1

ENVIRONMENTAL PROTECTION AGENCY 

40 CFR Parts 86 and 600 

DEPARTMENT OF Transportation 

National Highway Traffic Safety Administration 

49 CFR Parts 531, 533, and 537 

[EPA–HQ–OAR–2009–0472; FRL_XXXX-X; NHTSA-2009-0059]

RIN 2060-AP58; RIN 2127-AK90

Proposed Rulemaking to Establish Light-Duty Vehicle Greenhouse Gas Emission 

Standards and Corporate Average Fuel Economy Standards 

 

AGENCIES: Environmental Protection Agency (EPA) and National Highway Traffic 

Safety Administration (NHTSA). 

ACTION: Proposed Rule. 

SUMMARY: EPA and NHTSA are issuing this joint proposal to establish a National 

Program consisting of new standards for light-duty vehicles that will reduce greenhouse 

gas emissions and improve fuel economy. This joint proposed rulemaking is consistent 

with the National Fuel Efficiency Policy announced by President Obama on May 19, 

2009, responding to the country’s critical need to address global climate change and to 

reduce oil consumption. EPA is proposing greenhouse gas emissions standards under the 

Clean Air Act, and NHTSA is proposing Corporate Average Fuel Economy standards 

under the Energy Policy and Conservation Act, as amended. These standards apply to 

passenger cars, light-duty trucks, and medium-duty passenger vehicles, covering model 

years 2012 through 2016. They require these vehicles to meet an estimated combined 

average emissions level of 250 grams of CO2 per mile in MY 2016 under EPA’s GHG 

program, and 34.1 mpg in MY 2016 under NHTSA’s CAFE program and represent a 

harmonized and consistent national program (National Program). Under the National 

Program, the overall light-duty vehicle fleet would reach 35.5 mpg in MY 2016, if all 

reductions were made through fuel economy improvements. The Program would result 

in approximately 950 million metric tons of CO2 emission reductions and approximately 

1.8 billion barrels of oil savings over the lifetime of vehicles sold in model years 2012 

through 2016. 

 The vehicle categories covered by this rulemaking are responsible for almost 60 

percent of all U.S. transportation-related greenhouse gas emissions and include cars, sport 

utility vehicles, minivans, and pickup trucks used for personal transportation. 

Transportation related emissions are responsible for approximately 30 percent of total 

U.S. greenhouse gas emissions. Under the National Program, automobile manufacturers 
2

would be able to build a single light-duty national fleet that satisfies all requirements 

under both programs while ensuring that consumers still have a full range of vehicle 

choices. 

DATES: Comments: Comments must be received on or before [INSERT DATE], 2009. 

Under the Paperwork Reduction Act, comments on the information collection provisions 

must be received by the Office of Management and Budget (OMB) on or before 

[INSERT DATE ], 2009. See the SUPPLEMENTARY INFORMATION section on 

“Public Participation” for more information about written comments. 

Hearings: NHTSA and EPA will jointly hold two public hearings on the following dates: 

October XX, 2009, in Detroit, Michigan, and October YY, 2009, in Sacramento, 

California The hearings will start at 9 a.m. local time and continue until everyone has had 

a chance to speak. See the SUPPLEMENTARY INFORMATION section on “Public 

Participation.” for more information about the public hearings. 

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-OAR2009-0472 and/or NHTSA-2009-XXXX0059, by one of the following methods: 

• www.regulations.gov: Follow the on-line instructions for submitting comments. 

• Email: a-and-r-dDocket@epa.gov 

• Fax: EPA: (202) 566–1741; NHTSA: (202) 493-2251. 

• Mail: 

o EPA: Environmental Protection Agency, EPA Docket Center (EPA/DC), 

Air and Radiation Docket, Mail Code 2822T, 1200 Pennsylvania Avenue, 

NW., Washington, DC 20460, Attention Docket ID No. EPA-HQ-OAR2009-0472. In addition, please mail a copy of your comments on the 

information collection provisions to the Office of Information and 

Regulatory Affairs, Office of Management and Budget (OMB), Attn: 

Desk Officer for EPA, 725 17th St., NW., Washington, DC 20503. 

o NHTSA: Docket Management Facility, M-30, U.S. Department of 

Transportation, West Building, Ground Floor, Rm. W12-140, 1200 New 

Jersey Avenue, SE, Washington, DC 20590. 

• Hand Delivery: 

o EPA: Docket Center, (EPA/DC) EPA West, Room B102, 1301

Constitution Ave., NW., Washington, DC, Attention Docket ID No. EPAHQ-OAR-2009-0472. Such deliveries are only accepted during the 

Docket’s normal hours of operation, and special arrangements should be 

made for deliveries of boxed information. 

o NHTSA: West Building, Ground Floor, Rm. W12-140, 1200 New Jersey 

Avenue, SE, Washington, DC 20590, between 9 a.m. and 5 p.m. Eastern 

Time, Monday through Friday, except Federal Holidays. 

Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-2009-0472 

and/or NHTSA-2009-XXXX0059. See the SUPPLEMENTARY INFORMATION

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section on “Public Participation” for more information about submitting written 

comments. 

Public Hearing: NHTSA and EPA will jointly hold two public hearings at the following 

locations: October XX, 2009, [LOCATION & ADDRESS], Detroit, Michigan; and 

October YY, 2009, [LOCATION & ADDRESS], Sacramento, California. See the 

SUPPLEMENTARY INFORMATION section on “Public Participation” for more 

information about the public hearings. 

Docket: All documents in the dockets are listed in the www.regulations.gov index. 

Although listed in the index, some information is not publicly available, e.g., confidential 

business information (CBI) or other information whose disclosure is restricted by statute. 

Certain other material, such as copyrighted material, will be publicly available only in 

hard copy. Publicly available docket materials are available either electronically in 

www.regulations.gov or in hard copy at the following locations: EPA: EPA Docket 

Center, EPA/DC, EPA West, Room 3334, 1301 Constitution Ave., NW., Washington, 

DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through 

Friday, excluding legal holidays. The telephone number for the Public Reading Room is 

(202) 566–1744. NHTSA: Docket Management Facility, M-30, U.S. Department of 

Transportation, West Building, Ground Floor, Rm. W12-140, 1200 New Jersey Avenue, 

SE, Washington, DC 20590. The Docket Management Facility is open between 9 a.m. 

and 5 p.m. Eastern Time, Monday through Friday, except Federal holidays. 

FOR FURTHER INFORMATION CONTACT: EPA: Tad Wysor, Office of 

Transportation and Air Quality, Assessment and Standards Division, Environmental 

Protection Agency, 2000 Traverwood Drive, Ann Arbor MI 48105; telephone number: 

734-214-4332; fax number: 734-214-4816; email address: wysor.tad@epa.gov, or 

Assessment and Standards Division Hotline; telephone number (734) 214-4636; e-mail 

address asdinfo@epa.gov. NHTSA: [insert name], [insert office name], National 

Highway Traffic Safety Administration, 1200 New Jersey Avenue, SE, Washington, DC 

20590. Telephone: (202) 366-[insert #]_____. 

SUPPLEMENTARY INFORMATION: 

A. Does this Action Apply to Me? 

 This action affects companies that manufacture or sell new light-duty vehicles, 

light-duty trucks, and medium-duty passenger vehicles, as defined under EPA’s CAA 

regulations,1

 and passenger automobiles (passenger cars) and non-passenger automobiles 

 

1

 “Light-duty vehicle,” “light-duty truck,” and “medium-duty passenger vehicle” are defined in 40 CFR 

86.1803-01. Generally, the term “light-duty vehicle” means a passenger car, the term “light-duty truck” 

means a pick-up truck, sport-utility vehicle, or minivan of up to 8,500 lbs gross vehicle weight rating, and 

“medium-duty passenger vehicle” means a sport-utility vehicle or passenger van from 8,500 to 10,000 lbs 

gross vehicle weight rating. Medium-duty passenger vehicles do not include pick-up trucks. 

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(light trucks) as defined under NHTSA’s CAFE regulations.2

 Regulated categories and 

entities include: 

Category NAICS CodesAExamples of Potentially Regulated Entities

Industry 336111 

336112 

Motor vehicle manufacturers.

Industry 811112 

811198 

541514 

Commercial Importers of Vehicles and Vehicle Components. 

A North American Industry Classification System (NAICS)

 This list is not intended to be exhaustive, but rather provides a guide regarding 

entities likely to be regulated by this action. To determine whether particular activities 

may be regulated by this action, you should carefully examine the regulations. You may 

direct questions regarding the applicability of this action to the person listed in FOR 

FURTHER INFORMATION CONTACT. 

B. Public Participation 

NHTSA and EPA request comment on all aspects of this joint proposed rule. 

This section describes how you can participate in this process. 

How Do I Prepare and Submit Comments?

In this joint proposal, there are many issues common to both EPA’s and 

NHTSA’s proposals. For the convenience of all parties, comments submitted to the EPA 

docket will be considered comments submitted to the NHTSA docket, and vice versa. An 

exception is that comments submitted to the NHTSA docket on the Draft Environmental 

Impact Statement will not be considered submitted to the EPA docket. Therefore, the 

public only needs to submit comments to either one of the two agency dockets. 

Comments that are submitted for consideration by one agency should be identified as 

such, and comments that are submitted for consideration by both agencies should be 

identified as such. Absent such identification, each agency will exercise its best 

judgment to determine whether a comment is submitted on its proposal. 

 

Further instructions for submitting comments to either the EPA or NHTSA docket 

are described below. 

EPA: Direct your comments to Docket ID No EPA-HQ-OAR-2009-0472. 

EPA’s policy is that all comments received will be included in the public docket without 

change and may be made available online at www.regulations.gov, including any 

personal information provided, unless the comment includes information claimed to be 

Confidential Business Information (CBI) or other information whose disclosure is 

restricted by statute. Do not submit information that you consider to be CBI or otherwise 

 

2

 “Passenger car” and “light truck” are defined in 49 CFR Part 523. 
5

protected through www.regulations.gov or e-mail. The www.regulations.gov Web site is 

an ‘‘anonymous access’’ system, which means EPA will not know your identity or 

contact information unless you provide it in the body of your comment. If you send an email comment directly to EPA without going through www.regulations.gov your e-mail 

address will be automatically captured and included as part of the comment that is placed 

in the public docket and made available on the Internet. If you submit an electronic 

comment, EPA recommends that you include your name and other contact information in 

the body of your comment and with any disk or CD–ROM you submit. If EPA cannot 

read your comment due to technical difficulties and cannot contact you for clarification, 

EPA may not be able to consider your comment. Electronic files should avoid the use of 

special characters, any form of encryption, and be free of any defects or viruses. For 

additional information about EPA’s public docket visit the EPA Docket Center homepage 

at http:// www.epa.gov/epahome/dockets.htm. 

NHTSA: Your comments must be written and in English. To ensure that your 

comments are correctly filed in the Docket, please include the Docket number NHTSA2009-XXXX0059 in your comments. Your comments must not be more than 15 pages 

long.3 NHTSA established this limit to encourage you to write your primary comments 

in a concise fashion. However, you may attach necessary additional documents to your 

comments. There is no limit on the length of the attachments. If you are submitting 

comments electronically as a PDF (Adobe) file, we ask that the documents submitted be 

scanned using the Optical Character Recognition (OCR) process, thus allowing the 

agencies to search and copy certain portions of your submissions.4

 Please note that 

pursuant to the Data Quality Act, in order for the substantive data to be relied upon and 

used by the agencies, it must meet the information quality standards set forth in the OMB 

and Department of Transportation (DOT) Data Quality Act guidelines. Accordingly, we 

encourage you to consult the guidelines in preparing your comments. OMB’s guidelines 

may be accessed at http://www.whitehouse.gov/omb/fedreg/reproducible.html. DOT’s 

guidelines may be accessed at http://www.dot.gov/dataquality.htm.

Tips for Preparing Your Comments 

When submitting comments, remember to: 

• Identify the rulemaking by docket number and other identifying 

information (subject heading, Federal Register date and page number). 

• Follow directions - The agency may ask you to respond to specific 

questions or organize comments by referencing a Code of Federal 

Regulations (CFR) part or section number. 

• Explain why you agree or disagree, suggest alternatives, and substitute 

language for your requested changes. 

 

3

 See 49 CFR 553.21. 

4

 Optical character recognition (OCR) is the process of converting an image of text, such as a scanned 

paper document or electronic fax file, into computer-editable text. 
6

• Describe any assumptions and provide any technical information and/or 

data that you used. 

• If you estimate potential costs or burdens, explain how you arrived at your 

estimate in sufficient detail to allow for it to be reproduced. 

• Provide specific examples to illustrate your concerns, and suggest 

alternatives. 

• Explain your views as clearly as possible, avoiding the use of profanity or 

personal threats. 

Make sure to submit your comments by the comment period deadline identified in the 

DATES section above. 

How Can I be Sure That My Comments Were Received?

NHTSA: If you submit your comments by mail and wish Docket Management to 

notify you upon its receipt of your comments, enclose a self-addressed, stamped postcard 

in the envelope containing your comments. Upon receiving your comments, Docket 

Management will return the postcard by mail. 

How Do I Submit Confidential Business Information?

 Any confidential business information (CBI) submitted to one of the agencies will 

also be available to the other agency. However, as with all public comments, any CBI 

information only needs to be submitted to either one of the agencies’ dockets and it will 

be available to the other. Following are specific instructions for submitting CBI to either 

agency. 

EPA: Do not submit CBI to EPA through www.regulations.gov or e-mail. 

Clearly mark the part or all of the information that you claim to be CBI. For CBI 

information in a disk or CD ROM that you mail to EPA, mark the outside of the disk or 

CD ROM as CBI and then identify electronically within the disk or CD ROM the specific 

information that is claimed as CBI. In addition to one complete version of the comment 

that includes information claimed as CBI, a copy of the comment that does not contain 

the information claimed as CBI must be submitted for inclusion in the public docket. 

Information so marked will not be disclosed except in accordance with procedures set 

forth in 40 CFR Part 2. 

 

NHTSA: If you wish to submit any information under a claim of confidentiality, 

you should submit three copies of your complete submission, including the information 

you claim to be confidential business information, to the Chief Counsel, NHTSA, at the 

address given above under FOR FURTHER INFORMATION CONTACT. When you 

send a comment containing confidential business information, you should include a cover 

letter setting forth the information specified in our confidential business information 

regulation.5

 

5

 See 49 CFR Part 512. 

Formatted: Font: 12 pt
7

 In addition, you should submit a copy from which you have deleted the claimed 

confidential business information to the Docket by one of the methods set forth above. 

Will the Agencies Consider Late Comments?

 

 NHTSA and EPA will consider all comments received before the close of 

business on the comment closing date indicated above under DATES. To the extent 

practicable, we will also consider comments received after that date. If interested persons 

believe that any new information the agency places in the docket affects their comments, 

they may submit comments after the closing date concerning how the agency should 

consider that information for the final rule. However, the agencies’ ability to consider 

any such late comments in this rulemaking will be limited due to the time frame for 

issuing a final rule. 

 

 If a comment is received too late for us to practicably consider in developing a 

final rule, we will consider that comment as an informal suggestion for future rulemaking 

action. 

How Can I Read the Comments Submitted By Other People?

 

 You may read the materials placed in the docket for this document (e.g., the 

comments submitted in response to this document by other interested persons) at any 

time by going to http://www.regulations.gov. Follow the online instructions for accessing 

the dockets. You may also read the materials at the EPA Docket Center or NHTSA 

Docket Management Facility by going to the street addresses given above under 

ADDRESSES. 

How do I participate in the public hearings?

 NHTSA and EPA will jointly host two public hearings on the dates and locations 

described in the DATES and ADDRESSES sections above. 

If you would like to present testimony at the public hearings, we ask that you 

notify the EPA and NHTSA contact persons listed under FOR FURTHER 

INFORMATION CONTACT at least ten days before the hearing. Once EPA and 

NHTSA learn how many people have registered to speak at the public hearing, we will 

allocate an appropriate amount of time to each participant, allowing time for lunch and 

necessary breaks throughout the day. For planning purposes, each speaker should 

anticipate speaking for approximately ten minutes, although we may need to adjust the 

time for each speaker if there is a large turnout. We suggest that you bring copies of your 

statement or other material for the EPA and NHTSA panels and the audience. It would 

also be helpful if you send us a copy of your statement or other materials before the 

hearing. To accommodate as many speakers as possible, we prefer that speakers not use 

technological aids (e.g., audio-visuals, computer slideshows). However, if you plan to do 

so, you must notify the contact persons in the FOR FURTHER INFORMATION 
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CONTACT section above. You also must make arrangements to provide your 

presentation or any other aids to NHTSA and EPA in advance of the hearing in order to 

facilitate set-up. In addition, we will reserve a block of time for anyone else in the 

audience who wants to give testimony. 

 The hearing will be held at a site accessible to individuals with disabilities. 

Individuals who require accommodations such as sign language interpreters should 

contact the persons listed under FOR FURTHER INFORMATION CONTACT

section above no later than ten days before the date of the hearing. 

NHTSA and EPA will conduct the hearing informally, and technical rules of 

evidence will not apply. We will arrange for a written transcript of the hearing and keep 

the official record of the hearing open for 30 days to allow you to submit supplementary 

information. You may make arrangements for copies of the transcript directly with the 

court reporter. 

Table of Contents 

I. Overview of Joint EPA/NHTSA National Program 

 A. Introduction 

1. Building Blocks of the National Program 

2. Joint Proposal for a National Program 

 B. Summary of the Joint Proposal 

 C. Background and Comparison of NHTSA and EPA Statutory Authority 

 1. NHTSA Statutory Authority 

2. EPA Statutory Authority 

3. Comparing the Agencies’ Authority 

D. Summary of the Proposed Standards for the National Program 

1. Joint Analytical Approach 

2. Level of the Standards 

3. Form of the Standards 

E. Summary of Costs and Benefits for the Joint Proposal 

 1. Summary of Costs and Benefits of Proposed NHTSA CAFE 

Standards 

2. Summary of Costs and Benefits of Proposed EPA GHG 

Standards 

F. Program Flexibilities for Achieving Compliance 

 1. CO2/CAFE Credits Generated Based on Fleet Average Performance 

 2. Air Conditioning Credits 

3. Flex-fuel and Alternative Fuel Vehicle Credits 

4. Temporary Lead-time Allowance Alternative Standards 

5. Additional Credit Opportunities under the CAA 

G. Coordinated Compliance 

H. Conclusion 
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II. Joint Technical Work Completed for This Proposal 

 A. Introduction 

 B. How did NHTSA and EPA Develop the Baseline Market Forecast? 

 1. Why do the Agencies Establish a Baseline Vehicle Fleet? 

2. How do the Agencies Develop the Baseline Vehicle Fleet? 

3. How is the Development of the Baseline Fleet for this Proposal 

Different from NHTSA’s Historical approach, and Why is this 

Approach Preferable? 

4. How Does Manufacturer Product Plan Data Factor into the 

Baseline Used in this Proposal? 

C. Development of Attribute-Based Curve Shapes 

 D. Relative Car-Truck Stringency 

 E. Joint Vehicle Technology Assumptions 

1. What Technologies do the Agencies Consider? 

2. How did the Agencies Determine the Costs and Effectiveness of 

Each of these Technologies? 

