and recent examples of mid- than necessary for compliance in MY opportunities to add some technologies cycle product changes, it seems 2018, in order to carry those product in years where smaller shares of a reasonable to expect that manufacturers changes forward through the next manufacturer’s portfolio is scheduled to will tend to attempt to keep engineering redesign and contribute to compliance be redesigned. In addition, the analysis and other costs down by applying most with the MY 2021 standard. This accounts for multiyear planning—that major changes mainly during vehicle explicit simulation of multiyear is, the potential that manufacturers may redesigns and some mostly modest planning plays an important role in apply ‘‘extra’’ technology in an early changes during product freshenings. As determining year-by-year analytical model year with many planned mentioned below, comment is sought on results. redesigns in order to carry technology the approach to account for product As in previous iterations of CAFE forward to facilitate compliance in a cadence. rulemaking analysis, the simulation of later model year with fewer planned compliance actions that manufacturers redesigns. Further, the analysis accounts (c) Component Sharing and Inheritance might take is constrained by the pace at for the potential that manufacturers (Engines, Transmissions, and Platforms) which new technologies can be applied could earn CAFE and/or CO2 credits in In practice, manufacturers are limited in the new vehicle market. Operating at some model years and use those credits in the number of engines and the Make/Model level (e.g., Toyota in later model years, thereby providing transmissions that they produce.

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Typically, a manufacturer produces a modifies the engine on the ‘‘engine possible data sources and approaches number of engines—perhaps six or eight leader’’ (or ‘‘transmission leader’’), the that could be used to represent any engines for a large manufacturer—and changes to that engine propagate additional costs associated with phased tunes them for slight variants in output through to the other vehicles that share introduction of new engines or for a variety of car and truck that engine (or transmission) in transmissions. applications. Manufacturers limit subsequent years as those vehicles are There are some logical consequences complexity in their engine portfolio for redesigned. The CAFE model has been of this approach, the first of which is much the same reason as they limit modified to provide additional that forcing engine and transmission complexity in vehicle variants: They flexibility vis-a`-vis product cadence. In changes to propagate through to other face engineering manpower limitations, a recent public comment, NRDC noted: vehicles in this way effectively dictates and supplier, production, and service EPA and NHTSA currently constrain their the pace at which new technology can costs that scale with the number of parts model to apply significant fuel-efficient be applied and limits the total number produced. technologies mainly during a product- of unique engines that the model In previous analyses that used the redesign as opposed to product-refresh (or simulates. In the past, NHTSA used CAFE model (with the exception of the mid-cycle). This was identified as one of the ‘‘phase-in caps’’ (see discussion below) 2016 Draft TAR), engines and most sensitive assumptions affecting overall to limit the amount of technology that transmissions in individual vehicle program costs by NHTSA in the TAR. By can be applied to any vehicle in a given models were allowed relative freedom constraining the model, the agencies have year. However, by explicitly tying the likely under-estimated the ability of auto in technology application, potentially manufacturers to incorporate some engine changes to a specific vehicle’s leading to solutions that would, if technologies during their product refreshes. product cadence, rather than letting the followed, create many more unique This is particularly true regarding the critical timing of changes vary across all the engines and transmissions than exist in powertrain technologies which are vehicles that share an engine, the model the analysis fleet (or in the market) for undergoing continuous improvement. The ensures that an engine is only changed a given model year. This multiplicity agency should account for these trends and when its leader is redesigned (at most). likely failed to sufficiently account for incorporate greater flexibility for Given that most vehicle redesign cycles costs associated with such increased automakers—within their models—to are five to eight years, this approach still incorporate more mid-cycle complexity in the product portfolio and enhancements.339 represents shorter average lives than may have represented an unrealistic most engines in the market, which tend diffusion of products for manufacturers While engine redesigns are only to be in production for eight to ten years that are consolidating global production applied to the engine leader when it is or more. It is also the case that vehicles to increasingly smaller numbers of redesigned in the model, followers may which share an engine in the analysis shared engines and platforms.338 The now inherit upgraded engines (that they fleet (MY 2016, for this analysis) are lack of a constraint in this area allowed share with the leader) at either refresh assumed to share that same engine the model to apply different levels of or redesign. All transmission changes, throughout the analysis—unless one or technology to the engine in each vehicle whether upgrades to the ‘‘leader’’ or both of them are converted to power- in which it was present at the time that inheritance to ‘‘followers’’ can occur at split hybrids (or farther) on the vehicle was redesigned or refreshed, refresh as well as redesign. This electrification path. In the market, this independent of what was done to other provides additional opportunities for is not true—since a manufacturer will vehicles using a previously identical technology diffusion within choose an engine from among the engine. manufacturers’ product portfolios. engines it produces to fulfill the One peer reviewer of the CAFE model While ‘‘follower’’ vehicles are efficiency and power demands of a recently commented, ‘‘The integration awaiting redesign (or, for transmissions, vehicle model upon redesign. That of inheritance and sharing of engines, refreshing as applicable), they carry a engine need not be from the same family transmissions, and platforms across a legacy version of the shared engine or of engines as the prior version of that manufacturer’s light duty fleet and transmission. As one peer reviewer vehicle. This is a simplifying separately across its light duty truck recently stated, ‘‘Most of the time a assumption in the model. While the fleet is standard practice within the manufacturer will convert only a single model already accommodates detailed industry.’’ In the current version of the plant within a model year. Thus both inputs regarding redesign schedules for CAFE model, engines and transmissions the ‘old’ and ‘new’ variant of the engine specific vehicles and commercial that are shared between vehicles must (or transmission) will produced for a information sources are available to 340 apply the same levels of technology, in finite number of years.’’ The CAFE inform these inputs, further research all technologies, dictated by engine or model currently carries no additional would be needed to determine whether transmission inheritance. This forced cost associated with producing both design schedules for specific engines adoption is referred to as ‘‘engine earlier revisions of an engine and the and transmissions can practicably be inheritance’’ in the model updated version simultaneously. simulated. documentation. In practice, the model Further research would be needed to The CAFE model has implemented a first chooses an ‘‘engine leader’’ among determine whether sufficient data is similar structure to address shared vehicles sharing the same engine—the likely to be available to explicitly vehicle platforms. The term ‘‘platform’’ vehicle with the highest sales in MY specify and apply additional costs is used loosely in industry but generally 2016. If there is a tie, the vehicle with involved with continuing to produce an refers to a common structure shared by the highest average MSRP is chosen, existing engine or transmission for some a group of vehicle variants. The degree representing the idea that manufacturers vehicles that have not yet progressed to of commonality varies with some will choose to pilot the newest a newer version of that engine or platform variants exhibiting traditional technology on premium vehicles if transmission. Comment is sought on ‘‘badge engineering’’ where two possible. The model applies the same products are differentiated by little more logic with respect to the application of 339 Comment by Environmental Law & Policy than insignias, while other platforms Center, Natural Resources Defense Council (NRDC), transmission changes. After the model Public Citizen, and Sierra Club, Docket ID EPA– may be used to produce a broad suite of HQ–OAR–2015–0827–9826, at 32. vehicles that bear little outer 338 2015 NAS Report, at pg. 258–259. 340 CAFE Model Peer Review, p. 19. resemblance to one another.

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Given the degree of commonality practical restrictions on technology on phase-in caps and, if greater reliance between variants of a single platform, application, including the on phase-in caps is recommended, what manufacturers do not have complete improvements described above. Unlike approach and information can be used freedom to apply technology to a vehicle-specific restrictions related to to define and apply these caps. vehicle: While some technologies (e.g. redesign, refreshes or platforms/engines, (e) Interactions Between Regulatory low rolling resistance tires) are very phase-in caps constrain technology Classes nearly ‘‘bolt-on’’ technologies, others application at the vehicle manufacturer involve substantial changes to the level for a given model year. Introduced Like earlier versions, the current structure and design of the vehicle, and in the 2006 version of the CAFE model, CAFE model provides the capability for therefore necessarily are constant among they were intended to reflect a integrated analysis spanning different vehicles that share a common platform. manufacturer’s overall resource capacity regulatory classes, accounting both for NHTSA has, therefore, modified the available for implementing new standards that apply separately to CAFE model such that all mass technologies (such as engineering different classes and for interactions reduction technologies are forced to be research and development personnel between regulatory classes. Light constant among variants of a platform. and financial resources), thereby vehicle CAFE and CO2 standards are Within the analysis fleet, each vehicle ensuring that resource capacity is specified separately for passenger cars is associated with a specific platform. accounted for in the modeling process. and light trucks. However, there is Similar to the application of engine and Compared to prior analyses of light- considerable sharing between these two transmission technologies, the CAFE duty standards, these model changes regulatory classes—where a single model defines a platform ‘‘leader’’ as the result in some changes in the broad engine, transmission, or platform can vehicle variant of a given platform that characteristics of the model’s appear in both the passenger car and has the highest level of observed mass application of technology to light truck regulatory class. For reduction present in the analysis fleet. manufacturers’ fleets. Since the use of example, some sport-utility vehicles are If there is a tie, the CAFE model begins phase-in caps has been de-emphasized offered in 2WD versions classified as mass reduction technology on the and manufacturer technology passenger cars and 4WD versions vehicle with the highest sales in model deployment remains tied strongly to classified as light trucks. Integrated year 2016. If there remains a tie, the estimated product redesign and analysis of manufacturers’ passenger car model begins by choosing the vehicle freshening schedules, technology and light truck fleets provides the with the highest MSRP in MY 2016. As penetration rates may jump more ability to account for such sharing and the model applies technologies, it quickly as manufacturers apply reduces the likelihood of finding effectively levels up all variants on a technology to high-volume products in solutions that could involve introducing platform to the highest level of mass their portfolio. As a result, the model impractical levels of complexity in reduction technology on the platform. will ignore a phase-in cap to apply manufacturers’ product lines. So, if the platform leader is already at inherited technology to vehicles on Additionally, integrated fleet analysis MR3 in MY 2016, and a ‘‘follower’’ shared engines, transmissions, and provides the ability to simulate the starts at MR0 in MY 2016, the follower platforms. potential that manufacturers could earn will get MR3 at its next redesign (unless In previous CAFE rulemakings, CAFE and CO2 credits by over the leader is redesigned again before redesign/refresh schedules and phase-in complying with the standard in one that time, and further increases the MR caps were the primary mechanisms to fleet and use those credits toward level associated with that platform, then reflect an OEM’s limited pool of compliance with the standard in the follower would receive the new MR available resources during the another fleet (i.e., to simulate credit level). rulemaking time frame and the years transfers between regulatory classes). In the 2015 NPRM proposing new fuel preceding it, especially in years where While previous versions of the CAFE consumption and GHG standards for many models may be scheduled for model have represented manufacturers’ heavy-duty pickups and vans, NHTSA refresh or redesign. The newly- fleets by drawing a distinction between specifically requested comment on the introduced representation of platform-, passenger cars and light trucks, the general use of shared engines, engine-, and transmission-related current version of the CAFE model adds transmissions, and platforms within considerations discussed above augment a further distinction, capturing the CAFE rulemakings. While no the model’s preexisting representation difference between passenger cars commenter responded to this specific of redesign cycles and eliminate the classified as domestic passenger cars request, comments from some need to rely on phase-in caps. By and those classified as imports. The environmental organizations cited design, restrictions that enforce CAFE program regulates those passenger examples of technology sharing between commonality of mass reduction on cars separately, and the current version light- and heavy-duty products. NHTSA variants of a platform, and those that of the CAFE model simulates all three has continued to refine its enforce engine and transmission CAFE regulatory classes separately: implementation of an approach inheritance, will result in fewer vehicle- Domestic Passenger Cars (DC), Imported accounting for shared engines, technology combinations in a Passenger Cars (IC), and Light Trucks transmissions, and platforms, and again manufacturer’s future modeled fleet. (LT). CAFE regulations state that seeks comment on the approach, The integration of shared components standards, fuel economy levels, and recommendations regarding any other and product cadence as a mechanism to compliance are all calculated separately approaches, and any information that control the pace of technology for each class. These requirements are would facilitate implementation of the application also more accurately specified explicitly by the Energy Policy agency’s current approach or any represents each manufacturer’s unique and Conservation Act (EPCA), with the alternative approaches. position in the market and its existing 2007 Energy Independence and Security technology footprint, rather than a Act (EISA) having added the (d) Phase-In Caps technology-specific phase-in cap that is requirement to enforce minimum The CAFE model retains the ability to uniformly applied to all manufacturers standards for domestic passenger cars. use phase-in caps (specified in model in a given year. Comment is sought This update to the accounting imposes inputs) as proxies for a variety of regarding this shift away from relying two additional constraints on

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manufacturers that sell vehicles in the reflected integrated analysis of the light- The ‘‘application level’’ describes the U.S.: (1) The domestic minimum floor, duty and HD PUV fleets, thereby system of the vehicle to which the and (2) Limited transfers between cars accounting for sharing between the technology is applied, which in turn classified as ‘‘domestic’’ versus those fleets. However, for most OEMs, that determines the extent to which that classified as ‘‘imported.’’ The domestic analysis showed considerably less decision affects other vehicles in a minimum floor creates a threshold that sharing between light-duty and HD PUV manufacturer’s fleet. For example, if a every manufacturer’s domestic car fleet fleets than initially expected. Today’s technology is applied at the ‘‘engine’’ must exceed without the application of analysis includes only vehicles subject level, it naturally affects all other CAFE credits. If a manufacturer’s to CAFE and light-duty CO2 standards, vehicles that share that same engine calculated standard is below the and the agencies invite comment on (though not until they themselves are domestic minimum floor, then the whether integrated analysis of the two redesigned, if it happens to be in a domestic floor is the binding constraint fleets should be pursued further. future model year). Technologies (even for manufacturers that are applied at the ‘‘vehicle’’ level can be 3. Technology Application Algorithm assumed to be willing to pay fines for applied to a vehicle model without non-compliance). The second constraint (a) Technology Representation and impacting the other models with which poses challenges for manufacturers that Pathways it shares components. Platform-level sell cars from both the domestic and technologies affect all of the vehicles on imported passenger car categories. While some properties of the a given platform, which can easily span While previous versions of the CAFE technologies included in the analysis technology classes, regulatory classes, model considered those fleets as a single are specified by the user (e.g., cost of the and redesign cycles. fleet (i.e., passenger cars), the model technology), the set of included now forces them to comply separately technologies is part of the model itself, The ‘‘application schedule’’ identifies and limits the volume of credits that can which contains the information about when manufacturers are assumed to be be shifted between them for compliance. the relationships between able to apply a given technology—with However, the CAA provides no technologies.341 In particular, the CAFE many available only during vehicle direction regarding compliance by model contains the information about redesigns. The application schedule also domestic and imported vehicles; EPA the sequence of technologies, the paths accounts for which technologies the has not adopted provisions similar to on which they reside, any prerequisites CAFE model tracks but does not apply. the aforementioned EPCA/EISA associated with a technology’s These enter as part of the analysis fleet requirements and is not doing so today. application, and any exclusions that (‘‘Baseline Only’’), and while they are Therefore, consistent with current and naturally follow once it is applied. necessary for accounting related to cost proposed CO2 regulations, the CAFE and incremental fuel economy model determines compliance for 341 Unlike the 2012 Final Rule, where each improvement, they do not represent a manufacturers’ overall passenger car technology had a single effectiveness value for the choice that manufacturers make in the fleets for EPA’s program. CAFE analysis, technology effectiveness in the model. As discussed in Section II.B, the current version of the CAFE model is based on the analysis fleet contains the information During 2015–2016, a single version of ANL simulation project and defined for each the CAFE model was applied to produce combination of technologies, resulting in more than about each vehicle model, engine, and analyses supporting both a rulemaking 100,000 technology effectiveness values for each of transmission selected for simulation and regarding heavy-duty pickups and vans ten technology classes. This large database is defines the initial technology state of extracted locally the first time the model is run and the fleet relative to the sets of (HD PUV) and the 2016 draft TAR can be modified by the user in that location to regarding CAFE standards for passenger reflect alternative assumptions about technology technologies in Table II–80 and Table cars and light trucks. Both analyses effectiveness. II–81.

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Table 11-80- CAFE Model Technologies (1) ~ c;~,.;uuology Application Application Description Level Schedule SOHC Engine Baseline Only Single Overhead Camshaft Engine DOHC Engine Baseline Only Double Overhead Camshaft Engine OHV Engine Baseline Only Overhead Valve Engine (maps to SOHC) VVT Engine Baseline Only Variable Valve Timing VVL Engine Redesign Only Variable Valve Lift SGDI Engine Redesign Only Stoichiometric Gasoline Direct Injection DEAC Engine Redesign Only Cylinder Deactivation HCR Engine Redesign Only High Compression Ratio Engine HCR2 Engine Redesign Only High Compression Ratio Engine with DEAC and CEGR TURBOl Engine Redesign Only Turbocharging and Downsizing, Level 1 (18 bar) TURB02 Engine Redesign Only Turbocharging and Downsizing, Level 2 (24 bar) CEGRl Engine Redesign Only Cooled Exhaust Gas Recirculation, Level 1 (24 bar) ADEAC Engine Redesign Only Advanced Cylinder Deactivation CNG Engine Baseline Only Compressed Natural Gas Engine ADSL Engine Redesign Only Advanced Diesel Engine DSLI Engine Redesign Only Diesel engine improvements

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As Table II–80 and Table II–81 show, updates to shared components during example) throughout a manufacturer’s all of the engine technologies may only refresh. For example, assume Vehicle A portfolio and reduces the number of be applied (for the first time) during and Vehicle B share Engine 1, and years during which a manufacturer redesign. New transmissions can be engine 1 is redesigned as part of Vehicle would build both new and legacy applied during either refresh or A’s redesign in MY 2020. Vehicle B is versions of the same engine. Despite redesign, except for manual not redesigned until 2025 but is increasing the rate of technology transmissions, which can only be refreshed in MY 2022. In the current diffusion, this change still restricts the upgraded during redesign. Unlike version of the CAFE model, Vehicle B pace at which new engines (for previous versions of the model, which would inherit the updated version of example) can be designed and built (i.e., only allowed significant changes to Engine 1 when it is freshened in MY no faster than the redesign schedule of vehicle powertrains at redesign, this 2022. This change allows more rapid the ‘‘leader’’ vehicle to which they are version allows vehicles to inherit diffusion of powertrain updates (for tied). The only technology for which

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this does not hold is mass reduction system or sub-system (e.g., engine TAR analysis, the model uses separate improvements; these occur at the technologies). technology classes for compact cars, platform level, and each model on that Technology classes, shown in Table– midsize cars, small SUVs, large SUVs, platform must be redesigned (not merely II–82, are a means for specifying and pickup trucks. However, in this refreshed) in order to receive the newest common technology input assumptions analysis, each of those distinctions also version of the platform that contains the for vehicles that share similar has a ‘‘performance’’ version, that most current mass reduction characteristics. Predominantly, these represents another class with similar technology. classes signify the degree of body style but higher levels of The CAFE model defines several applicability of each of the available performance attributes (for a total of 10 ‘‘technology classes’’ and ‘‘technology technologies to a specific class of technology classes). As the model pathways’’ for logically grouping all vehicles and represent a specific set of available technologies for application on Autonomie simulations (conducted as simulates compliance, identifying a vehicle. Technology classes provide part of the Argonne National Lab large- technologies that can be applied to a costs and improvement factors shared scale simulation study) that determine given manufacturer’s product portfolio by all vehicles with similar body styles, the effectiveness of each technology to to improve fleet fuel economy, it relies curb weights, footprints, and engine improve fuel economy. The vehicle on the vehicle class to provide relevant types, while technology pathways technology classes also define, for each cost and effectiveness information for establish a logical progression of technology, the additional cost each vehicle model. technologies on a vehicle within a associated with application.342 Like the

The model defines technology evaluating all paths, the model selects technology’s effectiveness, cost, and pathways for grouping and establishing the most cost-effective solution among interaction with all other technologies a logical progression of technologies on all pathways. This parallel path both present and available. a vehicle. Each pathway (or path) is approach allows the modeling system to (b) Technology Paths evaluated independently and in progress through technologies in any parallel, with technologies on these given pathway without being The modeling system incorporates 16 unnecessarily prevented from paths being considered in sequential technology pathways for evaluation as order. As the model traverses each path, considering technologies in other paths. Rather than rely on a specific set of shown in Table–II—83. Similar to the costs and fuel economy technology combinations or packages, individual technologies, each path improvements are accumulated on an the model considers the universe of carries an intrinsic application level that incremental basis with relation to the applicable technologies, dynamically denotes the scope of applicability of all preceding technology. The system stops identifying the most cost-effective technologies present within that path examining a given path once a combination of technologies for each and whether the pathway is evaluated combination of one or more manufacturer’s vehicle fleet based on on one vehicle at a time, or on a technologies results in a ‘‘best’’ each vehicle’s initial technology content collection of vehicles that share the technology solution for that path. After and the assumptions about each same platform, engine, or transmission.

342 Inputs are specified to assign each vehicle in the analysis fleet to one of these technology classes, as discussed in Section II.B.

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The technologies that comprise the compression ratio engines) was not used engine paths (Turbo, HCR, Diesel, and five Engine-Level paths available within in this analysis but is present within the ADEAC) simultaneously. They are the model are presented in Figure-II-13. model. Unlike earlier versions of the assumed to be mutually exclusive. Once Note: The baseline-level technologies CAFE model, that enforced strictly one path is taken, it locks out the others (SOHC, DOHC, OHV, and CNG) appear sequential application of technologies to avoid situations where the model in gray boxes. These technologies are like VVL and SGDI, this version of the could be perceived to force used to inform the modeling system of CAFE model allows basic engine manufacturers to radically change the initial engine’s configuration and are technologies to be applied in any order engine architecture with each redesign, not otherwise applicable during the once an engine has VVT (the base state incurring stranded capital costs and lost analysis. Additionally, the VCR path of all ANL simulations). Once the model opportunities for learning. (intended to house fuel economy progresses past the basic engine path, it improvements from variable considers all of the more advanced

For all pathways, the technologies are technology is deemed ineffective, the later in the pathway, it will ‘‘backfill’’ evaluated and applied to a vehicle in system will bypass it and skip ahead to anything that was previously skipped in sequential order, as shown from top to the next technology. If the modeling order to fully account for costs and fuel bottom. In some cases, however, if a system applies a technology that resides economy improvements of the full

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technology combination.343 For any The Basic Engine path begins with analysis fleet. Similarly, all automatic technology that is already present on a SOHC, DOHC, and OHV technologies transmissions with five forward gears or vehicle (either from the MY 2016 fleet defining the initial configuration of the fewer have been assigned the AT5 or previously applied by the model), the vehicle’s engine. Since these technology. The model preserves the system skips over those technologies as technologies are not available during initial configuration for as long as well and proceeds to the next. These modeling, the system evaluates this possible, and prohibits manual skipped technologies, however, will not pathway starting with VVT. Whenever a transmissions from becoming automatic be applied again during backfill. technology pathway forks into two or transmissions at any point. Automatic While costs are still purely more branch points, as the engine path transmissions may become CVT level 2 incremental, technology effectiveness is does at the end of the basic engine path, after progressing though the 6-speed no longer constructed that way. The all of the branches are treated as automatic. While the structure of the non-sequential nature of the basic mutually exclusive. The model model still allows automatic engine technologies have no obvious evaluates all technologies forming the transmissions to consider the move to preceding technology except for VVT, branch simultaneously and selects the DCT, in practice they are restricted from the root of our engine path. It was a most cost-effective for the application, doing so in the market data file. This natural extension to carry this approach while disabling the unchosen remaining allows vehicles that enter with a DCT to to the other branches as well. The paths. improve it (if opportunities to do so technology effectiveness estimates are The technologies that make up the exist) but does not allow automatic now an integrated part of the CAFE four Transmission-Level paths defined transmissions to become DCTs, in model and represent a translation of the by the modeling system are shown in recognition of low consumer Argonne simulation database that Figure-II-14. The baseline-level enthusiasm for the earlier versions the compares the fuel consumption of any technologies (AT5, MT5 and CVT) transmission that have been introduced combination of technologies (across all appear in gray boxes and are only used over the last decade. The model does paths) to the base vehicle (that has only to represent the initial configuration of not attempt to simulate ‘‘reversion’’ to VVT, 5-speed automatic transmission, a vehicle’s transmission. For simplicity, less advanced transmission no electrification, and no body-level all manual transmissions with five technologies, such as replacing a 6- improvements).344 forward gears or fewer have been speed AT with a DCT and then assigned the MT5 technology in the replacing that DCT with a 10-speed AT. 343 More detail about how the Argonne simulation The agencies invite comment on database was integrated into the CAFE model can manual transmissions, nor the inverse, technology whether or not the model should be be found in PRIA Chapter 6. combinations containing manual transmissions use 344 This is true for all combinations other than a reference point identical to the base vehicle modified to simulate such ‘‘reversion’’ those containing manual transmissions. Because the description, but containing a 5-speed manual rather and, if so, how this possible behavior model does not convert automatic transmissions to than automatic transmission. might be practicably simulated.

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The root of the Electrification path, larger architectural change of the two. In electrification technologies, there are shown in Figure-II-15, is a conventional general, the electrification technologies two electrical system improvements, powertrain (CONV) with no are applied as vehicle-level electric power steering (EPS) and electrification. The two strong hybrid technologies, meaning that the model accessory improvements (IACC), which technologies (SHEVP2 and SHEVPS) on applies them without affecting were not part of the ANL simulation the Hybrid/Electric path, are defined as components that might be shared with project and are applied by the model as stand-alone and mutually exclusive. other vehicles. In the case of the more fixed percentage improvements to all These technologies are not incremental advanced electrification technologies, technology combinations in a particular over each other for cost or effectiveness where engines and transmissions are technology class. Their improvements and do not follow a traditional removed or replaced, the model will are superseded by technologies in the progression logic present on other paths. choose a new vehicle to be the leader on other electrification paths, BISG or While the SHEVP2 represents a hybrid that component (if necessary) and will CISG, in the case of EPS, and strong system paired with the existing engine not force other vehicles sharing that hybrids (and above) in the case of IACC, on a given vehicle, the SHEVPS removes engine or transmission to become which are assumed to include those and replaces that engine, making it the hybrids (or EVs). In addition to the improvements already.

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The technology paths related to load vehicle level, and technologies within technology path. In addition to choosing reduction of the vehicle are shown in each path are considered purely among possible engine, transmission, Figure-II-16. Of these, only the Mass sequential. For mass reduction, and electrification improvements to Reduction (MR) path is applied at the aerodynamic improvements, and improve a vehicle’s fuel economy, the platform level, thus affecting all reductions in rolling resistance, the base CAFE model will consider technologies vehicles (across classes and body styles) level of each path is the ‘‘zero state,’’ in each of the possible load improvement on a given platform. The remaining which a vehicle has exhibited none of paths simultaneously. technology paths are all applied at the the improvements associated with the

Even though the model evaluates each the pathways are interconnected to and incremental accounting of technology path independently, some of allow for additional logical progression technologies. For example, the cost of

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SHEVPS (power-split strong hybrid/ on that vehicle. However, if it becomes of evaluation. For example, a vehicle electric) on the Hybrid/Electric path is necessary for a vehicle to progress to the with a 6-speed automatic transmission defined as incremental over the power-split hybrid, the model will will not be able to get improvements complete basic engine path (an engine virtually apply the technologies from a Manual Transmission path. For that contains VVT, VVL, SGDI, and associated with the reference point in this reason, the model implements logic DEAC), the AT5 (5-speed automatic) order to evaluate the attractiveness of to explicitly disable certain paths technology on the Automatic transitioning to the strong hybrid. whenever a constraining technology Transmission path, and the CISG (crank Of the 17 technology pathways from another path is applied on a present in the model, all Engine paths, mounted integrated starter/generator) vehicle. On occasion, not all of the the Automatic Transmission path, the technology on the Electrification path. technologies present within a pathway Electrification path, and both Hybrid/ For that reason, whenever the model Electric paths are logically linked for may produce compatibility constraints evaluates the SHEVPS technology for incremental technology progression. with another path. In such a case, the application on a vehicle, it ensures that, Some of the technology pathways, as model will selectively disable a at a minimum, all the aforementioned defined in the model and shown in conflicting pathway (or part of the technologies (as well as their Figure-II-17, may not be compatible pathway) as required by the predecessors) have already been applied with a vehicle given its state at the time incompatible technology.

For any interlinked technology to always move in the direction of MY 2016 analysis fleet contains pathways shown in Figure-II-17, the increasing technological sophistication information about each manufacturer’s: model also disables all preceding each time they are reevaluated by the • Vehicle models offered for sale—their technology paths whenever a vehicle model. current (i.e., MY 2016) production volumes, transitions to a succeeding pathway. For 4. Simulating Manufacturer Compliance manufacturer suggested retail prices (MSRPs), fuel saving technology content example, if the model applies SHEVPS With Standards technology on a vehicle, the model (relative to the set of technologies described disables the Turbo, HCR, ADEAC, and As a starting point, the model needs in Table II–80 and Table II–81), and other Diesel Engine paths, as well as the Basic enough information to represent each attributes (curb weight, drive type, assignment to technology class and Engine, the Automatic Transmission, manufacturer covered by the program. As discussed above in Section II.B, the regulatory class), and the Electrification paths (all of • Production constraints—product which precede the Hybrid/Electric cadence of vehicle models (i.e., schedule of 345 vehicle. This technology may be present in path). This implicitly forces vehicles conjunction with any engine-level technology, and model redesigns and ‘‘freshenings’’), vehicle as such, the Basic Engine path is not disabled upon platform membership, degree of engine and/ 345 The only notable exception to this rule occurs application of SHEVP2 technology, even though or transmission sharing (for each model whenever SHEVP2 technology is applied on a this pathway precedes the Hybrid/Electric path. variant) with other vehicles in the fleet,

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• Compliance constraints and this aspect of the model even more technology for which the effective cost flexibilities—historical preference for full realistic. is negative). Then the model applies compliance or penalty payment/credit This construction allows the model to expiring overcompliance credits (if application, willingness to apply additional choose technologies that both improve a allowed to under the perspective of cost-effective fuel saving technology in manufacturer’s regulatory compliance either the ‘‘unconstrained’’ or ‘‘standard excess of regulatory requirements, projected applicable flexible fuel credits, and current position and are most likely to be setting’’ analysis, for CAFE purposes). credit balance (by model year and regulatory attractive to its consumers. This also At this point, the model checks the class) in first model year of simulation. means that different assumptions about manufacturer’s compliance status again. Each manufacturer’s regulatory future fuel prices will produce different If the manufacturer is still not compliant requirement represents the production- rankings of technologies when the (and is unwilling to pay civil penalties, weighted harmonic mean of their model evaluates available technologies again for CAFE), the model will add vehicle’s targets in each regulated fleet. for application. For example, in a high technologies that are not cost-effective This means that no individual vehicle fuel price regime, an expensive but very until the manufacturer reaches has a ‘‘standard,’’ merely a target, and efficient technology may look attractive compliance. If the manufacturer each manufacturer is free to identify a to manufacturers because the value of exhausts opportunities to comply with compliance strategy that makes the most the fuel savings is sufficiently high to the standard by improving fuel sense given its unique combination of both counteract the higher cost of the economy/reducing emissions (typically vehicle models, consumers, and technology and, implicitly, satisfy due to a limited percentage of its fleet competitive position in the various consumer demand to balance price being redesigned in that year), the market segments. As the CAFE model increases with reductions in operating model will apply banked CAFE or CO2 provides flexibility when defining a set cost. Similarly, technologies for which credits to offset the remaining deficit. If of regulatory standards, each there exist consumer welfare losses no credits exist to offset the remaining manufacturer’s requirement is (discussed in Section II.E) will be seen deficit, the model will reach back in dynamically defined based on the as less attractive to manufacturers who time to alter technology solutions in specification of the standards for any may be concerned about their ability to earlier model years. simulation and the distribution of recover the full amount of the The CAFE model implements multi- footprints within each fleet. technology cost during the sale of the year planning by looking back, rather Given this information, the model vehicle. The model continues to add than forward. When a manufacturer is technology until a manufacturer either: attempts to apply technology to each unable to comply through cost-effective (a) Reaches compliance with regulatory (i.e., producing effective cost values less manufacturer’s fleet in a manner than standards (possibly through the than zero) technology improvements or minimizes ‘‘effective costs.’’ The accumulation and application of credit application in a given year, the effective cost captures more than the overcompliance credits), (b) reaches a model will ‘‘reach back’’ to earlier years incremental cost of a given technology; point at which it is more cost effective and apply the most cost-effective it represents the difference between to pay penalties than to add more technologies that were not applied at their incremental cost and the value of technology (for CAFE), or (c) reaches a that time and then carry those fuel savings to a potential buyer over the point beyond compliance where the technologies forward into the future and first 30 months of ownership.346 In manufacturer assumes its consumers re-evaluate the manufacturer’s addition to the technology cost and fuel will be unwilling to pay for additional compliance position. The model repeats savings, the effective cost also includes fuel saving/emissions reducing this process until compliance in the the change in fines from applying a technologies. current year is achieved, dynamically given technology and any estimated In general, the model adds technology rebuilding previous model year fleets welfare losses associated with the for several reasons but checks these and carrying them forward into the technology (e.g., earlier versions of the sequentially. The model then applies future, accumulating CAFE or CO2 CAFE model simulated low-range any ‘‘forced’’ technologies. Currently, credits from over-compliance with the electric vehicles that produced a welfare only VVT is forced to be applied to standard wherever appropriate. loss to buyers who valued standard vehicles at redesign since it is the root In a given model year, the model operating ranges between re-fueling of the engine path and the reference determines applicability of each events). The effective cost metric point for all future engine technology technology to each vehicle model, applied by the model does not attempt applications.347 The model next applies platform, engine, and transmission. The to reflect all costs of vehicle ownership. any inherited technologies that were compliance simulation algorithm begins Further research would be required in applied to a leader vehicle and carried the process of applying technologies order to support simulation that forward into future model years where based on the CAFE or CO2 standards assumes buyers behave as if they follower vehicles (on the shared system) specified during the current model year. actually consider all ownership costs, are freshened or redesigned (and thus This involves repeatedly evaluating the and that assumes manufacturers eligible to receive the updated version degree of noncompliance, identifying respond accordingly. The agencies will of the shared component). In practice, the next ‘‘best’’ technology (ranked by continue to consider the metric applied very few vehicle models enter without the effective cost discussed earlier) to represent manufactuers’ approach to VVT, so inheritance is typically the first available on each of the parallel making decisions regarding the step in the compliance loop. Then the technology paths described above and application of fuel-saving technologies model evaluates the manufacturer’s applying the best of these. The and invite comment regarding any compliance status, applying all cost- algorithm combines some of the practicable changes that might make effective technologies regardless of pathways, evaluating them sequentially compliance status (essentially any instead of in parallel, in order to ensure 346 The length of time over which to value fuel appropriate incremental progression of savings in the effective cost calculation is a model 347 As a practical matter, this affects very few technologies. input that can be modified by the user. This vehicles. More than 95% of vehicles in the market The algorithm first finds the best next analysis uses 30 months’ worth of fuel savings in file either already have VVT present or have the effective cost calculation, using the price of fuel surpassed the basic engine path through the applicable technology in each of the at the time of vehicle purchase. application of hybrids or electric vehicles. technology pathways then selects the

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best among these. For CAFE purposes, The Chevrolet Equinox is represented and XTS,349 the Chevrolet Colorado, the model applies the technology to the in the model inputs as a single Impala and Traverse (which is the affected vehicles if a manufacturer is nameplate, with five model variants designated ‘‘leader’’), and the GMC either unwilling to pay penalties or if distinguished by the presence of all- Acadia, Canyon, and Terrain. This is an applying the technology is more cost- wheel drive and four distinct example of how shared and inherited effective than paying penalties. powertrain configurations (two engines components interact with product Afterwards, the algorithm reevaluates paired with two different cadence: when the Equinox nameplate the manufacturer’s degree of transmissions). Across all five model is redesigned, the CAFE model has more noncompliance and continues variants, GM produced above 220,000 leverage over some variants than others application of technology. Once a units of the Equinox nameplate. About and cannot make changes to the engines manufacturer reaches compliance (i.e., 150,000 units of that production volume of the variants of the Equinox with V– the manufacturer would no longer need is regulated as Domestic Passenger Car, 6 unless that change is consistent with to pay penalties), the algorithm with the remainder regulated as Light all of the other nameplates just listed. proceeds to apply any additional Trucks. The easiest way to describe the The transmissions on the other variants technology determined to be cost- actions taken by the CAFE model is to of the Equinox are similarly widely effective (as discussed above). focus on a single model variant of the shared and represent the same kind of Conversely, if a manufacturer is Equinox (one row in the market data production constraint just described assumed to prefer to pay penalties, the file). The model variant of the Equinox with respect to the engine. When algorithm only applies technology up to with the highest production volume, accounting for the full set of engines, the point where doing so is less costly about 130,000 units in MY 2016, is transmissions, and platforms than paying penalties. The algorithm vehicle code 110111.348 This unique represented across the Equinox stops applying additional technology to model variant is the basis for the nameplate’s five variants, components this manufacturer’s products once no example. However, because it is only are shared across all three regulatory more cost-effective solutions are one of five variants on the Equinox classes. encountered. This process is repeated nameplate, the modifications made to This example uses a ‘‘standard for each manufacturer present in the that model in the simulation will affect setting’’ perspective to minimize the input fleet. It is then repeated again for the rest of the Equinox variants and amount of credit generation and each model year. Once all model years other vehicles across all fleets. application, in order to focus on the have been processed, the compliance The example Equinox variant is mechanics of technology application simulation algorithm concludes. The designated as an engine and platform and component sharing. The actions leader. As discussed earlier, this implies taken by the CAFE model when process for CO2 standard compliance simulation is similar, but without the that modifications to its engine (11031, operating on the example Equinox option of penalty payment. a 2.4L I–4) are tied to the redesign during GM’s compliance simulation are cadence of this Equinox, as are shown in Table–II–84. In general, the (a) Compliance Example modifications to its platform (Theta/TE). example Equinox begins the compliance The engine is shared by the Buick The following example will illustrate simulation with the technology LaCrosse, Regal, and Verano, and by the the features discussed above for the observed in its MY 2016 incarnation— GMC Terrain (as well as appearing in CAFE program. While the example a 2.6L I–4 with VVT and SGDI, a 6- two other variants of the Equinox). So describes the actions that General speed automatic transmission, low those vehicles, if redesigned after this Motors takes to modify the Chevrolet rolling resistance tires (ROLL20) and a Equinox, will inherit changes to engine Equinox in order to comply with the 10% realized improvement in 11031 when they are redesigned, augural standards (the baseline in this aerodynamic drag (AERO10). In MY carrying the legacy version of the engine analysis), and the logical consequences 2018, the Equinox is redesigned, at until then. Similarly, this Equinox of these actions, a similar example which time the engine adds VVL and shares its platform with the Cadillac level-1 turbocharging. The transmission would develop if instead simulating SRX and GMC Terrain, which will compliance with the EPA standards for on the Malibu is upgraded to an 8-speed inherit changes made to this platform automatic in 2018, which the Equinox those years. The structure of GM’s fleet when they are redesigned (if later than and the mechanisms at work in the also gets. The platform, for which this the Equinox, as is the case with the Equinox is the designated leader, gets CAFE model are identical in both cases, SRX). but different features of each program level-4 mass reduction. The CAFE This specific Equinox is a model also applies a few vehicle-level (unlimited credit transfers between transmission ‘‘follower,’’ getting updates fleets, for example) would likely cause technologies: low-drag brakes, made to its transmission leader (the electronic accessory improvements, and the model to choose different Chevrolet Malibu) when it is freshened technology solutions. additional aerodynamic improvements or redesigned. Additionally, two other (AERO20). Upon refresh in MY 2021, it At the start of the simulation in MY variants of the Equinox nameplate (the acquires an upgraded 10-speed 2016, GM has 30 unique engines shared more powerful versions, containing a transmission (AT10) from the Malibu. across over 33 unique nameplates, 260 3.6L V–6 engine) are not ‘‘leaders’’ on model variants, and three regulatory any of the primary components. Those 349 The agencies recognized that GM last classes. As discussed earlier, the CAFE variants are built on the same platform produced the Cadillac SRX for MY 2016, and note model will attempt to preserve that level as the example Equinox variant but this as one example of the limitations of using an of sharing across GM’s fleets to avoid share their engine with the Buick analysis fleet defined in terms of even a recent actual model year. Section II.B discusses these introducing additional production Enclave and LaCrosse, the Cadillac SRX tradeoffs, and the tentative judgment that, as a complexity for which the agencies do foundation for analysis presented here, it was better not estimate additional costs. An even 348 This numeric designation is not important to to develop the analysis fleet using the best smaller number of transmissions (16) understand the example but will allow an information available for MY 2016 than to have interested reader to identify the vehicle in model used manufacturers’ CBI to construct an analysis and platforms (12) are shared across the outputs to either recreate the example or use it as fleet that, though more current, would have limited same set of nameplates, model variants, a template to create similar examples for other the agencies’ ability to make public all analytical and regulatory classes. manufacturers and vehicles. inputs and outputs.

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Then in MY 2025 it is redesigned again mass of the platform (MR5). Using an persistent CAFE deficits in one or more and upgrades the engine to level-2 ‘‘unconstrained’’ perspective would fleets. In the ‘‘standard setting’’ turbocharging, replaces the 10-speed possibly lead to additional actions taken perspective, that forces compliance automatic transmission with a 8-speed after MY 2025, where GM may have without the use of CAFE credits, this is automatic transmission, adds a P2 been simulated to use credits earned in not an issue. strong hybrid, and further reduces the earlier model years to offset small,

The technology applications engine it inherits is the same one that upgraded again until MY 2026, so the described in Table–II–84 have was redesigned in MY 2018. This means performance versions of the Equinox consequences beyond the single variant that the Verano will improve its fuel continue with the 2018 version of the of the Equinox shown in the table. In economy in MY 2019 when the new engine throughout the remainder of the particular, two other variants of the engine is inherited but only to the simulation. While these inheritances Equinox (both of which are regulated as extent that the new version of the and sharing dynamics are not a perfect Light Trucks) get the upgraded engine, engine is an improvement over the representation of each manufacturer’s which they share with the example, in legacy version in the context of the specific constraints, nor the flexibilities MY 2018. Thus, this application of Verano’s other technology (which it is— available to shift strategies in real-time engine technology to a single variant of the Verano moves from 32 MPG to 44 as a response to changing market or the Equinox in the Domestic Car fleet, MPG when accounting for the other regulatory conditions, they are a ‘‘spills over’’ into the Light Truck fleet, technologies added during the MY 2019 reasonable way to consider the resource generating improvements in fuel redesign). constraints that prohibit fleet-wide economy and additional costs. This same story continues with the technology diffusion over shorter Furthermore, the Buick LaCrosse and diffusion of platform improvements windows than have been observed Regal, and the GMC Terrain also get the simulated by the CAFE model in MY historically and for which the agencies same engine, which they share with the 2018. The GMC Terrain is simulated to have no way to impose additional costs. example, in MY 2018. Those vehicles be redesigned in MY 2018, in Aside from the technology application also span the Domestic Car and Light conjunction with the Equinox. The and its consequences throughout the Truck fleets. However, the Buick performance variants of the Equinox, GM product portfolio, discussed above, Verano, which is not redesigned until with a 3.5L V–6, also upgrade their there are other important conclusions to MY 2019, continues with the legacy engines in MY 2018 (in conjunction draw from the technology application (i.e., MY 2016) version of the shared with the estimated Chevrolet Traverse example. The first of these is that engine until it is redesigned. When it redesign). However, when the Equinox product cadence matters, and only by inherits the new engine in MY 2019, it is next redesigned in MY 2025, the taking a year-by-year perspective can does so without modification; the engine shared with the Traverse is not this be seen. When the example Equinox

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is redesigned in MY 2018, the CAFE years and the standards present in those credits to offset deficits in the DC and model takes actions that cause the years. This is one reason why the CAFE LT fleets. In MY 2028, when GM is redesigned Equinox to significantly model, rather than OMEGA, was chosen simulated to aggressively apply exceed its fuel economy target. While no to examine the impacts of the proposed technology to the example Equinox, the single vehicle has a ‘‘standard,’’ having standards in this analysis. DC fleet exceeds its standard while the high volume vehicles significantly Another feature of note in Table–II–84 LT fleet still generates deficits. The below their individual targets can is the cost of applying these CAFE model offset that deficit with present compliance challenges for technologies. The costs are all expiring (and possibly transferred) manufacturers who must compensate by denominated in dollars and represent credits. However, by MY 2020 the exceeding targets on other vehicles. incremental cost increases relative to ‘‘standard setting’’ perspective removes While the example Equinox exceeds its the MY 2016 version of the Equinox. the option of using CAFE credits to MY 2018 target by almost 9 mpg, this Aside from the cost increase of over offset deficits and GM exceeds the version of the Equinox is not eligible to $5,000 in MY 2025 when the vehicle is standard in all three fleets, though by converted to a strong hybrid, the see significant technology changes again almost 2 mpg in DC and LT. As the incremental technology costs display a before MY 2025 (except for the Equinox example showed, many of the consistent trend between application transmission upgrade that occurs in MY vehicles redesigned in MY 2020 will events—decreasing steadily over time as 2021). Thus, the CAFE model is the cost associated with each given still be produced at the MY 2020 redesigning the Equinox in MY 2018 combination of technologies ‘‘learns technology level in MY 2025 where GM with respect to future targets and down.’’ By MY 2032, even the most is simulated to comply exactly across all standards—this Equinox is nearly 2 mpg expensive version of the example three fleets. Under an ‘‘unconstrained’’ below its target in MY 2024 before being Equinox costs nearly $800 less to perspective, the CAFE model would use redesigned in MY 2025. This reflects a produce than it did in MY 2025. the CAFE credits earned through over- real challenge that manufacturers face in The technology application in the compliance with the standards in MYs the context of continually increasing example occurs in the context of GM’s 2020–2023 to offset deficits created by CAFE standards, and represents a clear attempt to comply with the augural under-compliance as the standards example of why considering two model standards. As some of the components continued to increase, pushing some year snapshots where all vehicles are on the Equinox nameplate are shared technology application until later years assumed to be redesigned is across all three regulated fleets, Table– when the standards stabilized and those unrealistically simplistic. The MY 2018 II–85 shows the compliance status of credits expired. The CAFE model version of the example Equinox persists each fleet in MYs 2016–2025. In MY simulates compliance through MY 2032 (with little change) through six model 2017, the CAFE model applies expiring to account for this behavior.

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(b) Representation of OEMs’ Potential consequences of not satisfying those savings that occurred in the simulation Responsiveness to Buyers’ Willingness requirements), but also on what they after MY 2016 to the proposed standards To Pay for Fuel Economy Improvements think they can sell, technology-wise, to because none of the fuel economy consumers. In the 2012 final rule, the improvements were considered likely to The CAFE model simulates manufacturer responses to both agencies analyzed alternatives under the occur in the absence of increasing regulatory standards and technology assumption that manufacturers would standards. However, this assumption availability. In order to do so, it requires not improve the fuel economy of new contradicted much of the literature on assumptions about how the industry vehicles at all unless compelled to do so this topic and the industry’s recent views consumer demand for additional by the existence of increasingly experience with CAFE compliance, and fuel economy because manufacturer stringent CAFE and GHG standards.350 for CAFE standards, the analysis responses to potential standards depend This ‘‘flat baseline’’ assumption led the published in 2016 applied a reference not just on what they think they are best agencies to attribute all of the fuel case estimate that manufacturers will off producing to satisfy regulatory treat all technologies that pay for requirements (considering the 350 See, e.g., 75 FR 62844, 75 FR 63105. themselves within the first three years

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of ownership (through reduced though, have thus far declined to manufacturers different compliance expenditures on fuel) as if the cost of disclose the actual terms of CAFE or positions relative to the standards, and 351 that technology were negative. CO2 credit trades, so this calculation in light of the likelihood that some The industry has exceeded the currently uses the CAFE civil penalty OEMs will continue to use civil required CAFE level for both passenger rate as the basis to estimate this value. penalties as a means to resolve CAFE cars and light trucks in the past; It seems reasonable to assume that the deficits (at least for some fleets). notably, by almost 5 mpg during the fuel CAFE civil penalty rate likely sets an While described in greater detail in price spikes of the 2000s when CAFE effective ceiling on the price of any the CAFE model documentation, the standards for passenger cars were still traded CAFE credits, and considering effective cost reflects an assumption not frozen at levels established for the 1990 that each manufacturer can only about consumers’ actual willingness to model year.352 In fact, a number of produce one fleet of vehicles for sale in pay for additional fuel economy but manufacturers that traditionally paid the U.S., prices of CO2 credits might about what manufacturers believe CAFE civil penalties even reached reasonably be expected to be equivalent consumers are willing to pay. The compliance during years with to prices of CAFE credits. However, the reference case estimate for today’s sufficiently high fuel prices.353 The current CAFE model does not explicitly analysis is that manufacturers will treat model attempts to account for this simulate credit trading; therefore, the all technologies that pay for themselves observed consumer preference for fuel change in the value of CO2 credits within the first 21⁄2 years of ownership economy, above and beyond that should only capture the change in (through reduced expenditures on fuel) required by the regulatory standards, by manufacturer’s own cost of compliance, as if the cost of that technology were allowing fuel price to influence the so the compliance simulation algorithm negative. Manufacturers have repeatedly ranking of technologies that the model applies a ceiling at 0 (zero) to each indicated to the agencies that new 355 considers when modifying a calculated value of the CO2 credits. vehicle buyers are only willing to pay manufacturer’s fleet in order to achieve Just as manufacturers’ actual for fuel economy-improving technology compliance. In particular, the model approaches to vehicle pricing are if it pays back within the first two to ranks available technology not by cost, closely held, manufacturers’ actual three years of vehicle ownership.356 but by ‘‘effective cost.’’ future approaches to making decisions NHTSA has therefore incorporated this When the model chooses which about technology are not perfectly assumption (of willingness to pay for technology to apply next, it calculates knowable. The CAFE model is intended technology that pays back within 30 the effective cost of available to illustrate ways manufacturers could months) into today’s analysis. technologies and chooses the respond to standards, given a set of Alternatives to this 30-month estimate technology with the lowest effective production constraints, not to predict are considered in the sensitivity cost. The ‘‘effective cost’’ itself is a how they will respond. Alternatives to analysis included in today’s notice. In combination of the technology cost, the these ‘‘effective cost’’ metrics have been the current version of the model, this fuel savings that would occur if that considered and will continue to be assumption holds whether or not a technology were applied to a given considered. For example, instead of manufacturer has already achieved vehicle, the resulting change in CAFE using a dollar value, the model could compliance. This means that the most penalties (as appropriate), and the use a ratio, such as the net cost cost-effective technologies (those that affected volumes. User inputs determine (technology cost minus fuel savings) of pay back within the first 21⁄2 years) are how much fuel savings manufacturers an application of technology divided by applied to new vehicles even in the believe new car buyers will pay for corresponding quantity of avoided fuel absence of regulatory pressure. (denominated in the number of years consumption or CO2 emissions. Any However, because the value of fuel before a technology ‘‘pays back’’ its alternative metric has the potential to savings depends upon the price of fuel, cost). shift simulated choices among the model will add more technology Because the civil penalty provisions technology application options, and even without regulatory pressure when specified for CAFE in EPCA do not some metrics would be less suited to the fuel prices are high compared to apply to CO2 standards, the effective CAFE model’s consideration of simulations where fuel prices are cost calculation applied when multiyear product planning, or less assumed to be low. This assumption is simulating compliance with CO2 adaptable than others to any future consistent with observed historical standards uses an estimate of the simulation of credit trading. Comment is compliance behavior (and consumer potential value of CO2 credits. Including sought regarding the definition and demand for fuel economy in the new a valuation of CO2 credits in the application of criteria to select among vehicle market), as discussed above. effective cost metric provides a potential technology options and determine when One implication of this assumption is basis for future explicit modeling of to stop applying technology (consider that futures with higher, or lower, fuel credit trading.354 Manufacturers, not only standards, but also factors such prices produce different sets of as fuel prices, civil penalties for CAFE, attractive technologies (and at different 351 Draft TAR, p. 13–10, available at https:// and the potential value of credits for times). For example, if fuel prices were www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/ both programs), and this aspect of the above $7/gallon, many of the Draft-TAR-Final.pdf (last accessed June 15, 2018). model may be further revised. Any technologies in this analysis could pay 352 NHTSA, Summary of Fuel Economy future revision to the effective cost Performance, 2014, available at https:// for themselves within the first year or www.nhtsa.gov/sites/nhtsa.dot.gov/files/ would be considered in light of two and would be applied at high rates performance-summary-report-12152014-v2.pdf (last in all of the alternatives. Similarly, at accessed June 27, 2018). and future efforts will focus consideration on more the other extreme (significantly reduced 353 Ibid. Additional data available at https:// plausible imperfect trading. fuel prices), almost no additional fuel one.nhtsa.gov/cafe_pic/CAFE_PIC_Mfr_LIVE.html 355 Having the model continue to add technology (last accessed June 27, 2018). in order to build a surplus of credits as warranted economy would be observed. 354 By treating all passenger cars and light trucks by the estimated (whether specified as a model as being manufactured by a single ‘‘OEM,’’ inputs input or calculated dynamically as a clearing price) 356 This is supported by the 2015 NAS study, to the CAFE model can be structured to simulate market value of credits would provide part of the which found that consumers seek to recoup added perfect trading. However, competitive and other basis for having the model build the supply side of upfront purchasing costs within two or three years. factors make perfect trading exceedingly unlikely, an explicitly-simulated credit trading market. See 2015 NAS Report, at pg. 317.

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While these assumptions about effective cost of the technology (which model years, or negotiated settlements desired payback period and consumer includes technology cost, consumer fuel with NHTSA to resolve deficits). preferences for fuel economy may not savings, consumer welfare changes, and In the current analysis, NHTSA has affect the eventual level of achieved the cost of penalties for non-compliance relied on past compliance behavior and CAFE and CO2 emissions in the later with the standard) is less costly than certified transactions in the credit years of the program, they will affect the paying civil penalties or purchasing market to designate some manufacturers amount of additional technology cost credits. Unlike previous versions of the as being willing to pay CAFE penalties and fuel savings that are attributable to model, the current implementation in some model years. The full set of the standard. The approach currently further acknowledges that some assumptions regarding manufacturer only addresses the inherent trade-off manufacturers experience transitions behavior with respect to civil penalties between additional technology cost and between product lines where they rely is presented in Table–II–86, which the value of fuel savings, but other costs heavily on credits (either carried shows all manufacturers are assumed to could be relevant as well. Further forward from earlier model years or be willing to pay civil penalties prior to research would be required to support acquired from other manufacturers) or simulations that assume buyers behave MY 2020. This is largely a reflection of simply pay penalties in one or more either existing credit balances (which as if they consider all ownership costs fleets for some number of years. The (e.g., additional excise taxes and manufacturers will use to offset CAFE model now allows the user to specify, insurance costs) at the time of purchase deficits until the credits reach their when appropriate for the regulatory and that manufacturers respond expiration dates) or assumed trades program being simulated, on a year-by- accordingly. Comment is sought on the between manufacturers that are likely to approach described above, the current year basis, whether each manufacturer happen in the near-future based on values ascribed to manufacturers’ belief should be considered as willing to pay previous behavior. The manufacturers about consumer willingness-to-pay for penalties for non-compliance. This in the table whose names appear in bold fuel economy, and practicable provides additional flexibility, all had at least one regulated fleet (of suggestions for future improvements particularly in the early years of the three) whose CAFE was below its and refinements, considering the simulation. As discussed above, this standard in MY 2016. Because the model’s purpose and structure. assumption is best considered as a analysis began with the MY 2016 fleet, method to allow a manufacturer to and no technology can be added to (c) Representation of Some OEMs’ under-comply with its standard in some vehicles that are already designed and Willingness To Treat Civil Penalties as model years—treating the civil penalty built, all manufacturers can generate a Program Flexibility rate and payment option as a proxy for civil penalties in MY 2016. However, When considering technology other actions it may take that are not once a manufacturer is designated as applications to improve fleet fuel represented in the CAFE model (e.g., unwilling to pay penalties, the CAFE economy, the model will add purchasing credits from another model will attempt to add technology to technology up to the point at which the manufacturer, carry-back from future the respective fleets to avoid shortfalls.

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Several of the manufacturers in compliance deficits. Thus far, NHTSA challenging to simulate. This will be an Table–II–86 that are assumed to be has not attempted to include simulation area of focus moving forward. willing to pay civil penalties in the early of credit carry-back or trading in the NHTSA introduced the CAFE Public years of the program have no history of CAFE model. Unlike past versions, the Information Center 357 to provide public paying civil penalties. However, several current CAFE model provides a basis to access to a range of information of those manufacturers have either specify (in model inputs) CAFE credits regarding the CAFE program, including bought or sold credits—or transferred available from model years earlier than manufacturers’ credit balances. credits from one fleet to another to offset those being simulated explicitly. For However, there is a data lag in the a shortfall in the underperforming fleet. example, with this analysis representing information presented on the CAFE PIC As the CAFE model does not simulate model years 2016–2032 explicitly, that may not capture credit actions credit trades between manufacturers, credits earned in model year 2012 are across the industry for as much as providing this additional flexibility in made available for use through model several months. Additionally, CAFE the modeling avoids the outcome where year 2017 (given the current five-year credits that are traded between limit on carry-forward of credits). The the CAFE model applies more manufacturers are adjusted to preserve banked credits are specific to both technology than would be needed in the the gallons saved that each credit model year and fleet in which they were context of the full set of compliance represents.358 The adjustment occurs at earned. Comment and supporting flexibilities at the industry level. By the time of application rather than at the information are invited regarding statute, NHTSA cannot consider credit time the credits are traded. This means whether and, if so, how the CAFE model flexibilities when setting standards, so that a manufacturer who has acquired and inputs might practicably be most manufacturers (those without a credits through trade, but has not yet modified to account for trading of history of civil penalty payment) are applied them, may show a credit credits between manufacturers and/or assumed to comply with their standard balance that is either considerably through fuel economy improvements for carry-back of credits from later to earlier model years. higher or lower than the real value of the model years being considered in this the credits when they are applied. For analysis. The notable exception to this As discussed in the CAFE model documentation, the model’s default example, a manufacturer that buys 40 is FCA, who we expect will still satisfy million credits from Tesla, may show a the requirements of the program through logic attempts to maximize credit carry- forward—that is, to ‘‘hold on’’ to credits credit balance in excess of 40 million. a combination of credit application and However, when those credits are civil penalties through MY 2025 before for as long as possible. If a manufacturer needs to cover a shortfall that occurs applied, they may be worth only 1/10 as eventually complying exclusively much—making that manufacturer’s true through fuel economy improvements in when insufficient opportunities exist to add technology in order to achieve credit balance closer to 4 million than MY 2026. 40 million. As mentioned above, the CAA does compliance with a standard, the model not provide civil penalty provisions will apply credits. Otherwise it carries Having reviewed credit balances (as of similar to those specified in EPCA/ forward credits until they are about to October 23, 2017) and estimated the EISA, and the above-mentioned expire, at which point it will use them potential that some manufacturers could corresponding inputs apply only to before adding technology that is not trade credits, NHTSA developed inputs simulation of compliance with CAFE considered cost-effective. The model that make carried-forward credits standards. attempts to use credits that will expire available as summarized in Table–II–87, within the next three years as a means Table–II–88, and Table–II–89, after (d) Representation of CAFE and CO2 to smooth out technology application subtracting credits assumed to be traded Credit Provisions over time to avoid both compliance to other manufacturers, adding credits The model’s approach to simulating shortfalls and high levels of over- assumed to be acquired from other compliance decisions accounts for the compliance that can result in a surplus manufacturers through such trades, and potential to earn and use CAFE credits of credits. As further discussed in the adjusting any traded credits (up or as provided by EPCA/EISA. The model CAFE model documentation, model down) to reflect their true value for the similarly accumulates and applies CO2 inputs can be used to adjust this logic fleet and model year into which they credits when simulating compliance to shift the use of credits ahead by one were traded.359 While the CAFE model with EPA’s standards. Like past or more model years. In general, the will transfer expiring credits into versions, the current CAFE model can logic used to generate credits and apply another fleet (e.g., moving expiring be used to simulate credit carry-forward them to compensate for compliance credits from the domestic car credit (a.k.a. banking) between model years shortfalls, both in a given fleet and bank into the light truck fleet), some of and transfers between the passenger car across regulatory fleets, is an area that these credits were moved in the initial and light truck fleets but not credit requires more attention in the next banks to improve the efficiency of carry-back (a.k.a. borrowing) from future phase of model development. While the application and to better reflect both the model years or trading between current model correctly accounts for projected shortfalls of each manufacturers. Some manufacturers credits earned when a manufacturer manufacturer’s regulated fleets, and to have made occasional use of credit exceeds its standard in a given year, the represent observed behavior. For carry-back provisions, although the strategic decision of whether to earn context, a manufacturer that produces analysis does not assume use of carry- additional credits to bank for future one million vehicles in a given fleet, back as a compliance strategy because of years (in the current fleet or to transfer and experiences a shortfall of 2 mpg, the risk in relying on future into another regulatory fleet) and when would need 20 million credits to improvements to offset earlier to optimally apply them to deficits is completely offset the shortfall.

357 CAFE Public Information Center, http:// adjustment when traded between manufacturers or would be applied to the model year in which they www.nhtsa.gov/CAFE_PIC/CAFE_PIC_Home.htm fleets. were set to expire. For example, credits traded into (last visited June 22, 2018). 359 The adjustments, which are based upon the a domestic passenger car fleet for MY 2014 were 358 GHG credits for EPA’s program are standard, CAFE and year of both the party adjusted assuming they would be applied in the denominated in metric tons of CO2 rather than originally earning the credits and the party applying domestic passenger car fleet for MY 2019. gram/mile compliance credits and require no them, were implemented assuming the credits

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Table-11-87- Estimated Domestic Car CAFE Credit Banks, MY 2011 -2015 Manufacturer Model Year 2011 2012 2013 2014 2015 BMW ----- Daimler ----- FCA 3,533,996 18,886,353 42,604,131 1,682,307 - Ford 24,094,037 26,139,750 40,611,410 30,152,856 7,089,840 General 7,682,752 7,246,220 24,976,993 7,338,835 - Motors Honda 99 1,379,203 813,612 39,580,944 52,537,420 Hyundai Kia-H ----- Hyundai Kia-K ----- JLR ----- Mazda 15,526 ---- Nissan - 1,564,100 26,451,158 52,774,443 62,285,009 Mitsubishi Subaru --- 589,594 2,880,250 Tesla - 164,504 491,723 363,905 25,369,142 Toyota 31,937,216 29,691,134 17,474,425 12,181,000 4,828,440 Volvo ----- VWA - 1,529,328 2,836,482 4,390,945 4,479,510

T a bl e-II-- 88 E st. 1ma t e d I mpor t e d C ar CAFE C re d·t1 B an k s, MY 2011 -2015 Manufacturer Model Year 2011 2012 2013 2014 2015 BMW --- 4,163,432 6,329,325 Daimler ----- FCA - 6,326,946 --- Ford -- 1,385,379 -- General 1,576,672 251,275 2,780,629 3,646,294 1,304,196 Motors Honda 101 99 5,431,859 2,142,966 1,356,300 Hyundai Kia-H 28,338,076 16,403,710 44,063,236 10,185,700 9,658,416 Hyundai Kia-K 15,078,920 12,759,767 11,603,509 -- JLR --- 1,270,772 293,436 Mazda 5,617,262 322,320 - 15,430,643 13,254,400 Nissan 1,953,364 1,606,363 894,783 2,161,883 9,086,088 Mitsubishi Subaru - 6,804,584 1,894,165 22,616,350 1,867,661 Tesla ----- Toyota 39,697,080 62,935,487 66,791,277 47,709,001 50,293,119 Volvo ----- VWA 8,593,792 ----

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In addition to the inclusion of these but to examine the impact of proposed was not modified to allow exceptions to existing credit banks, the CAFE model standards based solely on fuel economy the life-span of compliance credits also updated its treatment of credits in improvements in all years for which treating them all as if they may be the rulemaking analysis. Congress has new standards are being considered. carried forward for no more than five declared that NHTSA set CAFE Comment is sought regarding the years, so the initial credit banks were standards at maximum feasible levels model’s representation of the CAFE and modified to anticipate the years in for each model year under consideration CO2 credit provisions, recommendations which those credits might be needed. without consideration of the program’s regarding any other options, and any The fact that MY 2016 is simulated credit mechanisms. However, as CAFE information that could help to refine the explicitly prohibited the inclusion of current approach or develop and rulemakings have evaluated longer time these banked credits in MY 2016 (which implement an alternative approach. periods in recent years, the early actions The CAFE model has also been could be carried forward from MY 2016 taken by manufacturers required more modified to include a similar to MY 2021), and thus underestimates nuanced representation. Therefore, the representation of existing credit banks the extent to which individual CAFE model now allows a ‘‘last year to in EPA’s CO2 program. While the life of manufacturers, and the industry as a consider credits,’’ set at the last year for a CO2 credit, denominated in metric whole, may rely on these early credits which new standards are not being tons CO2, has a five-year life, matching to comply with EPA standards between considered (MY 2019 in this analysis). the lifespan of CAFE credits, credits MY 2016 and MY 2021. The credit This allows the model to replicate the earned in the early years of the EPA banks with which the simulations in practical application of existing credits program, MY 2009–2011, may be used this analysis were conducted are toward CAFE compliance in early years through MY 2021.360 The CAFE model presented in the following tables:

360 In response to comments, EPA placed limits expire prior to this rule. However, credits generated traded, and applied to deficits generated through on credits earned in MY 2009, causing them to in MYs 2010–2011 may be carried forward, or MY 2021.

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T a bl e-II-- 90 E sf 1ma t e d P assenger C ar CO2 C re d·t1 B an k s, MY 2011 -2015 Manufacturer Model Year 2011 2012 2013 2014 2015 BMW 790,137 1,213,000 1,558,000 1,833,000 2,089,000 Daimler 688,000 777,000 899,000 1,199,000 1,443,000 FCA 4,089,000 4,554,000 5,142,000 6,574,000 7,318,000 Ford 1,911,000 2,546,000 3,485,000 4,743,000 4,216,000 General 2,040,000 3,804,000 3,487,000 4,882,000 4,588,000 Motors Honda 600,000 2,000,000 Hyundai Kia-H Hyundai Kia-K 114,000 1,236,000 548,000 973,000 1,161,000 JLR 278,000 343,000 355,000 392,000 379,000 Mazda 600,000 Nissan 765,000 1,863,000 Mitsubishi Subaru 511,000 611,000 1,000,000 1,200,000 1,400,000 Tesla Toyota 450,000 Volvo 32,000 102,000 169,000 89,000 143,000 VWA 1,215,000 1,343,000 1,700,000 2,065,000 2,444,000

T a bl e-II-- 91 E stimate . d L.Igl h t T rue k CO2 C re d.It B an k s, MY 2011 -2015 Manufacturer Model Year 2011 2012 2013 2014 2015 BMW 112,314 ---- Daimler 870,000 914,000 1,149,000 274,000 446,000 FCA 7,756,000 6,106,000 2,742,000 1,920,000 3,614,000 Ford 6,366,000 2,875,000 4,656,000 6,089,000 2,122,000 General 11,318,000 11,216,000 9,164,000 6,049,000 4,829,000 Motors Honda 945,000 1,400,000 Hyundai Kia-H 140,000 153,000 218,000 300,000 300,000 Hyundai Kia-K 556,000 591,000 981,000 973,000 1,219,000 JLR 1,715,000 1,635,000 1,973,000 1,940,000 2,168,000 Mazda 200,000 450,000 500,000 Nissan Mitsubishi Subaru 193,000 Tesla Toyota 8,701,000 8,710,000 8,545,000 9,045,000 8,000,000 Volvo 37,000 50,000 50,000 VWA 729,000 384,000 134,000 370,000 547,000

While the CAFE model does not the strategic accumulation and between fleets to improve the simulate the ability to trade credits application of compliance credits, as compliance position of a less efficient between manufacturers, it does simulate well as the ability to transfer credits fleet by leveraging credits earned by a

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more efficient fleet. The model prefers phase out in MY 2019), they may be targets (by volume) within a fleet, just to hold on to earned compliance credits included under either a ‘‘standard as the standards prescribe. Unlike within a given fleet, carrying them setting’’ or ‘‘unconstrained’’ analysis earlier versions of the CAFE model, the forward into the future to offset perspective. current version further disaggregates potential future deficits. This When the CAFE model simulates passenger cars into domestic and assumption is consistent with observed EPA’s program, the treatment of A/C imported classes (which manufacturers strategic behavior dating back to 2009. efficiency and off-cycle credits is report to NHTSA and EPA as part of From 2009 to present, no similar, but the model also accounts for their CAFE compliance submissions). manufacturer has transferred CAFE A/C leakage (which is not part of This allows the CAFE model to more credits into a fleet to offset a deficit in NHTSA’s program). When determining accurately estimate the requirement on the same year in which they were the compliance status of a the two passenger car fleets, represent earned. This has occurred with credits manufacturer’s fleet (in the case of the domestic passenger car floor (which acquired from other manufacturers via EPA’s program, PC and LT are the only must be exceeded by every trade but not with a manufacturer’s own fleet distinctions), the CAFE model manufacturer’s domestic fleet, without credits. Therefore, the current weighs future compliance actions the use of credits, but with the representation of credit transfers against the presence of existing (and possibility of civil penalty payment), between fleets—where the model expiring) CO2 credits resulting from and allows it to enforce the transfer cap prefers to transfer expiring, or soon-to- over-compliance with earlier years’ limit that exists between domestic and be-expiring credits rather than newly standards, A/C efficiency credits, A/C imported passenger cars, all for earned credits—is both appropriate and leakage credits, and off-cycle credits. purposes of the CAFE program. consistent with observed industry In calculating the achieved CAFE behavior. 5. Impacts on Each OEM and Overall Industry level, the model uses the prescribed This may not be the case for GHG harmonic average of fuel economy standards, though it is difficult to be (a) Technology Application and ratings within a vehicle fleet. Under an certain at this point. The GHG program Penetration Rates ‘‘unconstrained’’ analysis, or in a model seeded the industry with a large The CAFE model tracks and reports year for which standards are already quantity of early compliance credits final, it is possible for a manufacturer’s 361 technology application and penetration (earned in MYs 2009–2011 ) prior to rates for each manufacturer, regulatory CAFE to fall below its required level the existence formal standards of the class, and model year, calculated as the without generating penalties because EPA program. These early credits do not volume of vehicles with a given the model will apply expiring or expire until 2021. So, for manufacturers technology divided by the total volume. transferred credits to deficits if it is looking to offset deficits, it is more The ‘‘application rate’’ accounts only for strategically appropriate to do so. sensible to use current-year credits that those technologies applied by the model Consistent with current EPA expire in the next five years, rather than during the compliance simulation, regulations, the model applies simple draw down the bank of credits that can while the ‘‘penetration rate’’ accounts (not harmonic) production-weighted be used until MY 2021. The first model for the total percentage of a technology averaging to calculate average CO2 year for which earned credits outlive the present in a given fleet, whether applied levels. initial bank is MY 2017, for which final by the CAFE model or already present (c) Costs compliance actions and deficit at the start of the simulation. resolutions are still pending. Regardless, In addition to the aggregate For each technology that the model in order to accurately represent some of representation of technology adds to a given vehicle, it accumulates the observed behavior in the GHG credit penetration, the model also tracks each cost. The technology costs are defined system, the CAFE model allows (and individual vehicle model on which it incrementally and vary both over time encourages) within-year transfers has operated. Each row in the market and by technology class, where the same between regulated fleets for the purpose data file (the representation of vehicles technology may cost more to apply to of simulating compliance with the GHG offered for sale in MY 2016 in the U.S., larger vehicles as it involves more raw standards. discussed in detail in Section II.B.a and materials or requires different In addition to more rigorous PRIA Chapter 6) contains a record for specifications to preserve some accounting of CAFE and CO2 credits, the every model year and every alternative, performance attributes. While learning- model now also accounts for air that identifies with which technologies by-doing can bring down cost, and conditioning efficiency and off-cycle the vehicle started the simulation, should reasonably be implemented in adjustments. NHTSA’s program which technologies were applied, and the CAFE model as a rate of cost considers those adjustments in a whether those technologies were reduction that is applied to the manufacturer’s compliance calculation applied directly or through inheritance cumulative volume of a given starting in MY 2017, and the current (discussed above). Interested parties technology produced by either a single model uses the adjustments claimed by may use these outputs to assess how the manufacturer or the industry as a whole, each manufacturer in MY 2016 as the compliance simulation modified any in practice this notion is implemented starting point for all future years. vehicle that was offered for sale in MY as a function of time, rather than Because the air conditioning and off- 2016 in response to a given regulatory production volume. Thus, depending cycle adjustments are not credits in alternative. upon where a given technology starts NHTSA’s program, but rather along its learning curve, it may appear adjustments to compliance fuel (b) Required and Achieved CAFE and to be cost-effective in later years where economy (much like the Flexible Fuel Average CO2 Levels it was not in earlier years. As the model Vehicle adjustments that are due to The model fully represents the carries forward technologies that it has required CAFE (and now, CO2) levels for already applied to future model years, it 361 In response to public comment, EPA eliminated the use of credits earned in MY 2009 for every manufacturer and every fleet. The similarly adjusts the costs of those future model years. However, credits earned in MY standard for each manufacturer is based technologies based on their individual 2010 and MY 2011 remain. on the harmonic average of footprint learning rates.

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The other costs that manufacturers (regardless of regulatory class or body compliance value in each model year incur as a result of CAFE standards are style), in response to certain (and class). Once the simulation begins, civil penalties resulting from non- macroeconomic inputs and changes in new vehicles are added to the compliance with CAFE standards. The the average new vehicle price. The price population from the market data file and CAFE model accumulates costs of $5.50 impact is modest relative to the age throughout their useful lives during per 1/10–MPG under the standard, influence of the macroeconomic factors the simulation, with some fraction of multiplied by the number of vehicles in the model. The combination of these them being retired (or scrapped) along produced in that fleet, in that model two models modify the total number of the way. For example, in calendar year year. The model reports as the full new vehicles, the share of passenger 2017, the new vehicles (age zero) are ‘‘regulatory cost,’’ the sum of total cars and light trucks, and, as a MY 2017 vehicles (added by the CAFE technology cost and total fines by the consequence, the number of each given model simulation and represented at the manufacturer, fleet, and model year. As model sold by a given manufacturer. same level of detail used to simulate mentioned above, the relevant EPCA/ However, these two factors are compliance), the age one vehicles are EISA provisions do not also appear in insufficient to cause large changes to the MY 2016 vehicles (added by the CAFE the CAA, so this option and these costs composition of any of a manufacturer’s model simulation), and the age two apply only to simulated compliance fleets. In order to significantly change vehicles are MY 2015 vehicles with CAFE standards. the mix of models produced within a (inherited from the registered vehicle population and carried through the (d) Sales given fleet, the CAFE model would require a way to trade off the production analysis with less granularity). This In all previous versions of the CAFE of one vehicle versus another both national registered fleet is used to model, the total number of vehicles sold within a manufacturer’s fleet and across calculate annual fuel consumption, in any model year, in fact the number the industry. While NHTSA has vehicle miles traveled (VMT), pollutant of each individual vehicle model sold in experimented with fully-integrated emissions, and safety impacts under each year, has been a static input that consumer choice models, their each regulatory alternative. did not vary in response to price performance has yet to satisfy the In addition to dynamically modifying increases induced by CAFE standards, requirements of a rulemaking analysis. the total number of new vehicles sold, nor changes in fuel prices, or any other There are multiple levels of sales a dynamic model of vehicle retirement, input to the model. The only way to impacts that could result from or scrappage, has also been alter sales, was to update the entire increasing the prices of new vehicles implemented. The model implements forecast in the market input file. across the industry. Any estimate of the scrappage response by defining the However, in the 2012 final rule, NHTSA impacts at the manufacturer, or model, instantaneous scrappage rate at any age included a dynamic fleet share model level would be subject to an assumed using two functions. For ages less than that was based on a module in the pricing strategy that spreads technology 20, instantaneous scrappage is defined Energy Information Administration’s cost increases across available models in as a function of vehicle age, new vehicle NEMS model. This fleet share model a way that may cross-subsidize specific price, cost per mile of driving (the ratio did not change the size of the new models or segments at the expense of of fuel price and fuel economy), and a vehicle fleet in any year, but it did others. However, at the industry level, it small number of macroeconomic factors. change the share of new vehicles that is reasonable to assume that all For ages greater than 20, the were classified as passenger cars (or incremental technology costs can be instantaneous scrappage rate is a simple light trucks). That capability was not captured by the average price of a new exponential function of age. While the included in the central analysis but was vehicle. To the extent that this factor scrappage response does not affect included in the uncertainty analysis, influences the total number of new manufacturer compliance calculations, which looked at the baseline and vehicles sold in a given model year, it it impacts the lifetime mileage preferred alternative in the context of accumulation (and thus fuel savings) of can be included in an empirical model thousands of possible future states of all vehicles. Previous CAFE analyses of annual sales. However, there is the world. As some of those futures have focused exclusively on new limited historical evidence that the contained extreme cases of fuel prices, vehicles, tracing the fuel consumption average price of a new vehicle is a it was important to ensure consistent and social costs of these vehicles strong determining factor in the total modeling responses within that context. throughout their useful lives; the number of annual new vehicle sales. For example, at a gasoline price of $7/ scrappage effect also impacts the gallon, it would be unrealistic to expect 6. National Impacts registered vehicle fleet that exists when the new vehicle market’s light truck (a) Vehicle Stock and Fleet Turnover a set of standards is implemented. share to be the same as the future where As new vehicles enter the registered gasoline cost $2/gallon. The current The CAFE model carries a complete population their retirement rates are model has slightly modified, and fully representation of the registered vehicle governed by the scrappage model, so are integrated, the dynamic fleet share population in each calendar year, the vehicles already registered at the model. Every regulatory alternative and starting with an aggregated version of start of model year 2016. To the extent sensitivity case considered in this the most recent available data about the that a given set of CAFE or CO2 analysis reflects a dynamically registered population for the first year of standards accelerates or decelerates the responsive fleet mix in the new vehicle the simulation. In this analysis, the first retirement of those vehicles, additional market. model year considered is MY 2016, and fuel consumption and social costs may While the dynamic fleet share model the registered vehicle population enters accrue to those vehicles under that adjusts unit sales across body styles the model as it appeared at the end of standard. The CAFE model accounts for (cars, SUVs, and trucks), it does not calendar year 2015. The initial vehicle those costs and benefits, as well as modify the total number of new vehicles population is stratified by age (or model tracking all of the standard benefits and sold in a given year. The CAFE model year cohort) and regulatory class—to costs associated with the lifetimes of now includes a separate function to which the CAFE model assigns average new vehicles produced under the rule. account for changes in the total number fuel economies based on the reported For more detail about the derivation of of new vehicles sold in a given year regulatory class industry average the scrappage functions, see Section

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II.E, and PRIA Chapter 8. Comment is (c) Fuel Consumption and GHG Federal fuel excise tax is levied on every sought on the specification and Emissions gallon of gasoline and diesel sold in the inclusion of these factors in the current For every vehicle model in the market U.S., with diesel facing a higher per- model. file, the model estimates the VMT per gallon tax rate. The model uses a national perspective, where the state (b) Highway Travel vehicle (using the assumed VMT schedule, the vehicle fuel economy, fuel taxes present in the input files represent an estimated average fuel tax across all In support of prior CAFE rulemakings, price, and the rebound assumption). U.S. states. Accordingly, while the the CAFE model accounted for new Those miles are multiplied by the CAFE model cannot reasonably estimate travel that results from fuel economy volume for each vehicle. Fuel consumption is the product of miles potential losses to state fuel tax revenue improvements that reduce the cost of from increasingly the fuel economy of driven and fuel economy, which can be driving. The magnitude of the increase new vehicles, it can do so for the HTF, tracked by model year cohort in the in travel demand is determined by the and the agencies invite comment on the model. Carbon dioxide emissions from rebound effect. In both previous proposed standards’ implications for the vehicle tailpipes are the simple product versions and the current version of the HTF. CAFE model, the amount of travel of gallons consumed and the carbon In addition to the tailpipe emissions demanded by the existing fleet of content of each gallon. of carbon dioxide, each gallon of In order to calculate calendar year vehicles is also responsive to the gasoline produced for consumption by rebound effect (representing the price fuel consumption, the model needs to the on-road fleet has associated account for the inherited on-road fleet elasticity of demand for travel)— ‘‘upstream’’ emissions that occur in the in addition to the model year cohorts increasing when fuel prices decrease extraction, transportation, refining, and affected by this proposed rule. Using the relative to the fuel price when the VMT distribution of the fuel. The model VMT of the average passenger car and accounts for these emissions as well (on on which our mileage accumulation light truck from each cohort, the model schedules were built was observed. a per-gallon basis) and reports them computes the fuel consumption of each accordingly. Since the fuel economy of those model year class of vehicles for its age vehicles is already fixed, only the fuel in a given CY. The sum across all ages (d) Criteria Pollutant Emissions price influences their travel demand (and thus, model year cohorts) in a The CAFE model uses the entire on- relative to the mileage accumulation given CY provides estimated CY fuel road fleet, calculated VMT (discussed schedule and so is identical for all consumption. above), and emissions factors (which are regulatory alternatives. Rather than rely on the compliance an input to the CAFE model, specified While the average mileage values of fuel economy for either by model year and age) to calculate accumulation per vehicle by age is not historical vehicles or vehicles that go tailpipe emissions associated with a influenced by the rebound effect in a through the full compliance simulation, given alternative. Just as it does for way that differs by regulatory the model applies an ‘‘on-road gap’’ to additional GHG emissions associated alternative, three other factors influence represent the expected difference with upstream emissions from fuel total VMT in the model in a way that between fuel economy on the laboratory production, the model captures criteria produces different total mileage test cycle and fuel economy under real- pollutants that occur during other parts accumulation by regulatory alternative. world operation. This was a topic of of the fuel life cycle. While this is The first factor is the total industry sales interest in the recent peer review of the typically a function of the number of response: New vehicles are both driven CAFE model. While the model currently gallons of gasoline consumed (and miles more than older vehicles and are more allows the user to specify an on-road driven, for tailpipe criteria pollutant gap that varies by fuel type (gasoline, fuel efficient (thus producing more emissions), the CAFE model also E85, diesel, electricity, hydrogen, and rebound miles). To the extent that more estimates electricity consumption and CNG), it does not vary over time, by (or fewer) of these new models enter the the associated upstream emissions vehicle age, or by technology vehicle fleet in each model year, total (resource extraction and generation, combination. It is possible that the VMT will increase (or decrease) as a based on U.S. grid mix). ‘‘gap’’ between laboratory fuel economy result. The second factor is the dynamic and real-world fuel economy has (e) Highway Fatalities fleet share model. The fleet share changed over time, that fuel economy Earlier versions of the CAFE model influences not only the fuel economy degrades over time as a vehicle ages, or accounted for the safety impacts distribution of the fleet, as light trucks that specific combinations of fuel-saving associated with reducing vehicle mass are less efficient than passenger cars on technologies have a larger discrepancy in order to improve fuel economy. In average, but the total miles are between laboratory and real-world fuel particular, NHTSA’s safety analysis influenced by fact that light trucks are economy than others. Further research estimated the additional fatalities that driven more than passenger cars as well. would be required to determine whether would occur as a result of new vehicles Both of the first two factors can magnify the model should include a functional getting lighter, then interacting with the the influence of the rebound effect on representation of the on-road gap to on-road vehicle population. In general, vehicles that go through the compliance address these various factors, and taking mass out of the heaviest new simulation (MY 2016–2032) in the comment is sought on the data sources vehicles improved safety outcomes, manner discussed above and in Section and implementation strategies available while taking mass from the lightest new II.E. The third factor influencing total to do so. vehicles resulted in a greater number of annual VMT is the scrappage model. By Because the model produces an expected highway fatalities. However, modifying the retirement rates of on- estimate of the aggregate number of the change in fatalities did not road vehicles under each regulatory gallons sold in each CY, it is possible to adequately account for changes in alternative, the scrappage model either calculate both the total expenditures on exposure that occur as a result of increases or decreases the lifetime miles motor fuel and the total contribution to increased demand for travel as vehicles that accrue to vehicles in a given model the Highway Trust Fund (HTF) that become cheaper to operate. The current year cohort. result from that fuel consumption. The version of the model resolves that

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limitation and addresses additional accelerates) the retirement of registered independent of any changes to new sources of fatalities that can result from vehicles, impacts the number of vehicle mass, price, or longevity. the implementation of CAFE or CO2 fatalities through this mechanism— The CAFE model now estimates standards. These are discussed in importantly affecting not just new fatalities by combining the effects greater detail in Section 0 and PRIA vehicles sold from model years 2016– discussed above. In particular, the Chapter 11. 2032 but existing vehicles that are model estimates the fatality rate per NHTSA has observed that older already part of the on-road fleet. vehicles in the population are Similarly, to the extent that a CAFE or billion miles VMT for each model year vehicle in the population (the newest of responsible for a disproportionate CO2 alternative reduces new vehicle number of fatalities, both by number of sales, it can slow the transition from which are the new vehicles produced registrations and by number of miles older vehicles to newer vehicles, that model year). This estimate is driven. Accordingly, any factor that reducing the share of total vehicle miles independent of regulatory class and causes the population of vehicles to turn that are driven by newer, more varies only by year (and not vehicle over more slowly will induce additional technologically advanced vehicles. age). The estimated fatality rate is then fatalities—as those older vehicles Accounting for the change in vehicle multiplied by the estimated VMT for continue to be driven, rather than being miles traveled that occurs when each vehicle in the population and the retired and replaced with newer (even if vehicles become cheaper to operate has product of the change in curb weight not brand new) vehicle models. The led to a number of fatalities that can be and the relevant safety coefficient, as in scrappage effect, which delays (or attributed to the rebound effect, the equation below.

For the vehicles in the historical fleet, generate social costs. The most obvious incremental fuel expenditures are meaning all those vehicles that are cost associated with the program is the greater for the alternatives than for the already part of the registered vehicle cost of additional fuel economy baseline. population in CY 2016, only the model improving/CO2 emissions reducing Other social costs and benefits emerge year effect that determines the technology that is added to new as the result of physical phenomena, ‘‘FatalityEstimate’’ is relevant. However, vehicles as a result of the rule. However, like tailpipe emissions or highway each vehicle that is simulated explicitly the model does not inherently draw a fatalities, which are the result of by the CAFE model, and is eligible to distinction between costs and benefits. changes in the composition and use of receive mass reduction technologies, For example, the model tracks fuel the on-road fleet. The social costs must also consider the change between consumption and the dollar value of associated with those quantities its curb weight and the threshold fuel consumed. This is the cost of travel represent an economic estimate of the weights that are used to define safety under a given alternative (including the social damages associated with the classes. For vehicles above the baseline). The ‘‘cost’’ or ‘‘benefit’’ changes in each quantity. The model threshold, reducing vehicle mass can associated with the value of fuel tracks and reports each of these have a smaller negative impact on consumed is determined by the quantities by: Model year and vehicle fatalities (or even reduce fatalities, in reference point against which each age (the combination of which can be the case of the heaviest light trucks). alternative is considered. The CAFE used to produce calendar year totals), The ‘‘ChangePer100Lbs’’ depends upon regulatory class, fuel type, and social this difference. The sum of all estimated model reports absolute values for the discount rate. fatalities for each model year vehicle in amount of money spent on fuel in the the on-road fleet determines the baseline, then reports the amount spent The full list of potential costs and reported fatalities, which can be on fuel in the alternatives relative to the benefits is presented in Table–II–92 as summarized by either model year or baseline. If the baseline standard were well as the population of vehicles that calendar year. fixed at the current level, and an determines the size of the factor (either alternative achieves 100 mpg by 2025, new vehicles or all registered vehicles) (f) Costs and Benefits the total expenditures on fuel in the and the mechanism that determines the As the CAFE model simulates alternative would be lower, creating a size of the effect (whether driven by the manufacturer compliance with fuel savings ‘‘benefit.’’ This analysis number of miles driven, the number of regulatory alternatives, it estimates and uses a baseline that is more stringent gallons consumed, or the number of tracks a number of consequences that than each alternative considered, so the vehicles produced).

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III. Proposed CAFE and CO2 Standards For MYs since 2011 for CAFE and and higher CO2 grams/mile targets than for MYs 2021–2026 since 2012 for CO2, standards have smaller vehicles. This is because, taken the form of fuel economy and CO2 generally speaking, smaller vehicles are A. Form of the Standards targets expressed as functions of vehicle more capable of achieving higher levels NHTSA and EPA are proposing that footprint (the product of vehicle of fuel economy/lower levels of CO2 wheelbase and average track width). emissions, mostly because they tend not the form of the CAFE and CO2 standards for MYs 2021–2026 would follow the NHTSA and EPA continue to believe to have to work as hard to perform their that footprint is the most appropriate driving task. Although a manufacturer’s form of those standards in prior model attribute on which to base the proposed fleet average standards could be years. NHTSA has specific statutory standards, as discussed in Section II.C. estimated throughout the model year requirements for the form of CAFE Under the footprint-based standards, the based on the projected production standards: Specifically, EPCA, as function defines a CO2 or fuel economy volume of its vehicle fleet (and are amended by EISA, requires that CAFE performance target for each unique estimated as part of EPA’s certification standards be issued separately for footprint combination within a car or process), the standards to which the passenger cars and light trucks, and that truck model type. Using the functions, manufacturer must comply will be each standard be specified as a each manufacturer thus will have a determined by its final model year mathematical function expressed in CAFE and CO2 average standard for production figures. A manufacturer’s terms of one or more vehicle attributes each year that is unique to each of its calculation of its fleet average standards related to fuel economy. Although the fleets,363 depending on the footprints as well as its fleets’ average performance CAA does not have comparable specific and production volumes of the vehicle at the end of the model year will thus requirements for the form of CO2 models produced by that manufacturer. be based on the production-weighted standards for light-duty vehicles, EPA A manufacturer will have separate average target and performance of each has concluded that it is appropriate to footprint-based standards for cars and model in its fleet.364 set CO2 standards according to vehicle for trucks. The functions are mostly For passenger cars, consistent with footprint, consistent with the EPCA/ sloped, so that generally, larger vehicles prior rulemakings, NHTSA is proposing EISA requirements, which simplifies (i.e., vehicles with larger footprints) will to define fuel economy targets as compliance for the industry.362 be subject to lower CAFE mpg targets follows:

362 Such an approach is permissible under section car fleets whereas EPA combines all passenger cars comparing the fleet average standard (based on the 202(a) of the CAA and EPA has used the attribute- into one fleet. production-weighted average of the target levels for based approach in issuing standards under 364 As in prior rulemakings, a manufacturer may each model) with fleet average performance (based analogous provisions of the CAA. have some vehicle models that exceed their target on the production-weighted average of the 363 EPCA/EISA requires NHTSA to separate and some that are below their target. Compliance performance of each model). passenger cars into domestic and import passenger with a fleet average standard is determined by

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Where: c is the slope (in gallons per mile per square included values. For example, foot, or gpm, per square foot) of a line TARGETFE is the fuel economy target (in MIN[40,35] = 35 and MAX(40, 25) = 40, mpg) applicable to a specific vehicle relating fuel consumption (the inverse of such that MIN[MAX(40, 25), 35] = 35. fuel economy) to footprint, and model type with a unique footprint d is an intercept (in gpm) of the same line. For light trucks, also consistent with combination, prior rulemakings, NHTSA is proposing a is a minimum fuel economy target (in mpg), Here, MIN and MAX are functions b is a maximum fuel economy target (in that take the minimum and maximum to define fuel economy targets as mpg), values, respectively, of the set of follows:

Where: functions that are similar, with a, b, c, and d are as for passenger cars, but TARGETFE is the fuel economy target (in coefficients a–h corresponding to those taking values specific to light trucks, mpg) applicable to a specific vehicle listed above.365 For passenger cars, EPA e is a second minimum CO2 target (in g/mi), model type with a unique footprint is proposing to define CO2 targets as f is a second maximum CO2 target (in g/mi), combination, follows: g is the slope (in g/mi per square foot) of a a, b, c, and d are as for passenger cars, but second line relating CO2 emissions to TARGETCO2 = MIN[b,MAX[a,c × taking values specific to light trucks, footprint, and e is a second minimum fuel economy target FOOTPRINT + d]] h is an intercept (in g/mi) of the same second (in mpg), Where: line. f is a second maximum fuel economy target TARGETCO2 is the CO2 target (in grams per (in mpg), mile, or g/mi) applicable to a specific To be clear, as has been the case since g is the slope (in gpm per square foot) of a vehicle model configuration, second line relating fuel consumption the agencies began establishing a is a minimum CO2 target (in g/mi), (the inverse of fuel economy) to attribute-based standards, no vehicle b is a maximum CO2 target (in g/mi), footprint, and c is the slope (in g/mi, per square foot) of a need meet the specific applicable fuel h is an intercept (in gpm) of the same second line relating CO emissions to footprint, economy or CO2 targets, because line. 2 and compliance with either CAFE or CO2 Although the general model of the d is an intercept (in g/mi) of the same line. standards is determined based on target function equation is the same for For light trucks, CO targets are corporate average fuel economy or fleet each vehicle category (passenger cars 2 defined as follows: average CO2 emission rates. The and light trucks) and each model year, TARGETCO2 = MIN[MIN[b, MAX[a,c × required CAFE level applicable to a the parameters of the function equation FOOTPRINT + d]], MIN[f,MAX[e, g given fleet in a given model year is differ for cars and trucks. For MYs × FOOTPRINT + H]] determined by calculating the 2020–2026, the parameters are production-weighted harmonic average unchanged, resulting in the same Where: of fuel economy targets applicable to stringency in each of those model years. TARGETCO2 is the CO2 target (in g/mi) specific vehicle model configurations in Mathematical functions defining the applicable to a specific vehicle model the fleet, as follows: proposed CO2 targets are expressed as configuration,

Where: PRODUCTIONi is the number of model Similarly, the required average CO2 CAFErequired is the CAFE level the fleet is configuration i produced for sale in the level applicable to a given fleet in a required to achieve, U.S., and given model year is determined by i refers to specific vehicle model/ TARGETFE,i the fuel economy target (as calculating the production-weighted configurations in the fleet, defined above) for model configuration i.

365 EPA regulations use a different but specify requirements separately for different ranges equivalent and more efficient to present the targets mathematically equivalent approach to specify of vehicle footprint. Because these ranges reflect the as in this Section. targets. Rather than using a function with nested combined application of the listed minima, minima and maxima functions, EPA regulations maxima, and linear functions, it is mathematically

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average (not harmonic) of CO2 targets applicable to specific vehicle model configurations in the fleet, as follows:

Where: Today’s action would set standards one of the other regulatory alternatives CO2required is the average CO2 level the fleet that only apply to fuel economy and for the final rule. is required to achieve, CO . EPA seeks comment on this 2 B. Passenger Car Standards i refers to specific vehicle model/ approach. configurations in the fleet, Comment is sought on the proposed For passenger cars, NHTSA and EPA PRODUCTIONi is the number of model configuration i produced for sale in the standards and on the analysis presented are proposing CAFE and CO2 standards, U.S., and here; we seek any relevant data and respectively, for MYs 2021–2026 that TARGETCO2,i is the CO2 target (as defined information and will review responses. are defined by the following above) for model configuration i. That review could lead to selection of coefficients:

Section II.C above discusses in detail coefficients result in the footprint- 2017–2020 standards are also shown for how the coefficients in Table III–1 were dependent targets shown graphically comparison. developed for this proposal. The below for MYs 2021–2026. The MYs

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Figure 111-1 -Passenger Car Fuel Economy Targets

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While we do not know yet with years 2021 and beyond do not reflect ranging from three grams per mile certainty what CAFE and CO2 levels these adjustments. equivalent for Hyundai and Kia, to 17 will ultimately be required of individual EPA seeks comments on whether to grams per mile equivalent for Jaguar manufacturers, because those levels will proceed with this proposal to Land Rover.367 As related to methane depend on the mix of vehicles that they discontinue accounting for A/C leakage, (CH4) and nitrous oxide (N2O) produce for sale in future model years, methane emissions, and nitrous oxide emissions, manufacturers averaged 0.1 based on the market forecast of future emissions as part of the CO2 emissions grams per mile equivalent in deficits for sales that was used to examine today’s standards to provide for better harmony the 2016 MY, with deficits ranging from with the CAFE program, or whether to proposed standards, we currently 0.1 grams per mile equivalent for GM, continue to consider these factors estimate that the target functions shown Mazda, and Toyota, to 0.6 grams per toward compliance and retain that as a mile equivalent for Nissan.368 above would result in the following feature that differs between the average required fuel economy and CO EPA notes that since the 2010 2 programs. A/C leakage credits, which rulemaking on this subject, the agencies emissions levels for individual are accounted for in the baseline model, have accounted for the ability to apply manufacturers during MYs 2021–2026. have been extensively generated by A/C leakage credits by increasing EPA’s Prior to MY 2021, average required CO2 manufacturers, and make up a portion CO2 standard stringency by the average levels reflect underlying target functions of their compliance with EPA’s CO2 anticipated amount of credits when (specified above) that reflect the use of standards. In the 2016 MY, compared to the CAFE stringency automotive refrigerants with reduced manufacturers averaged six grams per requirements.369 For model years 2021– global warming potential (GWP) and/or mile equivalent in A/C leakage credits, 2025, the A/C leakage offset, or the use of technologies that reduce the 366 Prior to MY 2021, CO targets include refrigerant leaks. EPA is proposing to 2 367 Other manufacturers’ A/C leakage credit grams adjustments reflecting the use of automotive per mile equivalent include: BMW, Honda, exclude air conditioning refrigerants refrigerants with reduced global warming potential Mistubishi, Nissan, Toyota, and Volkswagen at 5 g/ and leakage, and nitrous oxide and (GWP) and/or the use of technologies that reduce mi; Mercedes at 6 g/mi; Ford, GM, and Volvo at 7 methane GHGs from average the refrigerant leaks and optionally nitrous oxide and methane emissions. EPA is proposing to g/mi; and FCA at 14 g/mi. performance calculations after model exclude air conditioning refrigerants and leakage, 368 Other manufacturers’ methane and nitrous year 2020; CO2 targets and resultant and nitrous oxide and methane GHGs from average oxide deficit grams per mile equivalent include fleet average requirements for model performance calculations after model year 2020; BMW at 0.2 g/mi, and Ford at 0.3 g/mi. FCA and CO2 targets (and resultant fleet average Volkswagen numbers are not reported due to an requirements) for model years 2021 and beyond do ongoing investigation and/or corrective actions. not reflect these adjustments. 369 75 FR 25330, May 7, 2010.

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equivalent stringency increase basis, folding in all N2O and CH4 to regulate these programs compared to the CAFE standard, is 13.8 emissions could add up to 3–4 g/mile to independently, which could include an g/mi equivalent for passenger cars and a manufacturer’s overall CO2 emissions effective date that would result in no 17.2 g/mi equivalent for light trucks.370 level because the equivalent standard lapse in regulation of A/C leakage or For those model years, manufacturers must be used for the entire fleet, not just emissions of nitrous oxide and methane. are currently allowed to apply A/C for ‘‘problem vehicles.’’ 374 To address If the agency decides to retain the A/C leakage credits capped at 18.8 g/mi this added difficulty, EPA amended the leakage and nitrous oxide and methane equivalent for passenger cars and 24.4 g/ MY 2012–2016 standards to allow emissions provisions for CO2 371 mi equivalent for light trucks. manufacturers to use CO2 credits, on a compliance, it would likely re-insert the For methane and nitrous oxide CO -equivalent basis, to meet the light- 2 current A/C leakage offset and increase emissions, as part of the MY 2012–2016 duty N O and CH standards in those 2 4 the stringency levels for CO rulemaking, EPA finalized standards to model years. EPA subsequently 2 compliance by the offset amounts cap emissions of N2O at 0.010 g/mile extended that same credit provision to described above (i.e., 13.8 g/mi and CH4 at 0.030 g/mile for MY 2012 MY 2017 and later vehicles. EPA seeks and later vehicles.372 However, EPA comment on whether to change existing equivalent for passenger cars and 17.2 g/ also provided an optional CO2- methane and nitrous oxide standards mi equivalent for light trucks), and equivalent approach to address industry that were finalized in the 2012 rule. retain the current caps (i.e., 18.8 g/mi concerns about technological feasibility Specifically, EPA seeks information equivalent for passenger cars and 24.4 g/ and leadtime for the CH4 and N2O from the public on whether the existing mi equivalent for light trucks). The standards for MY 2012–2016 vehicles. standards are appropriate, or whether agency will publish an analysis of this The CO2 equivalent standard option they should be revised to be less alternative approach in a memo to the allowed manufacturers to fold all 2- stringent or more stringent based on any docket for this rulemaking. The agency cycle weighted N2O and CH4 emissions, updated data. seeks comment on whether the current on a CO2-equivalent basis, along with If the agency moves forward with its offsets and caps would continue to be CO2, into their CO2 emissions fleet proposal to eliminate these factors, EPA appropriate in such circumstances or average compliance level.373 EPA would consider whether it is whether changes are warranted. estimated that on a CO2 equivalent appropriate to initiate a new rulemaking

We emphasize again that the values in CAFE standard with both their another fleet, or acquired from another these tables are estimates, and not domestically-manufactured and manufacturer. On top of this necessarily the ultimate levels with imported passenger car fleets—that is, requirement, EISA expressly requires which each of these manufacturers will domestic and imported passenger car each manufacturer to meet a minimum have to comply, for the reasons fleets must comply separately with the flat fuel economy standard for described above. passenger car CAFE standard in each domestically manufactured passenger 375 376 C. Minimum Domestic Passenger Car model year. In doing so, they may use cars. According to the statute, the Standards whatever flexibilities are available to minimum standard shall be the greater them under the CAFE program, such as of (A) 27.5 miles per gallon; or (B) 92% EPCA has long required using credits ‘‘carried forward’’ from of the average fuel economy projected manufacturers to meet the passenger car prior model years, transferred from by DOT for the combined domestic and

370 77 FR 62805, Oct. 15, 2012. 374 In the final rule for MYs 2012–2016, EPA 376 Transferred or traded credits may not be used, 371 77 FR 62649, Oct. 15, 2012. acknowledged that advanced diesel or lean-burn pursuant to 49 U.S.C. 32903(g)(4) and (f)(2), to meet gasoline vehicles of the future may face greater 372 75 FR 25421–24, May 7, 2010. the domestically manufactured passenger challenges meeting the CH4 and N2O standards than automobile minimum standard specified in 49 373 77 FR 62798, Oct. 15, 2012. the rest of the fleet. [See 75 FR 25422, May 7, 2010]. U.S.C. 32902(b)(4) and in 49 CFR 531.5(d). 375 49 U.S.C. 32904(b) (2007).

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nondomestic passenger automobile this requirement in more detail in ‘‘Preferred (Alternative 3)’’ and fleets manufactured for sale in the Section V.A.1 below. calculates what those standards would United States by all manufacturers in The following table lists the proposed be under the no action alternative (as the model year, which projection shall minimum domestic passenger car issued in 2012, and as updated by be published in the Federal Register standards (which very likely will be today’s analysis) and under the other when the standard for that model year updated for the final rule as the agency alternatives described and discussed is promulgated.377 NHTSA discusses updates its overall analysis and further in Section IV, below. resultant projection), highlighted as

respectively, for MYs 2021–2026 that D. Light Truck Standards are defined by the following coefficients: For light trucks, NHTSA and EPA are proposing CAFE and CO2 standards,

377 49 U.S.C. 32902(b)(4).

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Section II.C above discusses in detail coefficients result in the footprint- 2017–2020 standards are also shown for how the coefficients in Table III–4 were dependent targets shown graphically comparison. developed for this proposal. The below for MYs 2021–2026. The MYs

Figure 111-3 - Light Truck Fuel Economy Targets

378 Figure 111-4 - Light Truck C02 Targets

378 Prior to MY 2021, average achieved CO2 levels technologies that reduce the refrigerant leaks. calculations after MY 2020, CO2 targets and include adjustments reflecting the use of Because EPA is today proposing to exclude air resultant fleet average requirements for MYs 2021 automotive refrigerants with reduced global conditioning refrigerants and leakage, and nitrous and beyond do not reflect these adjustments. warming potential (GWP) and/or the use of oxide and methane GHGs from average performance

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While we do not know yet with above would result in the following refrigerant leaks. Because EPA is today certainty what CAFE and CO2 levels average required fuel economy and CO2 proposing to exclude air conditioning will ultimately be required of individual emissions levels for individual refrigerants and leakage, and nitrous manufacturers, because those levels will manufacturers during MYs 2021–2026. oxide and methane GHGs from average depend on the mix of vehicles that they Prior to MY 2021, average required CO2 performance calculations after model produce for sale in future model years, levels reflect underlying target functions year 2020, CO2 targets and resultant based on the market forecast of future (specified above) that reflect the use of fleet average requirements for model sales that were used to examine today’s automotive refrigerants with reduced years 2021 and beyond do not reflect proposed standards, we currently global warming potential (GWP) and/or these adjustments. estimate that the target functions shown the use of technologies that reduce the

We emphasize again the values in As discussed above in Chapter II, baseline no-action alternative, all of the these tables are estimates and not today’s notice also presents the results alternatives are more stringent than the necessarily the ultimate levels with of analysis estimating impacts under a preferred alternative. which each of these manufacturers will range of other regulatory alternatives the EPA also seeks comment on retaining have to comply for reasons described agencies are considering. Aside from the the existing credit program for above. no-action alternative, NHTSA and EPA regulation of A/C refrigerant leakage, defined the different regulatory nitrous oxide, and methane emissions as IV. Alternative CAFE and GHG alternatives in terms of percent- part of the CO2 standard. Standards Considered for MYs 2021/ increases in CAFE and GHG stringency The agencies have examined these 22–2026 from year to year. Under some alternatives because the agencies intend alternatives, the rate of increase is the to continue considering them as options Agencies typically consider regulatory same for both passenger cars and light for the final rule. The agencies seek alternatives in proposals as a way of trucks; under others, the rate of increase comment on these alternatives and on evaluating the comparative effects of differs. Two alternatives also involve a the analysis presented here, seek any different potential ways of gradual discontinuation of CAFE and relevant data and information, and will accomplishing their desired goal.379 average GHG adjustments reflecting the review responses. That review could Alternatives analysis begins with a ‘‘no- application of technologies that improve lead the agencies to select one of the action’’ alternative, typically described air conditioner efficiency or, in other as what would occur in the absence of ways, improve fuel economy under to calculate tailpipe CO2 for its standards. In any regulatory action. Today’s proposal conditions not represented by long- addition, under the no action alternative EPA adds CO2 equivalent (using Global Warming Potential includes a no-action alternative, standing fuel economy test procedures. (GWP) adjustment) for AC refrigerant leakage and described below, as well as seven For increased harmonization with nitrous oxide and methane emissions. The CAFE ‘‘action alternatives’’ besides the NHTSA CAFE standards, which cannot program does not include A/C refrigerant leakage, nitrous oxide and methane emissions because they proposal. The proposal may, in places, account for such issues, under do not impact fuel economy. Under Alternatives 1– be referred to as the ‘‘preferred Alternatives 1–8, EPA would regulate 8, the standards are completely aligned for gasoline alternative,’’ which is NEPA parlance, tailpipe CO2 independently of A/C because compliance is based on tailpipe CO2, CH4 refrigerant leakage, nitrous oxide and and CO for both programs and not emissions but NHTSA and EPA intend ‘‘proposal,’’ unrelated to fuel economy. Diesel and alternative ‘‘proposed action,’’ and ‘‘preferred methane emissions. Under the no action fuel vehicles would continue to be treated alternative’’ to be used interchangeably alternative, EPA would continue to differently between the CAFE and CO2 programs. for purposes of this rulemaking. regulate A/C refrigerant leakage, nitrous While harmonization would be significantly oxide and methane emissions under the improved, standards would not be fully aligned 380 because of the small fraction of the fleet that uses 379 As Section V.A.3 explains, NEPA requires overall CO2 standard. Like the diesel and alternative fuels (e.g., about four percent agencies to compare the potential environmental of the MY 2016 fleet), as well as differences impacts of their proposed actions to those of a 380 For the CAFE program, carbon-based tailpipe involving EPCA/EISA provisions EPA, lacking any reasonable range of alternatives. Executive Orders emissions (including CO2, CH4 and CO) are specific direction under the CAA, has declined to 12866 and 13563 and OMB Circular A–4 also measured, and fuel economy is calculated using a adopt, such as minimum standards for domestic encourage agencies to evaluate regulatory carbon balance equation. EPA uses carbon-based passenger cars and limits on credit transfers alternatives in their rulemaking analyses. emissions (CO2, CH4 and CO, the same as for CAFE) between regulated fleets.

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other regulatory alternatives for the final A. What alternatives did NHTSA and rule. EPA consider? The table below shows the different alternatives evaluated in this proposal.

Also, as mentioned previously in whether to proceed with this proposal better harmony with the CAFE program Section III.B., EPA seeks comments on to discontinue accounting for A/C or whether to continue to consider these leakage, methane emissions, and nitrous factors toward compliance and retain 381 Carbon dioxide equivalent of air conditioning oxide emissions as part of the CO2 that as a feature that differs between the refrigerant leakage, nitrous oxide and methane emissions standards to provide for programs. EPA seeks comment on emissions are included for compliance with the whether to change existing methane and EPA standards for all MYs under the baseline/no emissions may be regulated independently by EPA. nitrous oxide standards that were action alternative. Carbon dioxide equivalent is The GWP equivalent of each of the emissions would calculated using the Global Warming Potential finalized in the 2012 rule. Specifically, no longer be included with the tailpipe CO2 for EPA seeks information from the public (GWP) of each of the emissions. compliance with tailpipe CO2 standards. A 382 Beginning in MY 2021, air conditioning lengthier discussion of this issue can be found in on whether the existing standards are refrigerant leakage, nitrous oxide, and methane Section III.B. appropriate, or whether they should be

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revised to be less stringent or more draws attention the discussion of For MY 2026, this alternative applies stringent based on any updated data. ‘‘enhanced flexibilities’’ in Section X.C. the same targets as for MY 2025. Carbon Additionally, the agencies note that B. Definition of Alternatives dioxide equivalent of air conditioning this proposal also seeks comment on a refrigerant leakage, nitrous oxide, and 1. No-Action Alternative number of additional compliance methane emissions are included for flexibilities for the programs. See The No-Action Alternative applies the compliance with the EPA standards for Section X below, and EPA specifically augural CAFE and final GHG targets all model years under the baseline/no announced in 2012 for MYs 2021–2025. action alternative.

2. Alternative 1 (Proposed) tailpipe CO2 standards. Section III, cars and 0.5% for light trucks. Section above, defines this alternative in greater III describes the proposed standards Alternative 1 holds the stringency of detail. included in the preferred alternative. targets constant and MY 2020 levels 3. Alternative 2 Beginning in MY 2021, air conditioning through MY 2026. Beginning in MY refrigerant leakage, nitrous oxide, and 2021, air conditioning refrigerant Alternative 2 increases the stringency methane emissions are no longer leakage, nitrous oxide, and methane of targets annually during MYs 2021– included with the tailpipe CO for emissions are no longer included with 2026 (on a gallon per mile basis, starting 2 compliance with tailpipe CO2 standards. the tailpipe CO2 for compliance with from MY 2020) by 0.5% for passenger

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4. Alternative 3 trucks. The cap on adjustments for AC 4, 2, and 0 grams per mile in MYs 2022, efficiency improvements declines from 2023, 2024, 2025, and 2026, Alternative 3 phases out A/C and off- 6 grams per mile in MY 2021 to 5, 4, 3, respectively. Beginning in MY 2021, air cycle adjustments and increases the 2, and 0 grams per mile in MYs 2022, conditioning refrigerant leakage, nitrous stringency of targets annually during 2023, 2024, 2025, and 2026, oxide, and methane emissions are no MYs 2021–2026 (on a gallon per mile respectively. The cap on adjustments for longer included with the tailpipe CO2 basis, starting from MY 2020) by 0.5% off-cycle improvements declines from for compliance with tailpipe CO2 for passenger cars and 0.5% for light 10 grams per mile in MY 2021 to 8, 6, standards.

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5. Alternative 4 2026 (on a gallon per mile basis, starting refrigerant leakage, nitrous oxide, and from MY 2020) by 1.0% for passenger methane emissions are no longer Alternative 4 increases the stringency cars and 2.0% for light trucks. included with the tailpipe CO2 for of targets annually during MYs 2021– Beginning in MY 2021, air conditioning compliance with tailpipe CO2 standards.

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6. Alternative 5 from MY 2021) by 1.0% for passenger included with the tailpipe CO2 for cars and 2.0% for light trucks. compliance with tailpipe CO2 standards, Alternative 5 increases the stringency Beginning in MY 2021, air conditioning and MY 2021 CO2 targets are adjusted of targets annually during MYs 2022– refrigerant leakage, nitrous oxide, and accordingly. 2026 (on a gallon per mile basis, starting methane emissions are no longer

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7. Alternative 6 2026 (on a gallon per mile basis, starting refrigerant leakage, nitrous oxide, and from MY 2020) by 2.0% for passenger methane emissions are no longer Alternative 6 increases the stringency cars and 3.0% for light trucks. included with the tailpipe CO2 for of targets annually during MYs 2021– Beginning in MY 2021, air conditioning compliance with tailpipe CO2 standards.

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8. Alternative 7 trucks. The cap on adjustments for AC 4, 2, and 0 grams per mile in MYs 2022, efficiency improvements declines from 2023, 2024, 2025, and 2026, Alternative 7 phases out A/C and off- 6 grams per mile in MY 2021 to 5, 4, 3, respectively. Beginning in MY 2021, air cycle adjustments and increases the 2, and 0 grams per mile in MYs 2022, conditioning refrigerant leakage, nitrous stringency of targets annually during 2023, 2024, 2025, and 2026, oxide, and methane emissions are no MYs 2021–2026 (on a gallon per mile respectively. The cap on adjustments for longer included with the tailpipe CO2 basis, starting from MY 2020) by 1.0% off-cycle improvements declines from for compliance with tailpipe CO2 for passenger cars and 2.0% for light 10 grams per mile in MY 2021 to 8, 6, standards.

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9. Alternative 8 from MY 2021) by 2.0% for passenger included with the tailpipe CO2 for cars and 3.0% for light trucks. compliance with tailpipe CO2 standards, Alternative 8 increases the stringency Beginning in MY 2021, air conditioning and MY 2021 CO2 targets are adjusted of targets annually during MYs 2022– refrigerant leakage, nitrous oxide, and accordingly. 2026 (on a gallon per mile basis, starting methane emissions are no longer

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V. Proposed Standards, the Agencies’ model year.385 In determining the determination of what standards can be Statutory Obligations, and Why the maximum feasible level achievable by considered maximum feasible involves Agencies Propose To Choose Them the manufacturers, EPCA requires that a weighing and balancing of these Over the Alternatives NHTSA consider the four statutory factors, and the balance may shift factors of technological feasibility, depending on the information before A. NHTSA’s Statutory Obligations and economic practicability, the effect of NHTSA about the expected Why the Proposed Standards Appear to other motor vehicle standards of the circumstances in the model years be Maximum Feasible Government on fuel economy, and the covered by the rulemaking. The 1. EPCA, as Amended by EISA need of the United States to conserve agency’s decision must also support the 386 EPCA, as amended by EISA, contains energy. In addition, NHTSA has the overarching purpose of EPCA, energy authority to (and traditionally does) conservation, while balancing these a number of provisions regarding how 388 NHTSA must set CAFE standards. consider other relevant factors, such as factors. NHTSA must establish separate CAFE the effect of the CAFE standards on Besides the requirement that the motor vehicle safety and consumer standards be maximum feasible for the standards for passenger cars and light 387 trucks 383 for each model year,384 and preferences. The ultimate fleet in question and the model year in each standard must be the maximum question, EPCA/EISA also contain 385 feasible that NHTSA believes the Id. 386 49 U.S.C. 32902(f) (2007). 388 Center for Biological Diversity v. NHTSA, 538 manufacturers can achieve in that 387 Both of these additional considerations also F. 3d 1172, 1197 (9th Cir. 2008) (‘‘Whatever method relate, to some extent, to economic practicability, it uses, NHTSA cannot set fuel economy standards 383 49 U.S.C. 32902(b)(1) (2007). but NHTSA also has the authority to consider them that are contrary to Congress’ purpose in enacting 384 49 U.S.C. 32902(a) (2007). independently of that statutory factor. the EPCA—energy conservation.’’)

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several other requirements as explained cargo-carrying capability, etc., need to standard for that model year will also be below. use more fuel per mile to perform those evaluated or reevaluated and jobs than vehicles without these established accordingly. NHTSA (a) Lead Time characteristics. Thus, regardless of the explained this in the rulemaking to EPCA requires that NHTSA prescribe plain language of the statute, NHTSA establish standards for MYs 2017 and new CAFE standards at least 18 months believes that the different fuel economy beyond and received no comments.394 before the beginning of each model capabilities of cars and trucks would The 2016 Alliance/Global petition for year.389 For light-duty vehicles, NHTSA generally make separate standards rulemaking asked NHTSA to has consistently interpreted the appropriate for these different types of retroactively revise the 92-percent ‘‘beginning of each model year’’ as vehicles. minimum domestic passenger car September 1 of the CY prior, such that EPCA, as amended by EISA, also standards for MYs 2012–2016 ‘‘to reflect the beginning of MY 2019 would be requires another separate standard to be 92 percent of the required average September 1, 2018. Thus, if the first year set for domestically-manufactured 392 passenger car standard taking into for which NHTSA is proposing to set passenger cars. Unlike under the account the fleet mix as it actually new standards in this NPRM is MY standards for passenger cars and light occurred, rather than what was 2022, NHTSA interprets this provision trucks described above, the compliance forecast.’’ The petitioners stated that as requiring us to issue a final rule burden of the minimum domestic doing so would be ‘‘fully consistent covering MY 2022 standards no later passenger car standard is the same for with the statute.’’ 395 than April 1, 2020. all manufacturers; the statute clearly NHTSA understands that determining For amendments to existing states that any manufacturer’s the 92 percent value ahead of the model standards, EPCA requires that if the domestically-manufactured passenger year to which it applies, based on the amendments make an average fuel car fleet must meet the greater of either information then available to the economy standard more stringent, at 27.5 mpg on average, or agency, results in a different mpg least 18 months of lead time must be number than if NHTSA determined the provided.390 EPCA contains no lead . . . 92 percent of the average fuel economy 92 percent value based on the projected by the Secretary for the combined time requirement unless amendments domestic and non-domestic passenger information available at the end of the make an average fuel economy standard automobile fleets manufactured for sale in model year in question. NHTSA further less stringent. NHTSA therefore the United States by all manufacturers in the understands that determining the 92 interprets EPCA as allowing model year, which projection shall be percent value ahead of time can make amendments to reduce a standard’s published in the Federal Register when the the domestic minimum passenger car stringency up until the beginning of the standard for that model year is promulgated standard more stringent than it could be model year in question. In this in accordance with [49 U.S.C. 32902(b)].393 if it were determined at the end of the rulemaking, NHTSA is proposing to Since that requirement was model year, if manufacturers end up amend the standards for model year promulgated, the ‘‘92 percent’’ has producing more larger-footprint 2021. Since the agency proposes to always been greater than 27.5 mpg. passenger cars than NHTSA originally reduce these standards, this action is NHTSA published the 92-percent anticipated. not subject to a lead time requirement. minimum domestic passenger car Accordingly, NHTSA seeks comment standards for model years 2017–2025 at on this request by Alliance/Global. (b) Separate Standards for Cars and 49 CFR 531.5(d) as part of the 2012 final Additionally, recognizing the Trucks, and Minimum Standards for rule. For MYs 2022–2025, 531.5(e) states uncertainty inherent in projecting Domestic Passenger Cars that these were to be applied if, when specific mpg values far into the future, As discussed above, EPCA requires actually proposing MY 2022 and it is possible that NHTSA could define NHTSA to set separate CAFE standards subsequent standards, the previously the mpg values associated with a CAFE for passenger cars and light trucks for identified standards for those years are standard (i.e., the footprint curve) as a each model year.391 NHTSA interprets deemed maximum feasible, but if range rather than as a single number. this requirement as preventing the NHTSA determines that the previously For example, the sensitivity analysis agency from setting a single combined identified standards are not maximum included in this proposal and in the CAFE standard for cars and trucks feasible, the 92-percent minimum accompanying PRIA could provide a together, based on the plain language of domestic passenger car standards would basis for such an mpg range ‘‘defining’’ the statute. Congress originally intended also change. This is consistent with the the passenger car standard in any given separate CAFE standards for cars and statutory language that the 92-percent model year. If NHTSA took that trucks to reflect the different fuel standards must be determined at the approach, 92 percent of that ‘‘standard’’ economy capabilities of those different time an overall passenger car standard would also, necessarily, be a range. We types of vehicles, and over the history is promulgated and published in the also seek comment on this or other of the CAFE program, has never revised Federal Register. Thus, any time similar approaches. this requirement. Even as many cars and NHTSA establishes or changes a (c) Attribute-Based and Defined by trucks have come to resemble each other passenger car standard for a model year, Mathematical Function more closely over time—many crossover the minimum domestic passenger car and sport-utility models, for example, EISA requires NHTSA to set CAFE come in versions today that may be 392 In the CAFE program, ‘‘domestically- standards that are ‘‘based on 1 or more subject to either the car standards or the manufactured’’ is defined by Congress in 49 U.S.C. § 32904(b). The specifics of the definition are too 394 truck standards depending on their 77 FR 62624, 63028 (Oct. 15, 2012). many for a footnote, but roughly, a passenger car 395 Automobile Alliance and Global Automakers characteristics—it is still accurate to say is ‘‘domestically manufactured’’ as long as at least Petition for Direct Final Rule with Regard to that vehicles with truck-like 75% of the cost to the manufacturer is attributable Various Aspects of the Corporate Average Fuel characteristics such as 4 wheel drive, to value added in the United States, Canada, or Economy Program and the Greenhouse Gas Program Mexico, unless the assembly of the vehicle is (June 20, 2016) at 5, 17–18, available at https:// completed in Canada or Mexico and the vehicle is www.epa.gov/sites/production/files/2016-09/ 389 49 U.S.C. 32902(a) (2007). imported into the United States more than 30 days documents/petition_to_epa_from_auto_alliance_ 390 49 U.S.C. 32902(g)(2) (2007). after the end of the model year. and_global_automakers.pdf [hereinafter Alliance/ 391 49 U.S.C. 32902(b)(1) (2007). 393 49 U.S.C. § 32902(b)(4) (2007). Global Petition].

