July 18, 2018

Phase 2 Greenhouse Gas Emissions and Fuel Efficiency
Standards for Medium- and Heavy-Duty Engines and Vehicles
On October 25, 2016, the U.S. Environmental Protection
Agency (EPA) and the National Highway Traffic Safety
Administration (NHTSA) jointly published the second
phase of greenhouse gas (GHG) emissions and fuelefficiency standards for medium- and heavy-duty vehicles
and engines (81 Federal Register 73478) through theirauthorities under the Clean Air Act (CAA), as amended,and the Energy Independence and Security Act of 2007
(P.L. 110-140).
The Phase 2 rule sets emission standards for tractor-trailers,vocational vehicles, and heavy-duty pickup trucks and vans.
The rule expands on the Phase 1 standards (promulgated on
September 15, 2011, for model years [MYs] 2014 through2018; 76 Federal Register 57106) and introduces first-evercontrols on trailers (i.e., the part of the vehicle pulled by thetractor) and glider vehicles (i.e., a new chassis combinedwith an older engine). The standards phase in between MY
2021 and MY 2027 for engines and vehicles and between
MY 2018 and MY 2027 for trailers and gliders. Theagencies outline several benefits of the rule, including (1)reducing carbon dioxide (CO2) emissions and fuelconsumption from new on-road vehicles, (2) reducing thecosts for transporting goods, and (3) spurring innovation in
the clean energy technology sector.

The agencies estimate that the Phase 2 standards willachieve vehicle fuel savings of up to 25% beyond Phase 1
when fully implemented and depending on the vehicle
category (see Figure 1). Overall, the agencies estimate it
could cut GHG emissions by 1.1 billion metric tons of CO2and conserve 2 billion barrels of oil over the lifetime of thevehicles sold in the regulatory time frame.
Under the agencies’ cost modeling, the Phase 2 standards
result in up to $260 billion in total benefits while costing
the affected industry approximately $30 billion. Payback
periods for truck owners were determined to be favorable—with the buyer of a new long-haul truck in 2027 recouping
the extra cost of the technology through fuel savings in lessthan two years. Overall, vehicle owners could save an
estimated $170 billion in fuel costs over the lifetime of thevehicles sold in the regulatory time frame.

Selected Issues
In general, reaction to the standards has been favorable.
Many truck and engine manufacturers, drivers, fuel groups,and environmental organizations provided comments insupport of the rule upon its proposal. Nevertheless, several
issues may be of interest to Congress:

Remarks by President Obama, February 18, 2014.

Emissions Reductions
The California Air Resources Board (CARB) and somehealth and environmental organizations say that the rule is
not aggressive enough, and they have pushed for more
stringent standards. On December 29, 2016, EPA approved
California’s waiver request under Section 209(b) of theCAA to adopt its own MY 2014-2018 Phase 1 standards.
CARB expects to finalize its Phase 2 regulatory program by
the end of 2018, which is similar to but distinct from thefederal program.

The Phase 2 rule maintains the underlying regulatory
structure developed in Phase 1, such as the generalcategorization of medium- and heavy-duty vehicles and theseparate standards for engines and vehicles. It also retains
the Phase 1 averaging, banking, and trading complianceprovisions and its flexibilities for small businesses.
However, unlike Phase 1, the rule puts forth “technologyadvancing standards” (i.e., standards based “not only on
currently available technologies but also on utilization oftechnologies now under development or not yet widelydeployed”). These may include advancements in the engine,transmission, driveline, aerodynamic design, lower rolling
resistance tires, and extended idle reduction technologies.

Nitrogen Oxide (NOx) Standards
Controls for NOx emissions (a precursor to ground-levelozone) generally compete against fuel efficiency efforts.
Air quality regulators from Southern California and 10
other local and state agencies across the nation filed apetition to EPA to promulgate more stringent NOx
standards subsequent to the Phase 2 rule. EPA issued amemorandum in response to the petition on December 20,
2016, stating that the agency would initiate rulemaking “fora new on-highway heavy-duty NOx program with theintention of proposing standards that could begin in Model
Year 2024.” However, under the Trump Administration,
sources are reporting the expectation of delays before EPAofficials begin developing the standards.

”Heavy-duty trucks account for just 4% of all the vehicles on thehighway.... But they’re responsible for about 20% of carbon
pollution in the transportation sector.... And because they haul
about 70% of all domestic freight—70% of the stuff we use,everything from flat-screen TVs to diapers to produce to youname it—every mile that we gain in fuel efficiency is worth
thousands of dollars of savings every year.”www.crs.gov | 7-5700

Phase 2 Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles

Figure 1. CO2 and Fuel Efficiency Reductions from the Medium- and Heavy-Duty Vehicle Standards

Source: Courtesy of International Council on Clean Transportation, under a Share Alike license of Creative Commons.
Notes: Classifications defined at 49 CFR 523.2 and 49 CFR 565.15.

Trailer Provisions
The Phase 2 rule includes standards for both engine
emissions and the vehicle as a whole, including
requirements for improvements to the aerodynamics offreight trailers. On September 22, 2016, the Truck Trailer
Manufacturing Association (TTMA) filed petitions to EPA
and the U.S. Court of Appeals for the D.C. Circuit, which
contend that EPA lacks statutory authority under the CAA
to regulate the non-engine parts of vehicles. The court
granted EPA’s and NHTSA’s request to put the case on
hold and stayed the trailer provisions as EPA reconsiders
them. EPA is working to develop a proposal.
Racecar Provisions
In the Phase 2 proposal, EPA included language that wasintended to clarify tampering provisions with respect tononroad vehicles. However, industry groups claimed thatthe provisions would prevent owners from modifying motorvehicles used exclusively for racing. EPA removed thelanguage from the final rule. Nevertheless, some argue thatthe underlying compliance uncertainty remains. Legislation
to clarify it had been proposed in the 114th Congress (seeH.R. 4715/S. 2659) and the 115th Congress (see H.R. 350/S.
203 and S.Hrg. 115-127). On December 27, 2016, theRacing Enthusiasts and Suppliers Coalition filed petitions
with EPA and the D.C. Circuit to address the uncertainty.
The petition was combined with TTMA’s and others andthe case was put on hold (see above).

Glider Kit and Glider Vehicle Provisions
The term glider kit is used in the vehicle industry todescribe a chassis and cab assembly that is generally
produced by a vehicle manufacturer without a new engine,transmission, or rear axle. A third party then typicallyinstalls used parts to complete the assembly. Historically,
gliders have been used as a means to salvage valuable
components from vehicles that were badly damaged incollisions. Prior to the Phase 2 rulemaking, EPA andNHTSA observed a sharp increase in glider sales,suggesting to them that gliders were being used tocircumvent standards for safety and emissions (e.g. NOxand particulates). For this reason, EPA moved to apply
current emission standards to gliders under the Phase 2 rule.
On July 10, 2017, several glider kit manufacturers filed apetition to EPA arguing that gliders should not be
considered “new motor vehicles” under the CAA, and thus
EPA does not have the authority to regulate them. On
November 16, 2017, EPA issued a proposed repeal of therequirements (82 Federal Register 53442). Upon review,
the White House Office of Information and Regulatory
Affairs reportedly informed EPA that it needs a regulatory
impact analysis before a final repeal can take effect. On
July 6, 2018, EPA announced an 18-month enforcement
pause on the Phase 2 production limits for glider vehicles as
it reconsiders the rule.
Richard K. Lattanzio, rlattanzio@crs.loc.gov, 7-1754

www.crs.gov | 7-5700

IF10927