 F. Joint Economic Assumptions 

III. EPA Proposal for Greenhouse Gas Vehicle Standards 

A. Executive Overview of EPA Proposal 

1. Introduction 

2. Why is EPA Proposing this Rule? 

3. What is EPA Proposing? 

 4. Basis for the Proposed GHG Standards under Section 202(a) 

B. Proposed GHG Standards for Light-duty Vehicles, Light-duty Trucks, and 

Medium duty Passenger Vehicles 

1. What Fleet-wide Emissions Levels Correspond to the CO2 Standards? 

2. What Are the CO2 Attribute-based Standards? 

3. Overview of How EPA’s Proposed CO2 Standards Would Be 

 Implemented for Individual Manufacturers 

4. Averaging, Banking, and Trading Provisions for CO2 Standards 

5. CO2 Temporary Lead-time Allowance Alternative Standards 

6. Proposed Nitrous Oxide and Methane Standards 

7. Small Entity Deferment 

C. Additional Credit Opportunities for CO2 Fleet Average Program 

1. Air Conditioning Related Credits 

2. Flex Fuel and Alternative Fuel Vehicle Credits 

 3. Advanced Technology Vehicle Credits for Electric Vehicles, Plug- in 

 Hybrids, and Fuel Cells 

4. Off-cycle Technology Credits 

5. Early Credit Options 

D. Feasibility of the Proposed CO2 Standards 

1. How Did EPA Develop a Reference Vehicle Fleet for Evaluating Further 

CO2 Reductions? 

2. What are the Effectiveness and Costs of CO2-reducing Technologies? 
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3. How can Technologies be Combined into “Packages” and What is the 

Cost and Effectiveness of Packages? 

4. Manufacturer’s Application of Technology 

5. How is EPA Projecting that a Manufacturer Would Decide Between 

Options to Improve CO2 Performance to Meet a Fleet Average Standard? 

6. Why are the Proposed CO2 Standards Feasible? 

7. What Other Fleet-Wide CO2 Levels Were Considered? 

E. Certification, Compliance, and Enforcement 

1. Compliance Program Overview 

2. Compliance with Fleet-Average CO2 Standards 

3. Vehicle Certification 

4. Useful Life Compliance 

5. Credit Program Implementation 

6. Enforcement 

7. Prohibited Acts in the CAA 

8. Other Certification Issues 

9. Miscellaneous Revisions to Existing Regulations 

10. Warranty, Defect Reporting, and Other Emission-related Components 

 Provisions 

11. Light Vehicles and Fuel Economy Labeling 

F. How Would This Proposal Reduce GHG Emissions and Their Associated 

 Effects? 

1. Impact on GHG Emissions 

2. Overview of Climate Change Impacts from GHG Emissions 

3. Changes in Global Mean Temperature and Sea-level Rise Associated with 

 the Proposal’s GHG Emissions Reductions 

4. Weight Reduction and Potential Safety Impacts 

G. How Would the Proposal Impact Non-GHG Emissions and Their Associated 

 Effects? 

1. Upstream Impacts of Program 

2. Downstream Impacts of Program 

3. Health Effects of Non-GHG Pollutants 

4. Environmental Effects of Non-GHG Pollutants 

5. Air Quality Impacts of Non-GHG Pollutants 

H. What are the Estimated Cost, Economic, and Other Impacts of the Proposal? 

1. Costs Associated with the Vehicle Program 

2. Cost per Ton of Emissions Reduced 

3. Reduction in Fuel Consumption and its Impacts 

4. Impacts on U.S. Vehicle Sales and Consumer Vehicle Choice Modeling 

5. Economy-Wide Impacts of the Rule 

6. Benefits of Reducing GHG Emissions 

7. Non-GHG Health and Environmental Impacts 

8. Energy Security Impacts 

9. Other Impacts 

10. Summary of Costs and Benefits 
11

I. Statutory and Executive Order Reviews 

1. Executive Order 12866: Regulatory Planning and Review 

2. Paperwork Reduction Act 

3. Regulatory Flexibility Act 

4. Unfunded Mandates Reform Act 

5. Executive Order 13132 (Federalism) 

6. Executive Order 13175 (Consultation and Coordination with Indian Tribal 

 Governments) 

7. Executive Order 13045: “Protection of Children from Environmental 

 Health Risks and Safety Risks” 

8. Executive Order 13211 (Energy Effects) 

9. National Technology Transfer Advancement Act 

10. Executive Order 12898: Federal Actions to Address Environmental 

 Justice in Minority Populations and Low-Income Populations 

J. Statutory Provisions and Legal Authority 

IV. NHTSA Proposal for Passenger Car and Light Truck CAFE Standards for 

MYs 2012-2016

A. Executive overview of NHTSA proposal 

 1. Introduction 

 2. Role of Fuel Economy Improvements in Promoting Energy Independence, 

 Energy Security, and a Low Carbon Economy 

3. The National Program 

4. Review of CAFE Standard Setting Methodology per the President’s 

 January 26, 2009 Memorandum on CAFE Standards for MYs 2011 and 

 Beyond 

 5. Summary of the Proposed MY 2012-2016 CAFE Standards 

B. Background 

 1. Chronology of Events since the National Academy of Sciences Called for 

 Reforming and Increasing CAFE standards 

2. NHTSA issues Final Rule Establishing Attribute-based CAFE Standards 

for MY 2008-2011 Light Trucks (March 2006) 

3. Ninth Circuit Issues Decision re Final Rule for MY 2008-2011 Light 

Trucks (November 2007) 

4. Congress Enacts Energy Security and Independence Act of 2007 

(December 2007) 

5. NHTSA Proposes CAFE Standards for MYs 2011-2015 (April 2008) 

6. Ninth Circuit Revises its Decision re Final Rule for MY 2008-2011 Light 

Trucks (August 2008) 

7. NHTSA Releases Final Environmental Impact Statement (October 2008) 

8. Department of Transportation Decides not to Issue MY 2011-2015 Final 

Rule (January 2009) 

9. The President Requests NHTSA to Issue Final Rule for MY 2011 

Only (January 2009) 

10. NHTSA Issues Final Rule for MY 2011 (March 2009) 
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11. Energy Policy and Conservation Act, as Amended by the Energy 

Independence and Security Act 

C. Development and Feasibility of the Proposed Standards 

1. How was the Baseline Vehicle Fleet Developed? 

 2. How were the Technology Inputs Developed? 

 3. How did NHTSA Develop the Economic Assumption Inputs? 

4. How does NHTSA use the Assumptions in its Modeling Analysis? 

5. How did NHTSA Develop the Shape of the Target Curves for the 

Proposed Standards? 

D. Statutory Requirements 

1. EPCA, as Amended by EISA 

2. Administrative Procedure Act 

3. National Environmental Policy Act 

E. What are the Proposed CAFE Standards? 

1. Form of the Standards 

2. Passenger Car Standards for MYs 2012-2016 

3. Minimum Domestic Passenger Car Standards 

4. Light Truck Standards 

F. How do the Proposed Standards Fulfill NHTSA’s Statutory Obligations? 

G. Impacts of the Proposed CAFE Standards 

1. How would these Proposed Standards Improve Fuel Economy and Reduce 

GHG Emissions for MY 2012-2016 Vehicles? 

2. How would these Proposed Standards Improve Fleet-wide Fuel Economy 

and Reduce GHG Emissions Beyond MY 2016? 

3. How would these Proposed Standards Impact Non-GHG Emissions and 

their Associated Effects? 

4. What are the Estimated Costs and Benefits of these Proposed 

Standards? 

5. How would these Proposed Standards Impact Vehicle Sales? 

6. What are the Estimated Safety Impacts of these Proposed Standards? 

7. What Other Impacts (Quantitative and Unquantifiable) will these Proposed 

Standards Have? 

H. Vehicle Classification 

I. Compliance and Enforcement 

1. Overview 

2. How does NHTSA Determine Compliance? 

3. What Compliance Flexibilities are Available under the CAFE Program 

and How do Manufacturers Use Them? 

 4. Other CAFE Enforcement Issues—Variations in Footprint 

J. Other Near-term Rulemakings Mandated by EISA 

1. Commercial Medium- and Heavy-duty On-highway Vehicles and Work 

Trucks 

 2. Consumer Information 

K. Public Participation 

L. Regulatory Notices and Analyses 
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1. Executive Order 12866 and DOT Regulatory Policies and 

Procedures 

 2. National Environmental Policy Act 

 3. Regulatory Flexibility Act 

 4. Executive Order 13132 (Federalism) 

 5. Executive Order 12988 (Civil Justice Reform) 

 6. Unfunded Mandates Reform Act 

 7. Paperwork Reduction Act 

 8. Regulation Identifier Number 

 9. Executive Order 13045 

 10. National Technology Transfer and Advancement Act 

 11. Executive Order 13211 

 12. Department of Energy Review 

 13. Plain Language 

 14. Privacy Act 

I. Overview of Joint EPA/NHTSA National Program 

A. Introduction 

 

The National Highway Traffic Safety Administration (NHTSA) and the 

Environmental Protection Agency (EPA) are each announcing proposed rules whose 

benefits would address the urgent and closely intertwined challenges of energy 

independence and security and global warming. These proposed rules call for a strong 

and coordinated federal greenhouse gas and fuel economy program for passenger cars, 

light-duty-trucks, and medium-duty passenger vehicles (hereafter light-duty vehicles), 

referred to as the National Program. The proposed rules can achieve substantial 

reductions of greenhouse gas (GHG) emissions and improvements in fuel economy from 

the light-duty vehicle part of the transportation sector, based on technology that is already 

being commercially applied in most cases and that can be incorporated at a reasonable 

cost. 

This joint notice is consistent with the President’s announcement on May 19, 

2009 of a National Fuel Efficiency Policy of establishing consistent, harmonized, and 

streamlined requirements that would reduce greenhouse gas emissions and improve fuel 

economy for all new cars and light-duty trucks sold in the United States 6

 The National 

Program holds out the promise of delivering additional environmental and energy 

benefits, cost savings, and administrative efficiencies on a nationwide basis that might 

 

6

 President Obama Announces National Fuel Efficiency Policy, The White House, May 19, 2009. 

Available at: http://www.whitehouse.gov/the_press_office/President-Obama-Announces-National-FuelEfficiency-Policy/ (last accessed August 18, 2009). Remarks by the President on National Fuel Efficiency 

Standards, The White House, May 19, 2009. Available at:

http://www.whitehouse.gov/the_press_office/Remarks-by-the-President-on-national-fuel-efficiencystandards/ (Last accessed August 18, 2009). 
14

not be available under a less coordinated approach. The proposed National Program also 

offers the prospect of regulatory convergence by making it possible for the standards of 

two different federal agencies and the standards of California and other states to act in a 

unified fashion in providing these benefits. This would allow automakers to produce and 

sell a single fleet nationally. Thus, it may also help to mitigate the additional costs that 

manufacturers would otherwise face in having to comply with multiple sets of federal and 

state standards. This joint notice is also consistent with the Notice of Upcoming Joint 

Rulemaking signed by DOT and EPA on May 197

 and responds to the President’s 

January 26, 2009 memorandum on CAFE standards for model years 2011 and beyond,8

the details of which can be found in Section IV of this joint notice. 

 1. Building Blocks of the National Program

The National Program is both needed and possible because the relationship 

between improving fuel economy and reducing CO2 tailpipe emissions is a very direct 

and close one. The amount of those CO2 emissions is essentially constant per gallon 

combusted of a given type of fuel. Thus, the more fuel efficient a vehicle is, the less fuel 

it burns to travel a given distance. The less fuel it burns, the less CO2 it emits in traveling 

that distance.9 While there are emission control technologies that reduce the pollutants 

(e.g., carbon monoxide) produced by imperfect combustion of fuel by capturing or 

destroying them, there is no such technology for CO2. Further, while some of those 

pollutants can also be reduced by achieving a more complete combustion of fuel, doing 

so only increases the tailpipe emissions of CO2. Thus, there is a single pool of 

technologies for addressing these twin problems, i.e., those that reduce fuel consumption 

and thereby reduce CO2 emissions as well. 

 

a. DOT’s CAFE Program 

In 1975, Congress enacted the Energy Policy and Conservation Act (EPCA), 

mandating that NHTSA establish and implement a regulatory program for motor vehicle 

fuel economy to meet the various facets of the need to conserve energy, including ones 

having energy independence and security, environmental and foreign policy implications. 

Fuel economy gains since 1975, due both to the standards and market factors, have 

resulted in saving billions of barrels of oil and avoiding billions of metric tons of CO2

emissions. In December 2007, Congress enacted the Energy Independence and Securities 

Act (EISA), amending EPCA to require substantial, continuing increases in fuel economy 

standards. 

 

7

 74 FR 24007 (May 22, 2009). 

8

 Available at: http://www.whitehouse.gov/the_press_office/Presidential_Memorandum_Fuel_Economy/ 

(last accessed on August 18, 2009) 

9

 Panel on Policy Implications of Greenhouse Warming, National Academy of Sciences, National Academy 

of Engineering, Institute of Medicine, “Policy Implications of Greenhouse Warming: Mitigation, 

Adaptation, and the Science Base,” National Academies Press, 1992. p. 287. 
15

The CAFE standards address most, but not all, of the real world CO2 emissions 

because EPCA requires the use of 1975 passenger car test procedures under which 

vehicle air conditioners are not turned on during fuel economy testing.10 Fuel economy is 

determined by measuring the amount of CO2 and other carbon compounds emitted from 

the tailpipe, not by attempting to measure directly the amount of fuel consumed during a 

vehicle test, a difficult task to accomplish with precision. The carbon content of the test 

fuel11 is then used to calculate the amount of fuel that had to be consumed per mile in 

order to produce that amount of CO2. Finally, that fuel consumption figure is converted 

into a miles-per-gallon figure. CAFE standards also do not address the 5-8 percent of 

GHG emissions that are not CO2, i.e., nitrous oxide (N2O), and methane (CH4) as well as 

emissions of CO2 and hydrofluorocarbons (HFCs) related to operation of the air 

conditioning system. 

b. EPA’s Greenhouse Gas Standards for Light-duty Vehicles 

Under the Clean Air Act EPA is responsible for addressing air pollutants from 

motor vehicles. On April 2, 2007, the U.S. Supreme Court issued its opinion in 

Massachusetts v. EPA,

12 a case involving a 2003 order of the Environmental Protection 

Agency (EPA) denying a petition for rulemaking to regulate greenhouse gas emissions 

from motor vehicles under section 202(a) of the Clean Air Act (CAA).13 The Court held 

that greenhouse gases were air pollutants for purposes of the Clean Air Act and further 

held that the Administrator must determine whether or not emissions from new motor 

vehicles cause or contribute to air pollution which may reasonably be anticipated to 

endanger public health or welfare, or whether the science is too uncertain to make a 

reasoned decision. The Court further ruled that, in making these decisions, the EPA 

Administrator is required to follow the language of section 202(a) of the CAA. The 

Court rejected the argument that EPA cannot regulate CO2 from motor vehicles because 

to do so would de facto tighten fuel economy standards, authority over which has been 

assigned by Congress to DOT. The Court stated that “[b]ut that DOT sets mileage 

standards in no way licenses EPA to shirk its environmental responsibilities. EPA has 

been charged with protecting the public‘s ‘health’ and ‘welfare’, a statutory obligation 

wholly independent of DOT’s mandate to promote energy efficiency.” The Court 

concluded that “[t]he two obligations may overlap, but there is no reason to think the two 

agencies cannot both administer their obligations and yet avoid inconsistency.” 14 The 

Court remanded the case back to the Agency for reconsideration in light of its findings. 15

 

 

10 EPCA does not require the use of 1975 test procedures for light trucks. 

11 This is the method that EPA uses to determine compliance with NHTSA’s CAFE standards. 

12 549 U.S. 497 (2007). 

13 68 FR 52922 (Sept. 8, 2003). 

14549 U.S. at 531-32. 

15 For further information on Massachusetts v. EPA see the July 30, 2008 Advance Notice of Proposed 

Rulemaking, “Regulating Greenhouse Gas Emissions under the Clean Air Act”, 73 FR 44354 at 44397. 

There is a comprehensive discussion of the litigation’s history, the Supreme Court’s findings, and 

subsequent actions undertaken by the Bush Administration and the EPA from 2007-2008 in response to the

Supreme Court remand. 
16

 EPA has since proposed to find that emissions of GHGs from new motor vehicles 

and motor vehicle engines cause or contribute to air pollution that may reasonably be 

anticipated to endanger public health and welfare.16 This proposal represents the second 

phase of EPA’s response to the Supreme Court’s decision. 

c. California Air Resources Board Greenhouse Gas Program 

In 2004, the California Air Resources Board approved standards for new lightduty vehicles, which regulate the emission of not only CO2, but also other GHGs. Since 

then, thirteen states and the District of Columbia, comprising approximately 40 percent of 

the light-duty vehicle market, have adopted California’s standards. These standards 

apply to model years 2009 through 2016 and require reductions in CO2 emissions for 

passenger cars and some light trucks of 323 g/mil in 2009 up to 205 g/mi in 2016 and 439 

g/mi for light trucks in 2009 up to 332 g/mi in 2016. On June 30, 2009, EPA granted 

California’s request for a waiver of preemption under the CAA.17 The granting of the 

waiver permits California and the other states to proceed with implementing the 

California emission standards. 

2. Joint Proposal for a National Program

On May 19, 2009, the Department of Transportation and the Environmental 

Protection Agency issued a Notice of Upcoming Joint Rulemaking to propose a strong 

and coordinated fuel economy and greenhouse gas National Program for Model Year 

(MY) 2012-2016 light duty vehicles. 

 B. Summary of the Joint Proposal 

In this joint rulemaking, EPA is proposing GHG emissions standards under the 

Clean Air Act (CAA), and NHTSA is proposing Corporate Average Fuel Economy 

(CAFE) standards under the Energy Policy and Conservation Action of 1975 (EPCA), as 

amended by the Energy Independence and Security Act of 2007 (EISA). The intention of 

this joint rulemaking proposal is to set forth a carefully coordinated and harmonized 

approach to implementing these two statutes, in accordance with all substantive and 

procedural requirements imposed by law. 

 Climate change is widely viewed as the most significant long-term threat to the 

global environment. According to the Intergovernmental Panel on Climate Change, 

anthropogenic emissions of greenhouse gases are very likely (90 to 99 percent 

probability) the cause of most of the observed global warming over the last 50 years. The 

primary GHGs of concern are carbon dioxide (CO2), methane, nitrous oxide, 

hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride. Mobile sources emitted 

31.5 percent of all U.S. GHG in 2006, and have been the fastest-growing source of U.S. 

 

16 74 FR 18886 (Apr. 24, 2009). 

17 74 FR 32744 (July 8, 2009). 
17

GHG since 1990. Light-duty vehicles emit four GHGs--CO2, methane, nitrous oxide, and 

hydrofluorocarbons--and are responsible for nearly 60 percent of all mobile source 

GHGs. For light-duty vehicles, CO2 emissions represent about 95 percent of all 

greenhouse emissions, and the CO2 emissions measured over the EPA tests used for fuel 

economy compliance represent over 90 percent of total light-duty vehicle greenhouse gas 

emissions. 