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attributes related to fuel economy and 32902(c) and 32902(g). We therefore feasibility and economic practicability express[ed] . . . in the form of a believe that it is reasonable to interpret are often conflated, as will be covered mathematical function.’’ 396 NHTSA has section 32902(b)(3)(B) as applying only further in the following section. To be thus far based standards on vehicle to the establishing of new standards clear, whether a fuel-economy- footprint and proposes to continue to do rather than to the combined action of improving technology does or will exist so for all the reasons described in establishing new standards and (technological feasibility) is a different previous rulemakings. As in previous amending existing standards. question from what economic rulemakings, NHTSA proposes to define Moreover, we believe it would be an consequences could ensue if NHTSA the standards in the form of a absurd result not intended by Congress effectively requires that technology to constrained linear function that if the five year maximum limitation become widespread in the fleet and the generally sets higher (more stringent) were interpreted to prevent NHTSA economic consequences of the absence targets for smaller-footprint vehicles and from revising a previously-established of consumer demand for technology that lower (less stringent) targets for larger- standard that we have determined to be are projected to be required (economic footprint vehicles. These footprint beyond maximum feasible, while practicability). It is therefore possible curves are discussed in much greater concurrently setting five years of for standards to be technologically detail in Section II.C above. We seek standards not so distant from today. The feasible but still beyond the level that comment both on the choice of footprint concerns Congress sought to address are NHTSA determines to be maximum as the relevant attribute and on the much starker when NHTSA is trying to feasible due to consideration of the rationale for the constrained linear determine what standards would be other relevant factors. functions chosen to represent the maximum feasible 10 years from now as (2) Economic Practicability standards. compared to three years from now. ‘‘Economic practicability’’ has (d) Number of Model Years for Which (e) Maximum Feasible traditionally referred to whether a Standards May Be Set at a Time As discussed above, EPCA requires standard is one ‘‘within the financial EISA also states that NHTSA shall NHTSA to consider four factors in capability of the industry, but not so ‘‘issue regulations under this title determining what levels of CAFE stringent as to’’ lead to ‘‘adverse prescribing average fuel economy standards would be maximum feasible, economic consequences, such as a standards for at least 1, but not more and NHTSA presents in the sections significant loss of jobs or unreasonable than 5, model years.’’ 397 In the 2012 below its understanding of what those elimination of consumer choice.’’ 401 In final rule, NHTSA interpreted this four factors mean. All factors should be evaluating economic practicability, provision as preventing the agency from considered, in the manner appropriate, NHTSA considers the uncertainty setting final standards for all of MYs and then the maximum feasible surrounding future market conditions 2017–2025 in a single rulemaking standards should be determined. and consumer demand for fuel economy action, so the MYs 2022–2025 standards alongside consumer demand for other (1) Technological Feasibility were termed ‘‘augural,’’ meaning ‘‘that vehicle attributes. NHTSA has they represent[ed] the agency’s current ‘‘Technological feasibility’’ refers to explained in the past that this factor can judgment, based on the information whether a particular method of be especially important during available to the agency [then], of what improving fuel economy is available for rulemakings in which the auto industry levels of stringency would be maximum deployment in commercial application is facing significantly adverse economic feasible in those model years.’’ 398 That in the model year for which a standard conditions (with corresponding risks to said, NHTSA also repeatedly clarified is being established. Thus, NHTSA is jobs). Consumer acceptability is also a that the augural standards were in no not limited in determining the level of major component to economic way final standards and that a future de new standards to technology that is practicability,402 which can involve novo rulemaking would be necessary in already being commercially applied at consideration of anticipated consumer order to both propose and promulgate the time of the rulemaking. For this responses not just to increased vehicle final standards for MYs 2022–2025. proposal, NHTSA is considering a wide cost, but also to the way manufacturers Today, NHTSA proposes to establish range of technologies that improve fuel may change vehicle models and vehicle new standards for MYs 2022–2026 and economy, subject to the constraints of sales mix in response to CAFE to revise the previously-established final EPCA regarding how to treat alternative standards. In attempting to determine standards for MY 2021. Legislative fueled vehicles, and considering the the economic practicability of attribute- history suggests that Congress included need to account for which technologies based standards, NHTSA considers a the five year maximum limitation so have already been applied to which wide variety of elements, including the NHTSA would issue standards for a vehicle model/configuration, and the annual rate at which manufacturers can period of time where it would have need to realistically estimate the cost increase the percentage of their fleet that reasonably realistic estimates of market and fuel economy impacts of each employs a particular type of fuel-saving conditions, technologies, and economic technology. NHTSA has not attempted technology,403 the specific fleet mixes of practicability (i.e., not set standards too to account for every technology that far into the future).399 However, the might conceivably be applied to has considered a range of hybrid vehicle concerns Congress sought to address by improve fuel economy and considers it technologies that do so. imposing those limitations are not unnecessary to do so given that many 401 67 FR 77015, 77021 (Dec. 16, 2002). 402 See, e.g., Center for Auto Safety v. NHTSA present for nearer model years where technologies address fuel economy in (CAS), 793 F.2d 1322 (D.C. Cir. 1986) 400 NHTSA already has existing standards. similar ways. Technological (Administrator’s consideration of market demand as Revisiting existing standards is component of economic practicability found to be contemplated by both 49 U.S.C. 400 For example, NHTSA has not considered high- reasonable); Public Citizen v. NHTSA, 848 F.2d 256 speed flywheels as potential energy storage devices (Congress established broad guidelines in the fuel for hybrid vehicles; while such flywheels have been economy statute; agency’s decision to set lower 396 49 U.S.C. 32902(b)(3)(A). demonstrated in the laboratory and even tested in standards was a reasonable accommodation of 397 49 U.S.C. 32902(b)(3)(B). concept vehicles, commercially available hybrid conflicting policies). 398 77 FR 62623, 62630 (Oct. 15, 2012). vehicles currently known to NHTSA use chemical 403 For example, if standards effectively require 399 See 153 Cong. Rec. 2665 (Dec. 28, 2007). batteries as energy storage devices, and the agency manufacturers to widely apply technologies that

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different manufacturers, and standards. Economic practicability is increasing vehicle weight thereby lower assumptions about the cost of standards complex, and like the other factors must fuel economy capability, thus to consumers and consumers’ valuation also be considered in the context of the decreasing the level of average fuel of fuel economy, among other things. overall balancing and EPCA’s economy that NHTSA can determine to Prior to the MYs 2005–2007 overarching purpose of energy be feasible. NHTSA has considered the rulemaking under the non-attribute- conservation. Depending on the additional weight that it estimates based (fixed value) CAFE standards, conditions of the industry and the would be added in response to new NHTSA generally sought to ensure the assumptions used in the agency’s safety standards during the rulemaking economic practicability of standards in analysis of alternative standards, timeframe.405 NHTSA has also part by setting them at or near the NHTSA could well find that standards accounted for EPA’s ‘‘Tier 3’’ standards capability of the ‘‘least capable that maximize net benefits, or that are for criteria pollutants in its estimates of manufacturer’’ with a significant share higher or lower, could be at the limits technology effectiveness.406 of the market, i.e., typically the of economic practicability, and thus In the 2012 final rule establishing manufacturer whose fleet mix was, on potentially the maximum feasible level, CAFE standards for MYs 2017–2021, average, the largest and heaviest, depending on how the other factors are NHTSA also discussed whether EPA generally having the highest capacity balanced. GHG standards and California GHG and capability so as to not limit the While we discuss safety as a separate standards should be considered and availability of those types of vehicles to consideration, NHTSA also considers accounted for as ‘‘other motor vehicle consumers. In the first several safety as closely related to, and in some standards of the Government.’’ NHTSA rulemakings establishing attribute-based circumstances a subcomponent of recognized that ‘‘To the extent the GHG standards, NHTSA applied marginal economic practicability. On a broad standards result in increases in fuel cost-benefit analysis, considering both level, manufacturers have finite economy, they would do so almost overall societal impacts and overall resources to invest in research and exclusively as a result of inducing consumer impacts. Whether the development. Investment into the manufacturers to install the same types standards maximize net benefits has development and implementation of of technologies used by manufacturers thus been a touchstone in the past for fuel saving technology necessarily in complying with the CAFE NHTSA’s consideration of economic comes at the expense of investing in standards.’’ 407 NHTSA concluded that practicability. Executive Order 12866, as other areas such as safety technology. ‘‘the agency had already considered amended by Executive Order 13563, On a more direct level, when making EPA’s [action] and the harmonization states that agencies should ‘‘select, in decisions on how to equip vehicles, benefits of the National Program in choosing among alternative regulatory manufacturers must balance cost developing its own [action],’’ and that approaches, those approaches that considerations to avoid pricing further ‘‘no further action was needed.’’ 408 maximize net benefits . . .’’ In practice, consumers out of the market. As Considering the issue afresh in this however, agencies, including NHTSA, manufacturers add technology to proposal, and looking only at the words must consider situations in which the increase fuel efficiency, they may in the statute, obviously EPA’s GHG modeling of net benefits does not decide against installing new safety standards applicable to light-duty capture all of the relevant equipment to reduce cost increases. And vehicles are literally ‘‘other motor considerations of feasibility. Therefore, as the price of vehicles increase beyond vehicle standards of the Government,’’ as in past rulemakings, NHTSA is the reach of more consumers, such in that they are standards set by a considering net societal impacts, net consumers continue to drive or Federal agency that apply to motor consumer impacts, and other related purchase older, less safe vehicles. In vehicles. Basic chemistry makes fuel elements in the consideration of assessing practicability, NHTSA also economy and tailpipe CO2 emissions economic practicability. considers the harm to the nation’s two sides of the same coin, as discussed NHTSA’s consideration of economic economy caused by highway fatalities at length above, and when two agencies practicability depends on a number of and injuries. functionally regulate both (because by elements. Expected availability of regulating fuel economy, you regulate capital to make investments in new (3) The Effect of Other Motor Vehicle Standards of the Government on Fuel CO2 emissions, and vice versa), it would technologies matters; manufacturers’ be absurd not to link their standards.409 expected ability to sell vehicles with Economy The global warming potential of N2O, certain technologies matters; likely ‘‘The effect of other motor vehicle CH4, and HFC emissions are not closely consumer choices matter and so forth. standards of the Government on fuel linked with fuel economy, but neither NHTSA’s analysis of the impacts of this economy’’ involves analysis of the do they affect fuel economy capabilities. proposal incorporates assumptions to effects of compliance with emission, How, then, should NHTSA consider capture aspects of consumer safety, noise, or damageability standards EPA’s various GHG standards? preferences, vehicle attributes, safety, on fuel economy capability and thus on NHTSA is aware that some and other elements relevant to an average fuel economy. In many past stakeholders believe that NHTSA’s impacts estimate; however, it is difficult CAFE rulemakings, NHTSA has said obligation to set maximum feasible to capture every such constraint. that it considers the adverse effects of CAFE standards can best be executed by Therefore, it is well within the agency’s other motor vehicle standards on fuel letting EPA decide what GHG standards discretion to deviate from the level at economy. It said so because, from the which modeled net benefits are CAFE program’s earliest years 404 until 405 PRIA, Chapter 5. maximized if the agency concludes that recently, the effects of such compliance 406 PRIA, Chapter 6. that level would not represent the on fuel economy capability over the 407 77 FR 62624, 62669 (Oct. 15, 2012). maximum feasible level for future CAFE history of the CAFE program have been 408 Id. 409 negative ones. For example, safety In fact, EPA includes tailpipe CH4, CO, and consumers do not want, or to widely apply CO2 in the measurement of tailpipe CO2 for GHG technologies before they are ready to be standards that have the effect of compliance using a carbon balance equation so that widespread, NHTSA believes that these standards the measurement of tailpipe CO2 exactly aligns with could potentially be beyond economically 404 42 FR 63184, 63188 (Dec. 15, 1977). See also the measurement of fuel economy for the CAFE practicable. 42 FR 33534, 33537 (June 30, 1977). compliance.

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are appropriate and reasonable under but is not labeled as one (i.e., a State unnecessary provisions were deleted. the CAA. NHTSA disagrees. While EPA tailpipe CO2 standard or prohibition on Specifically, the recodification and NHTSA consider some similar CO2 emissions). eliminated subsection (d). The House factors under the CAA and EPCA/EISA, NHTSA and EPA agree that state report on the recodification declared respectively, they are not identical. tailpipe greenhouse gas emissions that the subdivision was ‘‘executed,’’ Standards that are appropriate under the standards do not become Federal and described its purpose as CAA may not be ‘‘maximum feasible’’ standards and qualify as ‘‘other motor ‘‘[p]rovid[ing] for modification of under EPCA/EISA, and vice versa. vehicle standards of the Government,’’ average fuel economy standards for Moreover, considering EPCA’s language when subject to a CAA preemption model years 1978, 1979, and 1980.’’ 415 in the context in which it was written, waiver. EPCA’s legislative history It is generally presumed, when Congress it seems unreasonable to conclude that supports this position. includes text in one section and not in Congress intended EPA to dictate CAFE EPCA, as initially passed in 1975, another, that Congress knew what it was stringency. In fact, Congress clearly mandated average fuel economy doing and made the decision separated NHTSA’s and EPA’s standards for passenger cars beginning deliberately. responsibilities for CAFE under EPCA with model year 1978. The law required NHTSA has previously considered the by giving NHTSA authority to set the Secretary of Transportation to impact of California’s Low Emission standards and EPA authority to measure establish, through regulation, maximum Vehicle standards in establishing fuel and calculate fuel economy. If Congress feasible fuel economy standards 412 for economy standards and occasionally had wanted EPA to set CAFE standards, model years 1981 through 1984 with the has done so under the ‘‘other standards’’ it could have given that authority to intent to provide steady increases to sections.416 During the 2012 EPA in EPCA or at any point since achieve the standard established for rulemaking, NHTSA sought comment Congress amended EPCA.410 1985 and thereafter authorized the on the appropriateness of considering NHTSA and EPA are obligated by Secretary to adjust that standard. California’s tailpipe GHG emission Congress to exercise their own For the statutorily-established standards in this section and concluded independent judgment in fulfilling their standards for model years 1978–1980, that doing so was unnecessary.417 In statutory missions, even though both EPCA provided each manufacturer with light of the legislative history discussed agencies’ regulations affect both fuel the right to petition for changes in the above, however, NHTSA now economy and CO2 emissions. Because of standards applicable to that determines that this was not this relationship, it is incumbent on manufacturer. A petitioning appropriate. Notwithstanding the both agencies to coordinate and look to manufacturer had the burden of improper categorization of such demonstrating a ‘‘Federal fuel economy one another’s actions to avoid discussions, NHTSA may consider standards reduction’’ was likely to exist unreasonably burdening industry elements not specifically designated as for that manufacturer in one or more of through inconsistent regulations, but factors to be considered under EPCA, those model years and that it had made both agencies must be able to defend given the breadth of such factors as reasonable technology choices. ‘‘Federal their programs on their own merits. As technological feasibility and economic standards,’’ for that limited purpose, with other recent CAFE and GHG practicability, and such consideration included not only safety standards, rulemakings, the agencies are was appropriate.418 continuing do all of these things in this noise emission standards, property loss proposal. reduction standards, and emission (4) The Need of the United States To With regard to standards issued by the standards issued under various Federal Conserve Energy State of California, State tailpipe statutes, but also ‘‘emissions standards ‘‘The need of the United States to standards (whether for greenhouse gases applicable by reason of section 209(b) of 413 conserve energy’’ means ‘‘the consumer or for other pollutants) do not qualify as [the CAA].’’ (Emphasis added). cost, national balance of payments, ‘‘other motor vehicle standards of the Critically, all definitions, processes, and environmental, and foreign policy Government’’ under 49 U.S.C. 32902(f); required findings regarding a Federal implications of our need for large fuel economy standards reduction were therefore, NHTSA will not consider quantities of petroleum, especially located within a single self-contained them as such in proposing maximum imported petroleum.’’ 419 feasible average fuel economy subsection of 15 U.S.C. 2002 that standards. States may not adopt or applied only to model years 1978– (i) Consumer Costs and Fuel Prices 414 enforce tailpipe greenhouse gas 1980. Fuel for vehicles costs money for emissions standards when such In 1994, Congress recodified EPCA. vehicle owners and operators. All else standards relate to fuel economy As part of this recodification, the CAFE equal, consumers benefit from vehicles standards and are therefore preempted provisions were moved to Title 49 of the that need less fuel to perform the same under EPCA, regardless of whether EPA United States Code. In doing so, amount of work. Future fuel prices are granted any waivers under the Clean Air a critical input into the economic 412 Act (CAA).411 As is the case today, EPCA required the Secretary to determine ‘‘maximum feasible average Preempted standards of a State or a fuel economy’’ after considering technological 415 H.R. Rep. No. 103–180, at 583–584, tbl. 2A. political subdivision of a State include, feasibility, economic practicability, the effect of 416 See, e.g., 68 FR 16896, 71 FR 17643. for example: other Federal motor vehicle standards on fuel 417 See 77 FR 62669. (1) A fuel economy standard; and economy, and the need of the Nation to conserve 418 See, e.g., discussion in Center for Automotive (2) A law or regulation that has the energy. 15 U.S.C. 2002(e) (recodified July 5, 1994). Safety v. National Highway Traffic Safety 413 Section 202 of the CAA (42 U.S.C. 7521) Administration, et al., 793 F.2d. 1322 (D.C. Cir. direct effect of a fuel economy standard, requires EPA to prescribe air pollutant emission 1986) at 1338, et seq., providing that NHTSA may standards for new vehicles; Section 209 of the CAA consider consumer demand in establishing 410 We note, for instance, that EISA was passed (42 U.S.C. 7543) preempts state emissions standards standards, but not ‘‘to such an extent that it ignored after the Massachusetts v. EPA decision by the but allows California to apply for a waiver of such the overarching goal of fuel conservation. At the Supreme Court. If Congress had wanted to amend preemption. other extreme, a standard with harsh economic EPCA in light of that decision, they would have 414 As originally enacted as part of Public Law consequences for the auto industry also would done so at the time. They did not. 94–163, that subsection was designated as section represent an unreasonable balancing of EPCA’s 411 This topic is discussed further in Section VI 502(d) of the Motor Vehicle Information and Cost policies.’’ below. Savings Act. 419 42 FR 63184, 63188 (Dec. 15, 1977).

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analysis of potential CAFE standards raised concerns about potential NHTSA defined ‘‘the need of the United because they determine the value of fuel economic consequences for automaker States to conserve energy’’ in the late savings both to new vehicle buyers and and supplier operations in the U.S. due 1970s as including, among other things, to society, the amount of fuel economy to disparities between CAFE standards environmental implications. In 1988, that the new vehicle market is likely to at home and their counterpart fuel NHTSA included climate change demand in the absence of new economy/efficiency and GHG standards concepts in its CAFE notices and standards, and they inform NHTSA abroad. NHTSA finds these concerns prepared its first environmental about the ‘‘consumer cost . . . of our more relevant to technological assessment addressing that subject.424 It need for large quantities of petroleum.’’ feasibility and economic practicability cited concerns about climate change as In this proposal, NHTSA’s analysis than to the national balance of one of its reasons for limiting the extent relies on fuel price projections from the payments. Moreover, to the extent that of its reduction of the CAFE standard for U.S. Energy Information an automaker decides to globalize a MY 1989 passenger cars.425 Since then, Administration’s (EIA) Annual Energy vehicle platform to meet more stringent NHTSA has considered the effects of Outlook (AEO) for 2017. Federal standards in other countries, that reducing tailpipe emissions of CO2 in its government agencies generally use EIA’s automaker would comply with United fuel economy rulemakings pursuant to price projections in their assessment of States’s standards and additionally the need of the United States to future energy-related policies. generate overcompensation credits that conserve energy by reducing petroleum it can save for future years if facing consumption. (ii) National Balance of Payments compliance concerns,or sell to other (iv) Foreign Policy Implications Historically, the need of the United automakers. While CAFE standards are States to conserve energy has included set at maximum feasible rates, efforts of U.S. consumption and imports of consideration of the ‘‘national balance manufacturers to exceed those standards petroleum products impose costs on the of payments’’ because of concerns that are rewarded not only with additional domestic economy that are not reflected importing large amounts of oil created a credits but a market advantage in that in the market price for crude petroleum significant wealth transfer to oil- consumers who place a large weight on or in the prices paid by consumers for exporting countries and left the U.S. fuel savings will find such vehicles that petroleum products such as gasoline. economically vulnerable.420 As recently much more attractive. These costs include (1) higher prices for as 2009, nearly half the U.S. trade petroleum products resulting from the deficit was driven by petroleum,421 yet (iii) Environmental Implications effect of U.S. oil demand on world oil this concern has largely laid fallow in Higher fleet fuel economy can reduce prices, (2) the risk of disruptions to the more recent CAFE actions, arguably in U.S. emissions of various pollutants by U.S. economy caused by sudden part because other factors besides reducing the amount of oil that is increases in the global price of oil and petroleum consumption have since produced and refined for the U.S. its resulting impact of fuel prices faced played a bigger role in the U.S. trade vehicle fleet but can also increase by U.S. consumers, and (3) expenses for deficit. Given significant recent emissions by reducing the cost of maintaining the strategic petroleum increases in U.S. oil production and driving, which can result in increased reserve (SPR) to provide a response corresponding decreases in oil imports, vehicle miles traveled (i.e., the rebound option should a disruption in this concern seems likely to remain effect). Thus, the net effect of more commercial oil supplies threaten the fallow for the foreseeable future.422 stringent CAFE standards on emissions U.S. economy, to allow the U.S. to meet Increasingly, changes in the price of fuel of each pollutant depends on the part of its International Energy Agency have come to represent transfers relative magnitudes of its reduced obligation to maintain emergency oil between domestic consumers of fuel emissions in fuel refining and stocks, and to provide a national and domestic producers of petroleum distribution and increases in its defense fuel reserve.426 Higher U.S. rather than gains or losses to foreign emissions from vehicle use. Fuel consumption of crude oil or refined entities. Some commenters have lately savings from CAFE standards also petroleum products increases the necessarily results in lower emissions of magnitude of these external economic 420 See 42 FR 63184, 63192 (Dec. 15, 1977) ‘‘A CO2, the main GHG emitted as a result costs, thus increasing the true economic major reason for this need [to reduce petroleum of refining, distribution, and use of cost of supplying transportation fuels consumption] is that the importation of large transportation fuels. Reducing fuel quantities of petroleum creates serious balance of above the resource costs of producing payments and foreign policy problems. The United consumption directly reduces CO2 them. Conversely, reducing U.S. States currently spends approximately $45 billion emissions because the primary source of consumption of crude oil or refined annually for imported petroleum. But for this large transportation-related CO2 emissions is petroleum products (by reducing motor expenditure, the current large U.S. trade deficit fuel combustion in internal combustion would be a surplus.’’ fuel use) can reduce these external 421 See Today in Energy: Recent improvements in engines. costs. petroleum trade balance mitigate U.S. trade deficit, NHTSA has considered While these costs are considerations, U.S. Energy Information Administration (July 21, environmental issues, both within the the United States has significantly 2014), https://www.eia.gov/todayinenergy/ context of EPCA and the context of the increased oil production capabilities in detail.php?id=17191. National Environmental Policy Act 422 For an illustration of recent increases in U.S. production, see, e.g., U.S. crude oil and liquid fuels (NEPA), in making decisions about the 424 53 FR 33080, 33096 (Aug. 29, 1988). production, Short-Term Energy Outlook, U.S. setting of standards since the earliest 425 53 FR 39275, 39302 (Oct. 6, 1988). Energy Information Administration (June 2018), days of the CAFE program. As courts of 426 While the U.S. maintains a military presence https://www.eia.gov/outlooks/steo/images/ appeal have noted in three decisions in certain parts of the world to help secure global fig13.png. While it could be argued that reducing 423 access to petroleum supplies, that is neither the oil consumption frees up more domestically- stretching over the last 20 years, primary nor the sole mission of U.S. forces produced oil for exports, and thereby raises U.S. overseas. Additionally, the scale of oil consumption GDP, that is neither the focus of the CAFE program 423 CAS, 793 F.2d 1322, 1325 n. 12 (D.C. Cir. reductions associated with CAFE standards would nor consistent with Congress’ original intent in 1986); Public Citizen, 848 F.2d 256, 262–63 n. 27 be insufficient to alter any existing military EPCA. EIA’s Annual Energy Outlook (AEO) series (D.C. Cir. 1988) (noting that ‘‘NHTSA itself has missions focused on ensuring the safe and provides midterm forecasts of production, exports, interpreted the factors it must consider in setting expedient production and transportation of oil and imports of petroleum products, and is available CAFE standards as including environmental around the globe. See Chapter 7 of the PRIA for at https://www.eia.gov/outlooks/aeo/. effects’’); CBD, 538 F.3d 1172 (9th Cir. 2007). more information on this topic.

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recent years to the extent that the U.S. technologies as available in the analysis. evaluating what levels of stringency is currently producing enough oil to Thus, today’s analysis includes would result in maximum feasible satisfy nearly all of its energy needs and assumptions about manufacturers’ use standards, NHTSA assesses the is projected to continue to do so or of those technologies, as detailed in potential safety impacts and considers become a net energy exporter. This has Section X.B.1.c)(4) them in balancing the statutory added new stable supply to the global considerations and to determine the (f) EPCA/EISA Requirements That No oil market and reduced the urgency of maximum feasible level of the Longer Apply Post-2020 the U.S. to conserve energy. We discuss standards. this issue in more detail below. Congress amended EPCA through The attribute-based standards that EISA to add two requirements not yet Congress requires NHTSA to set help to (5) Factors That NHTSA Is Prohibited discussed in this section relevant to mitigate the negative safety effects of the From Considering determination of CAFE standards during historical ‘‘flat’’ standards originally EPCA also provides that in the years between MY 2011 and MY required in EPCA, in recent determining the level at which it should 2020 but not beyond. First, Congress rulemakings, NHTSA limited the set CAFE standards for a particular stated that, regardless of NHTSA’s consideration of mass reduction in model year, NHTSA may not consider determination of what levels of lower weight vehicles in its analysis, the ability of manufacturers to take standards would be maximum feasible, which impacted the resulting advantage of several EPCA provisions standards must be set at levels high assessment of potential adverse safety that facilitate compliance with CAFE enough to ensure that the combined effects. That analytical approach did not standards and thereby reduce the costs U.S. passenger car and light truck fleet reflect, however, the likelihood that of compliance.427 As discussed further achieves an average fuel economy level automakers may pursue the most cost in Section X.B.1.c) below, NHTSA of not less than 35 mpg no later than effective means of improving fuel cannot consider compliance credits that MY 2020.428 And second, between MYs efficiency to comply with CAFE manufacturers earn by exceeding the 2011 and 2020, the standards must requirements. For this rulemaking, the CAFE standards and then use to achieve ‘‘increase ratably’’ in each model modeling does not limit the amount of compliance in years in which their year.429 Neither of these requirements mass reduction that is applied to any measured average fuel economy falls apply after MY 2020, so given that this segment but rather considers that below the standards. NHTSA also rulemaking concerns the standards for automakers may apply mass reduction cannot consider the use of alternative MY 2021 and after, they are not relevant based upon cost-effectiveness, similar to fuels by dual fuel vehicles nor the to this rulemaking. most other technologies. NHTSA does availability of dedicated alternative fuel (g) Other Considerations in Determining not, of course, mandate the use of any vehicles in any model year. EPCA Maximum Feasible Standards particular technology by manufacturers encourages the production of alternative in meeting the standards. The current fuel vehicles by specifying that their NHTSA has historically considered proposal, like the Draft TAR, also fuel economy is to be determined using the potential for adverse safety considers the safety effect associated a special calculation procedure that consequences in setting CAFE with the additional vehicle miles results in those vehicles being assigned standards. This practice has been traveled due to the rebound effect. a higher fuel economy level than they consistently approved in case law. As In this rulemaking, NHTSA is actually achieve. courts have recognized, ‘‘NHTSA has considering the effect of additional The effect of the prohibitions against always examined the safety expenses in fuel savings technology on considering these statutory flexibilities consequences of the CAFE standards in the affordability of vehicles—the in setting the CAFE standards is that the its overall consideration of relevant likelihood that increased standards will flexibilities remain voluntarily- factors since its earliest rulemaking result in consumers being priced out of employed measures. If NHTSA were under the CAFE program.’’ Competitive the new vehicle market and choosing to instead to assume manufacturer use of Enterprise Institute v. NHTSA, 901 F.2d keep their existing vehicle or purchase those flexibilities in setting new 107, 120 n. 11 (D.C. Cir. 1990) (‘‘CEI–I’’) a used vehicle. Since new vehicles are standards, higher standards would (citing 42 FR 33534, 33551 (June 30, significantly safer than used vehicles, appear less costly and therefore more 1977)). The courts have consistently slowing fleet turnover to newer vehicles feasible, which would thus tend to upheld NHTSA’s implementation of results in older and less safe vehicles require manufacturers to use those EPCA in this manner. See, e.g., remaining on the roads longer. This flexibilities in order to meet higher Competitive Enterprise Institute v. significantly affects the safety of the standards. By keeping NHTSA from NHTSA, 956 F.2d 321, 322 (D.C. Cir. United States light duty fleet, as including them in our stringency 1992) (‘‘CEI–II’’) (in determining the described more fully in Section 0 above determination, the provision ensures maximum feasible fuel economy and in Chapter 11 of the PRIA that these statutory credits remain true standard, ‘‘NHTSA has always taken accompanying this proposal. compliance flexibilities. passenger safety into account’’) (citing Furthermore, as fuel economy standards Additionally, for non-statutory CEI–I, 901 F.2d at 120 n. 11); become more stringent, and more fuel incentives that NHTSA developed by Competitive Enterprise Institute v. efficient vehicles are introduced into the regulation, NHTSA does not consider NHTSA, 45 F.3d 481, 482–83 (D.C. Cir. fleet, fueling costs are reduced. This these subject to the EPCA prohibition on 1995) (‘‘CEI–III’’) (same); Center for results in consumers driving more considering flexibilities, either. EPCA is Biological Diversity v. NHTSA, 538 F.3d miles, which results in more crashes very clear as to which flexibilities are 1172, 1203–04 (9th Cir. 2008) and increased highway fatalities. not to be considered. When the agency (upholding NHTSA’s analysis of vehicle 2. Administrative Procedure Act has introduced additional flexibilities safety issues associated with weight in such as A/C efficiency and ‘‘off-cycle’’ connection with the MYs 2008–2011 To be upheld under the ‘‘arbitrary and technology fuel economy improvement light truck CAFE rulemaking). Thus, in capricious’’ standard of judicial review values, NHTSA has considered those in the APA, an agency rule must be 428 49 U.S.C. 32902(b)(2)(A). rational, based on consideration of the 427 49 U.S.C. 32902(h). 429 49 U.S.C. 32902(b)(2)(C). relevant factors, and within the scope of

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the authority delegated to the agency by considerations be integrated into that the 2012 final rule that established the statute. The agency must examine process.432 To accomplish that purpose, standards for MY 2021 and identified the relevant data and articulate a NEPA requires an agency to compare ‘‘augural’’ standard levels for MYs satisfactory explanation for its action the potential environmental impacts of 2022–2025. Not only do we believe that including a ‘‘rational connection its proposed action to those of a the facts before us have changed, but we between the facts found and the choice reasonable range of alternatives. believe that those facts have changed made.’’ Burlington Truck Lines, Inc., v. To explore the environmental sufficiently that the balancing of the United States, 371 U.S. 156, 168 (1962). consequences of this proposed rule in EPCA factors and other considerations Statutory interpretations included in depth, NHTSA has prepared a Draft must also change. The standards we are an agency’s rule are subject to the two- Environmental Impact Statement proposing today reflect that balancing. step analysis of Chevron, U.S.A. v. (‘‘DEIS’’). The purpose of an EIS is to The overarching purpose of EPCA is Natural Resources Defense Council, 467 ‘‘provide full and fair discussion of energy conservation; that fact remains U.S. 837 (1984). Under step one, where significant environmental impacts and the same. Examining that phrasing a statute ‘‘has directly spoken to the [to] inform decisionmakers and the afresh, Merriam-Webster states that to precise question at issue,’’ id. at 842, the public of the reasonable alternatives ‘‘conserve’’ means, in relevant part, ‘‘to court and the agency ‘‘must give effect which would avoid or minimize adverse keep in a safe or sound state; especially, to the unambiguously expressed intent impacts or enhance the quality of the to avoid wasteful or destructive use of Congress,’’ id. at 843. If the statute is human environment.’’ 433 of.’’ 434 This is consistent with our silent or ambiguous regarding the NEPA is ‘‘a procedural statute that understanding of Congress’ original specific question, the court proceeds to mandates a process rather than a intent for the CAFE program: To raise step two and asks ‘‘whether the agency’s particular result.’’ Stewart Park & fleet-wide fuel economy levels in answer is based on a permissible Reserve Coal., Inc. v. Slater, 352 F.3d response to the Arab oil embargo in the construction of the statute.’’ Id. 545, 557 (2d Cir. 2003). The agency’s 1970s and protect the country from If an agency’s interpretation differs overall EIS-related obligation is to ‘‘take further gasoline price shocks and supply from the one that it has previously a ‘hard look’ at the environmental shortages. Those price shocks, while adopted, the agency need not consequences before taking a major they were occurring, were disruptive to demonstrate that the prior position was action.’’ Baltimore Gas & Elec. Co. v. the U.S. economy and significantly wrong or even less desirable. Rather, the Natural Resources Defense Council, affected consumers’ daily lives. agency would need only to demonstrate Inc., 462 U.S. 87, 97 (1983). Congress therefore sought to keep U.S. that its new position is consistent with Significantly, ‘‘[i]f the adverse energy consumption in a safe and sound the statute and supported by the record environmental effects of the proposed state for the sake of consumers and the and acknowledge that this is a departure action are adequately identified and economy and avoid such shocks in the from past positions. The Supreme Court evaluated, the agency is not constrained future. emphasized this in FCC v. Fox by NEPA from deciding that other Today, the conditions that led both to Television, 556 U.S. 502 (2009). When values outweigh the environmental those price shocks and to U.S. energy an agency changes course from earlier costs.’’ Robertson v. Methow Valley vulnerability overall have changed regulations, ‘‘the requirement that an Citizens Council, 490 U.S. 332, 350 significantly. In the late 1970s, the U.S. agency provide a reasoned explanation (1989). was a major oil importer and changes for its action would ordinarily demand The agency must identify the (intentional or not) in the global oil that it display awareness that it is ‘‘environmentally preferable’’ supply had massive domestic changing position,’’ but ‘‘need not alternative but need not adopt it. consequences, as Congress saw. While demonstrate to a court’s satisfaction that ‘‘Congress in enacting NEPA . . . did oil consumption exceeded domestic the reasons for the new policy are better not require agencies to elevate production for many years after that, net than the reasons for the old one; it environmental concerns over other energy imports peaked in 2005, and suffices that the new policy is appropriate considerations.’’ Baltimore since then, oil imports have declined permissible under the statute, that there Gas & Elec. Co. v. Natural Resources while exports have increased. are good reasons for it, and that the Defense Council, Inc., 462 U.S. 87, 97 The relationship between the U.S. and agency believes it to be better, which the (1983). Instead, NEPA requires an the global oil market has changed for conscious change of course adequately agency to develop alternatives to the two principal reasons. The first reason indicates.’’ 430 The APA also requires proposed action in preparing an EIS. 42 is that the U.S. now consumes a that agencies provide notice and U.S.C. 4322(2)(C)(iii). The statute does significantly smaller share of global oil comment to the public when proposing not command the agency to favor an production than it did in the 1970s. At regulations,431 as we are doing today. environmentally preferable course of the time of the Arab oil embargo, the U.S. consumed about 17 million barrels 3. National Environmental Policy Act action, only that it make its decision to proceed with the action after taking a per day of the globe’s approximately 55 As discussed above, EPCA requires hard look at the environmental million barrels per day.435 While OPEC NHTSA to determine the level at which consequences. (particularly Saudi Arabia) still has the to set CAFE standards for each model We seek comment on the DEIS ability to influence global oil prices by year by considering the four factors of associated with this NPRM. imposing discretionary supply technological feasibility, economic restrictions, the greater diversity of both practicability, the effect of other motor 4. Evaluating the EPCA Factors and suppliers and consumers since the vehicle standards of the Government on Other Considerations To Arrive at the 1970s has reduced the degree to which fuel economy, and the need of the Proposed Standards United States to conserve energy. The NHTSA well recognizes that the 434 ‘‘Conserve,’’ Merriam-Webster, available at National Environmental Policy Act decision it proposes to make in today’s https://www.merriam-webster.com/dictionary/ (NEPA) directs that environmental NPRM is different from the one made in conserve (last visited June 25, 2018). 435 Short-Term Energy Outlook, U.S. Energy Information Administration (June 2018), available 430 Ibid., 1181. 432 NEPA is codified at 42 U.S.C. 4321–47. at https://www.eia.gov/outlooks/steo/pdf/steo_ 431 5 U.S.C. 553. 433 40 CFR 1502.1. full.pdf.

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a single actor (or small collection of rising global oil prices themselves made commenters raise the possibility that actors) can impact the welfare of using those technologies more feasible. even if the most productive deposits are individual consumers. Oil is a fungible As a hypothetical example, if it costs already tapped, any rises in global oil global commodity, though there are $79 per barrel to extract oil from a shale prices should spur technology limits to the substitutability of different play, when the market price for that oil development that improves output of types of crude for a given application. is $60 per barrel, it is not worth the less productive deposits.442 Moreover, The global oil market can, to a large producer’s cost to extract the oil; when even if U.S. production increases more extent, compensate for any producer the market price is $80 per barrel, it slowly than, for example, EIA currently that chooses not to sell to a given buyer becomes cost-effective. estimates, all increases in U.S. by shifting other supply toward that Recent analysis further suggests that production help to temper global prices buyer. And while regional proximity, the U.S. oil supply response to a rise in and the risk of oil shocks because they comparability of crude oil, and foreign global prices is much larger now due to reduce the influence of other producing policy considerations can make some the shale revolution, as compared to countries who might experience supply transactions more or less attractive, as what it was when U.S. production interruptions due to geopolitical long as exporters have a vested interest depended entirely on conventional instability or deliberately reduce supply in preserving the stability (both in terms wells. Unconventional wells may be not in an effort to raise prices.443 of price and supply) of the global oil only capable of producing more oil over market, coordinated, large-scale actions time but also may be capable of These changes in U.S. oil intensity, (like the multi-nation sanctions against responding faster to price shocks. One production, and capacity cannot Iran in recent years) would be required 2017 study concluded that ‘‘The long- entirely insulate consumers from the to impose costs or welfare losses on one run price responsiveness of supply is effects of price shocks at the gas pump, specific player in the global market. As about 6 times larger for tight oil on a per because although domestic production a corollary to the small rise in U.S. well basis, and about 9 times larger may be able to satisfy domestic energy petroleum consumption over the last when also accounting for the rise in demand, we cannot predict whether few decades, the oil intensity of U.S. unconventional-directed drilling.’’ That domestically produced oil will be GDP has continued to decline since the same study further found that ‘‘Given a distributed domestically or more Arab oil embargo, suggesting that U.S. price rise to $80 per barrel, U.S. oil broadly to the global market. But it GDP is less susceptible to increases in production could rise by 0.5 million appears that domestic supply may global petroleum prices (sudden or barrels per day in 6 months, 1.2 million dampen the magnitude, frequency, and otherwise) than it was at the time of in 1 year, 2 million in 2 years, and 3 duration of price shocks. As global per- EPCA’s passage or when these policies million in 5 years.’’ 439 Some analysts barrel oil prices rise, U.S. production is were last considered in 2012. While the suggest that shale drillers can respond now much better able to (and does) U.S. still has a higher energy intensity more quickly to market conditions ramp up in response, pulling those of GDP than some other developed because, unlike conventional drillers, prices back down. Corresponding per- nations, our energy intensity has been they do not need to spend years looking gallon gas prices may not fall declining since 1950 (shrinking by for new deposits, because there are overnight,444 but it is foreseeable that about 60% since 1950 and almost 30% simply so many shale oil wells being they could moderate over time and between 1990 and 2015).436 drilled, and because they are more likely respond faster than prior to the The second factor that has changed productive (although their supply may shale revolution. EIA’s Annual Energy the United States’ relationship to the be exhausted more quickly than a Outlook for 2018 acknowledges global oil market is the changing U.S. conventional well, the sheer numbers uncertainty regarding these new oil reliance on imported oil over the last appear likely to make up for that sources but projects that while retail decade. U.S. domestic oil production concern).440 Some commenters disagree prices of gasoline and diesel will began rising in 2009 with more cost- and suggest that the best deposits are increase between 2018 and 2050, annual effective drilling and production already known and tapped.441 Other average gasoline prices would not technologies.437 Domestic oil exceed $4/gallon (in real dollars) during production became more cost-effective downhole drilling motors and the invention of that timeframe under EIA’s ‘‘reference for two basic reasons. First, technology other necessary supporting equipment, materials, and technologies (particularly, downhole telemetry improved: The use of horizontal drilling equipment) had brought some applications within 442 LeBlanc, R. In the Sweet Spot: The Key to in conjunction with hydraulic fracturing the realm of commercial viability. EIA’s AEO 2018 Shale, Wall Street Journal (Mar. 6, 2018), available has greatly expanded the ability of also projects that by the early 2040s, tight oil at http://partners.wsj.com/ceraweek/connection/ producers to profitably recover natural production will account for nearly 70% of total U.S. sweet-spot-key-shale/. production, up from 54% of the U.S. total in 2017. 443 Alessi, C. & Sider, A. U.S. Oil Output Expected gas and oil from low-permeability See also, Tight oil remains the leading source of to Surpass Saudi Arabia, Rivaling Russia for Top geologic plays—particularly, shale future U.S. crude oil production, U.S. Energy Spot, Wall Street Journal (Jan. 19, 2018), available plays—and consequently, oil Information Administration (Feb. 22, 2018), https:// at https://www.wsj.com/articles/u-s-crude- www.eia.gov/todayinenergy/detail.php?id=35052. production-expected-to-surpass-saudi-arabia-in- production from shale plays has grown 439 rapidly in recent years.438 And second, Newell, R. G. & Prest, B.C. The 2018-1516352405. Unconventional Oil Supply Boom: Aggregate Price 444 To be clear, the fact that the risk of gasoline Response from Microdata, Working Paper 23973, price shocks may now be lower than in the past is 436 Today in Energy: Global energy intensity National Bureau of Economic Research (Oct. 2017), different from arguing that gasoline prices will continues to decline, U.S. Energy Information available at http://www.nber.org/papers/w23973 never rise again at all. The Energy Information Administration (July 12, 106), https://www.eia.gov/ (last visited June 25, 2018). Administration tracks and reports on pump prices todayinenergy/detail.php?id=27032. 440 Ip, G. America’s Emerging Petro Economy around the country, and we refer readers to their 437 Energy Explained, U.S. Energy Information Flips the Impact of Oil, Wall Street Journal (Feb. 21, website for the most up-to-date information. EIA Administration, https://www.eia.gov/energy 2018), available at https://www.wsj.com/articles/ projects under its ‘‘reference case’’ assumptions that explained/index.cfm (last visited June 25, 2018). americas-emerging-petro-economy-flips-the-impact- the structural changes in the oil market will keep 438 Review of Emerging Resources: U.S. Shale Gas of-oil-1519209000 (last visited June 25, 2018). prices below $4/gallon through 2050. Prices will and Shale Oil Plays, U.S. Energy Information 441 Olson, B. Shale Trailblazer Turns Skeptic on foreseeably continue to rise and fall with supply Administration (July 8, 2011), https://www.eia.gov/ Soaring U.S. Oil Production, Wall Street Journal and demand changes; the relevant question for the analysis/studies/usshalegas/. Practical application (Mar. 5, 2018), available at https://www.wsj.com/ need of the U.S. to conserve energy is not whether of horizontal drilling to oil production began in the articles/shale-trailblazer-turns-skeptic-on-soaring- there will be any movement in prices but whether early 1980s, by which time the advent of improved u-s-oil-production-1520257595. that movement is likely to be sudden and large.

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case’’ projection.445 The International in the 1970s when making fuel- prosperity as it was when EPCA was Energy Agency (IEA)’s Oil 2018 report efficiency trade-offs within their passed. The national balance of suggests some concern that excessive household fleets (or when replacing payments considerations are likely focus on investing in U.S. shale oil household vehicles at the time of drastically less important than they production may increase price volatility purchase). On a longer-term basis, if oil were in the 1970s, at least in terms of after 2023 if investment is not applied prices rise, consumers have more oil imports and vehicle fuel economy. more broadly but also states that U.S. options to invest in additional fuel Foreign policy considerations appear to shale oil is capable of and expected to economy when purchasing new vehicles have shifted along with the supply respond quickly to rising prices in the than at any other time in history. shifts also discussed above. future, and that American influence on Global oil demand conditions are also Whether and how environmental global oil markets is expected to different than in previous years. considerations create a need for CAFE continue to rise.446 From the supply Countries that had very small markets standards is, perhaps, more side, it is possible that the oil market for new light-duty vehicles in the 1970s complicated. As discussed earlier in this conditions that created the price shocks are now driving global production as document, carbon dioxide is a direct in the 1970s may no longer exist. their economies improve and growing byproduct of the combustion of carbon- Regardless of changes in the oil numbers of middle-class consumers are based fuels in vehicle engines.448 Many supply market, on the demand side, able to purchase vehicles for personal argue that it is likely that human conditions are also significantly use. The global increase in drivers activities, especially emissions of different from the 1970s. If gasoline inevitably affects global oil demand, greenhouse gases like carbon dioxide, prices increase suddenly and which affects oil prices. However, these contribute to the observed climate dramatically, in today’s market changes generally occur gradually over warming since the mid-20th century.449 American consumers have more options time, unlike a disruption that causes a Even taking that premise as given, it is for fuel-efficient new vehicles. Fuel- gasoline price shock. Market growth reasonable to ask whether rapid ongoing efficient vehicles were available to happens relatively gradually and is increases in CAFE stringency (or even, purchasers in the 1970s, but they were subject to many different factors. Oil for that matter, electric vehicle generally small entry-level vehicles with supply markets likely have time to mandates) can sufficiently address features that did not meet the needs and adjust to increases in demand from climate change to merit their costs. To preferences of many consumers. Today, higher vehicle sales in countries like ‘‘conserve,’’ again, means ‘‘to avoid most U.S. households maintain a China and India, and in fact, those wasteful or destructive use of.’’ household vehicle fleet that serves a increases in demand may temper global Some commenters have argued variety of purposes and represents a prices by keeping production increasing essentially that any petroleum use is variety of fuel efficiency levels. more steadily than if demand was less destructive because it all adds Manufacturers have responded to fuel certain; clear demand rewards increased incrementally to climate change. They economy standards and to consumer production and encourages additional argue that as CAFE standards increase, demand over the last decade to offer a resource development over time. It petroleum use will decrease; therefore wide array of fuel-efficient vehicles in therefore seems unlikely that growth in CAFE standard stringency should different segments and with a wide these vehicle markets could lead to increase as rapidly as possible. Other range of features. A household may now gasoline price shocks. Moreover, even as commenters, recognizing that economic respond to short-term increases in fuel these vehicle markets grow, it is practicability is also relevant, have price by shifting vehicle miles traveled possible that these and other vehicle argued essentially that because more within their household fleet away from markets may be moving away from stringent CAFE standards produce less less-efficient vehicles and toward petroleum usage under the direction of CO2 emissions, NHTSA should simply models with higher fuel economy. A their governments.447 If this occurs, set CAFE standards to increase at the similar option existed in the 1970s, global oil production will fall in most rapid of the alternative rates that though not as widely as today, and response to reduced global demand, but NHTSA cannot prove is economically vehicle owners in 2018 do not have to latent production capacity would exist impracticable. The question here, again, sacrifice as much utility as owners did to offset the impacts of unexpected is whether the additional fuel saved supply interruptions and maintain a (and CO2 emissions avoided) by more 445 Annual Energy Outlook 2018, U.S. Energy rapidly increasing CAFE standards Information Administration (Feb. 6, 2018) at 57, 58, level of global production that is available at https://www.eia.gov/outlooks/aeo/pdf/ accessible to petroleum consumers. better satisfies the U.S.’s need to avoid AEO2018.pdf. The U.S. Energy Information This, too, would seem likely to reduce destructive or wasteful use of energy Administration (EIA) is the statistical and analytical the risk of gasoline price shocks. than more moderate approaches that agency within the U.S. Department of Energy more appropiately balance other (DOE). EIA is the nation’s premier source of energy Considering all of the above factors, if information and every fuel economy rulemaking gasoline price shocks are no longer as statutory considerations. since 2002 (and every joint CAFE and CO2 much of a threat as they were when In the context of climate change, rulemaking since 2009) has applied fuel price EPCA was originally passed, it seems NHTSA believes it is hard to say that projections from EIA’s Annual Energy Outlook increasing CAFE standards is necessary (AEO). AEO projections, documentation, and reasonable to consider what the need of underlying data and estimates are available at the United States to conserve oil is to avoid destructive or wasteful use of https://www.eia.gov/outlooks/aeo/. today and going forward. Looking to the energy as compared to somewhat-less- 446 See Oil 2018: Analysis and Forecasts to 2023 discussion above on what factors are rapidly-increasing CAFE standards. The Executive Summary, International Energy Agency most stringent of the regulatory (2018), available at http://www.iea.org/Textbase/ relevant to the need of the United States npsum/oil2018MRSsum.pdf (last visited June 25, to conserve oil, one may conclude that 2018). See also Kent, S. & Puko, T. U.S. Will Be the the U.S. is no longer as dependent upon 448 Depending on the energy source, it may also World’s Largest Oil Producer by 2023, Says IEA, be a byproduct of consumption of electricity by Wall Street Journal (Mar. 5, 2018), available at petroleum as the engine of economic vehicles. https://www.wsj.com/articles/u-s-will-be-the- 449 Climate Science Special Report: Fourth worlds-largest-oil-producer-by-2023-says-iea- 447 Lynes, M. Plug-in electric vehicles: future National Climate Assessment, Volume I (Wuebbles, 1520236810 (reporting on remarks at the 2018 market conditions and adoption rates, U.S. Energy D.J. et al., eds. 2017), available at https:// CERAWeek energy conference by IEA Executive Information Administration (Oct. 23, 2017), https:// science2017.globalchange.gov/ (last accessed Feb. Director Fatih Birol). www.eia.gov/outlooks/ieo/pev.php. 23, 2018).

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alternatives considered in the 2012 final much more likely today that oil prices vehicles. Any of the alternatives could rule and FRIA (under much more will rise only moderately in the future thus be achieved on a technical basis optimistic assumptions about and that price shocks are less likely. alone but only if the level of resources technology effectiveness), which would Accordingly, it is reasonable to believe that might be required to implement the have required a seven percent average that U.S. consumers value future fuel technologies is not considered. annual fleetwide increase in fuel savings accurately and choose new However, as discussed above, we no economy for MYs 2017–2025 compared vehicles based on that view. This is longer view the need of the U.S. to to MY 2016 standards, was forecast to particularly true, since Federal law conserve energy as nearly infinite, only decrease global temperatures in requires that new vehicles be posted which means that it no longer combines 2100 by 0.02 °C in 2100. Under with a window sticker providing with boundless technological feasibility NHTSA’s current proposal, we estimated costs or savings over a five to quickly push stringency upward. anticipate that global temperatures year period compared to average new The effect of other motor vehicle would increase by 0.003 °C in 2100 vehicles.451 Even if consumers do not standards of the Government on fuel compared to the augural standards. As explicitly think to themselves ‘‘this new economy is similarly not limiting during reported in NHTSA’s Draft EIS, car will save me $5,000 in fuel costs this rulemaking time frame. As compared to the average global mean over its lifetime compared to that other discussed above, the analysis projects surface temperature for 1986–2005, new car,’’ gradual and relatively that safety standards will add some global surface temperatures are still predictable fuel price increases in the mass to new vehicles during this time forecast to increase by 3.484–3.487 °C, foreseeable future allow consumers to frame and accounts for Tier 3 depending on the alternative. Because roughly estimate the comparative value compliance in estimates of technology the impacts of any standards are small, of fuel savings among vehicles and effectiveness, but neither of these things and in fact several-orders-of-magnitude choose the amount of fuel savings that appear likely to make it significantly smaller, as compared to the overall they want, in light of the other vehicle harder for industry to comply with more forecast increases, this makes it hard for attributes they value. It seems, then, that stringent CAFE standards. In terms of NHTSA to conclude that the climate consumer cost as an element of the need EPA’s GHG standards, as also discussed change effects potentially attributable to of the U.S. to conserve energy is also above, NHTSA and EPA’s coordination the additional energy used, even over less urgent in the context of the in this proposal should make the two the full lifetimes of the vehicles in structural changes in oil markets over sets of standards similarly binding, question, is ‘‘destructive or wasteful’’ the last several years. although differences in compliance enough that the ‘‘need of the U.S. to Given the discussion above, NHTSA provisions remain such that which conserve energy’’ requires NHTSA to tentatively concludes that the need of standards are more binding will vary place an outsized emphasis on this the U.S. to conserve energy may no somewhat between manufacturers and consideration as opposed to others.450 longer function as assumed in previous over time. Consumer costs are the remaining considerations of what CAFE standards The remaining factor to consider is issue considered in the context of the would be maximum feasible. The economic practicability. NHTSA has need of the U.S. to conserve energy. overall risks associated with the need of typically defined economic NHTSA has argued in the past, the U.S. to conserve oil have entered a practicability, as discussed above, as somewhat paternalistically, that CAFE new paradigm with the risks whether a given CAFE standard is standards help to solve consumers’ substantially lower today and projected ‘‘within the financial capability of the ‘‘myopia’’ about the value of fuel into the future than when CAFE industry but not so stringent as’’ to lead savings they could receive, when buying standards were first issued and in the to ‘‘adverse economic consequences, a new vehicle if they chose a more fuel- recent past. The effectiveness of CAFE such as a significant loss of jobs or efficient model. There has been standards in reducing the demand for unreasonable elimination of consumer extensive debate over how much fuel combined with the increase in choice.’’ As part of that definition, consumers do (and/or should) value fuel domestic oil production have NHTSA looks at a variety of elements savings and fuel economy as an attribute contributed significantly to the current that can lead to adverse economic in new vehicles, and that debate is situation and outlook for the near- and consequences. All of the alternatives addressed in Section II.E. For purposes mid-term future. The world has considered today arguably raise of considering the need of the U.S. to changed, and the need of the U.S. to economic practicability issues. NHTSA conserve energy, the question of conserve energy, at least in the context believes there could be potential for consumer costs may be closer to of the CAFE program, has also changed. unreasonable elimination of consumer whether U.S. consumers so need to save Of the other factors under 32902(g), choice, loss of U.S. jobs, and a number money on fuel that they must be the changes are perhaps less significant. of adverse economic consequences required to save substantially more fuel We continue to believe that under nearly all if not all of the (through purchasing a new vehicle technological feasibility, per se, is not regulatory alternatives considered made more fuel-efficient by more limiting during this rulemaking time today. stringent CAFE standards) than they frame. The technologies considered in If a potential CAFE standard requires would otherwise choose. this analysis either are already in manufacturers to add technology to new Again, when EPCA originally passed, commercial production or likely will be vehicles that consumers do not want, or Congress was trying to protect U.S. by MY 2021—some at great expense. to skip adding technology to new consumers from the negative effects of Based on our analysis, all of the vehicles that consumers do want, it another gasoline price shock. It appears alternatives appear as though they could would seem to present issues with narrowly be considered technologically elimination of consumer choice. 450 The question of whether or how rapidly to feasible, in that they could be achieved Depending on the extent and expense of increase CAFE stringency is different from the based on the existence or the projected required fuel saving technology, that question of whether to set CAFE standards at all. future existence of technologies that elimination of consumer choice could Massachusetts v. EPA, 549 U.S. 497 (2007) (‘‘Agencies, like legislatures, do not generally could be incorporated on future be unreasonable. resolve massive problems in one fell regulatory When deciding on which new vehicle swoop.’’) 451 49 CFR 575.401; 40 CFR 600.302–12. to purchase, American consumers

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generally tend not to be interested in can increase sales of vehicles that do not fuel economy over other attributes, In better fuel economy above other help manufacturers meet the standards addition, EIA’s latest AEO 2018 attributes, particularly when gasoline (such as vehicles that fall significantly suggests, based on current assumptions, prices are low.452 Manufacturers have short of their fuel economy targets, due that per-gallon prices are likely to stay repeatedly indicated to the agencies that to higher levels of performance (e.g., under $4 through 2050.455 It therefore new vehicle buyers are only willing to larger, less efficient engines) or other seems unlikely that consumer pay for fuel economy-improving features). Over the last several years, preferences are going to change technology if it pays back within the despite record sales overall, most dramatically in the foreseeable future first two to three years of vehicle manufacturers have been managing their and certainly not within the time frame ownership.453 NHTSA has therefore CAFE compliance obligations through of the standards covered by this incorporated this assumption (of use of credits,454 because many proposal. willingness to pay for technology that consumers have chosen to buy vehicles Thus, if manufacturers are not pays back within 30 months) into that do not improve manufacturers’ currently able to sell higher-fuel today’s analysis. As a result, NHTSA’s compliance positions. analysis finds that the most cost- economy vehicles without heavy Consumer decisions to purchase subsidization, particularly HEVs, effective technology is applied with or relatively low-fuel economy vehicles PHEVs, and EVs, it seems unlikely that without CAFE (or CO2) standards, might seem irrational if gasoline prices their ability to do so will improve diminishing somewhat the incremental were expected to rebound in the future, unless consumer preferences change or cost-effectiveness of new CAFE but current indicators suggest this is not fuel prices rise significantly, either of standards. particularly likely. Although we know which seem unlikely. Today’s analysis Consumers not being interested in of no clear ‘‘tipping point’’ for gasoline indicates, perhaps predictably, that better fuel economy can take two forms: prices at which American consumers electrification rates must increase as First, it can dampen sales of vehicles suddenly become more interested in with the additional technology required stringency increases among the options the agencies are considering. to meet the standards, and second, it 454 See CAFE Public Information Center, National Highway Traffic Safety Administration, https:// 452 See, e.g., Comment by Global Automakers, one.nhtsa.gov/cafe_pic/CAFE_PIC_Mfr_LIVE.html 455 As noted elsewhere in this proposal, the Docket ID NHTSA–2016–0068–0062 (citing a 2014 (last visited June 25, 2018). Readers can examine agencies based analysis on AEO 2017 projections of, study by Strategic Vision that found that ‘‘. . . achieved versus required fuel economy by model for instance, fuel prices, as it was the best available generally, customers as a whole place a higher year and by individual manufacturer or by entire information at the time the analysis was conducted. priority on handling and ride than fuel economy.’’). fleets. When a manufacturer’s achieved fuel As such, where possible, the agency incorporated 453 This is supported by the 2015 NAS study, economy falls short of required fuel economy but latest AEO 2018 projections into the discussion, in which found that consumers seek to recoup added the manufacturer has not paid civil penalties, the effort to re-confirm no discernible impact to upfront purchasing costs within two or three years. manufacturer is using credits somehow to make up analysis results or to provide the best possible See 2015 NAS Report, at pg. 317. the shortfall. information for the discussion.

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Manufacturers have commented to the offering more of these models every options, sales of these vehicles are not agencies that ‘‘Although automakers are year, with improved technology and growing,’’ noting that even for hybrid

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vehicles, which require no adaptation additional costs projected for HEVs, vehicle, or a pickup made by a different by consumers (for example, to range PHEVs, and EVs. This trend may well manufacturer rather than pay the extra limits or refueling by charging), sales extend beyond electrification cost that the manufacturer is trying to ‘‘have declined from a peak of a 3.1 technologies to other technologies. recoup from higher-fuel economy percent share of the market (in 2013) to When costs for fuel economy-improving vehicles that had to be artificially . . . 1.8 percent [in 2016].’’ 456 The same technology exceed the fuel savings, discounted to be sold. We seek source further stated that this decline consumers may very well be unwilling comment on the effect of fuel economy was despite the technology being to pay the full cost for vehicles with standards on cross-subsidization across available in the market for more than 15 higher fuel economy that would be models. years, and that in 2016, ‘‘close to 75 increasingly needed as to comply as the Moreover, assuming that percent of the people who have traded stringency of the alternatives increases. manufacturers try to pass the costs of in a hybrid or electric car to a dealer If consumers are not willing to pay those technologies on to consumers in have replaced it with a conventional the full cost for vehicles with higher the form of higher new vehicle prices, (non-hybrid) gasoline-powered car.’’ 457 fuel economy, it seems reasonably rather than absorbing them and hurting While some consumers continue to seek foreseeable that they will consider profitability, this can affect consumers’ out hybrid and electric vehicles, then, vehicles made more expensive by higher ability to afford new vehicles. The many other consumers seem CAFE standards to be not ‘‘available’’ to analysis assumes that the increased cost uninterested in them, even given the them to purchase—or put more simply, of meeting standards is passed on to generous incentives and subsidies often that they will be turned off by more consumers through higher new vehicle available for consumers in the form of expensive vehicles with technologies prices, and looks at those increases as a tax credits, government rebates, High they do not want, and seek instead to one-time payment. In the context of, for Occupancy Vehicle Lane access, purchase cheaper vehicles without that example, a $30,000 new vehicle, preferred and/or subsidized parking, technology (or with different another $2,000 may not seem significant among others. Despite this broad technologies, such as those that improve to some readers. Yet manufacturers and ongoing lack of consumer interest, a performance or safety). Manufacturers dealers have repeatedly commented to number of manufacturers nonetheless have long cross-subsidized vehicle NHTSA that the overall price of the models in their lineups in order to continue to increase their offerings of vehicle is less relevant to the majority recoup costs in cases where they do not these vehicles. At best, this trend seems of consumers than the monthly payment believe they can pass the full costs of economically inefficient; more amount, which is a significant factor in development and production forward as concerningly for economic consumers’ ability to purchase or lease price increases for the vehicle model in practicability, it seems likely to impact a new vehicle. Amortizing a $2,000 question. Given that this cross- consumer choice (as discussed further price increase over, for example, 48 subsidization is ongoing, however, and below) in ways that could weigh heavily months may also not seem like a large possibly deepening as manufacturers on sales, jobs, and consumers amount to some readers, even have had to meet increasingly stringent themselves. We seek comment on this accounting for interest payments. Yet issue. CAFE standards over the past several years, it is unclear how much additional the corresponding up-front and monthly If the evidence indicates that hybrid costs may pose a challenge to low- sales are declining as gasoline prices distribution of costs could be supported by the market. Certainly, if CAFE income or credit-challenged purchasers. remain low, it seems reasonable to standards continue to increase in As discussed previously, such increased conclude that consumers will not stringency as gasoline prices stay costs will price many consumers out of choose to buy more of them going relatively low and consumer willingness the market—leaving them to continue forward as gasoline prices are forecast to to pay for significant additional fuel driving an older, less safe, less efficient, remain low. This is consistent with the economy improvements remains and more polluting vehicle, or analysis discussed in Section II.E, that correspondingly low, then additional purchasing another used vehicle that even while some consumers may be cross-subsidization of products to try to would likewise be less safe, less willing to pay between $2,000 and ease those products into consumer efficient, and more polluting than an $3,000 more for vehicles with electrified acceptance seems likely to impair equivalent new vehicle. technologies, that incremental consumer choice, insofar as the vehicles For example, the average MY 2025 willingness-to-pay falls well short of the they want to buy will cost more and prices estimated here under the baseline may have technology for which they are and proposed CAFE standards are about 456 Comment by Global Automakers, Docket ID $34,800 and $32,750, respectively (and NHTSA–2016–0068–0062, citing IHS Global New unwilling to pay. Models that have Vehicle Registration Data for 2013, 2015, and historically been able to bear higher $34,500 and $32,550 under the baseline January–June 2016. percentages of the cross-subsidization and proposed GHG standards). The 457 Id. at B–6 and B–7, citing Matt Richtel, burden may not be able to bear much buyer of a new MY 2025 vehicle might American Drivers Regain Appetite for Gas Guzzlers, thus avoid the following purchase and New York Times (June 24, 2016), https:// more—a pickup truck buyer, for www.nytimes.com/2016/06/28/science/cars-gas- example, may eventually decide to first-year ownership costs under the global-warming.html. purchase a used vehicle, another type of proposed standards:

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While the buyer of the average vehicle more and more difficult for foreseeably increase, and the ability to would also purchase somewhat more manufacturers and dealers to continue offset such increases by extending fuel under the proposed standards, this creating loan terms that both keep finance terms to account for increased difference might average only five monthly payments low and do not finance charges and vehicle prices due gallons per month during the first year result in consumers still owing to CAFE standards is limited by the fact of ownership.462 Some purchasers may significant amounts of money on the that doing so increases the amount of consider it more important to avoid vehicle by the time they can be expected time before consumers will have these very certain (e.g., being reflected to be ready for a new vehicle. positive equity in their vehicles (and Over the last decade, as vehicle sales in signed contracts) cost savings than able to trade in the vehicle for a newer have rebounded in the wake of the the comparatively uncertain (because, model). This reduces the mechanisms recession, historically low interest rates e.g., some owners drive considerably and increases in the average duration of that manufacturers, captive finance less than others, and may purchase fuel financing terms have helped companies, dealers, and independent in small increments as needed) fuel manufacturers and dealers keep lenders have in order to maintain sales savings. For some low-income consumers’ monthly payments low. at comparable levels. In other words, if purchasers or credit-challenged These trends (low interest rates and vehicle sales have not already hit the purchasers, the cost savings may make longer loan periods), along with pent-up breaking point, they may be close.463 the difference between being able or not demand for new vehicles, have helped The agencies seek comment on the to purchase the desired vehicle. As keep vehicle sales high. As interest rates impact that increased prices, interest vehicles get more expensive in response have increased, and most predict will rates, and financing terms are likely to to higher CAFE standards, it will get continue to rise, monthly payments will have on the new vehicle market.

458 Using down payment assumption of $4,056. 461 Using average rate of 1.83% (discussed above (‘‘Current sales are a poor predictor of future sales. See Press Release, Edmunds, New Vehicle Prices in Section II.E). Many of the macroeconomic factors that have Climb to All-Time High in December (Jan. 3, 2018), 462 Based on estimated sales volumes and average contributed to the current boom may not exist six https://www.edmunds.com/about/press/new- fuel consumption discussed below in Section VI, to nine years into the future [i.e., during the mid- vehicle-prices-climb-to-all-time-high-in- and on average vehicle survival and mileage 2020s]. The low interest loans and extended time accumulation rates (discussed above in Section II.E) december.html. loans that are now readily available may not be indicating that the average vehicle delivers about 459 Using average rate of 5.46% (discussed above 11% of it lifetime service (i.e., distance driven) available then. The automotive industry is a in Section II.E). during the first year of operation. cyclical business, and it appears to be near the top 460 Using average rate of 4.25% (discussed above 463 See, e.g., Comment by Global Automakers, of a cycle now.’’) in Section II.E). Docket ID NHTSA–2016–0068–0062, at 10

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The increasing risk that turn to the used vehicle market, where model. As Section VII.C on today’s sales manufacturers and dealers will hit a levels of safety may not be comparable. and employment analysis indicates, the wall in their ability to keep monthly We seek comment on these sales function of the CAFE model payments low may fall considerations. appears fairly accurate at predicting disproportionately on new and low- Alternatively, rather than or in sales trends but does not presume that income buyers. To build on the addition to continuing to cross- sales are particularly responsive to discussion above, manufacturers often subsidize fuel economy improvements changes in vehicle price. We are purposely cross-subsidize the prices of that consumers are unwilling to pay for concerned, however, that the sales entry-level vehicles to keep monthly directly, manufacturers may choose to model as it currently functions may payments low and attract new and try to improve their compliance position miss two key points about potential young consumers to their brand. Higher under higher CAFE standards by future sales and employment effects. CAFE standard stringency leads to restricting sales of certain vehicle First, the analysis does not account higher costs for technology across models or options. If consumers tend to for the risk discussed above that manufacturers’ fleets, meaning that want the 6-cylinder engine version of a manufacturers and dealers may not be more and more cross-subsidization vehicle rather than the 4-cylinder able to continue keeping monthly new becomes necessary to maintain version, for example, the manufacturer vehicle payments low, for a variety of affordability for entry-level vehicle may choose to make fewer 6-cylinders reasons. Interest rates and inflation may purchasers. While this is clearly an available. This solution, if chosen, rise; further lengthening loan terms may economic issue for industry, it may also would directly impact consumer choice. not be practical as they increase the slow fleet-wide improvement in vehicle It seems increasingly likely that this period of time that the purchaser has characteristics like safety—both in terms solution could be chosen as CAFE negative equity (which has secondary of manufacturers having to divert stringency increases. impacts described above). While these resources to adding technology to In terms of risks to employment, may be not-entirely-negative things for vehicles that consumers do not want today’s analysis focuses on employment the economy as a whole, they would and then figuring out how to get as a function of estimated changes in create negative pressure on vehicle sales consumers to buy them and in terms of vehicle price in response to different or employment associated with those new vehicles potentially becoming levels of standards and assumes that all sales. unaffordable for certain groups of cost increases to vehicle models are Second, as the cost of compliance consumers, meaning that they must passed forward to consumers in the increases with CAFE stringency, it is either defer new vehicle purchases or form of price increases for that vehicle possible that manufacturers may shift

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production overseas to locations where losing sales by absorbing the additional all vehicles covered by the rulemaking labor is cheaper. The CAFE program costs of meeting higher CAFE standards, time frame), higher stringency standards contains no mandates with regard to it is foreseeable that absorbing those are increasingly less cost-beneficial. As where vehicles are manufactured and costs would hurt company profits. If shown and discussed in Section VII.C, arguably disincentivizes domestic manufacturers choose that approach the analysis of consumer impacts shows production of passenger cars through year after year to avoid losing market that consumers recoup only a portion of the minimum domestic passenger car share, continued falling profits would the costs associated with increasing standard. If it becomes substantially lead to negative earnings reports and stringency under all of the alternatives. more expensive for manufacturers to risks to companies’ long-term viability. The fuel savings resulting from each of meet their CAFE obligations, they may Thus, even if sales levels are maintained the alternatives is substantially less than seek to cut costs wherever they can, despite higher standards, it seems the costs associated with the alternative, which could include layoffs or changing possible that industry could face meaning that net savings for consumers production locations. adverse economic consequences. There may be other adverse economic More broadly, when gasoline prices improves as stringency decreases. consequences besides those discussed stay relatively low (as they are expected Figure V–2 below illustrates this above. If manufacturers seek to avoid to remain through the lifetime of nearly trend.464

We recognize that this is a • In 2012, we assumed in the main analysis fleet reflected. When significantly different analytical result analysis that manufacturers would add no technology is used by the analysis fleet, from the 2012 final rule, which showed more technology than needed for it is ‘‘unavailable’’ to be used again for compliance, while today’s analysis assumes the opposite trend. Using the compliance with future standards logically that manufacturers will add because the same technology cannot be projections available to the agencies for technologies that pay for themselves within the 2012 rulemaking, all of the 2.5 years, consistent with manufacturer used twice (once by a manufacturer for alternatives considered in that information on payback period. its own reasons and then again by the rulemaking were projected to have net • In 2012, we measured impacts of the model to simulate manufacturer savings to consumers and to society post-2017 standards relative to compliance responses to higher standards). Some of with pre-2017 standards, which meant that a this would happen necessarily in an overall, and those net savings improved lot of cost-effective technology attributable to updated rulemaking because a later-in- as stringency increased. Put simply, the the 2017–2020 standards was ‘‘counted’’ time analysis fleet inevitably includes result is different today from what it toward the 2025 standards. • more technology; in this particular case, was in 2012 because the facts and the In 2012, we used analysis fleets based on 2016 happened to be a somewhat analysis are also different. While the 2008 or 2010 technology. Today’s analysis technology-heavy year, and 2008 and uses a 2016-based analysis fleet. differences in the facts and the analysis 2010 (the fleets used in 2012) arguably are described extensively in Section II These three points above mean that, did not reflect the state of technology in above and in the PRIA accompanying overall, the current analysis fleet reflects 2012 well. this proposal, a few noteworthy ones the application of much additional Furthermore, readers should note the include: technology than the 2012-final-rule following changes:

464 For the reader’s reference, Alternatives 3 and unchanged. Phasing out these procedures increases to leaving the procedures unchanged, net savings to 7 phase out A/C and off-cycle procedures, while the compliance costs and reduces net savings relative consumer with seven percent discount rate. other alternatives leave those procedures

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• Estimates of effectiveness and cost are fulfill EPCA’s overarching purpose of motor vehicle standards of the different for a number of technologies, as energy conservation in light of the facts Government is minimal when the two discussed in Section II above and in Chapter before the agency today and as we agencies regulating the same aspects of 6 of the PRIA, and indirect costs are expect them to be in the rulemaking vehicle performance are working determined using the RPE rather than the time frame. In the 2012 final rule that together to develop those regulations. ICM; • Fuel prices forecasts are considerably established CAFE standards for MYs Therefore, NHTSA views the lower in AEO 2017 than they were in AEO 2017–2021, and presented augural determination of maximum feasible 2012; CAFE standards for MYs 2022–2025, standards as a question of the • The current analysis uses a rebound NHTSA stated that ‘‘maximum feasible appropriateness of standards given that effect value of 20% instead of 10%; standards would be represented by the their need—either from the societal- • The current analysis newly accounts for mpg levels that we could require of the benefits perspective in terms of risk price impacts on fleet turnover; industry before we reach a tipping point associated with gasoline price shocks or • The social cost of carbon is different and that presents risk of significantly other related catastrophes, or from the accounts only for domestic (not adverse economic consequences.’’ 467 private-benefits perspective in terms of international) impacts; However, the context of that rulemaking consumer willingness to purchase new • The current analysis does not attempt to purposely limit the appearance of potential was meaningfully different from the vehicles with expensive technologies safety effects, and the value of a statistical current context. At that time, NHTSA that may allow them to save money on life is higher than in 2012. understood the need of the U.S. to future fuel purchases—seems likely to conserve energy as necessarily pushing remain low for the foreseeable future. All of these changes, together, mean the agency toward setting stricter and When determining the maximum that the standards under any of the stricter standards. Combining a then- feasible standards, and in particular the regulatory alternatives (compared to the paramount need of the U.S. to conserve economic practicability of higher preferred alternative) are more energy with the perception that standards, we also note that the expensive and have lower benefits than technological feasibility should no proposed standards have the most if they had been calculated using the longer be seen as an important limiting positive effect on on-road safety as inputs and assumptions of the 2012 factor, NHTSA then concluded that only compared to the alternatives considered. analysis. This, in turn, helps lead the significant economic harm would be a The analysis indicates that, compared to agency to a different conclusion about basis for controlling the pace at which the baseline standards defining the No- what standards might be maximum CAFE stringency increased over time. Action alternative, any regulatory feasible in the model years covered by Today, the relative importance of the alternatives under consideration would the rulemaking. NHTSA has thus both need of the U.S. to conserve energy has improve overall highway safety. Some relied on new facts and circumstances changed when compared to the of this estimated reduction is in developing today’s proposal and beginning of the CAFE program and a attributable to vehicles, themselves, reasonably rejected prior facts and great deal even since the 2012 being generally safer if they do not analyses relied on in the 2012 final rulemaking. As discussed above, the apply as much mass reduction to rule.465 effectiveness of CAFE standards in passenger cars as might be applied By directing NHTSA to determine reducing the demand for fuel combined under the baseline standards. maximum feasible standards by with the increase in domestic oil Additionally, the analysis estimates that considering the four factors, Congress production have contributed the alternatives to the baseline recognized that ‘‘maximum feasible’’ significantly to the current situation and standards would cause the fleet to turn may change over time as the agency outlook for the near- and mid-term over to newer and safer vehicles, which assessed the relative importance of each future. The world has changed, and the will also be more fuel efficient than the factor.466 If one factor appears to be need of the U.S. to conserve energy may vehicles being replaced, more quickly more important than the others in the no longer disproportionately outhweigh than otherwise anticipated. time frame to be covered by the other statutorily-mandated Furthermore, the analysis estimates that standards, it makes sense to give it more considerations such as economic the alternatives to the baseline standard weight in the agency’s determination of practicability—even when considering would involve reduced overall demand maximum feasible standards for those fuel savings from potentially more- for highway travel. As discussed above model years. If no factor appears to be stringent standards. in Section II.F, and in Chapter 11 of the particularly paramount, it makes sense Thus, while more stringent standards accompanying PRIA, most of the to determine maximum feasible may be possible, insofar as production- estimated overall improvement in standards by more generally weighing ready technology exists that the highway safety from this proposal is each factor, as long as EPCA’s direction industry could physically employ to attributable to reduced travel demand to establish maximum feasible standards reach higher standards, it is not clear (attributable to the rebound effect) and continues to be fulfilled in a manner that higher standards are now accelerated turnover to safer vehicles. that does not undermine energy economically practicable in light of The trend in these results is clear, with conservation. current U.S. consumer needs to the less stringent alternatives producing NHTSA tentatively concludes that conserve energy. While vehicles can be the greatest estimated improvement in proposing CAFE standards that hold the built with advanced fuel economy- highway safety and the proposed MY 2020 curves for passenger cars and improving technology, this does not standards producing the most favorable light trucks constant through MY 2026 mean that consumers will buy the new outcomes from a highway safety would be the maximum feasible vehicles that might be required to perspective. These considerations standards for those fleets and would include such technology; that industry bolster our determination that the could continue to subsidize their proposed standards are maximum 465 See Fox v. FCC, 556 U.S. at 514–515; see also production and sale; or that adverse feasible based upon current and NAHB v. EPA, 682 F.3d 1032 (D.C. Cir. 2012). economic consequences would not projected technology for the model 466 If this were not accurate, it seems illogical that Congress would have, at various times, set specific result from doing so. The effect of other years in question. mpg goals for the CAFE program (e.g., 35 mpg by Standards that retain the MY 2020 2020). 467 77 FR 62624, 63039 (Oct. 15, 2012). curves through MY 2026 will save fuel

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beyond what the market would achieve CAFE standard and in the ‘‘flat’’ reasonably be anticipated to endanger on its own for vehicles manufactured portions of the footprint curves at the public health or welfare.’’ If EPA makes during the rulemaking time frame and larger-footprint end, designing an the appropriate endangerment and will result in the highest net benefits appropriate backstop was likely to be cause or contribute findings, then both for consumers and for society. fairly complex and likely to undermine section 202(a) authorizes EPA to issue Such standards would avoid the risks Congress’ objective in requiring standards applicable to emissions of identified in the discussion of economic attribute-based standards. See, those pollutants. Indeed, EPA’s practicability for more stringent particularly, 75 FR at 25369–70 (May 7, obligation to do so is mandatory: standards and are consistent with the 2010). Coalition for Responsible Regulation, relatively lower need of the United As in 2010, NHTSA believes that 684 F.3d at 114; Massachusetts v. EPA, States to conserve energy and the additional backstop standards are not 549 U.S. at 533. Moreover, EPA’s impact that has on consumer choice. necessary. The current proposal is based mandatory legal duty to promulgate Moreover, as the fuel economy of the on the agency’s best current these emission standards derives from new vehicle fleet improves over time, understanding of the need of the U.S. to ‘‘a statutory obligation wholly the marginal benefits of continued conserve energy now and going forward, independent of DOT’s mandate to improvements diminish, making the in light of changed circumstances and promote energy efficiency.’’ consumer willingness to bear them and balanced against the other EPCA factors. Massachusetts, 549 U.S. at 532. the economic practicability of them We seek comment on how an additional Consequently, EPA has no discretion to diminish. It is much more expensive, backstop standard might be constructed decline to issue greenhouse standards and saves much less fuel, for a vehicle that addresses the concerns raised in the under section 202(a) or to defer issuing to improve from 40 to 50 mpg, than for 2010 final rule and that also does not such standards due to NHTSA’s a vehicle to improve from 15 to 20 obviate the agency’s assessment of what regulatory authority to establish fuel mpg.468 If obtaining the marginal CAFE levels would be maximum economy standards. Rather, ‘‘[j]ust as benefits of new cars and their fuel feasible. EPA lacks authority to refuse to regulate economy technologies becomes too We seek comment on all aspects of on the grounds of NHTSA’s regulatory expensive for consumers, some the above discussion. authority, EPA cannot defer regulation consumers will choose to drive less on that basis.’’ Coalition for Responsible B. EPA’s Statutory Obligations and Why efficient used vehicles longer. Regulation, 684 F.3d at 127. the Proposed Standards Appear To Be NHTSA recognizes that the Ninth Appropriate and Reasonable Any standards under CAA section Circuit has previously held that NHTSA 202(a)(1) ‘‘shall be applicable to such must consider whether a ‘‘backstop’’ is 1. Basis for the CO2 Standards Under vehicles . . . for their useful life.’’ necessary for the CAFE standards based Section 202(a) of the Clean Air Act Emission standards set by the EPA on the EPCA factors in 49 U.S.C. Title II of the Clean Air Act (CAA) under CAA section 202(a)(1) are 32902(f), given that the overarching provides for comprehensive regulation technology-based, as the levels chosen purpose of EPCA is energy must be premised on a finding of 469 of mobile sources, authorizing EPA to conservation. NHTSA and EPA regulate emissions of air pollutants from technological feasibility. Thus, discussed the concept of backstops in all mobile source categories. Under standards promulgated under CAA the context of the modern CAFE Section 202(a) 470 and relevant case law, section 202(a) are to take effect only program (as opposed to the CAFE as discussed below, EPA considers such after providing ‘‘such period as the program at issue in the Ninth Circuit issues as technology effectiveness, its Administrator finds necessary to permit decision) in the 2010 final rule cost (both per vehicle, per manufacturer, the development and application of the establishing CAFE and GHG standards and per consumer), the lead time requisite technology, giving appropriate for MYs 2012–2016. In that document, necessary to implement the technology, consideration to the cost of compliance the agencies explained that even if the and based on this the feasibility and within such period’’ (CAA section 202 statute did not preclude a backstop practicability of potential standards; the (a)(2); see also NRDC v. EPA, 655 F. 2d beyond what was already provided for impacts of potential standards on 318, 322 (D.C. Cir. 1981)). EPA must in the minimum domestic passenger car emissions reductions of both GHGs and consider costs to those entities which non-GHGs; the impacts of standards on are directly subject to the standards. 468 As the base level of fuel economy improves, Motor & Equipment Mfrs. Ass’n Inc. v. there are fewer gallons to be saved from improving oil conservation and energy security; the further. A typical assumption is that vehicles are impacts of standards on fuel savings by EPA, 627 F. 2d 1095, 1118 (D.C. Cir. driven 15,000 miles per year. A vehicle that consumers; the impacts of standards on 1979). Thus, ‘‘the [s]ection 202(a)(2) improves from 30 mpg to 40 mpg reduces its annual the auto industry; other energy impacts; reference to compliance costs fuel consumption from 500 gallons/year to 375 encompasses only the cost to the motor- gallons/year at 15,000 miles/year or by 125 gallons. as well as other relevant factors such as A vehicle that improves from 15 mpg to 20 mpg, impacts on safety. vehicle industry to come into on the other hand, reduces its annual fuel This proposed rule would implement compliance with the new emission consumption from 1,000 gallons/year to 750 a specific provision from Title II, section standards.’’ Coalition for Responsible gallons/year—twice as much as the first example, 471 Regulation, 684 F.3d at 128; see also id. even though the mpg improvement is only half as 202(a). Section 202(a)(1) of the Clean large. Going from 40 to 50 mpg would save only 75 Air Act (CAA) states that ‘‘the at 126–27 (rejecting arguments that EPA gallons/year at 15,000 miles/year. If fuel prices are Administrator shall by regulation was required to consider or should have high, the value of those gallons may be sufficient prescribe (and from time to time revise) considered costs to other entities, such to offset the cost of improving further, but (1) EIA as stationary sources, which are not does not currently anticipate particularly high fuel . . . standards applicable to the prices in the foreseeable future, and (2) as the emission of any air pollutant from any directly subject to the emission baseline level of fuel economy continues to class or classes of new motor vehicles standards). EPA is afforded considerable increase, the marginal cost of the next gallon saved . . . , which in his judgment cause, or discretion under section 202(a) when similarly increases with the cost of the technologies assessing issues of technical feasibility required to meet the savings. contribute to, air pollution which may 469 CBD v. NHTSA, 508 F.3d 508, 537 (9th Cir. and availability of lead time to 2007), opinion vacated and superseded on denial of 470 42 U.S.C. 7521(a). implement new technology. Such reh’g, 538 F.3d 1172 (9th Cir. 2008). 471 42 U.S.C. 7521(a). determinations are ‘‘subject to the

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restraints of reasonableness,’’ which F.3d 195 (D.C. Cir. 2001) (upholding EPA’s defined as the aggregate group of these ‘‘does not open the door to ‘crystal ball’ promulgation of technology-based standards same six greenhouse gases from new inquiry.’’ NRDC, 655 F. 2d at 328 for small non-road engines under section motor vehicles and new motor vehicle (quoting International Harvester Co. v. 213(a)(3) of the CAA). However, EPA is not engines contribute to air pollution. As a compelled under section 231 to obtain the Ruckelshaus, 478 F. 2d 615, 629 (D.C. ‘‘greatest degree of emission reduction result of these findings, section 202(a) Cir. 1973)). In developing such achievable’’ as per sections 213 and 202 of requires EPA to issue standards technology-based standards, EPA has the CAA, and so EPA does not interpret the applicable to emissions of that air the discretion to consider different Act as requiring the agency to give pollutant. New motor vehicles and standards for appropriate groupings of subordinate status to factors such as cost, engines emit CO2, CH4, N2O, and HFC. vehicles (‘‘class or classes of new motor safety, and noise in determining what EPA has established standards and other vehicles’’), or a single standard for a standards are reasonable for aircraft engines. provisions that control emissions of Rather, EPA has greater flexibility under larger grouping of motor vehicles CO2, HFCs, N2O, and CH4. EPA has not (NRDC, 655 F. 2d at 338). Finally, with section 231 in determining what standard is set any standards for PFCs or SF as most reasonable for aircraft engines, and is 6 respect to regulation of vehicular not required to achieve a ‘‘technology they are not emitted by motor vehicles. greenhouse gas emissions, EPA is not 473 forcing’’ result. 2. EPA’s Tentative Conclusion That the ‘‘required to treat NHTSA’s . . . Proposed CO Standards Are regulations as establishing the baseline This interpretation was upheld as 2 Appropriate and Reasonable for the [section 202(a) standards].’’ reasonable in NACAA v. EPA (489 F.3d Coalition for Responsible Regulation, 1221, 1230 (D.C. Cir. 2007)). CAA In this section, EPA discusses the 684 F.3d at 127 (noting further that ‘‘the section 202(a) does not specify the factors, data and analysis the [section 202 (a)standards] provid[e] degree of weight to apply to each factor, Administrator has considered in the benefits above and beyond those and EPA accordingly has discretion in selection of the EPA’s proposed revised resulting from NHTSA’s fuel-economy choosing an appropriate balance among GHG emission standards for MYs 2021 standards’’). factors. See Sierra Club v. EPA, 325 F.3d and later. EPA requests comment on all Although standards under CAA 374, 378 (D.C. Cir. 2003) (even where a aspects of the proposed revised section 202(a)(1) are technology-based, provision is technology-forcing, the standards, including all Alternatives they are not based exclusively on provision ‘‘does not resolve how the discussed in this section and section IV technological capability. EPA has the Administrator should weigh all [the of this preamble. discretion to consider and weigh statutory] factors in the process of As discussed in Sections I and V.B of various factors along with technological finding the ‘greatest emission reduction this preamble, the primary purpose of feasibility, such as the cost of achievable’ ’’); see also Husqvarna AB v. Title II of the Clean Air Act is the compliance (see section 202(a)(2)), lead EPA, 254 F. 3d 195, 200 (D.C. Cir. 2001) protection of public health and welfare. time necessary for compliance (section (great discretion to balance statutory EPA’s light-duty vehicle GHG standards 202(a)(2)), safety (see NRDC, 655 F.2d at factors in considering level of serve this purpose, as the GHG 336 n. 31) and other impacts on technology-based standard, and emissions from light-duty vehicles have consumers,472 and energy impacts statutory requirement ‘‘[to give] been found by EPA to endanger public associated with use of the technology appropriate consideration to the cost of health and welfare (see EPA’s 2009 (see George E. Warren Corp. v. EPA, 159 applying . . . technology’’ does not Endangerment Finding for on-highway F.3d 616, 623–624 (D.C. Cir. 1998) mandate a specific method of cost motor vehicles), and the goal of these (ordinarily permissible for EPA to analysis); Hercules Inc. v. EPA, 598 F. standards is to reduce these emissions consider factors not specifically 2d 91, 106–07 (D.C. Cir. 1978) (‘‘In that contribute to climate change. enumerated in the Act)). reviewing a numerical standard, we CAA section 202(a)(2) states when In addition, EPA has clear authority to must ask whether the agency’s numbers setting emission standards for new set standards under CAA section 202(a) are within a ‘zone of reasonableness,’ motor vehicles, the standards ‘‘shall that are technology forcing when EPA not whether its numbers are precisely take effect after such period as the considers that to be appropriate but is right’’); Permian Basin Area Rate Cases, Administrator finds necessary to permit not required to do so (as compared to 390 U.S. 747, 797 (1968) (same); Federal the development and application of the standards set under provisions such as Power Commission v. Conway Corp., requisite technology, giving appropriate section 202(a)(3) and section 213(a)(3)). 426 U.S. 271, 278 (1976) (same); Exxon consideration to the cost of compliance EPA has interpreted a similar statutory Mobil Gas Marketing Co. v. FERC, 297 within such period.’’ 42 U.S.C. provision, CAA section 231, as follows: F. 3d 1071, 1084 (D.C. Cir. 2002) (same). 7521(a)(2). That is, when establishing As noted above, EPA has found that emissions standards, the Administrator While the statutory language of section 231 the elevated concentrations of must consider both the lead time is not identical to other provisions in title II of the CAA that direct EPA to establish greenhouse gases in the atmosphere may necessary for the development of technology-based standards for various types reasonably be anticipated to endanger technology which can be used to of engines, EPA interprets its authority under public health and welfare.474 EPA achieve the emissions standards and the section 231 to be somewhat similar to those defined the ‘‘air pollution’’ referred to in resulting costs of compliance on those provisions that require us to identify a CAA section 202(a) to be the combined entities that are directly subject to the reasonable balance of specified emissions mix of six long-lived and directly standards. reduction, cost, safety, noise, and other emitted GHGs: Carbon dioxide (CO ), The Administrator is not limited to factors. See, e.g., Husqvarna AB v. EPA, 254 2 methane (CH4), nitrous oxide (N2O), consideration of the factors specified in hydrofluorocarbons (HFCs), CAA section 202(a)(2) when 472 Since its earliest Title II regulations, EPA has considered the safety of pollution control perfluorocarbons (PFCs), and sulfur establishing standards for light-duty technologies. See 45 FR 14496, 14503 (March 5, hexafluoride (SF6). The EPA further vehicles. In addition to feasibility and 1980). (‘‘EPA would not require a particulate found under CAA section 202(a) that cost of compliance, the Administrator control technology that was known to involve emissions of the single air pollutant may (and historically has) considered serious safety problems. If during the development of the trap-oxidizer safety problems are discovered, such factors as safety, energy use and EPA would reconsider the control requirements 473 70 FR 69664, 69676 (Nov. 17, 2005). security, degree of reduction of both implemented by this rulemaking.’’) 474 74 FR 66496 (Dec. 15, 2009). GHG and non-GHG pollutants,

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technology cost-effectiveness, and costs vehicle fleet of a wide range of below, the Administrator weighs and other impacts on consumers. As technologies that both reduce CO2 and technology availability along with discussed in prior rulemakings setting improve fuel economy (see PRIA several other factors, including costs, GHG standards,475 EPA may establish Chapter 6). The majority of these emissions impacts, safety, and technology-forcing standards under technologies have already been consumer impacts in determining the section 202(a), but when it does so it developed, have been commercialized, appropriate standards under the Clean must provide sufficient basis for its and are in-use on vehicles today. These Air Act. belief that the industry can develop the technologies include, but are not limited (b) Consideration of the Cost of needed technology in the available time. to, engine and transmission Compliance However, EPA is not required to set technologies, vehicle mass reduction technology-forcing standards under technologies, technologies to reduce the EPA is required to consider costs in section 202(a). Rather, because section vehicles’ aerodynamic drag, and a range compliance before setting standards 202(a), unlike the text of section of electrification technologies. The under section 202(a). Compared to the 202(a)(3) and section 213(a)(3),476 does electrification technologies include 12- proposed standards, the EPA MY 2020– not specify that standards shall obtain Volt stop-start systems, 48-Volt mild 2025 standards announced in 2012 ‘‘the greatest degree of emission hybrids, strong hybrid systems, plug-in would cost the automotive industry an reduction achievable,’’ EPA retains hybrid electric vehicles, and dedicated estimated total of $260 billion for the considerable discretion under section electric vehicles. vehicles produced from MY 2016 through MY 2029, as shown in Table 202(a) in deciding how to weigh the If the Administrator’s consideration of various factors, consistent with the VIII–9. The additional per-vehicle the appropriateness of the standards technology costs for these previously- language and purpose of the Clean Air were based solely on an assessment of Act, to determine what standards are issued standards would be an estimated technology availability and $2,260 in MY 2030, relative to the appropriate. development, the Administrator might The analysis of alternatives supports proposed standards, as shown in Table consider a wide range of standards to be the Administrator’s consideration of a VIII–31 and Table VIII–32. Especially appropriate. As shown in Sections range of alternative standards, from the considering the change in reference VII.B.2 and VIII.B.1.b), and in PRIA existing standards to several alternatives point, these costs are considerably larger Chapter 6.3.2, the projected penetration that are less stringent. Specifically, the than EPA projected in 2012. Less of technologies varies across the analysis supports the consideration of stringent standards would be less this range of alternative standards due Alternatives presented in today’s burdensome. For example, compared to to factors relevant under the EPA’s proposal. In general, the existing EPA the proposed standards, Alternative 8 is authority pursuant to section 202(a), standards are projected to result in the projected to increase the per-vehicle such as GHG emissions reductions, the highest penetration of advanced cost by $1,510 (also in MY 2030), necessary technology and associated technologies, in particular mild hybrid Alternative 6 increases the per-vehicle lead-time, the costs of compliance on and strong hybrid technologies. Lower costs by $1,120, and Alternative 4 automakers, the impact on consumers stringency Alternatives in general are increases the per-vehicle costs by $490. projected to result in lower penetration with respect to cost and vehicle choice, (c) Consideration of Costs to Consumers and effects on safety. These factors, and of technologies, in particular for the the Administrator’s proposed mild hybrid and strong hybrid In addition to the costs to the conclusion, after consideration of these technologies, with the Preferred automotive industry described above, factors, indicate that Alternative 1 Alternative projected to result in the which could be passed on to consumers, represents the most appropriate lowest level of electrification technology the analysis estimates increased costs standards for model years 2021 and penetration. For example, the existing for the consumer for changes in beyond are discussed further below. CO2 standards are projected to require a maintenance, financing, insurance, combined passenger car and truck fleet taxes, and other fees, as shown in Table (a) Consideration of the Development penetration of mild hybrids plus strong VIII–31 and Table VIII–32. Considering and Application of Technology To hybrids of 58% of new vehicle sales in these additional costs, EPA’s Reduce CO2 Emissions MY 2030, while Alternative 8 projects a previously-issued standards for MYs When EPA establishes emissions 34% penetration, Alternative 6 projects 2020–2025 would increase the projected standards under section 202, it a 22% penetration, Alternative 4 per-vehicle costs in MY 2030 to an considers both what technologies are projects an 8% penetration, and the estimated $2,810 relative to the currently available and what Proposed Alternative (Alternative 1) proposed standards, at a seven percent technologies under development may projects a 4% penetration. These discount rate. The lower the increased become available. For today’s proposal, technologies are available and in stringency of the Alternative, the lower EPA takes note of the analysis of the production today, and MY 2020 through the total per-vehicle costs increase for potential penetration into the future MY 2025 standards are still a number of the consumer. For example, Alternative years away. In light of the wide range 8 increases the total costs for the 475 See, e.g., 77 FR 62624, 62673 (Oct. 15, 2012). of existing technologies that have consumer on a per-vehicle basis by 476 Section 202(a)(3) provides that regulations already been developed, have been $2,270 (in MY 2030 compared to the applicable to emissions of certain specified pollutants from heavy-duty vehicles or engines commercialized, and are in-use on costs of the proposed standards), ‘‘shall contain standards which reflect the greatest vehicles today, including those Alternative 6 increases the costs to the degree of emission reduction achievable through developed since the 2012 rule, consumer by $1,400 per-vehicle, and the application of technology which the technology availability, development Alternative 4 increases the costs by $610 Administrator determines will be available . . . giving appropriate consideration to cost, energy, and application, if it were considered in per-vehicle, all at a seven percent and safety factors associated with the application of isolation, is not necessarily a limiting discount rate. such technology.’’ 42 U.S.C. 7521(a)(3). Section factor in the Administrator’s selection of The analysis also projects the fuel 213(a)(3) contains a similar provision for new which standards are appropriate within savings for the vehicle owner over the nonroad engines and new nonroad vehicles (other than locomotives or engines used in locomotives). the range of the Alternatives presented life of the vehicles that come with lower 42 U.S.C. 7547(a)(3). in this proposal. However, as described levels of CO2 emissions. For example, as

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477 shown in Table VIII–32 (at a seven CO2. As noted above, the purpose of emissions averaging, banking, and percent discount rate), for the Title II emissions standards is to protect trading program; air-conditioning previously-announced EPA standards the public health and welfare, and in program credits; flexibility in how to for MYs 2021–2025 (in MY 2030 establishing emissions standards the comply with the N2O and methane compared to the costs of the proposed Administrator is cognizant of the standard; off-cycle credit program, etc.) standards), the analysis projects a per- importance of this goal. At the same was to maintain consumer choice. The vehicle life-time fuel savings, including time, as discussed above, unlike other EPA standards are designed to require retail taxes, of $1,510 per vehicle, as provisions in Title II, Section 202(a) reductions of CO2 emissions over time well as an additional savings to the does not require the Administrator to set from the vehicle fleet as a whole but consumer from rebound driving and standards which result in the greatest also to provide sufficient flexibility to time saved refueling the vehicle of $610 degree of emissions control achievable, the automotive manufacturers so that per vehicle, for a total savings of $2,120. though the Administrator has the firms can produce vehicles which serve However, these savings to the consumer discretion to do so. Thus, in setting the needs of their customers. EPA are not enough to offset the these standards, the Administrator takes believes the past several model years in accompanying projected $2,810 increase into consideration other factors the market place show the benefits of in consumer costs. Compared to the discussed above and below, including this approach. Automotive companies proposed standards, the previously- not only technological feasibility, lead- have been able to reduce their fleet-wide issued EPA standards for MYs 2021– time, and the cost of compliance but CO2 emissions while continuing to 2025 would increase net costs to also potential impacts of vehicle produce and sell the many diverse consumers by $690 over the lifetime of emission standards on safety and other products that serve the needs of the MY 2030 vehicles. This imbalance impacts on consumers. Notwithstanding consumers in the market, e.g., full-size between costs and fuel savings contrasts the fact that GHG emissions reductions pick-up trucks with high towing sharply with what EPA projected in would be lower under today’s proposal capabilities, minivans, cross-over 2012 when setting those standards then, than for the existing EPA standards, in vehicles, SUVs, and passenger cars; and the fuel savings is considerably light of the new assessment indicating vehicles with off-road capabilities; smaller (this is due in large part to lower higher vehicle costs and associated luxury/premium vehicles, supercars, current and projected fuel prices). Also, impacts on consumers, and safety performance vehicles, entry level relative to the proposed standards, and impacts, the Administrator believes vehicles, etc. over the lifetime of MY 2030 vehicles, from a cost/benefit perspective that the At the same, the Administrator the projected net cost increase to foregone GHG emission reduction recognizes that automotive customers consumers from adopting Alternative 8 benefits from the proposed standards are a diverse group, that automotive is $300, Alternative 6 projects a net cost are warranted. companies do not all compete for the increase to consumers of $100, same segments of the market, and that (e) Consideration of Consumer Choice Alternative 4 projects a net savings to increasing stringency in the standards can be expected to have different effects consumers of $60, and Alternative 2 As discussed previously, the EPA CO2 projects a net savings to consumers of standards are based on vehicle footprint, not just on certain vehicle segments but $10. and in general smaller footprint vehicles on certain manufacturers who have developed market strategies around have individual CO2 targets that are (d) Consideration of GHG Emissions lower (more stringent) than larger those vehicle segments. The Administrator further recognizes that As discussed above, the purpose of footprint vehicles. The passenger car the diversity of the automotive customer CO standards established under CAA fleet has footprint curves that are 2 base, combined with the analysis, raises Section 202 is to reduce GHG emissions, distinct from the light-truck fleet. One of concerns that the existing standards, if which contribute to climate change. As the goals EPA had in designing the they are not adjusted, may not continue shown in Table VIII–34, the analysis program with footprint-based standards, to fulfill the agency’s goal of providing projects that, compared to the baseline in considering the shape, slope, and sufficient manufacturer flexibility to standards, the proposed CO standards stringency of the footprint standard 2 meet consumer needs and consumer for MYs 2021–2026 would increase curves, and in adopting many choice preferences. The analysis vehicle CO compliance flexibilities (e.g., the 2 emissions by 713 million projects that high penetrations of metric tons (MMT) over the lifetime of 477 This preamble and the PRIA document hybridized vehicles would be required the vehicles produced from MY 1979 to achieve the previously-issued EPA through MY 2029, with an additional estimates annual GHG emissions from light-duty vehicles under the baseline CO2 standards, the MYs 2021–2025 standards, specifically 159 MMT in CO2 reduction from proposed standards, and the standards defined by 37% mild hybrid penetration and 21% upstream sources for a total increase of each of the other regulatory alternatives under consideration. For the final rule issued in 2012, strong hybrids for the new vehicle fleet 872 MMT. The modeling of proposed in MY 2030 (See Table VIII–24). For the revised and alternative standards EPA estimated changes in atmospheric CO2, global temperature, and sea level rise using GCAM and passenger car fleet, the projection is projects that more stringent standards MAGICC with outputs from its OMEGA model. 20% mild hybrid and 24% strong will result in smaller increases in GHG Because the agencies are now using the same model hybrid, and for the light-truck fleet 56% emissions (also compared to the and inputs, outputs from NHTSA’s DEIS (that also used GCAM and MAGICC) were analyzed. Today’s mild hybrid and 17% strong hybrid (See baseline standards. Compared to the analysis estimates that annual GHG emissions from Table VIII–26 and Table VIII–28). baseline standards, Alternative 8 is light-duty vehicles under the CO2 standards defined The Administrator is concerned that projected to increase CO2 emissions by by each regulatory alternative would be within this projected level of hybridization, 264 MMT from combined vehicle about one percent of emissions under the corresponding CAFE standards. Especially and the associated vehicle costs, arising tailpipe and upstream reductions over considering the uncertainties involved in estimating from the existing standards may be too the lifetime of the vehicles produced future climate impacts, the very similar estimates of high from a consumer-choice through MY 2029. Alternative 6 is future GHG emissions under CO2 standards and perspective. While consumers have projected to increase CO2 emissions by corresponding CAFE standards means that climate impacts presented in NHTSA’s draft EIS represent benefited from improvements over 422 MMT, Alternative 4 by 649 MMT of well the potential climate impacts of the proposed several decades in traditional vehicle CO2, and Alternative 2 by 825 MMT of and alternative CO2 standards. technologies, such as advancements in

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transmissions and internal combustion The automotive industry is highly proposed standards, the previously- engines, advanced electrification competitive, and firms may be reluctant issued EPA standards would increase technologies are a departure from what to base their future product strategy on highway fatalities by 15,680 over the consumers have traditionally an uncertain future credit availability. lifetime of vehicles produced through purchased. Strong hybrid and other As can be seen in Table VIII–24, the MY 2029 (See Table VII–89). advanced electrification technologies analysis projects that lower levels of EPA views the potential impacts of have been available for many years (20 stringency (Alternatives 1–8) will emission standards on safety as an years for strong hybrids and eight years require lower penetrations of mild important consideration in determining for plug-in and all electric vehicles), and hybrids and strong hybrids as compared the appropriate standards under section sales levels have been relatively low, on to the 2012 EPA standards. For example, 202. The analysis projects adverse the order of two to three precent per Alternative 8 projects a 34% penetration impacts on safety that are significantly year for strong hybrids.478 As discussed of mild and strong hybrid new vehicle different from the analysis included and above, the analysis projects that the sales in MY 2030, Alternative 6 projects considered in the 2012 rule which 2012 EPA standards are projected to a 22% penetration of these technologies, established the MY 2021–25 GHG require a significant increase in Alternative 4 projects an eight percent standards and the 2016 Draft Technical hybridization over the next 7 to 12 penetration, and Alternative 2 projects a Assessment Report. As discussed model years. This large increase may four percent penetration of mild and previously in this document, previous require automotive companies to change strong hybrids in MY 2030. The EPA analyses limited the amount of mass the choice of vehicle types and the proposal, Alternative 1, projects a two reduction assumed for certain vehicles, utility of the vehicles available to percent penetration of mild hybrids and while acknowledging that customers from what the companies a two percent penetration of strong manufacturers would not necessarily would otherwise offer in the absence of hybrids. These are levels similar to what choose to avoid mass reductions in the the existing standards. auto manufacturers are selling today, ways that the agencies assumed. The EPA notes that in the EPA’s annual suggesting that auto companies will be current analysis eliminates this Manufacturer Performance Report on able to produce vehicles in the future constraint. The Administrator considers the compliance status of the automotive that meet the full range of needs from this difference to be a significant factor companies for the EPA GHG standards, consumers, thus preserving consumer indicating that it is appropriate to EPA has reported that emissions trading choice. consider a range of alternative revised standards, including Alternative 1, the has occurred a number of times in the (f) Consideration of Safety past several years.479 Through MY 2016, preferred alternative. EPA has long considered the effects these trades have included 12 firms, on safety of its emission standards. See (g) Balancing of Factors and EPA’s with five firms trading CO credits to 2 45 FR 14496, 14503 (1980) (‘‘EPA would Proposed Revised Standards for MY seven firms, and thus far in the EPA not require a particulate control 2021 and Later GHG program credits generated in MY technology that was known to involve As discussed in this section, the 2010 through MY 2016 have been serious safety problems.’’). More Administrator is required to consider a traded. This represents about one-half of recently, EPA has considered the number of factors when establishing the automotive companies selling potential impacts of emissions emission standards under Section vehicles in the U.S. market, but since standards on safety in past rulemakings 202(a)(2) of the Clean Air Act: The several of these firms are small players, on GHG standards, including the 2010 standards ‘‘shall take effect after such it is less than half of the volume. In rule which established the 2012–2016 period as the Administrator finds total, approximately 30 million light-duty vehicle GHG standards, and necessary to permit the development Megagrams of CO2 have been traded the 2012 rule which previously and application of the requisite between firms, which is approximately established the 2017–2025 light-duty technology, giving appropriate 10% of the MY 2016 industry-wide vehicle GHG standards. Indeed, section consideration to the cost of compliance bank of credits. Credit trading between 202(a)(4)(A) specifically prohibits the within such period.’’ 42 U.S.C. firms can lower the costs of compliance use of an emission control device, 7521(a)(2). For this proposal, the for firms, both for those selling and system or element of design that will Administrator has considered a wide those purchasing credits, and this cause or contribute to an unreasonable range of potential emission standards program compliance flexibility is risk to public health, welfare, or safety. (Alternatives 1 through 9), ranging from another tool by which auto firms can 42 U.S.C. 7521(a)(4)(A). the existing EPA MY 2021 to MY 2025 provide the types of vehicle offerings The proposal’s safety analysis projects standards, through a number of less that customers want. However, long- that the 2012 EPA GHG standards for stringent alternatives, including term planning is an important MYs 2021 and later would increase Alternative 1, the preferred Alternative. consideration for automakers, and an vehicle fatalities due to several reasons, In addition to technological feasibility, OEM who may want to purchase credits namely increased vehicle prices lead-time, and the costs of compliance, as part of a future compliance strategy resulting in delayed turnover of the the Administrator has also considered cannot be guaranteed they will be able vehicle fleet to newer, safer vehicles, the impact of various standards on to find credits. increased fatalities and accidents due projected emissions reductions, the rebound effect, and passenger car consumer choice, and vehicle safety. 478 Light-Duty Automotive Technology, Carbon mass reduction. The assessment is The Administrator believes the existing Dioxide Emissions, and Fuel Economy Trends: 1975 discussed in Section 0 of this preamble EPA standards for MY 2021 and later, Through 2017, U.S. EPA Table 5.1 (Jan. 2018), available at https://nepis.epa.gov/Exe/ZyPDF.cgi? and is detailed in Chapter 11 of the considered as a whole, are too stringent. Dockey=P100TGDW.pdf. PRIA. The assessment projects that The Administrator gives particular 479 See Greenhouse Gas Emission Standards for Alternative 1, which includes no change consideration to the high projected costs Light-Duty Vehicles: Manufacturer Performance in the GHG emissions standards for MY of the standards and the impact of the Report for the 2016 Model Year (EPA Report 420– R18–002), U.S. EPA (Jan. 2018), available at https:// 2021 and later, would yield the lowest standards on vehicle safety. The nepis.epa.gov/Exe/ZyPDF.cgi?Dockey= number of vehicle fatalities. The analysis projects that, compared to the P100TGIA.pdf. analysis projects that, compared to the proposed standards, the previously-

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issued EPA standards for MYs 2021– VI. Preemption of State and Local Laws dioxide is an ‘‘air pollutant’’ within the 2025 would increase MY 2030 Accomplishing the goals of EPCA meaning of the CAA and thus compliance costs by nearly $1,900 per requires a set of uniform national fuel potentially subject to regulation under vehicle. Although EPA projected a economy standards. Achieving this that statute. The Supreme Court did not 480 similar cost increase in the 2012 rule national standard requires the agencies consider the issue of preemption under announcing standards through 2025, to clearly discuss the extent to which EPCA of state laws or regulations this prior estimate was relative to an state and local standards are expressly regulating CO2 tailpipe emissions from indefinite continuation of standards for or impliedly preempted. As described automobiles, but it did address the MY 2016, and assuming that absent herein, doing so is fundamental to the relationship between EPA and NHTSA 483 regulation, manufacturers would not effectiveness of the new proposed set of rulemaking obligations. Later that increase fuel economy at all. In fuel economy standards and to the year, two Federal district courts in addition, as mentioned above, the critical importance of ensuring that the Vermont and California ruled that the analysis projects that, compared to the proposed Federal standards will GHG motor vehicle emission standards proposed standards, the previously- constitute uniform national adopted by those states were not 484 issued EPA standards would increase requirements, as Congress intended. preempted under EPCA. Still later highway fatalities by 12,903 over the This is also a fundamental reason that that year, Congress enacted EISA, lifetime of vehicles produced through EPA is proposing the withdrawal of amending EPCA by mandating annual MY 2029. In evaluating the other CAA preemption waivers granted to increases in passenger car and light Alternatives under consideration, the California relating to its GHG standards truck CAFE standards through MY 2020 Administrator notes that Alternative 1 and Zero Emissions Vehicle (ZEV) and maximum feasible fuel economy 485 has the lowest cost of compliance and mandate. standards subsequently. the lowest number of fatalities. He also In March 2008, EPA denied notes that Alternative 1 will preserve A. Preemption Under the Energy Policy California’s request for a waiver of CAA consumer choice in the vehicle market and Conservation Act preemption.486 In May 2008, NHTSA and will provide a relatively high net 1. History of EPCA Preemption issued a proposal for MYs 2011–2015 savings to consumers, when assessing Discussions in Rulemakings standards, which included a significant the increased costs of vehicles against discussion of EPCA preemption and a fuel savings over the lifetime of the NHTSA has asserted the preemption proposed regulatory statement to of certain State emissions standards vehicle. provide that state vehicle tailpipe CO2 The Administrator recognizes that under EPCA a number of times in CAFE standards are related to fuel economy Alternative 1 is projected to result in rulemakings dating back to 2002.481 The and therefore expressly preempted less CO2 reductions compared to the initial rulemaking discussion was under EPCA, and that they conflict with existing EPA standards and is not prompted by a court filing by the State the goals and objectives of EPCA and projected to achieve additional GHG of California claiming that NHTSA did therefore also impliedly preempted.487 reductions beyond the MY 2020 not treat California’s Greenhouse Gas The Bush Administration did not issue standards. However, the Administrator Emissions regulation as preempted.482 a final rule for MYs 2011–2015. notes that, unlike other provisions in This continuous dialogue involves a A number of significant actions Title II referenced above, section 202(a) variety of parties (i.e., the states, the happened in quick succession at the does not require the Administrator to set Federal government—especially EPA— beginning of the prior Administration. standards which result in the ‘‘greatest and the general public) and occurs The first day post-inauguration, CARB degree of emissions control achievable.’’ through a variety of means, including petitioned for reconsideration of EPA’s In light of this statutory discretion and several rulemaking proceedings. After denial of a waiver of CAA preemption the range of factors that the statute NHTSA first raised the issue of for California’s GHG emissions authorizes and permits the preemption in 2002 when proposing standards for 2009 and later model year Administrator to consider, and his standards for MYs 2005–2007 light vehicles.488 Several days later, on consideration of the factors discussed trucks, the agency explored preemption January 26, 2009, President Obama above, the EPA proposes to conclude at great length in response to extensive issued a memorandum requesting, that maintaining the MY 2020 standards public comment in its August 2005 among other things (including going forward is an appropriate NPRM and its April 2006 final rule for approach under section 202(a). MYs 2008–2011 light trucks. 483 The Court reasoned that the fact that NHTSA Therefore, based on the data and During the period between the NPRM ‘‘sets mileage standards in no way licenses EPA to shirk its environmental responsibilities. EPA has analysis detailed in this proposal, the and the final rule for MYs 2008–2011 light trucks, California separately been charged with protecting the public’s ‘health’ Administrator is proposing that the and ‘welfare,’ . . . a statutory obligation wholly existing MY 2021 and later GHG requested that the EPA grant a waiver of independent of DOT’s mandate to promote energy standards are too stringent and is CAA preemption, pursuant to Section efficiency.... The two obligations may overlap, proposing to revise the MY 2021 and 209 of that act, for its Greenhouse Gas but there is no reason to think the two agencies Emissions regulation. If EPA granted the cannot both administer their obligations and yet later standards to maintain the MY 2020 avoid inconsistency.’’ Massachusetts v. EPA, 549 levels in subsequent model years. EPA waiver, the CAA would under certain U.S. 497, 532 (2007). requests comment on all aspects of this circumstances allow other states to 484 Green Mountain Chrysler v. Crombie, 508 proposal and supporting assessments, adopt the same regulation pursuant to F.Supp.2d 295 (D. Vt. 2007); Central Valley Chrysler-Jeep, Inc. v. Goldstene, 529 F.Supp.2d including the Administrator’s CAA Section 177, without being preempted by the CAA. 1151 (E.D. Cal. 2007), as corrected (Mar. 26, 2008). consideration of the relevant factors 485 In 2007, the Supreme Court ruled in Public Law 110–140 (2007). under section 202(a) of the Clean Air 486 73 FR 12156 (Mar. 6, 2008). Act, the proposed Alternative 1, the Massachusetts v. EPA that carbon 487 73 FR 24352 (May 2, 2008). previously-established EPA GHG 488 For background on CARB’s petition, see EPA’s 481 standards, and all of the Alternatives 67 FR 77025 (December 16, 2002). Notice of Decision Granting a Waiver of Clean Air 482 See Appellants Opening Brief filed on behalf Act Preemption for California’s 2009 and discussed in section IV of this preamble. Michael P. Kenny in Central Valley Chrysler- Subsequent Model Year Greenhouse Gas Emission Plymouth, Inc. et al. v. Michael P. Kenny, No. 02– Standards for New Motor Vehicles, 74 FR 32744 480 77 FR 62624, 62665 (Oct. 15, 2012). 16395, at p. 33 (9th Cir. 2002). (Jul. 8, 2009).

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consideration of EPCA preemption in requirements and be deemed to comply regulation. In a further indication of light of Massachusetts v. EPA and other with California’s standards, and that Congress’ intent to ensure that state laws), that NHTSA’s rulemaking be this amendment facilitated the National regulatory schemes do not impinge divided into two parts—one regulation Program by allowing a manufacturer to upon EPCA’s goals, the statute preempts establishing standards for model year ‘‘meet all standards with a single state laws merely related to fuel 2011 only, and another for subsequent national fleet.’’ 494 NHTSA, at the time, economy standards or average fuel years. Less than two months after that erroneously saw this as obviating economy standards. Here, NHTSA memorandum, on March 6, 2009, consideration of EPCA preemption. At intends to assert preemption only over NHTSA issued its final rule for MY the same time, the agency did not state requirements that directly affect 2011 vehicles and announced that it address whether California’s ZEV corporate average fuel economy. program would be preempted since it would consider EPCA preemption in The Supreme Court has interpreted 489 has never been part of the National subsequent rulemakings. Then, on similar statutory preemption language Program. May 19, 2009, the White House on several occasions, concluding that a announced a coordinated program 2. Preemption Analysis state law ‘‘relates to’’ a Federal law if it addressing motor vehicle fuel economy ‘‘has a connection with or refers to’’ the and greenhouse gas emissions, to be Present circumstances require NHTSA subject of the Federal law.498 The Court, known as the ‘‘National Program,’’ to address the issue of preemption. citing similar Federal statutory whereby NHTSA and EPA would jointly Despite past attempts by NHTSA and language, extended the application of establish rules to harmonize compliance EPA to harmonize their respective and the ‘‘related to’’ standard to the Airline requirements for manufacturers. As part related regulations, the automotive Deregulation Act in Morales v. Trans of the National Program, several industry and U.S. consumers now face World Airlines, Inc.,499 concluding manufacturers and their trade regulatory uncertainty and increased that,’’ [f]or purposes of the present case, associations announced their costs, in no small part as a result of the key phrase, obviously, is ‘relating commitment to take several actions, California’s separate GHG emissions and to.’ The ordinary meaning of these including agreeing not to contest ZEV program. NHTSA and EPA now words is a broad one—‘to stand in some forthcoming CAFE and GHG standards seek to address these concerns with this relation; to have bearing or concern; to for MYs 2012–2016; not to challenge rulemaking proposal, in the interest of pertain; refer; to bring into association any grant of a CAA preemption waiver regulatory certainty and the clear with or connection with,’ . . .—and the for California’s GHG standards for prospect for disharmony with conflicting state requirements.495 words thus express a broad pre-emptive certain model years; and to stay and NHTSA is also guided by a desire to purpose.’’ 500 Courts look ‘‘both to the then dismiss all pending litigation obtain comments from state and local objectives of the . . . statute as a guide challenging California’s regulation of officials and other members of the to the scope of the state law that GHG emissions, including litigation public to inform fully the agency’s Congress understood would survive, concerning EPCA preemption of state position on this important issue.496 [and] to the nature of the effect of the GHG standards.490 state law on [the Federal standards].’’ 501 Less than two months later, in July (a) EPCA Preemption One of Congress’ objectives in EPCA 2009, EPA granted California’s January EPCA’s express preemption language was to create a national fuel economy 2009 request for reconsideration of the is broad and clear: CAA preemption waiver denial, standard, as clearly expressed in 49 allowing California to establish its own When an average fuel economy standard U.S.C. 32919(a). In addition to the 491 prescribed under this chapter is in effect, a statute’s plain language, which controls, GHG standards under the CAA. In State or a political subdivision of a State may granting the preemption waiver, EPA not adopt or enforce a law or regulation the legislative history of that provision acknowledged that its analysis was related to fuel economy standards or average further confirms that Congress intended based solely on CAA considerations and fuel economy standards for automobiles the provision to be broadly preemptive. did not ‘‘attempt to interpret or apply covered by an average fuel economy standard As Congress debated proposals that EPCA,’’ concluding that ‘‘EPA takes no under this chapter.497 would eventually become EPCA, the position regarding whether or not Unlike the CAA, EPCA does not allow Senate bill 502 sought to preempt State California’s GHG standards are for a waiver of preemption. Nor does laws only if they were ‘‘inconsistent’’ preempted under EPCA.’’ 492 EPCA allow for states to establish or with Federal fuel economy standards, In the subsequent MYs 2012–2016 enforce an identical or equivalent labeling, or advertising, while the House CAFE rulemaking, NHTSA elected to bill 503 sought to preempt State laws defer consideration of EPCA preemption 494 76 FR 74854, 74863 (Dec. 1, 2011). only if they were not ‘‘identical to’’ a concerns because of the ‘‘consistent and 495 While California’s ‘‘deem to comply’’ Federal requirement. The express coordinated Federal standards that provision provided some temporary relief from preemption provision, as enacted, three different sets of standards, its regulations still preempts all State laws that relate to apply nationally under the National mandate that some manufacturers comply with 493 Program.’’ Later, in establishing MYs burdensome filing requirements and California may fuel economy standards. No exception is 2017–2021 CAFE standards, NHTSA act to revoke the provision. In fact, California is made for State laws on the ground that pointed out that after finalization of the already seeking comment on potentially changing the regulation to provide that manufacturers would 498 MYs 2012–2016 CAFE standards, only be deemed to comply with CARB requirements Shaw v. Delta Airlines, Inc., 463 U.S. 85, 97 California amended its GHG regulations if meeting the currently-final EPA standards. See (1983) (ERISA case). to provide that manufacturers could https://www.arb.ca.gov/msprog/levprog/leviii/ 499 504 U.S. 374, 383–84 (1992). elect to comply with the EPA GHG leviii_dtc_notice05072018.pdf (last accessed May 500 Id. at 383. 17, 2018). Moreover, the ‘‘deem to comply’’ 501 California Div. of Labor Standards provision applies only to tailpipe CO2 emissions Enforcement v. Dillingham Constr., N.A., Inc., 519 489 74 FR 14196 (Mar. 6, 2009). requirements—not to the ZEV program. U.S. 316, 325 (1997), (quoting N.Y Conference of 490 75 FR 25324, 25328 (May 7, 2010). 496 See also E.O. 13132 (Federalism); E.O. 12988 Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 491 74 FR 32744 (Jul. 8, 2009). sec. 3(b)(1)(B) (Civil Justice Reform); 54 FR 11765 514 U.S. 645, 656 (1995)). 492 74 FR at 32783 (Jul. 8, 2009). (Mar. 22, 1989); 58 FR 68274 (Dec. 23, 1993); and 502 S. 1883, 94th Cong., 1st Sess., Section 509. 493 75 FR 25324, 25546 (May 7, 2010); see also 74 70 FR 21844 (Apr. 27, 2005). 503 H.R. 7014, 94th Cong., 1st Sess., Section 507 FR 49454, 49635 (Sep. 28, 2009). 497 49 U.S.C. 32919. as introduced, Section 509 as reported.

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they are consistent with or identical to linked to fuel consumption because CO2 preempting state standards that are Federal requirements.504 is a necessary and inevitable byproduct related to fuel economy standards, when In enacting EISA, Congress did not of burning gasoline. The more fuel a Federal fuel economy standards are in repeal or amend EPCA’s express vehicle burns or consumes, the more place. preemption provision. Congress did, CO2 it emits. To the extent that light In mandating Federal fuel economy however, adopt a savings provision vehicles are not powered by internal standards under EPCA, Congress has regarding the effect of EISA, and the combustion engines, their use generally expressly preempted any state laws or amendments made by it: involves some release of CO2 or other regulations relating to fuel economy Nothing in this Act or an amendment made GHG emissions, even if indirectly, standards. A state requirement limiting by this Act supersedes, limits the authority associated with the vehicle performing tailpipe CO2 emissions is such a law or provided or responsibility conferred by, or its work of traveling down the road. regulation because it has the direct authorizes any violation of any provision of CNG and LPG vehicles release CO2 effect of regulating fuel consumption. law (including a regulation), including any during combustion. Even for battery- Given that substantially reducing CO energy or environmental law or regulation. 2 electric vehicles, fossil fuels are used in tailpipe emissions from automobiles is We understand this statutory language at least some part of production of unavoidably and overwhelmingly to prevent EISA from limiting pre- electricity in virtually all parts of the dependent upon substantially existing authority or responsibility country, and that electricity is used to increasing fuel economy through conferred by any law or from move the vehicles. And with hydrogen installation of engine technologies, authorizing violation of any law. By the vehicles, methane remains a major part transmission technologies, accessory same token, the savings provision does of the generation of hydrogen fuel, technologies, vehicle technologies, and not purport to expand pre-existing which is also used to move those hybrid technologies, increases in fuel authority or responsibility. Thus, to the vehicles. Carbon dioxide is thus a economy inevitably produce extent that EPCA’s express preemption byproduct of moving virtually if not commensurate reductions in CO2 provision limited State authority and literally all light-duty vehicles, and the tailpipe emissions. Since there is but responsibility prior to the enactment of amount of CO2 released directly one pool of technologies 507 for reducing EISA, it continues to limit such correlates to the amount of fossil fuels tailpipe CO2 emissions and increasing authority and responsibility to the same used to power the vehicle so it can fuel economy available now and for the extent after the enactment of EISA. We move. foreseeable future, regulation of CO2 recognize that the Congressional Record EPCA has specified since its inception emissions and fuel consumption are contains statements regarding the that compliance with CAFE standards is inextricably linked. Such state savings provision indicating that certain to be determined in accordance with regulations are therefore unquestionably members of Congress may have test and calculation procedures ‘‘related’’ and expressly preempted considered this language as allowing established by EPA.506 More under 49 U.S.C. 32919. California to set tailpipe GHG emissions specifically, the tests are to be Moreover, state standards that have standards in contravention of EPCA’s performed using ‘‘the same procedures the effect of regulating tailpipe CO2 express preemption provision. Note, for passenger automobiles the emissions or fuel economy are likewise however, that statements made on the Administrator used for model year 1975 related to fuel economy standards and floor of the Senate or House before the . . . procedures that give comparable likewise preempted. For instance, if a votes on EISA cannot expand the scope results.’’ Under these procedures, state were to regulate all tailpipe GHG of the savings provision or even be used compliance with the CAFE standards is emissions from a vehicle, and not just to ‘‘clarify’’ it, given the unambiguous and has always been based on the rates CO2, the state would nonetheless plain meaning of both the savings of emission of CO2, CO, and regulate tailpipe CO2 emissions, since provision and EPCA’s express hydrocarbons from covered vehicles, CO2 emissions comprise the preemption provision. If Congress had but primarily on the emission rates of overwhelming majority of tailpipe wanted to narrow the express CO2. In the measurement and carbon emissions. EPCA preempts such preemption provision, it could have calculation of a given vehicle model’s a standard. chosen to include such an amendment fuel economy for purposes of Likewise, a state law prohibiting all in EISA. It did not. determining a manufacturer’s tailpipe emissions, carbon or otherwise, compliance with Federal fuel economy (b) Tailpipe CO2 Emissions Regulations from some or all vehicles sold in the standards, the role of CO2 is state, would relate to fuel economy or Prohibitions are Related to Fuel approximately 100 times greater than Economy Standards standards and be preempted by EPCA, the combined role of the other two since the majority of tailpipe emissions This broad statutory preemption relevant carbon exhaust gases. Given consist of CO2. We recognize that this provision also necessarily governs state that the amount of CO2, CO, and preempts state programs, such as regulations over greenhouse gas hydrocarbons emitted from a vehicle’s California’s ZEV mandate, that establish emissions. GHG emissions, and tailpipe relates directly to the amount of requirements that a portion of a particularly CO2 emissions, are fuel it consumes, EPA can reliably and vehicle’s fleet sold or purchased consist mathematically linked to fuel economy; accurately convert the amount of those of vehicles that produce no tailpipe therefore, regulations limiting tailpipe gases emitted by that vehicle into the emissions. CO2 emissions are directly related to miles per gallon achieved by that fuel economy.505 To summarize, most vehicle. In recognizing that 1975 test (c) Other GHG Emissions Requirements light vehicles are powered by gasoline procedures were sufficient to measure May Not Be Preempted by EPCA internal combustion engines. The fuel economy performance, Congress While EPCA expressly preempts state combustion of gasoline produces CO2 in recognized the direct relationship tailpipe CO2 emission limits, some GHG amounts that can be readily calculated. between CO2 emissions and fuel emissions from vehicles have no CO2 emissions are always and directly economy standards, while in the same piece of legislation expressly 507 With the minor exception of regulating the 504 See 71 FR 17566, 17657 (April 6, 2006). carbon intensity of fuels—an activity not preempted 505 71 FR at 17659, et seq. 506 49 U.S.C. 32904(c). by EPCA.

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relation to fuel economy and are NHTSA invites comments on the preemption, makes clear that waiver of therefore outside the scope of EPCA extent to which a state standard can preemption under that statute operates preemption. For instance, vehicle air have some incidental impact on fuel only to relieve ‘‘application of this conditioning units can cause GHG economy or CO2 emissions without section’’—the preemption provision of emissions by leaking refrigerants when being ‘‘related to’’ fuel economy the CAA—and not application of other the system is recharged or when it is standards. statutes.516 EPA and NHTSA tentatively crushed at the end of the vehicle’s life. (d) A Waiver of CAA Preemption Does agree that a waiver under the CAA does Since such emissions have no bearing Not Affect, in Any Way, EPCA not also waive EPCA preemption. on a vehicle’s fuel economy Preemption The Vermont and California Federal performance or tailpipe CO2 emissions, states can pass laws specifically When a state establishes a standard district court decisions mentioned regulating or even prohibiting such related to fuel economy, it does so in above involved challenges to a vehicular refrigerant leakage without violation of EPCA’s preemption statute California Air Resources Board relating to fuel economy if doing so and the standard is therefore void ab regulation establishing vehicle tailpipe would be otherwise consistent with initio. GHG emission standards. The courts Federal law. Therefore, EPCA would not Federal preemption is rooted in the concluded that EPCA did not preempt preempt such laws, if narrowly drafted Supremacy Clause of the U.S. such standards. In both decisions, the Constitution.509 Courts have long so as not to include tailpipe CO2 courts placed much weight upon the emissions. If, however, a state law recognized that the Supremacy Clause fact that California had petitioned EPA sought to limit the combined GHG of the Constitution gives Congress the for a waiver of CAA preemption emissions from a motor vehicle, in a power to specifically preempt State pursuant to 42 U.S.C. 7543(b). law.510 Broadly speaking, the United manner that would include tailpipe CO2 NHTSA and EPA do not agree with States Supreme Court has long held that emissions, EPCA would preempt that the district courts’ express preemption ‘‘an act done in violation of a statutory portion of the law limiting tailpipe CO2 analyses. EPCA preempts state laws and prohibition is void,’’ 511 and has emissions. regulations ‘‘related to fuel economy specifically noted that such acts are not Similarly, state safety requirements standards or average fuel economy may have a merely incidental impact on merely ‘‘voidable at the instance of the government’’ but void from the standards for automobiles covered by an fuel economy and not relate to fuel 517 512 average fuel economy standard.’’ The economy. For instance, a state may outset. The Ninth Circuit stated it more plainly: ‘‘Under Federal law, an courts in Green Mountain Chrysler and mandate that children traveling in Central Valley Chrysler-Jeep recognized motor vehicles sit in child safety seats. act occurring in violation of a statutory 513 the relationship between CO2 emissions Child safety seats add weight, and mandate is void ab initio.’’ Discussing the Supremacy Clause, the and fuel economy. Nonetheless, they added weight has an impact on fuel erroneously concluded that the ‘‘related economy. This impact is merely Supreme Court explicitly explained that, ‘‘[i]t is basic to this constitutional to’’ language in EPCA’s preemption incidental, however, and does not clause should be construed ‘‘very directly relate to fuel economy command that all conflicting state provisions be without effect.’’ 514 And at narrowly’’ and adopted a novel standards. interpretation of ‘‘related to.’’ 518 The Likewise, EPA has recognized that least one Federal Court of Appeals explicitly stated that the Supremacy courts failed to recognize precedent California may apply for a waiver of providing broad effect to other CAA preemption for vehicle emissions, Clause means ‘‘state laws that ‘interfere preemption statutes using terms similar which must be granted in certain with, or are contrary to the laws of 515 to ‘‘related to,’’ as discussed above. circumstances. That said, EPCA does Congress’ are void ab initio.’’ While both the CAA and EPCA may preempt any regulation limiting or (e) A Clean Air Act Waiver Does Not preempt state laws limiting GHG prohibiting CO2 emissions or all tailpipe ‘‘Federalize’’ EPCA-Preempted State emissions from motor vehicles, avoiding emissions, as such regulations have the Standards preemption (by waiver or otherwise) effect of regulating CO emissions and 2 under one Federal law has no bearing relate to fuel economy standards.508 The district court in Green Mountain on the other Federal law’s preemptive Chrysler concluded that it could resolve 508 NHTSA notes that over the last decade CARB effect. Section 209 of the CAA, which the challenge to Vermont’s regulations has complicated its regulation of smog-forming provides for the possible waiver of CAA without directly considering the emissions (the original purpose of the Section 209 application of EPCA’s preemption CAA waiver) by combining it with regulation of and which contain dense populations of allergy GHG and, principally, CO2 emissions as well as the sufferers. provision. The court said that the ZEV mandate. Since EPCA prohibits state 509 U.S. Const. art VI, cl. 2. dispute did not concern preemption but regulation of CO emissions, a state program that 2 510 See Gibbons v. Ogden, 22 U.S. 1 (1824). concerned reconciling two different combines regulation of the two groups of pollutants 511 is preempted to the extent that the program relates Ewert v. Bluejacket, 259 U.S. 129, 138 (1922), Federal statutes (EPCA and the CAA). In to fuel economy. A regulatory regime in which quoting Waskey v. Hammer, 223 U.S. 85, 94 (1912). this regard, the district court stated that smog-forming pollutants are addressed without also 512 Waskey, 223 U.S. at 92. if EPA approved California’s waiver 513 directly or indirectly regulating fuel economy is not Cabazon Band of Mission Indians v. City of petition (which had not yet occurred), preempted under EPCA. Indio, Cal., 694 F.2d 634, 637 (9th Cir. 1982). Additionally, NHTSA notes that some suggest 514 Maryland v. Louisiana, 451 U.S. 725, 746 then Vermont’s GHG regulations that insofar as carbon dioxide emissions cause (1981) (citing McCulloch v. Maryland, 4 Wheat. 316, become ‘‘other motor vehicle standards’’ global climate change, they indirectly worsen air 427 (1819)). Other courts have used similar that NHTSA must consider in setting quality by (1) increasing formation of smog, because language to describe the impact of preemption. See, the chemical process that forms ground-level ozone e.g., Nathan Kimmel, Inc. v. DowElanco, 275 F.3d occurs faster at higher temperatures, and (2) 1199, 1203 (9th Cir. 2002) (explaining preempted 516 42 U.S.C. 7543(b)(1) (emphasis added); see increasing ragweed pollen, which can cause asthma state laws are ‘‘without effect’’); Sweat v. Hull, 200 also 42 U.S.C. 7543(b)(3) (‘‘compliance with such attacks in allergy sufferers. Comment is sought on F.Supp.2d 1162, 1172 (D. Ariz. 2001) (explaining State standards shall be treated as compliance with the extent to which the zero-tailpipe-emissions preempted state laws are ‘‘ineffective.’’). applicable Federal standards for purposes of this vehicles compelled to be sold by California’s ZEV 515 Antilles Cement Corp. v. Fortuno, 670 F.3d subchapter’’) (emphasis added). program reduce temperatures in the parts of 310, 323 (1st Cir. 2012) (quoting Gibbons v. Ogden, 517 49 U.S.C. 32919(a) (emphasis added). California which are in non-attainment for ozone 22 U.S. (9 Wheat.) 1 (1824)). 518 E.g., 529 F.Supp.2d at 1176.

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CAFE standards.519 In the court’s view, automotive industry’s withdrawal of what level of regulation is necessary to once EPA grants a waiver, compliance appeals. As explained above, the secure public health and welfare.’’ 523 with California’s standards is deemed to withdrawal of those appeals was a pre- In support of its position, the Central satisfy all Federal standards—not just condition to the 2010 issuance of the Valley Chrysler-Jeep found persuasive those of the CAA. In states that adopt final rule establishing the ‘‘National the Green Mountain Chrysler court’s California’s standards, compliance with Program’’ of fuel economy standards view that California emissions that standard would be deemed to and GHG emission standards for MYs regulations under CAA Section 209 satisfy all Federal standards as well. 2012–2016. have always been considered ‘‘other With this Federal accommodation of standards’’ on fuel economy. As state standards, the court concluded, In their appeals of the Green mentioned previously in the discussion Vermont’s regulations would stand. Mountain Chrysler decision, the vehicle of the ‘‘other standards’’ to be The court’s premise that preemption manufacturer associations argued that considered as factors in establishing provisions and principles do not apply the operation of EPCA’s express maximum feasible fuel economy is not based on precedent and is not preemption provision does not require standards, EPCA, as originally enacted, supported by applicable law. In fact, the that a conflict be shown between the contained a specific self-contained district court in Central Valley Chrysler- Federal and state standards, that the provision that provided that any Jeep recognized that ‘‘[t]he Green Federal and state standards be identical, manufacturer could apply to DOT for Mountain court never actually offers a or that the Federal and state standards modification of an average fuel economy legal foundation for the conclusion that serve the same purpose. We agree. The standard for model years 1978 through a state regulation granted waiver under conflict principles of implied 1980 if it could show the likely [CAA] section 209 [42 U.S.C. 7543] is preemption do not apply in fields where existence of a ‘‘Federal standards fuel essentially a federal regulation such that Congress has enacted an express economy reduction,’’ defined to include any conflict between the state regulation preemption provision prohibiting even EPA-approved California emissions and EPCA is a conflict between federal standards that reduce fuel economy. the existence of state standards. The regulations.’’ 520 NHTSA and EPA The court reasoned that ‘‘in 1975 when statutory test, whether the state disagree with the conclusion of these EPCA was passed, Congress decisions and reaffirm the longstanding standards are ‘‘related to’’ the Federal unequivocally stated that federal position that state standards regulating standards, is met by showing that the standards included EPA-approved tailpipe GHG emissions, such as the state GHG emission standards are not California emissions standards.’’ 524 standards challenged in the California simply related to, but actually the However, when EPCA was recodified in and Vermont district court cases, are functional equivalent of, the Federal 1994, ‘‘all reference to the modification preempted by EPCA because they fuel economy standards. The district process applicable for model years 1978 ‘‘relate to’’ fuel economy standards. We court itself recognized that ‘‘there is a through 1980, including the categories also note that those courts failed to near-perfect correlation between fuel of federal standards, was omitted as consider, much less give any weight to, consumed and carbon dioxide executed.’’ 525 The court noted that the NHTSA’s views of preemption, as the released.’’ Neither the inclusion in the legislative intent of the 1994 expert agency with authority over the state standard of emissions for which recodification was not intended to make Federal fuel economy program.521 The that relationship does not exist, nor the a substantive change to the law.526 United States opposed, as amicus assigning to the state standard of a Thus, the court concluded that ‘‘[i]f the curiae, the Green Mountain Chrysler purpose other than energy conservation, recodification worked no substantive decision on appeal to the Second diminishes the statutory implications of change in the law, then the term ‘other Circuit, but the Second Circuit did not the state standard’s meeting the motor vehicle standards of the 522 issue a decision on appeal due to the relatedness test. Those unrelated types Government’ continues to include both of emissions constitute a very low emission standards issued by EPA and 519 Green Mountain Chrysler, 508 F.Supp.2d at emission standards for which EPA has percentage of the overall tailpipe 398. issued a waiver under Section 209(b) of 520 emissions. Finally, while there are Central Valley Chrysler-Jeep, 529 F.Supp.2d at the CAA, as it did when enacted in 1165. Congress must state its intention clearly to means of compliance with the state 527 accord a state law the status of Federal law, which 1975.’’ it did not do in either in Section 209(b) of the CAA standard other than improving fuel NHTSA believes that the district court or in EPCA. See, e.g., Indep. Cmty. Bankers Ass’n economy, their contributions to misread EPCA to the point of turning it v. Bd. of Governors, 820 F.2d 428, 436–37 (D.C. Cir. compliance are minor. Improving fuel on its head. As discussed previously in 1987) (recognizing that, although Congress ‘‘has the power to assimilate state law,’’ ‘‘[s]uch decisions economy is the only feasible method of this document, the ‘‘federal standards’’ require an unequivocal congressional expression’’ achieving full compliance. Again, definition discussed by the court existed because ‘‘some [state] restrictions would in all NHTSA and EPA agree. in a self-contained scheme allowing likelihood conflict with [other] existing Federal laws’’). The Central Valley Chrysler-Jeep court manufacturers to petition NHTSA for 521 See Geier v. American Honda Motor Co., 529 went further, noting that while NHTSA modification of the fuel economy U.S. 861, 883 (2000) (‘‘Congress has delegated to is required to give consideration to requirements only between 1978 and DOT authority to implement the statute; the subject ‘‘other standards,’’ including those matter is technical; and the relevant history and 523 Central Valley Chrysler-Jeep, 529 F.Supp.2d at background are complex and extensive. The agency ‘‘promulgated by EPA,’’ ‘‘[t]here is no 1168. is likely to have a thorough understanding of its corresponding duty by EPA to give 524 own regulation and its objectives and is ‘uniquely Central Valley Chrysler-Jeep, 529 F.Supp.2d at qualified’ to comprehend the likely impact of state consideration to EPCA’s regulatory 1173 (quoting Green Mountain Chrysler, 508 requirements.’’); Medtronic, Inc. v. Lohr, 518 U.S. scheme. This asymmetrical allocation F.Supp.2d at 345). EPCA Section 502(d)(3)(D)(i) provided: ‘‘Each of the following is a category of 470, 496 (1996) (‘‘agency is uniquely qualified to by Congress of the duty to consider determine whether a particular form of state law Federal standards: . . . Emissions standards under stands as an obstacle to the accomplishment and other governmental regulations Section 202 of the Clean Air Act, and emissions execution of the full purposes and objectives of indicates that Congress intended that standards applicable by reason of Section 209(b) of Congress’’) (internal quotation marks omitted). DOT, through NHTSA, is to have the such Act.’’ 522 525 Id. See Proof Brief for the United States as burden to conform its CAFE program Amicus Curiae, 07–4342–cv (2d Cir. filed Apr. 16, 526 Id. 2008). under EPCA to EPA’s determination of 527 Id.

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1980, and thus has no application either Thus, EPCA went on to include requirement to consider other standards. at the time of the decision or today. And ‘‘Emissions standards under Section 202 There is no hint in the histories of either even if that definition of ‘‘federal of the CAA, and emissions standards EPCA or EISA of an intent to give other standards’’ were applied to EPCA applicable by reason of Section 209(b) of standards special, much less superior, generally, NHTSA would balance that such Act’’ in its list of ‘‘categor[ies] of status under EPCA. The limited against other factors enumerated in Federal standards.’’ 531 concerns and purpose were to ensure EPCA that it ‘‘shall’’ consider in setting Because California standards to that any adverse effects of other maximum feasible fuel economy combat smog (not GHG regulations) ‘‘by standards on fuel economy considered standards. However, the district courts’ reason of section 209(b)’’ could be in connection with the fuel economy view is that this factor instead creates an considered to reduce federal fuel standards. Those concerns are evident ‘‘obligation’’ to ‘‘harmonize’’ CAFE economy standards for three years, the in a 1974 report, entitled ‘‘Potential for standards with state emissions district courts erroneously believed that Motor Vehicle Fuel Economy regulations under a CAA Section 209 state CO2 regulations are somehow now Improvement,’’ submitted to Congress waiver.528 In other words, under the ‘‘federal’’ standards under 49 U.S.C. by the Department of Transportation district courts’ opinions, a state 32902(f). On its face, this language and EPA.535 That report noted that the standard controls what NHTSA does, applied only to three long past model weight added by safety standards would and the agency therefore has no further years and only to reducing standards, and one set of emissions standards discretion to consider the other factors not setting them. ‘‘For purposes of this might temporarily reduce the level of Congress directed it to consider. subsection’’ referred to section 502(d) of achievable fuel economy.536 These Consistent with the legislative history EPCA—not EPCA section 502(e) [now concerns can also be found in the and NHTSA’s long-standing 49 U.S.C. 32902(f)] which sets forth the congressional reports on EPCA.537 interpretations, NHTSA interprets EPCA factor of ‘‘the effect of other (f) State Tailpipe GHG Emissions EPCA, a statute which it administers in Federal motor vehicle standards on fuel Standards Conflict With EPCA and are implementing the national fuel economy.’’ After MY 1980, section Therefore Preempted Impliedly economy program, as providing that the 502(d) became obsolete. When EPCA requirement to ‘‘consider’’ the four was recodified in 1994, section 502(d) Notwithstanding that state standards EPCA statutory factors set forth in 49 was dropped as executed and therefore limiting or prohibiting tailpipe CO2 U.S.C. 32902(f) does not mean the surplusage. As the listing of Federal emissions are expressly preempted by agency is obligated to harmonize CAFE standards in 502(d) never had any EPCA, they also clearly conflict with the standards with state tailpipe CO2 application outside that subsection and objectives of EPCA and would therefore emissions standards. EPA concurs that a ceased to have significance when that also be impliedly preempted. CAA waiver does not also waive the subsection became obsolete, it had and State regulation of CO2 emissions effect of any other Federal law, has no bearing on the recodified version would frustrate Congress’ objectives in including EPCA. of EPCA. The recodification to rescind establishing the CAFE program and As discussed above in the ‘‘other this subsection, which had no conflict with NHTSA’s efforts to standards’’ section of this rulemaking, substantive significance for 14 years, implement the program in a manner NHTSA further believes that the district was entirely non-substantive.532 consistent with EPCA. While the courts in Green Mountain Chrysler and NHTSA believes that the district overarching purpose of EPCA may be Central Valley Chrysler-Jeep courts in Green Mountain Chrysler and energy conservation, Congress directed misconstrued the provision in EPCA as Central Valley Chrysler-Jeep sought to NHTSA to consider four factors in enacted in 1975 that allowed give a CAA waiver for the California establishing maximum feasible fuel manufacturers to petition NHTSA to GHG regulation an effect far beyond the economy standards. NHTSA balances reduce CAFE standards that Congress terms of the CAA provision authorizing these factors to determine, through the had set for model years 1978, 1979, and such a waiver. As discussed previously, CAFE program, the amount of energy 1980 if there was a ‘‘Federal standards the courts overlooked the fact that the the light-duty vehicle fleet should fuel economy reduction.’’ 529 This CAA itself makes clear that waiver of conserve. Allowing a state to make a provision did not involve a factor to be preemption under that statute operates state-specific determination for how balanced in determining fuel economy only to relieve application of the CAA much energy should be conserved (in standards. It provided for a reduction in preemption statute.533 State GHG the same way that the CAFE program fuel economy standards for cars at a regulations, even if subject to an EPA conserves energy) necessarily frustrates time when only conventional pollutants waiver, would remain regulations NHTSA’s efforts to make that were regulated. The provision was ‘‘adopt[ed] or enforc[ed]’’ by ‘‘a State or determination for the country as a specifically designed to address political subdivision of a State’’ and whole because it sends the industry in California’s then-existing smog therefore would be subject to different directions in order to try to regulations, particularly with regard to preemption by EPCA.534 meet multiple standards at once rather the additional weight (which other The courts’ view suggests an apparent than allowing the industry to focus its things being equal reduces fuel misunderstanding of the underlying resources and efforts on the path laid economy) associated with catalytic concerns and purposes of the out at the Federal level. This is converters. In so doing, Congress particularly true when considering that recognized the potential interplay for 531 Id. § 502(d)(3)(D). when California sets standards, other three model years between California’s 532 The recodification was ‘‘[t]o revise, codify, states can choose to adopt those smog regulations and the possibility that and enact without substantive change’’ laws related it could reduce Federal fuel economy to transportation. Public Law 103–272 (emphasis 535 standards for those model years.530 added). This report was prepared in compliance with 533 42 U.S.C. 7543(b)(1) (emphasis added); see Section 10 of the Energy Supply and Environmental also 42 U.S.C. 7543(b)(3) (‘‘compliance with such Coordination Act of 1974, Public Law 93–319. 528 Id. at 1170. State standards shall be treated as compliance with 536 See id. at 6–8 and 91–93. 529 Public Law 94–163 sec. 502(d), 89 Stat. 904– applicable Federal standards for purposes of this 537 See page 22 of Senate Report 94–179, pages 88 05. subchapter’’) (emphasis added). and 90 of House Report 94–340, and pages 155–7 530 See H.R. No. 94–340, at 87. 534 49 U.S.C. 32919(a). of the Conference Report, Senate Report 94–516.

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standards and thereby further increase rejecting the manufacturers’ arguments, feasible means to eliminate tailpipe CO2 the compliance complexity. the court held that the Vermont emissions is by eliminating the use of A critical objective of EPCA was to standards do not create an obstacle to petroleum fuel (i.e., electric or fuel cell establish a single national program to achieving EPCA’s goals because the propulsion), and because the purpose of regulate vehicle fuel economy. Vermont standards are, in the court’s the ZEV program is to affect fuel Congress, in passing EPCA, judgment, consistent with EPCA’s economy,539 ZEV mandates directly accomplished this objective by standard setting criteria. In reaching that relate to fuel economy and are thereby providing broad preemptive power conclusion, the court did not consider expressly preempted. ZEV mandates are established in the language codified at the impact of the Vermont standards on also intended to force the development 49 U.S.C. 32919(a). Other congressional the balancing done by NHTSA in setting and commercial deployment of ZEVs— objectives underlying EPCA include CAFE standards. For its part, the court regardless of the technological avoiding serious adverse economic in Central Valley Chrysler-Jeep feasibility or economic practicability of effects on manufacturers and concluded that there was no conflict doing so—putting the program entirely maintaining a reasonable amount of preemption, since if California’s at odds with critical factors that consumer choice among a broad variety standards were granted a waiver under Congress required NHTSA to consider of vehicles. To guide the agency toward CAA section 209 by EPA, they would in establishing fuel economy standards. the selection of standards meeting these satisfy CAA objectives and be consistent Therefore, ZEV mandates also interfere competing objectives, Congress with EPCA.538 The court simply with achieving the goals of EPCA and specified four factors that NHTSA must assumed consistency. If this assumption are therefore impliedly preempted. consider in determining the maximum proved incorrect, to the extent of any California’s ZEV mandate represents feasible level of average fuel economy incompatibility between the two the most prominent example. California and thus the level at which each regimes, ‘‘NHTSA is empowered to initially launched its ZEV mandate in standard must be set. As discussed revise its standards’’ to take into 1990 to force the development and above, since the only practical way to account California’s regulations, deployment of ZEVs to reduce smog- reduce tailpipe CO2 emissions is to according to that court. forming emissions. As California’s Low improve fuel economy, it would be NHTSA disagreed with the two Emission Vehicle and EPA’s Tier 3 impossible for a state tailpipe CO2 district court rulings at the time and standards for criteria pollutant emissions standard to be adopted continues to do so now. We note that emissions have become increasingly without interfering with CAFE the Vermont decision was appealed and stringent, the greater impact of standards. If a state were to establish briefed (including an Amicus Brief filed California’s ZEV mandate is the standards that have the effect of by the United States) prior to the stay reduction of tailpipe GHG emissions. In requiring a lower level of fuel economy and withdrawal of the litigation its latest iteration the ZEV mandate no than CAFE standards, those standards pursuant to the National Program longer focuses on tailpipe smog forming would be meaningless since they would arrangement described previously. emissions, a fact that CARB not reduce CO2 emissions. Instead, a NHTSA was not a party to those cases acknowledged in 2012 when applying State could only establish a standard and is not bound by these decisions. for a waiver for its Advanced Clean Car that has the effect of requiring a higher Those erroneous decisions further Program, in stating ‘‘[t]here is no criteria level of average fuel economy. Setting support the need for NHTSA, as the emissions benefit from including the standards that are more stringent than agency with expert authority to interpret ZEV proposal in terms of vehicle (tank- the fuel economy standards EPCA, to reaffirm its longstanding view to-wheel or TTW) emissions. The LEV promulgated under EPCA would upset of the preemption provision. Moreover, III criteria pollutant fleet standard is the efforts of NHTSA to balance and EPA, as the agency charged with responsible for those emission achieve Congress’s competing goals. administering the CAA, further reductions in the fleet; the fleet would Setting a standard above the level determines that CAA waivers do not become cleaner regardless of the ZEV judged by NHTSA to be consistent with ‘‘federalize’’ state standards; therefore, regulation because manufacturers would the statutory consideration after careful state standards directly affecting fuel adjust their compliance response to the consideration of these issues in a economy are subject to EPCA standard by making less polluting rulemaking proceeding would negate preemption even if there is a CAA conventional vehicles.’’ 540 the agency’s careful analysis and waiver in place. In its current configuration, the ZEV decision-making. (g) ZEV Mandates mandate requires manufacturers to For the same reasons, a state generate credits based upon the number regulation having the effect of regulating Another form of EPCA-preempted of vehicles delivered for retail sale. tailpipe carbon dioxide emissions or state regulation is a zero-emission Vehicles earn varying amounts of ZEV fuel economy is likewise impliedly vehicle (ZEV) mandate. Such laws credits depending upon technology and preempted under 49 U.S.C. Chapter 329. require that a certain number or range, with some vehicles earning The Vermont and California district percentage of vehicles sold or delivered several credits. Manufacturers court decisions discussed above for sale within a state must be ZEVs, delivering for sale certain plug-in hybrid addressed conflict preemption. The vehicles that produce neither smog- Green Mountain Chrysler court forming nor CO2 tailpipe emissions. 539 See, e.g., Fact Sheet: 2003 Zero Emission concluded that the Vermont GHG ZEV mandates may require either that Vehicle Program, California Air Resources Board standards presented no conflict actual ZEVs be sold or delivered for sale (March 18, 2004), available at https:// preemption concerns and rejected the or provide for generation and www.arb.ca.gov/msprog/zevprog/factsheets/ 2003zevchanges.pdf (stating that one of the contention that Vermont’s GHG application of ZEV credits, which may ‘‘significant features of the April 2003 changes to regulations would conflict with or may not be traded. While NHTSA has the ZEV regulation’’ included removal of ‘‘all Congress’ intent that there be a single, not previously commented on the references to fuel economy or efficiency,’’ after a nationwide fuel economy standard and relationship between the ZEV mandates 2002 lawsuit asserting that AT PZEV provisions pertaining to the fuel economy of hybrid electric that those regulations upset NHTSA’s and the CAFE program because the only vehicles were preempted by EPCA). careful balancing of the EPCA statutory 540 Docket No. EPA–HQ–OAR–2012–0562, Pp. factors in its rulemaking proceedings. In 538 529 F.Supp.2d at 1179. 15–16.

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vehicles earn some limited ZEV credits, This involves implementation of some based rather than design mandates. even though they are not truly ZEVs, but of the most expensive and advanced Moreover, by forcing manufacturers to such credits can only satisfy a portion technologies in the automotive industry, design, produce, and deliver for sale of a manufacturer’s ZEV credit regardless of consumer demand (which vehicles that produce no tailpipe CO2 requirements. The credit requirements tends to be lower during periods of emissions, the ZEV mandate forces increase annually, with the number of sustained relatively-low gasoline further expensive investments in fuel- required credits equaling 4.5% of a prices). The California Air Resources saving technology than NHTSA has manufacturer’s light duty vehicle sales Board’s own midterm review report for determined appropriate to require in 541 in 2018, rising to 22% in 2025. To hit their Advanced Clean Car program cites setting fuel economy standards.547 We this 22% credit requirement, a estimates from the 2016 Draft Technical seek comment on the extent to which manufacturer would need to deliver for Assessment Report relating to the compliance with the ZEV mandate sale ZEVs totaling somewhere between incremental vehicle costs of ZEVs over less than eight percent and 15.4% of 2016 vehicles with internal combustion frustrates manufacturers’ efforts to their light duty sales in California, per engines.545 While stating marginal comply with CAFE standards. various projections.542 With advance increased costs have fallen when For the reasons outlined above, the notice, manufacturers may elect to use compared to previous estimates, CARB California ZEV mandate is expressly credits earned from over-complying nevertheless still shows battery electric and impliedly preempted by EPCA. with vehicle tailpipe GHG emission subcompact vehicles with 75 miles of While EPA had previously granted a requirements toward partial satisfaction range, for which consumer demand waiver of CAA preemption for of the ZEV mandate. remains very low, as costing $7,505 California’s Advanced Clean Car The EPA has granted a waiver of CAA more than ones with an internal Program, which includes the California preemption under Section 209 of the combustion engine, with large cars ZEV mandate, this waiver has no effect CAA for California’s Advanced Clean costing $11,355 more. Battery electric on EPCA preemption of the ZEV Car program, which includes subcompacts with a 200-mile range, for mandate, as described above. California’s ZEV mandate in addition to which consumer demand is slightly California’s GHG regulation and LEV higher than a 75-mile range, were 3. Conclusion and Severability program. Nine other states have elected estimated to cost $12,001 more than to adopt the ZEV mandate pursuant to comparable vehicles with internal Given the importance of an effective, Section 177 of the CAA 543—which, combustion engines, and large cars smooth functioning national program to combined with California, represent $16,746 more. Even subcompact plug-in regulate fuel economy and in light of the approximately 30% of United States hybrids with 40 miles of electric range failure of two Federal district courts to light duty vehicle sales annually.544 cost $9,260 more than internal consider NHTSA’s analysis and Manufacturers must satisfy the ZEV combustion engine equivalents, and carefully crafted position on mandate for each state. While, $13,991 more for large cars. And as preemption, NHTSA is considering traditionally, manufacturers could apply discussed above, consumers have not taking the further step of summarizing credits earned in one state to satisfy the been willing to pay the full cost of this that position in an appendix to be added requirements of another state, this technology—meaning manufacturers are to the parts in the Code of Federal ‘‘travel’’ provision is limited only to fuel likely to spread the costs of the ZEV Regulations setting forth the passenger cell electric vehicles beginning with MY mandate to non-ZEV vehicles (and to car and light truck CAFE standards. 2018. vehicles sold in other states). This That proposed regulatory text may be Accordingly, manufacturers must expensive and market-distorting found at the end of this preamble. endeavor to design, produce, and mandate for manufacturers to eliminate deliver for sale significant numbers of vehicle tailpipe CO2 emissions (and NHTSA considers its proposed vehicles that produce zero tailpipe CO2 thus petroleum fuel use) for part of their decision on the maximum feasible emissions within each state that has fleets has always interfered with CAFE standards for MY 2021–2026 to be adopted the California ZEV mandate. NHTSA’s balancing of statutory factors severable from its decision on EPCA in establishing maximum feasible fuel preemption. Our proposed 541 Cal. Code Regs. tit.13, sec. 1962.2(b). economy standards, and increasing ZEV interpretation of 49 U.S.C. 32919 does 542 The Air Resources Board initially projected credit requirements through 2025 make not depend on our decision to finalize that 15.4% of new vehicles delivered for sale would consist of ZEVs. See., e.g., Staff Report: Initial it all-the-more of an obstacle to and a court’s decision to uphold, the Statement of Reasons 2012 Proposed Amendments accomplishing EPCA’s goal of CAFE standards being proposed today to the California Zero Emission Vehicle Program establishing a coherent national fuel under 49 U.S.C. 32902. NHTSA solicits Regulations, California Air Resources Board at 48 economy program. Unlike NHTSA’s (Dec. 7, 2011), available at https://www.arb.ca.gov/ comment on the severability of these regact/2012/zev2012/zevisor.pdf (stating ‘‘[b]y CAFE program, the ZEV mandate forces actions. model year 2025, staff expects 15.4 percent of new investment in specific technology sales will be ZEVs and [Plug-In Hybrids].’’) (electric and fuel cell technology) rather However, an increased supply of credits and than allowing manufacturers to improve projected increases in battery electric range has resulted in others projecting reduced required ZEV fuel economy through more cost- fleet penetration. See, e.g., What is ZEV?, Union of effective technologies that better reflect Concerned Scientists (Oct. 31, 2016), https:// consumer demand.546 This appears to 547 See, e.g., Alan, J., Hardman, S. & Carley, S. www.ucsusa.org/clean-vehicles/california-and- conflict directly with Congress’ intent Cost implications for automakers’ compliance with western-states/what-is-zev (projecting ‘‘about 8 emission standards from Zero Emissions Vehicle percent of sales to be ZEVs’’ in 2025). that CAFE standards be performance- mandate, TRB 2018 Annual Meeting paper 543 These states are Connecticut, Maine, submittal, https://trid.trb.org/view/1495714 (last Maryland, Massachusetts, New Jersey, New York, 545 California Air Resources Board, California’s accessed June 28, 2018) (finding based on Oregon, Rhode Island, and Vermont. Advanced Clean Cars Midterm Review, Appendix independent research that in 2025, costs reach 544 See Automotive Retailing: State by State, C, Zero Emission Vehicle and Plug-in Hybrid National Automobile Dealers Association, https:// Electric Vehicle Technology Assessment, Table 8, at approximately $1,500 per vehicle on average to www.nada.org/statedata/ (last visited June 25, C–64 (Jan. 18, 2017), available at https:// comply with CAFE alone and increase to around 2018) (estimating that these states represented www.arb.ca.gov/msprog/acc/mtr/appendix_c.pdf. $2,100 per vehicle on average to comply with both 28.6% of new motor vehicle registrations in 2016). 546 13 Cal. Code of Regulations 1962.2. CAFE and ZEV).

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B. Preemption Under the Clean Air Act Section 209(b)(1)(A)–(C), 42 U.S.C. conditions), EPA proposes to find that 7543(b)(1)(A–(C) (Emphasis added).550 California does not need its GHG and 1. Background Any one of these three findings operates ZEV standards to meet compelling and (a) Statutory Background: Clean Air Act to forbid a waiver. extraordinary conditions because those Section 209(a) Preemption, Section standards address environmental (1) EPA’s Proposed Action 209(b)(1) California Waiver, and Section problems that are not particular or 209(b)(1)(A)–(C) Prohibitions on Waiver EPA is proposing to withdraw the unique to California, that are not caused EPA’s regulation of new motor January 9, 2013 waiver of preemption by emissions or other factors particular vehicles under Title II generally for California’s Advanced Clean Car or unique to California, and for which preempts state standards in the same (ACC) program, Zero Emissions Vehicle the standards will not provide any subject area. Section 209(a) of the Act (ZEV) mandate, and Greenhouse Gas remedy particular or unique to provides that: (GHG) standards that are applicable to California. new model year (MY) 2021 through Third, under section 209(b)(1)(C) ‘‘No State or any political subdivision 2025. 78 FR 2145 (January 9, (consistency with section 202(a)), EPA thereof shall adopt or attempt to enforce any 2013.) 551 552 EPA proposes to do so on proposes to find that California’s GHG standard relating to the control of emissions from new motor vehicles or new motor multiple grounds. and ZEV standards are inconsistent with vehicle engines subject to this part. No State First, EPA notes that elsewhere in this section 202(a) because they are shall require certification, inspection or any notice NHTSA has proposed to find that technologically infeasible in that they other approval relating to the control of California’s GHG and ZEV standards are provide sufficient lead time to permit emissions from any new motor vehicle or preempted under EPCA. Although EPA the development of necessary new motor vehicle engine as condition has historically declined to consider as technology, giving appropriate precedent to the initial retail sale, titling (if part of the waiver process whether consideration to compliance costs.553 any), or registration of such motor vehicle, California standards are constitutional EPA therefore proposes to make 548 motor vehicle engine, or equipment.’’ or otherwise legal under other Federal findings under sections 209(b)(1)(B) and However, Title II affords special statutes apart from the Clean Air Act, (C), either of which, as discussed above, treatment to California: Subject to EPA believes that this notice presents a independently triggers the statutory certain conditions, it may obtain from unique situation and that it is prohibition that ‘‘no such waiver will be EPA a waiver of section 209(a) appropriate to consider the implications granted.’’ preemption. Specifically, section of NHTSA’s proposed conclusion as In addition, EPA proposes to 209(b)(1) of the Act requires the part of EPA’s reconsideration of the conclude that States may not adopt Administrator, after an opportunity for waiver. In this regard, EPA is proposing California’s GHG standards pursuant to public hearing, to waive application of to conclude that state standards section 177 because the text, context, the prohibitions of section 209(a) to preempted under EPCA cannot be and purpose of section 177 support the California, if California determines that afforded a valid waiver of preemption conclusion that this provision is limited its State standards will be, in the under CAA 209(b). Accordingly, EPA is to providing States the ability, under aggregate, at least as protective of public proposing to conclude that if NHTSA certain circumstances and with certain health and welfare as applicable Federal finalizes a determination that conditions, to adopt and enforce standards.549 A waiver under section California’s GHG and ZEV standards are standards designed to control criteria 209(b)(1) allows California to ‘‘adopt preempted, then it would be necessary pollutants to address NAAQS [and] enforce a[] standard relating to the to withdraw the waiver separate and nonattainment. control of emissions from new motor apart from the analysis under section (2) History of Waiver for California GHG vehicles or new motor vehicle engines.’’ 209(b)(1)(B), (C) that follows. and ZEV Standards, and Associated CAA section 209(a), 42 U.S.C. 7543(a). Second, under section 209(b)(1)(B) Issues of Statutory Interpretation But California’s ability to obtain a (compelling and extraordinary waiver is not unlimited. The statute In December 2005, California for the first time applied to EPA for a provides that ‘‘no such waiver will be 550 As presented in the United States Code, the granted’’ if the Administrator finds any cross-reference in prong (C) is to ‘‘section 7521(a) preemption waiver for GHG standards of the following: ‘‘(A) [California’s] of this title,’’ i.e., CAA section 201(a), 42 U.S.C. for MY 2009 and following. EPA denied 7521(a), which governs EPA’s administration of determination [that its standards in the this request in March 2008, relying on ‘‘Emission standards for new motor vehicles or new the second prong under section aggregate will be at least as protective] motor vehicle engines administration of ‘‘Emissions is arbitrary and capricious, (B) standards for new motor vehicles or new motor 209(b)(1)(B) and finding that California [California] does not need such State vehicle engines.’’ did not need those standards to meet 551 standards to meet compelling and This proposed action does not address compelling and extraordinary whether the statutory interpretations and their conditions. In doing so, it noted that extraordinary conditions, or (C) such policy consequences laid out in the proposal may GHG standards, unlike prior standards State standards and accompanying have implications for past waivers granted to for which California had requested and enforcement procedures are not California for other standards besides its GHG and ZEV standards. EPA proposes to take this action in received waivers, are designed to consistent with section [202(a)].’’ the context of this joint rulemaking with NHTSA, address global air pollution problems— and the California standards identified herein are not air pollution problems specific to 548 Clean Air Act (CAA) section 209(a), 42 U.S.C. the focus of EPA’s proposal. As circumstances 7543(a). require and resources permit, EPA may in future California. 73 FR 12156, March 6, 2008. 549 CAA section 209(b), 42 U.S.C. 7543(b). The actions consider whether this proposal, if finalized, provision does not identify California by name. makes it appropriate or necessary to revisit past 553 Under section 209(b)(1)(C) of the CAA, EPA Rather, it applies on its face to ‘‘any State which grants of other waivers beyond those granted with must deny California’s waiver request if EPA finds has adopted standards (other than crankcase respect to California’s GHG and ZEV program. that California’s standards and accompanying emission standards) for the control of emissions 552 EPA proposes to withdraw the waiver for enforcement procedures are not consistent with from new motor vehicles or new motor vehicle these model years because these are the model years section 202(a). Section 202(a) provides that an engines prior to March 30, 1966.’’ California is the at issue in NHTSA’s proposal. EPA solicits emission standard shall take effect after such period only State that meets this requirement. See S. Rep. comment on whether one or more of the grounds of time as the Administrator finds necessary to No. 90–403 at 632 (1967). This proposal refers supporting the proposed withdrawal of this waiver permit development and application of the requisite interchangeably to ‘‘California’’ and ‘‘CARB’’ (the would also support withdrawing other waivers that technology, giving appropriate consideration to California Air Resources Board). it has previously granted. compliance costs.

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Due to this new circumstance, EPA conditions’’ to mean environmental regulations pursuant to CAA section reconsidered its historic interpretation problems with causes that were specific 209(b). 78 FR 2112. The ACC program and application of section 209(b)(1)(B). to California—given that those is a single coordinated package Although today’s proposal contains standards were designed to address comprising regulations for ZEV and proposed findings under each prong of global air pollution problems as low-emission vehicles (LEV) 209(b)(1), prong (B) was the only one at compared to local or regional air regulations,556 for new passenger cars, issue in the 2008 waiver denial (and pollution problems caused specifically light-duty trucks, medium-duty EPA’s subsequent reversal), and it by certain conditions in California. passenger vehicles, and certain heavy- merits extended discussion at the outset EPA in the 2008 waiver denial also duty vehicles, for MY 2015 through due to its central significance in the applied a second, alternative 2025. Thus, in terms of proportion, the policy and legal context and the history construction of section 209(b)(1)(B). ACC program is comparable to the underlying today’s proposal. Under this alternative construction, EPA combined Federal Tier 3 Motor Vehicle As a general matter, EPA had considered whether the impacts of Emissions Standards and the 2017 and historically interpreted section climate change in California were later MY Light-duty Vehicle GHG 209(b)(1)(B) to require EPA to consider sufficiently different enough from the Standards.557 According to CARB, the whether, to meet compelling and impacts felt in the rest of the country ACC program was intended to address extraordinary conditions in California, such that California could be considered California’s near and long-term smog the state needs to have its own separate to need its GHG standards to meet issues as well as certain specific GHG new motor vehicle program in the compelling and extraordinary emission reduction goals.558 78 FR aggregate.554 Under this historical conditions—interpreting ‘‘compelling 2114. See also 78 FR 2122, 2130–31. approach, EPA considered California’s and extraordinary conditions’’ to mean The ACC program regulations impose need for a separate program as a whole, environmental effects specific to multiple and varying complex rather than California’s need for the California. compliance obligations that have particular aspect of the program for The next year, following a simultaneous, and sometimes which California sought a waiver in any presidential election and change in overlapping, deadlines with each particular instance. (Typically, prior to administration, EPA reconsidered the its ACC program waiver request, 2008 denial at California’s request. On 556 The LEV regulations in question include standards for both GHG and criteria pollutants California would seek a waiver for only reconsideration, EPA reversed course and granted a waiver for California’s (including ozone and PM). Amendments for the particular aspects of its new motor LEV III program included replacement of separate vehicle program.) In the 2008 GHG GHG standards. 74 FR 32744 (July 9, nonmethane organic gas (NMOG) and oxides of waiver denial, EPA determined that this 2009). In granting the waiver, EPA nitrogen (NOX) standards with combined NMOG reverted to its historical interpretation plus NOX standards, which provides automobile interpretation was inappropriate under of section 209(b)(1)(B), under which it manufacturers with additional flexibility in meeting the circumstances. the new stringent standards; an increase of full had construed ‘‘compelling and In its 2008 waiver denial, EPA useful life durability requirements from 120,000 extraordinary conditions’’ to mean miles to 150,000 miles, which guarantees vehicles proceeded under two alternative environmental problems caused by sustain these extremely low emission levels longer; constructions of the statute. Under both conditions specific to California and/or a backstop to assure continued production of super- of these constructions, EPA determined ultra-low-emission vehicles after partial-zero- effects experienced to a unique degree that it was a reasonable interpretation of emission vehicles (PZEVs) as a category are moved or in a unique manner in California, and from the ZEV regulations to the LEV regulations in section 209(b)(1)(B) to require a separate under which it had evaluated 2018; more stringent particulate matter (PM) review of California’s need for standards standards for light- and medium-duty vehicles, California’s need for its own, separate which will reduce the health effects and premature designed to address a global air new motor vehicle program as a whole, pollution problem and its effects, as deaths associated with these emissions; zero fuel rather than California’s need for the evaporative emission standards for PCs and LDTs, distinct from other portions of specific aspects of its separate program and more stringent standards for medium- and California’s new motor vehicle program, for which it was seeking a waiver. In heavy-duty vehicles (MDVs); and, more stringent which up until then had been designed supplemental federal test procedure (SFTP) reverting to this determination, the EPA standards for PC and LDTs, which reflect more to address local or regional air pollution aggressive real world driving and, for the first time, 555 necessarily determined that it makes no problems. Under the first difference whether California seeks a require MDVs to meet SFTP standards. 78 FR 2114. construction, EPA found it relevant that waiver to implement separate standards 557 78 FR 23641, April 22, 2016; 77 FR 62624, elevated GHG concentrations in in response to its own specific, local air October 15, 2012. California were similar to 558 ‘‘The Advanced Clean Cars program . . . will pollution problems, or whether reduce criteria pollutants . . . and . . . help concentrations found elsewhere in the California seeks a waiver to implement achieve attainment of air quality standards; The world, and that local conditions in separate standards designed to address Advanced Clean Cars Program will also reduce California, such as the local topography, a global air pollution problem. greenhouse gases emissions as follows: by 2025, the local climate, and the significant CO2 equivalent emissions will be reduced by 13 Since 2009, EPA has continued to million metric tons (MMT) per year, which is 12 number of motor vehicles in California, adhere to this interpretation and percent from base line levels; the reduction were not the determining factors application of section 209(b)(1)(B) when increases in 2035 to 31 MMT/year, a 27 percent causing the elevated GHG reviewing CARB’s waiver requests, reduction from baseline levels; by 2050, the concentrations found in California and proposed regulation would reduce emissions by regardless of whether the waiver was more than 40 MMT/year, a reduction of 33 percent elsewhere. In sum, EPA found that requested with regard to standards from baseline levels; and viewed cumulatively over California did not need its GHG designed to address traditional, local the life of the regulation (2017–2050), the proposed standards to meet ‘‘compelling and environmental problems, or global Advanced Clean Cars regulation will reduce by extraordinary conditions’’—interpreting more than 850 MMT CO2-equivalent, which will climate issues. In this proposal, the EPA help achieve the State’s climate change goals to ‘‘compelling and extraordinary proposes to determine that this reduce the threat that climate change poses to reversion to the pre-2008 interpretation California’s public health, water resources, 554 See, e.g., 49 FR 18887 (May 3, 1984). was not appropriate. agriculture industry, ecology and economy.’’ 78 FR 555 Criteria pollutants generally present public 2114. CARB Resolution 12–11, at 19, (January 26, health and environmental concern in proportion to On January 9, 2013, EPA granted 2012), available in the docket for the January 2013 their ambient local concentration and California has CARB’s request for a waiver of waiver action, Document No. EPA–HQ–OAR–2012– long had unusually severe problems in this regard. preemption to enforce its ACC program 0562, the docket for the ACC program waiver.

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standard. These deadlines began in 2015 pollutant fleet standard was responsible the ACC program can be found in and are scheduled to be phased in for those emission reductions.560 CARB CARB’s waiver request, located in the through 2025. For example, compliance further noted that its ZEV regulation docket for the January 2013 waiver with the GHG requirements began in was intended to focus primarily on zero action, Docket No. EPA–HQ–OAR– 2017 and will be phased-in through emission drive—that is, battery electric 2012–0562. 2025. The implementation schedule and (BEVs), plug-in hybrid electric vehicles 2. Statutory Provisions Applicable to the the interrelationship of regulatory (PHEVs), and hydrogen fuel cell Proposed Action provisions with each of the three vehicles (FCVs)—in order to move standards together demonstrates that advanced, low GHG vehicles from Under section 209(b) of the Clean Air CARB intended that at least the GHG demonstration phase to Act, EPA may reconsider a grant of a and ZEV standards, if not also the LEV commercialization (78 FR 2122, 2130– waiver of preemption and withdraw standards, would be implemented as a 31). Specifically, for 2018 MY through same if the Administrator makes any cohesive program. For example, in its 2025 MY, the ACC program ZEV one of the three findings in section ACC waiver request, CARB stated that requirements mandate use of 209(b)(1)(A), (B) and (C). EPA’s the ‘‘ZEV regulation must be considered technologies such as BEVs, PHEVs and authority to reconsider and withdraw in conjunction with the proposed LEV FCVs, in up to 15% of a manufacturer’s the grant of a waiver for the ACC III amendments. Vehicles produced as a California fleet and in each of the program is implicit in section 209(b) result of the ZEV regulation are part of section 177 States by MY 2025 561 (78 given that the authority to revoke a grant a manufacturer’s light-duty fleet and are FR 2114). Additionally, the ACC of authority is implied in the authority therefore included when calculating program regulations provide various for such a grant. Further support for fleet averages for compliance with the compliance flexibilities allowing for EPA’s authority is based on the LEV III GHG amendments.’’ CARB’s substitution of compliance with one legislative history for section 209(b), Initial Statement of Reasons at 62–63.559 program requirement for another. For and the judicial principle that agencies CARB also noted ‘‘[b]ecause the ZEVs instance, manufacturers may opt to possess inherent authority to reconsider have ultra-low GHG emission levels that over-comply with the GHG fleet their decisions.564 The legislative are far lower than non-ZEV technology, standard in order to offset a portion of history from the 1967 CAA amendments they are a critical component of their ZEV compliance requirement for where Congress enacted the provisions automakers’ LEV III GHG standard MY 2018 through 2021. Further, until now codified in section 209(a) and (b) compliance strategies.’’ Id. CARB MY 2018, sales of BEVs (since MY 2018, provides support for this view. The further explained that ‘‘the ultra-low limited to FCVs) in California count Administrator has ‘‘the right . . . to GHG ZEV technology is a major toward a manufacturer’s credit withdraw the waiver at any time [if] component of compliance with the LEV requirement in section 177 States. This after notice and an opportunity for III GHG fleet standards for the overall is known as the ‘‘travel provision’’ (78 public hearing he finds that the State of light duty fleet.’’ Id. CARB’s request also FR 2120).562 For their part, the GHG California no longer complies with the repeatedly touted the GHG emissions emission regulations include an conditions of the waiver.’’ S. Rep. No. benefits of the ACC program. optional compliance provision that 50–403, at 34 (1967). Additionally, Up until the ACC program waiver allows manufacturers to demonstrate subject to certain limitations, request, CARB had relied on the ZEV compliance with CARB’s GHG administrative agencies possess requirements as a compliance option for standards by complying with applicable inherent authority to reconsider their reducing criteria pollutants. Federal GHG standards. This is known decisions in response to changed Specifically, California first included as the ‘‘deemed to comply’’ circumstances. It is well settled that the ZEV requirement as part of its first provision.563 A complete description of EPA has inherent authority to LEV program, which was then known as reconsider, revise, or repeal past LEV I, that mandated a ZEV sales 560 CARB ACC waiver request at EPA–HQ–OAR– decisions to the extent permitted by law requirement that phased-in starting with 2012–0562–0004. so long as the Agency provides a the 1998 MY through 2003 MY. EPA 561 Under section 177, any State that has state reasoned explanation. This authority issued a waiver of preemption for these implementation plan provisions approved under exists in part because EPA’s part D of Subchapter I of the Act may opt to adopt regulations on January 13, 1993 (58 FR and enforce standards that are identical to interpretations of the statutes it 4166 (January 13, 1993). Since this standards for which EPA has granted a waiver of administers ‘‘are not carved in stone.’’ initial waiver of preemption, California preemption to California under CAA section 209(b). Chevron U.S.A. Inc. v. NRDC, Inc., 467 has made multiple amendments to the EPA’s longstanding interpretation of section 209(b) U.S. 837, 863 (1984). An agency ‘‘must and its relationship with section 177 is that it is not ZEV requirements and EPA has appropriate under section 209(b)(1)(C) to review consider varying interpretations and the subsequently granted waivers for those California regulations, submitted by CARB, through wisdom of its policy on a continuing amendments. In the ACC program the prism of adopted or potentially adopted basis.’’ Id. at 863–64. This is true when, waiver request California also included regulations by section 177 States. as is the case here, review is undertaken a waiver of preemption request for ZEV 562 On March 11, 2013, the Association of Global Automakers and Alliance of Automobile ‘‘in response to . . . a change in amendments that related to 2012 MY Manufacturers filed a petition for reconsideration of administration.’’ National Cable & through 2017 MY and imposed new the January 2013 waiver grant, requesting that EPA Telecommunications Ass’n v. Brand X requirements for 2018 MY through 2025 reconsider the decision to grant a waiver for MYs internet Services, 545 U.S. 967, 981 MY (78 FR 2118–9). Regarding the ACC 2018 through 2025 ZEV standards on technological feasibility grounds. Petitioners also asked for (2005). The EPA must also be cognizant program ZEV requirements, CARB’s consideration of the impact of the travel provision, waiver request noted that there was no which they argue raise technological feasibility https://www.arb.ca.gov/msprog/levprog/leviii/ criteria emissions benefit in terms of issues in section 177 States, as part of the agency’s leviii_dtc_notice05072018.pdf. vehicle (tank-to-wheel—TTW) review under section 209(b)(1)(C). EPA continues to 564 In 2009, EPA reconsidered the 2008 GHG evaluate the petition. waiver denial at CARB’s request and granted it emissions because its LEV III criteria 563 On May 7, 2018, California issued a notice upon reconsideration. 72 FR 32744. The EPA noted seeking comments on ‘‘potential alternatives to a the authority to ‘‘withdraw a waiver in the future 559 Available in the docket for the January 2013 potential clarification’’ of this provision for MY if circumstances make such action appropriate.’’ waiver decision, Docket No. EPA–HQ–OAR–2012– vehicles that would be affected by revisions to the See 74 FR 32780 n.222; see also 32752–53 n.50 0562. Federal GHG standards. The notice is available at (citing 50 S. Rep. No. 403, at 33–34), 32755 n.74.

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where it is changing a prior position and taking into account statutory mandates questions as to CARB’s technological articulate a reasoned basis for the and any applicable court orders.565 projections for ZEV-type technologies, change. FCC v. Fox Television Stations, EPA is proposing to withdraw the which are a compliance option for both Inc., 556 U.S. 502, 515 (2009). This grant of a waiver of preemption for the ZEV mandate and GHG standards. proposal reflects changed circumstances California to enforce the GHG and ZEV As also previously discussed, above, that have arisen since the initial grant of standards of the ACC program for MY CARB’s ZEV regulations include the the 2013 ACC program waiver of 2021–2025. EPA proposes to withdraw travel provision, which previously preemption. They include the agency’s due to separate proposed findings under allowed manufacturers to earn credit for 566 reconsideration of California’s record section 209(b)(1)(B), and (C). ZEVs sold in California (which, despite Under section 209(b)(1)(B), EPA is support for, and EPA’s decision and very slow ZEV sales, far outpaces any proposing to find that California does underlying statutory interpretation on, other State in these sales) to comply not need its ZEV and GHG standards to California’s need for GHG and ZEV with credit requirements in section 177 meet compelling and extraordinary States. Starting with MY 2018, this standards, as well as costs and conditions in California. EPA is provision only applies to FCVs. When technological feasibility considerations proposing to find that CARB does not the travel provision was adopted, it was that differ from California’s assumptions need its own GHG and ZEV standards anticipated that by MY 2018, incentives and which were bases for agency to meet compelling and extraordinary of this type for BEV sales would no conclusions that were made at that time. conditions in California given that longer be necessary—i.e., that When California submits a package of ‘‘compelling and extraordinary consumers would adopt such vehicles standards for EPA review pursuant to conditions’’ mean environmental on their own. Unfortunately, there has CAA section 209, EPA has long problems with causes and effects in been a serious lack of market interpreted the statute as authorizing California whereas GHG emissions penetration, consumer demand levels, EPA to approve certain provisions and present global air pollution problems. and lack of or slow development of defer action on others. EPA believes this Additionally, California does not need necessary infrastructure for any ZEVs— approach of partially approving the ZEV requirements to meet BEV or otherwise—in such States. This submissions is implicit in section 209, ‘‘compelling and extraordinary’’ in turn means that manufacturers’ sales particularly given the fact that EPA’s conditions in California given that it of ZEVs in section 177 States are evaluation of the technological allows manufacturers to generate credits unlikely, contrary to CARB’s projections feasibility of standards is best in section 177 states as a means to in its submissions to support its understood as in effect an evaluation of satisfy those manufacturers’ obligations application for the ACC waiver, to generate sufficient credits to satisfy each standard for each year (i.e., to comply with the mandate that a certain percentage of their vehicles sold those manufacturers’ obligations to standards that are submitted together in California be ZEV (or be credited as comply with the mandate that a certain may vary substantially in their effect such from sales in section 177 States). percentage of their vehicles sold in and some may require longer lead time Under section 209(b)(1)(C), EPA is California be ZEV (or be credited as than others). Furthermore, since proposing to find that CARB’s GHG and such from sales in section 177 States). California always retains the authority ZEV standards are not consistent with In short, EPA is now of the view that as a matter of state law to determine section 202(a) based on changed CARB’s projections and assumptions at whether to implement state standards circumstances since the January 2013 the time of the waiver request were for which a waiver of preemption has waiver. Specifically, the agency is, in overly ambitious and likely will not be been granted, we do not believe this this action, jointly proposing with realized within the provided lead time. approach poses the risk that a partial NHTSA revisions to the Federal GHG Thus, EPA is also proposing to find that approval could force California to and fuel economy standards based on CARB’s ZEV standards for MY 2021 implement a program they would not proposed conclusions that the current through 2025, and the GHG standards have chosen had they anticipated EPA’s (or augural) standards for MY 2021 which rely on the ZEV requirement as decision. EPA believes that because its through 2025 are not feasible. The a compliance option, are technologically authority to grant waivers of preemption proposed findings in this notice call infeasible and therefore, not consistent is best understood as applying on a into question CARB’s projections and with section 209(b)(1)(C). granular level—where the feasibility of assumptions that underlay the As described above, EPA is proposing compliance for a particular year can be technological feasibility findings for its to withdraw the waiver with respect to assessed—rather than being limited to waiver application for the GHG California’s ZEV standards based on approving or disapproving preemption standards and thus the technological findings made pursuant to sections for an entire package of standards findings made by EPA in 2013 in 209(b)(1)(B) and 209(b)(1)(C). EPA is submitted together, it follows that EPA’s connection with the grant of the waiver proposing to withdraw the waiver with authority to withdraw the grant of for the ACC program. respect to California’s GHG standards waiver of preemption should also apply Similarly, with regard to ZEV based on findings made under these on a granular level, i.e., for any model standards, this notice also raises three prongs as well as a separate year for which EPA concludes the finding made under section 209(b)(1)(B). 565 Additionally, because the ZEV and GHG conditions for waiver of preemption no On March 11, 2013, EPA received a petition for reconsideration from the Association of Global standards are closely interrelated, as longer exist or for which it concludes Automakers and Alliance of Automobile demonstrated by the description above that it erred in its prior determination Manufacturers of the decision to grant a waiver for of their complex, overlapping that one of the conditions triggering a MYs 2018 through 2025 ZEV standards. 566 compliance regimes, EPA is proposing denial a waiver was not met. Further, Under this provision, a waiver is not permitted if (A) the protectiveness determination of to withdraw the waiver of preemption because neither the Clean Air Act nor the State is arbitrary and capricious; (B) the State for ZEV standards under the second and the Administrative Procedure Act does not need such State standards to meet third prongs of section 209(b)(1). specify deadlines for reconsideration of compelling and extraordinary conditions; or (C) EPA believes that a finding made agency action, EPA may, issue a new such State standards and accompanying enforcement procedures are not consistent with pursuant to any of the prongs of section final action to change a prior action, section 202(a) of the Act. 209(b)(1) is an independent and

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adequate ground to withdraw the Motor and Equip. Mfrs. Ass’n v. EPA, California with the broadest possible waiver. In this regard, EPA notes that 627 F.2d 1095, 1112 (D.C. Cir. 1979) discretion in setting regulations it finds the statute provides that ‘‘No such (MEMA I). Additionally, as discussed in protective of the public health and waiver shall be granted if the section III.B, below, EPA proposes to welfare.’’ 571 Administrator finds that—(B) the State find that there is clear and compelling With respect to the consistency does not need such State standards to evidence that California does not need finding, MEMA I did not articulate a meet compelling and extraordinary its ZEV and GHG standards to meet standard of proof applicable to all conditions; or (C) such State standards compelling and extraordinary proceedings but found that the and accompanying enforcement conditions. Similarly, as discussed in opponents of the waiver were unable to procedures are not consistent with section III.C, below, there is clear and meet their burden of proof even if the section 202(a) of the Act.’’ (Emphasis compelling evidence that both the ZEV standard were a mere preponderance of added.) Consequently, a final waiver and GHG standards are not the evidence. withdrawal decision that relies on more technologically feasible.567 As the agency has consistently than one of these provisions would In MEMA I, 627 F.2d 1095, the U.S. explained, although MEMA I did not present independent and severable Court of Appeals for D.C. Circuit found explicitly consider the standard of proof bases for the decision to withdraw. And, that ‘‘the burden of proving [that for ‘‘standards,’’ as compared to separate and apart from its analysis California’s regulations do not comply ‘‘accompanying enforcement under 209(b)(1)(A)–(C), EPA proposes to with the CAA] is on whoever attacks procedures,’’ nothing in the opinion determine that if NHTSA finalizes its them. California must present its suggests that the court’s analysis would proposed determination that EPCA regulations and findings at the hearing not apply with equal force to such preempts California’s standards, that and thereafter the parties opposing the determinations.572 Moreover, the would provide an independent and waiver request bear the burden of normal standard of proof in civil matters adequate ground to withdraw the waiver persuading the Administrator that the is a preponderance of the evidence. for those standards. EPA proposes to waiver request should be denied.’’ 568 International Harvester Co. v. interpret section 209(b)(1) to only MEMA I dealt with a challenge Ruckelshaus, 478 F.2d 615, 643 (D.C. authorize it to waive CAA preemption brought by Motor and Equipment Cir. 1979). for standards that are not independently Manufacturers Association against The role of the Administrator in preempted by EPCA. EPA’s grant of a waiver of preemption considering California’s application for Additionally, under CAA section 177, for California’s accompanying a preemption waiver is to make a States that have designated enforcement procedures, which in this reasonable evaluation of the information nonattainment areas may opt to adopt instance were vehicle in-use in the record in coming to the waiver and enforce standards that are identical maintenance regulations. The specific decision. The Administrator is required to standards for which EPA has granted challenge to EPA’s action contested to ‘‘consider all evidence that passes the a waiver of preemption to California EPA’s findings that section 209 allowed threshold test of materiality and . . . under CAA section 209(b). For States for a waiver of preemption for CARB’s thereafter assess such material evidence that have adopted the ZEV standards, in-use maintenance regulations. MEMA against a standard of proof to determine the consequence of any final withdrawal I also specifically considered the whether the parties favoring a denial of action would be that they cannot standards of proof for two findings that the waiver have shown that the factual implement these standards. (A State EPA must make in order to grant a circumstances exist in which Congress may not ‘‘make attempt[s] to enforce’’ waiver for an ‘‘accompanying intended a denial of the waiver.’’ 573 California standards for which EPA has enforcement procedure’’ (as opposed to As the court in MEMA I stated, if the not waived preemption. Motor Vehicle standards): (1) Protectiveness in the Administrator ignores evidence Mfrs. Ass’n v. NYS Dep. of Envtl aggregate and (2) consistency with demonstrating that the waiver should Conservation, 17 F.3d 521, 534 (2d Cir. section 202(a) findings. The court not be granted, or if he seeks to 1994)). Where states have adopted instructed that ‘‘the standard of proof overcome that evidence with CARB’s ZEV and GHG standards into must take account of the nature of the unsupported assumptions of his own, their SIPs, under section 177, the risk of error involved in any given he runs the risk of having his waiver provisions of the SIP would continue to decision, and it therefore varies with the decision set aside as ‘‘arbitrary and be enforceable until revised. If this finding involved. We need not decide capricious.’’ 574 Therefore, the proposal is finalized, EPA may how this standard operates in every Administrator’s burden is to act subsequently consider whether to waiver decision.’’ 569 ‘‘reasonably.’’ 575 employ the appropriate provisions of The court upheld the Agency’s The instant action involves a decision the CAA to identify provisions in position that denying a waiver required whether to withdraw a previous grant of section 177 states’ SIPs that may require ‘‘clear and compelling evidence’’ to a waiver of preemption as compared to amendment and to require submission show that proposed enforcement the initial evaluation of and decision of such amendments. procedures undermine the whether to grant a waiver request from EPA is taking comments on all aspects protectiveness of California’s California. Specifically, as discussed in of this proposal. standards.570 The court noted that this Section III, below, EPA is proposing (a) Burden and Standard of Proof in standard of proof ‘‘also accords with the findings for the withdrawal of Waiver Decisions congressional intent to provide preemption for CARB’s ACC program under multiple criteria set out in section Here, the Administrator is proposing 567 EPA is assuming without agreeing that the 209(b)(1). For example, EPA is the withdrawal of a previously granted burden of proof requires clear and compelling proposing to withdraw the waiver based waiver of preemption. As discussed in evidence but believes a preponderance of the section III.A. below, EPA proposes to evidence is the proper burden of proof. Regardless, EPA firmly believes that it has clear and compelling 571 Id. find that there is clear and compelling evidence to support the agency’s statutory findings. 572 74 FR 32748. evidence that California’s protectiveness 568 MEMA I, 627 F.2d at 1122. 573 MEMA I, 627 F.2d at 1122. determination for its ZEV and GHG 569 Id. 574 Id. at 1126. standards was arbitrary and capricious. 570 Id. 575 Id.

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on considerations such as the nature of confines of state air pollution programs in section 177 states as a means to GHG concentrations as a global air as covered by section 209(b)(1)(B). It satisfy those manufacturers’ obligations pollution problem, rather than a would also be consistent with the GHG to comply with the mandate that a regional or local air pollution problem, waiver denial for EPA to exercise its certain percentage of their vehicles sold whether or not CARB’s particular GHG own judgment in making the requisite in California be ZEV (or be credited as standards actually would reduce GHG findings called for under section such from sales in section 177 States). emissions in California, whether a 209(b)(1)(B) in the instant action. This finding is premised on agency waiver for CARB’s GHG standards is EPA is, thus, soliciting comments on review of the interpretation and permissible if those regulations are the appropriate burden and standard of application of section 209(b)(1)(B) in the preempted by EPCA, and the effect of proof for withdrawing a previously January 2013 ACC waiver request. Thus, technological infeasibility for the 2012 issued waiver, taking into consideration EPA is required to articulate a reasoned Federal GHG standards for MY 2021– that different approaches may apply to basis for the change in its position. FCC 2025. Natural Resources Defense the various criteria of Section 209(b) v. Fox Television Stations, Inc., 556 U.S. Council v. EPA, 655 F.2d 318, 331 (D.C. and that EPA is not merely responsible 502, 515 (2009). Cir. 1981) (‘‘[T]here is substantial room for evaluating a request by California and comments thereon but is proposing (2) Historical Waiver Practices Under for deference to the EPA’s expertise in Section 209(b)(1)(B) projecting the likely course of withdrawal of a grant of preemption. [technological] development.’’) Up until the 2008 GHG waiver denial, 3. Discussion: Analysis Under Section EPA had interpreted section 209(b)(1)(B) (Emphasis added.) EPA believes that 209(b)(1)(B), (C) these are kinds of issues that extend as requiring a consideration of well beyond the boundaries of (a) Proposed Finding Under Section California’s need for a separate motor California’s authority under section 209(b)(1)(B): California Does Not Need vehicle program designed to address 209(b). EPA posits, therefore, that the its Standards To Meet Compelling and local or regional air pollution problems decision to withdraw the waiver would Extraordinary Conditions and not whether the specific standard warrant exercise of the Administrator’s (1) Introduction that is the subject of the waiver request judgment. is necessary to meet such conditions (73 Section 209(b)(1)(B) provides that no FR 12156; March 6, 2008). Additionally, Furthermore, that decision entails waiver of section 209(a) preemption will California typically would seek a waiver matters not only of policy judgment but be granted if the Administrator finds of particular aspects of its new motor of statutory interpretation, chief among that California does not need ‘‘such vehicle program up until the ACC which is the question of what is the standards to meet compelling and program waiver request. In the 2008 appropriate inquiry under section extraordinary conditions.’’ EPA is GHG waiver denial, which was a waiver 209(b)(1) when the Administrator is proposing to withdraw the grant of request for only GHG emissions faced with a request for a preemption waiver of preemption for CARB’s GHG standards, however, EPA determined waiver for standards designed to and ZEV standards for 2021 MY through that its prior interpretation of section address a global environmental 2025 MY based on a finding that 209(b)(1)(B) was not appropriate for problem. EPA has previously expressed California does not need these standards GHG standards because such standards the view that certain waiver requests to meet compelling and extraordinary are designed to address global air might call for the Administrator to conditions, as contemplated under pollution problems in contrast to local exercise judgment in determining section 209(b)(1)(B). As shown below, or regional air pollution problems California’s need for particular EPA is proposing to determine that the specific to and caused by conditions standards, under section 209(b)(1)(B). ACC program GHG and ZEV standards specific to California (73 FR 12156–60). Specifically, in the March 6, 2008 GHG are standards that would not In the 2008 denial, EPA further waiver denial, EPA posited that it was meaningfully address global air explained that its previous reviews of neither required nor appropriate for the pollution problems posed by GHG California’s waiver request under Agency to defer to California on the emissions in contrast to local or regional section 209(b)(1)(B) had usually been statutory interpretation of the Clean Air air pollution problem with causal ties to cursory and undisputed, as the Act, including the issue of the confines conditions in California. As also shown fundamental factors leading to or limits of state authority established below, EPA is proposing to find that California’s air pollution problems— by section 209(b)(1)(B), especially given while potential conditions related to geography, local climate conditions (like that EPA’s evaluation of California’s global climate change in California thermal inversions), significance of the request for a waiver to enforce GHG could be substantial, they are not motor vehicle population—had not standards would relate to the limits of sufficiently different from the potential changed over time and over different California’s authority to regulate GHG conditions in the nation as a whole to local and regional air pollutants. These emissions from new motor vehicles, justify separate state standards under fundamental factors applied similarly instead of particular regulatory CAA section 209(b)(1)(B). Moreover, the for all of California’s air pollution provisions that California was seeking to GHG and ZEV standards would not have problems that are local or regional in enforce. There, EPA construed section a meaningful impact on the potential nature. 209(b)(1)(B) as calling for either a conditions related to global climate In the 2008 denial, EPA noted that consideration of environmental change. EPA is thus proposing to find atmospheric concentrations of GHG are problems with causes that were specific that California does not need GHG substantially uniform across the globe, to California, or in the alternative, standards to meet compelling and based on their long atmospheric life and environmental effects specific to extraordinary conditions, as the resulting mixing in the atmosphere. California in comparison to the rest of contemplated under section Therefore, with regard to atmospheric the nation. EPA further explained that 209(b)(1)(B). Additionally, California GHG concentrations and their this interpretation called for its own does not need the ZEV requirements to environmental effects, the California- judgment because it necessitated a meet ‘‘compelling and extraordinary’’ specific causal factors that EPA had determination of whether elevated conditions in California given that it considered when reviewing previous concentrations of GHGs lie within the allows manufacturers to generate credits waiver applications under section

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209(b)(1)(B)—the geography and climate to need its GHG standards to meet any standard [singular] relating to the of California, and the large motor compelling and extraordinary control of emissions from new motor vehicle population in California, which conditions. EPA determined that the vehicles or new motor vehicle engines were considered the fundamental causes waiver should be denied under this subject to this part.’’ (Emphasis added.) of the air pollution in California—do not alternative interpretation as well. States are forbidden from adopting a have the same relevance to the question standard, singular; California requests (3) Interpretation of Section 209(b)(1)(B) at hand. The atmospheric concentration waivers seriatim by submitting a of GHG in California is not affected by Under section 209(b)(1)(B), EPA standard or package of standards to the geography and climate of California. cannot grant a waiver request if EPA EPA; follows that EPA considers those The long duration of these gases in the finds that California ‘‘does not need submissions as it receives them, atmosphere means they are well-mixed such State standards to meet compelling individually, not in the aggregate with throughout the global atmosphere, such and extraordinary conditions.’’ The all standards for which it has previously that their concentrations over California statute does not define the phrase granted waivers. and the U.S. are substantially the same ‘‘compelling and extraordinary Furthermore, reading the phrase as the global average. The number of conditions,’’ and EPA considers the text ‘‘such State standards’’ as requiring EPA motor vehicles in California, while still of section 209(b)(1)(B), and in particular always and only to consider California’s a notable percentage of the national total the meaning and scope of this phrase, to entire program in the aggregate limits and still a notable source of GHG be ambiguous. the application of the criterion. Once emissions in the State, is not a First, the provision is ambiguous with EPA had determined that California significant percentage of the global respect to the scope of EPA’s analysis. needed its very first set of submitted vehicle fleet and bears no closer relation It is unclear whether EPA is meant to standards to meet extraordinary and to the levels of GHG in the atmosphere evaluate the particular standard or compelling conditions, it is unclear that over California than any other standards at issue in the waiver request EPA would ever have the discretion to comparable source or group of sources or all of California’s standards in the determine that California did not need of GHG anywhere in the world. aggregate. Section 209(b)(1)(B) any subsequent standards for which it Emissions of greenhouse gases from references the need for ‘‘such State sought a successive waiver—unless EPA California cars do not generally remain standards.’’ Section 209(b)(1)(B) does is authorized to consider a later confined within California’s local not specifically employ terms that could submission separate from its earlier environment but instead become one only be construed as calling for a finding. Moreover, up until the ACC part of the global pool of GHG standard-by-standard analysis or each program waiver request, California’s emissions, with this global pool of individual standard. For example, it waiver request involved individual emissions leading to a relatively does not contain phrases such as ‘‘each standards or particular aspects of homogenous concentration of GHG over State standard’’ or ‘‘the State standard.’’ California’s new motor vehicle the globe. Thus, the emissions of motor Nor does the use of the plural term program.577 As previously explained, vehicles in California do not affect ‘‘standards’’ definitively answer the however, the ACC waiver program California’s air pollution problem in any question of the proper scope of EPA’s could be considered as the entire new way different from emissions from analysis, given that the variation in the motor vehicle program for California vehicles and other pollution sources all use of singular and plural form of a given that it is a single coordinated around the world. Similarly, the word in the same law 576 is often program comprising a suite of standards emissions from California’s cars do not insignificant and a given waiver request that California intended to be a cohesive only affect the atmosphere in California typically encompasses multiple program for addressing emissions from but in fact become one part of the global ‘‘standards.’’ Thus, while it is clear that a wide variety of vehicles, specifically, pool of GHG emissions that affect the ‘‘such State standards’’ refers at least to new passenger cars, light duty trucks, atmosphere globally and are distributed all of the standards that are the subject medium passenger vehicles, and certain throughout the world, resulting in of the particular waiver request before heavy duty vehicles. basically a uniform global atmospheric the Administrator, that phrase can The application of the phrase ‘‘such concentration. reasonably be considered as referring State standards’’ to state standards in EPA then applied the reasoning laid either to the standards in the entire the aggregate may have appeared more out above to the GHG standards at issue California program, the program for reasonable in the context of, for in the 2008 waiver denial. Having similar vehicles, or the particular example, the 1984 PM waiver request, limited the meaning of this provision to standards for which California is as opposed to the present context, as it situations where the air pollution requesting a waiver under the pending relates to an application for a waiver problem was local or regional in nature, request. with regard to GHG and ZEV EPA found that California’s GHG There are reasons to doubt that the standards.578 In the 1984 request, the standards did not meet this criterion. phrase ‘‘such State standards’’ in section agency confronted the need for a In the 2008 waiver denial, EPA also 209(b)(1)(B) is intended to refer to all reading of ‘‘such State standards’’ in applied an alternative interpretation standards in California’s program, section 209(b)(1)(B) that would be where EPA would consider effects of the including all the standards it has consistent with the State’s ‘‘in the global air pollution problem in historically adopted and obtained aggregate, at least as protective’’ finding California in comparison to the effects waivers for previously. The waiver under the root text of 209(b)(1),’’ on the rest of the country and again under 209(b) is a waiver of, and is addressed the GHG standards separately logically dependent on and presupposes 577 The 2009 and Subsequent MY GHG standards from the rest of California’s motor the existence of, the prohibition under for New Motor Vehicles, 73 FR 12156 (March 6, vehicle program. Under this alternative 209(a), which forbids (absent a waiver) 2008); The On-Board diagnostics system requirements (OBD II) 81 FR 78144 (November 7, interpretation, EPA considered whether any state to ‘‘adopt or attempt to enforce impacts of global climate change in 2016), The ZEV program regulations 76 FR 61096 (October 3, 2011), 71 FR 78190 (December 26, California were sufficiently different 576 ‘‘Words [in Acts of Congress] importing the 2006)) and the Heavy-duty Truck idling from impacts on the rest of the country singular include and apply to several persons.’’ 1 requirements 77 FR 9239 (February 16, 2012). such that California could be considered U.S.C. 1. 578 49 FR 18887 (May 3, 1984).

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because Congress explicitly allows ‘‘extraordinary,’’ especially where Holifield (CA), id., at 30942. See also, California to adopt some standards that ‘‘extraordinary’’ conditions are a MEMA I, 627 F.2d at 1109 (noting the are less stringent than Federal predicate for a local deviation from discussion of California’s ‘‘peculiar standards. EPA explained that the national standards.) Support for this local conditions’’ in the legislative phrase ‘‘in the aggregate’’ was interpretation can be found in pertinent history). specifically aimed at allowing California legislative history that refers to The EPA thus, believes that it is to adopt less stringent CO standards at California’s ‘‘peculiar local conditions’’ appropriate, in evaluating California’s the same time when California wanted and ‘‘unique problems.’’ S. Rep. No. need for a waiver under section to adopt NOX standards that were 403, 90th Cong. 1st Sess., at 32 (1967). 209(b)(1)(B), to examine California’s tighter than the Federal NOX standards, This legislative history also indicates to address ozone problems.579 California that California is to demonstrate program as a whole to the extent that reasoned that a relaxed CO standard ‘‘compelling and extraordinary the problem is designed to address local would facilitate the technological circumstances sufficiently different from or regional air pollution problems, feasibility of the desired more stringent the nation as a whole to justify particularly in light of the fact that the NOX standards. When evaluating that standards on automobile emissions State’s aggregate analysis under the root waiver request, EPA noted that it would which may, from time to time, need to text of 209(1)(b)(1) is designed in part to be inconsistent for Congress to allow be more stringent than national permit California to adopt standards for EPA to look at each air pollutant standards.’’ Id. (Emphasis added.) EPA some criteria pollutants that are less separately for purposes of determining believes this is evidence of stringent than the Federal standards as compelling and extraordinary Congressional intent that separate a trade-off for standards for other conditions for that air pollution standards in California are justified only criteria pollutants, where the levels of problem, while at the same time by a showing of particular criteria pollutants addressed by allowing California to adopt standards circumstances in California that are California’s standards are caused by for a particular air pollutant that was different from circumstances in the conditions specific to California, and less stringent than the Federal standards nation as a whole to justify separate contribute primarily to environmental for that same pollutant. EPA proposes to standards in California. EPA thus, reads effects that are specific to California. determine that the balance of textual, the term ‘‘extraordinary’’ in this EPA could also review California’s GHG contextual, purposive, and legislative- statutory context as referring primarily standards themselves even where, as in history evidence at minimum supports to factors that tend to produce higher the instant ACC waiver package, the the conclusion that it is ambiguous levels of pollution: Geographical and waiver request is for a single whether the Administrator may climatic conditions (like thermal coordinated package of requirements consider whether California needs the inversions) that in combination with and amendments that include standards particular standard or standards under large numbers and high concentrations designed to address global review to meet compelling and of automobiles, create serious air extraordinary conditions. environmental effects caused by a pollution problems in California (73 FR globally distributed a globally Second, the statute does not speak 12156, 12159–60). with precision as to the substance of distributed pollutant, such as GHGs as EPA’s analysis. ‘‘Compelling and Additional relevant legislative history well as requirements for a compliance extraordinary conditions,’’ as the history supports a decision to examine mechanism that could likely address of the 2008 waiver denial and 2009 California’s need for GHG standards ‘‘in both criteria pollutants and GHG reconsideration and grant narrated the context of global climate change.’’ emissions, which in this instance are above demonstrates, is a phrase See, e.g., 73 FR 12161. Specifically, this the ZEV requirements. The EPA further susceptible of multiple interpretations, legislative history demonstrates that notes that in keeping with its pre-2008 particularly in the context of GHG Congress did not justify this provision interpretation, its review of California’s emissions and associated, global based on the need for California to enact ACC program request under section environmental problems. EPA believes separate standards to address pollution 209(b)(1)(B) was cursory and that the term ‘‘extraordinary’’ is most problems of a more national or global undisputed, given that view that the reasonably read to refer to nature. Rather relevant legislative fundamental factors leading to circumstances that are specific to history ‘‘indicates that Congress allowed California’s air pollution problems— California and the term is reasonably waivers of preemption for California geography, local climate conditions (like interpreted to refer to circumstances motor vehicle standards based on the thermal inversions), significance of the particular effects of local conditions in that are primarily responsible for motor vehicle population—had not California on the air pollution problems causing the air pollution problems that changed over time and over different in California.’’ Congress discussed ‘‘the the standards are designed to address, local and regional air pollutants. unique problems faced in California as such as thermal inversions resulting Additionally, as previously explained, a result of its climate and topography.’’ from California’s local geography and up until the ACC program waiver, H.R. Rep. No. 728, 90th Cong. 1st Sess., wind patterns. (Conditions that are California had relied on the ZEV similar on a global scale are not at 21 (1967). See also Statement of Cong. Holifield (CA), 113 Cong. Rec. 30942–43 requirements as a compliance mechanism for criteria pollutants as 579 (1967). Congress also noted the large The intent of the 1977 amendment was to compared to the ACC program, where accommodate California’s particular concern with effect of local vehicle pollution on such CARB for the first time relied on it for NOX, which the State regards as a more serious local problems. See, e.g., Statement of threat to public health and welfare than carbon Cong. Bell (CA) 113 Cong. Rec. 30946. GHG emissions reductions. Here, as monoxide. California was eager to establish oxides previously explained, CARB specifically of nitrogen standards considerably higher than In particular, Congress focused on applicable Federal standards, but technological California’s smog problem, which is noted that that there was no criteria developments posed the possibility that emission especially affected by local conditions emissions benefit for its ZEV standards control devices could not be constructed to meet and local pollution. See Statement of in terms of vehicle emissions because its both the high California oxides of nitrogen standard LEV III criteria pollutant fleet standard and the high Federal carbon monoxide standard. Cong. Smith (CA) 113 Cong. Rec. MEMA I, 627 F.2d at 1110 n.32. 30940–41 (1967); Statement of Cong. was responsible for those emission

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reductions.580 The EPA therefore, ‘‘compelling and extraordinary believes that the number of motor believes a review of the grant of the ACC conditions’’ such that California vehicles in California bears no program waiver and the agency ‘‘need[s]’’ separate GHG and ZEV significant relationship to the levels of reasoning underpinning the grant are standards for new motor vehicles for GHGs in California. This is because appropriate at this time. As previously MY 2021 through MY 2025. GHGs emissions from cars located in explained, an agency ‘‘must consider (4) Proposed Determination That California are relatively small part of the . . . the wisdom of its policy on a California Does Not Need Its ACC global pool of GHG emissions. Thus, continuing basis.’’ Chevron, 467 U.S. at Program Regulations To Meet GHG emissions of motor vehicles in 863–64. This is true when, as is the case Compelling and Extraordinary California do not affect California’s here, review is undertaken ‘‘in response Conditions conditions related to global climate to . . . a change in administration.’’ change in any way different from Brand X Internet Services, 545 U.S. at EPA is proposing to withdraw the emissions from vehicles and other 981. In sum, EPA proposed to conclude waiver of preemption of the GHG and pollution sources all around the world. that the pre-2008 interpretation of ZEV standards on two alternative Similarly, the GHG emissions from cars section 209(b)(1)(B) would allow for grounds: (1) California ‘‘does not need’’ in California become one part of the review of California’s GHG standards in the standards ‘‘to meet compelling and global pool of GHG emissions that affect themselves, given that the ACC program extraordinary conditions,’’ under the atmosphere globally and are is a single coordinated motor vehicle section 209(b)(1)(B); (2) even if distributed throughout the world, emission control program that is California does have compelling and resulting in basically a uniform global designed to address both traditional, extraordinary conditions in the context atmospheric concentration. This is in local environmental causes and effects of global climate change, California does contrast to the kinds of motor vehicle (including via criteria pollutants) and not ‘‘need’’ these standards under emissions normally associated with section 209(b)(1)(B) because they will global air pollution problems. Thus, ozone levels, such as VOCs and NOX, EPA is proposing that at this time its not meaningfully address global air and the local climate and topography review has led it to propose to pollution problems of the sort that in the past have led to the determine that California does not need associated with GHG emissions. EPA is conclusion that California has the need its own GHG and ZEV standards, to the interpreting section 209(b)(1)(B) to for state standards to meet compelling extent California intended the ZEV permit the Agency to specifically review and extraordinary conditions. Therefore, California’s need for GHG standards— requirements to serve as a compliance California does not need its GHG and i.e., standards for a globally distributed option for GHG standards, because GHG ZEV standards to ‘‘meet’’ the conditions: air pollutant which is of concern for its emissions do not present conditions a problem does not cause you to ‘‘need’’ connection to global environmental specific to California—in the terms of something that would not meaningfully effects—as opposed to reviewing the legislative history discussed above, address the problem. GHG emissions do not present ‘‘unique California’s need for its motor vehicle In justifying the need for its GHG problems’’ in California as compared to program as a whole (including both its standards, CARB extensively described the whole country. As shown below, GHG-targeting and non-GHG-targeting GHG emissions could be associated with components), in part because the rest of climatic conditions in California. potential adverse effects in California, California’s ACC program consists of ‘‘Record-setting fires, deadly heat but EPA does not believe that these standards that are designed to address waves, destructive storm surges, loss of would be sufficiently different from local or regional air pollution problems. winter snowpack—California has potential adverse effects in either Accordingly, EPA is proposing to find experienced all of these in the past coastal States like Florida, that GHG emitted by California motor decade and will experience more in the Massachusetts, and Louisiana or the vehicles become part of the global pool coming decades. California’s climate— nation as a whole, to constitute a of GHG emissions that affect much of what makes the state so unique ‘‘need’’ for separate state standards concentrations of GHGs on a uniform and prosperous—is already changing, under section 209(b)(1)(B). EPA is of the basis throughout the world. The local and those changes will only accelerate view, therefore, that GHG emissions climate and topography in California and intensify in the future. Extreme would not be associated with ‘‘peculiar have no significant impact on the long- weather will be increasingly common as local conditions’’ in California that term atmospheric concentrations of a result of climate change. In California, Congress alluded to in promulgating greenhouse gases in California. More extreme events such as floods, heat section 209(b)(1)(B). In the alternative, importantly, California’s standards for waves, droughts and severe storms will EPA is proposing to determine that GHG emissions (both the GHG and ZEV increase in frequency and intensity. California does not need the ACC standards) would not materially affect Many of these extreme events have the program GHG and ZEV standards to global concentrations of GHG levels. potential to dramatically affect human address compelling and extraordinary Accordingly, even if EPA were to health and well-being, critical conditions, because they will not assume California had compelling and infrastructure and natural systems’’ (78 meaningfully address global air extraordinary conditions that were FR 2129). CARB also provided a pollution problems like the kinds uniquely impacted by high levels of summary report on the third assessment associated with GHG emissions and GHGs, California’s GHG and ZEV from the California Climate Change would not have any meaningful impact standards would not meaningfully Center (2012), which described dramatic on potential adverse effects related to address those concerns and conditions. sea level rises and increases in global climate change in California. As In the alternative, EPA believes that temperatures (78 FR 2129). These are shown below, based on this reading of even if California has compelling and similar, if not identical to, the section 209(b)(1)(B), the agency is extraordinary conditions, California justifications that EPA addressed and proposing to find that GHG emissions does not need these standards under rejected in the 2008 GHG waiver denial. impacts cannot be considered section 209(b)(1)(B) because they will Notably, in the 2008 denial EPA not meaningfully address global air observed that some of these events— 580 CARB ACC waiver request at EPA–HQ–OAR– pollution problems like the kinds increased temperatures, heat waves, sea 2012–0562–0004. associated with GHG emissions. EPA level rises, wildfires—were also

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occurring across the U.S. (73 FR 12163, determination than whether California demonstration phase to 12165–68). CARB further noted that the needs its mobile source pollution commercialization (78 FR 2130). CARB South Coast and San Joaquin Valley Air program to meet compelling and further noted that ‘‘ZEVs have ultra-low Basins continue to experience some of extraordinary conditions in California GHG emission levels that are far lower the worst air quality in the nation and (79 FR 46256, 46262: August 7, 2014). than non-ZEV technology’’ (78 FR continue to be in non-attainment with See also Utility Air Regulatory Group 2139). In yet another instance, CARB the PM and ozone national ambient air v. EPA, 134 S. Ct. 2427 (2014) (partially relied on conclusions from the quality standards (78 FR 2128–9). The reversing the GHG ‘‘Tailoring’’ Rule on September 2010 Joint Technical EPA has typically considered grounds that the section 202(a) Assessment Report (TAR), which was nonattainment air quality in California endangerment finding for GHG developed by EPA, NHTSA, and CARB, as falling within the purview of emissions from motor vehicles did not on effects of the ZEV requirements on ‘‘compelling and extraordinary compel regulation of all sources of GHG GHG standards. This report concluded conditions.’’ California however, did not emissions under the Prevention of that ‘‘electric drive vehicles including indicate how the GHG standards would Significant Deterioration and Title V hybrid(s) . . . battery electric vehicles help California in the attainment efforts permit programs). . . . plug-in hybrid(s) . . . and for these areas. Moreover, as previously As also previously indicated, hydrogen fuel cell vehicles . . . can noted, the ACC ZEV requirements are California is to demonstrate dramatically reduce petroleum intended in part as a GHG compliance ‘‘compelling and extraordinary consumption and GHG emissions mechanism for MYs 2018 through 2025. circumstances sufficiently different from compared to conventional technologies. the nation as a whole to justify EPA believes that any effects of global The future rate of penetration of these climate change would apply to the standards on automobile emissions technologies into the vehicle fleet is not nation, indeed the world, in ways which may, from time to time, need to only related to future GHG and similar to the conditions noted in be more stringent than national corporate average fuel economy (CAFE) California.581 For instance, California’s standards.’’ S. Rep. No. 403, 90th Cong. standards, but also to future reductions claims that it is uniquely susceptible to 1st Sess., at 32 (1967). (Emphasis in HEV/PHEV/EV battery costs, [and] certain risks because it is a coastal State added.) EPA does not believe that these the overall performance and consumer does not differentiate California from conditions, mentioned above, merit demand for the advanced technologies’’ other coastal States such as separate GHG standards in California. (78 FR 2142). But nowhere does CARB Massachusetts, Florida, and Rather, these effects, as previously either show or purport to show a causal Louisiana.582 Any effects of global explained, are widely shared and do not connection between its GHG standards climate change (e.g. water supply issues, present ‘‘unique problems’’ with respect and reducing any adverse effects of increases in wildfires, effects on to the nature or degree of the effect climate change in California. EPA does agriculture) could certainly affect California would experience. In sum, not believe that identifying methods for California. But those effects would also EPA finds that any effects of global reducing GHG emissions and then affect other parts of the United States. climate change in California are not noting the potential dangers of climate Many parts of the United States, ‘‘extraordinary’’ as compared to the rest change are sufficient to demonstrate that especially western States, may have of the country. EPA is thus, proposing California needs its standards to meet issues related to drinking water (e.g., to find that CARB has not demonstrated compelling and extraordinary increased salinity) and wildfires, and that these negative impacts it attributes circumstances as contemplated under effects on agriculture; these occurrences to global climate change are section 209(b)(1)(B). California also does are by no means limited to California. ‘‘extraordinary’’ to merit separate GHG not need the ZEV requirements to meet These are issues of national, indeed and ZEV standards. ‘‘compelling and extraordinary’’ international, concern. Further, these The ACC program waiver contained conditions in California given that the are some of the effects that EPA references to the potential GHG benefits FCV ‘‘travel provision’’ allow considered as bases for the section or attributes of CARB’s GHG and ZEV manufacturers to generate credits in 202(a) GHG endangerment finding, standards program (78 FR 2114, 2130– section 177 states as a means to satisfy which was a prerequisite for the Federal 2131). CARB repeatedly touted the 583 those manufacturers’ obligations to GHG standards for motor vehicles. benefits of both the ZEV and GHG comply with the mandate that a certain EPA has also previously opined that standards as it related to the GHG percentage of their vehicles sold in evaluation of whether California’s emissions reductions in California. In California be ZEV (or be credited as standards are necessary to meet one instance, CARB stated that the ACC such from sales in section 177 States). compelling and extraordinary program regulations for the 2017 In sum, California did not quantify and conditions is not contingent on or through 2025 MYs were designed to demonstrate climate benefits in directly related to EPA’s cause or respond to California’s identified goals California that may result from the GHG contribution finding for the section of reducing GHG emissions to 80% standards. EPA therefore, proposes to 202(a) GHG endangerment finding, below 1990 levels by 2050 and in the find that it is not appropriate to waive which was a completely different near term to reduce GHG levels to 1990 preemption for California to enforce its levels by 2020 (78 FR 2114, 2130–31). 581 GHGs standards. EPA continues to IPCC. 2015. Intergovernmental Panel on CARB’s Resolution 12–11, (January 26, Climate Change (IPCC) Observed Climate Change believe that any problems related to 2012).584 In another instance, CARB Impacts Database, available at http://sedac.ipcc- atmospheric concentrations of GHG are _ noted that the ZEV regulation data.org/ddc/observed ar5/index.html. global in nature and any reductions 582 They are also similar to previous claims amendments were intended to focus achieved as a result of California’s marshalled by Massachusetts over a decade ago. primarily on zero emission drive—that separate GHG standards will not accrue Massachusetts v. EPA, 549 U.S. 497, 522–24 (2007). is BEVs, FCVs, and PHEVs in order to According to Massachusetts, at the time, global sea meaningful benefits to California. Thus, move advanced, low GHG vehicles from levels rose between 10 and 20 centimeters over the GHG emissions raise issues that do not 20th century as a result of global warming and had begun to swallow its coastal areas. 584 Available in the docket for the January 2013 bear the same causal link between local 583 74 FR 66496, 66517–19, 66533 (December 15, waiver decision, Docket No. EPA–HQ–OAR–2012– emissions and local benefits to health 2009). 0562. and welfare in California as do local or

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regional air pollution problems (such as also rely on emerging technology that in section 177 States, but which was criteria pollutants). EPA further finds are similar to the ones for the Federal limited to FCVs starting with MY 2018. that atmospheric concentrations of GHG standards, including ZEV-type The manufacturer credit system was GHGs are not the kind of local or technologies (78 FR 2136–7). Most premised on ever increasing numbers of regional air pollution problem Congress importantly, CARB’s feasibility finding, ZEVs that would be sold in each of the intended to identify in the second and EPA’s decision to grant the waiver, section 177 States. Challenges for ZEVs criterion of section 209(b)(1)(B). These noted a ‘‘deemed to comply’’ provision in these States include lack of market findings also apply to the ZEV that allowed manufacturers of advanced penetration, consumer demand levels provisions given that CARB, in a change technology vehicles to comply with that are lower than projections at the from prior practice, and as previously CARB GHG standards through time of the grant of the ACC waiver in explained, cited its ZEV standards as a compliance with the Federal GHG 2013, and lack of or slow development means to reduce GHG emissions instead standards as well as utilize the EPA of necessary infrastructure. This in turn of criteria pollutants for MY 2021 accounting provisions for these vehicles means that manufacturers in section 177 through MY 2025. Thus, EPA is (78 FR 2136). Revisions to the Federal States are unlikely to meet CARB’s proposing to withdraw the waiver of GHG standards, in light of the projections that their sales in those preemption for the GHG and ZEV technology development and States will generate the necessary requirements for MYs 2021 through availability assessment for those credits as CARB projected to support the 2025 because California does not need standards, would therefore, implicate ZEV sales requirement mandate in the these provisions to meet compelling and the technological feasibility findings lead time provided. extraordinary conditions. that served as the underpinning for Today’s proposal indicates challenges EPA’s grant of CARB’s GHG standards for the adoption of all ZEV technologies (b) Proposed Finding Under Section waiver. such as lack of required infrastructure 209(b)(1)(C): California’s Standards Are Further, because EPA believes that the and a lower level of consumer demand Not Consistent With Section 202(a) ZEV and GHG standards are intertwined for FCVs in both California and (1) Introduction as shown in some of the program individual section 177 States, and EPA Under section 209(b)(1)(C), EPA complexities discussed above, EPA believes it is now unlikely that cannot grant a waiver request if EPA believes that this provides further manufacturers will be able to generate finds that California’s ‘‘standards and justification for withdrawing the waiver requisite credits in section 177 States in accompanying enforcement procedures of preemption for both standards, under the lead time provided. In short, EPA is are not consistent with section 202(a) of section 209(b)(1)(C). For example, in the now of the view that CARB’s projections the Act.’’ 585 The EPA is also proposing waiver request CARB stated that the and assumptions that underlay its ACC to find that both ZEV and GHG ‘‘ZEV regulation must be considered in program and its 2013 waiver application standards for new MY 2021 through conjunction with the proposed LEV III were overly ambitious and likely will 2025 are not consistent with Section amendments. Vehicles produced as a not be realized within the provided lead 202(a) of the Clean Air Act, as result of the ZEV regulation are part of time. Thus, EPA is also proposing to a manufacturer’s light-duty fleet and are find that CARB’s ZEV standards for MY contemplated by section 209(b)(1)(C). therefore included when calculating 2021 through 2025 are not Specifically, EPA is proposing to fleet averages for compliance with the technologically feasible and therefore, determine that there is inadequate lead LEV III GHG amendments.’’ CARB’s are not consistent with section time to permit the development of Initial Statement of Reasons at 62–63, 209(b)(1)(C). technology necessary to meet those which is in the docket for the waiver requirements, giving appropriate (2) Historical Waiver Practices Under decision.587 CARB also noted ‘‘[b]ecause consideration to cost of compliance Section 209(b)(1)(C) the ZEVs have ultra-low GHG emission within the lead time provided in the levels that are far lower than non-ZEV In prior waivers of Federal 2013 waiver. This finding reflects the technology, they are a critical preemption, under section 209(b), EPA assessments in today’s proposal on the component of automakers’ LEV III GHG has explained that California’s technological feasibility of the Federal standard compliance strategies.’’ Id. standards are not consistent with GHG standards for MY 2021 through section 202(a) if there is inadequate lead 586 CARB further explained that ‘‘the ultra- 2025. low GHG ZEV technology is a major time to permit the development of As previously explained, the MY 2021 component of compliance with the LEV technology necessary to meet those through 2025 Federal and CARB GHG III GHG fleet standards for the overall requirements, given appropriate standards were the results of light duty fleet.’’ Id. consideration to the cost of compliance collaboration between CARB and EPA. Similarly, with regard to CARB’s ZEV within that time. California’s The respective standards are equally standards, EPA is now cognizant that accompanying enforcement procedures stringent and have the same lead time. certain ZEV sales requirements would also be inconsistent with section (78 FR 2135) CARB’s GHG standards mandated by CARB are technologically 202(a) if the Federal and California test infeasible within the provided lead-time procedures were inconsistent. 585 Section 202(a) provides that an emission EPA also relies on two key decisions standard shall take effect after such period of time for purposes of CAA 209(b)(1)(C). as the Administrator finds necessary to permit Specifically, today’s proposal also raises handed down by the U.S. Court of development and application of the requisite questions as to CARB’s technological Appeals for the D.C. Circuit for technology, giving appropriate consideration to projections for ZEV-type technologies, guidance regarding the lead time compliance costs. which are a compliance option for both requirements of section 202(a): Natural 586 Although this section generally discusses the technological feasibility of CARB’s GHG standards the ZEV mandate and GHG standards. Resources Defense Council v. EPA for MY 2021–2025, we believe the current Federal CARB’s ZEV regulations also include (NRDC), 655 F.2d 318 (D.C. Cir. 1981) standards are sufficiently similar to (if not less the travel provision, which allowed (upholding EPA’s lead time projections stringent than) the current California standards to manufacturers of ZEVs sold in for emerging technologies as serve as an appropriate proxy for considering the technological feasibility of the current California California to count toward compliance reasonable), and International Harvester standards. Compare Cal. Code Regs. Tit. 13, v. Ruckelshaus (International § 1961.3 with 40 CFR 89.1818–12. 587 Docket ID No. EPA–HQ–OAR–2012–0562. Harvester), 478 F.2d 615 (D.C. Cir. 1979)

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(reversing EPA’s refusal to extend ‘‘restraints of reasonableness and does doubling or tripling of vehicle cost compliance deadline where technology not open the door to crystal ball constitutes an excessive cost or was presently available on grounds that inquiry.’’ NRDC v. EPA, 655 F.2d at 329. represents an infeasible standard was hardship would likely result if it were ‘‘The Clean Air Act requires the EPA to incorrect. Such a bright line (and a wrongful denial of compliance look to the future in setting standards, extreme) test is inappropriate. Instead, deadline extension.). EPA further notes but the agency must also provide a the agency should holistically consider the court’s conclusion in NRDC. reasoned explanation of its basis for whether technology control costs are Given this time frame [a 1980 decision on believing that its projection is reliable.’’ infeasible by considering the availability 1985 model year standards], we feel that Id. of the technology, the reasonableness of there is substantial room for deference to the EPA will make a consistency finding costs associated with adopting it within EPA’s expertise in projecting the likely where CARB provides for longer lead the required lead time, and consumer course of development. The essential time in instances in of emerging or acceptance. question in this case is the pace of that unavailable technology at the time development, and absent a revolution in the CARB adopts its standards. In sum, (3) Interpretation of Section 209(b)(1)(C) study of industry, defense of such a EPA’s review of CARB’s technological EPA cannot grant a waiver, under projection can never possess the inescapable section 209(b)(1)(C), if California’s logic of a mathematical deduction. We think feasibility involves both evaluations of that the EPA will have demonstrated the predictions for future technological ‘‘standards and accompanying reasonableness of its basis for projection if it advances and presently available enforcement procedures are not answers any theoretical objections to the technology. EPA also believes that a consistent with section [202(a)].’’ [projected control technology], identifies the longer lead time would allow CARB Relevant legislative history from the major steps necessary in refinement of the ‘‘modify its standards if the actual 1967 CAA amendments indicates that technology, and offers plausible reasons for future course of technology diverges EPA is to grant a waiver unless it finds believing that each of those steps can be that there is ‘‘inadequate time to permit completed in the time available. from expectation.’’ Id. As previously mentioned above, costs the development of the necessary NRDC, 655 F.2d at 331 (emphasis considerations are also tied to the technology given the cost of compliance added). compliance timing for a particular within that time period.’’ This is similar With regard to appropriate lead time standard and are thus, relevant for to language found in section 202(a), in the section 209(b) waiver context, purposes of the consistency which is discussed below. Additional EPA considers whether adequate control determination called for by the third relevant legislative history indicates that technology is presently available or waiver criterion under section EPA is not to grant a waiver where already in existence and in use at the 209(b)(1)(C). In evaluating compliance ‘‘California standards are not consistent time CARB adopts standards for which costs for CARB standards, EPA with the intent of section 202(a) of the it seeks a waiver. If adequate control considers the actual cost of compliance Act, including economic practicability technology is not presently available, in the time provided by applicable and technological feasibility.’’ The EPA determines whether CARB has California regulations. Compliance costs cross-reference to section 202(a) is an provided adequate lead time for the ‘‘relates to the timing of standards and indication of the role EPA plays in development and application of procedures.’’ MEMA I, 627 F.2d at 1118 reviewing California’s waiver request necessary technology prior to the (emphasis in original). Where under section 209(b)(1)(C). effective date of applicable standards. technology is not presently available, With regard to section 202(a), As explained above, considerations EPA also considers the period necessary standards promulgated under section under this criterion include adequacy of to permit development and application 202(a)(1) ‘‘shall take effect after such lead time, technological feasibility and of the requisite technology. period as the Administrator finds costs as well as test procedures In terms of waiver practice, EPA has necessary to permit the development consistency. Notably, there are similar previously taken the position that and application of the requisite considerations for Federal standards technology control costs must be technology, giving appropriate setting under section 202(a). For excessive for EPA to find that consideration to the cost of compliance example, in adopting the MY 2017 California’s standards are inconsistent within such period.’’ Section 202(a). through 2025 GHG standards, section with section 202(a).588 (See MEMA I, Pertinent legislative history from the 202(a) required and EPA found in 627 F.2d at 1118 ‘‘Congress wanted to 1970 and 1977 amendments indicate October 2012 that the MY 2017 through avoid undue economic disruption in the that EPA ‘‘was expected to press for the 2025 GHG standards are feasible in the automotive manufacturing industry and development and application of lead time provided and that technology also sought to avoid doubling or tripling improved technology rather than be costs were reasonable (77 FR 62671–73; of the cost of motor vehicles to limited by that which exists today.’’ S. October 15, 2012). Even where purchasers.’’) Consistent with this Rep. No. 1196, 91st Cong., 2d Sess. 24 technology is available, EPA can practice, in the ACC program waiver, (1970); H.R. Rep. No. 294, 95th Cong., consider hardships that could result to EPA contended that control costs for the 1st Sess. 273 (1977). In sum, EPA manufacturers from either a short lead ZEV standards were ‘‘not excessive.’’ believes that section 202(a) allows for a time or not granting a compliance ‘‘Under EPA’s traditional analysis of projection of lead time as to future extension. International Harvester, 478 cost in the waiver context, because [an technological developments. F.2d at 626. incremental cost of $12,900 in MY 2020] Where CARB relies on emerging (4) Proposed Finding That California’s does not represent a ‘doubling or technology (i.e., where technology is Standards Are Not Consistent With tripling’ of the vehicle cost, such cost is unavailable at time of grant of waiver), Section 202(a) not excessive nor does it represent an EPA will review CARB’s prediction of As previously mentioned, today’s infeasible standard’’ (78 FR 2142). EPA future technological developments and proposal now cast significant doubts on now believes that its prior view that a determine whether CARB has provided EPA’s predictions for future and timely reasoned explanations for the time 588 74 FR 32744, 32774 (July 8, 2009); 47 FR 7306, availability of emerging technologies for period selected. Any projections by 7309 (February 18, 1982); 46 FR 26371, 26373 (May compliance with Federal GHG standards CARB would have to be subject to 12, 1981), 43 FR 25735 (June 14, 1978). for MY 2021–2025. It highlights in

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particular challenges for ZEV-type discusses, certain control technology even at the time of the waiver request, technologies, such as BEVs and PHEVs, would likely not be fully developed in CARB was already cognizant of that California relied on as compliance time for deployment in MY 2021 challenges presented by both ZEV and options for the ZEV mandate through 2025 motor vehicles. GHG standards. CARB noted that requirements and GHG standards. As With regard to the ZEV standards, although several individual also previously mentioned CARB’s GHG CARB’s waiver request contained technologies offered substantial CO2 standards were developed jointly by projections and explanations for ZEVs reduction potential many of the EPA and CARB with the result that that included projected sales of FCVs in technologies had only limited CARB’s GHG standards share a similar both California and section 177 States. deployment in new vehicle models (78 structure with EPA GHG standards in Specifically, CARB’s projections, at the FR 2136). CARB also extended the travel terms of both lead time and stringency. time, were that nearly every vehicle provisions beyond 2017 for FCVs due to For instance, the methodology and manufacturer would be introducing insufficient refueling infrastructure in underlying data used by CARB to assess BEVs and PHEVs within the next one to section 177 States as compared to other technologies and costs were similar to three years, and five manufacturers kinds of ZEV technologies (78 FR 2120; and, in many instances, the same as would be commercially introducing CARB Resolution 12–11 at 15). EPA is, those used by EPA to assess the Federal FCVs by 2015.590 As explained above, therefore, acting in anticipation of the GHG standards (78 FR 2136). Also, the the ZEV regulations contains the travel challenges presented by its GHG and technological feasibility analyses provision that allow manufacturers to ZEV standards. As previously underlying CARB’s standards were comply with the ZEV sales mandate by explained, a late modification or based on several emerging technologies generating credits for vehicle sales in extension of time carries attendant similar to control technologies section 177 States and vice versa. At the hardships for technologically advanced manufacturers who might have made considered by EPA and NHTSA in grant of the ACC program waiver, EPA major investment commitments evaluating Federal GHG standards for found CARB’s assumptions and (International Harvester, 478 F.2d 615). MYs 2021–2025. Id. Additionally, projections appeared reasonable within EPA believes that today’s proposal, CARB’s feasibility finding was premised the provided lead time for MYs 2021 when finalized, would be sufficiently on a finding of reduced compliance through 2025 (78 FR 2141–42). costs and flexibility because of the ahead of the compliance deadline for deemed to comply provisions, which Technological challenges may serve MY 2021 through 2025 and thus, allowed for compliance with Federal as basis for either a future compliance manufacturers would not incur any GHG standards in lieu of California’s deadline extension or modifications to hardships. Indeed, the expectation is standards.589 In sum, EPA’s findings of the federal GHG standards that would that the proposed withdrawal would technological feasibility for the GHG be consistent with today’s proposal and provide notice to manufacturers of the and ZEV standards were premised on would then raise questions as to CARB’s intended compliance deadline the availability of both current and predictions and projections of modifications for MYs 2021 through emerging technologies in the lead-time technological feasibility and costs. At 2025. CARB provided for new MY 2021–2025 this time, however, CARB has shown no Finally, the agency is acting on the motor vehicles (78 FR 2138–2139, indication that it intends to either likelihood of increased compliance 2143). These kinds of control extend the compliance deadline for or costs as shown in today’s proposal. technologies would include ZEV-type modify its standards by providing (These are costs that will likely be technologies, which are used as a additional compliance flexibilities. EPA passed on to consumers in most compliance option for CARB’s GHG believes it is reasonable, therefore, to instances.). As previously explained, standards because their GHG emissions consider any expected hardship that because compliance technologies that levels are significantly lower than non- would be posed to manufacturers if EPA California relied on for both ZEV and ZEV technology. As the NPRM does not withdraw CARB’s waiver. GHG standards are similar to the NRDC, 655 F.2d at 330. An early technologies considered by EPA in 589 On May 7, 2018, California issued a notice withdrawal of the waiver would also evaluating the feasibility of standards seeking comments on ‘‘potential alternatives to a provide a measure of certainty to all for MYs 2021 through 2025, economies potential clarification’’ of this provision for MY manufacturers. ‘‘ ‘[T]the base hour for of scale were expected to drive down vehicles that would be affected by revisions to the commencement of production is both manufacturing and technology Federal GHG standards. The notice is available at: https://www.arb.ca.gov/msprog/levprog/leviii/ relatively distant, and until that time the costs. The EPA, however, now expects leviii_dtc_notice05072018.pdf. EPA proposes to probable effect of a relaxation of the that manufacturers may no longer be determine that the ‘‘deemed to comply’’ provision standard would be to mitigate the willing to commit to investments for a in California’s program does not prevent EPA from consequences of any strictness in the limited market as compared to the finding that California’s ZEV and GHG standards are inconsistent with section 202(a), for two final rule, not to create new broader national market, which was reasons. First, the ‘‘deemed to comply’’ provision is hardships.’’ 591 Further, from past contemplated by the federal and in flux; the state process that may ‘‘clarify[]’’ it experience with waivers for challenging California GHG standards. renders it unclear whether California will continue standards, EPA is aware that CARB has Today’s proposal also confirms slower to deem a program that may be revised as proposed in this joint rulemaking to comply with its own subsequently either modified pace of development of ZEV technology program. Second, EPA proposes to determine that compliance deadlines or provided and differences in projected a ‘‘deemed to comply’’ provision is logically additional compliance flexibilities for manufacturing costs in states that have incompatible with a preemption waiver analysis. such standards.592 EPA also notes that adopted these standards under section The entire premise of 209(a) preemption and 209(b)(1) waivers is that California’s standards will 177 as well as lower consumer demands differ from the Federal standards. If ‘‘deemed to 590 CARB waiver request at 27–28, which can be for FCVs. The EPA also now expects comply’’ provisions in California’s program found in Docket ID No. EPA–HQ–OAR–2012–0562. that the pace of technological prevented EPA from determining that California’s 591 Id. The ‘‘hardships’’ referred to are hardships developments as it relates to standards is inconsistent with section 202(a), then that would be created for manufacturers able to those provisions’ presence would prevent EPA’s comply with the more stringent standards being infrastructure for FCVs will slow down. analysis under this prong (209(b)(1)(C) from relaxed late in the process. denying it a waiver no matter the content of those 592 For example, CARB has made multiple 78144 (November 7, 2016)) and the ZEV program standards. revisions to its on-Board diagnostics (OBD) (81 FR regulations (76 FR 61096 (October 3, 2011)).

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The EPA is thus, proposing to find that limited to providing States the ability, to satisfy those manufacturers’ CARB’s ZEV standards for MYs 2021 under certain circumstances and with obligations to comply with the mandate through 2025 are technologically certain conditions, to adopt and enforce that a certain percentage of their infeasible in the lead time provided and standards identical to those for which vehicles sold in California be ZEV (or be therefore, that CARB’s ZEV standards California has obtained a waiver— credited as such from sales in section are not consistent with section 202(a). provided that those standards are 177 States). In addition, because other As previously mentioned EPA is designed to control criteria pollutants to states have adopted aspects of proposing to withdraw the grant of address NAAQS nonattainment. EPA California’s ACC program this decision waiver for both standards on grounds solicits comment on how and when this would also affect those states and those that they are not consistent with section new interpretation should be adopted persons in such states, which are 202(a). In light of all the foregoing, the and implemented, if finalized (e.g., located in multiple EPA regions and agency finds that is necessary and whether EPA should adopt it as of the federal circuits. For these reasons, EPA reasonable to reconsider the grant of effective date of a final rule, or as of a determines and finds for purposes of waiver for CARB’s GHG and ZEV later date, such as model year 2021 or section 307(b)(1) that any final standards. EPA requests comments on calendar year 2020, in order to allow withdrawal action would be of national all aspects of this proposal, especially additional time for planning and applicability, and also that such action specific costs for the ZEV requirements transition). would be based on a determination of as it relates to MYs 2021 through 2025. nationwide scope or effect for purposes 5. Severability and Judicial Review 4. States Cannot Adopt California’s GHG of section 307(b)(1). Pursuant to section EPA considers its proposed decision 307(b)(1), judicial review of this final Standards for NAAQS Nonattainment on the appropriate federal standards for Purposes Under Section 177 action may be sought only in the United light duty greenhouse gas vehicles for States Court of Appeals for the District As explained above, CAA section 177 MY 2021–2025 to be severable from its of Columbia Circuit. Judicial review of provides that other States, under certain decision on withdrawing the ACC any final action may not be obtained in circumstances and with certain waiver, particularly with respect to the subsequent enforcement proceedings, conditions, may ‘‘adopt and enforce’’ requirements of CAA 209(b)(1)(B). Our pursuant to section 307(b)(2). standards that are ‘‘identical to the proposed interpretation of CAA California standards for which a waiver 209(b)(1)(B), and our evaluation of the VII. Impacts of the Proposed CAFE and has been granted for [a given] model ACC waiver under that provision, does CO2 Standards year.’’ 42 U.S.C. 7507. The EPA not depend on our decision to finalize, A. Overview proposes to determine that this section and a court’s decision to uphold, the New CAFE and CO standards will does not apply to CARB’s GHG light duty vehicles standards being 2 have a range of impacts. EPCA/EISA standards. proposed today under CAA 202(a). EPA and NEPA require DOT to consider such In this regard, the EPA notes that the solicits comment on the severability of impacts when making decisions about section is titled ‘‘New motor vehicle these actions, particularly with respect new CAFE standards, and the CAA emission standards in nonattainment to the other criteria of CAA 209(b). areas’’ and that its application is limited Section 307(b)(1) of the CAA provides requires EPA to do so when making to ‘‘any State which has [state in which Federal courts of appeal decisions about new emissions implementation] plan provisions petitions of review of final actions by standards. Like past rulemakings, approved under this part’’—i.e., under EPA must be filed. This section today’s announcement is supported by CAA title I part D, which governs ‘‘Plan provides, in part, that petitions for the analysis of many potential impacts requirements for nonattainment areas.’’ review must be filed in the Court of of new standards. Today’s Areas are only designated Appeals for the District of Columbia announcement proposes new standards nonattainment with respect to criteria Circuit if (i) the Agency action consists through model year 2026, explicitly pollutants for which EPA has issued a of ‘‘nationally applicable regulations estimates manufacturers’ responses to NAAQS, and nonattainment SIPs are promulgated, or final action taken, by standards through model year 2029, and intended to assure that those areas the Administrator,’’ or (ii) such action is considers impacts, throughout those attain the NAAQS. It would be illogical locally or regionally applicable, but vehicles’ useful lives. The agencies do to require approved nonattainment SIP ‘‘such action is based on a not know today what would actually provisions as a predicate for allowing determination of nationwide scope or come to pass decades from now under States to adopt California’s standards if effect and if in taking such action the the proposed standards or under any of alternatives under consideration. The states could use this authority to adopt Administrator finds and publishes that analysis is thus properly interpreted not California standards that addressed such action is based on such a as a forecast, but rather as an environmental problems other than determination.’’ Separate and apart from assessment—reflecting the best nonattainment of criteria pollutant whether a court finds this action to be judgments regarding many different standards. Furthermore, the placement locally or regionally applicable, the factors—of impacts that could occur.593 of section 177 in title I part D, rather Administrator is proposing to find that As discussed below, the analysis was than title II (the location of the any final action resulting from this conducted to explore the sensitivity of California waiver provision) would rulemaking is based on a determination this assessment to a variety of potential make no sense if it functioned as a of ‘‘nationwide scope or effect’’ within changes in key analytical inputs (e.g., waiver applicable to all subjects, as does the meaning of section 307(b)(1). fuel prices). This decision, when finalized, will the California-focused provision under This section summarizes various affect persons in California and those section 209(b), rather than as a impacts of the preferred alternative (i.e., manufacturers and/or owners/operators provision specifically targeting criteria the proposed standards) defined above of new motor vehicles nationwide who pollutants and nonattainment areas, as in Section III. The no-action alternative does the rest of title I part D. must comply with California’s new Therefore, the text, context, and motor vehicle requirements. For 593 ‘‘Prediction is very difficult, especially if it’s purpose of section 177 suggest, and the instance, manufacturers may generate about the future.’’ Attributed to Niels Bohr, Nobel EPA proposes to conclude, that it is credits in section 177 states as a means laureate in Physics.