 Improving energy security by reducing our dependence on foreign oil has been a 

national objective since the first oil price shocks in the 1970s. Net petroleum imports 

now account for approximately 60 percent of U.S. petroleum consumption. World crude 

oil production is highly concentrated, exacerbating the risks of supply disruptions and 

price shocks. Tight global oil markets led to prices over $100 per barrel in 2008, with 

gasoline reaching as high as $4 per gallon in many parts of the U.S., causing financial 

hardship for many families. The export of U.S. assets for oil imports continues to be an 

important component of the U.S.’ historically unprecedented trade deficits. 

Transportation accounts for about two-thirds of U.S. petroleum consumption. Light-duty 

vehicles account for about 60 percent of transportation oil use, which means that they 

alone account for about 40 percent of all U.S. oil consumption. 

NHTSA and EPA have coordinated closely and worked jointly in developing their 

respective proposals. This is reflected in many aspects of this joint proposal. For 

example, the agencies have developed a comprehensive joint Technical Support 

Document (TSD) that provides a solid technical underpinning for each agency’s 

modeling and analysis used to support their proposed standards. Also, to the extent 

allowed by law, the agencies have harmonized many elements of program design, such as 

the form of the standard (the footprint-based attribute curves), and the definitions used for 

cars and trucks. They have developed the same or similar compliance flexibilities, to the 

extent allowed and appropriate under their respective statutes, such as averaging, 

banking, and trading of credits, and have harmonized the compliance testing and test 

protocols used for purposes of the fleet average standards each agency is proposing. 

Finally, as discussed in Section I.C., under their respective statutes each agency is called 

upon to exercise its judgment and determine standards that are an appropriate balance of 

various relevant statutory factors. Given the common technical issues before each 

agency, the similarity of the factors each agency is to consider and balance, and the 

authority of each agency to take into consideration the standards of the other agency, both 

EPA and NHTSA are proposing standards that result in a harmonized National Program. 

 This joint proposal covers passenger cars, light-duty-trucks, and medium-duty 

passenger vehicles built in model years 2012 through 2016. These vehicle categories are 

responsible for almost 60 percent of all U.S. transportation-related GHG emissions. EPA 

and NHTSA expect that automobile manufacturers will meet these proposed standards by 

utilizing technologies that will reduce vehicle GHG emissions and improve fuel 

economy. Although many of these technologies are available today, the emissions 

reductions and fuel economy improvements proposed would involve more widespread 

use of these technologies across the light-duty vehicle fleet. These include improvements 
18

to engines, transmissions, and tires, increased use of start-stop technology, improvements 

in air conditioning systems (to the extent currently allowed by law), increased use of 

hybrid and other advanced technologies, and the initial commercialization of electric 

vehicles and plug-in hybrids. 

 

The proposed National Program would result in approximately 950 million metric 

tons of total carbon dioxide equivalent emissions reductions and approximately 1.8 

billion barrels of oil savings over the lifetime of vehicles sold in model years 2012 

through 2016. In total, the combined EPA and NHTSA 2012-2016 standards would 

reduce GHG emissions from the U.S. light-duty fleet by approximately 21 percent by 

2030 over the level that would occur in the absence of the National Program. These 

proposals also provide important energy security benefits, as light-duty vehicles are about 

95 percent dependent on oil-based fuels. The combined benefits of the proposed CAFE 

and GHG standardsNational Program wouldwill total about $XXX 250 billion at a 3% 

discount rate, or $195 billion at a 7% discount rate. In the discussion that follows in 

Section III and IV, each agency explains the related benefits for their individual 

standards. 

Together, EPA and NHTSA estimate that the average cost increase for a model 

year 2016 vehicle due to the proposed National Program is less than $1,100. However,

the typical driver would save enough in lower fuel costs over the first three years of use 

to offset the higher vehicle costs. U.S. consumers who purchase their vehicle outright 

would save enough in lower fuel costs over the first three years to offset these higher 

vehicle costs. However, most U.S. consumers purchase a new vehicle using credit rather 

than paying cash and the typical car loan today is a five year, 60 month loan. These 

consumers would see immediate savings due to their vehicle’s lower fuel consumption in 

the form of reduced monthly costs of $12-$14 per month throughout the duration of the 

loan (that is, the fuel savings outweigh the increase in loan payments by $12-$14 per 

month). Whether a consumer takes out a loan or purchases a new vehicle outright, over 

the lifetime of a model year 2016 vehicle, consumers would save more than $3,000 due 

to fuel savings. The average 2016 MY vehicle will haveemit Over the lifetime of a 

typical new vehicle, consumers are estimated to save approximately $2,800 and reduce 

their vehicle 16 fewer metric tons of CO2 emissions by XX[ metric tonsduring its lifetime. 

This joint proposal also offers the prospect of important regulatory convergence 

and certainty to automobile companies. Absent this proposal, there would be three 

separate federal and state regimes independently regulating light-duty vehicles to reduce 

fuel consumption and GHG emissions: NHTSA’s CAFE standards, EPA’s GHG 

standards, and the GHG standards applicable in California and other states adopting the 

California standards. This joint proposal would allow automakers to meet both the 

NHTSA and EPA requirements with a single national fleet, greatly simplifying the 

industry's technology, investment and compliance strategies. In addition, in a letter dated 

May 18, 2009, California stated that it “recognizes the benefit for the country and 

California of a National Program to address greenhouse gases and fuel economy and the 

historic announcement of United States Environmental Protection Agency (EPA) and 
19

National Highway Transportation Safety Administration's (NHTSA) intent to jointly 

propose a rule to set standards for both. California fully supports proposal and adoption 

of such a National Program.” To promote the National Program, California announced 

its commitment to take several actions, including revising its program for MYs 2012-

2016 such that compliance with the federal GHG standards would be deemed to be 

compliance with California's GHG standards. This would allow the single national fleet 

used by automakers to meet the two Federal requirements and to meet California 

requirements as well. This commitment was conditioned on several points, including 

EPA GHG standards that are substantially similar to those described in the May 19, 2009 

Notice of Upcoming Joint Rulemaking. Many automakers and trade associations also 

announced their support for the National Program announced that day.18 The 

manufacturers conditioned their support on EPA and NHTSA standards substantially 

similar to those described in that Notice. NHTSA and EPA met with many vehicle 

manufacturers to discuss the feasibility of the National Program. EPA and NHTSA are 

confident that these proposed GHG and CAFE standards, if finalized, would successfully 

harmonize both the federal and state programs for MYs 2012-2016 and would allow our 

country to achieve the increased benefits of a single, nationwide program to reduce lightduty vehicle GHG emissions and reduce the country’s dependence on fossil fuels by 

improving these vehicles’ fuel economy. 

A successful and sustainable automotive industry depends upon, among other 

things, continuous technology innovation in general, and low greenhouse gas emissions 

and high fuel economy vehicles in particular. In this respect, this proposal would help 

spark the investment in technology innovation necessary for automakers to successfully 

compete in both domestic and export markets, and thereby continue to support a strong 

economy. 

While this proposal covers MYs 2012-2016, EPA and NHTSA anticipate the 

importance of seeking a strong, coordinated national program for light-duty vehicles in 

model years beyond 2016 in a future rulemaking. 

Key elements of the proposal for a harmonized and coordinated program are the 

level and form of the GHG and CAFE standards, the available compliance mechanisms, 

and general implementation elements. These elements are outlined in the following 

sections. 

C. Background and Comparison of NHTSA and EPA Statutory 

Authority 

This section provides the agencies’ respective statutory authorities under which CAFE 

and GHG standards are established. 

 1. NHTSA Statutory Authority

 

18 These letters are available at www.epa.gov/otaq/climate/regulations.htm. 
20

 NHTSA establishes CAFE standards for passenger cars and light trucks for each 

model year under EPCA, as amended by EISA. EPCA mandates a motor vehicle fuel 

economy regulatory program to meet the various facets of the need to conserve energy, 

including ones having environmental and foreign policy implications. EPCA allocates 

the responsibility for implementing the program between NHTSA and EPA as follows: 

NHTSA sets CAFE standards for passenger cars and light trucks; EPA establishes the 

procedures for testing, tests vehicles, collects and analyzes manufacturers’ data, and 

calculates the average fuel economy of each manufacturer’s passenger cars and light 

trucks; and NHTSA enforces the standards based on EPA’s calculations. 

 a. Standard Setting 

 We have summarized below the most important aspects of standard setting under 

EPCA, as amended by EISA. 

For each future model year, EPCA requires that NHTSA establish standards at 

“the maximum feasible average fuel economy level that it decides the manufacturers can 

achieve in that model year,” based on the agency’s consideration of four statutory factors: 

technological feasibility, economic practicability, the effect of other standards of the 

Government on fuel economy, and the need of the nation to conserve energy. EPCA 

does not define these terms or specify what weight to give each concern in balancing 

them; thus, NHTSA defines them and determines the appropriate weighting based on the 

circumstances in each CAFE standard rulemaking.19

 

For MYs 2011-2020, EPCA further requires that separate standards for passenger 

cars and for light trucks be set at levels high enough to ensure that the CAFE of the 

industry-wide combined fleet of new passenger cars and light trucks reaches at least 35 

mpg not later than MY 2020. 

i. Factors That Must be Considered in Deciding the Appropriate Stringency 

of CAFE Standards 

(1) Technological feasibility 

“Technological feasibility” refers to whether a particular method of improving 

fuel economy can be available for commercial application in the model year for which a 

standard is being established. Thus, the agency is not limited in determining the level of 

new standards to technology that is already being commercially applied at the time of the 

rulemaking. NHTSA has historically considered all types of technologies that improve 

real-world fuel economy, except those whose effects are not reflected in fuel economy 

testing. Principal among them are technologies that improve air conditioner efficiency 

 

19 See Center for Biological Diversity v. NHTSA, 538 F.3d. 1172, 1195 (9th Cir. 2008) (“The EPCA clearly 

requires the agency to consider these four factors, but it gives NHTSA discretion to decide how to balance 

the statutory factors—as long as NHTSA’s balancing does not undermine the fundamental purpose of the 

EPCA: energy conservation.”) 
21

because the air conditioners are not turned on during testing under existing test 

procedures. 

(2) Economic practicability 

“Economic practicability” refers to whether a standard is one “within the financial 

capability of the industry, but not so stringent as to” lead to “adverse economic 

consequences, such as a significant loss of jobs or the unreasonable elimination of 

consumer choice.”20 This factor is especially important in the context of current events, 

where the automobile industry is facing significantly adverse economic conditions, as 

well as significant loss of jobs. In an attempt to ensure the economic practicability of 

attribute-based standards, NHTSA considers a variety of factors, including the annual 

rate at which manufacturers can increase the percentage of its fleet that employs a 

particular type of fuel-saving technology, and cost to consumers. Consumer acceptability 

is also an element of economic practicability, one which is particularly difficult to gauge 

during times of frequently-changing fuel prices. NHTSA believes this approach is 

reasonable for the MY 2012-2016 standards in view of the facts before it at this time. 

NHTSA is aware, however, that facts relating to a variety of key issues in CAFE 

rulemaking are steadily evolving and seeks comments on the balancing of these factors in 

light of the facts available during the comment period. 

 At the same time, the law does not preclude a CAFE standard that poses 

considerable challenges to any individual manufacturer. The Conference Report for 

EPCA, as enacted in 1975, makes clear, and the case law affirms, “a determination of 

maximum feasible average fuel economy should not be keyed to the single manufacturer 

which might have the most difficulty achieving a given level of average fuel 

economy.”21 Instead, NHTSA is compelled “to weigh the benefits to the nation of a 

higher fuel economy standard against the difficulties of individual automobile 

manufacturers.” Id. The law permits CAFE standards exceeding the projected capability 

of any particular manufacturer as long as the standard is economically practicable for the 

industry as a whole. Thus, while a particular CAFE standard may pose difficulties for 

one manufacturer, it may also present opportunities for another. The CAFE program is 

not necessarily intended to maintain the competitive positioning of each particular 

company. Rather, it is intended to enhance fuel economy of the vehicle fleet on 

American roads, while protecting motor vehicle safety and being mindful of the risk of 

harm to the overall United States economy. 

(3) The effect of other motor vehicle standards of the Government on fuel 

economy 

 

20 67 FR 77015, 77021 (Dec. 16, 2002). 

21

 CEI-I, 793 F.2d 1322, 1352 (D.C. Cir. 1986). 
22

“The effect of other motor vehicle standards of the Government on fuel 

economy,” involves an analysis of the effects of compliance with emission,22 safety, 

noise, or damageability standards on fuel economy capability and thus on average fuel 

economy. In previous CAFE rulemakings, the agency has said that pursuant to this 

provision, it considers the adverse effects of other motor vehicle standards on fuel 

economy. It said so because, from the CAFE program’s earliest years23 until present, the 

effects of such compliance on fuel economy capability over the history of the CAFE 

program have been negative ones. For example, safety standards that have the effect of 

increasing vehicle weight lower vehicle fuel economy capability and thus decrease the 

level of average fuel economy that the agency can determine to be feasible. 

In the wake of Massachusetts v. EPA and of EPA’s proposed endangerment 

finding, granting of a waiver to California for its motor vehicle GHG standards, and its 

own proposal of GHG standards, NHTSA is confronted with the issue of how to treat 

those standards under the “other motor vehicle standards” provision. To the extent the 

GHG standards result in increases in fuel economy, they would do so almost exclusively 

as a result of inducing manufacturers to install the same types of technologies used by 

manufacturers in complying with the CAFE standards. The primary exception would 

involve increases in the efficiency of air conditioners. 

Comment is requested on whether and in what way the effects of the California 

and EPA standards should be considered under the “other motor vehicle standards” 

provision or other provisions of EPCA in 49 U.S.C. 32902, consistent with NHTSA’s 

independent obligation under EPCA/EISA to issue CAFE standards. The agency has 

already considered EPA’s proposal and the harmonization benefits of the National 

Program in developing its own proposal. 

(4) The need of the United States to conserve energy 

“The need of the United States to conserve energy” means “the consumer cost, 

national balance of payments, environmental, and foreign policy implications of our need 

for large quantities of petroleum, especially imported petroleum.”24 Environmental 

implications principally include reductions in emissions of criteria pollutants and carbon 

dioxide. Prime examples of foreign policy implications are energy independence and 

security concerns. 

 (a) Fuel prices and the value of saving fuel 

Projected future fuel prices are a critical input into the preliminary economic 

analysis of alternative CAFE standards, because they determine the value of fuel savings 

 

22 In the case of emission standards, this includes standards adopted by the Federal government and can

include standards adopted by the States as well, since in certain circumstances the Clean Air Act allows 

States to adopt and enforce State standards different from the Federal ones. 

23 42 FR 63184, 63188 (Dec. 15, 1977). See also 42 FR 33534, 33537 (Jun. 30, 1977). 

24 42 FR 63184, 63188 (1977). 
23

both to new vehicle buyers and to society. In this rule, NHTSA relies on fuel price 

projections from the U.S. Energy Information Administration’s (EIA) Annual Energy 

Outlook (AEO) for this analysis. Federal government agencies generally use EIA’s 

projections in their assessments of future energy-related policies. 

(b) Petroleum consumption and import externalities 

U.S. consumption and imports of petroleum products impose costs on the 

domestic economy that are not reflected in the market price for crude petroleum, or in the 

prices paid by consumers of petroleum products such as gasoline. These costs include (1) 

higher prices for petroleum products resulting from the effect of U.S. oil import demand 

on the world oil price; (2) the risk of disruptions to the U.S. economy caused by sudden 

reductions in the supply of imported oil to the U.S.; and (3) expenses for maintaining a 

U.S. military presence to secure imported oil supplies from unstable regions, and for 

maintaining the strategic petroleum reserve (SPR) to provide a response option should a 

disruption in commercial oil supplies threaten the U.S. economy, to allow the United 

States to meet part of its International Energy Agency obligation to maintain emergency 

oil stocks, and to provide a national defense fuel reserve. Higher U.S. imports of crude 

oil or refined petroleum products increase the magnitude of these external economic 

costs, thus increasing the true economic cost of supplying transportation fuels above the 

resource costs of producing them. Conversely, reducing U.S. imports of crude petroleum 

or refined fuels or reducing fuel consumption can reduce these external costs. 

(c) Air pollutant emissions 

While reductions in domestic fuel refining and distribution that result from lower 

fuel consumption will reduce U.S. emissions of various pollutants, additional vehicle use 

associated with the rebound effect25 from higher fuel economy will increase emissions of 

these pollutants. Thus, the net effect of stricter CAFE standards on emissions of each 

pollutant depends on the relative magnitudes of its reduced emissions in fuel refining and 

distribution, and increases in its emissions from vehicle use. 

Fuel savings from stricter CAFE standards also result in lower emissions of CO2, 

the main greenhouse gas emitted as a result of refining, distribution, and use of 

transportation fuels. Lower fuel consumption reduces carbon dioxide emissions directly, 

because the primary source of transportation-related CO2 emissions is fuel combustion in 

internal combustion engines. 

NHTSA has considered environmental issues, both within the context of EPCA 

and the National Environmental Policy Act, in making decisions about the setting of 

standards from the earliest days of the CAFE program. As courts of appeal have noted in 

 

25 The “rebound effect” refers to the tendency of drivers to drive their vehicles more as the cost of doing so 

goes down, as when fuel economy improves. 
24

three decisions stretching over the last 20 years,26 NHTSA defined the “need of the 

Nation to conserve energy” in the late 1970s as including “the consumer cost, national 

balance of payments, environmental, and foreign policy implications of our need for large 

quantities of petroleum, especially imported petroleum.”27 Pursuant to that view, 

NHTSA declined in the past to include diesel engines in determining the appropriate 

level of standards for passenger cars and for light trucks because particulate emissions 

from diesels were then both a source of concern and unregulated.28 In 1988, NHTSA 

included climate change concepts in its CAFE notices and prepared its first 

environmental assessment addressing that subject.29 It cited concerns about climate 

change as one of its reasons for limiting the extent of its reduction of the CAFE standard 

for MY 1989 passenger cars.30 Since then, NHTSA has considered the benefits of 

reducing tailpipe carbon dioxide emissions in its fuel economy rulemakings pursuant to 

the statutory requirement to consider the nation’s need to conserve energy by reducing 

fuel consumption. 

ii. Other Factors Considered by NHTSA 

NHTSA considers the potential for adverse safety consequences when in 

establishing CAFE standards. This practice is recognized approvingly in case law.31 

Under the universal or “flat” CAFE standards that NHTSA was previously authorized to 

establish, the primary risk to safety came from the possibility that manufacturers would 

respond to higher standards by building smaller, less safe vehicles in order to “balance 

out” the larger, safer vehicles that the public generally preferred to buy. Under the 

attribute-based standards being proposed in this action, that risk is reduced because 

building smaller vehicles tends to raise a manufacturer’s overall CAFE obligation, rather 

than only raising its fleet average CAFE. However, even under attribute-based standards, 

there is still risk that manufacturers will rely on downweighting to improve their fuel 

economy (for a given vehicle at a given footprint target) in ways that may reduce safety. 

 

26 Center for Auto Safety v. NHTSA, 793 F.2d 1322, 1325 n. 12 (D.C.Cir.1986); Public Citizen v. NHTSA, 

848 F.2d 256, 262-3 n. 27 (D.C. Cir. 1988)(noting that “NHTSA itself has interpreted the factors it must 

consider in setting CAFE standards as including environmental effects”); and Center for Biological 

Diversity v. NHTSA, 538 F.3d 1172 (9th Cir. 2007). 

27 42 FR 63184, 63188 (Dec. 15, 1977) (emphasis added)

28 For example, the final rules establishing CAFE standards for MY 1981-84 passenger cars, 42 FR 33533, 

33540-1 and 33551 (Jun. 30, 1977), and for MY 1983-85 light trucks, 45 FR 81593, 81597 (Dec. 11, 

1980).

29 53 FR 33080, 33096 (Aug. 29, 1988). 

30 53 FR 39275, 39302 (Oct. 6, 1988). 

31 See, e.g., Center for Auto Safety v. NHTSA (CAS), 793 F. 2d 1322 (D.C. Cir. 1986) (Administrator’s 

consideration of market demand as component of economic practicability found to be reasonable); Public

Citizen 848 F.2d 256 (Congress established broad guidelines in the fuel economy statute; agency’s decision 

to set lower standard was a reasonable accommodation of conflicting policies). As the United States Court 

of Appeals pointed out in upholding NHTSA's exercise of judgment in setting the 1987-1989 passenger car 

standards, “NHTSA has always examined the safety consequences of the CAFE standards in its overall 

consideration of relevant factors since its earliest rulemaking under the CAFE program.” Competitive 

Enterprise Institute v. NHTSA (CEI I), 901 F.2d 107, 120 at n.11 (D.C. Cir. 1990).
25

In addition, the agency considers consumer demand in establishing new standards 

and in assessing whether already established standards remained feasible. In the 1980’s, 

the agency relied in part on the unexpected drop in fuel prices and the resulting 

unexpected failure of consumer demand for small cars to develop in explaining the need 

to reduce CAFE standards for a several year period in order to give manufacturers time to 

develop alternative technology-based strategies for improving fuel economy. 

iii. Factors that NHTSA is Statutorily Prohibited from Considering in Setting 

Standards 

EPCA provides that in determining the level at which it should set CAFE 

standards for a particular model year, NHTSA may not consider the ability of 

manufacturers to take advantage of several EPCA provisions that facilitate compliance 

with the CAFE standards and thereby reduce the costs of compliance.32 As noted below 

in Section IV, manufacturers can earn compliance credits by exceeding the CAFE 

standards and then use those credits to achieve compliance in years in which their 

measured average fuel economy falls below the standards. Manufacturers can also 

increase their CAFE levels through MY 2019 by producing alternative fuel vehicles. 

EPCA provides an incentive for producing these vehicles by specifying that their fuel 

economy is to be determined using a special calculation procedure that results in those 

vehicles being assigned a high fuel economy level. 

iv. Weighing and Balancing of Factors 

NHTSA has broad discretion in balancing the above factors in determining the 

average fuel economy level that the manufacturers can achieve. Congress “specifically 

delegated the process of setting ... fuel economy standards with broad guidelines 

concerning the factors that the agency must consider. The breadth of those guidelines, 

the absence of any statutorily prescribed formula for balancing the factors, the fact that 

the relative weight to be given to the various factors may change from rulemaking to 

rulemaking as the underlying facts change, and the fact that the factors may often be 

conflicting with respect to whether they militate toward higher or lower standards give 

NHTSA discretion to decide what weight to give each of the competing policies and 

concerns and then determine how to balance them-as long as NHTSA's balancing does 

not undermine the fundamental purpose of the EPCA: energy conservation, and as long 

as that balancing reasonably accommodates “conflicting policies that were committed to 

the agency's care by the statute.’” 

Thus, EPCA does not mandate that any particular number be adopted when 

NHTSA determines the level of CAFE standards. Rather, any number within a zone of 

reasonableness may be, in NHTSA’s assessment, the level of stringency that 

manufacturers can achieve. See, e.g., Hercules Inc. v. EPA, 598 F. 2d 91, 106 (D.C. Cir. 

1978) (“In reviewing a numerical standard we must ask whether the agency’s numbers 

are within a zone of reasonableness, not whether its numbers are precisely right”). 

 

32 49 U.S.C. 32902(h). 
26

v. Other Requirements Related to Standard Setting 

The standards for passenger cars and those for light trucks must increase ratably 

each year. This statutory requirement is interpreted, in combination with the requirement 

to set the standards for each model year at the level determined to be the maximum 

feasible level that manufacturers can achieve for that model year, to mean that the annual 

increases should not be disproportionately large or small in relation to each other. 

The standards for passenger cars and light trucks must be based on one or more 

vehicle attributes, like size or weight, that correlate with fuel economy and must be 

expressed in terms of a mathematical function. Fuel economy targets are set for 

individual vehicles and increase as the attribute decreases and vice versa. For example, 

size-based (i.e., size-indexed) standards assign higher fuel economy targets to smaller 

(and generally, but not necessarily, lighter) vehicles and lower ones to larger (and 

generally, but not necessarily, heavier) vehicles. The fleet-wide average fuel economy 

that a particular manufacturer is required to achieve depends on the size mix of its fleet, 

i.e., the proportion of the fleet that is small-, medium- or large-sized. 

This approach can be used to require virtually all manufacturers to increase 

significantly the fuel economy of a broad range of both passenger cars and light trucks, 

i.e., the manufacturer must improve the fuel economy of all the vehicles in its fleet. 

Further, this approach can do so without creating an incentive for manufacturers to make 

small vehicles smaller or large vehicles larger, with attendant implications for safety. 

b. Test Procedures for Measuring Fuel Economy 

EPCA provides EPA with the responsibility for establishing CAFE test 

procedures. Current test procedures measure the effects of nearly all fuel saving 

technologies. The principal exception is improvements in air conditioning efficiency. By 

statutory law in the case of passenger cars and by administrative regulation in the case of 

light trucks, air conditioners are not turned on during fuel economy testing. See Section 

I.C.2 for details. 

The fuel economy test procedures for light trucks could be amended through 

rulemaking to provide for air conditioner operation during testing and to take other steps 

for improving the accuracy and representativeness of fuel economy measurements. 

Comment is sought by the agencies regarding implementing such amendments beginning 

in MY 2017 and also on the more immediate interim alternative step of providing CAFE 

program credits under the authority of 49 U.S.C. 32904(c) for light trucks equipped with 

relatively efficient air conditioners for MYs 2012-2016. These CAFE credits would be 

earned by manufacturers on the same terms and under the same conditions as EPA is 

proposing to provide them under the CAA, and additional detail is on this request for 

comment for early CAFE credits is contained in Section IV of this preamble. 
27

Modernizing the passenger car test procedures, or even providing similar credits, would 

not be possible under EPCA as currently written. 

c. Enforcement and Compliance Flexibility 

EPA is responsible for measuring automobile manufacturers’ CAFE so that 

NHTSA can determine compliance with the CAFE standards. When NHTSA finds that a 

manufacturer is not in compliance, it notifies the manufacturer. Surplus credits generated 

from the five previous years can be used to make up the deficit. The amount of credit 

earned is determined by multiplying the number of tenths of a mpg by which a 

manufacturer exceeds a standard for a particular category of automobiles by the total 

volume of automobiles of that category manufactured by the manufacturer for a given 

model year. If there are no (or not enough) credits available, then the manufacturer can 

either pay the fine, or submit a carry back plan to NHTSA. A carry back plan describes 

what the manufacturer plans to do in the following three model years to earn enough 

credits to make up for the deficit. NHTSA must examine and determine whether to 

approve the plan. 

In the event that a manufacturer does not comply with a CAFE standard, even 

after the consideration of credits, EPCA provides for the assessing of civil penalties, 

unless, as provided below, the manufacturer has earned credits for exceeding a standard 

in an earlier year or expects to earn credits in a later year.33 The Act specifies a precise 

formula for determining the amount of civil penalties for such a noncompliance. The 

penalty, as adjusted for inflation by law, is $5.50 for each tenth of a mpg that a 

manufacturer’s average fuel economy falls short of the standard for a given model year 

multiplied by the total volume of those vehicles in the affected fleet (i.e., import or 

domestic passenger car, or light truck), manufactured for that model year. The amount of 

the penalty may not be reduced except under the unusual or extreme circumstances 

specified in the statute. 

 Unlike the National Traffic and Motor Vehicle Safety Act, EPCA does not 

provide for recall and remedy in the event of a noncompliance. The presence of recall 

and remedy provisions34 in the Safety Act and their absence in EPCA is believed to arise 

from the difference in the application of the safety standards and CAFE standards. A 

safety standard applies to individual vehicles; that is, each vehicle must possess the 

requisite equipment or feature that must provide the requisite type and level of 

performance. If a vehicle does not, it is noncompliant. Typically, a vehicle does not 

entirely lack an item or equipment or feature. Instead, the equipment or features fails to 

perform adequately. Recalling the vehicle to repair or replace the noncompliant 

equipment or feature can usually be readily accomplished. 

In contrast, a CAFE standard applies to a manufacturer’s entire fleet for a model 

year. It does not require that a particular individual vehicle be equipped with any 

 

33 EPCA does not provide authority for seeking to enjoin violations of the CAFE standards. 

34 49 U.S.C. 30120, Remedies for defects and noncompliance. 
28

particular equipment or feature or meet a particular level of fuel economy. It does require 

that the manufacturer’s fleet, as a whole, comply. Further, although under the attributebased approach to setting CAFE standards fuel economy targets are established for 

individual vehicles based on their footprints, the vehicles are not required to comply with 

those targets. However, as a practical matter, if a manufacturer chooses to design some 

vehicles that fall below their target levels of fuel economy, it will need to design other 

vehicles that exceed their targets if the manufacturer’s overall fleet average is to meet the 

applicable standard. 

Thus, under EPCA, there is no such thing as a noncompliant vehicle, only a 

noncompliant fleet. No particular vehicle in a noncompliant fleet is any more, or less, 

noncompliant than any other vehicle in the fleet. 

2. EPA Statutory Authority 

 Title II of the Clean Air Act (CAA) provides for comprehensive regulation of 

mobile sources, authorizing EPA to regulate emissions of air pollutants from all mobile 

source categories. Pursuant to these sweeping grants of authority, EPA considers such 

issues as technology effectiveness, its cost (both per vehicle, per manufacturer, and per 

consumer), the lead time necessary to implement the technology, and based on this the 

feasibility and practicability of potential standards; the impacts of potential standards on 

emissions reductions of both GHGs and non-GHGs; the impacts of standards on oil 

conservation and energy security; the impacts of standards on fuel savings by consumers; 

the impacts of standards on the auto industry; other energy impacts; as well as other 

relevant factors such as impacts on safety. 

 

 As a result of EPA rules implementing Title II, new cars and SUVs sold today 

have emissions levels of hydrocarbons, oxides of nitrogen, and carbon monoxide that are 

98-99% lower than new vehicles sold in the 1960s, on a per mile basis. Similarly, 

standards established for heavy-duty highway and nonroad sources require emissions rate 

reductions on the order of 90% or more for particulate matter and oxides of nitrogen. 

Overall ambient levels of automotive-related pollutants are lower now than in 1970, even 

as economic growth and vehicle miles traveled have nearly tripled. These programs have 

resulted in millions of tons of pollution reduction and major reductions in pollutionrelated deaths (estimated in the tens of thousands per year) and illnesses. The net societal 

benefits of the mobile source programs are enormous. In its annual reports on federal 

regulations, the Office of Management and Budget reports that many of EPA’s mobile 

source emissions standards typically have projected benefit-to-cost ratios of 5:1 to 10:1 or 

more. Title II emission standards have also stimulated the development of a much 

broader set of advanced automotive technologies, such as on-board computers and fuel 

injection systems, which are at the core of today’s automotive designs and have yielded 

not only lower emissions, but improved vehicle performance, reliability, and durability. 
29

 This proposal implements a specific provision from Title II, section 202(a).35

 

Section 202 (a) (1) of the Clean Air Act (CAA) states that “the Administrator shall by 

regulation prescribe (and from time to time revise)...standards applicable to the emission 

of any air pollutant from any class or classes of new motor vehicles ..., which in his 

judgment cause, or contribute to, air pollution which may reasonably be anticipated to 

endanger public health or welfare.” If EPA makes the appropriate endangerment and 

cause or contribute findings, then section 202(a) authorizes EPA to issue standards 

applicable to emissions of those pollutants. 

 

Any standards under CAA section 202(a)(1) “shall be applicable to such vehicles 

... for their useful life.” Emission standards set by the EPA under CAA section 

202(a)(1) are technology-based, as the levels chosen must be premised on a finding of 

technological feasibility. Thus, standards promulgated under CAA section 202(a) are to 

take effect only “after providing such period as the Administrator finds necessary to 

permit the development and application of the requisite technology, giving appropriate 

consideration to the cost of compliance within such period” (section 202 (a)(2); see also 

NRDC v. EPA, 655 F. 2d 318, 322 (D.C. Cir. 1981)). EPA is afforded considerable 

discretion under section 202(a) when assessing issues of technical feasibility and 

availability of lead time to implement new technology. Such determinations are “subject 

to the restraints of reasonableness”, which “does not open the door to ‘crystal ball’ 

inquiry.” NRDC, 655 F. 2d at 328, quoting International Harvester Co. v. Ruckelshaus, 

478 F. 2d 615, 629 (D.C. Cir. 1973). However, “EPA is not obliged to provide detailed 

solutions to every engineering problem posed in the perfection of the trap-oxidizer. In 

the absence of theoretical objections to the technology, the agency need only identify the 

major steps necessary for development of the device, and give plausible reasons for its 

belief that the industry will be able to solve those problems in the time remaining. The 

EPA is not required to rebut all speculation that unspecified factors may hinder ‘real 

world’ emission control.” NRDC, 655 F. 2d at 333-34. In developing such technologybased standards, EPA has the discretion to consider different standards for appropriate 

groupings of vehicles (“class or classes of new motor vehicles”), or a single standard for 

a larger grouping of motor vehicles (NRDC, 655 F. 2d at 338). 

Although standards under CAA section 202(a)(1) are technology-based, they are 

not based exclusively on technological capability. EPA has the discretion to consider and 

weigh various factors along with technological feasibility, such as the cost of compliance 

(see section 202(a) (2)), lead time necessary for compliance (section 202(a)(2)), safety 

(see NRDC, 655 F. 2d at 336 n. 31) and other impacts on consumers, and energy impacts 

associated with use of the technology. See George E. Warren Corp. v. EPA, 159 F.3d 

616, 623-624 (D.C. Cir. 1998) (ordinarily permissible for EPA to consider factors not 

specifically enumerated in the Act). See also Entergy Corp. v. Riverkeeper, Inc., 129 

S.Ct. 1498, 1508-09 (2009) (congressional silence did not bar EPA from employing costbenefit analysis under Clean Water Act absent some other clear indication that such 

analysis was prohibited; rather, silence indicated discretion to use or not use such an 

approach as the agency deems appropriate). 

 

35 42 U.S.C. 7521 (a) 
30

 In addition, EPA has clear authority to set standards under CAA section 202(a) 

that are technology forcing when EPA considers that to be appropriate, but is not required 

to do so (as compared to standards set under provisions such as section 202(a)(3) and 

section 213(a)(3)). EPA has interpreted a similar statutory provision, CAA section 231, 

as follows: 

While the statutory language of section 231 is not identical to other provisions in 

title II of the CAA that direct EPA to establish technology-based standards for 

various types of engines, EPA interprets its authority under section 231 to be 

somewhat similar to those provisions that require us to identify a reasonable 

balance of specified emissions reduction, cost, safety, noise, and other factors. 

See, e.g., Husqvarna AB v. EPA, 254 F.3d 195 (DC Cir. 2001) (upholding EPA’s 

promulgation of technology-based standards for small non-road engines under 

section 213(a)(3) of the CAA). However, EPA is not compelled under section 231 

to obtain the ‘‘greatest degree of emission reduction achievable’’ as per sections 

213 and 202 of the CAA, and so EPA does not interpret the Act as requiring the 

agency to give subordinate status to factors such as cost, safety, and noise in 

determining what standards are reasonable for aircraft engines. Rather, EPA has 

greater flexibility under section 231 in determining what standard is most 

reasonable for aircraft engines, and is not required to achieve a ‘‘technology 

forcing’’ result.36

 

This interpretation was upheld as reasonable in NACAA v. EPA, (489 F.3d 1221, 

1230 (D.C. Cir. 2007)). CAA section 202(a) does not specify the degree of weight to 

apply to each factor, and EPA accordingly has discretion in choosing an appropriate 

balance among factors. See Sierra Club v. EPA, 325 F.3d 374, 378 (D.C. Cir. 2003) 

(even where a provision is technology-forcing, the provision “does not resolve how the 

Administrator should weigh all [the statutory] factors in the process of finding the 

'greatest emission reduction achievable’”). Also see Husqvarna AB v. EPA, 254 F. 3d 

195, 200 (D.C. Cir. 2001) (great discretion to balance statutory factors in considering 

level of technology-based standard, and statutory requirement “to [give appropriate] 

consideration to the cost of applying ... technology” does not mandate a specific method 

of cost analysis); see also Hercules Inc. v. EPA, 598 F. 2d 91, 106 (D.C. Cir. 1978) (“In 

reviewing a numerical standard we must ask whether the agency’s numbers are within a 

zone of reasonableness, not whether its numbers are precisely right”); Permian Basin 

Area Rate Cases, 390 U.S. 747, 797 (1968) (same); Federal Power Commission v. 

Conway Corp., 426 U.S. 271, 278 (1976) (same); Exxon Mobil Gas Marketing Co. v. 

FERC, 297 F. 3d 1071, 1084 (D.C. Cir. 2002) (same). 

a. EPA’s Testing Authority 

Under section 203 of the CAA, sales of vehicles are prohibited unless the vehicle 

is covered by a certificate of conformity. EPA issues certificates of conformity pursuant 

 

36 70 FR 69664, 69676, November 17, 2005. 
31

to section 206 of the Act, based on (necessarily) pre-sale testing conducted either by EPA 

or by the manufacturer. The Federal Test Procedure (FTP or ‘‘city’’ test) and the 

Highway Fuel Economy Test (HFET or ‘‘highway’’ test) are used for this purpose. 

Compliance with standards is required not only at certification but throughout a vehicle’s 

useful life, so that testing requirements may continue post-certification. Useful life 

standards may apply an adjustment factor to account for vehicle emission control 

deterioration or variability in use (section 206(a)). 

Pursuant to EPCA, EPA is required to measure fuel economy for each model and 

to calculate each manufacturer’s average fuel economy.

37 EPA uses the same tests – the 

FTP and HFET – for fuel economy testing. EPA established the FTP for emissions 

measurement in the early 1970s. In 1976, in response to the Energy Policy and 

Conservation Act (EPCA) statute, EPA extended the use of the FTP to fuel economy 

measurement and added the HFET.38 The provisions in the 1976 regulation, effective 

with the 1977 model year, established procedures to calculate fuel economy values both 

for labeling and for CAFE purposes. Under EPCA, EPA is required to use these 

procedures (or procedures which yield comparable results) for measuring fuel economy 

for cars for CAFE purposes, but not for labeling purposes.