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defined in Section IV provides the standards involve fleets leading up and perspective. The social perspective baseline relative to which all impacts extending well beyond MY 2016. focuses on economic benefits and costs, are shown. Because the proposed Considering this, the proposed setting aside economic transfers such as standards (and other standards standards were examined on an fuel taxes but including economic considered below), being of a incremental basis, modeling each new externalities such as the social cost of ‘‘deregulatory’’ nature, are less stringent model year’s standards over the entire CO2 emissions. The manufacturer than the no-action alternative, all span of included model years, using perspective focuses on average impacts are directionally opposite those results as a baseline relative to requirements and levels of performance impacts reported in recent CAFE and which to measure impacts attributable (i.e., average fuel economy level and CO2 rulemakings. For example, while to the next model year’s standards. For CO2 emission rates), compliance costs, past rulemakings reported positive example, incremental costs attributable and degrees of technology application. values for fuel consumption avoided to the standards proposed today for MY The private perspective focuses on costs under new standards, today’s proposal 2023 are calculated as follows: of vehicle purchase and ownership, _ reports negative values, as fuel COSTProposed,MY 2023 = (COSTProposed including outlays for fuel (and fuel _ ¥ _ _ consumption will be somewhat greater through MY 2023 COSTNo-Action through taxes). The physical perspective focuses _ _ under today’s proposed standards than MY 2023—(COSTProposed through MY on national-scale highway travel, fuel ¥ _ _ under standards defining the baseline 2022 COSTNo-Action through MY 2022) consumption, highway fatalities, and no-action alternative. Reported negative Where: greenhouse gas and criteria pollutant values for avoided fuel consumption COSTProposed,MY 2023: Incremental technology emissions. could also be properly interpreted as cost during MYs 2017–2030 and This analysis does not explicitly simply ‘‘additional fuel consumption.’’ attributable to the standards proposed for identify ‘‘co-benefits’’ from its proposed Similarly, reported negative values for MY 2023. action to change fuel economy COSTProposed_through_MY 2022: Technology cost costs could be properly interpreted as for MYs 2017–2030 under standards standards, as such a concept would ‘‘avoided costs’’ or ‘‘benefits,’’ and proposed through MY 2022. include all benefits other than cost reported negative values for benefits COSTProposed_through_MY 2023: Technology cost savings to vehicle buyers. Instead, it could be properly interpreted as for MYs 2017–2030 under standards distinguishes between private benefits— ‘‘foregone benefits’’ or ‘‘costs.’’ proposed through MY 2023. which include economic impacts on _ _ However, today’s notice retains COSTNo-Action through MY 2022: Technology cost vehicle manufacturers, buyers of new reporting conventions consistent with for MYs 2017–2030 under no-action cars and light trucks, and owners (or alternative standards through MY 2022. past rulemakings, anticipating that, users) of used cars and light trucks—and COSTNo-Action_through_MY 2023: Technology cost compared to other options, doing so will for MYs 2017–2030 under no-action external benefits, which represent facilitate review by most stakeholders. alternative standards through MY 2023. indirect benefits (or costs) to the remainder of the U.S. economy that Today’s analysis presents results for Additionally, today’s analysis individual model years in two different includes impacts on new vehicle sales stem from the proposal’s effects on the ways. The first way is similar to past volumes and the use (i.e., survival) of behavior of vehicle manufacturers, rulemakings and shows how vehicles of all model years, such that buyers, and users. In this accounting manufacturers could respond in each standards introduced in a model year framework, changes in fuel use and model year under the proposed produce impacts attributable to vehicles safety impacts resulting from the standards and each alternative covering having been in operation for some time. proposal’s effects on the number of used MYs 2021/2–2026. The second, For example, as modeled here, vehicles in use represent an important expanding on the information provided standards for MY 2021 will impact the component of its private benefits and in past rulemakings, evaluates prices of new vehicles starting in MY costs, despite the fact that previous incremental impacts of new standards 2017, and those price impacts will affect analyses have failed to recognize these proposed for each model year, in turn. the survival of all vehicles still in effects. The agency’s presentation of In past rulemaking analyses, NHTSA operation in calendar years 2017 and private costs and benefits from its modeled year-by-year impacts under the beyond (e.g., MY 2021 standards impact proposed action clearly distinguishes aggregation of standards applied in all the operation of MY 2007 vehicles in between those that would be model years, and EPA modeled calendar year 2027). Therefore, while experienced by owners and users of cars manufacturers’ hypothetical compliance past rulemaking analyses focused and light trucks produced during with a single model years’ standards in largely on impacts over the useful lives previous model years and those that that model year. Especially considering of the explicitly modeled fleets, much of would be experienced by buyers and multiyear planning effects, neither today’s analysis considers all model users of cars and light trucks produced approach provides a clear basis to years through 2029, as operated, during the model years it would affect. attribute impacts to specific standards throughout those vehicles’ useful lives. Moreover, it clearly separates these into first introduced in each of a series of For some impacts, such as on benefits related to fuel consumption and model years. For example, of the technology penetration rates, average those related to safety consequences of technology manufacturers applied in vehicle prices, and average vehicle vehicle use. This is more meaningful MY 2016, some would have been ownership costs, the focus was on the and informative than simply identifying applied even under the MY 2014 useful life of the MY 2030 fleet, as the all impacts other than changes in fuel standards, and some were likely applied simulation of manufacturers’ technology savings to buyers of new vehicles as to position manufacturers toward application and credit use (when ‘‘co-benefits.’’ compliance with (including credit included in the analysis) continues to For the social perspective, the banking to be used toward) MY 2018 evolve after model year 2026, stabilizing following effects for model years standards. Therefore, of the impacts by model year 2030. through 2029 as operated throughout attributable to the model year 2016 fleet, Effects were evaluated from four those vehicles’ useful lives are only a portion can be properly perspectives: The social perspective, the summarized: attributed to the MY 2016 standards, manufacturer perspective, the private • Technology Costs: Incremental cost, as and the impacts of the MY 2016 perspective, and the physical expected to be paid by vehicle purchasers, of

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fuel-saving technology beyond that added non-fatal crash costs, and additional averages of CO2 requirements under no- under the no-action alternative. congestion and noise costs. action and indicated alternatives. • Welfare Loss: Loss of value to vehicle • Total Benefits: Sum of pretax fuel • Average Achieved CO2: Average of owners resulting from incremental increases savings, mobility benefits, refueling benefits, manufacturers’ CO2 emission rates for in the numbers of strong and plug-in hybrid Benefits Offsetting Rebound Fatality Costs, indicated fleet(s) and model year(s). Benefits Offsetting Rebound Non-Fatal Crash electric vehicles (strong HEVs or SHEVs, and For the private perspective, the PHEVs) and/or battery electric vehicles Costs, energy security benefits, and benefits following effects for the MY 2030 fleet (BEVs), beyond increases occurring under the from reducing emissions of CO2, other GHGs, no-action alternative. The loss of value is a and criteria pollutants. are summarized: • function of the factors that lead to different Net Benefits: Total benefits minus total • Average Price Increase: Average increase valuations for conventional and electric costs. in vehicle price, relative to the average • versions of similar-size vehicles (e.g., Retrievable Electrificaiton Costs: The occurring under the no-action alternative. differences in: travel range, recharging time portion of HEV, PHEV, and BEV technology • Welfare Loss (Costs): Average loss of versus refueling time, performance, and costs which can be passed onto consumers, value to vehicle owners resulting from comfort). using the willingness to pay analysis incremental increases in the numbers of • Pre-tax Fuel Savings: Incremental described above. • strong HEVs, PHEVs) and/or BEVs, beyond savings, beyond those achieved under the no- Electrification Tax Credits: Estimates of increases occurring under the no-action action alternative, in outlays for fuel the portion of HEV, PHEV, and BEV alternative. The loss of value is a function of purchases, setting aside fuel taxes. technology costs which are covered by the factors that lead to different valuations • Mobility Benefit: Value of incremental federal or state tax incentives. • for conventional and electric versions of travel, beyond that occurring under the no- Irretreivable Electrification Costs: The similar-size vehicles (e.g., differences in: action alternative. portion of HEV, PHEV, and BEV technology Travel range, recharging time versus • Refueling Benefit: Value of incremental costs OEM’s must either absorb as a profit refueling time, performance, and comfort). reduction, compared to the no-action loss, or cross-subsidize with the prices of • Ownership Costs: Average increase in alternative, of time spent refueling vehicles. internal combustion engine (ICE) vehicles. some other costs of vehicle ownership (taxes, • Total Electrification Costs: Total • Non-Rebound Fatality Costs: Social fees, financing), beyond increase occurring incremental technology costs attributable to value of additional fatalities, beyond those under no-action alternative. HEV, PHEV, or BEV vehicles. occurring under the no-action alternative, • Fuel Savings: Average of fuel outlays setting aside any additional travel For the manufacturer perspective, the (including taxes) avoided over a vehicles’ attributable to the rebound effect. following effects for the aggregation of expected useful lives, compared to outlays • Rebound Fatality Costs: Social value of model years 2017–2029 are occurring under no-action alternative. • additional fatalities attributable to the summarized: Mobility Benefit: Average incremental rebound effect, beyond those occurring under value of additional travel over average the no-action alternative. • Average Required Fuel Economy: vehicles’ useful lives, compared to travel • Benefits Offsetting Rebound Fatality Average of manufacturers’ CAFE occurring under no-action alternative. Costs: Assumed further value, offsetting requirements for indicated fleet(s) and model • Refueling Benefit: Average incremental rebound fatality costs, of additional travel year(s). value of avoided time spent refueling over • attributed to the rebound effect. Percent Change in Stringency from average vehicles’ useful lives, compared to • Non-Rebound Non-Fatal Crash Costs: Baseline: Percentage difference between time spent refueling under no-action Social value of additional crash-related losses averages of fuel economy requirements under alternative. (other than fatalities), beyond those occurring no-action and indicated alternatives. • Total Costs: Sum of average price • under the no-action alternative, setting aside Average Required Fuel Economy: increase, welfare loss, and ownership costs. any additional travel attributable to the Industry-wide average of fuel economy levels • Total Benefits: Sum of fuel savings, rebound effect. achieved by indicated fleet(s) in indicated mobility benefit, and refueling benefit. • model year(s). • Net Benefits: Total benefits minus total Rebound Non-Fatal Crash Costs: Social • value of additional crash-related losses (other Percent Change in Stringency from costs. than fatalities) attributable to the rebound Baseline: Percentage difference between averages of fuel economy levels achieved For the physical perspective, the effect, beyond those occurring under the no- under no-action and indicated alternatives. following effects for model years action alternative. • Total Technology Costs ($b): Cost of fuel- • Benefits Offsetting Rebound Non-Fatal through 2029 as operated throughout saving technology beyond that applied under Crash Costs: Assumed further value, those vehicles’ useful lives are no-action alternative. summarized: offsetting rebound non-fatal crash costs, of • Total Civil Penalties ($b): Cost of civil additional travel attributed to the rebound penalties (for the CAFE program) beyond • Greenhouse gases include carbon effect. those levied under no-action alternative. dioxide (CO2), methane (CH4), and nitrous • Additional Congestion and Noise (Costs): • Total Regulatory Costs ($b): Sum of oxide (N2O), and values are reported Value of additional congestion and noise technology costs and civil penalties. separately for vehicles (tailpipe) and resulting from incremental travel, beyond • Sales Change (millions): Change in upstream processes (combining fuel that occurring under the no-action number of vehicles produced for sale in U.S., production, distribution, and delivery) and alternative. relative to the number estimated to be shown as reductions relative to the no-action • Energy Security Benefit: Value of produced under the no-action alternative. alternative. avoided economic exposure to petroleum • Revenue Change ($b): Change in total • Criteria pollutants include carbon price ‘‘shocks,’’ the avoided exposure revenues from vehicle sales, relative to total monoxide (CO), volatile organic compounds resulting from incremental reduction of fuel revenues occurring under the no-action (VOC), nitrogen oxides (NOX), sulfur dioxide consumption beyond that occurring under alternative. (SO2) and particulate matter (PM), and values the no-action alternative. • Curb Weight Reduction: Reduction of are shown as reductions relative to the no- • Avoided CO2 Damages (Benefits): Social average curb weight, relative to MY 2016. action alternative. value of incremental reduction of CO2 • Technology Penetration Rates: MY 2030 • Fuel consumption aggregates all fuels, emissions, compared to emissions occurring average technology penetration rate for with electricity, hydrogen, and compressed under the no-action alternative. indicated ten technologies (three engine natural gas (CNG) included on a gasoline- • Other Avoided Pollutant Damages technologies, advanced transmissions, and equivalent-gallon (GEG) basis, and values are (Benefits): Social value of incremental six degrees of electrification). shown as reductions relative to the no-action reduction of criteria pollutant emissions, • Average Required CO2: Average of alternative. compared to emissions occurring under the manufacturers’ CO2 requirements for • VMT, with rebound (billion miles): no-action alternative. indicated fleet(s) and model year(s). Increase in highway travel (as vehicle miles • Total Costs: Sum of incremental • Percent Change in Stringency from traveled), relative to the no-action alternative, technology costs, welfare loss, fatality costs, Baseline: Percentage difference between and including the rebound effect.

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• VMT, without rebound (billion miles): CAFE rulemakings, NEPA does not adopted all such provisions. For Increase in highway travel (as vehicle miles require EPA to do so for EPA example, EPA has not adopted the traveled), relative to the no-action alternative, rulemakings. CO2 standards for each EPCA/EISA provisions limiting transfers and excluding the rebound effect. regulatory alternative being harmonized between regulated fleet or requiring • Fatalities, with rebound: Increase in highway fatalities, relative to the no-action as practical with corresponding CAFE separate compliance by domestic and alternative, and including the rebound effect. standards, environmental impacts of imported passenger car fleets. Such • Fatalities, without rebound: Increase in GHG standards should be directionally differences introduce differences highway fatalities, relative to the no-action identical and similar in magnitude to between impacts estimated under CAFE alternative, and excluding the rebound effect. those of CAFE standards. Nevertheless, standards and under CO2 standards. • Fuel Consumption, with rebound (billion in this section, following the series of Also, as mentioned above, Congress has gallons): Reduction of fuel consumption, tables below, today’s announcement required that new CAFE standards be relative to the no-action alternative, and provides a more detailed analysis of considered in a manner that sets aside including the rebound effect. estimated impacts of the proposed the potential use of CAFE credits and • Fuel Consumption, without rebound (billion gallons): Reduction of fuel CAFE and CO2 standards. Results the potential additional application of consumption, relative to the no-action presented herein for the CAFE standards alternative fuel vehicles (such as electric alternative, and excluding the rebound effect. differ slightly from those presented in vehicles) during the model years under the DEIS; while, as discussed above, consideration. Congress has provided no Below, this section tabulates results EPCA/EISA requires that the Secretary corresponding direction regarding the for each of these four perspectives and determine the maximum feasible levels analysis of potential CO standards, and does so separately for the proposed 2 of CAFE standards in manner that, as today’s analysis does consider these CAFE and CO2 standards. More detailed presented here, sets aside the potential potential responses to CO2 standards. results are presented in the Preliminary use of CAFE credits or application of As mentioned above, analysis was Regulatory Impact Analysis (PRIA) alternative fuels toward compliance conducted to examine the sensitivity of accompanying today’s notice, and with new standards, NEPA does not results to changes in key inputs. additional and more detailed analysis of impose such constraints on analysis Following the detailed consideration of environmental impacts for CAFE presented in corresponding DEISs, and potential environmental impacts, this regulatory alternatives is provided in the DEIS presents results of an section concludes with a tabular the corresponding Draft Environmental ‘‘unconstrained’’ analysis that considers summary of results of this sensitivity Impact Statement (DEIS). Underlying manufacturers’ potential application of analysis. CAFE model output files are available alternative fuels and use of CAFE B. Impacts of Proposed Standards on (along with input files, model, source credits. Requirements, Performance, and Costs code, and documentation) on NHTSA’s In terms of all estimated impacts, 594 to Manufacturers in Specific Model website. Summarizing and tabulating including estimated costs and benefits, Years results for presentation here involved results of today’s analysis are different considerable ‘‘off model’’ calculations for CAFE and CO2 standards. As mentioned above, impacts are (e.g., to combine results for selected Differences arise because, even when presented from two different model years and calendar years, and to the mathematical functions defining perspectives for today’s proposal. From combine various components of social fuel economy and CO2 targets are either perspective, overall impacts are and private costs and benefits); tools ‘‘harmonized,’’ surrounding regulatory the same. The first perspective, Volpe Center staff used to perform these provisions may not be. For example, following the approach taken by calculations are also available on NHTSA in past CAFE rulemakings, 595 while both CAFE and CO2 standards NHTSA’s website. allow credits to be transferred between examines impacts of the overall While the National Environmental fleets and traded between proposal—i.e., the entire series of year- Policy Act (NEPA) requires NHTSA to manufacturers, EPCA/EISA places by-year standards—on each model year. prepare an EIS documenting estimating explicit and specific limits on the use of This perspective is especially relevant environmental impacts of the regulatory such credits, such as by requiring that to understanding how the overall alternatives under consideration in each domestic passenger car fleet meet proposal may impact manufacturers in a minimum CAFE standard (as terms of year-by-year compliance, 594 Compliance and Effects Modeling System, National Highway Traffic Safety Administration, discussed above). The CAA provides no technology pathways, and costs. The https://www.nhtsa.gov/corporate-average-fuel- specific direction regarding CO2 second, presented below in Section economy/compliance-and-effects-modeling-system standards, and while EPA has adopted VII.C, provides a clearer (last visited June 25, 2018). many regulatory provisions harmonized characterization of the incremental 595 These tools, available at the same location, are impacts attributable to standards scripts executed using R, a free software with specific EPCA/EISA provisions environment for statistical computing. R is available (e.g., separate standards for passenger introduced in each successive model through https://www.r-project.org/. cars and light trucks), EPA has not year.

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VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00276 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.167 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43261 II 8.2 3.4 3.4 2.8 -1.2 -1.5 -5.2 17.0 80.7 87.0 33.9 92.9 -62.3 -62.7 -27.6 -10.5 -67.7 Sum I 7.7 0.4 0.4 0.3 0.9 3.8 9.3 -0.2 -6.0 -0.2 -0.7 -6.7 -3.2 -7.0 2029 I 7.8 0.4 0.4 0.3 0.9 9.5 9.3 3.9 -0.2 -6.1 -0.2 -0.7 -3.2 -6.8 -1.2 -1.2 -7.2 Standards 2028 I 1.0 1.8 1.8 1.8 8.0 0.4 0.4 0.3 9.4 9.4 9.6 -0.2 -0.2 -0.7 -3.2 -6.8 -7.3 -6.3 -1.3 CAFE 2027 I 1.0 1.8 0.4 0.4 0.3 3.8 3.9 9.5 9.7 8.1 -0.2 -6.4 -0.2 -0.7 -7.0 -7.4 2026 Proposed I 0.4 0.4 0.9 0.3 7.7 3.9 9.8 8.3 and -0.2 -0.2 -3.2 -3.2 -0.7 -1.3 -1.3 -7.6 2025 I 1.9 1.9 8.6 8.5 0.3 0.3 0.9 0.3 7.2 3.9 -0.1 -6.8 -6.6 -0.2 -0.7 -3.3 -1.3 Baseline 2024 I 1.7 8.4 0.3 0.3 0.8 0.2 3.8 under -1.1 -0.1 -6.6 -0.1 -0.5 -3.2 -6.3 -6.3 -5.2 -5.2 -5.7 2023 I 1.5 8.6 8.4 8.1 0.3 0.3 0.7 0.2 2.8 -0.1 -6.8 -0.1 -0.4 -2.3 -4.7 -5.9 -1.0 2022 2017-2029 I 1.2 1.7 7.5 0.0 7.8 0.0 0.2 0.2 0.5 0.2 6.2 6.6 7.2 -6.1 -0.2 -1.4 -4.5 -5.2 -0.6 MYs 2021 I in 0.0 0.6 0.0 0.2 0.2 0.3 0.1 5.0 0.8 5.3 -3.6 -0.4 -0.1 -3.1 -0.1 ($b) 2020 I 1.2 Costs 0.0 0.4 0.0 0.0 0.1 0.2 0.2 0.1 0.7 0.0 5.1 5.1 4.2 -0.7 -0.4 -3.7 -3.6 -2.7 2019 I 0.0 0.0 0.0 0.0 2.7 0.4 0.5 0.1 0.1 0.1 0.1 0.6 3.3 -0.2 -0.4 -2.3 -1.5 2018 I Regulatory l.l 0.7 0.0 0.0 0.3 0.0 0.2 0.1 0.1 0.1 0.0 0.0 0.3 0.0 -0.2 -0.6 -0.3 2017 I under under under under under under under under under under under under under under under under under Undiscounted Costs Costs Chg. Costs Chg. Costs Chg. Costs Chg. Costs Chg. Costs Costs Chg. Chg. Costs Chg. Proposal Proposal Baseline Baseline Proposal Baseline Proposal Baseline Baseline Proposal Baseline Proposal Baseline Proposal Baseline Proposal Baseline I VII-3- Table Motors Motors Chrysler Chrysler Manufacturer Fiat Ford Daimler Daimler Kia Ford BMW BMW Fiat Kia JLR General General Hyundai Honda Hyundai Honda II

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00277 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.168 43262 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 0.0 0.0 0.6 9.9 -8.7 -5.9 -1.0 -0.3 18.9 11.0 30.0 58.4 -34.2 -20.2 458.2 -319.1 1.1 1.0 2.7 0.1 0.0 0.0 0.0 5.9 2.0 -1.0 -0.6 -2.0 -0.1 46.7 1.2 1.0 2.8 0.1 0.0 0.0 0.0 5.8 2.0 -1.0 -1.2 -1.2 -9.9 -0.6 -2.0 -0.1 47.3 -34.3 -33.8 1.2 1.0 2.8 0.1 0.0 0.0 0.0 5.8 2.0 -1.2 -0.6 -0.1 -3.6 -3.6 -3.6 47.7 1.0 2.9 0.1 0.0 0.0 0.0 -0.6 -2.1 -2.1 -0.1 1.2 1.2 1.0 0.1 0.0 0.0 0.0 3.0 5.9 5.9 2.1 2.1 -1.1 -1.1 -1.1 -1.2 -1.2 -0.6 -3.7 -3.7 -2.2 -0.1 46.9 48.2 1.1 1.3 1.9 2.9 0.1 0.0 0.0 0.0 5.8 -1.0 -0.1 -1.2 -0.7 -3.6 -2.1 45.0 -32.6 -34.6 -35.2 -34.7 1.1 1.3 1.7 0.1 0.0 0.0 0.0 5.3 -1.7 -0.1 -1.2 -0.8 -0.7 -3.2 43.1 -30.8 1.1 1.6 2.3 2.5 0.0 0.0 0.0 0.0 0.5 5.4 -0.8 -0.1 -0.4 -0.7 -3.2 -1.4 40.0 -27.9 1.5 1.0 2.0 0.0 0.0 0.0 0.0 0.0 OJ 5.4 -0.2 -0.7 -0.5 -1.2 35.7 -24.0 1.0 2.0 0.3 0.0 0.0 0.0 0.0 0.0 0.6 3.7 -1.1 -0.2 -0.3 -0.2 -1.8 -3.2 25.0 -14.5 1.6 2.0 0.1 0.5 0.3 0.0 0.0 0.0 0.0 0.0 0.0 -0.2 -9.5 -0.7 -1.0 -0.1 16.8 1.5 1.4 0.0 0.0 0.1 0.3 0.2 0.0 0.0 0.0 0.0 0.0 -0.1 -0.4 -0.9 -5.8 11.4 0.0 0.0 0.0 0.2 0.0 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.9 4.3 -0.5 -1.6 under under under under under under under under under under under under under under under under under Chg. Costs Chg. Chg. Costs Chg. Costs Chg. Costs Costs Chg. Costs Chg. Costs Chg. Costs Chg. Proposal Baseline Proposal Baseline Proposal Baseline Proposal Baseline Proposal Baseline Proposal Baseline Proposal Baseline Proposal Baseline Proposal am Sub Subam Mazda Mazda JLR Tesla Tesla Toyota Toyota VWA VWA Volvo Volvo Ave.!Total Ave.!Total Nissan/Mitsubishi Nissan/Mitsubishi

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00278 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.169 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43263 00 900 -900 -500 -5 1,250 1,950 1,000 3,300 3,350 2,250 4)00 2029 -1,600 -2,600 -2,950 -2,500 900 -900 -500 -500 1,250 1,000 2,300 4,150 2,000 3,400 3,450 2028 -1,650 -2,650 -3,000 -2,600 900 -900 -500 -500 1,250 1,000 3,500 3,500 2,350 4,150 2,000 2027 -1,650 -2,750 -3,050 -2,650 Standard 950 -900 -500 -500 1,300 1,050 1,950 3,550 3,550 2,350 4,250 2026 -1,650 -2,800 -3,100 -2,700 CAFE d 00 950 -900 -550 -5 1,250 1,050 3,650 3,450 3,600 2,400 2,000 2025 -1,650 -2,900 -2,550 -2,750 dP 850 950 -850 -400 -400 1,200 3,750 3,200 3,100 2,400 2,000 2024 -1,700 -3,000 -2,350 -2,300 700 850 -650 -300 -300 Baser 1,000 1,950 3,650 3,200 3,050 2,100 2023 -1,650 -2,900 -2,300 -2,300 under 900 750 600 -550 -200 -200 1,950 1,450 3,750 2,950 2,950 2022 -1,200 -2,950 -2,100 -2,150 00 650 600 900 500 ,900 -300 -700 -I -100 1,500 3,400 2,800 2,700 2017-2029 2021 -2,650 -2,000 -I 0 0 MYs 150 700 350 500 400 400 -100 -200 in 1,850 2,300 2,300 2020 -1,600 -1,600 -I, ' ' ($) 0 0 -50 500 550 350 250 450 400 ,000 -200 -300 1,550 2,300 2019 -I -1,700 T 0 0 0 150 200 350 450 250 250 -200 -100 -550 1,000 1,550 2018 -1,050 Price 0 0 0 0 00 50 100 100 150 350 550 250 200 -150 -I -300 2017 - A under under under under under under under under under under under under under under under VTT-4 Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Chg. Chg. Chg. Chg. Chg. Chg. Chg. Costs Costs Costs Costs Costs Costs Costs Costs Table Chrysler Chrysler Manufacturer Kia Ford Ford Daimler Daimler Motors Motors General Fiat BMW BMW Fiat General Hyundai Hyundai Honda Honda

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VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00282 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.173 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43267 I 0% 0% 0% 0% 0% 3610 3670 2o29 I -e:- 0% 0% 0% 0% 0% -- 2o28 3610 3670 . I A a!. 0% 0% 0% 0% 0% 3620 3670 2021 I ---- Industrv 0% 0% 0% 0% 0% 63% 63% 64% 64% 51% 51% 51% 51% 3620 3670 2o26 - I 0% 0% 0% 0% 0% 22% 24% 24% 24% 24% 3640 3690 2o25 I Standards 0% 0% 0% 0% 0% 6% 6% 6% 6% 6% 6% 3650 3690 2o24 I CAFE 0% 0% 0% 0% 0% 5% 79% 77% 73% 71% 71% 72% 72% 2o23 3660 3700 d I - t: 1% 1% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% - 13% 16% 18% 32% 34% 34% 32% 32% 32% 32% 32% 44% 46% 47% 48% 25% 25% 26% 26% 26% 26% 26% 26% 3670 3710 2022 I dP 0% 0% 0% 0% 0% 5% 5% 11% 16% 17% 17% 17% 17% 17% 17% 17% 17% 83% 81% 92% 92% 93% 93% 93% 93% 93% 93% 93% 54% 57% 59% 59% 59% 23% 2021 3690 3720 I 1% 1% 0% 0% 0% 0% 7% 0% 4% 86% 82% 21% 29% 3720 3740 2020 I Basel' 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 3% 4% der 14% 14% 18% 12% 14% 41% 46% 2o19 3760 3770 I 0% 0% 0% 0% 0% 0% 0% 9% 10% 10% 31% 32% 36% 39% 66% 75% 38% 65% 73% 2o18 3790 3800 I 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 3% 3% 6% 6% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 12% 12% 13% 14% 13% 15% 16% 16% 15% 14% 14% 14% 14% 13% 13% 13% 13% 13% 13% 13% 13% 14% 14% 14% 14% 14% 48% 25% 27% 48% 3820 3820 2011 Penetraf I C!ll - Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal I Technol s s Engines Engines (lb.) (lb.) VII-6- EV EV Vehicles Vehicles Deac Deac Engines Engines NA NA Systems Systems HEVs HEVs HEVs HEVs SI SI CR CR Transmission Transmission Weight Weight Technology Table Cell Cell SS SS 12V 12V Strong Strong Curb Curb Dedicated Dedicated Fuel Fuel Plug-In Plug-In Dynamic Dynamic MildHEVs MildHEVs Turbo Turbo Adv. Adv. High High II

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00283 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.174 43268 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3680 3670 2o29 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2o28 3680 3670 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3690 3680 2021 -BMW I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 91% 91% 91% 91% 91% 91% 91% 91% 3690 3680 2o26 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Standards 3690 3680 2o25 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% CAFE 91% 91% 91% 91% 3690 3680 2o24 d I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 90% 90% -.-- 2o23 3690 3680 I dP 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 90% 90% 3710 3710 2022 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 90% 90% 2021 3730 3730 I Basel' 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 90% 90% 3730 3730 2020 der I 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2o19 3750 3750 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 82% 82% 82% 82% 2o18 3820 3820 I Penetraf 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 2% 2% 2% -~.:: 80% 80% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 3830 3830 2011 I Technol - Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal I VII-7 s s Engines Engines (lb.) (lb.) Table EV EV Vehicles Vehicles Deac Deac Engines Engines NA NA Systems Systems HEVs HEVs HEVs HEVs SI SI CR CR Transmission Transmission Weight Weight Technology Cell Cell SS SS 12V 12V Strong Strong Curb Curb Dedicated Dedicated Fuel Fuel Plug-In Dynamic Dynamic MildHEVs MildHEVs Plug-In Turbo Turbo Adv. Adv. High High II

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00284 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.175 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43269 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3980 3960 2o29 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2o28 3980 3960 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3980 3960 2021 Daiml I - 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3970 3960 2o26 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Standards 3980 3970 2o25 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3980 3970 2o24 CAFE I d 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2o23 3980 3970 -.-- I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% dP 84% 85% 85% 85% 85% 85% 85% 85% 3990 3990 2022 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 83% 84% 85% 85% 85% 85% 85% 85% 85% 83% 2021 4040 4040 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 74% 74% 4060 4060 2020 der Baser I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 98% 98% 98% 98% 98% 98% 98% 98% 98% 98% 98% 98% 98% 98% 98% 98% 98% 98% 98% 98% 98% 98% 59% 59% 2o19 4060 4060 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2o18 4130 4130 I Penetraf 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 13% 13% 13% 13% 85% 85% 85% 85% 83% 82% 83% 83% 82% 83% 83% 83% 83% 83% 83% 82% 83% 82% 83% 82% 83% 82% 83% 82% 83% 82% 83% 82% 83% 83% 4130 4130 2011 -~.:: I Technol Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal - I VII-8 s s Engines Engines (lb.) (lb.) Table EV EV Vehicles Vehicles Deac Deac Engines Engines NA NA Systems Systems HEVs HEVs HEVs HEVs SI SI CR CR Transmission Transmission Weight Weight Technology Cell Cell SS SS 12V 12V Strong Strong Curb Curb Fuel Fuel Dedicated Dedicated Plug-In Dynamic Dynamic MildHEVs MildHEVs Plug-In Turbo Turbo Adv. Adv. High High II

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00285 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.176 43270 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 0% 0% 0% 0% 0% 0% 0% 0% 0% 3860 3960 2029 I I I 0% 0% 0% 0% 0% 0% 0% 0% 0% 61% 61% 2028 3870 3960 I I I Chrysler 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 2% 2% 15% 15% 15% 14% 14% 14% 81% 82% 82% 95% 95% 95% 60% 53% 52% 52% 43% 44% 44% 43% 44% 44% 3910 3980 2027 I I I I I I I I I I I I I I I I I I I I I I I Fiat - 0% 0% 0% 0% 0% 0% 0% 0% 0% 80% 59% 53% 43% 43% 3910 3980 2026 I I I 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 5% 2% 2% 15% 15% 14% 14% 95% 95% 39% 37% 52% 59% 40% 3950 4010 2025 I I I I I I I I I I I I I I I I I I I I I I I Standards 0% 0% 0% 0% 0% 0% 0% 0% 10% 40% 29% 3960 4010 2024 I I I CAFE 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 2% 2% 15% 15% 10% 12% 12% 95% 95% 66% 66% 37% 37% 30% 52% 52% 40% 2023 3960 4010 I I I I I I I I I I I I I I I I I I I I I I I 0% 0% 0% 0% 0% 0% 0% 0% 2% 11% 23% Proposed 3980 4020 2022 I I I and 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 17% 79% 73% 2021 3990 4030 I I I 8% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 11% 11% 13% 15% 15% 12% 12% 12% 84% 91% 95% 94% 32% 36% 36% 37% 37% 37% 42% 48% 48% Baseline 4010 4050 2020 I I I I I I I I I I I I I I I I I I I I I I 8% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 13% 11%1 78% 37% 43% under 2019 4030 4070 I I I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 4% 13% 13% 12% 82% 85% 85% 32% 32% 40% 23% 2018 4120 4140 I I I I I I I I I I I I I I I I I I I I I I I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3% 4% Penetration 16% 16% 12% 12% 64% 62% 4170 4170 2017 I Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal I Technology - VII-9 s s Engines Engines (lb.) (lb.) EV EV Vehicles Vehicles Deac Deac Engines Engines NA NA Systems Systems HEVs HEVs Table HEVs HEVs SI SI CR CR Transmission Transmission Weight Weight Technology Cell Cell SS SS 12V 12V Strong Strong Curb Curb Dynamic MildHEVs Dynamic Plug-In MildHEVs Plug-In Dedicated Dedicated Fuel Fuel Turbo Turbo Adv. Adv. High High

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00286 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.177 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43271 I 0% 0% 0% 0% 0% 0% 0% 0% 3870 3870 2o29 I 0% 0% 0% 0% 0% 0% 0% 0% 2o2s 3870 3870 I 0% 0% 0% 0% 0% 0% 0% 0% -Ford 3870 3870 2o27 I 0% 0% 0% 0% 0% 0% 0% 0% 3880 3890 2o26 I Standards 0% 0% 0% 0% 0% 0% 0% 0% 3880 3900 2o25 I CAFE 0% 0% 0% 0% 0% 0% 0% 0% 64% 64% 64% 64% 64% 64% 32% 32% 32% 32% 32% 32% 56% 56% 56% 57% 57% 57% d 3890 3900 2o24 I -.-- 0% 0% 0% 0% 0% 0% 0% 2% 2o23 3890 3910 I dP 0% 0% 0% 0% 0% 0% 0% 94% 95% 96% 97% 97% 97% 97% 97% 63% 63% 58% 59% 3890 3910 2022 I 0% 0% 0% 0% 0% 0% 0% 2% 2% 89% 63% 59% 24% 29% 29% 2021 3910 3930 I Basel' 0% 0% 0% 0% 0% 0% 0% 9% der 13% 81% 85% 85% 86% 86% 86% 86% 86% 86% 86% 76% 70% 67% 68% 68% 68% 68% 68% 68% 68% 68% 68% 41% 3920 3940 2020 I 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 2% 11% 10% 55% 54% 47% 2o19 4040 4040 I 0% 0% 0% 0% 0% 0% 0% 3% 10% 2o1s 4040 4040 Penetraf I -~.:: 1% 1% 1% 1% 8% 8% 8% 8% 8% 8% 8% 8% 8% 8% 8% 8% 8% 8% 0% 0% 0% 0% 0% 0% 0% 0% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 41% 47% 47% 46% 48% 46% 46% 41% 47% 4040 4040 2o17 I Technol Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal I VII-10- s s Engines Engines (lb.) (lb.) Table EV EV Vehicles Vehicles Deac Deac Engines Engines NA NA Systems Systems HEVs HEVs HEVs HEVs SI SI CR CR Transmission Transmission Weight Weight Technology Cell Cell SS SS 12V 12V Strong Strong Curb Curb Dynamic Dynamic Dedicated MildHEVs MildHEVs Plug-In Plug-In Dedicated Fuel Fuel Turbo Turbo Adv. Adv. High High II

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00287 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.178 43272 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 70% 4000 4070 2029 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 70% 2028 4000 4070 Mot I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 70% 62% 62% 62% 4000 4070 2027 . - 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% - G 70% 32% 32% 32% 32% 4000 4070 2026 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 70% 64% 64% 65% 66% 66% 61% 62% 32% 66% 66% 66% 66% 66% 4020 4100 2025 Standards 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 82% 50% 4040 4110 2024 - CAFE 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 5% d 13% 14% 81% 81% 50% 2023 4060 4120 1% 1% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 6% 10% 87% 84% 22% 22% 24% 27% 28% 28% 28% 28% 4060 4130 2022 dP 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 5% 10% 95% 95% 95% 95% 95% 95% 95% 97% 97% 91% 72% 77% 67% 69% 69% 69% 22% 2021 4070 4130 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 83% 82% 41% 49% 49% 45% 4150 4190 2020 Basel' der 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 12% 13% 66% 66% 38% 52% 58% 2019 4170 4200 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 36% 36% 45% 45% 47% 25% 2018 4240 4250 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 6% 14% 14% 16% 17% 18% 16% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 27% 27% Penetraf 4290 4290 2017 .10~ Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Technol - s s Engines Engines (lb.) (lb.) VII-11 EV EV Vehicles Vehicles Deac Deac Engines Engines NA NA Systems Systems HEVs HEVs HEVs HEVs SI SI Table CR CR Transmission Transmission Weight Weight Technology Cell Cell SS SS 12V 12V Strong Strong Curb Curb Fuel Fuel Dynamic Dedicated Dedicated Dynamic Plug-In MildHEVs Plug-In MildHEVs Turbo Turbo Adv. Adv. High High

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00288 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.179 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43273 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3400 3270 2029 100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3400 3270 2028 100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Bond 3400 3280 2027 100% - 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3400 3300 2026 100% Standards 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 13% 13% 13% 13% 13% 76% 76% 76% 76% 76% 3400 3310 2025 100% - CAFE 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% d 55% 55% 55% 55% 55% 55% 3400 3310 2024 100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 13% 13% 76% 76% 49% 3400 3310 2023 100% dP 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3% 60% 99% 32% 3420 3360 2022 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 12% 83% 97% 97% 97% 97% 97% 97% 97% 97% 97% 21% 2021 3420 3400 der Basel' 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 62% 3420 3410 2020 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 21% 21% 2019 3420 3410 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Penetraf 18% 87% 87% 55% 58% 3430 3420 2018 :y 0~ . 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 6% 0% 0% 0% 0% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 75% 75% 29% 3450 3450 2017 Technol - Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal VII-12 s s Table Engines Engines (lb.) (lb.) EV EV Vehicles Vehicles Deac Deac Engines Engines NA NA Systems Systems HEVs HEVs HEVs HEVs SI SI CR CR Weight Transmission Weight Transmission Technology Cell Cell SS SS 12V 12V Strong Strong Curb Curb Fuel Fuel Dedicated Dedicated Turbo Dynamic Plug-In Dynamic Plug-In MildHEVs Turbo MildHEVs Adv. Adv. High High

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00289 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.180 43274 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3080 3140 2o29 I · 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2o28 3080 3140 I "- 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Hvund 3080 3140 2021 I - 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3080 3140 2o26 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Standards 23% 23% 23% 23% 23% 3080 3160 2o25 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 22% CAFE 3080 3160 2o24 I d 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2o23 3090 3160 -.-- I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% dP 13% 15% 82% 82% 82% 82% 82% 81% 81% 81% 3100 3160 2022 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 4% 82% 82% 82% 82% 82% 82% 82% 82% 82% 82% 82% 82% 82% 82% 82% 82% 82% 82% 55% 55% 58% 58% 58% 58% 59% 59% 59% 59% 2021 3100 3160 I Basel' 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 79% 3140 3160 2020 der I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 25% 25% 25% 25% 2o19 3150 3160 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 18% 18% 68% 79% 79% 68% 79% 2o18 3160 3160 I Penetraf 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 7% 7% 0% 0% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 12% 12% 12% 15% 12% 18% 15% 18% 18% 18% 18% 18% 18% 18% 18% 18% 18% 18% 18% 19% 18% 19% 18% 19% 18% 18% 53% 53% -~.:: 3160 3160 2011 I Technol Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline - Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal I VII-13 s s Engines Engines (lb.) (lb.) EV EV Table Vehicles Vehicles Deac Deac Engines Engines NA NA Systems Systems HEVs HEVs HEVs HEVs SI SI CR CR Transmission Transmission Weight Weight Technology Cell Cell SS SS 12V 12V Strong Strong Curb Curb Fuel Fuel Plug-In Dedicated Dedicated MildHEVs MildHEVs Plug-In Dynamic Dynamic Turbo Turbo Adv. Adv. High High II

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00290 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.181 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43275 1 0% 0% 0% 0% 0% 0% 0% 0% 6% 67% 3220 3270 20% 2o29 1 0% 0% 0% 0% 0% 0% 0% 0% 6% 67% 20% 2o28 3220 3270 1 K. - 0% 0% 93% 93% 93% 0% 0% 0% 0% 0% 0% 67% 3220 3270 53% 53% 53% 22% 22% 22% 20% 2021 1 93% 0% 0% 0% 0% 0% 0% 0% 0% 67% 53% 22% 3220 3270 2o26 1 Standards 1% 1% 1% 1% 1% 0% 0% 53% 0% 0% 93% 0% 0% 0% 0% 3220 3280 2o25 1 CAFE d 1% 89% 89% 89% 89% 89% 89% 0% 0% 0% 0% 0% 23% 23% 23% 23% 23% 23% 0% 0% 0% 6% 6% 6% 6% 3220 3280 22% 22% 2o24 1 13% 13% 93% 93% 0% 0% 0% 93% 0% 0% 0% 0% 0% 53% 53% 2% 2% 2% 2% 2% 2% 2% 21% 21% 21% 21% 2o23 3230 3280 1 dP 93% 0% 0% 76% 76% 76% 76% 76% 75% 75% 75% 0% 0% 0% 0% 0% 67% 67% 67% 67% 47% 2% 0% 3240 3280 2022 1 93% 0% 0% 93% 93% 0% 0% 0% 0% 0% 0% 76% 67% 21% 21% 23% 2021 3240 3280 Basel· 1 der 14% 0% 0% 67% 0% 0% 0% 37% 45% 67% 0% 0% 0% 0% 3290 3290 2020 1 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 53% 53% 2o19 3290 3290 2% 2% 2% 2% 2% 1 0% 0% 0% 0% 31% 31% 29% 0% 0% 0% 0% 0% 0% 3300 3300 31% 31% 29% 2o18 Penetraf 1 ogy 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 2% 2% 2% 2% 2% 3290 3290 2% 2% 2011 1 Technol Baseline Proposal Baseline Proposal Baseline Baseline Proposal Proposal Baseline Baseline Baseline Proposal Proposal Baseline Baseline Proposal Proposal Baseline Proposal Proposal Baseline Proposal I VII-14- s s Engines Engines (lb.) (lb.) Table EV EV Vehicles Vehicles Deac Deac Engines Engines NA NA Systems Systems HEVs HEVs HEVs HEVs SI SI CR CR Transmission Transmission Weight Weight Cell Cell SS SS 12V 12V Strong Strong Curb Curb Dynamic Dynamic MildHEVs Plug-In MildHEVs Dedicated Fuel Fuel Plug-In Dedicated Turbo Technology Turbo Adv. Adv. High High I

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00291 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.182 43276 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 4590 4590 2o29 100% 100% I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 4590 4590 2o28 100% 100% I R, 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 4590 4590 2021 100% 100% I /Land 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 4590 4590 2o26 g 100% 100% I J - 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 4590 4590 2o25 100% 100% I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 4610 4620 2o24 100% 100% Standards I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 89% 89% 89% 89% 89% 89% 89% 89% 89% 89% 89% 89% 89% 89% 87% 87% 87% 87% 87% 87% 87% 87% 87% 87% 87% 87% 87% 87% 4610 4610 2o23 100% 100% CAFE I d 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 89% 89% 87% 87% ~ 4650 4650 2022 100% 100% I dP 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 89% 89% 87% 4660 4660 2021 100% 100% I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 89% 89% 87% 87% 87% 4790 4790 2o2o 100% 100% I Basel· 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% der 89% 89% 87% 87% 4800 4800 2o19 100% 100% I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 4830 4830 2o18 100% 100% I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Penetrat· 89% 89% 89% 89% 87% 87% 87% 87% 4830 4830 2011 100% 100% I og~ Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Technol I - VII-15 s s Engines Engines (lb.) (lb.) chicles EV EV V Vehicles Deac Deac Engines Engines NA NA Table Systems Systems HEVs HEVs HEVs HEVs SI SI Technology CR CR Transmission Transmission Weight Weight HEVs Cell Cell SS SS 12V 12V Strong Strong Fuel Dedicated Curb Dedicated Curb Plug-In Plug-In Dynamic Mild Fuel Dynamic MildHEVs Turbo Turbo Adv. Adv. High High I

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00292 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.183 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43277 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 6% 5% 14% 94% 95% 94% 36% 58% 44% 2029 3230 3300 I I I I I I I I I I I I I I I I I I I I I I I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3230 3300 2028 I I I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2027 3220 3300 I I I Mazda 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 6% 6% 6% 5% 5% 5% 14% 14% 14% 94% 94% 95% 94% 95% 95% 94% 94% 94% 36% 36% 36% 58% 58% 58% 44% 44% 44% 3220 3300 2026 I I I I I I I I I I I I I I I I I I I I I I I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3220 3310 2025 Standards- I I I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 6% 6% 6% 6% 14% 14% 94% 94% 94% 94% 94% 94% 36% 36% 58% 58% 44% 44% 3220 3310 2024 I I I I I I I I I I I I I I I I I I I I I I I CAFE 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 60% 34% 44% 3220 3310 2023 I I I Proposed 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 6% 6% 6% 6% 14% 14% 94% 94% 94% 94% 94% 94% 94% 25% 2022 3270 3310 I I I I I I I I I I I I I I I I I I I I I I I and 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3290 3310 2021 I I I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 7% 7% Baseline 14% 14% 2020 3290 3310 I I I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 6% 6% 6% 6% 6% 6% under 94% 94% 94% 94% 94% 94% 93% 93% 93% 94% 93% 94% 3310 3310 2019 I I I I I I I I I I I I I I I I I I I I I I I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 82% 82% 2018 3310 3310 I I I Penetration 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 6% 6% 6% 6% 94% 94% 94% 94% 22% 22% 3300 3300 2017 I Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Technology I VII-16- Table s s Engines Engines (lb.) (lb.) EV EV Vehicles Vehicles Deac Deac Engines Engines NA NA Technology Systems Systems HEVs HEVs HEVs HEVs SI SI CR CR Weight Weight Transmission Transmission Cell Cell SS SS 12V 12V Strong Strong Curb Curb MildHEVs Dynamic Plug-In Plug-In Dynamic MildHEVs Dedicated Dedicated Fuel Fuel Turbo Turbo Adv. Adv. High High

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00293 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.184 43278 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules I 0% 0% 0% 0% 0% 0% 0% 0% 3240 3320 2o29 I 0% 0% 0% 0% 0% 0% 0% 0% 2o28 3240 3320 I Mitsubish' I 0% 0% 0% 0% 0% 0% 0% 0% 3250 3320 2021 I 0% 0% 0% 0% 0% 0% 0% 0% N' 86% 86% 86% 86% 3250 3320 2o26 - I 0% 0% 0% 0% 0% 0% 0% 0% 3250 3320 2o25 I Standards 0% 0% 0% 0% 0% 0% 0% 0% 81% 86% 3270 3330 2o24 I CAFE 0% 0% 0% 0% 0% 0% 0% 0% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 76% 2o23 3290 3330 d I 1% 1% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% -.-- 18% 18% 18% 18% 18% 18% 18% 18% 70% 3290 3330 2022 I dP 0% 0% 0% 0% 0% 0% 0% 0% 63% 2021 3310 3350 I 0% 0% 0% 0% 0% 0% 0% 0% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 16% 16% 91% 91% 94% 95% 95% 96% 96% 96% 96% 96% 35% 3340 3350 2020 I 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 5% 5% 5% 5% 5% 5% 5% 5% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 19% der Basel' 2o19 3390 3390 I 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 92% 92% 91% 91% 94% 95% 95% 96% 96% 96% 96% 96% 92% 92% 2o18 3410 3410 I 1% 1% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 4% 4% 4% 4% 2% 2% 86% 86% 3400 3400 2011 Penetraf I -~.:: Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal I Technol - s s Engines Engines (lb.) (lb.) VII-17 EV EV Vehicles Vehicles Deac Deac Engines Engines NA NA Systems Systems HEVs HEVs HEVs HEVs SI SI CR CR Transmission Transmission Weight Weight Technology Cell Cell SS SS Table 12V 12V Strong Strong Curb Curb Dedicated Fuel Dedicated Fuel Plug-In Dynamic Dynamic MildHEVs MildHEVs Plug-In Turbo Turbo Adv. Adv. High High II

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00294 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.185 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43279 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3190 3330 2o29 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2o28 3190 3330 I 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Sub 11% 11% 11% 3190 3330 2021 - I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 69% 69% 68% 68% 3190 3360 2o26 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Standards 11% 11% 3210 3370 2o25 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 9% 9% 9% 9% 9% 9% CAFE 10% 3210 3370 2o24 d I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 10% -.-- 2o23 3210 3370 I dP 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 9% 9% 10% 3210 3370 2022 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 10% 59% 59% 59% 59% 59% 2021 3280 3390 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 9% 9% 10% 11% 12% 12% 12% 11% 11% 11% 11% 11% 11% 81% 81% 81% 81% 81% 81% 81% 81% 81% 81% 3440 3440 2020 der Basel' I 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 91% 2o19 3440 3440 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 9% 9% 2o18 3440 3440 I Penetraf 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% -~.:: 10% 91% 92% 91% 92% 92% 92% 92% 92% 92% 92% 92% 92% 92% 91% 92% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 3440 3440 2011 I Technol - Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal I VII-18 s s Engines Engines (lb.) (lb.) EV EV Table Vehicles Vehicles Deac Deac Engines Engines NA NA Systems Systems HEVs HEVs HEVs HEVs SI SI CR CR Transmission Transmission Weight Weight Technology Cell Cell SS SS 12V 12V Strong Strong Curb Curb Fuel Fuel Dedicated Dedicated Dynamic Dynamic Plug-In MildHEVs MildHEVs Plug-In Turbo Turbo Adv. Adv. High High II

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00295 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.186 43280 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3520 3530 2o29 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2o28 3530 3530 I -.::- 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Tovot 79% 79% 79% 3530 3530 2021 - I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 16% 16% 16% 16% 80% 99% 99% 99% 99% 28% 29% 29% 29% 3520 3530 2o26 I Standards 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 16% 80% 99% 28% 3550 3560 2o25 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% CAFE 80% 3570 3570 2o24 d I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% -.-- 2o23 3590 3590 I dP 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 31% 31% 31% 32% 32% 32% 33% 33% 3590 3590 2022 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 16% 17% 17% 17% 85% 86% 87% 97% 98% 99% 99% 29% 23% 24% 24% 24% 24% 24% 24% 24% 24% 21% 21% 21% 28% 2021 3590 3600 I Basel' 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 14% 13% 18% 84% 87% 62% 62% 63% 64% 63% 64% 65% 65% 65% 65% der 3630 3640 2020 I 8% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 6% 6% 6% 6% 6% 11% 19% 10% 10% 45% 45% 46% 46% 47% 47% 47% 47% 48% 48% 48% 48% 2o19 3690 3690 I 7% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 10% 10% 10% 34% 34% 61% 74% 62% 75% 2o18 3700 3700 I Penetraf 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3% 3% 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% -~.:: 38% 38% 21% 21% 3740 3740 2011 I Technol Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal I VII-19- Engines Engines (lb.) (lb.) s s Table Deac Deac EV EV Engines Engines NA NA Vehicles Vehicles Systems Systems HEVs HEVs SI SI CR CR Weight Weight Technology Transmission Transmission Cell Cell SS SS 12V 12V StrongHEVs StrongHEVs Curb Curb Adv. Adv. Dynamic Dynamic Turbo Turbo MildHEVs MildHEVs Plug-In Plug-In Fuel Fuel High High Dedicated Dedicated II

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00296 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.187 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43281 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 70% 71% 4050 4060 2029 100% 100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 70% 97% 97% 4050 4060 2028 100% 100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3% 3% 3% 2% 70% 97% 4050 4060 2027 100% 100% Vol 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3% 2% 70% 71% 71% 71% 4050 4060 2026 100% 100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 70% 4050 4060 Standards 2025 100% 100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3% 3% 2% 70% 98% 98% 98% 98% 98% 98% 71% 71% 97% 97% 97% CAFE 4050 4060 2024 100% 100% d 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 70% 98% 70% 98% 4070 4070 2023 100% 100% dP 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 70% 70% 98% 98% 4070 4070 2022 100% 100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 2% 2% 2% 0% 0% 0% 70% 70% 4070 4070 2021 100% 100% Basel· der 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 70% 98% 98% 70% 98% 98% 4070 4070 2020 100% 100% 2% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 2% 91% 70% 70% 91% 4070 4070 2019 100% 100% Penetraf 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 71% 71% 71% 71% 4170 4170 2018 100% 100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 2% 0% 0% 2% 70% 70% 70% 70% 4170 4170 2017 100% 100% Tech - Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal VII-20 Table s s Engines Engines (lb.) (lb.) EV EV Deac Vehicles Vehicles Deac Engines Engines NA NA Systems Systems HEVs HEVs HEVs HEVs SI SI Technology CR CR Weight Weight Transmission Transmission Cell Cell SS SS 12V 12V Strong Strong Curb Curb Dynamic Adv. Dynamic Turbo Plug-In Plug-In Dedicated Fuel Fuel MildHEVs MildHEVs Dedicated Turbo High Adv. High

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00297 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.188 43282 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 0% 0% 0% 0% 0% 0% 0% 0% 3240 3320 2029 0% 0% 0% 0% 0% 0% 0% 0% 2028 3240 3320 VW 0% 0% 0% 0% 0% 0% 0% 0% - 3260 3320 2027 0% 0% 0% 0% 0% 0% 0% 0% 14% 14% 14% 14% 3270 3320 2026 Standards 0% 0% 0% 0% 0% 0% 0% 0% 3280 3320 2025 - CAFE 0% 0% 0% 0% 0% 0% 0% 0% d 14% 14% 11% 15% 15% 15% 15% 15% 85% 82% 82% 82% 82% 82% 59% 56% 56% 56% 56% 56% 3290 3320 2024 0% 0% 0% 0% 0% 0% 0% 0% 63% 20% 27% 22% 22% 22% 21% 21% 21% 2023 3300 3320 dP 0% 0% 0% 0% 0% 0% 0% 0% 6% 6% 6% 6% 6% 6% 6% 6% 2% 2% 40% 43% 3330 3330 2022 0% 0% 0% 0% 0% 0% 0% 2% 32% 2021 3360 3370 Basel' der 0% 0% 0% 0% 0% 0% 0% 6% 6% 31% 48% 48% 46% 46% 44% 3360 3370 2020 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 64% 74% 74% 74% 74% 74% 74% 73% 74% 74% 73% 38% 51% 51% 51% 51% 51% 51% 51% 51% 51% 51% 51% 2019 3400 3410 0% 0% 0% 0% 0% 0% 0% 0% 3% 3% 3% 54% 34% 34% 24% 27% 2018 3420 3420 Penetraf 0~~ 1% 1% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% . 15% 10% 91% 94% 91% 94% 95% 94% 95% 94% 95% 94% 95% 94% 96% 96% 96% 97% 97% 97% 97% 97% 36% 32% 45% 41% 47% 24% 3480 3480 2017 Technol Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal VII-21- s s Engines Engines (lb.) (lb.) Table EV EV Vehicles Vehicles Deac Deac Engines Engines NA NA Systems Systems HEVs HEVs HEVs HEVs SI SI CR CR Transmission Transmission Weight Weight Technology Cell Cell SS SS 12V 12V Strong Strong Curb Curb Dynamic Dynamic Fuel MildHEVs Plug-In MildHEVs Dedicated Dedicated Fuel Plug-In Turbo Turbo Adv. Adv. High High

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00298 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.189 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43283 I 163 163 191 165 165 153 161 188 192 158 188 192 150 150 190 170 2o29 I 191 150 190 169 188 169 158 159 159 2o2s I (No-Action 171 191 191 151 151 161 161 163 163 163 163 193 165 165 158 192 188 187 192 199 192 194 192 166 167 166 167 166 167 150 190 2021 I 163 163 171 193 191 191 161 165 188 188 158 158 158 168 169 169 169 197 164 166 164 150 164 160 192 192 194 192 194 159 192 194 154 159 154 159 152 159 190 201 2o26 Standards I C02 191 191 161 163 173 165 164 169 164 166 150 162 160 192 159 164 174 190 201 201 203 2o25 I 171 173 183 181 178 158 168 172 197 188 172 167 162 166 160 158 167 167 166 158 174 159 199 159 159 159 202 206 202 201 201 201 Baseline 2o24 I 181 175 183 183 180 177 187 176 170 166 164 167 176 167 177 182 213 211 208 207 202 204 210 209 under 2o23 I 183 165 183 173 185 185 186 196 190 180 174 186 186 192 179 178 174 223 205 221 205 221 216 219 210 2022 I 2016-2029 183 193 195 185 198 196 189 199 169 176 194 189 189 234 201 228 217 221 206 209 232 212 232 200 202 230 2021 MYs I in 181 198 194 189 199 254 203 206 211 245 225 248 231 213 213 202 208 217 214 262 210 2020 I Levels 185 194 262 203 203 205 229 219 254 256 257 247 222 213 211 280 225 215 256 246 210 220 232 2o19 C02 I Ave. 196 270 304 225 246 263 269 264 213 218 213 234 229 216 214 250 2o18 I 198 192 282 313 240 236 220 210 216 248 253 238 272 284 262 273 273 286 265 241 264 231 246 234 232 212 231 222 275 265 2011 Achieved I and 283 302 316 248 250 256 269 277 277 286 272 278 293 248 222 232 209 222 241 234 242 214 234 244 224 236 220 216 226 251 217 224 245 282 217 217 2o16 I Required Required Required Required Required Required Required Required Required Required Required Required Required Required Achieved Achieved Achieved Achieved Achieved Achieved Achieved Achieved Achieved Achieved Achieved Achieved I VII-22- Motors Motors Table Chrysler Chrysler Manufacturer Subarn Subarn Fiat Fiat Ford Ford Kia Kia Mazda Mazda Mitsubishi Mitsubishi BMW BMW Daimler Daimler Rover Rover Jaguar/Land Jaguar/Land Tesla General General Honda Honda Hyundai Hyundai Nissan Nissan I

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VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00300 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.191 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43285 I 125 195 182 252 208 202 249 206 260 209 2o29 I 125 182 223 221 223 221 228 228 261 261 261 253 261 202 221 221 231 231 209 250 206 260 210 2o28 I (Preferred 195 195 223 261 258 261 258 253 258 209 203 221 231 206 260 209 2021 I 125 125 182 182 196 223 222 232 222 229 232 259 229 232 259 261 232 259 259 261 259 253 226 211 226 206 226 217 226 217 268 217 268 260 217 268 219 268 203 219 221 219 210 219 231 218 259 218 259 218 259 218 259 Standards 2o26 2 I C0 (4) 183 196 258 261 256 252 261 253 211 268 203 221 231 224 220 232 229 259 259 227 206 217 260 219 209 219 259 2o25 I 183 196 224 220 232 229 259 258 261 259 261 254 227 211 206 217 268 261 219 203 221 210 231 219 260 2o24 Proposed I (4) (4) 184 261 261 255 211 268 203 221 231 224 220 232 229 259 260 227 206 217 200 219 210 219 260 under 2o23 I (4) 184 224 222 232 231 259 259 261 258 260 261 256 227 216 206 217 204 268 265 261 219 206 221 211 231 220 260 2022 I 2016-2029 (4) 186 225 233 261 261 203 268 221 213 231 224 232 259 259 262 256 227 227 206 217 267 219 206 260 2021 MYs I in 194 182 192 203 207 206 245 250 248 251 253 213 215 253 282 208 217 202 2020 I Levels 2 185 194 203 221 211 256 257 247 222 216 213 288 206 225 215 256 215 246 221 269 262 (19) (19) 2o19 C0 I 196 304 229 239 214 229 212 219 265 263 255 270 274 262 218 213 213 234 229 270 Ave. 2o18 I 198 192 313 240 210 216 238 248 286 273 273 265 241 221 231 232 222 282 275 265 (19) (19) 2011 Achieved I and 302 316 248 250 256 269 277 256 272 254 277 262 286 226 272 278 254 224 293 248 288 222 232 209 222 241 234 283 232 219 212 242 214 234 244 224 236 220 216 226 251 217 224 245 282 217 217 (19) 2o16 I Required Required Required Required Required Required Required Required Required Required Required Required Required Required Achieved Achieved Achieved Achieved Achieved Achieved Achieved Achieved Achieved Achieved Achieved Achieved Achieved I VII-23- Motors Motors Table Chrysler Chrysler Manufacturer Subaru Subaru Nissan Fiat Fiat Ford Ford Kia Kia Mazda Mazda Mitsubishi Mitsubishi BMW BMW Daimler Daimler Rover Rover Jaguar/Land Jaguar/Land Tesla Tesla General General Honda Honda Hyw1dai Hytmdai Nissan I

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VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00302 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.193 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43287 5.8 -8.1 -2.8 14.8 15.3 15.9 12.0 87.1 74.6 66.1 29.2 -233 -10.7 -61.5 -57.9 -56.0 -12.0 Sum I l.5 l.7 1.4 1.9 7.8 0.9 9.2 9.4 3.6 -1.2 -7.8 -6.9 -1.4 -2.9 -1.0 -6.9 -0.7 2o29 I 1.6 1.6 1.4 8.7 9.3 7.9 0.9 Standards -7.1 -7.0 -1.4 -3.0 -1.0 -7.0 -0.6 2 2o28 I C0 l.5 1.8 1.8 1.4 1.6 8.6 7.9 0.9 7.8 3.6 3.6 -6.4 -2.9 -1.0 -1.4 -1.2 -1.2 -6.9 -6.3 -0.6 2021 I 1.8 1.6 1.4 1.7 8.6 0.7 7.0 7.6 3.5 Proposed -1.2 -6.4 -2.9 -1.0 -1.5 -6.1 -0.4 2o26 I and l.5 l.7 1.7 1.4 7.5 7.2 0.4 6.1 3.6 -1.1 -1.3 -5.4 -3.0 -1.0 -5.2 -5.6 -5.9 -0.2 2o2s I Baseline l.5 l.5 1.7 1.4 0.4 7.4 6.3 6.3 3.6 -1.1 -0.1 -1.2 -5.2 -53 -3.0 -1.0 2o24 I under 1.8 1.4 1.4 1.2 7.6 0.4 6.1 6.1 3.4 -5.1 -0.1 -1.0 -1.0 -5.4 -2.8 -0.8 2o23 I l.3 1.2 1.0 1.2 0.4 7.1 6.1 2.3 -1.8 -4.5 -4.7 -4.8 -0.1 -0.7 -5.2 -0.9 -0.8 -4.9 2017-2029 2022 I 1.1 1.2 0.3 0.9 0.0 0.9 0.9 6.7 5.6 5.6 5.9 -0.8 -0.5 -4.6 -0.6 -0.6 -4.4 -4.2 in MYs 2021 I ($b) 0.9 0.2 0.0 0.4 0.5 0.3 0.7 3.8 3.8 5.5 -0.1 -0.4 -3.0 -0.6 -3.6 -2.7 -0.1 2o2o I Costs 0.8 0.8 0.3 0.9 0.2 0.2 0.4 3.4 00 00 5.1 -0.1 -0.5 -3.3 -2.5 -0.4 -0.6 l2o19 0.1 0.1 0.4 OJ 0.2 05 00 00 00 3.4 2.2 -2.1 -0.1 -0.2 -0.2 -0.2 -1.6 2o18 Regulatory I l.3 0.1 0.1 0.2 0.2 0.4 0.1 00 00 00 00 00 00 -0.1 -0.1 -OJ -0.6 2011 I under under under under under under under under under under tmdcr tmdcr tmder tmdcr tmdcr tmder tmdcr Undiscounted Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Chg. Chg. Chg. Chg. Chg. Chg. Chg. Chg. Costs Costs Costs Costs Costs Costs Costs Costs Costs VII-24- I Table Motors Motors Chrysler Chrysler Manufacturer Daimler Fiat Ford Kia BMW BMW Daimler Fiat Ford Kia JLR General General Honda Hyw1dai Honda Hyw1dai II

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00303 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.194 43288 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 8.6 0.0 0.0 6.1 3.6 -4.9 -3.3 -7.3 -9.3 12.7 46.1 26.9 -10.7 -37.5 -21.7 424.8 -327.0 1.3 1.7 0.3 0.8 0.0 0.0 2.9 -0.7 -0.3 -1.5 -1.2 -5.0 -1.3 50.2 -41.0 1.3 1.7 0.8 0.0 0.0 0.4 3.0 5.7 5.9 -2.5 -2.5 -1.1 -1.2 -0.7 -0.3 -4.9 -1.3 -40.4 1.3 0.8 0.0 0.0 0.4 3.0 5.6 -1.2 -0.7 -1.2 -4.8 -2.6 -0.3 -1.3 47.9 49.6 -38.8 1.3 1.7 1.7 0.7 0.4 00 00 5.6 2.8 -1.2 -1.2 -0.6 -4.7 -0.3 -1.3 -37.2 1.7 0.0 0.0 0.9 0.6 0.4 4.3 -1.2 -0.8 -1.3 -0.5 -3.5 -2.3 -2.3 -0.4 41.7 46.2 -32.8 1.4 0.9 0.6 0.4 00 00 3.8 2.8 2.8 -1.2 -0.5 -3.0 -2.3 -1.0 -0.8 -0.4 40.0 -31.1 0.9 0.9 0.6 0.0 0.0 0.4 3.4 2.6 -2.6 -1.3 -0.8 -0.6 -0.5 -2.2 -0.4 38.0 -29.1 0.8 0.6 0.2 0.0 0.2 00 3.4 -0.1 -0.5 -0.5 -2.6 -1.3 -0.7 -0.2 33.6 -24.9 1.5 1.8 0.0 0.2 0.7 0.0 0.2 0.5 3.3 -1.1 -0.1 -0.4 -0.4 -2.5 -0.6 -0.2 29.5 -21.0 1.4 0.2 0.4 0.1 0.0 0.0 0.2 00 2.5 -1.0 -0.1 -0.1 -1.9 -0.4 -0.2 20.9 -14.2 1.5 1.0 0.3 0.1 0.0 0.2 0.0 0.0 0.0 0.0 0.0 -1.1 -0.6 -0.2 -0.2 -9.5 14.9 1.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.9 9.2 -0.7 -0.6 -5.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.4 3.0 -0.3 -1.4 under under under under under under under under under under m1der m1der m1der tmdcr tmder tmdcr tmder Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Chg. Chg. Chg. Chg. Chg. Chg. Chg. Chg. Chg. Costs Costs Costs Costs Costs Costs Costs Costs Subaru Subaru VWA Volvo Ave./Total Volvo VWA Ave./Total Mazda Mazda JLR Tesla Toyota Tesla Toyota Nissan/Mitsubishi Nissan/Mitsubishi

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00304 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.195 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43289 II -900 1,750 1,250 1,800 3,350 3,400 5,950 4,050 4,350 4,150 2029 -1,250 -3,000 -1,500 -2,800 -3,450 -3,400 -2,950 I -850 1,750 1,200 1,850 3,450 3,150 5,000 4,100 4,500 4,250 2028 -L250 -3,050 -1,500 -2,550 -3,550 -3,500 -3,050 I -800 1,800 1,150 1,850 3,400 3,850 5,150 4,350 2,850 4,300 2027 -1,250 -2,800 -1,500 -2,300 -3,400 -3,550 -3,000 I Standards 2 900 -500 1,750 1,800 3,050 3,850 5,300 4,400 2,750 4,450 2026 -1,250 -2,850 -1,500 -2,150 -3,450 -3,650 -2,650 C0 I 550 -200 1,750 1,850 3,350 5,500 2,650 4,100 2,600 4,100 2025 -1,250 -2,400 -1,550 -2,050 -3,100 -3,250 -2,250 I Proposed 550 and -200 1,750 1,850 3,300 5,600 2,750 3,650 4,250 2,300 2024 -1,250 -2,350 -1,550 -1,750 -3,250 -2,800 -2,300 I 500 Baseline -150 1,500 1,700 3,400 3,250 5,800 2,650 4,000 2,250 2023 -1,050 -2,250 -2,400 -1,400 -1,700 -2,950 -2,400 I under 500 -850 -150 -950 1,250 1,200 2,700 4,050 2,150 3,200 2,850 3,650 2022 -2,250 -2,200 -1,650 -2,600 -1,950 I -50 550 400 -400 -650 2017-2029 1,100 3,000 2,100 3,800 2,450 2,600 2,050 2021 -2,000 -2,000 -1,550 -1,550 -1,300 I 0 MYs -50 150 450 250 in -200 1,650 1,400 1,800 2,050 2,500 2,100 2020 -L300 -1,600 -1,000 -1,200 -1,350 I 0 0 -50 150 250 400 200 -250 -900 1,250 1,200 1,850 2,350 2,200 2019 -1,500 -1,250 -1,200 I Increases($) 0 0 50 -50 150 150 100 850 850 750 200 -950 -600 -450 -550 -100 2018 1,600 Price I 0 0 0 0 0 50 50 100 100 150 600 550 350 -300 -100 -300 -250 2017 I Average under under under under under under under under under under under under under under under under under Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal VII-25- Chg. Chg. Chg. Chg. Chg. Chg. Chg. Chg. Costs Costs Costs Costs Costs Costs Costs Costs Costs I Table Motors Motors Chrysler Chrysler Manufacturer Kia Kia Ford Ford Fiat Fiat Daimler Daimler JLR BMW BMW General General Hyundai Hyundai Honda Honda II

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00305 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.196 43290 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 0 0 -900 L250 Ll50 3,450 4,850 2,800 2,650 2,300 -2,300 -2,400 -1,950 -3,150 -4,200 -1,050 -4,600 0 0 -900 1,150 1,250 3,550 5,000 2,800 2,700 2,250 -2,250 -2,450 -1,900 -3,250 -4,300 -3,600 -1,050 0 0 -900 1,150 1,250 2,700 2,550 2,200 3,650 5,050 -2,200 -2,350 -1,900 -3,350 -4,350 -3,700 -1,050 0 0 -900 1,150 1,200 3,750 4,650 2,600 2,650 2,200 -3,500 -2,100 -2,400 -1,850 -3,950 -3,800 -1,000 0 0 -900 -850 1,150 1,800 1,050 1,650 3,900 4,650 2,350 -1,850 -3,650 -1,550 -1,350 -3,900 -3,950 0 0 950 -700 -850 1,500 1,750 1,050 4,650 4,050 2,250 -1,750 -3,800 -1,500 -1,200 -3,900 -4,000 0 0 600 950 -400 -750 1,750 1,300 3,850 4,400 2,150 -1,650 -3,600 -1,550 -1,000 -3,650 -4,150 0 0 950 500 550 -300 -350 -750 1,900 1,300 2,350 2,950 -1,400 -2,200 -1,000 -2,200 -2,350 0 0 800 300 450 -100 -250 -600 1,650 1,300 2,450 2,500 -2,250 -1,200 -1,000 -1,750 -2,100 0 0 -50 100 300 250 -800 -100 -100 -750 1,200 1,000 2,550 2,400 -2,350 -1,750 -1,200 0 0 0 0 0 50 100 850 600 200 -550 -450 -700 1,650 2,650 -2,450 -1,050 - 0 0 0 0 0 0 0 50 50 -50 150 550 400 -350 -300 1,000 1,500 0 0 0 0 0 0 0 0 0 50 50 50 -50 750 200 -100 -450 under under under under under under under under under under under under under under under under under Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Chg. Chg. Chg. Chg. Chg. Chg. Chg. Chg. Chg. Costs Costs Costs Costs Costs Costs Costs Costs bishi Subaru Subaru Volvo VWA JLR Mazda Mazda Tesla Tesla Toyota Toyota Volvo Ave./Total Ave./Total VWA Nissan/Mitsu Nissan/Mitsubishi

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00306 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.197 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43291 0% ?!2. -5% -4% -4% -3% -5% -1% -1% -2% -3% -4% -4% -4% Change 0

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VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00308 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.199 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43293 0% 0% 0% 7% 0% 41% 21% 3570 3680 2029 0% 0% 0% 0% 4% 38% 37% 40% 20% 2028 3570 3680 A 0% 0% 0% 0% 62% 62% 62% 40% 40% 3590 3680 2027 0% 0% 0% 0% Industrv 16% 17% 18% 16% 15% 15% 79% 79% 76% 75% 37% 25% 26% 26% 26% 3600 3690 2026 1% 1% 1% 1% 1% 0% 0% 0% 0% 61% 62% 24% 3630 3700 2025 - . Standards- 0% 0% 0% 0% 12% 13% 60% 24% 25% .., 3640 3700 2024 -- CO, 1% 1% 0% 0% 0% 0% d 2% 2% 2% 2% 2% 10% 21% 23% 20% 2023 3650 3710 8% 0% 0% 0% 0% 0% 2% 20% 3660 3710 2022 dP 1% 1% 1% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 6% 5% 18% 19% 12% 12% 12% 12% 12% 12% 12% 12% 12% 88% 87% 85% 84% 83% 91% 93% 93% 93% 93% 93% 93% 94% 94% 31% 35% 37% 38% 38% 39% 51% 57% 59% 25% 26% 28% 28% 29% 2021 3680 3720 0% 0% 0% 0% 0% 85% 83% 42% 3720 3750 2020 der Baser 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 9% 9% 4% 4% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 14% 17% 12% 15% 2019 3760 3770 8% 8% 0% 0% 0% 0% 0% 0% 0% 10% 64% 73% 33% 36% 64% 71% 2018 3790 3800 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 6% 6% 3% 2% 2% 2% 2% 13% 13% 12% 17% 17% 12% 12% 12% 12% 11% 11% 11% 11% 11% 11% 11% 11% 11% Penetraf 48% 24% 28% 28% 29% 24% 48% 3810 3820 2017 o~v . Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Technol - s s Engines Engines (lb.) (lb.) VII-27 EV EV Vehicles Vehicles Deac Deac Engines Engines NA NA Systems Systems HEVs HEVs HEVs HEVs SI SI Table CR CR Transmission Transmission Weight Weight Technology Cell Cell SS SS 12V 12V Strong Strong Curb Curb Dedicated Dedicated Fuel Fuel Plug-In MildHEVs Plug-In Dynamic Dynamic MildHEVs Turbo Turbo Adv. Adv. High High

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00309 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.200 43294 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 0% 0% 0% 0% 0% 0% 0% 0% 0% 3500 3590 2029 0% 0% 0% 0% 0% 0% 0% 0% 0% 2028 3500 3590 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 2% 2% BMW 3520 3600 2027 - 0% 0% 0% 0% 0% 0% 0% 0% 0% 6% 6% 6% 6% 2% 2% 2% 2% 2% 92% 92% 92% 92% 3520 3600 2026 0% 0% 0% 0% 0% 0% 0% 0% 0% 5% - . Standards 19% 19% 76% 3540 3600 2025 .., -- CO, 0% 0% 0% 0% 0% 0% 0% 0% d 92% 92% 92% 92% 92% 92% 34% 61% 34% 3560 3600 2024 0% 0% 0% 0% 0% 0% 0% 0% 39% 55% 2023 3580 3600 dP 0% 0% 0% 0% 0% 0% 0% 9% 3% 3% 3% 91% 91% 67% 27% 3630 3630 2022 0% 0% 0% 0% 0% 0% 0% 90% 2021 3670 3670 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% der Basel' 8% 8% 0% 0% 0% 0% 0% 0% 0% 83% 83% 90% 29% 29% 3670 3670 2020 0% 0% 0% 0% 0% 0% 0% 0% 6% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 78% 35% 55% 58% 58% 58% 56% 2019 3690 3690 0% 0% 0% 0% 0% 0% 0% 0% 3% 82% 83% 80% 26% 2018 3800 3800 Penetraf 0~~ 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 2% 2% 2% . 13% 80% 80% 79% 66% 96% 97% 96% 97% 97% 96% 97% 96% 97% 96% 97% 95% 97% 95% 97% 94% 97% 92% 97% 92% 97% 92% 97% 92% 97% 97% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 3820 3820 2017 Technol - Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal VII-28 s s Engines Engines (lb.) (lb.) Table EV EV Vehicles Vehicles Deac Deac Engines Engines NA NA Systems Systems HEVs HEVs HEVs HEVs SI SI CR CR Transmission Transmission Weight Weight Technology Cell Cell SS SS 12V 12V Strong Strong Curb Curb Dedicated Dynamic Dynamic MildHEVs MildHEVs Dedicated Fuel Fuel Plug-In Plug-In Turbo Turbo Adv. Adv. High High

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00310 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.201 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43295 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3780 3890 2o29 I 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 3% 3% 0% 0% 2o28 3770 3890 I 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3% 3770 3890 2021 Daiml I - 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3% 94% 94% 94% 94% 3780 3890 2o26 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3% 86% - 3820 3900 2o25 . Standards I .., -- CO, 0% 0% 0% 0% 0% 0% 0% 0% 0% 9% 9% 9% 9% 0% 86% 3820 3900 2o24 d I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3% 3% -.-- 21% 20% 2o23 3840 3900 I dP 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 13% 31% 64% 75% 20% 3880 3920 2022 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 83% 84% 85% 85% 85% 85% 85% 85% 85% 37% 55% 20% 40% 2021 3960 3960 I Basel' 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 2% 2% 2% 2% 2% 2% der 74% 53% 50% 4000 4000 2020 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 19% 19% 19% 19% 19% 19% 18% 18% 18% 18% 18% 73% 73% 75% 75% 75% 75% 75% 75% 75% 75% 75% 97% 97% 98% 97% 98% 97% 98% 97% 98% 97% 98% 97% 98% 97% 98% 97% 98% 94% 98% 94% 98% 98% 59% 50% 41% 28% 28% 2o19 4000 4000 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 2% 2% 4% 2o18 4120 4120 I Penetraf 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3% -~.:: 13% 13% 13% 13% 12% 12% 18% 18% 85% 84% 85% 85% 82% 81% 67% 66% 4110 4110 2011 I Technol - Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal I VII-29 s s Engines Engines (lb.) (lb.) Table EV EV Vehicles Vehicles Deac Deac Engines Engines NA NA Systems Systems HEVs HEVs HEVs HEVs SI SI CR CR Transmission Transmission Weight Weight Technology Cell Cell SS SS 12V 12V Strong Strong Curb Curb Fuel Fuel Dedicated Dedicated Plug-In Dynamic Dynamic MildHEVs Plug-In MildHEVs Turbo Turbo Adv. Adv. High High II

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00311 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.202 43296 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3840 3920 2029 I I I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 52% 52% 44% 46% 45% 45% 45% 45% 2028 3840 3920 I I I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Chrysler 16% 16% 16% 13% 13% 13% 82% 82% 82% 97% 97% 97% 61% 61% 36% 40% 3880 3930 2027 I I I I I I I I I I I I I I I I I I I I I I I Fiat 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 82% 63% 34% 3890 3930 2026 I I I 8% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 16% 16% 13% 13% 75% 63% 97% 97% 59% 23% 28% 22% 3920 3950 2025 I I I I I I I I I I I I I I I I I I I I I I Standards- 2 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 77%177% 60% 3930 3950 2024 C0 I I I 8% 8% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 15% 15% 13% 13% 19% 19% 77% 78% 78% 97% 97% 60% 23% 23% 2023 3930 3950 I I I I I I I I I I I I I I I I I I I I I I I Proposed 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 12% 10% 3930 3950 2022 I I I and 7% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 10% 68% 74% 2021 3950 3950 I I I Baseline 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 13% 15% 15% 11% 13% 13% 13% 89% 89% 84% 91% 96% 96% 57% 54% 58% 59% 22% 22% 23% 3980 3980 2020 I I I I I I I I I I I I I I I I I I I I I I I under 8% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 13% 54% 2019 4010 4010 I I I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 15% 13% 13% 85% 83% 85% 85% 32% 44% 47% 22% 22% 2018 4100 4100 I I I I I I I I I I I I I I I I I I I I I I I Penetration 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 15% 12% 11% 64% 64% 20% 20% 4160 4160 2017 I Baseline Baseline Technology Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal - I VII-30 s s Engines Engines (lb.) (lb.) EV EV Vehicles Vehicles Deac Deac Engines Engines NA NA Systems Systems Table HEVs HEVs HEVs HEVs SI SI CR CR Transmission Transmission Weight Weight Technology Cell Cell SS SS 12V 12V Strong Strong Curb Curb Dynamic MildHEVs Dynamic MildHEVs Dedicated Dedicated Fuel Fuel Plug-In Plug-In Turbo Turbo Adv. Adv. High High

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00312 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.203 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43297 0% 0% 0% 0% 0% 0% 0% 0% 10% 3780 3920 2029 0% 0% 0% 0% 0% 0% 0% 0% 10% 78% 78% 2028 3780 3920 0% 0% 0% 0% 0% 0% 7% 0% 5% 85% 86% 86% 3780 3920 2027 -Ford 0% 0% 0% 0% 0% 0% 0% 5% 14% 77% 3850 3930 2026 - . Standards 0% 0% 0% 0% 0% 0% 0% .., 3890 3940 2025 -- CO, 0% 0% 0% 0% 0% 0% 0% d 53% 53% 41% 41% 3890 3940 2024 0% 0% 0% 0% 0% 0% 0% 2023 3890 3950 dP 0% 0% 0% 0% 0% 0% 0% 94% 95% 96% 97% 97% 97% 97% 97% 43% 43% 49% 49% 3890 3950 2022 0% 0% 0% 0% 0% 0% 0% 89% 40% 43% 2021 3910 3950 Basel' der 0% 0% 0% 0% 0% 0% 0% 16% 81% 84% 85% 86% 86% 85% 85% 85% 85% 85% 81% 85% 85% 86% 86% 86% 83% 81% 76% 45% 3920 3960 2020 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 17% 55% 47% 2019 4030 4030 0% 0% 0% 0% 0% 0% 0% 3% 3% 10% Penetraf 2018 4040 4040 o~y 1% 1% 1% 1% 8% 8% 8% 8% 8% 8% 8% 8% 8% 8% 8% 8% 8% 8% 0% 0% 0% 0% 0% 0% 0% 0% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 2% 2% 2% 2% . 46% 48% 46% 46% 46% 46% 46% 41% 46% 47% 41% 46% 47% 46% 47% 46% 46% 46% 46% 46% 4040 4040 2017 Technol Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal VII-31- s s Engines Engines (lb.) (lb.) Table EV EV Vehicles Vehicles Deac Deac Engines Engines NA NA Systems Systems HEVs HEVs HEVs HEVs SI SI CR CR Transmission Transmission Weight Weight Technology Cell Cell SS SS 12V 12V Strong Strong Curb Curb Fuel Dynamic Dynamic Dedicated MildHEVs Plug-In Plug-In Dedicated MildHEVs Fuel Turbo Turbo Adv. Adv. High High

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00313 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.204 43298 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 16% 69% 50% 29% 3960 4090 2029 I I I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3% 10% 14% 89% 83% 70% 50% 2028 3970 4090 I I I Motors 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 6% 4% 70% 50% 3990 4090 2027 I I I General 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 15% 81% 88% 86% 83% 70% 50% 3990 4090 2026 I I I 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 15% 15% 15% 15% 15% 70% 96% 95% 96% 92% 96% 96% 98% 98% 69% 50% 28% 4020 4120 2025 I I I I I I I I I I I I I I I I I I I I I I I Standards- 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2 60% 38% 50% 4050 4130 2024 I I I C0 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 50% 2023 4060 4140 I I I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Proposed 35% 37% 50% 4060 4150 2022 I I I and 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 96% 97% 96% 97% 96% 97% 96% 96% 67% 69% 69% 69% 30% 50% 51% 51% 56% 22% 2021 4070 4160 I I I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Baseline 15% 15% 15% 15% 15% 84% 84% 33% 58% 41% 24% 4160 4210 2020 I I I I I I I I I I I I I I I I I I I I I I I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% under 30% 66% 66% 52% 2019 4180 4230 I I I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 15% 15% 18% 36% 36% 47% 45% 45% 21% 21% 2018 4250 4280 I I I I I I I I I I I I I I I I I I I I I I I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 4% Penetration 14% 15% 15% 14% 27% 27% 4300 4300 2017 I Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Technology I - VII-32 s s Engines Engines (lb.) (lb.) EV EV Vehicles Vehicles Deac Deac Engines Engines NA NA Systems Systems HEVs HEVs HEVs HEVs Table SI SI CR CR Transmission Transmission Weight Weight Technology Cell Cell SS SS 12V 12V Strong Strong Curb Curb Dedicated MildHEVs Dynamic Dedicated Fuel Fuel Dynamic Plug-In Plug-In MildHEVs Turbo Turbo Adv. Adv. High High

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00314 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.205 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43299 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3280 3410 2029 100% I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3270 3420 2028 100% I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3280 3420 2027 100% Honda I - 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3310 3430 2026 100% I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Standards 3310 3430 2 2025 100% I C0 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 6% 3% 6% 3% 6% 3% 6% 3% 6% 3% 6% 3% 76% 76% 76% 76% 76% 76% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 45% 45% 45% 45% 45% 45% 3310 3430 2024 100% I I I I I I I I I I I I I I I I I I I I I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Proposed 96% 76% 39% 2023 3310 3430 I I I and 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3% 3% 80% 97% 97% 97% 97% 60% 22% 3380 3440 2022 I I I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Baseline 41% 3420 3460 2021 I I I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% under 85% 87% 85% 87% 2020 3420 3460 I I I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 75% 21% 21% 21% 21% 21% 3430 3460 2019 I I I 0% 0% 0% 0% Penetration 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 18% 18% 2018 3430 3470 I I I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 75% 75% 75% 75% 75% 3470 3450 2017 I Technology - Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal I VII-33 Table s s Engines Engines (lb.) (lb.) EV EV Vehicles Vehicles Deac Deac Engines Engines NA NA Systems Systems HEVs HEVs HEVs HEVs SI SI CR CR Transmission Transmission Weight Weight Technology Cell Cell SS SS 12V 12V Strong Strong Curb Curb Dynamic Dedicated Dedicated Fuel Plug-In Plug-In Fuel MildHEVs MildHEVs Dynamic Turbo Turbo Adv. Adv. High High

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00315 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.206 43300 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 3040 3140 2o29 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% · 2o28 3060 3140 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% "- 81% 81% 81% 3050 3140 2021 Hvund I - 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3060 3140 2o26 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% - 3140 3160 2o25 . Standards I .., -- 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% CO, 3140 3160 2o24 d I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% -.-- 2o23 3150 3160 I dP 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3150 3160 2022 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 82% 82% 82% 82% 82% 82% 82% 82% 82% 82% 82% 82% 82% 82% 82% 82% 81% 81% 55% 58% 55% 58% 58% 58% 58% 58% 58% 58% 59% 59% 59% 59% 59% 2021 3150 3160 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 79% der Baser 3150 3160 2020 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 25% 25% 25% 25% 2o19 3160 3160 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 18% 18% 68% 79% 79% 68% 79% 2o18 3160 3160 I Penetraf 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 7% 7% 0% 0% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% -~.:: 12% 12% 12% 15% 12% 18% 15% 18% 18% 18% 18% 18% 18% 18% 18% 18% 18% 19% 18% 19% 18% 19% 18% 19% 18% 18% 53% 53% 3160 3160 2011 I Technol - Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal I VII-34 s s Engines Engines (lb.) (lb.) Table EV EV Vehicles Vehicles Deac Deac Engines Engines NA NA Systems Systems HEVs HEVs HEVs HEVs SI SI CR CR Transmission Transmission Weight Weight Technology Cell Cell SS SS 12V 12V Strong Strong Curb Curb Fuel Fuel Dedicated Dedicated Plug-In MildHEVs MildHEVs Plug-In Dynamic Dynamic Turbo Turbo Adv. Adv. High High II

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00316 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.207 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43301 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 80% 3220 3280 2029 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 80% 2028 3220 3280 K' 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 80% 3220 3280 2027 - 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 80% 3220 3280 2026 - . Standards 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% .., 80% 3220 3280 2025 -- CO, d 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 12% 12% 12% 12% 12% 12% 81% 23% 23% 22% 23% 22% 23% 22% 23% 22% 23% 22% 22% 3220 3280 2024 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 13% 13% 12% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 2023 3230 3280 dP 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 77% 77% 77% 77% 77% 77% 77% 77% 69% 74% 3250 3290 2022 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 5% 5% 77% 96% 96% 96% 96% 66% 66% 66% 66% 66% 66% 66% 66% 66% 45% Basel' 2021 3250 3290 der 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 14% 67% 67% 34% 45% 3300 3300 2020 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 53% 53% 2019 3300 3300 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Penetraf 31% 31% 31% 31% 29% 29% 2018 3300 3300 ~y 0~ . 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 3300 3300 2017 Technol - Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal VII-35 s s Table Engines Engines (lb.) (lb.) EV EV Vehicles Vehicles Deac Deac Engines Engines NA NA Systems Systems HEVs HEVs HEVs HEVs SI SI CR CR Transmission Transmission Weight Weight Technology Cell Cell SS SS 12V 12V Strong Strong Curb Curb Fuel Fuel Dedicated Dedicated MildHEVs Dynamic Dynamic MildHEVs Plug-In Plug-In Turbo Turbo Adv. Adv. High High

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00317 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.208 43302 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 21% 4500 4440 2o29 100% I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 4500 4430 2o28 100% I R, 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 4500 4440 2021 100% I /Land 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 4500 4430 2o26 100% I - J 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 11% 11% 11% 11% 11% 18% 18% 18% 18% 4500 4430 2o25 100% I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 4530 4480 2o24 100% Standards I - 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 4% 4% 4% 4% 4% 4% CO, 11% 11% 18% 18% 11% 11% 11% 11% 11% 11% 11% 67% 67% 67% 67% 67% 68% 68% 39% 39% 39% 39% 39% 39% 39% 61% 67% 61% 67% 61% 67% 61% 67% 61% 67% 61% 68% 61% 68% 4530 4480 2o23 100% d I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 4% 17% 61% 67% 85% 89% 89% 89% 89% 89% 89% 89% 89% 29% 4570 4550 2022 100% I dP 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 11% 11% 34% 39% 39% 61% 62% 23% 4580 4580 2021 100% I 0% 0% 0% 3% 3% 0% 0% 0% 0% 0% 0% 0% 0% 73% 73% 4770 4770 Baser 2020 100% I der 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 11% 11% 89% 89% 86% 89% 86% 89% 89% 89% 76% 76% 24% 24% 4780 4780 2o19 100% I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 4830 4830 2o18 100% 100% I p 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 89% 89% 89% 89% 87% 87% 87% 87% 4830 4830 2011 100% 100% I Technol Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal - I VII-36 s s Engines Engines (lb.) (lb.) EV EV Vehicles Vehicles Deac Deac Engines Engines Table NA NA Systems Systems HEVs HEVs HEVs HEVs SI SI CR CR Transmission Transmission Weight Weight Technology HEVs HEVs Cell Cell SS SS 12V 12V Strong Strong Curb Curb Fuel Fuel Dedicated Dedicated Dynamic Plug-In Plug-In Dynamic Mild Mild Turbo Turbo Adv. Adv. High High I

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00318 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.209 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43303 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 60% 60% 3150 3300 2o29 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 60% 60% 2o28 3150 3300 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 60% 60% Mazd 3200 3300 2021 I - 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 60% 35% 34% 34% 34% 60% 3190 3300 2o26 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 5% 5% 5% 5% 5% - . Standards 15% 46% 3220 3300 2o25 .., I -- CO, 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% d 3220 3310 2o24 I -.-- 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 15% 15% 79% 79% 79% 44% 46% 2o23 3220 3310 I dP 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 5% 3270 3310 2022 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 94% 94% 94% 94% 94% 94% 94% 94% 94% 94% 94% 2021 3290 3310 I Basel' 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% der 3290 3310 2020 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 93% 93% 93% 93% 2o19 3310 3310 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 82% 82% 2o18 3310 3310 Penetraf I -~.:: 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 94% 94% 94% 94% 94% 94% 94% 94% 94% 94% 94% 94% 94% 94% 94% 94% 94% 94% 95% 94% 95% 94% 95% 94% 95% 95% 22% 22% 3300 3300 2011 I Technol - Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal I VII-37 s s Engines Engines (lb.) (lb.) Table EV EV Vehicles Vehicles Deac Deac Engines Engines NA NA Systems Systems HEVs HEVs HEVs HEVs SI SI CR CR Transmission Transmission Weight Weight Technology Cell Cell SS SS 12V 12V Strong Strong Curb Curb Fuel Fuel Dedicated Dedicated Dynamic Dynamic MildHEVs Plug-In MildHEVs Plug-In Turbo Turbo Adv. Adv. High High II

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00319 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.210 43304 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3270 3340 2029 · 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2028 3270 3340 Mitsubish 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% I 3270 3340 2027 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% N' 3270 3340 2026 - 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 85% 86% 87% 87% 87% 3270 3340 2025 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% - . Standards 67% 3290 3360 2024 .., -- CO, 1% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 7% 7% 7% 7% 7% 7% 7% 6% 6% 7% 7% 7% 7% 7% d 20% 2023 3300 3360 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 4% 4% 4% 4% 4% 4% 4% 4% 14% 3300 3360 2022 dP 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 7% 2021 3320 3370 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3% 3% 3% 3360 3370 2020 1% 1% der Baser 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2019 3390 3390 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 92% 92% 92% 92% 92% 92% 92% 95% 92% 96% 95% 96% 96% 97% 96% 97% 97% 97% 97% 97% 97% 97% 97% 97% 2018 3410 3410 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 4% 4% 2% 2% 86% 86% 3400 3400 2017 Penetraf 0~~ . Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Technol - s s Engines Engines (lb.) (lb.) VII-38 EV EV Vehicles Vehicles Deac Deac Engines Engines NA NA Systems Systems HEVs HEVs HEVs HEVs SI SI CR CR Transmission Transmission Weight Weight Technology Table Cell Cell SS SS 12V 12V Strong Strong Curb Curb Dynamic Dynamic MildHEVs MildHEVs Plug-In Plug-In Dedicated Dedicated Fuel Fuel Turbo Turbo Adv. Adv. High High

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00320 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.211 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43305 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3190 3310 2o29 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2o28 3190 3310 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3190 3310 2021 Sub I - 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3190 3310 2o26 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% - . Standards 3210 3330 2o25 .., I -- CO, 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3210 3330 d 2o24 I 8% 8% 8% 8% 8% 8% 8% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% -.-- 2o23 3210 3330 I dP 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3210 3330 2022 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 34% 34% 35% 35% 35% 35% 35% 35% 35% 2021 3280 3360 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% der Baser 3440 3440 2020 I 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 91% 92% 92% 92% 92% 92% 92% 92% 92% 92% 92% 2o19 3440 3440 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2o18 3440 3440 Penetraf I -~.:: 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 7% 7% 7% 0% 7% 7% 0% 7% 7% 7% 7% 7% 0% 0% 0% 0% 0% 91% 92% 91% 92% 92% 92% 92% 92% 92% 91% 91% 91% 91% 91% 92% 3440 3440 2011 I Technol - Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal I VII-39 s s Engines Engines (lb.) (lb.) Table EV EV Vehicles Vehicles Deac Deac Engines Engines NA NA Systems Systems HEVs HEVs HEVs HEVs SI SI CR CR Transmission Transmission Weight Weight Technology Cell Cell SS SS 12V 12V Strong Strong Curb Curb Fuel Fuel Dedicated Dedicated Plug-In Dynamic Dynamic MildHEVs MildHEVs Plug-In Turbo Turbo Adv. Adv. High High II

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00321 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.212 43306 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 30% 3470 3610 2o29 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 30% 2o28 3480 3610 I -.::- 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 30% 41% 41% 41% 3480 3610 2021 Tovot I - 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 32% 32% 33% 33% 38% 27% 3480 3610 2o26 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% - . Standards 33% 3540 3630 2o25 .., I -- CO, 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 14% d 3550 3640 2o24 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% -.-- 27% 28% 29% 2o23 3590 3650 I dP 0% 0% 0% 0% 0% 0% 0% 0% 0% 7% 0% 7% 7% 7% 3% 3% 98% 99% 99% 99% 99% 99% 99% 99% 3580 3650 2022 I 1% 0% 0% 0% 0% 0% 0% 0% 0% 7% 0% 0% 4% 4% 4% 4% 4% 4% 4% 4% 4% 97% 98% 99% 99% 99% 99% 99% 99% 99% 97% 27% 27% 2021 3580 3650 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% der Baser 18% 87% 87% 62% 63% 63% 63% 63% 63% 64% 64% 64% 64% 3630 3690 2020 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% 2% 2% 10% 45% 2o19 3690 3710 I 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 10% 62% 75% 62% 75% 34% 2o18 3700 3720 Penetraf I -~.:: 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% 3% 3% 3% 3% 3% 38% 38% 21% 21% 21% 21% 21% 21% 22% 22% 22% 22% 23% 23% 23% 23% 3740 3740 2011 I Technol - Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal I VII-40 s s Engines Engines (lb.) (lb.) Table EV EV Vehicles Vehicles Deac Deac Engines Engines NA NA Systems Systems HEVs HEVs HEVs HEVs SI SI CR CR Transmission Transmission Weight Weight Technology Cell Cell SS SS 12V 12V Strong Strong Curb Curb Fuel Fuel Dedicated Dedicated Dynamic Dynamic MildHEVs Plug-In MildHEVs Plug-In Turbo Turbo Adv. Adv. High High II

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00322 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.213 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43307 I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 85% 70% 98% 3960 4040 2o29 100% 100% I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 12% 12% 12% 12% 70% 3950 4040 2o28 100% 100% I 0% 0% 0% 0% 0% 0% 0% 3% 3% 3% 0% 0% 0% 0% 2% 2% 2% 12% 12% 85% 85% 70% 3950 4050 2021 100% 100% I Vol - 0% 0% 0% 0% 0% 0% 0% 3% 0% 0% 0% 0% 2% 12% 12% 85% 70% 98% 98% 98% 3950 4050 2o26 100% 100% I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 85% 70% 98% 3950 4050 2o25 100% 100% Standards I - 0% 0% 0% 0% 0% 0% 0% 3% 3% 0% 0% 0% 0% C07 12% 12% 12% 12% 85% 70% 3950 4050 2o24 100% 100% d I I 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 0% 2% 2% 2% 12% 70% 98% 98% 78% 20% 3970 4070 2o23 100% 100% I dP 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 0% 2% 10% 70% 38% 98% 54% 43% 4020 4070 2022 100% 100% I 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 0% 10% 70% 38% 98% 54% 43% 4020 4070 2021 Basel· 100% 100% I der 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 10% 70% 54% 4020 4070 2020 100% 100% I 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 2% 2% 2% 2% 10% 70% 38% 38% 91% 98% 48% 43% 43% 4020 4070 2o19 100% 100% I Penetraf 0% 0% 0% 0% 0% 0% 0% 0% 2% 0% 0% 0% 2% 2% 71% 71% 71% 69% 4170 4170 s;;;za:: 2o18 100% 100% I 0% 0% 0% 0% 0% 0% 0% 0% 2% 0% 0% 0% 2% 2% 70% 70% 70% 69% 4170 4170 2011 100% 100% I Technol - Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal VII-41 I Table s s Engines Engines (lb.) (lb.) EV EV Deac Deac Vehicles Vehicles Engines Engines NA NA Systems Systems HEVs HEVs HEVs HEVs SI SI Technology CR CR Weight Weight Transmission Transmission Cell Cell SS SS 12V 12V Strong Strong Curb Curb MildHEVs MildHEVs Turbo Dynamic Dynamic Plug-In Plug-In Turbo Dedicated Dedicated Adv. Adv. Fuel High Fuel High II

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00323 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.214 43308 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 0% 0% 0% 0% 0% 0% 0% 0% 0% 3240 3310 2029 I I I 0% 0% 0% 0% 0% 0% 0% 0% 0% 2028 3240 3310 I I I 1% 1% 1% 1% 1% 1% 1% 1% 1% VW 0% 0% 0% 0% 0% 0% 0% 0% 0% 3% 3% 3% 2% 2% 2% 17% 17% 17% 76% 76% 76% 73% 73% 73% 97% 97% 97% 67% 68% 68% 22% 22% 22% 3250 3310 2027 I I I I I I I I I I I I I I I I I I I I I I I 0% 0% 0% 0% 0% 0% 0% 0% 0% 3% 2% 3260 3310 2026 I I I Standards- 0% 0% 0% 0% 0% 0% 0% 0% 0% 7% 5% 2 3280 3310 2025 I I I C0 0% 0% 0% 0% 0% 0% 0% 0% 0% 10% 66% 73% 77% 3290 3320 2024 I I I 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 11% 17% 17% 16% 17% 13% 17% 13% 13% 13% 13% 85% 85% 85% 85% 74% 74% 74% 73% 96% 96% 97% 97% 52% 24% Proposed 2023 3300 3320 I I I I I I I I I I I I I I I I I I I I I I I and 0% 0% 0% 0% 0% 0% 0% 0% 32% 47% 40% 3320 3320 2022 I I I 0% 0% 0% 0% 0% 0% 0% 0% 40% 2021 3360 3360 Baseline I I I 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 17% 17% 14% 17% 14% 15% 74% 74% 74% 95% 95% 95% 96% 95% 96% 55% 55% 41% 25% 26% 3360 3360 2020 under I I I I I I I I I I I I I I I I I I I I I I I 0% 0% 0% 0% 0% 0% 0% 0% 64% 55% 2019 3400 3400 I I I 1% 1% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 9% 9% Penetration 17% 17% 11% 14% 95% 95% 95% 95% 54% 45% 41% 41% 2018 3420 3420 I I I I I I I I I I I I I I I I I I I I I I I 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 4% 17% 91% 91% 45% 44% 45% 3480 3480 2017 I Technology - Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Baseline Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal Proposal I VII-42 s s Table Engines Engines (lb.) (lb.) EV EV Vehicles Vehicles Deac Deac Engines Engines NA NA Systems Systems HEVs HEVs HEVs HEVs SI SI CR CR Transmission Transmission Weight Weight Technology Cell Cell SS SS 12V 12V Strong Strong Curb Curb MildHEVs Dedicated Dedicated Fuel Plug-In Dynamic MildHEVs Dynamic Fuel Plug-In Turbo Turbo Adv. Adv. High High

C. Incremental Impacts of Standards the same. The first perspective, taken characterization of the incremental Proposed for Each Model Year above in VI.A, examines impacts of the impacts attributable to standards As mentioned above, impacts are overall proposal — i.e., the entire series introduced in each successive model presented from two different of year-by-year standards — on each year. For example, the standards perspectives for today’s proposal. From model year. The second perspective, proposed for MY 2023 are likely to either perspective, overall impacts are presented here, provides a clearer impact manufacturers’ application of

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technology in model years prior to MY useful lives. Tables appearing below 1977–2016 and MY 2017–2029 cohorts). 2023, as well as model years after MY summarize results as aggregated across The PRIA presents costs and benefits for 2023. By conducting analysis that these model and calendar years. individual model years (with MY’s successively introduces standards for Underlying model output files 596 report 1977–2016 in a single bucket) for the each MY, in turn, isolates the physical impacts and specific preferred alternative. incremental impacts attributable to new monetized costs and benefits standards introduced in each MY, attributable to each model year in each 1. What are the Social Costs and considering the entire span of MYs calendar (thus providing information Benefits of the Proposed Standards? (1977–2029) included in the underlying needed to, for example, differentiate (a) CAFE Standards modeling, throughout those vehicles’ between impacts attributable to the MY

596 Available at https://www.nhtsa.gov/corporate- average-fuel-economy/compliance-and-effects- modeling-system.

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Table VII-44- Combined LDV Estimated Electrification Cost Coverage for MYs 2017-2029, CAFE P rogram, U n d.1scounte d , M·lrI lOllS 0 f$2016 Model Year Standards MY MY MY MY MY MY TOTAL Through 2021 2022 2023 2024 2025 2026 Retrievable Electrification -24.2 -2.09 0.164 -691 -781 0.00 -1500 Costs Electrification Tax Credits -0.112 -35.3 0.197 0.112 0.000 0.00 -35.1 Irretrievable Electrification -3.41 -37.1 -22.3 -132 -184 0.00 -379 Costs Total Electrification costs -27.7 -74.5 -21.9 -823 -965 0.00 -1910

Table VII-45- Combined LDV Societal Net Benefits for MYs 1977-2029, CAFE Program, 3% Discount Rate Model Year Standards MY MY MY MY MY MY Through 2021 2022 2023 2024 2025 2026 TOTAL Societal Costs and Benefits Through MY 2029 ($b) Technology Costs -30.5 -40.4 -51.4 -73.9 -56.4 0.0 -252.6 Pre-tax Fuel Savings -30.8 -19.8 -25.5 -33.2 -23.6 0.0 -132.9 Mobility Benefit -13.7 -10.4 -12.2 -14.1 -10.7 0.0 -61.1 Refueling Benefit -2.0 -1.2 -1.6 -2.1 -1.6 0.0 -8.5 Non-Rebound Fatality Costs -6.8 -4.7 -7.2 -8.6 -8.2 0.0 -35.4 Rebound Fatality Costs -9.4 -6.3 -8.3 -10.0 -7.6 0.0 -41.7 Benefits Offsetting Rebound -9.4 -6.3 -8.3 -10.0 -7.6 0.0 -41.7 Fatality Costs Non-Rebound Non-Fatal -10.7 -7.3 -11.2 -13.4 -12.7 0.0 -55.3 Crash Costs Rebound Non-Fatal Crash -14.8 -9.9 -12.9 -15.6 -11.9 0.0 -65.1 Costs Benefits Offsetting Rebound -14.8 -9.9 -12.9 -15.6 -11.9 0.0 -65.1 Non-Fatal Crash Costs Congestion and Noise -10.8 -7.6 -10.2 -12.6 -10.7 0.0 -51.9 Energy Security Benefit -2.5 -1.6 -2.1 -2.7 -2.0 0.0 -10.9 C02 Damages -1.0 -0.6 -0.8 -1.1 -0.8 0.0 -4.3 Other Pollutant Damages -0.5 -0.2 -0.3 -0.3 0.1 0.0 -1.2 Total Costs -83.0 -76.3 -101.0 -134.0 -108.0 0.0 -502.1 Total Benefits -74.7 -50.1 -63.7 -79.1 -58.2 0.0 -325.8 Net Benefits 8.4 26.2 37.4 55.0 49.4 0.0 176.4

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Table VII-46- Combined LDV Estimated Electrification Cost Coverage for MYs 2017-2029, CAFE Pro~ram, 3% Discount Rate, Millions of $2016 Model Year Standards Through MY MY MY MY MY MY TOTAL 2021 2022 2023 2024 2025 2026 Retrievable Electrification -18.6 -1.61 0.124 -572 -606 0.00 -1200 Costs Electrification Tax Credits -0.0919 -28.8 0.158 0.0885 0.00 0.00 -28.6 Irretrievable Electrification -2.70 -27.0 -17.2 -119 -148 0.00 -314 Costs Total Electrification costs -21.3 -57.4 -16.9 -692 -755 0.00 -1540

Table VII-47- Combined LDV Societal Net Benefits for MYs 1977-2029, CAFE Program, 7% Discount Rate Model Year Standards MY MY MY MY MY MY TOTAL Through 2021 2022 2023 2024 2025 2026 Societal Costs and Benefits Through MY 2029 ($b) Technology Costs -23.9 -31.0 -39.0 -56.5 -41.9 0.0 -192.3 Pre-tax Fuel Savings -20.0 -12.6 -16.0 -20.8 -14.8 0.0 -84.2 Mobility Benefit -8.6 -6.3 -7.3 -8.5 -6.3 0.0 -37.1 Refueling Benefit -1.3 -0.8 -1.0 -1.4 -1.0 0.0 -5.4 Non-Rebound Fatality -3.8 -2.4 -3.7 -4.5 -4.0 0.0 -18.4 Costs Rebound Fatality Costs -6.1 -3.9 -5.1 -6.2 -4.6 0.0 -25.8 Benefits Offsetting -6.1 -3.9 -5.1 -6.2 -4.6 0.0 -25.8 Rebound Fatality Costs Non-Rebound Non-Fatal -6.0 -3.8 -5.8 -7.0 -6.2 0.0 -28.8 Crash Costs Rebound Non-Fatal Crash -9.5 -6.2 -7.9 -9.6 -7.2 0.0 -40.4 Costs Benefits Offsetting -9.5 -6.2 -7.9 -9.6 -7.2 0.0 -40.4 Rebound Non-Fatal Crash Costs Congestion and Noise -6.6 -4.4 -5.8 -7.2 -5.8 0.0 Energy Security Benefit -1.6 -1.0 -1.3 -1.7 -1.3 0.0 -6.9

C02 Damages -0.6 -0.4 -0.5 -0.7 -0.5 0.0 -2.7 Other Pollutant Damages -0.4 -0.2 -0.2 -0.3 0.0 0.0 -1.1 Total Costs -55.8 -51.7 -67.2 -90.9 -69.6 0.0 -335.2 Total Benefits -48.1 -31.4 -39.4 -49.2 -35.8 0.0 -203.9 Net Benefits 7.7 20.3 27.8 41.7 33.9 0.0 131.4

Table VII-48- Combined LDV Estimated Electrification Cost Coverage for MYs 2017-2029, CAFE Pro~ram, 7% Discount Rate, Millions of $2016 Model Year Standards Through MY MY MY MY MY MY TOTAL 2021 2022 2023 2024 2025 2026 Retrievable Electrification -13.3 -1.15 0.0875 -456 -441 0.00 -911 Costs Electrification Tax Credits -0.0716 -22.1 0.119 0.0652 0.00 0.00 -22.0 Irretrievable Electrification -2.01 -17.9 -12.4 -105 -113 0.00 -250 Costs Total Electrification costs -15.3 -41.2 -12.2 -561 -554 0.00 -1180

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(b) CO2 Standards

Table VII-49- Combined LDV Societal Net Benefits for MYs 1977-2029, GHG Program, U ndiscounted Model Year Standards MY MY MY MY MY MY TOTAL Through 2021 2022 2023 2024 2025 2026 Societal Costs and Benefits Through MY 2029 ($b) Technology Costs -51.4 -57.0 -59.4 -82.0 -77.2 0.0 -327.0 Pre-tax Fuel Savings -54.0 -55.0 -31.7 -36.1 -31.6 0.0 -208.4 Mobility Benefit -25.9 -26.6 -16.7 -20.2 -17.5 0.0 -106.9 Refueling Benefit -3.3 -3.5 -2.1 -2.5 -2.3 0.0 -13.6 Non-Rebound Fatality Costs -11.9 -15.6 -14.6 -20.4 -20.2 0.0 -82.7 Rebound Fatality Costs -16.8 -18.2 -11.4 -13.5 -12.3 0.0 -72.2 Benefits Offsetting Rebound -16.8 -18.2 -11.4 -13.5 -12.3 0.0 -72.2 Fatality Costs Non-Rebound Non-Fatal -18.6 -24.3 -22.8 -31.8 -31.6 0.0 -129.1 Crash Costs Rebound Non-Fatal Crash -26.3 -28.4 -17.9 -21.1 -19.3 0.0 -113.0 Costs Benefits Offsetting Rebound -26.3 -28.4 -17.9 -21.1 -19.3 0.0 -113.0 Non-Fatal Crash Costs Congestion and Noise -19.3 -22.0 -17.2 -22.9 -22.3 0.0 -103.7 Energy Security Benefit -4.4 -4.5 -2.6 -3.1 -2.8 0.0 -17.3 C02 Damages -1.8 -1.8 -1.0 -1.2 -1.0 0.0 -6.8 Other Pollutant Damages -0.9 -0.7 0.0 0.7 0.9 0.0 0.1 Total Costs -144.0 -166.0 -143.0 -192.0 -183.0 0.0 -828.0 Total Benefits -133.0 -139.0 -83.4 -96.9 -85.9 0.0 -538.2 Net Benefits 10.9 27.0 59.9 94.8 97.0 0.0 289.6

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Table VII-50- Combined LDV Estimated Electrification Cost Coverage for MYs 2017-2029, GHG P rogram, U n d.1scounte d , M·lrI lOllS 0 f$2016

iHVU'-'i ~ l;;dl Ql llllUUbh MY MY MY MY MY MY TOTAL 2021 2022 2023 2024 2025 2026 Retrievable Electrification -61.1 0.905 -933 -60.6 -843 0.00 -1900 Costs Electrification Tax Credits 0.00 0.00 0.00 -133 -16.0 0.00 -149 Irretrievable Electrification -12.3 0.102 -77.2 -236 -206 0.00 -531 Costs Total Electrification costs -73.4 1.01 -1010 -430 -1060 0.00 -2570

Table VII-51- Combined LDV Societal Net Benefits for MYs 1977-2029, GHG Program, 3% Discount Rate Model Year Standards MY MY MY MY MY MY TOTAL Through 2021 2022 2023 2024 2025 2026 Societal Costs and Benefits Through MY 2029 ($b) Technology Costs -42.0 -45.8 -46.9 -65.0 -60.1 0.0 -259.8 Pre-tax Fuel Savings -36.9 -37.2 -22.1 -25.3 -22.3 0.0 -143.8 Mobility Benefit -17.3 -17.4 -10.8 -13.0 -11.1 0.0 -69.6 Refueling Benefit -2.3 -2.4 -1.4 -1.7 -1.6 0.0 -9.4 Non-Rebound Fatality Costs -7.2 -9.0 -8.0 -11.2 -10.9 0.0 -46.3 Rebound Fatality Costs -11.4 -12.1 -7.5 -8.8 -8.0 0.0 -47.8 Benefits Offsetting Rebound -11.4 -12.1 -7.5 -8.8 -8.0 0.0 -47.8 Fatality Costs Non-Rebound Non-Fatal -11.2 -14.1 -12.5 -17.5 -17.0 0.0 -72.3 Crash Costs Rebound Non-Fatal Crash -17.9 -18.9 -11.7 -13.8 -12.4 0.0 -74.7 Costs Benefits Offsetting Rebound -17.9 -18.9 -11.7 -13.8 -12.4 0.0 -74.7 Non-Fatal Crash Costs Congestion and Noise -12.4 -13.7 -10.2 -13.4 -12.8 0.0 -62.5 Energy Security Benefit -3.0 -3.0 -1.8 -2.2 -2.0 0.0 -11.9 C02 Damages -1.2 -1.2 -0.7 -0.8 -0.7 0.0 -4.7 Other Pollutant Damages -0.7 -0.6 -0.2 0.3 0.4 0.0 -0.8 Total Costs -102.0 -114.0 -96.8 -130.0 -121.0 0.0 -563.8 Total Benefits -90.7 -92.7 -56.2 -65.3 -57.7 0.0 -362.6 Net Benefits 11.3 20.9 40.7 64.4 63.5 0.0 200.8

Table VII-52- Combined LDV Estimated Electrification Cost Coverage for MYs 2017-2029, GHG

P ro !ram, 3%0 n·IS COUllt R a t e, M·lrI lOllS 0 f$2016 Model Year Standards Through MY MY MY MY MY MY TOTAL 2021 2022 2023 2024 2025 2026 Retrievable Electrification -49.1 0.685 -717 -48.0 -679 0.00 -1490 Costs Electrification Tax Credits 0.00 0.00 0.00 -114 -13.3 0.00 -127 Irretrievable Electrification -10.4 0.0803 -63.9 -187 -175 0.00 -436 Costs Total Electrification costs -59.5 0.766 -781 -349 -867 0.00 -2060

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2. What are the private costs and benefits of the proposed standards, relative to the no-action alternative? (a) What are the impacts on producers of new vehicles? (b) CAFE Standards

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Table VII-55- Combined Light-Duty CAFE Compliance Impacts and Cumulative Industry Costs th roue1h MY 2029 MY MY MY MY MY MY Model Year Standards Through TOTAL 2021 2022 2023 2024 2025 2026 Fuel Economy Average Required Fuel 37.0 37.0 37.0 37.0 37.0 37.0 N/A Economy - MY 2026+ (mpg) Percent Change in Stringency -5.4% -10.2% -15.3% -20.6% -26.0% -26.0% N/A from Baseline Average Achieved Fuel 39.7 39.7 39.7 39.7 39.7 39.7 N/A Economy - MY 2030 (mpg) Average Achieved Fuel 37.2 37.2 37.2 37.2 37.2 37.2 N/A Economy - MY 2020 (mpg) Total Regulatory Costs Through MY 2029 Vehicles (7% discount rate) Total Technology Costs ($b) -23.9 -31.0 -39.0 -56.5 -41.9 0.0 -192.3 Total Civil Penalties ($b) -0.7 -0.6 -0.6 -0.1 -0.1 0.0 -2.1 Total Regulatory Costs ($b) -24.5 -31.6 -39.6 -56.6 -41.9 0.0 -194.2 Sales and Revenue Impacts Through MY 2029 Vehicles (7% discount rate for Revenue Change) Sales Change (millions) 0.1 0.2 0.2 0.3 0.2 0.0 1.0 Revenue Change ($b) -23.8 -30.2 -36.8 -52.7 -38.9 0.0 -182.4

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T bl VII 56 C om b.me d L.Igl h t- D uty Fl P enetratwn f or MY 2030 CAFE P rog ram a e -- eet ' MY MY MY MY MY MY Model Year Standards Through 2021 2022 2023 2024 2025 2026 Technology Use Under CAFE Alternative in MY 2030 (total fleet penetration) Curb Weight Reduction (percent change 4.3% 4.3% 4.3% 4.3% 4.3% 4.3% from MY 20 16) High Compression Ratio Non-Turbo 17.2% 17.2% 17.2% 17.2% 17.2% 17.2% Engines Turbocharged Gasoline Engines 51.1% 51.1% 51.1% 51.1% 51.1% 51.1% Dynamic Cylinder Deactivation 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Advanced Transmissions 92.9% 92.9% 92.9% 92.9% 92.9% 92.9% Stop-Start 12V (Non-Hybrid) 13.7% 13.7% 13.7% 13.7% 13.7% 13.7% Mild Hybrid Electric Systems (48v) 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% Strong Hybrid Electric Systems 2.3% 2.3% 2.3% 2.3% 2.3% 2.3% Plug-In Hybrid Electric Vehicles (PHEVs) 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% Dedicated Electric Vehicles (EV s) 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% Fuel Cell Vehicles (FCVs) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Table VII-57 -Light Truck CAFE Compliance Impacts and Cumulative Industry Costs through MY 2029 MY MY MY MY MY MY Model Year Standards Through TOTAL 2021 2022 2023 2024 2025 2026 Fuel Economy Average Required Fuel 31.3 31.3 31.3 31.3 31.3 31.3 N/A Economy - MY 2026+ (mpg) Percent Change in Stringency -6.6% -11.7% -17.0% -22.6% -28.3% -28.3% N/A from Baseline Average Achieved Fuel 33.6 33.6 33.6 33.6 33.6 33.6 N/A Economy - MY 2030 (mpg) Average Achieved Fuel 31.6 31.6 31.6 31.6 31.6 31.6 N/A Economy - MY 2020 (mpg) Total Regulatory Costs Through MY 2029 Vehicles (7% discount rate) Total Technology Costs ($b) -13.1 -20.1 -18.9 -35.8 -20.2 0.0 -108.1 Total Civil Penalties ($b) -0.3 -0.3 -0.4 0.0 -0.1 0.0 -1.0 Total Regulatory Costs ($b) -13.4 -20.4 -19.2 -35.8 -20.2 0.0 -109.0 Sales and Revenue Impacts Through MY 2029 Vehicles (7% discount rate for Revenue Change) Sales Change (millions) -0.4 -0.4 -0.2 -0.1 -0.1 0.0 -1.1 Revenue Change ($b) -20.6 -27.1 -23.0 -37.0 -21.7 0.0 -129.4

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T bl VII 58 L.Igl ht T rue k Fl t P ene t ra f IOn f or MY 2030 CAFE P rogram a e -- ee ' MY MY MY MY MY MY Model Year Standards Through 2021 2022 2023 2024 2025 2026 Technology Use Under CAFE Alternative in MY 2030 (total fleet penetration) Curb Weight Reduction (percent 4.4% 4.4% 4.4% 4.4% 4.4% 4.4% change from MY 20 16) High Compression Ratio Non-Turbo 8.1% 8.1% 8.1% 8.1% 8.1% 8.1% Engines Turbocharged Gasoline Engines 53.1% 53.1% 53.1% 53.1% 53.1% 53.1% Dynamic Cylinder Deactivation 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Advanced Transmissions 98.3% 98.3% 98.3% 98.3% 98.3% 98.3% Stop-Start 12V (Non-Hybrid) 12.3% 12.3% 12.3% 12.3% 12.3% 12.3% Mild Hybrid Electric Systems (48v) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Strong Hybrid Electric Systems 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% Plug-In Hybrid Electric Vehicles 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% (PHEVs) Dedicated Electric Vehicles (EV s) 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% Fuel Cell Vehicles (FCVs) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Table VII-59- Passenger Car CAFE Compliance Impacts and Cumulative Industry Costs through MY 2029 MY MY MY MY MY MY Model Year Standards Through TOTAL 2021 2022 2023 2024 2025 2026 Fuel Economy Average Required Fuel 43.7 43.7 43.7 43.7 43.7 43.7 N/A Economy - MY 2026+ (mpg) Percent Change in Stringency -4.3% -9.2% -14.3% -19.6% -25.2% -25.2% N/A from Baseline Average Achieved Fuel 46.7 46.7 46.7 46.7 46.7 46.7 N/A Economy - MY 2030 (mpg) Average Achieved Fuel 43.9 43.9 43.9 43.9 43.9 43.9 N/A Economy - MY 2020 (mpg) Total Regulatory Costs Through MY 2029 Vehicles (7% discount rate) Total Technology Costs ($b) -10.8 -10.9 -20.1 -20.7 -21.6 0.0 -84.1 Total Civil Penalties ($b) -0.4 -0.4 -0.2 -0.1 0.0 0.0 -1.0 Total Regulatory Costs ($b) -11.1 -11.3 -20.4 -20.8 -21.7 0.0 -85.3 Sales and Revenue Impacts Through MY 2029 Vehicles (7% discount rate for Revenue Change) Sales Change (millions) 0.5 0.5 0.4 0.4 0.3 0.0 2.1 Revenue Change ($b) -3.3 -3.1 -13.7 -15.7 -17.2 0.0 -52.9