39 EPCA does not pose this 

restriction on CAFE test procedures for light trucks, but EPA does use the FTP and 

HFET for this purpose. EPA determines fuel economy by measuring the amount of CO2

and all other carbon compounds (e.g. total hydrocarbons (THC) and carbon monoxide 

(CO)), and then, by mass balance, calculating the amount of fuel consumed. 

b. EPA Enforcement Authority 

Section 207 of the CAA grants EPA broad authority to require manufacturers to 

remedy vehicles if EPA determines there are a substantial number of noncomplying 

vehicles. In addition, section 205 of the CAA authorizes EPA to assess penalties of up to 

$37,500 per vehicle for violations of various prohibited acts specified in the CAA. In 

determining the appropriate penalty, EPA must consider a variety of factors such as the 

gravity of the violation, the economic impact of the violation, the violator’s history of 

compliance, and “such other matters as justice may require.” Unlike EPCA, the CAA 

does not authorize vehicle manufacturers to pay fines in lieu of meeting emission 

standards. 

3. Comparing the Agencies’ Authority

As the above discussion makes clear, there are both important differences 

between the statutes under which each agency is acting as well as several important areas 

of similarity. One important difference is that EPA’s authority addresses various GHGs, 

while NHTSA’s authority addresses fuel economy as measured under specified test 

procedures. This difference is reflected in this rulemaking in the scope of the two 

 

37 See 49 U.S.C. 32904(c). 

38 See 41 FR 38674 (Sept. 10, 1976), which is codified at 40 CFR Part 600. 

39 See 49 U.S.C. 32904(c). 
32

standards: EPA’s proposal takes into account air conditioning related reductions, as well 

as proposed standards for methane and N2O, but NHTSA’s does not. A second important 

difference is that EPA is proposing certain compliance flexibilities, and takes those 

flexibilities into account in its technical analysis and modeling supporting its proposal. 

EPCA places certain limits on compliance flexibilities for CAFE, and expressly prohibits 

NHTSA from considering the impacts of the compliance flexibilities in setting the CAFE 

standard so that the manufacturers’ election to avail themselves of the permitted 

flexibilities remains strictly voluntary.40 The Clean Air Act, on the other hand, contains 

no such prohibition. These considerations result in some differences in the technical 

analysis and modeling used to support EPA’s and NHTSA’s proposed standards. 

These differences, however, do not change the fact that in many critical ways the 

two agencies are charged with addressing the same basic issue of reducing GHG 

emissions and improving fuel economy. Given the direct relationship between emissions 

of CO2 and fuel economy levels, both agencies are looking at the same set of control 

technologies (with the exception of the air conditioning related technologies). The 

standards set by each agency will drive the kind and degree of penetration of this set of 

technologies across the vehicle fleet. As a result, each agency is trying to answer the 

same basic question – what kind and degree of technology penetration is necessary to 

achieve the agencies’ objectives in the rulemaking time frame, given the agencies’ 

respective statutory authorities? 

In making the determination of what standards are appropriate under the CAA and 

EPCA, each agency is to exercise its judgment and balance many similar factors, such as 

the availability of technologies, the appropriate lead time for introduction of technology, 

and based on this the feasibility and practicability of their standards; the impacts of their 

standards on emissions reductions (of both GHGs and non-GHGs); the impacts of their 

standards on oil conservation; the impacts of their standards on fuel savings by 

consumers; the impacts of their standards on the auto industry; as well as other relevant 

factors such as impacts on safety. Conceptually, therefore, each agency is considering 

and balancing many of the same factors, and each agency is making a decision that at its 

core is answering the same basic question of what kind and degree of technology 

penetration is it appropriate to call for in light of all of the relevant factors. Finally, each 

agency has the authority to take into consideration impacts of the standards of the other 

agency. EPCA calls for NHTSA to take into consideration the effects of EPA’s 

emissions standards on fuel economy capability (see 49 U.S.C. 32902 (f)), and EPA has 

the discretion to take into consideration NHTSA’s CAFE standards in determining 

appropriate action under section 202(a). This is consistent with the Supreme Court’s 

statement that EPA’s mandate to protect public health and welfare is wholly independent 

from NHTSA’s mandate to promote energy efficiency, but there is no reason to think the 

two agencies cannot both administer their obligations and yet avoid inconsistency. 

Massachusetts v. EPA, 549 U.S. 497, 532 (2007). 

 

40 74 FR 24009 (May 22, 2009). 
33

In this context, it is in the Nation’s interest for the two agencies to work together 

in developing their respective proposed standards, and they have done so. For example, 

the agencies have committed considerable effort to develop a joint Technical Support 

Document that provides a technical basis underlying each agency’s analyses. The 

agencies also have worked closely together in developing and reviewing their respective 

modeling, to develop the best analysis and to promote technical consistency. The 

agencies have developed a common set of attribute-based curves that each agency 

supports as appropriate both technically and from a policy perspective. The agencies 

have also worked closely to ensure that their respective programs will work in a 

coordinated fashion, and will provide regulatory compatibility that allows auto 

manufacturers to build a single national light-duty fleet that would comply with both the 

GHG and the CAFE standards. The resulting overall close coordination of the proposed 

GHG and CAFE standards should not be surprising, however, as each agency is using a 

jointly developed technical basis to address the closely intertwined challenges of energy 

security and climate change. As discussed above, in determining the standards to 

propose the agencies are called upon to weigh and balance various factors that are 

relevant under their respective statutory provisions. Each agency is to exercise its 

judgment and balance many similar factors, such as the availability of technologies, the 

appropriate lead time for introduction of technology, and based on this, the feasibility and 

practicability of their standards; and the impacts of their standards on the following: 

emissions reductions (of both GHGs and non-GHGs); oil conservation; fuel savings by 

consumers; the auto industry; as well as other relevant factors such as safety. 

Conceptually, each agency is considering and balancing many of the same factors, and 

each agency is making a decision that at its core is answering the same basic question of 

what kind and degree of technology penetration is appropriate and required in light of all 

of the relevant factors. Each Administrator is called upon to exercise judgment and 

propose standards that the Administrator determines are a reasonable balance of these 

relevant factors. 

As set out in detail in Sections III and IV of this notice, both EPA and NHTSA 

believe the agencies’ proposals are fully justified under their respective statutory criteria. 

The proposed standards can be achieved within the lead time provided, based on a 

projected increased use of various technologies which in most cases are already in 

commercial application in the fleet to varying degrees. Detailed modeling of the 

technologies that could be employed by each manufacturer supports this initial 

conclusion. The agencies also carefully assessed the costs of the proposed rules, both for 

the industry as a whole and per manufacturer, as well as the costs per vehicle, and 

consider these costs to be reasonable and recoverable (from fuel savings). The agencies 

recognize the significant increase in the application of technology that the proposed 

standards would require across a high percentage of vehicles, which will require the 

manufacturers to devote considerable engineering and development resources before 

2012 laying the critical foundation for the widespread deployment of upgraded 

technology across a high percentage of the 2012-2016 fleet. This clearly will be 

challenging for automotive manufacturers and their suppliers, especially in the current 
34

economic climate. However, based on all of the analyses performed by the agencies, our 

judgment is that it is a challenge that can reasonably be met. 

The agencies also evaluated the impacts of these standards with respect to the 

expected reductions in GHGs and oil consumption and, found them to be very significant 

in magnitude. The agencies considered other factors such as the impacts on noise, 

energy, and vehicular congestion. The impact on safety was also given careful 

consideration. Moreover, the agencies quantified the various costs and benefits of the 

proposed standards, to the extent practicable. The agencies’ analyses to date indicate that 

the overall quantified benefits of the proposed standards far outweigh the projected costs. 

All of these factors support the reasonableness of the proposed standards. 

The agencies also evaluated alternatives which were less and more stringent than 

those proposed. Less stringent standards, however, would forego important GHG 

emission reductions and fuel savings that are technically achievable at reasonable cost in 

the lead time provided. In addition, less stringent GHG standards would not result in a 

harmonized National Program for the country. Based on California’s letter of May 18, 

2009, the GHG emission standards would not result in the State of California revising its 

regulations such that compliance with EPA’s GHG standards would be deemed to be 

compliance with California’s GHG standards for these model years. The substantial cost 

advantages associated with a single national program discussed at the outset of this 

section would then be foregone. 

The agencies are not proposing any of the more stringent alternatives analyzed 

largely due to concerns over lead time and economic practicability. The proposed 

standards already require aggressive application of technologies, and more stringent 

standards which would require more widespread use (including more substantial 

implementation of advanced technologies such as strong hybrids) raise serious issues of 

adequacy of lead time, not only to meet the standards but to coordinate such significant 

changes with manufacturers’ redesign cycles. At a time when the entire industry remains 

in an economically critical state, the agencies believe that it would be unreasonable to 

propose more stringent standards. Even in a case where economic factors were not a 

consideration, there are real-world time constraints which must be considered due to the 

short lead time available for the early years of this program, in particular for model years 

2012 and 2013. The physical processes which the automotive industry must follow in 

order to introduce reliable, high quality products require certain minimums of time during 

the product development process. These include time needed for durability testing which 

requires significant mileage accumulation under a range of conditions (e.g., high and low 

temperatures, high altitude, etc.) in both real-world and laboratory conditions. In 

addition, the product development cycle includes a number of pre-production gateways 

on the manufacturing side at both the supplier level and at the automotive manufacturer 

level that are constrained by time. Thus adequate lead-time is an important factor that 

the agencies have taken into consideration in evaluating the proposed standards as well as 

the alternative standards. 
35

 As noted, both agencies also considered the overall costs of their respective 

proposed standards in relation to the projected benefits. The fact that the benefits are 

estimated to considerably exceed their costs supports the view that the proposed 

standards represent a reasonable balance of the relevant statutory factors. In drawing this 

conclusion, the agencies acknowledge the uncertainties and limitations of the analyses. 

For example, the analysis of the benefits is highly dependent on the estimated price of 

fuel projected out many years into the future. There is also significant uncertainty in the 

potential range of values that could be assigned to the social cost of carbon. There are a 

variety of impacts that the agencies are unable to quantify, such as non-market damages, 

extreme weather, socially contingent effects, or the potential for longer-term catastrophic 

events, or the impact on consumer choice. The agencies also note the need to consider 

factors such as the availability of technology within the lead time provided and many of 

the other factors discussed above. The cost-benefit analyses are one of the important 

things the agencies consider in making a judgment as to the appropriate standards to 

propose under their respective statutes. Consideration of the results of the cost-benefit 

analyses by the agencies, however, includes careful consideration of the limitations 

discussed above. 

 One important area where the two agencies’ authorities are similar but not 

identical involves the transfer of credits between a single firm’s car and truck fleets. 

EISA revised EPCA to allow for such credit transfers, but with a cap on the amount of 

CAFE credits which can be transferred between the car and truck fleets. 49 U.S.C. 

32903(g)(3). Under CAA section 202(a), EPA is proposing to allow CO2 credit transfers 

between a single manufacturer’s car and truck fleets, with no corresponding limits on 

such transfers. In general, the EPCA limit on CAFE credit transfers is not expected to 

have the practical effect of limiting the amount of CO2 emission credits a manufacturers

may be able to transfer under the CAA program, recognizing that manufacturers must 

comply with both the proposed CAFE standards and the proposed EPA standards. 

However, it is possible that in some specific circumstances the EPCA limit on CAFE 

credit transfers could constrain the ability of a manufacturer to achieve cost savings 

through unlimited use of GHG emissions credit transfers under the CAA program. 

 

 The agencies request comment on the impact of the EISA credit transfer caps on 

the implementation of the proposed CAFE and GHG standards, including whether it 

would impose such a constraint and the impacts of a constraint on costs, emissions, and 

fuel economy. In addition, the agencies invite comment on approaches that could assist 

in addressing this issue, recognizing the importance the agencies place on harmonization, 

and that would be consistent with their respective statutes. For example, any approach 

must be consistent with both the EISA transfer caps and the EPCA requirement to set 

annual CAFE standards at the maximum feasible average fuel economy level that

NHTSA decides the manufacturers can achieve in that model year, based on the agency’s 

consideration of the four statutory factors. Manufacturers should submit publicly 

available evidence supporting their position on this issue so that a well informed decision 

can be made and explained to the public.
36

D. Summary of the Proposed Standards for the National Program 

1. Joint Analytical Approach

 NHTSA and EPA have worked closely together on nearly every aspect of this 

joint proposal. The extent and results of this collaboration is reflected in the elements of 

the respective NHTSA and EPA proposals, as well as the analytical work contained in the 

Joint Technical Support Document (Joint TSD). The Joint TSD, in particular, describes 

important details of the analytical work that are shared, as well as any differences in 

approach. These includes the build up of the baseline and reference fleets, the derivation 

of the shape of the curve that defines the standards, a detailed description of the costs and 

effectiveness of the technology choices that are available to vehicle manufacturers, a 

summary of the computer models used to estimate how technologies might be added to 

vehicles, and finally the economic inputs used to calculate the impacts and benefits of the 

rules, where practicable. Some of these are highlighted below. 

 EPA and NHTSA have jointly developed attribute curve shapes that each agency 

is using for its proposed standards. Both agencies reviewed the shape of the attributebased curve used for the model year 2011 CAFE standards. After a new and thorough 

analysis of current vehicle data and the comments received from previous two CAFE 

rules, the two agencies improved upon the constrained logistic curve and developed a 

similarly shaped piece-wise linear function. Further details of these functions can be 

found in Sections III and IV of this preamble as well as Chapter 2 of the Joint TSD. 

A critical technical underpinning of each agency’s proposal is the cost and 

effectiveness of the various control technologies. These are used to analyze the 

feasibility and cost of potential GHG and CAFE standards. The technical work reflected 

in the joint TSD is the culmination of over 3 years of literature research, consultation 

with experts, detailed computer simulations, vehicle tear-downs and engineering review, 

all of which will continue into the future as more data becomes available. To promote 

transparency, the vast majority of this information is collected from publically available 

sources, and can be found in the docket of this rule. Non-public (i.e., confidential 

manufacturer) information was used only to the limited extent it was needed to fill a data 

void. A detailed description of all of the technology information considered can be 

found in Chapter 3 of the Joint TSD (and for A/C, Chapter 2 of the EPA RIA). 

 

This detailed technology data forms the inputs to computer models that each 

agency uses to project how vehicle manufacturers may add those technologies in order to 

comply with new standards. These are the OMEGA and Volpe models for EPA and 

NHTSA respectively. The Volpe model is tailored for NHTSA’s EPCA and EISA needs, 

while the OMEGA model is tailored for EPA’s CAA needs. In developing the National 

Program, EPA and NHTSA have worked closely to ensure that consistent and reasonable 

results are achieved from both models. This fruitful collaboration has resulted in the 

improvement of both approaches and now, far from being redundant, these models serve 
37

the purposes of the respective agencies while also maintaining an important validating 

role. The models and their inputs can also be found in the docket. Further description of 

the model and outputs can be found in Sections II and IV of this preamble, and Chapter 3 

of the Joint TSD. 

This comprehensive joint analytical approach has provided a sound and consistent 

technical basis for each agency in developing its proposed standards, which are 

summarized in the sections below. 

2. Level of the Standards 

In this notice, EPA and NHTSA are proposing two separate sets of standards, 

each under its respective statutory authorities. EPA is proposing national CO2 emissions 

standards for light-duty vehicles under section 202 (a) of the Clean Air Act. These 

standards would require these vehicles to meet an estimated combined average emissions 

level of 250 grams/mile of CO2 in model year 2016. NHTSA is proposing CAFE 

standards for passenger cars and light trucks under 49 U.S.C. 32902. These standards 

would require them to meet an estimated combined average fuel economy level of 34.1 

mpg in model year 2016. The proposed standards for both agencies begin with the 2012 

model year, with standards increasing in stringency through model year 2016. They 

represent a harmonized approach that will allow industry to build a single national fleet 

that will satisfy both the GHG requirements under the CAA and CAFE requirements 

under EPCA/EISA.

Given differences in their respective statutory authorities, however, the agencies’ 

proposed standards include some important differences. Under the CO2 fleet average 

standard proposed under CAA section 202(a), EPA expects manufacturers to take 

advantage of the option to generate CO2-equivalent credits by reducing emissions of 

hydrofluorocarbons (HFCs) and CO2 through improvements in their air conditioner 

systems. EPA accounted for these reductions in developing its proposed CO2 standard. 

EPCA does not allow vehicle manufacturers to use air conditioning credits in complying 

with CAFE standards for passenger cars.41 CO2 emissions due to air conditioning 

operation are not measured by the test procedure mandated by statute for use in 

establishing and enforcing CAFE standards for passenger cars. As a result, 

improvements in the efficiency of passenger car air conditioners would not be considered 

as a possible control technology for purposes of CAFE. 

These differences regarding the treatment of air conditioning improvements 

(related to CO2 and HFC reductions ) affect the relative stringency of the EPA standard 

and NHTSA standard. The 250 grams per mile of CO2 equivalent emissions limit is 

equivalent to 35.5 mpg42 if the automotive industry were to meet this CO2 level all 

 

41 There is no such statutory limitation with respect to light trucks. 

42 The agencies are using a common conversion factor between fuel economy in units of miles per gallon 

and CO2

 emissions in units of grams per mile. This conversion factor is 8,887 grams CO2 per gallon 
38

through fuel economy improvements. As a consequence of the prohibition against 

NHTSA’s allowing credits for air conditioning improvements for purposes of passenger 

car CAFE compliance, NHTSA is proposing fuel economy standards that are estimated to 

require a combined (passenger car and light truck) average fuel economy level of 34.1 

mpg by MY 2016. 

NHTSA and EPA’s proposed standards, like the standards NHTSA promulgated 

in March 2009 for model year 2011 (MY 2011), are expressed as mathematical functions 

depending on vehicle footprint. Footprint is one measure of vehicle size, and is 

determined by multiplying the vehicle’s wheelbase by the vehicle’s average track 

width.43 The standards that must be met by the fleet of each manufacturer would be 

determined by computing the sales-weighted harmonic average of the targets applicable 

to each of the manufacturer’s passenger cars and light trucks. Under these proposed 

footprint-based standards, the levels required of individual manufacturers depend, as 

noted above, on the mix of vehicles sold. NHTSA and EPA’s respective proposed 

standards are shown in the tables below. It is important to note that the standards are the 

attribute-based curves proposed by each agency. The values in the tables below reflect 

the agencies’ projection of the corresponding fleet levels that would result from these 

attribute-based curves. 

 As shown in Table I.D.2-1, NHTSA’s proposed fleet-wide CAFE-required levels 

for passenger cars under the proposed standards are projected to increase from 33.6 to 

38.0 mpg between MY 2012 and MY 2016. Similarly, fleet-wide CAFE levels for light 

trucks are projected to increase from 25.0 to 28.3 mpg. These numbers do not include the 

effects of other flexibilities and credits in the program. NHTSA has also estimated the 

average fleet-wide required levels for the combined car and truck fleets. As shown, the 

overall fleet average CAFE level is expected to be 34.1 mpg in MY 2016. These 

standards represent a 4.3 percent average annual rate of increase relative to the MY 2011 

standards.44 

Table I.D.2-1 Average Required Fuel Economy (mpg) 

under Proposed CAFE Standards 

 2011-base 2012 2013 2014 2015 2016 

Passenger Cars 30.2 33.6 34.4 35.2 36.4 38.0 

Light Trucks 24.1 25.0 25.6 26.2 27.1 28.3 

Combined Cars & Trucks 27.3 29.8 30.6 31.4 32.6 34.1 

 

gasoline fuel. Diesel fuel has a conversion factor of 10,180 grams CO2 per gallon diesel fuel though for the 

purposes of this calculation, we are assuming 100% gasoline fuel. 

43 See 49 CFR 523.2 for the exact definition of “footprint.” 

44 Because required CAFE levels depend on the mix of vehicles sold by manufacturers in a model year, 

NHTSA’s estimate of future required CAFE levels depends on its estimate of the mix of vehicles that will 

be sold in that model year. NHTSA currently estimates that the MY 2011 standards will require average

fuel economy levels of 30.5 mpg for passenger cars, 24.2 mpg for light trucks, and 27.6 mpg for the 

combined fleet. 
39

Accounting for the expectation that some manufacturers would continue to pay 

civil penalties rather than achieving required CAFE levels, and the ability to use FFV 

credits, NHTSA estimates that the proposed CAFE standards would lead to the following 

average achieved fuel economy levels, based on the projections of what each 

manufacturer’s fleet will comprise in each year of the program:45

Table I.D.2-2 Projected Fleet-Wide Achieved CAFE Levels under the Proposed 

Footprint-Based CAFE Standards (mpg) 

 2012 2013 2014 2015 2016 

Passenger Cars 32.5 33.4 34.3 35.3 36.5 

Light Trucks 24.1 24.6 25.3 26.3 27.0 

Combined Cars & Trucks 28.7 29.6 30.4 31.6 32.7 

NHTSA is also required by EISA to set a minimum fuel economy standard for 

domestically manufactured passenger cars in addition to the attribute-based passenger car 

standard. The minimum standard “shall be the greater of (A) 27.5 miles per gallon; or 

(B) 92 percent of the average fuel economy projected by the Secretary for the combined 

domestic and non-domestic passenger automobile fleets manufactured for sale in the 

United States by all manufacturers in the model year....”46

 

Based on NHTSA’s current market forecast, the agency’s estimates of these 

minimum standards under the proposed MY 2012-2016 CAFE standards (and, for 

comparison, the final MY 2011 standard) are summarized below in Table I.D.2-3.47 For 

eventual compliance calculations, the final calculated minimum standards will be updated 

to reflect any changes in the average fuel economy level required under the final 

standards. 

Table I.D.2-3 Estimated Minimum Standard for Domestically Manufactured Passenger 

Cars under Final MY 2011 and Proposed MY 2012-2016 CAFE Standards for Passenger 

Cars (mpg) 

2011 2012 2013 2014 2015 2016

28.0 30.9 31.6 32.4 33.5 34.9 

 

45 NHTSA’s estimates account for availability of CAFE credits for the sale of flexibly-fuel vehicles (FFVs), 

and for the potential that some manufacturers would pay civil penalties rather than complying with the

proposed CAFE standards. This yields NHTSA’s estimates of the real-world fuel economy that could be 

achieved under the proposed CAFE standards. NHTSA has not included any potential impact of car-truck 

credit transfer in its estimate of the achieved CAFE levels. 

46 49 U.S.C. 32902(b)(4). 

47 In the March 2009 final rule establishing MY 2011 standards for passenger cars and light trucks, NHTSA 

estimated that the minimum required CAFE standard for domestically manufactured passenger cars would 

be 27.8 mpg under the MY 2011 passenger car standard. Based on the agency’s current forecast of the MY 

2011 passenger car market, NHTSA now estimates that the minimum required CAFE standard will be 28.0 

mpg in MY 2011. 
40

EPA is proposing GHG emissions standards, and Table I.D.2-4 provides EPA’s 

estimates of their projected overall fleet-wide CO2 equivalent emission levels.48 The 

g/mi values are CO2 equivalent values because they include the projected use of A/C 

credits by manufacturers.

Table I.D.2-4 Projected Fleet-Wide Emissions Compliance Levels under the Proposed 

Footprint-Based CO2 Standards (g/mi) 

 2012 2013 2014 2015 2016 

Passenger Cars 261 253 246 235 224 

Light Trucks 352 341 332 317 302 

Combined Cars & Trucks 295 286 276 263 250 

 As shown in Table I.D.2-4, projected fleet-wide CO2 emission level requirements 

for cars under the proposed approach are projected to increase in stringency from 261 to 

224 grams per mile between MY 2012 and MY 2016. Similarly, fleet-wide CO2

equivalent emission level requirements for trucks are projected to increase in stringency 

from 352 to 302 grams per mile. As shown, the overall fleet average CO2 level 

requirements are projected to be 250 g/mile in 2016. 

 EPA anticipates that manufacturers will take advantage of program flexibilities 

such as flex fueled vehicle credits, and car/truck credit trading. Due to the credit trading 

between cars and trucks, the estimated improvements in CO2 emissions are distributed 

differently than shown in Table I.D 2-4, where full manufacturer compliance is assumed. 

Table I.D.2-5 shows EPA projection of the achieved emission levels of the fleet for MY 

2012 through 2016, which does consider the impact of car/truck tradingcredit transfer and 

the increase in emissions due to program flexibilities including flex fueled vehicle 

credits, and the temporary leadtime allowance alternative standards. and the impact of 

car/truck trading. The use of optional air conditioning credits is considered both in this 

analysis of achieved levels and of the projected levels described above.which does 

consider the increase in emissions due to program flexibilities such as the flex fueled 

vehicle credits, as well as the impact of car/truck trading and optional air conditioning 

credits. As can be seen in Table I.D.2-5, the projected achieved levels are slightly higher 

for model years 2012-2015 due to the projected use of the proposed flexibilities, but in 

model year 2016 the achieved value is projected to be 250 g/mi for the fleet. 

Table I.D.2-5 Projected Fleet-Wide Achieved Emission Levels under the Proposed 

Footprint-Based CO2 Standards (g/mi) 

 2012 2013 2014 2015 2016 

Passenger Cars 264 254 245 232 220 

Light Trucks 365 355 346 332 311 

Combined Cars & Trucks 302 291 281 267 250 

 

48 These levels do not include the effect of flexible fuel credits, transfer of credits between cars and trucks, 

temporary lead time allowance, or any other credits with the exception of air conditioning. 
41

NHTSA’s and EPA’s technology assessment indicates there is a wide range of 

technologies available for manufacturers to consider in upgrading vehicles to reduce 

GHG emissions and improve fuel economy.49 As noted, these include improvements to 

the engines such as use of gasoline direct injection and downsized engines that use 

turbochargers to provide performance similar to that of larger engines, the use of 

advanced transmissions, increased use of start-stop technology, improvements in tire 

performance, reductions in vehicle weight, increased use of hybrid and other advanced 

technologies, and the initial commercialization of electric vehicles and plug-in hybrids. 

EPA is also projecting improvements in vehicle air conditioners including more efficient 

as well as low leak systems. All of these technologies are already available today, and 

EPA’s and NHTSA’s assessment is that manufacturers would be able to meet the 

proposed standards through more widespread use of these technologies across the fleet. 

 With respect to the practicability of the standards in terms of lead time, during 

MYs 2012-2016 manufacturers are expected to go through the normal automotive 

business cycle of redesigning and upgrading their light-duty vehicle products, and in 

some cases introducing entirely new vehicles not on the market today. This proposal 

would allow manufacturers the time needed to incorporate technology to achieve GHG 

reductions and improve fuel economy during the vehicle redesign process. This is an 

important aspect of the proposal, as it avoids the much higher costs that would occur if 

manufacturers needed to add or change technology at times other than their scheduled 

redesigns. This time period would also provide manufacturers the opportunity to plan for 

compliance using a multi-year time frame, again consistent with normal business 

practice. Over these five model years, there would be an opportunity for manufacturers 

to evaluate almost every one of their vehicle model platforms and add technology in a 

cost effective way to control GHG emissions and improve fuel economy. This includes 

redesign of the air conditioner systems in ways that will further reduce GHG emissions. 

Both agencies considered other standards as part of the rulemaking analyses, both 

more and less stringent than those proposed. EPA’s and NHTSA’s analysis of alternative 

standards are contained in Sections III and IV of this notice, respectively. 

The CAFE and GHG standards described above are based on determining 

emissions and fuel economy using the city and highway test procedures that are currently 

used in the CAFE program. Both agencies recognize that these test procedures are not 

fully representative of real world driving conditions. For example EPA has adopted more 

representative test procedures that are used in determining compliance with emissions 

standards for pollutants other than GHGs. These test procedures are also used in EPA’s 

fuel economy labeling program. However, as discussed in Section III, the current 

information on effectiveness of the individual emissions control technologies is based on 

performance over the two CAFE test procedures. For that reason EPA is proposing to 

use the current CAFE test procedures for the proposed CO2 standards and is not 

 

49 The close relationship between emissions of CO2 – the most prevalent greenhouse gas emitted by motor 

vehicles--and fuel consumption, means that the technologies to control CO2 emissions and to improve fuel 

economy overlap to a great degree 
42

proposing to change those test procures in this rulemaking. NHTSA, as discussed above, 

is limited by statute in what test procedures can be used for purposes of passenger car 

testing; however there is no such statutory limitation with respect to test procedures for 

trucks. However, the same reasons for not changing the truck test procedures apply for 

CAFE as well. 

Both EPA and NHTSA are interested in developing programs that employ test 

procedures that are more representative of real world driving conditions, to the extent 

authorized under their respective statutes. This is an important issue, and the agencies 

intend to address it in the context of a future rulemaking to address standards for model 

year 2017 and thereafter. This could include a range of test procedure changes to better 

represent real-world driving conditions in terms of speed, acceleration, deceleration, 

ambient temperatures, use of air conditioners, and the like. With respect to air 

conditioner operation, EPA discusses the procedures it intends to use for determining 

emissions credits for controls on air conditioners in Section III. Comment is also invited 

in Section IV on the issue of providing air conditioner credits under 49 U.S.C. 32902 

and/or 32904 for light-trucks in the model years covered by this proposal. 

Finally, based on the information EPA developed in its recent rulemaking that 

updated its fuel economy labeling program to better reflect average real-world fuel 

economy, the calculation of fuel savings and CO2 emissions reductions obtained by the 

proposed CAFE and GHG standards includes adjustments to account for the difference 

between the fuel economy level measured in the CAFE test procedure and the fuel 

economy actually achieved on average under real world driving conditions. These 

adjustments are industry averages for the vehicles’ performance as a whole, however, and 

are not a substitute for the information on effectiveness of individual control technologies 

that will be explored for purposes of a future GHG and CAFE rulemaking. 

 

3. Form of the Standards

In this rule, NHTSA and EPA are proposing attribute-based standards for 

passenger cars and light trucks. NHTSA adopted an attribute standard based on vehicle 

footprint in its Reformed CAFE program for light trucks for model years 2008-2011,50

and recently extended this approach to passenger cars in the CAFE rule for MY 2011 as 

required by EISA.51 EPA and NHTSA are proposing vehicle footprint as the attribute for 

the GHG and CAFE standards. Footprint is defined as a vehicle’s wheelbase multiplied 

by its track width -- in other words, the area enclosed by the points at which the wheels 

meet the ground. The agencies believe that the footprint attribute is the most appropriate 

attribute on which to base the standards under consideration, as further discussed later in 

this notice and in Chapter 2 of the joint TSD. 

Under the proposed footprint-based standards, each manufacturer would have a 

GHG and CAFE target unique to its fleet, depending on the footprints of the vehicle 

 

50 71 FR 17566 (Apr. 6, 2006). 

51 74 FR 14196 (Mar. 30, 2009). 
43

models produced by that manufacturer. A manufacturer would have separate footprintbased standards for cars and for trucks. Generally, larger vehicles (i.e., vehicles with 

larger footprints) would be subject to less stringent standards (i.e., higher CO2 grams/mile 

standards and lower CAFE standards) than smaller vehicles. This is because, generally 

speaking, smaller vehicles are more capable of achieving higher standards than larger 

vehicles. While a manufacturer’s fleet average standard could be estimated throughout 

the model year based on projected production volume of its vehicle fleet, the standard to 

which the manufacturer must comply would be based on its final model year production 

figures. A manufacturer’s calculation of fleet average emissions at the end of the model 

year would thus be based on the production-weighted average emissions of each model in 

its fleet. 

In designing the footprint-based standards, the agencies built upon the footprint 

standard curves for passenger cars and light trucks used in the CAFE rule for MY 2011.52 

EPA and NHTSA worked together to design car and truck footprint curves that followed 

from logistic curves used in that rule. The agencies started by addressing two main 

concerns regarding the car curve. The first concern was that the 2011 car curve was 

relatively steep near the inflection point thus causing concern that small variations in 

footprint could produce relatively large changes in fuel economy targets. A curve that 

was directionally less steep would reduce the potential for gaming. The second issue was 

that the inflection point of the logistic curve was not centered on the distribution of 

vehicle footprints across the industries’ fleet, thus resulting in a flat (universal or 

unreformed) standard for over half the fleet. The proposed car curve has been shifted and 

made less steep compared to the car curve adopted by NHTSA for 2011, such that it 

better aligns the sloped region with higher production volume vehicle models. Finally, 

both the car and truck curves are defined in terms of a constrained linear function for fuel 

consumption and, equivalently, a piece-wise linear function for CO2. NHTSA and EPA 

include a full discussion of the development of these curves in the joint TSD and a 

summary is found in Section II below. In addition, a full discussion of the equations and 

coefficients that define the curves is included in Section III for the CO2 curves and 

Section IV for the mpg curves. The following figures illustrate the standards. First 

Figure I.D.3-1 shows the fuel economy (mpg) car standard curve. 

Under an attribute-based standard, every vehicle model has a performance target 

(fuel economy for the CAFE standards, and CO2 g/mile for the GHG emissions 

standards), the level of which depends on the vehicle’s attribute (for this proposal, 

footprint). The manufacturers’ fleet average performance is determined by the 

production-weighed53 average (for CAFE, harmonic average) of those targets. NHTSA 

and EPA are proposing CAFE and CO2 emissions standards defined by constrained linear 

functions and, equivalently, piecewise linear functions.54 As a possible option for future 

 

52 74 FR 14407-14409 (Mar. 30, 2009). 

53 Production for sale in the United States. 

54 The equations are equivalent but are specified differently due to differences in the agencies’ respective 

models. 
44

rulemakings, the constrained linear form was introduced by NHTSA in the 2007 NPRM 

proposing CAFE standards for MY 2011-2015. 

NHTSA is proposing the attribute curves below for assigning a fuel economy 

level to an individual vehicle’s footprint value, for model years 2012 through 2016. 

These mpg values would be production weighted to determine each manufacturer’s fleet 

average standard for cars and trucks. Although the general model of the equation is the 

same for each vehicle category and each year, the parameters of the equation differ for 

cars and trucks. Each parameter also changes on an annual basis, resulting in the yearly 

increases in stringency. Figure I.D.3-1 below illustrates the passenger car CAFE 

standard curves for model years 2012 through 2016 while Figure I.D.3-2 below illustrates 

the light truck standard curves for model years 2012-2016. The MY 2011 final standards 

for cars and trucks, which are specified by a constrained logistic function rather than a 

constrained linear function, are shown for comparison. 
45

454035302520

35 40 45 50 55 60 65 70

Footprint (sf)

Target (mpg) 2011

20162015201420132012

Figure I.D.3-1 Final MY 2011 and Proposed MY 2012-2016 Passenger Car Fuel Economy Targets 
46

454035302520

35 40 45 50 55 60 65 70

Footprint (sf)

Target (mpg)2016 2015 2014 2013

2012

2011

Figure I.D.3-2. Final MY 2011 and Proposed MY 2012-2016 Light Truck Fuel Economy Targets 
47

 EPA is proposing the attribute curves below for assigning a CO2 level to an 

individual vehicle’s footprint value, for model years 2012 through 2016. These CO2

values would be production weighted to determine each manufacturer’s fleet average 

standard for cars and trucks. Although the general model of the equation is the same for 

each vehicle category and each year, the parameters of the equation differ for cars and 

trucks. Each parameter also changes on an annual basis, resulting in the yearly increases 

in stringency. Figure I.D.3-3 below illustrates the CO2 car standard curves for model 

years 2012 through 2016 while Figure I.D.3-4 shows the CO2 truck standard curves for 

Model Years 2012-2016. 
48

400350300250200

30 35 40 45 50 55 60 65 70 Footprint (sq feet)

CO2 (grams per mile)

2012

2016

`

Figure I.D.3-3. CO2 (g/mi) Car standard curves. 
49

400350300250200

30 35 40 45 50 55 60 65 70 Footprint (sq feet)

CO2 (grams per mile) 2012

2016

Figure I.D.3-4. CO2 (g/mi) Truck standard curves. 
50
51

 

NHTSA and EPA propose to use the same vehicle category definitions for 

determining which vehicles are subject to the car footprint curves versus the truck curve 

standards. In other words, a vehicle classified as a car under the NHTSA CAFE program 

would also be classified as a car under the EPA GHG program, and likewise for trucks. 

EPA and NHTSA are proposing to employ the same car and truck definitions for the MY 

2012-2016 CAFE and GHG standards as those used in the CAFE program for the 2011 

model year standards.55 This proposed approach of using CAFE definitions allows 

EPA’s proposed CO2 standards and the proposed CAFE standards to be harmonized 

across all vehicles. EPA is not changing the car/truck definition for the purposes of any 

other previous rule. 

Generally speaking, a smaller footprint vehicle will have lower CO2 emissions 

relative to a larger footprint vehicle. A footprint-based CO2 standard can be relatively 

neutral with respect to vehicle size and consumer choice. All vehicles, whether smaller 

or larger, must make improvements to reduce CO2 emissions, and therefore all vehicles 

will be relatively more expensive. With the footprint-based standard approach, EPA and 

NHTSA believe there should be no significant effect on the relative distribution of 

different vehicle sizes in the fleet, which means that consumers will still be able to 

purchase the size of vehicle that meets their needs. Table I.D.3-1 illustrates the fact that 

different vehicle sizes will have varying CO2 emissions and fuel economy targets under 

the proposed standards. 

Table I.D.3-1 Model Year 2016 CO2 and Fuel Economy Targets for Various MY 2008 

Vehicle Types 

Vehicle 

Type 

Example 

Models 

Example Model 

Footprint (sq. ft.) 

CO2 Emissions 

Target (g/mi) 

Fuel Economy 

Target (mpg) 

Example Passenger Cars 

Compact 

car Honda Fit 40 214 41.4 

Midsize 

car Ford Fusion 46 237 37.3 

Fullsize 

car Chrysler 300 53 270 32.8 

Example Light-duty Trucks 

Small SUV

4WD Ford 

Escape 44 269 32.8 

Midsize 

crossover Nissan Murano 49 289 30.6 

Minivan Toyota Sienna 55 313 28.2 

Large 

pickup 

Chevy 

Silverado 67 358 24.7 

 

55 49 CFR Part 523. 
52

truck 

E. Summary of Costs and Benefits for the Joint Proposal 

 This section summarizes the projected costs and benefits of the proposed CAFE 

and GHG emissions standards. These projections helped inform the agencies’ choices 

among the alternatives considered and provide further confirmation that proposed 

standards fall within the spectrum of choices allowable under their respective statutory 

criteria. The costs and benefits projected by NHTSA to result from NHTSA’s proposed 

CAFE standards are presented first, followed by those from EPA’s analysis of the 

proposed GHG emissions standards. 

The agencies recognize that there are uncertainties regarding the benefit and cost 

values presented in this proposal. Some benefits and costs are not quantified. The values 

of other benefits and costs could be too low or too high. 