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T bl VII 60 P assen~er C ar Fl t P ene t ra f IOn ~or MY 2030 CAFE P ro ~ram a e -- ee ' MY MY MY MY MY MY Model Year Standards Through 2021 2022 2023 2024 2025 2026 Technology Use Under CAFE Alternative in MY 2030 (total fleet penetration) Curb Weight Reduction 4.1% 4.1% 4.1% 4.1% 4.1% 4.1% (percent change from MY 20 16) High Compression Ratio Non- 24.7% 24.7% 24.7% 24.7% 24.7% 24.7% Turbo Engines Turbocharged Gasoline Engines 49.5% 49.5% 49.5% 49.5% 49.5% 49.5% Dynamic Cylinder Deactivation 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Advanced Transmissions 88.5% 88.5% 88.5% 88.5% 88.5% 88.5% Stop-Start 12V (Non-Hybrid) 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% Mild Hybrid Electric Systems 0.7% 0.7% 0.7% 0.7% 0.7% 0.7% (48v) Strong Hybrid Electric Systems 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% Plug-In Hybrid Electric 0.7% 0.7% 0.7% 0.7% 0.7% 0.7% Vehicles (PHEV s) Dedicated Electric Vehicles 0.7% 0.7% 0.7% 0.7% 0.7% 0.7% (EVs) Fuel Cell Vehicles (FCVs) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Table VII-61- Domestic Car CAFE Compliance Impacts and Cumulative Industry Costs through MY 2029 MY MY MY MY MY MY Model Year Standards Through TOTAL 2021 2022 2023 2024 2025 2026 Fuel Economy Average Required Fuel 43.2 43.2 43.2 43.2 43.2 43.2 N/A Economy - MY 2026+ (mpg) Percent Change in Stringency -4.3% -9.1% -14.2% -19.6% -25.2% -25.2% N/A from Baseline Average Achieved Fuel 46.5 46.5 46.5 46.5 46.5 46.5 N/A Economy -MY 2030 (mpg) Average Achieved Fuel 43.6 43.6 43.6 43.6 43.6 43.6 N/A Economy - MY 2020 (mpg) Total Regulatory Costs Through MY 2029 Vehicles (7% discount rate) Total Technology Costs ($b) -6.1 -9.1 -13.9 -12.6 -14.3 0.0 -56.1 Total Civil Penalties ($b) -0.1 -0.1 0.0 0.0 0.2 0.0 0.0 Total Regulatory Costs ($b) -6.2 -9.3 -14.0 -12.5 -14.3 0.0 -56.3 Sales and Revenue Impacts Through MY 2029 Vehicles (7% discount rate for Revenue Change) Sales Change (millions) 0.3 0.3 0.3 0.2 0.2 0.0 1.2 Revenue Change ($b) -1.8 -4.7 -10.3 -9.7 -ll.8 0.0 -38.4

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T bl VII 62 D omes f IC C ar Fl t P ene t ra f IOn f or MY 2030 CAFE P rogram a e -- ee ' MY MY MY MY MY MY Model Year Standards Through 2021 2022 2023 2024 2025 2026 Technology Use Under CAFE Alternative in MY 2030 (total fleet penetration) Curb Weight Reduction (percent 4.8% 4.8% 4.8% 4.8% 4.8% 4.8% change from MY 20 16) High Compression Ratio Non- 12.7% 12.7% 12.7% 12.7% 12.7% 12.7% Turbo Engines Turbocharged Gasoline Engines 61.9% 61.9% 61.9% 61.9% 61.9% 61.9% Dynamic Cylinder Deactivation 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Advanced Transmissions 91.1% 91.1% 91.1% 91.1% 91.1% 91.1% Stop-Start 12V (Non-Hybrid) 11.5% 11.5% 11.5% 11.5% 11.5% 11.5% Mild Hybrid Electric Systems 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% (48v) Strong Hybrid Electric Systems 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% Plug-In Hybrid Electric Vehicles 0.6% 0.6% 0.6% 0.6% 0.6% 0.6% (PHEVs) Dedicated Electric Vehicles 0.6% 0.6% 0.6% 0.6% 0.6% 0.6% (EVs) Fuel Cell Vehicles (FCVs) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Table VII-63- Imported Car CAFE Compliance Impacts and Cumulative Industry Costs through MY 2029 MY MY MY MY MY MY Model Year Standards Through TOTAL 2021 2022 2023 2024 2025 2026 Fuel Economy Average Required Fuel 44.2 44.2 44.2 44.2 44.2 44.2 N/A Economy - MY 2026+ (mpg) Percent Change in Stringency -4.3% -9.2% -14.3% -19.6% -25.3% -25.3% N/A from Baseline Average Achieved Fuel 47.0 47.0 47.0 47.0 47.0 47.0 N/A Economy -MY 2030 (mpg) Average Achieved Fuel 44.1 44.1 44.1 44.1 44.1 44.1 N/A Economy - MY 2020 (mpg) Total Regulatory Costs Through MY 2029 Vehicles (7% discount rate) Total Technology Costs ($b) -4.6 -1.8 -6.2 -8.1 -7.3 0.0 -27.9 Total Civil Penalties ($b) -0.2 -0.3 -0.2 -0.2 -0.1 0.0 -1.0 Total Regulatory Costs ($b) -4.9 -2.0 -6.4 -8.3 -7.4 0.0 -29.0 Sales and Revenue Impacts Through MY 2029 Vehicles (7% discount rate for Revenue Change) Sales Change (millions) 0.2 0.2 0.2 0.1 0.1 0.0 0.9 Revenue Change ($b) -1.4 1.6 -3.4 -6.0 -5.4 0.0 -14.6

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T bl VII 64 I mporte dC ar Fl P enetratwn f or MY 2030 CAFE P rogram a e -- eet ' MY MY MY MY MY MY Model Year Standards Through 2021 2022 2023 2024 2025 2026 Technology Use Under CAFE Alternative in MY 2030 (total fleet penetration) Curb Weight Reduction (percent 3.2% 3.2% 3.2% 3.2% 3.2% 3.2% change from MY 20 16) High Compression Ratio Non- 39.0% 39.0% 39.0% 39.0% 39.0% 39.0% Turbo Engines Turbocharged Gasoline Engines 34.7% 34.7% 34.7% 34.7% 34.7% 34.7% Dynamic Cylinder Deactivation 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Advanced Transmissions 85.4% 85.4% 85.4% 85.4% 85.4% 85.4% Stop-Start 12V (Non-Hybrid) 19.1% 19.1% 19.1% 19.1% 19.1% 19.1% Mild Hybrid Electric Systems (48v) 1.3% 1.3% 1.3% 1.3% 1.3% 1.3% Strong Hybrid Electric Systems 6.5% 6.5% 6.5% 6.5% 6.5% 6.5% Plug-In Hybrid Electric Vehicles 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% (PHEVs) Dedicated Electric Vehicles (EV s) 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% Fuel Cell Vehicles (FCVs) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

(c) CO2 Standards

Table VII-65- Combined Light-Duty C02 Compliance Impacts and Cumulative Industry Costs t h rouglhMY2029 MY MY MY MY MY MY Model Year Standards Through TOTAL 2021 2022 2023 2024 2025 2026

Average C02 Emission Rate Average Required C0 - MY 2 240.0 240.0 240.0 240.0 240.0 240.0 N/A 2026+ (g/mi) Percent Change in Stringency -13.3% -18.5% -24.4% -30.5% -36.9% -36.9% N/A from Baseline Average Achieved C0 - MY 2 229.0 229.0 229.0 229.0 229.0 229.0 N/A 2030 (g/mi) Total Regulatory Costs Through MY 2029 Vehicles (7% discount rate) Total Technology Costs ($b) -32.8 -34.9 -34.9 -48.9 -44.1 0.0 -195.6 Total Civil Penalties ($b) N/A N/A N/A N/A N/A N/A N/A Total Regulatory Costs ($b) -32.8 -34.9 -34.9 -48.9 -44.1 0.0 -195.6 Sales and Revenue Impacts Through MY 2029 Vehicles (7% discount rate for Revenue Change) Sales Change (millions) 0.2 0.2 0.2 0.2 0.2 0.0 1.1 Revenue Change ($b) -31.1 -34.2 -32.4 -45.8 -41.6 0.0 -185.1

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T bl VII 66 C b. d L.Igl ht D t Fl t P t f ~ MY 2030 CO P a e -- om me - my ee ene ra IOn or ' 2 ro gram MY MY MY MY MY MY Model Year Standards Through 2021 2022 2023 2024 2025 2026 Technology Use Under CAFE Alternative in MY 2030 (total fleet penetration) Curb Weight Reduction (percent 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% change from MY 20 16) High Compression Ratio Non-Turbo 12.4% 12.4% 12.4% 12.4% 12.4% 12.4% Engines Turbocharged Gasoline Engines 40.8% 40.8% 40.8% 40.8% 40.8% 40.8% Dynamic Cylinder Deactivation 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Advanced Transmissions 93.6% 93.6% 93.6% 93.6% 93.6% 93.6% Stop-Start 12V (Non-Hybrid) 11.1% 11.1% 11.1% 11.1% 11.1% 11.1% Mild Hybrid Electric Systems (48v) 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% Strong Hybrid Electric Systems 1.8% 1.8% 1.8% 1.8% 1.8% 1.8% Plug-In Hybrid Electric Vehicles 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% (PHEVs) Dedicated Electric Vehicles (EV s) 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% Fuel Cell Vehicles (FCVs) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Table VII-67- Light Truck C02 Compliance Impacts and Cumulative Industry Costs through MY 2029 MY MY MY MY MY MY Model Year Standards Through TOTAL 2021 2022 2023 2024 2025 2026

Average C02 Emission Rate Average Required C0 - MY 2 284.0 284.0 284.0 284.0 284.0 284.0 N/A 2026+ (g/mi) Percent Change in Stringency -14.1% -19.8% -25.7% -32.1% -39.2% -39.2% N/A from Baseline Average Achieved C0 - MY 2 268.0 268.0 268.0 268.0 268.0 268.0 N/A 2030 (g/mi) Total Regulatory Costs Through MY 2029 Vehicles (7% discount rate) Total Technology Costs ($b) -16.2 -18.9 -17.0 -29.3 -22.1 0.0 -103.5 Total Civil Penalties ($b) N/A N/A N/A N/A N/A N/A N/A Total Regulatory Costs ($b) -16.2 -18.9 -17.0 -29.3 -22.1 0.0 -103.5 Sales and Revenue Impacts Through MY 2029 Vehicles (7% discount rate for Revenue Change) Sales Change (millions) -0.4 -0.7 -0.2 -0.1 -0.1 0.0 -1.5 Revenue Change ($b) -23.6 -31.8 -21.1 -31.9 -24.1 0.0 -132.5

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T bl VII 68 L.Igl ht T rue k Fl t P ene t ra f IOn f or MY 2030 CO P rogram a e -- ee ' 2 MY MY MY MY MY MY Model Year Standards Through 2021 2022 2023 2024 2025 2026 Technology Use Under CAFE Alternative in MY 2030 (total fleet penetration) Curb Weight Reduction (percent 4.4% 4.4% 4.4% 4.4% 4.4% 4.4% change from MY 20 16) High Compression Ratio Non-Turbo 6.3% 6.3% 6.3% 6.3% 6.3% 6.3% Engines Turbocharged Gasoline Engines 42.1% 42.1% 42.1% 42.1% 42.1% 42.1% Dynamic Cylinder Deactivation 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Advanced Transmissions 98.6% 98.6% 98.6% 98.6% 98.6% 98.6% Stop-Start 12V (Non-Hybrid) 10.2% 10.2% 10.2% 10.2% 10.2% 10.2% Mild Hybrid Electric Systems (48v) 3.1% 3.1% 3.1% 3.1% 3.1% 3.1% Strong Hybrid Electric Systems 0.7% 0.7% 0.7% 0.7% 0.7% 0.7% Plug-In Hybrid Electric Vehicles 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% (PHEVs) Dedicated Electric Vehicles (EV s) 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% Fuel Cell Vehicles (FCVs) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Table VII-69- Passenger Car C02 Compliance Impacts and Cumulative Industry Costs through MY 2029 MY MY MY MY MY MY Model Year Standards Through TOTAL 2021 2022 2023 2024 2025 2026

Average C02 Emission Rate Average Required C0 - MY 2 204.0 204.0 204.0 204.0 204.0 204.0 N/A 2026+ (g/mi) Percent Change in Stringency -12.7% -17.9% -24.4% -30.8% -36.9% -36.9% N/A from Baseline Average Achieved C0 - MY 2 197.0 198.0 198.0 198.0 198.0 198.0 N/A 2030 (g/mi) Total Regulatory Costs Through MY 2029 Vehicles (7% discount rate) Total Technology Costs ($b) -16.6 -16.1 -17.9 -19.5 -22.0 0.0 -92.1 Total Civil Penalties ($b) N/A N/A N/A N/A N/A N/A N/A Total Regulatory Costs ($b) -16.6 -16.1 -17.9 -19.5 -22.0 0.0 -92.1 Sales and Revenue Impacts Through MY 2029 Vehicles (7% discount rate for Revenue Change) Sales Change (millions) 0.6 0.9 0.4 0.4 0.3 0.0 2.6 Revenue Change ($b) -7.4 -2.4 -11.4 -13.9 -17.5 0.0 -52.7

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(d) What are the impacts on buyers of new vehicles? (e) CAFE Standards

(f) CO2 Standards

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Table VII-72 - Impacts to the Average Consumer of a MY 2030 Vehicle under CAFE Program, 7% Discount Rate Model Year Standards MY MY MY MY MY MY TOTAL Through 2021 2022 2023 2024 2025 2026 Per Vehicle Consumer Impacts for MY 2030 ($) Average Price Increase -200 -280 -380 -500 -490 0 -1,850 Ownership Costs -50 -70 -90 -120 -110 0 -440 Fuel Savings -220 -160 -240 -310 -280 0 -1,210 Mobility Benefit -80 -70 -90 -100 -90 0 -430 Refueling Benefit -10 -10 -10 -10 -10 0 -50 Total Costs -250 -350 -470 -620 -610 0 -2,300 Total Benefits -320 -230 -340 -430 -370 0 -1,690 Net Benefits -60 110 120 210 220 0 600

Table VII-73 - Impacts to the Average Consumer of a MY 2030 Vehicle under C02 Program, 3% Discount Rate Model Year Standards MY MY MY MY MY MY TOTAL Through 2021 2022 2023 2024 2025 2026 Per Vehicle Consumer Impacts for MY 2030 ($) Average Price Increase -240 -340 -420 -580 -680 0 -2,260 Ownership Costs -70 -90 -110 -160 -180 0 -610 Fuel Savings -320 -410 -300 -380 -420 0 -1,830 Mobility Benefit -100 -130 -90 -110 -110 0 -540 Refueling Benefit -10 -20 -10 -10 -20 0 -70 Total Costs -310 -430 -530 -740 -860 0 -2,870 Total Benefits -430 -550 -410 -510 -540 0 -2,440 Net Benefits -120 -130 130 230 320 0 430

Table VII-7 4 - Impacts to the Average Consumer of a MY 2030 Vehicle under C02 Program, 7% Discount Rate Model Year Standards MY MY MY MY MY MY TOTAL Through 2021 2022 2023 2024 2025 2026 Per Vehicle Consumer Impacts for MY 2030 ($) Average Price Increase -240 -340 -420 -580 -680 0 -2,260 Ownership Costs -60 -90 -100 -140 -160 0 -550 Fuel Savings -260 -340 -250 -320 -340 0 -1,510 Mobility Benefit -100 -130 -90 -110 -110 0 -540 Refueling Benefit -10 -20 -10 -10 -20 0 -70 Total Costs -300 -420 -520 -730 -840 0 -2,810 Total Benefits -370 -480 -360 -440 -470 0 -2,120 Net Benefits -70 -60 170 280 370 0 690

D. What are the Energy and impacts on national fuel consumption proposal is expected to indirectly Environmental Impacts? and national CO2 emissions will track in impact such emissions (by reducing virtual lockstep with each other. travel demand and accelerating fleet Today’s proposal directly involves the turnover to newer and cleaner vehicles fuel economy and average CO2 Today’s proposal does not directly emissions of light-duty vehicles, and the involve pollutants such as carbon on one hand while, on the other, proposal is expected to most directly monoxide, smog-forming pollutants increasing activity at refineries and in and significantly impact national fuel (nitrogen oxides and unburned the fuel distribution system), it is expected that these impacts will be consumption and CO2 emissions. Fuel hydrocarbons), final particles, or ‘‘air economy and CO2 emissions are so toxics’’ (e.g., formaldehyde, much smaller than impacts on fuel use closely related that it is expected the acetaldehyde, benzene). While today’s and CO2 emissions because standards

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for these other pollutants are vastly cleaner than in the past, and it is organic compounds (VOCs) and independent of those for CO2 emissions. expected that new vehicles will nitrogen oxides (NOX) — the two motor Following decades of successful continue to improve. For example, the vehicle criteria pollutants that regulation of criteria pollutants and air following chart shows trends in new contribute to the formation of smog. toxics, modern vehicles are already vehicles’ emission rates for volatile

Because new vehicles are so much forming pollutants would continue to under the baseline and proposed cleaner than older models, it is expected decline nearly identically over the next standards (CAFE standards — trends for that under any of the alternatives two decades. The following chart shows CO2 standards would be very similar), considered here for fuel economy and estimated total fuel consumption, CO2 using units that allow the three to be CO2 standards, emissions of smog- emissions, and smog-forming emissions shown together:

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While the differences in fuel use and corresponding difference in smog- following table shows percentage CO2 emissions trends under the baseline forming emissions trends is too small to differences between the amounts shown and proposed standards are clear, the discern. For these three measures, the above:

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As indicated, for most of the coming such as smog, and any positive or emitted by human activities include two decades, it is estimated that, even negative impacts of today’s notice on carbon dioxide (CO2), methane (CH4), as fuel consumption and CO2 emissions these other air quality problems would nitrous oxide (N2O), and several would increase under the proposed most likely be far too small to observe. fluorine-containing halogenated standards (compared to fuel The remainder of this section substances. Although CO2, CH4, and summarizes the impacts on fuel consumption and CO2 emissions under N2O occur naturally in the atmosphere, the baseline standards), smog-forming consumption and emissions for both the human activities have changed their pollution would actually decrease. proposed CAFE standards and the atmospheric concentrations. From the proposed CO standards. During the two decades shown above, it 2 pre-industrial era (i.e., ending about is estimated that the proposed standards 1. Energy and Warming Impacts 1750) to 2016, concentrations of these would increase aggregate fuel Section V discusses, among other greenhouse gases have increased consumption and CO emissions by 2 things, the need of the Nation to globally by 44, 163, and 22%, about four percent but would decrease conserve energy, providing context for respectively.597 The Draft aggregate smog-forming pollution by the estimated impacts on national-scale Environmental Impact Analysis (DEIS) about 0.1% (because impacts of the fuel consumption summarized below. accompanying today’s notice discusses reduced travel and accelerated fleet Corresponding to these changes in fuel potential impacts of greenhouse gases at turnover would outweigh those of consumption, the agencies estimate that greater length, and also summaries increased refining and fuel distribution). today’s proposal will impact CO2 analysis quantifying some of these As the analysis affirms, while fuel emissions. CO2 is one of several impacts (e.g., average temperatures) for economy and CO2 emissions are two greenhouse gases that absorb infrared each of the considered regulatory sides (or, arguably, the same side) of the radiation, thereby trapping heat and alternatives. same coin, fuel economy and CO2 are making the planet warmer. The most only incidentally related to pollutants important greenhouse gases directly (a) CAFE Standards

597 Impacts and U.S. emissions of GHGs are of U.S. Greenhouse Gas Emissions and Sinks (EPA www.epa.gov/sites/production/files/2018-01/ discussed at greater length in EPA’s 2018 Inventory 430–R–18–003) (Apr. 12, 2018), available at https:// documents/2018_complete_report.pdf.

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Table VII-76- Cumulative Changes in Fuel Consumption and GHG Emissions for MY's 1977-2029 V n d er CAFEProgram Model Year Standards MY 2021 MY 2022 MY 2023 MY 2024 MY 2025 MY 2026 TOTAL Through Upstream Emissions C02 (million metric tons) 37.2 23.8 30.4 37.8 21.9 0.0 151 c~ (thousand metric tons) 330 214 274 358 251 0.0 1,430 N20 (thousand metric tons) 5.0 3.2 4.1 5.4 3.9 0.0 21.5 Tailpipe Emissions C02 (million metric tons) 149 97 125 165 122 0.0 658 c~ (thousand metric tons) -2.5 -1.9 -2.4 -2.9 -2.4 0.0 -12.0 N20 (thousand metric tons) -2.2 -1.7 -2.1 -2.5 -2.0 0.0 -10.6 Total Emissions C02 (million metric tons) 186 121 156 203 144 0.0 810 c~ (thousand metric tons) 327 212 272 355 249 0.0 1,420 N20 (thousand metric tons) 2.8 1.5 2.0 2.9 1.9 0.0 11.0 Fuel Consumption (billion 16.7 10.9 14.1 18.3 13.1 0.0 73.1 Gallons)

Table VII-77- Cumulative Changes in Criteria Pollutant Emissions for MY's 1977-2029 Under CAFE p rogram Model Year Standards MY MY MY MY MY MY TOTAL Through 2021 2022 2023 2024 2025 2026 Upstream Emissions CO (million metric tons) 0.0 0.0 0.0 0.0 0.0 0.0 0.1 VOC (thousand metric tons) 48.7 31.6 41.2 53.8 39.4 0.0 215 NOx (thousand metric tons) 27.4 17.5 22.7 28.7 18.7 0.0 115 so2 (thousand metric tons) 20.3 12.6 15.8 18.2 6.8 0.0 73.7 PM (thousand metric tons) 2.1 1.3 1.7 2.2 1.5 0.0 8.8 Tailpipe Emissions CO (million metric tons) -1.0 -0.8 -1.0 -1.3 -1.1 0.0 -5.2 VOC (thousand metric tons) -64.2 -52.2 -65.9 -84.8 -64.7 0.0 -332 NOx (thousand metric tons) -56.4 -42.1 -53.1 -66.7 -52.2 0.0 -271 so2 (thousand metric tons) -0.6 -0.4 -0.5 -0.6 -0.5 0.0 -2.5 PM (thousand metric tons) -2.2 -1.8 -2.3 -2.9 -2.4 0.0 -11.7 Total Emissions CO (million metric tons) -1.0 -0.8 -1.0 -1.3 -1.1 0.0 -5.2 VOC (thousand metric tons) -15.5 -20.6 -24.7 -31.0 -25.3 0.0 -117 NOx (thousand metric tons) -29.0 -24.5 -30.4 -38.1 -33.5 0.0 -156 so2 (thousand metric tons) 19.7 12.2 15.3 17.7 6.4 0.0 71.3 PM (thousand metric tons) -0.1 -0.5 -0.6 -0.7 -1.0 0.0 -2.9

(b) CO2 Standards

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Table VII-78 - Cumulative Changes in Fuel Consumption and GHG Emissions for MY's 1977-2029 Under C02 Proeram Model Year Standards MY MY MY MY2024 MY 2025 MY 2026 TOTAL Through 2021 2022 2023 Upstream Emissions C02 (million metric tons) 45.2 45.4 26.4 24.5 17.6 0.0 159 c~ (thousand metric tons) 398 403 234 268 234 0.0 1,540 N20 (thousand metric tons) 6.0 6.0 3.5 4.1 3.7 0.0 23.3 Tailpipe Emissions C02 (million metric tons) 180 182 106 128 117 0.0 713 c~ (thousand metric tons) -2.8 -3.2 -2.5 -3.1 -2.7 0.0 -14.2 N20 (thousand metric tons) -2.5 -3.0 -2.2 -2.6 -2.3 0.0 -12.6 Total Emissions C02 (million metric tons) 225 228 133 153 134 0.0 873 c~ (thousand metric tons) 396 400 232 265 231 0.0 1,520 N20 (thousand metric tons) 3.5 3.1 1.3 1.5 1.4 0.0 10.7 Fuel Consumption (billion 20.3 20.5 12.0 13.8 12.3 0.0 78.9 Gallons)

Table VII-79- Cumulative Changes in Criteria Pollutant Emissions for MY's 1977-2029 Under GHG p roeram Model Year Standards MY MY MY MY MY MY TOTAL Through 2021 2022 2023 2024 2025 2026 Upstream Emissions CO (million metric tons) 0.0 0.0 0.0 0.0 0.0 0.0 0.1 VOC (thousand metric tons) 59.1 59.8 34.9 41.3 37.3 0.0 232 NOx (thousand metric tons) 33.2 33.1 19.5 19.9 16.2 0.0 122 so2 (thousand metric tons) 24.6 24.0 14.2 8.5 2.6 0.0 73.9 PM (thousand metric tons) 2.5 2.5 1.5 1.6 1.3 0.0 9.4 Tailpipe Emissions CO (million metric tons) -1.2 -1.3 -1.0 -1.4 -1.2 0.0 -6.1 VOC (thousand metric tons) -74.6 -76.2 -62.1 -84.9 -74.5 0.0 -372 NOx (thousand metric tons) -63.0 -65.3 -51.7 -69.8 -61.9 0.0 -312 so2 (thousand metric tons) -0.6 -0.7 -0.5 -0.6 -0.5 0.0 -3.0 PM (thousand metric tons) -2.5 -2.9 -2.4 -3.1 -2.9 0.0 -13.8 Total Emissions CO (million metric tons) -1.1 -1.2 -1.0 -1.4 -1.2 0.0 -6.0 VOC (thousand metric tons) -15.5 -16.5 -27.2 -43.6 -37.2 0.0 -140 NOx (thousand metric tons) -29.8 -32.2 -32.2 -49.9 -45.7 0.0 -190 so2 (thousand metric tons) 24.0 23.3 13.7 7.9 2.1 0.0 71.0 PM (thousand metric tons) 0.0 -0.4 -0.9 -1.6 -1.6 0.0 -4.4

2. How would the proposal impact incremental impacts on criteria and air methodology used to calculate those emissions of criteria and toxic toxic pollutant emissions would be too impacts; the health and environmental pollutants? small to observe under any of the effects associated with the criteria and Although this proposal focuses on regulatory alternatives under toxic air pollutants that are being consideration. Nevertheless, the impacted by this proposal; the potential standards for fuel economy and CO2, it will also have an impact on criteria and following sections detail the criteria impact of this proposal on air toxic pollutant emissions, although pollutant and air toxic inventory concentrations of criteria and air toxic as discussed above, it is expected that impacts of this proposal; the pollutants in the ambient air; and other

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unquantified health and environmental calculate each of these three sources of great enough to compensate for effects. impacts.598 increased emissions from fuel refining Today’s analysis reflects the As shown in Table VII–80, it is and distribution and therefore an overall combined result of several underlying estimated in 2025 the light duty vehicle increase in total PM2.5 and SOx is seen impacts, all discussed above. CAFE and CAFE scenarios would result in in 2025. Similar results can be seen in CO2 standards are estimated to impacts reductions of NOX, VOC, and CO, and Table VII–81 which shows results for 599 increases in PM2.5 and SOx. For NOx, new vehicle prices, fuel economy levels, the CO2 target scenarios. and CO emission rates. These changes VOC, and CO, it is estimated net 2 In 2035, Table VII–82 shows are estimated to impact the size and reductions result from lower composition of the new vehicle fleet downstream, or tailpipe emissions in decreases in total CO result from all and to impact the retention of older the scenarios evaluated. This is a result CAFE scenarios, while NOX, VOC, SO2, vehicles (i.e., vehicle survival and of reduced VMT rebound as well as and PM2.5 increase. Tailpipe CO scrappage) that tend to have higher fewer older vehicles in the scenarios as emissions reductions more than offset criteria and toxic pollutant emission compared to the baseline. Because the increases in upstream CO emissions. For rates. Along with the rebound effect, scenarios result in greater fuel NOX, VOC, SO2, and PM2.5 however, these lead to changes in the overall consumption than the baseline, upstream emissions increases are not amount of highway travel and the however, upstream emissions associated offset by tailpipe NOX, VOC, SO2, and distribution among different vehicles in with fuel refining and distribution PM2.5 emissions reductions. Similar the on-road fleet. Vehicular emissions increase for all pollutants in all results can be seen in the CO2 target depend on the overall amount of scenarios as compared to the baseline. scenarios for 2035 shown in Table VII– Tailpipe emissions reductions for NOx, highway travel and the distribution of 83, with the exception that NOX that travel among different vehicles, and VOC, and CO more than compensate for emission decrease for scenarios 1–4 and emissions from ‘‘upstream’’ processes this increase in 2025. PM2.5 and SOx, increase for scenarios 5–8. For all tailpipe emissions reductions are not (e.g., petroleum refining, electricity criteria pollutants, the overall impact of generation) depend on the total the proposed program would be small 598 The agencies have employed the same consumption of different types of fuels methodology in this rulemaking to estimate the compared to total U.S. inventories for light-duty vehicles. effect of each alternative on emissions of PM and across all sectors. other criteria pollutants emissions as they have (a) Impacts previously applied in the other rulemakings under the National Program. Briefly, emissions from In addition to affecting fuel vehicle use are estimated for each calendar year of consumption and emissions of the analysis period by applying emission rates per greenhouse gases, this rule would vehicle-mile of travel to estimates of VMT for cars influence ‘‘non-GHG’’ pollutants, i.e., and light trucks produced during each model year making up the vehicle fleet. These emission rates ‘‘criteria’’ air pollutants and their are derived from EPA’s Motor Vehicle Emissions precursors, and air toxics. The proposal Simulator (MOVES); they reflect normal increases would affect emissions of carbon in vehicles’ emission rates as they age and monoxide (CO), fine particulate matter accumulate mileage, as well as adopted and pending vehicle emission standards and regulations (PM2.5), sulfur dioxide (SOX), volatile on fuel composition. ‘‘Upstream’’ emissions from organic compounds (VOC), nitrogen crude oil production, fuel refining, and fuel oxides (NOX), benzene, 1,3-butadiene, distribution are estimated from the total energy content of fuels produced and consumed (gasoline, formaldehyde, acetaldehyde, and diesel, ethanol, and electricity), using separate acrolein. Consistent with the evaluation emission factors per unit of fuel energy for each conducted for the Environmental Impact phase of fuel production and distribution derived Statement accompanying this NPRM, from Argonne National Laboratories’ Greenhouse Gases and Regulated Emissions in Transportation the agency analyzed criteria air (GREET) fuel cycle model. This procedure accounts pollutant impacts in 2025 and 2035 (as for differences in domestic emissions associated a representation of future program with refining fuel from imported and domestically- impacts). Estimates of these non-GHG supplied crude petroleum, as well as from importing fuel that has been refined outside the emission impacts are shown by U.S. Economic damages caused by emissions from pollutant in Table VII–80 through Table vehicle use and from fuel production and VII–87 and are broken down by the two distribution are monetized using different per-ton drivers of these changes: (a) values, which reflect differences in the locations where emissions occur and resulting variation in ‘‘downstream’’ emission changes, population exposure to their potential adverse reflecting the estimated effects of VMT health effects. However, we note that in some other rebound (discussed in Chapter 8.7 of the rules affecting tailpipe emissions of criteria PRIA), changes in vehicle fleet age, pollutants, EPA has employed more detailed methods for estimating emissions associated with changes in vehicle emission standards, different phases of fuel production and distribution, and changes in fuel consumption; and and has also used more detailed estimates of their (b) ‘‘upstream’’ emission increases per-ton health damage costs that reflect variation in population exposure to emissions occurring during because of increased refining and different phases of fuel production and distribution. distribution of motor vehicle gasoline The agencies will consider whether to employ these relative to the baseline. Program impacts more detailed procedures in their analysis on criteria and toxics emissions are supporting the final rule. 599 discussed below, followed by individual While estimates for CY 2025 and 2035 are shown here, estimates through 2050 are shown in discussions of the methodology used to PRIA Chapter 5.

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Table VII-80 - Criteria Emissions in 2025 (1,000 metric tons) under Fuel Economy Targets t Alt.1 Alt. 2 Alt. 3 Alt. 4 Alt. 5 Alt. 6 Alt. 7 Alt.8 tailpipe -174.789 -163.704 -155.704 -136.685 -102.784 -98.207 -71.136 -58.049 co upstream 3.087 2.901 2.771 2.396 1.723 1.720 1.299 1.083 total -171.703 -160.802 -152.933 -134.289 -101.061 -96.487 -69.837 -56.966 tailpipe -15.250 -14.308 -13.596 -12.117 -9.260 -8.862 -6.460 -5.285 voc upstream 11.485 10.825 10.346 9.020 6.595 6.566 5.009 4.269 total -3.765 -3.482 -3.249 -3.097 -2.664 -2.295 -1.451 -1.016 tailpipe -11.506 -10.732 -10.220 -8.980 -6.708 -6.550 -4.810 -3.786 NOx upstream 6.275 5.900 5.636 4.886 3.532 3.522 2.668 2.241 total -5.231 -4.832 -4.584 -4.094 -3.176 -3.027 -2.141 -1.546 tailpipe -0.073 -0.068 -0.064 -0.054 -0.037 -0.035 -0.025 -0.020 so2 upstream 4.078 3.806 3.630 3.074 2.104 2.119 1.553 1.202 total 4.005 3.738 3.566 3.021 2.067 2.084 1.528 1.182 tailpipe -0.303 -0.283 -0.270 -0.235 -0.175 -0.167 -0.120 -0.098 PM2s upstream 0.474 0.446 0.426 0.370 0.268 0.267 0.203 0.171 total 0.171 0.162 0.156 0.135 0.093 0.100 0.082 0.073

Table VII-81- Criteria Emissions in 2025 (1,000 metric tons) under C02 Targets Pollutant Alt. 1 Alt. 2 Alt. 3 Alt. 4 Alt. 5 Alt. 6 Alt. 7 Alt.8 tailpipe -140.738 -133.545 -127.227 -99.668 -55.956 -60.866 -39.908 -27.145 co upstream 2.528 2.430 2.276 1.784 1.006 1.078 0.725 0.501 total -138.210 -131.115 -124.951 -97.884 -54.949 -59.788 -39.183 -26.644 tailpipe -11.916 -11.283 -10.812 -8.599 -4.906 -5.447 -3.636 -2.492 voc upstream 9.242 8.879 8.331 6.571 3.793 4.043 2.638 1.960 total -2.674 -2.404 -2.481 -2.028 -1.114 -1.404 -0.999 -0.532 tailpipe -9.160 -8.650 -8.280 -6.440 -3.547 -3.923 -2.607 -1.724 NOx upstream 5.104 4.905 4.596 3.609 2.049 2.193 1.451 1.030 total -4.057 -3.745 -3.684 -2.832 -1.497 -1.730 -1.157 -0.694 tailpipe -0.064 -0.061 -0.057 -0.043 -0.022 -0.023 -0.014 -0.009 so2 upstream 3.504 3.370 3.143 2.428 1.290 1.397 0.849 0.573 total 3.440 3.309 3.086 2.385 1.268 1.374 0.836 0.564 tailpipe -0.247 -0.234 -0.223 -0.173 -0.096 -0.104 -0.068 -0.045 PM2s upstream 0.384 0.369 0.346 0.272 0.155 0.166 0.115 0.078 total 0.137 0.135 0.123 0.099 0.059 0.062 0.047 0.033

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As shown in Table VII–84 through toxics as compared to the baseline. This compared to the baseline. As is the case Table VII–87, it is estimated that the result is caused by greater VMT rebound with criteria emissions, upstream toxic proposed program would result in small miles assumed in the augural scenario emissions generally increase in the changes for air toxic emissions and fewer rebound VMT in scenarios 1– evaluated scenarios as compared to the compared to total U.S. inventories 8, and fewer older vehicles in the baseline because of the greater amount across all sectors. In 2025, it is scenarios as compared to the baseline. of gasoline and diesel being refined and estimated the scenarios evaluated would Similarly, in 2035, acetaldehyde, distributed. reduce total acetaldehyde, acrolein, benzene, butadiene, acrolein, and benzene, butadiene, and formaldehyde, formaldehyde would all be reduced as

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Table VII-84- Toxic Emissions in 2025 1,000 metric tons ) under Fuel Economy Targets Pollutant Alt.l Alt. 2 Alt. 3 Alt. 4 Alt. 5 Alt. 6 Alt. 7 Alt.8 Acetaldehyde tailpipe -0.117 -0.109 -0.104 -0.091 -0.067 -0.064 -0.046 -0.038 upstream 0.002 0.002 0.002 0.002 0.001 0.001 0.001 0.001 total -0.114 -0.107 -0.102 -0.089 -0.066 -0.063 -0.046 -0.037 Acrolein tailpipe -0.006 -0.006 -0.005 -0.005 -0.004 -0.003 -0.002 -0.002 upstream 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 total -0.006 -0.005 -0.005 -0.005 -0.003 -0.003 -0.002 -0.002 Benzene tailpipe -0.457 -0.428 -0.407 -0.361 -0.274 -0.263 -0.192 -0.156 upstream 0.044 0.041 0.040 0.034 0.025 0.025 0.019 0.016 total -0.413 -0.387 -0.368 -0.327 -0.249 -0.238 -0.172 -0.140 Butadiene tailpipe -0.054 -0.051 -0.048 -0.043 -0.032 -0.031 -0.022 -0.018 upstream 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 total -0.054 -0.050 -0.048 -0.042 -0.032 -0.031 -0.022 -0.018 Formaldehyde tailpipe -0.092 -0.086 -0.082 -0.072 -0.055 -0.052 -0.038 -0.031 upstream 0.016 0.015 0.015 0.013 0.009 0.009 0.007 0.006 total -0.076 -0.071 -0.068 -0.060 -0.045 -0.043 -0.031 -0.025

Table VII-85- Toxic Emissions in 2025 (1,000 metric tons) under C02 Tar~ets Pollutant Alt.l Alt. 2 Alt. 3 Alt. 4 Alt. 5 Alt. 6 Alt. 7 Alt.8 Acetaldehyde tailpipe -0.095 -0.090 -0.086 -0.067 -0.037 -0.040 -0.026 -0.018 upstream 0.002 0.002 0.002 0.001 0.001 0.001 0.000 0.000 total -0.093 -0.088 -0.084 -0.065 -0.036 -0.039 -0.025 -0.017 Acrolein tailpipe -0.005 -0.005 -0.004 -0.004 -0.002 -0.002 -0.001 -0.001 upstream 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 total -0.005 -0.005 -0.004 -0.003 -0.002 -0.002 -0.001 -0.001 Benzene tailpipe -0.361 -0.341 -0.327 -0.258 -0.146 -0.161 -0.107 -0.073 upstream 0.035 0.034 0.032 0.025 0.015 0.015 0.010 0.008 total -0.325 -0.308 -0.295 -0.233 -0.132 -0.146 -0.097 -0.066 Butadiene tailpipe -0.043 -0.041 -0.039 -0.031 -0.018 -0.019 -0.012 -0.009 upstream 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 total -0.043 -0.041 -0.039 -0.031 -0.017 -0.019 -0.012 -0.009 Formaldehyde tailpipe -0.074 -0.070 -0.067 -0.052 -0.029 -0.032 -0.021 -0.015 upstream 0.013 0.013 0.012 0.009 0.005 0.006 0.004 0.003 total -0.061 -0.057 -0.055 -0.043 -0.024 -0.026 -0.017 -0.012

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(b) Methodology emissions from light duty cars and For a more detailed description of the trucks attributable to the rebound effect method used to estimate emissions, For the downstream analysis, were also calculated using the CAFE please refer to pages 104–106 of the emission factors in grams per mile for model. A more complete discussion of CAFE model documentation. VOC, CO, NOX, PM2.5, and air toxics by the inputs, methodology, and results is For the purposes of this emission vehicle model year and age were taken contained in PRIA Chapter 6. This analysis, it is assumed that all gasoline from the current version of the EPA proposal also assumes implementation in the timeframe of the analysis is ‘‘Motor Vehicle Emission Simulator’’ of EPA’s Tier 3 emission standards.600 blended with 10% ethanol (E10). While (MOVES2014a) and multiplied in the electric vehicles have zero tailpipe CAFE model by assumed VMT to estimate mass VOC, CO, NOX, PM2.5, 600 See 79 FR 23414 (April 28, 2014). EPA’s Tier vehicle emissions and the sulfur content of and air toxics emissions. Additional 3 emissions standards included standards for gasoline.

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emissions, it is assumed that formaldehyde. These emission factors Generally, the three broad classes of manufacturers will plan for these came from the MOVES 2014a model and particles include ultrafine particles vehicles in their regulatory compliance were incorporated into the CAFE model. (UFPs, generally considered as strategy for non-GHG emissions Emission factors for electricity particulates with a diameter less than or standards, and will not over-comply upstream emissions were also based on equal to 0.1 mm [typically based on with those standards. Because the Tier GREET 2017. GREET allows the user to physical size, thermal diffusivity or 3 emissions standards are fleet-average either select a region of the country for electrical mobility]), ‘‘fine’’ particles standards (for all pollutants except the electricity upstream emissions or to (PM2.5; particles with a nominal mean formaldehyde and PM2.5), it is assumed use the U.S. average of electricity aerodynamic diameter less than or equal that if a manufacturer introduces EVs emissions. The regional emission factors to 2.5 mm), and ‘‘thoracic’’ particles into its fleet, that it would reflect the specific mix of fuels used to (PM10; particles with a nominal mean correspondingly compensate through generate electricity in the selected aerodynamic diameter less than or equal changes to vehicles elsewhere in its region. The U.S. mix provides an to 10 mm).602 Particles that fall within fleet, rather than meet an overall lower average of electricity-related emissions the size range between PM2.5 and PM10, fleet-average emissions level. (in grams per million Btu) in the U.S. in are referred to as ‘‘thoracic coarse Consequently, no tailpipe pollutant a given calendar year. The GREET 2017 particles’’ (PM10–2.5, particles with a benefit (other than CO2, formaldehyde, U.S. mix emission factors were used for nominal mean aerodynamic diameter and PM2.5) is assumed. The analysis the analysis. In order to capture less than or equal to 10 mm and greater does not estimate evaporative emissions projected changes in upstream than 2.5 mm). EPA currently has from light-duty vehicles. Other factors emissions over time, upstream emission standards that regulate PM2.5 and 603 which may impact downstream non- factors for gasoline, diesel, and PM10. GHG emissions, but are not estimated in electricity were taken from the GREET Particles span many sizes and shapes this analysis, include the potential for 2017 model in five year increments, and may consist of hundreds of different decreased criteria pollutant emissions beginning in 1995 and ending in 2040. chemicals. Particles are emitted directly because of increased air conditioner For the downstream analysis of from sources and are also formed efficiency; reduced refueling emissions emissions, there are a number of through atmospheric chemical because of less frequent refueling events uncertainties associated with the reactions; the former are often referred and reduced annual refueling volumes method, such as: Emission factors are to as ‘‘primary’’ particles, and the latter resulting from the CO2 standards; and based on samples of tested vehicles and as ‘‘secondary’’ particles. Particle increased hot soak evaporative these samples may not represent average concentration and composition varies emissions because of the likely increase emissions for the full in-use fleet; and by time of year and location, and, in in number of trips associated with VMT there is considerable uncertainty in addition to differences in source rebound modeled in this proposal. In estimating total vehicle use (VMT). For emissions, is affected by several all, these additional analyses would the upstream analysis of emissions, weather-related factors, such as likely result in small changes relative to there are uncertainties related to the temperature, clouds, humidity, and the national inventory. projection of emissions associated with wind. A further layer of complexity To determine the impacts of increased fossil fuel extraction, refining, and mode comes from particles’ ability to shift fuel production on upstream emissions, split for transportation of fuels. In between solid/liquid and gaseous the impact of increased gasoline addition, projections for electricity- phases, which is influenced by consumption by light-duty vehicles on related upstream emissions are based on concentration and meteorology, the extraction and transportation of assumptions about the fuels and especially temperature. crude oil, refining of crude oil, and technologies used to generate electricity Fine particles are produced primarily distribution and storage of finished which may not represent actual by combustion processes and by gasoline was estimated. To assess the conditions through 2050. transformations of gaseous emissions resulting increases in domestic (e.g., sulfur oxides (SOX), oxides of emissions, the fraction of increased E. Health Effects of Non-GHG Pollutants nitrogen, and volatile organic gasoline consumption that would be This section discusses health effects compounds (VOC)) in the atmosphere. supplied by additional domestic associated with exposure to some of the The chemical and physical properties of refining of gasoline, and the fraction of criteria and air toxic pollutants PM2.5 may vary greatly with time, that gasoline that would be refined from impacted by the proposed vehicle region, meteorology, and source domestic crude oil was estimated. Using standards. category. Thus, PM2.5 may include a NEMS, it was estimated that 50% of complex mixture of different 1. Particulate Matter increased gasoline consumption would components including sulfates, nitrates, be supplied by increased domestic (a) Background organic compounds, elemental carbon refining and that 90% of this additional Particulate matter is a highly complex and metal compounds. These particles refining would use imported crude mixture of solid particles and liquid can remain in the atmosphere for days petroleum. Emission factors for most droplets distributed among numerous 602 U.S. EPA. (2009). Integrated Science upstream emission sources are based on atmospheric gases which interact with the DOE Argonne National Laboratory’s Assessment for Particulate Matter (Final Report). solid and liquid phases. Particles range U.S. Environmental Protection Agency, 601 GREET 2017 model, but emission in size from those smaller than 1 Washington, DC, EPA/600/R–08/139F. Figure 3–1. factors developed by EPA were relied on nanometer (10–9 meter) to more than 603 Regulatory definitions of PM size fractions, for the air toxics estimated in this 100 micrometers (mm, or 10–6 meter) in and information on reference and equivalent analysis: benzene, 1,3-butadiene, methods for measuring PM in ambient air, are diameter (for reference, a typical strand provided in 40 CFR parts 50, 53, and 58. With acetaldehyde, acrolein, and of human hair is 70 mm in diameter and regard to national ambient air quality standards a grain of salt is approximately 100 mm). (NAAQS) which provide protection against health 601 Greenhouse Gas, Regulated Emissions, and and welfare effects, the 24-hour PM10 standard Energy Use in Transportation model (GREET), U.S. Atmospheric particles can be grouped provides protection against effects associated with Department of Energy, Argonne National into several classes according to their short-term exposure to thoracic coarse particles Laboratory, https://greet.es.anl.gov/. aerodynamic and physical sizes. (i.e., PM10–2.5).

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to weeks and travel hundreds to As summarized in the final rule is from studies that evaluated thousands of kilometers. promulgating the 2012 PM NAAQS, and decrements in lung function growth (in discussed extensively in the 2009 PM children), increased respiratory (b) Health Effects of PM ISA, the available scientific evidence symptoms, and asthma development. Scientific studies show exposure to significantly strengthens the link The strongest evidence from short-term ambient PM is associated with a broad between long- and short-term exposure PM2.5 exposure studies has been range of health effects. These health to PM2.5 and mortality, while providing observed for increased respiratory- effects are discussed in detail in the indications that the magnitude of the related emergency department visits and 2009 Integrated Science Assessment for PM2.5-mortality association with long- hospital admissions for chronic Particulate Matter (PM ISA), which was term exposures may be larger than obstructive pulmonary disease (COPD) used as the basis of the 2012 NAAQS.604 previously estimated.610 611 The and respiratory infections.613 The PM ISA summarizes health effects strongest evidence comes from recent The body of scientific evidence evidence for short- and long-term studies investigating long-term exposure detailed in the 2009 PM ISA is still exposures to PM2.5, PM10–2.5, and to PM2.5 and cardiovascular-related limited with respect to associations 605 ultrafine particles. The PM ISA mortality. The evidence supporting a between long-term PM2.5 exposures and concludes that human exposures to causal relationship between long-term developmental and reproductive effects ambient PM2.5 are associated with a PM2.5 exposure and mortality also as well as cancer, mutagenic, and number of adverse health effects and includes consideration of studies that genotoxic effects. The strongest characterizes the weight of evidence for demonstrated an improvement in evidence for an association between broad health categories (e.g., community health following reductions PM2.5 and developmental and cardiovascular effects, respiratory in ambient fine particles. reproductive effects comes from effects, etc.).606 The discussion below The 2009 PM ISA examined the epidemiological studies of low birth highlights the PM ISA’s conclusions association between cardiovascular weight and infant mortality, especially pertaining to health effects associated effects and long-term PM2.5 exposures in due to respiratory causes during the with both short- and long-term PM multi-city epidemiological studies post-neonatal period (i.e., 1 month to 12 exposures. Further discussion of health conducted in the U.S. and Europe. months of age).614 With regard to cancer effects associated with PM can also be These studies have provided new effects, ‘‘[m]ultiple epidemiologic found in the rulemaking documents for evidence linking long-term exposure to studies have shown a consistent the most recent review of the PM PM2.5 with an array of cardiovascular positive association between PM2.5 and 607 608 NAAQS completed in 2012. effects such as heart attacks, congestive lung cancer mortality, but studies have EPA has concluded that ‘‘a causal heart failure, stroke, and mortality. This generally not reported associations relationship exists’’ between both long- evidence is coherent with between PM2.5 and lung cancer and short-term exposures to PM2.5 and epidemiological studies of effects incidence.’’ 615 premature mortality and cardiovascular associated with short-term exposure to In addition to evaluating the health effects and that ‘‘a causal relationship is effects attributed to short- and long-term PM2.5 that have observed associations likely to exist’’ between long- and short- with a continuum of effects ranging exposure to PM2.5, the 2009 PM ISA also term PM2.5 exposures and respiratory from subtle changes in indicators of evaluated whether specific components effects. Further, there is evidence cardiovascular health to serious clinical or sources of PM2.5 are more strongly ‘‘suggestive of a causal relationship’’ events, such as increased associated with specific health effects. between long-term PM exposures and 2.5 hospitalizations and emergency The 2009 PM ISA concluded that ‘‘many other health effects, including department visits due to cardiovascular [components] of PM can be linked with developmental and reproductive effects disease and cardiovascular mortality.612 differing health effects, and the (e.g., low birth weight, infant mortality) As detailed in the 2009 PM ISA, evidence is not yet sufficient to allow and carcinogenic, mutagenic, and extended analyses of seminal differentiation of those [components] or genotoxic effects (e.g., lung cancer epidemiological studies, as well as more sources that are more closely related to 609 616 mortality). recent epidemiological studies specific health outcomes.’’ For PM10–2.5, the 2009 PM ISA 604 conducted in the U.S. and abroad, U.S. EPA. (2009). Integrated Science provide strong evidence of respiratory- concluded that available evidence was Assessment for Particulate Matter (Final Report). ‘‘suggestive of a causal relationship’’ U.S. Environmental Protection Agency, related morbidity effects associated with between short-term exposures to Washington, DC, EPA/600/R–08/139F. long-term PM2.5 exposure. The strongest 605 The ISA also evaluated evidence for evidence for respiratory-related effects PM10–2.5 and cardiovascular effects (e.g., individual PM components but did not reach causal hospital admissions and Emergency determinations for components. Department (ED) visits, changes in 606 The causal framework draws upon the available in this review but also reflect assessment and integration of evidence from across consideration of important progress that has been epidemiological, controlled human exposure, and made to advance our understanding of a number of 613 U.S. EPA. (2009). Integrated Science toxicological studies, and the related uncertainties potential biologic modes of action or pathways for Assessment for Particulate Matter (Final Report). that ultimately influence our understanding of the PM-related cardiovascular and respiratory effects U.S. Environmental Protection Agency, evidence. This framework employs a five-level (U.S. EPA. (2009). Integrated Science Assessment Washington, DC, EPA/600/R–08/139F, Chapter 2 hierarchy that classifies the overall weight of for Particulate Matter (Final Report). U.S. (Section 2.3.1 and 2.3.2) and Chapter 6. evidence and causality using the following Environmental Protection Agency, Washington, DC, 614 U.S. EPA. (2009). Integrated Science categorizations: Causal relationship, likely to be EPA/600/R–08/139F, Chapter 5). Assessment for Particulate Matter (Final Report). causal relationship, suggestive of a causal 610 78 FR 3103–3104 (Jan. 15, 2013). U.S. Environmental Protection Agency, relationship, inadequate to infer a causal 611 U.S. EPA. (2009). Integrated Science Washington, DC, EPA/600/R–08/139F, Chapter 2 relationship, and not likely to be a causal Assessment for Particulate Matter (Final Report). (Section 2.3.1 and 2.3.2) and Chapter 7. relationship (U.S. EPA. (2009). Integrated Science U.S. Environmental Protection Agency, 615 U.S. EPA. (2009). Integrated Science Assessment for Particulate Matter (Final Report). Washington, DC, EPA/600/R–08/139F, Chapter 6 Assessment for Particulate Matter (Final Report). U.S. Environmental Protection Agency, (Section 6.5) and Chapter 7 (Section 7.6). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R–08/139F, Table 1–3). 612 U.S. EPA. (2009). Integrated Science Washington, DC, EPA/600/R–08/139F. pg 2–13. 607 78 FR 3103–3104 (Jan. 15, 2013). Assessment for Particulate Matter (Final Report). 616 U.S. EPA. (2009). Integrated Science 608 77 FR 38906–38911 (June 29, 2012). U.S. Environmental Protection Agency, Assessment for Particulate Matter (Final Report). 609 These causal inferences are based not only on Washington, DC, EPA/600/R–08/139F, Chapter 2 U.S. Environmental Protection Agency, the more expansive epidemiological evidence (Section 2.3.1 and 2.3.2) and Chapter 6. Washington, DC, EPA/600/R–08/139F. pg 2–26.

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cardiovascular function), respiratory for additional potentially at-risk the weight of evidence for these health effects (e.g., ED visits and hospital populations and lifestages, such as those effects.629 The discussion below admissions, increase in markers of with diabetes, people who are obese, highlights the Ozone ISA’s conclusions pulmonary inflammation), and pregnant women, and the developing pertaining to health effects associated premature mortality. The scientific fetus.626 with both short-term and long-term evidence was ‘‘inadequate to infer a periods of exposure to ozone. 2. Ozone causal relationship’’ between long-term For short-term exposure to ozone, the exposure to PM10–2.5 and various health (a) Background Ozone ISA concludes that respiratory effects.617 618 619 Ground-level ozone pollution is effects, including lung function For UFPs, the 2009 PM ISA typically formed through reactions decrements, pulmonary inflammation, concluded that the evidence was exacerbation of asthma, respiratory- involving VOC and NOX in the lower ‘‘suggestive of a causal relationship’’ atmosphere in the presence of sunlight. related hospital admissions, and between short-term exposures and These pollutants, often referred to as mortality, are causally associated with cardiovascular effects, including ozone precursors, are emitted by many ozone exposure. It also concludes that changes in heart rhythm and vasomotor types of sources, such as highway and cardiovascular effects, including function (the ability of blood vessels to nonroad motor vehicles and engines, decreased cardiac function and expand and contract). It also concluded power plants, chemical plants, increased vascular disease, and total that there was evidence ‘‘suggestive of a refineries, makers of consumer and mortality are likely to be causally causal relationship’’ between short-term commercial products, industrial associated with short-term exposure to exposure to UFPs and respiratory facilities, and smaller area sources. ozone, and that evidence is suggestive of effects, including lung function and The science of ozone formation, a causal relationship between central pulmonary inflammation, with limited transport, and accumulation is complex. nervous system effects and short-term and inconsistent evidence for increases Ground-level ozone is produced and exposure to ozone. in ED visits and hospital admissions. destroyed in a cyclical set of chemical For long-term exposure to ozone, the Scientific evidence was ‘‘inadequate to reactions, many of which are sensitive Ozone ISA concludes that respiratory infer a causal relationship’’ between to temperature and sunlight. When effects, including new onset asthma, short-term exposure to UFPs and ambient temperatures and sunlight pulmonary inflammation and injury, are additional health effects including levels remain high for several days and likely to be causally related with ozone premature mortality as well as long-term the air is relatively stagnant, ozone and exposure. The Ozone ISA characterizes exposure to UFPs and all health its precursors can build up and result in the evidence as suggestive of a causal outcomes evaluated.620 621 more ozone than typically occurs on a relationship for associations between The 2009 PM ISA conducted an single high-temperature day. Ozone and long-term ozone exposure and evaluation of specific groups within the its precursors can be transported cardiovascular effects, reproductive and general population potentially at hundreds of miles downwind from developmental effects, central nervous increased risk for experiencing adverse precursor emissions, resulting in system effects and total mortality. The health effects related to PM elevated ozone levels even in areas with evidence is inadequate to infer a causal exposures.622 623 624 625 The evidence relationship between chronic ozone low local VOC or NOX emissions. detailed in the 2009 PM ISA expands exposure and increased risk of lung our understanding of previously (b) Health Effects of Ozone cancer. identified at-risk populations and This section provides a summary of Finally, inter-individual variation in lifestages (i.e., children, older adults, the health effects associated with human responses to ozone exposure can and individuals with pre-existing heart exposure to ambient concentrations of result in some groups being at increased and lung disease) and supports the ozone.627 The information in this risk for detrimental effects in response identification of additional at-risk section is based on the information and to exposure. In addition, some groups populations (e.g., persons with lower conclusions in the February 2013 are at increased risk of exposure due to socioeconomic status, genetic Integrated Science Assessment for their activities, such as outdoor workers differences). Additionally, there is Ozone (Ozone ISA), which formed the or children. The Ozone ISA identified emerging, though still limited, evidence basis for EPA’s revision to the primary several groups that are at increased risk and secondary standards in 2015.628 for ozone-related health effects. These 617 U.S. EPA. (2009). Integrated Science The Ozone ISA concludes that human groups are people with asthma, children Assessment for Particulate Matter (Final Report). exposures to ambient concentrations of and older adults, individuals with U.S. Environmental Protection Agency, Washington, DC, EPA/600/R–08/139F. Section 2.3.4 ozone are associated with a number of reduced intake of certain nutrients (i.e., and Table 2–6. adverse health effects and characterizes Vitamins C and E), outdoor workers, 618 78 FR 3167–3168 (Jan. 15, 2013). and individuals having certain genetic 619 77 FR 38947–38951 (June 29, 2012). 626 U.S. EPA. (2009). Integrated Science variants related to oxidative metabolism 620 U.S. EPA. (2009). Integrated Science Assessment for Particulate Matter (Final Report). or inflammation. Ozone exposure Assessment for Particulate Matter (Final Report). U.S. Environmental Protection Agency, during childhood can have lasting U.S. Environmental Protection Agency, Washington, DC, EPA/600/R–08/139F. Chapter 8 Washington, DC, EPA/600/R–08/139F. Section 2.3.5 and Chapter 2 (Section 2.4.1). effects through adulthood. Such effects and Table 2–6. 627 Human exposure to ozone varies over time include altered function of the 621 78 FR 3121 (Jan. 15, 2013). due to changes in ambient ozone concentration and 622 U.S. EPA. (2009). Integrated Science because people move between locations which have 629 The ISA evaluates evidence and draws Assessment for Particulate Matter (Final Report). notable different ozone concentrations. Also, the conclusions on the causal nature of relationship U.S. Environmental Protection Agency, amount of ozone delivered to the lung is not only between relevant pollutant exposures and health Washington, DC, EPA/600/R–08/139F. Chapter 8 influenced by the ambient concentrations but also effects, assigning one of five ‘‘weight of evidence’’ and Chapter 2. by the individuals breathing route and rate. determinations: Causal relationship, likely to be a 623 77 FR 38890 (June 29, 2012). 628 U.S. EPA. Integrated Science Assessment of causal relationship, suggestive of, but not sufficient 624 78 FR 3104 (Jan. 15, 2013). Ozone and Related Photochemical Oxidants (Final to infer, a causal relationship, inadequate to infer 625 U.S. EPA. (2011). Policy Assessment for the Report). U.S. Environmental Protection Agency, a causal relationship, and not likely to be a causal Review of the PM NAAQS. U.S. Environmental Washington, DC, EPA/600/R–10/076F, 2013. The relationship. For more information on these levels Protection Agency, Washington, DC, EPA/452/R– ISA is available at http://cfpub.epa.gov/ncea/isa/ of evidence, please refer to Table II in the Preamble 11–003. Section 2.2.1. recordisplay.cfm?deid=247492#Download. of the ISA.

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respiratory and immune systems. of Nitrogen also concluded that there is Science Assessment for Sulfur Oxides— 631 Children absorb higher doses likely to be a causal relationship Health Criteria (SOX ISA). Short-term (normalized to lung surface area) of between long-term NO2 exposure and peaks (5–10 minutes) of SO2 have long ambient ozone, compared to adults, due respiratory effects. This conclusion is been known to cause adverse respiratory to their increased time spent outdoors, based on new epidemiologic evidence health effects, particularly among higher ventilation rates relative to body for associations of NO2 with asthma individuals with asthma. In addition to size, and a tendency to breathe a greater development in children combined with those with asthma (both children and fraction of air through the mouth. biological plausibility from adults), potentially at-risk lifestages Children also have a higher asthma experimental studies. include all children and the elderly. prevalence compared to adults. In evaluating a broader range of health During periods of elevated ventilation, asthmatics may experience symptomatic 3. Nitrogen Oxides effects, the 2016 ISA for Oxides of Nitrogen concluded evidence is bronchoconstriction within minutes of (a) Background ‘‘suggestive of, but not sufficient to exposure. Following an extensive Oxides of nitrogen (NOX) refers to infer, a causal relationship’’ between evaluation of health evidence from nitric oxide and nitrogen dioxide (NO2). short-term NO2 exposure and epidemiologic and laboratory studies, For the NOX NAAQS, NO2 is the cardiovascular effects and mortality and EPA concluded that there is a causal indicator. Most NO2 is formed in the air between long-term NO2 exposure and relationship between respiratory health through the oxidation of nitric oxide cardiovascular effects and diabetes, effects and short-term exposure to SO2. (NO) emitted when fuel is burned at a birth outcomes, and cancer. In addition, Separately, based on an evaluation of high temperature. NOX is also a major the scientific evidence is inadequate the epidemiologic evidence of contributor to secondary PM2.5 (insufficient consistency of associations between short-term formation. NOX and VOC are the two epidemiologic and toxicological exposure to SO2 and mortality, EPA major precursors of ozone. evidence) to infer a causal relationship concluded that the overall evidence is for long-term NO exposure with suggestive of a causal relationship (b) Health Effects of Nitrogen Oxides 2 fertility, reproduction, and pregnancy, between short-term exposure to SO2 and The most recent review of the health as well as with postnatal development. mortality. effects of oxides of nitrogen completed A key uncertainty in understanding the 5. Carbon Monoxide by EPA can be found in the 2016 relationship between these non- Integrated Science Assessment for respiratory health effects and short- or (a) Background Oxides of Nitrogen—Health Criteria long-term exposure to NO2 is Carbon monoxide is a colorless, (Oxides of Nitrogen ISA).630 The copollutant confounding, particularly odorless gas emitted from combustion primary source of NO2 is motor vehicle by other roadway pollutants. The processes. Nationally, particularly in emissions, and ambient NO2 available evidence for non-respiratory urban areas, the majority of CO concentrations tend to be highly health effects does not adequately emissions to ambient air come from 632 correlated with other traffic-related address whether NO2 has an mobile sources. pollutants. Thus, a key issue in independent effect or whether it (b) Health Effects of Carbon Monoxide characterizing the causality of NO2- primarily represents effects related to health effect relationships was other or a mixture of traffic-related Information on the health effects of evaluating the extent to which studies pollutants. CO can be found in the January 2010 supported an effect of NO2 that is The 2016 ISA for Oxides of Nitrogen Integrated Science Assessment for independent of other traffic-related concluded that people with asthma, Carbon Monoxide (CO ISA) associated pollutants. EPA concluded that the children, and older adults are at with the 2010 evaluation of the 633 findings for asthma exacerbation increased risk for NO2-related health NAAQS. The CO ISA presents integrated from epidemiologic and effects. In these groups and lifestages, conclusions regarding the presence of controlled human exposure studies NO2 is consistently related to larger causal relationships between CO provided evidence that is sufficient to effects on outcomes related to asthma exposure and categories of adverse infer a causal relationship between exacerbation, for which there is health effects. This section provides a respiratory effects and short-term NO2 confidence in the relationship with NO2 summary of the health effects associated exposure. The strongest evidence exposure. with exposure to ambient supporting an independent effect of NO2 concentrations of CO, along with the exposure comes from controlled human 4. Sulfur Oxides ISA conclusions.634 exposure studies demonstrating (a) Background increased airway responsiveness in 631 U.S. EPA. (2008). Integrated Science Sulfur dioxide (SO ), a member of the individuals with asthma following 2 Assessment (ISA) for Sulfur Oxides—Health sulfur oxide (SO ) family of gases, is Criteria (Final Report). EPA/600/R–08/047F. ambient-relevant NO X 2 exposures. The formed from burning fuels containing Washington, DC: U.S. Environmental Protection coherence of this evidence with sulfur (e.g., coal or oil derived), Agency. 632 U.S. EPA, (2010). Integrated Science epidemiologic findings for asthma extracting gasoline from oil, or hospital admissions and ED visits as Assessment for Carbon Monoxide (Final Report). extracting metals from ore. SO and its well as lung function decrements and 2 U.S. Environmental Protection Agency, gas phase oxidation products can Washington, DC, EPA/600/R–09/019F, 2010. increased pulmonary inflammation in dissolve in water droplets and further Available at http://cfpub.epa.gov/ncea/cfm/ children with asthma describe a recordisplay.cfm?deid=218686. See Section 2.1. oxidize to form sulfuric acid which plausible pathway by which NO 633 U.S. EPA, (2010). Integrated Science 2 reacts with ammonia to form sulfates, exposure can cause an asthma Assessment for Carbon Monoxide (Final Report). which are important components of U.S. Environmental Protection Agency, exacerbation. The 2016 ISA for Oxides ambient PM. Washington, DC, EPA/600/R–09/019F, 2010. Available at http://cfpub.epa.gov/ncea/cfm/ 630 U.S. EPA. Integrated Science Assessment for (b) Health Effects of SO2 recordisplay.cfm?deid=218686. Oxides of Nitrogen—Health Criteria (2016 Final 634 Personal exposure includes contributions from Report). U.S. Environmental Protection Agency, Information on the health effects of many sources and in many different environments. Washington, DC, EPA/600/R–15/068, 2016. SO2 can be found in the 2008 Integrated Total personal exposure to CO includes both

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Controlled human exposure studies of were generally robust, although this duty, light-duty), engine operating subjects with coronary artery disease limited evidence makes it difficult to conditions (idle, acceleration, show a decrease in the time to onset of disentangle effects attributed to CO deceleration), and fuel formulations exercise-induced angina (chest pain) itself from those of the larger complex (high/low sulfur fuel). Also, there are and electrocardiogram changes air pollution mixture. Controlled human emissions differences between on-road following CO exposure. In addition, exposure studies have not extensively and nonroad engines because the epidemiologic studies observed evaluated the effect of CO on respiratory nonroad engines are generally of older associations between short-term CO morbidity. Animal studies at levels of technology. After being emitted in the exposure and cardiovascular morbidity, 50–100 ppm CO show preliminary engine exhaust, diesel exhaust particularly increased emergency room evidence of altered pulmonary vascular undergoes dilution as well as chemical visits and hospital admissions for remodeling and oxidative injury. The and physical changes in the atmosphere. coronary heart disease (including CO ISA concludes that the evidence is The lifetime for some of the compounds ischemic heart disease, myocardial suggestive of a causal relationship present in diesel exhaust ranges from infarction, and angina). Some between short-term CO exposure and hours to days. epidemiologic evidence is also available respiratory morbidity, and inadequate to (b) Health Effects of Diesel Exhaust for increased hospital admissions and conclude that a causal relationship emergency room visits for congestive exists between long-term exposure and In EPA’s 2002 Diesel Health heart failure and cardiovascular disease respiratory morbidity. Assessment Document (Diesel HAD), as a whole. The CO ISA concludes that Finally, the CO ISA concludes that exposure to diesel exhaust was a causal relationship is likely to exist the epidemiologic evidence is classified as likely to be carcinogenic to between short-term exposures to CO and suggestive of a causal relationship humans by inhalation from cardiovascular morbidity. It also between short-term concentrations of environmental exposures, in accordance concludes that available data are CO and mortality. Epidemiologic with the revised draft 1996/1999 EPA 635 636 inadequate to conclude that a causal evidence suggests an association exists cancer guidelines. A number of relationship exists between long-term between short-term exposure to CO and other agencies (National Institute for exposures to CO and cardiovascular mortality, but limited evidence is Occupational Safety and Health, the morbidity. available to evaluate cause-specific International Agency for Research on Animal studies show various mortality outcomes associated with CO Cancer, the World Health Organization, neurological effects with in-utero CO exposure. In addition, the attenuation of California EPA, and the U.S. exposure. Controlled human exposure CO risk estimates which was often Department of Health and Human studies report central nervous system observed in copollutant models Services) made similar hazard and behavioral effects following low- contributes to the uncertainty as to classifications prior to 2002. EPA also level CO exposures, although the whether CO is acting alone or as an concluded in the 2002 Diesel HAD that it was not possible to calculate a cancer findings have not been consistent across indicator for other combustion-related unit risk for diesel exhaust due to all studies. The CO ISA concludes the pollutants. The CO ISA also concludes limitations in the exposure data for the evidence is suggestive of a causal that there is not likely to be a causal occupational groups or the absence of a relationship with both short- and long- relationship between relevant long-term dose-response relationship. term exposure to CO and central exposures to CO and mortality. nervous system effects. In the absence of a cancer unit risk, A number of studies cited in the CO 6. Diesel Exhaust the Diesel HAD sought to provide additional insight into the significance ISA have evaluated the role of CO (a) Background exposure in birth outcomes such as of the diesel exhaust cancer hazard by Diesel exhaust consists of a complex preterm birth or cardiac birth defects. estimating possible ranges of risk that mixture composed of particulate matter, There is limited epidemiologic evidence might be present in the population. An carbon dioxide, oxygen, nitrogen, water of a CO-induced effect on preterm births exploratory analysis was used to vapor, carbon monoxide, nitrogen and birth defects, with weak evidence characterize a range of possible lung compounds, sulfur compounds and for a decrease in birth weight. Animal cancer risk. The outcome was that numerous low-molecular-weight toxicological studies have found environmental risks of cancer from long- hydrocarbons. A number of these perinatal CO exposure to affect birth term diesel exhaust exposures could gaseous hydrocarbon components are plausibly range from as low as 10–5 to weight, as well as other developmental individually known to be toxic, as high as 10–3. Because of outcomes. The CO ISA concludes the including aldehydes, benzene and 1,3- uncertainties, the analysis evidence is suggestive of a causal butadiene. The diesel particulate matter acknowledged that the risks could be relationship between long-term present in diesel exhaust consists lower than 10–5, and a zero risk from exposures to CO and developmental mostly of fine particles (<2.5 mm), of diesel exhaust exposure could not be effects and birth outcomes. Epidemiologic studies provide which a significant fraction is ultrafine ruled out. Non-cancer health effects of acute and evidence of associations between short- particles (< 0.1 mm). These particles chronic exposure to diesel exhaust term CO concentrations and respiratory have a large surface area which makes emissions are also of concern to EPA. morbidity such as changes in them an excellent medium for adsorbing EPA derived a diesel exhaust reference pulmonary function, respiratory organics, and their small size makes them highly respirable. Many of the symptoms, and hospital admissions. A 635 U.S. EPA. (March 2005). Guidelines for limited number of epidemiologic organic compounds present in the gases and on the particles, such as polycyclic Carcinogen Risk Assessment EPA/630/P–03/001F, studies considered copollutants such as https://www.epa.gov/risk/guidelines-carcinogen- organic matter, are individually known risk-assessment (Last accessed July 2018). ozone, SO2, and PM in two-pollutant 636 models and found that CO risk estimates to have mutagenic and carcinogenic U.S. EPA (2002). Health Assessment properties. Document for Diesel Engine Exhaust. EPA/600/8– Diesel exhaust varies significantly in 90/057F Office of Research and Development, ambient and nonambient components; both Washington, DC. Retrieved on March 17, 2009 from components may contribute to adverse health chemical composition and particle sizes http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm? effects. between different engine types (heavy- deid=29060 (last accessed July 2018). pp. 1–1 1–2.

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concentration (RfC) from consideration since 2011 are three new epidemiology pollutants known collectively as ‘‘air of four well-conducted chronic rat studies which have examined lung toxics.’’ 641 These compounds include, inhalation studies showing adverse cancer in occupational populations, for but are not limited to, benzene, 1,3- pulmonary effects. The RfC is 5 mg/m3 example, truck drivers, underground butadiene, formaldehyde, acetaldehyde, for diesel exhaust measured as diesel nonmetal miners and other diesel acrolein, polycyclic organic matter, and particulate matter. This RfC does not motor-related occupations. These naphthalene. These compounds were consider allergenic effects such as those studies reported increased risk of lung identified as national or regional risk associated with asthma or immunologic cancer with exposure to diesel exhaust drivers or contributors in the 2011 or the potential for cardiac effects. There with evidence of positive exposure- National-scale Air Toxics Assessment was emerging evidence in 2002, response relationships to varying and have significant inventory discussed in the Diesel HAD, that degrees.637 638 639 These newer studies contributions from mobile sources.642 exposure to diesel exhaust can (along with others that have appeared in (b) Benzene exacerbate these effects, but the the scientific literature) add to the exposure-response data were lacking at evidence EPA evaluated in the 2002 EPA’s Integrated Risk Information that time to derive an RfC based on Diesel HAD and further reinforces the System (IRIS) database lists benzene as these then-emerging considerations. The concern that diesel exhaust exposure a known human carcinogen (causing EPA Diesel HAD states, ‘‘With [diesel likely poses a lung cancer hazard. The leukemia) by all routes of exposure and particulate matter] being a ubiquitous findings from these newer studies do concludes that exposure is associated component of ambient PM, there is an not necessarily apply to newer with additional health effects, including uncertainty about the adequacy of the technology diesel engines b the newer genetic changes in both humans and existing [diesel exhaust] noncancer engines have large reductions in the animals and increased proliferation of database to identify all of the pertinent emission constituents compared to older bone marrow cells in mice.643 644 645 [diesel exhaust]-caused noncancer technology diesel engines. EPA states in its IRIS database that data health hazards.’’ The Diesel HAD also In light of the growing body of indicate a causal relationship between notes ‘‘that acute exposure to [diesel scientific literature evaluating the health benzene exposure and acute exhaust] has been associated with effects of exposure to diesel exhaust, in lymphocytic leukemia and suggest a irritation of the eye, nose, and throat, June 2012 the World Health relationship between benzene exposure respiratory symptoms (cough and Organization’s International Agency for and chronic non-lymphocytic leukemia phlegm), and neurophysiological Research on Cancer (IARC), a and chronic lymphocytic leukemia. symptoms such as headache, recognized international authority on EPA’s IRIS documentation for benzene lightheadedness, nausea, vomiting, and the carcinogenic potential of chemicals also lists a range of 2.2 x 10–6 to 7.8 x numbness or tingling of the and other agents, evaluated the full 10–6 per mg/m3 as the unit risk estimate extremities.’’ The Diesel HAD noted that range of cancer-related health effects (URE) for benzene.646 647 The the cancer and noncancer hazard data for diesel engine exhaust. IARC International Agency for Research on conclusions applied to the general use concluded that diesel exhaust should be Cancer (IARC) has determined that of diesel engines then on the market and regarded as ‘‘carcinogenic to benzene is a human carcinogen and the as cleaner engines replace a substantial humans.’’ 640 This designation was an U.S. Department of Health and Human number of existing ones, the update from its 1988 evaluation that Services (DHHS) has characterized applicability of the conclusions would considered the evidence to be indicative benzene as a known human need to be reevaluated. of a ‘‘probable human carcinogen.’’ carcinogen.648 649 It is important to note that the Diesel 7. Air Toxics HAD also briefly summarizes health 641 U.S. EPA. (2015) Summary of Results for the effects associated with ambient PM and (a) Background 2011 National-Scale Assessment. http:// www3.epa.gov/sites/production/files/2015-12/ discusses EPA’s then-annual PM2.5 Light-duty vehicle emissions documents/2011-nata-summary-results.pdf. NAAQS of 15 mg/m3. In 2012, EPA contribute to ambient levels of air toxics 642 U.S. EPA (2015) 2011 National Air Toxics revised the annual PM2.5 NAAQS to 12 that are known or suspected human or Assessment. http://www3.epa.gov/national-air- toxics-assessment/2011-national-air-toxics- mg/m3. There is a large and extensive animal carcinogens, or that have body of human data showing a wide assessment. noncancer health effects. The 643 U.S. EPA. (2000). Integrated Risk Information spectrum of adverse health effects population experiences an elevated risk System File for Benzene. This material is available associated with exposure to ambient of cancer and other noncancer health electronically at: https://www.epa.gov/iris (Last PM, of which diesel exhaust is an effects from exposure to the class of accessed July 2018) 644 International Agency for Research on Cancer, important component. The PM2.5 IARC monographs on the evaluation of carcinogenic NAAQS is designed to provide 637 Garshick, E., Laden, F., Hart, J.E., Davis, M.E., risk of chemicals to humans, Volume 29, some protection from the noncancer health Eisen, E.A., & Smith T.J. 2012. Lung cancer and industrial chemicals and dyestuffs, International effects and premature mortality elemental carbon exposure in trucking industry Agency for Research on Cancer, World Health workers. Environmental Health Perspectives. Organization, Lyon, France 1982. attributed to exposure to PM2.5. The contribution of diesel PM to total 120(9): 1301–1306. 645 Irons, R.D.; Stillman, W.S.; Colagiovanni, D.B.; 638 Silverman, D.T., Samanic, C.M., Lubin, J.H., Henry, V.A. (1992). Synergistic action of the ambient PM varies in different regions Blair, A.E., Stewart, P.A., Vermeulen, R., & Attfield, benzene metabolite hydroquinone on myelopoietic of the country and also, within a region, M.D. (2012). The diesel exhaust in miners study: a stimulating activity of granulocyte/macrophage from one area to another. The nested case-control study of lung cancer and diesel colony-stimulating factor in vitro, Proc. Natl. Acad. contribution can be high in near- exhaust. Journal of the National Cancer Institute. Sci. 89:3691–3695. 639 Olsson, A.C., et al. ‘‘Exposure to diesel motor 646 A unit risk estimate is defined as the increase roadway environments, for example, or exhaust and lung cancer risk in a pooled analysis in the lifetime risk of an individual who is exposed in other locations where diesel engine from case-control studies in Europe and Canada.’’ for a lifetime to 1 mg/m3 benzene in air. use is concentrated. American Journal of Respiratory and Critical Care 647 U.S. EPA. (2000). Integrated Risk Information Since 2002, several new studies have Medicine 183(7). (2011): 941–948. System File for Benzene. This material is available been published which continue to 640 IARC [International Agency for Research on electronically at: http://www3.epa.gov/iris/subst/ Cancer]. (2013). Diesel and gasoline engine exhausts 0276.htm. report increased lung cancer risk with and some nitroarenes. IARC Monographs Volume 648 International Agency for Research on Cancer occupational exposure to diesel exhaust 105. [Online at http://monographs.iarc.fr/ENG/ (IARC). (1987). Monographs on the evaluation of from older engines. Of particular note Monographs/vol105/index.php]. carcinogenic risk of chemicals to humans, Volume

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A number of adverse noncancer known human carcinogen.656 657 658 Program (NTP) and International health effects including blood disorders, There are numerous studies consistently Agency for Research on Cancer (IARC) such as pre-leukemia and aplastic demonstrating that 1,3-butadiene is have concluded that formaldehyde is a anemia, have also been associated with metabolized into genotoxic metabolites known human carcinogen.662 663 by experimental animals and humans. long-term exposure to benzene. The The conclusions by IARC and NTP most sensitive noncancer effect The specific mechanisms of 1,3- reflect the results of epidemiologic observed in humans, based on current butadiene-induced carcinogenesis are research published since 1991 in data, is the depression of the absolute unknown; however, the scientific lymphocyte count in blood. EPA’s evidence strongly suggests that the combination with previous animal, inhalation reference concentration (RfC) carcinogenic effects are mediated by human and mechanistic evidence. for benzene is 30 mg/m3. The RfC is genotoxic metabolites. Animal data Research conducted by the National based on suppressed absolute suggest that females may be more Cancer Institute reported an increased lymphocyte counts seen in humans sensitive than males for cancer effects risk of nasopharyngeal cancer and under occupational exposure associated with 1,3-butadiene exposure; specific lymph hematopoietic conditions. In addition, recent work, there are insufficient data in humans malignancies among workers exposed to including studies sponsored by the from which to draw conclusions about formaldehyde.664 665 666 A National Health Effects Institute, provides sensitive subpopulations. The URE for Institute of Occupational Safety and ¥ evidence that biochemical responses are 1,3-butadiene is 3 × 10 5 per mg/m3.659 Health study of garment workers also occurring at lower levels of benzene 1,3-butadiene also causes a variety of reported increased risk of death due to exposure than previously known.650 651 reproductive and developmental effects leukemia among workers exposed to 652 653 EPA’s IRIS program has not yet in mice; no human data on these effects formaldehyde.667 Extended follow-up of evaluated these new data. EPA does not are available. The most sensitive effect a cohort of British chemical workers did currently have an acute reference was ovarian atrophy observed in a not report evidence of an increase in 660 concentration for benzene. The Agency lifetime bioassay of female mice. nasopharyngeal or lymph hematopoietic for Toxic Substances and Disease Based on this critical effect and the cancers, but a continuing statistically benchmark concentration methodology, Registry (ATSDR) Minimal Risk Level significant excess in lung cancers was an RfC for chronic health effects was (MRL) for acute exposure to benzene is reported.668 Finally, a study of 29 mg/m3 for 1–14 days exposure. calculated at 0.9 ppb (approximately 2 mg/m3). embalmers reported formaldehyde (c) 1,3-Butadiene exposures to be associated with an (d) Formaldehyde increased risk of myeloid leukemia but EPA has characterized 1,3-butadiene not brain cancer.669 as carcinogenic to humans by In 1991, EPA concluded that inhalation.654 655 The IARC has formaldehyde is a carcinogen based on Health effects of formaldehyde in 661 determined that 1,3-butadiene is a nasal tumors in animal bioassays. An addition to cancer were reviewed by the human carcinogen and the U.S. DHHS Inhalation URE for cancer and a Agency for Toxics Substances and has characterized 1,3-butadiene as a Reference Dose for oral noncancer effects were developed by the agency 662 NTP. (2014). 13th Report on Carcinogens. 29, Supplement 7, Some industrial chemicals and and posted on the IRIS database. Since Research Triangle Park, NC: U.S. Department of dyestuffs, World Health Organization, Lyon, France. that time, the National Toxicology Health and Human Services, Public Health Service, 649 NTP. (2014). 13th Report on Carcinogens. National Toxicology Program. Research Triangle Park, NC: U.S. Department of 656 International Agency for Research on Cancer 663 IARC Monographs on the Evaluation of Health and Human Services, Public Health Service, (IARC). (1999). Monographs on the evaluation of Carcinogenic Risks to Humans Volume 100F (2012): National Toxicology Program. carcinogenic risk of chemicals to humans, Volume Formaldehyde. 650 Qu, O.; Shore, R.; Li, G.; Jin, X.; Chen, C.L.; 71, Re-evaluation of some organic chemicals, 664 Hauptmann, M., Lubin, J. H., Stewart, P. A., Cohen, B.; Melikian, A.; Eastmond, D.; Rappaport, hydrazine and hydrogen peroxide and Volume 97 Hayes, R. B., & Blair, A. 2003. Mortality from S.; Li, H.; Rupa, D.; Suramaya, R.; Songnian, W.; (in preparation), World Health Organization, Lyon, lymphohematopoetic malignancies among workers Huifant, Y.; Meng, M.; Winnik, M.; Kwok, E.; Li, Y.; France. in formaldehyde industries. Journal of the National Mu, R.; Xu, B.; Zhang, X.; Li, K. (2003). HEI Report 657 International Agency for Research on Cancer Cancer Institute 95: 1615–1623. 115, Validation & Evaluation of Biomarkers in (IARC). (2008). Monographs on the evaluation of 665 Hauptmann, M., Lubin, J. H., Stewart, P. A., Workers Exposed to Benzene in China. carcinogenic risk of chemicals to humans, 1,3- Hayes, R. B., & Blair, A. 2004. Mortality from solid 651 Qu, Q., R. Shore, G. Li, X. Jin, L.C. Chen, B. Butadiene, Ethylene Oxide and Vinyl Halides cancers among workers in formaldehyde industries. Cohen, et al. (2002). Hematological changes among (Vinyl Fluoride, Vinyl Chloride and Vinyl Bromide) American Journal of Epidemiology 159: 1117–1130. Chinese workers with a broad range of benzene Volume 97, World Health Organization, Lyon, 666 Beane Freeman, L. E., Blair, A., Lubin, J. H., exposures. American. Journal of Industrial France. Stewart, P. A., Hayes, R. B., Hoover, R. N., & Medicine. 42: 275–285. 658 NTP. (2014). 13th Report on Carcinogens. Hauptmann, M. 2009. Mortality from lymph 652 Lan, Qing, Zhang, L., Li, G., Vermeulen, R., et Research Triangle Park, NC: U.S. Department of hematopoietic malignancies among workers in al. (2004). Hematotoxically in Workers Exposed to Health and Human Services, Public Health Service, formaldehyde industries: The National Cancer Low Levels of Benzene. Science 306: 1774–1776. National Toxicology Program. Institute cohort. Journal of the National Cancer 653 Turtletaub, K.W. and Mani, C. (2003). Benzene 659 U.S. EPA. (2002). ‘‘Full IRIS Summary for 1,3- Institute. 101: 751–761. metabolism in rodents at doses relevant to human butadiene (CASRN 106–99–0)’’ Environmental 667 Pinkerton, L. E. 2004. Mortality among a exposure from Urban Air. Research Reports Health Protection Agency, Integrated Risk Information cohort of garment workers exposed to Effect Inst. Report No.113. System (IRIS), Research and Development, National formaldehyde: an update. Occupational 654 U.S. EPA. (2002). Health Assessment of 1,3- Center for Environmental Assessment, Washington, Environmental Medicine 61: 193–200. Butadiene. Office of Research and Development, DC https://cfpub.epa.gov/ncea/iris2/chemical 668 Coggon, D., Harris, E. C. Poole, J., & Palmer, National Center for Environmental Assessment, Landing.cfm?substance_nmbr=139 (Last accessed K. T. 2003. Extended follow-up of a cohort of Washington Office, Washington, DC. Report No. July 10, 2018). British chemical workers exposed to formaldehyde. EPA600–P–98–001F. This document is available 660 Bevan, C.; Stadler, J.C.; Elliot, G.S.; et al. Journal of the National Cancer Institute. 95:1608– electronically at http://www3.epa.gov/iris/supdocs/ (1996). Subchronic toxicity of 4-vinylcyclohexene 1615. buta-sup.pdf. in rats and mice by inhalation. Fundamental 669 Hauptmann, M., Stewart P. A., Lubin J. H., 655 U.S. EPA. (2002). ‘‘Full IRIS Summary for 1,3- Applied Toxicology. 32:1–10. Beane Freeman, L. E., Hornung, R. W., Herrick, R. butadiene (CASRN 106–99–0)’’ Environmental 661 EPA. Integrated Risk Information System. F., Hoover, R. N., Fraumeni, J. F., & Hayes, R. B. Protection Agency, Integrated Risk Information Formaldehyde (CASRN 50–00–0) https:// 2009. Mortality from lymph hematopoietic System (IRIS), Research and Development, National cfpub.epa.gov/ncea/iris/iris_documents/ malignancies and brain cancer among embalmers Center for Environmental Assessment, Washington, documents/subst/0419_summary.pdf (Last accessed exposed to formaldehyde. Journal of the National DC http://www3.epa.gov/iris/subst/0139.htm. July 2018). Cancer Institute 101:1696–1708.

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Disease Registry in 1999,670 anticipated to be a human carcinogen by not classifiable as to its carcinogenicity supplemented in 2010,671 and by the the U.S. DHHS in the 13th Report on in humans.684 World Health Organization.672 These Carcinogens and is classified as possibly Lesions to the lungs and upper organizations reviewed the scientific carcinogenic to humans (Group 2B) by respiratory tract of rats, rabbits, and literature concerning health effects the IARC.677 678 Acetaldehyde is hamsters have been observed after linked to formaldehyde exposure to currently listed on the IRIS Program subchronic exposure to acrolein.685 The evaluate hazards and dose response Multi-Year Agenda for reassessment agency has developed an RfC for relationships and defined exposure within the next few years. acrolein of 0.02 mg/m3 and an RfD of 0.5 concentrations for minimal risk levels The primary noncancer effects of mg/kg-day.686 (MRLs). The health endpoints reviewed exposure to acetaldehyde vapors Acrolein is extremely acrid and included sensory irritation of eyes and include irritation of the eyes, skin, and irritating to humans when inhaled, with respiratory tract, reduced pulmonary respiratory tract.679 In short-term (four acute exposure resulting in upper function, nasal histopathology, and week) rat studies, degeneration of respiratory tract irritation, mucus immune system effects. In addition, olfactory epithelium was observed at hypersecretion and congestion. The research on reproductive and various concentration levels of intense irritancy of this carbonyl has developmental effects and neurological acetaldehyde exposure.680 681 Data from been demonstrated during controlled effects were discussed along with these studies were used by EPA to tests in human subjects, who suffer several studies that suggest that develop an inhalation reference intolerable eye and nasal mucosal formaldehyde may increase the risk of concentration of 9 mg/m3. Some sensory reactions within minutes of asthma, particularly in the young. asthmatics have been shown to be a exposure.687 These data and additional EPA released a draft Toxicological sensitive subpopulation to decrements studies regarding acute effects of human Review of Formaldehyde—Inhalation in functional expiratory volume (FEV1 exposure to acrolein are summarized in Assessment through the IRIS program test) and bronchoconstriction upon EPA’s 2003 Toxicological Review of for peer review by the National Research acetaldehyde inhalation.682 Acrolein.688 Studies in humans indicate Council (NRC) and public comment in that levels as low as 0.09 ppm (0.21 mg/ 673 (f) Acrolein June 2010. The draft assessment m3) for five minutes may elicit reviewed more recent research from EPA most recently evaluated the subjective complaints of eye irritation animal and human studies on cancer toxicological and health effects with increasing concentrations leading and other health effects. The NRC literature related to acrolein in 2003 and to more extensive eye, nose and released their review report in April concluded that the human carcinogenic respiratory symptoms. Acute exposures 674 2011. EPA is currently developing a potential of acrolein could not be in animal studies report bronchial revised draft assessment in response to determined because the available data hyper-responsiveness. Based on animal this review. were inadequate. No information was data (more pronounced respiratory available on the carcinogenic effects of (e) Acetaldehyde irritancy in mice with allergic airway acrolein in humans and the animal data disease in comparison to non-diseased Acetaldehyde is classified in EPA’s provided inadequate evidence of mice 689) and demonstration of similar IRIS database as a probable human carcinogenicity.683 The IARC effects in humans (e.g., reduction in carcinogen, based on nasal tumors in determined in 1995 that acrolein was rats, and is considered toxic by the 684 International Agency for Research on Cancer inhalation, oral, and intravenous available electronically at http://www3.epa.gov/iris/ (IARC). (1995). Monographs on the evaluation of routes.675 The URE in IRIS for subst/0290.htm. carcinogenic risk of chemicals to humans, Volume acetaldehyde is 2.2 × 10 6 per mg/ 677 NTP. (2014). 13th Report on Carcinogens. 63. Dry cleaning, some chlorinated solvents and m3.676 Acetaldehyde is reasonably Research Triangle Park, NC: U.S. Department of other industrial chemicals, World Health Health and Human Services, Public Health Service, Organization, Lyon, France. National Toxicology Program. 685 U.S. EPA. (2003). Integrated Risk Information 670 ATSDR. 1999. Toxicological Profile for 678 International Agency for Research on Cancer System File of Acrolein. Office of Research and Formaldehyde, U.S. Department of Health and (IARC). (1999). Re-evaluation of some organic Development, National Center for Environmental Human Services (HHS), July 1999. chemicals, hydrazine, and hydrogen peroxide. IARC Assessment, Washington, DC. This material is 671 ATSDR. 2010. Addendum to the Toxicological Monographs on the Evaluation of Carcinogenic Risk available at http://www3.epa.gov/iris/subst/ Profile for Formaldehyde. U.S. Department of of Chemical to Humans, Vol 71. Lyon, France. 0364.htm. Health and Human Services (HHS), October 2010. 679 U.S. EPA (1991). Integrated Risk Information 686 U.S. EPA. (2003). Integrated Risk Information 672 IPCS. 2002. Concise International Chemical System File of Acetaldehyde. This material is System File of Acrolein. Office of Research and Assessment Document 40. Formaldehyde. World available electronically at http://www3.epa.gov/iris/ Health Organization. Development, National Center for Environmental subst/0290.htm. Assessment, Washington, DC. This material is 673 EPA (U.S. Environmental Protection Agency). 680 U.S. EPA. (2003). Integrated Risk Information available at http://www3.epa.gov/iris/subst/ 2010. Toxicological Review of Formaldehyde (CAS System File of Acrolein. Research and 0364.htm. No. 50–00–0)—Inhalation Assessment: In Support Development, National Center for Environmental 687 of Summary Information on the Integrated Risk U.S. EPA. (2003) Toxicological review of Information System (IRIS). External Review Draft. Assessment, Washington, DC. This material is acrolein in support of summary information on EPA/635/R–10/002A. U.S. Environmental available electronically at http://www3.epa.gov/iris/ Integrated Risk Information System (IRIS) National Protection Agency, Washington DC [online]. subst/0364.htm. Center for Environmental Assessment, Washington, Available: http://cfpub.epa.gov/ncea/irs_drats/ 681 Appleman, L.M., Woutersen, R. A., & Feron, DC. EPA/635/R–03/003. p. 10. Available online at: recordisplay.cfm?deid=223614. V. J. (1982). Inhalation toxicity of acetaldehyde in http://www3.epa.gov/ncea/iris/toxreviews/ 674 NRC (National Research Council). 2011. rats. I. Acute and subacute studies. Toxicology. 23: 0364tr.pdf. Review of the Environmental Protection Agency’s 293–297. 688 U.S. EPA. (2003) Toxicological review of Draft IRIS Assessment of Formaldehyde. 682 Myou, S., Fujimura, M., Nishi, K., Ohka, T., acrolein in support of summary information on Washington DC: National Academies Press. http:// & Matsuda, T. (1993) Aerosolized acetaldehyde Integrated Risk Information System (IRIS) National books.nap.edu/openbook.php?record_id=13142. induces histamine-mediated bronchoconstriction in Center for Environmental Assessment, Washington, 675 U.S. EPA (1991). Integrated Risk Information asthmatics. Am. Rev. Respir. Dis. 148(4 Pt 1): 940– DC. EPA/635/R–03/003. Available online at: https:// System File of Acetaldehyde. Research and 943. cfpub.epa.gov/ncea/risk/recordisplay.cfm? Development, National Center for Environmental 683 U.S. EPA. (2003). Integrated Risk Information deid=51977 (Last accessed July 10 2018). Assessment, Washington, DC. This material is System File of Acrolein. Research and 689 Morris, J. B., Symanowicz, P. T., Olsen, J. E., available electronically at http://www3.epa.gov/iris/ Development, National Center for Environmental et al. (2003). Immediate sensory nerve-mediated subst/0290.htm. Assessment, Washington, DC. This material is respiratory responses to irritants in healthy and 676 U.S. EPA (1991). Integrated Risk Information available at http://www3.epa.gov/iris/subst/ allergic airway-diseased mice. Journal of Applied System File of Acetaldehyde. This material is 0364.htm. Physiology. 94(4):1563–1571.

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respiratory rate), individuals with indeno[1,2,3-cd]pyrene) as Group B2, recent animal carcinogenicity studies. compromised respiratory function (e.g., probable human carcinogens.694 Since The draft reassessment completed emphysema, asthma) are expected to be that time, studies have found that external peer review.699 Based on at increased risk of developing adverse maternal exposures to PAHs in a external peer review comments responses to strong respiratory irritants population of pregnant women were received, a revised draft assessment that such as acrolein. EPA does not currently associated with several adverse birth considers all routes of exposure, as well have an acute reference concentration outcomes, including low birth weight as cancer and noncancer effects, is for acrolein. The available health effect and reduced length at birth, as well as under development. The external reference values for acrolein have been impaired cognitive development in review draft does not represent official summarized by EPA and include an preschool children (three years of agency opinion and was released solely ATSDR MRL for acute exposure to age).695 696 These and similar studies are for the purposes of external peer review acrolein of 7 mg/m3 for 1–14 days’ being evaluated as a part of the ongoing and public comment. The National exposure; and Reference Exposure Level IRIS reassessment of health effects Toxicology Program listed naphthalene (REL) values from the California Office associated with exposure to as ‘‘reasonably anticipated to be a of Environmental Health Hazard benzo[a]pyrene. human carcinogen’’ in 2004 on the basis Assessment (OEHHA) for one-hour and (h) Naphthalene of bioassays reporting clear evidence of 8-hour exposures of 2.5 mg/m3 and 0.7 carcinogenicity in rats and some mg/m3, respectively.690 Naphthalene is found in small 700 quantities in gasoline and diesel fuels. evidence of carcinogenicity in mice. (g) Polycyclic Organic Matter Naphthalene emissions have been California EPA has released a new risk assessment for naphthalene, and the The term polycyclic organic matter measured in larger quantities in both IARC has reevaluated naphthalene and (POM) defines a broad class of gasoline and diesel exhaust compared re-classified it as Group 2B: Possibly compounds that includes the polycyclic with evaporative emissions from mobile carcinogenic to humans.701 aromatic hydrocarbon compounds sources, indicating it is primarily a (PAHs). One of these compounds, product of combustion. Acute (short- Naphthalene also causes a number of naphthalene, is discussed separately term) exposure of humans to chronic non-cancer effects in animals, below. POM compounds are formed naphthalene by inhalation, ingestion, or including abnormal cell changes and primarily from combustion and are dermal contact is associated with growth in respiratory and nasal tissues. present in the atmosphere in gas and hemolytic anemia and damage to the The current EPA IRIS assessment particulate form. Cancer is the major liver and the nervous system.697 includes noncancer data on hyperplasia concern from exposure to POM. Chronic (long term) exposure of workers and metaplasia in nasal tissue that form Epidemiologic studies have reported an and rodents to naphthalene has been the basis of the inhalation RfC of 3 mg/ increase in lung cancer in humans reported to cause cataracts and retinal m3.702 The ATSDR MRL for acute exposed to diesel exhaust, coke oven damage.698 EPA released an external exposure to naphthalene is 0.6 mg/kg/ emissions, roofing tar emissions, and review draft of a reassessment of the day. cigarette smoke; all of these mixtures inhalation carcinogenicity of (i) Other Air Toxics contain POM compounds.691 692 Animal naphthalene based on a number of studies have reported respiratory tract In addition to the compounds tumors from inhalation exposure to 694 U.S. EPA (1997). Integrated Risk Information System File of indeno (1,2,3-cd) pyrene. Research described above, other compounds in benzo[a]pyrene and alimentary tract and and Development, National Center for gaseous hydrocarbon and PM emissions liver tumors from oral exposure to Environmental Assessment, Washington, DC. This from motor vehicles will be affected by benzo[a]pyrene.693 In 1997 EPA material is available electronically at https:// this action. Mobile source air toxic classified seven PAHs (benzo[a]pyrene, cfpub.epa.gov/ncea/risk/recordisplay.cfm?deid= 2776 (Last accessed July 10 2018). compounds that will potentially be benz[a]anthracene, chrysene, 695 Perera, F. P., Rauh, V., Tsai, W. Y., et al. impacted include ethylbenzene, benzo[b]fluoranthene, (2002). Effect of transplacental exposure to propionaldehyde, toluene, and xylene. benzo[k]fluoranthene, environmental pollutants on birth outcomes in a Information regarding the health effects dibenz[a,h]anthracene, and multiethnic population. Environmental Health Perspectives. 111: 201–205. of these compounds can be found in 696 Perera, F. P., Rauh, V., Whyatt, R. M., Tsai, W. EPA’s IRIS database.703 690 U.S. EPA. (2009). Graphical Arrays of Y., Tang, D., Diaz, D., Hoepner, L., Barr, D., Tu, Y. Chemical-Specific Health Effect Reference Values H., Camann, D., & Kinney, P. (2006). Effect of 699 for Inhalation Exposures (Final Report). U.S. prenatal exposure to airborne polycyclic aromatic Oak Ridge Institute for Science and Education. Environmental Protection Agency, Washington, DC, hydrocarbons on neurodevelopment in the first 3 (2004). External Peer Review for the IRIS EPA/600/R–09/061, 2009. http://cfpub.epa.gov/ years of life among inner-city children. Reassessment of the Inhalation Carcinogenicity of ncea/cfm/recordisplay.cfm?deid=211003 (last Environmental Health Perspectives. 114: 1287– Naphthalene. August 2004. http://cfpub.epa.gov/ accessed July 10 2018). 1292. ncea/cfm/recordisplay.cfm?deid=84403. 691 Agency for Toxic Substances and Disease 697 U. S. EPA. 1998. Toxicological Review of 700 NTP. (2014). 13th Report on Carcinogens. U.S. Registry (ATSDR). (1995). Toxicological profile for Naphthalene (Reassessment of the Inhalation Department of Health and Human Services, Public Polycyclic Aromatic Hydrocarbons (PAHs). Atlanta, Cancer Risk), Environmental Protection Agency, Health Service, National Toxicology Program. GA: U.S. Department of Health and Human Integrated Risk Information System, Research and 701 International Agency for Research on Cancer Services, Public Health Service. Available Development, National Center for Environmental (IARC). (2002). Monographs on the Evaluation of electronically at http://www.atsdr.cdc.gov/ Assessment, Washington, DC. This material is the Carcinogenic Risk of Chemicals for Humans. ToxProfiles/TP.asp?id=122&tid=25. available electronically at https://cfpub.epa.gov/ Vol. 82. Lyon, France. 692 U.S. EPA (2002). Health Assessment ncea/iris/iris_documents/documents/toxreviews/ 702 U.S. EPA. (1998). Toxicological Review of Document for Diesel Engine Exhaust. EPA/600/8– 0436tr.pdf (last accessed July 10 2018). Naphthalene. Environmental Protection Agency, 90/057F Office of Research and Development, 698 U. S. EPA. 1998. Toxicological Review of Integrated Risk Information System (IRIS), Research Washington DC. http://cfpub.epa.gov/ncea/cfm/ Naphthalene (Reassessment of the Inhalation and Development, National Center for recordisplay.cfm?deid=29060 (last accessed July 10 Cancer Risk), Environmental Protection Agency, Environmental Assessment, Washington, DC 2018). Integrated Risk Information System, Research and https://cfpub.epa.gov/ncea/iris/iris_documents/ 693 International Agency for Research on Cancer Development, National Center for Environmental documents/toxreviews/0436tr.pdf (last accessed (IARC). (2012). Monographs on the Evaluation of Assessment, Washington, DC. This material is July 10 2018). the Carcinogenic Risk of Chemicals for Humans, available electronically at https://cfpub.epa.gov/ 703 U.S. EPA Integrated Risk Information System Chemical Agents and Related Occupations. Vol. ncea/iris/iris_documents/documents/toxreviews/ (IRIS) database is available at: https://www.epa.gov/ 100F. Lyon, France. 0436tr.pdf (last accessed July 10 2018) iris (last accessed July 10 2018)

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(j) Exposure and Health Effects findings suggest a substantial roadway sufficient,’’ or ‘‘inadequate and Associated With Traffic source of these carbonyls. insufficient.’’ The panel categorized Locations in close proximity to major In the past 15 years, many studies evidence of a causal association for roadways generally have elevated have been published with results exacerbation of childhood asthma as concentrations of many air pollutants reporting that populations who live, ‘‘sufficient.’’ The panel categorized emitted from motor vehicles. Hundreds work, or go to school near high-traffic evidence of a causal association for new of such studies have been published in roadways experience higher rates of onset asthma as between ‘‘sufficient’’ peer-reviewed journals, concluding that numerous adverse health effects, and ‘‘suggestive but not sufficient.’’ compared to populations far away from concentrations of CO, NO, NO2, 707 ‘‘Suggestive of a causal association’’ was benzene, aldehydes, particulate matter, major roads. In addition, numerous how the panel categorized evidence studies have found adverse health black carbon, and many other linking traffic-associated air pollutants effects associated with spending time in compounds are elevated in ambient air with exacerbation of adult respiratory within approximately 300–600 meters traffic, such as commuting or walking along high-traffic roadways; however, it symptoms and lung function decrement. (approximately 1,000–2,000 feet) of It categorized as ‘‘inadequate and major roadways. Highest concentrations is difficult to fully control for confounding in such insufficient’’ evidence of a causal of most pollutants emitted directly by 708 709 710 711 relationship between traffic-related air motor vehicles are found at locations studies. The health outcomes with the strongest evidence pollution and health care utilization for within 50 meters (approximately 165 respiratory problems, new onset adult feet) of the edge of a roadway’s traffic linking them with traffic-associated air pollutants are respiratory effects, asthma, chronic obstructive pulmonary lanes. disease (COPD), nonasthmatic A large-scale review of air quality particularly in asthmatic children, and respiratory allergy, and cancer in adults measurements in the vicinity of major cardiovascular effects. roadways between 1978 and 2008 Numerous reviews of this body of and children. Other literature reviews concluded that the pollutants with the health literature have been published as have been published with conclusions steepest concentration gradients in well. In 2010, an expert panel of the generally similar to the HEI 713 714 715 716 vicinities of roadways were CO, Health Effects Institute (HEI) published panel’s. However, in 2014, ultrafine particles, metals, elemental a review of hundreds of exposure, researchers from the U.S. Centers for epidemiology, and toxicology Disease Control and Prevention (CDC) carbon (EC), NO, NOX, and several 712 VOCs.704 These pollutants showed a studies. The panel rated how the published a systematic review and large reduction in concentrations within evidence for each type of health meta-analysis of studies evaluating the 100 meters downwind of the roadway. outcome supported a conclusion of a risk of childhood leukemia associated Pollutants that showed more gradual causal association with traffic- with traffic exposure and reported reductions with distance from roadways associated air pollution as either positive associations between ‘‘sufficient,’’ ‘‘suggestive but not included benzene, NO2, PM2.5, and ‘‘postnatal’’ proximity to traffic and PM10. In the review article, results leukemia risks, but no such association Institute Research Report 149.Available at https:// 717 varied based on the method of statistical www.healtheffects.org/publication/development- for ‘‘prenatal’’ exposures. analysis used to determine the trend. and-application-sensitive-method-determine- Health outcomes with few For pollutants with relatively high concentrations-acrolein-and-other (last accessed publications suggest the possibility of background concentrations relative to July 10 2018) 707 other effects still lacking sufficient near-road concentrations, detecting In the widely-used PubMed database of health publications, between January 1, 1990 and August evidence to draw definitive conclusions. concentration gradients can be difficult. 18, 2011, 605 publications contained the keywords Among these outcomes with a small For example, many aldehydes have high ‘‘traffic, pollution, epidemiology,’’ with number of positive studies are background concentrations as a result of approximately half the studies published after 2007. photochemical breakdown of precursors 708 Laden, F., Hart, J. E., Smith, T. J., Davis, M. neurological impacts (e.g., autism and from many different organic E., & Garshick, E. (2007) Cause-specific mortality in reduced cognitive function) and the unionized U.S. trucking industry. reproductive outcomes (e.g., preterm compounds. This can make detection of Environmental Health Perspectives 115:1192–1196. gradients around roadways and other 709 Peters, A., von Klot, S., Heier, M., 713 Boothe, V. L. & Shendell, D. G. (2008). primary emission sources difficult. Trentinaglia, I., Ho¨rmann, A., Wichmann, H. E., & Lo¨wel, H. (2004) Exposure to traffic and the onset Potential health effects associated with residential However, several studies have measured of myocardial infarction. New England Journal of proximity to freeways and primary roads: review of aldehydes in multiple weather Medicine. 351: 1721–1730. scientific literature, 1999–2006. Journal of conditions and found higher 710 Zanobetti, A., Stone, P. H., Spelzer, F. E., Environmental Health. 70: 33–41. concentrations of many carbonyls Schwartz, J. D., Coull, B. A., Suh, H. H., Nearling, 714 Salam, M. T., Islam, T., & Gilliland, F. D. downwind of roadways.705 706 These B. D., Mittleman, M. A., Verrier, R. L., & Gold, D. (2008). Recent evidence for adverse effects of R. (2009) T-wave alternans, air pollution and traffic residential proximity to traffic sources on asthma. in high-risk subjects. American Journal of Curr Opin Pulm Med 14: 3–8. 704 Karner, A. A., Eisinger, D. S., & Niemeier, D. Cardiology. 104: 665–670. 715 A. (2010). Near-roadway air quality: synthesizing 711 Dubowsky Adar, S., Adamkiewicz, G., Gold, Sun, X., Zhang, S., & Ma, X. (2014) No the findings from real-world data. Environmental D. R., Schwartz, J., Coull, B. A., & Suh, H. (2007) association between traffic density and risk of Science Technology. 44: 5334–5344. Ambient and microenvironmental particles and childhood leukemia: a meta-analysis. Asia Pacific 705 Liu, W., Zhang, J., Kwon, J. et al. (2006). exhaled nitric oxide before and after a group bus Journal of Cancer Prevention. 15: 5229–5232. Concentrations and source characteristics of trip. Environmental Health Perspectives. 115: 507– 716 Raaschou-Nielsen, O. & Reynolds, P. (2006). airborne carbonyl comlbs measured outside urban 512. Air pollution and childhood cancer: A review of the residences. Journal of the Air Waste Management 712 Health Effects Institute Panel on the Health epidemiological literature. International Journal of Assocication 56: 1196–1204. Effects of Traffic-Related Air Pollution. (2010). Cancer. 118: 2920–9. 706 Cahill, T. M., Charles, M. J., & Seaman, V. Y. Traffic-related air pollution: A critical review of the 717 (2010). Development and application of a sensitive literature on emissions, exposure, and health Boothe, V. L., Boehmer, T. K., Wendel, A. M., method to determine concentrations of acrolein and effects. HEI Special Report 17. Available at http:// & Yip, F. Y. (2014) Residential traffic exposure and other carbonyls in ambient air. Health Effects www.healtheffects.org. childhood leukemia: a systematic review and meta- analysis. American Journal of Preventative Medicine. 46: 413–422.

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birth, low birth weight).718 719 720 721 stronger respiratory associations in sources). Near-roadway monitors for In addition to health outcomes, children experiencing chronic social NO2 begin operation between 2014 and particularly cardiopulmonary effects, stress, such as in violent neighborhoods 2017 in Core Based Statistical Areas conclusions of numerous studies or in homes with high family (CBSAs) with population of at least 729 730 731 suggest mechanisms by which traffic- stress. 500,000. Monitors for CO and PM2.5 related air pollution affects health. The risks associated with residence, begin operation between 2015 and 2017. Numerous studies indicate that near- workplace, or schools near major roads These monitors will further our roadway exposures may increase are of potentially high public health understanding of exposure in these systemic inflammation, affecting organ significance due to the large population locations. systems, including blood vessels and in such locations. According to the 2009 EPA and DOT continue to research lungs.722 723 724 725 Long-term exposures American Housing Survey, more than near-road air quality, including the in near-road environments have been 22 million homes (17% of all U.S. types of pollutants found in high associated with inflammation-associated housing units) were located within 300 concentrations near major roads and conditions, such as atherosclerosis and feet of an airport, railroad, or highway health problems associated with the asthma.726 727 728 with four or more lanes. This mixture of pollutants near roads. corresponds to a population of more Several studies suggest that some 8. Environmental Justice factors may increase susceptibility to than 50 million U.S. residents in close the effects of traffic-associated air proximity to high-traffic roadways or Environmental justice (EJ) is a pollution. Several studies have found other transportation sources. Based on principle asserting that all people 2010 Census data, a 2013 publication deserve fair treatment and meaningful 718 Volk, H. E., Hertz-Picciotto, I., Delwiche, L., et estimated that 19% of the U.S. involvement with respect to al. (2011). Residential proximity to freeways and population (more than 59 million environmental laws, regulations, and autism in the CHARGE study. Environmental people) lived within 500 meters of roads policies. EPA seeks to provide the same Health Perspectives. 119: 873–877. degree of protection from environmental 719 Franco-Suglia, S., Gryparis, A., Wright, R. O., with at least 25,000 annual average et al. (2007). Association of black carbon with daily traffic (AADT), while about 3.2% health hazards for all people. DOT cognition among children in a prospective birth of the population lived within 100 shares this goal and is informed about cohort study. American Journal of Epidemiology. meters (about 300 feet) of such roads.732 the potential environmental impacts of doi: 10.1093/aje/kwm308. [Online at http:// Another 2013 study estimated that 3.7% its rulemakings through its NEPA dx.doi.org]. 720 Power, M. C., Weisskopf, M. G., Alexeef, S. E., of the U.S. population (about 11.3 process (see NHTSA’s DEIS). As et al. (2011). Traffic-related air pollution and million people) lived within 150 meters referenced below, numerous studies cognitive function in a cohort of older men. (about 500 feet) of interstate highways have found that some environmental Environmental Health Perspectives. 2011: 682–687. or other freeways and expressways.733 hazards are more prevalent in areas 721 Wu, J., Wilhelm, M., Chung, J., et al. (2011). On average, populations near major where non-white, Hispanic and people Comparing exposure assessment methods for traffic- related air pollution in and adverse pregnancy roads have higher fractions of minority with low socioeconomic status (SES) outcome study. Environmental Research. 111: 685– residents and lower socioeconomic represent a higher fraction of the 6692. status. Furthermore, on average, population compared with the general 722 Riediker, M. (2007). Cardiovascular effects of Americans spend more than an hour population. In addition, compared to fine particulate matter components in highway traveling each day, bringing nearly all patrol officers. Inhal Toxicol 19: 99–105. doi: non-Hispanic whites, some 10.1080/08958370701495238 Available at http:// residents into a high-exposure subpopulations defined by race and dx.doi.org. microenvironment for part of the day. ethnicity have been shown to have 723 Alexeef, S. E., Coull, B. A., Gryparis, A., et al. In light of these concerns, EPA has greater levels of some health conditions (2011). Medium-term exposure to traffic-related air required through the NAAQS process during some life stages. For example, in pollution and markers of inflammation and that air quality monitors be placed near endothelial function. Environmental Health 2014, about 13% of Black, non-Hispanic Perspectives. 119: 481–486. doi:10.1289/ high-traffic roadways for determining and 24% of Puerto Rican children were ehp.1002560 Available at http://dx.doi.org. concentrations of CO, NO2, and PM2.5 estimated to currently have asthma, 724 Eckel, S. P., Berhane, K., Salam, M. T., et al. (in addition to those existing monitors compared with eight percent of white, (2011). Traffic-related pollution exposure and located in neighborhoods and other 734 exhaled nitric oxide in the Children’s Health Study. non-Hispanic children. Environmental Health Perspectives. (IN PRESS). locations farther away from pollution As discussed in the DEIS, doi:10.1289/ehp.1103516. Available at http:// concentrations of many air pollutants dx.doi.org. 729 Islam, T., Urban, R., Gauderman, W. J., et al. are elevated near high-traffic roadways. 725 Zhang, J., McCreanor, J. E., Cullinan, P., et al. (2011). Parental stress increases the detrimental If minority populations and low-income (2009). Health effects of real-world exposure diesel effect of traffic exposure on children’s lung exhaust in persons with asthma. Res Rep Health function. American Journal of Respiratory Critical populations disproportionately live near Effects Inst 138. [Online at http:// Care Medicine. (In press). such roads, then an issue of EJ may be www.healtheffects.org]. 730 Clougherty, J. E., Levy, J. I., Kubzansky, L. D., present. We reviewed existing scholarly 726 Adar, S. D., Klein, R., Klein, E. K., et al. et al. (2007). Synergistic effects of traffic-related air literature examining the potential for (2010). Air pollution and the microvasculatory: a pollution and exposure to violence on urban asthma disproportionate exposure among cross-sectional assessment of in vivo retinal images etiology. Environmental Health Perspectives. 115: in the population-based Multi-Ethnic Study of 1140–1146. people with low SES, and we conducted Atherosclerosis. PLoS Med 7(11): E1000372. 731 Chen, E., Schrier, H. M., Strunk, R. C., et al. our own evaluation of two national doi:10.1371/journal.pmed.1000372. Available at (2008). Chronic traffic-related air pollution and datasets: The U.S. Census Bureau’s http://dx.doi.org. stress interact to predict biologic and clinical American Housing Survey for calendar 727 Kan, H., Heiss, G., Rose, K. M., et al. (2008). outcomes in asthma. Environmental Health Prospective analysis of traffic exposure as a risk Perspectives. 116: 970–5. year 2009 and the U.S. Department of factor for incident coronary heart disease: the 732 Rowangould, G. M. (2013) A census of the U.S. Education’s database of school Atherosclerosis Risk in Communities (ARIC) study. near-roadway population: public health and locations. Environmental Health Perspectives. 116: 1463– environmental justice considerations. Publications that address EJ issues 1468. doi:10.1289/ehp.11290. Available at http:// Transportation Research Part D 25: 59–67. generally report that populations living dx.doi.org. 733 Boehmer, T. K., Foster, S. L., Henry, J. R., 728 McConnell, R., Islam, T., Shankardass, K., et Woghiren-Akinnifesi, E. L., & Yip, F. Y. (2013) near major roadways (and other types of al. (2010). Childhood incident asthma and traffic- Residential proximity to major highways—United related air pollution at home and school. States, 2010. Morbidity and Mortality Weekly Report 734 http://www.cdc.gov/asthma/most_recent_ Environmental Health Perspectives. 1021–1026. 62 (3); 46–50. data.htm.

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transportation infrastructure) tend to be stressors such as parental smoking and land use category, region of country, composed of larger fractions of relationship stress also may increase and housing type were included. nonwhite residents. People living in susceptibility to the adverse effects of In examining schools near major neighborhoods near such sources of air air pollution.746 747 roadways, the Common Core of Data pollution also tend to be lower in Two national databases were analyzed (CCD) from the U.S. Department of income than people living elsewhere. that allowed evaluation of whether Education, which includes information Numerous studies evaluating the homes and schools were located near a on all public elementary and secondary demographics and socioeconomic status major road and whether disparities in schools and school districts nationwide, of populations or schools near roadways exposure may be occurring in these was examined.750 To determine school have found that they include a greater environments. The American Housing proximities to major roadways, a percentage of minority residents, as well Survey (AHS) includes descriptive geographic information system (GIS) to as lower SES (indicated by variables statistics of over 70,000 housing units map each school and roadways based on such as median household income). across the nation. The study survey is the U.S. Census’s TIGER roadway file Locations in these studies include Los conducted every two years by the U.S. was used.751 Non-white students were Angeles, CA; Seattle, WA; Wayne Census Bureau. The second database we found to be overrepresented at schools County, MI; Orange County, FL; and analyzed was the U.S. Department of within 200 meters of the largest California 735 736 737 738 739 740 Such Education’s Common Core of Data, roadways, and schools within 200 disparities may be due to multiple which includes enrollment and location meters of the largest roadways also had factors.741 information for schools across the U.S. higher than expected numbers of People with low SES often live in In analyzing the 2009 AHS, the focus students eligible for free or reduced- neighborhoods with multiple was on whether or not a housing unit price lunches. For example, Black environmental stressors and higher rates was located within 300 feet of ‘‘4-or- students represent 22% of students at of health risk factors, including reduced more lane highway, railroad, or schools located within 200 meters of a health insurance coverage rates, higher airport.’’ 748 Whether there were primary road, whereas Black students smoking and drug use rates, limited differences between households in such represent 17% of students in all U.S. access to fresh food, visible locations compared with those in schools. Hispanic students represent neighborhood violence, and elevated locations farther from these same 30% of students at schools located rates of obesity and some diseases such transportation facilities was within 200 meters of a primary road, 749 as asthma, diabetes, and ischemic heart analyzed. Other variables, such as whereas Hispanic students represent disease. Although questions remain, 22% of students in all U.S. schools. several studies find stronger 1358. Doi:10.1289/ehp.0900612 [Online at http:// Overall, there is substantial evidence dx.doi.org]. associations between air pollution and 743 Clougherty, J. E., Levy, J. I., Kubzansky, L. D., that people who live or attend school health in locations with such chronic Ryan, P. B., Franco Suglia, S., Jacobson Canner, M., near major roadways are more likely to neighborhood stress, suggesting that & Wright, R. J. (2007) Synergistic effects of traffic- be non-white, Hispanic ethnicity, and/ populations in these areas may be more related air pollution and exposure to violence on or low SES. The emission reductions urban asthma etiology. Environmental Health susceptible to the effects of air Perspectives. 115: 1140–1146. doi:10.1289/ehp.9863 from these proposed standards will pollution.742 743 744 745 Household-level [Online at http://dx.doi.org]. likely result in widespread air quality 744 Finkelstein, M. M., Jerrett, M., DeLuca, P., improvements, but the impact on 735 Marshall, J. D. (2008) Environmental Finkelstein, N., Verma, D. K., Chapman, K., & Sears, pollution levels in close proximity to M. R. (2003) Relation between income, air pollution inequality: air pollution exposures in California’s roadways will be most direct. Thus, South Coast Air Basin. and mortality: A cohort study. Canadian Medical 736 Su, J. G., Larson, T., Gould, T., Cohen, M., & Association Journal. 169: 397–402. these proposed standards will likely 745 Buzzelli, M. (2010) Transboundary air pollution Shankardass, K., McConnell, R., Jerrett, M., help in mitigating the disparity in racial, and environmental justice: Vancouver and Seattle Milam, J., Richardson, J., & Berhane, K. (2009) ethnic, and economically based Parental stress increases the effect of traffic-related compared. GeoJournal 57: 595–608. doi:10.1007/ exposures. s10708–009–9269–6 [Online at http://dx.doi.org]. air pollution on childhood asthma incidence. Proc National Academy of Science. 106: 12406–12411. 737 Chakraborty, J. & Zandbergen, P. A. (2007) doi:10.1073/pnas.0812910106 [Online at http:// 9. Environmental Effects of Non-GHG Children at risk: measuring racial/ethnic disparities dx.doi.org]. Pollutants in potential exposure to air pollution at school and 746 home. Journal of Epidemiol Community Health 61: Lewis, A. S., Sax, S. N., Wason, S. C. & (a) Visibility Campleman, S. L (2011) Non-chemical stressors and 1074–1079. doi: 10.1136/jech.2006.054130 [Online cumulative risk assessment: an overview of current at http://dx.doi.org]. Visibility can be defined as the degree initiatives and potential air pollutant interactions. 738 Green, R. S., Smorodinsky, S., Kim, J. J., to which the atmosphere is transparent International Journal of Environmental Research in 752 McLaughlin, R., & Ostro, B. (2003) Proximity of Public Health. 8: 2020–2073. Doi:10.3390/ to visible light. Visibility impairment California public schools to busy roads. ijerph8062020 [Online at http://dx.doi.org]. is caused by light scattering and Environmental Health Perspectives. 112: 61–66. 747 Rosa, M. J., Jung, K. H., Perzanowski, M. S., doi:10.1289/ehp.6566 [http://dx.doi.org]. absorption by suspended particles and Kelvin, E. A., Darling, K.W., Camann, D. E., 739 gases. Visibility is important because it Wu, Y. & Batterman, S. A. (2006) Proximity of Chillrud, S. N., Whyatt, R. M., Kinney, P. L., Perera, schools in Detroit, Michigan to automobile and F. P., & Miller, R. L. (2010) Prenatal exposure to has direct significance to people’s truck traffic. Journal of Exposure Science & polycyclic aromatic hydrocarbons, environmental enjoyment of daily activities in all parts Environmental Epidemiology. doi:10.1038/ tobacco smoke and asthma. Respiratory Medicine. of the country. Individuals value good sj.jes.7500484 [Online at http://dx.doi.org]. (In press). doi:10.1016/j.rmed.2010.11.022 [Online visibility for the well-being it provides 740 Su, J. G., Jerrett, M., de Nazelle, A., & Wolch, at http://dx.doi.org]. J. (2011) Does exposure to air pollution in urban 748 This variable primarily represents roadway parks have socioeconomic, racial, or ethnic proximity. According to the Central Intelligence 750 http://nces.ed.gov/ccd/. gradients? Environmental Research. 111: 319–328. Agency’s World Factbook, in 2010, the United 751 Pedde, M. & Bailey, C. (2011) Identification of 741 Depro, B. & Timmins, C. (2008) Mobility and States had 6,506,204 km or roadways, 224,792 km Schools within 200 Meters of U.S. Primary and environmental equity: do housing choices of railways, and 15,079 airports. Highways thus Secondary Roads. Memorandum to the docket. determine exposure to air pollution? North Caroline represent the overwhelming majority of 752 National Research Council, (1993). Protecting State University Center for Environmental and transportation facilities described by this factor in Visibility in National Parks and Wilderness Areas. Resource Economic Policy the AHS. National Academy of Sciences Committee on Haze 742 Clougherty, J. E. & Kubzansky, L. D. (2009) A 749 Bailey, C. (2011) Demographic and Social in National Parks and Wilderness Areas. National framework for examining social stress and Patterns in Housing Units Near Large Highways and Academy Press, Washington, DC. This book can be susceptibility to air pollution in respiratory health. other Transportation Sources. Memorandum to viewed on the National Academy Press website at Environmental Health Perspectives. 117: 1351– docket. http://www.nap.edu/books/0309048443/html/.