 For several reasons, the estimates for costs and benefits presented by NHTSA and 

EPA, while consistent, are not directly comparable, and thus should not be expected to be 

identical. Most important, NHTSA and EPA’s proposed standards would require slightly 

different fuel efficiency improvements. EPA’s proposed GHG standard is more stringent 

in part due to its assumptions about manufacturers’ use of air conditioning credits, which 

result from reductions in air conditioning-related emissions of HFCs and CO2. In 

addition, the proposed CAFE and GHG standards offer different program flexibilities, 

and the agencies’ analyses differ in their accounting for these flexibilities (for example, 

FFVs etc.) , primarily because NHTSA is statutorily prohibited from considering some 

flexibilities when establishing CAFE standards, while EPA is not. These differences 

contribute to differences in the agencies’ respective estimates of costs and benefits 

resulting from the new standards 

 Because EPCA prohibits NHTSA from considering the use of FFV credits when 

establishing CAFE standards, the agency’s primary analysis of costs, fuel savings, and 

related benefits from imposing higher CAFE standards does not include them. However, 

EPCA does not prohibit NHTSA from considering the fact that manufacturers may pay 

civil penalties rather than complying with CAFE standards, and NHTSA’s primary 

analysis accounts for some manufacturers’ tendency to do so. In addition, NHTSA 

performed a supplemental analysis of the effect of FFV credits on benefits and costs from 

its proposed CAFE standards, to demonstrate the real-world impacts of FFVs, and the 

summary estimates presented in Section IV include these effects. Including the use of 

FFV credits reduces estimated per-vehicle compliance costs of the program. However, as 

shown below, including FFV credits does not significantly change the projected fuel 

savings and CO2 reductions, because FFV credits reduce the fuel economy levels that 

manufacturers achieve not only under the proposed standards, but also under the baseline 

MY 2011 CAFE standards. 
53

Also, EPCA, as amended by EISA, allows manufacturers to transfer credits 

between their passenger car and light truck fleets. However, EPCA also prohibits 

NHTSA from considering manufacturers’ ability to use CAFE credits when determining 

the stringency of the CAFE standards. Because of this prohibition, NHTSA’s primary 

analysis does not account for the extent to which credit transfers might actually occur. 

For purposes of its supplemental analysis, NHTSA considered accounting for the fact that 

EPCA allows some transfer of CAFE credits between the passenger car and light truck 

fleets, but determined that in NHTSA’s year-by-year analysis, manufacturers’ likely 

credit transfers cannot be reasonably estimated at this time.56

Therefore, NHTSA’s primary analysis shows the estimates the agency considered 

for purposes of establishing new CAFE standards, and its supplemental analysis 

including manufacturers’ potential use of FFV credits currently reflects the agency’s best 

estimate of the potential real-world effects of the proposed CAFE standards. 

EPA made explicit assumptions about manufacturers’ use of FFV credits under 

both the baseline and control alternatives, and its estimates of costs and benefits from the 

proposed GHG standards reflect these assumptions. However, under the proposed GHG 

standards, FFV credits would be available through MY 2015 and starting 2016 would be 

available only upon a demonstration of the use of alternative fuel. 

 EPA’s analysis also assumes that manufacturers would transfer credits between 

their car and truck fleets in the MY 2011 baseline subject to the maximum value allowed 

by EPCA, and that unlimited car-truck credit transfers would occur under the proposed 

GHG standards. Including these assumptions in EPA’s analysis increases the resulting 

estimates of fuel savings and reductions in GHG emissions, while reducing EPA’s 

estimates of program compliance costs. 

 Finally, under the proposed EPA GHG program, there is no ability for a 

manufacturer to intentionally pay fines in lieu of meeting the standard. Under EPCA, 

however, vehicle manufacturers are allowed to pay fines as an alternative to compliance 

with applicable CAFE standards. NHTSA’s analysis explicitly estimates the level of 

voluntary fine payment by individual manufacturers, which reduces NHTSA’s estimates 

of both the costs and benefits of its proposed CAFE standards. In contrast, the CAA does 

not allow for fine payment in lieu of compliance with emission standards, and EPA’s 

analysis of costs and benefits from its proposed standard thus assumes full compliance. 

This assumption results in higher estimates of fuel savings, reductions in GHG emissions, 

and manufacturers’ compliance costs to sell fleets that comply with both NHTSA’s 

proposed CAFE program and EPA’s proposed GHG program. 

 

56 NHTSA’s analysis estimates multi-year planning effects within a context in which each model year is 

represented explicitly, and technologies applied in one model year carry forward to future model years. 

NHTSA does not currently have a basis to estimate how a manufacturer might, for example, weigh the 

transfer of credits from the passenger car to the light truck fleet in MY 2013 against the potential to carry 

light truck technologies forward from MY 2013 through MY 2016. The agency is considering the 

possibility of implementing such analysis for purposes of the final rule. 
54

 In summary, the projected costs and benefits presented by NHTSA and EPA are 

not directly comparable, because the levels being proposed by EPA include air 

conditioning-related improvements in equivalent fuel efficiency and HFC reductions, 

because the assumptions incorporated in EPA’s analysis regarding car-truck credit 

transfers, and because of the projection by EPA of complete compliance with the 

proposed GHG standards. It should also be expected that overall EPA’s estimates of 

GHG reductions and fuel savings achieved by the proposed GHG standards will be 

slightly higher than those projected by NHTSA only for the CAFE standards because of 

the reasons described above. For the same reasons, EPA’s estimates of manufacturers’ 

costs for complying with the proposed passenger car and light trucks GHG standards are 

slightly higher than NHTSA’s estimates for complying with the proposed CAFE 

standards. 

1. Summary of Costs and Benefits of Proposed NHTSA CAFE 

Standards

 Without accounting for the compliance flexibilities that NHTSA is prohibited 

from considering when determining the level of new CAFE standards, since 

manufacturers’ decisions to use those flexibilities are voluntary, NHTSA estimates that 

these fuel economy increases would lead to fuel savings totaling 62 billion gallons 

throughout the useful lives of vehicles sold in MYs 2012-2016. At a 3% discount rate, 

the present value of the economic benefits resulting from those fuel savings is $158 

billion. 

The agency further estimates that these new CAFE standards would lead to 

corresponding reductions in CO2 emissions totaling 656 million metric tons (mmt) during 

the useful lives of vehicles sold in MYs 2012-2016. The present value of the economic 

benefits from avoiding those emissions is $16.4 billion, based on a global social cost of 

carbon value of $20 per metric ton,57 although NHTSA estimated the benefits associated 

with five different values of a one ton GHG reduction ($5, $10, $20, $34, $56).58 See 

Section II for a more detailed discussion of the social cost of carbon. It is important to 

note that NHTSA’s CAFE standards and EPA’s GHG standards will both be in effect, 

and each will lead to increases in average fuel economy and CO2 emissions reductions. 

 

57 We have developed two interim estimates of the global social cost of carbon (SCC) ($/tCO2 in 2007 

(2006$)): $33 per tCO2 at a 3% discount rate, and $5 per tCO2 with a 5% discount rate. The 3% and 5% 

estimates have independent appeal and at this time a clear preference for one over the other is not 

warranted. Thus, we have also included – and centered our current attention on – the average of the 

estimates associated with these discount rates, which is $19 (in 2006$) per ton of CO2 emissions. When 

converted to 2007$ for consistency with other economic values used in the agency’s analysis, this figure 

correspond to $20 per metric ton of CO2 emissions occurring in 2007. This value is assumed to increase at 

3% annually for emissions occurring after 2007. 

58 The $10 and $56 figures are alternative interim estimates based on uncertainty about interest rates of long 

periods of time. They are based on an approach that models discount rate uncertainty as something that 

evolves over time; in contrast, the preferred approach mentioned in the immediately preceding paragraph 

assumes that there is a single discount rate with equal probability of 3% and 5%. 
55

The two agencies’ standards together comprise the National Program, and this discussion 

of costs and benefits of NHTSA’s CAFE standards does not change the fact that both the 

CAFE and GHG standards, jointly, are the source of the benefits and costs of the 

National Program. 

 

Table I.E.1-1 NHTSA Fuel Saved (billion gallons) and CO2 Emissions Avoided (mmt) 

under Proposed CAFE Standards (without FFV Credits)

2012 2013 2014 2015 2016 Total

Fuel (b. gal.) 4 9 13 16 19 62

CO2 (mmt) 44 96 137 173 206 656

2012 2013 2014 2015 2016 Total

Fuel (b. gal.) 4 9 13 16 19 62 

CO2 (mmt) 44 96 137 173 206 656 

 Considering manufacturers’ ability to earn credit toward compliance by selling 

FFVs, NHTSA estimates very little change in incremental fuel savings and avoided CO2

emissions, assuming FFV credits would be used toward both the baseline and proposed 

standards: 

Table I.E.1-2 NHTSA Fuel Saved (billion gallons) and CO2 Emissions Avoided (mmt) 

under Proposed CAFE Standards (with FFV Credits) 

2012 2013 2014 2015 2016 Total

Fuel (b. gal.) 5 8 12 15 19 59

CO2 (mmt) 49 90 129 167 204 639

2012 2013 2014 2015 2016 Total

Fuel (b. gal.) 5 8 12 15 19 59 

CO2 (mmt) 49 90 129 167 204 639 

NHTSA estimates that these fuel economy increases would produce other benefits 

both to drivers (e.g., reduced time spent refueling) and to the U.S. (e.g., reductions in the 

costs of petroleum imports beyond the direct savings from reduced oil purchases, as well 

as some disbenefits (e.g., increase traffic congestion) caused by drivers’ tendency to 

travel more when the cost of driving declines (as it does when fuel economy increases). 

NHTSA has estimated the total monetary value to society of these benefits and 

disbenefits, and estimates that the proposed standards will produce significant net 

benefits to society. Using a 3% discount rate, NHTSA estimates that the present value of 

these benefits would total more than $200 billion over the useful lives of vehicles sold 

during MYs 2012-2016. More discussion regarding monetized benefits can be found in 

Section IV of this notice and in NHTSA’s Regulatory Impact Analysis. 

Table I.E.1-3 NHTSA Discounted Benefits ($billion) 

under Proposed CAFE Standards (before FFV Credits, using 3 percent Discount Rate)

2012 2013 2014 2015 2016 Total

Passenger Cars 7.6 17.0 24.4 31.2 38.7 119.1

Light Trucks 5.5 11.6 17.3 22.2 26.0 82.6

Combined 13.1 28.7 41.8 53.4 64.7 201.7
56

2012 2013 2014 2015 2016 Total

Passenger Cars 7.6 17.0 24.4 31.2 38.7 119.1 

Light Trucks 5.5 11.6 17.3 22.2 26.0 82.6 

Combined 13.1 28.7 41.8 53.4 64.7 201.7 

Using a 7% discount rate, NHTSA estimates that the present value of these benefits 

would total more than $159 billion over the same time period.

Table I.E.1-4 NHTSA Discounted Benefits ($billion)

under Proposed Standards (before FFV Credits, using 7 percent Discount Rate)

2012 2013 2014 2015 2016 Total

Passenger Cars 6.0 13.6 19.5 25.0 31.1 95.3

Light Trucks 4.3 9.1 13.5 17.4 20.4 64.6

Combined 10.3 22.6 33.1 42.4 51.5 159.8

 NHTSA estimates that FFV credits could reduce achieved benefits by about 4.5%: 

Table I.E.1-54 NHTSA Discounted Benefits ($billion) 

under Proposed CAFE Standards (with FFV Credits, using a 3 percent Discount Rate) 

2012 2013 2014 2015 2016 Total

Passenger Cars 7.8 15.9 22.5 28.6 37.1 111.9

Light Trucks 6.1 10.2 15.9 22.1 26.3 80.5

Combined 13.9 26.1 38.4 50.7 63.3 192.5

2012 2013 2014 2015 2016 Total

Passenger Cars 7.8 15.9 22.5 28.6 37.1 111.9 

Light Trucks 6.1 10.2 15.9 22.1 26.3 80.5 

Combined 13.9 26.1 38.4 50.7 63.3 192.5 

 NHTSA attributes most of these benefits—about $158 billion, as noted above—to 

reductions in fuel consumption, valuing fuel (for societal purposes) at the future pre-tax 

prices projected in the Energy Information Administration’s (EIA’s) reference case 

forecast from Annual Energy Outlook (AEO) 2009. The Preliminary Regulatory Impact 

Analysis (PRIA) accompanying this proposed rule presents a detailed analysis of specific 

benefits of the proposed rule. 

Table I.E.1-5 6 Summary of Benefits of the Proposed Rule 

Benefit Amount $ Value

Fuel savings 62 billion gallons $158 billion

CO2 emissions reductions 656 million metric tons (mmt) $16.4 billion

Amount $ Value

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57

Fuel savings 61.6 billion gallons $158.0 billion

CO2 emissions reductions 656 million metric tons 

(mmt)

$16.4 billion

NHTSA estimates that the increases in technology application necessary to 

achieve the projected improvements in fuel economy will entail considerable monetary 

outlays. The agency estimates that incremental costs for achieving its proposed standards 

– that is, outlays by vehicle manufacturers over and above those required to comply with 

the MY 2011 CAFE standards – will total about $60 billion (i.e., during MYs 2012-

2016). 

Table I.E.1-76 NHTSA Incremental Technology Outlays ($b) 

under Proposed CAFE Standards (before FFV Credits) 

2012 2013 2014 2015 2016 Total

Passenger Cars 4.1 6.5 8.4 9.9 11.8 40.8

Light Trucks 1.5 2.8 4.0 5.2 5.9 19.4

Combined 5.7 9.3 12.5 15.1 17.6 60.2

2012 2013 2014 2015 2016 Total

Passenger Cars 4.1 6.5 8.4 9.9 11.8 40.8 

Light Trucks 1.5 2.8 4.0 5.2 5.9 19.4 

Combined 5.7 9.3 12.5 15.1 17.6 60.2 

 NHTSA estimates that use of FFV credits could significantly reduce these 

outlays: 

Table I.E.1-87 NHTSA Incremental Technology Outlays ($b) 

under Proposed CAFE Standards (with FFV Credits) 

2012 2013 2014 2015 2016 Total

Passenger Cars 2.5 4.4 6.1 7.4 9.3 29.6

Light Trucks 1.3 2.0 3.1 4.3 5.0 15.6

Combined 3.7 6.3 9.2 11.7 14.2 45.2

2012 2013 2014 2015 2016 Total

Passenger Cars 2.5 4.4 6.1 7.4 9.3 29.6 

Light Trucks 1.3 2.0 3.1 4.3 5.0 15.6 

Combined 3.7 6.3 9.2 11.7 14.2 45.2 

 The agency projects that manufacturers will recover most or all of these additional 

costs through higher selling prices for new cars and light trucks. To allow manufacturers 

to recover these increased outlays (and, to a much lesser extent, the civil penalties that 

some companies are expected to pay for noncompliance), the agency estimates that the 

proposed standards would lead to increases in average new vehicle prices ranging from 

$421 per vehicle in MY 2012 to $1,076 per vehicle in MY 2016: 

 

Table I.E.1-98 NHTSA Incremental Increases in Average New Vehicle Costs ($) 

under Proposed CAFE Standards (before FFV Credits) 

2012 2013 2014 2015 2016

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58

Passenger Cars 591 735 877 979 1,127

Light Trucks 283 460 678 882 1,020

Combined 476 635 806 945 1,091

2012 2013 2014 2015 2016

Passenger Cars 498 674 820 930 1,085 

Light Trucks 291 485 701 911 1,058 

Combined 421 605 777 924 1,076 

 NHTSA estimates that use of FFV credits could significantly reduce these costs, 

especially in earlier model years: 

Table I.E.1-9 10 NHTSA Incremental Increases in Average New Vehicle Costs ($) 

under Proposed CAFE Standards (with FFV Credits) 

2012 2013 2014 2015 2016

Passenger Cars 295 448 591 695 851

Light Trucks 231 347 533 758 895

Combined 271 411 571 716 866

2012 2013 2014 2015 2016

Passenger Cars 295 448 591 695 851 

Light Trucks 231 347 533 758 895 

Combined 271 411 571 716 866 

 NHTSA estimates, therefore, that the total benefits of these proposed standards 

would be more than three times the magnitude of the corresponding costs. As a 

consequence, its proposed standards would produce net benefits of $142 billion at a 3 

percent discount rate (with FFV credits, $147 billion) or $100 billion at a 7 percent 

discount rate over the useful lives of vehicles sold during MYs 2012-2016. 

2. Summary of Costs and Benefits of Proposed EPA GHG 

Standards

 EPA has conducted a preliminary assessment of the costs and benefits of the 

proposed GHG standards. Table I.E.2-1 shows EPA’s estimated lifetime fuel savings and 

CO2 equivalent emission reductions for all vehicles sold in the model years 2012-2016. 

The values in Table I.E.2-1 are projected lifetime totals for each model year and are not 

discounted. As documented in DRIA Chapter 5, the potential credit tradingtransfer

between cars and trucks may change the distribution of the fuel savings and GHG

emission impacts between cars and trucks. As discussed above with respect to NHTSA’s 

CAFE standards, it is important to note that NHTSA’s CAFE standards and EPA’s GHG 

standards will both be in effect, and each will lead to increases in average fuel economy 

and CO2 emissions reductions. The two agency’s standards together comprise the 

National Program, and this discussion of costs and benefits of EPA’s GHG standards 

does not change the fact that both the CAFE and GHG standards, jointly, are the source 

of the benefits and costs of the National Program. 

Formatted Table

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59

Table I.E.2-1 EPA’s Estimated 2012-2016 Model Year Lifetime Fuel Saved and CO2

GHG Emissions Avoided

2012 2013 2014 2015 2016 Total

Cars Fuel (billion gallons) 4 6 8 11 14 43

Fuel (billion barrels) 0.1 0.1 0.2 0.3 0.3 1.0

CO2 EQ (mmt) 51 74 98 137 179 539

Light Trucks Fuel (billion gallons) 2 4 6 9 12 33

Fuel (billion barrels) 0.1 0.1 0.1 0.2 0.3 0.8

CO2 EQ (mmt) 30 51 77 107 143 408

Combined Fuel (billion gallons) 7 10 14 19 26 76

Fuel (billion barrels) 0.2 0.2 0.3 0.5 0.6 1.8

CO2 EQ (mmt) 81 125 174 244 323 947

2012 2013 2014 2015 2016 Total

Fuel (billion gallons) 7 10 14 19 26 76

Fuel (billion barrels) 0.2 0.2 0.3 0.5 0.6 1.8

CO2 (mmt) 81 125 174 243 324 947

Table I.E.2-2 shows EPA’s estimated lifetime discounted benefits for all vehicles 

sold in model years 2012-2016. Although EPA estimated the benefits associated with 

five different values of a one ton GHG reduction ($5, $10, $20, $34, $56), for the 

purposes of this overview presentation of estimated benefits EPA is showing the benefits 

associated with one of these marginal values, $20 per ton of CO2, in 2007 dollars and 

2007 emissions, in this joint proposal. Table I.E.2-2 presents benefits based on the $20 

value. Section III.H.6 presents the five marginal values used to estimate monetized 

benefits of GHG reductions and Section III.H.10 presents the program benefits using 

each of the five marginal values, which represent only a partial accounting of total 

benefits due to omitted climate change impacts and other factors that are not readily 

monetized. These factors are being used on an interim basis while analysis is conducted 

to generate new estimates. The values in the table are discounted values for each model 

year throughout their projected lifetimes. The benefits include all benefits considered by 

EPA such as fuel savings, GHG reductions, PM benefits, energy security and other 

externalities such as reduced refueling and accidents, congestion and noise. The lifetime 

discounted benefits are shown for one of five different social cost of carbon (SCC) values 

considered by EPA. The values in Table I.E.2-2 do not include costs associated with new 

technology required to meet the proposal. 