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them directly, where they live and the EPA generally retained the value in areas of special scenic work, and in places where they enjoy secondary (welfare-based) PM2.5 significance like national parks and recreational opportunities. Visibility is standards, concluding that the target wilderness areas and reduced use of also highly valued in significant natural level of protection against PM-related sensitive ornamentals in landscaping.764 areas, such as national parks and visibility impairment would be The most recent Integrated Science wilderness areas, and special emphasis achieved in areas meeting the existing Assessment (ISA) for Ozone presents is given to protecting visibility in these secondary standards for PM2.5. more detailed information on how areas. For more information on visibility ozone affects vegetation and 753 (b) Plant and Ecosystem Effects of 765 see the final 2009 PM ISA. Ozone ecosystems. The ISA concludes that EPA is working to address visibility ambient concentrations of ozone are impairment. Reductions in air pollution The welfare effects of ozone can be associated with a number of adverse from implementation of various observed across a variety of scales, i.e. welfare effects and characterizes the programs associated with the Clean Air subcellular, cellular, leaf, whole plant, weight of evidence for different effects Act Amendments of 1990 (CAAA) population and ecosystem. Ozone can associated with ozone.766 The ISA provisions have resulted in substantial produce both acute and chronic injury concludes that visible foliar injury improvements in visibility and will in sensitive species depending on the effects on some vegetation, reduced continue to do so in the future. Because concentration level and the duration of vegetation growth, reduced productivity 759 trends in haze are closely associated the exposure. In those sensitive in terrestrial ecosystems, reduced yield 760 with trends in particulate sulfate and species, effects from repeated and quality of some agricultural crops, nitrate due to the relationship between exposure to ozone throughout the and alteration of below-ground their concentration and light extinction, growing season of the plant tend to biogeochemical cycles are causally visibility trends have improved as accumulate, so that even low associated with exposure to ozone. It emissions of SO and NO have concentrations experienced for a longer also concludes that reduced carbon 2 X duration have the potential to create decreased over time due to air pollution 761 sequestration in terrestrial ecosystems, regulations such as the Acid Rain chronic stress on vegetation. Ozone alteration of terrestrial ecosystem water Program.754 damage to sensitive species includes cycling, and alteration of terrestrial In the Clean Air Act Amendments of impaired photosynthesis and visible community composition are likely to be 1977, Congress recognized visibility’s injury to leaves. The impairment of causally associated with exposure to value to society by establishing a photosynthesis, the process by which ozone. the plant makes carbohydrates (its national goal to protect national parks source of energy and food), can lead to (c) Atmospheric Deposition and wilderness areas from visibility reduced crop yields, timber production, impairment caused by manmade Wet and dry deposition of ambient and plant productivity and growth. pollution.755 In 1999, EPA finalized the particulate matter delivers a complex Impaired photosynthesis can also lead regional haze program to protect the mixture of metals (e.g., mercury, zinc, to a reduction in root growth and visibility in Mandatory Class I Federal lead, nickel, aluminum, and cadmium), carbohydrate storage below ground, areas.756 There are 156 national parks, organic compounds (e.g., polycyclic resulting in other, more subtle plant and forests and wilderness areas categorized organic matter, dioxins, and furans), and ecosystems impacts.762 These latter as Mandatory Class I Federal areas.757 inorganic compounds (e.g., nitrate, impacts include increased susceptibility sulfate) to terrestrial and aquatic These areas are defined in CAA Section of plants to insect attack, disease, harsh ecosystems. The chemical form of the 162 as those national parks exceeding weather, interspecies competition and compounds deposited depends on a 6,000 acres, wilderness areas and overall decreased plant vigor. The variety of factors including ambient memorial parks exceeding 5,000 acres, adverse effects of ozone on areas with conditions (e.g., temperature, humidity, and all international parks which were sensitive species could potentially lead oxidant levels) and the sources of the in existence on August 7, 1977. to species shifts and loss from the material. Chemical and physical EPA has also concluded that PM2.5 affected ecosystems,763 resulting in a transformations of the compounds occur can cause adverse effects on visibility in loss or reduction in associated in the atmosphere as well as the media other areas that are not targeted by the ecosystem goods and services. onto which they deposit. These Regional Haze Rule, such as urban Additionally, visible ozone injury to areas, depending on PM2.5 leaves can result in a loss of aesthetic transformations in turn influence the concentrations and other factors such as fate, bioavailability and potential dry chemical composition and relative 759 73 FR 16486 (Mar. 27, 2008). toxicity of these compounds. humidity (i.e., an indicator of the water 760 73 FR 16491 (Mar. 27, 2008). Only a small Adverse impacts to human health and composition of the particles).758 In percentage of all the plant species growing within the environment can occur when December 2012, EPA revised the the U.S. (over 43,000 species have been catalogued particulate matter is deposited to soils, in the USDA PLANTS database) have been studied primary (health-based) PM2.5 standards with respect to ozone sensitivity. in order to increase public health 761 The concentration at which ozone levels 764 73 FR 16490–16497 (Mar. 27, 2008). protection. As part of that same review, overwhelm a plant’s ability to detoxify or 765 U.S. EPA. Integrated Science Assessment of compensate for oxidant exposure varies. Thus, Ozone and Related Photochemical Oxidants (Final whether a plant is classified as sensitive or tolerant Report). U.S. Environmental Protection Agency, 753 U.S. EPA. (2009). Integrated Science depends in part on the exposure levels being Washington, DC, EPA/600/R–10/076F, 2013. The Assessment for Particulate Matter (Final Report). considered. Chapter 9, Section 9.3.4 of U.S. EPA, ISA is available at http://cfpub.epa.gov/ncea/isa/ U.S. Environmental Protection Agency, 2013 Integrated Science Assessment for Ozone and recordisplay.cfm?deid=247492#Download. Washington, DC, EPA/600/R–08/139F. Related Photochemical Oxidants. Office of Research 766 The Ozone ISA evaluates the evidence 754 U.S. EPA. 2009 Final Report: Integrated and Development/National Center for associated with different ozone related health and Science Assessment for Particulate Matter. U.S. Environmental Assessment. U.S. Environmental welfare effects, assigning one of five ‘‘weight of Environmental Protection Agency, Washington, DC, Protection Agency. EPA 600/R–10/076F. evidence’’ determinations: Causal relationship, EPA/600/R–08/139F, 2009. 762 73 FR 16492 (Mar. 27, 2008). likely to be a causal relationship, suggestive of a 755 See Section 169(a) of the Clean Air Act. 763 73 FR 16493–16494 (Mar. 27, 2008). Ozone causal relationship, inadequate to infer a causal 756 64 FR 35714 (July 1, 1999). impacts could be occurring in areas where plant relationship, and not likely to be a causal 757 62 FR 38680–38681 (July 18, 1997). species sensitive to ozone have not yet been studied relationship. For more information on these levels 758 78 FR 3226, January 15, 2013. or identified. of evidence, please refer to Table II of the ISA.

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water, and biota.767 Deposition of heavy and increased potential for invasive on seed germination, flowering and fruit metals or other toxics may lead to the species. ripening. Effects of individual VOCs or human ingestion of contaminated fish, Building materials including metals, their role in conjunction with other impairment of drinking water, damage stones, cements, and paints undergo stressors (e.g., acidification, drought, to terrestrial, freshwater and marine natural weathering processes from temperature extremes) have not been ecosystem components, and limits to exposure to environmental elements well studied. In a recent study of a recreational uses. Atmospheric (e.g., wind, moisture, temperature mixture of VOCs including ethanol and deposition has been identified as a key fluctuations, sunlight, etc.). Pollution toluene on herbaceous plants, component of the environmental and can worsen and accelerate these effects. significant effects on seed production, human health hazard posed by several Deposition of PM is associated with leaf water content, and photosynthetic pollutants including mercury, dioxin both physical damage (materials damage efficiency were reported for some plant and PCBs.768 effects) and impaired aesthetic qualities species.774 (soiling effects). Wet and dry deposition Research suggests an adverse impact The ecological effects of acidifying of PM can physically affect materials, of vehicle exhaust on plants, which has deposition and nutrient enrichment are adding to the effects of natural in some cases been attributed to detailed in the Integrated Science weathering processes, by potentially Assessment for Oxides of Nitrogen and promoting or accelerating the corrosion aromatic compounds and in other cases 769 775 776 777 Sulfur-Ecological Criteria. of metals, by degrading paints and by to nitrogen oxides. Atmospheric deposition of nitrogen and deteriorating building materials such as F. Air Quality Impacts of Non-GHG sulfur contributes to acidification, stone, concrete and marble.770 The Pollutants altering biogeochemistry and affecting effects of PM are exacerbated by the animal and plant life in terrestrial and presence of acidic gases and can be Changes in emissions of non-GHG aquatic ecosystems across the United additive or synergistic due to the pollutants due to these rules will impact States. The sensitivity of terrestrial and complex mixture of pollutants in the air air quality. Information on current air aquatic ecosystems to acidification from and surface characteristics of the quality and the results of our air quality nitrogen and sulfur deposition is material. Acidic deposition has been modeling of the projected impacts of predominantly governed by geology. shown to have an effect on materials these rules are summarized in the Prolonged exposure to excess nitrogen including zinc/galvanized steel and following section. and sulfur deposition in sensitive areas other metal, carbonate stone (as 1. Current Concentrations of Non-GHG acidifies lakes, rivers, and soils. monuments and building facings), and Pollutants Increased acidity in surface waters surface coatings (paints).771 The effects

creates inhospitable conditions for biota on historic buildings and outdoor works Nationally, levels of PM2.5, ozone, and affects the abundance and of art are of particular concern because NOX, SOX, CO, and air toxics have biodiversity of fishes, zooplankton, of the uniqueness and irreplaceability of declined significantly in the last 30 macroinvertebrates, and ecosystem many of these objects. years and are continuing to drop as function. Over time, acidifying (d) Environmental Effects of Air Toxics previously promulgated regulations deposition also removes essential come into full effect. However, as of nutrients from forest soils, depleting the Emissions from producing, April 22, 2016, more than 125 million capacity of soils to neutralize future transporting, and combusting fuel people lived in counties designated acid loadings and negatively affecting contribute to ambient levels of nonattainment for one or more of the forest sustainability. Major effects in pollutants that contribute to adverse NAAQS, and this figure does not forests include a decline in sensitive effects on vegetation. Volatile organic include the people living in areas with tree species, such as red spruce (Picea compounds, some of which are a risk of exceeding a NAAQS in the rubens) and sugar maple (Acer considered air toxics, have long been future. Many Americans continue to be suspected to play a role in vegetation saccharum). In addition to the role 772 exposed to ambient concentrations of air nitrogen deposition plays in damage. In laboratory experiments, a toxics at levels which have the potential acidification, nitrogen deposition also wide range of tolerance to VOCs has to cause adverse health effects. In been observed.773 Decreases in leads to nutrient enrichment and altered addition, populations who live, work, or harvested seed pod weight have been biogeochemical cycling. In aquatic attend school near major roads reported for the more sensitive plants, systems increased nitrogen can alter experience elevated exposure and some studies have reported effects species assemblages and cause concentrations to a wide range of air eutrophication. In terrestrial systems pollutants. 770 U.S. Environmental Protection Agency (U.S. nitrogen loading can lead to loss of EPA). 2009. Integrated Science Assessment for nitrogen-sensitive lichen species, Particulate Matter (Final Report). EPA–600–R–08– 774 Cape, J. N., Leith, I. D., Binnie, J., Content, J., decreased biodiversity of grasslands, 139F. National Center for Environmental Donkin, M., Skewes, M., Price, D. N., Brown, A. R., meadows and other sensitive habitats, Assessment—RTP Division. December. Available on & Sharpe, A. D. (2003). Effects of VOCs on the internet at http://cfpub.epa.gov/ncea/cfm/ herbaceous plants in an open-top chamber recordisplay.cfm?deid=216546. experiment. Environmental Pollution. 124:341–343. 767 U.S. EPA. Integrated Science Assessment for 771 Irving, P.M., e.d. 1991. Acid Deposition: State 775 Viskari E. L. (2000). Epicuticular wax of Particulate Matter (Final Report). U.S. of Science and Technology, Volume III, Terrestrial, Norway spruce needles as indicator of traffic Environmental Protection Agency, Washington, DC, Materials, Health, and Visibility Effects, The U.S. pollutant deposition. Water, Air, and Soil Pollution. EPA/600/R–08/139F, 2009. National Acid Precipitation Assessment Program, 121:327–337. 768 U.S. EPA. (2000). Deposition of Air Pollutants Chapter 24, page 24–76. 776 Ugrekhelidze, D., Korte, F., & Kvesitadze, G. to the Great Waters: Third Report to Congress. 772 U.S. EPA. (1991). Effects of organic chemicals (1997). Uptake and transformation of benzene and Office of Air Quality Planning and Standards. EPA– in the atmosphere on terrestrial plants. EPA/600/3– toluene by plant leaves. Ecotox. Environ. Safety 453/R–00–0005. 91/001. 37:24–29. 769 773 777 NOX and SOX secondary ISA U.S. EPA. Cape J. N., Leith, I. D., Binnie, J., Content, J., Kammerbauer H., Selinger, H, on Rommelt, R., Integrated Science Assessment (ISA) for Oxides of Donkin, M., Skewes, M., Price, D. N., Brown, A. R., Ziegler-Jons, A., Knoppik, D., & Hock, B. (1987). Nitrogen and Sulfur Ecological Criteria (Final & Sharpe, A. D. (2003). Effects of VOCs on Toxic components of motor vehicle emissions for Report). U.S. Environmental Protection Agency, herbaceous plants in an open-top chamber the spruce Picea abies. Environmental Pollution. Washington, DC, EPA/600/R–08/082F, 2008. experiment. Environmental Pollution. 124:341–343. 48:235–243.

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(a) Particulate Matter dates for areas designated (d) Carbon Monoxide There are two primary NAAQS for nonattainment for the 2008 eight-hour There are two primary NAAQS for ozone NAAQS are in the 2015 to 2032 PM2.5: An annual standard (12.0 CO: An eight-hour standard (9 ppm) and micrograms per cubic meter (mg/m3)) set timeframe, depending on the severity of a one-hour standard (35 ppm). The in 2012 and a 24-hour standard (35 mg/ the problem in each area. primary NAAQS for CO were retained m3) set in 2006, and two secondary Nonattainment area attainment dates in August 2011. There are currently no NAAQS for PM2.5: An annual standard associated with areas designated for the CO nonattainment areas; as of (15.0 mg/m3) set in 1997 and a 24-hour 2015 NAAQS will be in the 2020–2037 September 27, 2010, all CO standard (35 mg/m3) set in 2006. timeframe, depending on the severity of nonattainment areas have been There are many areas of the country the problem in each area. redesignated to attainment. that are currently in nonattainment for EPA has already adopted many The past designations were based on the annual and 24-hour primary PM2.5 emission control programs that are the existing community-wide NAAQS. As of April 22, 2016, more expected to reduce ambient ozone monitoring network. EPA is making than 23 million people lived in the levels. As a result of these and other changes to the ambient air monitoring seven areas that are still designated as federal, state and local programs, eight- requirements for CO. The new nonattainment for the 1997 annual hour ozone levels are expected to requirements are expected to result in

PM2.5 NAAQS. These PM2.5 improve in the future. However, even approximately 52 CO monitors nonattainment areas are comprised of 33 with the implementation of all current operating near roads within 52 urban full or partial counties. As of April 22, state and federal regulations, there are areas by January 2015 (76 FR 54294, 2016, nine areas aredesignated as August 31, 2011). projected to be counties violating the nonattainment for the 2012 annual ozone NAAQS well into the future. (e) Diesel Exhaust PM PM2.5 NAAQS; these areas are composed of 20 full or partial counties with a (b) Nitrogen Dioxide Because DPM is part of overall population of more than 23 million. As ambient PM and cannot be easily of April 22, 2016, 16 areas are On April 6, 2018, based on a review distinguished from overall PM, we do designated as nonattainment for the of the full body of scientific evidence, not have direct measurements of DPM 2006 24-hour PM2.5 NAAQS, these areas EPA issued a decision to retain the in the ambient air. DPM concentrations are composed of 46 full or partial current national ambient air quality are estimated using ambient air quality counties with a population of more than standards (NAAQS) for oxides of modeling based on DPM emission 32 million. In total, there are currently nitrogen (NOX). The EPA has concluded inventories. DPM emission inventories 24 PM2.5 nonattainment areas with a that the current NAAQS protect the are computed as the exhaust PM population of more than 39 million public health, including the at-risk emissions from mobile sources people. populations of older adults, children combusting diesel or residual oil fuel. The EPA has already adopted many and people with asthma, with an DPM concentrations were recently mobile source emission control adequate margin of safety. The NAAQS estimated as part of the 2011 NATA. programs that are expected to reduce for nitrogen oxides are a one-hour Areas with high concentrations are ambient PM concentrations. As a result standard at a level of 100 ppb based on clustered in the Northeast, Great Lake of these and other federal, state and the three-year average of 98th percentile States, California, and the Gulf Coast local programs, the number of areas that of the yearly distribution of one-hour States and are also distributed fail to meet the PM2.5 NAAQS in the daily maximum concentrations, and an throughout the rest of the U.S. The future is expected to decrease. However, annual standard at a level of 53 ppb. median DPM concentration calculated even with the implementation of all nationwide is 0.76 mg/m3. current state and federal regulations, (c) Sulfur Dioxide (f) Air Toxics there are projected to be counties The EPA is currently reviewing the violating the PM2.5 NAAQS well into the The most recent available data future. States will need to meet the 2006 primary SO2 NAAQS and has proposed indicate that the majority of Americans 24-hour standards in the 2015–2019 to retain the current primary standard continue to be exposed to ambient timeframe and the 2012 primary annual (83 FR 26752, June 8, 2018), which is a concentrations of air toxics at levels standard in the 2021–2025 timeframe. one-hour standard of 75 ppb established which have the potential to cause Ozone in June 2010. The EPA has been adverse health effects. The levels of air The primary and secondary NAAQS finalizing the initial area designations toxics to which people are exposed vary for ozone are eight-hour standards with for the 2010 SO2 NAAQS in phases and depending on where people live and a level of 0.07 ppm. The most recent completed designations for most of the work and the kinds of activities in revision to the ozone standards was in country in December 2017. The EPA is which they engage, as discussed in 2015; the previous eight-hour ozone under a court order to finalize initial detail in EPA’s most recent Mobile primary standard, set in 2008, had a designations by December 31, 2020, for Source Air Toxics Rule. According to level of 0.075 ppm. As of April 22, 2016, a remaining set of about 50 areas where the National Air Toxic Assessment there were 44 ozone nonattainment states have deployed new SO2 (NATA) for 2015, mobile sources were areas for the 2008 ozone NAAQS, monitoring networks. As of July 2018, responsible for 50% of outdoor composed of 216 full or partial counties, the EPA has designated 42 areas as anthropogenic toxic emissions and were with a population of more than 120 nonattainment for the 2010 SO2 NAAQS the largest contributor to cancer and million. in actions taken in 2013, 2016, and noncancer risk from directly emitted States with ozone nonattainment 2017.778 There also remain nine pollutants. Mobile sources are also large areas are required to take action to bring nonattainment areas for the primary contributors to precursor emissions those areas into attainment. The annual SO2 NAAQS set in 1971. which react to form air toxics. attainment date assigned to an ozone Formaldehyde is the largest contributor nonattainment area is based on the 778 78 FR 47191, 81 FR 45049, 81 FR 89870, 83 to cancer risk of all 71 pollutants area’s classification. The attainment FR 1098, and 83 FR 14597. quantitatively assessed in the 2011

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NATA. Mobile sources were responsible emissions inventories, in addition to the beyond the issues regarding fuel for more than 25% of primary processing time associated with the production and distribution (upstream) anthropogenic emissions of this modeling itself, has precluded us from GHG emissions discussed in Section pollutant in 2011 and are major performing air quality modeling for this VI.D.2. The agencies seek comment on contributors to formaldehyde precursor proposal. any studies or research in this area that emissions. Benzene is also a large Section VI.D.2 of the preamble should be considered in the future to contributor to cancer risk, and mobile present projections of the changes in assess a fuller range of health and sources account for almost 80% of criteria pollutant and air toxics environmental impacts from the light- ambient exposure. Over the years, EPA emissions because of the proposed duty vehicle fleet shifting to different has implemented a number of mobile vehicle standards; the basis for those technologies and/or materials. At this source and fuel controls which have estimates is set out in Chapter 10 of the point, it is unclear whether there is resulted in VOC reductions, which also PRIA. The atmospheric chemistry sufficient information about the reduced formaldehyde, benzene and related to ambient concentrations of lifecycle impacts of the myriad of other air toxic emissions. PM2.5, ozone and air toxics is very available technologies, materials, and 2. Air Quality Impacts of Non-GHG complex, and making predictions based cradle-to-grave pathways to conduct the Pollutants solely on emissions changes is type of detailed assessments that would extremely difficult. be needed in a regulatory context, but (a) Impacts of Proposed Standards on the agencies seek comment on any Future Ambient Concentrations of 3. Other Unquantified Health and current or future studies and research PM2.5, Ozone and Air Toxics Environmental Effects underway on this topic, and how such Full-scale photochemical air quality In addition, the agencies seek analysis could practicably and in a modeling is necessary to accurately comment on whether there are any other balanced way be integrated in the project levels of criteria pollutants and health and environmental impacts modeling, especially considering the air toxics. For the final rule, a national- associated with advancements in characterization of specific vehicles in scale air quality modeling analysis will technologies that should be considered. the analysis fleet and the be performed to analyze the impacts of For example, the use of technologies characterization of specific technology the standards on PM2.5, ozone, and and other strategies to reduce fuel options. selected air toxics (i.e., benzene, consumption and/or GHG emissions G. What are the impacts on the total formaldehyde, acetaldehyde, acrolein could have effects on a vehicle’s life- fleet size, usage, and safety? and 1,3-butadiene). The length of time cycle impacts (e.g., materials usage, needed to prepare the necessary manufacturing, end of life disposal), 1. CAFE Standards

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Table VII-88- Cumulative Changes in Fleet Size, Usage and Fatalities for MY's 1977-2029

U n d er CAFEPro~ ram Model Year Standards MY MY MY MY MY MY TOTAL Through 2021 2022 2023 2024 2025 2026 Cumulative Changes in Fleet Size, Usage and Fatalities Through MY 2029 Fleet Size (millions) -31 -28 -38 -48 -46 0 -190 Share L T, CY 2040 45% 45% 45% 45% 45% 45% N/A VMT, Fatalities, and Fuel Consumption for MY's 2017-2029 VMT, with rebound -222 -149 -200 -236 -219 0 -1,030 (billion miles) VMT, without rebound -48 -29 -43 -46 -70 0 -235 (billion miles) Fatalities, with rebound -1,840 -1,160 -1,740 -2,010 -1,880 0 -8,630 Fatalities, without -420 -175 -452 -442 -666 0 -2,160 rebound Fuel Consumption, with 20 14 18 23 17 0 91 rebound (billion gallons) Fuel Consumption, 26 18 23 29 21 0 116 without rebound (billion gallons) VMT, Fatalities, and Fuel Consumption for MY's 1977-2016 VMT, with rebound -76.6 -70.4 -88.0 -115 -91.4 0 -441 (billion miles) VMT, without rebound -79.3 -72.8 -91.0 -119 -94.5 0 -457 (billion miles) Fatalities, with rebound -711 -646 -804 -1,060 -829 0 -4,050 Fatalities, without -737 -669 -832 -1,090 -856 0 -4,180 rebound Fuel Consumption, with -3.33 -2.87 -3.58 -4.65 -3.65 0 -18.1 rebound (billion gallons) Fuel Consumption, -3.46 -2.98 -3.71 -4.82 -3.78 0 -18.8 without rebound (billion gallons)

2. CO2 Standards

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H. What other impacts (quantitative and estimated impacts, and some are likely starting in MY 2019; NHTSA may unquantifiable) will these proposed to do so for the bulk of the analysis. To consider changing the civil penalty rate standards have? explore the sensitivity of estimated in a separate regulatory action, and 1. Sensitivity Analysis impacts to changes in model inputs, depending on the timing of any such analysis was conducted using action, the final rule to follow today’s As discussed at the beginning of this alternative values for a range of different proposal could reflect the change.780 section, results presented today reflect inputs. Results of this sensitivity The following table lists the cases the agencies’ best judgments regarding analysis are summarized below, and included in the sensitivity analysis. The many different factors. Based on analyses in past rulemakings, the detailed model inputs and outputs are final rule could adopt any 779 agencies recognize that some analytical available on NHTSA’s website. combination—or none—of these inputs are especially uncertain, some Regulatory alternatives are identical alternatives as reference case inputs, are likely to exert considerable across all cases, except that one case and the agencies invite comment on all influence over specific types of includes an increase in civil penalty rate of them.

779 The CAFE model and all inputs and outputs www.nhtsa.gov/corporate-average-fuel-economy/ 780 83 FR 13904 (Apr. 2, 2018). supporting today’s proposal are available at https:// compliance-and-effects-modeling-system.

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T a bl e VII-- 90 C ases I ncldd. u e Ill Sens• ·r IvHy ·t A nalySIS Sensitivity Case Description Reference Case Reference case Assume 50% loss in consumer surplus- equivalent to Consumer Benefit at 50% the assumption that consumers will only value the calculated benefits they receive at 50 percent of the analysis estimates Consumer Benefit at 75% 75% loss in consumer surplus New vehicle sales will remain at levels specified for MY Fleet Share and Sales Response Disabled 2016 in the market data input file Keeps average new vehicle prices at MY 2016 levels within the scrappage model throughout the model Disable Scrappage Price Effect simulation; this disables the effect of slower scrappage when new vehicle prices increase across more stringent scenanos. Disables both the scrappage price effect and the fleet Scrappage and Fleet Share Disabled share and sales response. High Oil Price High fuel price estimates

High Oil Price with 60 Month Payback High fuel price estimates and a 60-mo. payback period

Low Oil Price Low fuel price estimates

Low Oil Price with 12 Month Payback Low fuel price estimates and a 12-mo. payback period

High GDP High GDP growth rate High GDP with High Oil Price High GDP growth rate and high fuel price estimates

High GDP with Low Oil Price High GDP growth rate and low fuel price estimates

LowGDP Low GDP growth rate Low GDP with High Oil Price Low GDP growth rate and high fuel price estimates

Low GDP with Low Oil Price Low GDP growth rate and low fuel price estimates On-road gap (difference between rated fuel economy On Road Gap 0.10 and observed fuel economy) is set to 0 .1. On Road Gap 0.30 On-road gap is set to 0.3 12-month payback period (i.e., voluntary application of 12 Month Payback Period technologies paying back within first year of vehicle ownership) 24 Month Payback Period 24-month payback period

36 Month Payback Period 36-month payback period

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Rebound effect, the increase miles traveled as the cost of Rebound Effect at 10% travel decreases, is set to 10%

Rebound Effect at 30% Rebound effect set to 30% Redesign cadence (schedule of major technology Long Fleet Redesign Cadence upgrades for vehicles, engines, etc.) is extended to 1.2 times that of the reference case (rounded to nearest MY) Redesign cadence shortened to a 0.8 times that of the Short Fleet Redesign Cadence reference case (rounded to nearest MY) Lower bounds of confidence interval of safety Safety Coefficient at 5th Percentile coefficients Upper bounds of confidence interval of safety Safety Coefficient at 95th Percentile coefficients Improvements in successive MY vehicles stabilize 5 Fatalities Flat Earlier years earlier than central case Improvements in successive MY vehicles stabilize 5 Fatalities Flat Later years later than central case High Social Cost of Carbon High social cost of carbon

Low Social Cost of Carbon Low social cost of carbon

High HEV Battery Costs HEV battery costs 1/3 more than in reference case

Low HEV Battery Costs HEV battery costs 1/3 less than in reference case

Exclude Strong Hybrids Strong hybrids are excluded from the analysis

HCR2 (advanced high compression ratio engine) is Include HCR2 Engines included in the analysis

Fines at $14 in 2019 CAFE compliance fines are set to $14 beginning in 2019

Technology retail price equivalent (RPE) of 1.10 (i.e., Technology Cost Markup 1.10 10% markup of direct costs)

Technology retail price equivalent (RPE) of 1.19 (i.e., Technology Cost Markup 1.19 19% markup of direct costs)

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The remaining tables in the section summarize various estimated impacts as estimated for all of the cases included in the sensitivity analysis.

781 Climate-related economic damages caused by which are 25 for CH4 and 298 for N2O. These GWPs Chapter 8.11.2 and the Appendix to Chapter 8. For emissions of GHGs other than CO2 were estimated were estimated by the United Nations comparison, using the alternative approach results by converting those emissions to their (mass) Intergovernmental Panel on Climate Change in its in estmates which average $256 per (metric) ton for CH4 and $2,820 for N2O over the analysis period, equivalents in CO2 emissions and applying the per- 4th Assessment Report (available at https:// or about 22% and 13% higher than the values used ton damage costs used to monetize CO2 emissions. www.ipcc.ch/publications_and_data/ar4/wg1/en/ in this sensitivity case. A detailed description of the Specifically, emissions of methane (CH ) and ch2s2-10-2.html; last accessed July 19, 2018). An 4 methods used to construct these alternative values nitrous oxide (N2O) were converted to their alternative approach would be to develop direct is available in the docket for this rule. The agency equivalent in CO2 emissions using the 100-year estimates of the climate damage costs for these will consider using this alternative approach in its Global Warming Potentials (GWPs) for those gases, GHGs derived using the same process that was used analysis supporting the final rule. to estimate the SCC, described previously in PRIA

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Table VII-91 - Average Required and Achieved CAFE Levels, Vehicle Sales, and Employment Hours under Proposed CAFE Standards (MY 2029 Combined Fleet) Average Average Required Achieved Vehicle Employment Sensitivity Case CAFE CAFE Sales Hours (xl,OOO) Standard Level (xl,OOO) (mpg) (mpg) Reference Case 37.0 39.7 18,006 2,527,497 Consumer Benefit at 50% 37.0 39.7 18,006 2,527,497 Consumer Benefit at 75% 37.0 39.7 18,006 2,527,497 Fleet Share and Sales Response 36.9 39.5 16,578 2,339,120 Disabled Scrappage Price Effect Disabled 37.0 39.7 18,006 2,527,497 Scrappage and Fleet Share Disabled 36.9 39.5 16,578 2,339,120 High Oil Price 38.3 43.2 18,003 2,486,835 High Oil Price with 60 Month Payback 38.2 48.4 17,960 2,550,397 Low Oil Price 36.0 37.7 18,006 2,565,428 Low Oil Price with 12 Month Payback 36.0 37.6 18,000 2,568,164 HighGDP 37.0 39.7 18,092 2,539,507 LowGDP 38.3 43.2 18,089 2,498,657 High GDP with High Oil Price 36.0 37.7 18,092 2,577,619 High GDP with Low Oil Price 37.0 39.7 17,457 2,450,393 Low GDP with High Oil Price 38.3 43.2 17,454 2,410,837 Low GDP with Low Oil Price 36.0 37.7 17,457 2,487,169 On Road Gap 0.10 37.0 39.5 18,004 2,527,780 On Road Gap 0.30 37.0 39.9 18,005 2,529,090 12 Month Payback Period 37.0 38.8 18,004 2,523,931 24 Month Payback Period 37.0 39.3 18,006 2,525,462 36 Month Payback Period 37.0 40.0 18,005 2,529,575 Rebound Effect at 10% 37.0 39.7 18,006 2,527,497 Rebound Effect at 30% 37.0 39.7 18,006 2,527,497 Long Fleet Redesign Cadence 37.0 39.9 18,000 2,533,310 Short Fleet Redesign Cadence 37.0 39.8 18,003 2,537,370 Safety Coefficient at 5th Percentile 37.0 39.7 18,006 2,527,497 Safety Coefficient at 95th Percentile 37.0 39.7 18,006 2,527,497 Fatalities Flat Earlier 37.0 39.7 18,006 2,527,497 Fatalities Flat Later 37.0 39.7 18,006 2,527,497 High Social Cost of Carbon 37.0 39.7 18,006 2,527,497 Low Social Cost of Carbon 37.0 39.7 18,006 2,527,497 High HEV Battery Costs 37.0 39.7 18,006 2,527,497 Low HEV Battery Costs 37.0 39.7 18,006 2,527,634 Exclude Strong Hybrids 37.0 39.8 18,006 2,527,741 Include HCR2 Engines 37.0 41.1 18,012 2,523,575 Fines at $14 in 2019 37.0 39.8 18,007 2,528,506 Technology Cost Markup 1.10 37.0 40.5 18,012 2 530 142

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Technology Cost Markup 1.19 37.0 40.2 18,011 2,528,548 Technology Cost Markup 1.24 37.0 40.3 18,009 2,529,575 Technology Cost Markup 1.37 37.0 39.8 18,010 2,526,972 Technology Cost Markup 1.75 37.0 39.4 18,001 2,527,326 Technology Cost Markup 2.00 37.0 39.2 17,995 2,528,328 AE020 18 Fuel Prices 37.2 39.8 18,007 2,520,290 Utility Value Loss in HEV s 37.0 39.7 18,006 2,527,497

Nonzero Valuation ofC~ and N20 37.0 39.7 18,006 2,527,497

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Table VII-92- Average Required and Achieved C02 Levels, Vehicle Sales, and Employment Hours under Proposed C02 Standards (MY 2029 Combined Fleet) Average Average Vehicle Employment Required C0 Achieved Sensitivity Case 2 Sales Hours Standard C02 Rating (xl,OOO) (xl,OOO) (g/mile) (g/mile) Reference Case 240.1 229.6 18,016 2,519,524 Consumer Benefit at 50% 240.1 229.6 18,016 2,519,524 Consumer Benefit at 75% 240.1 229.6 18,016 2,519,524 Fleet Share and Sales Response 241.3 230.7 16,578 2,331,605 Disabled Scrappage Price Effect Disabled 240.1 229.6 18,016 2,519,524 Scrappage and Fleet Share Disabled 241.3 230.7 16,578 2,331,605 High Oil Price 231.8 207.3 18,006 2,485,426 High Oil Price with 60 Month Payback 232.7 186.6 17,965 2,547,313 Low Oil Price 246.2 242.8 18,019 2,554,288 Low Oil Price with 12 Month Payback 246.1 243.9 18,018 2,554,045 HighGDP 240.1 230.1 18,102 2,530,790 LowGDP 231.8 207.3 18,092 2,497,237 High GDP with High Oil Price 246.2 242.8 18,105 2,566,418 High GDP with Low Oil Price 240.1 230.1 17,468 2,442,039 Low GDP with High Oil Price 231.8 207.3 17,457 2,409,607 Low GDP with Low Oil Price 246.2 242.4 17,469 2,476,916 On Road Gap 0.10 240.1 230.6 18,015 2,518,279 On Road Gap 0.30 240.2 227.7 18,014 2,520,876 12 Month Payback Period 239.8 237.2 18,019 2,511,392 24 Month Payback Period 240.0 232.5 18,018 2,515,942 36 Month Payback Period 240.2 226.2 18,012 2,523,599 Rebound Effect at 10% 240.1 229.6 18,016 2,519,524 Rebound Effect at 30% 240.1 229.6 18,016 2,519,524 Long Fleet Redesign Cadence 240.0 227.6 18,012 2,525,628 Short Fleet Redesign Cadence 240.3 227.8 18,014 2,524,315 Safety Coefficient at 5th Percentile 240.1 229.6 18,016 2,519,524 Safety Coefficient at 95th Percentile 240.1 229.6 18,016 2,519,524 Fatalities Flat Earlier 240.1 229.6 18,016 2,519,524 Fatalities Flat Later 240.1 229.6 18,016 2,519,524 High Social Cost of Carbon 240.1 229.6 18,016 2,519,524 Low Social Cost of Carbon 240.1 229.6 18,016 2,519,524 High HEV Battery Costs 240.1 229.6 18,016 2,519,524 Low HEV Battery Costs 240.0 230.0 18,017 2,517,939 Exclude Strong Hybrids 240.1 229.1 18,016 2,519,640 Include HCR2 Engines 240.1 220.0 18,016 2,516,858 Technology Cost Markup 1.10 240.2 222.1 18,017 2,523,878 Technology Cost Markup 1.19 240.2 224.6 18,018 2,521,079 Technology Cost Markup 1.24 240.1 226.6 18,019 2,518,399

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VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00375 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.257 43360 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules Year Vehicle No-Action Model 35,075 33,XII 35,912 33,681 34,996 35,031 35,161 33,812 35,910 35,032 35,909 35,031 34,942 34,942 33,811 35,07X 35,933 35,038 35,004 35,031 35,031 35,031 ,-, Alternative 2029, Average MSRP ·------Pro2ram .. Model 2029 32,531 33,147 32,636 32,550 32,421 32,592 33,084 32,550 32,700 32,700 32,496 32,550 33,07X 32,550 32,069 33,091 32,069 32,542 32,069 33,083 32,541 32,550 GHG Year MSRP ------2016 32,048 32,048 32,04X 32,048 32,048 32,048 32,048 32,048 32,048 32,048 32,04X 32,04X 32,048 32,04X 32,048 32,04X 32,048 32,048 32,04X 32,048 32,048 32,048 Vehicle Vehicle Average Average Year MSRPModel I Year 13 Vehicle No-Action Model 34,772 34,816 34,X 34,7XX 33,833 34,767 34,813 34,833 35,634 34,X23 34,788 34,813 35,645 34,Xl3 35,634 33,711 33,709 35,634 34,813 33,709 34,813 34,813 Alternative 2029, MSRP Pro2ram Model 2029 33,234 33,357 32,904 32,774 32,774 32,774 32,804 32,774 32,811 32,774 32,720 32,133 32,904 32,745 33,393 32,774 32,774 33,357 32,131 32,133 33,357 32,774 CAFE ------.------Year . MSRP -·-·· Year ---- 2016 Initial 32,048 32,048 32,048 32,04X 32,048 32,04X 32,04X 32,048 32,048 32,048 32,048 32,048 32,048 32,04X 32,04X 32,048 32,04X 32,048 32,048 32,048 32,048 32,048 MSRP Vehicle Vehicle Average Average Average Model -·-- I ----Q- Payback Payback Disabled Price Price Price Price Disabled Month Month Case --- Oil Response Oil Oil . Oil 75% 50% Share 60 12 Period Period Period 10% at at Effect Low Low at High Sales High Fleet with with 0.30 0.10 ------and with with Sensitivity with Price Benetlt and Benefit with Case Payback Payback Payback Effect Gap Gap Price Price Price Price GDP GDP Share Oil Oil GDP GDP Oil Oil GOP Road Road Month Month Month 12 Low Low Scrappage Scrappage On 24 On 36 Consumer Consumer Low Rebom1d Low Reference Fleet Disabled LowGDP High High High High High II

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00376 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.258 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43361 n/a 35,021 35,031 35,031 35,031 35,031 34,821 34,177 34,205 34,375 35,031 34,905 35,031 35,031 35,031 34,778 34,861 35,031 34,471 34,771 35,560 36,067 34,885 35,031 n/a 32,658 32,555 32,525 32,511 32,550 32,651 32,483 32,595 32,616 32,450 32,550 32,550 32,527 32,395 32,550 n/a 32,048 32,048 32,550 32,550 32,048 32,048 32,048 32,550 32,550 32,048 32,048 32,048 32,048 32,527 32,048 32,048 32,048 32,048 32,048 32,048 32,048 32,550 32,550 32,048 32,048 32,048 32,048 32,048 32,048 32,520 32,048 n/a 34,850 34,813 34,813 34,240 34,606 34,136 34,084 34,813 34,755 34,813 34,570 35,253 35,640 34,691 34)28 34,813 34,813 34,825 34,813 34,813 34,813 34,625 34,813 n/a 32,854 32,774 32,774 32,774 32,774 32,774 32,676 32,712 32,775 32,686 32,787 32,654 32,774 32,774 32,774 32,716 32,864 32,954 32,774 32,774 32,770 n/a 32,048 32,048 32,048 32,048 32,048 32,048 32,848 32,048 32,048 32,048 32,048 32,048 32,663 32,048 32,048 32,048 32,048 32,048 32,048 32,048 32,048 32,048 32,048 32,048 32,048 0 2 N and 1.19 1.24 1.10 1.37 1.75 Percentile 2.00 Percentile Credits 2 Cadence HEVs Cadence 95th 5th Carbon Carbon ofCIL Costs in C0 Costs at at 30% Markup Markup Markup Markup Markup Markup of of at of Hybrids Prices 2019 Engines Earlier Later Loss in Cost Cost Cost Cost Cost Cost Cost Cost Redesign Redesign Battery Battery Fuel Flat Flat Effect Valuation Strong $14 HCR2 Trading Value Coefficient Coefficient Fleet at Fleet Social HEV Social HEY Safety Safety Short Utility Fatalities Fatalities Fines Perfect Rebound Long Low Exclude Low Include Technology Technology Technology Technology Technology Technology AE02018 High High Nonzero

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00377 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.259 43362 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 88 97 90 98 98 98 95 51 51 50 23 108 126 114 104 126 126 123 Fuel Cons. (billion gallons) Fuel Rebound through and without -5,950 -5,650 -1,490 -2,640 -5,770 -5,780 -6,350 -6,340 -6,340 -6,440 -5,650 -2,720 -6,180 -7,440 -6,590 -6,400 -6,340 -6,580 Fatalities Emissions Fatalities 2 C0 VMT, -650 -610 -140 -280 -630 -630 -690 -690 -690 -700 -610 -270 -670 -830 -680 -680 -670 -690 Consumption and VMT Miles) (billion 6.2 71.2 12.5 12.7 12.4 80.4 89.1 80.8 72.6 73.1 73.1 73.1 67.6 64.9 Fuel 113.8 117.1 116.3 116.7 Cons. (billion gallons) Fuel Consumption Rebound and Fuel with Standard -7,820 -8,560 -4,300 -12,000 -10,670 -10,920 -10,910 -12,340 -13,100 -12,660 -12,980 -12,680 -12,680 -10,810 -13,140 -12,800 -13,370 -12,680 Fatalities Fatalities CAFE Fatalities, VMT, Consumption -920 -490 VMT -1,390 -1,220 -1,250 -1,250 -1,430 -1,500 -1,510 -1,470 -1,470 -1,010 -1,510 -1,460 -1,470 -1,470 -1,240 -1,550 Miles) (billion (VMT), Prooosed 65 135 138 136 889 803 809 809 809 787 747 894 986 718 Travel C02 1,260 1,297 1,288 1,293 under (mmt) Size, 2029 (%) 2040 1\'IY Share 3383% 3388% 3380% 3541% 5351% 5364% 5368% 5338% 4663% 4549% 4572% 4532% 4537% 4540% 4538% 4538% 4538% 4627% Fleet LT,CY in Size -59 -44 -51 -174 -186 -170 -185 -185 -190 -190 -180 -190 -181 -192 -191 -174 -181 -202 Changes (millions) Fleet Price Price Price Price Month Month Oil Response Oil Oil Oil 75% 50% Cumulative Share 60 12 Case - at at Low Effect Low High Sales High Fleet with with 0.30 0.10 and with with with VII-94 Price and Benefit Benefit Case with Gap Gap Price Price P Price Price Sensitivity GDP GDP Share Oil Oil GD Oil Oil GDP Table Road Road Scrappage Scrappage On Consumer Consumer On Disabled Disabled High Payback High Low Fleet Disabled High Payback HighGDP High Reference LowGDP Low Low Low

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00378 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.260 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43363 84 87 86 90 74 77 92 98 98 98 98 98 98 98 98 93 98 97 96 73 98 98 103 101 109 100 103 -7,270 -6,860 -6,390 -6,300 -4,940 -6,340 -5,900 -6,340 -4,950 -5,910 -7,000 -7,600 -5,220 -5,240 -6,080 -6,340 -6,340 -6,470 -4,630 -6,620 -6,340 -8,050 -6,340 -6,090 -6,340 -6,340 -12,680 -780 -750 -680 -530 -690 -690 -640 -690 -640 -760 -820 -540 -570 -570 -630 -670 -690 -690 -690 -710 -690 -720 -690 -690 -690 -690 -1,470 73.1 75.1 73.1 56.9 81.4 85.4 77.2 73.1 72.5 75.7 76.8 75.5 73.1 73.1 73.1 73.1 73.1 73.1 68.7 69.0 62.9 65.4 64.7 60.8 56.3 69.2 69.5 -9,900 -9,510 -14,470 -13,600 -11,730 -12,210 -12,680 -11,840 -12,680 -10,310 -10,810 -10,770 -12,110 -13,650 -14,420 -12,280 -12,520 -15,850 -12,680 -10,830 -12,580 -13,180 -12,680 -12,680 -14,520 -12,680 -12,680 -1,670 -1,570 -1,330 -1,420 -1,140 -1,470 -1,370 -1,470 -1,190 -1,250 -1,250 -1,400 -1,580 -1,660 -1,390 -1,860 -1,530 -1,470 -1,080 -1,470 -1,470 -1,450 -1,470 -1,470 -1,460 -1,470 -1,470 854 809 809 802 837 850 827 835 809 809 809 766 901 751 762 723 715 631 768 945 623 695 673 809 809 809 809 45.4 45.4 4538% 4551% 4525% 4538% 4538% 4493% 4550% 4538% 4566% 4560% 4559% 4545% 4524% 4509% 4508% 4539% 4538% 4538% 4418% 4538% 4538% 4542% 4538% 4538% 4541% -140 -190 -190 -142 -152 -154 -175 -214 -236 -175 -180 -190 -196 -190 -190 -190 -182 -190 -202 -194 -210 -179 -190 -190 -190 -184 -190 and s 1.10 1.19 1.24 1.37 1.75 2.00 4 Cadence HEV Cadence 95th 5th Carbon Carbon ofCH Period Period Period Costs in Costs 10% at at 30% Markup Markup Markup Markup Markup Markup of of at at Hybrids Prices 2019 Engines Earlier Later Loss in Cost Cost Cost Cost Cost Cost Cost Cost Redesign Redesign Battery Batterv Fuel Payback Payback Payback Flat Flat Effect Effect Valuation Strong $14 HCR2 Value Coefficient Coefficient Fleet at Fleet Social HEV Social HEV Month Month Month 12 Safety Safety Short 36 Utility Fines Fatalities Fatalities Rebound Rebound Percentile Percentile 24 Long Low Low Exclude Include Technology Technology Technology Technology Technology Technology AE02018 High High Nonzero N20

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00379 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.261 43364 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules Cons. 98 98 98 95 97 90 51 51 50 88 23 123 108 103 109 104 126 126 114 126 (billion Fuel gallons) Fuel Rebound through and without -7,270 -6,860 -7,440 -2,640 -2,720 -6,590 -6,350 -6,400 -6,340 -6,340 -6,440 -6,340 -5,770 -5,650 -1,490 -5,650 -5,780 -6,180 -6,580 -5,950 Fatalities Fatalities Emissions 2 C0 VMT, -780 -750 -830 -280 -270 -680 -690 -670 -690 -690 -700 -690 -630 -610 -140 -610 -630 -670 -680 -650 Consumption VMT Miles) and Cons. 6.2 12.7 12.4 12.5 81.4 80.8 89.1 80.4 77.2 72.6 73.1 73.1 73.1 64.9 71.2 67.6 117.1 116.7 113.8 116.3 (billion (billion Fuel gallons) Fuel Consumption Rebound and Fuel with Standard -8,560 -7,820 -4,300 -14,470 -13,600 -13,370 -13,140 -12,660 -12,800 -12,680 -12,680 -12,980 -12,680 -10,810 -10,920 -10,670 -10,910 -12,340 -13,100 -12,000 Fatalities Fatalities co, Fatalities, VMT, Consumption ,510 ,430 -920 -490 VMT -1,670 -1,570 -1,550 -1,010 -I -1,460 -1,470 -1,470 -1,470 -1,500 -1,470 -1,250 -1,240 -1,220 -1,250 -I -1,510 -1,390 Miles) (billion Pronosed (VMT), 65 138 135 136 854 894 803 809 809 809 889 901 718 986 747 787 C02 1,297 1,293 1,260 1,288 (mmt) ------under Travel 2029 Size, LT, 2040 (%) MY ------3541% 3383% 3388% 3380% 5364% 5338% 5351% 5368% 4493% 4525% 4627% 4572% 4663% 4540% 4538% 4538% 4537% 4538% 4532% 4549% Fleet CY Share in Size -51 -44 -59 -210 -202 -202 -185 -181 -174 -170 -185 -191 -174 -180 -190 -190 -192 -190 -186 -181 Changes (millions) Fleet Price Price Price Price Disabled Month Month Oil Response Oil Oil Cumulative Oil 75% 50% Share 60 12 Case Period Period at at Low Effect Low High Sales High Fleet with with 0.10 0.30 and with VII-95- with with Price and Benefit Benefit Case with Payback Payback Gap Gap Price Price Price Price Sensitivity GDP GDP Share Oil Oil GDP Oil Oil GDP Table Road Road Month Month 12 Scrappage Scrappage Consumer Consumer On On Fleet Payback Reference Low Payback Disabled Disabled Low Low 24 Low LowGDP High High HighGDP High High

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00380 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.262 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43365 84 87 86 90 74 97 96 73 92 98 98 98 77 98 98 98 98 98 98 98 101 103 108 106 100 -5,900 -6,340 -6,340 -6,080 -6,390 -4,630 -8,050 -6,340 -6,340 -6,340 -6,340 -6,300 -4,940 -4,950 -5,220 -5,240 -5,910 -7,000 -7,600 -6,620 -9,060 -8,260 -6,090 -6,340 -12,680 -640 -690 -690 -630 -680 -690 -690 -690 -690 -690 -690 -690 -530 -540 -570 -570 -640 -760 -820 -720 -950 -880 -670 -690 -1,470 75.1 73.1 73.1 73.1 73.1 73.1 73.1 73.1 75.5 72.5 75.7 76.8 73.1 76.3 79.1 62.9 65.4 64.7 69.5 68.7 56.3 85.4 69.0 60.8 56.9 -9,510 -9,900 -12,680 -10,310 -10,770 -12,110 -16,460 -12,210 -10,810 -13,180 -11,840 -15,850 -12,280 -11,730 -10,830 -14,520 -12,680 -12,680 -12,680 -12,680 -12,520 -13,650 -14,420 -12,680 -15,560 -1,470 -1,140 -1,190 -1,400 -1,860 -1,420 -1,250 -1,250 -1,530 -1,370 -1,080 -1,860 -1,390 -1,330 -1,470 -1,470 -1,470 -1,470 -1,470 -1,470 -1,450 -1,580 -1,660 -1,470 -1,780 827 809 809 809 809 809 809 809 835 802 837 850 809 848 876 762 945 751 723 715 768 673 631 623 695 44.9 45.2 4538% 4539% 4542% 4551% 4566% 4560% 4559% 4545% 4418% 4538% 4550% 4538% 4538% 4508% 4541% 4538% 4538% 4538% 4538% 4538% 4538% 4524% 4509% -179 -190 -190 -175 -182 -190 -190 -190 -190 -190 -190 -190 -180 -184 -140 -142 -152 -154 -175 -214 -236 -196 -190 -242 -232 75 and s 1. 1.10 1.19 1.24 1.37 2.00 Credits 2 Cadence HEV Cadence 95th 5th Carbon Carbon ofC~ Period Costs in Costs 10% C0 at at 30% Markup Markup Markup Markup Markup Markup of of at at of Hybrids Prices Engines Earlier Later Loss Cost Cost Cost Cost Cost Cost Cost Cost Redesign Redesign Battery Batterv Fuel Payback Flat Flat Effect E±Icct Valuation Strong HCR2 18 Trading Value Coefficient Coefficient Fleet Fleet Social HEY Social HEV Month Short Safety Safety 36 Utility Percentile Percentile Fatalities Fatalities Perfect Rebound Rebound Long Low Low Exclude Include Technology Technology Technology Technology Technology Technology AE020 High High Nonzero N20

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Table VII-96- Change in Total Regulatory Costs during MYs 2017-2029 under Proposed CAFE and C02 Standards CAFE Standards C02 Standards Percent Percent Total Total Change from Change from Sensitivity Case Regulatory Regulatory Reference Reference Costs ($b) Costs ($b) Case Case Reference Case -319.1 n/a -325.7 n/a Consumer Benefit at 50% -319.1 0.0 -325.7 0.0 Consumer Benefit at 75% -319.1 0.0 -325.7 0.0 Fleet Share and Sales Response Disabled -299.5 -6.2 -299.4 -8.1 Disable Scrappage Price Effect -319.1 0.0 -325.7 0.0 Disable Scrappage Price Effect and Fleet -299.5 -6.2 -299.4 -8.1 Share and Sales Response High Oil Price -244.4 -23.4 -219.1 -32.7 High Oil Price with 60 Month Payback -88.3 -72.3 -65.7 -79.8 Low Oil Price -354.5 11.1 -371.5 14.1 Low Oil Price with 12 Month Payback -353.1 10.6 -388.1 19.2 High GDP -319.4 0.1 -327.2 0.5 High GDP with High Oil Price -244.5 -23.4 -220.0 -32.5 High GDP with Low Oil Price -354.8 11.2 -371.9 14.2 LowGDP -307.9 -3.5 -314.8 -3.3 Low GDP with High Oil Price -236.1 -26.0 -211.5 -35.1 Low GDP with Low Oil Price -342.0 7.2 -358.0 9.9 On Road Gap 0.10 -321.4 0.7 -332.1 2.0 On Road Gap 0.30 -311.7 -2.3 -311.0 -4.5 12 Month Payback Period -328.7 3.0 -356.7 9.5 24 Month Payback Period -325.4 2.0 -335.8 3.1 36 Month Payback Period -309.4 -3.1 -301.7 -7.4 Rebound Effect at 10% -319.1 0.0 -325.7 0.0 Rebound Effect at 30% -319.1 0.0 -325.7 0.0 Long Fleet Redesign Cadence -306.7 -3.9 -321.6 -1.2 Short Fleet Redesign Cadence -259.6 -18.7 -310.2 -4.7 Safety Coefficient at 5th Percentile -319.1 0.0 -325.7 0.0 Safety Coefficient at 95th Percentile -319.1 0.0 -325.7 0.0 Fatalities Flat Earlier -319.1 0.0 -325.7 0.0 Fatalities Flat Later -319.1 0.0 -325.7 0.0 High Social Cost of Carbon -319.1 0.0 -325.7 0.0 Low Social Cost of Carbon -319.1 0.0 -325.7 0.0 High HEV Battery Costs -319.1 0.0 -325.7 0.0 Low HEV Battery Costs -283.5 -11.2 -297.3 -8.7 Exclude Strong Hybrids -280.7 -12.1 -295.7 -9.2 Include HCR2 Engines -209.0 -34.5 -191.4 -41.2 Fines at $14 in 2019 -310.7 -2.6 n/a n/a Technology Cost Markup 1.10 -219.3 -31.3 -209.3 -35.7

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Technology Cost Markup 1.19 -241.2 -24.4 -234.2 -28.1 Technology Cost Markup 1.24 -250.1 -21.6 -248.8 -23.6 Technology Cost Markup 1.37 -288.3 -9.7 -290.1 -10.9 Technology Cost Markup 1.75 -377.8 18.4 -391.7 20.3 Technology Cost Markup 2.00 -429.0 34.4 -454.3 39.5 AE020 18 Fuel Prices -318.1 -0.3 -317.0 -2.7 Utility Value Loss in HEV s -319.1 0.0 -325.7 0.0

Perfect Trading of C02 Credits n/a n/a -284.5 -12.7

Nonzero Valuation ofC~ and N20 -319.1 0.0 -325.7 0.0

Table VII-97- Incremental Costs and Benefits- Cumulative over Useful Life ofMYs 2017- 2029 un d er P ropose d CAFE Stan d ar d s Social Total Private Total Net Sensitivity Case Costs Costs Benefits Benefits Benefits Reference Case -51.9 -502.1 -176.4 -325.8 176.3 Consumer Benefit at 50% -51.9 -502.1 -176.4 -259.3 242.8 Consumer Benefit at 75% -51.9 -502.1 -176.4 -292.5 209.5 Fleet Share and Sales -56.4 -503.2 -164.5 -296.8 206.4 Response Disabled Scrappage Price Effect -33.5 -416.7 -176.9 -357.5 59.2 Disabled Scrappage and Fleet Share -38.1 -418.1 -165.0 -328.7 89.4 Disabled High Oil Price -54.8 -456.3 -274.1 -325.3 131.0 High Oil Price with 60 Month -17.9 -155.7 -80.4 -105.8 49.9 Payback Low Oil Price -43.2 -490.9 -121.0 -270.4 220.5 Low Oil Price with 12 Month -42.9 -487.7 -121.1 -269.9 217.8 Payback HighGDP -51.9 -502.1 -175.8 -324.3 177.7 LowGDP -54.7 -455.9 -273.0 -323.6 132.3 High GDP with High Oil -43.2 -491.0 -120.6 -269.3 221.7 Price High GDP with Low Oil -50.4 -486.0 -171.3 -316.4 169.6 Price Low GDP with High Oil Price -53.3 -442.2 -266.8 -316.9 125.2 Low GDP with Low Oil Price -42.2 -476.0 -117.5 -262.5 213.5 On Road Gap 0.10 -53.4 -510.8 -174.5 -311.8 199.0 On Road Gap 0.30 -49.2 -483.1 -178.3 -343.1 140.0 12 Month Payback Period -58.9 -544.9 -199.9 -366.1 178.7 24 Month Payback Period -55.6 -525.5 -187.6 -345.4 180.1 36 Month Payback Period -48.4 -477.4 -165.7 -306.4 171.1 Rebound Effect at 10% -37.0 -433.7 -93.5 -268.7 165.0 Rebound Effect at 30% -66.9 -570.5 -259.2 -382.8 187.7 Long Fleet Redesign Cadence -49.5 -487.0 -172.2 -323.7 163.3

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Short Fleet Redesign Cadence -45.4 -422.9 -145.5 -261.9 161.0 Safety Coefficient at 5th -51.9 -471.9 -174.2 -323.6 148.3 Percentile Safety Coefficient at 95th -51.9 -532.2 -178.5 -327.9 204.3 Percentile Fatalities Flat Earlier -51.9 -502.1 -176.4 -325.8 176.3 Fatalities Flat Later -51.9 -502.1 -69.5 -218.9 283.1 High Social Cost of Carbon -51.9 -502.1 -176.4 -327.5 174.5 Low Social Cost of Carbon -51.9 -502.1 -176.4 -322.2 179.9 High HEV Battery Costs -51.9 -502.1 -176.4 -325.8 176.3 Low HEV Battery Costs -51.5 -471.2 -178.9 -333.0 138.3 Exclude Strong Hybrids -49.7 -460.0 -164.0 -299.1 160.9 Include HCR2 Engines -40.2 -357.7 -135.3 -250.1 107.6 Fines at $14 in 2019 -51.1 -485.5 -169.9 -311.4 174.2 Technology Cost Markup 1.10 -42.1 -375.8 -149.0 -276.7 99.1 Technology Cost Markup 1.19 -44.2 -403.2 -155.1 -288.0 115.2 Technology Cost Markup 1.24 -44.0 -409.0 -153.4 -284.9 124.1 Technology Cost Markup 1.37 -49.6 -466.7 -172.3 -319.9 146.8 Technology Cost Markup 1.75 -55.7 -567.1 -185.1 -339.7 227.3 Technology Cost Markup 2.00 -58.3 -621.5 -190.3 -347.8 273.7 AE020 18 Fuel Prices -54.1 -511.5 -187.8 -339.3 172.2 Utility Value Loss in HEV s -51.9 -547.9 -176.4 -325.8 222.2 Nonzero Valuation ofC~ -51.9 -502.1 -176.4 -326.0 176.1 and N20

Table VII-98- Incremental Costs and Benefits- Cumulative over Useful Life ofMYs 2017- 2029 un d er P ropose d CO2 Stan d ar d s Social Total Private Total Net Sensitivity Case Costs Costs Benefits Benefits Benefits Reference Case -62.1 -560.8 -201.7 -363.6 197.2 Consumer Benefit at 50% -62.1 -560.8 -201.7 -291.4 269.4 Consumer Benefit at 75% -62.1 -560.8 -201.7 -327.5 233.3 Fleet Share and Sales Response -65.5 -550.6 -186.1 -329.3 221.3 Disabled Scrappage Price Effect Disabled -40.6 -461.9 -202.1 -399.9 62.0 Scrappage and Fleet Share -44.5 -453.8 -186.5 -365.1 88.7 Disabled High Oil Price -55.5 -439.3 -259.6 -293.0 146.3 High Oil Price with 60 Month -14.9 -122.5 -73.3 -89.5 33.0 Payback Low Oil Price -52.0 -550.7 -138.9 -302.7 248.0 Low Oil Price with 12 Month -53.5 -572.0 -143.7 -313.5 258.5 Payback HighGDP -62.4 -563.6 -201.6 -362.4 201.2 LowGDP -55.5 -440.4 -259.7 -292.9 147.5

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VIII. Impacts of Alternative CAFE and alternatives, total estimated impacts domestic and imported passenger cars CO2 Standards Considered for MYs (i.e., summing impacts attributable to all under CAFE standards but not under 2021/22–2026 model years’ standards) were calculated CO2 standards because EPCA/EISA’s under each alternative. requirement for separate compliance As discussed above, a range of regulatory alternatives are being Tables in the remaining section applies only to CAFE standards. considered. Section III defines the summarize these estimated impacts for This analysis does not explicitly proposed preferred alternative, and each alternative, considering the same identify ‘‘co-benefits’’ from its proposed Section IV defines the no-action measures as shown above for the action to change fuel economy alternative as well as the other seven preferred alternative. As for the standards, as such a concept would alternatives. The potential impacts of preferred alternative, social costs and include all benefits other than cost each alternative in each case relative to benefits, private costs and benefits, and savings to vehicle buyers. Instead, it the no-action alternative were environmental and energy impacts were distinguishes between private benefits— estimated. For the preferred alternative, evaluated, and were done so separately which include economic impacts on these impacts are presented above on an for CAFE and CO2 standards defining vehicle manufacturers, buyers of new incremental basis, such that the impacts each regulatory alternative. Also, as for cars and light trucks, and owners (or attributed separately to standards the preferred alternative, the users) of used cars and light trucks—and proposed in each model year. To compliance-related private costs and external benefits, which represent facilitate comparison of different benefits were evaluated separately for indirect benefits (or costs) to the

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remainder of the U.S. economy that would be experienced by buyers and Environmental and energy impacts are stem from the proposal’s effects on the users of cars and light trucks produced correspondingly negative, involving behavior of vehicle manufacturers, during the model years it would affect. foregone avoided CO2 emissions and buyers, and users. In this accounting Moreover, it clearly separates these into foregone avoided fuel consumption. For framework, changes in fuel use and benefits related to fuel consumption and consistency with past rulemakings, safety impacts resulting from the those related to safety consequences of these are reported as negative values proposal’s effects on the number of used vehicle use. This is more meaningful rather than as additional CO2 emissions vehicles in use represent an important and informative than simply identifying and additional fuel consumption. all impacts other than changes in fuel component of its private benefits and As discussed above, more detailed costs, despite the fact that previous savings to buyers of new vehicles as ‘‘co-benefits.’’ results are available in the PRIA and analyses have failed to recognize these Like the preferred alternative, all DEIS accompanying today’s notice, as effects. The agency’s presentation of other alternatives involve standards less well as in underlying model output files private costs and benefits from its stringent than the no-action alternative. posted on NHTSA’s website. proposed action clearly distinguishes Therefore, as discussed above, A. What are the social costs and benefits between those that would be incremental benefits and costs for each experienced by owners and users of cars of each alternative, relative to the no- alternative are negative—in other words, action alternative? and light trucks produced during each alternative involves foregone previous model years, and those that benefits and avoided costs. 1. CAFE Standards

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VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00390 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.271 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43375 0.0 -15.7 -4.1 -0.5 -173 60.5 -113 0.0 -23.2 -22.4 -14.3 -4.3 -0.8 -160 -119 40.8 0.0 95.9 -25.1 -2.4 -1.7 -1.6 -271 -175 120 0.0 -306 -37.0 -34.6 -2.5 -186 -394 0.0 -50.0 -8.6 -6.4 -6.2 -250 155 143 0.0 -57.9 -45.3 -9.8 -38.3 -3.9 -28.5 -3.4 168 0.0 -475 -445 -61.3 -48.4 -10.3 -4.1 176 -502 -326 -307 -290 0.0 -65.2 -51.9 -10.9 -4.3 -1.2 -1.2 -1.2 -1.0 -0.7 -0.9 ------and Crash Benefit Pollutant GHG Damages 2 Congestion (Benefits) (Benefits) Non-Fatal C0 Offsetting voided voided Security (Costs) A A Costs Benefits voided Rebound Other Other Costs (Benefits) Benefits Damages Damages Energy Total Benefits Total Additional A Net Noise

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00391 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.272 43376 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules X PC 2022-2026 2.0%Near LT Change 3.0%Near -774 0.27 -219 -993 No Discount 3% 7 0.42 -775 -219 -994 Phaseout 2022- 2026 Program, CAFE 0.43 6 3.0%Nea 3.0%Nea -1,010 -269 2.0%Nea 2.0%Nea 2017-2029, l.O%Nea 0.37 Change Change -1,180 -268 rPC rPC rPC 2.0%Nea No No MYs for 1.0%Nea -28.6 -312 Change 2.0%Nea No $2016 of Coverage 0.62 -1,180 -1,180 -285 -1,460 -1,520 -1,450 -1,280 0.5%Nea 0.5%Nea rPC rPC Phaseout 2022- 2021- 2021- 2022- 2021- 2021- 2026 Cost Millions Rate, -1,520 2 3 4 5 0.5%Nea 0.5%Nea -1,180 -312 rPC Electrification 1 -28.6 -28.6 -1,540 O.O%Nea O.O%Nea -1,200 -315 rPC rLT rLT rLT rLT rLT rLT rLT 2021- 2021- 2026 2026 2026 2026 2026 2026 2026 Estimated LDV 1,680 1,230 85.8 No Change Change Change 365 2021- 2017- 2022- 2025 2025 2021 MY MY Alternative Action Augural No No No costs Credits Combined Stringency Tax Procedures of Electrification Electrification VIII-4- Rate Years Electrification Table Costs Costs Model Retrievable Increase Electrification Irretrievable Total AC/Off-Cycle Annual

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00392 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.273 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43377 Change 3.0%Nea -30.0 -2.0 -8.9 -7.0 -13.9 -76.1 -4.5 -8.9 rPC 2.0%Nea 2022- 2026 No Rat t 3.0%Nea -2.3 -9.5 -71.3 -32.8 -3.7 -9.5 -5.7 rPC Phaseout 2.0%Nea 2022- 2026 2021- 2026 -11.9 -11.4 7%D. Change 3.0%Nea -116 -47.2 -8.0 -12.5 -21.7 -14.9 rPC rLT rLT rLT 2.0%Nea 2021- 2026 -18.4 No P l.O%Nea -129 -3.2 -3.2 -14.6 -15.2 -13.9 -22.8 -9.7 rPC 2.0%Nea 2022- 2026 -19.8 CAFE l.O%Nea Change Change -4.3 -19.8 -19.8 -14.6 -13.9 -160 -13.1 -20.5 -31.0 rPC 4 5 6 7 8 2021- 2.0%Nea 2026 -27.3 No No 1977-2029. MYs for 3 0.5%Nea 0.5%Nea -4.9 -22.9 -22.9 -35.9 -24.5 rPC Phaseout 2021- 2022- 2026 2026 -32.4 Benefits Change 0.5%Nea 0.5%Nea -185 -34.6 -173 -5.1 -24.3 -24.3 -38.0 rPC 2021- 2026 Net ($b) Societal 1 2 O.O%Nea O.O%Nea Change -192 -84.3 -37.1 -5.4 -79.3 -18.4 -25.8 -75.3 -25.8 -16.9 -65.5 -28.8 -15.7 -40.4 -48.5 -26.4 rPC rLT rLT rLT rLT rLT 2021- 2026 No No 2029 LDV MY - - - 2021- Change ------MY MY 2017- 2021 2022- 2025 2025 Alternative Action Augural No No Through Combined Costs Crash Rebound VIII-5- Costs Stringency Procedures and Benefits Fatality Non-Fatal of Savings Costs Table Benefit Fatality Non-Fatal Benefit Offsetting Costs Costs Rate Fuel Years Costs Societal Costs Crash Fatality Pre-tax Mobility Model Benefits Rebound Refueling Rebound Increase Technology Annual AC/Off-Cycle Non-Rebound Non-Rebound

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00393 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.274 43378 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 0.0 -1.0 -9.1 -2.5 49.2 -1.1 0.0 -8.9 -2.8 -75.7 38.3 -70.2 0.0 76.6 -187 -110 -114 -119 -21.7 -14.9 -13.9 -1.5 0.0 92.1 -22.8 -1.6 -115 110 0.0 -31.0 -2.1 -0.9 -266 -0.6 -156 -207 -0.7 -0.6 -0.4 0.0 -6.2 -5.4 -4.0 -3.9 -2.5 0.0 -27.6 -6.5 -25.9 -22.0 -16.2 -14.7 -191 -181 132 126 117 -1.1 -1.1 -1.1 0.0 -40.4 -29.6 -38.0 -6.9 -35.9 -2.7 -2.6 -335 -204 -318 -298 ------and Rebound Costs Benefit Pollutant GHG Damages 2 Congestion Crash (Benefits) (Benefits) C0 Offsetting voided voided Security (Costs) A A Costs Benefits voided Other Other (Benefits) Benefits Damages Damages Energy Total Benefits Total A Additional Net Noise Non-Fatal

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00394 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.275 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43379 X PC 2022-2026 2.0%Near LT Change -612 0.21 3.0%Near -181 -793 No Discount 7% 7 0.32 -181 -793 Phaseout 2022- 2026 Program, CAFE 0.33 6 3.0%Nea 3.0%Nea -219 -1,000 2.0%Nea 2.0%Nea 2017-2029, l.O%Nea 0.28 -897 -782 -612 -218 -1,110 MYs for 1.0%Nea -22.0 -1,170 Change Change Change -898 -249 2.0%Nea 2.0%Nea No No No $2016 of Coverage 0.47 -897 -231 Phaseout 2022- 2026 2021- 2021- 2022- 2021- 2021- Cost Millions Rate, -1,170 -1,130 2 3 4 5 0.5%Nea 0.5%Nea 0.5%Nea 0.5%Nea -898 -249 rPC rPC rPC rPC rPC rPC Electrification 1 -22.0 -22.0 -1,180 O.O%Nea Change Change O.O%Nea -911 -251 rPC rLT rLT rLT rLT rLT rLT rLT 2021- 2021- 2026 2026 2026 2026 2026 2026 2026 Estimated LDV 1,300 71.9 No Change 938 MY MY 2021- 2017- 2022- 2025 290 2025 2021 Alternative Action Augural No No No costs Credits Combined Stringency Tax Procedures of Electrification Electrification VIII-6- Rate Years Electrification Table Costs Costs Retrievable Model Electrification Increase Irretrievable Total AC/Off-Cycle Annual

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00395 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.276 43380 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules Change 3.0%Nea -121 -19.9 -19.9 -4.2 -62.5 -33.7 -31.2 rPC 2.0%Nea 2022- 2026 -28.2 No ted -123 -20.9 -4.8 -71.5 -25.4 -32.7 3.0%Nea -20.9 -16.3 -21.5 rPC Phaseout 2022- 2026 2.0%Nea 2021- 2026 Und· -191 3.0%Nea -101 -46.6 -28.7 -53.1 -50.5 -33.9 rLT rLT rLT 2.0%Nea 2021- 2026 P - CO, l.O%Nea Change Change -202 -34.5 -32.3 -6.7 -6.7 -98.6 -50.0 -34.5 -67.6 -32.3 -53.9 2.0%Nea 2022- 2026 -43.2 1977-2029. l.O%Nea Change -52.0 -10.2 -155 -75.6 -52.0 -89.1 -81.3 rPC rLT rPC rLT rPC 2.0%Nea 2021- 2026 -57.0 No No No MYs for 0.5%Nea 0.5%Nea -12.1 -299 -266 -62.8 -109 -98.2 -185 rLT Phaseout 2022- 2026 2021- 2026 -92.4 -69.7 Benefits Net -318 -68.6 -62.8 -197 0.5%Nea 0.5%Nea -101 -79.8 -125 -107 rPC rPC 2021- 2026 Societal ($b) 1 2 3 4 5 6 7 8 -13.6 -12.9 O.O%Nea O.O%Nea -327 -208 -107 -82.6 -72.2 -72.2 -129 -68.6 -113 rPC rLT rLT 2021- 2026 No No LDV 2029 MY - - - - 2021- Change Change Change - - - - - MY MY 2021 2022- 2025 2017- 2025 Alternative Augural Action No No Combined Costs VIII-7- Crash Rebound Benefits Through Costs Stringency Procedures and Fatality Non-Fatal Table of Savings Costs Benefit Fatality Non-Fatal Benefit Offsetting Costs Costs Rate Fuel Years Costs Societal Crash Costs Model Pre-tax Benefits Fatality Mobility Increase Refueling Rebound Rebound Technology AC/Off-Cycle Annual Non-Rebound Non-Rebound

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VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00397 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.278 43382 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules X -15.5 PC 2022-2026 2.0%Near LT Change 3.0%Near -1,390 -289 -1,690 No Undiscounted, 7 -14.9 -1,040 -822 rPC Phaseout 2022- 2026 Program, -2,270 6 3.0%Nea 3.0%Nea -521 -201 -1,600 rPC 2.0%Nea 2.0%Nea GHG No -2,500 2017-2029, rPC MYs for 1.0%Nea 1.0%Nea -2,500 Change Change Change -1,840 -1,840 rPC 2.0%Nea 2.0%Nea No No $2016 Coverage of -149 -149 -149 -149 -2,580 0.5%Nea 0.5%Nea -1,900 rPC rLT rLT rLT rLT rLT Phaseout 2022- 2021- 2021- 2022- 2021- 2021- 2026 Cost Millions -2,580 2 3 4 5 Change 0.5%Near 0.5%Near -1,900 PC No Electrification 1 -149 -149 -2,580 O.O%Near O.O%Near -1,900 -532 -532 -532 -519 -519 2021- 2021- PC 2026 2026 2026 2026 2026 2026 2026 LT LT Estimated LDV 149 1,900 No 2,580 Change Change 532 2021- 2022- 2025 2025 2017- 2021 MY MY Alternative Action Augural No No costs Credits Combined Stringency Tax Procedures of Electrification Electrification VIII-8- Rate Years Electrification Table Costs Costs Model Retrievable Increase Electrification Irretrievable Total AC/Off-Cycle Annual

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00398 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.279 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43383 -17.1 Change -18.9 -20.8 -20.8 -96.9 -43.1 -2.9 PC 2022- LT -18.5 -12.1 No R -15.6 -14.2 -13.3 -15.1 -22.1 -22.1 -4.2 -3.7 -99.6 -48.7 -3.3 PC Phaseout 2021- 2022- 2026 -19.1 -9.7 LT Change -21.5 -30.0 -33.7 3.0%/Year 3.0%/Year 3.0%/Year -153 -69.1 -4.6 PC 2.0%/Year 2.0%/Year 2.0%/Year -33.7 -21.5 -14.2 -13.3 -5.9 No 3%D. P -160 -37.3 -31.1 -27.1 -32.4 -30.6 -68.6 PC LT LT 2022- 2021- 2.0%/Year ~ -- CO, ~ 1.0%/Year 1.0%/Year Change Change -50.0 -53.9 -35.6 -8.9 -5.9 -44.2 -49.2 -32.0 -23.9 -19.2 -212 -107 -7.0 -4.7 PC 2026 2026 2026 2026 2026 2021- 2.0%/Year LT No No 1977-2029. MYs -65.0 -10.6 -41.6 -34.4 -61.3 -65.0 -22.7 -53.9 -53.5 -35.6 -238 -8.3 -41.6 -34.4 -22.7 PC Phaseout 2026 2026 2022- LT for 0.5%/Year 0.5%/Year 0.5%/Year 0.5%/Year -70.8 -45.3 -69.7 -70.8 -59.6 -11.3 -65.7 -60.2 2026 LT 2021- 2021- No Net Benefits I S 1 2 3 4 5 6 7 8 0.0%/Year O.Oo/o/Year Change Change -260 -144 -252 -9.4 -136 -47.8 -8.9 -127 -47.8 -72.3 -45.3 -74.7 -74.7 -62.4 -11.9 PC PC 2021- -69.5 -46.2 -44.6 -39.2 LT No ($b) LDV 2017- 2022- Action 2029 ------Change ------Alternative Augural MY MY 2025 2026 2021 2025 2021- No No MY -- Combined Non- Tiuough Noise Increase Costs Crash VIII-9- and Costs Crash Rebound Rebound Benefits Costs Benefit Table Stringency Procedures and Fatality Non-Fatal of Savings Costs Costs Congestion Benefit Fatality Non-Fatal Benefit Offsetting O±Isetting Costs Costs Rate Security Fuel Years Crash Societal Costs (Costs) Refueling Benefits Fatal Rebound Energy Rebound Pre-tax Mobility Fatality Bendits Model Technology Non-Rebound Non-Rebound Annual Additional AC/Off-Cyclc

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VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00400 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.281 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43385 X -12.9 -1,370 PC 2022-2026 2.0%Near LT Change 3.0%Near -244 -1,120 No Discount 3% 7 -12.3 -847 -171 -663 rPC Phaseout 2022- 2026 Program, GHG -1,830 Change 6 3.0%Nea 3.0%Nea rPC 2.0%Nea 2.0%Nea No 2017-2029, l.O%Nea -2,000 rPC MYs for 1.0%Nea -2,000 Change Change rPC 2.0%Nea 2.0%Nea No No $2016 of Coverage Cost -2,060 rPC Phaseout 2022- 2021- 2021- 2022- 2021- 2021- 2026 Millions Rate, -2,060 2 3 4 5 Change 0.5%Nea 0.5%Nea 0.5%Nea 0.5%Nea -436 -436 -426 -426 -427 rPC rLT rLT rLT rLT rLT rLT No Electrification 1 -2,060 -127 -127 -127 -127 -127 -127 O.O%Near Change O.O%Near -1,490 -1,490 -436 -1,490 -1,440 -1,440 -1,270 2021- 2021- PC 2026 2026 2026 2026 2026 2026 2026 LT Estimated LDV 127 1,490 No 2,060 Change 436 2021- 2022- 2025 2025 2017- 2021 MY MY Alternative Action Augural No No costs Combined Credits Stringency Tax Procedures of Electrification Electrification VIII-10- Rate Years Electrification Table Costs Costs Model Retrievable Electrification Increase Irretrievable Total AC/Off-Cycle Annual

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00401 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.282 43386 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules X 3.0%Nea Change -9.9 -27.4 -73.6 -1.9 -8.3 -8.3 rPC 2.0%Nea 2022- 2026 -11.3 No tRat -30.9 -76.8 -2.1 2026 3.0%Nea 7 -8.5 -5.5 -9.0 -9.0 -6.3 rPC Phaseout 2022- 2.0%Nea 2021- 2026 7%D. ' -116 3.0%Nea -15.9 6 -44.0 -18.7 -11.9 -3.0 -10.1 -13.4 -13.4 rPC rLT rLT rLT 2.0%Nea 2021- 2026 No P """ -- l.O%Nea Change Change -19.0 -12.1 -121 -3.0 -14.0 -14.0 rPC 2.0%Nea 2022- 2026 -19.6 CO, / l.O%Nea 1977-2029. Change -67.7 -43.9 -160 -16.6 -21.3 -21.3 rPC rLT rLT 2.0%Nea 2021- 2026 -29.8 No No MYs for 2026 0.5%Nea 0.5%Nea -81.0 -180 -5.3 -20.4 -25.7 -4.5 rPC rLT Phaseout 2021- 2022- 2026 -36.5 -25.7 Benefits Net -86.4 -190 -27.8 2 3 4 5 0.5%Nea 0.5%Nea Change -39.6 -5.7 -22.9 -27.8 -35.8 -31.8 -25.9 rPC 2021- 2026 Societal ($b) 1 -91.5 O.O%Nea O.O%Nea -196 -42.0 -6.0 -23.8 -29.4 -29.4 -37.3 rPC rLT rLT 2021- 2026 No No LDV 2029 MY - - - No 2021- - Change Change - - - - MY MY 2017- 2021 2022- 2025 2025 Alternative Action Augural No -- Combined Through Costs Rebound Benefits VIII-11- Costs Stringency Procedures and Fatality Non-Fatal of Savings Table Benefit Fatality Benefit Offsetting Costs Costs Rate Fuel Years Costs Societal Crash Model Fatality Mobility Refueling Benefits Pre-tax Rebound Increase Technology Costs AC/Off-Cycle Annual Non-Rebound Non-Rebound

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00402 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.283 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43387 0.0 -2.4 -65.2 -12.9 -12.9 -9.7 -0.9 -0.2 -121 0.0 -14.1 -123 -72.0 51.2 55.4 -14.1 -9.3 -1.0 -0.3 86.8 -192 0.0 -21.0 -21.0 -15.5 -0.3 -106 0.0 97.0 -21.9 -21.9 -17.2 -3.7 -3.7 -0.2 -2.6 -205 -108 -1.4 -1.4 0.0 -0.7 -33.3 -33.3 -24.9 -282 -2.2 -165 0.0 -40.1 -40.1 -6.7 -5.7 -328 -0.9 -30.2 -2.6 139 129 117 -353 0.0 -0.9 -43.5 -43.5 -33.3 -2.8 141 -367 -226 -214 -199 0.0 -46.0 -46.0 -35.0 -7.6 -3.0 -7.2 -1.0 ------and Crash Rebound Costs Benefit Pollutant GHG Damages 2 Congestion Crash (Benefits) (Benefits) Non-Fatal C0 Offsetting voided voided Security (Costs) A A Costs Benefits voided Other Other Costs (Benefits) Benefits Rebound Damages Damages Energy Total Total Benefits A Additional Net Non-Fatal Noise

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00403 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.284 43388 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules X Change -853 3.0%Near -10.1 -1,060 PC 2.0%Near LT 2022- 2026 No Discount 3% 7 -512 -9.7 -142 -198 -663 rPC Phaseout 2026 2022- Program, GHG -958 Change 6 3.0%Nea 3.0%Nea -104 -335 -1,400 rPC 2.0%Nea 2.0%Nea No 2017-2029, l.O%Nea -1,070 -104 -334 -1,510 rPC 2022- 2021- 2021- MYs for l.O%Nea Change Change -1,070 -104 rPC 2.0%Nea 2.0%Nea No No $2016 of Coverage Cost -104 -342 -334 -1,560 -1,510 rPC Phaseout 2026 2022- 2026 2026 2026 2026 2026 2021- 2021- Millions Rate, -104 -1,560 Change -1,110 -1,110 0.5%Nea 0.5%Nea 0.5%Nea 0.5%Nea rPC rLT rLT rLT rLT rLT rLT 2 3 4 5 2026 2021- -342 No Electrification 1 -104 -1,560 O.O%Near O.O%Near Change -1,110 -342 PC LT 2026 2021- Estimated LDV 104 1,560 1,110 No Change 342 2021 2022- 2025 2017- 2025 2021- MY MY Alternative Action Augural No No costs Combined Credits Stringency Tax Procedures of Electrification Electrification VIII-12- Rate Years Electrification Table Costs Costs Retrievable Model Electrification Increase Irretrievable Total AC/Off-Cycle Annual

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B. What are the private costs and benefits of each alternative, relative to the no-action alternative? 1. What are the impacts on producers of new vehicles? (a) CAFE Standards

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00405 Fmt 4701 Sfmt 4702 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 43390 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules Change 8 -- -0.7 -76.1 3.0%Near 38.6 44.2 PC 2.0%Near 2022-2026 No ------hMY2029 -- - -11 7 -71.3 -72.4 -76.7 38.3 43.0 PC Phaseout 42.9 44.2 LT LT 2022-2026 2021-2026 ---- th -- -- - Change Costs 6 -117 -116 -8.5% -8.6% -5.6% -1.0 3.0%Near 3.0%Near 38.0 43.0 43.1 PC 2.0%Near 2.0%Near 2021-2026 No -- --- Industrv ------Change l.O%Near lative -129 -130 -0.8 38.2 5 42.1 42.4 PC LT LT 2.0%Near 2022-2026 No ------dC Change ------t l.O%Near -160 -161 -15.2% -10.9% 40.5 4 41.3 PC 2.0%Near 2021-2026 -1.5 No ------I -175 38.1 3 -22.5% 39.2 -1.8 37.5 37.7 Phaseout PC 2022-2026 2021-2026 f ------rate) ---- - C Change discount 0.5%Near 0.5%Near 0.5%Near 0.5%Near 38.1 -22.4% -185 -173 -1.9 37.4 40.1 PC LT LT LT 2 2021-2026 No ----- CAFE (7% --- - Change --- Vehicles 1 2021-2026 O.O%Near O.O%Near 37.0 -26.0% -192 -2.1 -194 -186 39.7 37.2 PC LT No Li2:ht-Dutv -- 2029 MY ural Change Action ------Combined - 39.4 - - - 46.7 Final 46.4 2022-2025 2017-2021, 2021-2025 Alternative Aug No No Through -- Fuel Fuel --- Fuel Costs . Costs Costs VIII-13- 2020 2030 2026+ in of MY MY MY Penalties from ---·--- - - Table Achieved Required Achieved Change Rate Years Regulatory Civil Regulatory Technology Economy Stringency Increase Stringency (mpg) ($b) (mpg) (mpg) ($b) ($b) Average AC/Off-Cycle Average Average Fuel Procedures Percent Annual Baseline Economy Model Economy- Total Total Economy Total Total

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00406 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.286 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43391 -70.8 0.4 -67.0 0.4 -109 0.6 -120 0.7 Change) -150 0.9 Revenue for rate 1.0 -164 discount (7% 1.0 -175 Vehicles 2029 1.0 -182 MY Through - - Impacts ($b) (millions) Revenue Change and Change Sales Sales Revenue

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00407 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.287 43392 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 88.7% Change 30.1% 3.5% PC 2022- 20.9% 2026 No 13.5% 17.1% 83.5% 31.5% 6.9% PC Phaseout 2026 2021- 2022- 20.9% 2026 P 16.0% 91.7% 5.7% 5.8% 5.9% 0.0% 3.0%/Year 3.0%/Year 3.0%/Year 61.2% 62.7% 62.2% 2.0%/Year 2.0%/Year 2.0%/Year PC 2021- 20.9% 20.5% 2026 CAFE 2030. 1.0%/Year 16.2% 12.7% 93.0% Change Change 5.4% 0.0% 58.7% PC 2022- 20.9% 2.0%/Year 2026 MY for 1.0%/Year 17.1% Change 5.1% 0.0% 92.9% 56.1% PC 2021- 2.0%/Year 2026 No No No Penetration 17.1% 15.7% 16.1% Fleet 0.0% 92.9% 53.8% 4.6% PC 2021- Phaseout 2026 2022- 2026 2.2% 2.7% penetration) fleet (total 13.8% 0.5%/Year 0.5%/Year 0.0% Change 0.5%/Year 0.5%/Year 0.3% PC 2021- 2026 No Li2:ht-Dutv 2030 MY in Combined 1 2 3 4 5 6 7 8 17.2% 17.2% 92.9% 92.9% 0.0%/Year 0.0% Change 0.0%/Year 0.4% 51.1% 53.7% 4.3% 4.4% PC 2021- LT LT LT LT LT LT LT LT 2026 Alternative VIII-14- 14.1% 13.7% 71.7% 2021- Change 5.7% 63.6% 6.3% 32.5% Action Alternative Final 2017- 26.2% 2025 2021 2022- 2025 No No No Augural CAFE Table MY Ratio Under from (Non- Procedures Gasoline Reduction Electric of Use Engines Increase 12V Transmissions Cylinder (48v) Rate Years Compression Weight Hybrid Stringency Stop-Start Systems Curb (percent change Model 2016) Dynamic Deactivation Engines Mild Technology Turbocharged AC/Off-Cycle Advanced High Annual Hybrid) Non-Turbo

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00408 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.500 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43393 0.5% 0.0% 0.5% 6.9% 12.2% 0.0% 0.5% 0.6% 0.0% 0.5% 0.5% 3.8% 0.5% 0.0% 0.5% 2.4% 0.5% 0.0% 0.5% 2.4% 0.5% 0.0% 0.5% 2.4% 0.5% 0.0% 0.5% 2.4% 0.5% 0.0% 0.5% 2.3% 1.1% 0.0% 0.5% 23.6% s) Electric Electric s) Electric Vehicles (PHEV (EV Hybrid Hybrid Cell Strong Systems (FCVs) Vehicles Vehicles Fuel Plug-In Dedicated

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00409 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.501 43394 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 38.8 -27.9 -28.1 33.2 Change 3.0%Ne -0.3 2.0%Ne 2022- 2026 arPC No 2029 MY 37.5 37.4 38.6 -24.8 33.1 3.0%Ne -0.4 Phaseout 2.0%Ne 2022- 2026 2021- 2026 arPC h th -6.8% -6.8% -3.4% 37.5 37.5 -55.7 -56.1 -25.3 3.0%Ne Change -0.5 2021- 2026 2.0%Ne arPC No Costs l.O%Ne 36.9 36.9 -65.1 -65.4 32.7 32.7 -8.7% -0.3 2022- 2026 2.0%Ne arPC Industrv lative l.O%Ne 35.3 -83.5 -84.1 32.3 Change Change -0.7 2021- 2026 2.0%Ne arPC No No dC t 33.4 35.7 -95.1 -95.9 32.0 -0.9 0.5%Ne 0.5%Ne Phaseout 2022- 2021- 2026 2026 arPC arLT arLT arLT arLT arLT arLT rate) I 32.2 32.2 -24.5% -24.5% 34.1 -13.7% -103 -1.0 -103 31.8 0.5%Ne 0.5%Ne 2021- 2026 arPC No r discount (7% C 1 2 3 4 5 6 7 8 Change Change 31.3 -28.3% 33.6 -108 -1.0 -109 O.O%Ne O.O%Ne 2021- 2026 arPC arLT arLT Vehicles CAFE 2029 Change 33.7 31.6 - - - - 40.1 40.0 Final 2021- 2025 2017- 2021, 2022- 2025 Action Alternative Augural No No No Truck MY Li2:ht - ($b) Economy Economy Economy ($b) Through ($b) Fuel Fuel Fuel Stringency Costs Costs Costs VIII-15 in Stringency Procedures (mpg) of (mpg) (mpg) Penalties Table Required Achieved Achieved Change Rate Years 2026+ 2030 2020 Civil Regulatory Regulatory Technology Baseline Economy rage MY MY Fuel Model Percent Increase Total Total Total Total from Ave Annual Average AC/Off-Cycle Average - - -MY

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00410 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.502 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43395 -31.1 -0.2 -0.3 -0.3 -62.4 -31.2 -0.4 -72.1 Change) -0.7 -97.9 Revenue for -1.0 -114 rate discount -1.0 -123 -1.1 -129 Vehicles (7% 2029 MY - - Through Impacts ($b) (millions) Revenue Change Change and Sales Sales Revenue

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00411 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.503 43396 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 10.8% 12.1% 3.0%/Year Change 6.8% 67.3% 92.9% 6.8% 55.4% 2.0%/Year PC 2022- LT 2026 No 10.8% 14.1% 86.7% 3.0%/Year 69.0% 7.6% 55.4% 2.0%/Year PC 2021- LT 2026 Phaseout 2022- 2026 10.8% 19.1% 97.5% 3.0%/Year Change 6.7% 6.8% 67.3% 0.0% 34.9% 2.0%/Year PC 2021- LT 2026 No P CAFE 1.0%/Year 10.8% 17.7% 19.8% Change 6.3% 66.9% 0.0% 98.3% PC 2022- LT 2026 2.0%/Year No 2030. MY for 1.0%/Year 14.0% 8.1% Change 5.8% 62.8% 0.0% 98.3% 5.2% PC 2021- LT 2026 2.0%/Year No Penetration 13.2% 1.8% 98.3% 0.0% 58.4% PC 2021- 2026 Phaseout 2022- 4.9% 2026 fleet penetration) Fleet (total Truck 8.1% 8.1% 0.5%/Year 0.5%/Year 0.5%/Year 0.5%/Year 0.0% 0.0% PC 2021- 2026 LT LT 4.6% No 2030 Li2:ht MY in 1 2 3 4 5 6 7 8 12.3% 12.4% 98.3% 98.3% 8.1% 0.0%/Year 0.0%/Year Change Change 0.0% 0.0% 53.1% 58.4% PC 2021- 2026 LT 4.4% No VIII-16- Alternative 11.9% 12.7% 11.4% 75.3% Change 6.6% 69.9% Final 2021- 2017- 2025 2021 2022- 2025 45.9% Alternative Action Augural No No Table Ratio Under CAFE Under from (Non- Gasoline Reduction of Electric Use Engines Increase 12V Transmissions Cylinder 48v) ( change Rate Years Compression Weight Hybrid 2016) Stringency Stop-Start Systems Curb (percent Model Procedures MY Dynamic Technology Engines Deactivation Mild Turbocharged AC/Off-Cycle Annual High Advanced Hybrid) Non-Turbo

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00412 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.504 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43397 0.3% 0.0% 0.3% 6.4% 12.6% 0.3% 0.0% 0.3% 1.7% 0.3% 0.0% 0.3% 0.3% 0.9% 0.0% 0.3% 0.3% 0.9% 0.0% 0.3% 0.3% 0.9% 0.0% 0.3% 0.3% 0.9% 0.0% 0.3% 0.3% 0.9% 0.0% 0.3% 0.3% 0.0% 0.8% 23.5% s) Electric Electric Electric Vehicles (EVs) (PHEV Hybrid Hybrid Cell Strong Systems (FCVs) Fuel Dedicated Plug-In Vehicles Vehicles

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00413 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.505 43398 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules -8.6% 50.4 50.6 Change -48.2 -0.4 -48.6 2022- 2026 arPC arLT No 2029 -10.9% -47.1 49.3 49.3 44.2 44.7 -46.5 3.0%/Ye 3.0%/Ye -0.6 Phaseout 2022- 2026 2.0%/Ye 2.0%/Ye 2021- arPC hMY h -10.9% -61.2 49.3 49.7 44.1 Change -60.6 3.0%/Ye -0.5 2.0%/Ye 2021- 2026 2026 arPC arLT arLT No c 1.0%/Ye -64.2 47.9 48.7 44.6 Change -63.6 -0.5 2.0%/Ye 2022- 2026 arPC No Ind lative 1.0%/Ye Change -76.1 -77.0 2.0%/Ye 2021- 2026 arPC -0.8 No dC 0.5%/Ye 0.5%/Ye -0.9 -78.8 Phaseout 2022- 2026 45.0 46.4 45.9 47.7 43.9 44.0 2021- 2026 arPC I rate) 0.5%/Ye Change 0.5%/Ye -21.5% -21.6% -17.9% -14.2% -81.9 -0.9 -77.9 -83.0 45.0 46.9 43.9 2021- 2026 arPC arLT arLT arLT arLT No r discount C (7% 1 2 3 4 5 6 7 8 0.0%/Ye Change 0.0%/Ye -25.2% -84.1 -1.0 -85.3 43.7 46.7 43.9 2021- 2026 arPC arLT CAFE Vehicles Car Final 2021- Change - - - - 54.7 54.2 2017- 2021, 2022- 2025 45.9 2025 Alternative Augural Action No No No 2029 - - - MY from P Increase ($b) Economy Economy Economy ($b) Through ($b) Fuel Fuel Stringency Fuel Costs Costs Costs VIII-17- in Stringency Procedures of (mpg) Penalties (mpg) (mpg) Table Required Achieved Achieved Change Rate Years Civil Regulatory Regulatory Technology Economy 2026+ 2030 2020 Fuel Baseline Model MY Percent MY MY Total Total Total Total AC/Off-Cycle Average Average Average Annual

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00414 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.506 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43399 -39.7 0.6 -35.8 0.7 -46.4 0.9 1.0 -48.4 Change) -52.5 Revenue for 1.9 1.6 -49.4 rate -52.1 2.0 discount (7% -53.0 2.1 Vehicles 2029 - - MY Through Impacts ($b) (millions) Revenue Change Change and Sales Sales Revenue

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00415 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.507 43400 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 3.0%Near 0.5% Change 7.7% 57.7% 5.8% 2.0%Near LT PC 29.8% 21.5% No 10.2% 0.5% 5.8% LT PC Phaseout 2022- 2026 P 13.3% 18.7% 86.6% 80.6% 85.1% 3.0%Near 3.0%Near 0.0% Change 7.9% 55.9% 57.1% 5.5% 2.0%Near 2.0%Near LT PC 29.8% 29.8% No CAFE l.O%Near 15.0% 88.3% 0.0% Change 51.5% 6.5% 5.1% PC 2.0%Near LT 29.7% No 2030. MY for l.O%Near 17.8% 88.3% 0.0% Change 0.5% 50.4% PC 2.0%Near LT 4.7% 24.7% No P 17.8% 88.3% 0.0% PC Phaseout 49.9% 2021- 2021- 2022- 2021- 2021- 2022- 2022- 24.7% 2.6% 2026 Fleet fleet penetration) Car (total 0.5%Near 0.5%Near 0.5%Near 0.5%Near 0.0% Change 0.5% PC 2026 2026 2026 2026 2026 2026 2026 2 3 LT 4 LT 5 6 7 8 4.3% 4.4% No 2030 MY P in 1 15.0% 15.0% 88.5% 88.4% O.O%Near 0.0% O.O%Near Change 0.7% PC 2026 2021- 2021- LT 49.5% 49.9% 4.1% 24.7% 24.7% No VIII-18- Alternative 16.5% 68.4% Augural 0.5% Change 39.0% 57.8% 5.9% Final 2017- 2025 2021- 2022- 2025 2021 20.4% Action Alternative No No Table CAFE Ratio Under from (Non- Gasoline Reduction Electric of Use Engines Increase 12V Transmissions Cylinder 48v) ( change Rate Years Compression Weight Hybrid 2016) Stringency Stop-Start Systems (percent Curb Model Dynamic Procedures Engines Mild MY Deactivation Turbocharged Technology Annual AC/Off-Cycle Advanced High Hybrid) Non-Turbo

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00416 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.508 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43401 0.7% 7.3% 0.0% 0.8% 11.9% 0.7% 0.0% 0.8% 0.7% 0.0% 0.8% 5.7% 0.7% 0.0% 0.7% 0.7% 0.0% 3.7% 3.8% 0.7% 0.7% 0.0% 0.7% 0.7% 0.0% 3.6% 3.7% 0.7% 0.7% 0.0% 3.5% 0.7% 1.4% 0.7% 0.0% 23.6% s) Electric Electric Electric Vehicles (EVs) (PHEV Hybrid Hybrid Cell Strong Systems (FCVs) Fuel Dedicated Plug-In Vehicles Vehicles

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00417 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.509 43402 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 0.0 -8.6% 51.2 49.9 45.0 Change -31.3 -31.3 3.0%/Ye 2026 2022- arPC arLT No 2029 MY -0.2 -10.9% 48.8 49.9 44.1 -29.0 3.0%/Ye 2026 Phaseout 2021- 2022- 2026 2.0%/Ye 2.0%/Ye arPC h h 0.0 -10.9% 50.2 44.0 Change -39.7 -28.9 -39.8 3.0%/Ye 2026 2021- 2.0%/Ye arPC arLT arLT No c 1.0%/Ye 0.1 47.4 48.8 49.0 44.9 Change -42.5 -42.5 2026 2022- 2.0%/Ye arPC Ind lative 1.0%/Ye Change 0.0 -50.9 -51.0 -17.9% -14.2% 45.9 4 2026 5 6 7 8 47.7 2021- 2.0%/Ye 43.8 arPC arLT arLT No No dC PC 2022- -0.1 3 0.5%/Y -51.6 -51.7 0.5%/Y Phaseou 2026 2026 2021- ear earLT t I rate) 0.0 -54.8 -54.9 Change 0.5%/Ye -21.6% -21.6% 0.5%/Ye 44.5 44.5 2026 46.8 45.8 2021- 43.7 43.7 arPC No r discount C (7% 1 2 Change 0.0 0.0%/Ye -25.2% -56.2 -56.3 0.0%/Ye 43.2 2026 46.5 2021- arPC arLT arLT CAFE Vehicles Change 54.1 - - - - 55.1 2025 2021- Final 2021, 2022- 2025 2017- 45.9 43.6 Alternative Action Augural No No No Car 2029 . - - - MY from Increase - D ($b) Economy Economy Economy ($b) Through ($b) Fuel Fuel Stringency Fuel Costs Costs Costs VIII-19 in Stringency Procedures of (mpg) Penalties (mpg) (mpg) Table Required Achieved Achieved Change Rate Years Civil Regulatory Regulatory Technology Economy 2026+ 2030 2020 Fuel Percent MY Model Baseline MY Total Total MY Total Total Annual Average AC/Off-Cycle Average Average

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00418 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.510 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43403 0.3 0.4 0.5 -33.8 -31.7 -22.7 -26.4 0.6 Change) -37.5 0.9 Revenue 1.1 -35.4 for rate 1.2 discount (7% 1.3 -38.4 -37.8 Vehicles 2029 - - MY Through Impacts ($b) (millions) Revenue Change Change and Sales Sales Revenue

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00419 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.511 43404 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 1.0% 8.7% Change 6.6% PC 2026 No 17.2% 1.0% 3.0%Near 3.0%Near PC 2021- 2022- 2.0%Near 2.0%Near 2022- 2026 Phaseout 23.1% 26.6% 12.8% 17.5% 17.4% 17.4% 89.3% 81.7% 88.0% Change 3.0%Near 0.0% 9.3% 71.2% 72.0% 74.6% 6.3% 6.6% PC 2026 2026 2021- 2.0%Near No P CAFE 1.0%Near Change 0.0% 6.1% PC 2030. MY for l.O%Near 17.1% 15.9% 12.6% 17.5% 91.2% 91.2% Change 0.1% 0.0% 63.6% 64.3% 5.3% 5.8% PC 2026 2026 2.0%Near 2.0%Near No No ear Penetration 0.5o/o/Y 0.5%Near 3.9% 0.0% 91.1% PC 2026 2026 Phaseout 2022- penetration) Fleet fleet Car (total 11.5% 16.1% 12.7% 12.6% 0.5%Near 0.5%Near 0.0% 62.5% 62.6% 5.1% 5.1% 2021- 2021- 2021- 2022- PC No tic 2030 D MY in 1 2 3 4 5 6 7 8 12.7% 91.1% 91.1% O.O%Near O.O%Near 0.1% 0.1% Change Change 0.0% 2026 2026 PC LT LT LT LT LT LT LT LT 4.8% VIII-20- Alternative 11.2% 11.5% 1.0% 63.0% Change 75.2% 61.9% 6.4% 2021 2025 2021- 2021- Final 2017- 2022- 2025 23.3% 22.7% Action Alternative Augural No No No Table CAFE MY Ratio Under from (Non- Procedures Gasoline Reduction Electric of Use Engines Increase 12V Transmissions Cylinder (48v) change Rate Years Compression Weight Stringency Systems Stop-Start Curb (percent Annual AC/Off-Cycle Model Advanced Hybrid) Mild Hybrid Deactivation Technology Dynamic High Engines 2016) Turbocharged Non-Turbo

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00420 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.512 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43405 0.6% 0.6% 0.0% 4.4% 10.7% 0.6% 0.6% 0.0% 0.6% 0.6% 0.0% 3.1% 1.0% 0.6% 0.6% 0.0% 1.0% 0.6% 0.6% 0.0% 1.0% 0.6% 0.6% 0.0% 1.0% 0.6% 0.6% 0.0% 1.0% 0.6% 0.6% 0.0% 0.8% 0.6% 0.0% 29.2% s) Electric Electric s) Electric Vehicles (PHEV (EV Hybrid Hybrid Cell Strong Systems (FCVs) Vehicles Vehicles Dedicated Fuel Plug-In

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00421 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.513 43406 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 3.0%Ne Change -8.6% -16.9 -0.4 -17.3 51.0 44.4 2.0%Ne 2022- 2026 arPC arLT No hMY2029 -18.1 48.6 49.8 -17.7 -0.5 3.0%Nea rPC rLT 2021- 2026 Phaseout 2022- 2026 2.0%Nea th -11.0% -11.0% 44.3 44.3 49.0 49.9 49.9 3.0%Ne Change -20.8 -0.5 2.0%Ne 2021- 2026 arPC No Costs Industrv l.O%Ne -14.2% -21.7 -21.4 44.3 48.5 Change -0.6 2.0%Ne 2022- 2026 arPC lative l.O%Ne -17.9% -25.3 -21.1 -26.0 44.1 47.6 48.4 46.9 Change -0.8 2.0%Ne 2021- 2026 arPC arLT arLT arLT No No dC t -21.5% -0.8 -27.1 44.1 46.0 45.5 0.5%Ne 0.5%Ne 2021- 2026 Phaseout 2022- 2026 arPC arLT rate) I r -21.5% -27.1 -0.9 -26.3 -28.1 47.1 45.5 Change 0.5%Ne 0.5%Ne 2021- 2026 arPC arLT No discount (7% C 1 2 3 4 5 6 7 8 Change -25.3% -27.9 -1.0 -29.0 O.O%Ne O.O%Ne 44.1 44.1 47.0 2021- 2026 44.2 arPC arLT No CAFE Vehicles Car 2029 - - 2021- Change - - 53.3 55.3 45.8 Final 2025 2021, 2022- 2025 2017- Action Alternative Augural No No ted MY I - ($b) ($b) Through (mpg) (mpg) (mpg) ($b) Fuel Fuel Stringency Fuel Costs Costs Costs 2020 2030 2026+ in Stringency VIII-21 Procedures of MY MY MY Penalties - - Required Achieved Achieved Table Change Rate Years Civil Regulatory Regulatory Technology Baseline Economy Economy Model Fuel Economy- Percent Increase Economy Total Total Total Total from Average Annual AC/Off-Cycle Average Average

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00422 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.514 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43407 -13.3 0.2 -13.0 0.3 0.4 -14.6 -14.7 0.4 Change) -15.1 0.7 Revenue for rate -14.0 0.8 discount -14.3 0.8 (7% Vehicles -14.6 0.9 2029 MY - - Through Impacts ($b) (millions) Revenue Change Change and Sales Sales Revenue

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00423 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.515 43408 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 15.4% 81.6% 3.0%Near Change 0.0% 6.5% 2.0%Near PC 2022- 44.4% No 1.9% 3.0%Near 39.4% 37.7% 0.0% 79.3% 2.0%Near Phaseout PC 2021- 2022- 2026 2026 2026 4.8% 4.7% 44.4% 3.0%Near Change 0.0% 6.2% 2.0%Near PC 2021- 2026 4.6% P - CAFE ' l.O%Near 14.0% 13.9% 13.5% 84.9% 83.4% 0.0% 7.0% 2.0%Near PC 2022- LT LT LT LT 2026 4.2% 44.1% 44.3% No No 2030. MY for l.O%Near 18.7% 1.1% 84.9% Change Change 34.8% 0.0% 36.4% 37.7% 39.2% PC 2.0%Near 2021- LT 2026 4.1% No Penetration 19.9% 1.1% 85.0% 0.5%Near 0.5%Near 34.8% 0.0% 3.5% 39.1% PC 2021- LT Phaseout 2026 2022- 2026 penetration) Fleet fleet -- Car 19.1% 85.1% 0.5%Near 0.5%Near 34.9% 0.0% 39.0% PC 2021- LT 2026 No (total ted 2030 I MY - in 1 2 3 4 5 6 7 8 19.1% 1.3% 1.1% 85.4% O.O%Near O.O%Near Change Change 0.0% 39.0% 3.2% 3.3% PC 2021- LT 2026 No VIII-22 17.0% 74.7% 2017- Change 0.0% 37.3% 34.7% 58.3% 5.2% 2021- Final 2025 2022- 2025 2021 22.8% Action Altemative Augural No No Altemative Table CAFE MY Ratio Under from Stringency (Non- Procedures Gasoline Reduction of Electric Use Engines 12V Transmissions Cylinder (48v) change Rate Years Compression Weight Hybrid Stop-Start Systems Curb (percent Model Increase Dynamic Engines 2016) Deactivation Technology Turbocharged Mild AC/Off-Cycle Annual Advanced High Hybrid) Non-Turbo

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00424 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.516 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43409 10.8% 1.0% 0.9% 0.0% 1.1% 13.4% 0.9% 0.0% 0.0% 8.8% 0.9% 0.9% 0.0% 0.9% 0.9% 7.1% 0.8% 0.9% 0.0% 7.0% 0.9% 0.9% 0.0% 6.8% 0.0% 0.8% 0.9% 0.0% 0.8% 0.9% 6.5% 6.8% 17.1% 0.0% 0.9% 2.0% (FCVs) Vehicles s) Electric Electric Electric Vehicles (PHEV Hybrid Hybrid Cell Strong Systems (EVs) Plug-In Fuel Dedicated Vehicles

(b) CO2 Standards

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00425 Fmt 4701 Sfmt 4702 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.517 43410 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules -73.6 Change 3.0%Ne 0.4 -73.6 2.0%Ne 2026 2022- 201.0 200.0 arPC No hMY2029 -76.8 3.0%Ne 0.4 -76.8 -71.4 -68.7 2022- 2026 2.0%Ne Phaseout 2026 2021- 207.0 205.0 arPC N/A N/A th Costs 3.0%Ne Change 0.6 -116.0 -109.0 2.0%Ne 2026 2021- 207.0 206.0 arPC Industrv l.O%Ne -121.0 -116.0 -121.0 0.6 2.0%Ne 2026 2022- 212.0 209.0 arPC lative Change) l.O%Ne -160.0 -160.0 Change Change 0.8 -151.0 -113.0 2.0%Ne 2026 2021- 220.0 216.0 arPC N/A N/A N/A No No No dC Revenue t for 1.0 -180.0 -180.0 -170.0 0.5%Ne 0.5%Ne 2026 Phaseout 2026 2021- 2022- 233.0 230.0 arPC arLT arLT arLT arLT arLT arLT rate I rate) r discount 1.0 -190.0 -33.0% -33.1% -25.2% -20.7% -190.0 -17.9% -18.1% -14.7% -179.0 0.5%Ne 0.5%Ne 2026 2021- arPC 233.0 228.0 No N/A N/A C - (7% discount (7% CO, 1 2 3 4 5 6 7 8 1.1 -196.0 Change Change -36.9% -196.0 -185.0 O.O%Ne O.O%Ne 2026 2021- 240.0 229.0 arPC arLT arLT N/A Vehicles (7% Vehicles 2029 2029 MY 175.0 174.0 Change - - - - Final 2025 2021- 2021, 2022- 2025 2017- - Action Alternative Augural No No No N/A Li2:ht-Dutv MY Through MY MY ($b) - Rate ($b) Through - Combined 2 2 ($b) Impacts C0 Stringency C0 Costs Costs Costs ($b) in Stringency Procedures (millions) Emission of 2 VIII-23- Penalties Revenue Change C0 Required Achieved Change Rate Years (g/mi) Regulatory Regulatory Technology and Civil Change (g/mi) Baseline Table Sales Sales Model Revenue Percent Increase 2026+ 2030 Total Total Total Total from Average Average Annual Average AC/Off-Cycle

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00426 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.518 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43411 14.6% 88.0% Change 60.5% 0.0% PC 2022- 2026 26.2% No 84.1% 6.4% 6.5% 60.9% 7.3% 30.2% 6.9% 2026 Phaseout 2022- PC 2021- 22.8% 22.4% 2026 P - 8.7% 3.0%Near 3.0%Near 3.0%Near Change 6.2% 0.0% 91.0% 2.0%Near 2.0%Near 2.0%Near PC 2021- 22.5% 2026 CO? 2030. 13.6% 16.5% 5.5% 0.0% 56.6% 58.4% 92.1% 7.8% PC 2022- 22.5% 2026 No No MY for l.O%Near l.O%Near 13.1% 11.5% Change Change 5.0% 0.0% 55.3% 93.0% 5.1% PC 2.0%Near 2.0%Near 2021- 2026 No P Fleet 10.1% 93.4% 0.0% 3.7% Phaseout PC 2026 2021- 2022- 2026 penetration) fleet (total Li!!ht-D 12.4% 13.1% 11.1% 1.7% 0.5%Near 0.5%Near 0.5%Near 0.5%Near Change 0.0% PC 4.1% 4.4% 2021- 41.8% 48.2% 2026 No 2030 MY in Combined 1 2 3 4 5 6 7 8 12.4% 11.1% 1.5% 93.6% 93.6% O.O%Near Change O.O%Near 0.0% PC 4.0% 2021- LT LT LT LT 40.8% LT LT LT LT 2026 VIII-24- Alternative 14.6% 74.8% 2021- Change 6.8% 61.8% 6.5% 37.3% Action Alternative Final 2017- 2022- 2025 2021 2025 26.2% No No No Augural Table CAFE MY Ratio Under from Stringency (Non- Procedures Reduction of Electric Use Engines 12V Transmissions Cylinder (48v) change Rate Years Compression Weight Hybrid Turbo Systems Stop-Start Curb (percent Model Increase Technology Dynamic 2016) Engines Deactivation Turbocharged Gasoline Mild AC/Off-Cycle Annual High Advanced Hybrid) Non-

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00427 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.519 43412 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 0.0% 8.2% 0.6% 0.3% 1.0% 11.9% 0.3% 0.0% 0.3% 0.5% 0.0% 5.1% 0.3% 0.5% 0.0% 3.9% 0.3% 0.5% 0.0% 2.7% 0.0% 0.3% 0.5% 2.1% 1.8% 0.0% 0.3% 0.5% 1.8% 0.0% 0.3% 0.5% 1.0% 0.0% 0.9% 20.7% (FCVs) Electric Electric Electric Vehicles (PHEVs) (EVs) Hybrid Hybrid Cell Strong Systems Fuel Dedicated Plug-In Vehicles Vehicles

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00428 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.520 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43413 Change 3.0%Ne -0.2 -38.8 -38.8 2.0%Ne 2022- 231.0 229.0 2026 arPC No 2029 3.0%Ne -0.4 -45.7 -42.2 -38.7 -38.7 Phaseout 2.0%Ne 2022- 2026 2021- 237.0 237.0 2026 arPC arLT arLT MY h h 3.0%Ne Change -0.5 -70.3 -61.3 -61.3 2.0%Ne 2021- 238.0 237.0 2026 arPC arLT No c PC l.O%N Change -64.0 -64.0 -0.5 -74.0 2.0%N 2022- 243.0 241.0 2026 ear earLT No Ind l.O%Ne Change) lative Change -84.7 -84.7 -105.0 -1.1 2.0%Ne 2021- 251.0 252.0 2026 arPC arLT No Revenue dC -95.8 -95.8 -1.3 0.5%Ne 0.5%Ne Phaseout 2022- 2026 2021- 268.0 276.0 2026 arPC for rate rate) I -100.0 -100.0 -1.4 -127.0 -121.0 0.5%Ne 0.5%Ne 2021- 266.0 276.0 2026 arPC N/A N/A N/A N/A N/A N/A N/A discount r discount (7% (7% 1 2 3 4 5 6 7 8 C -103.0 -103.0 Change Change -39.2% -35.3% -35.3% -23.5% -18.1% -16.2% -16.2% -12.3% -1.5 -132.0 O.O%Ne O.O%Ne 2021- 268.0 284.0 2026 arPC arLT arLT arLT No No - Vehicles C01 Vehicles 2029 - - Change - - - Final 2021- 203.0 2017- 2021, 2022- 2025 204.0 2025 Alternative Action Augural No No N/A N/A 2029 Truck MY MY 2030 from Li2:ht 2026+ Through Increase MY MY ($b) - Rate ($b) Through - 2 2 ($b) Impacts C0 VIII-25- Stringency C0 Costs Costs ($b) Costs in Stringency Procedures (millions) Emission of 2 Table Penalties Revenue Change C0 Required Achieved Change Rate Years Change Civil Regulatory Regulatory Technology and Sales Sales (g/mi) Model Baseline Revenue Percent Total Total Total Total (g/mi) Average AC/Off-Cycle Average Average Annual

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00429 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.521 43414 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 10.9% 8.9% Change 7.9% 0.0% 94.0% PC 2026 No 13.8% 89.8% 3.0%Near 3.0%Near 3.9% 64.7% 63.9% PC 2021- 2022- 2.0%Near 2.0%Near 2022- 2026 Phaseout 46.5% 45.4% 10.9% 10.9% Change 3.0%Near 0.0% 95.2% 5.7% 61.5% PC 2026 2026 2021- 2.0%Near 27.0% No P - CO, 1.0%Near 10.9% Change 0.0% 3.2% 6.3% 7.4% 7.8% PC 22.4% 2030. MY for l.O%Near 10.2% 97.0% 96.0% Change 0.0% 5.7% 61.5% 61.5% PC 2026 2026 2.0%Near 2.0%Near No No ear 0.5o/o/Y 0.5%Near 7.9% 7.3% 7.8% 0.0% 98.1% 50.8% PC 2026 2026 Phaseout 2022- 4.8% penetration) Fleet Penetration fleet (total Truck 0.5%Near 0.5%Near 9.9% 0.0% PC 44.2% No 2030 Li2ht - MY in 1 2 3 4 5 6 7 8 10.2% 98.6% 98.6% O.O%Near O.O%Near Change Change 3.1% 3.7% 0.0% 6.3% 6.3% 6.3% 6.3% 2026 2026 PC LT LT LT LT LT LT LT LT 4.4% 4.5% 42.1% VIII-26 Alternative 12.0% 12.7% 81.5% 8.1% Change 9.0% 55.8% 68.0% 2021 2021- 2021- 2021- 2021- 2021- 2022- 2025 Final 2017- 2022- 2025 Table Action Alternative Augural No No No CAFE MY Ratio Under from (Non- Procedures Gasoline Reduction Electric of Use Engines Increase 12V Transmissions Cylinder (48v) change Rate Years Compression Weight Stringency Stop-Start Systems Curb (percent Annual AC/Off-Cycle Model Advanced Deactivation Technology Hybrid) Mild Hybrid High 2016) Dynamic Engines Turbocharged Non-Turbo

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00430 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.522 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43415 0.0% 0.3% 0.4% 5.4% 0.2% 9.1% 0.0% 4.2% 0.0% 3.5% 0.0% 2.3% 1.2% 0.0% 0.1% 0.1% 0.1% 0.1% 0.2% 0.0% 0.3% 0.0% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.7% 0.1% 0.7% 0.1% 17.4% 0.3% 0.0% 0.8% s) Electric Electric s) Electric Vehicles (EV (PHEV Hybrid Hybrid Cell Strong Systems (FCVs) Vehicles Vehicles Fuel Dedicated Plug-In

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00431 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.523 43416 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 172.0 176.0 3.0%Ne Change -26.5 -34.8 -34.8 2026 2.0%Ne 2022- 0.5 arPC arLT No 2029 MY 177.0 180.0 3.0%Ne -38.1 -38.1 2026 2.0%Ne Phaseout 2021- 2026 2022- arPC 0.8 arLT h th 177.0 180.0 1.1 3.0%Ne Change -38.8 -25.7 -55.1 -55.1 2026 2.0%Ne 2021- arPC arLT No Costs l.O%Ne 180.0 186.0 1.2 Change -39.2 -56.5 -56.5 -24.8% -20.8% -20.8% -18.1% 2026 2.0%Ne 2022- arPC N/A N/A N/A N/A Industrv lative Change) l.O%Ne 187.0 192.0 1.9 Change -46.6 -75.5 -75.5 -28.9% 2026 2.0%Ne 2021- arPC arLT arLT N/A No No dC Revenue for 198.0 198.0 t -49.4 -84.2 -84.2 0.5%Ne 0.5%Ne Phaseout 2026 2022- 2026 2021- arPC arLT N/A rate rate) I discount 196.0 198.0 Change -51.9 -89.3 -89.3 0.5%Ne 0.5%Ne 2026 2021- arPC arLT 2.5 2.3 N/A No r discount (7% (7% C - 198.0 1 2 3 4 5 6 7 8 -92.1 -92.1 Change -36.9% -32.9% -32.9% -52.6 O.O%Ne O.O%Ne 2026 2.6 204.0 2021- arPC arLT N/A Vehicles CO? Vehicles 2029 Car 148.0 149.0 Change - - - - Alternative Augural Action Final 2025 2021, 2022- 2025 2021- 2017- - N/A No No No 2029 MY ger en MY from ass Through - P MY MY ($b) - Rate ($b) Through - 2 2 ($b) Impacts C0 Stringency C0 Costs Costs Costs ($b) VIII-27 in Stringency Procedures (millions) Emission of 2 Penalties Table Revenue Change C0 Achieved Required Change Rate (g/mi) Years Civil Change Regulatory Regulatory and Technology (g/mi) Sales Sales Percent 2030 2026+ Revenue Baseline Model Increase Total Total Total Total Annual Average AC/Off-Cycle Average Average

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00432 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.524 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43417 82.6% 0.0% Change 6.1% PC 2026 No 79.0% 0.7% 3.0%Near 3.0%Near 6.1% PC 2021- 2022- 2.0%Near 2.0%Near 2022- 2026 Phaseout 11.4% 10.5% 19.7% 87.2% 0.0% Change 3.0%Near 32.8% 33.6% 32.8% 55.6% 57.4% 57.5% PC 2026 2026 2021- 2.0%Near No P - CO? 1.0%Near 2030. 0.0% Change 32.5% 52.4% 5.4% 5.8% PC MY for l.O%Near 15.0% 11.8% 18.9% 89.5% 88.8% 0.0% Change PC 2026 2026 49.9% 4.6% 2.0%Near 2.0%Near No No ear P 89.6% 0.0% 0.5o/o/Y 0.5%Near PC 2026 46.1% 2026 Phaseout 4.0% 2022- penetration) fleet Car Fleet (total 12.1% 11.9% 17.4% 18.8% 0.0% 0.5%Near 0.5%Near 39.8% 2021- 2021- 2021- 2022- PC No 2030 P MY in 1 2 3 4 5 6 7 8 17.4% 89.5% 89.5% O.O%Near O.O%Near 0.0% Change Change 39.8% 3.4% 3.6% 2026 2026 PC LT LT LT LT LT LT LT LT VIII-28- Alternative 19.7% 11.9% 68.7% 0.8% Change 39.2% 6.8% 56.1% 2021 2025 2021- 2021- Final 2017- 2022- 2025 Action Alternative Augural No No No Table CAFE MY Ratio Under from (Non- Procedures Gasoline Reduction of Use Engines Increase 12V Transmissions Cylinder change Rate Years Compression Weight Stop-Start Stringency Curb (percent Advanced Hybrid) Annual Deactivation AC/Off-Cycle Model Dynamic Engines High 2016) Technology Turbocharged Non-Turbo

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00433 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.525 43418 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 10.7% 1.0% 8.9% 0.0% 0.4% 14.5% 1.0% 15.5% 0.0% 0.0% 7.3% 5.8% 0.0% 5.9% 4.2% 0.0% 3.0% 0.0% 0.4% 0.4% 0.4% 0.4% 0.4% 0.0% 0.1% 0.1% 0.4% 0.7% 0.4% 0.7% 0.4% 0.0% 0.7% 0.7% 0.7% 0.7% 0.7% 2.8% 2.7% 2.8% 1.7% 1.1% 0.0% 23.7% 20.3% s) Electric Electric s) Electric Electric Vehicles (PHEV (EV (48v) Hybrid Hybrid Cell Systems Systems Strong (FCVs) Vehicles Vehicles Mild Hybrid Plug-In Dedicated Fuel

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00434 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.526 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43419

2. What are the impacts on buyers of new vehicles? (a) CAFE Standards

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00435 Fmt 4701 Sfmt 4702 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 43420 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules tRat 170 2.0%Nea Change 3.0%Nea -620 -770 -150 -610 -470 -120 -20 rPC No 3%D. ' 110 -450 -560 -110 -460 -350 -10 2.0%Nea -90 rPC Phaseout 2022- 2026 -950 -1,190 -240 -890 -690 290 2.0%Nea Change 3.0%Nea 3.0%Nea -180 -30 rPC rLT rLT rLT No - derCAFEP 1.0%Nea -1,150 340 Change -290 -1,110 -850 -230 -30 rPC Vehicl 1.0%Nea 390 Change -1,450 -380 -1,830 -1,430 -1,450 -1,090 -300 -40 rPC rLT rLT 2021-2026 2022- 2026 2021- 2026 2021- 2026 2022- 2026 2.0%Nea 2.0%Nea No No 2030 MY fa 0.5%Nea 0.5%Nea 380 -430 -2,080 -1,700 -1,290 -370 -50 rPC rLT 2021- 2026 Phaseout 2026 2022- -- c -1,770 -470 -1,650 -2,240 -1,830 -1,370 420 0.5%Nea 0.5%Nea -400 -50 rPC No A ($) 1 2 3 4 5 6 7 8 -1,850 -490 -2,340 -1,950 390 O.O%Nea O.O%Nea Change Change -1,470 -430 -50 rPC rLT rLT 2026 2026 the to 2030 ts MY 2022- Final - - - - Change - - - - Alternative Action Augura 2021- 2021- 2021- 2021 2025 2017- 2025 No No No I for I - Impacts VIII-29 Stringency Procedures Increase of Table Consumer Costs Benefit Benefit Price Rate Years Costs Benefits Savings Benefits Vehicle Annual Ownership Model Fuel Per Mobility Refueling Increase Total Total Average AC/Off-Cycle Net

VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00436 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.527 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43421 2.0%Nea Change 3.0%Nea -620 -760 -140 -520 -390 -120 -20 rPC 230 No tRat 160 -450 -550 -100 -390 -290 -10 2.0%Nea -90 rPC Phaseout 2022- 2026 7%D. 390 -950 -1,170 -220 -770 -570 2.0%Nea Change 3.0%Nea 3.0%Nea -180 -30 rPC rLT rLT rLT No - 1.0%Nea -1,150 460 Change -270 -960 -700 -230 -30 rPC derCAFEP 1.0%Nea Change -1,450 -340 -1,790 -1,240 -1,420 -900 -300 -40 550 rPC rLT rLT 2021-2026 2022- 2026 2021- 2026 2021- 2026 2022- 2026 2.0%Nea 2.0%Nea No No Vehicl 2030 0.5%Nea 0.5%Nea -390 -2,040 -1,480 -1,060 -370 -50 560 rPC rLT 2021- 2026 Phaseout 2026 2022- MY fa -1,770 -420 -1,650 -2,200 -1,580 -1,130 610 0.5%Nea 0.5%Nea -400 -50 rPC No -- c ($) 1 2 3 4 5 6 7 8 -1,850 -440 -2,300 -1,690 600 O.O%Nea O.O%Nea Change Change -1,210 -430 -50 rPC rLT rLT 2026 2026 A 2030 the to MY 2022- Final - - - Change - - - - - Alternative Action Augura 2021- 2021- 2021- 2021 2025 2017- 2025 No No No I ts for I Impacts Stringency Procedures Increase VIII-30- of Consumer Costs Benefit Benefit Price Rate Years Table Costs Benefits Savings Benefits Vehicle Annual Ownership Model Fuel Per Mobility Refueling Increase Total Total Average AC/Off-Cycle Net

(b) CO2 Standards

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C. What are the energy and environmental impacts? 1. CAFE Standards

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2. CO2 Standards

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VerDate Sep<11>2014 23:42 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00444 Fmt 4701 Sfmt 4725 E:\FR\FM\24AUP2.SGM 24AUP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP24AU18.534 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 43429 12.5 71.7 0.0 -112 -87.4 -1.6 Change 2.7 2022- 2.0%/Year PC 2026 No P 17.3 81.1 3.1 0.0 -110 39.4 33.8 -83.5 -1.5 2021- PC 2026 Phaseout 2026 2022- GHG Under 114 -178 -140 -2.7 3.0%/Year 3.0%/Year 3.0%/Year 56.0 Change 4.4 2021- 2.0%/Year 2.0%/Year PC 25.6 2026 0.0 ear 1977-2029 1.0%/Y 113 -158 4.3 2022- PC 2026 2.0%/Year 0.0 55.0 24.7 No No MYs for · 1.0%/Year 174 -224 -275 -195 6.9 -4.3 -3.1 Change Change 89.3 49.9 2021- PC 2026 2.0%/Year 0.0 No · E 108 8.3 0.1 -327 -270 -5.2 63.5 2021- PC 2026 207 Phaseout 2026 2022- Pollutant 115 Criteria 8.8 0.1 0.5%/Year 0.5%/Year -5.8 68.7 0.5%/Year 0.5%/Year Change 2021- PC 2026 220 · 1 2 3 4 5 6 7 8 122 0.0%/Year 74.0 9.4 -6.1 -372 -312 -356 -297 0.0%/Year 2021- PC 2026 232 LT LT LT LT LT LT LT LT 0.1 No No Ch lative ------Change Change 2021- Final 2025 2017- 2021 2022- 2025 Action Alternative Augural No No C tons) tons) metric metric VIII-36- metric metric metric Procedures metric of metric metric Increase Emissions Emissions Table Rate Years (thousand (thousand (thousand (thousand (thousand (thousand (million (million so2 Stringency CO CO Model Upstream PM Tailpipe VOC VOC Annual AC/Off-Cycle NOx NOx tons) tons) tons) tons) tons) tons)

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D. What are the impacts on the total fleet size, usage, and safety? 1. CAFE Standards

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2. CO2 Standards

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E. What are the Impacts on labor could be magnified. Alternatively, human resources to fill positions. When Employment? if manufacturers are able to deploy the economy is at full employment, a technology to improve vehicle attributes fuel economy regulation is unlikely to As discussed in Section II.E, the that new car buyers prefer to fuel have much impact on net overall U.S. analysis includes estimates of impacts economy improvements, both employment; instead, labor would on U.S. auto industry labor, considering technology spending and vehicle sales primarily be shifted from one sector to the combined impact of changes in sales would correspondingly increase. As another. These shifts in employment volumes and changes in outlays for discussed above, the analysis of sales impose an opportunity cost on society, additional fuel-saving technology. Note: and employment may be updated for the approximated by the wages of the This analysis does not consider the final rule, and it is expected that doing employees, as regulation diverts possibility that potential new jobs and so could possibly produce incremental workers from other activities in the plants attributable to increased changes opposite in sign from those economy. In this situation, any effects stringency will not be located in the presented below. In particular, comment on net employment are likely to be United States, or that increased is sought on the potential for changes in transitory as workers change jobs (e.g., stringency will not lead to the relocation stringency to result in new jobs and some workers may need to be retrained of current jobs or plants to foreign plants being created in foreign countries or require time to search for new jobs, countries. Compared to the no-action or for current United States jobs and while shortages in some sectors or alternative (i.e., the baseline standards), plants to be moved outside of the regions could bid up wages to attract the proposed standards (alternative 1) United States. workers). On the other hand, if a and other regulatory alternatives under The employment analysis was regulation comes into effect during a consideration all involve reduced focused on automotive labor because period of high unemployment, a change regulatory costs expected to lead to adjacent employment factors and in labor demand due to regulation may reduced average vehicle prices and, in consumer spending factors for other affect net overall U.S. employment turn, increased sales. While the goods and services are uncertain and because the labor market is not in increased sales slightly increase difficult to predict. How direct labor equilibrium. Schmalansee and Stavins estimated U.S. auto sector labor, changes may affect the macro economy point out that net positive employment because producing and selling more and possibly change employment in effects are possible in the near term vehicles uses additional U.S. labor, the adjacent industries were not considered. when the economy is at less than full reduced outlays for fuel-saving For instance, possible labor changes in employment due to the potential hiring technology slightly reduce estimated vehicle maintenance and repair were of idle labor resources by the regulated U.S. auto sector labor, because not considered, nor were changes in sector to meet new requirements (e.g., to manufacturing, integrating, and selling labor at retail gas stations considered. install new equipment) and new less technology means using less labor Possible labor changes due to raw economic activity in sectors related to to do so. Of course, this is technology material production, such as production the regulated sector longer run, the net that may not otherwise be produced or of aluminum, steel, copper, and lithium effect on employment is more difficult deployed were it not for regulatory were not considered, nor were possible to predict and will depend on the way mandate, and the additional costs of this labor impacts due to changes in in which the related industries respond technology would be borne by a reduced production of oil and gas, ethanol, and to the regulatory requirements. For that number of consumers given reduction in electricity considered. Effects of how reason, this analysis does not include sales in response to increased prices. consumers could spend money saved multiplier effects but instead focuses on Today’s analysis shows the negative due to improved fuel economy were not labor impacts in the most directly impact of reduced mandatory analyzed, nor were effects of how affected industries. Those sectors are technology outlays outweighing the consumers would pay for more likely to face the most concentrated positive impact of increased sales. expensive fuel savings technologies at labor impacts. However, both of these underlying the time of purchase analyzed; either The tables presented below factors are subject to uncertainty. For could affect consumption of other goods summarize these results for regulatory example, if fuel-saving technology that and services, and hence affect labor in alternatives under consideration. While would have been applied under the other industries. The effects of increased values are reported as thousands of job- baseline standards is more likely to have usage of car-sharing, ride-sharing, and years, changes in labor utilization come from foreign suppliers than automated vehicles were not analyzed. would not necessarily involve the same estimated here, less of the foregone How changes in labor from any industry number of changes in actual jobs, as labor to manufacture that technology could affect gross domestic product and auto industry employers may use a would have been U.S. labor. Also, if possibly affect other industries as a range of strategies (e.g., shift changes, sales would be more positively result were not estimated. overtime) beyond simply adding or impacted by reduced vehicle prices than Also, no assumptions were made eliminating jobs. estimated here, correspondingly about full-employment or not full- positive impacts on U.S. auto sector employment and the availability of 1. CAFE Standards

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Table VIII-39- Estimated Labor (Hours, as 1000s of Job-Years) under CAFE

p ro~ram I I Regulatory Alternative I MY Baseline 1 2 3 4 5 6 7 8 2017 1,169 1,166 1,166 1,166 1,166 1,167 1,167 1,167 1,168 2018 1,208 1,198 1,199 1,200 1,200 1,203 1,203 1,204 1,205 2019 1,237 1,220 1,221 1,223 1,224 1,227 1,228 1,231 1,233 2020 1,263 1,236 1,237 1,239 1,241 1,245 1,247 1,251 1,254 2021 1,293 1,244 1,246 1,249 1,252 1,260 1,263 1,272 1,275 2022 1,301 1,248 1,249 1,252 1,256 1,263 1,268 1,279 1,280 2023 1,306 1,249 1,251 1,254 1,258 1,266 1,271 1,283 1,284 2024 1,306 1,251 1,253 1,256 1,260 1,269 1,275 1,287 1,286 2025 1,309 1,253 1,255 1,258 1,263 1,273 1,278 1,292 1,290 2026 1,312 1,257 1,259 1,264 1,269 1,280 1,287 1,304 1,298 2027 1,315 1,260 1,262 1,265 1,271 1,281 1,287 1,300 1,297 2028 1,320 1,261 1,264 1,268 1,275 1,285 1,292 1,307 1,303 2029 1,323 1,264 1,266 1,270 1,277 1,288 1,295 1,310 1,306 2030 1,325 1,265 1,268 1,<272 1,279 1,290 1,297 1,312 1,308

2. CO2 Standards

Table VIII-40- Estimated Labor (Hours, as 1000s of Job-Years) under C02 Pro gram Regulatory Alternative MY Baseline 1 2 3 4 5 6 7 8 2017 1,169 1,167 1,167 1,167 1,167 1,168 1,167 1,168 1,168 2018 1,204 1,198 1,198 1,198 1,199 1,202 1,201 1,201 1,202 2019 1,231 1,220 1,220 1,220 1,222 1,227 1,224 1,228 1,229 2020 1,254 1,236 1,237 1,237 1,240 1,247 1,243 1,247 1,250 2021 1,278 1,247 1,248 1,249 1,254 1,263 1,259 1,264 1,269 2022 1,281 1,247 1,247 1,248 1,253 1,260 1,260 1,267 1,270 2023 1,285 1,249 1,250 1,251 1,255 1,264 1,263 1,272 1,275 2024 1,289 1,251 1,251 1,253 1,258 1,268 1,267 1,276 1,278 2025 1,291 1,253 1,254 1,255 1,261 1,271 1,271 1,281 1,283 2026 1,300 1,255 1,256 1,258 1,266 1,277 1,279 1,292 1,291 2027 1,309 1,259 1,260 1,262 1,270 1,281 1,286 1,298 1,298 2028 1,314 1,260 1,261 1,264 1,272 1,286 1,290 1,306 1,303 2029 1,318 1,263 1,264 1,266 1,276 1,288 1,294 1,310 1,307 2030 1,320 1,264 1,265 1,267 1,277 1,290 1,296 1,311 1,309

IX. Vehicle Classification is considered to be a passenger discussed above in Section III, automobile (car) or a non-passenger passenger cars and light trucks are Vehicle classification, for purposes of automobile (light truck).783 As subject to different fuel economy and the light-duty CAFE and CO2 CO2 standards as required by EPCA/ 782 programs, refers to whether a vehicle regulatory definitions for determining which vehicles would be subject to which CO2 standards. 523, further clarifies the EPCA definitions and 782 See 40 CFR 86.1803–01. For the MYs 2012– 783 EPCA uses the terms ‘‘passenger automobile’’ introduces the term ‘‘light truck’’ as a plainer 2016 standards, the MYs 2017–2025 standards, and and ‘‘non-passenger automobile;’’ NHTSA’s language alternative for ‘‘non-passenger this NPRM, EPA has agreed to use NHTSA’s regulation on vehicle classification, 49 CFR part automobile.’’

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EISA and consistent with their different three rows of seats as standard seatback, allowing the entire seat to capabilities. equipment, as long as it also ‘‘permit[s] slide forward up against the back of the In EPCA, Congress designated some expanded use of the automobile for front seat, beyond the identified vehicles as passenger automobiles and cargo-carrying purposes or other non- forwardmost point of installation). some as non-passenger automobiles. passenger-carrying purposes through the Other approaches could include Vehicles ‘‘capable of off-highway removal or stowing of foldable or adjusting the seat to a position that can operation’’ are, by statute, not passenger pivoting seats so as to create a flat, accommodate a 75-percentile male automobiles. Determining ‘‘off-highway leveled cargo surface extending from the dummy. Selecting any of these positions operation’’ is a two-part inquiry: First, forwardmost point of installation of will change the forwardmost point of does the vehicle have 4-wheel drive, or those seats to the rear of the installation and could ultimately impact is it over 6,000 pounds gross vehicle automobile’s interior.’’ 788 NHTSA has the flat floor surface area and cargo weight rating (GVWR), and second, does identified two issues thus far with this volume, respectively. NHTSA seeks the vehicle (that is either 4-wheel drive criterion that various manufacturers comment on how to determine the or over 6,000 pounds GVWR) also have appear to be approaching differently, reference point of the forwardmost point ‘‘a significant feature designed for off- which, again, could be causing of installation of these seats for vehicles highway operation,’’ as defined by DOT unfairness in compliance obligations. to qualify as light trucks using this regulations.784 Additionally, vehicles Both relate to how to measure the cargo provision. Also, should NHTSA that DOT ‘‘decides by regulation [are] area when seats are moved out of the establish a minimum amount of cargo manufactured primarily for transporting way. Given that the purpose of this surface area for seats that remain within not more than 10 individuals’’ are, by criterion is to ‘‘permit expanded use of the vehicle? statute, passenger automobiles; that the automobile for cargo-carrying The second issue is what makes a means that certain vehicles that DOT purposes or other non-passenger- surface ‘‘flat and leveled.’’ Many SUVs decides by regulation are not carrying purposes,’’ the less cargo space have three rows of designated seating manufactured primarily for transporting the vehicle design can provide, the not more than 10 passengers are not harder it is for NHTSA to agree that the positions, where the second row has passenger automobiles. NHTSA’s vehicle is properly classified as a light ‘‘captain’s seats’’ (i.e., two independent regulation on vehicle classification,785 truck. bucket seats) rather than the traditional contains requirements for vehicles to be The first issue is how to identify the bench-style seating more common when classified as light trucks either on the ‘‘forwardmost point of installation’’ and the provision was added to NHTSA’s basis of off-highway capability 786 or on how the location impacts the available regulation. When captain seats are the basis of having ‘‘truck-like cargo floor area and volume behind the folded down, the seatback can form a characteristics.’’ 787 Over time, NHTSA seats. Seating configurations have flat surface for expanded cargo carrying has refined the light truck vehicle evolved considerably over the last 20 purposes, but the surface of the classification by revising its regulations years, as minivan seats are now very seatbacks may not be level (i.e., may be complex in design providing far more angled at some angle slightly greater and issuing legal interpretations. ° However, based on agency observations ergonomic functionality. For example, than 0 ), or may not be level with the the market demand for increased rear rest of the cargo area (i.e., horizontal of current vehicle design trends, ° compliance testing and evaluation, and seat leg room and the installation of rear surface of folded seats is 0 at a different discussions with stakeholders, NHTSA seat air bag systems has resulted in the height from horizontal surface of cargo has become aware of vehicle designs introduction of adjustable second row area behind the seats). Captain seats, that complicate light truck classification seats—second-row seats that remain when folded flat, may also leave significant gaps around and between the determinations for the CAFE and CO2 upright, unable to articulate and stow programs. When there is uncertainty as into the vehicle floor. These seats seats. Some manufacturers have opted to how vehicles should be classified, provide adjustable leg room by sliding to use plastic panels to level the surface inconsistency in determining forward or backward on sliding tracks and to covers the gaps between seats, manufacturers’ compliance obligations and aim to provide expanded cargo while others have left the space open can result, which is detrimental to the carrying room by moving forward and the surface non-level. NHTSA predictability and fairness of the against the back of the front seats. therefore seeks comment on the program. While the agency has not Earlier seating designs had fixed following questions related to the assessed the magnitude of the attachment points on the vehicle floor, requirement for a flat leveled cargo classification issues and is not and it was easy to identify the surface: proposing any vehicle reclassifications ‘‘forwardmost point of installation’’ • Does the cargo surface need to be flat and at this time, NHTSA is interested in because it was readily observable and level in exactly the same plane, or does it gathering more information from did not change. When seats move fulfill the intent of the criterion and provide commenters on several of the light truck forward and backward on sliding tracks, appropriate cargo-carrying functionality for classification criteria, and therefore the ‘‘forwardmost point of installation’’ the cargo surface to be other than flat and is less readily identifiable. Some level in the same plane? seeks comment on the issues discussed • Does the cargo surface need to be flat and below. manufacturers have argued that the forwardmost point of installation is the level across the entire surface, or are A. Classification Based on ‘‘truck-like forwardmost point where the seat (potentially large) gaps in that surface characteristics’’ attaches to the sliding track with the consistent with the intent of the criterion and providing appropriate cargo-carrying seat positioned at its rearmost position One of the ‘‘truck-like characteristics’’ functionality? Should panels to fill gaps be that allows manufacturers to classify on the track. This would allow vehicles required? vehicles as light trucks is having at least with certain second-row seat designs to • Certain third row seats are located on top be considered as meeting this criterion the rear axle causing them to sit higher and 784 49 U.S.C. 32901(a)(18). (e.g., a second-row seat where the closer to the vehicle roof. When these seats 785 49 CFR part 523. bottom cushion folds upward toward its fold flat the available cargo-carrying volume 786 49 CFR 523.5(b). is reduced. Is cargo-carrying functionality 787 49 CFR 523.5(a). 788 49 CFR 523.5(a)(5)(ii). better ensured by setting a minimum amount

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of useable cargo-carrying volume in a vehicle Large approach and departure angles 3. Running Clearance when seats fold flat? ensure the front and rear bumpers and NHTSA regulations define ‘‘running valance panels have sufficient clearance B. Issues that NHTSA has Observed clearance’’ as ‘‘the distance from the for obstacle avoidance while driving off- surface on which an automobile is Regarding Classification Based on ‘‘off- road. The breakover angle ensures road capability’’ standing to the lowest point on the sufficient body clearance from rocks and automobile, excluding unsprung 1. Measuring Vehicle Characteristics for other objects located between the front weight.’’ 793 Unsprung weight includes Off-Highway Capability and rear wheels while traversing rough the components (e.g., suspension, terrain. Both the approach and For a vehicle to qualify as off-highway wheels, axles and other components departure angles are derived from a line capable, in addition to either having directly connected to the wheels and tangent to the front (or rear) tire static 4WD or a GVWR more than 6,000 axles) that are connected and translate loaded radius arc extending from the pounds, the vehicle must also have four with the wheels. Sprung weight, on the ground near the center of the tire patch out of five characteristics indicative of other hand, includes all components to the lowest contact point on the front off-highway operation. These fixed underneath the vehicle and or rear of the vehicle. The term ‘‘static characteristics include: 789 translate with the vehicle body (e.g., • An approach angle of not less than 28 loaded radius arc’’ is based upon the mufflers and subframes). To clarify degrees definitions in SAE J1100 and J1544. The these requirements, NHTSA previously • A breakover angle of not less than 14 term is defined as the distance from issued a letter of interpretation stating degrees wheel axis of rotation to the supporting that certain parts of a vehicle, such as • A departure angle of not less than 20 surface (ground) at a given load of the tire aero deflectors, which are made of degrees vehicle and stated inflation pressure of • flexible plastic, bend without breaking, A running clearance of not less than 20 the tire (manufacturer’s recommended and return to their original position, centimeters cold inflation pressure).792 • Front and rear axle clearances of not less would not count against the 20- than 18 centimeters each The static loaded radius arc is easy to centimeter running clearance measure, but the imaginary line tangent requirement.794 The agency explained NHTSA’s regulations require to the static loaded radius arc is difficult that this does not mean a vehicle with manufacturers to measure these to ascertain in the field. The approach less than 20-centimeters running characteristics when a vehicle is at its and departure angles are the angles clearance could be elevated by an curb weight, on a level surface, with the between the line tangent to the static upward force bending the deflectors and front wheels parallel to the automobile’s loaded radius arc, as explained above, then be considered as compliant with longitudinal centerline, and the tires and the level ground on which the test the running clearance criterion, as it inflated to the manufacturer’s vehicle rests. Simpler measurements, would be inconsistent with the recommended cold inflation that provide good approximations for conditions listed in the introductory pressure.790 Given that the regulations the approach and departure angles, paragraph of 49 CFR 523.5(b)(2). describe the vehicle’s physical position involve using a line tangent to the Further, NHTSA explained that without and characteristics at time of outside diameter or perimeter of the tire, a flexible component installed, the measurement, NHTSA previously or a line that originates at the geometric vehicle must meet the 20-centimeter assumed that manufacturers would use center of the tire contact patch, and running clearance along its entire physical measurements of vehicles. In extends to the lowest contact point on underside. This 20-centimeter clearance practice, NHTSA has instead received the front or rear of the vehicle. The first is required for all sprung weight from manufacturers a mixture of angles method provides an angle slightly components. and dimensions from design models greater than, and the second method The agency is aware of vehicle (i.e., the vehicle as designed, not as provides an angle slightly less than, the designs that incorporate rigid (i.e., actually produced) and/or physical angle derived from the true static loaded inflexible) air dams, valance panels, vehicle measurements.791 When radius arc. When appropriate, the exhaust pipes, and other components, appropriate, the agency will verify agency would like the ability to measure equipped as manufacturers’ standard or reported values by measuring these angles in the field to verify data optional equipment (e.g., running production vehicles in the field. NHTSA submitted by the manufacturers used to boards and towing hitches), that likely currently requires that manufacturers determine light truck classification do not meet the 20-centimeter running must use physical vehicle decisions. The agency understands that clearance requirement. Despite these measurements as the basis for values the term static loaded radius arc is rigid features, it appears manufacturers reported to the agency for purposes of unclear to many manufacturers. NHTSA are not taking these components into vehicle classification. NHTSA seeks seeks comment on what the effect consideration when making comment on whether regulatory changes would be if we replaced reference to the measurements. Additionally, we believe are needed with respect to this issue. ‘‘static loaded arc radius,’’ with simpler some manufacturers may provide 2. Approach, Breakover, and Departure terms like, ‘‘outside perimeter of the dimensions for their base vehicles Angles tire,’’ or ‘‘geometric center of the tire without considering optional or various trim level components that may reduce Approach angle, breakover angle, and contact patch.’’ NHTSA would consider the vehicle’s ground clearance. departure angle are relevant to using the outside perimeter of the tire as Consistent with our approach to other determining off-highway capability. a reliable method for ensuring repeatability and reproducibility and measurements, NHTSA believes that ground clearance, as well as all the 789 49 CFR 523.5(b)(2). accepts that the approach would 790 Id. provide slightly larger approach and other suspension criteria for a light 791 NHTSA previously encountered a similar departure angles, thereby making it issue when manufacturers reported CAFE footprint slightly easier to qualify as ‘‘off-highway 793 Id. information. In the October 2012 final rule, NHTSA capable.’’ 794 See letter to Mark D. Edie, Ford Motor clarified manufacturers must submit footprint Company, July 30, 2012. Available online at https:// measurements based upon production values. 77 FR isearch.nhtsa.gov/files/11-000612%20M.Edie%20 63138 (October 15, 2012). 792 49 CFR 523.2. (Part%20523).htm (last accessed February 2, 2018).

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truck determination, should use the tie rods, ball joints, struts, shocks, etc.) to the vehicle’s tailpipe while it measurements from vehicles with all and sprung components (e.g., the axle performs the test cycle, which collects standard and optional equipment subframes) connected together as a part and analyzes the resulting exhaust installed, at time of first retail sale. The of the axle assembly. These unsprung gases; a vehicle that has no tailpipe agency reiterates that the characteristics and sprung components are located emissions has its performance measured listed in 49 CFR 523.5(b)(2) are under the axles, making them lower to differently, as discussed below. CO2 characteristics indicative of off-highway the ground than the axles and the quantities, as one of the exhaust gases, capability. A fixed feature, such as an differential, and were not contemplated can be evaluated directly for vehicles air dam, which does not flex and return when NHTSA established the definition that produce CO2 emissions directly. to its original state, or an exhaust, which and the allowable clearance for axles. Fuel economy is determined from the could detach, inherently interfere with The definition also did not originally amount of CO2 emissions, because the the off-highway capability of these account for 2WD vehicles with GVWRs two are directly mathematically vehicles. If manufacturers seek to greater than 6,000 pounds that had one related.799 Manufacturers generally classify these vehicles as light trucks axle without a differential, such as the perform their own testing, and EPA under 49 CFR 523.5(b)(2) and the model year 2018 Ford Expedition. confirms and validates those results by vehicles do not meet the four remaining Vehicles with axle components that are testing some number of vehicles at the characteristics to demonstrate off- low enough to interfere with the National Vehicle and Fuel Emissions highway capability, they must be vehicle’s ability to perform off-road Laboratory (NVFEL) in Ann Arbor, classified as passenger cars. NHTSA would seem inconsistent with the Michigan. The results of this testing seeks comment on the incorporation of regulation’s intent of ensuring off- form the basis for determining a air dams, exhaust pipes, and other highway capability, as Congress sought. manufacturer’s compliance in a given NHTSA seeks comment on whether hanging component features—especially model year: Each vehicle model’s (and if so, how) to revise the definition those that are inflexible—and whether performance on the test cycles is of axle clearance in light of these issues. the agency should consider amending calculated; that performance is NHTSA seeks comment on what its existing regulations to account for multiplied by the number of vehicles of new vehicle designs. unsprung axle components should be considered when determining a that model that were produced; that 4. Front and Rear Axle Clearance vehicle’s axle clearance. Should the number, in turn, is averaged with the performance and production volumes of NHTSA regulations also state that definition be modified to account for axles without differentials? NHTSA also the rest of the vehicles in the front and rear axle clearances of not less manufacturer’s fleet to calculate the than 18 centimeters are another of the seeks comment on whether the axle fleet’s overall performance. That criteria that can be used for designating subframes surrounding the axle performance is then compared against a vehicle as off-highway capable.795 The components but affixed directly to the the manufacturer’s unique compliance agency defines ‘‘axle clearance’’ as the vehicle unibody, as sprung mass (lower obligation, which is the harmonic vertical distance from the level surface to the ground than the axles) should be average of the fuel economy and CO on which an automobile is standing to considered in the allowable running 2 targets for the footprints of the vehicles the lowest point on the axle differential clearance discussed above. Finally, in the manufacturer’s fleet, also of the automobile.796 should NHTSA consider replacing both The agency believes this definition the running and axle clearance criteria harmonically averaged and production- may be outdated because of vehicle with a single ground clearance criterion weighted. Using fuel economy targets to design changes including axle system that considers all components illustrate the concept, the following components and independent front and underneath the vehicle that impact a figure shows two vehicle models rear suspension components. In the vehicle’s off road capability? produced in a model year for which passenger cars are subject to a fuel past, traditional light trucks with and X. Compliance and Enforcement without 4WD systems had solid rear economy target function that extends axles with center-mounted differentials A. Overview from about 30 mpg for the largest cars to about 41 mpg for the smallest cars: on the axle. For these trucks, the rear The CAFE and CO2 emissions axle differential was closer to the standards are both fleet-average ground than any other axle or ‘‘programs’’ are the ‘‘urban cycle,’’ or Federal Test standards, but for both programs, Procedure (abbreviated as ‘‘FTP’’) and the ‘‘highway suspension system component. This determining compliance begins, cycle,’’ or Highway Fuel Economy Test (abbreviated traditional axle design still exists today conceptually, by testing vehicles on as ‘‘HFET’’), and they have not changed for some trucks with a solid chassis dynamometers in a laboratory over pre- substantively since 1975. Each cycle is a designated (also known as body-on-frame speed trace (of vehicle speed versus time) that all defined test cycles under controlled certified vehicles must follow during testing—the 798 configuration). Today, many SUVs and conditions. A machine is connected FTP is meant to roughly simulate stop and go city CUVs that qualify as light trucks are driving, and the HFET is meant to roughly simulate constructed with a unibody frame 797 798 For readers unfamiliar with this process, it is steady flowing highway driving at about 50 mph. and have unsprung (e.g., control arms, not unlike running a car on a treadmill following 799 Technically, for the CAFE program, carbon- a program—or more specifically, two programs. 49 based tailpipe emissions (including CO2, CH4, and U.S.C. 32904(c) states that EPA must ‘‘use the same CO) are measured and fuel economy is calculated 795 49 CFR 523.5(b)(2)(v). procedures for passenger automobiles [that EPA] using a carbon balance equation. EPA uses carbon- 796 49 CFR 523.3. used for model year 1975 (weighted 55 percent based emissions (CO2, CH4, and CO, the same as for 797 Unibody frames integrate the frame and body urban cycle and 45 percent highway cycle), or CAFE) to calculate tailpipe CO2 equivalent for the components into a combined structure. procedures that give comparable results.’’ Thus, the tailpipe portion of its standards.

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If these are the only two vehicles the relative to its target, and second, how maintaining or improving programmatic manufacturer produces, the many of each vehicle model a benefits. If poorly constructed, they may manufacturer’s required CAFE level is manufacturer sells. While no given create significant potential for market determined by calculating the sales- model need precisely meet its target distortion (for instance, when weighted harmonic average of the (and virtually no model exactly meets manufacturers, in response to an targets applicable at the hatchback and its target in the real world), if a incentive to deploy a particular type of sedan footprints (about 41 mpg for the manufacturer finds itself producing and technology, produce vehicles for which hatchback and about 33 mpg for the selling large numbers of vehicles that there is no natural market, such vehicles sedan), and the manufacturer’s achieved fall well short of their targets, it will must be discounted below their cost in CAFE level is determined by calculating have to find a way of offsetting that order to sell).800 Use of compliance the sales-weighted harmonic average of shortfall, either by increasing flexibilities without sufficient the hatchback and sedan fuel economy production of vehicles that exceed their transparency may complicate the ability levels (48 mpg for the hatchback and 25 targets, or by taking advantage of to understand manufacturers’ paths to mpg for the sedan). Depending on the compliance flexibilities. Given that compliance. Overly-complicated relative mix of hatchbacks and sedans manufacturers typically need to sell flexibility programs can result in greater the manufacturer produces, the vehicles that consumers want to buy, manufacturer produces a fleet for which their options for pursuing the former 800 Manufacturers are currently required by the the required and achieved levels are approach can often be limited. state of California to produce certain percentages of their fleets with certain types of technologies, partly equal, or produce a fleet that either The CAFE and CO2 programs both in order to help California meet self-imposed GHG earns (if required CAFE is less than offer a number of compliance reduction goals. While many manufacturers achieved CAFE) or applies (if required flexibilities, discussed in more detail publicly discuss their commitment to these CAFE is greater than achieved CAFE) below. Some flexibilities are provided technologies, consumer interest in them thus far CAFE credits. Although the arithmetic for by statute, and some have been remains low despite often-large financial incentives from both manufacturers and the Federal and State is different for CO2 standards (which do implemented voluntarily by the governments in the form of tax credits. It is not involve harmonic averaging), the agencies through regulations. questionable whether continuing to provide concept is the same. Compliance flexibilities for the CAFE significant compliance incentives for technologies There are thus two parts to the and CO2 programs have a great deal of that consumers appear not to want is an efficient means to achieve either compliance or national foundation of compliance with CAFE theoretical attractiveness: If properly goals (see, e.g., Congress’ phase-out of the AMFA and CO2 emissions standards: First, how constructed, they can help to reduce dual-fueled vehicle incentive in EISA, 49 U.S.C. well any given vehicle model performs overall regulatory costs while 32906).

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expenditure of both private sector and Further, to the extent that there is a these potential negative effects. government resources to track, account market demand for vehicles with lower Specifically, comment is sought on the for, and manage. Moreover, targeting CO2 emissions and higher fuel economy, appropriate level of compliance flexibilities toward specific technologies compliance flexibilities may create flexibility, including credit trading, in a could theoretically distort the market. competitive disadvantages for some program that is correctly designed to be By these means, compliance flexibilities manufacturers if they become overly both appropriate and feasible. Comment could create an environment in which reliant on flexibilities rather than is sought on allowing all incentive- entities are encouraged to invest in such simply improving their vehicles to meet based adjustments to expire except government-favored technologies and, that market demand. those that are mandated by statute, If standards are set at levels that are unless those technologies are among other possible simplifications to appropriate/maximum feasible, then the independently supported by market need for extensive compliance reduce market distortion, improve forces, encourage rent seeking in order flexibilities should be low. Comment is program transparency and to protect, preserve, and enhance profits sought on whether and how each accountability, and improve overall that are parasitic on the distortions agency’s existing flexibilities might be performance of the compliance created by government mandate. amended, revised, or deleted to avoid programs.

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T a bl e X -- 2 I ncen f 1ves th a t a dd ress ~aps m compnancer t es t proce d ures Regulatory NHTSA EPA item Authority Current NPRM Authority Current NPRM Program Program A/C Allows mfrs No change; CAA "Credits" for Seeking efficiency to earn "fuel seeking 202(a) A/C comment on consumption comment on efficiency combining improvement eliminating; improvements A/C efficiency values" seeking up to caps of menu items (FCIVs) comment on 5.0 g/mi for and thermal equivalent to Alliance/Global cars and 7.2 technologies EPA credits request to allow g/mi for menu items; starting in retroactive trucks seeking MY 2017 starting in MY comment on 2012 (propose adding to deny) combined caps of8 g/mi for cars and 11.5 g/mi for trucks (thermal efficiency technologiues are currently capped under the off-cycle menu at 10 g/mi)

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Off-cycle Allows mfrs No change; CAA "Menu" of Seeking to earn "fuel seeking 202(a) pre-approved comment on consumption comment on credits ( ~ 10), expanding to improvement eliminating; up to cap of include: 2 new values" seeking 10 g/mi for techs for menu (FCIVs) comment on MY 2014 and (high equivalent to Alliance/Global beyond; other efficiency EPA credits request to allow pathways alternators and starting in retroactive require EPA advanced A/C MY 2017 starting in MY approval compressors), . . 2012 (propose through either mcreasmg cap to deny) 5-cycle to 15 g/mi, testing or 'streamlining' through approval public notice process, and comment adding other techs to menu, updating menu values, allowing suppliers to seek approval (rather than just OEMs)

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T a bl e X -- 3 I ncenf 1ves th a t encourage applr 1ca rIOn o ft ec h no og1es Pickup Allows mfrs No change; CAA 10 g/mi for Seeking comment trucks to earn seeking 202(a) full-size on FCIVs comment on pickups with extending/expanding equivalent extending mild hybrids incentives to all to EPA availability OR light trucks and to credits of incentive overperforming passenger cars starting in past current target by 15% MY 2017 expiration (MYs 2017- date 2021 ); 20 g/mi for full-size pickups with strong hybrids OR overperforming target by 20% (MYs 2017- 2025)

T a bl e X -- 4 I ncent1ves t h at encoura ~e a ternative f ue I veh. IC I es Dedicated 49 Fuel economy No CAA Multiplier Seeking comment alternative fuel U.S.C. calculated change 202(a) incentives on vehicle 32905(a) assummg forEVs, extending/expanding and (c) gallon of FCVs, multipliers and on liquid/gaseous NGVs additional incentives alt fuel= 0.15 (each forNGVs; seeking gallons of vehicle comment on gasoline; for counts as extending 0 g/mi Evs, 2.0 factor for upstream petroleum vehicles); emissiOns equivalency each EV = factor 0 g/mi upstream emissiOns through MY 2021 (then phases out based on per-mfr production cap of200k vehicles)

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BILLING CODE 4910–59–C each manufacturer’s fleet must meet. Whether the vehicles a manufacturer It is further noted that compliance is This means that a manufacturer can produces are large or small therefore has a measure of how a manufacturer’s fleet produce, for example, much larger- no impact on compliance—compliance performance compares to its individual footprint vehicles than it was expected depends, instead, on the performance of compliance obligation and is generally to produce when the standards (i.e., the a manufacturer’s vehicles relative to not a measure of how the curves) were set and still be in their targets, averaged across the fleet as manufacturer’s fleet performance compliance because its fleet a whole. compares to other manufacturers’ fleets performance is better than its The following sections discuss 801 or to some industry-wide number. compliance obligation given the NHTSA’s compliance and enforcement This is because the standards are footprints of the vehicles it ended up program, EPA’s compliance and attribute-based, per Congress (in the producing. This also means that a enforcement program, and seek case of CAFE, at least), rather than a manufacturer can produce plenty of comment on a variety of options with single ‘‘flat’’ mpg or g/mi number which small-footprint vehicles and still fall respect to the compliance flexibilities short of its compliance obligation if currently available under each program. 801 The exception is the CAFE program’s enough of its vehicles fall below their More broadly, the agencies are taking minimum standard for domestically-manufactured passenger cars, see Section III and V above and 49 targets and the manufacturer has no the opportunity with this rulemaking to U.S.C. 32902. other way of making up the shortfall. seek comment and suggestions relating

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to the current flexibilities allowed under years prior and following, subject to Comment is sought on these changes, as the existing CAFE and tailpipe CO2 various statutory constraints. well as on the general efficacy of these programs (including eliminating or EPCA and EISA specify several flexibilities and their role in the fuel expanding existing flexibilities). The flexibilities that are available to help economy and GHG programs. agencies also seek comment on several manufacturers comply with CAFE Moreover, the following sections outstanding petitions relating to existing standards. Some flexibilities are defined explain how manufacturers submit data or newly-proposed flexibilities, and the by statute—for example, while Congress and information to the agency—NHTSA current credit trading system. required that NHTSA allow is proposing to implement a new manufacturers to transfer credits earned standardized template for manufacturers B. NHTSA Compliance and for over-compliance from their car fleet to use to submit CAFE data to the Enforcement to their truck fleet and vice versa, agency, as well as standardized NHTSA’s CAFE enforcement program Congress also limited the amount by templates for reporting credit is largely dictated by statute. As which manufacturers could increase transactions. Additionally, NHTSA is discussed earlier in this notice, each their CAFE levels using those proposing to add requirements that vehicle manufacturer is subject to transfers.807 NHTSA believes Congress specify the precision of the fuel savings separate CAFE standards for passenger balanced the energy-saving purposes of adjustment factor in 49 CFR 536.4. cars and light trucks, and for the the statute against the benefits of certain These new proposals are intended to passenger car standards, a flexibilities and incentives and streamline reporting and data collection manufacturer’s domestically- intentionally placed some limits on from manufacturers, in addition to manufactured and imported passenger certain statutory flexibilities and helping the agency use the best car fleets are required to comply incentives. NHTSA has done its best in available data to inform CAFE program separately.802 Additionally, crafting the credit transfer and trading decision making. domestically-manufactured passenger regulations authorized by EISA to Finally, NHTSA provides an overview cars are subject to the statutory ensure that total fuel savings are of CAFE compliance data for MYs 2011 minimum standard.803 preserved when manufacturers exercise through 2018 to demonstrate how EPA calculates the fuel economy level their statutorily-provided compliance manufacturers have responded to the of each fleet produced by each flexibilities. progressively increasing CAFE manufacturer, and transmits that NHTSA and EPA have previously standards for those years. NHTSA information to NHTSA; 804 that developed other compliance flexibilities believes that providing this data is calculation includes adjustments to the for the CAFE program under EPA’s important because it gives the public a fuel economy of individual vehicles EPCA authority to calculate better understanding of current depending on whether they have certain manufacturer’s fuel economy levels. As compliance trends and the potential incentivized technologies.805 finalized in the 2012 final rule for MYs impacts that CAFE compliance in those Manufacturers also report early product 2017 and beyond, EPA provides model years may have on the future projections to NHTSA per EPCA’s manufacturers ‘‘credits’’ under EPA’s model years addressed by this reporting requirements, and NHTSA program and fuel economy rulemaking. relies upon both this manufacturer data ‘‘adjustments’’ or ‘‘improvement values’’ This is, of course, only an overview and EPA-validated data to conduct its under NHTSA’s program for: (1) description of CAFE compliance. own enforcement of the CAFE program. Technologies that cannot be measured NHTSA also granted a petition for NHTSA also periodically releases public on the 2-cycle test procedure, i.e., ‘‘off- rulemaking in 2016 requesting a number reports through its CAFE Public cycle’’ technologies; and (2) air of changes to compliance-related Information Center (PIC) to share recent conditioning (A/C) efficiency topics.808 The responses to those CAFE program data.806 improvements that also improve fuel requests are discussed below. In general, NHTSA then determines the economy that cannot be measured on there is a tentatively decision to deny manufacturer’s compliance with each the 2-cycle test procedure. Additionally, most of the Alliance and Global’s applicable standard and notifies the programs give manufacturers requests as discussed in the sections manufacturers if any of their fleets have compliance incentives for utilizing that follow. Comment is sought on these fallen short. Manufacturers have the ‘‘game changing’’ technologies on tentative decisions, including what option of paying civil penalties on any pickup trucks, such as pickup truck impact granting any of these individual shortfall or can submit credit plans to hybridization. requests could have on effective NHTSA. Credits can either be earned or The following sections outline how stringency and compliance pathways. purchased and can be used either in the NHTSA determines whether year they were earned or in several manufacturers are in compliance with 1. Light-Duty CAFE the CAFE standards for each model (a) How does NHTSA determine 802 49 U.S.C. 32904(b). year, and how manufacturers may use compliance? 803 49 U.S.C. 32902(b)(4). compliance flexibilities to comply, or 804 49 U.S.C. 32904(c)–(e). EPCA granted EPA address non-compliance by paying civil (1) Manufacturers Submit Data to authority to establish fuel economy testing and penalties. As mentioned above, some NHTSA and EPA Facilitates CAFE calculation procedures; EPA uses a two-year early Testing certification process to qualify manufacturers to compliance flexibilities are prescribed start selling vehicles, coordinates manufacturer by statute and some are implemented EPCA, as amended by EISA, requires testing throughout the model year, and validates through EPA’s EPCA authority to a manufacturer to submit reports to the manufacturer-submitted final test results after the close of the model year. measure fuel economy, such as fuel Secretary of Transportation explaining 805 For example, alternative fueled vehicles get consumption improvement values for whether the manufacturer will comply special calculations under EPCA (49 U.S.C. 32905– air conditioning efficiency and off-cycle with an applicable CAFE standard for 32906), and fuel economy levels can also be technologies. This proposal includes the model year for which the report is adjusted to reflect air conditioning efficiency and language updating and clarifying made; the actions a manufacturer has ‘‘off-cycle’’ improvements, as discussed below. 806 NHTSA CAFE Public Information Center, existing regulatory text in this area. taken or intends to take to comply with https://one.nhtsa.gov/cafe_pic/CAFE_PIC_ Home.htm. 807 See 49 U.S.C. 32903(g). 808 81 FR 95553 (Dec. 28, 2016).

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the standard; and other information the and any hybrid/electric full-size pickup (2) Proposed Changes to CAFE Secretary requires by regulation.809 A truck technologies used each model year Reporting Requirements manufacturer must submit a report to calculate the average fuel economy NHTSA is proposing changes to CAFE containing the above information during specified in 40 CFR 600.510–12(c). reporting requirements with the intent the 30-day period before the beginning Manufacturers identify the makes and to streamline reporting and data of each model year, and during the 30- model types 812 equipped with each collection from manufacturers, in day period beginning the 180th day of technology, which compliance category addition to helping the agency use the 810 the model year. When a manufacturer those vehicles belong to, and the best available data to inform CAFE decides it is unlikely to comply with its associated fuel economy adjustment program decision-making. The agency CAFE standard, the manufacturer must value for each technology. In some requests comments on the following report additional actions it intends to cases, NHTSA may require reporting requirements. take to comply and include a statement manufacturers to provide supplemental about whether those actions are information to justify or explain the (i) Standardized CAFE Report sufficient to ensure compliance.811 benefits of these technologies. NHTSA Templates To implement these reporting requires manufacturers to provide In a 2015 rulemaking, NHTSA requirements, NHTSA issued 49 CFR detailed information on the model types proposed to amend 49 CFR part 537 to part 537, ‘‘Automotive Fuel Economy using these technologies to gain fuel require a new data format for light-duty Reports,’’ which specifies three types of economy benefits. These details are vehicle CAFE reports.814 NHTSA CAFE reports that manufacturers must necessary to facilitate NHTSA’s introduced a new standardized template submit to comply. Manufacturers must technical analyses and to ensure the for collecting manufacturer’s CAFE first submit a pre-model year (PMY) agency can perform random information under 49 CFR 537.7(b) and report containing a manufacturer’s enforcement audits when necessary. (c) in order to ensure the accuracy and projected compliance information for NHTSA uses PMY, MMY, and completeness of data collected and to that upcoming model year. The PMY supplemental reports to help the agency better align with the final data provided report must be submitted before and manufacturers anticipate potential to EPA. NHTSA explained that for MYs December 31st of the calendar year prior compliance issues as early as possible, 2013–2015, most manufacturer reports to the corresponding model year. and help manufacturers plan NHTSA received did not conform to all Manufacturers must then submit a mid- compliance strategies. NHTSA also uses of the requirements specified in 49 CFR model year (MMY) report containing the reports for auditing purposes, which part 537. For example, NHTSA updated information from helps manufacturers correct errors prior identified several instances where manufacturers based upon actual and to the end of the model year and manufacturers’ CAFE reports included projected information known midway accordingly, submit accurate final ‘‘yes’’ or ‘‘no’’ values in response to through the model year. The MMY reports to EPA. Additionally, NHTSA requests for a vehicle’s numerical report must be submitted by July 31 of issues public reports twice a year that ground clearance values. the given model year. Finally, provide a summary of manufacturers’ Some manufacturers contend that the manufacturers must submit a final and projected fleet fuel economy changes in reporting requirements may supplementary report anytime the performances values. be one source of confusion. NHTSA is manufacturer needs to correct Throughout the model year, NHTSA aware that manufacturers seem to be previously submitted information. also conducts vehicle testing as part of confused about what footprint data is Manufacturers submit both non- its footprint validation program, to required because of the modification to confidential and confidential versions of 815 confirm the accuracy of track width and the base tire definition in the 2012 CAFE reports to NHTSA. Confidential wheelbase measurements submitted in final rule for MYs 2017 and beyond. reports differ in that they include manufacturer’s reports.813 This helps Specifically, these manufacturers fail to estimated production sales information the agency better understand how understand the required reporting that is withheld from public disclosure manufacturers may adjust vehicle information for model types based upon to protect each manufacturer’s characteristics to change a vehicle’s footprint values. Beginning in MY 2013, competitive sales strategies. footprint measurement, and thus its fuel manufacturers were to provide attribute- Manufacturer reports include based target standards in consideration information on light-duty automobiles economy target. NHTSA ultimately determines a of the change in the base tire definition and medium-duty passenger vehicles for for each unique model type and each model year and describe projected manufacturer’s compliance based on CAFE data EPA receives in final model footprint combination of the and actual fuel economy standards, fuel manufacturer’s automobiles. NHTSA economy performance values, year reports. EPA verifies the information, accounting for NHTSA and has found cases where manufacturers production volumes, information on did not aggregate their model types by vehicle design features (e.g., engine EPA testing, and forwards the information to NHTSA. A each unique footprint combination. displacement and transmission class), Likewise, NHTSA found other errors in manufacturer’s final model year report and other vehicle attribute manufacturers’ vehicle information must be submitted to EPA no later than characteristics (e.g., track width, submissions. A review of the MY 2015 90 days after December 31 of the model wheelbase, and other off-road features PMY reports showed that several year. for light trucks). Beginning with MY manufacturers provided the required 2017, manufacturers may also provide information incorrectly. 812 NHTSA collects model type information based projected information on any air- upon the EPA definition for ‘‘modet type’’ in 40 Problems with inaccurate or missing conditioning (A/C) systems with CFR 600.002. data have become an even greater issue improved efficiency, off-cycle 813 U.S. Department of Transportation, NHTSA, for manufacturers planning to use the technologies (e.g., stop-start systems), Laboratory Test Procedure for 49 CFR part 537, new procedures for A/C efficiency and Automobile Fuel Economy Attribute Measurements off-cycle technologies, and incentives (Mar. 30, 2009), available at http://www.nhtsa.gov/ 809 49 U.S.C. 32907(a). DOT/NHTSA/Vehicle%20Safety/ 810 Id. Test%20Procedures/Associated%20Files/TP-537- 814 80 FR 40540 (Jul. 13, 2015). 811 Id. 01.pdf. 815 49 CFR 523.2.

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for advanced full-sized pickup (ii) Standardized Credit Trade provisions in 49 CFR 536.8(f), and the trucks.816 Manufacturers seeking to take Documents finality provisions of 49 CFR 536.8(g). advantage of the new procedures and A credit trade is defined in 49 CFR NHTSA seeks comment on this incentives must provide information on 536.3 as the receipt by NHTSA of an approach, as well as on any changes to the model types equipped with the instruction from a credit holder to place the template that may be necessary to technologies. However, NHTSA has its credits in the account of another better facilitate manufacturer credit identified and contacted several credit holder. Traded credits are moved transaction requests. The agency’s manufacturers that have failed to submit from one credit holder to the recipient proposed template is located in the required information in their 2017 credit holder within the same NHTSA’s docket for review. The and 2018 PMY reports. compliance category for which the finalized template would be available Therefore, as part of this rulemaking, credits were originally earned. If a credit on the CAFE PIC site for manufacturers NHTSA is proposing to adopt a has been traded to another credit holder to use. standardized template for reporting all and is subsequently traded back to the (iii) Credit Transaction Information required data for PMY, MMY, and originating manufacturer, it will be supplemental CAFE reports. The deemed not to have been traded for Though entities are permitted to trade template will be available through the compliance purposes. NHTSA does not CAFE credits, there is limited public CAFE Public Information Center (PIC) administer trade negotiations between information available on credit 819 website. NHTSA is also proposing to manufacturers and when a trade transactions. As discussed earlier, make the PMY and MMY reports exactly document is received the agreement NHTSA maintains an online CAFE the same; many manufacturers already must be issued jointly by the current database with manufacturer and submit PMY reports and then update credit holder and the receiving party. fleetwide compliance information that the MMY reports with the same type of NHTSA does not settle contractual or includes year-by-year accounting of information. NHTSA believes that this payment issues between trading credit balances for each manufacturer. approach will further simplify reporting manufacturers. While NHTSA maintains this database, for manufacturers. Further, NHTSA is NHTSA created its CAFE database to the agency’s regulations currently state expanding its CAFE reporting maintain credit accounts for that it does not publish information on 820 requirements for manufacturers to manufacturers and to track all credit individual transactions, and provide additional vehicle descriptors, transactions. Credit accounts consist of historically, NHTSA has not required common EPA carline codes, and more a balance of credits in each compliance trading entities to submit information information on emerging technologies. category and vintage held by the holder. regarding the compensation (whether Additional data columns will be While maintaining accurate credit financial, or in terms of other credits) included in the reporting template for records is essential, it has become a manufacturers receive in exchange for 821 manufacturers to identify these challenging task for the agency given the credits. Thus, NHTSA’s public emerging technologies. recent increase in credit transactions. database offers sparse information to Manufacturers have requested NHTSA those looking to determine the value of NHTSA believes adopting a approve trade or transfer requests not a credit. standardized template will ensure only in response to end-of-model year The lack of information regarding manufacturers provide the agency with shortfalls but also during the model year credit transactions means entities all the necessary data in a simpler, when purchasing credits to bank for wishing to trade credits have little, if compliant format. The template would future model years. any, information to determine the value organize the required data in a To reduce the burden on all parties, of the credits they seek to buy or sell. standardized and consistent manner, encourage compliance, and facilitate It is widely assumed that the civil adopt formats for values consistent with quicker NHTSA credit transaction penalty for noncompliance with CAFE those provided to EPA, and calculate approval, the agency is proposing to add standards largely determines the value manufacturer’s target standards. This a required template to standardize the of a credit, because it is logical to will also help NHTSA code CAFE information parties submit to NHTSA in assume that manufacturers would not electronic data for use in the agency’s reporting a credit transaction. Presently, purchase credits if it cost less to pay electronic database system. Overall, manufacturers are inconsistent in noncompliance penalties instead, but it these changes are anticipated to submitting the information required by is unknown how other factors affect the drastically reduce manufacturer and 49 CFR 536.8, creating difficulty for value. For example, a credit nearing the government burden for reporting under NHTSA in processing transactions. The end of its five-model-year lifespan both EPCA/EISA and the Paperwork template NHTSA is proposing is a would theoretically be worth less than Reduction Act.817 simple spreadsheet that trading parties a credit with its full five-model-year NHTSA seeks comment on the use of fill out. When completed, parties will be lifespan remaining. In the latter case, a standardized reporting template, or on able to click a button on the spreadsheet the credit holder would value the credit any possible changes to the proposed to generate a transaction letter for the more, as it can be used for a longer standardized template, which is located parties to sign and submit to NHTSA, period of time. in NHTSA’s docket for review. along with the spreadsheet. Using this In the interest of facilitating a Information on fuel consumption template simplifies the credit transparent, efficient credit trading improvement technologies (i.e., off- transaction process, and ensures that cycle) in the template will be collected trading parties are following the 819 Manufacturers may generate credits, but non- at the vehicle model type level. NHTSA requirements for a credit transaction in manufacturers may also hold or trade credits. Thus, plans to revise the template as part of 49 CFR 536.8(a).818 the word ‘‘entities’’ is used to refer to those that the Paperwork Reduction Act process. Additionally, the template includes may be a party to a credit transaction. 820 49 CFR 536.5(e)(1). an acknowledgement of the fraud/error 821 NHTSA understands that not all credits are 816 NHTSA allows manufacturers to use these exchanged for monetary compensation. If NHTSA incentives for complying with standards starting in 818 Submitting a properly completed template and were to require entities to report compensation MY 2017. accompanying transaction letter will satisfy the exchanged for credits, it would not be limited to 817 44 U.S.C. 3501 et seq. trading requirements in 49 CFR part 536. reporting monetary compensation.

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market, NHTSA is considering final compliance values to EPA, EPA rejected, NHTSA notifies the modifying its regulations to require verifies the data and issues final CAFE manufacturer and requests a revised trading parties to submit the amount of reports to manufacturers and NHTSA. plan or payment of the appropriate compensation exchanged for credits, in NHTSA then identifies the penalty. Similarly, if the manufacturer addition to the parties trading and the manufacturers’ compliance categories is delinquent in submitting a response number of credits traded in a (i.e., domestic passenger car, imported within 60 days, NHTSA takes action to transaction. NHTSA is considering passenger car, and light truck fleets) that immediately collect a civil penalty. If amending its regulations to permit the do not meet the applicable CAFE NHTSA receives and approves a agency to publish information on these standards. NHTSA uses EPA-verified manufacturer’s plan to carryback future specific transactions. NHTSA seeks data to compare fleet average standards earned credits within the following comment on requiring these disclosures with actual fleet performance values in three years in order to comply with when trades occur. each compliance category. Each vehicle current regulatory obligations, NHTSA a manufacturer produces has a fuel (iv) Precision of the CAFE Credit will defer levying fines for non- economy target based on its footprint Adjustment Factor compliance until the date(s) when the (footprint curves are discussed above in EPCA, as amended by EISA, required Section II.C), and each compliance manufacturer’s approved plan indicates the Secretary of Transportation to category has a CAFE standard measured that the credits will be earned or establish an adjustment factor to ensure in miles per gallon (mpg). If a vehicle acquired to achieve compliance. If the total oil savings are preserved when exceeds its target, it is a ‘‘credit manufacturer fails to acquire or earn 822 manufacturers trade credits. The generator,’’ if it falls short of its target, sufficient credits by the plan dates, adjustment factor applies to credits it is a ‘‘credit loser.’’ Averaging these NHTSA will initiate non-compliance traded between manufacturers and to vehicles across a compliance category, proceedings.823 credits transferred across a accounting for volume, equals a fleet In the event that a manufacturer does manufacturer’s compliance fleets. average. A manufacturer complies with In establishing the adjustment factor, not comply with a CAFE standard even NHTSA’s fuel economy standard if its NHTSA did not specify the exact after the consideration of credits, EPCA fleet average performance is greater than precision of the output of the equation provides that the manufacturer is liable or equal to its required standard, or if 824 in 49 CFR 536.4(b). NHTSA’s standard for a civil penalty. Presently, this it is able to use available compliance practice has been round to the nearest penalty rate is set at $5.50 for each tenth flexibilities, described below in Section four decimal places (e.g., 0.0001) for the of a mpg that a manufacturer’s average X.B.1.e., to resolve any shortfall. adjustment factor. However, in the fuel economy falls short of the standard absence of a regulatory requirement, If the average fuel economy level of for a given model year multiplied by the the vehicles in a compliance category many manufacturers have contacted total volume of those vehicles in the falls below the applicable fuel economy NHTSA for guidance, and NHTSA has affected compliance category standard, NHTSA provides written had to correct several credit transaction manufactured for that model year.825 All requests. In some instances, notification to the manufacturer that it has not met that standard. The penalties are paid to the U.S. Treasury manufacturers have had to revise signed and not to NHTSA itself. credit trade documents and submit manufacturer is required to confirm the additional trade agreements to properly shortfall and must either submit a plan (4) Civil Penalties for Non-Compliance address credit shortages. indicating how it will allocate existing NHTSA is proposing to add credits, or if it does not have sufficient A manufacturer is liable to the requirements to 49 CFR 536.4 specifying credits available in that fleet, how it will Federal government for a civil penalty if the precision of the adjustment factor by earn, transfer and/or acquire credits, or it does not comply with its applicable rounding to four decimal places (e.g., pay the appropriate civil penalty. The average fuel economy standard, after 0.0001). NHTSA has also included manufacturer must submit a credit considering credits available to the equations for the adjustment factor in its allocation plan or payment within 60 manufacturer.826 proposed credit transaction report days of receiving agency notification. As previously mentioned, the NHTSA approves a credit allocation template, mentioned above, with the potential civil penalty rate is currently plan unless it finds the proposed credits same level of precision. NHTSA seeks $5.50 for each tenth of a mpg that a comment on this approach. are unavailable or that it is unlikely that the plan will result in the manufacturer manufacturer’s average fuel economy (3) NHTSA Then Analyzes EPA- earning sufficient credits to offset the falls short of the average fuel economy Certified CAFE Values for Compliance projected shortfall. If a plan is approved, standard for a model year, multiplied by After manufacturers complete NHTSA revises the manufacturer’s the total volume of those vehicles in the certification testing and submit their credit account accordingly. If a plan is compliance category.

Since the inception of the CAFE payments. Generally, import manufacturers, with the majority of program, NHTSA has collected a total of manufacturers have paid significantly payments made by import $890,427,578 in CAFE civil penalty more in civil penalties than domestic manufacturers for passenger cars and

822 49 U.S.C. § 32903(f)(1). 825 NHTSA proposed retaining the $5.50 civil 826 49 U.S.C. §§ 32911–12. 823 See generally 49 CFR part 536. penalty rate in an April 2018 NPRM. See 83 FR 824 49 U.S.C. § 32912. 13904 (Apr. 2, 2018).

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not light trucks. Import passenger car applicable CAFE standard is more (1) Program Credits and Credit Trading manufacturers paid a total of stringent than the maximum feasible $890,057,188 in CAFE fines while average fuel economy level that the Generating, trading, transfer, and domestic manufacturers paid a total of manufacturer can achieve. NHTSA must applying CAFE credits is fundamentally $370,390. then issue by Federal Register notice an governed by statutory mandates defined Prior to the CAFE credit trade and alternative average fuel economy by Congress. As discussed above in transfer program, several manufacturers standard for the passenger automobiles Section X.B.1., program credits are opted to pay civil penalties instead of manufactured by the exempted generated when a vehicle complying with CAFE standards. Since manufacturer. The alternative standard manufacturer’s fleet over-complies with NHTSA introduced trading and is the maximum feasible average fuel its determined standard for a given transferring, manufacturers have largely economy level for the manufacturers to model year, meaning its vehicle fleet traded or transferred credits in lieu of which the alternative standard applies. achieved a higher corporate average fuel paying civil penalties. NHTSA assumes NHTSA is not proposing any changes to economy value than the amount that buying and selling credits is a more the small volume manufacturer required by the CAFE program for that cost-effective strategy for manufacturers provision or alternative standards model year. Conversely, if the fleet than paying civil penalties, in part regulations in this rulemaking. average CAFE level does not meet the because it seems logical that the price of standard, the fleet would incur debits a credit is directly related to the civil (c) What compliance flexibilities and (also referred to as a shortfall). A penalty rate and decreases as a credit incentives are currently available under manufacturer whose fleet generates life diminishes.827 Prior to trading and the CAFE program and how do credits in a given model year has several transferring, on average, manufacturers manufacturers use them? options for using those credits, paid $29,075,899 in civil penalty There are several compliance including credit carry-back, credit carry- payments annually (a total of flexibilities that manufacturers can use forward, credit transfers, and credit $814,125,176 from model years 1982 to to achieve compliance with CAFE trading. 2010). Since trading and transferring, standards beyond applying fuel Credit ‘‘carry-back’’ means that manufacturers now pay an annual economy-improving technologies. Some manufacturers are able to use credits to average of $15,260,480 each model year. compliance flexibilities are statutorily offset a deficit that had accrued in a The agency notes that five mandated by Congress through EPCA prior model year, while credit ‘‘carry- manufacturers have paid civil penalties and EISA, specifically program credits, forward’’ means that manufacturers can since 2011 totaling $76,302,402, and no including the ability to carry-forward, bank credits and use them towards civil penalty payments were made in carry-back, trade and transfer credits, compliance in future model years. 2015. However, over the next several and special fuel economy calculations EPCA, as amended by EISA, requires years, as stringency increases, for dual- and alternative-fueled vehicles NHTSA to allow manufacturers to carry manufacturers are expected to have (discussed in turn, below). However, 49 back credits for up to three model years, challenges with CAFE standard U.S.C. 32902(h) expressly prohibits and to carry forward credits for up to NHTSA from considering the compliance. five model years.829 EPA also follows availability of statutorily-established these same limitations under its GHG (b) What Exemptions and Exclusions credits (either for building dual- or program.830 does NHTSA allow? alternative-fueled vehicles or from (a) Emergency and Law Enforcement accumulated transfers or traders) in Credit ‘‘transfer’’ means the ability of Vehicles determining the level of the standards. manufacturers to move credits from their passenger car fleet to their light Under EPCA, manufacturers are Thus, NHTSA may not raise CAFE truck fleet, or vice versa. As part of the allowed to exclude emergency vehicles standards because manufacturers have EISA amendments to EPCA, NHTSA from their CAFE fleet 828 and all enough of those credits to meet higher standards. This is an important was required to establish by regulation manufacturers that produce emergency a CAFE credit transferring program, now vehicles have historically done so. difference from EPA’s authority under the CAA, which does not contain such codified at 49 CFR part 536, to allow a NHTSA is not proposing any changes to manufacturer to transfer credits between this exclusion. a restriction, and which flexibility EPA has assumed in the past in determining its car and truck fleets to achieve (b) Small Volume Manufacturers appropriate levels of stringency for its compliance with the standards. For Per 49 U.S.C. 32902(d), NHTSA program. example, credits earned by established requirements for exempted NHTSA also promulgated compliance overcompliance with a manufacturer’s small volume manufacturers in 49 CFR flexibilities in response to EPA’s car fleet average standard could be used part 525, ‘‘Exemptions from Average exercise of discretion under its EPCA to offset debits incurred because of that Fuel Economy Standards.’’ The small authority to calculate fuel economy manufacturer’s not meeting the truck volume manufacturer exemption is levels for individual vehicles and for fleet average standard in a given year. available for any manufacturer whose fleets. These compliance flexibilities, However, EISA imposed a cap on the projected or actual combined sales which were first introduced in the 2012 amount by which a manufacturer could (whether in the United States or not) are rule for MYs 2017 and beyond, include raise its CAFE standards through fewer than 10,000 passenger air conditioning efficiency improvement transferred credits: 1 mpg for MYs automobiles in the model year two years and ‘‘off cycle’’ adjustments, and 2011–2013; 1.5 mpg for MYs 2014– before the model year for which the incentives for advanced technologies in 2017; and 2 mpg for MYs 2018 and manufacturer seeks to comply. The full size pick-up trucks, including manufacturer must submit a petition incentives for mild and strong hybrid 829 49 U.S.C. § 32903(a). with information stating that the electric full-size pickup trucks and 830 As part of its 2017–2025 GHG program final performance-based incentives in full- rulemaking, EPA did allow a one-time CO2 carry- forward beyond five years, such that any credits 827 See 49 CFR 536.4 for NHTSA’s regulations size pickup trucks. As explained above, generated from MYs 2010 through 2016 will be able regarding CAFE credits. comment is sought on all of these to be used to comply with light duty vehicle GHG 828 49 U.S.C. § 32902(e). adjustments and incentives. standards at any time through MY 2021.

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beyond.831 These statutory limits will suggest that the transfer cap applies at Per EISA, total oil savings must be continue to apply to the determination the time credits are transferred. preserved in NHTSA’s credit trading of compliance with the CAFE standards. However, NHTSA believes its program.838 The provisions for credit EISA also prohibits the use of subsequent interpretation—that the transferring within a manufacturer’s transferred credits to meet the minimum transfer cap applies at the time the fleet 839 do not include the same domestic passenger car fleet CAFE credits are used—is a more appropriate, requirement; however, NHTSA standard.832 plain language reading of the statute. prescribed a fuel savings adjustment In their 2016 petition for rulemaking, While manufacturers have approached factor that applies to both credit trades the Alliance of Automobile NHTSA with various interpretations between manufacturers and credit Manufacturers and Global Automakers that would allow them to circumvent transfers between a manufacturer’s (Alliance/Global or Petitioners) asked the EISA transfer cap, NHTSA believes compliance fleets.840 NHTSA to amend the definition of it is improper to ignore a transfer cap ‘‘transfer’’ as it pertains to compliance Congress clearly articulated. Therefore, When NHTSA initially considered the flexibilities.833 In particular, Alliance/ NHTSA proposes to deny Alliance/ preservation of oil savings, the agency Global requested that NHTSA add text Global’s petition to revise the definition explained how one credit is not to the definition of ‘‘transfer’’ stating of ‘‘transfer’’ in 49 CFR 536.3. necessarily equal to another. For that the statutory transfer cap in 49 Credit ‘‘trading’’ means the ability of example, the fuel savings lost if the U.S.C. 32903(g)(3) applies when the manufacturers to sell credits to, or average fuel economy of a manufacturer credits are transferred. Alliance/Global purchase credits from, one another. falls one-tenth of an mpg below the assert that adding this text to the EISA allowed NHTSA to establish by level of a relatively low standard are definition is consistent with NHTSA’s regulation a CAFE credit trading greater than the average fuel savings prior position on this issue. program, also now codified at 49 CFR gained by raising the average fuel In the 2012–2016 final rule, NHTSA part 536, to allow credits to be traded economy of a manufacturer one-tenth of stated: between vehicle manufacturers. EISA a mpg above the level of a relatively 841 NHTSA interprets EISA not to prohibit the also prohibits manufacturers from using high CAFE standard. The effect of banking of transferred credits for use in later traded credits to meet the minimum applying the adjustment factor is to model years. Thus, NHTSA believes that the domestic passenger car CAFE increase the value of credits earned for language of EISA may be read to allow standard.837 exceeding a relatively low CAFE manufacturers to transfer credits from one Under 49 CFR part 536, credit holders standard for credits that are intended to fleet that has an excess number of credits, (including, but not limited to be applied to a compliance category within the limits specified, to another fleet manufacturers) have credit accounts with a relatively high CAFE standard, that may also have excess credits instead of transferring only to a fleet that has a credit with NHTSA where they can, as and to decrease the value of credits shortfall. This would mean that a outlined above, hold credits, use them earned for exceeding a relatively high manufacturer could transfer a certain number to achieve compliance with CAFE CAFE standard for credits that are of credits each year and bank them, and then standards, transfer credits between intended to be applied to a compliance the credits could be carried forward or back compliance categories, or trade them. A category with a relatively low CAFE ‘without limit’ later if and when a shortfall credit may also be cancelled before its standard. ever occurred in that same fleet.834 expiration date, if the credit holder so Alliance/Global stated that while Following that final rule, NHTSA chooses. Traded and transferred credits carry forward and carry back credits clarified via interpretation that the are subject to an ‘‘adjustment factor’’ to have been used for many years, the transfer cap from EISA does not limit ensure total oil savings are preserved, as CAFE standards did not change during how many credits may be transferred in required by EISA. EISA also prohibits the Congressional CAFE freeze, meaning a given model year, but it does limit the credits earned before MY 2011 from credits earned during those years were application of transferred credits to a being traded or transferred. 835 As discussed above, NHTSA is associated with the same amount of fuel compliance category in a model year. 842 ‘‘Thus, manufacturers may transfer as concerned with the potential for savings from year to year. Alliance/ many credits into a compliance category compliance flexibilities to have Global suggest that because there is no as they wish, but transferred credits may unintended consequences. Given that longer a Congressional CAFE freeze, not increase a manufacturer’s CAFE the credit trading program is optional NHTSA should apply the adjustment level beyond the statutory limits.’’ 836 under EISA, comment is sought on NHTSA believes the transfer caps in whether the credit trading provisions in 838 49 U.S.C. § 32903(f)(1). 49 U.S.C. 32903(g)(3) are still properly 49 CFR part 536 should cease to apply 839 49 U.S.C. § 32903(g). read to limit the application of credits 840 See 49 CFR 536.5. See also 74 FR 14430 (Mar. beginning in MY 2022. 30, 2009) (Per NHTSA’s final rule for MY 2011 in excess of those values. NHTSA (a) Fuel Savings Adjustment Factor Average Fuel Economy Standards for Passenger understands that the language in the Cars and Light Trucks, ‘‘There is no other clear 2012–2016 final rule could be read to Under NHTSA’s credit trading expression of congressional intent in the text of the regulations, a fuel savings adjustment statute suggesting that NHTSA would have authority to adjust transferred credits, even in the 831 49 U.S.C. § 32903(g)(3). factor is applied when trading occurs interest of preserving oil savings. However, the goal 832 49 U.S.C. § 32903(g)(4). between manufacturers, but not when a of the CAFE program is energy conservation; 833 Auto Alliance and Global Automakers Petition manufacturer carries credits forward or ultimately, the U.S. would reap a greater benefit for rulemaking on Corporate Average Fuel Economy carries back credits within their own from ensuring that fuel oil savings are preserved for (June 20, 2016) at 13. both trades and transfers. Furthermore, accounting 834 75 FR 25666 (May 7, 2010). fleet. The Alliance/Global requested that for traded credits differently than for transferred 835 See, letter from O. Kevin Vincent, Chief NHTSA require manufacturers to apply credits does add unnecessary burden on program Counsel, NHTSA to Tom Stricker, Toyota (July 5, the fuel savings adjustment factor when enforcement. Thus, NHTSA will adjust credits both 2011). Available online at https://isearch.nhtsa.gov/ credits are carried forward or carried when they are traded and when they are transferred files/10-004142%20--%20Toyota%20CAFE back within the same fleet, including for so that no loss in fuel savings occurs’’). %20credit%20transfer%20banking%20--%205 841 74 FR 14432 (Mar. 30, 2009). %20Jul%2011%20final%20for%20signature.htm existing, unused credits. 842 Auto Alliance and Global Automakers Petition (last accessed Apr. 18, 2018). for rulemaking on Corporate Average Fuel Economy 836 Id. 837 49 U.S.C. § 32903(f)(2). (June 20, 2016) at 10.

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factor when moving credits within a NHTSA had originally been concerned for dedicated alternative fuel vehicles, manufacturer’s fleet. about. Alliance/Global assert that by not there are no limits or phase-out for this NHTSA has tentatively decided to revising the MY 2012–2016 VMT special fuel economy calculation, unlike deny Alliance/Global’s request to apply estimates, credits earned during that for duel-fueled vehicles, as discussed the fuel savings adjustment factor to timeframe were undervalued. Therefore, below. credits that are carried forward or Alliance/Global argue that NHTSA EPCA’s statutory incentive for dual- carried back within the same fleet, to should retroactively revise its VMT fueled vehicles at 49 U.S.C. 32906 and the extent that the request would impact estimates to ‘‘reflect better the real the measurement methodology for dual- credits carried forward or backward world fuel economy results.’’ 846 fueled vehicles at 49 U.S.C. 32905(b) retroactively within manufacturer’s Such retroactive adjustments could and (d) expire in MY 2019; therefore, compliance fleets (i.e., credits that were unfairly penalize manufacturers for NHTSA had to examine the future of generated prior to MY 2021, when this decisions they made based on the these provisions in the 2017 and later rule takes effect). NHTSA has regulations as they existed at the time. CAFE rulemaking.847 NHTSA and EPA tentatively determined that applying the As Alliance/Global acknowledge, concluded that it would be adjustment factor to credits earned in adjusting vehicle miles travelled inappropriate to measure duel-fueled model years past would be inequitable. estimates would disproportionately vehicles’ fuel economy like that of Manufacturers planned compliance affect manufacturers that have a credit conventional gasoline vehicles with no strategies based, at least in part, on how deficit and were part of EPA’s recognition of their alternative fuel credits could be carried forward and Temporary Lead-time Allowance capability, which would be contrary to backward, including the lack of an Alternative Standards (TLAAS). The the intent of EPCA/EISA. Accordingly, adjustment factor when credits are TLAAS program sunsets for model years the agencies proposed that for MY 2020 carried forward or backward within the 2021 and later. Given some and later vehicles, the general same fleet. Thus, retroactively stating manufacturers would be provisions authorizing EPA to establish that manufacturers must apply the disproportionately harmed were we to testing and calculation procedures adjustment factor in this situation could accept Alliance/Global’s suggestion, would provide discretion to set the disadvantage certain manufacturers, and NHTSA has tentatively decided to deny CAFE calculation procedures for those result in windfalls for other Alliance/Global’s request to vehicles.848 The methodology for EPA’s manufacturers. retroactively change the agency’s VMT approach is outlined in the 2012 final However, NHTSA seeks comment on schedules for model years 2011–2016. rule for MYs 2017 and beyond at 77 FR whether the agency should apply the Alliance/Global’s suggestion that a 63128 (Oct. 15, 2012). NHTSA seeks fuel savings adjustment factor to credits TLAAS manufacturer would be allowed comment on the current approach. that are carried forward or carried back to elect either approach does not change (3) Incentives for Advanced within the same fleet beginning with the fact that manufacturers in the Technologies in Full Size Pickup Trucks MY 2021. TLAAS program made production In the 2012 final rule for MYs 2017 (b) VMT Estimates for Fuel Savings decisions based on the regulations as understood at the time. and beyond, EPA finalized criteria that Adjustment Factor would provide an adjustment to the fuel NHTSA uses a vehicle miles traveled (2) Special Fuel Economy Calculations economy of a manufacturer’s full size (VMT) estimate as part of its fuel for Dual and Alternative Fueled pickup trucks if the manufacturer savings adjustment equation to ensure Vehicles employed certain defined hybrid that when traded or transferred credits As discussed at length in prior technologies for a significant quantity of are used, fuel economy credits are rulemakings, EPCA, as amended by those trucks.849 Additionally, EPA adjusted to ensure fuel oil savings is EISA, encouraged manufacturers to finalized an adjustment to the fuel preserved.843 For model years 2017– build alternative-fueled and dual- (or economy of a manufacturer’s full sized 2025, NHTSA finalized VMT values of flexible-) fueled vehicles by providing pickup truck if it achieved a fuel 195,264 miles for passenger car credits, special fuel economy calculations for economy performance level and 225,865 miles for light truck ‘‘dedicated’’ (that is, 100%) alternative significantly above the CAFE target for credits.844 These VMT estimates fueled vehicles and ‘‘dual-fueled’’ (that its footprint.850 This performance-based harmonized with those used in EPA’s is, capable of running on either the incentive recognized that not all GHG program. For model years 2011– alternative fuel or gasoline/diesel) manufacturers may have wished to 2016, NHTSA estimated different VMTs vehicles. pursue hybridization, and aimed to by model year. Dedicated alternative fuel reward manufacturers for applying fuel- Alliance/Global requested that automobiles include electric, fuel cell, saving technologies above and beyond NHTSA apply fixed VMT estimates to and compressed natural gas vehicles, what they might otherwise have done. the fuel savings adjustment factor for among others. NHTSA’s provisions for EPA provided the incentive for its GHG MYs 2011–2016, similar to how NHTSA dedicated alternative fuel vehicles in 49 program under its CAA authority, and handles MYs 2017–2021. NHTSA U.S.C. 32905(a) state that the fuel for the CAFE program under its EPCA rejected a similar request from the economy of any dedicated automobile authority, similar to the A/C efficiency Alliance in the 2017 and later manufactured after 1992 shall be and off-cycle adjustment values rulemaking, citing lack of scope, and measured based on the fuel content of described below. expressing concern about the potential the alternative fuel used to operate the EPA established limits on the vehicles loss of fuel savings.845 automobile. A gallon of liquid eligible to qualify for these credits; a Alliance/Global argue that data from alternative fuel used to operate a truck must meet minimum criteria for MYs 2011–2016 demonstrate that no dedicated automobile is deemed to bed size and towing or payload fuel savings would have been lost, as contain .15 gallon of fuel. Under EPCA, 847 77 FR 62651 (Oct. 15, 2012). 843 See 49 CFR § 536.4(c). 846 Auto Alliance and Global Automakers Petition 848 49 U.S.C. §§ 32904(a), (c). 844 77 FR 63130 (Oct. 15, 2012). for rulemaking on Corporate Average Fuel Economy 849 77 FR 62651 (Oct. 15, 2012). 845 Id. (June 20, 2016) at 11. 850 Id.

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capacity, and there are minimum sales used as part of the determination of a For example, air conditioning is thresholds (in terms of a percentage of manufacturers’ CAFE level.853 turned off during 2-cycle testing. Any a manufacturer’s full-size pickup truck A/C is a virtually standard automotive air conditioning system efficiency fleet) that a manufacturer must satisfy in accessory, with more than 95% of new improvements that reduce load on the order to qualify for the incentives. cars and light trucks sold in the United engine and improve fuel economy Additionally, the incentives phase out States equipped with mobile air cannot be measured on the tests. at different rates through 2025—the conditioning systems. A/C use places Additionally, the city cycle includes mild hybrid incentive phases out in MY load on an engine, which results in less time at idle than today’s real world 2021, the strong hybrid incentive phases additional fuel consumption; the high driving, and the highway cycle is out in 2025, the 15% performance penetration rate of A/C systems relatively low speed (average speed of incentive (10 g/mi) credit phases out in throughout the light duty vehicle fleet 48 mph and peak speed of 60 mph). MY 2021, and the 20% performance means that they can significantly impact Other off-cycle technologies that incentive (20 g/mi) credit is available for the total energy consumed, as well as improve fuel economy at idle, such as a maximum of five years between MYs GHG emissions resulting from stop start, and those that improve fuel 854 2017–2025, provided the vehicle’s CO2 refrigerant leakage. A number of economy to the greatest extent at emissions level does not increase.851 methods related to the A/C system expressway speeds, such as active grille At the time of developing this components and their controls can be shutters which improve aerodynamics, proposal, no manufacturer has claimed used to improve A/C system receive less than their real-world these full-size pickup truck credits. efficiencies.855 benefits in the 2-cycle compliance tests. Some vehicle manufacturers have ‘‘Off-cycle’’ technologies are those Since EPA established its GHG announced potential collaborations, that reduce vehicle fuel consumption program for light duty vehicles, NHTSA research projects, or possible future and CO2 emissions but for which the and EPA sought to harmonize their introduction these technologies for this fuel consumption reduction benefits are respective standards, despite separate segment.852 Additionally, similar to the not recognized under the 2-cycle test statutory authorities limiting what the incentive for hybridized pickup trucks, procedure used to determine agencies could and could not consider. the agency is not aware of any vehicle compliance with the fleet average For example, for MYs 2012–2016, manufacturers currently benefiting from standards. The CAFE city and highway NHTSA was unable to consider the performance-based incentive. test cycles, also commonly referred to improvements manufacturers made to Comment is sought on whether to together as the 2-cycle laboratory passenger car A/C efficiency in 856 extend either the incentive for hybrid compliance tests (or 2-cycle tests), were calculating compliance. At that time, full size pickup trucks or the developed in the early 1970s when few NHTSA stated that the agency’s performance-based incentive past the vehicles were equipped with A/C statutory authority did not allow dates that EPA specified in the 2012 systems. The city test simulates city NHTSA to provide test procedure final rule for MYs 2017 and beyond. driving in the Los Angeles area at that flexibilities that would account for A/C time. The highway test simulates system and off-cycle fuel economy (4) Air Conditioning Efficiency and Off- driving on secondary roads (not improvements.857 Thus, NHTSA Cycle Adjustment Values expressways). The cycles are effective in calculated its standards in a way that A/C efficiency and off-cycle fuel measuring improvements in most fuel allowed manufacturers to comply with consumption improvement values economy improving technologies; the CAFE standards using 2-cycle (FCIVs) are compliance flexibilities however, they are unable to measure or procedures alone. made available under NHTSA’s CAFE underrepresent some fuel economy Of the two agencies, EPA was the first program through EPA’s EPCA authority improving technologies because of to establish an off-cycle technology program. For MYs 2012–2016, EPA to calculate fuel economy levels for limitations in the test cycles. allowed manufacturers to request off- individual vehicles and for fleets. cycle credits for ‘‘new and innovative NHTSA modified its regulations in the 853 77 FR 63130–34 (Oct. 15, 2012). Instead of technologies that achieve GHG 2012 final rule for MYs 2017 and manufacturers gaining credits as done under the GHG program, a direct adjustment is made to the reductions that are not reflected on beyond to reflect the fact that certain manufacturer’s fuel economy fleet performance current test procedures . . .’’ 858 In the flexibilities, including A/C efficiency value. subsequent 2017 and beyond improving technologies and off-cycle 854 Notably, however, manufacturers cannot claim rulemaking, off-cycle technology was no technology fuel consumption CAFE-related benefits for reducing A/C leakage or longer required to be new and improvement values (FCIVs), may be switching to an A/C refrigerant with a lower global warming potential, because while these innovative, but rather only required to improvements reduce GHGs consistent with the demonstrate improvements not reflected 851 77 FR 62651–2 (Oct. 15, 2012). purpose of the CAA, they generally do not relate to on test procedures. 852 At the time of this proposal, there is awareness fuel economy and thus are not relevant to the CAFE of some vehicle models that may qualify in future program. At that time (starting with MY 2017), years should manufacturers choose to claim these 855 The approach for recognizing potential A/C NHTSA considered off-cycle credits. For example, the 2019 Ram 1500 introduces efficiency gains is to utilize, in most cases, existing technologies and A/C efficiency a mild hybrid ‘‘eTorque’’ system (Sam Abuelsamid, vehicle technology/componentry but improve the improvements when assessing 2019 Ram 1500 Gets 48V Mild Hybrid On All Gas energy efficiency of the technology designs and Engines, Forbes (Jan. 15, 2019), https:// operation. For example, most of the additional air compliance with the CAFE program. www.forbes.com/sites/samabuelsamid/2018/01/15/ conditioning-related load on an engine is because Accounting for off-cycle technologies 2019-ram-1500-gets-standard-48v-mild-hybrid-on- of the compressor, which pumps the refrigerant and A/C efficiency improvements in the all-gas-engines/#2a0cc967e9e6); Ford is expected to around the system loop. The less the compressor CAFE program allowed manufacturers introduce a hybrid F–150 (Keith Naughton, How operates, the less load the compressor places on the to design vehicles with improved fuel Ford plans to market the gasoline-electric F–150, engine resulting in less fuel consumption and CO2 Automotive News (November 30, 2017), http:// emissions. Thus, optimizing compressor operation www.autonews.com/article/20171130/OEM05/ with cabin demand using more sophisticated 856 74 FR 49700 (Sept. 28, 2009). 171139990/ford-electric-f150-pickup-marketing; sensors, controls and control strategies, is one path 857 At that time, NHTSA stated ‘‘[m]odernizing and the Workhorse W–15 system includes both an to improving the efficiency of the A/C system. For the passenger car test procedures, or even providing electric battery pack and gasoline range extender further discussion of A/C efficiency technologies, similar credits, would not be possible under EPCA (Workhorse W–15 Pickup, http://workhorse.com/ see Section II.D of this NPRM and Chapter 6 of the as currently written.’’ 75 FR 25557 (May 7, 2010). pickup/ (last accessed April 13, 2018). accompanying PRIA. 858 75 FR 25341 (May 7, 2010).

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economy, even if the improvements and apply off-cycle and A/C • re-affirm that technologies meeting the would not show up on the 2-cycle adjustments. ‘‘There will be separate stated definitions are entitled to the off-cycle compliance test. In adding off-cycle and improvement values for each type of credit at the values stated in the regulation; A/C efficiency improvements to credit, calculated separately for cars and • re-acknowledge that technologies shown NHTSA’s program, the agency was able for trucks. These improvement values to generate more emissions reductions than to harmonize with EPA, which began are subtracted from the manufacturer’s the pre-approved amount are entitled to accounting for these features in earlier 2-cycle-based fleet fuel consumption additional credit; GHG regulations. value to yield a final new fleet fuel • confirm that technologies not in the null vehicle set but which are demonstrated to (a) Distinguishing ‘‘Credits’’ From Air consumption value, which would be inverted to determine a final fleet fuel provide emissions reductions benefits Conditioning Efficiency and Off-Cycle 862 constitute off-cycle credits; and Benefits CAFE value.’’ Alliance/Global say because of this • modify the off-cycle program to account It is important to note some important process, ‘‘technology credits earned in for unanticipated delays in the approval differences between consideration given the current model year must be process by providing that applications based to A/C efficiency improvement and off- immediately applied toward any deficits on the 5-cycle methodology are to be deemed cycle technologies, and other in the current model year. This approved if not acted upon by the agencies flexibilities in the CAFE program. approach forces manufacturers to use within a specified timeframe (for instance 90 NHTSA accounts for A/C efficiency and their credits in a sub-optimal way, and days), subject to any subsequent review of off-cycle improvements through EPA can result in stranded credits.’’ 863 As accuracy and good faith. test procedural changes that determine explained in this section, NHTSA does With respect to Alliance/Global’s fuel consumption improvement values. not issue credits to manufacturers for While regarded by some as ‘‘credits’’ request regarding off-cycle technologies improving A/C efficiency, nor does it that demonstrate emissions reductions either as shorthand, or because there are issue credits for implementing off-cycle greater than what is allowable from the many terms that overlap between technologies. EPA does adjust fuel menu, today’s preferred alternative NHTSA’s CAFE program and EPA’s economy compliance values on a retains this capability. As was the case GHG program, NHTSA’s CAFE program vehicle level for those vehicles that does not give manufacturers credits for implement A/C efficiency for model years 2017–2021, a implementing more efficient A/C improvements and off-cycle manufacturer is still eligible for a fuel systems, or introducing off-cycle technologies. consumption improvement value other 859 technologies. That is, there is no NHTSA therefore proposes to deny than the default value provided for in bankable, tradable or transferrable credit Alliance/Global’s request because what the menu, provided the manufacturer earned by a manufacturer for the petitioners 864 refer to as demonstrates the fuel economy implementing more efficient A/C ‘‘technology credits’’ are actually fuel improvement.865 This would include systems or installing an off-cycle economy adjustment values applied to the two-tiered process for demonstrating technology. In fact, the only credits the fuel economy measurement of the CO2 reductions and fuel economy provided for in NHTSA’s CAFE program individual vehicles. Thus, these improvement.866 are those earned by overcompliance adjustments are not actually ‘‘credits,’’ with a standard.860 What NHTSA does The Alliance/Global’s requests to per the definition of a ‘‘credit’’ in EPCA/ streamline aspects of the A/C efficiency for off-cycle technologies and A/C EISA and are not subject to the ‘‘carry efficiency improvements is adjust and off-cycle programs in response to forward’’ and ‘‘carry back’’ provisions in the issues outlined above have been individual vehicle compliance values 49 U.S.C. 32903. considered. Among other things, the based on the fuel consumption To alleviate confusion, and to ensure improvement values of these consistency in nomenclature, NHTSA is Alliance/Global requested the agencies technologies. As a result, a proposing to update language in its consider providing for a default manufacturer’s vehicle as a whole may regulations to reflect that the use of the acceptance of petitions for off-cycle exceed its fuel economy target, and be term ‘‘credits’’ to refer to A/C efficiency credits, provided that all required regarded as a credit-generating vehicle. and off-cycle technology adjustments— information has been provided, to Illustrative of this confusion, in the should actually be termed fuel accelerate the processing of off-cycle 2016 Alliance/Global petition, the consumption improvement values credit requests. While it is agreed that Petitioners asked NHTSA to avoid (FCIVs). any continuation of the A/C efficiency imposing unnecessary restrictions on and off-cycle program should the use of credits. Alliance/Global (b) Petition Requests on A/C Efficiency incorporate programmatic referenced language from an EPA report and Off-Cycle Program Administration that stated compliance is assessed by improvements, there are significant As discussed above, NHTSA and EPA concerns with the concept of default measuring the tailpipe emissions of a jointly administer the off-cycle program. manufacturer’s vehicles, and then accepting petition requests that do not The 2016 Alliance/Global petition address program issues like uncertainty reducing vehicle compliance values requested that NHTSA and EPA make depending on A/C efficiency in quantifying program benefits, or various adjustments to the off-cycle improvements and off-cycle general program administration. program; specifically, the petitioners technologies.861 This language is Comment is requested comment on requested that the agencies should: consistent with NHTSA’s statement in these issues. the 2017 and later final rule, in which 862 77 FR 62726 (Oct. 15, 2012). Additionally, for a discussion of the explained how the agencies coordinate 863 Id. at 16. consideration of inclusion of the off- 864 The agencies also refer to A/C and off cycle cycle program in future CAFE and GHG 859 This is not to be confused with EPA’s parallel technology adjustment values as ‘‘credits’’ standards, see Section X.D. program, which refers to the GHG’s consideration sporadically throughout their regulations. The of A/C improvements and off-cycle technologies as agencies propose to amend their respective ‘‘credits.’’ regulatory texts to reflect these are adjustments and 860 49 U.S.C. 32903. not actual credits that can be carried forward or 865 77 FR 62837 (Oct. 15, 2012). 861 See Alliance/Global petition at 15. back. For a further discussion, see above. 866 40 CFR 86.1869–12.

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(c) Petition Requests on Including Air- This included deciding whether to cycle adjustments for model years 2010 Conditioning Efficiency Improvements apply traditional tailpipe technologies, through 2016. in the CAFE Calculations for MYs 2010– or A/C efficiency improvements, or Of the two agencies, EPA was the first 2016 both. Granting A/C efficiency to establish an off-cycle technology For model years 2012 through 2016, adjustments to manufacturers program. For model years 2012 through NHTSA was unable 867 to consider retroactively could result in arbitrarily 2016, EPA allowed manufacturers to improvements manufacturers made to varying levels of adjustments granted to request off-cycle credits for ‘‘new and passenger car A/C efficiency in manufacturers, similar to the Alliance/ innovative technologies that achieve 868 Global request regarding retroactive off- GHG reductions that are not reflected on calculating CAFE compliance. 874 However, EPA did consider passenger cycle adjustments. Thus, it is tentatively current test procedures. . .’’ In the car improvements to A/C efficiency for believed the existing A/C efficiency subsequent 2017 and beyond this timeframe. To allow manufacturers improvement structure for model years rulemaking, NHTSA joined EPA and to build one fleet that complied with 2010 through 2016 should remain included an off-cycle program for CAFE both EPA and NHTSA standards, unchanged. compliance. The Alliance/Global petition cites a NHTSA adjusted its standards to (d) Petition Requests on Including Off- statement in the 2012–2016 final rule as account for the differences borne out of Cycle Improvements in the CAFE affirmation that NHTSA took off-cycle A/C efficiency improvements. Calculations for MYs 2010–2016 adjustments into account in formulating Specifically, the agencies converted the 2012–2016 stringencies, and EPA’s g/mi standards to NHTSA mpg As described above, NHTSA first therefore should allow manufacturers (CAFE) standards. Then, EPA then allowed manufacturers to generate off- earn off-cycle benefits in model years estimated the average amount of cycle technology fuel consumption that have already passed. In particular, improvement manufacturers were improvement values equivalent to CO 2 Alliance/Global point to a general expected to earn via improved A/C off-cycle credits in MY 2017.871 In statement where NHTSA, while efficiency. From there, NHTSA took finalizing the rule covering MYs 2017 discussing consideration of the effect of EPA’s converted mpg standard and and beyond, NHTSA declined to other motor vehicle standards of the subtracted the average improvement retroactively extend its off-cycle Government on fuel economy, stated attributable to improvement in A/C program to apply to model years 2012 that that rulemaking resulted in efficiency. NHTSA set its standard at 872 through 2016, explaining ‘‘NHTSA consistent standards across the this level to allow manufacturers to did not take [off-cycle credits] into program.875 The Alliance/Global comply with both standards with account when adopting the CAFE petition appears to take this statement similar levels of technology.869 standards for those model years. As as a blanket assertion that NHTSA’s In the Alliance/Global petition for such, extending the credit program to rulemaking, the Petitioners requested consideration of all ‘‘relevant the CAFE program for those model years technologies’’ included off-cycle that NHTSA and EPA revisit the average would not be appropriate.’’ 873 efficiency benefit calculated by EPA technologies. To the contrary, as quoted The Alliance/Global petition for applicable to model years 2012 through above, NHTSA explicitly stated it had rulemaking asked NHTSA to reconsider 2016. The Alliance/Global argued that not considered these off-cycle calculating fuel economy for model 876 A/C efficiency improvements were not technologies. The fact that NHTSA had not taken properly acknowledged in the CAFE years 2010 through 2016 to include off- off-cycle adjustments into consideration program, and that manufacturers that cycle adjustments allowed under EPA’s in setting its 2012–2016 standards exceeded the A/C efficiency program during that period. The makes granting this request improvements estimated by the Petitioners argued that NHTSA inappropriate. Doing so would result in agencies. The Petitioners request that incorrectly stated the agency had taken a question as to whether the 2012–2016 EPA amend its regulations such that off-cycle adjustments into consideration standards were maximum feasible under manufacturers would be entitled to when setting standards for model years 49 U.S.C. 32902(b)(2)(B). If NHTSA had additional A/C efficiency improvement 2017 through 2025, but not for model not considered industry’s ability to earn benefits retroactively. years 2010–2016. The Alliance/Global NHTSA has tentatively decided to also argued that because neither NHTSA off-cycle adjustments—an incentive that retain the structure of the existing A/C nor EPA considered off-cycle allows manufacturers to utilize efficiency program, and not extend it to adjustments in formulating the technologies other than those that were being modeled as part of NHTSA’s model years 2010 through 2016. stringency of the 2012–2016 standards, analysis—the agency could have Likewise, EPA has tentatively decided NHTSA should retroactively grant concluded more stringent standards not to modify its regulations to change manufacturers off-cycle adjustments for were maximum feasible. Additionally, the way A/C efficiency improvements those model years as EPA did. Doing so, granting off-cycle adjustments to are accounted for. It is believed this is they say, would maintain consistency manufacturers retroactively raises appropriate as manufacturers decided between the agencies’ programs. questions of equity. NHTSA issued its what fuel economy-improving Pursuant to the Alliance/Global 2012–2016 standards without an off- technologies to apply to vehicles based request, NHTSA has reconsidered the cycle program, and manufacturers had on the standards as finalized in 2010.870 idea of granting retroactive credits for model years 2010 through 2016. For the 874 75 FR 25341, 25344 (May 7, 2010). EPA had 867 At that time, NHTSA stated ‘‘[m]odernizing reasons that follow, NHTSA has also provided an option for manufacturers to claim the passenger car test procedures, or even providing tentatively decided that manufacturers ‘‘early’’ off-cycle credits in the 2009–2011 time similar credits, would not be possible under EPCA should not be granted retroactive off- frame. as currently written.’’ 75 FR 25557 (May 7, 2010). 875 Id. 868 74 FR 49700 (Sept. 28, 2009). 876 Likewise, EPA stated it had not considered off- 871 869 Id. 77 FR 62840 (Oct. 15, 2012). cycle technologies in finalizing the 2012–2016 rule. 870 In the MY 2017 and beyond rulemaking, 872 See id.; EPA decided to extend provisions ‘‘Because these technologies are not nearly so well NHTSA reaffirmed its position it would not extend from its MY 2017 and beyond off-cycle program to developed and understood, EPA is not prepared to A/C efficiency improvement benefits to earlier the 2012–2016 model years. consider them in assessing the stringency of the 873 model years. 77 FR 62720 (Oct. 15, 2012). Id. CO2 standards.’’ Id. at 25438.

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no reason to suspect that NHTSA would (d) Light-Duty CAFE Compliance Data Figure X–2 through Figure X–5 allow the use off-cycle technologies to for MYs 2011–2018 provide a graphical overview of fuel meet fuel economy standards. This proposal examines how economy performance and standards for Therefore, manufacturers made fuel manufacturers could respond to model years 2011 to 2018. There are economy compliance decisions with the potential future CAFE and CO2 separate graphs for the total overall expectation that they would have to standards. For the reader’s reference, industry fleet and each of the three meet fuel economy standards using on- this section provides a brief overview of compliance categories, domestic and cycle technologies. Generating off-cycle how manufacturers have responded to import passenger cars and light trucks. adjustments retroactively would the progressively increasing CAFE Fuel economy performance is compared arbitrarily reward (and potentially standards for MYs 2011–2018. NHTSA against the overall industry fuel disadvantage other) manufacturers for uses data from CAFE reports submitted economy standards for each model year. compliance decisions they made by manufacturers to EPA or directly to Fuel economy performance values without the knowledge such NHTSA to evaluate compliance with the include any increases from dual-fueled technologies would be eligible for CAFE program. The data for model vehicles and for vehicles equipped with NHTSA’s off-cycle program. Thus, years 2011 through 2016 include fuel consumption improving NHTSA has tentatively decided to deny manufacturers’ final compliance data technologies.879 880 Compliance reflects Alliance/Global’s request for retroactive that has been verified by EPA.878 The the actual fuel economy performance of off-cycle adjustments. data for model years 2017 and 2018 the fleet, and does not include the include the most recent estimated It is worth noting that in the model application of prior model year or future projections from manufacturers’ pre- model year credits for overcompliance. years 2017 and later rulemaking, and mid-model year (PMY and MMY) NHTSA and EPA did include off-cycle reports required by 49 CFR part 537. technologies in establishing the Because the PMY and MMY data do not 879 Congress established the Alternative Motor stringency of the standards. As reflect final vehicle production levels, Fuels Act (AMFA) which allows manufacturers to Alliance/Global note, NHTSA and EPA increase their fleet fuel economy performance the final CAFE values may be different values by producing dual fueled vehicles. limited their consideration to start-stop than the manufacturers’ PMY and MMY Incentives are allowed for building advanced and active aerodynamic features, estimates. Model year 2011 was selected technology vehicles such as hybrids and electric because of limited technical information as the start of the data because it vehicles, compressed natural gas vehicles and on these technologies. At that time, the building vehicles able to run on dual fuels such as represents the first compliance model E85 and gasoline. For model years 1993 through agencies stated they ‘‘have virtually no year where manufacturers are permitted 2014, the maximum increase in CAFE performance data on the cost, development time to trade and transfer credits. The for a manufacturer attributable to dual fueled necessary, manufacturability, etc [sic] of overview of the data for model years vehicles is 1.2 miles per gallon for each model year and thereafter decreases by 0.2 miles per gallon these technologies. The agencies thus 2011 to 2018 is important because it each model year until ending in 2019 (see 49 U.S.C. cannot project that some of these gives the public an understanding of 32906). technologies are feasible within the current compliance trends and the 880 Under EPA’s authoirity, NHTSA established 2017–2025 timeframe.’’ 877 potential impacts that these years may provisions starting in model year 2017 allowing have on the future model years manufacturers to increase fuel economy performance using the fuel consumption benefits addressed by this rulemaking. gained by technolongies not accounted for during 877 Draft Joint Technical Support Document: normal 2-cycle EPA compliance testing (i.e, called Rulemaking for 2017–2025 Light-Duty Vehicle 878 Volkswagen’s model year 2016 final EPA off-cycle technologies for technologies such as stop- Greenhouse Gas Emission Standards and Corporate verified compliance data is excluded due to start systems) as well as for AC systems with Average Fuel Economy Standards (November 2011). ongoing enforcement activites by EPA and NHTSA improved efficiencies and for hybrid or electric full P. 5–57. for Volkswagen diesel vehicles. size pickup trucks.

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Figure X-2 Total Fleet Compliance Overview for MYs 2011 to 2018

Figure X-3 Domestic Passenger Car Compliance Overview for MYs 2011 to 2018

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Figure X-4- Import Passenger Car Compliance Overview for MYs 2011 to 2018

Figure X-5- Light Truck Compliance Overview for MYs 2011 to 2018

As shown in the figures, MYs 2011 to 2015. Comparatively, of CAFE standards for the overall fleet manufacturers fuel economy domestic and import passenger cars and for light trucks and for import performance for the total fleet (the exceeded standards on average by 2.1 passenger cars fleets individually. For combination of all vehicles produced for mpg and 2.3 mpg, respectively. On MYs 2016–2018, the total fleet has an sale during the model year) and for each aveage, light truck manufacturers fell average shortfall of 0.5 mpg. The largest compliance fleet are better than CAFE short of standards by 0.3 mpg on individual shortfalls are 1.4 mpg for the standards through MY 2015. On average over MYs 2011–2015. light truck fleet in MY 2016 and 2.8 mpg average, the total fleet exceeds CAFE For MYs 2016–2018 the overall for the import passenger car fleet in MY standards by approximately 0.9 mpg for industry is or is estimated to fall short 2018. Domestic passenger car fleets are

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expected to continue to exceed CAFE complete. Historically, manufacturers Trading credits from another standards. NHTSA expects that on an have generally resolved credit shortfalls manufacturer and transferring them overall industry basis, manufacturers first by carrying forward any earned across fleets occurs far more frequently. will apply carry forward and traded credits and then applying traded credits. Also, credit trading has taken the place CAFE credits to cover the MY 2016– In model years 2014 and 2015, the of civil penalty payments for resolving 2018 noncompliances. amount of credit shortfalls are almost compliance shortfalls. Only a handful of Figure X–6 provides a historical the same as the amount of carryforward manufacturers have had to make civil overview of the industry’s use of CAFE and traded credits. Manufacturers penalty payments since the compliance flexibilities for addressing occastionally carryback credits or opt to implementation of the credit trading shortfalls. MY 2015 is the latest model transfer earned credits between their program.881 year for which CAFE compliance is fleets to resolve compliance shortfalls.

2. Medium- and Heavy-Duty Technical 2. The CO2 to gasoline conversion provisions and potentially add new Amendments factor. In 49 CFR 535.6(a)(4)(ii) and flexibility opportunities to broaden the (d)(5)(ii), NHTSA provides the pathways manufacturers would have to In today’s rule, NHTSA is proposing methodology and equations for meet standards. Such an approach to make minor technical revisions to converting the CO2 FELs/FCLs for would support the increased application correct typographical mistakes and heavy-duty pickups vans (gram per of technologies that the automotive improper references adopted in the mile) and for engines (grams per hp-hr) industry is developing and deploying agency’s 2016 Phase 2 medium- and to their gallon-of-gasoline equivalence. that could potentially lead to further heavy-duty fuel efficiency In each equation, NHTSA is proposing long-term emissions reductions and rulemaking.882 The proposed changes to change the conversion factor to 8,887 allow manufacturers to comply with are as follows: grams per gallon of gasoline fuel instead standards while reducing costs. 1. NHTSA heavy-duty vehicles and of a factor of 8,877 as currently existing. One category of flexibilities such as engine fuel consumption credit 3. Curb weight definition. In 40 CFR off-cycle credits and credit banking equations. In each credit equation in 49 523.2, the reference in the definition for involve credits that are based on real CFR 535.7, the minus-sign in each curb weight is incorrect. NHTSA is world emissions reductions and do not multiplication factor was omitted in the proposing to correct the definition to represent a loss of overall emissions final version of the rule sent to the incorporate the EPA reference in 40 CFR benefits or a reduction in program Federal Register. For example, the 86.1803 instead of 49 CFR 571.3. stringency, yet offer manufacturers with credit equation in Part 535.7(b)(1) C. EPA Compliance and Enforcement potentially lower-cost or more efficient should be specified as, Total MY Fleet paths to compliance. Another category FCC (gallons) = (Std¥Act) × (Volume) × EPA is requesting comment on a of flexibilities described below as (UL) × (10¥2) instead of (102) as variety of ‘‘enhanced flexibilities’’ incentives, such as incentives for currently existing. NHTSA is proposing whereby EPA would make adjustments advanced technologies, hybrid to correct these omissions. to current incentives and credits technologies, and alternative fuels, do

881 Only five manufacturers have paid CAFE civil largest amount of civil penalties, followed by Volvo. one.nhtsa.gov/cafe_pic/CAFE_PIC_Fines_ penalties since credit trading began in 2011. See Summary of CAFE Civil Penalties Collected, LIVE.html. Predominately, Jaguar Land Rover has paid the CAFE Public Information Center, https:// 882 81 FR 73478 (Oct. 25, 2016).

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result in a loss of emissions benefit and Advanced Technology Incentives: The 2017–2021. To be eligible a represent a reduction in the effective current EPA GHG program provides manufacturer would have to show that stringency of the standards to the extent incentives for electric vehicles, fuel cell the mild hybrid technology is utilized in the incentives are used by vehicles, plug-in hybrid vehicles, and a specified portion of its truck fleet manufacturers. These incentives would natural gas vehicles. Currently, beginning with at least 20% of a help manufacturers meet a numerically manufacturers are able to use a 0 g/mile company’s full-size pickup production more stringent standard but would not emissions factor for all electric powered in MY 2017 and ramping up to at least reduce real-world CO2 emissions vehicles rather than having to account 80% in MY 2021. compared to a lower stringency option for the GHG emissions associated with EPA received input from automakers with fewer such incentives in the short upstream electricity generation up to a that these incentives should be term. A policy rationale for providing per-manufacturer cumulative extended and available to all light-duty such incentives, as EPA articulated in production cap for MYs 2022–2025. The trucks (e.g., cross-over vehicles, the 2012 rulemakings,883 is that such program also includes multiplier minivans, sport utility vehicles, smaller- provisions could incentivize advanced incentives that allow manufacturers to sized pick-ups) and not only full size technologies with the potential to lead count advanced technology vehicles as pick-up trucks. Automakers also to greater GHG emissions reductions in more than one vehicle in the recommended that the program’s the longer-term, where such compliance calculations. The current production thresholds should be technologies today are limited by higher multipliers begin with MY 2017 and removed because they discourage the costs, market barriers, infrastructure, end after MY 2021.887 Stakeholders application of technology since and consumer awareness. Such have suggested that these incentives manufacturers cannot be confident of incentive approaches would also result should be expanded to further support achieving the sales thresholds. Some in rewarding automakers who invest in the production of advanced stakeholders have also suggested an certain technological pathways, rather technologies by allowing manufacturers additional credit for strong and mild than being technology neutral. to continue to use the 0 g/mile hybrid passenger cars. EPA seeks Automakers and other stakeholders emissions factor for electric powered comment on whether these incentives have expressed support for this type of vehicles rather than having to account should be expanded along the lines approach. For example, Ford recently for upstream electricity generation suggested by stakeholders. For example, stated ‘‘[w]e support increasing clean emissions and by extending and Global Automakers recommends a 20 g/ car standards through 2025 and are not potentially increasing the multiplier mile credit for strong hybrid light trucks asking for a rollback. We want one set incentives. EPA is considering a range and a 10 g/mile credit for strong hybrid of standards nationally, along with of incentives to further encourage passenger cars. These incentives could additional flexibility to help us provide advanced technology vehicles. lead to additional product offerings of more affordable options for our Examples of possible incentives and an strong hybrids, and technologies that customers.’’ 884 Honda also recently estimate of their impact on the offer similar emissions reductions, stated their support for an approach that stringency of the standards is provided which could enable manufacturers to would retain the existing standards below. Global Automakers recently achieve additional long-term GHG while extending the advanced recommended a multiplier of 3.5 for emissions reductions. technology multipliers for electrified EVs and fuel cell vehicles which falls Off-cycle Emission Credits: Starting vehicles, eliminate automakers’ within the range of the examples with MY 2008, EPA started employing 888 responsibility for the impact of provided below. EPA requests a ‘‘five-cycle’’ test methodology to upstream emissions from the electric comments on extending or increasing measure fuel economy for the fuel grid, and accommodate more off-cycle advanced technology incentives economy label.889 However, for GHG technologies.885 including the use of 0 g/mile emissions and CAFE compliance, EPA continues EPA has received input from factor for electric powered vehicles and to use the established ‘‘two-cycle’’ (city automakers and other stakeholders, multiplier incentives, including and highway test cycles, also known as including suppliers and alternative fuels multipliers in the range of 2–4.5. the FTP and HFET) test methodology. Hybrid Incentives: The current industries, supporting a variety of As learned through development of the 886 program includes incentives for program flexibilities. EPA requests ‘‘five-cycle’’ methodology and prior automakers to use strong and mild comments on the following and other rulemakings, there are technologies that hybrids (or technologies that provide flexibility concepts, including the scope provide real-world GHG emissions and similar emissions benefits) in full size of the flexibilities and the range of fuel consumption improvements, but pick-up truck vehicles, provided the model years over which such provisions those improvements are not fully manufacturer meets specified would be appropriate. reflected on the ‘‘two-cycle’’ test. EPA production thresholds. Currently, the The concepts include but are not established the off-cycle credit program strong hybrid per vehicle credit is 20 g/ limited to: to provide an incentive for technologies mile, available through MY 2025, and that achieve CO2 reductions but 883 the technology must be used on at least See 77 FR 62810–62826, October 15, 2012. normally would not be chosen as a GHG 884 ‘‘A Measure of Progress’’ By Bill Ford, 10% of a company’s full-size pickups to control strategy, as their GHG benefits Executive Chairman, Ford Motor Company, and Jim receive the credit for the model year. are not measured on the specified 2- Hackett, President and CEO, Ford Motor Company, The program also includes a credit for March 27, 2018, https://medium.com/ cycle test. Automakers as well as auto mild hybrids of 10 g/mi during MYs cityoftomorrow/a-measure-of-progress- suppliers have recommended several bc34ad2b0ed. 885 887 changes to the current off-cycle credits Honda Release ‘‘Our Perspective—Vehicle The current multipliers are for EV/FCVs: 890 Greenhouse Gas and Fuel Economy Standards,’’ 2017–2019—2.0, 2020—1.75, 2021—1.5; for PHEVs program to help it achieve that goal. April 20, 2018, http://news.honda.com/ and dedicated and dual fuel CNG vehicles: 2017– newsandviews/pov.aspx?id=10275-en. 2019—1.6, 2020—1.45, 2021—1.3. 889 https://www.epa.gov/vehicle-and-fuel- 886 Memorandum to docket EPA–HQ–OAR–2018– 888 Memorandum to docket EPA–HQ–OAR–2018– emissions-testing/dynamometer-drive-schedules. 0283 regarding meetings with the Alliance of 0283 regarding meetings with the Alliance of 890 ‘‘Petition for Direct Final Rule with Regard to Automobile Manufacturers on April 16, 2018 and Automobile Manufacturers on April 16, 2018 and Various Aspects of the Corporate Average Fuel Global Automakers on April 17, 2018. Global Automakers on April 17, 2018. Continued

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Automakers and suppliers have an application to EPA that must go As noted above, EPA has received data suggested changes including: through a public review and comment from multiple manufacturers on high • Streamlining the program in ways process even if the manufacturer uses a efficiency alternators and advanced air that would give auto manufacturers methodology previously approved by conditioning compressors that could more certainty and make it easier for EPA. For example, under the current serve as the basis for new menu credits manufacturers to earn credits; program, multiple manufacturers have for these technologies.894 EPA requests • Expanding the current pre-defined submitted applications for high comments on adding these technologies off-cycle credit menu to include efficiency alternators and advanced air to the menu including comments on additional technologies and increasing conditioning compressors using similar credit level and appropriate credit levels where appropriate; methodologies and producing similar definitions.895 EPA also requests • Eliminating or increasing the credit levels of credits. comments on other off-cycle cap on the pre-defined list of off-cycle EPA requests comment on revising technologies that EPA could consider technologies and revising the thermal the regulations to allow all auto adding to the menu including technology credit cap; and manufacturers to make use of a supporting data that could serve as the • A role for suppliers to seek methodology once it has been approved basis for the credit. approval of their technologies. by EPA without the subsequent In 2014, EPA approved additional Under EPA’s existing regulations, applications from other manufacturers credits for Mercedes-Benz 896 stop-start there are three pathways by which a undergoing the public review process. system through the off-cycle credit manufacturer may accrue off-cycle This would reduce redundancy present process based on data submitted by technology credits. The first is a in the current program. Manufacturers Mercedes on fleet idle time and its predetermined list or ‘‘menu’’ of credit would need to provide EPA with at least system’s real-world effectiveness (i.e., values for specific off-cycle technologies the same level of data and detail for the how much of the time the system turns that may be used beginning for MY technology and methodology as the firm off the engine when the vehicle is 2014.891 This pathway allows that went through the public comment stopped). Multiple auto manufacturers manufacturers to use conservative credit process. have requested that EPA revise the table values established by EPA for a wide EPA also requests comment on menu value for stop-start technology range of off-cycle technologies, with revising the regulations to allow EPA to, based solely on one input value EPA minimal data submittal or testing in effect, add technologies to the pre- considered, idle time, in the context of requirements. In cases where additional approved credit menu without going the Mercedes stop-start system, but no laboratory testing can demonstrate through a subsequent rulemaking. For firms have provided additional data on emission benefits, a second pathway example, if one or more manufacturers any of the other factors which go into submit applications with sufficient allows manufacturers to use 5-cycle the consideration of a conservative supporting data for the same or similar testing to demonstrate and justify off- value for stop-start systems. Systems technology, the data from that cycle CO credits.892 The additional vary significantly in hardware, design, 2 application(s) could potentially be used emission tests allow emission benefits and calibration, leading to wide by EPA as the basis for adding to be demonstrated over some elements variations in how much of the idle time technologies to the menu. EPA is of real-world driving not captured by the engine is actually turned off. EPA requesting comment on revising the the GHG compliance tests, including has learned that some stop-start systems regulations to allow EPA to establish high speeds, rapid accelerations, and may be less effective in the real world through a decision document a credit than the agency estimated in its 2012 cold temperatures. Under this pathway, value, or scalable value as appropriate, rulemaking analysis, for example, due to manufacturers submit test data to EPA, and technology definitions or other systems having a disable switch and EPA decides whether to approve criteria to be used for determining available to the driver, or stop-start the off-cycle credits without soliciting whether a technology qualifies for the systems be disabled under certain public comment on the data. The third new menu credit. This streamlined temperature conditions or auxiliary and last pathway allows manufacturers process of adding a technology to the loads, which would offset the benefits of to seek EPA approval, through a notice menu would involve an opportunity for the higher idle time estimates. EPA and comment process, to use an public review but not a formal requests additional data from the OEMs, alternative methodology other than the rulemaking to revise the regulations, suppliers, and other stakeholders menu of 5-cycle methodology for allowing EPA to add technologies to the regarding a comprehensive update to determining the off-cycle technology menu in a timely manner, where EPA 893 the stop-start off-cycle credit table CO2 credits. believes that sufficient data exists to value. EPA requests comments on changes to estimate an appropriate credit level for The menu currently includes a the off-cycle process that would that technology across the fleet. In this fleetwide cap on credits of 10 g/mile 897 streamline the program. Currently, process, EPA could issue a decision to address the uncertainty surrounding under the third pathway, manufacturers document, after considering public the data and analysis used as the basis submit an application that includes comments, making the new menu of the menu credits. Some stakeholders their methodology to be used to credits available to all manufacturers have expressed concern that the current determine the off-cycle credit value and (effectively adding the technology to the data that then undergoes a public menu without changing the regulations 894 https://www.epa.gov/vehicle-and-engine- review and comment process prior to an each time). By adding technologies to certification/compliance-information-light-duty- EPA decision regarding the application. the menu, EPA would eliminate the greenhouse-gas-ghg-standards Each manufacturer separately submits 895 See EPA Memorandum to Docket EPA–HQ– need for manufacturers to subsequently OAR–2018–0283 ‘‘Potential Off-cycle Menu Credit submit individual applications for the Levels and Definitions for High Efficiency Economy Program and the Greenhouse Gas technologies after the first application Alternators and Advanced Air Conditioning Program,’’ Auto Alliance and Global Automakers, was approved. Compressors.’’ June 20, 2016. 896 ‘‘EPA Decision Document: Mercedes-Benz Off- 891 See 40 CFR 86.1869–12(b). In addition, EPA requests comments cycle Credits for MY 2012–2016,’’ EPA–420–R–14– 892 See 40 CFR 86.1869–12(c). on modifying the menu through this 025, September 2014. 893 See 40 CFR 86.1869–12(d). current rulemaking to add technologies. 897 40 CFR 86.1869–12(b)(2).