 

Table I.E.2-2 EPA’s Estimated 2012-2016 Model Year Lifetime Discounted Benefits

Assuming the $20/ton SCC Valuea ($billions of 2007 dollars) 

Assumed SCC ValueDiscount 

Rate

Model Year 

2012 2013 2014 2015 2016 Total 
60

$20/ton CO2 in 20073% $20.4 $31.7 $44.9 $63.7 $87.2 $248 

7% $15.8 $24.7 $34.9 $49.3 $67.7 $193

a The benefits include all benefits considered by EPA such as fuel savings, GHG reductions, PM benefits, 

energy security and other externalities such as reduced refueling and accidents, congestion and noise. 

Table I.E.2-3 shows EPA’s estimated lifetime fuel savings, lifetime CO2 emission 

reductions, and the monetized net present values of those fuel savings and CO2 emission 

reductions. The gallons of fuel and CO2 emission reductions are projected lifetime values 

for all vehicles sold in the model years 2012-2016. The estimated fuel savings in billions 

of barrels and the GHG reductions in million metric tons of CO2 shown in Table I.E.2-3 

are totals for the five model years throughout their projected lifetime and are not 

discounted. The monetized values shown in Table I.E.2-3 are the summed values of the 

discounted monetized-fuel savings and monetized-CO2 reductions for the five model 

years 2012-2016 throughout their lifetimes. The monetized values in Table I.E.2-3 

reflect both a 3 percent and a 7 percent discount rate as noted. 

Table I.E.2-3 EPA’s Estimated 2012-2016 Model Year Lifetime Fuel savings, CO2

Emission Reductions, and Discounted Monetized Benefits at a 3% Discount Rate 

(monetized values in 2007 dollars) 

Amount $ value 

(billions) 

Fuel savings 1.8 billion barrels $193, 3% discount rate

$151, 7% discount rate

CO2 emission reductions 

(valued assuming $20/ton CO2 in 2007) 947 MMT CO2e 

$21.0, 3% discount rate

$15.0, 7% discount rate

 Table I.E.2-4 shows EPA’s estimated incremental technology outlays for cars and 

trucks for each of the model years 2012-2016. The total outlays are also shown. The 

technology outlays shown in Table I.E.2-4 are for the industry as a whole and do not 

account for fuel savings associated with the proposal. 

Table I.E.2-4 EPA’s Estimated Incremental Technology Outlays ($billions of 2007 

dollars) 

 2012 2013 2014 2015 2016 Total 

Cars $3.5 $5.3 $7.0 $8.9 $10.7 $35.3 

Trucks $2.0 $3.1 $4.0 $5.1 $6.8 $20.9 

Combined $5.4 $8.4 $10.9 $13.9 $17.5 $56.1 

 Table I.E.2-5 shows EPA’s estimated incremental cost increase of the average 

new vehicle for each model year 2012-2016. The values shown are incremental to a 

baseline vehicle and are not cumulative. In other words, the estimated increase for 2012 

model year cars is $374 relative to a 2012 model year car absent the proposal. The 
61

estimated increase for a 2013 model year car is $531 relative to a 2013 model year car 

absent the proposal (not $374 plus $531). 

Table I.E.2-5 EPA’s Estimated Incremental Increase in Average New Vehicle Cost (2007 

dollars per unit) 

 2012 2013 2014 2015 2016 

Cars $374 $531 $663 $813 $968 

Trucks $358 $539 $682 $886 $1,213 

Combined $368 $534 $670 $838 $1,050 

F. Program Flexibilities for Achieving Compliance 

 EPA’s and NHTSA’s proposed programs provide compliance flexibility to 

manufacturers, especially in the early years of the National Program. This flexibility is 

expected to provide sufficient lead time for manufacturers to make necessary 

technological improvements and reduce the overall cost of the program, without 

compromising overall environmental and fuel economy objectives. The broad goal of 

harmonizing the two agencies’ proposed standards includes preserving manufacturers’ 

flexibilities in meeting the standards, to the extent appropriate and required by law. The 

following section provides an overview of the flexibility provisions the agencies are 

proposing. 

1. CO2/CAFE Credits Generated Based on Fleet Average Performance

 Under the NHTSA and EPA proposal the fleet average standards that apply to a 

manufacturer’s car and truck fleets would be based on the applicable footprint-based 

curves. At the end of each model year, when production of the model year is complete, a 

production-weighted fleet average would be calculated for each averaging set (cars and 

trucks). Under this approach, a manufacturer’s car and/or truck fleet that achieves a fleet 

average CO2/CAFE level better than the standard would generate credits. Conversely, if 

the fleet average CO2/CAFE level does not meet the standard the fleet would generate 

debits (also referred to as a shortfall). 

 Under the proposed program, a manufacturer whose fleet generates credits in a 

given model year would have several options for using those credits, including credit 

carry-back, credit carry-forward, credit transfers, and credit trading. These provisions 

exist in the MY 2011 CAFE program under EPCA and EISA, and similar provisions are 

part of EPA’s Tier 2 program for light duty vehicle criteria pollutant emissions, as well as 

many other mobile source standards issued by EPA under the CAA. EPA is proposing 

that the manufacturer would be able to carry-back credits to offset any deficit that had 

accrued in a prior model year and was subsequently carried over to the current model 

year. EPCA already provides for this. EPCA restricts the carry-back of CAFE credits to 

three years and EPA is proposing the same limitation, in keeping with the goal of 

harmonizing both sets of proposed standards. 
62

 After satisfying any need to offset pre-existing deficits, remaining credits could be 

saved (banked) for use in future years. Under the CAFE program, EISA allows 

manufacturers to apply credits earned in a model year to compliance in any of the five 

subsequent model years.59 EPA is also proposing, under the GHG program, to allow 

manufacturers to use these banked credits in the five years after the year in which they 

were generated (i.e., five years carry-forward). 

 EISA required NHTSA to establish by regulation a CAFE credits transferring 

program, which NHTSA established in a March 2009 final rule codified at 49 CFR Part 

536, to allow a manufacturer to transfer credits between its vehicle fleets to achieve 

compliance with the standards. For example, credits earned by over-compliance with a 

manufacturer’s car fleet average standard could be used to offset debits incurred due to 

that manufacturer’s not meeting the truck fleet average standard in a given year. EPA’s 

Tier 2 program also provides for this type of credit transfer. For purposed of this NPRM, 

EPA proposes unlimited credit transfers across a manufacturer’s car-truck fleet to meet 

the GHG standard. This is based on the expectation that this kind of credit transfer 

provision will allow the required GHG emissions reductions to be achieved in the most 

cost effective way, and this flexibility will facilitate the ability of the manufacturers to 

comply with the GHG standards in the lead time provided. Under the CAA, unlike under 

EISA, there is no statutory limitation on car-truck credit transfers. Therefore EPA is not 

proposing to constrain car-truck credit transfers as doing so would increase costs with no 

corresponding environmental benefit. For the CAFE program, however, EISA limits the 

amount of credits that may be transferred, and also prohibits the use of transferred credits 

to meet the statutory minimum level for the domestic car fleet standard.60 These and 

other statutory limits would continue to apply to the determination of compliance with 

the CAFE standard. 

 Finally, EISA also allowed NHTSA to establish by regulation a CAFE credit 

trading program, which NHTSA established in the March 2009 final rule at 40 CFR Part 

536, to allow credits to be traded (sold) to other vehicle manufacturers. EPA is also 

proposing to allow credit trading in the GHG program. These sorts of exchanges are 

typically allowed under EPA’s current mobile source emission credit programs, although 

manufacturers have seldom made such exchanges. Under the NHTSA CAFE program, 

EPCA also allows these types of credit trades, although, as with transferred credits, 

traded credits may not be used to meet the minimum domestic car standards specified by 

statute.61

2. Air Conditioning Credits

 Air conditioning (A/C) systems contribute to GHG emissions in two ways. 

Hydrofluorocarbon (HFC) refrigerants, which are powerful GHG pollutants, can leak 

from the A/C system. Operation of the A/C system also places an additional load on the 

 

59 49 U.S.C. 32903(a)(2). 

60 49 U.S.C. 32903(g)(4). 

61 49 U.S.C. 32903(f)(2). 
63

engine, which results in additional CO2 tailpipe emissions. EPA is proposing an approach 

that allows manufacturers to generate credits by reducing GHG emissions related to A/C 

systems. Specifically, EPA is proposing a test procedure and method to calculate CO2 

equivalent reductions for the full useful life on a grams/mile basis that can be used as 

credits in meeting the fleet average CO2 standards. EPA’s analysis indicates this 

approach provides manufacturers with a highly cost-effective way to achieve a portion of 

GHG emissions reductions under the EPA program. EPA is estimating that manufacturers 

will on average take advantage of 11 g/mi GHG credit toward meeting the 250 g/mi by 

2016 (though some companies may have more). EPA is also proposing to allow 

manufacturers to earn early A/C credits starting in MY 2009 through 2011, as discussed 

further in a later section.

Comment is also sought on the more immediate interim alternative approach 

solution of providing CAFE credits under 49 U.S.C. 32904(c) for light trucks equipped 

with relatively efficient air conditioners for MYs 2012-2016. The agencies invite 

comment on allowing a manufacturer to generate additional CAFE credits from the 

reduction of fuel consumption from through the application of air conditioning efficiency 

improvement technologies to trucks. Currently, the CAFE program does not induce 

manufacturers to install more efficient air conditioners because the air conditioners are 

not turned on during fuel economy compliance testing. The agencies note that if such 

credits were adopted, it may be necessary to reflect them in the setting of the CAFE 

standards for light trucks for the same model years and invite comment on that issue

3. Flex-fuel and Alternative Fuel Vehicle Credits

EPCA authorizes an incentive under the CAFE program for production of dualfueled or flexible-fuel vehicles (FFV) and dedicated alternative fuel vehicles. FFVs are 

vehicles that can run both on an alternative fuel and conventional fuel. Most FFVs are E85 capable vehicles, which can run on either gasoline or a mixture of up to 85 percent 

ethanol and 15 percent gasoline. Dedicated alternative fuel vehicles are vehicles that run 

exclusively on an alternative fuel. EPCA was amended by EISA to extend the period of 

availability of the FFV incentive, but to begin phasing it out by annually reducing the 

amount of FFV incentive that can be used toward compliance with the CAFE standards.62

 

EPCA does not premise the availability of the FFV credits on actual use of alternative 

fuel by an FFV vehicle. Under NHTSA’s CAFE program, pursuant to EISA, after MY 

2019, no FFV credits will be available for CAFE compliance. 63 For dedicated 

alternative fuel vehicles, there are no limits or phase-out of the credits. Consistent with 

the statute, NHTSA will continue to allow the use of FFV credits for purposes of 

compliance with the proposed standards until the end of the phase-out period. 

 

62 EPCA provides a statutory incentive for production of FFVs by specifying that their fuel economy is 

determined using a special calculation procedure that results in those vehicles being assigned a higher fuel 

economy level than would otherwise occur. This is typically referred to as an FFV credit. 

63 Id.
64

For the GHG program, EPA is proposing to allow FFV credits in line with EISA 

limits only during the period from MYs 2012 to 2015. After MY 2015, EPA proposes to 

allow FFV credits only based on a manufacturer’s demonstration that the alternative fuel 

is actually being used in the vehicles. EPA is seeking comments on how that 

demonstration could be made. EPA discusses this in more detail in Section III.C of the 

preamble. 

 

4. Temporary Lead-time Allowance Alternative Standards

Manufacturers with limited product lines may be especially challenged in the 

early years of the proposed program. Manufacturers with narrow product offerings may 

not be able to take full advantage of averaging or other program flexibilities due to the 

limited scope of the types of vehicles they sell. For example, some smaller volume 

manufacturers focus on high performance vehicles with higher CO2 emissions, above the 

CO2 emissions target for that vehicle footprint, but do not have other types of vehicles in 

their production mix with which to average. Often, these manufacturers pay fines under 

the CAFE program rather than meeting the applicable CAFE standard. EPA believes that 

these technological circumstances may call for a more gradual phase-in of standards so 

that manufacturer resources can be focused on meeting the 2016 levels. 

 EPA is proposing a temporary lead-time allowance for manufacturers who sell 

vehicles in the U.S. in MY 2009 whose vehicle sales in that model year are below 

400,000 vehicles. EPA proposes that this allowance would be available only during the 

MY 2012-2015 phase-in years of the program. A manufacturer that satisfies the 

threshold criteria would be able to treat a limited number of vehicles as a separate 

averaging fleet, which would be subject to a less stringent GHG standard.64 Specifically, 

a standard of 125 percent of the vehicle’s otherwise applicable foot-print target level 

would apply to up to 100,000 vehicles total, spread over the four year period of MY 2012 

through 2015. Thus, the number of vehicles to which the flexibility could apply is 

limited. EPA also is proposing appropriate restrictions on credit use for these vehicles, as 

discussed further in Section III. By MY 2016, these allowance vehicles must be averaged 

into the manufacturer’s full fleet (i.e., they are no longer eligible for a different standard). 

EPA discusses this in more detail in Section III.B of the preamble. 

5. Additional Credit Opportunities under the CAA

 EPA is proposing additional opportunities for early credits in MYs 2009-2011 

through over-compliance with a baseline standard. The baseline standard would be set to 

be equivalent, on a national level, to the California standards. Potentially, credits could 

be generated by over-compliance with this baseline in one of two ways – overcompliance by the fleet of vehicles sold in California and the CAA section 177 states 

(i.e., those states adopting the California program), or over-compliance with the fleet of 

 

64 EPCA does not permit such an allowance. Consequently, manufacturers who may be able to take 

advantage of a lead-time allowance under the proposed GHG standards would be required to comply with 

the applicable CAFE standard or be subject to penalties for non-compliance. 
65

vehicles sold in the 50 states. EPA is also proposing early credits based on overcompliance with CAFE, but only for vehicles sold in states outside of California and the 

CAA section 177 states. Under the proposed early credit provisions, no early FFV credits 

would be allowed, except those achieved by over-compliance with the California 

program based on California’s provisions that manufacturers demonstrate actual use of 

the alternative fuel. EPA’s proposed early credits options are designed to ensure that 

there would be no double counting of early credits. Consistent with this paragraph, 

NHTSA notes, however, that credits for overcompliance with CAFE standards during 

MYs 2009-2011 will still be available for manufacturers to use toward compliance in 

future model years, just as before. 

EPA is proposing additional credit opportunities to encourage the 

commercialization of advanced GHG/fuel economy control technologies, such as electric 

vehicles, plug-in hybrid electric vehicles, and fuel cell vehicles. These proposed 

advanced technology credits are in the form of a multiplier that would be applied to the 

number of vehicles sold, such that each eligible vehicle counts as more than one vehicle 

in the manufacturer’s fleet average. EPA is also proposing to allow early advanced 

technology credits to be generated beginning in MYs 2009 through 2011. 

EPA is also proposing an Option for manufacturers to generate credits for 

employing technologies that achieve GHG reductions that are not reflected on current test 

procedures. Examples of such “off-cycle” technologies might include solar panels on 

hybrids, adaptive cruise control, and active aerodynamics, among other technologies. 

EPA is seeking comments on the best ways to quantify such credits to ensure any offcycle credits applied for by a manufacturer are verifiable, reflect real-world reductions, 

based on repeatable test procedures, and are developed through a transparent process 

allowing appropriate opportunities for public comment. 

G. Coordinated Compliance 

Previous NHTSA and EPA regulations and statutory provisions establish ample 

examples on which to develop an effective compliance program that achieves the energy 

and environmental benefits from CAFE and motor vehicle GHG standards. NHTSA and 

EPA are proposing a program that recognizes, and replicates as closely as possible, the 

compliance protocols associated with the existing CAA Tier 2 vehicle emission 

standards, and with CAFE standards. The certification, testing, reporting, and associated 

compliance activities closely track current practices and are thus familiar to 

manufacturers. EPA already oversees testing, collects and processes test data, and 

performs calculations to determine compliance with both CAFE and CAA standards. 

Under this proposed coordinated approach, the compliance mechanisms for both 

programs are consistent and non-duplicative. EPA will also apply the CAA authorities 

applicable to its separate in-use requirements in this program. 

The proposed approach allows manufacturers to satisfy the new program 

requirements in the same general way they comply with existing applicable CAA and 
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CAFE requirements. Manufacturers would demonstrate compliance on a fleet-average 

basis at the end of each model year, allowing model-level testing to continue throughout 

the year as is the current practice for CAFE determinations. The proposed compliance 

program design establishes a single set of manufacturer reporting requirements and relies 

on a single set of underlying data. This approach still allows each agency to assess 

compliance with its respective program under its respective statutory authority. 

NHTSA and EPA do not anticipate any significant noncompliance under the 

proposed program. However, failure to meet the fleet average standards (after credit 

opportunities are exhausted) would ultimately result in the potential for penalties under 

both EPCA and the CAA. The CAA allows EPA considerable discretion in assessment 

of penalties. Penalties under the CAA are typically determined on a vehicle-specific 

basis by determining the number of a manufacturer’s highest emitting vehicles that 

caused the fleet average standard violation. This is the same mechanism used for EPA’s 

National Low Emission Vehicle and Tier 2 corporate average standards, and to date there 

have been no instances of noncompliance. CAFE penalties are specified by EPCA and 

would be assessed for the entire noncomplying fleet at a rate of $5.50 times the number 

of vehicles in the fleet, times the number of tenths of mpg by which the fleet average falls 

below the standard. In the event of a compliance action arising out of the same facts and 

circumstances, EPA could consider CAFE penalties when determining appropriate 

remedies for the EPA case. 

H. Conclusion 

This joint proposal by NHTSA and EPA represents a strong and coordinated 

National Program to achieve greenhouse gas emission reductions and fuel economy 

improvements from the light-duty vehicle part of the transportation sector. EPA’s 

proposal for GHG standards under the Clean Air Act is discussed in Section III of this 

notice; NHTSA’s proposal for CAFE standards under EPCA is discussed in Section IV. 

Each agency includes analyses on a variety of relevant issues under its respective statute, 

such as feasibility of the proposed standards, costs and benefits of the proposal, and 

effects on the economy, auto manufacturers, and consumers. This joint rulemaking 

proposal reflects a carefully coordinated and harmonized approach to developing and 

implementing standards under the two agencies’ statutes and is in accordance with all 

substantive and procedural requirements required by law. 

 NHTSA and EPA believe that the MY 2012 through 2016 standards proposed 

would provide substantial reductions in emissions of GHGs and oil consumption, with 

significant fuel savings for consumers. The proposed program is technologically feasible 

at a reasonable cost, based on deployment of available and effective control technology 

across the fleet, and industry would have the opportunity to plan over several model years 

and incorporate the vehicle upgrades into the normal redesign cycles. The proposed 

program would result in enormous societal net benefits, including greenhouse gas 

emission reductions, fuel economy savings, improved energy security, and cost savings to 

consumers from reduced fuel utilization. 
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