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cap may constrain manufacturers ability efficiency technologies and the thermal review and comment prior to an EPA in the future to fully utilize the menu control technologies directly interact decision. However, once approved, the especially if the menu is expanded to with each other because improved subsequent auto manufacturer include additional technologies, as thermal control results in reduced air applications requesting credits based on described above. For example, Global conditioning loads of the more efficient the supplier methodology would not be Automakers suggested that the cap be air conditioning technologies. Because subject to public review. EPA also raised from 10 g/mi to 15 g/mi. EPA of this interaction, an approach that requests comments on a concept where requests comments on increasing the would remove the thermal control credit supplier (with at least one auto current cap, for example from the program from the off-cycle credit manufacturer partner) demonstrated current 10 g/mile to 15 g/mile to program and combine them with the AC credits would be available provisionally accommodate increased use of the efficiency program would seem for a limited period of time, allowing menu. EPA also requests comment on a appropriate to quantify the combined manufacturers to implement the concept that would replace the current impact. Additionally, a cap that reflects technology and collect data on their menu cap with an individual this combination of these two related vehicles in order to support a manufacturer cap that scales with the programs may also be appropriate. For continuation of credits for the manufacturer’s average fleetwide target example, if combined, the credit cap for technology in the longer term. Also, the levels. The cap would be based on a thermal controls and air conditioning provisional credits could be included percentage of the manufacturer’s efficiency could be the combined value under the menu credit cap since they fleetwide 2-cycle emissions of the current individual program caps would be based on a general analysis of performance, for example at 5–10% of of 8.0 grams/mile for cars and 11.5 the technology rather than CO2 a manufacturer’s emissions fleet grams/mile for trucks. This combined manufacturer-specific data. EPA wide target. With a cap of five for a A/C efficiency and thermal controls cap requests comments on all aspects of this manufacturer with a 2-cycle fleetwide would also apply to any additional approach. Incentives for Connected or average CO2 level of 200 g/mile, for thermal control or air conditioning example, the cap would be 10 g/mile. efficiency technology credit generated Autonomous Vehicles: Connected and EPA believes this may be a reasonable through other off-cycle credit pathways. autonomous vehicles have the potential and more technically correct approach Also, by removing the thermal credits to significantly impact vehicle for the caps, recognizing that in many from the off-cycle menu, they would no emissions in the future, with their cases the emissions benefits of off-cycle longer be counted against the menu cap aggregate impact being either positive or negative, depending on a large number technologies correlate with the CO2 discussed above, representing a way to levels of the vehicles, providing more or provide more room under the menu cap of vehicle-specific and system-wide less emissions reductions depending on for other off-cycle technologies. factors. Currently, connected or autonomous vehicles would be eligible the CO2 levels of the vehicles in the Comment is sought on this approach fleet. For example, applying stop-start to and the appropriateness of the described for credits under the off-cycle program if a manufacturer provides data vehicles with higher vehicle idle CO2 per vehicle cap limits above. levels provide more emissions sufficient to demonstrate the real-world As mentioned above, EPA has heard emissions benefits of such technology. reductions than when applied to from many suppliers and their trade vehicles with lower idle emissions. This However, demonstrating the associations an interest in allowing incremental real-world benefits of these approach also would help account for suppliers to have a role in seeking off- emerging technologies will be the uncertainty associated with the cycle credits for their technologies. EPA challenging. Stakeholders have menu credits and help ensure that off- requests comment on providing a suggested that EPA should consider an cycle menu credits do not become an pathway for suppliers, along with at incentive for these technologies without overwhelming portion of the least one auto OEM partner, to submit requiring individual manufacturers to manufacturers overall emissions off-cycle applications for EPA approval. demonstrate real world emissions reduction strategy. Auto manufacturers would remain benefits of the technologies. EPA The current GHG rule contains a CO2 entirely responsible for the full useful believes that any near-term incentive credit program for improvements to the life emissions performance of the off- program should include some efficiency of the air conditioning system cycle technology as is currently the demonstration that the technologies will on light-duty vehicles (see § 86.1868– case, including, for example, existing be both truly new and have some 12). The total of A/C efficiency credits responsibilities for defect reporting and connection to overall environmental is calculated by summing the individual the prohibition on defeat devices. Under benefits. EPA requests comment on such credit values for each efficiency such an approach, an application incentives as a way to facilitate improving technology used on a vehicle submitted by a supplier and vehicle increased use of these technologies, as specified in the air conditioning manufacturer would establish a credit including some level of assurance that credit menu. The total credit sum for and/or methodology for demonstrating they will lead to future additional each vehicle is capped at 5.0 grams/mile credits that all auto manufacturers could emissions reductions. for cars and 7.2 grams/mile for trucks. then use in their subsequent Among the possible approaches, the Additionally, the off-cycle credit applications. This process could include most basic credits could be awarded to program (see § 86.1869–12) contains full-vehicle simulation modeling that is manufacturers that produce vehicles credit earning opportunities for compatible with EPA’s ALPHA with connected or automated technologies that reduce the thermal simulation tool. EPA requests comment technologies. For connected vehicles, a loads on the vehicle from environmental on requiring that the supplier be set amount of credit could be provided conditions (solar loads, parked interior partnered in a substantive way with one for each vehicle capable of Vehicle-to- ambient air temperature). These menu- or more auto manufacturers to ensure Vehicle (V2V) or Vehicle-to- based thermal control credits have that there is a practical interest in the Infrastructure (V2I) communications. separate cap limits under the off-cycle technology prior to investing resources One possible example is to provide a set program of 3.0 grams/mile for cars and in the approval process. The supplier amount of credit, using the off-cycle 4.3 grams/mile for trucks. The AC application would be subject to public menu, for any vehicle that can

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communicate basic safety messages (as that total vehicle miles travelled would industry supporting high octane blends outlined in SAE J2735) to other be higher and, therefore, generate more as a way to enable GHG reducing vehicles. The credits provided would be emission reduction benefits, under the technologies such as higher an incentive to enable future former case. Credits could be based off compression ratio engines. Stakeholders transportation system efficiencies, as of the CO2 emissions reduction of the suggested that mid-level (e.g., E30) high these technologies on an individual autonomous fleet, taking into account octane ethanol blends should be vehicle are unlikely to impact emissions the higher VMT of the shared-use fleet, considered and that EPA should in any meaningful way. However, if relative to the average. consider requiring that mid-level blends these technologies are dispersed widely As suggested by this partial list of be made available at service stations. across the fleet they could, under some examples, a variety of approaches Higher octane gasoline could provide circumstances, lead to future emission would be possible to incentivize the use manufacturers with more flexibility to reductions, and an incentive available to of these technologies. EPA seeks meet more stringent standards by manufacturers now could help facilitate comment on these and related enabling opportunities for use of lower approaches to incentivize autonomous that transformation. CO emitting technologies (e.g., higher and connected vehicle technologies 2 The rationale for providing credits for compression ratio engines, improved where they would have the most vehicle automation is similar to that for turbocharging, optimized engine beneficial effect on future emissions. connected vehicles. EPA could provide combustion). EPA requests comment on a set credit for vehicles that achieve Credit Carry-forward: Currently, CO2 credits may be carried forward, or if and how EPA could support the some specific threshold of automation, production and use of higher octane perhaps based on the industry standard banked, for five years, with the exception that MY 2010–2015 credits gasoline consistent with Title II of the SAE definitions (SAE J3016). Individual Clean Air Act. autonomous vehicles might achieve may be carried forward and used some emissions reductions, but the through MY 2021. Automakers have To illustrate how additional impact may increase as larger numbers suggested a variety of ways in which flexibilities would translate to a of autonomous vehicles are on the road GHG credit life could be extended under reduction in the stringency of the and can coordinate and provide system the Clean Air Act, including the ability standards, EPA analyzed several 898 efficiencies. Providing credits for for automakers to carry-forward MY examples as described below. The 2010 and later banked credits out to MY autonomous vehicles, again through a example flexibilities EPA selected for 2025, extending the life of credits set credit, would provide manufacturers this analysis are (1) removing the beyond five years, or even unlimited a clear incentive to bring these requirement to account for upstream credit life where credits would not technologies to market. It would be emissions associated with electricity use expire. EPA believes longer credit life important for any such program to (i.e., extending the 0 g/mile emissions would provide manufacturers with incentivize only those approaches that factor), (2) a range of higher multipliers additional flexibility to further integrate could reasonably be expected to provide for electric vehicles, and (3) additional banked credits into their product plans, additional contributions to overall credits for hybrids sold in the light- potentially reducing costs. EPA requests emission reductions, taking system truck fleet. EPA estimated what each comments on extending credit carry- additional flexibility could contribute to effects into account. As above, EPA forward beyond the current five years, believes that any near-term incentive estimate an equivalent percent per year including unlimited credit life. CO standard reduction it would program should include some Natural Gas Vehicle Credits: Vehicles 2 represent on a fleetwide basis. The demonstration that the technologies are that are able to run on compressed examples and results are provided in truly new and have some connection to natural gas (CNG) currently are eligible the table below for several example environmental benefits overall. for an advanced technology multiplier technology sales penetration values A number of stakeholders have also credit for MYs 2017–2021. Dual-fueled (three and six percent for battery electric requested that EPA consider credits for natural gas vehicles, which can run automated and connected vehicles that either on natural gas or on gasoline, are vehicles, 10 and 20% for mild hybrid are placed in ridesharing or other high also eligible for an advanced technology light-trucks, five and 10% for strong mileage applications, where any multiplier credit if the vehicles meet hybrid light-trucks). These examples potential environmental benefits could minimum CNG range requirements. EPA were chosen to provide a sense of the be multiplied due to the high utilization received input from several industry relationship between the additional of these vehicles. That is, credits could stakeholders who supported expanding flexibility and program stringency. For take into account that the per-mile these incentives to further incentivize each example scenario, EPA made a emission reduction benefits would vehicles capable of operating on natural number of assumptions regarding the accrue across a larger number of miles gas, including treating incentives for fleet penetration of the technology, car/ for shared-use vehicles. There are likely natural gas vehicles on par with those truck mix, and others, which are many possible approaches that could for electric vehicles and other advanced documented in the docket. Additional accomplish this objective. As one technologies, and adjusting or removing flexibilities could be structured to example, a manufacturer who owns or the minimum range requirements for provide a level of overall stringency partners with a shared-use mobility dual-fueled CNG vehicles. EPA requests equivalent to the full range of the entity could receive credit for ensuring comments on these potential additional Alternatives EPA is requesting comment that their autonomous vehicles are used incentives for natural gas fueled on in this proposal, from the proposed throughout the life of the vehicle in vehicles. standards through more stringent shared-use fleets rather than as High Octane Blends: EPA received alternatives described above in this personally owned vehicles. Such credits input from renewable fuel industry section, including the ‘‘No Action’’ would be based off of the assumption stakeholders and from the automotive alternative.

898 Memorandum, ‘‘Spreadsheet tool for the various light-duty vehicle GHG footprint curves and Kevin Bolon, EPA Office of Air and Radiation. comparative analysis of program stringencies for compliance flexibilities combinations,’’ July 2018, Docket No. EPA–HQ–OAR–2018–0283.

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Table X–6 shows three examples of reducing the stringency of the of overall stringency, the factors scenarios for how enhanced flexibilities standards. EPA requests comment on discussed in Section V above, regarding could impact overall program the potential use of enhanced program EPA Justification for the Proposed GHG stringency. Example A reduces the flexibilities as an alternative approach Standards, would support a relatively stringency of the EPA CO2 standard to establishing the appropriate CO2 less stringent standard with fewer from 4.7% per year to 4.0% per year. standards for MY 2021–2025. flexibilities or a relatively more Example C, which includes the EPA solicits comment on the stringent standard with more maximum incentive flexibilities shown individual options for flexibilities and flexibilities. EPA also solicits comment in Table X–5, significantly reduces the on the potential for combining them as on whether any flexibilities or EPA CO program stringency from 4.7% described in these example scenarios. 2 combinations of flexibilities in per year to 0.8% per year. Increasing the For example, EPA solicits comments on particular are more or less consistent BEV multipliers or hybrid credits how to take these flexibilities into with the Administrator’s rationale for beyond those listed in Table XX by EPA account in considering the level of the would have the effect of further standards and whether, for a given level proposing Alternative 1.

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D. Should NHTSA and EPA continue to standards for the MYs covered by that 1. Why were alternatives that phased account for air conditioning efficiency rulemaking.902 out the A/C efficiency and off-cycle and off-cycle improvements? The Draft TAR included an extended programs considered? As stated in the 2012 NPRM and final discussion of the history and As part of this rulemaking, rules for MYs 2017 and beyond, the technological underpinnings of the A/C alternatives were considered that phase purpose of the off-cycle improvement efficiency and off-cycle FCIV out the A/C efficiency and off-cycle incentive is to encourage the measurement procedures; 903 however, compliance flexibilities to reassess the introduction and market penetration of there is a belief that it is also benefits and costs of including these off-cycle technologies that achieve real- appropriate to now revisit the basic flexibilities in the agencies’ respective world benefits.899 In the 2012 NPRM, question of, and accordingly comment is programs. The A/C efficiency and off- NHTSA stated, sought on, how A/C efficiency and off- cycle programs have been the subject of . . . because we and EPA do not believe that cycle credits and FCIVs fit in setting discussion and debate since the MYs we can yet reasonably predict an average maximum feasible CAFE standards 2017 and beyond final rule. The amount by which manufacturers will take under EPCA/EISA, and GHG standards Alliance of Automobile Manufacturers advantage of [the off-cycle FCIV] consistent with EPA’s authority under and Global Automakers petitioned the opportunity, it did not seem reasonable for the CAA. It is believed that it would be agencies to streamline aspects of both the proposed standards to include it in our prudent to revisit factors that EPA agencies’ A/C efficiency and off-cycle stringency determination at this time. We identified in their first 2009 NPRM to programs as part of a 2016 request to expect to re-evaluate whether and how to establish GHG emissions standards,904 more broadly harmonize the CAFE and include off-cycle credits in determining GHG programs (further discussion of the maximum feasible standards as the off-cycle such as how to best ensure that any off- cycle credits (and associated FCIVs) Alliance/Global petition is located technologies and how manufacturers may be above). On the other hand, other expected to employ them become better applied for using manufacturer stakeholders have questioned the defined in the future.900 proposed and agency approved test purpose and efficacy of the off-cycle procedures are verifiable, reflect real- credit program, specifically, whether the By the 2012 final rule, NHTSA and world reductions, are based on EPA had determined that it was agencies are accurately capturing repeatable test procedures, and are appropriate, under EPA’s EPCA technology benefits and whether the developed through a transparent process authority for testing and calculation programs are unrealistically inflating procedures, for the agencies to provide along with appropriate opportunities for manufacturers’ compliance values. a fuel economy adjustment factor for off- public comment. Whether the program There are two factors that may be cycle technologies.901 NHTSA assessed is still serving its originally intended important to consider at this time, (1) some amount of off-cycle credits in the purpose is also a determination to be manufacturer’s increasing use of A/C determination of the maximum feasible made. efficiency and off-cycle technologies to achieve compliance in light of the 899 77 FR 63134 (Oct. 15, 2012). 902 77 FR 62727, 63018 (Oct. 15, 2012). program’s increasing complexity; and 900 76 FR 75226 (Dec. 1, 2011). 903 See Draft TAR at 5–207 et seq. (2) the questions of whether the 901 77 FR 62628, 62649–50 (Oct. 15, 2012). 904 See 74 FR 49482 (Sept. 28, 2009). agencies are accurately accounting for

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A/C efficiency and off-cycle benefits. In Similarly, in its request for the agencies The Alliance commented that the response to comments that the programs to more fully incorporate estimated industry ‘‘needs the off-cycle credit in their current form were actually costs for A/C efficiency and off-cycle program to function effectively to fulfill impeding innovative technology growth, technologies in their analysis, ICCT the significant role that will be needed in particular from manufacturers, the noted that ‘‘companies are clearly for generating large quantities of credits concept was considered to, instead of prioritizing [off-cycle] technologies over from [off-cycle] emission reduction.’’ 910 continuing to grow the A/C efficiency more advanced test-cycle efficiency Moreover, the Alliance pointed out that and off-cycle flexibilities, assess two technologies.’’ 907 ‘‘[l]imited Agency resources have alternatives that would set standards Concurrent with the Alliance/Global’s delayed the processing of [petitions for without the availability of A/C petition for the agencies to take action off-cycle credits], and the delay impedes efficiency and off-cycle credits for on various aspects of the A/C efficiency manufacturers’ ability to plan for compliance. Each of these issues will be and off-cycle programs, other compliance or make investment expanded upon, in turn. stakeholders raised issues about the decisions.’’ 911 More specifically, the programs that could be discussed at this Alliance commented that: (a) Manufacturers’ Increasing Reliance time. For example, ACEEE commented [c]ase-by-case approvals for off-cycle credit on the A/C Efficiency and Off-cycle on the Draft TAR that ‘‘an off-cycle Programs To Achieve Compliance applications is excessively burdensome due technology that is common in current to slow agency response and unnecessary Since the 2012 final rule for MYs vehicles and is not reflected in the testing. The procedures for granting off-cycle 2017 and beyond and the Draft TAR, stringency of the standards has no place GHG credits are not being implemented per manufacturers have increasingly in the off-cycle credit program. The the provisions of the regulation and are not utilized A/C efficiency and off-cycle purpose of the program is to incentivize functioning to the level necessary for technology to achieve either credits adoption of fuel saving technology, not industry for long-term compliance. Without under the GHG program, or fuel to provide loopholes for manufacturers timely processing, EPA works against its consumption improvement values to achieve the standards on paper.’’ 908 stated intent of ‘provid[ing] an incentive for CO and fuel consumption reducing off-cycle (FCIVs) under the CAFE program. A/C Compare these comments with EPA’s 2 2017 Light-Duty Automotive technologies that would otherwise not be efficiency and off-cycle technology use developed because they do not offer a ranges among manufacturers, from some Technology, Carbon Dioxide Emissions, significant 2-cycle benefit.’ 912 manufacturers claiming zero grams/mile and Fuel Economy Trends: 1975 (or the equivalent under the CAFE Through 2017 report, which estimated Notably, the agencies’ implementation program), to some manufacturers that A/C efficiency and off-cycle credits of the off-cycle credit provisions has claiming 7 grams/mile in MY 2016.905 could, at most, ‘‘reduce adjusted MY been described as 913 Accordingly, with some manufacturers’ 2016 CO2 tailpipe emission values by ‘‘underperforming.’’ potentially reaching the credit cap (10 about 7 g/mi, which would translate to The Alliance’s ‘‘primarily regulatory grams/mile) during the timeframe an adjusted fuel economy increase of need’’ as of the 2016 Draft TAR was ‘‘a contemplated by this rulemaking, if not approximately 0.5 mpg.’’ 909 A/C and renewed focus on removing all obstacles before, considerations relating to off-cycle flexibilities allow that are having the unintended result of manufacturers’ increasing reliance on manufacturers to optionally apply a slowing investment and implementation the A/C efficiency and off-cycle wide array of technologies to improve of [credit] technologies.’’ 914 The programs for compliance, and the fuel economy. While the agencies do not Alliance stated generally that ‘‘[w]ith agencies’ administration of the require or incentivize the adoption of the pre-approved credit list properly programs, are presented for discussion. any particular technologies, the industry administered, the off-cycle program can These issues have not been raised sua is in fact expanding its use of more cost- be expected to grow toward the credit sponte; rather, manufacturers’ effective A/C efficiency and off-cycle caps that were established in the comments on the A/C efficiency and off- technologies rather than other regulation, and these credit caps will cycle programs have been increasing technology pathways. Accordingly become binding constraints for many or recently in volume. Specifically, comment is sought on how large of a most automobile manufacturers. At that manufacturers asserted in their 2016 role A/C efficiency and off-cycle point, the credit caps will be comments to the Draft TAR that technology should play in manufacturer counterproductive since they will ‘‘[s]ignificant volumes of off-cycle compliance. Is an adjusted fuel impede greater implementation of the credits will be essential for the industry economy increase of approximately 0.5 beneficial off-cycle technologies.’’ 915 in order to comply with the GHG and mpg noteworthy? Similarly in regards to the agencies’ CAFE standards through 2025.’’ 906 Next, when manufacturers are refusal to grant off-cycle credits for increasingly reliant on A/C efficiency technologies like driver assistance 905 See Greenhouse Gas Emission Standards for and off-cycle technology to achieve systems, the Alliance stated that ‘‘[t]he Light-Duty Vehicles: Manufacturer Performance compliance, agency administration of unintended consequence of this is that Report for the 2016 Model Year (EPA Report 420– the flexibility becomes more significant. R18–002), U.S. EPA (Jan. 2018), available at https:// automakers may not be able to continue nepis.epa.gov/Exe/ZyPDF.cgi? to pursue technologies that do not Dockey=P100TGIA.pdf. therefore set at very challenging levels, off-cycle 906 technologies and the associated GHG and fuel Comment by Alliance of Automobile 910 Comment by Alliance of Automobile Manufacturers, Docket ID NHTSA–2016–0068– economy benefits are viewed by the industry as a critical area that must become a major source of Manufacturers, Docket ID NHTSA–2016–0068– 0095, at 162. It is important to note the Alliance 0095, at 166. submitted this statement in context of the CAFE credits.’’ 907 911 Id. at 167. and GHG levels set in the 2012 final rule for MYs Comment by ICCT, Docket ID EPA–HQ–OAR– 912 2017 and beyond. Specifically, the Alliance 2015–0827–4017, at 10. Comment by Alliance of Automobile asserted ‘‘[t]he Agencies included off-cycle credits 908 Comment by ACEEE, Docket ID NHTSA– Manufacturers, Docket ID EPA–HQ–OA–2017– from only two technologies in their analyses for 2016–0068–0078, at 14. 0190. setting the stringency of the standards (engine stop 909 Light-Duty Automotive Technology, Carbon 913 Comment by Alliance of Automobile start and active aerodynamic features). However, Dioxide Emissions, and Fuel Economy Trends: 1975 Manufacturers, Docket ID NHTSA–2016–0068– because the fuel consumption benefits of many Through 2017, U.S. EPA at 141 (Jan. 2018), 0095, at 166. other technologies were overestimated in the available at https://nepis.epa.gov/Exe/ZyPDF.cgi? 914 Id. at xiv. Agencies’ analyses, and the standards were Dockey=P100TGDW.pdf. 915 Id. at 164.

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provide certainty in supporting vehicle holds true is in particular component sought on how to implement this compliance.’’ 916 testing as measured with the federal correction. These comments highlight the standardized testing procedure. For 2. Why was the phase-out as modeled challenges to assure improvement example, the federal test procedures (e.g., year over year reductions in values from A/C efficiency and off-cycle provide specific guidance on how a available FCIVs) for certain alternatives technologies reflect verifiable, real- vehicle should be installed on the proposed? world fuel economy improvements, are dynamometer, if the vehicle’s windows attributable to specific vehicle models, should be open or closed, and the The CAFE model was used to assess are based on repeatable test procedures vehicle’s tire pressure. On the other the economic, technical, and and are developed through a transparent hand, the regulations provide no environmental impacts of alternatives process with appropriate opportunities specific guidance on how other that kept the A/C efficiency and off- for public comment. There is a belief components should be tested so the cycle programs as is and alternatives this process and these considerations agencies and manufacturers can most that phased those programs out. As are important to assure the integrity and accurately quantify benefits. described fully in Section II.B, the CAFE fairness of the A/C and off-cycle For example, to more accurately model is a software simulation that procedures. The menu and 5-cycle test capture the benefit of a high efficiency begins with a recently produced fleet of methodologies are predefined and are alternator on the 2-cycle or 5-cycle test, vehicles and applies cost effective not subject to the in-depth review that the vehicle would need to run more technologies to each manufacturers’ fleet year-by-year, taking into proposed new test procedures are systems that draw power from the consideration vehicle refresh and subject to. Comment is sought on alternator, like the infotainment system redesign schedules and common parts whether and how menu-based A/C and or temperature controlled seats. There is among vehicles. The CAFE model off-cycle credits should be not guidance for these additional outputs technology pathways that implemented. components in the tests as they are manufacturers could use to comply with currently performed due to the (b) Potential for Benefits To Be Double the proposed policy alternatives. Counted complexity of systems available in the For this NPRM, the modeling analysis light duty vehicle market. Essentially, it uses the off-cycle credits submitted by Next, the potential for technology is uncertain how to define in regulations benefits to be over-counted is worth each manufacturer for MY 2017 what component systems need to be on compliance and carries these forward to mention, but it is noted that aspects of or off during testing to accurately this issue are being addressed in this future years with a few exceptions. capture the benefit of component Several technologies described in rulemaking. As stated in the 2012 final synergies. Developing guidance on rule for MYs 2017 and beyond, fuel Section II.D are associated with off-cycle specific systems would also likely credits. In particular, stop-start systems, saving technologies integral to basic require a significant amount of time and vehicle design (e.g., camless engines, integrated starter generators, and full resources. Comment is sought on hybrids are assumed to generate off- variable compression ratio engines, specific technologies that may be micro air/hydraulic launch assist cycle credits when applied to improve receiving more benefit based on the fuel economy. Similarly, higher levels of devices, advanced transmissions) current test procedures, or more should not be eligible for off-cycle aerodynamic improvements are generally, any other issues related to assumed to require active grille shutters credits. Specifically, ‘‘[b]eing integral, integrated component testing. there is no need to provide an incentive on the vehicle, which also qualify for It is noted, however, that the optional for their use, and (more important), off-cycle credits. The analysis assumes 5-cycle test procedure for determining these technologies would be that any off-cycle credits that are A/C and off-cycle improvement values incorporated regardless. Granting associated with actions outside of over-counts benefits. The 5-cycle test credits would be a windfall.’’ 917 technologies discussed in Section II.D procedure weighs the 2-cycle tests used Assumedly, because these technologies (either chosen from the pre-approved for compliance with three additional are integral to basic vehicle design, their menu or petitioned for separately) test cycles to better represent real-world benefit would be appropriately captured remain at levels identified by factors impacting fuel economy and on the 2-cycle tests and 5-cycle tests. manufacturers in MY 2017. Any GHG emissions, including higher speeds additional off-cycle credits that accrue Similarly, ICCT commented that, ‘‘[i]n and more aggressive driving, colder as the result of explicit technology theory, off-cycle credits are a good idea, temperature operation, and the use of application are calculated dynamically as they encourage real-world fuel air conditioning. However, the current in each year, for each alternative. This consumption reduction for technologies regulations erroneously do not require method allows for the capture of that are not fully included on the that the 2-cycle benefit be subtracted benefits and costs from A/C efficiency official test cycles. However, real-world from the 5-cycle benefit, resulting in a and off-cycle technologies as compared benefits only accrue if double-counting credit calculation that is artificially too to an alternative where those is avoided and the amount of the real- high and not reflecting actual real-world technologies are not used for world fuel consumption reduction is emission reductions that were intended. compliance purposes. accurately measured.’’ 918 Since the 5-cycle test procedures In considering potential future actions Broadly, there is agreement with the include the 2-cycle tests used for regarding the A/C efficiency and off- concept that capturing real-world compliance, it is believed the 2-cycle cycle flexibilities, it was recognized that driving behavior is essential to benefit should be subtracted from the 5- removing the programs immediately accurately measure the true benefits of cycle benefit to avoid over-counting of would present a considerable challenge A/C efficiency and off-cycle benefits. Manufacturers interested in for manufacturers. Based on compliance technologies. One example where this generating credits under the 5-cycle and mid-model year data for MY 2017, the first model year that NHTSA 916 Id. at 126. pathway identified this issue to the 917 77 FR 62732 (Oct. 15, 2012). agencies, and have asked EPA to clarify accepted FCIVs for CAFE compliance, 918 Comment by ICCT, Docket EPA–HQ–OAR– the regulations. This issue is discussed manufacturers have reported A/C 2015–0827–4017, at 10. in Section X.C, above, and comment is efficiency and off-cycle FCIVs at

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noteworthy levels. EPA’s MY 2016 out was identified as a reasonable the credit program for advanced Performance Report reported wide option for manufacturers to come into technologies in pickup trucks.921 penetration of FCIVs from menu compliance with GHG or fuel economy Accordingly, an incremental decrease in technologies and noted some standards without using A/C efficiency the maximum A/C efficiency and off- technologies widely employed by OEMs and off-cycle improvements for cycle FCIVs a manufacturer can receive included active grill shutters, glass or compliance. starting in MY 2022 and ending in MY glazing, and stop-start systems. Throughout the joint CAFE and GHG 2026 was modeled. Table X–7 below Additional details of individual programs, the agencies have phased out shows the incremental cap total starting manufacturers’ MY 2016 performance flexibility and incentive programs rather in MY 2021 and reducing by the and individual A/C and off-cycle than ending those programs abruptly, recommended value until MY 2026. technology penetration can be found on such as with the alternative fuel vehicle EPA’s website.919 Accordingly, a phase- program (as mandated by EISA) 920 and

The MY 2016 fleet final compliance consumption, among other attributes. alternative without A/C efficiency or data to identify the starting point for the The alternatives and associated impacts off-cycle technology was more FCIV phase-out was reviewed.922 For presented below are compared to a expensive. Similarly, although the A/C efficiency technologies, 6 grams/ baseline where EPA’s GHG emissions CAFE model only applied technology to mile was used as the starting point, standards for MYs 2022–2025 remain in the fleet until the fleet met the which was the highest FCIV a single effect and NHTSA’s augural CAFE standards, alternatives that did not manufacturer had received in MY 2016. standards would be in place (for further employ A/C efficiency and off-cycle For off-cycle technologies, the discussion of the interpretation of what technologies saved more fuel and maximum allowable cap of 10 gram/ baseline is appropriate, see preamble reduced GHG emissions more than mile set in the 2012 final rule for MYs Section II.B and PRIA Chapter 6). alternatives that did employ the A/C 2017 and beyond was used. Although The modeling results indicated no efficiency and off-cycle technologies, no manufacturer had reached the 10 and in significantly higher amounts for gram/mile cap as of MY 2016, there is significant change in the fleet average achieved fuel economy, which is the higher stringency alternative. On a belief that it is still feasible for some average, the modeling shows that manufacturers to reach the cap in MYs expected because the model only applies technologies to a manufacturers’ phasing out the A/C efficiency and off- prior to 2021. Comment is invited on cycle programs decreases fuel this methodology. fleet until the standard is met. However, the change in regulatory costs, average consumption over the ‘‘no change’’ 3. What do the modeled alternatives vehicle prices, societal costs, and scenario but confirms that show? societal net benefits is noteworthy. manufacturers will have to apply A lower 923 and higher 924 stringency Without A/C efficiency and off-cycle costlier technology to meet the alternative with and without the A/C technologies available, the CAFE model standards. efficiency and off-cycle flexibilities applied more costly technologies to the The slight difference in fleet were modeled to see the impact on fleet. This trend was less noticeable performance under the different regulatory costs, average vehicle prices, with the low stringency alternative; alternatives confirms how the CAFE societal costs and benefits, average however, the advanced technology model considers the universe of achieved fuel economy, and fuel required to meet the high stringency applicable technologies and

919 See Greenhouse Gas Emission Standards for 921 For further discussion of the advanced nepis.epa.gov/Exe/ZyPDF.cgi? Light-Duty Vehicles: Manufacturer Performance technology pickup truck program, see Section Dockey=P100TGIA.pdf. Report for the 2016 Model Year (EPA Report 420– X.B.1.e.4, above. 923 Existing standards through MY 2020, then R18–002), U.S. EPA (Jan. 2018), available at https:// 922 See Greenhouse Gas Emission Standards for 0.5%/year increases for both passenger cars and nepis.epa.gov/Exe/ZyPDF.cgi? Light-Duty Vehicles: Manufacturer Performance light trucks for MYs 2021–2026. 924 Dockey=P100TGIA.pdf. Report for the 2016 Model Year (EPA Report 420– Existing standards through MY 2020, then 920 49 U.S.C. 32906. R18–002), U.S. EPA (Jan. 2018), available at https:// 2%/year increases for passenger cars and 3%/year increases for light trucks, for MYs 2021–2026.

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dynamically identifies the most cost- pursuant to the Data Quality Act, in (subject heading, Federal Register date and effective combination of technologies order for substantive data to be relied page number). • for each manufacturer’s vehicle fleet upon and used by the agency, it must Explain why you agree or disagree, suggest alternatives, and substitute language based on the assumptions about each meet the information quality standards for your requested changes. technology’s effectiveness, cost, and set forth in the OMB and DOT Data • Describe any assumptions and provide interaction with all other technologies. Quality Act guidelines. Accordingly, we any technical information and/or data that For further discussion of the technology encourage you to consult the guidelines you used. pathways employed in the CAFE model, in preparing your comments. OMB’s • If you estimate potential costs or please refer to Section II.D above. guidelines may be accessed at https:// burdens, explain how you arrived at your www.gpo.gov/fdsys/pkg/FR-2002-02-22/ estimate in sufficient detail to allow for it to XI. Public Participation pdf/R2-59.pdf. DOT’s guidelines may be be reproduced. • Provide specific examples to illustrate NHTSA and EPA request comment on accessed at https:// all aspects of this NPRM. This section your concerns and suggest alternatives. www.transportation.gov/regulations/ • Explain your views as clearly as describes how you can participate in dot-information-dissemination-quality- possible, avoiding the use of profanity or this process. guidelines. personal threats. • A. How do I prepare and submit EPA: Direct your comments to Docket Make sure to submit your comments by the comment period deadline identified in comments? ID No. EPA–HQ–OAR–2018–0283. EPA’s policy is that all comments the DATES section above. In this NPRM, there are many issues received will be included in the public C. How can I be sure that my comments common to both NHTSA’s and EPA’s docket without change and may be were received? proposals. For the convenience of all made available online at http:// NHTSA: If you submit your comments parties, comments submitted to the www.regulations.gov, including any to NHTSA’s docket by mail and wish NHTSA docket will be considered personal information provided, unless DOT Docket Management to notify you comments to the EPA docket and vice the comment includes information upon its receipt of your comments, versa. An exception is that comments claimed to be Confidential Business please enclose a self-addressed, stamped submitted to the NHTSA docket on Information (CBI) or other information postcard in the envelope containing NHTSA’s Draft Environmental Impact whose disclosure is restricted by statute. your comments. Upon receiving your Statement (EIS) will not be considered Do not submit information that you comments, Docket Management will submitted to the EPA docket. Therefore, consider to be CBI or otherwise return the postcard by mail. commenters only need to submit protected through http:// comments to either one of the two www.regulations.gov or email. The D. How do I submit confidential agency dockets, although they may http://www.regulations.gov website is business information? submit comments to both if they so an ‘‘anonymous access’’ system, which choose. Comments that are submitted Any confidential business means EPA will not know your identity information (CBI) submitted to one of for consideration by only one agency or contact information unless you should be identified as such, and the agencies will also be available to the provide it in the body of your comment. other agency. However, as with all comments that are submitted for If you send an email comment directly consideration by both agencies should public comments, any CBI information to EPA without going through http:// only needs to be submitted to either one also be identified as such. Absent such www.regulations.gov, your email identification, each agency will exercise of the agencies’ dockets and it will be address will be automatically captured available to the other. Following are its best judgment to determine whether and included as part of the comment a comment is submitted on its proposal. specific instructions for submitting CBI that is placed in the public docket and to either agency: Further instructions for submitting made available on the internet. If you comments to either the NHTSA or the EPA: Do not submit CBI to EPA submit an electronic comment, EPA through http://www.regulations.gov or EPA docket are described below. recommends that you include your NHTSA: Your comments must be email. Clearly mark the part or all of the name and other contact information in written and in English. To ensure that information that you claim to be CBI. the body of your comment and with any your comments are correctly filed in the For CBI information in a disk or CD– disk or CD–ROM you submit. If EPA docket, please include the docket ROM that you mail to EPA, mark the cannot read your comment due to number NHTSA–2018–0067 in your outside of the disk or CD–ROM as CBI technical difficulties and cannot contact comments. Your comments must not be and then identify electronically within you for clarification, EPA may not be more than 15 pages long.925 NHTSA the disk or CD–ROM the specific able to consider your comment. established this limit to encourage you information that is claimed as CBI. In Electronic files should avoid the use of to write your primary comments in a addition to one complete version of the special characters, any form of concise fashion. However, you may comment that includes information encryption, and be free of any defects or attach necessary additional documents claimed as CBI, a copy of the comment viruses. For additional information to your comments, and there is no limit that does not contain CBI must be about EPA’s public docket visit the EPA on the length of attachments. If you are submitted for inclusion in the public Docket Center homepage at https:// submitting comments electronically as a docket. Information so marked will not www.epa.gov/dockets. PDF (Adobe) file, we ask that the be disclosed except in accordance with documents please be scanned using the B. Tips for Preparing Your Comments the procedures set forth in 40 CFR part Optical Character Recognition (OCR) 2. When submitting comments, please process, thus allowing the agencies to NHTSA: If you wish to submit any remember to: search and copy certain portions of your information under a claim of submissions.926 Please note that • Identify the rulemaking by docket confidentiality, you should submit three number and other identifying information copies of your complete submission, 925 49 CFR 553.21. including the information you claim to 926 Optical character recognition (OCR) is the scanned paper document or electronic fax file, into be confidential business information, to process of converting an image of text, such as a computer-editable text. the Chief Counsel, NHTSA, at the

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address given above under FOR FURTHER 30 days following that hearing to allow energy effects of the proposed rule and INFORMATION CONTACT. When you send a you to submit supplementary explain why the proposed regulation is comment containing confidential information. preferable to other potentially effective business information, you should and reasonably feasible alternatives XII. Regulatory Notices and Analyses include a cover letter setting forth the considered. information specified in 49 CFR part A. Executive Order 12866, Executive The proposed rule seeks to establish 512. Order 13563 passenger car and light truck fuel In addition, you should submit a copy Executive Order 12866, ‘‘Regulatory economy standards and greenhouse gas from which you have deleted the Planning and Review’’ (58 FR 51735, emissions standards. An evaluation of claimed confidential business Oct. 4, 1993), as amended by Executive energy effects of the proposed action information to the Docket by one of the Order 13563, ‘‘Improving Regulation and reasonably feasible alternatives methods set forth above. and Regulatory Review’’ (76 FR 3821, considered is provided in NHTSA’s Draft EIS and in the PRIA. To the extent E. Will the agencies consider late Jan. 21, 2011), provides for making that EPA’s CO standards are comments? determinations whether a regulatory 2 action is ‘‘significant’’ and therefore substantially related to fuel economy NHTSA and EPA will consider all subject to the Office of Management and and accordingly, petroleum comments received before the close of Budget (OMB) review and to the consumption, the Draft EIS and PRIA business on the comment closing date requirements of the Executive Order. analyses also provide an estimate of indicated above under DATES. To the Under section 3(f)(1) of Executive Order impacts of EPA’s proposed rule. extent practicable, we will also consider 12866, this action is an ‘‘economically E. Environmental Considerations comments received after that date. If significant regulatory action’’ because if interested persons believe that any adopted, it is likely to have an annual 1. National Environmental Policy Act information that the agencies place in effect on the economy of $100 million (NEPA) the docket after the issuance of the or more. Accordingly, EPA and NHTSA Concurrently with this NPRM, NPRM affects their comments, they may submitted this action to the OMB for submit comments after the closing date NHTSA is releasing a Draft review and any changes made in Environmental Impact Statement (Draft concerning how the agencies should response to OMB recommendations consider that information for the final EIS), pursuant to the National have been documented in the docket for Environmental Policy Act, 42 U.S.C. rule. However, the agencies’ ability to this action. The benefits and costs of consider any such late comments in this 4321–4347, and implementing this proposal are described above and in regulations issued by the Council on rulemaking will be limited due to the the Preliminary Regulatory Impact time frame for issuing a final rule. Environmental Quality (CEQ), 40 CFR Analysis (PRIA), which is located in the part 1500, and NHTSA, 49 CFR part If a comment is received too late for docket and on the agencies’ websites. us to practicably consider in developing 520. NHTSA prepared the Draft EIS to a final rule, we will consider that B. DOT Regulatory Policies and analyze and disclose the potential comment as an informal suggestion for Procedures environmental impacts of the proposed CAFE standards and a range of future rulemaking action. The rule, if adopted, would also be alternatives. The Draft EIS analyzes significant within the meaning of the F. How can I read the comments direct, indirect, and cumulative impacts Department of Transportation’s submitted by other people? and analyzes impacts in proportion to Regulatory Policies and Procedures. The You may read the materials placed in benefits and costs of this proposal are their significance. The Draft EIS describes potential the dockets for this document (e.g., the described above and in the PRIA, which environmental impacts to a variety of comments submitted in response to this is located in the docket and on resources. Resources that may be document by other interested persons) NHTSA’s website. at any time by going to http:// affected by the proposed action and www.regulations.gov. Follow the online C. Executive Order 13771 (Reducing alternatives include fuel and energy use, instructions for accessing the dockets. Regulation and Controlling Regulatory air quality, climate, land use and You may also read the materials at the Costs) development, hazardous materials and EPA Docket Center or the DOT Docket This proposed rule is expected to be regulated wastes, historical and cultural Management Facility by going to the an E.O. 13771 deregulatory action. resources, noise, and environmental street addresses given above under Details on the estimated cost savings of justice. The Draft EIS also describes how ADDRESSES. this proposed rule can be found in climate change resulting from global PRIA, which is located in the docket GHG emissions (including the U.S. light G. How do I participate in the public and on the agencies’ websites. duty transportation sector under the hearings? Proposed Action and alternatives) could NHTSA and EPA will jointly host two D. Executive Order 13211 (Energy affect certain key natural and human public hearings on the dates and Effects) resources. Resource areas are assessed locations to be announced in a separate Executive Order 13211 applies to any qualitatively and quantitatively, as notice. At all hearings, both agencies rule that: (1) Is determined to be appropriate, in the Draft EIS. will accept comments on the economically significant as defined NHTSA has considered the rulemaking, and NHTSA will also under E.O. 12866, and is likely to have information contained in the Draft EIS accept comments on the EIS. a significant adverse effect on the as part of developing its proposal. The NHTSA and EPA will conduct the supply, distribution, or use of energy; or Draft EIS is available for public hearings informally, and technical rules (2) that is designated by the comment; instructions for the of evidence will not apply. We will Administrator of the Office of submission of comments are included arrange for a written transcript of each Information and Regulatory Affairs as a inside the document. NHTSA will hearing, to be posted in the dockets as significant energy action. If the simultaneously issue the Final soon as it is available, and keep the regulatory action meets either criterion, Environmental Impact Statement and official record of each hearing open for the agencies must evaluate the adverse Record of Decision, pursuant to 49

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U.S.C. 304a(b), and U.S. Department of State intends to maintain compliance developed, funded, or approved under Transportation Final Guidance on MAP– with the NAAQS. When EPA revises a title 23 or chapter 53 of title 49, U.S.C. 21 Section 1319 Accelerated NAAQS, each State must revise its SIP Accordingly, this action and associated Decisionmaking in Environmental to address how it plans to attain the new program activities are not subject to Reviews (http://www.dot.gov/sites/ standard. transportation conformity. Under the dot.gov/files/docs/MAP-21_1319_Final_ No Federal agency may ‘‘engage in, General Conformity Rule, a conformity Guidance.pdf) unless it is determined support in any way or provide financial determination is required where a that statutory criteria or practicability assistance for, license or permit, or Federal action would result in total considerations preclude simultaneous approve’’ any activity that does not direct and indirect emissions of a issuance. For additional information on ‘‘conform’’ to a SIP or Federal criteria pollutant or precursor NHTSA’s NEPA analysis, please see the Implementation Plan after EPA has originating in nonattainment or Draft EIS. approved or promulgated it.927 Further, maintenance areas equaling or no Federal agency may ‘‘approve, exceeding the rates specified in 40 CFR 2. Clean Air Act (CAA) as Applied to accept, or fund’’ any transportation 93.153(b)(1) and (2). As explained NHTSA’s Action plan, program, or project developed below, NHTSA’s proposed action results The CAA (42 U.S.C. 7401 et seq.) is pursuant to title 23 or chapter 53 of title in neither direct nor indirect emissions the primary Federal legislation that 49, U.S.C., unless the plan, program, or as defined in 40 CFR 93.152. addresses air quality. Under the project has been found to ‘‘conform’’ to The General Conformity Rule defines authority of the CAA and subsequent any applicable implementation plan in direct emissions as ‘‘those emissions of amendments, EPA has established effect.928 The purpose of these a criteria pollutant or its precursors that National Ambient Air Quality Standards conformity requirements is to ensure are caused or initiated by the Federal (NAAQS) for six criteria pollutants, that Federally sponsored or conducted action and originate in a nonattainment which are relatively commonplace activities do not interfere with meeting or maintenance area and occur at the pollutants that can accumulate in the the emissions targets in SIPs, do not same time and place as the action and atmosphere as a result of human cause or contribute to new violations of are reasonably foreseeable.’’ 932 Because activity. EPA is required to review each the NAAQS, and do not impede the NHTSA’s action would set fuel NAAQS every five years and to revise ability of a State to attain or maintain economy standards for light duty those standards as may be appropriate the NAAQS or delay any interim vehicles, it would cause no direct considering new scientific information. milestones. EPA has issued two sets of emissions consistent with the meaning The air quality of a geographic region regulations to implement the conformity of the General Conformity Rule.933 is usually assessed by comparing the requirements: Indirect emissions under the General levels of criteria air pollutants found in (1) The Transportation Conformity Conformity Rule are ‘‘those emissions of the ambient air to the levels established Rule 929 applies to transportation plans, a criteria pollutant or its precursors (1) by the NAAQS (taking into account, as programs, and projects that are That are caused or initiated by the well, the other elements of a NAAQS: developed, funded, or approved under federal action and originate in the same Averaging time, form, and indicator). title 23 or chapter 53 of title 49, U.S.C. nonattainment or maintenance area but Concentrations of criteria pollutants (2) The General Conformity Rule 930 occur at a different time or place as the within the air mass of a region are applies to all other federal actions not action; (2) That are reasonably measured in parts of a pollutant per covered under transportation foreseeable; (3) That the agency can million parts (ppm) of air or in conformity. The General Conformity practically control; and (4) For which micrograms of a pollutant per cubic Rule establishes emissions thresholds, the agency has continuing program meter (mg/m3) of air present in repeated or de minimis levels, for use in responsibility.’’ 934 Each element of the air samples taken at designated evaluating the conformity of an action definition must be met to qualify as monitoring locations using specified that results in emissions increases.931 If indirect emissions. NHTSA has types of monitors. These ambient the net increases of direct and indirect determined that, for purposes of general concentrations of each criteria pollutant emissions are lower than these conformity, emissions that may result are compared to the levels, averaging thresholds, then the project is presumed from the proposed fuel economy time, and form specified by the NAAQS to conform and no further conformity standards would not be caused by in order to assess whether the region’s evaluation is required. If the net NHTSA’s action, but rather would occur air quality is in attainment with the increases of direct and indirect because of subsequent activities the NAAQS. emissions exceed any of these agency cannot practically control. When the measured concentrations of thresholds, and the action is not ‘‘[E]ven if a Federal licensing, a criteria pollutant within a geographic otherwise exempt, then a conformity rulemaking, or other approving action is region are below those permitted by the determination is required. The a required initial step for a subsequent NAAQS, EPA designates the region as conformity determination can entail air activity that causes emissions, such an attainment area for that pollutant, quality modeling studies, consultation initial steps do not mean that a Federal while regions where concentrations of with EPA and state air quality agencies, agency can practically control any criteria pollutants exceed Federal and commitments to revise the SIP or to resulting emissions.’’ 935 standards are called nonattainment implement measures to mitigate air areas. Former nonattainment areas that quality impacts. 932 40 CFR 93.152. are now in compliance with the NAAQS The proposed CAFE standards and 933 Department of Transportation v. Public are designated as maintenance areas. associated program activities are not Citizen, 541 U.S. 752, 772 (2004) (‘‘[T]he emissions from the Mexican trucks are not ‘direct’ because Each State with a nonattainment area is they will not occur at the same time or at the same required to develop and implement a 927 42 U.S.C. 7506(c)(1). place as the promulgation of the regulations.’’). State Implementation Plan (SIP) 928 42 U.S.C. 7506(c)(2). NHTSA’s action is to establish fuel economy documenting how the region will reach 929 40 CFR part 51, subpart T, and part 93, subpart standards for MY 2021–2026 passenger car and A. light trucks; any emissions increases would occur attainment levels within time periods 930 40 CFR part 51, subpart W, and part 93, well after promulgation of the final rule. specified in the CAA. For maintenance subpart B. 934 40 CFR 93.152. areas, the SIP must document how the 931 40 CFR 93.153(b). 935 40 CFR 93.152.

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As the CAFE program uses emissions standards for light duty 6. Endangered Species Act (ESA) performance-based standards, NHTSA vehicles is not the type of activity that Under Section 7(a)(2) of the ESA cannot control the technologies vehicle has the potential to cause effects on federal agencies must ensure that manufacturers use to improve the fuel historic properties. However, NHTSA actions they authorize, fund, or carry economy of passenger cars and light includes a brief, qualitative discussion out are ‘‘not likely to jeopardize the trucks. Furthermore, NHTSA cannot of the impacts of the alternatives on continued existence’’ of any federally control consumer purchasing (which historical and cultural resources in listed threatened or endangered species affects average achieved fleetwide fuel Section 7.3 of the Draft EIS. or result in the destruction or adverse economy) and driving behavior (i.e., 4. Fish and Wildlife Conservation Act modification of the designated critical operation of motor vehicles, as habitat of these species. 16 U.S.C. measured by VMT). It is the (FWCA) 1536(a)(2). If a federal agency combination of fuel economy The FWCA (16 U.S.C. 2901 et seq.) determines that an agency action may technologies, consumer purchasing, and provides financial and technical affect a listed species or designated driving behavior that results in criteria assistance to States for the development, critical habitat, it must initiate pollutant or precursor emissions. For consultation with the appropriate purposes of analyzing the revision, and implementation of Service—the U.S. Fish and Wildlife environmental impacts of the proposal conservation plans and programs for Service of the Department of the Interior and alternatives under NEPA, NHTSA nongame fish and wildlife. In addition, and/or the National Oceanic and has made assumptions regarding all of the Act encourages all Federal Atmospheric Administration’s National these factors. The agency’s Draft EIS departments and agencies to utilize Marine Fisheries Service of the predicts that increases in air toxic and their statutory and administrative Department of Commerce, depending on criteria pollutants would occur in some authorities to conserve and to promote the species involved—in order to ensure nonattainment areas under certain conservation of nongame fish and that the action is not likely to jeopardize alternatives. However, the proposed wildlife and their habitats. The agencies the species or destroy or adversely standards and alternatives do not conclude that the FWCA is not modify designated critical habitat. See mandate specific manufacturer applicable to this proposal because it 50 CFR 402.14. Under this standard, the decisions, consumer purchasing, or does not involve the conservation of federal agency taking action evaluates driver behavior, and NHTSA cannot nongame fish and wildlife and their the possible effects of its action and practically control any of them.936 habitats. In addition, NHTSA does not have the determines whether to initiate 5. Coastal Zone Management Act consultation. See 51 FR 19926, 19949 statutory authority to control the actual (CZMA) VMT by drivers. As the extent of (June 3, 1986). emissions is directly dependent on the The Coastal Zone Management Act Pursuant to Section 7(a)(2) of the ESA, operation of motor vehicles, changes in (16 U.S.C. 1451 et seq.) provides for the the agencies have considered the effects any emissions that result from NHTSA’s preservation, protection, development, of the proposed standards and have proposed standards are not changes the and (where possible) restoration and reviewed applicable ESA regulations, agency can practically control or for enhancement of the nation’s coastal case law, and guidance to determine which the agency has continuing zone resources. Under the statute, States what, if any, impact there might be to program responsibility. Therefore, the are provided with funds and technical listed species or designated critical proposed CAFE standards and assistance in developing coastal zone habitat. The agencies have considered alternative standards considered by management programs. Each issues related to emissions of CO2 and NHTSA would not cause indirect participating State must submit its other GHGs and issues related to non- emissions under the General Conformity program to the Secretary of Commerce GHG emissions. Based on this Rule, and a general conformity for approval. Once the program has been assessment, the agencies have determination is not required. approved, any activity of a Federal determined that the actions of setting agency, either within or outside of the CAFE and GHG emissions standards 3. National Historic Preservation Act coastal zone, that affects any land or does not require consultation under (NHPA) water use or natural resource of the Section 7(a)(2) of the ESA. Accordingly, The NHPA (54 U.S.C. 300101 et seq.) coastal zone must be carried out in a NHTSA and EPA have concluded its sets forth government policy and manner that is consistent, to the review of this action under Section 7 of procedures regarding ‘‘historic maximum extent practicable, with the the ESA. properties’’—that is, districts, sites, enforceable policies of the State’s 7. Floodplain Management (Executive buildings, structures, and objects program.938 Order 11988 and DOT Order 5650.2) included on or eligible for the National Register of Historic Places. Section 106 The agencies conclude that the CZMA These Orders require Federal agencies of the NHPA requires federal agencies to is not applicable to this proposal to avoid the long- and short-term ‘‘take into account’’ the effects of their because it does not involve an activity adverse impacts associated with the within, or outside of, the nation’s actions on historic properties.937 The occupancy and modification of coastal zones that affects any land or agencies conclude that the NHPA is not floodplains, and to restore and preserve water use or natural resource of the applicable to this proposal because the the natural and beneficial values served coastal zone. NHTSA has, however, promulgation of CAFE and GHG by floodplains. Executive Order 11988 conducted a qualitative review in its also directs agencies to minimize the 936 See, e.g., Department of Transportation v. Draft EIS of the related direct, indirect, impact of floods on human safety, Public Citizen, 541 U.S. 752, 772–73 (2004); South and cumulative impacts, positive or health and welfare, and to restore and Coast Air Quality Management District v. Federal negative, of the alternatives on preserve the natural and beneficial Energy Regulatory Commission, 621 F.3d 1085, potentially affected resources, including values served by floodplains through 1101 (9th Cir. 2010). coastal zones. 937 Section 106 is now codified at 54 U.S.C. evaluating the potential effects of any 306108. Implementing regulations for the Section actions the agency may take in a 106 process are located at 36 CFR part 800. 938 16 U.S.C. 1456(c)(1)(A). floodplain and ensuring that its program

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planning and budget requests reflect 9. Migratory Bird Treaty Act (MBTA), These requirements may be satisfied if consideration of flood hazards and Bald and Golden Eagle Protection Act the transportation use of a Section 4(f) floodplain management. DOT Order (BGEPA), Executive Order 13186 property results in a de minimis impact 5650.2 sets forth DOT policies and The MBTA (16 U.S.C. 703–712) on the area. NHTSA concludes that Section 4(f) is procedures for implementing Executive provides for the protection of certain not applicable to its proposal because Order 11988. The DOT Order requires migratory birds by making it illegal for this rulemaking is not an approval of a that the agency determine if a proposed anyone to ‘‘pursue, hunt, take, capture, action is within the limits of a base transportation program or project that kill, attempt to take, capture, or kill, requires the use of any publicly owned floodplain, meaning it is encroaching on possess, offer for sale, sell, offer to land. the floodplain, and whether this barter, barter, offer to purchase, encroachment is significant. If purchase, deliver for shipment, ship, 11. Executive Order 12898: ‘‘Federal significant, the agency is required to export, import, cause to be shipped, Actions to Address Environmental conduct further analysis of the proposed exported, or imported, deliver for Justice in Minority Populations and action and any practicable alternatives. transportation, transport or cause to be Low-Income Populations’’ If a practicable alternative avoids transported, carry or cause to be carried, Executive Order (E.O.) 12898 (59 FR floodplain encroachment, then the or receive for shipment, transportation, 7629 (Feb. 16, 1994)) establishes federal agency is required to implement it. carriage, or export’’ any migratory bird executive policy on environmental covered under the statute.939 justice. Its main provision directs In this proposal, the agencies are not The BGEPA (16 U.S.C. 668–668d) occupying, modifying and/or federal agencies, to the greatest extent makes it illegal to ‘‘take, possess, sell, practicable and permitted by law, to encroaching on floodplains. The purchase, barter, offer to sell, purchase make environmental justice part of their agencies, therefore, conclude that the or barter, transport, export or import’’ mission by identifying and addressing, Orders are not applicable to this action. any bald or golden eagles.940 Executive as appropriate, disproportionately high NHTSA has, however, conducted a Order 13186, ‘‘Responsibilities of and adverse human health or review of the alternatives on potentially Federal Agencies to Protect Migratory environmental effects of their programs, affected resources, including Birds,’’ helps to further the purposes of policies, and activities on minority floodplains, in its Draft EIS. the MBTA by requiring a Federal agency populations and low-income to develop a Memorandum of 8. Preservation of the Nation’s Wetlands populations in the United States. Understanding (MOU) with the Fish and With respect to GHG emissions, EPA (Executive Order 11990 and DOT Order Wildlife Service when it is taking an has determined that this final rule will 5660.1a) action that has (or is likely to have) a not have disproportionately high and These Orders require Federal agencies measurable negative impact on adverse human health or environmental to avoid, to the extent possible, migratory bird populations. effects on minority or low-income undertaking or providing assistance for The agencies conclude that the populations because it impacts the level of environmental protection for all new construction located in wetlands MBTA, BGEPA, and Executive Order affected populations without having any unless the agency head finds that there 13186 do not apply to this proposal because there is no disturbance, take, disproportionately high and adverse is no practicable alternative to such measurable negative impact, or other human health or environmental effects construction and that the proposed covered activity involving migratory on any population, including any action includes all practicable measures birds or bald or golden eagles involved minority or low-income population. The to minimize harms to wetlands that may in this rulemaking. increases in CO2 and other GHGs result from such use. Executive Order associated with the standards will affect 11990 also directs agencies to take 10. Department of Transportation Act climate change projections, and EPA has action to minimize the destruction, loss (Section 4(f)) estimated marginal increases in or degradation of wetlands in Section 4(f) of the Department of projected global mean surface ‘‘conducting Federal activities and Transportation Act of 1966 (49 U.S.C. temperatures and sea-level rise in this programs affecting land use, including 303), as amended, is designed to NPRM. Within settlements experiencing but not limited to water and related land preserve publicly owned park and climate change, certain parts of the resources planning, regulating, and recreation lands, waterfowl and wildlife population may be especially licensing activities.’’ DOT Order 5660.1a refuges, and historic sites. Specifically, vulnerable; these include the poor, the sets forth DOT policy for interpreting Section 4(f) provides that DOT agencies elderly, those already in poor health, the Executive Order 11990 and requires that cannot approve a transportation disabled, those living alone, and/or transportation projects ‘‘located in or program or project that requires the use indigenous populations dependent on having an impact on wetlands’’ should of any publicly owned land from a one or a few resources. However, the be conducted to assure protection of the public park, recreation area, or wildlife potential increases in climate change Nation’s wetlands. If a project does have or waterfowl refuge of national, State, or impacts resulting from this rule are so a significant impact on wetlands, an EIS local significance, or any land from a small that the impacts are not must be prepared. historic site of national, State, or local considered ‘‘disproportionately high significance, unless a determination is and adverse’’ on these populations. The agencies are not undertaking or made that: For non-GHG co-pollutants such as providing assistance for new (1) There is no feasible and prudent ozone, PM2.5, and toxics, EPA has construction located in wetlands. The alternative to the use of land, and concluded that reductions in agencies, therefore, conclude that these (2) The program or project includes downstream emissions would have Orders do not apply to this proposal. all possible planning to minimize harm beneficial human health or NHTSA has, however, conducted a to the property resulting from the use. environmental effects on near-road review of the alternatives on potentially populations. Therefore, the proposed affected resources, including wetlands, 939 16 U.S.C. 703(a). rule would not result in in its Draft EIS. 940 16 U.S.C. 668(a). ‘‘disproportionately high and adverse’’

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human health or environmental effects This preamble and NHTSA’s Draft EIS Flexibility Act to require Federal regarding these pollutants on minority discuss air quality, climate change, and agencies to provide a statement of the and/or low income populations. their related environmental and health factual basis for certifying that a NHTSA has also evaluated whether effects, noting where these would proposal will not have a significant its proposal would have disproportionately affect children. The economic impact on a substantial disproportionately high and adverse Administrator has also discussed the number of small entities. human health or environmental effects impact of climate-related health effects The agencies considered the impacts on minority or low-income populations. on children in the Endangerment and The agency includes its analysis in of this notice under the Regulatory Cause or Contribute Findings for Flexibility Act and certify that this rule Section 7.5 (Environmental Justice) of Greenhouse Gases Under Section 202(a) would not have a significant economic its Draft EIS. of the Clean Air Act (74 FR 66496, impact on a substantial number of small December 15, 2009). Additionally, this 12. Executive Order 13045: ‘‘Protection entities. The following is the agencies’ preamble explains why the agencies’ of Children from Environmental Health statement providing the factual basis for proposal is preferable to other Risks and Safety Risks’’ this certification pursuant to 5 U.S.C. alternatives considered. Together, this This action is subject to E.O. 13045 preamble and NHTSA’s Draft EIS satisfy 605(b). (62 FR 19885, April 23, 1997) because the agencies’ responsibilities under E.O. Small businesses are defined based on it is an economically significant 13045. the North American Industry regulatory action as defined by E.O. Classification System (NAICS) code.941 12866, and the agencies have reason to F. Regulatory Flexibility Act One of the criteria for determining size believe that the environmental health or safety risks related to this action may Pursuant to the Regulatory Flexibility is the number of employees in the firm. have a disproportionate effect on Act (5 U.S.C. 601 et seq., as amended by For establishments primarily engaged in children. Specifically, children are more the Small Business Regulatory manufacturing or assembling vulnerable to adverse health effects Enforcement Fairness Act (SBREFA) of automobiles, as well as light duty related to mobile source emissions, as 1996), whenever an agency is required trucks, the firm must have less than well as to the potential long-term to publish a notice of proposed 1,500 employees to be classified as a impacts of climate change. Pursuant to rulemaking or final rule, it must prepare small business. This proposed rule E.O. 13045, NHTSA and EPA must and make available for public comment would affect motor vehicle prepare an evaluation of the a regulatory flexibility analysis that manufacturers. There are 14 small environmental health or safety effects of describes the effect of the rule on small manufacturers of passenger cars and the planned regulation on children and entities (i.e., small businesses, small SUVs of electric, hybrid, and internal an explanation of why the planned organizations, and small governmental combustion engines. regulation is preferable to other jurisdictions). No regulatory flexibility potentially effective and reasonably analysis is required if the head of an 941 Classified in NAICS under Subsector 336— feasible alternatives considered by the agency certifies the proposal will not Transportation Equipment Manufacturing for Automobile Manufacturing (336111), Light Truck agencies. Further, this analysis may be have a significant economic impact on (336112), and Heavy Duty Truck Manufacturing included as part of any other required a substantial number of small entities. (336120). https://www.sba.gov/document/support- analysis. SBREFA amended the Regulatory table-size-standards.

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NHTSA believes that the rulemaking small businesses in the 2017 and later G. Executive Order 13132 (Federalism) would not have a significant economic rulemaking. EPA estimates that small impact on the small vehicle entities comprise less than 0.1% of total Executive Order 13132 requires manufacturers because under 49 CFR annual vehicle sales and exempting federal agencies to develop an part 525, passenger car manufacturers them will have a negligible impact on accountable process to ensure ‘‘meaningful and timely input by State making less than 10,000 vehicles per the CO2 emissions reductions from the year can petition NHTSA to have standards. Because EPA is exempting and local officials in the development of regulatory policies that have federalism alternative standards set for those small businesses from the CO2 manufacturers. These manufacturers do standards, we are certifying that the rule implications.’’ The Order defines the not currently meet the 27.5 mpg will not have a significant economic term ‘‘Policies that have federalism standard and must already petition the impact on a substantial number of small implications’’ to include regulations agency for relief. If the standard is entities. Therefore, EPA has not that have ‘‘substantial direct effects on raised, it has no meaningful impact on conducted a Regulatory Flexibility the States, on the relationship between these manufacturers—they still must go Analysis or a SBREFA SBAR Panel for the national government and the States, through the same process and petition the rule. or on the distribution of power and for relief. Given there already is a responsibilities among the various mechanism for relieving burden on EPA regulations allow small levels of government.’’ Under the Order, small businesses, which is the purpose businesses to voluntarily waive their agencies may not issue a regulation that of the Regulatory Flexibility Act, a small business exemption and has federalism implications, that regulatory flexibility analysis was not optionally certify to the CO2 standards. imposes substantial direct compliance prepared. This allows small entity manufacturers costs, unless the Federal government EPA believes this rulemaking would to earn CO2 credits under the CO2 provides the funds necessary to pay the not have a significant economic impact program, if their actual fleetwide CO2 direct compliance costs incurred by on a substantial number of small entities performance is better than their State and local governments, or the under the Regulatory Flexibility Act, as fleetwide CO2 target standard. However, agencies consult with State and local amended by the Small Business the exemption waiver is optional for officials early in the process of Regulatory Enforcement Fairness Act. small entities and thus we believe that developing the proposed regulation. The

EPA is exempting from the CO2 manufacturers opt into the CO2 program agencies complied with Order’s standards any manufacturer, domestic if it is economically advantageous for requirements. or foreign, meeting SBA’s size them to do so, for example in order to See Section VI above for further detail definitions of small business as generate and sell CO2 credits. Therefore, described in 13 CFR 121.201. EPA EPA believes this voluntary option does on the agencies’ assessment of the adopted the same type of exemption for not affect EPA’s determination that the federalism implications of this proposal. standards will impose no significant 942 Number of employees as of March 2018, adverse impact on small entities. source: Linkedin.com. 943 Rough estimate for model year 2017.

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H. Executive Order 12988 (Civil Justice average fuel economy standards lower proposing to use a consensus Reform) and higher than those proposed. The methodology developed by the Society Pursuant to Executive Order 12988, proposed fuel economy standards for of Automotive Engineers (SAE) and also ‘‘Civil Justice Reform,’’ 944 NHTSA has MYs 2021–2026 are the least costly, a new A/C test. EPA knows of no considered whether this rulemaking most cost-effective, and least consensus standard available for the A/ would have any retroactive effect. This burdensome alternative that achieve the C test. There are currently no voluntary proposed rule does not have any objective of the rule. consensus standards that NHTSA retroactive effect. K. Regulation Identifier Number administers relevant to today’s proposed I. Executive Order 13175 (Consultation The Department of Transportation CAFE standards. and Coordination With Indian Tribal assigns a regulation identifier number M. Department of Energy Review Governments) (RIN) to each regulatory action listed in the Unified Agenda of Federal In accordance with 49 U.S.C. This proposed rule does not have Regulations. The Regulatory Information 32902(j)(1), NHTSA submitted this tribal implications, as specified in Service Center publishes the Unified proposed rule to the Department of Executive Order 13175 (65 FR 67249, Agenda in April and October of each Energy for review. November 9, 2000). This rule will be year. You may use the RIN contained in implemented at the Federal level and N. Paperwork Reduction Act the heading at the beginning of this impose compliance costs only on document to find this action in the The Paperwork Reduction Act (PRA) vehicle manufacturers. Thus, Executive 947 Unified Agenda. of 1995, Public Law 104–13, gives the Order 13175 does not apply to this rule. Office of Management and Budget L. National Technology Transfer and J. Unfunded Mandates Reform Act (OMB) authority to regulate matters Advancement Act regarding the collection, management, Section 202 of the Unfunded Section 12(d) of the National storage, and dissemination of certain Mandates Reform Act of 1995 (UMRA) Technology Transfer and Advancement information by and for the Federal requires Federal agencies to prepare a Act (NTTAA) requires NHTSA and EPA government. It seeks to reduce the total written assessment of the costs, benefits, to evaluate and use existing voluntary amount of paperwork handled by the and other effects of a proposed or final consensus standards in its regulatory government and the public. The PRA rule that includes a Federal mandate activities unless doing so would be requires Federal agencies to place a likely to result in the expenditure by inconsistent with applicable law (e.g., notice in the Federal Register seeking State, local, or tribal governments, in the the statutory provisions regarding public comment on the proposed aggregate, or by the private sector, of NHTSA’s vehicle safety authority, or collection of information. NHTSA more than $100 million in any one year EPA’s testing authority) or otherwise strives to reduce the public’s (adjusted for inflation with base year of impractical.946 information collection burden hours 1995). Adjusting this amount by the Voluntary consensus standards are each fiscal year by streamlining external implicit gross domestic product price technical standards developed or and internal processes. deflator for 2016 results in $148 million To this end, NHTSA seeks to continue 945 adopted by voluntary consensus (111.416/75.324 = 1.48). Before standards bodies. Technical standards to collect information to ensure promulgating a rule for which a written are defined by the NTTAA as compliance with its CAFE program. statement is needed, section 205 of ‘‘performance-based or design-specific NHTSA intends to reinstate its UMRA generally requires NHTSA and technical specification and related previously-approved collection of EPA to identify and consider a management systems practices.’’ They information for Corporate Average Fuel reasonable number of regulatory pertain to ‘‘products and processes, Economy (CAFE) reports specified in 49 alternatives and adopt the least costly, such as size, strength, or technical CFR part 537 (OMB control number most cost-effective, or least burdensome performance of a product, process or 2127–0019), add the additional burden alternative that achieves the objective of material.’’ for reporting changes adopted in the the rule. The provisions of section 205 Examples of organizations generally October 15, 2012 final rule that recently do not apply when they are inconsistent regarded as voluntary consensus came into effect (see 77 FR 62623), and with applicable law. Moreover, section standards bodies include the American account for the change in burden as 205 allows NHTSA and EPA to adopt an Society for Testing and Materials proposed in this rule as well as for other alternative other than the least costly, (ASTM), the Society of Automotive CAFE reporting provisions required by most cost-effective, or least burdensome Engineers (SAE), and the American Congress and NHTSA. NHTSA is also alternative if the agency publishes with National Standards Institute (ANSI). If changing the name of this collection to the proposed rule an explanation of why the agencies do not use available and more accurately represent the breadth of that alternative was not adopted. potentially applicable voluntary all CAFE regulatory reporting. Although This proposed rule will not result in consensus standards, we are required by NHTSA seeks to add additional burden the expenditure by State, local, or tribal the Act to provide Congress, through hours to its CAFE report requirement in governments, in the aggregate, of more OMB, an explanation of the reasons for 49 CFR 537, the agency believes there than $148 million annually, but it will not using such standards. will be a reduction in burden due to the result in the expenditure of that For CO2 emissions, EPA is proposing standardization of data and the magnitude by vehicle manufacturers to collect data over the same tests that streamlined process. NHTSA is seeking and/or their suppliers. In developing are used for the MY 2012–2016 CO2 public comment on this collection. this proposal, NHTSA and EPA standards and for the CAFE program. In compliance with the PRA, this considered a variety of alternative This will minimize the amount of notice announces that the information testing done by manufacturers, since collection request (ICR) abstracted 944 61 FR 4729 (Feb. 7, 1996). manufacturers are already required to below has been forwarded to OMB for 945 Bureau of Economic Analysis, National Income and Product Accounts (NIPA), Table 1.1.9 run these tests. For A/C credits, EPA is review and comment. The ICR describes Implicit Price Deflators for Gross Domestic Product. https://bea.gov/iTable/index_nipa.cfm. 946 15 U.S.C. 272. 947 Codified at 44 U.S.C. 3501 et seq.

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the nature of the information collection To implement this statute, NHTSA vehicles beginning with MY 2017.952 and its expected burden. issued 49 CFR part 537, ‘‘Automotive These technologies include air- Title: Corporate Average Fuel Fuel Economy Reports,’’ which adds conditioning systems with increased Economy. additional definition to § 32907. The efficiency, off-cycle technologies whose Type of Request: Reinstatement and first report, the PMY report must be benefits are not adequately captured on amendment of a previously approved submitted to NHTSA before December the Federal Test Procedure and/or the collection. 31 of the calendar year prior to the Highway Fuel Economy Test,953 and OMB Control Number: 2127–0019. corresponding model year and contain hybrid electric technologies installed on Form Numbers: NHTSA Form 1474 manufacturers’ projected information full-size pickup trucks. Prior to MY (CAFE Projections Reporting Template) for that upcoming model year. The 2017, manufacturers were unable to and NHTSA Form 1475 (CAFE Credit second report, the MMY report must be earn a fuel economy benefit for these Template). submitted by July 31 of the given model technologies, so NHTSA’s reporting Requested Expiration Date of year and contain updated information requirements did not include an Approval: Three years from date of from manufacturers based upon actual opportunity to report them. Now, approval. and projected information known manufacturers must provide Summary of the collection of midway through the model year. information on these technologies in information: As part of this rulemaking, Finally, the last report, a supplementary their CAFE reports. NHTSA requires NHTSA is reinstating and modifying its report, is required to be submitted manufacturers to provide detailed previously-approved collection for anytime a manufacture needs to correct information on the model types using CAFE-related collections of information. information previously submitted to these technologies to gain fuel economy NHTSA and EPA have coordinated their NHTSA. benefits. These details are necessary to compliance and reporting requirements Compliance reports must include facilitate NHTSA’s technical analyses in an effort not to impose duplicative information on passenger and non- and to ensure the agency can perform burden on regulated entities. This passenger automobiles (trucks) random enforcement audits when information collection contains three describing the projected and actual fuel necessary. different components: Burden related economy standards, fuel economy In addition to a list of all fuel NHTSA’s CAFE reporting requirements, performance values, production sales consumption improvement technologies burden related to CAFE compliance, but volumes and information on vehicle utilized in their fleet, 49 CFR 537 not via reporting requirements, and design features (e.g., engine requires manufacturers to report the information gathered by NHTSA to help displacement and transmission class) make, model type, compliance category, inform CAFE analyses. All templates and other vehicle attribute and production volume of each vehicle referenced in this section will be characteristics (e.g., track width, wheel equipped with each technology and the available in the rulemaking docket for base and other light truck off-road associated fuel consumption comment. features). Manufacturers submit improvement value (FCIV). NHTSA is 1. CAFE Compliance Reports confidential and non-confidential proposing to add the reporting and versions of these reports to NHTSA. enforcement burden hours and cost for NHTSA seeks to reinstate 948 its Confidential reports differ by including these new incentives to this collection. collection related to the reporting estimated or actual production sales Manufacturers can also petition the EPA requirements in 49 U.S.C. 32907 information, which is withheld from and NHTSA, in accordance with 40 CFR ‘‘Reports and tests of manufacturers.’’ In public disclosure to protect each 86.1868–12 or 40 CFR 86.1869–12, to that section, manufacturers are manufacturer’s competitive sales gain additional credits based upon the statutorily required to submit CAFE strategies. NHTSA uses the reports as improved performance of any of the compliance reports to the Secretary of the basis for vehicle auditing and new incentivized technologies allowed Transportation.949 The reports must testing, which helps manufacturers for model year 2017. EPA approves state if a manufacturer will comply with correct reporting errors prior to the end these petitions in collaboration with its applicable fuel economy standard(s), of the model year and facilitate NHTSA and any adjustments are taken what actions the manufacturer intends acceptance of their final CAFE report by into account for both programs. As a to take to comply with the standard(s), the Environmental Protection Agency part the agencies’ coordination, NHTSA and include other information as (EPA). The reports also help the agency, provides EPA with an evaluation of required by NHTSA. Manufacturers are as well as the manufacturers who each new technology to ensure its direct required to submit two CAFE prepare them, anticipate potential impact on fuel economy and an compliance reports—a pre-model year compliance issues as early as possible, assessment on the suitability of each report (PMY) and mid-model year and help manufacturers plan their technology for use in increasing a (MMY) reporter—each year. In the event compliance strategies. manufacturer’s fuel economy a manufacturer needs to correct Further, NHTSA is modifying this performance. Furthermore, at times, previously-submitted information, a collection to account for additional NHTSA may independently request manufacturer may need to file information manufacturers are required additional information from a additional reports.950 to include in their reports. In the 2017 manufacturer to support its evaluations. and beyond final rule,951 NHTSA This information along with any 948 This collection expired on April 30, 2016. allowed for manufacturers to gain research conclusions shared with EPA 949 49 U.S.C. 32907 (delegated to the NHTSA additional fuel economy benefits by and NHTSA in the petitions is required Administrator at 49 CFR 1.95). Because of this delegation, for purposes of discussion, statutory installing certain technologies on their to be submitted in manufacturer’s CAFE references to the Secretary of Transportation in this reports. section will discussed in terms of NHTSA or the actions reported are not sufficient to ensure NHTSA administrator. compliance with that standard, the manufacturer 952 These technologies were not included in the 950 Specifically, a manufacturer shall submit a shall report additional actions it intends to take to burden for part 537 at the time as the additional report containing the information during the 30 comply with the standard and include a statement reporting requirements would not take effect until days before the beginning of each model year, and about whether those actions are sufficient to ensure years later. during the 30 days beginning the 180th day of the compliance. 953 E.g., engine idle stop-start systems, active model year. When a manufacturer decides that 951 77 FR 62623 (Oct. 15, 2012). transmission warmup systems, etc.

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NHTSA is seeking to change the the credit transaction template. The fleet, NHTSA occasionally asks burden hours for its CAFE reporting template NHTSA is proposing is a manufacturers for information that is requirements in 49 CFR part 537. simple spreadsheet that trading parties similar to information submitted as part NHTSA plans to reduce the total fill out. When completed, parties will be of EPA’s final model year report (e.g., amount of time spent collecting the able to click a button on the spreadsheet final model year vehicle volumes). required reporting information by to generate a joint transaction letter for Periodically, NHTSA may ask standardizing the required data and the parties to sign and submit to manufacturers for more detailed streamlining the collection process NHTSA, along with the spreadsheet. information than what is required for using a standardized reporting template. NHTSA believes these changes will compliance (e.g., what engines are The standardized template will be used significantly reduce the burden on shared across vehicle models). Often, by manufacturers to collect all the manufacturers in managing their CAFE NHTSA requests this information from required CAFE information under 49 credit accounts. manufacturers after manufacturers have CFR 537.7(b) and (c) and provides a Finally, NHTSA is accounting for the submitted their final model year reports format which ensures accuracy, additional burden due to existing CAFE to EPA, but before EPA processes and completeness and better alignment with program elements. In 49 CFR part 525, releases final model year reports. the final data provided to EPA. small volume manufacturers submit Information like this, which is used to petitions to NHTSA for exemption from verify and supplement the data used to 2. Other CAFE Compliance Collections an applicable average fuel economy create the analysis fleet, is tremendously NHTSA is proposing a new standard and to request to comply with valuable to generating an accurate standardized template for manufacturers a less stringent alternative average fuel analysis fleet, and setting maximum buying CAFE credits and for economy standard. In 49 CFR part 534, feasible standards. The more accurate manufacturers submitting credit manufacturers are required to submit the analysis fleet is, the more accurate transactions in accordance with 49 CFR information to NHTSA when the modeling of what technologies part 536. In 49 CFR part 536.5(d), establishing a corporate controlled could be applied will be. Therefore, NHTSA is required to assess compliance relationship with another manufacturer. NHTSA is accounting for the burden on with fuel economy standards each year, A controlled relationship exists between manufacturers to provide the agency utilizing the certified and reported manufacturers that control, are with this additional information. In CAFE data provided by the controlled by, or are under common almost all instances, manufacturers Environmental Protection Agency for control with, one or more other already have the information NHTSA enforcement of the CAFE program manufacturers. Accordingly, seeks, but it might need to be pursuant to 49 U.S.C. 32904(e). Credit manufacturers that have entered into reformatted or recompiled. Because of values are calculated based on the CAFE written contracts transferring rights and this, NHTSA believes the burden to data from the EPA. If a manufacturer’s responsibilities to other manufacturers provide this information will often be vehicles in a particular compliance in controlled relationships for CAFE minimal. category performs better than its purposes are required to provide reports Affected Public: Respondents are required fuel economy standard, to NHTSA. There are additional manufacturers of engines and vehicles NHTSA adds credits to the reporting requirements for within the North American Industry manufacturer’s account for that manufacturers submitting carry back Classification System (NAICS) and use compliance category. If a manufacturer’s plans and when manufacturers split the coding structure as defined by vehicles in a particular compliance apart from controlled relationships and NAICS including codes 33611, 336111, category performs worse than the must designate how credits are to be 336112, 33631, 33631, 33632, 336320, required fuel economy standard, allocated between the parties.954 33635, and 336350 for motor vehicle NHTSA will add a credit deficit to the Manufacturers with credit deficits at the and parts manufacturing. manufacturer’s account and will end of the model year, can carry back Respondent’s obligation to respond: provide written notification to the future earned credits up to three model Regulated entities required to respond manufacturer concerning its failure to years in advance of the deficit to resolve to inquiries covered by this collection. comply. The manufacturer will be a current shortfall. The carryback plan 49 U.S.C. 32907. 49 CFR part 525, 534, required to confirm the shortfall and proving the existence of a manufacturers 536, and 537. must either: Submit a plan indicating future earned credits must be submitted Frequency of response: Variable, how it will allocate existing credits or and approved by NHTSA, pursuant to based on compliance obligation. Please earn, transfer and/or acquire credits or 49 U.S.C. 32903(b). see PRA supporting documentation in pay the equivalent civil penalty. The 3. Analysis Fleet Composition the docket for more detailed manufacturer must submit a plan or information. As discussed in Section II., in setting payment within 60 days of receiving Average burden time per response: CAFE standards, NHTSA creates an notification from NHTSA. Variable, based on compliance NHTSA is proposing for analysis fleet from which to model obligation. Please see PRA supporting manufacturers to use the credit potential future economy documentation in the docket for more transaction template any time a credit improvements. To compose this fleet, detailed information. transaction request is sent to NHTSA. the agency uses a mixture of compliance Number of respondents: 23. For example, manufacturers that data and information from other sources purchase credits and want to apply to best replicate the fleet from a recent 4. Estimated Total Annual Burden them to their credit accounts will use model year. While refining the analysis Hours and Costs

954 See 49 CFR part 536.

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O. Privacy Act Regulatory Text Full-size pickup truck means a light truck or medium duty passenger vehicle In accordance with 5 U.S.C. 553(c), In consideration of the foregoing, that meets the requirements specified in the agencies solicit comments from the under the authority of 49 U.S.C. 32901, 40 CFR 86.1803. public to better inform the rulemaking 32902, and 32903, and delegation of process. These comments are posted, authority at 49 CFR 1.95, NHTSA * * * * * without edit, to www.regulations.gov, as proposes to amend 49 CFR Chapter V as PART 531—PASSENGER described in DOT’s system of records follows: AUTOMOBILE AVERAGE FUEL notice, DOT/ALL–14 FDMS, accessible ECONOMY STANDARDS through www.transportation.gov/ PART 523—VEHICLE CLASSIFICATION privacy. In order to facilitate comment ■ 3. The authority citation for part 531 ■ tracking and response, we encourage 1. The authority citation for part 523 continues to read as follows: commenters to provide their name, or continues to read as follows: Authority: 49 U.S.C. 32902; delegation of the name of their organization; however, Authority: 49 U.S.C 32901, delegation of authority at 49 CFR 1.95. authority at 49 CFR 1.95. submission of names is completely ■ optional. 4. Amend § 531.5 by revising Table III ■ 2. Amend § 523.2 by revising the to paragraph (c), and paragraph (d), List of Subjects definitions of ‘‘Curb weight’’ and ‘‘Full- deleting paragraph (e), and size pickup truck’’ to read as follows: 49 CFR Parts 523, 531, and 533 redesignating paragraph (f) as paragraph § 523.2 Definitions. (e) to read as follows: Fuel economy. * * * * * § 531.5 Fuel economy standards. 49 CFR Parts 536 and 537 Curb weight has the meaning given in * * * * * Fuel economy, Reporting and 40 CFR 86.1803. (c) * * * recordkeeping requirements. * * * * * BILLING CODE 4910–59–P

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Table III- Parameters for the Passenger Automobile Fuel Economy Targets, MYs 2012-2026

Parameters Model year 2 a (mpg) b (mpg) c (gal/mi/ft ) d (gal/mi)

2012 ......

...... 35.95 27.95 0.0005308 0.006057

.....

2013 ......

...... 36.80 28.46 0.0005308 0.005410

.....

2014 ......

...... 37.75 29.03 0.0005308 0.004725

.....

2015 ......

...... 39.24 29.90 0.0005308 0.003719

.....

2016 ......

...... 41.09 30.96 0.0005308 0.002573

.....

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Parameters Model year a (mpg) b (mpg) c (gal/milfr) d (gal/mi)

2017 ...... 43.61 32.65 0.0005131 0.001896

......

.....

2018 ...... 45.21 33.84 0.0004954 0.001811

......

......

2019 ...... 46.87 35.07 0.0004783 0.001729

......

......

2020 ...... 48.74 36.47 0.0004603 0.001643

......

......

2021 ...... 48.74 36.47 0.0004603 0.001643

......

......

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Parameters Model year a (mpg) b (mpg) c (gal/milfr) d (gal/mi)

2022 ...... 48.74 36.47 0.0004603 0.001643

......

.....

2023 ...... 48.74 36.47 0.0004603 0.001643

......

.....

2024 ...... 48.74 36.47 0.0004603 0.001643

......

.....

2025 ...... 48.74 36.47 0.0004603 0.001643

......

.....

2026 ......

...... 48.74 36.47 0.0004603 0.001643

.....

(d) In addition to the requirements of each manufacturer shall also meet the domestically manufactured passenger paragraphs (b) and (c) of this section, minimum fleet standard for automobiles expressed in Table IV:

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Table IV- Minimum Fuel Economy Standards for Domestically Manufactured Passenger Automobiles, MYs 2011-2026 Model year Minimum standard

2011 ...... 27.8

2012 ...... 30.7

2013 ...... 31.4

2014 ...... 32.1

2015 ...... 33.3

2016 ...... 34.7

2017 ...... 36.8

2018 ...... 38.0

2019 ...... 39.4

2020 ...... 40.9

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BILLING CODE 4910–59–C resulting from the use of those air For off-cycle technologies that are * * * * * conditioning systems must be covered under 40 CFR 86.1869–12(d), ■ 5. Amend § 531.6 by revising determined in accordance with 40 CFR NHTSA will consult with EPA regarding paragraphs (a) and (b) to read as follows: 600.510–12(c)(3)(i). NHTSA’s evaluation of the specific off- cycle technology to ensure its impact on § 531.6 Measurement and calculation (2) A manufacturer that seeks to procedures. increase its fleet average fuel economy fuel economy and the suitability of using the off-cycle technology to adjust (a) The fleet average fuel economy performance through the use of off-cycle the fuel economy performance. NHTSA performance of all passenger technologies must follow the will provide its views on the suitability automobiles that are manufactured by a requirements in 40 CFR 86.1869–12. A of the technology for that purpose to manufacturer in a model year shall be manufacturer is eligible to gain fuel EPA. NHTSA’s evaluation and review determined in accordance with consumption improvements for will consider: procedures established by the predefined off-cycle technologies in accordance with 40 CFR 86.1869–12(b) (1) Whether the technology has a Administrator of the Environmental direct impact upon improving fuel Protection Agency under 49 U.S.C. or for technologies tested using EPA’s 5- cycle methodology in accordance with economy performance; 32904 and set forth in 40 CFR part 600. (2) Whether the technology is related For model years 2017 to 2026, a 40 CFR 86.1869–12(c). The fuel consumption improvement is to crash-avoidance technologies, safety manufacturer is eligible to increase the critical systems or systems affecting fuel economy performance of passenger determined in accordance with 40 CFR 600.510–12(c)(3)(ii). safety-critical functions, or technologies cars in accordance with procedures designed for the purpose of reducing the established by EPA set forth in 40 CFR (b) A manufacturer is eligible to frequency of vehicle crashes; 600, Subpart F, including any increase its fuel economy performance (3) Information from any assessments adjustments to fuel economy EPA through use of an off-cycle technology conducted by EPA related to the allows, such as for fuel consumption requiring an application request made to application, the technology and/or improvements related to air EPA in accordance with 40 CFR related technologies; and conditioning efficiency and off-cycle 86.1869–12(d). The request must be (4) Any other relevant factors. technologies. approved by EPA in consultation with * * * * * (1) A manufacturer that seeks to NHTSA. To expedite NHTSA’s ■ 6. Add § 531.7 to read as follows: increase its fleet average fuel economy consultation with EPA, a manufacturer performance through the use of shall concurrently submit its § 531.7 Preemption. technologies that improve the efficiency application to NHTSA if the (a) General. When an average fuel of air conditioning systems must follow manufacturer is seeking off-cycle fuel economy standard prescribed under this the requirements in 40 CFR 86.1868–12. economy improvement values under the chapter is in effect, a State or a political Fuel consumption improvement values CAFE program for those technologies. subdivision of a State may not adopt or

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enforce a law or regulation related to such a law or regulation relates to average that is not attribute-based and does not fuel economy standards or average fuel fuel economy standards within the meaning separately regulate passenger cars and light economy standards for automobiles of 49 U.S.C. 32919. trucks, conflicts with: (A) Automobile fuel economy is directly (A) The fuel economy standards in this covered by an average fuel economy and substantially related to automobile standard under this chapter. Part; tailpipe emissions of carbon dioxide; (B) The judgments made by the agency in (b) Requirements Must Be Identical. (B) Carbon dioxide is the natural by- establishing those standards; and When a requirement under section product of automobile fuel consumption; (C) The achievement of the objectives of 32908 of this title is in effect, a State or (C) The most significant and controlling the statute (49 U.S.C. Chapter 329) under a political subdivision of a State may factor in making the measurements necessary which those standards were established, adopt or enforce a law or regulation on to determine the compliance of automobiles including objectives relating to reducing fuel disclosure of fuel economy or fuel with the fuel economy standards in this Part consumption in a manner and to the extent operating costs for an automobile is their rate of tailpipe carbon dioxide consistent with manufacturer flexibility, emissions; consumer choice, and automobile safety. covered by section 32908 only if the law (D) Almost all technologically feasible or regulation is identical to that (2) Any state law or regulation regulating reduction of tailpipe emissions of carbon or prohibiting tailpipe carbon dioxide requirement. dioxide is achievable through improving fuel emissions from automobiles is impliedly (c) State and Political Subdivision economy, thereby reducing both the preempted under 49 U.S.C. Chapter 329. Automobiles. A State or a political consumption of fuel and the creation and (3) A state law or regulation having the emission of carbon dioxide; subdivision of a State may prescribe direct effect of regulating or prohibiting (E) Accordingly, as a practical matter, requirements for fuel economy for tailpipe carbon dioxide emissions or fuel regulating fuel economy controls the amount automobiles obtained for its own use. economy is impliedly preempted under 49 of tailpipe emissions of carbon dioxide, and ■ U.S.C. Chapter 329. 7. Redesignate Appendix to Part 531— regulating the tailpipe emissions of carbon Example of Calculating Compliance dioxide controls fuel economy. PART 533—LIGHT TRUCK FUEL under § 531.5(c) as Appendix A to Part (2) As a state law or regulation related to 531—Example of Calculating fuel economy standards, any state law or ECONOMY STANDARDS Compliance under § 531.5(c) and amend regulation regulating or prohibiting tailpipe newly redesignated Appendix A by carbon dioxide emissions from automobiles ■ 9. The authority citation for part 533 removing all all references to is expressly preempted under 49 U.S.C. continues to read as follows: ‘‘Appendix’’ and adding in their place, 32919. Authority: 49 U.S.C. 32902; delegation of (3) A state law or regulation having the authority at 49 CFR 1.95. ‘‘Appendix A.’’ direct effect of regulating or prohibiting ■ 8. Add Appendix B to Part 531 to read tailpipe carbon dioxide emissions or fuel ■ 10. Amend § 533.5 by revising Table as follows: economy is a law or regulation related to fuel VII to paragraph (a) to read as follows Appendix B to Part 531—Preemption economy and expressly preempted under 49 and removing paragraph (k). U.S.C. 32919. (a) Express Preemption: (b) Implied Preemption: § 533.5 Requirements. (1) To the extent that any state law or (1) A state law or regulation regulating regulation regulates or prohibits tailpipe tailpipe carbon dioxide emissions from (a) * * * carbon dioxide emissions from automobiles, automobiles, particularly a law or regulation BILLING CODE 4910–59–P

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Table VII- Parameters for the Light Truck Fuel Economy Targets for MYs 2017-2026

Parameters

Model c g d a b e F h year (gal/mi/f (gal/mi/f (mpg) (mpg) (mpg) (mpg) (gal/mi) (gal/mi) t2) t2)

0.00054 0.00509 0.00045 2017 36.26 25.09 35.10 25.09 0.009851 84 7 46

0.00053 0.00479 0.00045 2018 37.36 25.20 35.31 25.20 0.009682 58 7 46

0.00052 0.00462 0.00045 2019 38.16 25.25 35.41 25.25 0.009603 65 3 46

0.00051 0.00449 0.00045 2020 39.11 25.25 35.41 25.25 0.009603 40 4 46

0.00051 0.00449 0.00045 2021 39.11 25.25 35.41 25.25 0.009603 40 4 46

2022 39.11 25.25 35.41 25.25 0.009603 0.00051 0.00449 0.00045

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BILLING CODE 4910–59–C performance through the use of be determined in accordance with 40 * * * * * technologies that improve the efficiency CFR 600.510–12(c)(3)(iii). ■ 11. Amend § 533.6 by revising of air conditioning systems must follow (c) A manufacturer is eligible to paragraphs (b) and (c) as follows: the requirements in 40 CFR 86.1868–12. increase its fuel economy performance § 533.6 Measurement and calculation Fuel consumption improvement values through use of an off-cycle technology procedures. resulting from the use of those air requiring an application request made to * * * * * conditioning systems must be EPA in accordance with 40 CFR (b) The fleet average fuel economy determined in accordance with 40 CFR 86.1869–12(d). The request must be performance of all light trucks that are 600.510–12(c)(3)(i). approved by EPA in consultation with manufactured by a manufacturer in a (2) A manufacturer that seeks to NHTSA. To expedite NHTSA’s model year shall be determined in increase its fleet average fuel economy consultation with EPA, a manufacturer accordance with procedures established performance through the use of off-cycle shall concurrently submit its by the Administrator of the technologies must follow the application to NHTSA if the Environmental Protection Agency under requirements in 40 CFR 86.1869–12. A manufacturer is seeking off-cycle fuel 49 U.S.C. 32904 and set forth in 40 CFR manufacturer is eligible to gain fuel economy improvement values under the part 600. For model years 2017 to 2026, consumption improvements for CAFE program for those technologies. a manufacturer is eligible to increase the predefined off-cycle technologies in For off-cycle technologies that are fuel economy performance of light accordance with 40 CFR 86.1869–12(b) covered under 40 CFR 86.1869–12(d), trucks in accordance with procedures or for technologies tested using the NHTSA will consult with EPA regarding established by EPA set forth in 40 CFR EPA’s 5-cycle methodology in NHTSA’s evaluation of the specific off- part 600, subpart F, including any accordance with 40 CFR 86.1869–12(c). cycle technology to ensure its impact on adjustments to fuel economy EPA The fuel consumption improvement is fuel economy and the suitability of allows, such as for fuel consumption determined in accordance with 40 CFR using the off-cycle technology to adjust improvements related to air 600.510–12(c)(3)(ii). the fuel economy performance. NHTSA conditioning efficiency, off-cycle will provide its views on the suitability technologies, and hybridization and (3) The eligibility of a manufacturer to of the technology for that purpose to other performance-based technologies increase its fuel economy using EPA. NHTSA’s evaluation and review for full-size pickup trucks that meet the hybridized and other performance-based will consider: requirements specified in 40 CFR technologies for full-size pickup trucks 86.1803. must follow 40 CFR 86.1870–12 and the (1) Whether the technology has a (1) A manufacturer that seeks to fuel consumption improvement of these direct impact upon improving fuel increase its fleet average fuel economy full-size pickup truck technologies must economy performance;

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(2) Whether the technology is related measurements necessary to determine ■ 16. Amend § 535.6 by revising to crash-avoidance technologies, safety the compliance of automobiles with the paragraph (a)(4)(ii) to read as follows: critical systems or systems affecting fuel economy standards in this Part is * * * * * safety-critical functions, or technologies their rate of tailpipe carbon dioxide (a) * * * designed for the purpose of reducing the emissions; (4) * * * frequency of vehicle crashes; (D) Almost all technologically feasible (ii) Calculate the equivalent fuel (3) Information from any assessments reduction of tailpipe emissions of consumption test group results as conducted by EPA related to the carbon dioxide is achievable through follows for spark-ignition vehicles and application, the technology and/or improving fuel economy, thereby alternative fuel spark-ignition vehicles. related technologies; and reducing both the consumption of fuel CO2 emissions test group result (grams (4) Any other relevant factors. and the creation and emission of carbon per mile)/8,887 grams per gallon of * * * * * dioxide; gasoline fuel) × (102) = Fuel ■ 12. Add § 533.7 to read as follows: (E) Accordingly, as a practical matter, consumption test group result (gallons regulating fuel economy controls the per 100 mile). § 533.7 Preemption. amount of tailpipe emissions of carbon * * * * * (a) General. When an average fuel dioxide, and regulating the tailpipe ■ 16. Amend § 535.6 by revising economy standard prescribed under this emissions of carbon dioxide controls paragraphs (a)(4)(ii) and (d)(5)(ii) to read chapter is in effect, a State or a political fuel economy. as follows: subdivision of a State may not adopt or (2) As a state law or regulation related * * * * * enforce a law or regulation related to to fuel economy standards, any state law or regulation regulating or prohibiting (a) * * * fuel economy standards or average fuel (4) * * * tailpipe carbon dioxide emissions from economy standards for automobiles (ii) Calculate the equivalent fuel automobiles is expressly preempted covered by an average fuel economy consumption test group results as standard under this chapter. under 49 U.S.C. 32919. (3) A state law or regulation having follows for spark-ignition vehicles and (b) Requirements Must Be Identical. alternative fuel spark-ignition vehicles. When a requirement under section the direct effect of regulating or CO2 emissions test group result (grams 32908 of this title is in effect, a State or prohibiting tailpipe carbon dioxide emissions or fuel economy is a law or per mile)/8,877 grams per gallon of a political subdivision of a State may gasoline fuel) × (10¥2) = Fuel adopt or enforce a law or regulation on regulation related to fuel economy and expressly preempted under 49 U.S.C. consumption test group result (gallons disclosure of fuel economy or fuel per 100 mile). operating costs for an automobile 32919. * * * * * covered by section 32908 only if the law (b) Implied Preemption: (d) * * * or regulation is identical to that (1) A state law or regulation regulating tailpipe carbon dioxide emissions from (5) * * * requirement. (ii) Calculate equivalent fuel (c) State and Political Subdivision automobiles, particularly a law or regulation that is not attribute-based and consumption FCL values for spark- Automobiles.—A State or a political ignition engines and alternative fuel subdivision of a State may prescribe does not separately regulate passenger spark-ignition engines. CO2 FCL value requirements for fuel economy for cars and light trucks, conflicts with: (A) The fuel economy standards in (grams per hp-hr)/8,887 grams per automobiles obtained for its own use. gallon of gasoline fuel) × (10¥2) = Fuel ■ this Part; 13. Redesignate Appendix to Part (B) The judgments made by the consumption FCL value (gallons per 100 533—Example of Calculating agency in establishing those standards; hp-hr). Compliance under § 533.5(i) as and Appendix A to Part 533—Example of * * * * * (C) The achievement of the objectives ■ 17. Amend § 535.7 by revising the Calculating Compliance under § 533.5(i) of the statute (49 U.S.C. Chapter 329) equations in paragraphs (b)(1), (c)(1), and amend newly redesignated under which those standards were (d)(1), (e)(2) and (f)(2)(iii)(E) to read as Appendix A by removing all references established, including objectives follows: to ‘‘Appendix’’ and adding in their relating to reducing fuel consumption in place, ‘‘Appendix A’’. a manner and to the extent consistent § 535.7 Averaging, banking, and trading ■ 14. Add Appendix B to Part 533 to with manufacturer flexibility, consumer (ABT) credit program. read as follows: choice, and automobile safety. * * * * * Appendix B to Part 533—Preemption (2) Any state law or regulation (b) * * * regulating or prohibiting tailpipe carbon (1) * * * (a) Express Preemption: dioxide emissions from automobiles is Total MY Fleet FCC (gallons) = (1) To the extent that any state law or ¥ impliedly preempted under 49 U.S.C. (Std¥Act) × (Volume) × (UL) × (10 2) regulation regulates or prohibits tailpipe Chapter 329. Where: carbon dioxide emissions from (3) A state law or regulation having Std = Fleet average fuel consumption automobiles, such a law or regulation the direct effect of regulating or relates to average fuel economy standard (gal/100 mile). prohibiting tailpipe carbon dioxide Act = Fleet average actual fuel consumption standards within the meaning of 49 emissions or fuel economy is impliedly U.S.C. 32919. value (gal/100 mile). preempted under 49 U.S.C. Chapter 329. Volume = the total U.S.-directed production (A) Automobile fuel economy is of vehicles in the regulatory subcategory. directly and substantially related to PART 535—MEDIUM- AND HEAVY- UL = the useful life for the regulatory automobile tailpipe emissions of carbon DUTY VEHICLE FUEL EFFICIENCY subcategory. The useful life value for dioxide; PROGRAM heavy-pickup trucks and vans (B) Carbon dioxide is the natural by- manufactured for model years 2013 product of automobile fuel ■ 15. The authority citation for part 535 through 2020 is equal to the 120,000 consumption; continues to read as follows: miles. The useful life for model years (C) The most significant and Authority: 49 U.S.C. 32902 and 30101; 2021 and later is equal to 150,000 miles. controlling factor in making the delegation of authority at 49 CFR 1.95. * * * * *

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(c) * * * Where: FEL = family emissions limit for the vehicle (1) * * * Std = the standard for the respective vehicle family (gal/1000 ton-mile). Vehicle Family FCC (gallons) = family regulatory subcategory (gal/1000 Payload = the prescribed payload in tons for (Std¥FEL) × (Payload) × (Volume) × ton-mile). each regulatory subcategory as shown in (UL) × (10¥3) the following table:

Volume = the number of U.S.-directed UL = the useful life for the regulatory production volume of vehicles in the subcategory (miles) as shown in the corresponding vehicle family. following table:

* * * * * Std = the standard for the respective engine equivalent mileage is 6.3 miles. For regulatory subcategory (gal/100 hp-hr). (d) * * * engines subject to compression-ignition FCL = family certification level for the engine heavy-duty standards, the equivalent (1) * * * family (gal/100 hp-hr). mileage is 6.5 miles. CF = a transient cycle conversion factor in Volume = the number of engines in the Engine Family FCC (gallons) = hp-hr/mile which is the integrated total (Std¥FCL) × (CF) × (Volume) × (UL) cycle horsepower-hour divided by the corresponding engine family. × (10¥2) equivalent mileage of the applicable test UL = the useful life of the given engine cycle. For engines subject to spark- family (miles) as shown in the following Where: ignition heavy-duty standards, the table:

* * * * * Std = the standard for the respective vehicle UL = the useful life for the regulatory family regulatory subcategory (gal/1000 subcategory. The useful life value for (e) * * * ton-mile). heavy-duty trailers is equal to the (2) * * * FEL = family emissions limit for the vehicle 250,000 miles. ¥ family (gal/1000 ton-mile). Vehicle Family FCC (gallons) = (Std * * * * * × × × Payload = 10 tons for short box vans and 19 FEL) (Payload) (Volume) (UL) tons for other trailers. (f) * * * × ¥3 (10 ) Volume = the number of U.S.-directed (2) * * * Where: production volume of vehicles in the (iii) * * * corresponding vehicle family. (E) * * *

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Off-cycle FC credits = (CO2 Credit/CF) × PART 536—TRANSFER AND TRADING the user (or buyer) must multiply the Production × VLM OF FUEL ECONOMY CREDITS calculated adjustment factor by the Where: number of its shortfall credits it plans to ■ 18. The authority citation for part 536 CO2 Credits = the credit value in grams per offset in order to determine the number mile determined in 40 CFR 86.1869– continues to read as follows: of equivalent credits to acquire from the 12(c)(3), (d)(1), (d)(2) or (d)(3). Authority: 49 U.S.C. 32903; delegation of earner (or seller). For transferred credits, CF = conversion factor, which for spark- authority at 49 CFR 1.95. the user of credits must multiply the ignition engines is 8,887 and for ■ calculated adjustment factor by the compression-ignition engines is 10,180. 19. Amend § 536.4 by revising Production = the total production volume for paragraph (c) to read as follows: number of its shortfall credits it plans to the applicable category of vehicles. offset in order to determine the number § 536.4 Credits. VLM = vehicle lifetime miles, which for of equivalent credits to transfer from the 2b–3 vehicles shall be 150,000 for the * * * * * compliance category holding the Phase 2 program. (c) Adjustment factor. When traded or available credits. The adjustment factor The term (CO2 Credit/CF) should be transferred and used, fuel economy is calculated according to the following rounded to the nearest 0.0001. credits are adjusted to ensure fuel oil formula: * * * * * savings is preserved. For traded credits,

Where: (6) Credit allocation plans received (d) Beginning with MY 2019, each A = Adjustment factor applied to traded and from a manufacturer will be reviewed manufacturer shall generate reports transferred credits when they are applied and approved by NHTSA. Use the required by this part using the NHTSA to an existing credit shortfall. The NHTSA Credit Template (OMB Control CAFE Projections Reporting Template quotient shall be rounded to 4 decimal No. 2127–0019, NHTSA Form 1475) to (OMB Control No. 2127–0019, NHTSA places; record the credit transactions requested Form 1474). The template is a fillable * * * * * in the credit allocation plan. The form. ■ 20. Amend § 536.5 by redesignating template is a fillable form that has an (1) Select the option to identify the paragraphs (c)(1) and (c)(2) as option for recording and calculating report as a pre-model year report, mid- paragraphs (c)(2) and (c)(3), credit transactions for credit allocation model year report, or supplementary respectively, adding paragraph (c)(1), plans. The template calculates the report as appropriate; and revising paragraph (d)(6) to read as required adjustments to the credits. The (2) Complete all required information follows: credit allocation plan and the completed for the manufacturer and for all vehicles transaction template must be submitted produced for the current model year § 536.5 Trading infrastructure. to NHTSA. NHTSA will approve the required to comply with CAFE * * * * * credit allocation plan unless it finds that standards. Identify the manufacturer (c) * * * the proposed credits are unavailable or submitting the report, including the full (1) Entities trading credits must that it is unlikely that the plan will name, title, and address of the official generate and submit trade documents result in the manufacturer earning responsible for preparing the report and using the NHTSA Credit Template sufficient credits to offset the subject a point of contact to answer questions (OMB Control No. 2127–0019, NHTSA credit shortfall. If the plan is approved, concerning the report. Form 1475). Entities shall fill out the NHTSA will revise the respective (3) Use the template to generate NHTSA Credit Template and use it to manufacturer’s credit account confidential and non-confidential generate a credit trade summary and accordingly. If the plan is rejected, reports for all the domestic and import credit trade confirmation, the latter of NHTSA will notify the respective passenger cars and light truck fleet which shall be signed by both trading manufacturer and request a revised plan produced by the manufacturer for the entities. The credit trade confirmation or payment of the appropriate fine. current model year. Manufacturers must serves as an acknowledgement that the * * * * * submit a request for confidentiality in parties have agreed to trade credits, and accordance with 49 CFR 512 to does not dictate terms, conditions, or PART 537—AUTOMOTIVE FUEL withhold projected production sales other business obligations. Managers ECONOMY REPORTS volume estimates from public legally authorized to obligate the sale disclosure. If the request is granted, and purchase of the traded credits must ■ 21. The authority citation for part 537 NHTSA will withhold the projected sign the trade confirmation. The continues to read as follows: production sales volume estimates from completed credit trade summary and a Authority: 49 U.S.C. 32907, delegation of public disclose until all the vehicles PDF copy of the signed trade authority at 49 CFR 1.95. produced by the manufacturer have confirmation must be submitted to ■ 24. Amend § 537.5 by revising been made available for sale (usually NHTSA. The NHTSA Credit Template is paragraph (d) and adding paragraph (e) one year after the current model year). available for download at http:// to read as follows: (4) Submit confidential reports and www.nhtsa.gov. requests for confidentiality to NHTSA * * * * * § 537.5 General requirements for reports. on CD–ROM in accordance with Part (d) * * * * * * * * 537.12. Email copies of non-confidential

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(i.e., redacted) reports to NHTSA’s by each the light truck fleet, as specified projections are not sufficiently secure email address: [email protected]. in part 533 of this chapter, for the representative for those purposes, state Requests for confidentiality must be current model year. the specific nature of any reason for the submitted in a PDF or MS Word format. (3) Provide the information required insufficiency and the specific additional Submit 2 copies of the CD–ROM to: by paragraph (a)(1) for pre- and mid- testing or derivation of fuel economy Administrator, National Highway model year reports using the NHTSA values by analytical methods believed Traffic Administration, 1200 New Jersey CAFE Projections Reporting Template, by the manufacturer necessary to Avenue SW, Washington, DC 20590, OMB Control No. 2127–0019, NHTSA eliminate the insufficiency and any and submit emailed reports Form 1474. The required reporting plans of the manufacturer to undertake electronically to the following secure template can be downloaded from that testing or derivation voluntarily email address: [email protected]; http://www.nhtsa.gov. and submit the resulting data to the (5) Confidentiality Requests. * * * * * Environmental Protection Agency under (i) Manufacturers can withhold ■ 25. Amend § 537.7 by revising 40 CFR 600.509. information on projected production paragraphs (b)(3), (b)(4), (b)(5), (c)(1), (c) * * * sales volumes under 5 U.S.C. 552(b)(4) (c)(2), (c)(3) and (c)(7)(i), (c)(7)(ii) and (1) For each model type of the and 15 U.S.C. 2005(d)(1). In accordance, (c)(7)(iii) to read as follows: manufacturer’s automobiles, provide the the manufacturer must: * * * * * information specified in paragraph (c)(2) (A) Show that the item is within the (b) * * * of this section in the NHTSA CAFE scope of sections 552(b)(4) and (3) State the projected required fuel Projections Reporting Template (OMB 2005(d)(1); economy for the manufacturer’s Control No. 2127–0019, NHTSA Form (B) Show that disclosure of the item passenger automobiles and light trucks 1474) and list the model types in order would result in significant competitive determined in accordance with 49 CFR of increasing average inertia weight damage; 531.5(c) and 49 CFR 533.5 and based from top to bottom. (C) Specify the period during which upon the projected sales figures (2)(i) Combined fuel economy; and the item must be withheld to avoid that provided under paragraph (c)(2) of this (ii) Projected sales for the current damage; and section. For each unique model type model year and total sales of all model (D) Show that earlier disclosure and footprint combination of the types. would result in that damage. manufacturer’s automobiles, provide the (3) For each vehicle configuration (ii) [Reserved] information specified in paragraph whose fuel economy was used to (e) Each report required by this part (b)(3)(i) and (ii) of this section and the calculate the fuel economy values for a must be based upon all information and CAFE Projections Reporting Template, model type under paragraph (c)(2) of data available to the manufacturer 30 OMB Control No. 2127–0019, NHTSA this section, provide the information days before the report is submitted to Form 1474. specified in paragraph (c)(4) of this the Administrator. (i) In the case of passenger section in the NHTSA CAFE Projections ■ 23. Amend § 537.6 by revising automobiles: Reporting Template (OMB Control No. paragraphs (b) and (c) to read as follows: (A) Beginning model year 2013, base 2127–0019, NHTSA Form 1474). § 537.6 General content of reports. tire as defined in 49 CFR 523.2, * * * * * * * * * * (B) Beginning model year 2013, front (7) * * * (b) Supplementary report. Except as axle, rear axle and average track width (i) Provide a list of each air provided in paragraph (c) of this as defined in 49 CFR 523.2, conditioning efficiency improvement section, each supplementary report for (C) Beginning model year 2013, technology utilized in your fleet(s) of each model year must contain the wheelbase as defined in 49 CFR 523.2, vehicles for each model year. For each information required by and § 537.7(b) and technology identify vehicles by make and (c) in accordance with § 537.8(b)(1), (D) Beginning model year 2013, and model types that have the (2), (3), and (4) as appropriate. footprint as defined in 49 CFR 523.2. technology, which compliance category (c) Exceptions. The pre-model year (E) The fuel economy target value for those vehicles belong to and the number report, mid-model year report, and each unique model type and footprint of vehicles for each model equipped supplementary report(s) submitted by entry listed in accordance with the with the technology. For each an incomplete automobile manufacturer equation provided in 49 CFR parts 531. compliance category (domestic for any model year are not required to (4) State the projected final required passenger car, import passenger car and contain the information specified in fuel economy that the manufacturer light truck) report the air conditioning § 537.7(c)(4)(xv) through (xviii) and anticipates having if changes fuel consumption improvement value in (c)(5). The information provided by the implemented during the model year will gallons/mile in accordance with the incomplete automobile manufacturer cause the targets to be different from the equation specified in 40 CFR 600.510– under § 537.7(c) shall be according to target fuel economy projected under 12(c)(3)(i). base level instead of model type or paragraph (b)(3) of this section. (ii) Provide a list of off-cycle carline. (5) State whether the manufacturer efficiency improvement technologies ■ 24. Amend § 537.7 by revising believes that the projections it provides utilized in your fleet(s) of vehicles for paragraphs (a)(2) and (3) as follows: under paragraphs (b)(2) and (b)(4) of this each model year that is pending or section, or if it does not provide an approved by EPA. For each technology § 537.7 Pre-model year and mid-model average or target under those identify vehicles by make and model year reports. paragraphs, the projections it provides types that have the technology, which (a) * * * under paragraphs (b)(1) and (b)(3) of this compliance category those vehicles (2) Provide a report with the section, sufficiently represent the belong to, the number of vehicles for information required by paragraph (a)(1) manufacturer’s average and target fuel each model equipped with the of this section by each domestic and economy for the current model year for technology, and the associated off-cycle import passenger automobile fleet, as purposes of the Act. In the case of a credits (grams/mile) available for each specified in part 531 of this chapter, and manufacturer that believes that the technology. For each compliance

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category (domestic passenger car, (ii) Such revisions of and additions to using 298 g CO2 to represent 1 g N2O import passenger car and light truck) the information submitted by the and 25 g CO2 to represent 1 g CH4. You calculate the fleet off-cycle fuel manufacturer in its pre-model year may then subtract the applicable consumption improvement value in report regarding the automobiles converted values from the fuel gallons/mile in accordance with the produced during the current model year conversion measured values of CH4 and/ equation specified in 40 CFR 600.510– as are necessary to reflect the or N2O to demonstrate compliance with 12(c)(3)(ii). information provided under paragraph the CH4 and/or N2O standards. This (iii) Provide a list of full-size pick-up (b)(4)(i) of this section. option may not be used for model year trucks in your fleet that meet the mild (c)(1) Each report required by 2021 or later. and strong hybrid vehicle definitions. paragraph (a)(1), (2), (3), or (4) of this (iv) Optionally, through model year For each mild and strong hybrid type, section must be submitted in 2020, compliance with greenhouse gas identify vehicles by make and model accordance with § 537.5(c) not more emission requirements may be types that have the technology, the than 45 days after the date on which the demonstrated by comparing emissions number of vehicles produced for each manufacturer determined, or could have from the vehicle prior to the fuel model equipped with the technology, determined with reasonable diligence, conversion to the emissions after the the total number of full size pick-up that a report is required under fuel conversion. This comparison must trucks produced with and without the paragraph (a)(1), (2), (3), or (4) of this be based on FTP test results from the technology, the calculated percentage of section. emission data vehicle (EDV) hybrid vehicles relative to the total * * * * * representing the pre-conversion test number of vehicles produced and the group. The sum of CO , CH , and N O Environmental Protection Agency 2 4 2 associated full-size pickup truck credits shall be calculated for pre- and post- (grams/mile) available for each List of Subjects conversion FTP test results, where CH4 technology. For the light truck and N O are weighted by their global 40 CFR Part 85 2 compliance category calculate the fleet warming potentials of 25 and 298, Pick-up Truck fuel consumption Confidential business information, respectively. The post-conversion sum improvement value in gallons/mile in Imports, Labeling, Motor vehicle of these emissions must be lower than accordance with the equation specified pollution, Reporting and recordkeeping the pre-conversion conversion in 40 CFR 600.510–12(c)(3)(iii). requirements, Research, Warranties. greenhouse gas emission results. CO2 * * * * * 40 CFR Part 86 emissions are calculated as specified in ■ 40 CFR 600.113–12. If statements of 26. Amend § 537.8 by revising Administrative practice and paragraphs (a)(3), paragraph (b)(3)(i) and compliance are applicable and accepted procedure, Confidential business in lieu of measuring N O, as permitted (ii), and paragraph (c)(1) and adding information, Incorporation by reference, 2 paragraphs (a)(4) and (b)(4) to read as by EPA regulation, the comparison of Labeling, Motor vehicle pollution, the greenhouse gas results also need not follows: Reporting and recordkeeping measure or include N2O in the before § 537.8 Supplementary reports. requirements. and after emission comparisons. This (a) * * * For the reasons stated in the option may not be used for model year (3) Each manufacturer whose pre- or preamble, the Environmental Protection 2021 or later. Agency proposes to amend 40 CFR parts mid-model year report omits any of the * * * * * information specified in § 537.7(b) or (c) 85 and 86 as follows: PART 86—CONTROL OF EMISSIONS shall file a supplementary report PART 85—CONTROL OF AIR FROM NEW AND IN-USE HIGHWAY containing the information specified in POLLUTION FROM MOBILE SOURCES paragraph (b)(3) of this section. VEHICLES AND ENGINES (4) Each manufacturer whose pre- or ■ 27. The authority citation for part 85 ■ mid-model year report omits any of the continues to read as follows: 29. The authority citation for part 86 continues to read as follows: information specified in § 537.5(c) shall Authority: 42 U.S.C. 7401–7671q. file a supplementary report containing Authority: 42 U.S.C. 7401–7671q. the information specified in paragraph Subpart F—[Amended] ■ 30. Amend § 86.1818–12 as follows: (b)(4) of this section. ■ 28. Amend § 85.525 by revising ■ a. Revise paragraphs (c)(2)(i)(A) (b) * * * paragraphs (b)(1)(iii) and (b)(1)(iv) to through (C); (3) * * * read as follows: ■ b. Revise paragraphs (c)(3)(i)(A), (B) (i) All of the information omitted from and (D); the pre- or mid-model year report under § 85.525 Applicable standards. ■ c. Revise paragraph (f) introductory § 537.7(b) and (c); and * * * * * text; and paragraphs (f)(1) through (3). (ii) Such revisions of and additions to (b) * * * The revisions read as follows: the information submitted by the (1) * * * manufacturer in its pre-model year (iii) If the OEM complied with the § 86.1818–12 Greenhouse gas emission report regarding the automobiles nitrous oxide (N2O) and methane (CH4) standards for light-duty vehicles, light-duty produced during the current model year standards and provisions set forth in 40 trucks, and medium-duty passenger as are necessary to reflect the CFR 86.1818–12(f)(1) or (3), and the fuel vehicles. information provided under paragraph conversion CO2 measured value is lower * * * * * (b)(3)(i) of this section. than the in-use CO2 exhaust emission (c) * * * (4) The supplementary report required standard, you also have the option (2) * * * by paragraph (a)(4) of this section must through model year 2020 to convert the (i) * * * contain: difference between the in-use CO2 (A) For passenger automobiles with a (i) All information omitted from the exhaust emission standard and the fuel footprint of less than or equal to 41 pre-model year report under conversion CO2 measured value into square feet, the gram/mile CO2 target § 537.6(c)(2); and GHG equivalents of CH4 and/or N2O, value shall be selected for the

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appropriate model year from Table 1 to Paragraph (c)(2)(i)(A). BILLING CODE 4910–59–P

(B) For passenger automobiles with a selected for the appropriate model year footprint of greater than 56 square feet, from Table 1 to Paragraph (c)(2)(i)(B). the gram/mile CO2 target value shall be

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(C) For passenger automobiles with a grams/mile, except that for any vehicle Where: footprint that is greater than 41 square footprint the maximum CO2 target value ƒ is the vehicle footprint, as defined in feet and less than or equal to 56 square shall be the value specified for the same § 86.1803; and feet, the gram/mile CO2 target value model year in paragraph (c)(2)(i)(B) of a and b are selected from Table 1 to shall be calculated using the following this section: Paragraph (c)(2)(i)(C): equation and rounded to the nearest 0.1 Target CO2 = [a × ƒ] + b

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* * * * * (A) For light trucks with a footprint of from Table 1 to Paragraph Table 1 to (3) * * * less than or equal to 41 square feet, the Paragraph (c)(3)(i)(A): gram/mile CO2 target value shall be BILLING CODE 4910–59–C (i) * * * selected for the appropriate model year

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(B) For light trucks with a footprint rounded to the nearest 0.1 grams/mile, Where: that is greater than 41 square feet and except that for any vehicle footprint the ƒ is the footprint, as defined in § 86.1803; and less than or equal to the maximum maximum CO2 target value shall be the a and b are selected from Table 1 to footprint value specified in the table value specified for the same model year Paragraph Table 1 to Paragraph below for each model year, the gram/ in paragraph (c)(3)(i)(D) of this section: (c)(3)(i)(B): For the appropriate model mile CO target value shall be calculated 2 × ƒ year: using the following equation and Target CO2 = (a ) + b

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* * * * * specified in the table below for each appropriate model year from Table 1 to (D) For light trucks with a footprint model year, the gram/mile CO2 target Paragraph Table 1 to Paragraph greater than the minimum value value shall be selected for the (c)(3)(i)(D):

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* * * * * N2O data submittal waiver provisions of 2020, manufacturers may elect to not (f) Nitrous oxide (N2O) and methane § 86.1829(b)(1)(iii)(G) are not required to meet the emission standards in (CH4) exhaust emission standards for be tested for N2O under the in-use paragraph (f)(1) of this section. This passenger automobiles and light trucks. testing programs required by § 86.1845 option may not be used for model year Each manufacturer’s fleet of combined and § 86.1846. 2021 or later. Manufacturers making this passenger automobile and light trucks (1) Standards applicable to each test election shall include N2O and CH4 must comply with N2O and CH4 group. (i) Exhaust emissions of nitrous emissions in the determination of their standards using either the provisions of oxide (N2O) shall not exceed 0.010 fleet average carbon-related exhaust paragraph (f)(1), or, through model year grams per mile at full useful life, as emissions, as calculated in 40 CFR part 2020, provisions of paragraphs (f)(2) or measured according to the Federal Test 600, subpart F. Manufacturers using this (3) of this section. Except with prior Procedure (FTP) described in subpart B option must include both N2O and CH4 EPA approval, a manufacturer may not of this part. Through model year 2020, full useful life values in the fleet average use the provisions of both paragraphs manufacturers may optionally calculations for passenger automobiles (f)(1) and (2) of this section in a model determine an alternative N2O standard and light trucks. Use of this option will year. For example, a manufacturer may under paragraph (f)(3) of this section. account for N2O and CH4 emissions not use the provisions of paragraph This option may not be used for model within the carbon-related exhaust (f)(1) of this section for their passenger year 2021 or later. (ii) Exhaust emissions emission value determined for each automobile fleet and the provisions of of methane (CH4) shall not exceed 0.030 model type according to the provisions paragraph (f)(2) for their light truck fleet grams per mile at full useful life, as of 40 CFR part 600. This option requires in the same model year. The measured according to the Federal Test the determination of full useful life manufacturer may use the provisions of Procedure (FTP) described in subpart B emission values for both the Federal both paragraphs (f)(1) and (through of this part. Through model year 2020, Test Procedure and the Highway Fuel model year 2020) (3) of this section in manufacturers may optionally Economy Test. Manufacturers selecting a model year. For example, a determine an alternative CH4 standard this option are not required to manufacturer may meet the N2O under paragraph (f)(3) of this section. demonstrate compliance with the standard in paragraph (f)(1)(i) of this This option may not be used for model standards in paragraph (f)(1) of this section and an alternative CH4 standard year 2021 or later. section. determined under paragraph (f)(3) of (2) Include N2O and CH4 in fleet (3) Optional use of alternative N2O this section. Vehicles certified using the averaging program. Through model year and/or CH4 standards. Through model

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year 2020, manufacturers may select an the provisions of paragraph (f)(4) of this automobiles and/or light trucks. alternative standard applicable to a test section for each test group/alternative Manufacturers may not generate these group, for either N2O or CH4, or both. standard combination. Debits must be credits for model year 2021 or later. This option may not be used for model included in the calculation of total Credits shall be calculated according to year 2021 or later. For example, a credits or debits generated in a model this section for each air conditioning manufacturer may choose to meet the year as required under § 86.1865– system that the manufacturer is using to N2O standard in paragraph (f)(1)(i) of 12(k)(5). For flexible fuel vehicles (or generate CO2 credits. Manufacturers this section and an alternative CH4 other vehicles certified for multiple may also generate early air conditioning standard in lieu of the standard in fuels) you must meet these alternative refrigerant leakage credits under this paragraph (f)(1)(ii) of this section. The standards when tested on any section for the 2009 through 2011 model alternative standard for each pollutant applicable test fuel type. years according to the provisions of must be greater than the applicable * * * * * § 86.1871–12(b). ■ exhaust emission standard specified in 31. Revise § 86.1867–12 to read as follows: Issued on August 1, 2018, in Washington, paragraph (f)(1) of this section. DC, under authority delegated in 49 CFR 1.95 Alternative N2O and CH4 standards § 86.1867–12 CO2 credits for reducing and 501.5. apply to emissions measured according leakage of air conditioning refrigerant. Heidi R. King, to the Federal Test Procedure (FTP) Through model year 2020, Deputy Administrator, National Highway described in Subpart B of this part for manufacturers may generate credits Traffic Safety Administration. the full useful life, and become the applicable to the CO2 fleet average applicable certification and in-use program described in § 86.1865–12 by Andrew R. Wheeler, emission standard(s) for the test group. implementing specific air conditioning Acting Administrator, Environmental Manufacturers using an alternative system technologies designed to reduce Protection Agency. standard for N2O and/or CH4 must air conditioning refrigerant leakage over [FR Doc. 2018–16820 Filed 8–23–18; 8:45 am] calculate emission debits according to the useful life of their passenger BILLING CODE 4910–59–P

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